How often must an employer distribute an SPD to plan participants?

Generally speaking, under ERISA, a group health plan-sponsoring employer must distribute an SPD to plan participants within 90 days of the participant’s enrollment in the plan. That would include a newly-hired employee who enrolls in the plan mid-year and any employee that elects coverage for the first time at open enrollment. Thereafter, ERISA requires the employer to automatically provide an updated SPD every five years if changes have been made to the original SPD, and every 10 years if no changes have been made. Lastly, an SPD must be provided upon an employee’s request.

Because the SPD is oftentimes the employer’s method for communicating benefits and obligations under the plan, and since benefits (and sometimes obligations) change each year, many employers distribute an updated SPD each year during open enrollment. That way, the employer can avoid any miscommunication to employees (and their dependents) regarding plan benefits.

It’s also important to note that other ERISA and PPACA requirements may determine when certain notices regarding plan benefits might be required. First, if changes to the plan are considered ‘material’ or a ‘material reduction’, then ERISA requires the employer to distribute a summary of material modification (SMM) or a summary of material reduction of benefits. Both of those must go out within a certain time after the change takes effect—but practically speaking, it makes sense to distribute the SMM or material reduction notice prior to the change taking effect. Not only does that satisfy the notice requirements, but it also helps avoid any miscommunication with employees. Similarly, PPACA’s SBC rules may require 60-days advance notice of a change to plan benefits (i.e., a change to any information outlined in the most recently-provided SBC) that occurs outside of open enrollment. Employers should be aware of those additional ERISA/SBC notice requirements if any changes to the plan occur. Therefore, by providing an annual updated SPD at open enrollment, employers can incorporate any of those changes to provide consistent and reliable benefit information to employees.