DOL, HHS, and IRS Release Final Regulations on Summary of Benefits and Coverage Requirement
On February 14, 2012, the U.S. Departments of Labor, Health and Human Services, and Treasury issued a final rule under the Patient Protection and Affordable Care Act (“PPACA”) that requires group health plans and health insurance issuers to: (1) provide a summary of benefits and coverage (“SBC”) for each benefit package offered under the plan, and (2) make available, upon request, to participants and beneficiaries a uniform glossary of terms commonly used in connection with health insurance coverage.
The SBC must include the following information: (1) uniform definitions of standard medical and insurance terms; (2) a description of the coverage, including cost sharing requirements for each category of benefits; (3) the exceptions, reductions, and limitations of the coverage; (4) the cost-sharing provisions of the coverage, including deductible, coinsurance, and copayment obligations; (5) coverage examples; (6) a statement that the SBC is only a summary and that the plan documents should be consulted for more complete information; (7) contact information for questions; (8) for plans that maintain one or more networks of providers, an internet address for obtaining a list of network providers; (9) for plans that use a prescription drug formulary, an internet address for obtaining information on prescription drug coverage; and (10) an internet address for obtaining the uniform glossary. Beginning January 1, 2014, the SBC must also include a statement indicating whether the plan provides minimum essential health coverage as defined under the PPACA.
The SBC must be presented in a uniform format and use language that is understandable to the average plan participant. The SBC must not exceed four double-sided pages in length, and must use 12-point or larger font. The final rule includes a model SBC, which is to be used for the first year of applicability only. Thereafter, updated model documents will be issued by the agencies.
The plan administrator for a self-insured plan and either the administrator or carrier for an insured plan must distribute the SBC at enrollment, annually, and upon request. In addition, if the plan makes a material modification in any of the terms of coverage that would affect the content of the SBC (other than a change that is made in connection with renewal or reissuance of the policy), notice must be provided to plan participants at least 60 days in advance of such change. The new disclosure obligations are effective beginning on the first day of the first open enrollment period that begins on or after September 23, 2012. For plans that do not have an annual open enrollment period, the disclosure requirements apply beginning on the first day of the first plan year that begins on or after September 23, 2012.
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