Employers are increasingly using electronic media in connection with their employee benefit plans, including their group health plans. In general, federal law allows employers to provide most health plan notices electronically, provided they comply with certain rules regarding electronic delivery.
Department of Labor (DOL) regulations contain a safe harbor under which employers may use electronic means to distribute certain documents required under the Employee Retirement Income Security Act of 1974 (ERISA), such as summary plan descriptions (SPDs), summaries of material modifications (SMMs) and summary annual reports (SARs). Certain other health plan notices, such as the annual Women’s Health and Cancer Rights Act (WHCRA) notice and Medicare Part D notice, may also be provided electronically using the DOL’s safe harbor.
Other health plan notices, such as the summary of benefits and coverage (SBC), have their own rules for electronic delivery. This Compliance Overview provides general information regarding electronic disclosure of health plan notices.
ERISA requires employers that sponsor group health plans to provide certain notices and disclosures to plan participants and beneficiaries. These disclosures include the following:
- SPD;
- SMM;
- SAR;
- Any documents relating to the plan (upon a participant’s written request);
- Benefit claims and appeals decisions.
Under ERISA, employers must use delivery methods reasonably calculated to ensure actual receipt of this information by plan participants and beneficiaries. Employers may satisfy this delivery method requirement by mailing the notices to employees’ homes, distributing the notices to employees at work or including the notices in a company newsletter or publication.
Requirements for Electronic Delivery
In addition to the consent requirement described above for individuals without work-related computer access, the DOL’s safe harbor imposes the following requirements on electronic delivery of ERISA disclosures.
Notice
A notice must be sent either electronically or in paper form to plan participants and beneficiaries at the time the document is provided electronically. The notice must:
- Indicate the significance of the document when it is not otherwise apparent (for example, for an SMM—“the attached document describes changes in your plan benefits”); and
- Explain the participant’s right to request a paper copy.
This notice is required each time an ERISA disclosure is provided electronically. According to the DOL, furnishing a general notice on a periodic basis is not an acceptable way to alert participants about the significance of a document. This notice may be included with other disclosures that are made at the same time, as long as the notice is sufficiently conspicuous to alert participants and beneficiaries to the electronic disclosure. A sample notice is provided at the end of this document.
Actual Receipt
Employers must take steps to ensure that the electronic delivery results in actual receipt. For example, this may include using electronic mail features, such as a return receipt or notice that the email was not delivered, or conducting periodic reviews or surveys to confirm receipt of the transmitted information.
Confidentiality
When personal information pertaining to an individual’s benefits or accounts is transmitted electronically, steps must be taken to protect the confidentiality of the information.
Style, Format and Content Requirements
Documents delivered electronically must continue to be furnished in a manner consistent with the applicable style, format and content requirements contained within ERISA.
Paper Copy
Plan participants and beneficiaries are entitled to receive a paper copy of any ERISA disclosure provided electronically.
Other Health Plan Notices
In addition to ERISA-required disclosures, employers may provide certain other health plan notices electronically. As explained below, while the DOL’s safe harbor rules apply to many other types of health plan notices, some notices have their own rules for electronic delivery.
Other Health Plan Notices Subject to the DOL’s Safe Harbor Rules
The following health plan notices may also be distributed electronically by following the DOL’s safe harbor rules:
- Annual CHIP notice (for health plans that cover residents of states that provide a premium assistance subsidy under a state Medicaid or CHIP plan);
- Annual WHCRA notice;
- HIPAA special enrollment notice; and
- Exchange notice.
In addition, the DOL’s safe harbor rules for electronic delivery apply to notices required under the Consolidated Omnibus Budget Reconciliation Act (COBRA) and Medicare Part D; however, as described below, there are some additional considerations for these notices.
COBRA Notices
Employers must provide COBRA notices to nonemployees in certain situations. For example, the General COBRA Notice must be provided to covered employees and spouses within 90 days of initial plan participation. A single General Notice may be mailed to a covered employee and his or her spouse if they reside at the same address. However, if employers use electronic delivery, they must follow the DOL’s rules for obtaining consent prior to using electronic delivery for nonemployees, such as spouses. It is not enough to electronically provide the General Notice to employees with instructions to share it with spouses. Due to this complexity, employers may opt to mail COBRA notices instead of using electronic delivery.
Medicare Part D Notices
According to the Centers for Medicare and Medicaid Services (CMS), group health plan sponsors may deliver the Medicare Part D notices electronically if they follow the DOL’s standards for electronic disclosure. In addition, if the notices are provided electronically, the employer must inform the employees that they are responsible for providing a copy of the electronic disclosure to their Medicare-eligible dependents covered under the group health plan.
Health Plan Notices Subject to Different Rules for Electronic Delivery
HIPAA Privacy Notice
The HIPAA Privacy Rules include specific requirements for electronic delivery of a covered entity’s notice of privacy practices (or privacy notice). Under these rules, if an employer’s group health plan has a website that includes information on the plan’s services or benefits, the notice of privacy practices must be posted on the website and it must be electronically available through the website. In addition, the privacy notice may be electronically distributed via email to participants who have agreed to receive an electronic notice and have not withdrawn their agreement. The health plan must provide a participant with a paper copy of the privacy notice if it discovers that the electronic delivery has failed.
Summary of Benefits and Coverage
The SBC may be provided electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan. SBCs also may be provided electronically to participants and beneficiaries who request an SBC online. In either case, the individual must have the option to receive a paper copy upon request.
If the rules for online enrollment do not apply, there are two additional rules for electronic distribution of the SBC. These rules may apply, for example, if a plan does not have an online enrollment system or if the plan allows paper or telephone enrollment in addition to online enrollment.
Individuals Covered Under the Plan – The SBC may be delivered electronically to participants and beneficiaries who are already covered under the group health plan if the DOL’s safe harbor for electronic delivery is satisfied.
Eligible Individuals Not Enrolled – For participants and beneficiaries who are eligible but not enrolled for coverage, the SBC may be provided electronically if:
o The format is readily accessible;
o The SBC is provided in paper form, free of charge, upon request; and
o If the electronic form is an internet posting, the plan timely notifies the individual in paper form (such as a postcard) or email that the documents are available on the internet, provides the internet address and notifies the individual that the documents are available in paper form upon request. The DOL and other federal agencies have provided sample language to meet this notification requirement. This sample language is provided below.
This Compliance Overview is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice. ©2004, 2010-2013, 2015-2018 Zywave, Inc. All rights reserved.