Proposed Changes To The Summary of Benefits and Coverage (“SBC”) For 2015

By Kristi R. Gauthier
Clark Hill

The Patient Protection and Affordable Care Act (“PPACA”) mandates that employers and their group health plans issue SBCs on an annual basis before reenrollment in a group health plan and upon initial eligibility.  The purpose of the SBC is to provide individuals with summary information about the employer sponsored group health plan in a format that is intended to be easy for individuals to understand while allowing individuals to compare health plan options and better understand their scope of coverage. 

In December 2014, the Agencies issued proposed regulations to amend the format and distribution requirements of SBCs in an effort to improve access to important plan information and to provide clarifications that will make it easier for health insurance issuers and group health plans to comply with providing this information.  If finalized, these proposed regulations will take effect upon the first open enrollment period or plan year beginning on or after September 1, 2015.   Some of the proposed changes to the SBC include:

•    Shortening the SBC from four double sided pages to just two and one half pages by removing information that is not required by law and has been deemed less useful to individuals choosing coverage.
•    Updates to reflect PPACA driven changes and recent guidance such as the removal of references to annual limits and the revision of information relating to minimum essential coverage and minimum value.
•    Increased number of coverage examples illustrated in the SBC.
•    Updates to the Uniform Glossary to reflect key PPACA terms.

The proposed regulations also provide changes to prevent unnecessary duplication of the SBC in situations where: (i) a group health plan has a binding contractual agreement with a third party to provide the SBC; (ii) a group health plan uses two or more insurance products provided by separate insurance issuers to insure benefits with respect to a single group health plan, and (iii) the SBC for student health insurance coverage is provided by another party (such as an institution of higher education).

The revised sample SBC, Uniform Glossary, coverage examples and related instructions are available for review and public comment at either http://cciio.cms.gov or www.dol.gov/ebsa/healthreform. 

Employers sponsoring group health plans should work carefully with their legal counsel, benefits consultants and insurance carriers or third party administrators to ensure compliance with these new rules and with health care reform in general.

Kristi R. Gauthier is a Senior Attorney at Clark Hill PLC and can be reached at 248-988-5854 or kgauthier@clarkhill.com.

*This article is not intended to give legal advice. It is comprised of general information. Employers facing specific issues should seek the assistance of legal counsel.