In response to the economic consequences of COVID-19, legislation from Congress and guidance from the Federal Agencies have ushered in a slew of changes to health plans: mandatory coverage of COVID-19 testing, expansions in telehealth, extensions of time to provide ERISA-required documents, including SPDs and required notices, and extensions of time to make certain elections and payments, such as those required under COBRA.
In addition to the timing extensions, Federal Agencies also granted flexibility to allow mid-year election changes to health plans and FSAs. As these rules are not required, employers can pick and choose which changes they want to allow. If an employer does adopt these changes, it must communicate its change to employees.
The 2021 open enrollment period can be the perfect time to provide notice of the above changes and meet plan communication compliance obligations. Plan sponsors must notify plan participants of any material changes to the SPD via a summary of material modifications (SMM). Although, there is no specific format required for an SMM, it is important to let employees know the provisions within the SPD are changing.
Employers often wish to use an open enrollment guide as an SMM. In doing so, referencing the document as an SMM is key. Sample language may read:
This document is to serve as a Summary of Material Modifications to the Summary Plan Description (SPD) for the [Plan Name] (Plan). It is meant to supplement and/or replace certain information in the SPD, so retain it for future reference along with your SPD. Please share these materials with your covered family members.
As for timing, the plan changes mentioned above are plan enhancements and thus must be communicated within 210 days after the end of the plan year in which the material change was adopted. If there are any material reductions to health plan benefits or services, those need to be communicated in a summary of material reduction in covered benefits (SMR) and be distributed no later than 60 days after the material reduction was adopted. A SMM or SMR is not needed if the plan changes or modifications are sufficiently described in an SPD distributed within the applicable deadlines noted above.
Providing communications that qualify as an SMM during open enrollment can be an efficient and timely way to handle required compliance obligations.