Summary Plan Description (SPD): What It Is and Why Your Business Needs One for Employee Benefits (Copy)
When offering health insurance benefits to your employees, compliance with federal regulations (ERISA) is just as important as choosing the right coverage. One key document that employers must have — yet is often overlooked — is the Summary Plan Description (SPD).
But what is an SPD, and why is it critical for your business? Let’s break it down.
What is a Summary Plan Description (SPD)?
An SPD is a required document under the Employee Retirement Income Security Act (ERISA). It provides employees with a clear and comprehensive overview of their benefits plan, including:
What benefits are offered (medical, dental, vision, etc.)
Who is eligible to participate
How benefits are paid
Plan rules and limitations
Claims and appeal procedures
Participant rights under ERISA
In short, the SPD explains how the health plan works — in plain English — so that employees understand their rights and responsibilities.
Who Needs to Provide an SPD?
Any employer offering a health plan subject to ERISA is required to provide an SPD to covered employees. This applies to:
Private-sector employers
Businesses of all sizes (even small businesses with just a handful of employees)
Employers offering fully insured or self-funded health plans
Note: Government and church plans are typically exempt from ERISA, but most other employers must comply.
Why is Having an SPD So Important?
1. ERISA Compliance — It’s the Law
ERISA requires employers to provide SPDs within 90 days of an employee becoming covered under a health plan OR within 210 days when there is a material change to the plan. Failure to comply can lead to steep fines and penalties from the Department of Labor (DOL).
2. Sets Clear Expectations for Employees
An SPD helps employees understand exactly what their health benefits include and how to use them. It serves as an official point of reference, reducing confusion and frustration.
3. Protection for Employers
If a dispute ever arises about what’s covered (or not covered), your SPD is a crucial defense document. It clearly spells out the terms of the plan, making it easier to resolve disputes fairly and avoid legal headaches.
4. It’s More Than a Carrier Document
Some employers mistakenly believe that the insurance carrier’s summary of benefits satisfies this requirement — but it doesn’t. Carrier documents explain coverage, but they do not include required ERISA language, participant rights, or claims appeal processes. Employers must provide a compliant SPD that meets all ERISA requirements.
How Do Employers Get an SPD?
Most insurance carriers do not automatically provide a compliant SPD. Employers typically need to:
Work with their benefits broker, TPA, or an ERISA compliance specialist to draft an SPD.
Customize the SPD to match their specific health plan offerings.
Distribute the SPD to all covered employees and keep it updated if the plan changes.
We’ve Got You Covered — Guidance on SPDs and Compliance
At Swanson Benefit Insurance Services (SBIS), we understand that benefits compliance can feel overwhelming — and we’re here to help simplify the process.
For some employers, particularly smaller groups, providing a formal Summary Plan Description (SPD) may not always seem necessary or may have been overlooked due to cost or other factors. Whether or not an SPD has been provided as part of your benefits package, we are here to help you understand what’s required, evaluate your current compliance standing, and explore cost-effective solutions if an SPD is needed.
If you’re unsure whether your plan includes a compliant SPD — or if you’d like a partner who can help keep your benefits both competitive and compliant — we’re here to support you every step of the way.
Contact us today to review your benefits and compliance needs.