After a six-month delay in the original effective date, group health plans (including grandfathered plans) will soon need to comply with a new requirement under Health Care Reform to provide a summary of benefits and coverage (SBC) so that employees can more easily compare insurance options.
The new SBC notice requirements are effective for plan years and open enrollment periods beginning on or after Sept. 23, 2012. If you need a refresher, the following are some key points for group health plans:
- An SBC must be provided to plan enrollees at specific times, such as upon application for coverage and at renewal, as well as upon request.
- Insured group health plans can satisfy the requirement if the issuer provides a timely and complete SBC to the participant or beneficiary.
- Combining information for different coverage tiers, different cost-sharing selections (such as levels of deductibles and copayments), and different add-ons to major medical coverage (such as FSAs, HRAs, HSAs, or wellness programs) into one SBC is permissible, provided the appearance is understandable.
- SBCs may be provided either as a stand-alone document or in combination with other summary materials (for example, an SPD), if the SBC information is intact and prominently displayed at the beginning of the materials and in accordance with the SBC timing requirements.
- The SBC must comply with certain appearance and format requirements and must use terminology understandable by the average plan enrollee; an SBC template along with instructions and related materials that may be used to satisfy the notice requirements, is available online.
The U.S. Department of Labor has released three sets of Frequently Asked Questions (FAQs) which address a number of issues relating to the SBC notice requirements. The FAQs also make clear that, during the first year of applicability of the new SBC rules, penalties will not be imposed on plans that are working diligently and in good faith to provide the required content in an appearance that is consistent with the final regulations.