Obamacare – Setnor Byer Insurance & Risk

ACA’s affordability threshold will be lower than ever before in 2024

By Anita Byer, Setnor Byer Insurance & Risk

The Affordable Care Act’s affordability threshold will be lower in 2024 than ever before. The Internal Revenue Service recently announced that the affordability threshold for employer-sponsored group health plans that begin in 2024 will be 8.39 percent. The affordability threshold, which is currently 9.12 percent, affects an employer’s potential liability for shared responsibility assessments (the pay-or-play penalty) under the ACA. The decreasing threshold means that an affordable group health plan in 2023 could become “unaffordable” in 2024, despite identical pricing and employee contribution requirements. So, employers with 50 or more full-time or full-time equivalent employees (Applicable Large Employers or ALEs) must review, and possibly adjust, employee cost and contribution requirements for group health insurance coverage in 2024.

Applicable Large Employers are generally required to offer full-time employees “affordable” minimum essential health care coverage to avoid an ACA shared responsibility assessment (penalty). Affordability is calculated as a percentage of household income. To be affordable in 2024, an employee’s required contribution for the lowest-cost, self-only coverage option offered by their employer (regardless of which coverage option is selected) cannot exceed 8.39 percent of that employee’s household income.

Since employers typically do not know their employees’ household incomes, ALEs can use one of the ACA’s affordability safe harbors to determine the maximum amount an employee can be required to pay without exceeding the affordability threshold. For example, assume Sam works 40 hours per week for 52 weeks, earning $12 per hour. The most Sam can be required to pay for the lowest-cost, self-only coverage option offered by Sam’s employer during the 2024 plan year is:

$174.51 per month (W-2 Safe Harbor Method);
$130.88 per month (Rate of Pay Safe Harbor Method); or
$101.94 per month (Federal Poverty Line Safe Harbor Method [48 Contiguous States 2023]).

If Sam earned $15 per hour, Sam’s required contribution for the lowest-cost, self-only coverage option cannot exceed:

$218.14 per month (W-2 Safe Harbor Method);
$163.61 per month (Rate of Pay Safe Harbor Method); or
$101.94 per month (Federal Poverty Line Safe Harbor Method [48 Contiguous States 2023]).

Note that the basis on which the ACA’s affordability threshold is applied is plan-year, not calendar-year. In other words, next year’s affordability threshold (8.39 percent) will apply on the first day of the new plan year in 2024, which could be January 1, July 1, or any other day in 2024. For non-calendar-year plans, the current affordability threshold (9.12 percent) will continue to apply until the new plan year begins in 2024.

The consequences for failing to satisfy the ACA’s affordability requirement can be severe. Applicable Large Employers need to review, and possibly adjust, next year’s group health plan offerings, pricing options, cost-sharing structure, and in some cases, compensation levels, to ensure compliance with the ACA’s affordability requirement.

Please contact us if you would like to learn more about affordable group health plan options for 2024.

ACA’s affordability threshold will be lower in 2023

By Anita Byer, Setnor Byer Insurance & Risk

The IRS announced that the Affordable Care Act’s affordability threshold for employer-sponsored group health plans will be 9.12 percent in 2023. Employers with 50 or more full-time or full-time equivalent employees (Applicable Large Employers or ALEs) must recognize that next year’s affordability threshold will be lower than this year’s, which is 9.61 percent. This means that a group health plan that was affordable in 2022 may be unaffordable in 2023, despite being exactly the same. Many ALEs will need to adjust their group health plan contribution requirements to avoid potential ACA penalties in 2023.

ALEs are generally required to offer full-time employees “affordable” minimum essential health care coverage to avoid the ACA’s employer shared responsibility (pay-or-play) penalty. Affordability is calculated as a percentage of household income. To be affordable in 2023, an employee’s required contribution for the lowest-cost, self-only coverage option offered by their employer (regardless of which coverage option is actually selected) cannot exceed 9.12 percent of that employee’s household income.

Since employers typically do not know their employees’ household incomes, ALEs can use one of the ACA’s affordability safe harbors to determine the most employees can be required to pay without exceeding the affordability threshold. For example, let’s assume Jordan works 40 hours per week for 52 weeks, earning $10 per hour. The most Jordan can be required to pay for the lowest-cost, self-only coverage option offered by Jordan’s employer in 2023 is:

$158.08 per month (W-2 Safe Harbor Method);
$118.56 per month (Rate of Pay Safe Harbor Method); or
$103.28 per month (Federal Poverty Line Safe Harbor Method—2022).

