October 2025 Compliance Corner: Summary Plan Descriptions (SPDs) and Summaries of Material Modifications (SMMs)

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By: Colin Clark, Staff Attorney

One crucial aspect of ERISA compliance is the requirement that plan administrators of employee benefit plans must provide summary plan descriptions (“SPDs”) to all plan participants, as well as summaries of material modifications (“SMMs”) whenever there are significant changes to plan terms. The SPD must describe individuals’ rights, benefits, and responsibilities under the plan in easily understandable language, and it must meet a number of requirements in terms of the content that must be included and how, when, and to whom it must be distributed. According to the Department of Labor (“DOL”), “the SPD is the primary vehicle for informing participants and beneficiaries about their rights and benefits under the employee benefit plans in which they participate.”

What Plans are Subject to the SPD/SMM Requirement?

The SPD and SMM requirements apply to most ERISA “employee welfare benefit plans” (“ERISA Plans”) with very few regulatory exceptions. ERISA Plans have three basic elements—there must be (1) a plan, fund or program; (2) that is established or maintained by an employer; (3) for the purpose of providing one or more of the following listed benefits to participants and beneficiaries: medical, surgical, or hospital care or benefits; benefits in the event of sickness, accident, disability, death or unemployment; vacation benefits; apprenticeship or other training programs; daycare centers; scholarship funds; prepaid legal services; holiday and severance benefits; or housing assistance benefits.

ERISA Plans include things like health (i.e., major medical) plans, dental plans, vision plans, prescription drug plans, life and AD&D plans, long and short term disability plans, health flexible spending accounts (FSAs), health reimbursement arrangements (HRAs), health “gap” or “bridge” plans (or other supplemental medical coverage), fixed indemnity coverage, employee assistance programs (EAPs), disease-management programs, telemedicine programs, on-site medical clinics, and prepaid legal plans. For any such benefits, employers must meet the SPD and SMM requirements, unless the plans fall under one of the few regulatory exemptions, the most significant of which is the exemption applicable to governmental and church plans.

To Whom Must SPDs/SMMs Be Provided?

Under DOL regulations, the plan administrator of a welfare benefit plan is required to furnish SPDs (and SMMs) only to participants covered under the plan and not to beneficiaries (note that the same is not true for retirement plans). The term “participant” is defined under ERISA as an employee or former employee of any employer who is or may become eligible for benefits under an ERISA Plan or whose beneficiaries are or may be eligible for benefits. Because the definition is not limited to current employees, it can include COBRA qualified beneficiaries, covered retirees, and other former employees who may remain eligible under a plan; however, the term participant does not specifically include a beneficiary.

A participant becomes “covered” under a plan on the earlier of (1) the date on which the plan provides that participation begins, (2) the date on which the individual becomes eligible to receive a benefit “subject only to the occurrence of the contingency for which the benefit is provided,” or (3) the date on which the individual makes a plan contribution, whether voluntary or mandatory. Generally, SPDs need not be distributed to employees before they join a plan. If SPDs are furnished to eligible employees before they enroll in coverage, such SPDs should make clear that enrollment (and payment of premiums) is a condition of receiving benefits under the plan.

When Must SPDs/SMMs Be Provided?

SPD Distribution Timing:

Generally, an SPD must be furnished when a participant first becomes covered by a plan and then at regular intervals thereafter. For a participant who is newly covered under an existing plan, an SPD must be furnished within 90 days after the participant first becomes covered under the plan (along with any SMMs previously furnished to participants, the content of which has not yet been incorporated into the SPD). For new plans, an SPD must be furnished to covered participants (and others so entitled) within 120 days after the plan first becomes subject to ERISA.

An updated SPD must be furnished at least every five years if there have been any material changes made within that five-year period. If no such material changes were made during the immediately preceding ten-year period, then a copy of the most recently distributed SPD must be re-furnished by the plan administrator at least once every ten years.

SMM Distribution Timing:

An SMM is required anytime there is a “material modification” in the terms of the plan or any change in the information required to be in the SPD. Whether a modification or reduction is considered to be “material” generally is a facts-and-circumstances determination; however, plan administrators should consider erring in favor of furnishing SMMs whenever plan changes are made. Among other things, changes in any of the information required to be included in the SPD will require an SMM, and adoption of new legislation or regulations may require an SMM. It is important to note that plan administrators need not furnish an SMM if the modifications in question are, instead, incorporated into an updated SPD, which is distributed by the applicable SMM deadline.

As a general rule, the plan administrator must furnish an SMM within 210 days after the end of the plan year in which a modification is adopted. However, any modification to a group health plan that is considered a “material reduction in covered services or benefits provided under the plan,” must be disclosed no later than 60 days after the date of adoption of the change. As with material modifications in general, the determination of whether a change results in a “material reduction” with respect to a group health plan is based on the facts and circumstances. Generally speaking, however, any modification that, independently or in conjunction with other contemporaneous modifications, would be considered by the average plan participant to be an important reduction in covered services or benefits constitutes a “material reduction.”

