ERISA: Overview
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that protects an individual’s right to benefits under employee welfare benefit plans and pension plans. For the plan participant and beneficiaries seeking to receive such benefits, the most important document is the Summary Plan Description.
What is a Summary Plan Description?
A Summary Plan Description (SPD) contains a summary of the plan’s terms, guidelines, and remedial provisions, which a plan administrator must provide to a plan participant and the beneficiaries. The law provides that the SPD must “be written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise the participants and beneficiaries of their rights and obligations. . .” The SPD is crucial to determining rights under the plan, thus it is important that plan participants and beneficiaries ensure receipt and retention of the SPD in their records.
What information should the Summary Plan Description provide?
Although ERISA does not explicitly define “summary plan description,” it does provide a detailed list of what the SPD must contain to sufficiently inform plan participants and beneficiaries. These requirements have been expanded by the Department of Labor. An SPD must contain the following:
• The name and type of plan administration;
• The name and address of the health insurance issuer, if any, that finances or administers the plan;
• The name and address of the designated agent for service of process;
• The plan administrator’s name and address;
• The trustee(s) title, name, and address;
• If there is a collective bargaining agreement (CBA), there must be a description of the applicable CBA provisions;
• A description and explanation of participation and benefit requirements;
• A description of nonforfeitable pension benefits;
• The circumstances that would disqualify, render ineligible, and/or result in the denial or loss of benefits to a participant;
• A description of any joint and survivor benefits under the plan, including in the description any requirement that an election be made as a condition to select or reject the joint and survivor annuity;
• The participant’s ERISA rights;
• The plan’s financing source(s) and benefit provider;
• If applicable, a statement that benefits are insured and the corresponding information;
• The date the fiscal year ends and whether the plan records are kept on a calendar, policy, or fiscal year basis;
• The statement of ERISA rights, as found in the statute;
• A description of the plan’s procedures governing qualified domestic relations orders and qualified medical child support orders;
• A description of the cost-sharing provisions in the plan;
• A description of the authority and requirements to terminate a plan or eliminate benefits;
• The benefit claims procedure, including the Department of Labor office where participants and beneficiaries can obtain assistance and information regarding their ERISA rights; and
• Remedies for denial of claims.
Who should receive the Summary Plan Description and when?
A plan participant and any beneficiaries entitled to benefits under a plan should receive a copy of the SPD. The SPD should be sent to a participant within 90 days of the employee becoming a participant and should be sent to beneficiaries within 90 days of first receiving benefits.
If you feel your rights under ERISA have been violated, or if you have any other questions regarding your employment rights, please contact the experienced Birmingham employment law attorneys at Michel Allen & Sinor. You can contact us either online or by calling us at (205) 3199724. We are here to serve you!