Research · 13 min read
What Notice a Plan Owes You When It Changes Mid-Year
Two federal duties cover a change made in the middle of a plan year, and their clocks run in opposite directions. One is 60 days before. The other is 60 days after.
Key takeaways
- Two federal notice duties can cover the same mid-year change, and their clocks run in opposite directions.
- The advance duty requires notice at least 60 days before the effective date, but only where four stated conditions all hold.
- The employer-plan duty is retrospective: 60 days after adoption for a group health plan's material reduction, and up to 210 days after the plan year closes for other modifications.
- A material reduction is defined, and the regulation's own list of examples ends with establishing new conditions such as preauthorization requirements.
- Delivery has a standard: measures reasonably calculated to ensure actual receipt, and posting copies where participants happen to gather is expressly not enough.
- Neither duty stops a change or opens an enrollment window, and the advance rule turns on whether the change would affect the content of one specific document.
Answer first: two duties, and one of them runs backwards
Guides say plans can revise drug lists and criteria during a year. Very few say what has to be told to you when that happens.
Two separate federal rules answer it, they come from different rulebooks, and their clocks point in opposite directions.
One attaches to the standardized summary of benefits and coverage. Where a material modification would affect that summary's content, is not reflected in the most recent one, and happens outside a renewal, notice is due no later than 60 days before the change takes effect.
The other attaches to the summary plan description in an employer plan. It is retrospective, and it is triggered by a reduction rather than by any change.
For a group health plan, a summary of a material reduction in covered services or benefits is due not later than 60 days after the modification is adopted.
Neither duty makes a change unlawful, and neither opens a door to a different plan. They govern what has to be written down and when.
The advance notice, and its four conditions
The advance duty is a single sentence with four conditions stacked in it, and all four have to hold.
There has to be a material modification, as defined for the employee benefit statute, in any of the terms of the plan or coverage.
It has to be one that would affect the content of the summary of benefits and coverage. It has to be one not reflected in the most recently provided summary.
And it has to occur other than in connection with a renewal or reissuance of coverage. A change made at renewal is handled by the ordinary renewal disclosures instead.
Where all four hold, the plan or insurer must provide notice of the modification no later than 60 days before the date it becomes effective. The notice has to be delivered in a form consistent with the same rule's delivery paragraph.
The second condition is the one that decides most drug questions, and it is a question about a particular plan's own document rather than a general rule. The companion guide lists what that summary is required to contain.
Where the phrase comes from, and what it does not say
The regulation borrows its trigger from another statute, which is a good reason to go and read that statute rather than assume.
The advance-notice paragraph defines a material modification by pointing at section 102 of the employee benefit statute. That section is the one requiring a summary plan description.
Read in full, it uses the phrase and never defines it. It says a summary of any material modification in the terms of the plan, and any change in the information its contents list requires, must be written to be understood by the average participant.
So the phrase arrives paired with a second trigger rather than with a definition. A change to something on the required contents list travels with it.
The statute behind the summary rule states the duty more loosely than the regulation does. It names a material modification not reflected in the most recent summary, and it omits both the effect-on-content limb and the renewal carve-out.
The regulation is the tighter of the two. Where the two are read together, the regulation's four conditions are the ones to test a change against.
The other clock, and why it points the other way
The employer-plan rule is older, and it was written for a document rather than for an event.
The general rule is generous to the plan. A summary of a material modification is due not later than 210 days after the close of the plan year in which it was adopted. The same applies to a change in the information the description has to contain.
Two clarifications in that paragraph are worth keeping. A modification does not occur before it is adopted, and applying an amendment retroactively to an earlier plan year does not move the disclosure date.
There is also a rule for changes that never happen. A summary is not required where the modification is rescinded or otherwise does not take effect.
Group health plans get a special rule that overrides the general one, and it is much shorter. A summary of any material reduction in covered services or benefits is due not later than 60 days after the modification is adopted.
An alternative exists for plans that already communicate at regular intervals. Where participants would reasonably be expected to receive the summary through a communication system running at intervals of not more than 90 days, the 60-day rule does not apply.
