This week we are talking about disclosures mandated by the Employee Retirement Income Security Act of 1974 (ERISA) and its related amendments. Or, what normal people call the paper that comes with your health insurance policy.
Disclosures keep coming up because we are in the thick of open enrollment season when many notices are distributed. Plus, we’ve been discussing the Department of Labor’s (DOL) proposed rule to create a new safe harbor for electronic notice distribution. It also asks for feedback about how the current ERISA disclosure rules are working. Since both of us like to save trees, and we routinely re-explain health plan notice content to people, we do have a few ideas. But we will get to those in a minute.
First, though, we want to highlight some immediate steps benefit professionals can take to make ERISA disclosures better right now. For example, the federal government provides lots of sample disclosure language. That doesn’t mean you have to use it! Federal model notices are often really long and confusing. But they can be rewritten, as long as all critical information is covered. Design and format usually can be improved too to increase readability. One notable exception is the Summary of Benefits and Coverage. Section 2715 of the Affordable Care Act specifies explicit content, length, and font standards.
Another thing to consider is ERISA disclosure delivery. Many plan administrators want to use modern technology to give the required information to plan participants. However, they feel hampered by a current ERISA electronic disclosure safe harbor for pension and welfare plans. It was created back in 2002, when “you’ve got mail,” and the dial-up modem sound was the norm. Unsurprisingly, it doesn’t work for many modern employers, and they assume electronic delivery is off the table.
What advisors and human resource professionals often forget, though, is you don’t have to use a safe harbor if it doesn’t feel safe. A group health plan can also rely on ERISA’s original distribution standard when coming up with an electronic distribution methodology. It is our friendly opinion that there are ways to pair the convenience of modern technology with an established delivery method “reasonably calculated to ensure actual receipt.”
The DOL seems to agree that there are other acceptable ways to get disclosure information in front of plan participants. They recently proposed a new optional ERISA safe harbor for electronic disclosures. This proposed rule would allow plan administrators to use valid e-mail addresses or text-enabled phone numbers to deliver notices unless a participant opted out. Oddly, the draft safe harbor only applies to retirement and pension plans. But the DOL could expand its scope in the final version to include health and welfare plans too.
Beyond the safe harbor, the DOL asks for some new ideas to make ERISA disclosures more meaningful to plan participants. Around here, we are excited they are asking. Just off the top of our heads, we think that most generalized notices could be consolidated into a single, snappily worded document. Also, if the summary plan description requirements were streamlined, maybe more employers would make sure they have one? Or here’s a crazy thought – what if instead of a written notice, plan administrators could present required key information through an engaging video?
If you are the type of person who thinks deeply about ERISA requirements (and let’s face it, you would never have read this far if you didn’t), then you probably have your own ideas about how ERISA disclosure requirements could serve consumers better. If so, you have until November 22, 2019, to share your opinions with federal regulators. It doesn’t need to be anything fancy – just a few sentences about improving the disclosure process. Maybe mention how it would be wonderful if any new ERISA disclosure rules would extend to both pension and health and welfare plans. Friends, let’s speak up about this! We could make a difference!