The complexity of group health insurance makes it difficult for employers to shop for health plans and for employees to choose among several employer-provided options. Unfortunately, helpful consumer information is not typically found in the patchwork of various non-uniform and intricate consumer disclosures, such as the Summary Plan Description required by ERISA. To help consumers make informed decisions about health care coverage, the Affordable Care Act created the Summary of Benefits and Coverage and Uniform Glossary requirement.
Under this requirement, insurers and employers are required to give group health plan participants and beneficiaries, which are generally employees and their dependents, a short, plain-language Summary of Benefits and Coverage (SBC). A Uniform Glossary of terms used in health coverage and medical care must also be made available to plan participants and beneficiaries.
Insurers must provide the SBC to employers:
- Upon Application (no later than 7 business days following receipt of the application)
- By 1st Day of Coverage (if any changes to the initial SBC were made)
- Upon Renewal (if renewal is automatic, no later than 30 days before the new plan year; if renewal applications are required, no later than the date application materials are distributed)
- Upon Request (no later than 7 business days following receipt the request)
Plan participants and beneficiaries must also receive the SBC:
- Upon Application (at the same time written application materials are distributed)
- By 1st Day of Coverage (if any changes to the initial SBC were made)
- Upon Renewal (if renewal is automatic, no later than 30 days before the new plan year, or within 7 business days after the new policy is issued; if renewal applications are required, no later than the date applications are distributed to participants)
- Upon Request (no later than 7 business days following receipt the request)
Though insurers and employers are both responsible for providing the SBC to plan participants and beneficiaries, only one SBC is required. Under the regulations, the obligation of one is satisfied if the other provides the required SBC in a timely manner. To avoid violations, employers must confirm, not assume, that the insurer is providing the required SBCs to plan participants and beneficiaries.
The SBC must include the following:
- Uniform definitions of standard insurance and medical terms
- Descriptions of coverage, including cost sharing, for each category of benefits
- Exceptions, reductions and limitations of coverages
- Cost-sharing provisions, including deductible, coinsurance and copayment obligations
- Renewability and continuation of coverage
- Coverage examples
- A statement about whether the plan or coverage provides minimum essential coverage and whether the share of the total allowed costs meets applicable requirements
- A statement that the SBC is only a summary of coverage
- contact information (telephone number, Internet address) for asking questions or requesting copies of plan or policy documents
- An Internet address (or similar contact information) for obtaining a list of network providers (for plans with one or more networks of providers)
- An Internet address (or similar contact information) for obtaining coverage information (for plans that use a formulary for prescription drug coverage)
The SBC must also provide an Internet address and phone number that plan participants and beneficiaries can use to obtain the Uniform Glossary, which provides definitions for a number of health-coverage-related and medical terms. Insurers and employers must provide the Uniform Glossary, in either paper or electronic form, no later than 7 business days after receiving a request from a plan participant or beneficiary.
The SBC and Uniform Glossary requirements, which also apply to grandfathered plans, became effective on September 23, 2012. However, the administration extended various safe harbors and enforcement relief through the end of the second year of applicability, so penalties will not be imposed on those working diligently and in good faith to meet the requirements.
Unlike the general descriptions provided in this article, the regulations are highly technical and very specific. For example, the SBC cannot be more than 4 double-sided pages in length and cannot use print smaller than 12-point font. Paying attention to the details is critical. Since a willful failure to provide the required information can result in a $1,000 fine for each plan participant or beneficiary, employers cannot afford a casual approach to SBCs.
At Setnor Byer Insurance & Risk, we are committed to serving as a resource for Affordable Care Act compliance. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.
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