The Department of Labor has released new regulations that will require you to revise your summary plan descriptions (SPDs) for pension and welfare benefit plans so they are more detailed than ever. Here’s a look at the information that must be included under the new rules.
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Plans Covered
Under the new rules, pension plans include defined benefit, defined contribution, 401(k), cash balance, money purchase, profit-sharing and ERISA section 404(c) plans. Welfare plans include group health programs, HMOs, disability plans and prepaid legal services. The new rules require SPDs to be updated by the first day of the second plan year beginning on or after Jan. 20, 2001. For example, if you have a calendar-year plan, your SPDs will need to be revised by Jan. 1, 2003.
Requirements For All Plans
Both pension and welfare plans must describe:
- the type of pension or welfare plan
- eligibility for participation
- a summary of benefits
- procedures governing qualified domestic-relations orders
- circumstances that may result in disqualification, ineligibility, denial, loss, suspension, offset, reduction or recovery of benefits
- participants’ rights and obligations on plan termination or modification
- fees or charges that must be paid as a condition of receiving benefits.
The regulations also include several model statements of participants’ rights that you can include to comply with the disclosure rules.
Health Plan Special Rules
Besides the general requirements above, summary plan descriptions for group health plans must specify:
- cost-sharing provisions such as deductibles and co-payments
- annual or lifetime caps or other benefit limits
- the extent to which preventive services are covered
- the extent of coverage for existing and new drugs and medical tests, devices and procedures
- the composition of the provider network and rules for using out-of-network services (provider lists may be furnished in a separate document)
- conditions or limits for emergency medical services
- claims procedures and time limits
- any pre-authorization or utilization review requirements.
Pension Plan Disclosure
Pension plan summaries must include the general requirements above for all summary descriptions and the following information:
- the plan’s normal retirement age
- any other conditions that must be met before a participant is eligible to receive benefits
- rules for accrual and vesting of pension benefits under the plan upon termination.