By: HUB's EB Compliance Team
Recently, the Department of Labor’s (“DOL’s”) Employee Benefits Security Administration (“EBSA”) published a proposed rule that would give ERISA-covered group health plans a new, optional safe harbor for delivering required disclosures electronically. Modeled on the “notice-and-access” safe harbor EBSA adopted for pension plans in 2020, the proposal would allow group health plan administrators to make covered documents available on a website as the default delivery method, so long as participants receive a notice of internet availability (“NOIA”) and retain the right to request paper copies, or just opt out entirely. The proposal would not replace the current 2002 electronic disclosure safe harbor; it would sit alongside it as an additional option.
Current Framework and the Basis for the Proposal
Group health plan administrators currently rely primarily on the 2002 electronic disclosure safe harbor at 29 C.F.R. § 2520.104b-1(c). That safe harbor limits electronic disclosure to two groups of recipients: participants who are “wired at work” (i.e., electronic access is integral to their job duties) and participants who affirmatively consent to electronic delivery. Recipients outside those two categories must still receive paper disclosures.
In 2020, the Department adopted a broader, default electronic delivery safe harbor for pension benefit plans at 29 C.F.R. § 2520.104b-31, but reserved judgment on extending that model to group health plans pending further study, citing the sensitivity of health information and shared jurisdiction with the Department of Health and Human Services and the Treasury Department.
Key Features of Proposed 29 C.F.R. § 2520.104b-32
The newly proposed rule would add a new section, 29 C.F.R. § 2520.104b-32, alongside the existing pension-plan safe harbor. Key elements include:
Covered individuals. A participant, beneficiary or other individual entitled to covered documents who supplies (or is assigned by an employer) an electronic address is a “covered individual.” The proposal would also treat a dependent child who has reached age 18 as a covered individual if the child separately provides an electronic address.
Covered documents. Unlike the pension-plan safe harbor, the proposed definition is not limited to documents plans must furnish automatically — it would extend to any document or information a group health plan administrator is required to furnish under Title I of ERISA, including documents that must be furnished only upon request.
Notice of internet availability. An NOIA with specified content (which includes a required “Disclosure About Your Health Plan” heading, a description of the document, the website address, and statements of the rights to request paper copies and opt out) must accompany each electronic posting. Plans may also consolidate recurring NOIAs into a single annual notice.
Website standards. The administrator must also maintain a website: (i) where documents remain available for at least one year (or until superseded), (ii) that is searchable, (iii) where documents are presented in a format suitable for online reading and printing, and (iv) that protects the confidentiality of personal information. Notably, the proposed rule would NOT permit the direct-to-email delivery option available under the pension safe harbor, citing concerns about the sensitivity of protected health information and employer monitoring of company email.
Paper copies and opt-out rights. Covered individuals may request paper copies free of charge at any time and may globally opt out of electronic delivery altogether, also free of charge.
Initial notification and severance from employment. Administrators must furnish an initial paper notice of default electronic delivery before relying on the safe harbor for any individual, unless that individual was already receiving disclosures electronically under the 2002 safe harbor before the proposed rule's applicability date. Administrators must also take steps to preserve access to employer-assigned electronic addresses — or obtain new ones — when a covered individual ends employment.
Implications for Plan Sponsors
The proposed safe harbor would be entirely voluntary. Plan sponsors that continue to rely on the 2002 safe harbor, or on mailed paper disclosures, would not be required to change existing practices in light of the proposed rule. For sponsors that may be considering the new approach once it has been finalized, EBSA's regulatory impact analysis projects substantial cost savings across the roughly 2.77 million ERISA-covered group health plans, driven largely by reduced printing and mailing costs, as well as an expectation that plans would also achieve a projected 90 percent electronic disclosure rate.
Adopting the safe harbor, if finalized as proposed, would require some operational investment. Such investment would include: (i) collecting and validating electronic addresses for participants and eligible adult dependents, (ii) confirming that plan or vendor websites meet the proposed content, retention, and searchability standards, and (iii) building out NOIA generation and delivery processes. As many plan sponsors rely on third-party administrators or insurance issuers to host disclosure websites and prepare required notices, plan sponsors should expect to coordinate with those vendors, including possibly revisiting administrative services agreements, before relying on the new safe harbor for any applicable group of covered individuals.
Because the rule remains a proposal, its applicability date has not yet been determined — EBSA proposed that it would apply beginning the first day of the first calendar year following publication of the final rule. It is unclear at this time then whether final rules would be effective for January 1, 2027 or if they will be pushed to 2028.
Employer Action Items
- Employers can continue relying on the existing 2002 electronic disclosure safe harbor or paper delivery at this time. No changes to current disclosure practices are required as a result of this proposal.
- Employers can assess the plan's current capacity to collect and maintain electronic addresses for participants and for dependents age 18 and older, since the proposed safe harbor depends on each covered individual affirmatively providing (or being assigned) an electronic address.
- Employers can confirm with TPAs, issuers, and their other service providers whether the providers’ existing website platforms could meet the proposed rule’s NOIA and website standards, as well as flag any needed updates to administrative services agreements.
- Employers can track the rulemaking through finalization and monitor the resulting applicability date before implementing any transition to the new safe harbor.
Conclusion
If finalized, the proposed rule would give group health plan sponsors a new, cost-saving option for delivering required notices — but it would not explicitly require any plan to change course from its current processes. Sponsors should treat the coming months as a planning window, including watching the comment period and revisiting the final rule, and evaluating operational readiness before consideration of adopting the new safe harbor once it takes effect.
If you have any questions, please contact your HUB Advisor. View more compliance articles in our Compliance Directory.
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Neither Hub International Limited nor any of its affiliated companies is a law or accounting firm, and therefore they cannot provide legal or tax advice. The information herein is provided for general information only and is not intended to constitute legal or tax advice as to an organization’s or individual's specific circumstances. It is based on Hub International's understanding of the law as it exists on the date of this publication. Subsequent developments may result in this information becoming outdated or incorrect and Hub International does not have an obligation to update this information. You should consult an attorney, accountant, or other legal or tax professional regarding the application of the general information provided here to your organization’s specific situation in light of your or your organization’s particular needs.