Employee Benefits Compliance, Laws, Regulations & FAQs, Summary of Benefits and Coverage

Additional ACA FAQs (Part IX) Clarify Questions on SBCs

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On May 11, the Departments of Labor, HHS and Treasury jointly issued 14 new “Frequently Asked Questions” (FAQs Part IX), clarifying implementation of the summary of benefits and coverage (SBC) provision of the Affordable Care Act (ACA).  These FAQs address questions that have been raised in response to the February 14th final regulations on SBCs.

Immediately below are those items from the FAQs that we think will be of most interest to group health plans sponsors.  Following that is a summary of all 14 of the FAQs.
FAQs of Most Interest to Group Health Plan Sponsors
  • Penalties:  “During the first year of applicability, the Departments will not impose penalties on plans and issuers that are working diligently and in good faith to comply.”   The first year of applicability is defined as coverage beginning before January 1, 2014.  (FAQ 8)
  • “Carve-out arrangements:”  During the first year of applicability, plans that include “carve-out arrangements”  (e.g., for prescription drugs or mental health) will be allowed to provide multiple partial SBCs that, together, provide all the relevant information. In future years, however, it appears that plan administrators of such plans must provide only one SBC that includes all the required information.  This will require the plan administrator to either combine the information from various SBCs into a single SBC, or contract with one of the insurers or other service providers to provide one consolidated SBC.  The FAQs state that “An issuer has no obligation to provide coverage information for benefits that it does not insure,” unless it contracts otherwise.  (FAQ 10)
  • Electronic SBCs:   The February 14th final rule provided a safe harbor for electronic provision of SBCs, which partly incorporated the DOL safe harbor for electronic distribution;  the FAQs provide an additional safe harbor:  “SBCs may be provided electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan. SBCs also may be provided electronically to participants and beneficiaries who request an SBC online.”  In either case, the individual must have the option to receive a paper copy upon request.”   (FAQ 1)
  • Non-English versions of SBC and glossary:   The FAQs say that written translations of the SBC template and the uniform glossary are now available in Spanish, Chinese and Tagalog, and that  Navajo translations will soon be available.  (FAQ 11) 
  • Updates to the SBC template:  Corrected versions of the Sample Completed SBC and the guide for coverage examples calculations (diabetes scenario) have been posted on the website.  The changes include correction of a typo in the original version (which listed the allowed amount for insulin as $11.92 rather than $119.20), the addition of sample taglines for obtaining translated documents, and some appearance modifications (underlining, bold type).  Plans and issuers may use either the original or updated version or may make modifications to their own SBCs. 
The website where the SBC and other documents are posted is: http://cciio.cms.gov/programs/consumer/summaryandglossary/index.html.  The FAQs are at: http://www.dol.gov/ebsa/faqs/faq-aca9.html
A Summary of Each of the FAQs:

FAQ 1:  Electronic SBCs:   The February 14th final rule provided a safe harbor for electronic provision of SBCs;  the FAQs provide an additional safe harbor:  “SBCs may be provided electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan. SBCs also may be provided electronically to participants and beneficiaries who request an SBC online. In either case, the individual must have the option to receive a paper copy upon request.” 

FAQ 2:  Provision of SBCs after a change in information.  The regulations require an issuer to provide an SBC to an individual or plan sponsor that applies for coverage as soon as practicable, but no later than seven business days after the substantially completed applications is submitted.  If the information required to be in the SBC changes after that time and before the first day of coverage, the issuer is notrequired to provide an updated SBC  until the first day coverage is effective, unless the individual or plan sponsor requests an updated SBC prior to that time.

FAQ 3:  Provision of SBCs after a change in information.  If an issuer provides an SBC to an individual or plan sponsor prior toapplication, the issuer is not required to provide another SBC after the individual or plan sponsor applies for coverage, if the information in the SBC has not changed.  However, if the individual or plan sponsor requests another copy of the SBC, it must be provided.

FAQ 4:  Provision of SBC to plan sponsor who is “shopping” for coverage:  An issuer is required to provide an SBC to a group health plan sponsor who is “shopping” for coverage but has not yet submitted an application only if the plan sponsor specifically requests an SBC or requests “summary information about a health insurance product.”  An insurer is not required to provide an SBC in response to general questions about coverage options or health products.

FAQ 5:  How an SBC can reference other documents. An SBC must provide all required content elements in the SBC template provided by the government.   It cannot reference other documents (e.g., an SPD) instead of including the required information in the SBC.  However, an SBC that does include all the required information can also reference other documents, either in a footnote or in the body of the SBC.

FAQ 6:  Appearance of electronic version of SBC.  When displaying an SBC electronically, it is permissible for a carrier to make minor adjustments to the formatting of the template SBCs.  Examples listed include expansion of columns, displaying the SBC electronically on a single web page to facilitate scrolling.  However, it is not permissible to delete rows or columns.  Also, the printed version must meet the formatting requirements for the SBC.

FAQ 7:  Showing only parts of SBCs to facilitate comparisons.  Issuers or plans (and brokers working with such plans) may display SBCs, or parts of SBCs, in a way that facilitates comparisons of different benefit package options.  For example, an electronic or hard copy comparison could show only deductibles, out-of-pocket limits, or other cost-sharing features.  The full SBC also must be provided. The limited comparison would not suffice instead of the required SBC.

FAQ 8:  Penalties.  The penalty for failure to provide the SBC or the uniform glossary applies if an entity “willfully fails to provide” the required information.  “During the first year of applicability, the Departments will not impose penalties on plans and issuers that are working diligently and in good faith to comply.”

FAQ 9:  Safe Harbor for streamlined calculator for coverage examples.  For the first year of applicability (defined as coverage beginning before January 1, 2014), the Departments are developing a calculator that plans and issuers can use as a safe harbor to complete the coverage examples in a streamlined fashion.  This is a transition tool for the first year only.

FAQ 10:  Carve-Out Arrangements.  During the first year of applicability, plans that include “carve-out arrangements” (e.g., for prescription drugs or mental health) will be allowed to provide multiple partial SBCs that, together, provide all the relevant information. In future years, however, it appears that plan administrators of such plans must either “synthesize the information into a single SBC,” or contract with one of the insurers or other service providers to provide one consolidated SBC.  The FAQ states that “An issuer has no obligation to provide coverage information for benefits that it does not insure,” unless it contracts otherwise.

FAQ 11:  Non-English versions of SBC and glossary.   Written translations of the SBC template and the uniform glossary are now available in Spanish, Chinese and Tagalog, and Navajo translations will soon be available.

FAQ 12:  No SBC required for insurance products no longer offered.  Issuers are not required to provide SBCs for insurance products that are no longer being offered for purchase.

FAQ 13:  Expatriate coverage.  During the first year of applicability, “the Departments will not take any enforcement action against a group health plan or insurance issuer for failing to provide an SBC with respect to expatriate coverage.”

FAQ 14:  Updates to the SBC template:  Corrected versions of the Sample Completed SBC and the guide for coverage examples calculations (diabetes scenario) have been posted on the website. The changes include correction of a typo in the original version (which listed the allowed amount for insulin as $11.92 rather than $119.20), the addition of sample taglines for obtaining translated documents, and some appearance modifications (underlining, bold type).  Plans and issuers may use either the original or updated version or may make modifications to their own SBCs.