DOL’s Group Health Plan Electronic Disclosures: We’re Halfway There

At my talk at the SHRM Annual Conference in Orlando in June about ERISA-ACA Compliance and Avoiding or Surviving a DOL Audit, I bemoaned the fact that health and welfare plan electronic disclosures were stuck in the era of AOL dial-up. Somebody from the DOL must have heard me, because we now have new proposed rules for health plan electronic disclosures. In the words of the famous philosopher Jon Bon Jovi, we’re halfway there.

In a prior blog post, we discussed the new rules about electronic disclosures for qualified retirement plans such as 401(k), 403(b), 457, and other defined contribution and defined benefit plans, but the same old rules for health and welfare plans:

While plan sponsors of qualified retirement plans have had new electronic disclosure rules since 2020 allowing participants to elect to receive the myriad of one-time and annual notices electronically, all health and welfare plans, including medical, prescription drug, dental, vision, life insurance, disability coverage, and others are all playing by the electronic disclosure rules set in (wait for it) 2002. You know, during the dial-up and AOL era. Those plans are only allowed to utilize electronic disclosures of their myriad one-time and annual notices when participants not only opt-in, but also have workplace computer systems and e-mail addresses at work in which to receive those disclosures.

One can only hope that we’ll get updated rules (like maybe to the mid-21st century) for health and welfare plan electronic disclosures sometime soon.

Well, we sort of got our wish. The DOL has now released a proposed regulation allowing a new safe harbor for electronic disclosures for sponsors of ERISA-covered group health plans when they wish to distribute their required plan documents electronically (such as Summary Plan Descriptions [SPDs] and Summary of Benefits and Coverage [SBCs], as well as other notices such as HIPAA special enrollment notices, Newborns’ and Mothers’ Health Protection Act notices, Women’s Health and Cancer Rights Act notices, and others). It only took the DOL 24 years from the last iteration, and we all know that technology hasn’t changed a bit since then, so no rush DOL.

But wait. The proposed regulation only applies to group health plans, not other welfare plans such as life and disability plans.

In way of background, the 2002 regulations presumed that the default method of delivering ERISA-required documents and notices was via paper, either mailed or hand-delivered. Those regulations allowed for a safe harbor for electronic disclosures when the plan sponsor/administrator:

  1. Determined that the participant had work-related access to electronic systems (what the DOL called was “wired at work”), or
  2. Obtained affirmative consent from the participant or beneficiary to receive documents electronically if the participant was not “wired at work” (e.g. was a COBRA-qualified beneficiary, retiree, worked on a factory floor, or others).

Now, under the new proposed rule, a plan sponsor may electronically distribute required ERISA group health plan notices under the new safe harbor to “covered individuals.” The proposed rule describes a “covered individual” as a participant or beneficiary who has provided the employer, plan sponsor, or administrator with an email address or smartphone number for able to receive an SMS text. This information should be collected by the employer when the individual enrolls in the group health plan. The email address could include the employee’s work email address.

The proposed rule reflects that dependent children who have reached age 18 has the right to independently receive ERISA group health plan documents and notices. If such a dependent child has provided the employer, plan administrator, or plan sponsor with their electronic address, then the administrator may use the new safe harbor when electronically distributing group health plan materials to that dependent.

Distribution of Documents and Notices

Under the new safe harbor, group health plan documents may be distributed by posting these documents on an internet website where the covered individual is able to access the document. When posting on the website, the administrator must meet the following requirements:

  1. Each covered document must be available on the website no later than the date it is legally required to be provided to participants.
  2. Covered documents must remain on the website for at least one year to allow covered individuals a reasonable window to review their plan materials.
  3. The covered document must be written in a manner calculated to be understood by the average plan participant.
  4. The document must be posted in a format that is able to be both read online and printed clearly on paper. A document posted in a PDF format should meet this requirement as well as the next one.
  5. A covered individual must be able to search the covered document electronically by numbers, letters or words. For example, a scanned document where a participant could not search by letters or words would not satisfy this requirement. A PDF document would.
  6. The document must be in a format that allows the covered individual to download and save a copy of the covered document or notice for their records.
  7. The administrator must take reasonable steps to ensure that the website protects the covered individual’s personal information.
  8. The proposed rule defines the type of “website” where covered documents may be posted broadly to include an “internet website” or “other internet-based information repository, such as a mobile app.” The website must be available to covered individuals at work as well as outside of the workplace such as at home.

