Proposed Regulations for SBCs under the ACA | Practical Law

Proposed Regulations for SBCs under the ACA | Practical Law

The Departments of Labor, Health and Human Services and Treasury have issued proposed regulations implementing the summary of benefits and coverage (SBC) requirements for group health plans and insurers under the Affordable Care Act (ACA).

Proposed Regulations for SBCs under the ACA

Practical Law Legal Update 8-507-3148 (Approx. 5 pages)

Proposed Regulations for SBCs under the ACA

by PLC Employee Benefits & Executive Compensation
Published on 23 Aug 2011 • USA (National/Federal)
The Departments of Labor, Health and Human Services and Treasury have issued proposed regulations implementing the summary of benefits and coverage (SBC) requirements for group health plans and insurers under the Affordable Care Act (ACA).
On August 17, 2011 the US Department of Labor, Health and Human Services and the Treasury issued proposed regulations to implement the summary of benefits and coverage (SBC) and notices of material modifications required to be distributed under the Affordable Care Act (ACA). These summaries are intended to allow consumers to:
  • More easily understand health coverage.
  • Choose the best health insurance options.
The ACA requires group health plans and health insurers to:
  • Compile and provide SBCs that accurately describe the benefits and coverage under their applicable plans and coverage.
  • Provide notices of material modifications if there are any changes in any of the terms of the plan or coverage that are not reflected in the most recently provided SBCs.
As required under the ACA, the Departments consulted with the National Association of Insurance Commissioners (NAIC) in developing the standards for SBCs in the proposed regulations. In addition, the Departments issued the following:
These documents were drafted by the NAIC primarily for use by health insurers, and will probably be revised to incorporate changes required for some group health plans after the public comment period. The regulations are applicable beginning March 23, 2012 and comments must be submitted by October 21, 2011.

Summary of Benefits and Coverage

The SBC requirements in the proposed regulations apply to group health plans and health insurers providing health insurance coverage in connection with group health plans. However, the plan administrator is ultimately responsible for providing SBCs. The SBCs must be provided to:
  • Plans by insurers upon an application or request for information by the plan about coverage. These must be provided as soon as practicable following the request, but no later than seven days following the request. An insurer also must provide a new SBC if and when the policy, certificate or contract (policy) is renewed or reissued.
  • Plans by insurers if and when the policy is renewed or reissued. These must be provided no later than the date the materials are distributed or, if reissuance is automatic, no later than 30 days before the first day of the new policy year.
  • Participants or beneficiaries by a plan or insurer for each benefit package for which the participant or beneficiary is eligible. These must be part of any written application materials that are distributed for enrollment or if there are no materials issued, then no later than the first day the participant is eligible to enroll.
  • Special enrollees under HIPAA pursuant to a special enrollment right. These must be provided within seven days of a request for special enrollment.
  • Plans by an insurer upon request (the plan or insurer must provide the SBC to participants and beneficiaries). These must be provided as soon as practicable, but no later than seven days after the request.
SBCs may be provided in paper or electronic form and must contain the following:
  • A uniform glossary with definitions of standard insurance and medical terms (see the proposed uniform glossary above).
  • A description of coverage (including cost sharing) for each applicable category of benefits.
  • All exceptions, reductions and limitations on coverage.
  • The cost sharing provisions of the coverage, including deductible, coinsurance and copayment requirements.
  • Information on coverage renewability and continuation.
  • Coverage examples, which illustrate benefits provided under the plan or coverage. This information is used to compare consumers' share of costs of care under different plan or coverage options.
  • A statement on whether the plan provides minimum essential coverage and whether the plan's share of the total benefit costs is acceptable. Since these requirements will not be relevant until other elements of the ACA have been implemented, this statement will only be required in SBCs for coverage beginning on or after January 1, 2014.
  • A statement that the SBC is only a summary, and that the plan document, policy or certificate of insurance determines coverage.
  • A contact number to call with questions and an internet address containing a copy of the individual coverage policy or group certificate of coverage.
  • For plans that maintain one or more networks of providers, an internet address with a list of network providers. This element and the following three elements were not included as part of the ACA, but were added under the proposed regulations.
  • For plans and insurers with a prescription drug formulary, an internet address with information on prescription drug coverage.
  • An internet address containing the uniform glossary.
  • Information on premiums (or cost of coverage for self-insured health plans).
SBCs must:
  • Be written in at least 12-point font.
  • Follow a uniform format.
  • Use standard terminology.
  • Be offered in a culturally and linguistically appropriate manner.
The agencies have interpreted the four-page requirement under the ACA to mean four double-sided pages. Also, to satisfy the requirement to provide the SBC in a culturally and linguistically appropriate manner, a plan or insurer may follow the rules for providing appeals notices (for more information on these rules, see Practice Note, Internal Claims and Appeals under the ACA).

Notice of Material Modifications

Notices of material modifications must be provided to enrollees no later than 60 days prior to the date on which the change will become effective. Material modifications include any modifications to coverage offered under a plan or policy that, independently or in connection with other contemporaneous changes, would be considered by the average plan participant to be an important change in covered benefits or other terms of coverage under the plan or policy.
The proposed regulations clarify that:
  • Notices of material modifications are only required for material modifications that would affect the content of the SBC.
  • Material modifications do not include modifications at renewal or reissuance of coverage.
For more information on these requirements, see Practice Note, Summary of Benefits and Coverage under the ACA, which will be updated to reflect the new proposed regulations and related guidance.

Webinar on Four-Page Summaries of Benefits and Coverage

Be the first to learn about complying with the four-page summaries requirement by attending our free webinar, Summaries of Benefits and Coverage under the ACA: Your Guide to the New Requirements, presented by Practical Law Company on Wednesday, September 21, 2011 at 1:00 pm ET.