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Proposed Health Benefit Summaries Are Onerous, Group Warns
Summaries of benefits and coverage could ‘frustrate, confuse and even mislead’ employees

By SHRM Online staff  10/28/2011
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The ERISA Industry Committee (ERIC), a group representing large U.S. employers with benefit plans subject to the Employee Retirement Income Security Act (ERISA), submitted comments on proposed regulations to implement the uniform summary of benefits and coverage (SBC) provisions under the Patient Protection and Affordable Care Act. The U.S. departments of Health and Human Services, Labor, and Treasury published the proposed rule in the Federal Register on Aug. 22, 2011.

The proposed regulations, if not altered, have the potential to upend the manner in which information about a group health plan's coverage and benefits is provided to employees and beneficiaries, the group's letter warned.

“ERIC’s members are deeply concerned that the proposed regulations will force them to provide benefit summaries that will frustrate, confuse and even mislead their employees” said ERIC President Mark Ugoretz. “The proposed SBC template is designed for insured plans in the individual and small group markets: It is poorly suited to communicate the essential terms of the group health plans offered by large employers.”

Redundancy for Self-Insured Plans

ERIC’s members say that most self-insured plans already provide required benefits statements and should not be subject to the SBC requirements, according to Ugoretz. The letter explains that employer group health plans are subject to detailed disclosure rules that require them to provide much of the same information in summary plan descriptions, summaries of material modification, COBRA continuation coverage notices, and similar documents.

ERIC Vice President Gretchen Young added that, “If the government believes that self-insured plans must prepare these summaries, then the Departments should at least recognize they should implement the SBC requirement in a way that minimizes the duplicative and misleading information employers are forced to provide to their employees, and that makes the administrative burdens and expenses associated with the SBC as light as possible.”

Among the group's recommendations for revisions to the proposed rule:

Adopting existing communications. One of ERIC’s principal recommendations is that the regulations should permit employers to adapt their communications to satisfy the SBC requirement rather than force them into a one-size-fits-all template. The departments should instead provide standards for the length, content and format of the SBC and should allow employers to design their SBCs to meet these standards.

Allow website posting. ERIC recommended that the final regulations should permit employers to provide the SBC by posting it on a website. “A rule permitting website disclosure would be an important step in addressing some of the concerns that the SBC requirement raises for large employers,” the letter said.

Unnecessary Burdens

“ERIC strongly urges the Departments to reconsider the rigid approach that the proposed regulations take with respect to the SBC requirement,” the group's letter emphasized. “The statute does not compel such an inflexible approach, and the proposed template simply would not work for a great many group health plans," it continued, adding, "Unless the proposed regulations are substantially modified, they will impose unnecessary costs and administrative burdens on employers with no corresponding benefit to employees.” 

SBC's Called 'Essential Redundant' for Self-Insured Plans

HighRoads, a provider of employer health care compliance and benefits management, offered its comments to draft regulations on the Summary of Benefits and Coverage (SBC) and the Uniform Glossary.

“For self-insured group health plans, there are a lot of unanswered questions in the proposed new regulations,” said Thomas Barker, former general counsel of the U.S. Department of Health and Human Services (HHS) and partner in the law firm of Foley Hoag, who consults to HighRoads on regulatory matters. “The SBC’s are essentially redundant to current communication documents self-insured employers provide their employees,” said Baker, adding, "There is little positive gain but additional expense.”

“That being said, with enactment of the new regulations only five months away, we encourage employers to start the process of becoming familiar with the SBC template in order to be in compliance," Baker advised. “It is also prudent to meet with vendors and create a solid logistical plan for fulfilling distribution requirements. Employers should also take inventory to create a list of plans for which an SBC is required,” he said. 

HighRoads formally submitted the following comments:

Comments on the Summary of Benefits and Coverage (SBC) 

“We agree that the proposed rule provides important protections to individuals who obtain health care coverage in the individual insurance marketplace. We also recognize that section 2715 of the PHS Act clearly applies to self-insured group health plans. We believe that the application of the statue to group health plans is redundant. It will cause additional burden for these plans, especially those who self-insure, with no real tangible benefit for the lives covered under the self-insured plan. Employers already engage in an annual enrollment communication campaign that is conducted before the start of the next plan year. Much of the information required in the SBC is already present in the annual enrollment communication material that employers provide to their employees. This is also true for the proposed requirement that an SBC accompany the enrollment material for each plan. This is typically already provided to employees by the employer during the enrollment period.”

Comments on the Uniform Glossary 

“We find that the uniform glossary is meaningless for participants in a group health plan because it is not specific to plan provisions. There may be terms in the glossary that do not apply to a specific plan and thus may cause employees added confusion. Requiring the use of uniform glossary terminology also burdens group health plans and insurers with the task of changing printed material to match the uniform glossary terminology.”

Comments on State Pre-Emption

“We are also concerned over the agencies’ statement of policy that state laws that are stricter than the proposed regulation are not subject to pre-emption. We urge the agencies to limit the ability of states to regulate employee benefit plans.”

Related Articles:

Preparation Steps for Summaries of Benefits and Coverage, SHRM Online Benefits Discipline, October 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

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Health Care Reform Resource Page

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