QUESTION: I’ve just been hired to help administer my company’s health and welfare plans, which are subject to ERISA. Can you explain the difference between a plan document and an SPD?
ANSWER: In general, ERISA envisions that employee benefit plans will have both a plan document and a summary plan description (SPD). But, as noted below, in some cases a single document may serve both purposes.
Plan Document. Plans that are subject to ERISA must be “established and maintained pursuant to a written instrument” called the plan document. The plan document is a comprehensive document that sets forth the rights of the plan’s participants and beneficiaries, and guides the plan sponsor and plan administrator in making decisions and executing their responsibilities. It sets forth what benefits are available, who is eligible, how benefits are funded, who is the named fiduciary, how the plan can be amended, and the procedures for allocating plan responsibilities.
Summary Plan Description. ERISA also requires employee benefit plans to have an SPD. A key function of the SPD is conveying plan information in an understandable summary to participants. The SPD must include many specified items, such as plan-identifying and eligibility information, a description of plan benefits and circumstances causing loss or denial of benefits, benefit claim procedures, and a statement of participants’ ERISA rights. It must be written in a manner calculated to be understood by the average plan participant and must be furnished at specific times to specific individuals (see our Checkpoint Question of the Week).
Plan Document and SPD in One Document? Some health and welfare plans use a single document as both the plan document and SPD. If this approach is taken, the document must comply with both ERISA’s written plan document requirements and its SPD format and content rules. While some courts and commentators have expressed the view that a combined plan document and SPD is unacceptable because it is not possible for a document to summarize itself, at least two appellate courts have approved the combined approach for welfare plans (see, for example, our Checkpoint article).
Participants and beneficiaries may request copies of the plan document and the SPD. Failure to furnish the documents within 30 days after the request may expose the ERISA plan administrator (typically the employer) to penalties of up to $110 per day, even if the document was already provided in the normal course, as may be the case with the SPD (see our Checkpoint Question of the Week).
Finally, note that a summary of benefits and coverage (SBC) is also required for group health plans but is separate from and in addition to the plan document and the SPD (see our Checkpoint Question of the Week).
For more information, see EBIA’s ERISA Compliance manual at Sections VIII (“Plan Design and the Written Document Requirement”) and XXIV (“Summary Plan Descriptions & Summaries of Material Modifications”). See also EBIA’s Self-Insured Health Plans manual at Sections IX (“Written Plan Document”) and XXVIII (“Participant Disclosure Requirements for Self-Insured Health Plans”).
Contributing Editors: EBIA Staff.