Total Articles: 3
Medical Plan Summary of Benefits and Coverage: The Forthcoming Mini-SPD
On August 22, 2011, the U.S. Departments of Treasury, Labor and Health and Human Services (the “Departments”) issued proposed regulations relating to the requirement under the Patient Protection and Affordable Care Act (PPACA) that participants in medical plans receive a summary of benefits and coverage (SBC) beginning in March 2012. These regulations are only proposed, and they could change when they are finalized.
What Employers Need to Know About Summary Plan Descriptions and Other Plan Communications After the U.S. Supreme Court's Decision in CIGNA Corp. v. Amara
The U.S. Supreme Court in CIGNA Corp. v. Amara1 has reshaped the remedies for an employer's breach of its ERISA fiduciary obligations in a way that likely will prove to be a mixed blessing for plan sponsors. The Court unanimously held that the remedy under ERISA Section 502(a)(1)(B) to enforce "the terms of the plan" is not available for inaccurate or misleading statements in a summary plan description ("SPD") or other communications about plan terms2. The decision concludes that summaries about plan terms are not themselves part of the plan and rejects the general approach adopted by many lower courts before Amara that would have enforced a statement in an SPD, if more favorable to a plan participant, as the enforcement of the terms of the plan3. In a common sense explanation, Justice Breyer suggests that had the Court ruled otherwise, employers likely would resort to drafting plan summaries "in the language of lawyers," which would defeat the fundamental purpose of the SPD: clear, simple communication.
Posting Notice of SPD on Firm Intranet Site may not be Sufficient to Meet ERISA Requirements.
Employers increasingly rely on electronic methods to communicate with employees, keep them informed of company policies and even to provide them with benefits documents as required by federal law. While this is usually a convenient and rapid method of communicating with employees, especially those working in geographically diverse locations, employers should make sure that they comply with federal regulations when providing notice of certain benefits as required by the Employee Retirement Insurance Security Act (ERISA).
