Need advice on a Summary Plan Description

jerzal

We are a small five person company. Someone recently informed me (I am somewhat new to HR.) that I need to give everyone a Summary Plan Description for our Health, Dental, Life, LTD insurance.

How do I go about this? What does it have to say? I called my insurance companies but they have been no help at all.

Does anyone have any examples they can email to me?

Thank you!

Hunter1

Since you aren't going to be able to create SPDs, examples won't help much. The SPD basically has to explain the policy in common english so the employee can understand the benefit as opposed to the master plan document which is more 'legalese'. Call your agent and demand (you can do it nicely at first) SPDs for your employees. The agent should provide this service with a smile.

LindaS

Agree with Hunter. Your insurance company is responsible for preparing the SPDs for their plans. In instances such as yours where their probably isn't alot of custom language the insurance company would provide their standard SPD with some type of insert describing anything specific to your plan. If your insurance agent is unwilling to help, contact the insurance company directly.

irenesmsaclaims

Normally, the SPD (certificate) is sent to the employee at home, at least that's what they do here. The master contract (with the employer) should be at your office. If it's insured, they have to provide these.

jerzal

is the SPD different from the Certificate of Insurance? Everyone gets the cert. of ins. from the ins. company. My understanding was the SPD was a document from us saying that this the payment (if they pay), how to enroll, dis-enroll, etc.

irenesmsaclaims

The certificate is the SPD in an insured plan. You do not have an additional obligation to provide a document, all of the enrollment information should be in the SPD. In fact, it's probably not a good idea for the employer to write something more, and risk contradictions and confusion.

mwild31

Hi Jerzal

You do have to give out a Summary Plan Description & it should be provided to you (you may have to make enough copies for your employees) by your broker. You don't put this together, it should be put together by the ERISA legal team/department/attorney at your broker's office/company. Just talk to your broker and say, "Hey, have you ever heard of the Employee Retirement Income Security Act of 1974, otherwise known as ERISA? If you haven't, could you become familiar with it quick as a Summary Plan Document is a federal requirement under this Act." The Summary Plan Document needs to be, as Hunter said, in plain English and it needs to outline for the employee their eligibility, summary of benefits, how the plan is administered, circumstances that could affect benefits, how the plan can be amended or terminated, pre-tax premiums (if applicable to your org.), claims procedures, a statement that the possession of this doc. or receipt of benefits does not constitute a contract of employment & a statement of ERISA rights. If your broker continues on with a blank stare or is not helpful - shop around for another broker that takes their responsibility seriously. x:-)

irenesmsaclaims

If it's an insured plan, no insurance company is going to allow a broker to write the SPD. Brokers typically do not have legal departments or ERISA experts, unless they are one of the big benefit consulting firms, and even then will not be writing insured plans. A self-funded plan is entirely different. Sadly, most brokers do not have extensive technical knowledge, especially in the area of compliance.

mwild31

[font size="1" color="#FF0000"]LAST EDITED ON 12-18-03 AT 05:55PM (CST)[/font][br][br]Hi irenesmsaclaims

While I appreciate your comments - what you say just ain't true in my state or with my broker (we only have 100 people at our company & found a broker - very easily I might add - that does indeed have an attorney attached to the brokerage house). In my previous post I did make it sound as though the broker is the only one that puts these things together (that's been my experience) I just put in a call to my compliance department & it turns out that in addition to the broker offering the SPDs, the insurance companies write them as well.

Perhaps the best advice we can give this poster is to go back to the broker and research further and if the answers aren't forthcoming, go directly to the insurance company. Also - in my experience, a certificate doesn't cover the requirement of a SPD - I have a call into my compliance rep. to verify. Finally, my experience is with fully insured plans & my post is in relation to fully insured plans which I assumed, due to the size of the original posters company, the original poster had.

Update - I just got off the phone with my compliance person - the Certificate of Insurance is seperate from the SPD and the possession of a cert. does not get you off the hook for a SPD. This is in my state, maybe it's different in others and irenesmsaclaims is correct in their statement - I would just go to your broker or the insurance company directly for the answer.

mrsbowden

AS far as the Cert. and SPD. I just asked our broker the same question last month..I was told that fully insured plans may have certificates instead of SPD and it was consider to be th same thing or atleast serve the same purpose.

I am not sure that this is right, just what I was told. I am located in WV, if that makes a difference.

mwild31

Our broker was very clear - a cert. is not the same as a SPD. The explanation that followed was kind of dry, but to break it down:

A cert. is just a piece of paper an ee would use to prove insurance to another provider (as well a their card of course) it states when the coverage begins and ends.

The SPD also states when coverage begins, but it essentially copies (to a large degree) the contract you (HR) receive and translates the legal mumbo jumbo into plain english for the ee's.

Here's an excerpt from the DOL's site:

"The Employee Retirement Income Security Act (ERISA) requires plan administrators — the people who run plans — to give plan participants in writing the most important facts they need to know about their retirement and health benefit plans including plan rules, financial information, and documents on the operation and management of the plan. Some of these facts must be provided to participants regularly and automatically by the plan administrator. Others are available upon request, free-of-charge or for copying fees. The request should be made in writing.

One of the most important documents participants are entitled to receive automatically when becoming a participant of an ERISA-covered retirement or health benefit plan or a beneficiary receiving benefits under such a plan, is a summary of the plan, called the summary plan description or SPD. The plan administrator is legally obligated to provide to participants, free of charge, the SPD. The summary plan description is an important document that tells participants what the plan provides and how it operates. It provides information on when an employee can begin to participate in the plan, how service and benefits are calculated, when benefits becomes vested, when and in what form benefits are paid, and how to file a claim for benefits. If a plan is changed, participants must be informed, either through a revised summary plan description, or in a separate document, called a summary of material modifications, which also must be given to participants free of charge.

In addition to the summary plan description, the plan administrator must automatically give participants each year a copy of the plan's summary annual report. This is a summary of the annual financial report that most plans must file with the Department of Labor. These reports are filed on government forms called the Form 5500. The summary annual report is available at no cost. To learn more about the plan assets, participants may ask the plan administrator for a copy of the annual report in its entirety."

Here's a site that's helpful as well: [url]http://www4.law.cornell.edu/uscode/29/1022.html[/url]