ERISA Disclosure Requirements

ERISA Compliance Guide for Welfare Benefit Plans

Document/Form Type of Information To Whom    When
Reporting Requirements (to the government)
Form 5500 Plan financial information and Participant counts

(Form 5500 records must be maintained for not less than six years.)

 U.S. Department of Labor (DOL)

Form 5500 must be filed electronically.

 Within seven months after the end of the Plan Year A 2-1/2 month extension is available by filing a Form 5558.

(Plans with fewer than 100 participants on the 1st day of the Plan Year may be exempt. Former employees covered under COBRA and Severance Pay Plans are also counted. Employees who waive coverage are not counted.)
Schedule A Insurance policy information DOL with Form 5500

(Insurance carriers are required to provide the employer with information necessary to complete this form.)

 With Form 5500

(Stop-loss policies owned by an employer that pays all premiums for the policies exclusively out of its general assets without employee contributions are not reportable on Schedule A. Employee contributions for coverage made through a Cafeteria Plan are not considered premiums.)
Schedule C Service Provider Information

Must complete Schedule C if service provider was paid $5,000 or more

(Commissions on fully insured plans are not reportable if already reported on Schedule A.)

 DOL with Form 5500 With Form 5500

(Exempt from filing Schedule C if premiums and benefits are paid from general assets of employer (not from a segregated account), employee contributions are forwarded and insurer refunds are returned within 3 months of receipt, a trust does not hold Plan assets, and, in the case of a self-insured plan, employee contributions are made through a Cafeteria Plan.
Disclosure Requirements (to Participants)
Plan Document Describes the Plan's terms and conditions related to the operation and administration of a Plan. The Plan Sponsor/Administrator retains the Plan Document. Distribution is not required, unless a Participant requests a copy. Upon written request

Hard copies must be available for examination at principal office and certain other locations.

 No later than 30 days after a written request
Summary Plan Description (SPD)* Primary vehicle for informing participants and beneficiaries about their benefits, rights, and obligations under the Plan and how it operates.* Participants and beneficiaries receiving benefits* Within 90 days after becoming covered by an existing Plan or within 120 days after a new Plan is established. Every 5 years if changes are made to SPD information or the Plan is amended. Otherwise, it must be furnished every 10 years.*
Summary of Material Modification (SMM) Describes material (important) modifications to a plan and changes in the information required to be in the SPD. Participants Within 210 days after the end of the plan year in which the change is adopted

Distribution of updated SPD satisfies this requirement.
Summary Annual Report (SAR) A narrative summary of Form 5500 information Participants Within 9 months after end of plan year, or 2 months after due date for filing Form 5500 with extension.
       
Additional Requirements for Group Health Plans
Summary of Material Reduction in Covered Services or Benefits A Summary of any reduction or elimination of benefits, formulas, methodologies, schedules, or service area, an increase in deductibles, coinsurance, or copays, or establishment of new conditions or requirements (e.g., prior authorization). Participants. Within 60 days after the date of the adoption of the change, or within 90 days by a system of communication that provides Participants information about their Plan.
HIPAA Notice of Privacy Practices Notice of how a covered entity may use and disclose PHI (protected health information) about the individual, as well as his or her rights and the covered entity's obligations with respect to that information Participants. Every three years.
Notification of Benefit Determination (claims notices or “explanation of benefits”) Information regarding benefit claim determinations

Adverse benefit determinations must include required disclosures (e.g., the specific reason(s) for the denial of a claim, reference to the specific plan provisions on which the benefit determination is based, and a description of the plan's appeal procedures).

