On March 19, 2012, DOL, HHS and Treasury (Departments) jointly issued a set of FAQs on implementing summaries of benefits and coverage (SBC) under the Affordable Care Act (ACA). These FAQs include several clarifications involving recently finalized regulations on SBCs.

An FAQ addresses the Departments' basic approach to ACA implementation, which is to focus on helping plans and insurers come into compliance with the new requirements, rather than penalizing those plans and insurers. To support this effort, the Departments will not impose penalties on plans and issuers working diligently and in good faith to provide SBCs in compliance with the final regulations.

In some cases, the final regulations require that SBCs be provided within seven business days. An FAQ clarifies that "provided" for this purpose means sent. As a result, an SBC is timely if sent within seven business days, even if the SBC is not received until after that period.

The Departments addressed questions about whether plans and insurers must provide a separate SBC for different coverage tiers (for example, self-only coverage and family coverage). Plans may combine information for different coverage tiers in one SBC if the appearance is understandable. The SBC coverage examples should use cost-sharing for the self-only coverage tier and note this assumption.

Plans can include information for health flexible spending accounts (health FSAs), health reimbursement arrangements (HRAs) and health savings accounts (HSAs) in the SBC for its major medical coverage if the appearance is understandable. Plans and insurers should include the cost sharing effects of health FSAs, HRAs and HSAs in the appropriate spaces on the SBC for deductibles, copayments, coinsurance and benefits otherwise not covered by the major medical coverage.

The Departments have provided a sample completed SBC to demonstrate how to handle combined information.

The FAQs explain that although a COBRA qualifying event does not itself trigger an SBC requirement, during an open enrollment period, any COBRA qualified beneficiary receiving COBRA coverage must be given the same rights to elect different coverage as similarly situated non-COBRA beneficiaries. As a result, qualified beneficiaries have the same rights to receive an SBC as other beneficiaries.

The FAQs also note that there are limited situations when a qualified beneficiary may have a right to be offered different coverage at the time of a qualifying event than the coverage the individual was receiving before the qualifying event, and that this may trigger the right to an SBC. As an example, the Departments reference the situation where a qualified beneficiary participates in a region-specific benefit package that is not available in the area to which the individual is relocating.

An FAQ addresses the situation where a plan or insurer enters into a binding agreement under which another party assumes responsibility to:

The plan or insurer generally will not be subject to enforcement action by the Departments for failing to provide a timely or complete SBC if the following conditions are satisfied:

The final regulations permit SBCs to be provided electronically to participants and beneficiaries who are eligible but not enrolled for coverage if certain requirements are met. One of the requirements, for internet postings of the SBC, is that the plan or insurer must timely notify individuals in electronic or paper form (for example, a postcard) that, among other things, the SBC is available on the internet. The FAQs include a three-paragraph model statement for this purpose, which plans or insurers can tailor.

SBCs must be provided in a "culturally and linguistically appropriate" manner, which is met by satisfying ACA requirements for providing appeals notices (see Practice Note, Internal Claims and Appeals under the ACA). The requirement is triggered if notices are sent to US counties in which at least 10% of the population is literate in a non-English language. The FAQs clarify that SBCs sent to an address in one of these counties must include a sentence on the availability of language assistance services. For these notices, the plan or insurer must:

Sample language for this requirement is available in the model notice of adverse benefit determination issued by the Departments under the internal claims and appeals requirements. Plans or insurers can voluntarily include the statement in SBCs for counties for which the 10% threshold is not met.

The FAQs indicate that an SBC cannot substitute a reference to summary plan descriptions (SPDs) or any other document for content required to be in the SBC. However, an SBC may reference:

SBCs are not required to include a statement about whether the plan is grandfathered under the ACA, though they may voluntarily choose to do so (see Practice Note, Grandfathered Health Plans under the ACA).

Although the good faith compliance standard for penalties is a helpful addition, many plans and insurers will be disappointed that the Departments did not delay the relatively short effective dates for providing SBCs provided under the final regulations (see Legal Update, Final Summary of Benefits and Coverage Rules Include Six-month Compliance Delay).