Employers that sponsor health insurance plans for its employees, even those plans largely managed through an insurance company, are required to provide detailed information regarding the plan and rights under the law to employees. The Department of Labor, the agency responsible for enforcing ERISA, can impose large fines for failing to provide updated employee benefit plan documents to employees. Even a single complaint by a disgruntled ex-employee can lead to an audit, and varying level of penalties depending on the severity of the infraction. Since the passage of the Affordable Care Act, a new disclosure form is required, called a “Summary of Benefits and Coverage.” Insurance companies insuring medical plans are required to provide this form to employers for distribution to employees. However, many insurance companies are no longer providing updated Summary Plan Descriptions (SPD’s), which provides information to employees regarding the plan administration and rights under the law.
Since insurance companies are no longer automatically providing this form, many employers now have out-of-date SPD’s which required amendments as the plan or law changes, including changes due to the Affordable Care Act. These changes include, for example, mandated information about “non-grandfathered” plans. The majority of plans are now “non-grandfathered” so they are required to comply with the Affordable Care Act. Also, if there is a legal dispute over benefits, courts will often enforce the terms of an out-of-date or incomplete summary plan description rather than the terms of the plan document. To avoid potential audits, fines, and adverse court rulings, employers should verify the status of their plan documents to make sure they are kept up to date, and make updates where required.
Cunningham Dalman is able to provide this document review for your company.