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Description of COBRA rights must be included in
SPD |
December 5, 2002
Santa Rosa, CA |
What is a Summary Plan
Description and why should you care?
The Employee Retirement Income
Security Act of 1974 (ERISA) requires plan administrators to provide
participants and beneficiaries with an accurate, comprehensive and clearly
understood summary of a group health plan's provisions. This document is known
as the Summary Plan Description (SPD). It is intended to simplify the language
of the plan, allowing the average plan participant and beneficiary to easily
understand their rights and duties under the plan. As of January 1, 2003, all
Summary Plan Descriptions for calendar year plans must reflect recent
Department of Labor regulations, some of which relate specifically to
COBRA.
Employers may be held liable for errors and
omissions in the SPD even though they are usually prepared by health plans.
When the language of the SPD conflicts with the terms of the Plan, the SPD will
often control because it is the document on which the average beneficiary has
relied. OnQue recently reported that the U.S. Supreme Court let stand an
appeals court decision in favor of a beneficiary who depended on the language
in her employer's SPD, which was more lenient than the actual provisions of the
plan and the COBRA regulations: Fallo_v_Piccadilly
Description of COBRA
rights must be included in SPD
Department of Labor regulations require that SPDs
be revised to include a detailed and easily understood description of COBRA
rights, including information about qualifying events, qualified beneficiaries,
premiums, notice and election requirements, procedures, and duration of
coverage. In addition to this basic COBRA information, the SPD should include
explanations of how COBRA rights and duties are affected by other laws,
including the newly passed Trade Assistance Act, HIPAA, Medicare entitlement,
and the FMLA. The document must clearly identify circumstances in which COBRA
and other benefits may be denied, reduced or lost. In addition to explaining
other ERISA rights, all SPDs that cover COBRA must include the
following:
"ERISA provides that all plan participants shall be
entitled to: Continue health care coverage for yourself, spouse or dependents
if there is a loss of coverage under the plan as a result of a qualifying
event. You or your dependents may have to pay for such coverage. Review this
summary plan description and the documents governing the plan on the rules
governing your COBRA continuation rights."
NOTE: Although the SPD must
include detailed information about COBRA continuation coverage, it is not a
substitute for the required COBRA notices.
To learn more about SPDs from
the DOL, click here: DOL SPD
Information
As always, consult competent counsel before changing your COBRA
administration policies. |
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This information is provided by
OnQue Technologies, Inc. for educational purposes only and does not constitute
legal advice. If legal advice or other professional assistance is required, the
services of a competent professional should be sought.
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