What is a summary plan description?

A summary plan description (SPD) is a document that an employer gives to its employees who   are participating in retirement or health benefit plans under the U.S. Department of Labor's Employee Retirement Income Security Act of 1974 (ERISA) .

Examples of retirement and health benefit plans that require a summary of details include:

• Group health, life, dental, vision and disability insurance plans
• Flexible Spending Accounts (FSAs)
• Health Reimbursement Arrangement (HRA)
• Employee Assistance Plans
• Other  fringe benefit plans with employer contribution 

The summary plan description contains important information regarding the retirement or health benefit plans provided, including:

• Summary and detailed description of benefits
• Minimum Standards for Participation
• features
• grant
• Vesting
• Benefit contributions and accruals
• Claims Process
• Fiduciary responsibilities for managers of plan assets
• Complaints and Appeals Process
• Right to sue for breach of fiduciary duty
• Guaranteed payment of certain benefits when the plan ends

In addition to informing employees of this important information, the SPD is also used to protect employers from potential legal action. For this purpose, the document should be reviewed by an attorney with SPD legal expertise.

Are employers required to provide a summary plan description?

Yes, employers are required by law to provide summary plan descriptions, regardless of the number of employees or plan participants. However, there are some exceptions. Generally, the SPD  is not required for plans  that are established or maintained by:

• by governmental institutions
• By churches
• Solely to comply with workers compensation, unemployment or disability laws
• For the “benefits of non-resident aliens or funded excess benefit plans” outside the US

The responsibility for preparing, filing, and delivering the SPD rests with the employer alone. It is not the responsibility of the insurance company, nor does the Certificate of Insurance count as a Summary Plan Statement (a common misconception).

If an employer fails to provide summary plan statements free of charge to its employees who are participating in an insured retirement or health benefit plan, they may be subject to heavy fines.

What does a summary plan description look like?

The summary plan description should look professional, as it is a legal document from the employer to its employees.

First, include the name and address of the employer, the name and contact information of the plan administrator, the name and year of the plan, and  the employer tax identification number.  Second, include important information about the retirement and health benefit plans, such as a summary of benefits, plan features, employee rights, employer/plan provider guarantees, etc. (see above).

Following are some guidelines when writing a summary plan description:

• Understand federal and state laws and their impact on the employer/employee.
• Evaluate the financial impact of the plan.
• Use correct legal language.
• Write the document in a way that is easy to understand, using everyday language.
• Keep your intentions clear, so that there is no room for misunderstanding, misinterpretation, or misinterpretation.
• Determine who and what is/is not covered.
• Do not overstep your authority, attempt to influence the employee's behavior, or violate the employee's privacy.
• Get it peer reviewed.
• Have it reviewed by a lawyer.
• Make it easy to find and navigate on the company intranet.
• Present it in a way that creates interest and promotes learning.

Keep in mind that if 10% or more of your employees do not speak English, you will need to provide SPD in other languages.

How often do summary plan statements need to be distributed?

The summary plan description must be distributed by the employer to plan participants within 120 days of the newly established program or within 90 days of coverage beginning.  The distribution method  must be appropriate and in a manner that assures receipt, whether through hand delivery, first-class mail or electronically. Posting the SPD on a wall or on the employer's intranet is not necessarily ""likely to result in full distribution.""

The SPD must be updated and distributed every five years if any changes are made to it and every ten years if no changes are made. In the meantime, SPD updates   can be provided with a Summary of Material Modifications (SMM) document .

What is the difference between a plan document and a summary plan description?

The difference between plan document and summary plan description is given below:

• Plan document  : A document informing employee participants about the benefits available to them and the guidelines used by the employer/plan administrator to determine plan operations. It is not usually distributed to plan participants.
• Summary plan description:  A written document distributed to plan participants to give them information about the benefit plan. This document includes things like the plan's features and benefits, rules, and claims procedures (see above).