Final rules have been issued relating to the requirement under Health Care Reform that group health plans provide participants and beneficiaries a summary of benefits and coverage (SBC) and related notices. The final rules include a 6-month delay in the effective date for compliance (originally set for March 23, 2012), and make changes to a number of requirements proposed in earlier regulations.
The following highlights major areas of importance employers should know about related to SBCs.
1. What notices are required in connection with the SBC?
Group health plans are required to provide participants and beneficiaries, without charge, a written SBC containing specific information about the plan coverage, as well as a uniform glossary of terms commonly used in health insurance coverage, at several points during the enrollment process and upon request.
Additionally, notice of any material modification in any of the terms of the plan or coverage that is not reflected in the most recently provided SBC generally must be provided to enrollees at least 60 days before the effective date of the change.
SBCs provided in connection with group health plan coverage may be provided in combination with other summary materials (for example, a summary plan description or SPD), if the SBC information is intact and prominently displayed at the beginning of the materials (such as immediately after the Table of Contents in an SPD) and in accordance with the timing requirements for providing an SBC.
2. Who is responsible for providing the notices?
An insured group health plan satisfies the requirement to provide an SBC if the issuer provides a timely and complete SBC to the participant or beneficiary. However, the final rules ultimately hold both the group health plan and the issuer responsible, so an employer (as the plan administrator or sponsor) should make arrangements with the issuer to ensure compliance.
Advance notice of material modification to the plan or coverage must be provided by the group health plan or the issuer. Again, an employer should coordinate with the issuer to ensure compliance.
3. What information is required to be included in the SBC?
A complete list of required information is provided in the final rules. Some of the requirements include: uniform standard definitions of medical and health coverage terms; a description of the coverage and cost sharing requirements; and information regarding any coverage limitations or exceptions. The SBC also must include coverage examples, similar to the Nutrition Facts labels required for packaged foods, which illustrate sample medical situations and describe how much coverage the plan would provide in an event such as having a baby or managing Type II diabetes.
4. When is compliance required?
The new requirements apply with respect to participants and beneficiaries who enroll or re-enroll in group health coverage through an open enrollment period (including re-enrollees and late enrollees), beginning on the first dayof the first open enrollment period that begins on or after Sept. 23, 2012.
For disclosures to participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees), the requirements apply beginning on the first day of the first plan year that begins on or after Sept. 23, 2012.
5. How should the SBC and uniform glossary look?
Both the SBC and the uniform glossary must comply with certain appearance and format requirements and must use terminology understandable by the average plan enrollee. The SBC may not exceed 4 double-sided pages in length, with print no smaller than 12-point font.
An SBC template and uniform glossary, along with instructions and related materials that may be used to satisfy the notice requirements, are available from the Center for Consumer Information & Insurance Oversight. Updated templates and other materials will be issued for later years to accommodate certain changes under Health Care Reform that are scheduled to take place beginning in 2014.
For More Information
Check out our Health Care Reform Checklist for information on other key provisions of Health Care Reform that may impact your company this year.