This is part one of a two-part article on a comprehensive list of notices to include in your employee’s open enrollment benefits.
When it comes to your employee benefits communications this open enrollment season, how confident are you in providing your employees (and their dependents) with all of these legally-required notices in the time and manner in which the law specifies?
Savvy employers can generally minimize both the administrative burden and cost of sending these notices by simply including them with the health plan enrollment materials they distribute each year. Although yearly distribution is not required for most federally mandated health plan notices, employers should consider including some of them with enrollment materials anyway. Some of the requirements vary by the type of health plan offered as well as the size of your company.
Here is a rundown of the notices you might wish to include in your open enrollment communication efforts.
Summary Plan Description (SPD)
One of the main documents you must provide employees, under ERISA, is a Summary Plan Description (SPD). This document must include specific information about what the plan covers, how it operates, how employees can take advantage of their benefits once they’ve enrolled, how they can file a claim, and finally, the process for appealing denied benefits.
This notice must be sent to each plan participant and to each beneficiary receiving benefits under the plan as follows: For existing plans, a new participant must receive a copy of the SPD within 90 days after becoming a participant, and a beneficiary must receive a copy within 90 days after first receiving benefits. For newly created plans, an SPD must be distributed to participants and beneficiaries within 120 days after the plan is first instituted. Additionally, a plan sponsor must provide an SPD within 30 days of it being requested by a plan participant.
Summary of Benefits and Coverage (SBC) and Uniform Glossary
The Summary of Benefits and Coverage (SBC) seems, on the surface, very similar to the SPD. They are not the same document, however, and both need to be provided to your employees. Your SBC is a standardized, 4-page document which contains a short description of all of your benefits in plain language that is easy for anyone to understand. Its purpose is to provide individuals with standard information so they can compare medical plans. The Uniform Glossary provides definitions of commonly used terms in health insurance coverage such as "deductible" and co-payment". This notice must be sent to any participants who enroll or re-enroll during an open enrollment period or through a QLE (Qualifying Life Event).
An SBC may be provided in either paper or electronic format. It may be hand delivered or mailed. It may also be emailed or posted on the Internet after obtaining an employee's agreement to receive the SBC electronically. If posted on the internet, employees must be notified about where the SBC is posted and that the SBC is available in paper form, free of charge, upon request.
Summary of Material Modifications (SMM) and Notice of Modification
An SMM must be provided to every plan participant covered under the plan when "material modifications" have been made to a plan other than at the time of renewal. There are different types of changes that establish a material modification. Material modifications include amendment provisions that establish new benefits, take away existing benefits, narrow or expand the circumstances under which benefits are paid, and terminate the plan entirely. If the amendment changes the information required to be disclosed in an SPD or SBC, an SMM should be distributed.
An SMM notice is required to be provided to all plan participants, including those on COBRA, at least 60 days prior to the date that the health plan change will become effective. The delivery of the SMM must be in a manner that will result in actual receipt by the participant or beneficiary. U.S Department of Labor (DOL) regulations approve of distributing SMMs by first, second, or third-class mail. SMMs can also be delivered by hand or electronically if the DOL’s electronic disclosure rules are be met.
The CHIPRA (Children's Health Insurance Program Reauthorization Act) notice informs employees of potential opportunities for group health plan premium assistance opportunities through Medicaid and the Children's Health Insurance Program (CHIP). This notice must be sent to all employees, regardless of their plan enrollment status, who reside in states in which the premium assistance is available.
This notice must be provided on an annual basis prior to the start of the plan year and may be sent to employees along with health plan eligibility information and enrollment packets, open enrollment materials, or the plan’s SPD. It should appear as a separate notice to ensure that employees will become aware of the significance of the notice. The notice may also be sent by first class mail, or if furnished electronically, can be provided as long as the requirements of the DOL are satisfied.
HIPAA Special Enrollment Rights Notice
HIPAA (The Health Insurance Portability and Accountability Act) offers eligible employees additional opportunities to enroll in a group health plan if they lose other coverage or experience certain life events, commonly referred to as Qualifying Life Events (QLEs). The law also prohibits discrimination against employees and their dependents based on any health factor they may have, including prior medical conditions, previous claims experience, and genetic information.
The Special Enrollment Rights Notice describes the group health plan’s special enrollment rules including the right to enroll within 30 days of the loss of other coverage or in the case of marriage, birth of a child, adoption, etc.
Employers must furnish this notice of Special Enrollment rights to eligible employees at or before the time they are first offered the opportunity to enroll. The special enrollment notice may be provided by including it with other benefit enrollment materials provided at the time of benefit enrollment eligibility. Even if an employer does not distribute written application materials, the special enrollment notice must be distributed at or before enrollment.
HIPAA Privacy Notice
HIPAA's Privacy Notice describes, in detail, how medical information about an employee or covered dependent may be used and disclosed, and how the covered plan participant can get access to that information.
If an employer sponsors a fully-funded group health plan and does not maintain or receive Protected Health Information (PHI) outside of enrollment or summary health information, it is exempt from having to issue this notice. If an employer has a self-insured health plan or maintains or receives PHI other than enrollment or summary health information, it must comply with the notice requirements.
A single notice to a health plan’s named covered individual is effective for all dependents covered through that insured employee. The notice must be provided upon an individual's enrollment in the plan, within 60 days of a material change to the notice and on request by any person.
If a covered entity maintains a website, the notice must be posted on that website (and the notice must be available electronically through the website). To meet the general notice requirements outlined above, the notice of privacy practices may be provided by e-mail, so long as the recipient has agreed to receive an electronic notice
KBI Benefits - An Invaluable Resource
Before sending out any relevant benefit documents, be sure to take the time to have them reviewed by an attorney, to ensure that they are compliant and contain all necessary information. This is an easy step to overlook, but it is actually the most important, because it can save you from major legal hassles down the road. Be sure to find out what you need to do in order to be a compliant communicator.
At KBI, we're equipped with vast HR knowledge and experience to help you navigate these tricky situations and have powerful resources available to help with your circumstances. Call us at (408) 366-8880 today!