Summary of Benefits and Coverage (SBC)

Quick Summary of Uniform Summary of Benefits (SBC) and Coverage and Uniform Glossary

Overview

The Patient Protection and Affordable Care Act (PPACA) requires group health plans and health insurance issuers to provide the Uniform Summary of Benefits and Coverage (SBC) and a Uniform Glossary of health insurance and medical terms to health plan participants and beneficiaries.  The purpose of the SBC is to provide clear, consistent understandable information about health benefits and coverage under the plan, so potential enrollees can make an “apples-to-apples” comparison among different coverage options.

Who Must Provide the SBC and Uniform Glossary?

All sizes of insured and self-funded group health plans and individual health policies (both grandfathered and non-grandfathered) must provide the SBC and Glossary.  For insured plans, the requirement is on both the plan administrator and the insurer, but if one of them provides timely and complete documents the other is not required to do so.  For self-funded plans, the plan sponsor has the legal obligation to provide the SBC, although plan sponsors may contract with third-party administrators to actually prepare the SBC.

What is the Penalty for Noncompliance? 

A group health plan or health insurer that willfully fails to provide the required information may be fined up to $1,000 per “failure” – which is per individual who was not provided the required documents. During the first year, however, the government will not impose penalties on plans and insurers that are working diligently and in good faith to comply.

What Plans must provide SBCs and What Participants must Receive SBCs?

SBCs must be provided for traditional medical plans and health reimbursement accounts (HRAs).  Employers with HRAs should confirm that the HRA administrator will prepare the SBC for the HRA, since most carriers have indicated they will not include HRA information in their SBCs for the underlying medical plans.  If an employer offers more than one benefit option, it must provide a separate SBC for each option, except that at re-enrollment, a plan need only provide an SBC for the option in which the participant is enrolled, unless the participant requests a different SBC.

The SBC must be provided to all participants and beneficiaries.  For beneficiaries, an SBC provided to the participant (employee) will be sufficient for the beneficiaries as well, except that a separate SBC must be provided to beneficiaries whose known address is different from the employee’s.

An SBC is not required for: retiree-only plans, Health Savings Accounts (HSAs), or HIPAA “excepted” benefits such as stand-alone dental and vision plans and most health flexible spending accounts (HFSAs).

When Must the SBC be Provided?

September 23, 2012 is the initial date by which plans and insurers must start providing the SBCs and the Uniform Glossary to plan participants and beneficiaries.  On an on-going basis, the SBC must be provided within the following timeframes:

• At Initial and open enrollment:  With open enrollment materials; if no open enrollment, must be provided before the date an employee is first eligible to enroll.
• Automatic re-enrollment:  At least 30 days before 1^st day of next plan year; or within 7 days after policy is issued.
• HIPAA Special Enrollment:  Within 90 days after enrollment (same as for SPDs), must provide SBC for benefit option in which employee enrolls. Must provide SBC earlier if individual requests it.
• Upon request: As soon as possible but within 7 business days after request

What is in the SBC?

Although the SBC is touted as a four-page document, it is actually eight pages because each page is two-sided. The SBC must be in at least 12-point font. The template for the SBC includes six sections:

1) Summary of basic cost-sharing amounts, dollar limits and whether the plan uses a network
2) Services, costs and limitations for a list of common medical events
3) Excluded Services & Other Covered Services
4) Your Right to Continue Coverage
5) Your Grievance and Appeals Rights
6) Examples of how the plan might cover medical expenses in two standard situations: having a baby (normal delivery) and managing type 2 diabetes.

How is the SBC Provided?

The SBC for a group plan may be provided either as a stand-alone document or in combination with other summary materials (such as the SPD).  For an individual policy the SBC must be a stand-alone document.  The SBC may be provided either in the exact colors in the template or in grayscale.  The SBC and the Uniform Glossary may be provided in paper or in electronic form.

The SBC must be made available in a non-English language if 10% or more of the people in the county (in which the SBC is sent) are literate only in that language.  A list of such counties is at http://cciio.cms.gov .    SBCs in English that are sent to individuals who reside in those counties must include a statement in the applicable non-English language indicating how the SBC can be obtained in that non-English language.

Electronic Distribution of SBCs

As noted above, SBCs may be provided electronically.  Electronic distribution of SBCs generally follows the DOL safe harbors, except that the DOL has provided an additional safe harbor for SBCs that liberalizes the circumstances under which the SBC may be provided electronically.  The initial DOL safe harbors are:

• For plan participants with work-related computer access to the employer’s intranet, the employer can send documents electronically without first obtaining the individual’s prior consent
• For those without work-related access, the employer must obtain prior consent in order to send documents electronically

Under the additional safe harbor for SBCs (which is in ACA FAQs Part IX, May 11, 2012, accessible at http://www.dol.gov/ebsa/faqs/faq-aca9.html), an employer can distribute the SBC without the prior consent of an individual who does not have work-related computer access when:

• The individual enrolls online or renews their coverage online, or
• The individual requests an SBC online.

In either case, the individual must have the option to receive a paper copy upon request.

The Uniform Glossary

The Uniform Glossary is a standard document prepared by the government.  It’s the same for all plans regardless of benefits or type of plan.  The plan or insurer can provide either the Glossary or the Internet address of a site that has the Glossary (such as the insurer’s or plan sponsor’s site, or the HHS’s or DOL’s site).  If an individual requests a paper copy of the Uniform Glossary, it must be provided at no charge within seven business days.

Prior Written Notice of Material Modifications to the SBC

If there is a mid-year (i.e., not at renewal) material modification of information in the SBC, the plan or issuer must provide at least 60-day’s prior written notice before the effective date of the change.  A “material modification” includes both benefit enhancements and reductions and is defined as a change that an average plan participant would consider an important change in benefits or terms of coverage.  It does not include changes in premium, but does include changes in cost-sharing (deductible, copayments, coinsurance).