ERISA and the Affordable Care Act (ACA) Distribution Guidelines for SPD – SMM – SMR – SBC

This guide breaks down how specific ERISA and ACA documents intertwine. Let’s dive into the SPD, SMM, SMR, and SBC to understand when each must be delivered to employees. Even better, you will find clear real‑world scenarios showing exactly which documents apply and when. You may be surprised to learn that, with the right timing, one document can even satisfy the requirements of another. Shall we continue?

Understanding  the Documents

SPD – Summary Plan Description – Distribution (ERISA)

A. Material changes made. EITHER distribute an SMM no later than 210 days after the end of the plan year in which the change was adopted OR distribute an updated SPD by that same deadline (in which case a separate SMM is not required). The SPD timing rule still requires a restated SPD at least every 5 years if there were changes during that period.

B. No Material changes. Every 10 years, if no material changes were made within those 10 years, distribute the SPD within 210 days following the last day of the 10^th plan year.

Based on the 5‑ and 10‑year SPD update rules, if the SPD is updated and distributed within the required timeline and fully incorporates all material modifications, it satisfies the SMM requirement; likewise, a timely and comprehensive SMM satisfies the need to update the SPD until the next required 5‑ or 10‑year requirement. Therefore, there is no obligation to distribute both documents simultaneously. Because the SMM is shorter and focuses only on material changes, fiduciaries often find it easier to distribute an SMM rather than a full SPD in-between the 5 year requirement. Material modifications typically include changes such as carrier transitions, eligibility rules, waiting periods, employer HSA contributions, or FSA limit adjustments.

SMM – Summary of Material Modification – Distribution (ERISA)

• Anytime a material change that impacts the details of the SPD is made to the plan(s) that is not a material reduction, distribute the SMM no later than 210 days after the last day of the plan year in which the change was adopted. This distribution will coincide with the annual plan renewal.
• If the SPD is distributed this satisfies the SMM requirement, there is no need to distribute both documents. The SPD distribution will suffice. As mentioned above, the SMM is sometimes easier for fiduciaries to distribute rather than the full SPD. Consider the SMM for the next GHP renewal.

SMR – Summary of Material Reduction – Distribution (ERISA)

• Anytime a mid-year (not if the change is effective at the plan renewal) material reduction (negative impact on employees) change is made. Distribute the SMR within 60 days after the adoption of the mid-year change. It is best practice to communicate the change as soon as possible so employees can prepare.  The SPD/SMM distribution cannot suffice.

SBC – Summary of Benefits and Coverage – Distribution (ACA) *

1. New hires/newly eligible the distribution should be with the enrollment materials or no later than the first day of coverage.
2. Automatically/Default renewed policy, distribute no later than 30 days before the first day of the new plan year.
3. Not automatically renewed, distribute as soon as practicable but no later than 7 business days after the policy is issued.
4. HIPAA Special Enrollment (SE) employee eligibility, distribute within 90 days of the first day of coverage. The best distribution practice is as soon as “practicable”.
5. Annual open enrollment, distribute the updated SBC when all written OE materials are distributed.
6. For a mid-year material change that is made to the plan(s) that affects the SBC content, provide the updated SBC 60 days before the material change occurs whether the change is a reduction or an enhancement.

If the SBC is distributed timely describing the change, this also satisfies the SMM/SMR requirements for that specific change. The SBC distribution will suffice.

Distribution Guidelines

• All documents can be posted to the Co Intranet as long as employees are informed through a separate written notice of availability to include the URL to access the posted notification.
• Best practice is to distribute the necessary document as soon as possible to inform employees of the changes regardless of the negative impact.
• If changes are made to eligibility adjust the plan documents to ensure stop-loss payment.

Scenario Examples

Scenario 1: The employer makes an employee contribution change mid-year. The change is not part of the SPD therefore the SPD, SMM, nor the SMR are required. Contributions also do not impact the SBC. Instead, the employer should provide updated OE materials, a stand-alone employee contribution change notice, updated rate sheet, payroll or HRIS announcement, or HRIS system-generated cost summaries for distribution.  The communication should include the new cost and the effective date of the change. If the cafeteria plan allows changes due to a significant change in the cost structure the employee has several options if applicable, select a new plan, revoke the existing plan, or switch to an alternate plan if available. If the cost is insignificant the employer can just simply make the change prospectively without the option to make any plan changes. The carrier must also approve the change.

Distribution:

1. SBC = no
2. SPD = no
3. SMM = no
4. SMR = no

Scenario 2: The employer increases the deductible mid-year. The change is considered a reduction because the employee cost share will be increased.

Distribution:

1. SBC = yes – 60 days BEFORE the change that affects SBC content (satisfies all notices)
2. SPD = no
3. SMM = no
4. SMR = no

Scenario 3: The carrier changes the customer service phone number mid-year. The change is considered a material change.

Distribution:

1. SBC = no
2. SPD = yes – 210 days after the plan year ends if the SMM is not distributed
3. SMM = yes – 210 days after the plan year ends if the SPD is not distributed
4. SMR = no

Scenario 4: The client terminates a medical plan, changes eligibility, and increases the employee contributions at renewal. There is an open enrollment period for the employees.

Distribution:

1. SBC = yes – distribute the updated SBC with the renewal packet
2. SPD = yes – 210 days after the plan year ends if the SMM is not distributed
3. SMM = yes – 210 days after the plan year ends if the SPD is not distributed
4. SMR = no

Scenario 5: The client terminates one of their GHPs mid-year. The change is considered a material reduction. If the cafeteria plan allows change in coverage or coverage curtailment mid-year, the employee can select a new plan if available, drop coverage in the plan that was not terminated, and enroll or drop dependents because the change to one plan is considered a plan-wide change not just a change for those directly impacted.

Distribution:

1. SBC = yes – 60 days BEFORE the change if participants will be moved to another plan
2. SPD = no
3. SMM = no
4. SMR = no

The SMM and SMR document should include

1. A description of the exact change – what benefit is eliminated, reduced, or changed, who is affected, eligibility adjusted, or any material modification impacting the SPD.
2. The effective date of the change
3. Reference the section within the SPD where the update will be captured
4. The document should be accurate and clearly written so the enrollee understands the impact of the change and the potential solutions
5. If there is a solution to the change, include the details. In the case of a material modification if the SBC and the SMR are provided, reference the SBC (this is not required). The SBC, if applicable will suffice for the SMM or the SMR.
6. Name of employer and logo – include the contact information (name, title, mailing address, phone, email)
7. Plan name (refer to the plan name of the SPD or 5500)
8. Plan number of the plan documents (refer to the SPD or 5500)
9. Effective date of change

If at any point you need assistance or are not sure which scenario to apply, your EHD team is here to support you. There is not a model notice for SMM or the SMR (EHD can assist). You can access your personal HRService portal to create the SMM to distribute to your employees 210 days after the plan year end date on which the change occurred. Time and cost saver right at your fingertips.