Since non-compliance can be costly, it is crucial for employers to understand the requirements governing SPDs. Although its name can be misleading, a summary plan description does not merely summarize the employee benefit plan. ERISA details specific requirements regarding the format and content of a summary plan description. Notably, if the information contained in the summary plan description conflicts with the terms of the employee benefits plan document, the summary plan description takes precedence.

There are two types of employee benefit plans that are covered by ERISA: pension benefit plans and welfare benefit plans. Pension benefit plans provide retirement income or deferral of income until termination of employment or beyond. A welfare benefit plan is a plan that has been established or maintained by an employee organization for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death, or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services. It is often difficult for employers to determine which benefits are covered by ERISA. Notably, severance pay, group health plans, and medical benefits to retirees are considered welfare benefits and are subject to ERISA’s requirements.

In recently-conducted audits in the Rochester area, the Department of Labor has requested companies’ summary plan descriptions and has reviewed the SPDs for compliance with ERISA standards. While it is unusual for SPDs to be reviewed in the pension context, our recent experience has marked an increased focus on SPDs in the welfare plan context. This has included the review of an SPD in the audit of a health insurance plan, an area in which we have not historically seen the Department focus on SPDs.

It is important to note that ERISA does not cover some employee benefit plans, and thus, employers whose plans fall in this limited category need not take such stringent measures to ensure compliance. Generally, plans sponsored by government entities and churches are not subject to ERISA’s requirements.

Additionally, an employee benefit plan which covers fewer than 100 employees is exempt from certain reporting and disclosing requirements, when specific conditions are satisfied, and is not required to furnish participants or beneficiaries with summary plan descriptions, even upon request.

Finally, employers must comply with the technical requirements for summary plan descriptions. For example, summary plan descriptions must include basic information like the name of the plan, the name and address of the employer sponsoring the plan, and the employer identification number. In addition to these simple factors, ERISA also describes several more complex requirements, many of which depend on a number of detail-specific circumstances. ERISA further requires employers to furnish plan participants and beneficiaries with a copy of the summary plan description within 90 days of becoming a participant, or in the case of a beneficiary, within 90 days after he or she first receives the benefits, or if later, within 120 days after the plan becomes subject to ERISA. Every five years, the plan administrator must provide each participant and beneficiary an updated summary plan description, which includes any amendments made within that five year period.

Please contact David M. Mehalick at (585) 419-8657/dmehalick@harrisbeach.com, Julie R. Bielecki at (585) 419-8637/jbielecki@harrisbeach.com, or the Harris Beach attorney with whom you usually work if you would like to review your employee benefit plans and summary plan descriptions.

This Legal Alert provides a brief analysis or comments on matters related to employee benefits plans. This alert does not purport to be a substitute for advice of counsel on specific matters.

Harris Beach has offices throughout New York state, including Albany, Buffalo, Ithaca, New York City, Niagara Falls, Rochester, Saratoga Springs, Syracuse and Yonkers, as well as Newark, New Jersey.