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DOL FAQs on SBCs Address Electronic Distribution and Coverage Example Calculator
Practical Law Legal Update 8-519-4292 (Approx. 5 pages)
DOL FAQs on SBCs Address Electronic Distribution and Coverage Example Calculator
by PLC Employee Benefits & Executive Compensation
| Published on 15 May 2012 • USA (National/Federal) |
On May 11, 2012, the Department of Labor (DOL) issued 14 frequently asked questions (FAQs) on summaries of benefits and coverage (SBCs) under the Affordable Care Act (ACA). The DOL also posted updated versions of the SBC template, a sample completed SBC and a guide for coverage examples calculations.
On May 11, 2012, the DOL issued frequently asked questions (FAQs), jointly prepared by the DOL, HHS and the Treasury (Departments), addressing the summaries of benefits and coverage (SBC) requirement under the Affordable Care Act (ACA). Among other issues, the latest FAQs address:
- Electronic SBCs. An FAQ states that SBCs may be provided to participants and beneficiaries electronically:
- in connection with the individuals' online enrollment or online renewal of plan coverage; and
- if the participants and beneficiaries request an SBC online.
In both cases, the individuals must have the option to receive a paper copy on request. The safe harbor for online enrollment or renewal is in addition to the safe harbor for providing SBCs to participants or beneficiaries covered under the plan who have effective access to documents provided electronically in the workplace (see Practice Note, Complying with the DOL Safe Harbor for Electronic Disclosure of Plan Information). A related FAQ addresses permitted adjustments to the SBC format for electronic display features, such as scrolling and column expansion. - Safe Harbor Calculator for Coverage Examples. SBCs must include coverage examples that illustrate benefits provided under the plan for common benefit scenarios (for example, pregnancy and serious or chronic medical conditions). To assist plans and insurers in completing the required coverage examples, the Departments are developing a safe harbor online calculator that will be available during the first year the SBC requirement applies. Plans and insurers will be able to enter specific information about their benefit packages to create the coverage examples. The calculator will be available soon on the Centers for Medicare & Medicaid Services (CMS) website.
- Coordinating Multiple Insurers. Addressing the situation where a plan obtains separate coverage from multiple insurers, an FAQ states that insurers are not required to provide SBC coverage information for benefits it does not insure. Rather, the plan administrator must provide complete SBCs for the plan in this context. A plan administrator that uses two or more insurance policies provided by separate insurers for a single plan can:
- synthesize the information into a single SBC; or
- request that one of the plan's insurers or third-party service providers perform this role.
During the first year the SBC requirements apply, a plan that uses two or more insurers can provide multiple partial SBCs that together provide all information needed to satisfy the SBC content requirements. A plan administrator that takes this approach should:- indicate that the plan provides coverage using multiple different insurers; and
- inform individuals who need help understanding how the policies interact that they can contact the plan administrator for more information.
For example, the plan administrator might include a cover letter or notations on the SBCs. - Expatriate Plans. The Departments acknowledge in an FAQ that expatriate plans may experience administrative challenges and costs in preparing SBCs (for example, due to distinct benefits and claims systems). As a result, the Departments announced a limited non-enforcement policy for expatriate plans under which the Departments will not take enforcement action against a plan or insurer that fails to provide an SBC for expatriate coverage during the first year that the SBC requirement applies.
- Insurance Products Not Offered for Purchase. The Departments will not take enforcement action against a plan or insurer that fails to provide an SBC with respect to insurance products that are no longer offered for purchase (known as closed blocks of business). However, coverage must be provided for these plans no later than September 23, 2013, when comparisons can be made to new coverage options available through the health insurance exchanges (see Practice Note, The Health Insurance Exchange and Related Requirements under the ACA).
- Pre-Application SBCs. Several of the new FAQs address when SBCs must be provided for plans that apply to an insurer for coverage. For example, an FAQ notes that insurers must provide SBCs to plans and plan sponsors that are looking for coverage but that have not yet applied for coverage. Specifically, the final regulations require that SBCs be provided on request for an SBC or "summary information about a health insurance product." The FAQ clarifies that the "summary information" language applies when a summary document is requested about a policy even if an SBC is not expressly requested by name.
- Written Translations. Written translations for the SBC template:
- are currently available in Spanish, Chinese and Tagalog through the CMS website; and
- will be available in Navajo shortly.
Other issues addressed in the FAQs include:
- Using SBC content to provide side-by-side comparisons of plan features, for example, as part of an online chart.
- A reminder regarding the one-year good faith compliance period, under which the Departments will not impose penalties on plans and insurers that work diligently and in good faith to provide SBCs in compliance with the final regulations (see Legal Updates, FAQs on SBCs Include One-year Good Faith Compliance Period and Final Summary of Benefits and Coverage Rules Include Six-month Compliance Delay).
Updated Versions of Related SBC Documents
The Departments also issued updated versions of:
- The SBC template.
- The sample completed SBC.
- The guide for coverage example calculations.
Among other changes, the updated documents:
- Reflect corrections to an error involving the diabetes treatment scenario/coverage example.
- Include language for obtaining translated documents and related services.
- Contain editorial enhancements to help make the documents accessible to individuals with disabilities.
Practical Implications
Although the latest FAQs do not delay the fast-approaching compliance date for providing SBCs, plans, plan sponsors and insurers may nonetheless welcome the first-year policies provided in the new guidance. In particular, the rule permitting partial SBCs for plans with multiple insurers may be helpful in preparing initial SBCs, though the FAQ also underscores challenges for later years when information from separate insurers must be combined in the same SBC. In addition, plans and insurers may want to document their SBC compliance efforts in case they wish to use the Departments' one-year good faith compliance policy.