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Health Plan Notices - Rules for Electronic Delivery

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); and

• 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.

In 2002, the DOL established a “safe harbor” for using electronic media to satisfy ERISA’s delivery method requirements. This includes delivering documents by email, using a company website to post documents and providing documents on other electronic media, such as magnetic disk or DVD. Employers that comply with the safe harbor’s requirements for electronic disclosures will satisfy ERISA’s delivery method requirement.

Covered Recipients

The DOL’s safe harbor allows employers to distribute ERISA disclosures electronically to: (1) employees with work-related computer access; and (2) other plan participants and beneficiaries who consent to receive disclosures electronically.

Employees with work-related computer access

An employee has work-related computer access if he or she:

• Has the ability to effectively access documents furnished in electronic form at any location where employees are reasonably expected to perform their duties; and

• Is expected to have access to the employer's electronic information system as an integral part of those duties.

While employees who work remotely may qualify as having work-related computer access, employees whose only access to the employer’s network is through a computer kiosk in a common area will not qualify.

Other plan participants and beneficiaries

An employer must obtain written consent prior to electronically delivering ERISA disclosures to beneficiaries and other plan participants who do not have work-related access to a computer. The consent may be received in either electronic or paper form. Prior to consenting, an individual must be given a clear and conspicuous statement that explains:

• The types of documents to which the consent will apply;

• That consent can be withdrawn at any time without charge;

• The procedures for withdrawing consent and for updating the address used for receipt of electronically furnished documents;

• The right to request and obtain a paper version of an electronically furnished document, including whether the paper version will be provided free of charge; and

• Hardware or software needed to access and retain the documents delivered electronically.

Where the electronic distribution is made through the internet, the individual must affirmatively consent in a manner that reasonably demonstrates his or her ability to access information in the electronic form that would be used. A sample consent form is provided at the end of this document.

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:

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.

“Electronic Delivery – Rules for Posting Documents to a Website
The DOL’s safe harbor allows employers to provide ERISA-required notices by posting them on a company website, provided the employer complies with all of the requirements for electronic delivery. This means that the employer must provide a written or electronic notice to plan participants and beneficiaries when the document is posted that describes the document’s significance and the right to receive a paper copy. Employers must also take steps to ensure actual receipt of the document. According to the DOL, these steps may include adding a prominent link to the document on the company’s main website, providing directions for retrieving lost passwords and keeping the document posted for a reasonable period of time following the notice to plan participants.
”

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.

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. Please refer to the DOL website or contact Coffman Benefits for the sample languages.

California Responds to COVID-19 Emergency by Providing Path to Coverage for Millions of Californians

• Effective immediately, anyone uninsured and eligible to enroll in health care coverage through Covered California can sign up through the end of June.

• The Department of Health Care Services announces new steps to help those eligible for Medi-Cal sign up easily and get immediate coverage.

• The moves come amid widespread disruption in the lives and livelihoods of Californians as public health officials seek to reduce the spread of COVID-19.

• All medically necessary screening and testing for COVID-19 are free of charge, and all health plans available through Medi-Cal and Covered California offer telehealth options.

• These actions build on increased state subsidies and the implementation of a state penalty, both of which took effect in January 2020.

States Relax Unemployment Benefit Eligibility for COVID-19

As of Tuesday, March 17, 2020, several states have announced adjustments to their unemployment insurance (UI) programs for employees who are out of work because of the COVID-19 outbreak. These states include Alabama, California, Louisiana, Pennsylvania and Wisconsin. Additional states are expected to issue similar guidance in the near future.

Each state administers a separate UI program, but all states follow the same guidelines established by federal law.

Federal Bill

The federal government is considering a bill that would encourage states to waive limitations on UI benefits (such as waiting weeks and work-search requirements) for COVID-19-related claims. If enacted, the Families First Coronavirus Response Act would also provide federal funds to help states pay for increased UI claims caused by the outbreak. 

DOL Guidance

The ongoing wave of state adjustments to their UI benefits follows new guidance  from the U.S. Department of Labor (DOL). On March 12, 2020, the DOL indicated that states may allow for UI benefits where:

• An employer temporarily ceases operations to prevent employees from coming to work due to COVID-19;

• An individual is quarantined with the expectation of returning to work after the quarantine is over; and

• An individual leaves employment due to a risk of exposure or infection, or to care for a family member affected by COVID-19.

The DOL has also clarified that an employee is not required to quit in order to receive benefits due to COVID-19.