On March 19, the Departments of Labor, Treasury, and Health and Human Services jointly issued FAQs addressing the new summary of benefits and coverage requirement under the Patient Protection and Affordable Care Act. Although the agencies released final regulations only a few weeks prior, the FAQs provide additional guidance and clarification.
Importantly, the FAQs did not delay the effective date for the SBC requirement. Therefore, group health plans and health insurance issuers must begin providing the SBC to most participants and beneficiaries beginning with the first open enrollment period beginning on or after Sept. 23.
The FAQs contain a good faith compliance standard for the first year that the SBC requirement is applicable. In the FAQs, the agencies state that they "will not impose penalties on plans and issuers that are working diligently and in good faith to provide the required SBC content in an appearance that is consistent with the final regulations."
Highlights of the FAQs include:
1. The agencies recognize that different entities and service providers may have certain information necessary to prepare an SBC, including the coverage examples. The FAQs state that until further guidance is issued, if a group health plan or health insurance provider has entered into a binding contractual arrangement under which another party has assumed responsibility to complete the SBC, provide required information to complete a portion of the SBC or deliver an SBC, then the plan or provider generally will not be subject to enforcement action for failing to provide a timely or complete SBC.
However, the enforcement action will only be avoided provided that: the plan or issuer monitors performance under the contract; any violation of the SBC final regulations is corrected as soon as practicable; and - if a plan or issuer has knowledge of a violation of the SBC final regulations but lacks the information to correct it - the plan or issuer communicates with participants and beneficiaries regarding the lapse and begins taking steps as soon as possible to avoid future violations.
2. The following may be combined in a single SBC, as long as its appearance is understandable regarding information about: multiple tiers of coverage (e.g., self-only, employee-plus-one, and family coverage); different cost-sharing selections (e.g., levels of deductibles, copayments, and coinsurance); and add-ons to major medical coverage (e.g., health flexible spending arrangements, health reimbursement arrangements, health savings accounts and wellness programs.)
3. The final regulations require the SBC to be provided in certain circumstances within seven business days. The FAQs clarify that, in the context of the final regulations, the term "provided" means "sent."
4. Group health plans and health insurance issuers are required to provide SBCs to individuals who are COBRA-qualified beneficiaries, as these individuals must be given the same rights to elect different coverage as are provided to similarly situated non-COBRA beneficiaries.
5. The FAQs provide model language for an e-card or postcard for participants and beneficiaries who are eligible but not enrolled in the group health plan to notify them that the SBC is available on the Internet. Group health plans and health insurance issuers may tailor the model language as appropriate.
6. If an SBC is sent to an address in a county in which 10% or more of the population is literate in a language other than English, the SBC must include a statement in the applicable language clearly indicating how to access the language services provided by the group health plan or health insurance issuer. Sample language for this statement is available on the model notice of adverse benefit determination, which is available on the DOL's website.
7. The FAQs state that an SBC is not permitted to substitute a cross-reference to a summary plan description or other document for any required content element of the SBC. However, an SBC may include a reference to the SPD.
Contributing Editor Kate Bongiovanni is an associate in the tax section of Smith, Gambrell & Russell, LLP. She practices in employee benefits law, with a concentration in health and welfare matters. She can be reached at email@example.com.
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