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Brown & Brown — Conference Presentation (October 2023)
40 slides from Brown & Brown's conference presentation, Oct 19, 2023
Slide 1: ERISA Plan Documents & SPDs
ERISA Plan Documents & SPDs October 19, 2023 Presented By: Scott Wold and Cindy Niesen Brown & Brown Regulatory and Legislative Strategy Group
Slide 2: Disclaimer
DISCLAIMER Brown & Brown, Inc. and all its affiliates, do not provide legal, regulatory or tax guidance, or advice. If legal advice counsel or representation is needed, the services of a legal professional should be sought. The information in this document is intended to provide a general overview o
Slide 3: Presentation Agenda
1 Employee Retirement Income Security Act (ERISA) Presentation Plan Documents Agenda 2 • Plan Document Requirements • Required and Suggested Content • Distribution Summary Plan Descriptions (SPDs) 3 • SPD Requirements • Required and Suggested Content • SPD Format • Distribution Requirements Wrap Doc
Slide 4: Employee Retirement Income Security Act (ERISA)
Employee Retirement Income 01 Security Act (ERISA)
Slide 5: ERISA Coverage
ERISA Coverage ERISA applies to private sector employers including publicly traded companies as well as nonprofit organizations. BROWN & BROWN | 5
Slide 6: ERISA Coverage: The Basics
ERISA Coverage THE BASICS Applies to Pension Plans and Employee Welfare Benefits Employee welfare benefit plan: • Duty to explain key features of the plan Any plan, fund or program established or • Provide fiduciary responsibility maintained by an employer or an employee organization or both for the
Slide 7: ERISA Coverage
ERISA Coverage Applies to: Does not apply to: • Medical, surgical or hospital care • Workers’ compensation • Benefits for accident, disability, • Payroll practices such as wage sickness or death continuation • Unemployment benefits • Paid time off for vacation, holidays, • Funded vacation benefits m
Slide 8: Voluntary Safe Harbor
Voluntary Safe Harbor Employer does not engage in any of the following activities which constitute endorsement: • Select or negotiate with the insurer • Endorse the plan or associate the plan with employer’s Examples: plans (include in materials, or use the employer’s name • Individual fixed indemni
Slide 9: Plan Documents
02, Plan Documents
Slide 10: Plan Document Requirements
Plan Document PLAN DOCUMENT REQUIREMENTS ERISA §402(a) • Every employee welfare benefit plan must be established pursuant to a written plan. » No form or format is prescribed by ERISA 402(a). » Plan Administrator is responsible for the plan document; typically, the employer/plan sponsor is the Plan
Slide 11: Plan Document: Required Content
Plan Document REQUIRED CONTENT • Named fiduciary and allocation of fiduciary duties • Procedure for allocation of fiduciary duties • Plan amendment and termination procedures • Claims procedures • Plan funding and payment provisions • Distribution of plan assets upon termination of the plan • For gr
Slide 12: Plan Document: Additional Suggested Provisions
Plan Document ADDITIONAL SUGGESTED PROVISIONS • Provisions corresponding to required content of SPD (e.g., benefits provided, eligibility requirements, etc.) • Discretionary authority • Use of plan assets to pay for administrative expenses • Rules restricting and regulating the use of Personal Healt
Slide 13: Plan Document: Distribution
Plan Document DISTRIBUTION • No general obligation to distribute • However, ERISA Section 104 provides: “The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated Summary Plan Description (SPD), and the latest annual report, any terminal re
Slide 14: Summary Plan Description (SPD)
03 Summary Plan Description (SPD)
Slide 15: SPD Requirements
Summary Plan Descriptions (SPDs) SPD REQUIREMENTS ERISA § 102(a) requires a summary to be provided that explains the plan terms in a manner calculated to be understood by the average participant. • Plan Administrator is responsible for the SPD; typically, the employer/plan sponsor is the Plan Admini
Slide 16: SPD Required Content
Summary Plan Descriptions (SPDs) REQUIRED CONTENT (ERISA §102(B); DOL REG. §2520.102-3) • The plan name • Designation of any named fiduciaries, if other than the Plan Administrator, e.g., claims fiduciary • The Plan Sponsor/employer's name, address and EIN • The plan number for ERISA Form 5500 purpo
Slide 17: SPD Required Content
Summary Plan Descriptions (SPDs) REQUIRED CONTENT (ERISA §102(B); DOL REG. §2520.102-3) • The name and address of the plan's agent for service • How insurer refunds (e.g., dividends, of legal process, and statement that service may be demutualization) are allocated to participants made on Plan Admin
Slide 18: SPD Required Content
Summary Plan Descriptions (SPDs) REQUIRED CONTENT (ERISA §102(B); DOL REG. §2520.102-3) • Claims procedures, including applicable time limits • Source of Plan contributions (employer and/or and remedies available under the plan for claims employee contributions) (which are denied in whole or in part
Slide 19: Additional Requirements for Group Health Plan SPDs
Summary Plan Descriptions (SPDs) A D D I T I O N A L R E Q U I R E M E N T S F O R G R O U P H E A LT H P L A N S P D S • Detailed description of Plan provisions and exclusions: » Copays, deductibles, coinsurance, eligible expenses, network provider provisions, prior authorization and utilization re
Slide 20: Additional Requirements for Group Health Plan SPDs
Summary Plan Descriptions (SPDs) A D D I T I O N A L R E Q U I R E M E N T S F O R G R O U P H E A LT H P L A N S P D S Information regarding federal mandates: • COBRA • HIPAA • Women's Health Cancer Rights Act • Newborns’ and Mothers’ Health Protection Act • Qualified Medical Child Support Orders •
Slide 21: SPD Optional Content
