AFFORDABLE CARE ACT – SUMMARY OF BENEFITS AND COVERAGE

The 2010 health care reform legislation, Patient Protection and Affordable Care Act (“Affordable Care Act”), created a new disclosure tool for group health plans and issuers of health insurance policies – the Summary of Benefits and Coverage.  This new document, which will be called the SBC, is in addition to the existing SPD (summary plan description) and SMM (summary of material modifications).  The SBC can, however, be included in the SPD so long as it is intact and prominently displayed at the front of the SPD.

The SBC can be no more than 4 double-sided pages long, and the print can be no smaller than 12 point font.  If your plan is fully-insured, the insurance company (the “issuer” in Affordable Care Act-speak) must provide the SBC to you.  Unless the issuer has agreed in writing to assume the responsibility of providing the SBC to the plan’s participants and beneficiaries, that responsibility rests with the plan administrator – almost always the employer.  For self-funded plans, of course, the plan administrator must prepare and distribute the SBC.

The SBC may be distributed in electronic or paper form.  The Department of Labor’s existing electronic disclosure regulations apply; and, participants and beneficiaries must be given a copy in paper form without charge upon request.  SBC must be provided in a “culturally and linguistically appropriate manner.”  That concept is explained in regulations issued under the Affordable Care Act’s claims and appeals procedures.

Despite the 4-page limit, quite a bit of information must be included in the SBC.  Required content includes (but is not limited to) a glossary of uniform definitions of standard insurance and medical terms; a description of coverage, including cost sharing, for each category of benefits; exceptions, reductions, and limitations on coverage; and coverage examples that include illustrating common benefits scenarios and related cost sharing.  The regulators (the Departments of Health and Human Services, Labor, and Treasury) have provided a glossary, a template, a sample completed SBC, and detailed instructions for preparing the SBC.  That information is available at http://www.dol.gov/ebsa/healthreform.  More guidance on the topic is expected and will also be posted at that site.

We would like to able to provide a date certain on which the SBC rules become applicable, but it isn’t that easy.  For group health plans with open enrollment, compliance is required on the first day of the first open enrollment period that begins on or after September 23, 2012.  Group health plans without open enrollment periods must comply beginning on the first day of the first plan year that begins on or after September 23, 2012 (January 1, 2013 for calendar year plans).

Noncompliance carries the potential for significant penalties.  The regulators, however, have indicated that, in the short term at least, their “approach to implementation is and will continue to be marked by emphasis on assisting (rather than imposing penalties on) plans, issuers, and others that are working diligently and in good faith to understand and come into compliance with the new law.”

With an emphasis on litigation, Sara Hauptfuehrer’s practice focuses on Title I of the Employee Retirement Income Security Act of 1974 (ERISA). She also handles employment discrimination litigation and counsels on a number of employee benefits-related issues.
 
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