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For Open Enrollment, Remember New Templates for SBCs

August 15, 2013 | Stephanie A. Smithey © Ogletree Deakins

Employers conducting their annual group health plan open enrollments this fall must remember to include a summary of benefits and coverage (SBC), along with a uniform glossary to that SBC, as required by the Patient Protection and Affordable Care Act. The SBC is required for both grandfathered and nongrandfathered plans in the insured and self-funded market, as well as the individual market.

Recent guidance from the U.S. Department of Labor, the U.S. Department of Health and Human Services, and the U.S. Treasury updates the SBC templates that describe coverage beginning on or after Jan. 1, 2014, and before Jan. 1, 2015. The updated templates and a sample completed template include a statement as to whether the group health plan provides minimum essential coverage and whether that coverage meets the minimum value requirements (i.e., the plan must cover at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan).

The updated templates are not required for SBCs issued for the 2014 plan year; however, if the group health plan does not use the updated templates for the upcoming open enrollment, the new guidance requires the plan or insurance company to include a disclosure with the SBC. That disclosure may be in the form of a cover letter stating whether the plan provides minimum essential coverage and meets the minimum value requirements. The guidance includes sample language for that disclosure, which can be found at question two (Q2) on the DOL’s “FAQs about the Affordable Care Act Implementation Part XIV.”

The other clarification to the SBC for the 2014 plan year is that additional coverage examples are not required as part of the SBC at this time. Plans and insurance companies should continue to answer questions on the SBC template regarding annual limits even though plans are prohibited from imposing annual limits on essential health benefits effective for plan or policy years beginning on or after January 1, 2014. The SBC should include detailed information on any limits on specific covered benefits that are not essential health benefits.

Remember that a group health plan must provide advance notice of a material modification if there is a material modification to the plan that is not reflected in the most recently provided SBC. Only material modifications affecting the SBC content would require this advance notice. For material modifications not reflected in the most recent SBC, notice is required (in paper or electronic form) no later than 60 days prior to the date that the change will become effective. Employers will want to keep this advance notice requirement in mind for plan terminations or other significant benefit changes.

Stephanie A. Smithey is a shareholder in the Indianapolis office of Ogletree Deakins, which provides counsel to management in every area of labor and employment law.