For many years, the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), has required employers to provide to group health plan participants and newly eligible employees a Summary Plan Description (an “SPD”) that generally describes the terms of the plan, including a description of plan eligibility requirements. More recently, the Patient Protection and Affordable Care Act (the “ACA”) established specific eligibility requirements for employer-provided group health plans. If your group health plan modified its eligibility rules to satisfy the ACA requirements, then you should update the eligibility provisions in your existing group health plan’s SPD. Specifically, the SPD should include a description of: (i) the measurement method used (look-back or monthly) to determine full-time employees, (ii) the employee groups to which the measurement method applies, and (iii) if using the look-back method, the length of the measurement, stability, and administrative periods being used. In addition, you may want to include additional details on eligibility determinations for rehires, unpaid leave, and change in employment status (e.g., part time to full time).
Even if existing SPDs do not contain provisions that expressly conflict with the ACA requirements, you should still clearly describe any new ACA eligibility provisions in an updated SPD. In addition to complying with ERISA and the ACA, clearly described ACA-compliant eligibility provisions should help you reduce potential conflicts with employees and risks of litigation, both from employees and from the IRS, over who was offered coverage and who was not. Finally, note that while enforcement of ERISA’s SPD requirement has historically been inconsistent, the number of audits of group health plans by the Department of Labor since the implementation of the ACA’s new eligibility requirements is on the rise. It is better to be safe than sorry.