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October 26, 2011

Weekly Wednesday Acronym – Have You Reviewed Your SPD Lately?

Filed under: General HR Buzz7:00 am

In Monday’s blog, I wrote about open enrollment time for many companies and their benefit renewals.  Something that is often overlooked is the Summary Plan Description (SPD).  If your plan is covered by the Employee Retirement Income Security Act (ERISA), then you need to have an SPD.

ERISA requires plan administrators – the people who run plans – to give plan participants an SPD which is an important document that tells participants what the plan provides and how it operates.  The purpose is to provide in understandable language basic information about the benefit plan.  It provides information such as when an employee can begin to participate in the plan, how service and benefits are calculated, when benefits become vested, and how to file a claim for benefits.  If a plan is changed, participants must be informed, either through a revised SPD, or in a separate document called a summary of material modifications.  The plan administrator is legally obligated to provide these documents to participants free of charge.

Earlier this year, an interesting case regarding SPD’s received quite a bit of national media attention.  In this U.S. Supreme Court Case, Cigna v. Amara, the SPD and the actual plan document conflicted.  The Court ruled in favor of Cigna, but the case set a strong reminder to employers to verify the content of plan summaries and plan communications against the plan document before sending to participants.  It is also advisable not to change your plan terms without carefully considering the changes to the plan documents that will need to be made.  Additionally, consulting legal counsel may be a good idea.

More information can be found at the following websites:

DOL – Summary Plan Description

IRS – Summary Plan Description

 Cigna v. Amara




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