ERISA SPDs and ACA SBCs – What’s the Difference?

With employer audits on the rise, and a growing spotlight on compliance, it’s more important than ever for brokers to help their employer clients conform with the laws of the health insurance industry. Should an audit occur, an employer will have to supply the Department of Labor (DOL) with significant documentation related to both ERISA and the Affordable Care Act (ACA), among other items. We know we have to be compliant with ERISA, the ACA, COBRA, HIPAA, etc. It’s easy to confuse areas of compliance, especially in our acronym-heavy industry.

Many employers assume their health insurance carriers provide the necessary documentation to keep them in compliance with the law. While partly true, it is not the full story. Employers also have a responsibility to create compliance documents adhering to federal ERISA law. Furthermore, employers must distribute related ACA and ERISA documents to participants – whether they’re created by the employer, a third-party administrator (TPA), or the carrier.

Health insurance carriers are required to produce documentation related to their plans’ benefits per the ACA, and the employer is required to produce other documentation related to their plans’ administration under ERISA.


Health insurance carriers are required to create Summaries of Benefits and Coverage, called SBCs, which are written summaries of the benefits and coverage contained in a plan. Sometimes an employer is responsible for creating an SBC if it sponsors a self-funded health insurance plan.

The Summary of Benefits, which has been a longstanding consumer resource in our industry, contains helpful information about benefits but does not meet the requirements of an SBC.

SBCs are a requirement that became effective in September 2012 as part of the ACA. SBCs all have a uniform format, intended to help health insurance consumers compare plans and benefits when deciding to enroll in a plan. Employers are required to distribute SBCs without charge to participants and beneficiaries for every medical benefit plan offered by the employer/insurer when an employee first becomes eligible to enroll, or during the employer’s open enrollment. SBCs must also be provided to employees upon request.

SBCs contain descriptions of coverage (including coinsurance, copay amounts, and deductibles) and information related to coverage limitations. They must also contain coverage examples to show how the plan will work in sample medical situations.

Employers must distribute a corresponding uniform glossary with each SBC; these glossaries define all terms mentioned in the carriers’ SBCs and must be distributed with the SBCs or upon employee request.


While SBCs and SPDs sound similar, they are quite different. Summary Plan Descriptions (SPDs) are documents that must be created by the employer (generally with help from a TPA) according to federal ERISA law.

The SPD is the primary vehicle for informing participants and beneficiaries about the plan and how it operates. The SPD translates the legalese in the ERISA plan document, which is a legal document that governs the plan and its administration, into language that is “calculated to be understood by the average plan participant,” as referenced under 29 U.S.C., Section 1022(a). The SPD must be “sufficiently accurate and comprehensive to reasonably apprise . . . participants and beneficiaries of their rights and obligations under the plan.”

The DOL has developed extensive regulations that explain what must be included in an SPD. Much of the required information is provided by carriers, but the carriers cannot cover all of the requirements.

The SPD may incorporate the carriers’ Evidence of Coverage (EOC), which generally provides sufficient descriptions of the plan’s benefits. However, the SPD must also include employer-specific content, such as an ERISA plan number, Employer Identification Number (EIN), plan financing method, and other information not contained in an EOC or SBC. An SBC and EOC can supplement an SPD, but each is different.

SPDs are required to be given to plan participants/beneficiaries within 90 days of becoming covered by the plan, regardless of whether or not the employee makes a request for the document. However, an employer that becomes subject to ERISA by sponsoring a new health plan for the first time has 120 days to create and distribute an SPD. The SPD must be redistributed every five years if changes were made to the plan, resulting in an updated SPD. If a plan does not have any changes, the SPD must be redistributed every 10 years. The employer must also provide translation of its SPD documents to non-English speakers free of charge.

Many employers choose to “wrap” all their plans’ EOC and SPD documentation together and distribute it as one combined piece; this is referred to as a “wrap document.” The wrap document is a single document containing all of the required information, which is simpler than having multiple separate documents for all lines of coverage offered by the employer. The SBC, however, is not part of the wrap document (or any ERISA document, for that matter) and must be distributed in addition to the SPD/wrap information.

ERISA and the ACA are both federal laws, of which all employers (except churches and the government) must comply – with differing extent depending on group size. Getting in compliance takes time and resources, but the investment is well worth it when you and your clients consider the alternative costs in DOL noncompliance penalties or a possible lawsuit. With audits on the rise, it’s important to make sure your employer groups are in compliance. Rely on your WBCompliance team to help!

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