SBC – the details Part II

Bottom line: As noted in Part I, a summary of benefits and coverages (SBC) must be provided to health plan participants and beneficiaries. The SBC consists of a 4 page (double sided) summary in a prescribed format and includes a glossary of terms as well as examples of how certain conditions will be covered by the plan. It is a standalone document.

The subregulatory guidance provides the SBC template and instructions on how to complete the SBC.

A voluminous amount of information was generated to describe the SBC. As with the regulations, the government agencies (HHS, IRS, DOL) are seeking comments in many areas.

We strongly urge you to read all the guidance including the preambles, examine the impact on your particular situation and above all comment!


The Affordable Care Act (ACA) incorporates sections of the Public Health Services (PHS) Act into ERISA and the Internal Revenue Code. Section 2715 of the Public Health Service Act is one of the incorporated sections.

Section 2715 provides rules regarding:
• The length of the SBC ( 4 pages with at least 12 point font)
• Language (culturally and linguistically appropriate)
• Contents (a list of specific items to enable comparability among plans)
• Rules for updating

On August 22, the regulations were published in the Federal Register in two parts; the proposed regulations and the sub-regulatory guidance. The sub-regulatory guidance included:
Subregulatory Guidance Document

NAIC Documents (Appendices to Subregulatory Guidance)
• Summary of Benefits and Coverage (SBC) Template
• Sample Completed SBC – Individual Health Insurance Coverage
• Instructions for Completing the SBC – Group Health Plan Coverage
• Instructions for Completing the SBC – Individual Health Insurance Coverage
• Why This Matters language for “Yes” Answers
• Why This Matters language for “No” Answers
• Guide for Coverage Examples Calculations
• Uniform Glossary of Coverage and Medical Terms

The SBC template
The SBC template and related documents were drafted by the NAIC primarily for use by health insurance issuers. The NAIC stated in its transmittal letter that additional modifications may be needed for some group health plans.
The government is requesting comments and notes that it will periodically review and update the documents, taking into account public comments.

Coverage examples
HHS provides specific information at necessary to simulate benefits covered under the plan or policy for the coverage example portion of the SBC. This information will be updated annually. The government proposes that plans and issuers are not required to update their SBC coverage examples for SBCs provided within 90 days of the update. For example, if HHS releases information on September 15th, SBCs provided on or after December 14th would be required to include the new information.

The government is requesting comments on this information as well as the annual update requirement. In addition, the preamble to the regulations also requests comments regarding various approaches to providing coverage examples.

Language regarding minimum essential coverage and whether the plan’s or coverage’s share of the total allowed cost of benefits provided under the plan or coverage meets the applicable minimum value is not required until the effective date of this provision (coverage beginning or after January 1, 2014).

The government is requesting comments on how employers might provided the information included in the minimum essential coverage statement.

The NAIC template includes nonworking websites for individuals to access the uniform glossary, prescription drug coverage as well as plan or coverage provider networks. Plans and issuers will have to modify the SBC to reflect the actual websites.

Layout and color
The NAIC indicated that the layout and color of the SBC was based on the results of consumer testing. The government recognizes that the use of color might be costly for some plans and issuers and proposes the use of the color version or grayscale version.

In addition, the government notes that the NAIC recommended layout is three double sided pages and is proposing that the SBC may be four double sided pages in length.

The government is interested in general comments regarding the proposed SBC template, sample completed template, instructions, sample language for “Why this Matters” and the guide for coverage examples.

The preamble notes that the purpose of the SBC is to provide employees with the information they need to compare different employer provided coverages and that the NAIC recognized the importance of presenting the SBC in a uniform manner.

The government is soliciting comments proposing flexibility in the SBC presentation explicitly addressing the potential positive or negative effects on the individuals’ ability to effectively compare benefits and coverage among group health plans. The preamble lists five additional issues for which comments are requested including:
1. Issues that may arise from the use of the template for different types of plans or coverage designs
2. Modifications needed for use by group health plans
3. Whether or not the SBC should include content regarding preexisting conditions or other information that might be important for individuals to know and how the template could be modified to ensure effective disclosure of these additional elements while respecting the statutory format requirements.
4. Whether services should be added or removed from the fourth page of the SBC as well as the whether the disclosure advising that the list is not complete is an adequate statement.
5. Whether the disclosure on the first page of the SBC indicating that the SBC is not the actual policy and does not include all the details is an adequate statement

Comments are also solicited with respect to proposal that no changes can made to the uniform glossary.

What should plan sponsors do?
We strongly urge you to read all the guidance including the preambles, examine the impact on your particular situation and above all comment! As you go through you open enrollment season, consider the impact of the SBC requirements.

Editorial comment:
Summer is coming to a close; plan sponsors with calendar year plans as well as their vendors are gearing up for open enrollment which is a time consuming and exacting task. Asking for comments to the extent requested within 60 days (October 21, 2011) during one of the busiest times of the year for many plan sponsors, is a monumental task, given the volume of the material which must be carefully reviewed, digested and applied to a plan sponsor’s particular situation.

We acknowledge that the regulations ask for comments regarding a phased approach, but even this will require time and effort on the part of the plan sponsors and their advisors to thoughtfully review the amount of information provided.

Given the volume of comments requested, the amount of information required in the proposed regulations, the strict formatting requirement, the 2012 implementation date, we believe it is time to step back, allow plan sponsors, advisors, brokers, insurance carriers to consider the practical implications and submit their comments; the 60 day comment period is not enough and the 2012 implementation date may be unworkable.

Note: all links are active as of the date of issuance of this ErisaALERT.

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