A number of plan sponsors have made changes to their group health plans in response to the COVID-19 pandemic, such as covering testing and sometimes treatment without any cost-sharing by the plan enrollee. Any changes that are made must be followed up by amending the plan and communicating the changes to the enrollees. Under the Employee Retirement Income Security Act (ERISA), all health plans are required to deliver a Summary Plan Description (SPD) to enrollees to inform them of the full spectrum of coverage and their rights under the plan.
Whenever a plan sponsor makes a material modification to the terms of the plan or the information required to be in an SPD, they must amend the plan and let participants know about the change through a Summary of Material Modification (SMM).
To qualify as “material,” a change must be important to plan enrollees. Examples include adding or eliminating a benefit, changing insurance companies, or changing rules for dependent eligibility.
Plan changes related to the COVID-19 pandemic that would have to be included in the SMM and SPD could include:
- Offering continuing coverage to staff who would otherwise lose coverage due to a furlough, layoff or reduction of hours.
- Changing eligibility terms to allow workers who may not have been eligible for coverage before to secure coverage (this could include part-time workers).
- Covering a larger portion of an employee’s premium share.
- Adding an employee assistance program to provide counseling for workers who may be undergoing unusual stress.
- Adding telemedicine coverage.
- Using funds in health savings accounts (HSAs) and flexible spending accounts (FSAs) to purchase over-the-counter medications.
- Covering COVID-19 testing with no cost-sharing.
- Covering COVID-19 treatment without cost-sharing.
Some of the above changes are required by new laws and health plans must respond accordingly by changing their SMMs and SPDs. For example, the Families First Coronavirus Response Act requires that group health insurance and individual health insurance plans cover coronavirus testing with zero cost-sharing.
And the Coronavirus Aid, Recover and Economic Stabilization Act reverses an Affordable Care Act rule that barred policyholders from using funds in HSAs and FSAs to pay for over-the-counter medications.
When the plan sponsor adopts these changes, it must also amend its plan summaries.
And SMMs must be delivered to plan participants within 60 days after a change has been adopted. You can deliver the SMM by mail, e-mail or posting it on your company’s intranet site. It’s recommended at this time that you opt for e-mail delivery.
One of the issues that may come up with any changes implemented in response to the COVID-19 outbreak is that some of the changes may be temporary.
If that’s the case, the plan needs to include the termination date of any benefits that are adopted on a temporary basis.
However, if you don’t know how long the temporary benefits will be in effect, their temporary nature must be communicated in the SMM. Employers need to issue another SMM when the temporary benefit or coverage term ends.
This is an unusual time and unusual times call for unusual measures. It’s unusual for changes to be made to a plan in the middle of a plan year but because of the way the pandemic crash-landed, many plan sponsors have had to make changes.
That said, you should work with us and your carrier on ensuring that the amended documents are sent out to staff.
As the employer, you should be aware of all the changes that have been made in response to COVID-19 so you can discuss them with any employees that have concerns or questions.