SPD, Plan Document, Certificate of Coverage, Master Group Policy

[Guest jblank]

Hello,

I am brand-new to benefits administration and am the administrator for employee benefits for a small company of under 30 employees. I have been trying to get clarity on the topic of Summary Plan Descriptions. I understand that it is required that the plan administrator provide these to employees for their retirement plan, welfare benefit plans and cafeteria plans within 90 of the employee's eligibility date for the plan. I have been told that an SPD and Plan Document are simply a different name for the same thing and are required when the company is self-funded. I have also been told that in a fully-insured situation that a Certificate of Coverage or a Master Group Policy is the only document required. Is this information correct? I ask because in gathering these documents I have been able to secure an SPD for our Cafeteria Plan, 401K and STD & LTD; whereas I am having a difficult time securing anything more than a Certificate of Coverage for our Health, Dental & Life. Our company is fully-insured. If I do need an SPD for the latter, is that the responsibility of the insurance carrier or is our company's responsibility to supply?

Thank you!

[Guest Gh4565]

Hello,

I am brand-new to benefits administration and am the administrator for employee benefits for a small company of under 30 employees. I have been trying to get clarity on the topic of Summary Plan Descriptions. I understand that it is required that the plan administrator provide these to employees for their retirement plan, welfare benefit plans and cafeteria plans within 90 of the employee's eligibility date for the plan. I have been told that an SPD and Plan Document are simply a different name for the same thing and are required when the company is self-funded. I have also been told that in a fully-insured situation that a Certificate of Coverage or a Master Group Policy is the only document required. Is this information correct? I ask because in gathering these documents I have been able to secure an SPD for our Cafeteria Plan, 401K and STD & LTD; whereas I am having a difficult time securing anything more than a Certificate of Coverage for our Health, Dental & Life. Our company is fully-insured. If I do need an SPD for the latter, is that the responsibility of the insurance carrier or is our company's responsibility to supply?

Thank you!

[Guest Gumby]

Along similar lines, I was wondering what typically makes up the plan document vs. the SPD in a self-insured medical plan. I have only come across the "SPD" for my company's medical plan (which is labeled as an "SPD") and have had trouble finding any other documentation that might be considered the plan document.

[Larry M]

[This is a laymen’s (non-attorney’s) attempt to differentiate among the various terms in your question.]

The Plan Document is the contract which states all the provisions of the plan and delineates the various responsibilities for financing the plan, the eligibility, and all the other aspects of the plan. The plan can be self funded in full, insured in full or a combination of both.

An SPD is a Summary [of the] Plan Document. This is supposed to describe, in simple language, the terms of the Plan Document which relate to such items as the benefits provided, the persons eligible, the way in which an individual becomes eligible, the persons responsible for maintaining the plan, and the ways in which appeals can be granted

The Group Policy is the contract between the insurance company and the plan sponsor. It may be the same as Plan Document, or it may be part of the Plan Document.

A Certificate of Coverage is a document provided by the insurance company to describe to the insured individual the terms of the insurance plan. It may contain all the information required in a summary plan description but, in many cases, it does not. In the latter case, you may be able to turn it into a SPD by attaching a page which includes the missing information (usually involving plan sponsor name, employer identification number, address and telephone number, name, address and telephone of the plan administrator and the person designated as agent for service of legal process, plan’s fiscal year end).

[Guest taxesquire]

I think Larry gave a very good explanation fo the documents. I'm just writing to voice my disagreement with the comment that "in a fully-insured situation that a Certificate of Coverage or a Master Group Policy is the only document required."

If you've got an insurance arrangement that is offerred through an employer to its employees, you need a plan doc and an SPD b/c you've got an ERISA plan. The plan doc and SPD can be the same, and it is possible that the underlying insurance policy could satisfy these requirements, too, but it's unlikely.

One area where the policy is usually deficient is with eligiblity, which, along with benefits, is the most important part of the plan. Most policies define eligibility as "whoever is eligible under the employers plan."

If employees are paying a portion of the premium on a pretax basis, then the plan document must comply with IRC 125 (cafeteria plans).

[Jacmo]

jblank: 1) You are required by ERISA to provide "disclosure" for H&W plans. (You are exempt from the other major ERISA requirement--"reporting, i.e., Form 5500"--until you have 100 or more participants at the beginning of a plan year). Disclosure requires a Plan Document and SPD--makes no difference if self funded or fully insured. The Plan Document is the "Philadelphia legalese" that gives a legal description of the plan. As noted by LarryM, the SPD is a summary of the plan document, written in everyday terminology that the average employee is supposed to be able to understand.

2) A Certificate of Coverage or Master Group Policy is not the only document required UNLESS it meets the ERISA requirement for a Plan Document and SPD. (Which is very rare).

3) The burden of ERISA disclosure is on the employer, not the insurance carrier.

Very few small employers actually have bona fide ERISA H&W Plan Documents/SPDs. The major reason--the high cost of the needed legal expertise to create them AND maintain them. Especially the maintenance--small employer benefits are constantly changing. Most ignore the requirements and don't pay the "penalty" until an employee sues. At which point, all the employer has for disclosure is handouts and verbal statements.