Summary Plan Descriptions (SPDs) OPTIONAL CONTENT Disclosure regarding the fiduciary’s discretionary authority to interpret plan Language indicating that in the event of a conflict between the Plan Document and the SPD, the Plan Document controls Rules regarding overpayments and erroneously paid ben
Slide 22: Language Assistance Requirements
Summary Plan Descriptions (SPDs) L A N G U A G E A S S I S TA N C E R E Q U I R E M E N T S SPD does not have to be in a language other than • Provide participants literate only in non-English English; however, the plan sponsor may have to language with an English-language SPD and a notice provide a
Slide 23: General Distribution Requirements
Summary Plan Descriptions (SPDs) GENERAL DISTRIBUTION REQUIREMENTS • SPD and any Summaries of Material Modifications (SMMs) that are not incorporated into the SPD must be distributed to participants » Under ERISA “participants” are the covered employees; spouses and dependents are “beneficiaries” no
Slide 24: Required Distribution Timing
Summary Plan Descriptions (SPDs) REQUIRED DISTRIBUTION TIMING SPD must be distributed: • Within 30 days of a request by a participant or beneficiary • New Plans – within 120 days after the effective date of plan • New Participants – within 90 days after participant first becomes covered • Existing P
Slide 25: Summaries of Material Modification (SMMs)
Summaries of Material Modification (SMMs) REQUIRED DISTRIBUTION TIMING • Upon any modification in the terms of the Plan that is “material” and any change in information required in the SPD » Can be accomplished through an amended and restated SPD or a Summary of Material Modification (SMM) » Must be
Slide 26: SPDs and SMMs: Distribution Methods
SPDs and SMMs DISTRIBUTION METHODS Must be furnished in a way “reasonably calculated to ensure actual receipt of the material” using method “likely to result in full distribution.” • Important to retain records demonstrating distribution • Mail of SPD • First-class mail to last known address • Hand
Slide 27: SPDs and SMMs: Distribution Methods
SPDs and SMMs DISTRIBUTION METHODS • Safe harbor for electronic distribution » Electronic disclosures permitted without prior consent to participant: (1) who has the ability to effectively access documents furnished in electronic form at any location where the participant is reasonably expected to p
Slide 28: Electronic Distribution Prior Consent Requirements
SPDs and SMMs ELECTRONIC DISTRIBUTION PRIOR CONSENT REQUIREMENTS • Affirmative consent required; negative consent insufficient • Consent must be provided or confirmed electronically in a manner that reasonably demonstrates the individual's ability to access information in the electronic form that wi
Slide 29: Consequences of Failure to Distribute
SPDs and SMMs C O N S E Q U E N C E S O F FA I L U R E TO D I S T R I B U T E • No specific monetary penalties unless the participant or beneficiary has requested copy • Potential criminal penalties for “willful violations” • Courts might base decisions on other document (e.g., enrollment materials,
Slide 30: Wrap Documents and Wrap SPDs
04 Wrap Documents and Wrap SPDs
Slide 31: Wrap Documents: Main Purpose
Wrap Documents MAIN PURPOSE A wrap is used to fulfill one or more plan document obligations imposed by ERISA. • We will discuss these obligations and the ways wraps can be used to fulfill them in detail in future slides BROWN & BROWN | 31
Slide 32: What Is a Wrap?
Wrap Documents W H AT I S A “ W R A P ? ” • The term “wrap” is made up » You won’t find it in the rules and regulations » It is referenced in the Form 5500 instructions • “Wrap” is used to describe a number of different documents that serve a number of different purposes • For plans subject to ERISA
Slide 33: Wrap Documents: Types
Wrap Documents TYPES Consolidated Wrap (aka “5500 Wrap”) Wrap SPD • Wrap document combines multiple policies/lines of • Incorporates multiple benefit summaries and carrier coverage into a single ERISA welfare benefit plan certificates by reference into a single plan SPD to » Fulfills requirement for
Slide 34: Wrap Documents: Types
Wrap Documents TYPES Required Information Wrapper (Mini-Wrap) • Wrapper plan document incorporates policy and certificate to create ERISA welfare benefit plan » Fulfills requirement for establishment under a “written plan” as required by ERISA and § 105 (i.e., self- funded plans) Wrapper SPD • Used
Slide 35: SPDs for Wrap Plans
SPDs for Wrap Plans Why use separate wrapper SPDs instead of a single document that can act as an SPD for all ERISA benefits? It’s about distribution and eligibility. • If an organization doesn’t qualify for electronic distribution of SPDs, printing and mailing a single wrap SPD for all ERISA benefi
Slide 36: "Mega" Wrap
“Mega” Wrap Using a single document that operates as both the Plan Document and SPD (often referred to as a “Mega” wrap). • ERISA defines the SPD as a plain language summary of the information contained in the plan document » It remains unclear whether this is a viable option as it’s unclear whether
Slide 37: Summary
05 Summary
Slide 38: Summary
Summary All ERISA employee welfare benefit plans should have a Plan Document & SPD This includes fully insured or self-insured plans A wrap document may be used to provide required ERISA information and to combine multiple plans into a single plan for Form 5500 filing purposes Ensure proper distribu
Slide 39: HRCI and SHRM Credits
HRCI and SHRM Credits This Program, ID No. 637787, has been approved for 1.00 HR (General) recertification credit hours toward aPHR™, aPHRi™, PHR®, PHRca®, SPHR®, GPHR®, PHRi™ and SPHRi™ recertification through HR Certification Institute® (HRCI®). Brown & Brown is recognized by SHRM to offer Profess
Slide 40: Thank You!
THANK YOU! © 2023 Brown & Brown. All rights reserved.
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