If Jordan earned $15 per hour, Jordan’s required contribution for the lowest-cost, self-only coverage option cannot exceed:

$237.12 per month (W-2 Safe Harbor Method; “Box 1”);
$177.84 per month (Rate of Pay Safe Harbor Method); or
$103.28 per month (Federal Poverty Line Safe Harbor Method—2022).

The affordability threshold for group health plans beginning in 2023 is only a fraction of a percent lower than 2022’s threshold, but the consequences for ALE’s that fail to adapt accordingly can be substantial. To ensure compliance with the ACA’s affordability requirement in 2023, ALEs need to evaluate and possibly adjust their health plan pricing options, cost-sharing structure, and in some cases, compensation levels.

Please contact us if you would like to learn more about affordable group health plan options for 2023.

Affordable Care Act: Will Your Group Health Plan be “Affordable” in 2022?

By Anita Byer, Setnor Byer Insurance & Risk

The IRS announced that the Affordable Care Act’s affordability threshold for employer-sponsored group health plans will be 9.61 percent in 2022. Employers with 50 or more full-time or full-time equivalent employees (Applicable Large Employers or ALEs) must recognize that next year’s affordability threshold will be lower than the 9.83 percent used in 2021. This means that a group health plan that was affordable in 2021 may be considered unaffordable in 2022, despite being exactly the same. As a result, many ALEs will need to make adjustments to avoid potential ACA penalties in 2022.

ALEs are generally required to offer full-time employees “affordable” minimum essential health care coverage to avoid the ACA’s employer shared responsibility (pay-or-play) penalty. Affordability is calculated as a percentage of household income. Since employers typically do not know their employees’ household income, ALEs can use one of the ACA’s affordability safe harbors to determine the most employees can be required to pay without exceeding the affordability threshold.

For example, let’s assume Sam worked 40 hours per week for 52 weeks in 2022. If Sam earned $10 per hour, the most Sam can be required to pay for the lowest-cost, self-only coverage option offered by Sam’s employer is:

$166.57 per month (W-2 Safe Harbor Method);
$124.93 per month (Rate of Pay Safe Harbor Method); or
$103.15 per month (Federal Poverty Line Safe Harbor Method—2021).

If Sam earned $15 per hour, Sam’s required contribution for the lowest-cost, self-only coverage option cannot exceed:

$249.86 per month (W-2 Safe Harbor Method);
$187.39 per month (Rate of Pay Safe Harbor Method); or
$103.15 per month (Federal Poverty Line Safe Harbor Method—2021).

The affordability threshold for group health plans beginning in 2022 is only a fraction of a percent lower than this year’s threshold, but the consequences for ALE’s that fail to adapt accordingly can be substantial. To ensure compliance with the ACA’s affordability requirement in 2022, ALEs need to evaluate and possibly adjust their health plan pricing options, cost-sharing structure, and in some cases, compensation levels.

Please contact us if you would like to learn more about ACA-compliant group health plan options for 2022.

Affordable Care Act Update: IRS Announces Affordability Threshold for 2020

The Internal Revenue Service announced that the Affordable Care Act’s affordability threshold will be 9.78 percent in 2020. This is important because employers with 50 or more full-time or full-time equivalent employees in the preceding calendar year (Applicable Large Employers or ALEs) must offer their full-time employees minimum essential health care coverage that is affordable. Otherwise, they may have to pay the ACA’s employer shared responsibility (employer mandate) penalty.

Affordability under the ACA is calculated as a percentage of household income. So, to satisfy the ACA’s affordability requirement in 2020, the lowest-cost, self-only coverage option offered by Applicable Large Employers may not exceed 9.78 percent of an employee’s household income. The affordability threshold is adjusted annually. In 2019, it was 9.86 percent.

ALEs can use one of the ACA’s affordability safe harbors to determine the most employees can be required to pay without exceeding the affordability threshold. For example, if Pat earned $10 per hour in 2020 and worked 40 hours per week for 52 weeks, Pat’s monthly payment cannot exceed:

W-2 Safe Harbor: $169.52 ($170.91 in 2019);
Rate of Pay Safe Harbor: $127.14 ($128.18 in 2019); or
Federal Poverty Line Safe Harbor: $101.79 ($99.75 in 2019).

Despite being small, these changes can still be significant. To ensure compliance with the ACA’s affordability requirement in 2020, ALEs need to evaluate and possibly adjust their health plan pricing options, cost-sharing structure, and in some cases, compensation levels.

Please contact us if you would like to learn more about ACA-compliant group health plans.

Affordable Care Act: Will Your Group Health Plan be Affordable in 2019?

