Federal Compliance Alert: SPDs and Plan Documents

Did you know that due to health care reform the Department of Labor (DOL) has increased their focus on auditing all employee benefits plans, including health and welfare benefits plans?

What’s Required?

ERISA (the federal Employee Retirement Income Security Act) requires employers of all sizes who are plan administrators of their group health plans to comply with 2 important requirements or risk potential penalties and possible audits:

• Maintain and distribute Summary Plan Descriptions (SPDs) to plan participants which accurately reflect the contents of the plan and which include specific information as required under federal law.
• Group health plans must be administered in accordance with a written Plan Document which must be made available to plan participants and beneficiaries upon request.

Many companies mistakenly assume that insurance contracts, certificates of insurance and benefits summaries fulfill the ERISA requirements for an SPD and Plan Document–but they don’t include the required or recommended provisions that protect the plan and the employer. Health care Reform has added even more complexity to the disclosure requirements and as
accelerated the DOL audit program.

Penalties for Non-Compliance

Employers/plan administrators may be liable for penalties if they don’t
provide an SPD or have a current Plan Document:

• Failure to provide an SPD or Plan Document within 30 days of receiving
  a request from a plan participant or beneficiary can result in a penalty
  of up to $110/day per participant or beneficiary for each violation.
• Lack of an SPD could trigger a plan audit by the U.S. Department
  of Labor (DOL).
• The DOL has increased its audit staff and national enforcement initiatives
  to investigate employers’ compliance with Health Care Reform, resulting
  in companies of all sizes being audited and being required to provide
  an SPD and Plan Document.

The Solution

Typically, the cost to develop an SPD and Plan Document can be very expensive–but we have solved this problem with a sophisticated system developed together with a major ERISA law firm and endorsed by the National Association of Health Underwriters that makes it easy and economical to comply with federal requirements.

DDI Benefits, Inc. will provide you with a Wrap SPD and Wrap Plan Document which are designed to wrap around existing certificates of insurance and benefit plan booklets to provide the required provisions and information necessary to comply with ERISA. To be compliant, the Wrap SPD and accompanying benefit plan component documents must be distributed to plan participants. Our document compliance solution includes the following benefits:

• Customized Wrap SPD and Wrap Plan Document that provide the required ERISA provisions and information that will help you achieve compliance. Distribution guidelines that explain how and when to provide these compliance documents to your plan participants.
• The ability to keep your documents current and updated as the federal government issues new amendments or when your plan information needs to be changed, typically at renewal.

Cost

Contact DDI at 503.206.5654 or info@ddibenefits.com for pricing.