by Jackson Lewis
The U.S. Department of Labor (DOL) recently issued amendments to its
regulation governing the content of summary plan descriptions (SPD)
required for employee benefit plans subject to the Employee Retirement
Income Security Act (ERISA).
The amendments update the disclosure rules applicable to pension and
welfare plans and are generally effective January 20, 2001, but SPDs
are not required to reflect these new requirements until the first day
of the second plan year after January 20, 2001. The amendments to the
rules governing the content of SPDs are intended to update the content
requirements and incorporate recommendations of the President's
Advisory Commission on Consumer Protection and Quality in the Health
Care Industry.
Group Health Plans
The final rules provide that the following information must be included in group health plan SPDs:
- any cost sharing provisions, including premiums, deductibles, coinsurance and co-payment amounts;
- any annual or lifetime caps or other limits on benefits under the plan;
- the extent to which preventive services are covered by the plan;
- whether, and under what circumstances, existing and new drugs are covered under the plan;
- whether, and under what circumstances, coverage is provided for medical tests, devices or procedures;
- provisions
governing the use of network providers, the composition of the provider
network, and whether, and under what circumstances, coverage is
provided for out-of-network services;
- any conditions or limits applicable to obtaining emergency medical care; and
- any
provisions requiring pre-authorization or utilization review as a
condition to obtaining a benefit or service under the plan.
Additional group health plan disclosures required by the regulations include:
- a requirement that an SPD either describe the plan's
procedures for processing qualified medical child support orders
(QMCSOs) or include a statement that participants and beneficiaries can
obtain a copy of the procedures at no cost;
- a disclosure of federal health care continuation coverage rights under COBRA;
- a disclosure of the method used to fund the plan;
- a claims procedure which addresses any required pre-authorization, approval or utilization review;
- for
plans with a provider network, either a listing of the members of the
network or a statement that a copy of the provider network can be
obtained at no cost to the participant or beneficiary;
- a required disclosure regarding the length of a hospital
stay following newborn deliveries under the Newborns' and Mothers'
Health Protection Act; and · repeals the limited exemption for relating
to SPDs of group health plans that provide benefits through qualified
health maintenance organizations (HMOs).
Pension Plans
The regulations also impose additional requirements on pension plan SPDs, including:
- a requirement that SPDs either describe the plan's
procedures for processing qualified domestic relations orders (QDROs)
or include a statement that participants and beneficiaries can obtain a
copy of the procedures at no cost; and
- for covered defined benefit plans, an updated PBGC statement of rights in connection with plan terminations.
Pension and Welfare Benefit Plans
The amendments to the final regulation also require that both pension and welfare benefit plan SPDs include the following:
- a revised "Statement of ERISA Rights";
- a statement regarding the plan sponsor's authority to terminate the plan or eliminate plan benefits; and
- a
claims procedure, or a statement that a copy of the procedure can be
obtained automatically, without charge, from a separate document.
Editor's Note: In recent years, courts have permitted plan
participants to sue for, and to receive, benefits based on plan
descriptions and booklets provided to the participants. Accordingly,
plan sponsors and administrators should review their plan descriptions
and booklets to determine whether these documents meet the SPD
requirements of ERISA and contain information that is consistent with
the current benefit plan terms.