There has been an explosion of participant disclosure requirements for group health plans in recent years. While health care reform created some of these new requirements, many of them became effective years earlier. For busy human resources departments, just keeping up with the summary plan description (SPD), summary of material modification and COBRA notice requirements can be challenging enough. And while some of these additional disclosure requirements can be satisfied by having the right language in the SPD, others require a separate, specifically-worded notice.
As we enter open enrollment season for calendar year plans, take a moment and use the following checklist to be sure your company is satisfying its group health plan participant disclosure requirements.
- Summary Plan Description – Provide to new participants within 90 days of becoming covered under plan. Updated SPD must be furnished every 5 years if changes made to plan, but most plans update SPD annually due to the amount of changes typically made each year. Must be written at level for average participant to understand and comprehensive enough to describe benefits, rights and obligations under plan.
- Summary of Material Modifications (SMM) – Provide to participants not later than 210 days after end of plan year change is adopted. Distribution of updated SPD satisfies this requirement. Describes material modifications to plan and changes in information required to be in SPD.
- Summary Annual Report (SAR) – Provide to participants within 9 months after end of plan year, or 2 months after Form 5500 filing due date (with approved extension). Narrative summary of Form 5500.
- Summary of Benefits and Coverages (SBC) – Provide to participants with enrollment materials and upon renewal or reissuance of coverage, and to special enrollees within 90 days of becoming covered under plan. Advance notice must be provided no later than 60 days prior to effective date of a material change in plan terms that would affect content of most recent SBC. Model language available on Department of Labor website.
- Summary of Material Reduction in Covered Services or Benefits – Provide to participants generally within 60 days of adoption of material reduction in group health plan services or benefits, or within 90 days if participants are provided information (including changes to the plan) at regular intervals of not more than 90 days in a manner that meets the general participant disclosure distribution requirements.
- Initial COBRA Notice – Provide to participants when plan coverage commences. This requirement may be satisfied by including appropriate language in SPD.
- Women’s Health and Cancer Rights Act Notice – Provide to participants upon enrollment and annually thereafter. This requirement may be satisfied by including appropriate language in SPD if it is redistributed annually. Describes required benefits for mastectomy-related reconstructive surgery, prostheses, and treatment of physical complications of mastectomy.
- Newborns’ Act Description of Rights – Notice must be included in SPD. Describes federal or state law relating to length of hospital stay for childbirth.
- Medicare Part D Notice of Creditable or Non-Creditable Coverage – Provide annually by October 15 to any participant who has coverage under Medicare Part A, or coverage under Medicare Part B and lives in a Medicare Part D service area. Because employers may not know Medicare eligibility for some dependents, providing notice to all participants ensures compliance. Describes whether plan Rx benefits are at least as good as benefits under Medicare Part D.
- Wellness Program Disclosure – Include in all materials describing terms of a health contingent wellness program (but not required if materials merely mention program availability without describing terms). Discloses availability of reasonable alternative standard or possibility of waiver of applicable standard. Must include contact information for obtaining alternative and statement that recommendations of personal physician will be accommodated.
- HIPAA Notice of Privacy Practices – Provide participants notification at least once every three years that they may receive a copy of HIPAA notice of privacy practices. Many employers ensure compliance by providing notification in connection with annual open enrollment, or including in SPD if it is redistributed annually.
- Children’s Health Insurance Program Reauthorization Act Notice – Provide to all employees annually. Employer (rather than plan) must inform employees of possible premium assistance opportunities available in state they reside. Model language available on DOL website.
- FMLA Notice – Provide to eligible employees upon hire. General FMLA notice explains FMLA’s provisions and procedures. Provide group health plan-specific provisions and procedures in SPD or separate notice if not included in general notice.
- External Review Process Disclosure – Notice describing plan’s external review process must be included in SPD or other evidence of coverage provided to plan enrollees.
- Notice of Coverage Options – Provide to all new employees. Employer (rather than plan) must inform employees about Health Insurance Marketplace, potential availability of tax credit, and that employee loses any employer contribution if a qualified health plan is purchased. Model language available on DOL website.
- Notice Regarding Designation of Primary Care Provider – Provide with SPD or similar benefit description. Describes participants’ rights to designate primary care provider, including pediatrician for children or OB/GYN for women. Model language available on DOL website.
- Notice Regarding Grandfathered Plan Status – For any plan that still maintains grandfathered status, notice must be included in any plan materials describing benefits or health coverage, including a contact for additional information.
This alert focuses on the periodic disclosures to participants required for ERISA-covered group health plans. While the SPD, SMM and SAR requirements do not apply to non-ERISA plans, sponsors of non-ERISA group health plans should consider complying with the SPD distribution requirements when including any of the other applicable disclosures described above in a plan description. Disclosures also are required for certain participant-specific events, such as COBRA, FMLA, and USERRA, or for plans that have received special exemptions, and in some cases disclosures must be provided to persons other than participants, such as spouses, dependents, and health care providers. These additional disclosure requirements are beyond the scope of this alert.