 Claimants (participants and beneficiaries or authorized claims representatives)
 Requirements vary depending on type of plan and type of benefit claim involved.
Initial COBRA Notice Notice of the right to purchase a temporary extension of group health coverage when coverage is lost due to a qualifying event. Covered employees and covered spouses. When group health plan coverage commences
COBRA Election Notice Notice to “qualified beneficiaries” of their right to elect COBRA coverage upon occurrence of qualifying event. Covered employees, spouses, and dependent children who are qualified beneficiaries Within 14 days after being notified by the employer or qualified beneficiary of the qualifying event

If the employer is also the plan administrator, the administrator must provide the notice not later than 44 days after: the date on which the qualifying event occurred; or if the plan provides that COBRA continuation coverage starts on the date of loss of coverage, the date of loss of coverage due to a qualifying event.
Notice of Unavailability of COBRA Notice that an individual is not entitled to COBRA coverage. Individuals who provide notice to the administrator of a qualifying event whom the administrator determines are not eligible for COBRA coverage. The administrator must provide this notice generally within 14 days after being notified by the individual of the qualifying event.
Notice of Early Termination of COBRA Coverage Notice that a qualified beneficiary's COBRA coverage will terminate earlier than the maximum period of coverage. Qualified beneficiaries whose COBRA coverage will terminate earlier than the maximum period of coverage. As soon as practicable following the administrator's determination that coverage will terminate.
Children's Health Insurance Program Reauthorization Act (CHIPRA) Employee notification about any premium assistance program subsidy under Medicaid or CHIP available in the state where the employee resides
Model Notice & List of States		 All employees, whether or not a Participant At the time of initial enrollment and on the first day of each Plan Year thereafter
Women's Health and Cancer Rights Act (WHCRA) Notice Describes required benefits for mastectomy-related reconstructive surgery, prostheses, and treatment of physical complications of mastectomy Participants Upon enrollment and annually thereafter
Certificate of Creditable Coverage A notice from employee's former group health plan documenting prior group health plan creditable coverage Participants and beneficiaries who lose coverage or who request a certificate
 Automatically upon losing group health plan coverage, becoming eligible for COBRA coverage, and when COBRA coverage ceases

A certificate may be requested free of charge anytime prior to losing coverage and within 24 months of losing coverage.
General Notice of Preexisting Condition Exclusion A notice describing a group health plan's preexisting condition exclusion and how prior creditable coverage can reduce the preexisting condition exclusion period. Participants Must be provided as part of any written application materials distributed for enrollment. If the plan does not distribute such materials, by the earliest date following a request for enrollment that a plan, in a prompt fashion.
Individual Notice of Period of Preexisting Condition Exclusion A notice that a specific “PEC” period applies to an individual upon consideration of creditable coverage evidence and an explanation of appeal procedures if the individual disputes the plan's determination Participants and Beneficiaries As soon as possible following the determination of creditable coverage
Notice of Special Enrollment Rights A notice describing the group health plan's special enrollment rules, including the right to a special enrollment within 30 days of the loss of other coverage or of marriage, birth of a child, adoption, or placement for adoption Employees eligible to enroll in a group health plan At or before the time an employee is initially offered the opportunity to enroll in the group health plan
Grandfathered Plan Status Disclosure Notice must state that the Plan is grandfathered & list contact information for questions and complaints Participants in Grandfathered Plans Annually. Must be included in all plan materials distributed to participants that describe the plan's benefits
Wellness Program Disclosure A notice that describes the terms of the wellness program, if offered, that requires individuals to meet a standard related to a health factor in order to obtain a reward. It must disclose the availability of a reasonable alternative standard or the possibility of a waiver. Participants and beneficiaries eligible to participate in the wellness program Anytime a description of the Wellness Program is distributed

(If the plan materials merely mention that a program is available, without describing its terms, this disclosure is not required.)
Medical Child Support Order (MCSO) Notice A notice from the Plan Administrator regarding the receipt and qualification determination of a MCSO, directing the plan to provide health insurance coverage to a participant's noncustodial children Participants, any child named in a MCSO, and his or her representative. The Administrator, upon receipt of MCSO, must promptly issue notice (including plan's procedures for determining its qualified status). The Administrator must also issue separate notice as to whether the MCSO is qualified, within a reasonable time after its receipt.
National Medical Support (NMS) Notice A notice used by state agencies that are responsible for enforcing health care coverage provisions in a MCSO. State agencies, employers, plan administrators, participants, custodial parents, and children's representatives Employer must send either Part A to the State agency, or Part B to the Plan Administrator within 20 days after the date of the notice or sooner, if reasonable. The Administrator must promptly notify affected persons of receipt of the notice and the procedures for determining its qualified status. The Administrator must, within 40 business days after its date or sooner, if reasonable, complete and return Part B to the state agency and provide required information to affected persons. Under certain circumstances, the employer may be required to send Part A to the state agency after the Plan Administrator has processed Part B.
Medicare Part D Notice of Creditable or
Non-Creditable Coverage		 Notice to Medicare eligible Participants whether or not their prescription drug coverage is creditable coverage, which means that the coverage is expected to pay on average as much as the standard Medicare prescription drug coverage. Any participant (employee or dependent) covered under Medicare Part A or B and lives in a service area of a Part D prescription Rx plan

