E-Delivery Of Summary Plan Descriptions

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This Alert Applies To: 
* Fully Insured
* Self-Funded
* Large Group (Over 50 lives)
* Small Group (Under 50 lives)

A recent case, Thomas v. CIGNA Group Ins., 2015 WL 893534 (E.D.N.Y. 2015) (1) highlights the importance of providing the required notice for electronically furnished summary plan descriptions ("SPDs"). (2)  In this case, a participant in ERISA life insurance plans stopped paying her policy premiums when she terminated work due to disability. Following her death, her beneficiary filed a claim for benefits with the insurer. The insurer denied the beneficiary's claim on the basis that the participant had not timely requested the premium waiver allowed for disabled participants under the plan and had been adequately notified of the waiver right. The beneficiary sued on the grounds that the premium waiver requirements were not adequately communicated to the participant. The court found that the plan administrator's determination that the participant was placed on notice of the waiver right was arbitrary and capricious and that it failed to properly notify the participant that the plan SPDs were posted on the plan sponsor's intranet site. There was no evidence showing that the participant received notice that SPDs had been posted to the intranet or that SPDs had been furnished to her in any other manner. The case underscores that a written or electronic notice must be provided to participants each time a new electronic SPD is posted.

Action Item

An ERISA plan administrator should implement a policy under which a written or electronic notice is delivered to plan participants each time a SPD is updated on the plan sponsor's website. The notice should (i) provide direction to the website, (ii) explain the significance of the SPD, and (iii) disclose that the participant may request a paper copy of the SPD. 

Below is a sample notification that plan sponsors could use when sending out an electronic copy of an SPD via email, in PDF format.  In the alternative, some plans prefer to include a direct link to the document, located on a company intranet or other website, in the email notification.  The language could also be revised to apply to other documents distributed electronically, such as a Summary of Material Modifications or other required ERISA disclosures.  However, it is important to note when using this approach that the Department of Labor imposes certain limitations on distributing documents to individuals electronically, if the intended recipient is not an active employee who has access to a computer as part of his or her regular job duties.  If the applicable document is being distributed to active employees who do not fall into this category, terminated employee participants, and/or plan beneficiaries, DOL rules generally require the plan administrator to obtain affirmative consent to electronic disclosure from each such individual.  The IRS has adopted similar, slightly less restrictive rules for electronic distribution of annual notices and other disclosures required by the Internal Revenue Code and IRS rules.

Sample Notice

Attached is a Summary Plan Description ("SPD") for the [insert name of plan] (the "Plan").  The purpose of this SPD is to provide a basic summary of the Plan's terms as of [insert date], including benefits provided under the Plan and your rights and obligations with respect to the receipt of such benefits.  [Please note that you may access a current copy of the SPD online, and any "Summaries of Material Modifications" that may be provided to reflect amendments to the Plan, at any time by visiting [insert website address].  You also have the right to request a paper copy of the SPD, free of charge, by contacting [insert contact email and/or phone number].
[Describe any special instructions required to view the document, such as how to obtain any login and PIN information that may be required to access the document.  For example, if the document is provided in PDF format, it may be necessary to include the following disclosure:  The attached SPD is provided in PDF format.  You may need to download Adobe Reader to your computer in order to be able to access and read the SPD.  Adobe Reader can be downloaded for free at http://get.adobe.com/reader/.

2 The rules discussed in this Client Alert apply to all electronically furnished plan disclosures. For a full description regarding ERISA disclosure through electronic media, including effective access to electronic delivery and participant consent, see http://www.law.cornell.edu/cfr/text/29/2520.104b-1


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The information provided is for educational purposes only. This information is from sources we believe to be reliable, but we cannot guarantee or represent that it is accurate or complete. The opinions are those of the writer, and the opinions and information presented are subject to change without notice.

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