DOL Proposes Rule to Shift Employer Health Plans to Digital Delivery

The U.S. Department of Labor has proposed a rule that would ease health plan information delivery rules. 

The proposed rule, unveiled July 22, would establish a safe harbor allowing approximately 2.8 million group health plans covered by the Employee Retirement Income Security Act to provide required documents digitally. 

Group health plans currently print and mail up to 11 billion sheets of paper each year, the DOL said in a news release. 

The DOL said the new safe harbor created by the proposed rule is similar to the 2020 safe harbor rule for pension plans, and that group health plans may still provide paper documents if desired. 

Acting Labor Secretary Keith Sonderling said the change will help “employers save billions by modernizing how health plans communicate with Americans.” The department estimates that the proposal could save group health plans $3.9 billion over 10 years while “giving participants and beneficiaries easier, more reliable access to their health plan information.”

“This proposal replaces outdated paperwork with clear, accessible digital tools that help families get the information they need, when they need it,” Sonderling said. “It’s a commonsense change that delivers real savings and better service for workers across the country.”

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‘Welcome’ News for Employers 

The proposed rule, said Sage Fattahian, partner with Philadelphia-based law firm Morgan Lewis, “is welcome news for many plan sponsors that have been seeking additional flexibility as employee communications increasingly occur in a digital environment.”

Several organizations that work with employers, including the ERISA Industry Committee and the Business Group on Health, recently asked DOL officials to make creating an e-delivery default option for health plans a priority.

The proposed rule is helpful because it aligns ERISA disclosure requirements with how employees and participants increasingly receive and access information — through electronic communications — and provides plan sponsors with an opportunity to reduce annual printing and mailing costs, Fattahian said.

If a plan sponsor elects to use the new safe harbor, she explained, it will need to ensure that required disclosure documents are posted to a secure website or other electronic repository that satisfies the proposed rule’s accessibility, searchability, retention, and confidentiality requirements. Plan sponsors also will need to establish procedures for furnishing the required notices of internet availability, providing any required initial notices, maintaining and monitoring participants’ electronic addresses — including addressing undeliverable notices — and honoring participants’ rights to request paper copies or opt out of electronic delivery altogether, Fattahian said. 

Establishing these procedures may pose some administrative challenges for plan sponsors, Fattahian said, but “for most plan sponsors, these implementation steps should be manageable and likely will not present a significant administrative burden.”