When should employers inform plan participants of changes?

Employers should inform plan participants of changes when there are significant changes like increased deductibles because these changes can greatly impact the participants' financial responsibilities and overall satisfaction with their benefits. Significant changes can affect employees’ out-of-pocket costs, access to care, and their understanding of how to utilize their benefits effectively.

Communication regarding significant changes is essential to ensure that all participants are aware of their new obligations and can plan accordingly. Such changes may also legally require notification under various regulations, including the Employee Retirement Income Security Act (ERISA), which mandates that employers provide information in a timely manner to ensure that participants have a clear understanding of their options and rights.

While minor updates might be important, they typically do not require the same level of communication or urgency as more substantial changes that can alter the structure of a benefits plan or significantly affect participants' costs. Annual reviews and infrequent notifications, such as every three years, do not align with the best practices for keeping employees informed about changes that could have direct financial implications. Thus, prompt and clear communication about significant changes aligns with both ethical considerations and regulatory requirements.