Expanded Electronic Delivery Proposed for Group Health Plans

Background on electronic plan disclosures

ERISA requires group health plans to provide required disclosures using methods reasonably calculated to ensure actual receipt by participants, beneficiaries and other entitled individuals. In 1997, the DOL amended the standards for paper delivery of certain required disclosures to add a safe harbor for the use of electronic media.

In 2002, the DOL expanded the 1997 safe harbor to apply to disclosures under Title I of ERISA generally, for both pension benefit plans and group health plans. The 2002 safe harbor applies to two groups: employees who are “wired at work,” meaning they can effectively access electronic documents at a location where they are expected to perform their job duties, and other participants, beneficiaries or individuals who affirmatively consent to electronic delivery.

In 2020, the DOL created a separate electronic disclosure safe harbor for pension benefit plans using notice-and-access and direct email methods, with safeguards such as accessibility standards, invalid-address checks and website security. See our insight, “New ERISA Rules for Retirement Plan Electronic Disclosure.”

Under the proposed rule, group health plans would be able to continue to rely upon the 2002 safe harbors as well as the new safe harbor under the proposed rule. There are also separate, additional rules that permit or require electronic disclosure for specific group health plan materials, including the Summary of Benefits and Coverage documents and Transparency in Coverage disclosures, such as cost-sharing tools and machine-readable rate files. The proposed rule would not replace those existing standards.

The proposed rule on electronic disclosures for group health plans

This proposed rule would create an additional optional safe harbor allowing group health plans to provide required documents electronically through an NOIA model, while preserving individuals’ rights to request free paper copies or opt out of electronic delivery.

Electronic delivery would be available for any document or information that a group health plan is required to provide, including documents that are only required upon request. This would include documents such as summary plan descriptions, summaries of material modifications as well as health plan notices and disclosures required under COBRA and Part 7 of ERISA. Part 7 of ERISA includes many of the laws administered jointly by the Departments of Labor, HHS and Treasury including the HIPAA portability and nondiscrimination requirements, the group market provisions of the Affordable Care Act, the Mental Parity and Addiction Equity Act and more.

Electronic disclosures could be provided to participants, beneficiaries (including dependents over the age of 18) or other individuals entitled to covered documents who provide an “electronic address.” For example, the electronic address could be an email address or text message number, provided by the individual or an electronic address can be assigned to an individual for the delivery of covered documents.

The proposed rule would not permit covered documents to be provided directly by email under the new safe harbor particularly due to concern that group health plan disclosures may contain personal or protected health information (PHI) protected by the HIPAA privacy rule. To take advantage of the safe harbor, plans would have to meet requirements related to the initial notification, NOIA and “internet website,” which are discussed below.

The proposed rule would require plans to have reasonable procedures in place to ensure documents are available as required and to take prompt action to address instances when covered documents are temporarily unavailable for a reasonable period due to technical maintenance, unforeseeable events or circumstances beyond the control of the plan.

The DOL proposes that the final rule would become applicable on the first day of the first calendar year following the date of publication of the final rule. However, the DOL specifically solicits input on whether an earlier applicability date would be helpful and appropriate, especially given the safe harbor would be optional, or whether a later date is needed to ensure adequate protection for participants.

The safe harbor would not be available for all welfare benefit plans, such as sickness, accident and disability plans.

Initial notification

To rely upon the safe harbor, plans would have to ensure an initial paper notification is provided regarding the covered documents that will be furnished electronically to an electronic address, including the electronic address that will be used for the individual. However, a plan would not be required to provide a paper copy of an initial notification of default electronic delivery for individuals who are already receiving electronic disclosures under the 2002 safe harbor.

The initial notification would be required to include:

• Instructions for accessing the covered documents, including a cautionary statement that the covered document is not required to be available on the internet website for more than one year or, if later, after it is superseded by a subsequent version of the covered document
• A statement regarding the right to request a paper version of any covered documents free of charge and how to make that request as well as how to opt out of electronic delivery and receive only paper versions of covered documents

Notice of Internet Availability

An NOIA would have to be provided for each covered document, however special rules allow for the combining of NOIAs. The NOIA would have to be provided at the time the covered document is made available on the internet website and provided electronically to the covered individual’s electronic address. The system for furnishing a NOIA would have to be designed to alert the administrator of a covered individual’s invalid or inoperable electronic address. Except for combined NOIAs, the NOIA would have to be provided separately from any other documents or disclosures.

The NOIA would have to meet specific content and timing requirements, including a website address or hyperlink sufficiently specific to provide ready access to the covered document. Like the Initial Notice, the NOIA would have to include a statement of the right and how to request and obtain a paper version of the covered document free of charge, as well as a statement regarding the right and instructions on how to opt out of electronic delivery and receive only paper versions of covered documents. Among other things, the NOIA would also have to include a telephone number to contact the administrator or other designated representative of the plan.

Standards for internet websites

The plan would have to maintain an internet website where covered individuals can access covered documents. Under the proposed rule, a website could include an internet website or other internet or electronic-based information repositories, such as a mobile application, where covered individuals have been provided reasonable access.

Specific internet website standards related to timing, format and reasonable access are outlined in the rule. For instance, plans would have to ensure that covered individuals outside of the workplace can access the internet website and that the website protects the confidentiality of personal information. Third-party administration of website-related activities is permissible; however, the plan would have a fiduciary duty to prudently select and monitor such parties.

Implications for plan sponsors

If finalized as proposed, the rule would create an optional new method for default electronic delivery of ERISA group health plan disclosures, which could reduce administrative burdens and expense.

Plan sponsors may want to evaluate the costs and administrative considerations associated with adopting the proposed new safe harbor compared with their existing disclosure methods. Plan sponsors that choose to use the new safe harbor would need to ensure required procedures are in place to monitor its ongoing compliance with the DOL e-disclosure safe harbor requirements.