The Employee Retirement Income Security Act (ERISA) governs how your practice must communicate to your employees about such topics as your health insurance plan and your retirement benefits. If your practice doesn’t abide by the law, you could face massive civil and criminal penalties, so it’s essential to stay on top of the requirements. One key to staying compliant under ERISA involves issuing your employees a Summary Plan Description—and if you don’t know what this means, then you may already be in violation of the rules.
To get a handle on what a Summary Plan Description (SDP) does and what it should include, check out a few important facts.
Understand What the SDP Is
If you’re offering health insurance to your employees, you must comply with the ERISA rules, which require you to supply plan participants with a document outlining the most important facts about the health plans you offer. As opposed to a plan document, which is often complex and written in legalize, the Summary Plan Description must be in plain English so your employees can understand it.
By having access to the SDP, your staff members will know more about their coverage so they can make important health benefits decisions simply by referring to the document. It also allows you to protect yourself. If your practice is sued by an employee under ERISA, the SDP is one of the documents an attorney will immediately request, and if you don’t have one, you’re not likely to win the lawsuit.
Include Coverage Specifics
Your SDP must include very specific details to be government-compliant, including the following:
- Your plan name
- The employer’s name and address
- The plan administrator’s name and contact information
- Details about how to appeal
- ERISA rights statement
- HIPAA statement
- Each benefit offered, along with information about what the plan pays and what the patient pays
- Deductible
- Out-of-pocket limit
- In-network and out-of-network benefits
- When employees are eligible to participate in the plan
- How benefits are calculated and paid
- How to claim benefits
These details allow employees to see what’s covered so they can make informed decisions about whether they want to participate in the plan, and so they can determine which health benefits they want to access. Your practice’s attorney should review your SDP and ensure that you’ve included everything necessary to stay compliant with the ERISA law.
Provide the SDP Free of Charge
You cannot charge your employees for copies of your SDP, even if you had to pay a significant amount of money to have an attorney help you create it. If an employee misplaces their copy and needs another one, you should provide it right away so they always have access to the documents. It’s also a good idea to keep a copy of the Summary Plan Description on your employee portal so staff members can refer to it frequently.
Make Sure You Share Revisions With Covered Individuals
Any time your benefits change in a way that reduces covered benefits, you must notify plan participants within 60 days of the change. You can either issue a revised Summary Plan Description or a summary of the changes in a different format.
If your benefits change in a way that won’t reduce covered benefits, you still must notify participants, but you have 210 days to do it. In most cases, however, if you have a high number of changes, you’re better off creating a new SDP and sharing it with employees as soon as you know what the updates are.
Best Practice: Request SDPs From Patients
You are required by law to issue Summary Plan Descriptions to individuals who participate in your employer-sponsored health plans. But many medical practices also choose to request SDPs from their patients so they can get a quick snapshot of a patient’s benefits. After all, ERISA impacts about 83 percent of the non-Medicare and non-Medicaid claims that physician offices file every day, so you’re more likely than not to see patients daily who have SDPs.
By collecting patients’ Summary Plan Descriptions, you’ll get a clear picture of their copay, deductible, coinsurance, in-network coverage, out-of-network coverage, and more. You’ll also find out whether preventive services are covered, if hospital admissions are restricted, and whether the patient is eligible for physical or occupational therapy.
If you have access to the patient’s SDP, you’ll be able to use it as a quick reference tool to quickly verify coverage.
Find out more about the complex ERISA rules by participating in the online training session, “Keep More of Your Reimbursement: Make ERISA Work for You.” During this 90-minute training,
David J. Zetter, PHR, SHRM-CP, CHC, CPCO, CPC, COC, PCS, FCS, CHBC, CMUP, PESC, CMAP, CMAPA, CMMP, CMHP, will provide you with the steps every practice must take to master the ERISA laws. Sign up today!
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