Unlike the Individual Mandate, the Affordable Care Act’s Employer Mandate isn’t going anywhere in 2019. Employers with 50 or more full-time and full-time equivalent employees will still have to offer “affordable” health coverage to avoid ACA penalties. But, there is a sliver of good news. Next year, employers will be able to increase the required employee contribution for coverage under their group health plans.

To satisfy the ACA’s initial affordability requirement, an employee’s required contribution for the lowest cost, self-only coverage could not be more than 9.5 percent of the employee’s household income. However, the initial affordability percentage is adjusted annually by the Internal Revenue Service. In 2019, the affordability percentage will be 9.86 percent.

When compared to prior years, the 2019 affordability adjustment represents the largest percentage increase under the ACA.

2014 9.5

2015 9.56

2016 9.66

2017 9.69

2018 9.56

2019 9.86

We can use the ACA’s affordability safe harbors to translate this percentage increase into dollars and cents. These safe harbors provide various methods for calculating the most an employer can charge employees for the lowest cost, self-only health coverage option without exceeding the ACA’s affordability threshold.

W-2 Safe Harbor. The maximum monthly contribution for a federal minimum wage employee ($7.25 per hour) who works 40 hours per week for 52 weeks in 2019 will be $123.91 (+ $3.77).
Rate of Pay Safe Harbor. The maximum monthly contribution for a federal minimum wage employee ($7.25 per hour) in 2019 will be $92.93 (+ $2.83).
Federal Poverty Line Safe Harbor. Based on the 2018 single individual FPL of $12,140, the maximum monthly contribution in 2019 will be $99.75 (+ $3.03).

These increases may be modest, but they can add up quickly for very large employers. They can also provide some much-needed wiggle room for employers teetering on the edge of unaffordability. The ultimate impact of the 2019 affordability percentage increase can be inconsequential or substantial. Employers will need to reevaluate their cost-sharing structure to find out.

Please contact us if you would like to learn more about ACA-compliant group health plans.

Gender Identity and Sex Stereotyping Under the Affordable Care Act

Did you know that the Affordable Care Act (ACA) contains a civil rights provision? The ACA prohibits discrimination on the basis of race, color, national origin, sex, age or disability in certain health programs and activities. Despite becoming law in 2010, final implementation rules were not issued by the Department of Health and Human Services (HHS) until May 2016. On July 18, 2016, the Nondiscrimination in Health Programs and Activities final rule went into effect.

Under the ACA, individuals cannot be excluded from participation in, be denied the benefits of, or otherwise be subjected to discrimination under any covered health program or activity on the basis of race, color, national origin, sex, age or disability. Though the final rule generally incorporates existing federal nondiscrimination laws and policies , provisions dealing with sex discrimination, primarily gender identity and sex stereotyping, are getting the most attention.

The final rule states that sex discrimination includes discrimination based on sex, pregnancy, childbirth and related medical conditions. Individuals cannot be denied health care based on their sex and women and men must be treated equally in terms of health care and insurance coverage. However, the final rule also prohibits discrimination on the basis of gender identity and sex stereotyping.

Gender identity is an individual’s internal sense of gender. It may be male, female, neither, or a combination of both. An individual’s gender identity may be different from the sex they were assigned at birth. A transgender individual is an individual whose gender identity is different from the sex assigned to that person at birth.

Sex stereotypes are stereotypical notions of masculinity or femininity. They include expectations of how individuals represent or communicate their gender to others and that individuals will consistently identify with and conform to stereotypes associated with their assigned gender. Sex stereotypes also include gendered expectations related to the appropriate roles of a certain sex.

According to HHS, categorical coverage exclusions or limitations for all health care services related to gender transition are discriminatory. Individuals must be treated in a manner consistent with their gender identity. Providers may not deny or limit treatment that is ordinarily or exclusively available to individuals of one gender because the person seeking treatment identifies as belonging to another gender.

The manner in which the final rule expanded the traditional scope of sex discrimination to include gender identity and sex stereotyping represents a fairly significant policy shift. However, HHS admits that the final rule does not resolve whether discrimination on the basis of an individual’s sexual orientation alone violates the ACA’s nondiscrimination provision. Nevertheless, HHS states that allegations of sexual orientation discrimination will be evaluated by the Office for Civil Rights to determine whether they involve the sorts of stereotyping that violate the ACA’s nondiscrimination provision.

Despite not being directly covered by the ACA’s nondiscrimination rules, many employers will be affected indirectly. Employers providing fully insured group health plans may be affected because their insurance companies are covered by the rule. Employers using a covered third-party administrator to manage their self-fund group plan may also be affected by the rule. Consequently, employers should have at least a basic understanding of the ACA’s nondiscrimination rules.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the constantly changing health care landscape and offer a number of valuable risk management solutions to help you properly and efficiently manage your employee benefits, group health and business insurance programs.

