Final Summary of Benefits and Coverage Rules Include Six-month Compliance Delay | Practical Law

Final Summary of Benefits and Coverage Rules Include Six-month Compliance Delay | Practical Law

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

Final Summary of Benefits and Coverage Rules Include Six-month Compliance Delay

Practical Law Legal Update 9-517-9861 (Approx. 5 pages)

Final Summary of Benefits and Coverage Rules Include Six-month Compliance Delay

by PLC Employee Benefits & Executive Compensation
Law stated as of 13 Feb 2012 • USA (National/Federal)
The Departments of Labor, Health and Human Services and Treasury issued final regulations implementing the summary of benefits and coverage requirement for group health plans and insurers under the Affordable Care Act (ACA).
On February 9, 2012, the DOL, HHS and the Treasury Department (Departments) issued final regulations implementing the summary of benefits and coverage (SBC) requirement applicable to group health plans and insurers under the Affordable Care Act (ACA). The final regulations make numerous changes to the proposed regulations, which were issued in August 2011 along with accompanying templates, instructions and other materials (see Legal Update, Proposed Regulations for Summary of Benefits and Coverage Disclosures). In addition to the final regulations, the Departments issued:
  • A compliance guidance document.
  • An SBC template and sample completed SBC.
  • Instructions for completing SBCs.
  • A uniform glossary of coverage and medical terms.
These documents are all available on the DOL's website.
The final regulations include a two-part delayed compliance date for providing SBCs, notices of material modifications and uniform glossaries (under the ACA, plans and insurers were to begin providing SBCs beginning March 23, 2012):
  • For disclosures to participants and beneficiaries who enroll or re-enroll in plan coverage through an open enrollment period (including re-enrollees or late enrollees), the final regulations apply beginning on the first day of the first open enrollment period that begins on or after September 23, 2012 (in general, the open enrollment period for 2013 plan years).
  • For disclosures to participants and beneficiaries who do not enroll through an open enrollment period (including newly eligible individuals and special enrollees), the final regulations apply beginning on the first day of the first plan year beginning on or after September 23, 2012 (for calendar year plans, January 1, 2013).
The most significant changes made by the final regulations include:
  • Adjusting certain timing rules for when SBCs must be provided (including to provide additional time for insurers to furnish SBCs to plans).
  • Increasing the timeframe for providing SBCs to special enrollees.
  • Modifying the SBC content requirements added under the proposed regulations to:
    • expand the information required for obtaining a uniform glossary to include a contact phone number for requesting a paper copy of the glossary and a disclosure that paper copies are available; and
    • remove the requirement, added under the proposed regulations, that SBCs include premium or cost of coverage information.
  • Specifying that SBCs can be provided either as a stand-alone document or in combination with other summary materials (including summary plan descriptions (SPDs)), so long as the SBC information is:
    • intact and prominently displayed at the beginning of the materials (for example, after an SPD's table of contents); and
    • provided consistent with the timing rules for SBCs.
  • Including a distinction, for SBCs distributed electronically by a plan or insurer, for participants or beneficiaries:
    • already covered under the plan, who can be provided SBCs electronically if the requirements of the DOL's safe harbor for electronic disclosure are satisfied; and
    • eligible for coverage but not enrolled in a plan, who can be provided SBCs electronically if the format is readily accessible and a paper copy is provided free of charge on request (additional requirements apply if the electronic form is an internet posting).
  • Reducing the number of required coverage examples from three to two.
  • Adding a provision that permits plans providing expatriate coverage to offer an internet address (or similar contact information) for obtaining information about benefits and coverage provided outside the US, instead of requiring these plans to summarize coverage for items and services provided outside the US.
Also, the preamble to the final regulations addresses how the SBC requirement applies for health reimbursement arrangements, health savings accounts and health flexible spending accounts (health FSAs), including how the disclosures work for health FSAs that are:
  • Excepted benefits under governing guidance.
  • Not excepted benefits and that are integrated with other major medical coverage.

Practical Implications

Although employers and insurers will welcome many of the changes under the final regulations (particularly elimination of the premium and cost of coverage requirement), the six-month compliance delay leaves little time for implementation. Compliance will likely result in significant administrative burden and cost to plans and insurers (by the Departments' estimate, the annualized cost for compiling and providing SBCs will be $73 million). Notably, the Departments specifically declined in the final regulations to exempt large or self-insured plans from the SBC requirement.
According to the Departments, future guidance relating to SBCs will address:
  • Penalty procedures for the assessment of civil fines for failing to provide SBCs.
  • Additional coverage examples for SBCs to be provided after the first year that the SBC requirement is applicable.
  • Content requirements involving minimum essential coverage and minimum value statements, which relate to the insurance exchanges to be established in 2014 under the ACA.
  • Possible changes to the requirement to provide SBCs in a "culturally and linguistically appropriate manner," which, if required, will be made as part of the regulations governing internal claims and appeals and external review under the ACA. The Departments intend to provide written translations of the SBC template, sample language and uniform glossaries in Spanish, Tagalog, Chinese and Navajo. For more information, see Practice Note, Internal Claims and Appeals under the ACA.
For more information on SBCs, see Practice Note, Summary of Benefits and Coverage under the ACA, which will be updated to reflect the final regulations and related guidance.