A Reminder for Employers when Providing Electronic Notices
As businesses become more engaged with technology, employee benefits plan sponsors and administrators often wonder what their options are for providing required notifications to plan participants. In an ongoing effort to cut costs, provide better service, and communicate information quickly, employers turn to electronic messaging which is faster, cheaper, convenient, and secure. At Rose & Kiernan, Inc., we are asked about this topic quite often by our clients, especially this time of the year – “Can we get rid of paper plan notices in favor of electronic communications?” It’s important to pay attention to both legal and administrative considerations.
While the Department of Labor (DOL) prescribes traditional mail as the default delivery method for certain participants and retired populations, plan sponsors and administrators must be familiar with the DOL safe harbor rules for electronic delivery if they are to consider switching to electronic notices. In addition, review whether you may be subject to any state or federal laws that regulate the disclosure of participant information such as the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
According to a recent issue of Benefits Magazine, citing the DOL safe harbor for electronic delivery of required notices, plan administrators must provide all required notices under the Employee Retirement Income Security Act (ERISA) to participants in a manner that will guarantee actual receipt and must be sent by a method of delivery that will result in full distribution.
DOL regulations divide permitted methods of electronic delivery into three categories:
- Delivering documents electronically
- Posting documents on a website
- Providing documents on a CD-ROM, DVD, or portable media
To utilize these methods, benefits plan administrators must follow DOL safe harbor regulations:
- The plan administrator must guarantee that the documents delivered result in a receipt of the notice including a return-receipt and notice of undelivered electronic mail.
- The method of electronic delivery must protect personal information of the plan participant.
- The benefits administrator must provide a paper copy of the previously provided electronic documents upon request.
DOL safe harbor rules only apply if participants have the ability to access the electronic documents at their place of work and whose access to the electronic information system is the integral part of their employment responsibilities. Absent this, individuals must affirmatively consent to receiving electronic notices for their essential benefits communications. Prior to obtaining affirmative consent, the benefits administrator must disclose the material provisions of the consent form, that participants may request physical copies of documents transmitted electronically, and demonstrate that participants would have access to a secure website should the administrator choose to use that method for electronic document distribution.
There are many types of documents which may be submitted electronically. These include:
- Consolidated Omnibus Budget Reconciliation Act (COBRA) Notifications
- Qualified Domestic Relations Order Notices
- Qualified Medical Child Support Order Notifications
- Information Concerning Participant Loans
- Plan Documents
- Copies of Collective Bargaining Agreements
- HIPAA Notices of Privacy Practices, provided there is prior consent to disclose such documents electronically
When considering switching from paper plan notices to electronic communications, it is recommended that plan sponsors ensure they can adhere to DOL safe harbor rules for electronic delivery and affirmative consent. Ultimately, the method of distribution should create a communication advantage for both sides.
If you have any questions on this topic, please contact our Employee Benefits Management Group (EBMG) at Rose & Kiernan, Inc. here or by calling (800) 242-4433. Advice given in this article is for information purposes only and are not intended to replace the advice of an insurance professional.