Agencies Issue New Guidance on Summary of Benefits and Coverage Requirement

The Department of Labor’s Employee Benefits Security Administration (EBSA) along with the Departments of Health and Human Services (HHS) and the Treasury have released a ninth set of Frequently Asked Questions (FAQs) on the Affordable Care Act’s implementation. This most recently issued guidance addresses questions regarding the health care reform law’s summary of benefits and coverage (SBC) requirement. The Affordable Care Act requires group health plans and health insurance issuers to provide consumers with a SBC that “accurately describes the benefits and coverage under the applicable plan or coverage” to enable enrollees and participants to better compare plan terms and benefits. This SBC must be provided during certain times, such as when potential enrollees are shopping for coverage, when they actually apply for coverage, at each plan year, and upon request. In addition, a notice must be sent to enrollees and policyholders informing them of any significant changes in coverage at least 60 days before such changes take effect. A uniform glossary of common healthcare-related insurance terms must also be provided to consumers at various points in the enrollment process. Final regulations implementing the SBC and uniform glossary requirements were issued in February 2012.

The new set of 14 FAQs provides guidance on a number of SBC issues, and details several temporary enforcement amnesty periods related to certain SBC provisions. Such information includes the following:

• A plan or issuer may provide the SBC electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan, and to those who request a SBC online. In each instance, a written copy must be provided upon request.
• An issuer does not need to provide an individual (or a plan or its sponsor) who received a SBC prior to applying for coverage with another SBC upon application, so long as the information has not changed. However, if by the time the application is filed, there is a change in the information required to be in the SBC, the issuer or plan must update and provide a current SBC to the individual (or plan or its sponsor) as soon as practicable following receipt of the application, but in no event later than seven business days following receipt of the application.
• If the coverage terms are in negotiation after the application has been filed and the information in the SBC changes during that period, a new SBC need not be provided (unless specifically requested) until the first day of coverage.
• Some plans or issuers provide web-based or print materials to illustrate the differences between benefit package options (including comparison charts and broker comparison websites). It is permissible to “combine” SBCs or SBC elements to provide a side-by-side comparison, however, the full SBC for all the benefit packages included in the comparison view/tool must be made available in accordance with the regulations and other guidance.
• Although an entity that willfully fails to provide the SBC or uniform glossary is subject to a fine, during this first year of applicability the agencies will not impose penalties on plans and issuers that are working diligently and in good faith to comply.
• The agencies are developing a calculator that plans can use as a safe harbor for the first year of applicability to complete the coverage examples portion of the SBC.
• The agencies will impose a temporary enforcement amnesty period on plans that use “carve out” arrangements. An issuer is not obligated to provide coverage information for benefits that it does not insure. Specifically, the guidance explains that “a plan administrator that uses two or more insurance products provided by separate issuers with respect to a single group health plan may synthesize the information into a single SBC, or may contract with one of its issuers (or other service providers) to perform that function. Due to the administrative challenges of combining benefit package information from multiple issuers, during the first year of applicability, for enforcement purposes, with respect to a group health plan that uses two or more issuers, the Departments will consider the provision of multiple partial SBCs that, together, provide all the relevant information to meet the SBC content requirements.” In such circumstances, the plan administrator should take steps (such as a cover letter or a notation on the SBCs themselves) to indicate that the plan provides coverage using multiple different insurers and that individuals who would like assistance understanding how these products work together may contact the plan administrator for more information. The agencies will not take any enforcement action against a plan or issuer for failing to provide an SBC before September 23, 2013 with respect to an insured product that is no longer being actively marketed for business, provided the SBC is provided no later than September 23, 2013.
• The agencies will not take any enforcement action against a group health plan or group health insurance issuer for failing to provide an SBC with respect to expatriate coverage during the first year of applicability.

The agencies have also made available a corrected Summary of Benefits and Coverage Template (pdf); a corrected Sample Completed SBC (pdf) and HHS Guidance on Inputs for Coverage Example Calculator.

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