Summary Plan Description Benefit Reports - A Guide for Employers

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Jean Murray, MBA, Ph.D., is an experienced business writer and teacher. She has taught at business and professional schools for over 35 years.

A Summary Plan Description (SPD) is a key report for businesses that have employee benefit plans. To understand the rules for SPDs, we’ll look at details for who, what, when, and how to comply with the information requirements of the Employee Retirement Income Security Act of 1974 (ERISA).

What Is the ERISA Information Requirement?

ERISA is a federal program that protects employees who have benefit plans set up by their employers. Two kinds of plans are covered:

• Retirement plans
• Health plans and additional welfare benefit plans

For businesses that have these two types of benefits, ERISA sets standards for plan managers, and it requires them to protect employee retirement savings plans from mismanagement and abuse. It also sets standards for information given to employees and beneficiaries.  

In addition to retirement plans, ERISA requirements apply to all kinds of health plans and benefits including medical benefits, life insurance, and vacation plans. COBRA benefits and Affordable Care Act regulations are also part of ERISA.

One key ERISA requirement is that plan administrators must give plan participants, in writing, the information they need to know about their retirement and health benefit plans. This is where the SPD comes in.

What a Summary Plan Description Should Include

An SPD document provides plain language information for plan participants (eligible employees who are covered by a benefit or retirement plan) and their beneficiaries on key items such as employee benefits and how and when they will be provided.   An SPD must specifically include:

• The name and type of plan
• Eligibility requirements
• A description of benefits and when participants have a right to those benefits
• A statement about whether the plan is covered by insurance from the Pension Benefit Guaranty Corporation if the plan is closed (required for retirement plans)
• The source of contributions to the plans and how the contributions are calculated
• The provisions for termination of the plan
• Procedures for benefit claims and how to dispute denied claims
• A statement of rights available to plan participants under ERISA.  

When to Issue Summary Plan Descriptions

• You must give new employees the most recent SPD within 90 days after they first become covered by the plan.
• You must give a beneficiary who is currently receiving benefits a copy of the most recent SPD within 90 days after they first receive benefits.
• You must give the SPD to all participants at least every five years if no changes were made or the plan was changed. Otherwise, you must give participants a copy every 10 years.

Summary Plan Description Dos and Don’ts

• Do make it understandable by the average plan participant.
• Do use examples and illustrations, clear cross-references, and a table of contents.
• Don't include misleading information.
• Don’t minimize exceptions, limitations, or other restrictions of benefits.
• Don’t put negative information in small print.
• Don’t use technical jargon or long, complex sentences.

Other Important Plan Information Forms

Benefit Plan Changes. If you make major changes to a retirement plan or health plan, you must give participants a Summary of Material Modifications. It must be understandable and given to participants and beneficiaries within 210 days after the close of the plan year in which the modification was made.  

Annual Report. Every year, all covered plans must file an annual report on Form 5500 or a short form 5500-SF. You must give participants and beneficiaries a summary of this annual report within nine months after the end of the plan year or two months after the due date for filing Form 5500.  

Plan Documents. These documents include the latest SPD, the latest Form 5500, trust agreements, and other documents for establishing or operating the plan. You must give these reports to participants within 30 days if you receive a written request. The U.S. Department of Labor may request plan documents at any time, and you must provide them.  

Summary of Benefits and Coverage (SBC). The SBC is an additional document that describes benefits and coverage under group health plans. The SBC document lists important questions about the health plan with specific answers and more information.

You must give the SBC to participants with enrollment materials when they renew coverage or if it’s reissued. You must also give the SBC to special enrollees along with the SPD (90 days from enrollment). Finally, you must give the SBC and a copy of the glossary (see below) within seven days of the request.  

Filing Benefit Plan Reports Electronically

The Department of Labor’s Employee Benefits Security Administration has an electronic filing system called EFAST2 to simplify and expedite the filing of Form 5500. You’ll need to log in and register to use the system. You can use EFAST2-approved vendors or the IFILE website.

The Bottom Line

Each benefit plan is unique and the requirements can be complicated. Before you begin writing your SPD, check with the IRS or Department of Labor for more information or utilize the HealthCare.gov website, which features a Glossary of Health Coverage and Medical Terms that you might find helpful. In addition, consider working with a qualified benefits specialist to ensure you are performing this task correctly.