The Summary Plan Description – An Explanation

Summary Plan Description

If you sign up for healthcare benefits through your employer, you have access to your company’s Summary Plan Description (SPD). In short, the SPD provides important details about your benefits plan and how the plan works. An SPD is required by law and must define when employees become eligible to participate in the plan, how benefits are calculated and paid, how to submit claims, and when benefits are fully guaranteed. Here’s a quick explanation about Summary Plan Descriptions.

What is a Summary Plan Description?

A Summary Plan Description is a document that employers must provide at no cost to employees who take part in Employee Retirement Income Security Act-covered retirement plans or health benefit plans. 

Health benefit plans include Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs), and Health Savings Accounts (HSAs).

Where do I get a Summary Plan Description?

Within 90 days of an employee’s hire date, they should receive an SPD covering the company’s healthcare and retirement benefits. The SPD may be provided electronically or as a hard copy. Employees can request a written version if they are given an electronic copy.

To receive a copy of the SPD, employees should contact the benefits plan administrator or HR department.

What’s included in the SPD?

The SPD must be written in plain language that all employees can understand*, and include:

*If 10 percent or more of a company’s employees speak a language other than English, the SPD must be published in those other languages too.

Eligibility, CDH Accounts, Plan Changes and More

Plan eligibility requirements

The SPD should describe what makes an individual an employee who is entitled to various benefits. It should also outline whether the benefits apply to independent contractors, temporary workers, spouses, domestic partners and children.

A Summary Plan Description should provide:

  • Requirements for plan eligibility, such as minimum age and service requirements
    • If there is a service requirement, it should also state how this is calculated
  • Start and end dates for the plan year
  • Identify who makes contributions to the plan (Employee/Employer/Both)
  • What happens to my benefits if I go on disability, leave the company, or die?
  • Retirement plan and 401k details, including vesting information, rollover contributions investment options
  • Borrowing rules from retirement accounts

Consumer Directed Healthcare Accounts

If you have a Flexible Spending Account, Health Reimbursement Arrangement, or Health Savings Account, you will find the following (and more):

For FSAs:

  • How much is the annual contribution amount?
  • Who contributes?
  • Is there an employer match?
  • Does my FSA have use-it-or-lose it, grace period, or rollover?
  • How do I submit a claim?

For HRAs:

  • Which expenses are eligible?
  • What are the reimbursement claim requirements, including limits?
  • When is my account funded?
  • Are my dependents covered?
  • Do funds rollover?
  • What happens when I retire?

For HSAs:

  • How much is my high deductible health plan (HDHP) premium?
  • How do I fund the HSA?
  • Does my employer match contributions?
  • Are there wellness incentives?
  • Can I change contribution amounts in the middle of the plan year?
  • How do I submit a claim?

What happens when benefits change?

Employers may change their benefit plans from time to time. When the plan is modified, the employer must notify all employees in writing, and employees should receive a revised SPD or a Summary of Material Modifications (SMM) explaining the changes.

If the change reduces coverage or benefits, the notification must be issued within 60 days of the change becoming effective. If there is no reduction in coverage or benefits, the notification must be sent within 210 days after the end of the plan year when the change became effective.