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WASHINGTON-The Labor Department is recognizing that paper isn't the only way for employers to give employees information about their benefit plans.
Tucked into the health care portability regulations is a Labor Department proposal that gives employers the green light, effective June 1, to use electronic communication systems, such as internal e-mail, to distribute to employees summary plan descriptions and modifications to the SPDs.
Under the Employee Retirement Income Security Act, SPDs, which describe an employer's benefit plans, must be distributed to employees within 90 days of their joining a plan or within 120 days of an employer starting a plan.
Employees also must receive a summary of material modifications made to a plan within 210 days after the end of the plan year in which the change or changes occur. Updated SPDs must be provided every five years, and new SPDs have to be issued every 10 years.
While many employers dislike preparing and distributing SPDs, believing relatively few employees read them, the Labor Department is at least making the burden a little lighter.
Under the interim regulations, health care plan SPDs and modifications can be delivered to employees electronically.
But the Labor Department does attach conditions for using electronic delivery systems. Employers or plan administrators must ensure that employees receive the information. That could be accomplished through the use of a return-receipt feature common in many corporate e-mail systems or surveys of participants by the plan administrator, the Labor Department says.
Employers also must give employees the right to obtain SPDs and updated information in paper form at no charge upon request.
Currently, the Labor Department electronic delivery proposal applies only to health care SPDs. But the department is asking for public comment on whether electronic delivery systems should be extended to other employee benefit plans and disclosures, such as summary annual reports and individual benefit statements.
Benefit consultants welcome the Labor Department's embrace-albeit a limited one-of new technology to communicate benefit plan information to employees.
"The Labor Department is setting the stage for a new era in benefit plan communication. Electronic delivery systems are a much faster and more environmentally friendly system of proving information to employees," said Henry Saveth, a principal with A. Foster Higgins & Co. Inc. in New York.
While the Labor Department proposal is limited just to health care SPDs, experts say it may be only a matter of time before the department broadens its proposal.
"This is important because the SPD is the heart and soul of disclosure. If the department is permitting the use of electronic delivery systems for SPDs, it follows that one day it will allow these systems to be used" to communicate other types of benefit plan information, Mr. Saveth added.
By Jerry Geisel