What counts as a reduction, in the regulation's own words
The 60-day duty turns on a defined term, and the definition is unusually concrete for a disclosure rule.
A material reduction in covered services or benefits means any modification or change that, independently or together with other contemporaneous ones, would be considered by the average plan participant to be an important reduction.
The regulation then lists what a reduction generally would include, and the list is the useful part.
Eliminating benefits payable under the plan. Reducing benefits payable under the plan, including a reduction occurring as a result of a change in formulas, methodologies or schedules that serve as the basis for making benefit determinations.
Increasing premiums, deductibles, coinsurance, copayments or other amounts to be paid by a participant or beneficiary. Reducing the service area covered by a health maintenance organization.
And the last one, which the regulation illustrates with the example a reader of this site will recognize. Establishing new conditions or requirements to obtaining services or benefits under the plan, with preauthorization requirements given as the example.
What furnished actually means
A notice duty is only worth what the delivery standard behind it is worth, and that standard is written down.
For material an employer plan has to furnish, the administrator must use measures reasonably calculated to ensure actual receipt by participants and beneficiaries.
Material owed to everyone covered must be sent by a method likely to result in full distribution. The regulation gives an example that clears up a common practice.
In no case is it acceptable merely to place copies of the material in a location frequented by participants. A notice board is not delivery.
Mail may be first, second or third class, but second or third class is acceptable only if return and forwarding postage is guaranteed and address correction is requested. Anything returned with an address correction has to be sent again by first-class mail or delivered in person.
Electronic delivery has its own route with conditions attached, and one of them is squarely about a change like this. The plan must tell the recipient the significance of the document where that is not otherwise reasonably evident. The regulation's own example of such a document is one describing changes in the benefits provided by your plan.
Consent, paper, and which people the electronic route covers
The electronic route splits people into two groups, and only one of them can be enrolled into it without being asked.
A participant who can effectively access electronic documents wherever they are reasonably expected to work, and for whom access to the employer's system is an integral part of those duties, is in the first group.
Everyone else has to affirmatively consent, in a way that reasonably demonstrates they can access the format that will be used, and has to supply an address for the documents.
Before consenting, they must get a clear and conspicuous statement covering five things. Which documents the consent applies to. That consent can be withdrawn at any time without charge.
The procedures for withdrawing it and for updating the address. The right to request and obtain a paper version, including whether that will be free. And any hardware or software requirements.
Whichever group you are in, a paper version has to be furnished on request. Asking for paper is the simplest way to stop a notice arriving somewhere you do not read.
Which plans each duty reaches
The two duties do not have the same footprint, and quoting the wrong one at the wrong plan wastes a conversation.
The advance duty reaches a group health plan and an insurer offering group or individual health insurance coverage. Individually purchased coverage is inside it, and the rule names an individual covered under a policy as the person who gets the notice.
The employer-plan duty is narrower. It applies to the administrator of an employee benefit plan subject to part 1 of title I of the employee benefit statute. The 60-day reduction rule inside it is written for a group health plan as that statute defines one.
So an individual-market policy is outside the second duty entirely. A governmental plan and most church plans sit outside the statute for the reasons set out in the companion guide on which rules reach your plan.
Neither duty is a promise that a plan will not change. Both are rules about the paperwork attached to a change that has already been decided.
A notice is also not an enrollment opportunity. What opens a mid-year enrollment window is a separate list of triggering events, covered in its own guide.
How to use this without overreading it
Start by establishing which kind of coverage you hold, because that decides which duty is even available to quote.
Then check the change against the four conditions in the advance rule, and against the definition of a material reduction in the employer-plan rule. They are different tests and a change can satisfy one and not the other.
Ask for the notice in writing rather than asking whether one was sent. Request the summary of material modifications for the current plan year, and any notice of modification issued since the last summary of benefits and coverage.
Ask for paper at the same time, and ask for the date the modification was adopted. The 60-day clock in the employer-plan rule runs from adoption rather than from the effective date.
Where a change has already cost you money, the document rights that open after a decision goes against you are the stronger route, and they are covered separately.
None of this is legal advice. Where the amount or the medication justifies it, someone qualified to advise on employee benefit plans is the right next call.
