Dive Brief:
- Employers know that they must prepare and distribute a summary plan description (SPD) for their ERISA benefit plans, including retirement benefits, health insurance, life insurance, and disability insurance.
- Because of the length of such documents, employers often may prefer to distribute the documents electronically.
- According to a blog post from the law firm of Stinson, Leonard, Street, posting an SPD on the company intranet only is not a good idea.
Dive Insight:
In a New York case, an employee on disability lost group term life insurance coverage not technically at work. While out on disability, the employee asked for a waiver of premium (but never made it) and died after the life insurance coverage lapsed. That didn't sit well with the employee’s estate, which then filed a claim for life insurance benefits. They said coverage was there because the employee didn't know that he needed to request the premium waiver.
The employer countered by saying that the SPD clearly explained that the employee needed to request the waiver. But the employer's only proof of SPD delivery was posting it to the company intranet. The New York court found that posting the SPD was insufficient delivery for ERISA plans under Department of Labor guidelines. The court also found that the employee’s estate was entitled to the death benefit. And since there was no waiver, it seems the employer, not the insurance company, will be have to pay the claim.
The advice from the employment lawyers at Stinson, Leonard,Street? Employers may wish to check their procedures to ensure that they are properly delivering SPDs to plan participants and have evidence that they have done it.
