ERISA: What Must Be In A Summary Plan Description For The "Average Plan Participant"?

You know that ERISA requires the Summary Plan Description to explain eligibility clearly enough so that an "average plan participant" can understand it.

So, who is an "average plan participant" and what is the standard for compliance with ERISA disclosure requirements?

Here's the recent case of Abrams v. Life Insurance Company of North America; UBS Financial Services, 2018 WL 1189181, __ Fed. Appx. __ (9th Cir. March 7, 2018). And...kudos to my friend Nicole Blohm and the team at Meserve for some nice work...

FACTS: Abrams claimed the claims administrator had improperly offset 50% of his earned wages from his ERISA-governed long term disability benefits. The plan contained a Work Incentive Benefit, described in the policy and the Summary Plan Description (SPD).  Abrams argued the policy and SPD failed ERISA disclosure requirements, and no offset should have been taken.

NINTH CIRCUIT HELD: The SPD and Plan satisfied ERISA disclosure requirements.

1. ERISA mandates that a SPD 'explain the circumstances which may result in disqualification, ineligibility, or denial or loss of benefits' in a manner 'calculated to be understood by the average plan participant,' and that information must be 'sufficiently accurate and comprehensive to reasonably apprise' plan participants of their rights and obligations under the plan."  Op. at 3.
2. "The SPD clearly explains how Abrams's monthly benefit would be impacted by money he earned while receiving benefits[.]"  Op. at 3.
3. The SPD did not "'minimize[], render[] obscure,' or otherwise make the Work Incentive Benefit offset to be "unimportant." Op. at 4.
4. The SPD described the Benefit and its offset in "the same style, typeface, and type size as the rest of the SPD and are located 'in close conjunction with' the description of the plan's benefits." Op. at 4.
5. ERISA does not require that the Benefit be given "special emphasis or [be] mentioned more than once in the SPD." Op. at 5.

And for anyone watching the NCAA Basketball finals—GO GONZAGA...

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