Proper Delivery Methods are Paramount for Notifying Participants About Plan Information

Use this as a guide to distributing health and welfare notices and disclosures.

Employers sponsoring and administrating ERISA group health and welfare plans are responsible for providing many notices and disclosures to eligible employees and participants. All these notices contain important plan information. Improperly distributing your notices or not documenting your delivery methods exposes you to statutory penalties.

Moreover, a participant or beneficiary could sue you if a notice was not delivered correctly and timely, and they suffered financial harm as a result. While ERISA-exempt sponsors of church or government plans don’t have to follow ERISA notice distribution requirements, doing so is a best practice.

This deep dive addresses:

The general rules for distributing ERISA notices to employees
The exception for delivering COBRA notices
The statutory penalties for noncompliance
Best practices

Notice distribution methods

As a plan sponsor, one of your basic fiduciary duties is that you must timely and accurately communicate plan information to eligible employees, participants and beneficiaries. You must do this in a manner that is reasonably calculated to ensure receipt. In a world where human resources departments and management are tied to their smart phones, it’s easy to assume that communicating notices electronically is compliant. However, this assumption is false and could be a costly miscalculation.

The Department of Labor (DOL) regulations contain a safe harbor under which you may use electronic means to distribute certain notices as long as you’ve satisfied certain conditions.

Electronic delivery safe harbor

To use the electronic delivery safe harbor, the employee must have electronic access as an integral part of their daily work duties. Merely having access to an email account or the intranet does not qualify for the electronic delivery safe harbor.

For all other employees, you must obtain affirmative opt-in consent. This includes providing detailed instructions on accessing notices, hardware/software requirements, and withdrawing consent. The electronic system must ensure the notices remain accessible for a reasonable time and are in a format that can be retained or printed.

When you distribute or post a notice electronically, you must notify participants that a plan notice has been delivered. You must also explain:

its significance
where it’s posted or how it was delivered
who they can contact to receive a hard copy free of charge

You can use electronic communication, such as an email to the address on file. Or you can use paper, such as a mailbox stuffer or newsletter article. The important thing is you must tell employees each time a notice is posted or distributed electronically.

Hard-copy delivery methods

For employees who do not meet the safe harbor criteria or have not consented to electronic delivery, you must use alternative methods to ensure distribution compliance.

The general rule for delivering notices is the method must be reasonably calculated to ensure participants and beneficiaries receive it. The Department of Labor (DOL) does not mandate a specific delivery method but provides examples of acceptable ones, including:

First-class mail (USPS): The most common method is first-class mail. This is generally considered sufficient for ensuring delivery.

Certified mail: While not required, certified mail provides proof of delivery and is useful for high-risk or critical disclosures, such as COBRA notices.

Hand delivery: You may distribute notices directly to employees at the workplace, provided you do this consistently and reliably. However, placing notices in a break room is not sufficient.

Statutory penalties for noncompliance

Each ERISA notice has per-day statutory penalties attached for noncompliance. Many of them are routinely adjusted for inflation. The baseline penalty is $110 per day per participant. The COBRA notice has a double penalty attached, one under the Tax Code and one under ERISA. Each of these is calculated per day per participant. Additionally, failing to provide the DOL any requested notice triggers yet another penalty.

Accordingly, it is imperative that you implement sound, documented procedures based on best practices for distributing notices.

Best practices for distributing notices

For employees who meet the electronic delivery safe harbor criteria, consider the following best practices:

Test delivery systems. Periodically verify that electronic systems are functioning properly and employees can access required notices.
Monitor acknowledgments. Use tracking systems to confirm receipt (e.g., delivery receipt) and engagement with the notices (e.g., read receipt).
Request personal email addresses. Request a nonworkplace email address in addition to your employer-provided email.
Alert recipients when new notices are posted if you post them on an intranet or company website. Reminders alone are not sufficient. Conduct periodic reviews or surveys to confirm employees have accessed the notices.

For employees who do not meet the safe harbor criteria, such as those without regular electronic access or who decline consent, incorporate the following best practices. Also develop a written policy and procedure for documenting compliance.

