Legal Definitions - SPD

SPD stands for Summary Plan Description.

A Summary Plan Description (SPD) is a document that provides participants in an employee benefit plan (such as health insurance, retirement, or disability plans) with a clear, easy-to-understand summary of their plan's key features, rights, and obligations. It is a legally required document under the Employee Retirement Income Security Act (ERISA) for most private-sector employer-sponsored plans. The SPD simplifies complex legal plan documents, explaining important details like eligibility requirements, benefits, claims procedures, and how to appeal a denied claim, ensuring participants can readily understand their benefits.

Here are some examples of how an SPD applies:

• Example 1: Understanding Health Benefits
  When a new employee, David, starts his job, he receives a document outlining the company's health insurance plan. This document explains what medical services are covered, the deductible amount, co-payment requirements, how to choose a doctor, and the process for submitting claims. David can easily refer to this document to understand his healthcare options and responsibilities.

  How it illustrates SPD: This document is the SPD for the health insurance plan. It distills the complex master policy into an accessible format, allowing David to quickly grasp the essential details of his benefits without needing to navigate dense legal jargon.

• Example 2: Retirement Planning
  Maria is considering retiring in a few years and wants to understand the specifics of her company's 401(k) plan, including when she becomes fully vested in employer contributions and the different options for withdrawing her funds once she retires. She consults a specific document provided by her employer.

  How it illustrates SPD: The document Maria is reviewing is the SPD for her 401(k) plan. It clearly outlines the vesting schedule, the procedures for requesting distributions, potential tax implications, and her rights as a plan participant, making it easier for her to plan her financial future.

• Example 3: Disability Claim Process
  After an unexpected accident, John needs to file a claim for long-term disability benefits through his employer's plan. He needs to know the eligibility criteria, the steps involved in filing the claim, what documentation is required, and what to do if his claim is initially denied.

  How it illustrates SPD: The SPD for John's long-term disability plan contains all this crucial information. It provides a straightforward guide to the claims process, his rights to appeal a denial, and contact information for plan administrators, helping him navigate a potentially stressful situation with clarity.