New Affordable Care Act Requirements Make SPD Distribution More Important Than Ever


All group health plans subject to the Employee Retirement Income Security Act (ERISA) are required to provide participants with a Summary Plan Description (SPD). An SPD is a document that plan sponsors must provide to plan participants. It should explain the plan’s benefits, claims review procedures and participants’ rights.

While this requirement under ERISA has been federal law for many years, enforcement has been inconsistent. Now the Affordable Care Act (ACA) has introduced new SPD requirements for employers, and the number of employer audits is on the rise.

An SPD must be written in a manner that the average person can understand, and must comprehensively outline a participant’s rights and obligations under the plan. Plan sponsors often mistakenly believe that insurance carrier booklets are sufficient to meet the SPD requirements under ERISA, but they are not. While the booklets contain detailed information about the plan, the plan sponsor is likely required to provide additional information to participants for ERISA purposes.

Employers need to take a great deal of care in ensuring that their SPDs are prepared correctly and that they satisfy ERISA guidelines. For this reason, most employers are probably not equipped to prepare an SPD on their own, and rather must turn to a qualified third party administrator (TPA) or employee benefits attorney for help.

If you need help preparing an SPD for your employee benefits plan, Watkins Insurance Group suggests the following:

We can provide you with a sample SPD wrap document and checklist. You can use these tools to help create your own ERISA-compliant SPD.
We partner with a third party administrator who can help you prepare your SPD for approximately $300 – $400 per year.
We can provide detailed answers to the most commonly asked questions about SPD requirements, as well as a checklist to help you ensure that you include all of the required information about your plan.

Contact your insurance carrier for copies of your plan booklets. While the booklets may not meet SPD requirements, they can help you prepare your compliant SPD.

Please call Watkins Insurance with any questions you have about preparing a Summary Plan Description for your employee benefits plan.

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