H&W: Final SBC Rules Apply Beginning in Fall 2015
On June 16, 2015, the Internal Revenue Service, Department of Labor and Department of Health & Human Services (“Departments”) issued final regulations regarding the summary of benefits and coverage (“SBC”) and the uniform glossary for group health plans and health insurance coverage in the group and individual markets under the Patient Protection and Affordable Care Act. The final regulations amend the final regulations published on February 14, 2012. These final regulations are designed to improve consumers’ access to important plan information so they can make informed choices when shopping for and renewing coverage, as well as to provide clarifications that will make it easier for health insurance issuers and group health plans to comply with the requirement to provide this information. These regulations finalize the propose regulations that were issued December 30, 2014. A summary of new information that was added follows:
1. Plans Using Multiple Issuers: Plans may use two or more insurance issuers to provide benefits. However, an issuer has no obligation to provide an SBC for benefits it does not insure. In these situations, a plan administrator may combine the information into a single SBC or provide multiple partial SBCs that, together, provide all the relevant information to meet the SBC content requirements.
2. Third Party Administrators: Although as a practical matter, third-party administrators may create SBCs for self-insured plans, the plan administrator is ultimately responsible for ensuring the SBC meets regulatory requirements. However, if a plan does use a third party to discharge its SBC obligations, the plan administrator will be excused from liability for the third party’s non-compliance if it takes certain steps to ensure receipt of SBCs. Specifically:
- the plan administrator must have a binding contract that obligates the third party to distribute the SBC.
- the plan administrator must monitor the performance of the third party. While the rules do not specify how this is to be done, the preamble to the rules notes that this is a fiduciary function and accordingly, it must be done effectively.
- if the plan administrator knows that the SBC is not being properly distributed and has the information needed to correct the noncompliance issue, it must do so as soon as practicable.
- if the plan administrator knows that the SBC is not being properly distributed and does not have the information needed to correct the noncompliance issue, it must contact the affected individuals and begin taking significant steps to avoid future violations.
3. Providing the SBC to Special enrollees: The SBC must be provided to special enrollees no later than the date on which a summary plan description is required to be provided (90 days from enrollment). To the extent that individuals who are eligible for special enrollment and are contemplating their coverage options would like to receive SBCs earlier, they may always request an SBC with respect to any particular plan, policy, or benefit package, and the SBC is required to be provided as soon as practicable, but in no event later than seven business days following receipt of the request.
4. Content of SBC: The SBC must include a statement that the SBC is only a summary and the plan document, policy or certificate should be consulted to determine the governing contractual provisions of coverage. Pending issuance of a new SBC template, this statement may be provided through a cover letter or similar disclosure
These regulations become effective for participants and beneficiaries who enroll or re-enroll in group health coverage “through an open enrollment period” beginning on the first day of the first open enrollment period that begins on or after September 1, 2015.
These regulations become effective for participants and beneficiaries who enroll in group health coverage “other than through an open enrollment period” beginning on the first day of the first plan year that begins on or after September 1, 2015.
