Agencies Issue Proposed Rule Outlining Requirements for Summary of Benefits and Coverage

apples to oranges.JPGThe DOL’s Employee Benefits Security Administration (EBSA) along with the Departments of the Treasury and Health and Human Services have issued a proposed rule (pdf) setting forth the requirements of the Summary of Benefits and Coverage (SBC) disclosure that health insurers and group health plans must provide to consumers to enable them to better compare benefits and coverage. The Affordable Care Act mandates that the SBC contain information that “accurately describes the benefits and coverage under the applicable plan or coverage.” Among other requirements, the SBC must be provided to all consumers when they are shopping or enrolling in health insurance coverage, as well as 30 days prior to the re-issuance or renewal of coverage for each plan year, and within seven days upon request. Health plans and issuers are also required to provide notice at least 60 days before any material modification is made in the plan or coverage during the plan or policy year. The SBC must be presented in a uniform format, use terminology understandable by the average plan enrollee, not exceed four double-sided pages in length, and not include print smaller than 12-point font.

The Act also requires that consumers be provided a uniform glossary of terms commonly used in health insurance coverage. To this end, the proposed rule outlines the standards that will govern who provides an SBC, who receives an SBC, when the SBC will be provided, and how it will be provided. In conjunction with the proposal, the agencies are issuing a proposed template (pdf) for the SBC, instructions, sample language, a guide for coverage examples calculations to be used in completing the template; and a uniform glossary that would satisfy the law’s disclosure requirements.

In a news release, Secretary of Labor Hilda L. Solis said: “Workers and their families need clear and understandable information regarding their health coverage,” adding: “Today's proposal is a common-sense step that will help workers quickly and easily compare different coverage options, in order to make more informed decisions.”

Generally, under the proposed rule, the SBC will summarize the key features of the plan or coverage, including the covered benefits, cost-sharing provisions, and coverage limitations and exceptions. In order to help consumers compare plans, the SBC will also include “Coverage Examples,” a standardized health plan comparison tool akin to nutrition label information. As discussed in a fact sheet, the Coverage Examples “would illustrate what proportion of care expenses a health insurance policy or plan would cover for three common benefits scenarios—having a baby, treating breast cancer, and managing diabetes.” Plan issuers would also have to illustrate how claims would be processed under each scenario. The proposed template document includes specific instructions and details about a HHS website that can assist with this simulation. According to the HHS, additional scenarios – but no more than six in total – may be required in future SBCs.

Overall, the proposed rule follows the requirements set forth in the statute, which states that an SBC must include:

  • Uniform definitions of standard insurance terms and medical terms so that consumers may compare health coverage and understand the terms of (or exceptions to) their coverage;
  • A description of the coverage, including cost sharing, for each category of benefits identified by the Departments;
  • The exceptions, reductions, and limitations on coverage;
  • The cost-sharing provisions of the coverage, including deductible, coinsurance, and co-payment obligations;
  • The renewability and continuation of coverage provisions;
  • A coverage facts label that includes examples to illustrate common benefits scenarios (including pregnancy and serious or chronic medical conditions) and related cost sharing based on recognized clinical practice guidelines;
  • A statement about whether the plan provides minimum essential coverage as defined under section 5000A(f) of the Code, and whether the plan’s or coverage’s share of the total allowed costs of benefits provided under the plan or coverage meets applicable requirements;
  • A statement that the SBC is only a summary and that the plan document, policy, or certificate of insurance should be consulted to determine the governing contractual provisions of the coverage; and
  • A contact number to call with questions and an Internet web address where a copy of the actual individual coverage policy or group certificate of coverage can be reviewed and obtained.

The proposed rule also includes four additional elements for the SBC: (1) for plans and issuers that maintain one or more networks of providers, an Internet address (or similar contact information) for obtaining a list of the network providers; (2) for plans and issuers that maintain a prescription drug formulary, an Internet address where an individual may find more information about the prescription drug coverage under the plan or coverage; (3) an Internet address where an individual may review and obtain the uniform glossary; and (4) premiums (or cost of coverage for self-insured group health plans).

In addition, until a plan or coverage is required to provide an SBC for coverage beginning on or after January 1, 2014, the minimal essential coverage statement is not required to be included in the SBC. Moreover, the proposal notes that the insurance exchanges are set to be operational in 2014. Therefore, “because the statutory SBC elements include the information in the minimum essential coverage statement, the Departments invite comments on how employers might provide this information to employees and the Exchanges in a manner that minimizes duplication and burden.” The agencies also acknowledge that some of the plan level information that is required to be provided in the SBC is also required to be provided under section 6056 of the Code (requiring employers to report to the IRS specific information related to employer-sponsored health coverage provided to employees) and are coordinating their efforts to determine how and whether the same data can be used for multiple purposes.

