HCW Benefits Blog

Contributor:
Laura Bibb, JD, GBA, Compiance Officer
Hill, Chesson & Woody

Last week at our Eleven in '11 series at CAI, Skip Woody and I presented, “Knock Knock: Is Your Organization Ready for an Imminent DOL Audit?”  As part of this presentation, we reviewed ERISA disclosure, reporting and fiduciary responsibility requirements. 

A common question in both sessions was, “With all of the disclosures required, can I send these disclosures/notices electronically?”  This is a question we routinely hear throughout the year.

Since many employers are busy readying for 1/1 renewals and preparing their annual notice packet, it seems like a wonderful time to take a look at electronic distribution of ERISA-required disclosures!  Boogie woogie, woogie…

If you aren’t one to run to the dance floor when the song, “Electric Slide,” is played at the office holiday party or a friend’s wedding, you’ve at least seen others flock to the dance floor.  The Electric Slide is a process…a step-by-step dance that gets repeated until the music stops. 

The Department of Labor (DOL) has set forth a safe harbor for electronic distributions of ERISA-required disclosures.  The safe harbor is a process … a step-by-step instruction that is repeated every time you send a disclosure electronically.

While employers are not required to comply with the safe harbor requirements, doing so ensures that the DOL will find that the plan has met the requirement to distribute disclosures in a method “reasonably calculated to ensure actual receipt.”

Want to learn how to send electronic disclosures?  Keep reading and I’ll teach you, teach you, teach you, I’ll teach you the electric slide (ERISA-style)!

What are the safe harbor requirements?
The following requirements must be met to comply with the DOL safe harbor for electronic disclosures:

1. The disclosures must be prepared and furnished in accordance with the applicable timing/format/content requirements;
2. Notification must be provided at the time of the electronic disclosure explaining the significance of the document and reminding the recipient of the right to request a paper copy;
3. If requested, the plan must provide a paper copy of the electronic disclosure (make sure you are aware whether the paper copy must be provided without charge); and
4. Ensure that, if any personal information regarding an individual is included in a disclosure, reasonable and appropriate safeguards are in place to protect the confidentiality of this information.

What does “electronic disclosure” mean?
There are a wide-variety of electronic disclosure methods available to employers and plan sponsors.  Email, attachment to email, posting to a company website, CD-ROM, and DVD are all allowable methods.

A company electing to utilize a website must take the following additional steps to meet the DOL safe harbor conditions:

1. Use appropriate means to ensure that posting the disclosures on the website results in actual receipt. This can be accomplished by adding a prominent link on the homepage, providing directions on the webpage for retrieving/replacing passwords (if applicable), and maintaining the disclosure on the website for a reasonable length of time.
2. Distribute disclosures on the website in accordance with all timing and format requirements.
3. Notify employees (either through a written or electronic notice) that the particular disclosure is available on the website. This notification must direct the employee to the website where the disclosure can be accessed, explain the significance of the disclosure and remind them of the right to request a paper copy.

What disclosures can I send electronically?
ERISA-required documents including SPDs and Summary Annual Reports (SARs) can be distributed electronically along with other notices such as Women’s Health and Cancer Rights Act (WHCRA) notices and Medicare Part D Creditable Coverage notices.

Who can receive electronic disclosures?
Electronic disclosures can be used for both employees and non-employees (dependents, COBRA participants, etc.).  However, a plan must take steps in addition to the safe harbor requirements (listed above) for plan participants who do not have work-related access to the employer’s computer system (ex. employees without computer access and non-employees). 

For plan participants without work-related access to the employer’s computer system, the plan must:

1. Provide a Statement Regarding Electronic Disclosures to the participant (prior to receiving the participant’s consent). This statement explains the types of documents to be provided electronically, the ability to withdraw consent and procedures for doing so, the right to receive a paper copy, the employer’s electronic delivery system, and what hardware and software will be needed to use it.
2. Obtain consent from the participant in order to distribute disclosures electronically. If the electronic disclosure is made via email or through a website (versus CD-ROM, DVD, etc.), the participant must provide his/her consent “in a manner that reasonably demonstrates the individual's ability to access information in the electronic form that will be used.”  For example, the participant could be required to provide the consent electronically.

No consent is required from employees with access to a work-related computer to receive disclosures electronically. 

REMEMBER:  Each time you distribute disclosures electronically you must provide a notification to recipients at the time of distribution!

Boogie, woogie, woogie!