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Final SBC Guidance Includes Additional Coverage Example
Practical Law Legal Update w-001-8712 (Approx. 5 pages)
Final SBC Guidance Includes Additional Coverage Example
by Practical Law Employee Benefits & Executive Compensation
| Law stated as of 12 Apr 2016 • USA (National/Federal) |
The Departments of Labor, Health and Human Services, and Treasury have finalized changes to the summaries of benefits and coverage (SBC) template, a sample completed SBC template, instructions, uniform glossary, and related materials. The SBC requirement was added under the Affordable Care Act (ACA).
The Departments of Labor (DOL), Health and Human Services (HHS), and Treasury (the Departments) have finalized changes to the template, a sample completed template, instructions, and related materials (including the uniform glossary) for use in completing summaries of benefits and coverage (SBC), as required under the Affordable Care Act (ACA) (see Practice Note, Summaries of Benefits and Coverage Under the ACA). The revised materials are available on DOL and HHS webpages addressing SBC compliance.
The Departments issued final regulations regarding the SBC requirement in June 2015 and indicated at that time that the SBC template and related materials would be finalized in 2016 (see Legal Update, Final SBC Rules Apply Beginning in Fall 2015).
Applicability Dates
A two-part applicability timetable applies to the final SBC template and related materials.
Health plans and insurers with an annual open enrollment period must use the final SBC template and related materials beginning on the first day of the first open enrollment period beginning on or after April 1, 2017 (regarding coverage for plan years beginning on or after that date).
For plans and insurers that do not use an annual open enrollment period, the SBC template and related documents must be used beginning on the first day of the first plan year that begins on or after April 1, 2017.
SBC Template
Instructions for Group Coverage SBCs
The Departments' revised materials include detailed instructions for completing each section of the revised SBC template.
Although the instructions include numerous specific directives for completing the template (for example, plans and insurers must use 12-point font and replicate all symbols), the instructions offer limited flexibility for certain provisions. For example, if plan terms that must be described in an SBC cannot reasonably be described consistent with the template and instructions, plans or insurers must accurately describe the terms using their best efforts in a way that is as consistent with the instructions and template as reasonably possible. These situations might occur if a plan:
- Provides a different structure for provider network tiers or drug tiers than is reflected in the SBC template and instructions.
- Provides different benefits based on facility type (for example, hospital inpatient versus non-hospital inpatient).
- Is reflecting the impact of a related health flexible spending arrangement (health FSA) or health reimbursement arrangement (HRA) (see Practice Notes, Cafeteria Plans and Defined Contribution Health Plans).
- Offers different cost-sharing based on participation in a wellness program (see Practice Note, Wellness Programs).
"Important Questions" Section
Although several of the questions in the "Important Questions" section of the SBC template are unchanged, there are a few differences in the final template. For example, reflecting a requirement under another ACA provision, a question concerning whether a plan imposed an overall annual limit was removed (see Practice Note, Lifetime Limits, Annual Limits, and Essential Health Benefits Under the ACA). In addition, a question involving whether there are services that the plan does not cover is addressed in a separate section of the template.
For the "Why This Matters" column of the "Important Questions" section, the final set of materials include standard "yes" and "no" answers that must be replicated, as applicable, without alteration.
Continuing Coverage, Appeals, Minimum Essential Coverage, and Minimum Value
The updated SBC template includes expanded boilerplate language addressing:
- An individual's rights regarding continuing coverage.
- Claims, appeals, and "grievances" under the plan.
In both cases, applicable contact information must be added.
This section also requires an affirmative representation (yes or no) regarding whether the plan:
- Provides minimum essential coverage (MEC) under the ACA.
- Meets ACA minimum value standards (MV).
(For more information regarding MEC and MV, see Practice Note, Employer Mandate Under the ACA: Two Types of Employer Mandate Penalties.)
Coverage Examples
The updated SBC template and supporting materials reflect the addition of a third coverage example (simple fracture) to the prior two examples (having a baby and managing type 2 diabetes). The three coverage examples are based on self-only coverage. A prominent instruction on the coverage examples page encourages individuals to focus on cost-sharing amounts and services that are excluded under the plan.
The revised final coverage examples list the types of services that might be included under each example (for example, durable medical equipment and rehabilitation services in the case of a simple fracture).
Uniform Glossary
Under the ACA, an SBC must include uniform definitions of standard insurance and medical terms. The Departments implemented this requirement using a comprehensive uniform glossary of common health coverage and medical terms. Under the final instructions:
- Terms that are defined in the uniform glossary should be underlined in the SBC.
- SBCs provided electronically may link defined terms to the uniform glossary.
An HHS "microsite" allows plans to electronically link defined terms in an SBC directly to the term's definition on the webpage.
For electronic SBCs, "hover text" applications also may be used so that a text bubble would appear with the definition if a user places a curser over the term.
Practical Impact
The revised final SBC template and related materials will require plans and insurers to (once again) review and update their SBC materials in advance of the two-part applicability timetable. Although the additional coverage example is likely the most prominent change, the final materials also include more subtle changes affecting many sections of the SBC template.
For analysis of the revised final SBC template and related materials, see Practice Note, Summaries of Benefits and Coverage Under the ACA.