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Are You SPD Compliant?

A summary plan description, or SPD, is the document that is given to participants and beneficiaries explaining the material terms of an ERISA plan. It is designed to summarize the plan a company offers. An SPD generally must be provided when a participant first becomes covered by a plan. It also must be provided on written request by a participant or enrolled dependent.

An updated SPD or summary of material modifications (“SMM”) must be provided no later than 210 days after the end of the plan year in which a material change to the plan was made. If there has been a material reduction in covered services or benefits, an SMM must be provided no later than 60 days after the date of the adoption of the material reduction.

Under the health care reform rules, there is a separate requirement that employers issue a revised summary of benefits and coverage (“SBC”) or a notification of material modification for mid-year changes to benefits described in the SBC. This rule is independent of the SPD and SMM rules but complying with the health care reform requirement also will satisfy the SMM requirement.

If there have been material changes to the plan, an updated SPD must be republished and distributed at least every five years. It is hard to imagine a plan that has not made a material change in the last five years, so, practically, almost all plans are required to distribute an updated SPD every five years.

What Should Be Included

There is no magic formula for the perfect SPD. Because plans vary greatly, there is no set formula or checklist for creating a SPD. However, they typically contain:

  • Plan-identifying information

  • Description of plan eligibility provisions

  • Description of plan benefits

  • Description of circumstances causing loss or denial of benefits (including eligibility or coverage termination)

  • Amendment and termination provisions

  • Subrogation

  • Coordination of benefits

  • Offset provisions

  • Recovery of overpayments

  • Assignment

  • Plan contributions and funding (including employer’s right to change amounts)

  • Claims procedures and time limits for lawsuits (if the plan imposes them)

  • External review information

  • Statement of ERISA rights

  • Offer of assistance in non-English language:

  • where plan has 100 or more participants at the beginning of the plan year and 10% or more are literate only in the same non-English language; or

  • where plan has fewer than 100 participants at the beginning of the year and 25% are literate only in the same non-English language

  • Description of employer’s refund allocation policy (for insured plans relying on Form 5500 exemptions)

  • Grant of discretion for plan administrator (and its delegate) to interpret plan and make factual determinations


  • Detailed description of group health plan benefit provisions (including cost-sharing provisions, preventive services coverage, etc.)

  • Procedures for obtaining preauthorizations, approvals, or utilization review decisions

  • Role of health insurers

  • Effect of provider discounts on co-pays, deductibles, etc.

  • COBRA information

  • Various applicable necessary information about GINA, USERRA, Michelle’s Law, etc.

  • Warning that in the event of a conflict between SPD and plan document, plan document controls

Distribution Timing

  • New Plans: Within 120 after the date the plan is created.

  • Newly Covered Participants: Within 90 days after the participant first becomes covered under the plan.

  • Ongoing Participants—Material Changes Made: Every five years if material changes are made within that five-year period. (Technically, distribution is not required until 210 days following the last day of the fifth plan year.)

  • Ongoing Participants—No Material Change: Every ten years if no material changes are made during the ten-year period. (Technically, distribution is not required until 210 days following the last day of the tenth plan year.)​


  • If a participant requests a copy of the SPD and the plan sponsor fails to provide it within 30 days, the Department of Labor can assess a penalty of up to $110 per day.

  • In a lawsuit, courts often consider the language of an SPD or SMM. If the SPD is inconsistent with the terms of the plan, a court may consider the terms of an outdated SPD in deciding litigation.

  • Other penalties, including a possible breach of fiduciary claim under ERISA may apply if an updated SPD was not provided.

  • Lack of an SPD could trigger a plan audit by the U.S. Department of Labor (DOL).

  • Failure to furnish to the DOL any requested information relating to the employee benefit plan can result in a penalty of up to $152 per day (not to exceed $1,527 per request).

Don’t Fall Into The Trap

Fully-insured plan administrators should not fall into the trap of thinking they can rely on the insurance carrier’s documents to satisfy the SPD requirement. Specifically, the insurance contract, policy or certificate booklet (collectively referred to as the “certificates”) are not SPDs. While those documents do contain information typically found in SPDs, they don’t have all the required language. However, by adding a wrap document to the certificates, the plan administrator can address missing ERISA requirements.

Two Types of WRAP documents:

  1. The first is a mega-wrap document which wraps the required ERISA language around a carrier’s certificate of coverage and can combine many employer-sponsored plans into a single plan. The mega-wrap document may even help the employer simplify their Form 5500 filing.

  2. The second type is used to wrap the required ERISA language around a single plan. Carriers often include state-mandated language in their certificates but fail to include ERISA requirements. A wrap document in this instance can be used by a fully-insured plan to wrap ERISA language around a medical certificate of coverage.

Other Means of Distribution

Posting an SPD or other ERISA disclosure to a company’s intranet, benefits portal, etc. is fine—as long as there is also a notice sent out each time new ERISA materials are posted there.

The ERISA electronic disclosure rules require that employers take appropriate and necessary means to ensure that the system for furnishing documents results in the actual receipt of the documents. There has been bad case law in the past of employers posting new ERISA documents to an intranet without notifying their employees, and the court therefore finding that the employees could rely on the prior documents.

Simply posting on an intranet without notification to employees is therefore not a good practice. But there is no need to send the actual ERISA documents via email—notifying employees that the documents are posted on the intranet is sufficient..The rules for when electronic disclosure is permitted without authorization (generally for employees who have work-related computer access that is integral to their job duties) and can be found here on the DOL website.

Employers should consider reviewing all of their benefit plans to make sure each SPD is up to date and has been distributed.

Want to learn more about ERISA Compliance or need assistance with updating or setting up your group's Summary Plan Description?

Contact AJM Associates at (248) 778-6070 or via email at

Follow Us: @ajmbenefits

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