Sources
- 45 CFR 147.200 — Summary of benefits and coverage and uniform glossaryParagraph (b), the notice of modification, which is the advance duty described throughout this article. Its four conditions are quoted from the paragraph itself: a material modification, as defined under section 102 of the employee benefit statute, in any of the terms of the plan or coverage; one that would affect the content of the summary of benefits and coverage; one that is not reflected in the most recently provided summary; and one occurring other than in connection with a renewal or reissuance of coverage. The paragraph then requires the plan or issuer to provide notice of the modification to enrollees, or in the individual market to an individual covered under a policy, not later than 60 days prior to the date on which the modification will become effective, in a form consistent with the section's own delivery paragraph. Paragraph (a)(1) is used only for the statement of whom the duty falls on. Verified against a same-run control at the same path depth, which returned the host's not-found page carrying none of this text.
- 42 U.S.C. 300gg-15 — Development and utilization of uniform explanation of coverage documents and standardized definitionsSubsection (d)(4), the statutory notice of modifications, used here for the comparison drawn in the article: the statute requires notice not later than 60 days prior to the effective date where a group health plan or health insurance issuer makes any material modification in any of the terms of the plan or coverage involved, as defined for purposes of section 1022 of title 29, that is not reflected in the most recently provided summary of benefits and coverage. The statutory sentence carries neither the limb about affecting the content of the summary nor the carve-out for a renewal or reissuance, both of which appear in the regulation. The printed title of the section was read before anything was written from it, because a plausible but incorrect section number returns a real and unrelated document on this host. Verified against a same-run control on the same host, which resolved to the database's document-not-found page.
- 29 CFR 2520.104b-3 — Summary of material modifications to the plan and changes in the information required to be included in the summary plan descriptionParagraph (a), the general rule that a summary description of any material modification, and of any change in the information the summary plan description must contain, is furnished not later than 210 days after the close of the plan year in which the modification or change was adopted; the statement that a modification does not occur before it is adopted; the rule that retroactive application to a prior plan year does not affect the disclosure date; and the rule that no summary is required where the modification is rescinded or otherwise does not take effect. Paragraph (a) also supplies the scope sentence used here, that the duty falls on the administrator of an employee benefit plan subject to part 1 of title I of the Act. Paragraph (d)(1), the special rule for group health plans, requiring a summary of any material reduction in covered services or benefits not later than 60 days after the date of adoption. Paragraph (d)(2), the alternative for plans whose participants would reasonably be expected to receive the summary through a communication system operating at intervals of not more than 90 days. And paragraph (d)(3), the definition of a material reduction in covered services or benefits, together with its list of what a reduction generally would include, quoted in the article: eliminating benefits payable, reducing benefits payable including as a result of a change in formulas, methodologies or schedules that serve as the basis for making benefit determinations, increasing premiums, deductibles, coinsurance, copayments or other amounts to be paid by a participant or beneficiary, reducing the service area covered by a health maintenance organization, and establishing new conditions or requirements such as preauthorization requirements to obtaining services or benefits under the plan. The URL cited is the effective address returned by the host, which dropped the subpart segment from the path requested. Verified against a same-run control at the same path depth, which returned the host's not-found page.
- 29 CFR 2520.104b-1 — DisclosureParagraph (b)(1), the delivery standard: the plan administrator must use measures reasonably calculated to ensure actual receipt of the material, material owed to all covered participants and beneficiaries must be sent by a method or methods of delivery likely to result in full distribution, and in no case is it acceptable merely to place copies of the material in a location frequented by participants. The same paragraph carries the mail rules quoted here, that material may be sent by first, second or third-class mail, that second or third-class is acceptable only if return and forwarding postage is guaranteed and address correction is requested, and that anything returned with an address correction must be sent again by first-class mail or personally delivered at the worksite. Paragraph (c)(1), the conditions on furnishing documents through electronic media, including measures reasonably calculated to result in actual receipt of transmitted information and to protect the confidentiality of personal information, preparation consistent with the style, format and content requirements applicable to the document, the notice apprising the individual of the significance of the document where that is not otherwise reasonably evident together with the regulation's own example of a document describing changes in the benefits provided by the plan, and the right to a paper version on request. Paragraph (c)(2), which limits that route to a participant with work-integral access to the employer's electronic system and to others who have affirmatively consented, and paragraph (c)(2)(ii)(C), the five items the clear and conspicuous statement must cover before consent. Verified against a same-run control at the same path depth, which returned the host's not-found page.
