Summary Plan Descriptions (SPD)
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What is it and What you need to know?
It seems like another day, another mandatory compliance regulation has been released, re-released or brought to your attention. Who has time to keep up with every little thing the government has put out there?
So now, as we wrap up July renewals, let’s review Summary Plan Descriptions (SPDs). It’s just another compliance issue that has been around from the early 2000s and is rarely remembered but can cost big bucks if missed.
If you are a company and you offer group health benefits to your employees you must provide an SPD. An SPD is a document that explains in layman’s terms the plan’s benefits, claim review procedures and ERISA rights. ERISA is the Employee Retirement Income Security Act.
No matter the company size, if group benefits are offered, an SPD must be provided. A common mistake is that an SBC (similar sounding and similar letters) is an SPD. Summary of Benefits Coverage (SBC) is not, in any shape or form, the same as an SPD. The SBC only tells the employee what the plan covers. An SBC is a document that is provided along with the SPD.
Like all compliance regulations, there are timeframes in which communication must occur. Let’s break it down:
- Within 120 days of the plan becoming subject to ERISA
- Within 90 days of enrollment
- Every 5 years if material modifications are made
- Every 10 years if no amendments occur
Best Practice Alert!
Make the SPD part of your new hire paperwork. That way, you will never forget to provide it.
SPDs can be lengthy. So can the accompanying documents that need to be provided along with the SPD. Luckily it is A-OKAY to email these notices to your employees. You can even post them on your company’s intranet sites. Because this insurance stuff can be confusing and blends together, make sure if you do email or post it, every employee signs a form stating they received the SPD and accompanying documents. The acknowledgement form should also include language stating the employee understands what was provided to them. Keep these forms on hand in the event of an audit. Don’t have employee emails? No problem, provide them in a staff meeting or mail to their home. Remember to get that acknowledgement signature regardless of how it was distributed!
Still not sure what to do, how to do it or what the SPD is exactly, just call Kuzneski Financial Group and we’ll get it taken care of for you!