A Summary of Benefits and Coverage (SBC) form is required to be completed annually for every health plan, to allow individuals to easily compare health coverage options when shopping for or enrolling in group and individual health coverage. The Departments of Labor, Treasury and Health and Human Services (the Departments), which together are responsible for implementing the group health plan standards under the Affordable Care Act,1 have slightly revised the rules governing the SBC.2 In general, the rules now include guidance released over the past few years in the form of answers to frequently asked questions (FAQs).
The new rules applicable to group health plans are discussed below.
In general, if a group health plan is insured, either the plan or insurer may prepare and distribute the SBC. Plan sponsors can rely on insurers as long as the insurer provides the SBC in a timely and complete manner.
The new rules include two additional, related provisions:
SBCs may be provided electronically in connection with online enrollment or online renewal of coverage.4 The new rules incorporate guidance from previous FAQs. As before, a paper copy must be provided upon request, free of charge.
In December 2014, the Departments proposed a new SBC template that includes significant changes from the existing template.5 However, the Departments will not release the final new template until later in 2015 or early 2016. They anticipate that it will have to be used for plan years beginning on or after January 1, 2017 (including open enrollment periods conducted in connection with that plan year). Plan sponsors should review the new template when it is released. It may include updated sample claims costs for the existing coverage examples plus a new third coverage example (simple fracture with emergency room visit).
Plan sponsors should assure that processes for providing SBCs are well organized and obligations are clearly stated between the plan and its insurers or service providers. Plans that rely on third parties to prepare SBCs should review them and monitor the process so that they comply with the new rules. Plan sponsors should look for the new SBC template scheduled for release by January 2016.
1 The Affordable Care Act is the shorthand name for the Patient Protection and Affordable Care Act (PPACA), Public Law No. 111-48, as modified by the subsequently enacted Health Care and Education Reconciliation Act (HCERA), Public Law No. 111-152.
2 The final rules were published in the June 16, 2015 Federal Register.
3 See Sibson Consulting’s May 18, 2012 Capital Checkup, “Plan Sponsors Working Diligently and in Good Faith on the Summary of Benefits and Coverage Will Not Face Penalties During the First Year.” SBCs were also discussed in Sibson’s August 2, 2013 Capital Checkup, “Affordable Care Act’s Summary of Benefits and Coverage Must be Completed for 2014 Plan Year.”
5 The proposed template is available on Department of Labor website.
Update is Sibson Consulting’s electronic newsletter summarizing compliance news. Update is for informational purposes only and should not be construed as legal advice. It is not intended to provide guidance on current laws or pending legislation. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.
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