- 29 U.S.C. 1022 — Summary plan descriptionSubsection (a) only, and for one narrow purpose: it is the section the advance-notice regulation points at for the meaning of a material modification, and it is the basis for the statement here that the section uses the phrase without supplying a definition of it. The subsection requires that a summary of any material modification in the terms of the plan, and any change in the information required under its contents list, be written in a manner calculated to be understood by the average plan participant and furnished as the filing and disclosure section directs. The section was read end to end to establish that no definition of the phrase appears in it, rather than that absence being assumed. The contents list itself and the written-request duty belong to a companion article and are not restated here. Verified against a same-run control on the same host, which resolved to the database's document-not-found page.
Frequently asked questions
My plan changed its drug list in the middle of the year. Was it supposed to warn me first?
It depends on which duty reaches your coverage and on whether the change meets that duty's test, and no general answer is honest here. The advance rule requires notice at least 60 days before the effective date, and only where four conditions all hold. There has to be a material modification in the terms of the plan or coverage. It has to be one that would affect the content of the summary of benefits and coverage. It has to be one not reflected in the most recently provided summary. And it has to occur other than in connection with a renewal or reissuance. The second condition is the one to test, and the companion guide lists what that summary must contain. Ask the plan in writing which notice it considers applicable and when it was issued.
How long before a change does a warning have to arrive?
The advance rule says notice must be provided not later than 60 days prior to the date the modification becomes effective. The employer-plan rule runs the other way. For a group health plan, a summary of a material reduction in covered services or benefits is due not later than 60 days after the modification is adopted. The general rule for other modifications is slower, allowing up to 210 days after the close of the plan year in which they were adopted. The same change can therefore be covered by an advance duty and a retrospective duty at once.
What counts as a reduction rather than just a change?
The employer-plan regulation defines it. A material reduction in covered services or benefits means any modification that, independently or together with other contemporaneous ones, would be considered by the average plan participant to be an important reduction. It then lists what a reduction generally would include. Eliminating benefits payable, and reducing benefits payable including through a change in the formulas, methodologies or schedules used to make benefit determinations. Increasing premiums, deductibles, coinsurance, copayments or other participant amounts, and reducing a health maintenance organization's service area. And establishing new conditions or requirements to obtaining services or benefits, with preauthorization requirements given as the example.
The plan says it notified me and I never saw anything. Does that matter?
The delivery standard is written down, so it is a checkable question rather than an argument about memory. For material an employer plan must furnish, the administrator has to use measures reasonably calculated to ensure actual receipt. Material owed to everyone covered has to go by a method likely to result in full distribution. The regulation states plainly that in no case is it acceptable merely to place copies in a location frequented by participants. Second or third-class mail is acceptable only with guaranteed return and forwarding postage and address correction requested, and anything returned with a correction must be resent first class or delivered in person.
Can a plan send a change notice by email instead of mailing it?
There is an electronic route, and it has conditions. The system has to be reasonably calculated to result in actual receipt and to protect the confidentiality of personal information. The document itself has to be prepared consistently with the style, format and content rules that apply to it. A notice must apprise the recipient of the significance of the document where that is not otherwise reasonably evident. The regulation's own example is a document describing changes in the benefits provided by the plan. A paper version has to be furnished on request. People whose work does not involve the employer's electronic system must affirmatively consent first, after a clear and conspicuous statement covering five listed points.
If I get one of these notices, can I switch plans?
Not by itself. A notice duty is about paperwork attached to a decision the plan has already made, and neither rule creates an enrollment right. The events that open a mid-year enrollment window are a separate enumerated list. The guide on joining outside open enrollment reads that list and names the two items that come nearest to a benefit change. Where the change has already produced a denial or a higher bill, the document rights that open after an adverse decision are the more useful route.