On April 23, 2013, the Departments of Labor, Treasury, and Health and Human Services (the “Agencies”) released additional FAQs addressing the summary of benefits and coverage (“SBC”) requirements under the Patient Protection and Affordable Care Act (“PPACA”). As stated in a previous SGR Client Alert, in February 2012, the Agencies issued final regulations implementing the SBC requirements under PPACA. As a reminder, group health plan sponsors were required to provide SBCs to participants and beneficiaries describing their plans’ benefits and coverage effective for plan years beginning after September 23, 2012 – January 1, 2013 for calendar year plans.
The additional FAQs include guidance for plan years beginning on or after January 1, 2014 and before January 1, 2015 (referred to in the FAQs as the “Second Year of Applicability”). In the FAQs, the Agencies clarify that additional coverage examples are not required as part of the SBC for the Second Year of Applicability. Therefore, for the Second Year of Applicability, plan sponsors should continue to use the same two coverage examples required under previous SBC guidance – having a baby and managing type 2 diabetes. The FAQs also retain the “good faith compliance” standard for the Second Year of Applicability for plan sponsors who are working diligently and in good faith to comply with the SBC requirements under PPACA.
In addition to the FAQs, the Agencies have released an updated SBC template and an updated sample completed SBC. According to the Agencies, the only change to the SBC template and sample completed SBC is the addition of statements regarding whether:
- The plan provides minimum essential coverage (“MEC”); and
- The plan’s share of the total allowed costs of benefits provided under the plan meets the applicable minimum value (“MV”) requirements.
The FAQs also provide transitional relief to plan sponsors that have already begun preparing their SBCs for the Second Year of Applicability. To the extent that a plan sponsor is unable to modify the SBC template for disclosures regarding MEC and MV (mentioned above), the Agencies will not take any enforcement action against such plan sponsors for using the template provided under previous SBC guidance. However, such plan sponsors are required to include a cover letter (or similar disclosure) with their SBCs stating whether (1) the plan provides MEC and (2) the plan meets the MV requirements under PPACA. The FAQs provide model language for these disclosures.