To CMS		 Annually (before October 15), upon enrollment, change in status of non/creditable status, and upon request


Within 60 days of beginning of each Plan Year.
*How and When Should an SPD and Other ERISA Documents be Delivered?

The Plan Administrator/employer is responsible for preparing the SPD and affirmatively delivering it to certain persons, e.g.:

  • covered employees
  • terminated COBRA Participants
  • parents or guardians of children covered under a qualified medical support order
  • dependants of a deceased participant
  • Representatives or guardians of incapacitated persons

Unless requested, an SPD does not need to be provided separately to dependants of a covered employee or to employees who are not covered, although it is a good idea to do so.

Determining whether an SPD was furnished to a Participant or Beneficiary is important. An employer should be prepared to prove that it furnished one in a way “reasonably calculated to ensure actual receipt,” using a method “likely to result in full distribution.” Acceptable methods of delivery include first-class mail, hand-delivery, and electronically, if the employees have access to computers in the workplace and can print a copy easily.

DOL regulations are quite clear that merely placing copies of the SPD in a break room or posting the SPD on an employer's website or intranet does not necessarily satisfy this requirement because it was not affirmatively delivered to the Participant.

 
Electronic Distribution of ERISA Documents

Requirements for employees with work-related computer access—Definition of work-related computer access: The employee has the ability to access documents at any location where they reasonably could be expected to perform employment duties. In addition, access to the employer's electronic information system must be an integral part of their employment duties.

  • Electronic materials must be prepared and furnished in accordance with otherwise applicable requirements (e.g., timing and format requirements for SPDs as outlined under ERISA.)
  • A notice must be provided to each recipient, at the time that the electronic document is furnished, detailing the significance of the document.
  • The notice must advise the participant of their rights to have the opportunity, at their work site, to access documents furnished electronically and to request and receive (free of charge) paper copies of any documents received electronically.
  • The employer must take necessary measures to ensure the electronic transmittal will result in actual receipt of information by the participants (i.e. return-receipt.)
  • If the disclosure includes personal information relating to an individual's accounts and benefits, the plan must take reasonable and appropriate steps to safeguard the confidentiality of the information.

Additional requirements for non-employees or employees with non-work related computer access—

  • Affirmative consent for electronic disclosure must be obtained from the individual. Before consent can be obtained, a pre-consent statement must be furnished that explains:
    • The types of documents that will be provided electronically;
    • The individual's right to withdraw consent at any time without charge;
    • The procedures for withdrawing consent and updating information (e.g. updating the address for receiving electronic disclosure);
    • The right to request a paper version and its cost (if any); and
    • The hardware and software requirements needed to access the electronic document.
  • The regulations permit the pre-consent statement to be provided electronically if the employer has a current and reliable e-mail address.
  • If system hardware or software requirements change, a revised statement must be provided and renewed consent from each individual must be obtained.
  • If the documents are to be provided via the Internet, the affirmative consent must be given in a manner that reasonably demonstrates the individual's ability to access the information in electronic form, and the individual must have provided an address for the receipt of electronically furnished documents.
  • The Employer must keep track of individual electronic delivery addresses, individual consents and the actual receipt of e-mailed documents by recipients.
  • The 5 steps outlined above under “Requirements for employees with work-related computer access” must also be followed.
Miscellaneous Terminology

Certificate/Evidence of Coverage (Certificate/Evidence of Insurance, Certificate Booklet, or just “Cert”)—a booklet describing the terms of the insurance coverage that are provided to Participants are Certificates of Insurance

Claim Fiduciary—is a Named Fiduciary having the authority and responsibility to adjudicate claims in accordance with the provisions of the Plan. For insured plans, the carrier is typically the Claim Fiduciary. However, for self-insured plans, the Plan Sponsor/Administrator can name itself or an independent third party as the Claim Fiduciary.

