Frequently Asked Questions Regarding Electronic Communication and Recordkeeping for
Employee Benefit Plans
Q1. How can we eliminate the high cost of printing SPDs and other ERISA documents and also avoid the time and
expenses required to manually track the individual mailing of announcement messages to employees by e-mail or 1st
class mail through the U.S. Postal Service?
A1. Under the final rules issued by the Department of Labor (DoL) in 2002, employers may use a number of
electronic methods for the distribution of ERISA required documents, however, unless the employer follows
all of the rules they may be subject to fines and penalties.
Ebix Inc. (Ebix) has developed a fully automated ERISA Notification & Document Distribution
Service that is in full compliance with ERISA, the DoL, and HIPAA. With this fully-outsourced service, you
will be able to substantially reduce the cost of furnishing ERISA documents to your employees and their
beneficiaries. Employers using our electronic distribution service can save a considerable amount of time
and money when compared to printing and distributing documents in the traditional method.
In addition to being able to greatly reduce the cost of all printing, storing, and distribution of your employee
benefit plan documents, our service includes full automation for the notification, confirmation, and tracking
requirements as required by the DoL.
Q2. What kinds of documents can we deliver to our employees electronically?
A2. Here is a partial list of documents that you may distribute to employees using the online ERISA Notification &
For more information, visit the Department of Labor WeEbixte at:
- Summary of Benefits and Coverage (SBC)
- Summary Plan Description (SPD)
- Summary of Material Modification (SMM)
- Summary of Material Reduction in Covered Services or Benefits
- Initial COBRA Notice
- HIPAA Certificate of Creditable Coverage
- General Notice of Preexisting Conditions Exclusion
- Notice of Special Enrollment Rights
- Wellness Program Disclosure
- Women’s Health and Cancer Rights Act (WHCRA) Notices
- Medical Child Support Order (MCSO) Notice
- National Medical Support (NMS) Notice
- Periodic Pension Benefit Statement
- Statement of Accrued and Nonforfeitable Benefits
- Qualified domestic relations order notifications
- Qualified medical child support order notices
- Information containing participant loans under ERISA 401(b)(1)
Q3. Why can't we just post our ERISA documents on our WeEbixte or deliver them to our employees on a CD-ROM or DVD?
A3. You certainly can use any of these methods, but unless you have a procedure for managing employee authorizations,
notifications, confirmations, and distribution of printed copies when requested by employees as required under ERISA
(see the requirements listed below), you will wind up spending a significant amount of money and may also be
subject to costly fines and/or penalties. Failure to comply with ERISA can lead to having to pay thousands of
dollars in damages to an employee or penalties to a regulatory agency.
Q4. Why can't we just send the documents as attachments to an e-mail message?
A4. You could do that, but you will not be in full compliance with the DoL rules. One of the rules (see below)
is that the employer or plan administrator must be able to prove that the employee actually received the e-mail
notice. Unless you receive a confirmation from the employee that he/she received the notice, you will not satisfy
Q5. If we send the announcements by e-mail with one or more documents attached, and we send the
messages with a "Request Read Receipt", will we be in compliance?
A5. You could do that, but what happens if an employee gave you the wrong e-mail address, or the mail box
for that employee was full and the message was rejected, or the employee failed for whatever reason to click
the button that sends the Read Receipt acknowledging receipt of the message? There is another important
consideration and that is the heavy load placed on your mail servers and the use of a large amount of bandwidth
when sending all the documents by e-mail. None of these issues are problems when you use our service because
we do not send the documents as attachments and confirmation of receipt or undeliverable notifications are
Q6. What is the most cost-effective method of delivering SPDs and other ERISA documents to employees?
A6. For most employers, the least expensive form of notification and delivery that meets or exceeds all DoL and
ERISA requirements is to use a combination of automated e-mail announcement messages and WeEbixte delivery of
documents along with automatically generated confirmations that the employee received the announcement message
as well as tracking and recording when the employee viewed one or more of the documents or requested the employer
to send printed copies of any documents.
Q7. Our attorneys are concerned that using an electronic method of distribution may not satisfy all of the DoL or
ERISA requirements. How do we know that we can safely switch from paper to electronic delivery of SPDs and other
ERISA documents? Is there any place we can go to confirm that we can use electronic delivery?
A7. On April 9th, 2002, the Department of Labor (DOL) issued final regulations allowing employers to distribute Summary
Plan Descriptions (SPDs), Summaries of Material Modifications (SMMs), Summary Annual Reports (SARs), and a number
of other employee benefit documents in an electronic format as long as the employer or plan administrator meets certain
» Click here to view the Department of Labor Final Rules Relating to the Use of Electronic
Communications and Recordkeeping Technologies for Employee Benefit Plans.
Q8 We have looked at the final DoL rules, but they are long and complicated. Can't you provide me with a brief,
easy-to-understand, summary of the rules?
