Feds Release New Summary of Benefits and Coverage Rules – 5 Months Late

By Gary Kushner, SPHR, CBP
President and CEO, Kushner & Company

Under the Patient Protection and Affordable Care Act of 2010 (PPACA), among other requirements insurers and health plans are to provide a new “summary of the Summary” Plan Description, known as the Summary of Benefits and Coverage (or, as it was known in the Act, the Uniform Explanation of Coverage), starting on March 23, 2012.  The Act’s purpose was straight-forward and clear: help participants be better able to choose a plan by having all plans provide information in a similar fashion.  Unlike most all other legislation, including the PPACA, the items for an SBC were very specific, as were the formatting and layout.  It was to be no more than four pages long, with a font of no less than 12 point, and had to contain information that would easily fill 10 or more pages under even the best of circumstances (unless your idea of a page was more a museum-sized mural).

In order to assist employers, insurers, and health plans come up with this new participant disclosure, the Act required three federal agencies–the Departments of Labor, Health and Human Services, and the Treasury–with providing a model of this new four page document by March 23, 2011.

Well, on August 17, 2011, almost five months after the law’s own requirement, the agencies did provide a model notice.  Surprise–they too couldn’t fit all of the required information onto four pages (it took them six).  Even better, they then added one of the items required for this document, a glossary of common plan terms, onto another notice to provide to participants.  So by the end there are more than 10 pages of information for employers, insurers, and plans to distribute.

But wait, there’s more.  Under the proposed rules, as required by the PPACA, in the event there is a material change in the plan benefits or coverages, a new Summary must be provided to participants no later than 60 days before the start of the new changes, typically the next plan year.  For large employers, this won’t be onerous as planning for the upcoming benefit year is usually done well in advance, often six to nine months before the start of the new plan year.  For small and mid-sized employers however, many insurers and stop-loss carriers are not currently providing renewal information and quotes until within 60 days of the new plan year.  This will force all employers and carriers to push for an earlier renewal process in preparation for the new plan year.  For example, for a calendar year plan, an employer will need to make all plan design decisions, including plan and contribution changes, by early to mid-October in order to communicate with employees by no later than November 1st.

Stay tuned.  I expect we’ll see a push for a number of items related to the new SBC.  First will be requests to delay the implementation date since the federal agencies were almost five months late getting employers and carriers the needed model information.  Second, expect to see requests for a safe harbor for small employers in order to meet this new requirement.

Kushner & Company is SBAM’s partner in providing our members employee benefit consulting and administration. For more information about Kushner & Company and the programs they offer, please click here.