Cafeteria Plan and Life/LTD Policy

[Guest deacon]

Do most plans provide employees with a copy of a life or disability policy issued by the carrier or do they summarize the policy and include it in the SPD that describes the other coverages such as health, flexible spending? We are in disagreement as to whether the average employee can understand the carrier's language. We have had an issue in the past where the life and disability benefits were summarized as opposed to using the actual policy and an employee misinterpreted the summarization. We understand that DOL requires that the SPD be written in terms understandable by the average plan participant.

[mroberts]

If you are only providing your employees with a summary and not a booklet certificate, you are in violation of ERISA. Coming from a carrier and having created the booklet certificates that your employees receive, I couldn't agree with you more that they are confusing. Nonetheless, much of the small print in the booklets is where problems arise and where companies and carriers find themselves in courts over.

If you find the booklets confusing, just provide a summary in addition to the booklets. At least that way your ass is covered.

Now, if you are referring to the policy itself, then you only need have a copy of it on hand for employees to look at if they wish.

[GBurns]

I am sure that your state insurance laws require that the covered employee get a certificate of coverage for each type of coverage or each separate policy. This has nothing to do with the SPD.

[KIP KRAUS]

I agree with mroberts and GBurns. In the past I have had the insurers print the additional ERISA information in their insurance certificates. Or, on the other hand, you can do as mroberts suggests and provide a summary and the certificate and in the summary refer the participant to the certificate for details not included in the summary.

[Guest PDDeBoy]

Am in agreement with GBurns, MRoberts,and Deacon. I'm always for shifting the risk where applicable. We always request in the RFP that summary plan descriptions be provided by the insurance provider and/or TPA and be included in the participant's plan booklet.