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Distribution Timing Rules for SPDs and SMM

Question: What are the general ERISA distribution timing rules for SPDs and SMMs?  Can they be posted to the company intranet?

Compliance Team Response:

General Summary Plan Description (SPD) Distribution Timing

  • New Plans: Within 120 after the date the plan is created.
  • Newly Covered Participants: Within 90 days after the participant first becomes covered under the plan.
  • Ongoing Participants—Material Changes Made: Every five years if material changes are made within that five-year period.  (Technically, distribution is not required until 210 days following the last day of the fifth plan year.)
  • Ongoing Participants—No Material Change: Every ten years if no material changes are made during the ten-year period.  (Technically, distribution is not required until 210 days following the last day of the tenth plan year.)

General Summary of Material Modifications (SMM) Distribution Timing

A SMM is required whenever there is a material change to the plan.  Whether a plan change is material or not is often unclear and will need to be assessed based on all facts and circumstances.

There are different rules that apply depending on whether the material change is a reduction in health benefits:

  • Material Reduction in Covered Services (health plans only): Within 60 days after adoption of the change. (Note that it’s a bad practice to wait this long to distribute an SMM describing a reduction in health benefits.  Participants might have already sought the services that have been eliminated prior to receiving the notice. This might give rise to a breach of fiduciary duty claim.  Best practice is always to distribute the SMM in advance of the reduction if possible.)
  • All Other Material Changes: Within 210 days after the end of the plan year.

Important Note re SPD Distribution Satisfying SMM Requirement: There is no need to distribute an SMM if the changes are incorporated into an updated SPD that is distributed by the applicable SMM deadline above.

Important Note re Wrap SPDs vs. Carrier Docs (EOCs, Policies, Certificates of Coverage): 
Employers often distribute the new carrier docs (that are incorporated by reference in the wrap SPD) at the start of each plan year as a way of satisfying the SMM rules through the SPD distribution alternative described above.  In most years, the carrier documents’ content will be the only SPD content that has been modified from the prior year.  These carrier documents, combined with open enrollment materials which typically include SMM content, will in many years satisfy the SPD/SMM requirements without any need to provide an updated wrap SPD.  There is no requirement that a new wrap SPD be distributed annually.

Special Summary of Benefits and Coverage (SBC) Distribution Timing Rules

Keep in mind that there are a number of separate timing (and electronic disclosure) rules related to distribution of SBCs. 

Beware that employers will need to distribute an updated SBC (or a summary of the changes) any time there is a mid-year material modification that affects the content of the SBC.  The SBC rule (unlike the SMM rules above) requires that the updated SBC be distributed 60 days prior to the date the change will become effective—and regardless of whether the material change is a reduction or enhancement of benefits.

Posting on Employer Intranet

Posting an SPD or other ERISA disclosure to a company’s intranet, benefits portal, wiki, etc. is fine—as long as there is also a notice sent out each time new ERISA materials are posted there. 

The ERISA electronic disclosure rules require that employers take appropriate and necessary means to ensure that the system for furnishing documents results in the actual receipt of the documents.  There has been bad case law in the past of employers posting new ERISA documents to an intranet without notifying their employees, and the court therefore finding that the employees could rely on the prior documents.

Simply posting on an intranet without notification to employees is therefore not a good practice.  But there is no need to send the actual ERISA documents via email—notifying employees that the documents are posted on the intranet is sufficient. The rules for when electronic disclosure is permitted without authorization (generally for employees who have work-related computer access that is integral to their job duties) are available here: https://www.newfront.com/blog/erisa-electronic-disclosure-rules-2

Regulations:

29 CFR §2520.104b-1(c):

c) Disclosure through electronic media.

(1)   Except as otherwise provided by applicable law, rule or regulation, the administrator of an employee benefit plan furnishing documents through electronic media is deemed to satisfy the requirements of paragraph (b)(1) of this section with respect to an individual described in paragraph (c)(2) if:

(i)   The administrator takes appropriate and necessary measures reasonably calculated to ensure that the system for furnishing documents—

(A)   Results in actual receipt of transmitted information (e.g., using return-receipt or notice of undelivered electronic mail features, conducting periodic reviews or surveys to confirm receipt of the transmitted information); and

(B)   Protects the confidentiality of personal information relating to the individual’s accounts and benefits (e.g., incorporating into the system measures designed to preclude unauthorized receipt of or access to such information by individuals other than the individual for whom the information is intended);

(ii)   The electronically delivered documents are prepared and furnished in a manner that is consistent with the style, format and content requirements applicable to the particular document;

(iii)   Notice is provided to each participant, beneficiary or other individual, in electronic or non-electronic form, at the time a document is furnished electronically, that apprises the individual of the significance of the document when it is not otherwise reasonably evident as transmitted (e.g., the attached document describes changes in the benefits provided by your plan) and of the right to request and obtain a paper version of such document; and

(iv)   Upon request, the participant, beneficiary or other individual is furnished a paper version of the electronically furnished documents.

Gertjejansen v. Kemper Ins. Cos., 274 Fed. Appx. 569 (9th Cir. 2008):

A plan administrator satisfies those disclosure requirements by furnishing documents through electronic media as long as the administrator “takes appropriate and necessary measures reasonably calculated to ensure that the system for furnishing documents . . . [r]esults in actual receipt of transmitted information.” 29 C.F.R. § 2520.104b-1(c)(1)(i). Lumbermens has submitted nothing on the record to suggest that the mere placement of an updated SPD on its intranet site could ensure that Gertjejansen would actually receive the transmitted information. The district court correctly reviewed the denial of benefits de novo.  When de novo review applies, “the court simply proceeds to evaluate whether the plan administrator correctly or incorrectly denied benefits.” Abatie, 458 F.3d at 963.


Brian Gilmore

About the author

Brian Gilmore

Brian Gilmore is the Lead Benefits Counsel at Newfront. He assists clients on a wide variety of employee benefits compliance issues. The primary areas of his practice include ERISA, ACA, COBRA, HIPAA, Section 125 Cafeteria Plans, and 401(k) plans. Brian also presents regularly at trade events and in webinars on current hot topics in employee benefits law. Connect with Brian on LinkedIn.


The information provided is of a general nature and an educational resource. It is not intended to provide advice or address the situation of any particular individual or entity. Any recipient shall be responsible for the use to which it puts this document. Newfront shall have no liability for the information provided. While care has been taken to produce this document, Newfront does not warrant, represent or guarantee the completeness, accuracy, adequacy, or fitness with respect to the information contained in this document. The information provided does not reflect new circumstances, or additional regulatory and legal changes. The issues addressed may have legal, financial, and health implications, and we recommend you speak to your legal, financial, and health advisors before acting on any of the information provided.

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