Issue 33: Final Summary of Benefits & Coverage Rule Delays Effective Date, Modifies Requirement

This is the thirty-third issue in our series of alerts for employers on selected topics in health care reform. (Click here to access our general summary of health care reform and other issues in this series.) This series of Health Care Reform Management Alerts is designed to provide an in-depth analysis of certain aspects of health care reform and how it will impact your employer-sponsored plans.

The Affordable Care Act requires group health plan sponsors (employers and insurers) to provide participants with a short Summary of Benefits and Coverage (SBC) for each benefit package offered. This issue supplements Issues 24 and 30 of our Health Care Reform Management Alert Series, which addressed IRS, DOL and HHS (the “Agencies”) proposed guidance and a template SBC released on August 22, 2011.

The Agencies have recently released their final rule governing the SBC requirement. Most notably, the final rule includes a six-month delay in the SBC delivery requirement to allow plans to coordinate the SBC with their open enrollment materials. This means an SBC will be required to be distributed beginning not earlier than September 23, 2012. For calendar year plans, the plan administrator and issuer will generally be required to issue an SBC for benefit packages offered for 2013 and later plan years, beginning with any open enrollment period that starts on or after September 23, 2012. Although several commentators asked that the Agencies exempt large group health plans or self-insured group health plans from the SBC requirement due to the “wealth of useful information” already provided, the Agencies determined not to do so, and felt that the SBC still serves a useful purpose to allow individuals to easily compare coverage across different plans and products.

The final rule includes a number of other changes and clarifications to the earlier proposed guidelines, as described in the chart below.

Requirement	Proposed Rule	Final Rule
Providing the SBC	An SBC must be issued for each benefit package.	Clarifies that “benefits package” includes group health plans but does not include HIPAA excepted benefits. This means an SBC is not required for stand-alone dental and vision, most health FSAs, most HSAs, etc.
The SBC must be provided upon participant request as soon as possible, but no later than seven calendar days following request.	The SBC must be provided no later than seven business days following a participant request.
	For plans with automatic enrollment/re-enrollment, the SBC must be provided at least 30 days prior to the start of the new plan year.	There are no changes to this provision of the proposed rule for self-funded plans For fully-insured plans, if the terms of coverage for the new plan year have not been finalized 30 days in advance, the SBC must instead be provided as soon as practicable, but no later than seven business days after the earlier of (1) issuance of the new policy, or (2) receipt of written confirmation of the intent to renew.
Both the sponsor of a group health plan sponsor and the insurer (if applicable) are required to provide an SBC for each benefit package to all eligible participants and beneficiaries.	The SBC requirement is considered satisfied for all entities if the SBC is provided to participants by any entity. A single SBC may be provided to a participant and any beneficiary at the participant’s last known address. For participants who are already enrolled in coverage, the plan or issuer must only provide the SBC for the coverage in which the individual is enrolled. The plan or issuer does not need to automatically provide SBCs for the other benefit packages for which the participant is eligible. The participant may still request SBCs for other benefit packages though.
The SBC must be provided within seven calendar days of a request for special enrollment.	The SBC must be provided to special enrollees no later than 90 days from enrollment (consistent with the timing for delivering an SPD following special enrollment). If a special enrollee requests an SBC sooner, it must be provided within seven business days.
Content	See “What Must Be Included in the SBC?” from Issue 24.	The SBC is no longer required to include participant premium costs. This change will allow many plans to significantly reduce the number of SBCs that need to be issued. The requirement to include a statement regarding whether the plan provides “minimum essential coverage” is delayed until 2014. Future guidance will be issued to address this aspect of the SBC. For coverage provided outside of the United States, plans may simply provide contact information for obtaining such benefit and coverage information in lieu of an SBC.
The SBC must include coverage examples describing costs under the plan for breast cancer, baby delivery and diabetes.	The SBC must no longer include a coverage example for breast cancer. The Agencies reserve the right to add additional coverage examples in the future.
Appearance	The SBC must be presented to participants as a stand-alone document.	SBCs issued in connection with group health plan coverage may be provided either as a stand-alone document or in combination with other summary materials (SPD, SMM, etc.), as long as the SBC is prominently displayed at the beginning of the materials.
The SBC template format must be followed.	If a plan’s terms cannot be described in the form of the template, for example where a wellness program results in different cost sharing, then the plan must use its best efforts to describe the plan terms in as consistent a manner as possible.
Form	The SBC may be delivered to participants electronically only if the DOL’s e-disclosure safe harbor is met.	Retains the proposed rule for participants and beneficiaries already covered under a group health plan. For individuals eligible for but not enrolled in coverage, the SBC may be provided electronically if the format is accessible and a paper copy is available upon request. If the e-disclosure is a website posting, the plan must advise the individual in paper form (e.g., a postcard) providing the website and notifying the individual that a paper copy is available upon request.
Notice of Mid-year Material Modifications	Plans must notify participants at least 60 days in advance of any material changes.	Changes to the SBC resulting from changes in regulatory requirements do not require advanced notice.
Effective Date	Plans must issue SBCs for each benefit package: For any open enrollment beginning on or after March 23, 2012, and For new hires, special enrollments and upon participant request, beginning on or after March 23, 2012.	Plans must issue SBCs for each benefit package: For any open enrollment beginning on or after September 23, 2012, and For new hires, special enrollments and upon participant request, beginning as of the first day of the plan year beginning on or after September 23, 2012.

Employer Action Steps

Determine which benefit packages and coverage levels are subject to the SBC requirement.
For fully-insured plans, coordinate with the insurance provider to determine who will prepare and distribute the SBC.
Complete the SBC template for each benefit package and prepare for distribution no later than the first open enrollment period following September 23, 2012 - generally for the 2013 plan year.
Determine whether to distribute electronically or to provide paper copies of the SBC.