Responsibility Rests on Both Sides in Health Benefits Communication
A May 2011 case before the U.S. Supreme Court, Cigna v. Amara, centered on whether critical information about Cigna’s pension benefits were properly communicated in the company’s Summary Plan Description (SPD), a federally required summary of plan benefits that must be distributed to employees, retirees and beneficiaries. At the heart of the case is the employees’ contention that Cigna failed to fully and clearly disclose a change in its pension plan which, if employees had understood it, might have spurred them to retire or take another job.
Even though Cigna admitted in court that its SPD was misleading, the U.S. Supreme Court ruled in favor of Cigna, saying it was unlikely that all 27,000 members of the class action lawsuit suffered “likely harm.”
The Future of Benefits Communication
While the Cigna ruling may look like another win for Corporate America, it isn’t that simple. It illustrates the growing need for all parties – employers, employees, and retirees - to step up their game and take greater responsibility in understanding, and communicating benefit plans and updates. It also serves a cautionary warning to employers that their benefits plan communications need to be more clear, accurate and available.
Details on how Cigna will need to remedy the problem have been left up to the lower courts, so it’s not clear how they will ultimately improve their benefits communication. However, as health care reform evolves and more federally required communication lies ahead, the Cigna case illustrates the need for employers to take SPDs more seriously.
Fortunately, more companies are embracing technology to manage and communicate benefit plan information, reducing financial exposure and enabling the information to get out in a more timely manner. In addition to distributing written SPDs, many are now automating their SPDs for instant updating and offering searchable online portals for their employees. Specifically, personalized online portals enable employers to automatically provide employees clear, comprehensive changes to benefits.
Employees Have a Responsibility
As employers improve their communication, employees must take greater responsibility for knowing the details of their benefits plans so that severe personal financial distress can be avoided. Employees should routinely look at their plans and compare their knowledge against the written plan and statements. The time to negotiate any corrections or omissions is before an emergency or life changing event such as retirement.
Pensions and health benefits are high-value components of every employee’s financial portfolio. To further avoid court disputes and massive legal fees and fulfill the goal of a positive working environment and properly financed retirement, both parties need to take more responsibility in communication.
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