Agencies Issue Additional Guidance on Summary of Benefits and Coverage Requirement

On March 19, 2012, the Departments of Labor, Health and Human Services, and the Treasury jointly issued a set of Frequently Asked Questions (“FAQs”) providing additional guidance on the PPACA’s Summary of Benefits and Coverage (“SBC”) requirement.  Group health plans must begin providing the SBC, which includes a four page summary of the plan’s material provisions, accompanied by a uniform glossary of health coverage and medical terms, by the first day of the first open-enrollment period (or plan year for plans without an open-enrollment period) beginning on or after September 23, 2012.  Among other things, the FAQs clarify that plans are not required to provide a separate SBC for each tier of coverage (self, employee-plus-one, or family coverage) available under the plan so long as the information is presented in an understandable format.  The FAQs also clarify that an SBC is not permitted to substitute cross-references to the summary plan description or other documents to fulfill any of the SBC content requirements, and that the notice may be provided to current plan participants electronically if the requirements of the DOL’s electronic disclosure regulation are met.  The FAQs also note that, until further guidance is issued, a group health plan may contract with a service provider to complete, provide, and deliver the SBC, provided the following conditions are satisfied: (1) the plan monitors performance under the contract; (2) if the plan has knowledge of a violation of the final regulations and the plan has the information to correct it, it is corrected as soon as practicable; and (3) if a the plan has knowledge of a violation of the final regulations and the plan does not have the information to correct it, the plan communicates with participants and beneficiaries regarding the lapse and begins taking significant steps as soon as practicable to avoid future violations.