Please contact us if you would like more information about complying with the Affordable Care Act or subscribe to our weekly risk mangement newsletter.

Supreme Court to Rule on Fate of the Affordable Care Act…Again

Once again, the fate of the Affordable Care Act (ACA) rests with the United States Supreme Court. Though the constitutionality of the ACA isn’t being challenged in King v. Burwell, the stakes may be just as high. This case involves the interpretation and applicability of the ACA’s individual health insurance subsidies (tax credits and cost-sharing reductions), and the outcome will likely depend on how the Court interprets four simple words.

The ACA created new marketplaces (Exchanges) where individuals can purchase health insurance. Only 16 states and the District of Columbia elected to establish their own state-based marketplaces. The federal government set up federally facilitated marketplaces in the remaining 34 states. This is important because the ACA provides that subsidies are available to individuals covered by a health plan enrolled in “through an Exchange established by the State.”

According to the King plaintiffs, this provision of the ACA clearly says (and means) that individuals purchasing health insurance in one of the 34 states with federally facilitated marketplaces are not entitled to subsidies. The Internal Revenue Service, on the other hand, has a broader interpretation of this provision. According to IRS regulations, subsidies are available to anyone who is enrolled in a health plan through an Exchange, regardless of whether it is state-based or federally facilitated.

The question before the Supreme Court is, simply stated, whether the IRS has the authority to extend ACA subsidies to health coverage purchased through federally facilitated marketplaces. Those who think this is an easy question should know that two federal appellate courts, the Fourth Circuit and the D.C. Circuit, had different answers.

What would happen if the Court rules against the IRS and holds that subsidies are not available to individuals in those 34 states with federally facilitated marketplace? Though difficult to predict, some believe such a result could prove catastrophic for the ACA.

According to a study by the RAND Corporation, individual health insurance enrollment in the 34 states with federally facilitated marketplaces would decline by 9.6 million to 4.1 million, a 70% decrease. The study also found that decreased enrollment would increase premiums. The average premium for a 40-year-old nonsmoker purchasing a silver plan in these states would go up $1,610, a 47% increase.

If the Court strikes down the IRS regulations, the Urban Institute estimates that the number of uninsured in 34 states would increase by 8.2 million people (a 44% increase relative to the number uninsured under the ACA as currently implemented). It would also eliminate $28.8 billion in tax credits and cost-sharing reductions in 2016 ($340 billion over 10 years) for 9.3 million people.

According to the Kaiser Family Foundation, disallowing subsidies in states with federally facilitated marketplaces may destabilize the individual insurance market in every state. It could also impact the ACA’s employer mandate applicable to large employers, since the penalty is triggered when an employee receives a subsidy.

At this point no one knows if or how King will affect health care reform. Could it undermine the ACA? Will it send shockwaves through the health insurance industry nationwide? We’ll just have to wait and see.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the ever-changing health care landscape. Check back with us periodically for informational updates about the Affordable Care Act. In the meantime, if you have specific questions, contact us.

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Are You Ready for the New Affordable Care Act Reporting Requirements?

The Affordable Care Act (ACA) requires Applicable Large Employers (ALEs) with 50 or more full-time or full-time equivalent employees to file information returns with the Internal Revenue Service and provide statements to their full-time employees about employer-offered health insurance coverage. This information will be used to administer the ACA’s employer shared responsibility provisions (employer mandate) and to determine whether an employee is eligible for the premium tax credit.

Filing Forms (Drafts)

In 2014, the IRS released non-final draft versions of two forms that ALEs can use to satisfy these reporting requirements.

Form 1095-C (Employer-Provided Health Insurance Offer and Coverage)
Form 1094-C (Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns)

Filing Deadlines

ALEs must file these forms with the IRS on or before February 28 (March 31 if filed electronically) of the year immediately following the calendar year for which the offer of coverage information is reported. For calendar year 2014, there is no filing requirement. For calendar year 2015, these forms must be filed by February 29, 2016 (or March 31, 2016 if filed electronically).

ALEs must also furnish a Form 1095-C to each full-time employee by January 31 of the following year. The first Forms 1095-C are due to these individuals by February 1, 2016.

