ERISA Summary Plan Description Requirements for HR Professionals

Executive overview

Before 1974, workers had no legal protection for pensions or health benefits when changing or losing jobs. The Employee Retirement Income Security Act (ERISA) of 1974 established federal minimum standards for most voluntary benefit plans, requiring employers to inform participants through formal documentation. Any employer that offers benefits — regardless of size — must comply with ERISA's rules on how those benefits are communicated and administered. The primary compliance tool is the Summary Plan Description (SPD), a plain-language document that every covered employee must receive within 90 days of enrolling in a plan.

ERISA background and applicability

• Passed in 1974 to protect workers from losing pensions and health benefits when changing jobs.
• Sets minimum standards for participation, vesting, benefit accrual, and plan funding.
• Applies to any employer offering voluntary benefits, not only those with 50+ employees.
• Non-compliance carries financial penalties for the organization.

What a Summary Plan Description is and must include

• An SPD translates complex plan documents into plain language accessible to all employees.
• Plan documents (dense legal text) do not need to be distributed unless an employee requests them.
• New enrollees must receive the current SPD within 90 days of enrolling; any employee may request an SPD for a plan they are not currently on, and must receive it within 30 days.
• Required SPD contents: plan name, address, and contact information; how to file a benefit claim; employee and plan duties; claims procedures; basic ERISA rights and responsibilities; premium, deductible, and co-payment details; in-network provider and pre-certification information; qualified medical child support order procedures; and HIPAA rights notices.

HR responsibilities and tools

• HR's role is to make benefit information accessible, not to advise on benefits — rely on the broker for explanations and ERISA WRAP documents.
• Benefits administration platforms (e.g., BerniePortal) can host SPDs and plan documents so employees can review plans and make informed decisions.
• Choosing the right broker is the primary benefits responsibility for an HR team; the broker handles compliance details.

Summary of Material Modification (SMM)

• When a plan changes, employees must be notified via a Summary of Material Modification (SMM).
• If the change is a material reduction in benefits, the SMM must be distributed within 60 days of the change taking effect.
• Material reductions include: eliminating or reducing benefits, increasing premiums or cost-sharing, shrinking an HMO's service area, or adding new conditions for obtaining services.