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Summary plan descriptions
  • SPDs contain important information about plan participants and beneficiaries’ rights, benefits, and responsibilities.

One of the most important documents participants are entitled to receive automatically is a summary of the benefit plan, called the summary plan description (SPD). The Employee Retirement Income Security Act (ERISA) requires plan administrators to give to participants and beneficiaries an SPD describing their rights, benefits, and responsibilities under the plan in understandable language. The SPD must be provided when an employee becomes a participant of an ERISA-covered retirement or health benefit plan, or when a beneficiary receives benefits under such a plan.

The plan administrator is legally obligated to provide the SPD to participants, free of charge. The SPD tells participants what the plan provides and how it operates, including information such as:

  • The name and type of plan;
  • The plan’s requirements regarding eligibility;
  • Description of the benefits and when participants have a right to those benefits;
  • How the service and benefits are calculated;
  • When the benefits become vested;
  • Statement that the plan is maintained pursuant to a collective bargaining agreement, if applicable;
  • Statement about whether the plan is covered by termination insurance from the Pension Benefit Guaranty Corporation (PBGC);
  • Source of contributions to the plan and the methods used to calculate the amount of contributions;
  • Provisions governing termination of the plan;
  • Procedures regarding claims for benefits and remedies for disputing denied claims; and
  • Statement of rights available to plan participants under ERISA.

If a plan is changed, participants must be informed, either through a revised SPD, or in a separate document, called a summary of material modification (SMM), which also must be given to participants free of charge. The SMM must be written in a manner that the average participant can understand.

Updated SPDs must be provided every five years if changes are made to the SPD information or the plan is amended; otherwise, they must be provided every ten years. New employees must receive a copy of their plan sponsor’s latest SPD within 90 days after becoming covered by the plan. Plan sponsors are not required to file the SPD with the Department of Labor (DOL), although they are required to provide it to DOL upon request.

ERISA also requires that SPDs be updated periodically. Furthermore, ERISA requires disclosure of any material reduction in covered services or benefits to participants and beneficiaries generally within 60 days of the adoption of the change through either a revised SPD or an SMM. Material changes that do not result in a reduction in covered services or benefits must be disclosed through an SMM or a revised SPD not later than 210 days after the end of the plan year in which the change was adopted.

SPDs for health plans

Among other information, the SPD of health plans must describe the following:

  • Cost-sharing provisions including premiums, deductibles, coinsurance, and co-payment amounts for which the participant or beneficiary will be responsible;
  • Annual or lifetime caps or other limits on benefits under the plan;
  • The extent to which preventive services are covered under the plan;
  • Whether, and under what circumstances, existing and new drugs are covered under the plan;
  • Whether, and under what circumstances, coverage is provided for medical tests, devices, and procedures;
  • Provisions governing the use of network providers, the composition of provider networks and whether, and under what circumstances, coverage is provided for out-of-network services;
  • Conditions or limits on the selection of primary care providers or providers of specialty medical care;
  • Conditions or limits applicable to obtaining emergency medical care; and
  • Provisions requiring preauthorization or utilization review as a condition to obtaining a benefit or service under the plan.

The DOL website has more information on SPDs and their importance.