Are you aware of the Summary Plan Description (SPD)? If you are an employee or a plan participant in a retirement or health plan, you should be familiar with this document. An SPD provides important information about the benefits, rules, and procedures of a retirement or health plan.
In this article, we will discuss what a Summary Plan Description is, its importance, and what information it contains. We will also talk about the requirements for creating an SPD and how to request a copy of it.
SPD is a Summary Plan Description. It is the employee benefit plan documentation that must be provided to all participants and beneficiaries that explains the basic rules of the plan in layperson’s terms. It contains descriptions of the rules for eligibility, participation, vesting, benefit calculation, benefit availability and how to file a claim for benefits. An SPD can be an important tool to understand your 401k or other retirement plan.
According to the Department of Labor:
The summary plan description is an important document that tells participants what the plan provides and how it operates. It provides information on when an employee can begin to participate in the plan and how to file a claim for benefits.
Why is a Summary Plan Description important?
The SPD is a document that provides a detailed summary of the retirement or health plan. It is designed to help plan participants understand the benefits, rules, and procedures of the plan. The SPD also serves as a legal document that outlines the rights and responsibilities of the plan sponsor, administrator, and participants.
As a plan participant, it is important to read and understand the SPD because it provides valuable information that can help you make informed decisions about your benefits. The SPD outlines the rules for eligibility, enrollment, and coverage, as well as how to file a claim or appeal a denied claim. It also provides information about the rights and responsibilities of plan participants and administrators.
Summary Plan Description for ERISA benefits plans
SPDs must be made available, free of charge, to all participants when they become eligible for a plan. The SPD must be continuously available, free of charge, to participants during eligibility and participation in the plan. This does not mean the plan must send you a paper copy; they can make it available for download online. When the plan changes, the plan administrator must update the SPD within a reasonable period of time. Otherwise the plan must release a Summary of Material Modifications (SMM) within a reasonable period of time.
The SPD is (typically) not the complete description of all plan rules. There are many rules that do not have to appear within the SPD. The description of rules in the SPD can be general and forego particular exceptions or areas open to plan administrator interpretation so long as they do not misstate plan rules and provide enough substance of the rule to allow participants to understand how the plan operates.
What information is included in an SPD?
The SPD contains a variety of information about the retirement or health plan, including:
Plan sponsor and administrator information
This section provides details about the plan sponsor, which is typically the employer, and the plan administrator, who is responsible for managing the plan. It includes their names, addresses, and contact information.
Plan eligibility and enrollment rules
This section outlines the rules for who is eligible to participate in the plan, when they become eligible, and how to enroll in the plan. It also covers how to change your enrollment status or opt out of the plan.
Benefits and coverage details
This section provides a summary of the benefits and coverage provided by the plan, including information about medical, dental, vision, and prescription drug benefits, as well as retirement benefits such as 401(k) plans.
Claim and appeal procedures
This section explains how to file a claim for benefits and how to appeal a denied claim. It also includes information about the time limits for filing a claim or appeal and the steps involved in the process.
COBRA continuation coverage
This section provides details about COBRA continuation coverage, which is a federal law that allows eligible individuals to continue their health coverage when they lose their job, retire, or experience other qualifying events.
What is the difference between a summary plan description and a plan document?
A plan document is the full, formal documentation of the plan rules. A summary plan description is an abbreviated summary of the most important plan rules described in plain language to help plan beneficiaries understand their rights under the plan. An employee or other plan beneficiary can request copies of either documents. Typically employees prefer reading the summary plan description because it provides a plain language description of the issues an employee most likely cares to know. The plan document contains detailed contractual language that articulates the daily operation of the plan. Sometimes it is important to review the plan document to understand the complicated issues of administration that may affect your rights under your benefit plans. If you believe your employer violated your rights under an ERISA plan then you should talk to an employee benefits attorney right away.
What are the requirements for creating an SPD?
The Employee Retirement Income Security Act (ERISA) requires all retirement and health plans to provide an SPD to their participants. The SPD must be written in a manner that is easily understood by the average plan participant.
Who needs to receive an SPD?
The SPD must be provided to all plan participants, including employees, retirees, and their beneficiaries. It must also be provided to new plan participants within 90 days of becoming eligible to participate in the plan.
Timing of distributing an SPD
The plan administrator must distribute the SPD within 120 days after the plan becomes subject to ERISA or within 90 days after a new participant becomes eligible to the plan. If there are any material changes to the plan, the plan administrator must provide an updated SPD within 210 days after the end of the plan year in which the changes were made.
Updating an SPD
The plan administrator must update the SPD every five years if there have been any material changes to the plan. If there have not been any material changes, the SPD must be updated every 10 years.
How to request a copy of the SPD
Plan participants have the right to request a copy of the SPD from the plan administrator. The request should be made in writing, and the plan administrator must provide the SPD within 30 days of receiving the request.
If a plan participant is having trouble obtaining a copy of the SPD, they can contact the Department of Labor’s Employee Benefits Security Administration (EBSA) for assistance.
Conclusion
A Summary Plan Description is an important document that provides valuable information about retirement or health plans. As a plan participant, it is important to read and understand the SPD in order to make informed decisions about your benefits. The SPD outlines the rules for eligibility, enrollment, and coverage, as well as how to file a claim or appeal a denied claim. If you need a copy of the SPD, you can request it from the plan administrator.
FAQs
- What is the difference between an SPD and a plan document?
- The plan document is a legal document that provides detailed information about the retirement or health plan. The SPD is a summary of the plan document that is designed to be easily understood by plan participants.
- Can an SPD be provided electronically?
- Yes, an SPD can be provided electronically if certain requirements are met. The plan administrator must ensure that the electronic version is accessible to all plan participants and that they have the ability to retain a copy of it.
- Can a plan participant sue if the plan administrator fails to provide an SPD?
- Yes, a plan participant can sue the plan administrator for failing to provide an SPD. The court can order the plan administrator to provide the SPD and can also award damages to the plan participant.
- Is an SPD the same as a benefit summary?
- No, an SPD is not the same as a benefit summary. A benefit summary is a brief overview of the benefits provided by a plan, while an SPD provides more detailed information about the plan’s rules and procedures.
- What should I do if I find errors in the SPD?
- If you find errors in the SPD, you should notify the plan administrator in writing. The plan administrator is required to correct any errors and provide an updated SPD if necessary.