QUESTION: We are reviewing the SPD procedures for our ERISA welfare plans and need some guidance. Who must receive SPDs for these plans?

ANSWER: ERISA requires a plan administrator to automatically furnish a summary plan description (SPD) to each participant covered under a welfare plan. The term “participant” is not limited to current employees; it includes any employee or former employee who is or may become eligible for benefits under the plan or whose beneficiaries may be eligible for benefits. A participant becomes “covered” under a welfare plan on the earliest date that the individual (1) begins participation, (2) becomes eligible to receive a benefit subject only to a contingency giving rise to the benefit (for example, an employee covered under a long-term disability plan is eligible for benefits even if no disability occurs), or (3) makes a voluntary or mandatory plan contribution. Here are considerations for furnishing automatic SPDs to common categories of individuals:

• Employees or Former Employees Covered Under the Plan. SPDs must be provided automatically to current plan participants and former employees, such as retirees, who remain covered under the plan. Automatic SPDs are not required for welfare plan beneficiaries such as covered spouses and dependent children, except as noted below.
• COBRA Qualified Beneficiaries. Generally, separate SPDs are not required for qualified beneficiaries living at the same address. For example, a single SPD can be furnished to a parent electing COBRA coverage for children living in the parent’s home.
• Alternate Recipients Under Qualified Medical Child Support Orders (QMCSOs). The DOL treats alternate recipients under QMCSOs as plan participants for ERISA disclosure purposes. Generally, the SPD should be furnished to the child’s custodial parent or guardian.
• Spouses or Other Dependents of Deceased Participants. A deceased participant’s spouse or dependents who continue to receive benefits under a medical or other welfare plan should be furnished with SPDs.
• Representatives or Guardians of Incapacitated Persons. When the plan has notice that the participant or other individual entitled to an SPD is incapacitated, the SPD should be sent to the individual’s representative or guardian.

SPDs must be automatically furnished at specific times. In addition, SPDs must be provided to plan participants and beneficiaries who request them, including those who have received automatic SPDs and some individuals not entitled to automatic SPDs. Failure to furnish requested copies within 30 days exposes the plan administrator (usually the employer) to penalties of up to $110 per day.

Finally, note that health care reform’s summary of benefits and coverage (SBC) is a separate disclosure requirement with different rules