By JoAnn Gulbin
Raise your hand if you procrastinate updating your Summary Plan Descriptions (SPDs). Yep, thought so.
While we all know that the Employee Retirement Income Security Act (ERISA) requires SPD updates on a regular basis, actually making the updates can be time-consuming and difficult, and can fall to the bottom of the to-do list.
That’s where a professional benefits writer can help. While your first instinct may be to look just to your ERISA attorney or plan administrator, partnering with a writer who has SPD expertise can ensure a better outcome. Here’s why:
SPDs are required by ERISA to be written in plain English and easily understood by the average employee. A lawyer’s focus on fulfilling the requirements of ERISA can mean clear and concise descriptions of key plan provisions are often sacrificed. While it’s essential to include legal input and review during the SPD drafting process, it’s best to leave the writing to someone focused on effectively communicating the plan provisions and how to best utilize plan benefits.
An inadequate SPD is a liability. SPDs offered by third-party administrators are often “off-the-shelf” products that are minimally customized for your plan. This approach runs the risk of critical plan provisions being omitted or inadequately described, leaving you open to legal action by plan participants in a claim dispute. And remember, the plan documents provided by administrators do not fulfill ERISA’s SPD requirement unless they are accompanied by a wrap document that includes the information required by ERISA.
Your SPD is more than just a legal requirement. Viewing your SPD simply as a legal document is too often a lost opportunity to educate plan participants about their benefits; instead, give employees a communication that helps them make informed decisions and appreciate the overall value of the plan.
Transform your SPDs into valuable communication tools by thinking less like a lawyer – and more like your employees. Need help drafting or updating your SPD? Contact us.
Reminder! For those of us who haven’t memorized the ERISA requirements for SPDs:
SPDs for new plans must be provided to participants and beneficiaries within 120 days of that plan’s effective date.
SPDs for existing plans must be provided within 90 days of the date a participant begins to be covered.
If material changes are made to a plan, a Summary of Material Modifications (SMM) must be provided within 210 days after the end of the plan year in which the change was effective.
Every five years, assuming a plan has changed, a new SPD must be provided to all participants (every 10 years if there have been no changes).
There are serious financial penalties for noncompliance.