Guidelines Issued for Summary of Benefits and Coverage

The Patient Protection and Affordable Care Act (PPACA) requires health plans and health insurance issuers to provide a Summary of Benefits and Coverage (SBC) to applicants and enrollees.

The SBC is a concise document providing simple and consistent information about health plan benefits and coverage. It must be provided free of charge. Its purpose is to help health plan consumers better understand the coverage they have and to help them make easy comparisons of different options when shopping for new coverage.

The responsibility for issuing an SBC is shared between the health insurance issuer (carrier, i.e. United Healthcare, Anthem or Coventry) and the plan sponsor (employer).  With a fully insured plan, the insurance carrier is required to develop and publish the SBC for the plan sponsor.  The plan sponsor (employer) is responsible for distributing the SBC to all eligible employees. 

Penalties

PPACA establishes a penalty of up to $1,000 for each willful failure to provide the SBC. Failing to provide the SBC may also trigger an excise tax of $100 per day per individual for each day of noncompliance.

Compliance Deadline

Plans and issuers must provide the SBC to participants and beneficiaries who enroll or re-enroll during an open enrollment period beginning with the first open enrollment period that begins on or after Sept. 23, 2012.  All newly eligible employees (new hires, special enrollees) must also receive the SBC beginning with the first plan year that begins on or after Sept. 23, 2012.

Providing the SBC

What Types of Plans Require an SBC? Generally, the two types of plans that require an SBC are group medical plans and Health Reimbursement Arrangements.  Plans excluded from the requirements include dental, vision, life and disability coverage.

Timing Requirements A health insurance issuer (carrier) offering group health insurance must provide an SBC to the plan sponsor (employer):

• At least 30 days prior to a group’s renewal date – described as the initial SBC
• By the first day of coverage, if there are any changes to the initial SBC
• Within seven business days after receipt of a group application for health coverage

The plan sponsor (employer) must provide an SBC to a member:

• At least 30 days prior to a group’s renewal date – described as the initial SBC
• By the first day of coverage, if there are any changes to the initial SBC
• As part of the new hire packet for newly eligible members
• At least 60 days prior to making a plan change not coinciding with the renewal
• Within seven business days after receipt of a request by the member

Method of Delivery

The SBC may be provided in either paper or electronic form (such as by e-mail or an Internet posting). However, the final regulations place restrictions on the electronic delivery of the SBC:

• The format is readily accessible by the plan or its sponsor
• The SBC is provided in paper form free of charge upon request
• If the electronic form is an Internet posting, the issuer advises the plan sponsor in paper form or e-mail that the documents are available on the Internet and provides the Internet address in a timely manner. The plan sponsor is responsible for promptly forwarding the information to members.

Wrap-Up

While the responsibility of SBC compliance is shared between the carrier and employer, Caravus is here to help.