UGS Summary Plan Description

The Plan Document/Summary Plan Description (PD/SPD) is one of the most important documents participants are entitled to receive when becoming a participant of an ERISA-covered health benefit plan.  The PD/SPD 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 and in what form benefits are paid, and how to file a claim for benefits. If a plan is changed, participants must be informed through a plan amendment.

Content

The PD/SPD must be written for the average participant and be sufficiently comprehensive to apprise covered persons of their benefits, rights, and obligations under the plan. 

The PD/SPD must accurately reflect the plan’s contents as of the date not earlier than 120 days prior to the date the PD/SPD is disclosed.

The PD/SPD must contain the following information:

• Plan Identifying Information:
  • Name of Plan
  • Name & Address of Employer
  • Plan Sponsor’s EIN
  • Plan Number
  • Type of Plan (medical, FSA, disability, etc.)
  • Type of plan administration (insurer, contract, etc.)
  • Plan administrator’s name address & telephone number
  • Name and address of agent for service of legal process
  • Statement that the plan administrator may be served with process
  • Plan year Information about plan trustees (if applicable)
  • Certain information about collective bargaining agreements (if applicable)
• Description of plan eligibility provisions
• Description of plan benefits
• Description of circumstances that would cause a denial of benefits
• Amendment and termination provisions
• Subrogation provisions
• Plan contributions and funding
• Coordination of benefits, and offset provisions
• Claim procedures and limits for lawsuits (if plan imposed)
• Statement of ERISA rights
• Offer of assistance in non-English language (if plan covers minimum number of non-English speaking participants)
• Description of employer’s refund allocation policy (for insured plans relying on Form 5500 exemptions)
• Grant of discretion for plan administrator to interpret plan and make factual determinations

Additional Content Required for Group Health Plans:

• Detailed description of group health plan benefit provisions
  • Cost sharing provisions, premiums and deductibles
  • Co-insurance and co-payment amounts
  • Annual lifetime caps
  • Any benefit limitations
  • When existing and new drugs are covered
  • When medical tests, devices and procedures are covered
  • Preventive services covered and amounts
  • Pre-authorizations or utilization review requirements
  • Use of network providers, composition of provider networks, and when out-of-network services are covered
  • Conditions or limitations on primary care providers or specialists
  • Condition of limitations for emergency medical care
• Role of health insurers (do they provide insurance or administration)
• Procedures for obtaining pre-authorizations, approvals, or utilization review decisions
• Effect of provider discounts on co-pays, deductibles or any other plan aspect
• Information of COBRA
• HIPAA preexisting condition and special enrollment disclosures
• Mental Health Parity Act – mental health parity disclosures
• Women’s Health and Cancer Rights Act – coverage for reconstructive surgery after mastectomy
• Newborns’ and Mothers Health Protection Act – minimum hospital stays after childbirth disclosures
• Qualified Medical Child Support Order (QMCSO) information
• Coverage for adopted children

Non-English Language

Under certain circumstances, the PD/SPD and plan amendments must state an offer of assistance in a non-English language.

This assistance must be calculated to provide participants a reasonable opportunity to become informed as to their rights and obligations under the plan.

If applicable, this offer of assistance (written in the non-English language) should appear at the beginning of the PD/SPD or plan amendment or on its cover.

The obligation for providing this assistance applies to:

• Plans with 100 or more participants that have the lesser of 10% or 500 or more participants literate only in the same non-English language
• Plans with fewer than 100 participants that have 25% of more participants literate only in the same non-English language

Material Modifications

The Plan Amendment describes material modifications to a plan and changes in the information required to be in the PD/SPD. 

• The Plan Amendment must be distributed to participants not later than 210 days after the end of the plan year in which the change was adopted.
• If a Plan Amendment describes a material reduction in covered services or benefits that would be considered by the average plan participant to be an important reduction in covered services or benefits, then this amendment  must be distributed to plan participants within 60 days of adoption of the material reduction on group health plan services.
• If the PD/SPD is updated with the material modifications and distributed within these time periods, the Plan Amendment does not need to be sent out.

Noncompliance

Failure to Comply with Content or Format Rules

If a PD/SPD is not compliant with the PD/SPD content or format rules, an employer may leave itself liable for:

• Breach of its fiduciary duty if the PD/SPD misleads the plan’s participants
• Unenforceability of the terms and conditions of the plan
• Payment of additional benefits not intended to be a part of the plan

Failure to Prepare or Supply an PD/SPD

• There are no specific or additional penalties for not automatically providing a PD/SPD, beyond the actions that can be taken for violating an ERISA provision.
• Participants and beneficiaries may bring suit to enforce any provision of ERISA, including the distribution of PD/SPDs.
• Criminal penalties may be assessed against any individual or company that willfully violates an ERISA disclosure requirement.
  • This penalty can be up to $100,000 and/or imprisonment of up to 10 years.
  • The penalty can be increased up to $500,000 if assessed against a company.
• The Plan Administrator may be liable for a penalty of up to $159 per day (for 2020), per occurrence penalty if it does not provide a response to a participant or beneficiary who requests a copy of the PD/SPD in writing.
• If a plan does not have a PD/SPD, a court may enforce other, informal plan descriptions that may make an employer liable for benefits it did not intend to be a part of the plan.
• Employers should also keep in mind that the PD/SPD is often the primary disclosure document for other health and welfare plan disclosure requirements, such as COBRA rights and other health plan mandates.  Failure to provide these notices may result in additional fines, penalties or civil actions.

Additional Resources

Department of Labor Web Site