The Affordable Care Act (ACA) requires group health plans and health insurers to prepare and distribute a brief, uniform summary of benefits and coverage (SBC) that aims to provide individuals with a better understanding of the health coverage offered under an arrangement and a basis of comparison with other health plans and policies.
The three agencies responsible for interpreting and enforcing the ACA—the U.S. Departments of the Treasury, Labor, and Health and Human Services—have now issued final regulations and additional forms and guidance addressing SBCs. Under these rules, the SBC must be provided in three different circumstances:
- From a health insurer to a group health plan
- From a health insurer or group health plan to a participant or beneficiary
- From a health insurer to an individual subscriber or dependent
In a prior alert, we outlined the rules as they were proposed on August 22, 2011. The final rules track the proposed rules in many respects, with certain adjustments. The most immediate relief offered by the final rules is a delay in their start date. Originally scheduled to take effect next month, the rules have been pushed back six months or more. Group health plans and health insurers will not need to provide SBCs to employees and dependents until the first annual enrollment period that begins on or after September 23, 2012. This delay will allow most group health plan sponsors to coordinate distribution of the SBC with the distribution of open enrollment materials.
Despite an effort to exempt large self-funded health plans that typically produce and distribute detailed summary plan descriptions, the SBC requirements will apply whether or not a plan is insured. However, plans that provide “excepted benefits” under the ACA, such as a health flexible spending account (FSA) funded only by reductions in employee compensation, as well as stand-alone vision and dental plans, do not need to provide SBCs. The rules also attempt to avoid duplicative SBCs by providing that group health plan sponsors may coordinate with health insurers to provide a single SBC and by allowing a single SBC to be provided per family, except where a family member is known to live at a different address. The final rules permit an SBC to be included in a summary plan description (SPD) as long as it is prominently displayed early in the SPD’s provisions (for example, right after the table of contents).
In distributing the SBC, group health plan sponsors will need to follow a number of rules, including the following:
- In addition to providing the SBC with enrollment materials, an SBC must be provided within 7 business days after a request from a participant or beneficiary.
- Material mid-year changes must be disclosed at least 60 days in advance.
- Disclosure may be made electronically in appropriate circumstances with paper copies available.
- Where 10 percent or more of a county’s population speaks a particular non-English language, the SBC must be made available in that language.
The content of the SBC must follow the prescribed form. Required information that does not fit that form must be provided in a manner that adheres as closely as possible to the form. The content requirements have been simplified to address certain concerns. For example, an SBC no longer needs to provide premium information and the examples that need to be provided have been reduced. A uniform glossary of terms must still be provided.
The content of the SBC will change over time. Certain changes to address matters that relate to state health insurance exchange requirements are expected to be introduced for coverage provided in 2014.
In preparing SBCs for your plans, you will want to look at the prescribed form, the instructions for completing the form, the sample completed form, and other materials that the government has prepared for these purposes. If your plans operate on a calendar year, you should consider developing your SBCs this spring and summer to ease the burdens during the traditionally hectic weeks leading up to annual enrollment. It is also worth watching for additional guidance on practical questions that emerge as group health plan sponsors and insurers start to implement the new requirements.
As the federal health care reform effort gained steam, Ballard Spahr attorneys launched the Health Care Reform Initiative to monitor and analyze legislative developments. With federal health care reform now a reality, our attorneys are helping health care entities and employers understand the relevant changes and plan for the future. For more information on the SBC requirements or any aspect of the ACA, please contact Edward I. Leeds at 215.864.8419 or firstname.lastname@example.org, or the member of the Employee Benefits and Executive Compensation Group with whom you work.