On April 23, 2013, the Departments of Labor, Health and Human Services (HHS), and Treasury issued Frequently Asked Questions (FAQs) regarding implementation of the Summary of Benefits and Coverage (SBC) provision of the Patient Protection and Affordable Care Act (PPACA).
What’s New?
- Effective January 1, 2014, the SBC will need to state whether the plan provides “minimum essential coverage” (MEC) as required by the “individual mandate.”
- It will also need to state whether the plan meets the “minimum value” (MV) requirement. Minimum value means the plan pays at least 60% of allowed charges for covered services, as required by the “employer mandate.”
The Departments provided a new template that incorporates these statements, but allows plans or issuers that are unable to modify their SBCs to continue using the current template, as long as they provide a cover letter or other disclosure that confirms whether the plan meets the MEC/MV requirements.
What Stayed the Same?
- Coverage examples have not changed for 2014.
- The SBC template was not changed to reflect PPACA’s requirement to eliminate annual limits on essential health benefits. Original instructions still apply:
- Answer “no” where the template asks, “Is there an overall annual limit on what the plan pays?”
- In the Why This Matters column, state: “The chart starting on page 2 describes any limits on what the plan will pay for specific covered services, such as office visits.”
- As an alternative, plans/issuers are now permitted, but not required, to remove the entire row from the document if there are no plan level annual dollar limits.
Additional Safe Harbors Extended
Regulators are extending the safe harbors and enforcement relief provided last year. Penalties will not be imposed on plans/issuers that are working “diligently and in good faith” to comply. The Departments will:
- Continue to work with plans/issuers to help them come into compliance.
- Allow modifications to the SBC for plan terms/conditions that do not fit within the SBC requirements, as long as the SBC is completed as closely in line with the instructions as possible.
- Allow electronic delivery if enrollment/renewal is electronic, if a person requests the SBC be provided electronically or in compliance with ERISA electronic delivery safe harbor.
- Permit continued use of the HHS coverage examples calculator.
- Allow carve out benefits to be provided in separate SBCs “until further guidance is issued.”
- Exempt fully insured and self-insured Expatriate and Medicare Advantage plans for 2014.
- Extend the anti-duplication rule to student health insurance – if another party (e.g., a health insurance issuer) provides a timely and complete SBC to the individual, the SBC requirement is satisfied.
- Extend relief to closed blocks of business to September 23, 2014, as long as the product is not actively marketed, never provided an SBC or was not marketed after September 23, 2012. Closed blocks are no longer sold, but may continue to have individuals enrolled in the plans.
SBC Refresher
Purpose of SBC
Provide individuals with standard information so they can compare medical plans as they make decisions about which plan to choose. Health insurers and self-funded group health plans must provide the SBC to individuals:
- When they enroll in coverage for the first time
- Prior to the beginning of each new plan year (at open enrollment or within 30 days if enrollment is automatic)
- Within seven business days of a request
Requirements of SBC
The SBC must include a:
- Four-page overview of plan benefits, cost sharing and limitations
- Required set of coverage examples explaining how the plan works
- Phone number and internet address for obtaining copies of plan documents
A standard glossary of medical and insurance terms must also be available.
The penalty for “willful” non-compliance is $1,000 per enrollee. Other ERISA and tax penalties may apply.
Read the SBC FAQs
