In a recent case from the Second Circuit, the court took a look at a health plan’s combined Plan Document/SPD and determined it failed to adequately and succinctly describe the plan’s benefits, as is required by ERISA. Specifically, the court focused on a few deficiencies in the SPD. First, the court noted that the SPD was voluminous at 156 pages, but failed to contain a table of contents or index. Instead, the SPD was organized into alphabetical sections ranging from highly specific (“Epidural Steroid Injections”) to general (“Exclusions”). The SPD also failed to utilize headings to clearly identify different sections and subsections. Additionally, the SPD did not plainly address common events, such as the effect of retirement on benefits. Lastly, the SPD used complicated and contradictory language that could easily be misunderstood by participants.
This case serves as a reminder that SPDs exist for the benefit of the participant. The SPD must clearly describe benefits and eligibility and must be able to be understood by the plan’s participants. Some deficiencies the court pointed out are tough to perfectly satisfy, such as describing the complexities of the plan using accessible language. Other elements, however, such as utilizing headings, subheadings, and tables of content, should be implemented in all SPDs as a straightforward way to make it more participant-friendly and therefore more ERISA-compliant.