The government has issued final regulations that provide guidance regarding the mandate set forth in Healthcare Reform that employees covered by employer-sponsored health plans have access to documents that will help them better understand their health insurance coverage. The required document is known as a "Summary of Benefits and Coverage" (SBC).
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The SBC was originally required to be distributed to employees beginning as of March 23, 2012 (and then annually thereafter). That date was then delayed pending final guidance. Now, the final regulations require that SBCs must be made available during the first open enrollment period beginning on or after September 23, 2012 (which may not be until November or December 2012 for a calendar year plan). SBCs will also need to be provided as of the first day of the plan year after September 23, 2012 for participants who join a health plan outside of open enrollment, such as new hires and dependents acquired through birth or marriage under HIPAA special enrollment rules (January 1, 2013 for calendar year plans).
In addition to final regulations on the SBC, the government also published a final template SBC and model completed SBC, as well as a final glossary of key terms that have standardized definitions in the SBC context.
HOW DOES THIS AFFECT YOU AS AN EMPLOYER?
The final regulation provides detailed instructions about what insurers and health plans must do to comply with the SBC requirement. The requirement is that insurers and health plans provide a standardized SBC and glossary to consumers "when shopping for coverage, enrolling in coverage, at each new plan year, and within seven business days of requesting a copy from their health insurance issuer or group health plan."
Many of the requirements that were set forth in the proposed regulations were not changed. The SBC must still be provided in a consistent four-page (double-sided) format with 12-point font. Individuals must be informed in writing 60 days ahead of any significant plan changes that affect the SBC (other than in connection with a renewal or reissuance of coverage). The SBC must also include a customer service phone number and internet address for questions and copies of plan documents.
The following summarizes the effective dates of these final regulations:
- For participants enrolling or re-enrolling at open enrollment (including late enrollees) – SBC must be provided prior to the first day of open enrollment beginning on/after September 23, 2012
- For participants enrolling other than through open enrollment (including newly eligible and special enrollees) – SBC must be provided starting on the first day of the plan year beginning on/after September 23, 2012 (January 1, 2013 for calendar year plans).
The following are some of the important differences between the proposed and final rules:
- It is no longer mandatory to include premium amounts in the SBC.
- For participants eligible for coverage but not yet enrolled, plans may send a paper postcard electronically or through regular mail to provide instructions for accessing the SBC online.
- Examples of how plans would cover treatment and services were reduced from three medical scenarios to two (having a baby and managing type 2 diabetes).
- SBCs for group health plans may now be included with other documents (e.g., summary plan description) as long as it is "prominently displayed" at the beginning of the document.
WHAT SHOULD I DO NEXT?
In addition to the documents noted above (sample SBC template, a sample completed SBC and Uniform Coverage Glossary), you can visit the U.S. Department of Labor website for more information. We would recommend reviewing these documents with your insurance carriers and your Corporate Synergies representatives.
The penalty for "willful" non-compliance is $1,000 per enrollee for each failure to comply. Corporate Synergies will be consulting with the insurance carriers (and third party administrators) to assist you in complying with this requirement.
If you have any additional questions regarding the information within this eCommunication, please call Corporate Synergies at 1.866.CSG.1719 or CLICK HERE to contact us today.
Corporate Synergies is pleased to provide regular updates on issues affecting group benefits insurance. As an insurance broker and consultant, Corporate Synergies is proactive in monitoring federal and state legislative and regulatory activity to ensure that you stay informed. Our customers call us their "Dedicated Advocates." We work on your behalf.