Electronic Distribution – Safe Harbor

The Department of Labor (“DOL”) has established rules under ERISA concerning the distribution of various disclosures required by ERISA to employees and to participants and beneficiaries outside of the work place.  These rules establish a safe harbor for both electronic and paper distribution of materials.

ERISA Disclosures

The regulations allow plan administrators to electronically send all disclosures required under Title I of ERISA.  ERISA Title I disclosures include: 

• Summary Plan Descriptions (“SPD”)
• Summaries of material modifications
• Summary annual reports
• COBRA notifications
• Qualified medical child support order notices
• HIPAA certificates of creditable coverage

Delivery Methods

The Department of Labor regulations provide examples of acceptable distribution methods.  These “safe harbors” are described below.  Please note that these provisions must comply with requirements described in the next section.

• Email
• Attachment to email
• Posting documents to a company web site
• Provision of documents by magnetic disk, CD-ROM, or DVD

Documents delivered electronically must be furnished in a manner consistent with the applicable style, format, and content requirements required by ERISA.  However, the DOL has indicated that the appearance of paper and electronic versions need not be identical.

In addition, when personal information pertaining to an individual’s benefits or accounts is transmitted electronically, steps must be taken to protect the confidentiality of the information.

Requirements

The Electronic safe harbor provisions must comply with the requirements described below.

The plan administrator must take steps to ensure the actual receipt of information that is distributed electronically.

Possible steps include:

• Using the return-receipt email feature
• Using the undelivered email feature
• Conducting periodic reviews or surveys to confirm receipt of transmitted material

The plan administrator must provide notice to each recipient at the time the electronic documents are furnished regarding the significance of the document.

Examples:

• When documents are delivered via email, the recipients should be able to distinguish them from all other items in their inbox.
• If the documents are newly posted to an intranet site, the intended recipients must be alerted to the fact that they are now available.

Please Note: An annual or periodic notice is not sufficient.

Paper versions of the electronic documents must be available upon request.  In addition, the paper copies must be provided at no charge if the document in question must otherwise be provided at no charge.

See Electronic Delivery RulesReview the FAQs at the end of the page for a printable summary of the Electronic Delivery Rules.

Recipient Requirements

Plan administrators may electronically distribute ERISA disclosures to recipients provided that:

• Employees have Work-Related Computer Access.
• Employees/Individuals Without Work Related Computer Access Affirmatively Consent to the Electronic Delivery.

Computer Access

Employees must meet the following requirements to qualify under this provision:

• The employee has the ability to access documents at any location where he/she could reasonably be expected to perform his/her employment duties.
• The employee’s access to the electronic information system is an integral part of his/her employment duties.

Employees working out of a home office will fall under this provision provided that they meet the requirements above and that the home office is a location where the employment duties could be reasonably performed and that access to the employer’s computer system is an integral part of the employee’s duties.

If the employees meet the criteria above, they DO NOT have to:

• Have the ability to print out a paper copy at the place where they have computer access
• Consent to receive documents electronically

 Without Computer Access

Employees/Individuals without work related computer access may affirmatively consent to the electronic delivery of materials.

A consent must include a clear and conspicuous statement that explains:   

• The types of documents to which the consent will apply;
• That consent can be withdrawn at any time without charge;
• The procedures for withdrawing consent and for updating the address used for receipt of electronically furnished documents;
• The right to request and obtain a paper version of an electronically furnished document, including whether the paper version will be provided free of charge; and
• Hardware or software needed to access and retain the documents delivered electronically.

If delivery is through the Internet or other electronic communication system, the individual must affirmatively consent in a manner that reasonably demonstrates the individual’s ability to access information in the electronic format that will be used.  Requiring that the consents be furnished back to the employer electronically is a reasonable demonstration of the individual’s access ability. 

An individual must provide an address for delivery of documents.

Note:  The plan administrator is generally not required to distribute SPDs, SMMs, or SARs to each beneficiary under the plan.  Therefore, the plan administrator is not required to obtain consent from each beneficiary under the plan (e.g. spouses and dependents).

FAQs

Can benefit and claim determinations be provided electronically?

Yes.  The regulations allow that benefit and claims determinations related to a specific individual may be communicated electronically to that individual.  However, if the information contained within the communication is confidential in nature, the plan administrator must take appropriate and necessary steps to ensure that the information remains confidential.  The regulations do not provide any guidance on what measures must be used to protect the confidentiality of this information.

What forms of electronic disclosure are permissible?

The regulations do not require the use of any specific form of electronic media.  Examples of permissible forms of electronic disclosure include delivery of documents by email, attachment to an email, posting documents on a company Web site, or on CD-ROM or DVD.

May a plan administrator electronically deliver ERISA notices by placing the information on a company Web site?

Not by itself.  The plan administrator must also send a notice, either electronically or in paper form, that notifies the employee that the SPD is available on the Web site.

Additional Resources

Federal Register: Rules Relating to Use of Electronic Communication

Reporting and Disclosure Guide for Employee Benefit Plans