Update: Final Rule Issued on Benefit Summaries
On Feb. 9, 2012, the Obama administration issued a final rule requiring U.S. health insurers and group health plans to provide a concise and comprehensible Summary of Benefits and Coverage document to current and potential health plan participants, for plan years beginning after the fall 2012 open enrollment season. See the SHRM Online article Administration Issues Final Rule on Summary of Benefits and Coverage.
In late August 2011, the U.S. departments of Treasury, Labor, and Health and Human Services issued a proposed rule for the Summary of Benefits and Coverage (SBC) and Uniform Glossary required by the Patient Protection and Affordable Care Act (PPACA). The departments were five months late in issuing the standards for the four-page (double-sided) disclosure that were originally set to becomes effective on March 23, 2012 (the deadline for the public comment period on the proposed regulations was Oct. 21, 2011).
Given the delay in guidance, a phased-in approach might be used.
Should plan sponsors wait for final guidance or begin preparations for the disclosure requirements based on what we know now? There are a number of things that plan sponsors should do in advance of implementation date.
Plan sponsors should become familiar with the SBC template in terms of format, content and rules for distribution. The SBC template in its present form is primarily for use by health insurance issuers. The departments recognize that modifications might be needed for group health plans. Because the intent of the SBC is uniformity to facilitate comparative shopping, changes to the template might be minimal.
Plan sponsors should be aware of the separate standards for providing the SBC in a “culturally and linguistically appropriate manner." English versions of the SBC must disclose the availability of language services in the relevant language in U.S. counties where at least 10 percent of the population is literate only in the same non-English language.
Strategize with Vendors
For group health plans with insured products, responsibility for preparation of the SBC falls on the insurer. The plan sponsor, however, is responsible for distribution of the SBC regardless of the financial arrangement. Because the SBC must be made available on demand, meet with vendors now to strategize about roles and responsibilities.
Commenting on proposed regulations might be at the bottom of an HR benefit manager's to-do list, but the departments are interested in comments about modifications to the template for use by group health plans—particularly about the potential positive and negative effects on an individual’s ability to compare benefits and coverage effectively among and across individual policies and group health plans. The comment process is an opportunity to influence the disclosure requirements.
Plan sponsors must provide an SBC for each health benefit in which a participant is enrolled. Plan sponsors must provide an SBC to a participant or beneficiary on request or in the event of a Health Insurance Portability and Accountability Act (HIPAA) special enrollment. The plan sponsor must be prepared to fulfill such requests within seven days of the request. Now is the time to inventory plans for which an SBC is required.
Each SBC requires certain elements, including:
• Premium (contributions).
• Deductible amounts.
• Out-of-pocket limits.
• Expenses that do not count toward the out-of-pocket maximum.
• Network requirements.
• Cost sharing.
• Coverage limitations and exceptions.
• Covered services (a list of 13 services for which the plan sponsor must categorize as covered or not covered).
• Other covered services.
• Telephone numbers, URLs and policy periods.
• A statement that the SBC is only a summary and that the plan document provides definitive information.
• Beginning Jan. 1, 2014, a statement whether the plan provides minimum essential coverage and whether cost sharing meets applicable requirements.
Plan sponsors should begin to gather these elements for each plan in the inventory. The SBC may not exceed four pages (double-sided) in 12-point font; consequently, expressing premium or contribution information within the SBC might prove challenging, especially if amounts are tiered by coverage category, salary range, plan option or other permutations. The SBC allows employers to provide an addendum with premium information.
Assign Approval Process and Time Frames
Like they do with summary plan descriptions (SPDs), plan sponsors should employ a review process that ensures accuracy. Who gathers the SBC elements? Who prepares the coverage examples? Which vendors need to be involved in the review process? Who provides the preliminary and final approvals for the SBC? What’s the timing for each of these steps?
Prepare Distribution Mechanisms
The SBC is intended to be a stand-alone document. Plan sponsors are required to distribute an SBC to participants and beneficiaries when they enroll, when they renew coverage, when the SBC is amended and on request. The SBC may be delivered electronically if the U.S. Department of Labor rules for electronic disclosure are satisfied. Plan sponsors should consider how to coordinate the SBC with other communication materials, particularly those distributed around annual benefits enrollment.
Don’t Forget the Uniform Glossary
What about the Uniform Glossary? There’s good news and bad. The good news is that plan sponsors cannot modify the Uniform Glossary. They must make it available to participants electronically (even if just providing a link to the U.S. Department of Health and Human Services website) or on paper (as requested) within seven days of the request.
The bad news is that plan sponsors cannot modify the Uniform Glossary. The Uniform Glossary has the potential to conflict with a glossary in the plan sponsor’s SPD. Plan sponsors should compare glossaries and decide whether changes are in order.
For self-insured group health plans, there are a lot of unanswered questions. But as James Thurber said, “It is better to know some of the questions than all of the answers.” Spend time now with the proposed regulations. Preparation will yield questions that only the federal departments can answer. Soliciting those answers now will pay off in March 2012.
Thomas Barker is a partner in the law firm of Foley Hoag. He focuses his practice on complex federal and state health care legal and regulatory matters. Prior to joining the firm, he was acting general counsel at the U.S. Department of Health and Human Services (HHS).
Kim Buckey is SPD practice lead at HighRoads and leads the firm's communications consulting practice.
Agencies Delay Deadline for Health Benefit Summaries, SHRM Online Benefits Discipline, November 2011
Get Ready for Summary of Benefits and Coverage Rule, SHRM Online Benefits Discipline, September 2011
Proposed Rule Issued on Comparable Health Plan Summaries, SHRM Online Benefits Discipline, August 2011