The proposed rule only anticipates that an administrator will use an internet/intranet website to distribute plan materials. Unlike the 2002 safe harbor, the new safe harbor does not include email as an alternative method of group health plan document and notice distribution because of concern that group health plan materials may include PHI that cannot be securely sent via email.

Initial Notice Requirement

Before relying on the new safe harbor, the administrator must provide an “initial notice” of electronic delivery to covered individuals. This notice serves as a “heads up” to individuals of the plan’s electronic delivery procedures. The notice must contain the following information:

  1. A statement that covered documents will be furnished electronically
  2. The notice must identify the e-mail address that will be used for the individual
  3. Any instructions necessary to access the covered documents
  4. A statement regarding how long documents will be posted.
  5. A warning that covered documents are not required to be available on the company website for more than one year or, if later, after it is superseded by a subsequent version of the covered document
  6. A statement of the individual’s right to request and obtain a paper version of the document free of charge, and an explanation of how to exercise this right
  7. A statement of the right to opt out of electronic delivery and receive only paper versions of the covered documents and notices.

These seven requirements must be furnished as a paper copy and not delivered electronically.

Notice Requirement Upon Posting a Document or Notice

Before posting a covered document or notice on its internet website, the plan must provide a Notice of Internet Availability (NOIA). This notice must be distributed to the email address or smartphone number provided by the employee or beneficiary. Further, the NOIA must meet the following requirements:

  1. A subject line that reads, “Disclosure About Your Health Plan.”
  2. A separate statement reading, “Important information about your health plan is now available. Please review this information.”
  3. Identify the covered document that is being posted by name (e.g. “Your Initial Notice of COBRA Rights and Responsibilities is now available.”).
  4. The internet address (or hyperlink) where the covered document is posted.
  5. It must describe the covered individual’s right to request and obtain a paper copy of the covered document free of charge.
  6. It must explain the covered individual’s right to opt out of electronic delivery and receive only paper copies of the covered documents.
  7. It must include a statement that the covered document is only required to be posted on the website for one year.
  8. It must provide a telephone number to contact the administrator or other designated representative of the plan.

As a general rule, a separate NOIA must be furnished each time a covered document is posted on the plan’s internet website. However, the proposed rule provides exceptions to this general rule where one NOIA may be provided describing the posting of multiple covered documents. For example, the NOIA may be provided at open enrollment and describe the posting of the ERISA group health plan’s annual required ERISA group health plan notices.

If the administrator is alerted that a covered individual’s email address has become invalid (e.g. because the NOIA is returned as undeliverable), the administrator must take steps to cure the problem. For example, the administrator should obtain a new email address for the covered individual where the NOIA can be properly delivered. Otherwise, for that individual the plan administrator would need to remove them from the electronic delivery process and return them to paper copy delivery.

When a covered individual terminates employment with the employer, the employer will need to take steps to make sure it has an up-to-date email address for the terminating employee. For example, if the individual will no longer have access to a company email address, the employer will need to obtain the individual’s personal email address to ensure that the covered individual has the ability to receive covered documents post-employment. Again, if no personal e-mail address is obtained, the individual should be returned to paper copy delivery.

Summary

While this proposed new rule may help many plan sponsors and administrators in saving our forests, remember that it only applies to ERISA-covered group health plans, and not to other welfare plans such as life, AD&D, and disability plans. Presumably, a wrap plan that encompasses both group health plans as well as other welfare plans may not qualify to use this new safe harbor, although that’s left for the DOL to determine in (hopefully) a final rule that expands these electronic disclosure rules to all ERISA-covered health and welfare programs.