Human Resources: Electronic Delivery of Compliance Communications: How to Tell If It’s Right for You

By Kim Buckey, Practice Lead, SPD Services, HighRoads

Under Department of Labor regulations, certain information about employee benefit plans can be distributed electronically both within—and outside—the workplace. However, there are very specific rules about what types of information can be delivered electronically, who can receive such information—and how such information can be delivered. A careful review of these rules can help you decide whether electronic delivery makes sense for you.

What Information Can Be Delivered Electronically

There are some restrictions on what types of information can be delivered in an electronic format. Eligible types of information include:

· Summary plan descriptions (SPDs)
· Summary annual reports (SARs)
· Summaries of material reductions (SMRs)
· Individual benefit statements
· Investment-related information in participant-directed individual account plans
· COBRA notices
· Qualified domestic relations order (QDRO) and qualified medical child support order (QMCSO) notices
· HIPAA certificates of creditable coverage
· Participant loan information and
· Information that must be provided or made available if requested by a participant or beneficiary.

However, it is important to note that spousal consents and other required communications from participants and beneficiaries and disclosures governed by the Internal Revenue Service (such as 204(h) notices) may not be delivered electronically. These must be provided in hardcopy format.

Who Can Receive Information Electronically

Two groups are covered by the electronic distribution rules—employees with work-related computer access, and beneficiaries and other plan participants who do not have work-related access. However, those participants who do not have work-related access, may consent to receive information electronically.

Participants with Work-Related Access

An employee can receive electronic distributions if he or she:

· can effectively access electronic documents at any location where he or she is reasonably expected to perform his or her duties and
· is expected to have access to the employer’s electronic delivery system as an integral part of those duties.

This includes employees who work at home or travel on business, as long as they have ready access to the employer’s system (for example, through a VPN or intranet).

The employer must take appropriate steps to ensure that use of the electronic delivery system results in actual receipt of the information and that individuals are told about the significance of the communication and their right to receive a paper version.

Please take note that providing access to a computer in a common area, or computer kiosks, is NOT an acceptable way to deliver required communications.

Participants Without Work-Related Access

For those participants who do not have work-related access to a computer—such as spouses, children, beneficiaries or terminated vested participants—the plan administrator must obtain a written consent (either on paper or electronically) from the participant stating that he or she wants to receive information electronically.

This consent must clearly state:

· The types of documents to which the consent will apply
· That consent can be withdrawn at any time without charge
· How to withdraw consent and update the address for receipt of electronically furnished documents, or other information;
· The right to request and obtain a paper version of an electronically furnished document, including whether the paper version will be provided free of charge and
· Any software or hardware needed to access and retain the electronic documents. (If the plan administrator changes its hardware or software requirements, it must provide a new notice and obtain a new consent.)

The participant must provide an email address at which he or she can receive electronic documents, or information about how to access them.

Basic Requirements for Electronic Delivery

Regardless of who is receiving the electronic materials, certain basic rules must be followed.

· The employer must takes steps to make sure that the system results in actual receipt of the information (for example, using return-receipt or notice of undelivered mail features, or conducting periodic reviews or surveys to confirm receipt of the information).
· The employer must take steps to make sure that the system protects the confidentiality of personal information relating to the individual’s accounts and benefits (for example, incorporating PINs or passwords).
· Each recipient must receive notice — in writing or electronically — of the significance of the document when it’s not otherwise evident (for example, explaining that a document attached to an e-mail contains plan benefit changes), and the individual’s right to receive a paper version upon request. Note that there is no requirement that the paper version of the document must be free, unless ERISA requires the document to be free of charge (such as SPDs, SMMs, SARs, SMRs, pension benefit statements and copies of QDRO procedures).
· The electronic documents may use interactive technologies, multimedia presentations and hyperlinks, but any differences between the paper and electronic versions of the document cannot change the information required to be in that document. In addition, the electronic version must meet applicable ERISA style, format and content requirements.

Additional Important Requirements

Electronic delivery can take many forms—CD or DVD, email or access to a Web site.

If the information is distributed through a CD or DVD, there is no need for a consent form. However, if documents will be furnished through the Internet or other electronic communication network (such as email), the recipient must provide an address for the receipt of the electronic documents, and must consent electronically — in a manner that shows that he or she can access information in the electronic form that will be used to provide the documents.

If the information is included on the employer’s Web site, the employer must notify participants and beneficiaries—by sending paper or electronic notices directing them to the Web site—that the document is available and why the document is important. The Department of Labor also recommends that the Web site home page contain a prominent link to the plan information sections and include directions on how to obtain replacements for lost or forgotten passwords, if applicable.

Does electronic delivery make sense for your organization? The answer will depend largely on the makeup of your plan participants; your willingness and ability to track individual email addresses, individual consents and the actual receipt of emailed documents by recipients and, of course, the advice of your legal counsel.

Kim Bucky is the practice lead for SPD Services at HighRoads, Inc. She is also author of the HR Compliance Connection blog. HighRoads SPD Services help organizations automate the detail-rich tasks associated with SPD development and maintenance to conserve critical staff productivity for more strategic projects while assuring compliance with government regulations.