Many organizations have employees who become eligible for benefits during their employment. At such time, the employer must provide them with a summary plan description (SPD) of any health benefits plan (or retirement plan) covered by the Employee Retirement Income Security Act (ERISA).
One commonly asked question in this situation is: Can we just put a stack of SPDs in the HR office and tell employees to come pick one up instead of furnishing the SPDs by mail or electronically? Although having a supply of SPDs available in HR isn’t necessarily a bad idea, it’s not an advisable approach to satisfying the ERISA requirement to furnish SPDs to employees.
A reasonable calculation
U.S. Department of Labor (DOL) regulations require you to furnish SPDs in a way that’s “reasonably calculated to ensure actual receipt” and “likely to result in full distribution” to everyone required to receive them. Because of the nature of these rules, whether a delivery method is satisfactory depends on the facts and circumstances regarding the employer’s workplace and workforce.
The regulations include several examples of acceptable SPD distribution methods. While hand-delivery of SPDs to employees at the worksite is a specifically approved method, the regulations caution that it’s unacceptable “merely to place copies of the [SPD] in a location frequented by participants.” In other words, the DOL envisions a system designed to put SPDs into the hands of required recipients — not one that must rely on those hands to reach out for the SPDs.
An approach that requires action on the part of employees to receive their SPDs may not be viewed as likely to result in “full distribution.” Employees may be unaware of the importance of receiving an SPD, or they might not pick it up within the applicable timeframes.
For example, a participant newly covered under an existing plan must be furnished an SPD within 90 days after the participant first becomes covered. That month and a half can go by quickly for employees who don’t pay much attention to the finer points of their benefits.
Bear in mind that the ultimate legal responsibility for distributing SPDs rests with the plan administrator. Approaches that are more likely to meet the standards set forth in DOL regulations include mailing and electronic distribution, so long as applicable requirements are met. Please contact us for further details.