ERISA Tips: What Must Be in an SPD for the Average Plan Participant
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In “ERISA: What Must be in a Summary Plan Description for the ‘Average Plan Participant’?
” Lane Powell writes in the ERISA Law Blog reminds that ERISA requires that an SPD explain eligibility in manner that is clear enough for the average plan participant to understand. But what does that mean?
Powell looks to a recent ruling in the 9th U.S. Circuit Court of Appeals, Abrams v. Life Insurance Company of North America; UBS Financial Services, 2018 WL 1189181, __ Fed. Appx. __ (9th Cir. March 7, 2018)
for clarity regarding who an average plan participant is and what the standard for compliance with ERISA disclosure requirements is.
In Abrams, Powell said, the plan included a work incentive benefit, which is described in the policy and the SPD. The plaintiff said that the claims administrator had not properly offset half of his earned wages from his long term disability benefits, which are covered by ERISA. He also asserted that the policy and SPD did not meet ERISA disclosure requirements, and that there should have been no offset taken.
The 9th Circuit ruled that the SPD and the plan satisfied ERISA’s disclosure requirements, Powell reports. She says that the court noted that:
ERISA mandates that a SPD “explain the circumstances which may result in disqualification, ineligibility, or denial or loss of benefits” in a manner “calculated to be understood by the average plan participant,’ and that information must be ‘sufficiently accurate and comprehensive to reasonably apprise’ plan participants of their rights and obligations under the plan.
The court also said that “The SPD clearly explains how Abrams’s monthly benefit would be impacted by money he earned while receiving benefits,” that it did not “minimize, render obscure, or otherwise make the work incentive benefit offset to be unimportant” and that it described the benefit and its offset in “the same style, typeface and type size as the rest of the SPD and are located ‘in close conjunction with’ the description of the plan’s benefits.” For good measure, Powell notes, the court said that ERISA does not require that the benefit be given “special emphasis” nor that the SPD mention it more than once.