DOL Moves to Simplify Health Plan Notices for Employers

Employers could soon have a simpler, less costly way to deliver required health plan notices to employees and their families. A proposed rule from the U.S. Department of Labor (DOL) would establish a new electronic-disclosure safe harbor under the Employee Retirement Income Security Act of 1974 (ERISA), allowing eligible group health plans to provide many required notices electronically rather than relying primarily on paper mailings.

The proposal could have broad implications for employers. According to the DOL, approximately 2.8 million ERISA-covered group health plans would be eligible to use the new safe harbor. The Department estimates those plans currently distribute up to 11 billion sheets of paper annually and projects the proposal could generate $3.9 billion in savings over 10 years through lower printing, mailing, and administrative costs.

ERISA requires employer-sponsored health plans to provide participants and beneficiaries with required health plan notices, such as summary plan descriptions and other ERISA-required communications. The proposal would not change what employers must disclose. Instead, it would modernize how those disclosures may be delivered.

Under the proposal, plans meeting the rule's conditions could provide required documents by email or make them available through a secure website or online portal, while notifying participants that new information is available. Individuals would continue to have the right to request paper copies or opt out of electronic delivery at no cost.

The proposal represents the culmination of more than two decades of DOL efforts to modernize employee benefit disclosures. Since 2002, the department has permitted electronic delivery under limited circumstances. After seeking public input in 2011, it finalized a modern notice-and-access safe harbor for retirement plans in 2020. This proposal would establish a comparable framework for group health plans for the first time.

For HR and benefits professionals, the proposal could simplify one of the more routine aspects of benefits administration. Electronic delivery may reduce the time and expense associated with printing, mailing, and tracking required notices while making information easier for employees and their families to access, search, and retain. The department notes that the Employee Benefits Security Administration oversees health benefits covering more than 155 million workers, retirees, and family members, underscoring the proposal's potential reach.

The proposal also aligns with a policy direction SHRM has supported for several years. In 2017 testimony before the DOL's ERISA Advisory Council, SHRM encouraged greater flexibility in how required health plan disclosures are presented, including through electronic delivery, while emphasizing that changes should avoid creating additional disclosure obligations or increasing liability risks for plan sponsors.

The proposal will now proceed through the federal rulemaking process, including a public comment period before the Department determines whether to issue a final rule. Until then, employers should continue following current ERISA disclosure requirements.