Form 1095-C

ALEs must file a Form 1095-C (or a substitute form) for each employee who was a full-time employee for any month of the calendar year. This form is used to report specific health insurance coverage information for each full-time employee to the IRS, such as:

which months the employee was a full-time employee
any offers of health coverage that meet the minimum value standard made to the employee and family members each month
the employee’s share of the monthly premium for the lowest-cost insurance that offers minimum value health coverage
whether any safe harbors are applicable to the employee
whether the employee was enrolled in the plan

Form 1094-C

ALEs must use Form 1094-C to transmit its Forms 1095-C to the IRS. A Form 1094-C must be attached to any Forms 1095-C filed by an ALE. One transmittal form can be used to cover all Forms 1095-C filed by an ALE or multiple transmittal forms can be used. The information reported with this form includes:

the total number of Forms 1095-C submitted with this particular transmittal
the total number of Forms 1095-C that will be filed by the ALE
whether the ALE is a member of an aggregate group (multiple employers treated as a single employer)
whether special rules or transition relief apply to the ALE

Though these ACA reporting forms are not due until 2016, large employers cannot wait until the last minute. Given the technical nature and complexity of the new ACA reporting requirements, legal and tax professionals should be consulted when preparing any forms filed with the IRS.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the health care reform process. Check back with us periodically for future informational updates about the Affordable Care Act. 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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Summary Plan Descriptions under ERISA

The Employee Retirement Income Security Act (ERISA) is a federal law that sets minimum standards for most voluntarily established employee pension and welfare plans in the private sector. To protect individuals in these plans, ERISA requires plan administrators, which are oftentimes the employers, to provide plan participants and their beneficiaries with a Summary Plan Description (SPD).

SPDs are used to give plan participants and beneficiaries important information about pension plans, like 401(k) and profit sharing plans, and welfare plans, like group health, disability and pre-paid legal plans. SPDs provide information about the plan, what benefits are available under the plan, the rights of participants and beneficiaries under the plan, and how the plan works.

SPDs must generally be given to each plan participant and each beneficiary receiving benefits under the plan within 90 days after first becoming covered by the plan. Under ERISA, SPDs must generally:

Identify the plan name, plan number and employer identification number (EIN)
Describe the type of plan (ex. 401(k), profit sharing, group health, disability)
Describe the type of plan administration
Provide contact information for the plan administrator and service of process
Describe the plan’s eligibility requirements
Describe circumstances which may result in disqualification, ineligibility, denial, loss, forfeiture, suspension or reduction of benefits
State the date of the plan’s fiscal year
Describe the procedures governing claims for benefits, applicable time limits and remedies if claims are denied
Describe provisions governing termination of the plan
A statement of rights available to plan participants under ERISA

SPDs for employee pension plans must include additional information, such as:

The plan’s normal retirement age
A description of benefits, eligibility, vesting and accrual
A statement about whether the plan is covered by termination insurance from the Pension Benefit Guaranty Corporation
Source of contributions to the plan and the methods used to calculate contributions amounts

Similarly, SPDs for employee welfare plans must also include additional information, such as information about:

Cost-sharing provisions, including costs of premiums, deductibles, coinsurance and copayment requirements
Annual or lifetime caps or limits on benefits
Coverage for preventive services
Coverage for drugs, medical tests, devices and procedures
The use of network providers, the composition of provider networks and whether, and under what circumstances, coverage is provided for out-of-network services
Conditions or limits on the selection of primary care providers or providers of specialty medical care
Conditions or limits applicable to obtaining emergency medical care
Preauthorization requirements or utilization review as a condition to obtaining a benefit or service

Since comprehension is the key, SPDs must follow strict style and formatting requirements. For example:

SPDs must be written in a manner calculated to be understood by the average plan participant
SPDs must be sufficiently comprehensive to apprise the plan’s participants and beneficiaries of their rights and obligations under the plan
SPDs must not be formatted in a way that misleads, misinforms or fails to inform participants and beneficiaries
Advantages and disadvantages of the plan must be presented without either exaggerating the benefits or minimizing the limitations
Exceptions, limitations, reductions, and restrictions of plan benefits cannot be minimized, rendered obscure or otherwise made to appear unimportant (style, caption, printing type and prominence must be the same as that used to describe plan benefits)

In fulfilling these requirements, plan administrators must consider the level of comprehension and education of typical participants in the plan and the complexity of the terms of the plan. In most cases, this will usually require limiting or eliminating technical jargon and long, complex sentences, and using clarifying examples, illustrations, clear cross references and a table of contents.

Unlike the general descriptions provided in this article, the SPD requirements are highly technical and very specific. To avoid violations, employers must confirm strict compliance with ERISA’s SPD requirement. If you have questions about your employee welfare plans, or if you would like to see how Setnor Byer Insurance & Risk can help, contact us.

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The Affordable Care Act’s Summary of Benefits and Coverage

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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