Around this time of year, employers who offer medical and other welfare plans to their employees find themselves swimming in an alphabet soup of year-end and open enrollment notice and disclosure requirements: WHCRA, CHIPRA, ERISA SBC, SPD, SMM, and SAR to name a few. Our clients often come to us with questions about “best practice” document distribution options. Here are the answers to some of the more common questions we have received this Fall.
What are the general distribution rules for our health and welfare documents?
The distribution of these documents is governed by a law called ERISA. Under ERISA a plan administrator (usually the employer) must use measures reasonably calculated to ensure actual receipt of the plan materials by participants. First class mail and in-hand delivery always work.
Can we just leave a pile of documents the break room or near our employees’ mailboxes? How about posting the notices in our company kitchen?
Unfortunately, these methodologies cannot ensure actual receipt of the documents and are not advised. Again, First Class mail and in-hand delivery are your best bets for paper delivery.
Can we avoid killing trees and distribute these documents electronically?
Yes! ERISA does allow distribution of documents electronically, if certain “safe harbor” rules are satisfied. There are different rules depending on whether or not your employees have computer access (and are required to have computer access) through their work at your company.
For employees who have computer access (and are required to have computer access) through their work, you may send ERISA documents electronically without prior consent, so long as certain rules are met. Most importantly, the individual must be provided with a notice at the time a document is furnished electronically, in electronic or nonelectronic form, that informs the recipient of the significance of the provided document and of the right to receive a paper version of that attached document on request. The document delivery system should also protect the confidentiality of any personal information transmitted, and the sender should make sure that the delivery system results in actual receipt of transmitted information (e.g., by using return-receipt or notice of undelivered electronic mail features, and conducting periodic reviews or surveys to confirm receipt of the transmitted information).
Electronic delivery is also available to individuals without computer access through work, but the rules get somewhat trickier in this scenario. Most importantly, the individual must consent to the delivery, must not have withdrawn the consent, and must provide an address for delivery of the materials. But certain additional safeguards are required, including a statement made to the individual regarding the documents to which the consent applies, the individual’s ability to withdraw consent, the right to request a paper version of a document, and any hardware or software requirements for accessing the documents. In addition, the consenting individual must be kept up to speed on hardware or software changes.
How about we just post the documents on our company intranet? Isn’t that enough?
Probably not. In our view, a mere intranet or website posting satisfies neither the general distribution rule nor the electronic distribution safe harbor described above.
I have heard that the electronic distribution rules are bit different for Summaries of Benefits and Coverage (otherwise known as SBCs). Is this true?
Yes. If an individual is enrolled in your health plan, the SBCs can be distributed under the electronic safe harbor described above. However, if an individual is eligible for (but not yet enrolled in) your health plan, a different set of rules applies. In this case, an SBC may be provided electronically to individuals, whether or not they have computer access to work, so long as:
The format is readily accessible (such as in an html, MS Word, or pdf format);
The SBC is provided in paper form free of charge upon request; and
If the SBC is provided via an internet posting, the plan timely advises the individuals, in paper form or email, that the SBC is available on the Internet and provides the Internet address (this is sometimes referred to as the “e-card” or “postcard” requirement).
Plans have flexibility with respect to the language contained in the e-card or postcard and may choose to tailor it in many ways. The DOL has provided a useful example, accessible here.
Finally, the DOL has provided one additional safe harbor for SBCs. Under this safe harbor, SBCs may be provided electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan. SBCs also may be provided electronically to participants and beneficiaries who request an SBC online. In either case, the individual must have the option to receive a paper copy upon request. Click here for more information.