What Is a Summary Plan Description and Why Does it Matter?

If you participate in employer-sponsored health insurance, retirement plans, or pension plans, the plan’s administrator is required to provide a summary of the plan. This summary plan description, or SPD, is a critical piece of paperwork for you as the beneficiary of the plan. It outlines important information, including what is included in the plan and what your ERISA rights are.

The summary document is usually different from the actual plan documents, although it can be made part of the plan.

What Is a Summary Plan Description?

The summary plan description is a documentation requirement of the Employee Retirement Security Act of 1974, known as ERISA. Under ERISA, administrators of covered employer-sponsored health, pension, and retirement plans must provide participants with an SPD that summarizes the important provisions of the plan documents. This information is typically considered to be the basic data you need to understand and manage your benefits.

Who Gets a Summary Plan Description?

Under ERISA, employees (i.e., the plan participants) must receive a summary plan description when they become eligible for benefits.

Typically, employers or administrators are required to provide the document to employees or plan participants by a certain deadline, such as within 90 days of an employee becoming covered. Administrators are the persons or entities who manage the plan and may include human resources or third-party businesses contracted by the employer.

Employees should also receive a new or updated summary plan description promptly if the plan changes. Changes can be documented in a revised SPD or in what is called a summary of material modifications.

What Information Is Included in Your Summary Plan Description?

Summary plan descriptions must include information such as:

• What the plan provides. These are the benefits you have access to under the plan. In the case of health insurance, the summary plan description may include some basic listing of covered expenses, for example. 
• How the plan operates. The SPD provides a basic overview of how the plan is managed and works, though this is not meant to be a detailed operating document. 
• When employees can participate in the plan. The SPD should provide a concise look at when employees become eligible for the plan.
• A description of claims processes. Employees can turn to their SPD to get information about how they can file a claim to receive benefits under the plan.
• A description of what rights employees have under the plan. The summary should include an accessible explanation of a plan participant’s ERISA rights and any other rights they or their beneficiaries have under the plan.
• What responsibilities do employees have concerning the plan. This will describe a plan participant’s duties under the plan, such as whether he or she has to cover a percentage of premiums or what information you must provide to their employer to remain covered. 

Summary Plan Description versus Actual Plan Documents

The point of the SPD is to provide employees and other plan participants with information about their benefits and how the plan works.

Because of this, SPDs should be written in language that is easy for plan participants to understand and does not include a lot of very complex legal, insurance, or business jargon. The summary plan description should also take a holistic look at the plan and provide everything an employee needs to make basic decisions about the plan. An SPD is typically not part of an ERISA plan and if there is a discrepancy between the SPD and a plan document, the latter will control.

In contrast, the plan document is used by the employer and administrators to manage the plan. It acts as a legally binding type of contract that sets forth the provisions of the plan. This document is typically much longer than the SPD and may include more legal and technical information. These documents are not typically provided as reference documents for employees, but they will be helpful to an attorney if a plan participant or beneficiary is involved in a case involving a failure of an employer or administrator to uphold your ERISA rights or a disability, pension or life insurance claim denial.

Finally, while it is uncommon, the SPD can be an ERISA plan document if the plan itself states that it is. In that case, it will be treated as being part and parcel of the plan.

What If Your ERISA Plan Administrator Does Not Issue Required Documents?

Plan administrators are legally obligated under ERISA to provide the summary plan description to you in a timely manner. They are also usually required to issue other periodic documents, such as a summary of benefits and coverage. If you do not understand how your plan works and do not have access to these types of documents, reach out to human resources department or plan administrators and ask about the provision of the plan or the SPD.

When To Call an ERISA Attorney

If you feel that your plan administrator or employer is not providing you with required information or you suspect there are any issues with your plan or claims process (such as a claim denial), you should work with an experienced ERISA attorney. An ERISA lawyer can help you understand what your rights are under the law and how you can advocate for them in the context of your plan or claim.

Claims administrators such as insurance companies often do not act in good faith and do not act in the interest of policyholders/plan participants. They frequently forget that the underlying purpose of ERISA is to protect the interests of participants and their beneficiaries in employee benefit plans.

The team at McKennon Law Group PC battles insurance companies on your behalf to help ensure you get the benefits you deserve. Contact us at 949-504-5381 if you are facing an ERISA matter you need assistance with.