A8. Yes, here is a brief summary of the DoL Electronic Communication of ERISA Documents requirements:
1) Employees With Computer Access at Work. For employees with work-related computer access, ERISA
disclosures may be delivered electronically if the employees:
(a) have the ability to effectively access documents furnished in electronic form at any location where the
employee is reasonably expected to perform his duties, and
(b) are expected to have access to the employer's electronic information as an integral part of those duties.
The DoL rules automatically extend to any employee who can access electronic documents at any location where he or
she works and whose access to the employer's electronic information system is an integral part of his or her duties.
To illustrate, John uses a computer at work to process orders and he also receives e-mail through his employer's
e-mail system. John is automatically covered by the rules, and the employer may deliver Summary Plan Descriptions
and other documents to him without any prior authorization from him.
Another employee, Walter, drives a truck for the same employer and does not have regular access to the employer's
e-mail system. Walter is not automatically covered by the rules. Walter must consent to receive documents
electronically, even if the employer were to set up computer kiosks in common areas frequented by employee.
2) Employees and Beneficiaries Without Access to a Computer at Work. For employees and beneficiaries
without work-related access to a computer as described above, there are additional requirements that must be met
if the employer wants to deliver documents electronically. The employer or plan administrator must first obtain
a consent form signed by the employee or beneficiary that specifically states the following:
Important: It is not acceptable to allow employees to access any computer other than the computer assigned to an
employee such as one located in a common area (e.g. computer kiosk) unless the employee has first been furnished
with a unique method that allows the computer system being used for the distribution of the notifications and
documents to identify the employees when they acknowledge receipt of their notifications or view the documents.
Ebix's ERISA Notification & Distribution Service records the date and time the employee logged on to the WeEbixte.
In addition, the system records the IP address of the computer on which the employee has viewed the document(s).
- The names or types of documents to which the consent applies
- A sentence stating that consent can be withdrawn at any time without charge
- An e-mail address where the employee will be able to receive future announcements and/or documents
if sent by e-mail
- The procedures for updating the e-mail address used for receipt of electronically furnished documents
- The procedures for withdrawing consent
- The right to request and obtain a printed version of an electronically furnished document and, if there is
a charge for the printed document, how much it will cost.
- The computer hardware or software needed to access and download the electronically delivered documents.
- If the plan administrator changes the hardware or software requirements, it must provide a new notice and
obtain a new consent.
3) Notification. Notifications must be sent either in electronic or paper form to each employee or
beneficiary at the time a document is provided electronically. The notification must (a) indicate the significance
of the document when it is not otherwise reasonably evident as transmitted, and (b) explain the participant's right
to request a paper copy.
4) Confirmation of Receipt. The employer or plan administrator must have the ability to identify when an
e-mail message is not delivered either due to the administrator having an invalid e-mail address, the employees e-mail
box being full, or any other reason the message is undeliverable. While these can all be done manually, the time and
expense involved can be excessive. The Ebix system automatically tracks the sending and delivery of each message
sent to an employee and the employer or plan administrator has the ability to produce reports showing the date and time
the messages were sent as well as when they were received and acknowledged by the employee. If messages are
undeliverable, we notify the employer and if a correct e-mail address is not available, we will send a notification
to the home address of the employee.
5) Confidentiality. Any information contained within the notification or other communication sent to an
employee electronically that contains confidential information, must be sent in a secure manner. The DoL
regulations do not provide any guidance on what methods are to be used to protect the confidentiality of this
information. Ebix's document tracking system uses a proprietary method for ensuring confidentiality of all
information sent to the employee.
6) Printed Documents. Employees and their beneficiaries may request a printed copy of any ERISA required
documents even if they are provided electronically and the employee could view them on his/her computer. When printed
documents are requested, the same rules governing whether a plan administrator may or may not charge for paper copies
apply. The Ebix system maintains a record of all employee requests for copies of printed documents. The employer
may wish to retain Ebix to handle the fulfillment aspect of printing and delivery of documents requested by employees.
7) Alternate Methods of Electronic Notification and Distribution. The DoL allows electronic notification and
distribution of documents by e-mail, attachment to an e-mail, posting documents on a company WeEbixte, or on CD-ROM
or DVD. However, just placing the documents on a company WeEbixte or handing out multiple copies of CD-ROMs or
DVDs does not, by itself, satisfy ERISA's disclosure requirements. The employer or plan administrator must first
obtain written authorization from the employee to use an electronic distribution method. The employer or plan
administrator must also send a notification to the employee, either electronically or in paper form, that alerts
the employee or beneficiary to the fact that the SPD is available on the company WeEbixte, CD-ROM, or DVD. All of
the other requirements listed above still apply.
» For more information
on how you can automate the distribution of your documents while saving money at the same time, call us at
800-533-1388 or click here to request more information online.
The information above does not constitute legal advice and is provided for
general information only. Please note that the information provided is subject to
change without notice. The information is suitable for use only in conjunction with
appropriate independent legal advice.