Summary Of Benefits And Coverage – Important Information

Health care reform expands ERISA’s disclosure requirements by requiring that a “summary of benefits and coverage” be provided to applicants and enrollees before enrollment or re-enrollment. The summary (referred to as the SBC) must accurately describe the “benefits and coverage under the applicable plan or coverage.” The SBC requirement applies in addition to ERISA’s SPDs.

The initial SBC must be distributed to participants and beneficiaries who enroll ore re-enroll during an open enrollment period that begins on or after September 23, 2012. For newly hired employees and special enrollees who enroll in coverage other than during an open enrollment period, the SBC must be distributed on the first day of the plan year that begins on or after September 23, 2012.

What Types of Plans Must Distribute a Summary of Benefits and Coverage?
The obligation to furnish an SBC applies to a group health plans and insurers. A plan that offers “excepted benefits” is not required to distribute an SBC. This would generally include a standalone dental or vision plan and most health flexible spending arrangements.

• Grandfathered group health plans must comply.
• Disclosures for a health FSA that is not an excepted benefit depend on whether it is integrated with other major medical coverage. If the health FSA is integrated with other major medical coverage, features of the health FSA can be included in the SBC for the major medical coverage. If the health FSA is not integrated with major medical coverage then it is required to furnish an SBC.
• A health reimbursement account (HRA) must comply.
• A health savings account (HSA) is not a group health plan and is not required to furnish an SBC. However an SBC for a high deductible health plan can mention the effects of any employer contributions to an HAS that can be used for deductibles, copayments, coinsurance or other services not covered by the high deductible health plan.

Who Must Provide the SBC?
Both the health insurance issuer and the plan administrator of a group plan are required to furnish an SBC to plan participants.

• If the group health plan is self-insured, the obligation to provide an SBC lies solely with the plan administrator.
• If the plan is fully insured, the obligation to timely provide an SBC lies both with the plan administrator and the insured.

When Must the SBC be Distributed?
A health insurance issuer that offers group health insurance must provide an SBC to the plan or plan sponsor as follows:

• Within 7 business days after receipt of an application for health coverage.
• By the first day of coverage; if there are any changes in the initial SBC.
• If written application for renewal is required, no later than the date the written application materials are distributed.
• If renewal is automatic, at least 30 days before the beginning of the new plan or policy year.

What Types of Information Must be Included in the Summary of Benefits and Coverage?

• Uniform definitions of standard insurance and medical terms so that consumers may compare health coverage and understand the terms of their coverage.
• A description of the coverage, including cost-sharing, for each category of benefits identified by the agencies.
• Exceptions, reductions and limitations on coverage.
• Cost-sharing provisions, including deductible, co-insurance and co-payment obligations.
• Renewability and continuation of coverage provisions.
• Coverage examples.
• Contact information for questions and obtaining a copy of the plan document or policy.
• An internet address for obtaining a list of network providers and information on the prescription drug formulary.
• An Internet address for obtaining the glossary of health coverage and medical terms.

Is the Summary of Benefits and Coverage Required to be Provided in a Uniform Format?
Yes. The SBC must be provided in the form issued by the Departments using prescribed language. The information must be presented in the order shown in the SBC template, must be in 12-point font and cannot exceed for pages. The template, instructions, the information necessary for the coverage examples, the uniform glossary and a sample completed SBC are available at: www.dol.gov/ebsa/healthreform or http://cciio.cms.gov/resources/other