There are two areas during open enrollment season where we can assist:
- Creating one document to serve dual needs. This can easily be accomplished, and we will show you how
- Providing you with the steps to electronically distribute materials via email or website posting as permitted by the ERISA such as the Summary Material Modification (SMM) and Summary Annual Report (SAR) for the Form 5500
Important Note: Both areas will also be discussed during our upcoming September 7th webinar. Click here to register.
Open Enrollment Communication Materials
When you have a change to the ERISA Plan, such as a new carrier for a benefit, adding or subtracting a benefit, modifying the eligibility rules, etc., these all need to be communicated to Plan participants. Open enrollment is touted as a perfect time to convey these changes ahead of the new Plan year. If the open enrollment materials have certain ERISA language inserted, the OE materials turn into a Summary of Material Modification (SMM), a document mandated under the ERISA. Typically, the SMM is created when the SPD is updated.* By using the OE materials, you don’t need to worry about distributing again later because one document now serves as two communication pieces.
* Under the ERISA, SMMs are required to be distributed within 210 days after the end of the Plan year in which the change is adopted, or if the change is a material reduction in covered services or benefits, no later than 60 days after the date of adoption of the reduction.
What ERISA language should be included in your OE materials to have it serve as an SMM?
If the materials include a section titled “What’s Changing for the New Plan Year,” a box at the top** of the section could be added that states:
|This section constitutes a Summary of Material Modifications to the Summary Plan Description (SPD) for the Plan, thereby modifying the information previously presented in the SPD with respect to the Plan. Please keep a copy of this SMM with the SPD previously provided to you.|
** ERISA material should not be listed as fine print at the bottom of the page. The ERISA mandates for the Plan participants to see the material clearly.
Electronic Distribution for Summary Material Modification (SMM) and Summary Annual Report (SAR) for Current Employees
Per the ERISA, Plan sponsors should ensure the materials are furnished by a method “reasonably calculated to ensure actual receipt.” For electronic distribution, this can be accomplished using email with return receipt enabled or by adding a confirmation of receipt checkbox to a website. Also, keeping a distribution log is considered good practice.
|SPD Distribution Methods Depend on an Individual’s Computer Access|
|☐||Active Employees: Options for those with computer access at work (does not include kiosks)
Note that the above electronic distribution methods only work for active employees
|☐||Active Employees and Other Recipients: Options for those with no computer access at work
Posting the SMM and SAR on the Company Website for Current Employees
Placing the SMM or SAR on a company website will satisfy the electronic distribution rules if the plan administrator:
- Uses appropriate and necessary means to ensure that posting these documents on a company’s website results in actual receipt
- Provides written or electronic notice to employees directing them to the website, at the time the document is posted, and describing the document’s significance and the right to request a paper copy
- Provides a paper copy of the document on request without charge
Taking “appropriate and necessary” measures to make sure the posting of the SMM and SAR on a company’s website results in an actual receipt could include:
- Adding a prominent link from the website’s homepage to the separate section that contains the document
- Providing directions on the website for how to replace a lost or forgotten password to the extent one is needed
- Maintaining the documents on the website for a reasonable period of time, following notice to employees of their availability
- Website Retention: Per DOL guidance, ERISA disclosures posted to a website for participant review should remain on the website until superseded by a subsequent version, but in no event less than one year
For questions on this material, feel free to reach out to Ann McAdam, Project Manager at firstname.lastname@example.org.