{ Banner Image }

Final Rule Issued Regarding Summary Of Benefits And Coverage Requirement

Click to Share Share  |  Twitter Facebook
Johanna M. Novak
Foster Swift Employment Labor & Benefits Quarterly
Summer 2012

The Internal Revenue Service, Department of Labor and Department of Health and Human Services (collectively, the "Department") published final regulations describing the summary of benefits and coverage ("SBC") requirement of the Patient Protection and Affordable Care Act ("PPACA").

The requirement to provide an SBC applies for disclosures to participants and beneficiaries who enroll or re-enroll in group health coverage through an open enrollment period beginning on the first day of the first open enrollment period that begins on or after September 23, 2012. For participants or beneficiaries who enroll in group health coverage other than through an open enrollment period, the requirement applies on the first day of the first plan year that begins on or after September 23, 2012. The SBC requirement applies to both fully-insured and self-insured plans, regardless of grandfathered plan status.

A written SBC must be provided without charge to the participant and beneficiary with respect to each benefit package offered by the plan for which the participant or beneficiary is eligible. The SBC must be provided as part of any written application materials that are distributed by the plan for enrollment. Under certain circumstances, the plan must also provide the SBC:

  1. after certain changes are made to the SBC,
  2. to special enrollees,
  3. upon request,
  4. and upon renewal of coverage.

These distribution requirements also apply to health insurance issuers. A group health plan required to provide an SBC to participants and beneficiaries satisfies its obligation if another party provides the SBC to the participants or beneficiaries. For example, in the case of a group health plan funded through an insurance policy, the plan satisfies the requirement to provide an SBC with respect to an individual if the issuer provides a timely and complete SBC to the individual.

If a single SBC is provided to a participant and any beneficiaries at the participant's last known address, then the requirement to provide the SBC is generally satisfied. However, if the beneficiary's last known address is different than the participant's last known address, a separate SBC is required to be provided to the beneficiary at his or her last known address.

The SBC must contain certain mandated language, including but not limited to, a description of the coverage, any exceptions or limitations of coverage, uniform definitions of standard insurance terms, and coverage examples. An SBC template is available at www.dol.gov/ebsa/healthreform (We have identified that the following link is no longer active, and it has been removed) under the heading "Summary of Benefits and Coverage and Uniform Glossary". Instructions for completing the template are also available at this link.

The SBC may not exceed 4 double-sided pages in length and may not include print smaller than 12-point font. The SBC may be provided in electronic form if certain distribution requirements are met.

If a plan or issuer makes any material modification to any of the terms of the plan, or coverage that would affect the SBC's content that is not reflected in the most recently provided SBC and that occurs other than in connection with a renewal or reissuance of coverage, then the plan or issuer must provide notice of the modification to enrollees not later than 60 days before the date on which the modification will become effective.

In addition to the requirement to provide an SBC, a group health plan or health insurance issuer must also make available to participants and beneficiaries a uniform glossary of certain health-coverage-related terms and medical terms. A template glossary can be found at the website noted above. The glossary must be made available upon request, in either paper or electronic form (as requested), within 7 business days after receipt of the request.

A group health plan or health insurance issuer that willfully fails to provide information required by these regulations is subject to a fine of not more than $1,000 for each such failure.