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Employers must distribute summaries of benefits and coverage at open enrollment
In April, the federal Centers for Medicare and Medicaid Services (CMS) posted the final 2017
summary of benefits and coverage (SBC) template and
sample completed SBC, along with
group plan SBC instructions and an updated
uniform glossary of health coverage and medical terms, now expanded by two pages. CMS also released a final
coverage example calculator and
The SBC is issued jointly by CMS with the Departments of Labor and the Treasury and is to be used by all health plans, including small and large group plans, as well as self-funded and fully insured plans and grandfathered plans. Employers must distribute a completed SBC template for each plan option, along with the uniform glossary, to all employees eligible to enroll in health plan coverage.
“The final SBC is the product of a year-and-a-quarter-long process of revising the original SBC issued by the departments in 2012,”
noted Timothy Jost, a professor at the Washington and Lee University School of Law in Lexington, Va., in a post on the Health Affairs Blog. A final rule, which primarily addressed issues involving the distribution of SBCs, was
finalized in June 2015. However, the agencies stated that
they would bifurcate the process and delay issuing the revised template until they received further input from the National Association of Insurance Commissioners and consumer testing, Jost explained.
released a proposed SBC template and a proposed uniform glossary for comment in February 2016. The process has reached completion with the release of the new final documents.
the final rule issued last June, the SBC and uniform glossary must be distributed by the first day of health plan open enrollment periods that begin on or after April 1, 2017. Employers that use calendar-year plans that start on Jan. 1 will have until the fall 2017 open enrollment season (for plan year 2018) to distribute these materials.
But for employers with a plan year that begins on July 1, open enrollment would likely be in May and June, and “they’d have to focus on distributing these documents a good six months earlier,” said Kim Buckey, vice president of compliance communications at Birmingham, Ala.-based DirectPath, an employee engagement and health care compliance firm.
While most plans years start on Jan. 1, “we do come across a lot of July 1 plan years, and many April 1 plan years. Companies that are merging might also initially have a short plan year,” and in these instances employers should be ready to distribute their SBCs using the revised template in 2017, she noted.
“With the right technology in place, we’re not anticipating employers will have problems delivering SBCs. But for those that are still doing these manually or who might be cobbling them together with legacy systems, it could be more of an issue,” Buckey said.
same rules apply for distributing SBCs as for other benefit plan compliance documents, she noted. “For employees with computer access on a full-time basis as part of their job, it’s fine to distribute [these documents] electronically. Otherwise, you have to solicit permission to send documents electronically,” she noted. Many employers give out a print version supplemented with online access, she said.
Buckey isn’t aware of anything preventing an employer from using the new template early, such as for calendar-year plans starting in January 2017, but “I would be surprised if many did. Because of the differences between the ‘current’ SBC template and the new one, there will be some extensive reprogramming and testing involved and that process would need to start now to allow sufficient lead time.” She said she suspects that not too many employers are eager to be early adopters of the new template, “especially when there’s a generous lead time before the effective date.”
In addition, for employers with fully insured plans, “it’s unlikely that their carriers would have SBCs prepared using the new template for this year’s open enrollment [for plan year 2017], given the complexity of their organizations and the approvals they must contend with,” Buckey noted.
Although the final template closely follows the proposal issued in February 2016, “what was proposed in February was markedly different from what had been originally proposed back in December 2014,” Buckey pointed out. The template is now shorter; it’s five pages instead of eight. “By reducing the template itself to five pages, the hope was that when you filled it in, it would be no longer than eight pages. The agencies eliminated redundant language, headers and footers that didn’t need to be there,” she explained.
Also, in the original template, “many terms were defined within the template itself; those definitions have been pulled out.” In the version meant for posting online, many terms can now be hyperlinked to definitions in the expanded uniform glossary, and in the print version, the formatting for a hyperlink can be provided to indicate that those terms may be found in the uniform glossary.
“If someone is looking at the SBC online and they don’t understand what a deductible is, they can click on the term and it will take them to a dedicated microsite managed by the Department of Labor that houses the glossary, and to the definition of deductible,” Buckey explained.
New Coverage Examples
One of the biggest changes in this new template is the addition of a new coverage example. While the older template gave two examples of how coverage applies in specific situations—having a baby and managing Type 2 diabetes—the revised template adds a third example, treating a simple fracture.
“There’s much more emphasis on the fact that these are examples of how the plan would apply cost-sharing for these situations, and that these are not literal estimates of actual procedure costs,” which had been a source of confusion in the earlier template, Buckey noted. The examples also clarify whether the plan has additional deductibles for costs such as hospital stays in addition to the plan’s overall deductible.
A Tool for Education
“Many employees will look at their enrollment materials, but they’ll also be guided by their HR people and get information about plan selection,” said Buckey. “If you’re getting coverage through your employer, there’s more information available to you and support through the enrollment process, whereas those purchasing through a public exchange are on their own; they don’t have that level of documentation or hand-holding available.”
While wading through up to eight pages of a completed SBC will still be daunting for many employees, HR and benefit managers should use the SBCs to walk employees through the process, Buckey advised. “The more that you can explain what these documents are and how to use them, the more effective they’ll be.”
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on
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