Employer Sponsored—means: 1) the employer contributes to the cost, 2) participation in the coverage is not voluntary, OR 3) the employer endorses or recommends the Plan.

Fidelity Bond—covers anyone who handles Plan assets and insures against a fiduciary's fraud or dishonesty. A bond may not be needed for an Unfunded Plan that accepts employee contributions that are not segregated from the employer's general assets.

Fiduciary Liability Insurance—indemnifies fiduciaries for errors in Plan administration, whether or not they are a Named Fiduciary.

Master Contract—an insurance policy issued to an employer, which provides group insurance benefits to its employees. It usually contains the same information as the Certificate of Coverage, but also has information specifically relating to the employer, such as a grace period for payment of premiums, the Policy Year, and premium rates.

Named Fiduciary—a person or an entity named in the Plan having the duty to operate it prudently and in the best interests of its Participants.

Other Fiduciaries—anyone (even an employee, whether or not (s)he is a Named Fiduciary) who performs functions, such as exercising discretionary responsibility, authority, or control over Plan management decisions, disposition of Plan assets, or rendering investment advice.

Plan Sponsor—the sponsoring employer

Plan Administrator—is typically the employer/Plan Sponsor, unless another party is designated. The Plan Administrator is directly responsible for Plan compliance. Note—the term “Plan Administrator” is usually not a TPA or an insurance company.

Participants and Beneficiaries—employees, former employees, their dependants and beneficiaries who are eligible to benefit from an ERISA plan.

Plan Number—a three digit number assigned by the Plan Administrator for Reporting on Form 5500.

Plan Year—any twelve month period chosen by the Administrator for Reporting purposes. Note—this is not necessarily the same as the policy year of underlying insurance contracts.

Summary of Benefits (Benefit Summary)—a short (1 to 4 pages) handout summarizing and highlighting the features of coverage contained in the Certificate of Coverage, e.g., deductibles, copays, coinsurance, exclusions, etc.

Third Party Administrator (TPA)—administers Plan and adjudicates claims. A TPA is usually not the Plan Administrator.

Welfare Benefit Plan—a program established by an employer or an employee organization that provides for its Participants or their Beneficiaries: medical, surgical, or hospital care or benefits; benefits in the event of sickness, accident, disability, death or unemployment; vacation benefits, apprenticeship or other training programs; day care centers; scholarship funds; or prepaid legal services. It may be self-insured, partially self-insured, or fully insured.

IMPORTANT NOTICE

This chart provides only general guidance, and not all rules and requirements are reflected in this guide. For example, the guide, as a general matter, does not focus on disclosures required by the Internal Revenue Code or the provisions of ERISA for which the Treasury Department and Internal Revenue Service have regulatory and interpretive authority. Refer to specific Form 5500 Instructions and the Code of Federal Regulations for complete, accurate, and up to date information on Reporting and Disclosure requirements. Information in ERISA Pros' publications is provided as a general informational source. Information and articles are general in nature and are not intended to constitute legal or tax advice in any particular matter. Transmission of this information does not create an attorney-client relationship. ERISA Pros, LLC is not a law firm and does not provide legal or tax advice. ERISA Pros does not warrant and is not responsible for errors or omissions in the content on its website or in its publications.

 

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© 2012 ERISA Pros, LLC, All rights reserved. Information on ERISA Pros' website, its newsletter, “News & Views,” and its blog, “ERISA Wonk,” is published as a general informational source. Information and articles are general in nature and are not intended to constitute legal or tax advice in any particular matter. Blog posts and comments reflect the personal views of their respective authors - not those of ERISA Pros. Transmission of this information does not create an attorney-client relationship. ERISA Pros, LLC is not a law firm and is not giving legal or tax advice. It does not warrant and is not responsible for errors or omissions in the content on its website or in its newsletters. ERISA is a complicated and confusing law. Summary Plan Descriptions (SPDs), Wrap Plan Documents, and Form 5500s require review and updating by qualified ERISA compliance professionals.