QUESTION: We have a fully insured group health plan. The insurer provides a state-law required certificate of insurance booklet that describes the coverage provided under the plan. Can we use that booklet as the summary plan description (SPD) for this plan?
ANSWER: The booklet probably cannot serve as the SPD on its own. ERISA requires that SPDs include certain specific information, and it is unlikely that the insurer-provided booklet contains all of the necessary details. Among the information required to be in the SPD is plan-identifying information; descriptions of eligibility, benefits, and circumstances causing loss of benefits; claims procedures; and a statement of ERISA rights. The insurer-provided booklet typically contains detailed benefits information and may include descriptions of claims procedures and rights under ERISA, but is often missing meaningful details about eligibility or circumstances causing loss of benefits. Sometimes it is customized to provide employer and plan-identifying information, but that information may be incomplete or inaccurate.
You may want to consider using a separate document that, when combined with the insurer-provided booklet, meets the ERISA requirements. This “wrap SPD” approach takes advantage of the detailed benefits information provided by the insurer’s booklet while allowing customization of the overall SPD. Such a wrap SPD must be consistent with the booklet and the underlying plan documents and should be drafted to avoid creating conflicts. For example, ambiguities may arise if the same information is covered in the wrap SPD and the booklet but the descriptions are not identical, or if a future change to that information only gets reflected in one of the documents. It is important to review both documents together to ensure that, when combined, they form a complete and accurate SPD. In addition, it is recommended that the wrap SPD be submitted to the insurer for review before it is finalized and adopted.
Lastly, note that the “summary of benefits and coverage” (SBC), while often provided along with an insurer booklet or SPD, is not an SPD but a separate document subject to its own requirements (see our Question of the Week).
For more information, see EBIA’s ERISA Compliance manual at Section XXIV.H (“Step-by-Step Guide to Drafting SPDs (and SMMs)”). See also EBIA’s “Sample Wrap Summary Plan Description for Insured Health Plan.” You may also be interested in our upcoming webinar, “Wrap Documents and Bundled Plans: Pros, Cons & Logistics” (live on 8/16/18).
Contributing Editors: EBIA Staff.