A Summary Plan Description (SPD) is a legal document employers must provide to employees who participate in certain retirement or health benefit plans. It explains, in plain language, the rights, responsibilities, and benefits employees are entitled to under the plan.
SPDs are required under the Employee Retirement Income Security Act of 1974 (ERISA) and are designed to keep employees informed while also protecting employers from legal risks.
What Plans Require an SPD?
Examples of plans that require a summary plan description include:
- Group health, dental, vision, life, and disability insurance
- Flexible spending accounts (FSAs)
- Health reimbursement arrangements (HRAs)
- Employee assistance programs (EAPs)
- Other employer-contributed fringe benefit plans
What Must Be Included in an SPD?
An SPD must describe key details of a benefits plan, such as:
- Summary of benefits and features
- Participation rules and vesting schedules
- Funding and contribution details
- Accrual and claims procedures
- Fiduciary responsibilities
- Grievance and appeals process
- Protections if a plan is terminated
- The right to sue in case of fiduciary breaches
Employer Requirements
Employers are legally required to prepare, file, and distribute SPDs for covered plans. This responsibility does not fall on insurance providers, and a Certificate of Insurance is not the same as an SPD.
Some exceptions apply, SPDs are generally not required for plans sponsored by:
- Government entities
- Churches
- Programs solely covering workers’ comp, unemployment, or disability
- Certain plans outside the U.S.
Failure to provide an SPD can result in significant fines.
Writing and Distributing SPDs
A compliant SPD should:
- Use plain, easy-to-understand language
- Clearly outline benefits, rights, and limitations
- Avoid confusing or misleading terminology
- Be professionally formatted and accessible (e.g., posted on an intranet)
- Be provided in additional languages if 10% or more of the workforce is not proficient in English
Employers should also have SPDs peer-reviewed and reviewed by an attorney to ensure accuracy and compliance.
Bottom line: An SPD is more than a compliance requirement, it’s a vital communication tool that helps employees understand their benefits and protects employers from potential disputes.
