“This is a step forward. There was a lot of confusion among companies about whether they were in compliance,” said Valerie Wise PhD, a senior consultant at Watson Wyatt.
The final rule (see DoL Releases Electronic Delivery Guidelines ) covers electronic disclosures at work – and beyond, such as at employees’ homes. At the same time, the rule clarifies that for non-workplace communications, participants and beneficiaries must be given basic information necessary to make informed decisions about receiving documents electronically.
Additionally, the rule allows for the acceptance of consent electronically to receive documents by email. However, the rule states that participants and beneficiaries have the right request a paper version of electronic disclosures.
Overall, the final rule applies to the electronic delivery of all of the provisions under title I of ERISA including Cobra notices, individual benefits statements and qualified medical child support orders.
Wyatt’s Wise said that even though many employers were delivering benefits information electronically before clarification, a final rule on the issue was still necessary.
“Employers could get sued over information that is missing or deleted from an electronically delivered SPD [that would appear in a paper copy],” she said. “The DOL is not requiring that electronic copies be identical to paper documents because they recognize that an electronic copy would have hyperlinks, for example. This suggests that the DOL recognizes the value of the electronic medium and its benefits to employers and employees who take advantage of it.”
She added that in actuality, delivering SPDs and other benefits information is extremely useful to employers and employees alike.
“It means easy access, documents are updateable immediately and it can help reduce costs,” she said. “Every time a change is needed, it won’t be necessary to make multiple copies of a document for all employees.”
The new rule could be a sore point with employers where workers do not have ready access to computers. While some employers have been eager to install Kiosks in their workplaces for use by these kinds of employees, the DOL holds that this would not be in compliance with its availability mandates.
Therefore, in these scenarios, employers would have to provide paper copies of benefits statements to all affected employees.
A copy of the notice is in the April 9 edition of the Federal Register