Enrollment season this year will bring an added compliance requirement for employers, which is intended to help plan enrollees know exactly what they’re getting out of their policy.
Beginning on Sept. 23, 180 million Americans with private health insurance will need to be provided with two pieces of information. One is a Summary of Benefits and Coverage, or SBC, that clearly explains their health plan and allows them to compare different coverage options.
Who needs to provide the SBC?
“Typically just about every type of group health plan and health insurance issuer is required to provide an SBC. That would include plans that are grandfathered. This is one of those few requirements out there that is applicable to grandfathered plans,” said Jeff Capwell, a partner at the Charlotte office of McGuireWoods.
Responsibility for compliance depends on the nature of the plan. If it’s a self-insured group health plan, the plan (including the plan administrator) is responsible for providing an SBC.
Who must be provided with the SBC?
“All participants and beneficiaries have a right to receive the SBC,” Capwell said. “The Supreme Court has ruled that participants are essentially people who have a ‘colorable claim’ to benefits. Anybody who is actually enrolled in the plan or a beneficiary who has rights under the plan by virtue of some participant will need to receive the SBC.”
“Colorable means [that] they have an argument to entitlement,” McElligott adds.
When must SBCs be provided?
“[The SBC] is going to be a key component of enrollment processes going forward.” Capwell says. "There are essentially five circumstances in which the document and the glossary will need to be provided":
1. At enrollment (i.e., initial enrollment) - with any written enrollment application materials the plan provides
Checklist: What must be included in an SBC?
- Uniform definitions
- Cross references to Summary Plan Descriptions are not permitted to substitute content requirements
- But may include cross references to address items not required to be addressed in the SBC, such as plan eligibility
- A description of the plan’s coverage for each category of benefits, including exceptions, reductions and limitations
- The plan’s cost-sharing provisions, such as deductibles, co-pays and coinsurance
- Information about renewability and continuation of coverage
- Hypothetical coverage examples selected by HHS to illustrate the benefits that would be provided for certain common benefits scenarios (these examples are included in the final regulations)
- For coverage beginning on or after Jan. 1, 2014, a statement as to whether the plan provides minimum essential coverage and whether the plan pays at least 60 percent of the total cost of benefit
- An internet address (or similar) for obtaining a list of the network providers
- An internet address where an individual may find more information about the prescription drug coverage under the group health plan or health insurance coverage
- An internet address where an individual may review and obtain the uniform glossary
- A disclosure that paper copies of the uniform glossary are available, and a contact phone number for obtaining a paper copy of the uniform glossary
- A statement that the SBC is only a summary, and that the plan document, insurance policy, contract or certificate of insurance should be consulted for more information about the coverage provided under the plan
- Contact information for questions or for obtaining a copy of the plan document or the insurance policy, contract or certificate of insurance
- Premium information
- Statement about the grandfathered status of the plan
- Barcodes and control numbers
- Generic names for benefit package options (i.e., standard option, high option)
- Plan’s eligibility requirements
- Optional: Add-ons to major medical coverage that can affect cost sharing and other information can be combined in the SBC provided the appearance of the SBC remains understandable (examples: FSAs, HSAs)
“I think it's smart for health plans to [also] include some reference to the eligibility requirements in their SBCs, so you're reducing the likelihood of someone claiming that they were told that they have coverage because they received the SBC,” McElligott notes. “There's no requirement to have anything about eligibility in there, but I think a reference to the eligibility requirements in the summary plan description is the prudent thing to do.”
- Rule 1 = Delivery to participants and beneficiaries enrolled in group health plan
DOL safe harbor:
- Active employees with ability to effectively access electronic documents at any location where performing job duties and access to the employer’s electronic information system as an integral part of job duties
- Affirmative consent required for all others (e.g., non-safe harbor employees, retirees, COBRA beneficiaries, and spouses and dependents)
- Rule 2 = Delivery to participants and beneficiaries eligible for but not enrolled
- Electronic delivery permitted under a more streamlined process
- Format must be readily accessible and a paper copy must be provided free of charge upon request
- Internet posting is permitted, provided participant and beneficiary is timely advised of the posting by paper postcard or email
- Must have notice that the documents are available, the Internet address, and notify that the documents are available in paper form upon request.
- Sample postcard is available