The agencies also request comment as to whether it would be “feasible or desirable to permit plans and issuers to input plan- or policy-specific information into a central Internet portal, such as the Federal health care reform website (www.healthcare.gov), that would use the information to generate the coverage examples for each plan or policy.”

In order to prevent “unnecessary duplication” with respect to group health coverage, the proposal lays out the following three provisions: 1) the requirement to provide an SBC will be considered satisfied for all entities if the SBC is provided by any entity, so long as all timing and content requirements are also satisfied; 2) only one SBC needs to be sent to an address if the participant and any beneficiaries who are known to reside at the same address; and 3) unless otherwise requested, at the time of renewal, the plan and issuer only need to automatically provide a new SBC for the benefit package in which a participant or beneficiary is enrolled. Under these proposed regulations, a group health plan or a health insurance issuer will provide the SBC as a stand-alone document . However, the agencies have invited comments on whether and how the SBC might best be coordinated with the summary plan description and other group health plan disclosure materials.

As to the definitions to be included in the uniform glossary, the new sections to the Public Health Service (PHS) Act added by the Affordable Care Act direct the agencies to develop standards and definitions for a number of insurance- and medical-related terms. In addition to the ones listed in the statute, the proposed rule includes standards and definitions for the following terms: allowed amount, balance billing, complications of pregnancy, emergency medical condition, emergency services, habilitation services, health insurance, in-network co-insurance, in-network co-payment, medically necessary, network, out-of-network coinsurance, plan, preauthorization, prescription drugs, primary care physician, primary care provider, provider, reconstructive surgery, specialist, and urgent care. The agencies seek comment on the uniform glossary, “including the content of the definitions and whether there are additional terms that are important to include in the uniform glossary so that individuals and employers may understand and compare the terms of coverage and the extent of medical benefits (or exceptions to those benefits).” For example, the agencies ask whether glossary definitions of any of the following terms would be helpful: claim, external review, maternity care, preexisting condition, preexisting condition exclusion period, or specialty drug.

With respect to the sample template, the agencies seek comment on the following issues:

  • The SBC template is intended to be used by all types of plan or coverage designs. The agencies seek input on issues that may arise from the use of this template for different types of plan or coverage designs (for example, designs using tiered provider networks or group health plans that may use multiple issuers or service providers to provide or administer different categories of benefits within a benefit package).
  • Comments are sought regarding any modifications needed for use by group health plans (e.g., with respect to disclosure regarding cost of coverage and changes in terminology required for self-insured plans, such as use of the term “plan year” instead of “policy period”).
  • The agencies ask whether the content of the SBC should require inclusion of additional information, such as information regarding any preexisting condition exclusion under the plan or policy, status as a grandfathered health plan, or other information that might be important for individuals to know about their coverage and how the SBC template could be modified to ensure effective disclosure of these additional elements, while respecting the statutory formatting requirements. For example, comments are requested on whether a simplified reporting method, such as a checkbox, could be used to disclose preexisting condition exclusions and grandfather status.
  • The fourth page of the SBC template includes a list of services that plans and issuers must indicate as either excluded or covered in the “Excluded Services & Other Covered Services” chart. The agencies are asking whether services should be added or removed from this list, as well as whether the disclosure stating that the list is not complete is adequate.
  • The SBC template includes a disclosure on the first page indicating to consumers that the SBC is not the actual policy and does not include all of the coverage details found in the actual policy. The agencies seek comment on the sufficiency of this disclosure.

Finally, group health plans and health insurance issuers must comply with the SBC and uniform glossary requirements beginning on or after March 23, 2012. The agencies invite comment on the feasibility of this deadline.

Comments on these proposed regulations and templates are due within 60 days of their publication in the Federal Register, which is scheduled for August 22, 2011. Comments on either proposal must include the regulatory identification number (RIN) 1210-AB52 and be submitted through the federal eRulemaking portal, via email to: E-OHPSCA2715.EBSA@dol.gov, or by mail or hand delivery to: Office of Health Plan Standards and Compliance Assistance, Employee Benefits Security Administration, Room N-5653, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, DC 20210, Attention: RIN 1210—AB52.

Photo credit: geotrac

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.