Everything you need to know about SPDs

What’s an SPD and why is it important?

Summary Plan Descriptions (SPDs) are documents that include all of the important information that employers and plan participants need to know about their benefit plan. Not only are SPDs beneficial to plan participants, SPD distribution is legally required for certain benefit plans and protects employers against liability. Failure to distribute SPDs to employees can lead to fines and other penalties.

At Employee Benefits Corporation, we help our clients meet their SPD requirements by providing a Summary Plan Description and My Company Plan for distribution. Both of these documents must be provided to employees to meet regulatory requirements.

Employee Benefits Corporation also provides clients with a Summary of Material Modification (SMM) template. If an employer makes a change to their plan, they could choose to distribute a summary of the changes with an SMM rather than the full SPD (including the My Company Plan).

You can expect the following in these three documents:

Who needs to distribute and receive SPDs?

Employers are required to distribute SPDs to all plan participants if they are subject to the Employee Retirement Income Securities Act of 1974 (ERISA).*

The following people must receive an SPD:

• Employees covered by the plan
• COBRA qualified beneficiaries covered by the plan
• Covered retirees
• Other former employees who remain eligible under a plan
• Alternate recipient under a qualified medical child support order
• Surviving spouses covered by the plan
• Representatives or guardians of incapacitated individuals

* Plans/employers that are not subject to ERISA, such as governmental employers and deemed church plans, are not required to distribute an SPD. However, employers may choose to distribute an SPD to plan participants so that they understand the specific details of their plan.

When do employers need to distribute SPDs and where can they find it?

There are several instances when employers are required to distribute SPDs to participants:

• Within 120 days of implementing a plan subject to ERISA
• Within 90 days of an employee becoming a new participant
• Within 30 days of a written request
• Within 60 days of a reduction in covered services or benefits (alternatively, an employer can distribute an SMM)
• 210 days after the end of any plan year in which the plan has an amendment (alternatively, an employer can distribute an SMM)
• Every five years after the plan has changed
• Every 10 years if there are no changes made to the plan

These are the minimum requirements for how often SPDs legally need to be distributed. However, it’s recommend that SPD distribution occurs as soon as possible, especially when participants are new or if there is a new plan.

Employee Benefits Corporation clients can find their SPD, My Company Plan and SMM template in their employer portal at the following locations:

How do I need to distribute SPDs?

There are several options to distribute SPDs (and SMMs) to employees. If it’s being distributed by mail, it’s important to ensure that the mailing list is up to date and all participants will receive it. Employers can distribute SPDs to their participants by:

• Mail (first, second, or third class)
• Special inserts to company publications – as long as there is a notice prominently displayed on the cover that the SPD is included
• Hand-delivery
• Electronic distribution (download the Digital Distribution Guide for electronic distribution requirements)

Reminder: It’s important to always keep delivery records when available.

The Employee Benefits Corporation Way

When it comes to SPDs, Employee Benefits Corporation provides the best in the industry. We tailor the required content to provide as much detail as possible about your specific plan design, including details about card usage, claim submission deadlines, and which expenses are eligible. The SPD gives employers the opportunity to share information with participants in consumer-friendly language that they can use as a reference for plan specifics and end of plan year details.

Employee Benefits Corporation provides a written SPD for the BESTflex, EBC HRA, and CommuteEase plans. While transportation benefits are not subject to ERISA, we provide an SPD to employers to help participants understand their qualified transportation plan. We also provide wrap plan SPDs as a standalone service. Our wrap plans combine health and welfare benefits into a single plan document and SPD. Contact us for more information.