On February 9th, the Departments of Labor, Health and Human Services, and Treasury jointly issued final regulations to implement the summary of benefits and coverage (“SBC”) requirement under federal health care reform. These final regulations impose additional requirements on employers and include a six-month compliance delay from the original effective date of March 23, 2012, to September 23, 2012. The Departments intend to issue updated materials for later years as additional requirements under health care reform become applicable.
We refer you to our January 12, 2012 Practice Update, titled Ringing in the New Year – Benefits Style for a general overview of the SBC requirements. The SBC is intended to serve as an easy-to-read, informative summary of benefits available under a plan – in some sense, a “mini-SPD” (summary plan description). Its purpose is to provide clear and consistent information that will enable employers and participants to compare and understand the costs and benefits of different health coverage options. The SBC rules apply to both fully insured and self-funded health plans, as well as grandfathered and non-grandfathered health plans.
Significant changes made by the final regulations referenced above are as follows:
- The SBC may be provided either as a stand-alone document or in combination with other summary materials (for example, a summary plan description) if the SBC information is intact and prominently displayed at the beginning of the materials (such as immediately after the table of contents in a summary plan description).
- To the extent a plan’s terms that are required to be described in the SBC template cannot reasonably be described in a manner consistent with the template and instructions, the plan or issuer must accurately describe the relevant plan terms while using its best efforts to do so in a manner that is as consistent with the instructions and template format as reasonably possible. This may occur, for example, if a plan provides different benefits based on facility types (such as hospital inpatient versus non-hospital inpatient).
- Premium information has been eliminated from the required content for the SBC document.
- Plans that provide expatriate coverage may include a reference in the SBC document regarding where to find information about benefits and coverage provided outside of the United States, instead of requiring these plans to summarize such coverage.
- The number of coverage examples required for SBCs has been reduced to two: having a baby (normal delivery) and managing type 2 diabetes (routine maintenance of a well-controlled condition). The breast cancer example has been removed from the template. Additionally, the language has been modified to clarify that the coverage examples are not intended to demonstrate costs for an actual, specific person (for example, the “You Pay” language was changed to “Patient Pays”).
The Departments have made available the following documents, accessible at http://cciioo.cms.gov and www.dol.gov/ebsa/healthreform:
- SBC Template. This document is available in modifiable format (MS Word) and is available in translated form in Spanish, Tagalog, Chinese, and Navajo.
- Sample Completed SBC. This document was completed using information for sample health coverage and provides a general illustration of a completed SBC.
- Instructions. Separate instructions are available for group health coverage and for individual health insurance coverage.
- Why This Language Matters. The SBC instructions include language that must be used when completing the “Why This Matters” column on the first page of the SBC template. Two language options are provided depending on whether the answer in the applicable row is “yes” or “no,” according to the terms of the plan or coverage.
- Coverage Examples. This guidance document provides all the information necessary to perform the coverage example calculations.
We recognize that the administrative process of compliance may be burdensome and costly; therefore, we recommend that you begin the process early. We are available to guide you through the compliance process and provide assistance as needed.