Communication During Open Season Fraught With Inconsistency, High Potential for Liability

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Clear understanding of why each open-season communication piece is being issued and what form it must take is critical if employers and plan administrators are to adhere to messaging rules, such as those on mandated plan descriptions and summaries that must contain information in a specific manner, and avoid exposure to litigation, a practitioner said.

Several questions should be answered by now, including whether the communication is legally required, said James Napoli, a partner with the Fairfax, Va. law firm Constangy, Brooks & Smith, LLP. Also, “who is supposed to be making the communication? Who is supposed to be receiving the communication and what issue is supposed to be addressed in the communication?”

Employers and plan administrators may be confused during the open-season period by who should be providing the information, Napoli said in a Sept. 15 e-mail to Bloomberg BNA. For example, notices meant to be provided by ERISA plan administrators should be sent by the party that is the plan's named administrator, which may or may not be the employer, he said.

Notices required under the Employee Retirement Income Security Act should not contain discussions of non-ERISA voluntary benefits, Napoli said. “The consequence of blurring the lines between fiduciary and non-fiduciary—ERISA and non-ERISA—is that the communication may be used in litigation or on audit as evidence establishing that the non-fiduciary is actually a fiduciary and/or the non-ERISA benefit is actually governed by ERISA.”

What communications may be provided electronically should already be known because “not all legally required information may be provided electronically to eligible employees,” Napoli said. Also, failure to provide hard copies of the materials to workers who do not have a computer as an essential part of the job function may violate communication requirements, he said.

Desire to Help

Those representing employers “tend to want to over-communicate during open enrollment,” Napoli said, likely due to concerns that legally required information may not explain well enough plan benefits or is confusing.

Plan communications often are subject to ERISA fiduciary standards. “The frontline HR employees who are charged with preparing and/or approving the employee communications for open enrollment need to make sure the communications stay on task and avoid favoring one type of coverage over the others,” Napoli said. Fiduciaries cannot mislead participants or make other misstatements regarding the plan coverages, he said.

Any information not required must nevertheless be in harmony with the information expressed in the legally-required notice, he said. “If the additional information contradicts the legally required information, at best, the recipients will be confused and, at worst, the legally required notice may be viewed as noncompliant, causing a civil penalty to be incurred,” he said.

To contact the reporter on this story: Michael Baer in Washington at

To contact the editor responsible for this story: Christine Pulfrey at