Employee Benefits Compliance, Summary of Benefits and Coverage

New Guidance Sets September 2012 Effective Date for Uniform Summary of Benefits and Coverage (SBC)

On February 9, 2012, the three U.S. Departments charged with implementing the Affordable Care Act (ACA) requirements for the Uniform Summary of Benefits and Coverage (SBC) issued a Final Rule and Compliance Guidance.  A number of important changes were made to the proposed regulations, and effective date was moved to September 23, 2012 (see details below).  The Guidance also provides updated templates, samples, instructions and examples.
Below is our initial list of important changes– based on our review of the Compliance Guidance.  We will update this list soon with additional information from the Final Rule.
Brief Background
The SBC is intended to provide plan participants and potential enrollees with clear, consistent and comparable information about health benefits and coverage under different plans and policies to help them compare different coverage options. The SBC requirements apply to both grandfathered and non-grandfathered plans, and to both group health plans (insured and self-funded) and individual health policies.  See The Leavitt Health Care Reform Bulletin dated August 19, 2011, for additional detail on what’s in the SBC.
At the end of this article is a list of all the SBC documents that are now available at http://cciio.cms.gov and www.dol.gov/ebsa/healthreform.
List of Important Changes Made by the Final Regulations and Compliance Guidance
1- The effective date for providing an SBC, Uniform Glossary and notice of modification is September 23, 2012.  The original effective date was March 23, 2012, but was postponed last November until after the issuance of final regulations.
  • Group health plans: The first day of the first open enrollment period that begins on or after September 23, 2012 (this applies to re-enrollees and late enrollees also).
  • Group health plans: For individuals who enroll other than through an open enrollment period (including newly eligible individuals and special enrollees), these final regulations apply beginning on the first day of the first plan year that begins on or after September 23, 2012.
  • Individual market: The final regulations apply to health insurance issuers beginning on September 23, 2012.
2- The February 2012 versions of the SBC and Uniform Glossary are temporary.   They apply only for coverage beginning before January 1, 2014, i.e. the “first year of applicability.”  More guidance will be issued for future years.
The ACA and the final regulations do not require certain information to be provided until 2014, so the current versions of the SBC and the Uniform Glossary do not include this information. Future versions will.  Specifically, the omitted information is the language required in paragraph (a)(2)(i)(G) of the final regulations, which will require a statement in the 2014 SBC about whether a plan or coverage provides minimum essential coverage and whether the plan’s or coverage’s share of the total allowed costs of benefits provided under the plan or coverage meets applicable minimum value requirements.
3- This version of the SBC and Uniform Glossary requires only two, rather than three, specific coverage examples.
The  two coverage examples are:

  • Having a baby (normal delivery) and,
  • Managing type 2 diabetes (routine maintenance of a well-controlled condition).
The breast cancer example (that was in the initial  version of the SBC) is not necessary at this time.
4- The SBC must contain specific information provided (by HHS and DOL) to simulate benefits under the plan or policy for the coverage example portion.
 HHS is providing this information at:
– or via hyperlink from www.dol.gov/ebsa/healthreform
Some of the specific information necessary to simulate benefits for the coverage example portion includes relevant medical items and services, dates of service, billing codes, and allowed charges.  For more information see paragraph (a)(2)(ii) of the final regulations.
5- For group health plan coverage, the SBC may be either a stand-alone document or in combination with other summary materials (such as the SPD).  For the individual market, the SBC must be a stand-alone document.
When the SBC may be provided in combination with other summary materials, e.g. a summary plan description, the SBC information must be intact and prominently displayed at the beginning of the materials such as immediately after the Table of Contents in a summary plan description.
6- The SBC may be provided either in color or grayscale.
The proposed regulations required the SBC to be provided in color.  However, due to concerns during the comment period about the cost of color printing, the final regulations provide that grayscale also may be used.
7- When preparing the SBC, the full SBC template authorized by this Compliance Guidance must be used.  However, if the template cannot reasonably be used, the plan or insurer may instead use “best efforts” to be consistent with the template.
To the extent a plan’s terms that are required to be described in the SBC template cannot reasonably be described in a manner consistent with the template and instructions, the plan or issuer must accurately describe the relevant plan terms while using its best efforts to do so in a manner that is still consistent with the instructions and template format as reasonably possible.
Such situations may occur, for example, if a plan provides a different structure for provider network tiers or drug tiers than is contemplated by the template and these instructions.
8- The SBC must be provided in a “culturally and linguistically” appropriate manner.   Part of this requirement is that it must be made available in another language if 10 percent or more of a county is literate in only that language.
To determine whether a particular county meets the “10-percent-or-more” threshold, refer to the  American Community Survey  published by the U.S. Census Bureau.  See:
          also  via hyperlink from www.dol.gov/ebsa/healthreform
As of February 9, 2012, 255 U.S. counties (78 of which are in Puerto Rico) meet this threshold. The overwhelming majority of these are Spanish; however, Chinese, Tagalog, and Navajo are present in a few counties, affecting five states, including Utah.  For more information, see the Final Rule atparagraph (a)(5).
9- It appears that the final regulations will not require 60 days prior notice before the effective date of a premium increase. The final regulations omit “increase premiums” from the list of changes or modifications that will be considered a “material modification” for which written notice must be provided at least 60 days prior to the effective date.
This has been a frequent question in recent months. One of the requirements in the SBC regulations is that a plan or issuer must provide at least 60 days prior written notice of any “material modification.” The proposed regulations last August specifically listed increases in both premiums and cost-sharing as examples of material modifications for which prior notice would be required at least 60 days prior to the effective date. The final regulations include a paragraph that is almost verbatim with the language in the proposed regulations, but it omits the word “premium.”    We did not see a specific comment by the regulators noting that they had decided to make this change, but the omission of this word  seems to confirm that they did.  
(The paragraph is on page 52450 of the proposed regulations (Federal Register / Vol. 76, No. 162 / Monday, August 22, 2011 / Proposed Rules) and on page 39 of the early-release copy of the final regulations.)
The following documents are now available at http://cciio.cms.gov and www.dol.gov/ebsa/healthreform:
1.  SBC template
The document is available in modifiable format (MS Word), as suggested by commenters for ease of use.
2.  Sample completed SBC
This document was completed using information for sample health coverage and provides a general illustration of a completed SBC.
3.  Instructions
For assistance in completing the SBC template, separate instructions are available for group health coverage and for individual health insurance coverage
4.  Why This Matters language
The SBC instructions include language that must be used when completing the “Why This Matters” column on the first page of the SBC template. Two language options are provided depending on whether the answer in the applicable row is “yes” or “no”, according to the terms of the plan or coverage.
5.  Coverage examples
This guidance document, together with information provided in Microsoft Excel format by HHS at http://cciio.cms.gov ( and accessible via hyperlink from www.dol.gov/ebsa/healthreform ), provides all the information necessary to perform the coverage example calculations.
6.  Uniform glossary
The uniform glossary of health coverage and medical terms may not be modified by plans or issuers.