United Benefit Advisors Insight and Analysis Blog

Are Electronic Plan Documents ACA-Compliant?

By Peter Freska, Benefits Advisor at The LBL Group
A UBA Partner Firm

  Jul 1, 2015 12:35:21 PM

Compliance filesThere is always something to be concerned about. Please read on.

Many have talked about the options for posting compliance documents online. It is interesting to note that posting documents on a company’s intranet is not enough. Especially in light of the new court decision (Thomas v. CIGNA Group Insurance, E.D.N.Y. (2013)), the topic is even more important. Historically, companies have mailed out hard copies of their compliance packets, Summary Plan Descriptions (SPDs), Summary of Benefits and Coverage (SBC), and Summary of Material Modifications (SMM). If this packet contains the Patient Protection and Affordable Care Act (PPACA) State Exchange notification, it also needs to go to new hires within 14 days.

So the question really becomes, how is your company distributing compliance documents? Do you have a written process? Do you have written consent? It boils down to one simple question: Are you compliant?

The question asked repeatedly is, what alternatives are available for a client to distribute these documents to plan participants via a means other than the traditional delivery methods of mailing a paper copy to each participant’s home address or handing out paper copies to participants?

Here is how it works. If all employees do not have regular access to company email as part of their normal job function, then electronic distribution is not compliant. Department of Labor regulations require that the plan administrator use measures that ensure employees actually received the disclosures. They also have safe harbor rules under which plans may use electronic delivery for ERISA required documents. Compliance ensures that the Department of Labor and courts will find the plan’s electronic delivery to be “reasonably calculated to ensure receipt.” This is the standard set under ERISA Section 104(b). With this, the plan administrator must ensure that the delivery method chosen results in actual receipt by the participant.

Electronic disclosures (for example, email, website posting or mailing a CD) require that notice is provided to each recipient at the time that the electronic document is provided. The notice must include the following:

  • Identity of the document
  • Significance of the document
  • Notice that a paper version of the document is available on request and for no charge.

Additionally, the electronic document must meet specific content requirements. If these are met, disclosure may be made to:

  1. A participant who has the ability to access electronic documents at their work location and whose access to a computer is an integral part of their job duties.
  2. A participant who consents in writing (may be electronic, but must be via email if disclosure is to be via email) to the electronic disclosure after receiving a statement from the plan sponsor describing:
    – The identity of the document to be disclosed electronically
    – That consent may be withdrawn at any time without charge
    – How to withdraw consent and update contact information
    – The right to request a paper copy free of charge
    – The type of hardware and software needed to access the electronic document

This means employers can email SBCs to employees whose job requires them to have an email address and regular access to a computer as an integral part of their job function (basically, desk workers). The problem occurs when employees do not have regular access to a computer at work as part of their normal job function. The plan may satisfy the electronic delivery safe harbor through several means:

  • Distributing a paper notice, requesting employees to email a specific person with their email address if they consent to email delivery of the SBC.
  • Providing CDs with the SBC on them to employees, along with the required written notice.
  • Mailing a postcard or other document to employees’ homes with the required notice and a website address where they can access the electronic SBC (the website needs to have a consent form page).
  • An additional recommendation is to include an electronic delivery statement on open enrollment materials outlining that the SBC and SPD should be read; also providing a list of ways employees may access or obtain the documents.

The bottom line is that if a postcard is mailed via first class mail to participants’ homes, a plan will comply with ERISA’s e-delivery regulation if:

  1. The postcard contains language describing:
    – The identity and importance of the document to be disclosed electronically,
    – The right to request a paper copy free of charge,
    – The type of hardware and software needed to access the electronic document; and
  2. The website where the SBC is located contains an electronic consent form.

So, the question remains. Are you compliant?

See our recent blog for what to include in an SBC. For additional information on completing the coverage examples, providing the glossary, distribution, language requirements and more, view UBA's "Summary of Benefits and Coverage FAQs"

Topics: PPACA Affordable Care Act, summary of benefits and coverage, Peter Freska, The LBL Group, Summary of Material Modifications, compliance documents, Summary Plan Description