SPDs and SMMs must also be furnished to a participant or beneficiary within 30 days after his or her written request. Failure to do so may result in penalties under ERISA § 502(c)(1) of up to $110 per day.

How Must SPDs/SMMs be Distributed?

SPDs and SMMs must be furnished in a way “reasonably calculated to ensure actual receipt of the material.” Probably the two most common methods of distributing SPDs (and SMMs) are by first-class mail or through electronic delivery. DOL regulations provide several examples of acceptable SPD distribution methods, including first-class mail (and second- or third-class mail, if return and forwarding postage is guaranteed and address correction is requested). DOL regulations also expressly provide that SPDs and SMMs may be furnished electronically (including, for example, through email or intranet postings, if certain specific requirements are met). Note that the electronic disclosure rules are complicated and are beyond the scope of this article. Employers that utilize electronic methods for delivering SPDs, SMMs, and other required documents to plan participants, or those that wish to do so, are encouraged to reach out to their consultants/advisors for guidance as needed.

What Information Must be Included in an SPD?

SPDs must include certain basic plan-identifying information, as enumerated in DOL Regulation § 2520.102-3. The DOL regulations also require that SPDs include a statement of the eligibility requirements for participation and any conditions that must be met in order to receive benefits. Satisfying this SPD content requirement in most cases will require describing not only employee eligibility requirements but also enrollment and open enrollment requirements, special enrollment, and eligibility for spouses, domestic partners, and children.

DOL regulations also require that SPDs include: (1) a description of the benefits the plan provides; (2) a statement clearly identifying circumstances that may result in disqualification and ineligibility, and in denial, loss, forfeiture, suspension, offset, reduction, or recovery of any benefits that a participant or beneficiary may reasonably expect the plan to provide; (3) relatively detailed descriptions regarding plan amendment and termination authority/rights; (4) provisions regarding a plan’s subrogation and reimbursement rights; (5) disclosures regarding the sources of contributions to the plan (e.g., employer contributions, employee contributions, or both), the method by which the amount of contributions are calculated (and information about other plan costs, if any), and the plan’s funding method; (6) detailed benefits claims and appeals procedures; and (7) a statement describing the ERISA rights of participants and beneficiaries.

Additional SPD content requirements apply to ERISA Plans that are group health plans. DOL regulations require a more detailed description of the benefit provisions of a group health plan, as laid out in DOL Regulation § 2520.102-3(j)(3). ERISA and DOL regulations require group health plan SPDs to describe certain information when a “health insurance issuer” is responsible in whole or in part for the financing or administration of a group health plan. In such a case, the SPD must include (a) the name and address of the health issuer; (b) whether, and to what extent, benefits under the plan are guaranteed under a contract or policy of insurance issued by the health issuer; and (c) the nature of any administrative services (e.g., claims processing and payment) provided by the health issuer.

In addition to the description of plan claims procedures required in the SPDs of all welfare plans, the SPD of a group health plan must provide information regarding procedures for obtaining pre-authorizations, approvals, or utilization review decisions. A group health plan SPD must also disclose the “office at the Department of Labor through which participants and beneficiaries may seek assistance or information regarding their rights under [HIPAA] with respect to health benefits that are offered through a group health plan.” Finally, a group health plan must include specific disclosures required under COBRA, HIPAA, the ACA, and other applicable federal laws.

Using ”Wrap” Plans to Meet SPD Requirements

Although an employer as plan administrator is legally responsible for SPDs, insurers often provide descriptive documents intended for distribution to eligible individuals. Such documents may even be called summary plan descriptions. However, these documents often do not contain all of the required elements for an SPD in general, and they may not include certain information that needs to be reflected in the SPD (e.g., multiple locations, controlled group issues, accurate plan number(s)). On the other hand, the description of benefits contained in such documents is typically very thorough. Therefore, one recommended approach is to supplement the insurers’ benefits documents with a “wrap plan” SPD (which also, among other things, permits an employer to file a single annual Form 5500 for all ERISA Plans the employer sponsors, rather than having to file separate 5500s for each benefit).

As the name implies, the wrap plan SPD “wraps” around the insurer-provided documents, and together, the two documents satisfy the SPD requirements. In other words, the wrap plan SPD includes required SPD content that the insurers’ documents do not include, and the insurers’ documents typically include detailed benefits descriptions that a wrap plan SPD would not include. Employers that do not currently have wrap plan SPD documents in place are encouraged to reach out to their advisors and/or legal counsel for assistance.