If you choose paper delivery, use direct mail to deliver required disclosures to employees’ home addresses. Ensure that documents are sent in a timely manner and tracked if necessary.
If you distribute your notices in person, hand them out during in-person meetings, onboarding sessions or other workplace gatherings. Have employees sign an acknowledgment form upon receipt and include all notices that were passed out during the meeting.
Hybrid approach: Combine electronic and physical delivery methods to ensure you’ve reached all employees. For instance, send an email notification and a hard copy for those without confirmed access.
Tailored communication plans: Develop a tailored communication strategy for nondesk employees, field employees and remote workers to ensure they receive important plan information.

COBRA exception

Although COBRA applicability is beyond the scope of this article, it is worth noting that there are separate rules for delivering COBRA notices.

Under the COBRA regulations, qualified beneficiaries who reside at different addresses must each receive their own set of COBRA notices. This ensures every qualified beneficiary is informed of their COBRA rights.

If you are subject to COBRA, include the following in your notice distribution processes:

If qualified beneficiaries (e.g., a spouse or dependent children) live at a different address from the covered employee or each other, send separate COBRA notices to each qualified beneficiary’s last known address.
Send COBRA notices to the most recent address on file for each qualified beneficiary. In situations like divorce, legal separation or children moving to college, ensure COBRA notices are sent to the appropriate addresses. Keep your records up to date, including dependent addresses. This is particularly important in cases of divorce.
Deliver COBRA notices by first-class mail, certified mail or an equivalent method. You must ensure the delivery method is reasonably calculated to ensure receipt.

In addition to the statutory penalties described above, failure to provide COBRA notices to each qualified beneficiary at their separate address may result in:

An extended COBRA continuation period
Liability for medical expenses that would have been covered under COBRA
Lawsuits for failure to comply with COBRA requirements

Checklist for delivering notices

Use this checklist to ensure compliance with the DOL’s electronic delivery safe harbor and to address delivery to all other employees.

Step 1: Confirm employee eligibility for safe harbor

Confirm which employees have electronic access as an integral part of their job duties.
For those without workplace access, secure written opt-in consent for electronic delivery during open enrollment or employee onboarding. Include clear instructions on accessing notices, provide information on hardware/software requirements, and inform employees of their right to withdraw consent at any time.

Step 2: Establish a compliant electronic delivery system

Ensure the system can confirm receipt of notices (e.g., tracking or acknowledgment features).
Verify notices are accessible for a reasonable period and can be retained or printed.
Provide a contemporaneous notice of electronic delivery, clearly identifying the significance of each notice.
Periodically test the system to ensure functionality and employee access.

Step 3: Develop alternative delivery methods for non-safe-harbor employees

Paper delivery:
- Use direct mail to send notices to employees’ home addresses.
- Track delivery or obtain acknowledgment if needed.
In-person distribution:
- Pass out a notice packet during employee onboarding sessions or open enrollment meetings.
- Obtain signed acknowledgments from employees upon receipt.
Hybrid approach:
- Notify employees electronically (if possible) and follow up with a hard copy for those without confirmed access.

Step 4: Communicate and train

Provide instructions on accessing electronic documents, including login steps and troubleshooting resources.
Offer support channels (e.g., HR representatives or your IT help desk) for employees with issues.
Train managers and HR staff to help employees with their delivery options.

Step 5: Monitor and document compliance

Maintain a log of consents, acknowledgments and delivery methods for each employee.
Audit delivery methods periodically to ensure compliance with the DOL requirements.
Retain copies of all notices, along with records of how and when they were delivered.

Step 6: Review and update your communication strategy

Regularly evaluate the workforce to identify employees who need alternative delivery methods (e.g., employees in the field and nondesk employees).
Update technology solutions to improve accessibility and capture receipt (e.g., check-the-box or clickability features).
Stay informed about regulatory updates regarding electronic delivery requirements. (Electronic delivery may be the gold standard in the future; it was encouraged and allowed by the DOL during the COVID-19 pandemic.)

Step 7: Engage employees

Use plain language when communicating about new notices and their importance to ensure readability.
Highlight key information with summaries or FAQs.
Provide a feedback channel for employees to report issues or suggest improvements to the delivery process.

Have questions?

Need help on this topic or have other benefits related questions? Reach out to our Employee Benefits team and we’ll be happy to help.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

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