Insights

There are actually a few different notice requirements in play when an employer makes a change to benefits. ERISA has the summary of material modification (SMM) requirement — any material change to the plan requires the employer to send an SMM within 210 days of the end of the plan year in which the change occurs. If it’s a “material reduction” to benefits, then the notice (SMM or a summary of material reduction of benefits) actually needs to be sent within 60 days of the change. So, those notices are generally after the change occurs.

However, the summary of benefits and coverage (SBC) rules (which came into play under the ACA) say that if there's a material change that impacts the information provided in the SBC, and that change occurs outside of open enrollment (it occurs mid-plan-year), then the employer must distribute an updated SBC (or a notice describing the change) 60 days in advance of the change. So, for modifications to the plan that occur mid-plan-year, that advance-notice SBC will likely need to be distributed. Keep in mind that providing the updated SBC will also meet ERISA’s summary of material modification and material reduction requirements.

Now, if the change or modification (even if it’s a reduction) is occurring as part of renewal or open enrollment (that is, changes that are taking effect for the new plan year), then those changes can be included in open enrollment materials (and a new SBC) that is distributed during open enrollment. So, in that case, there's no need to distribute an updated SBC/notice 60 days in advance. Instead, the employer could just include the updated SBC/notice in the open enrollment materials.