Beginning September 23, 2012, group health plans must provide a Summary of Benefits Coverage (SBC). Generally, the SBC is a mini Summary Plan Description that must be furnished to every participant and beneficiary. Plan sponsors that do not comply can be assessed a fine of $1,000 per occurrence and an excise tax of $100 per day. With distribution dates looming, a quick review of who must receive the SBC, how and when may be in order.
A group health plan must provide an SBC for each benefit package offered by the group health plan to eligible participants and beneficiaries. For purposes of the disclosure rule, a “participant” includes current and former employees and members of an employee organization who are or who may become eligible to receive benefits from the group health plan. A “beneficiary” is a person designated by a participant or by the terms of the plan, who is or who may become entitled to a benefit under the plan.
If a participant and any beneficiaries are known to reside at the same address, the plan can provide a single SBC to that address. The SBC can also be furnished electronically, but it must comply with the Department of Labor “safe harbor” for electronic disclosure under ERISA (Employee Retirement Income Security Act of 1974), and the individual must have the option to request a hard copy. The SBC must be provided at initial enrollment, special enrollment (pursuant to the Health Insurance Portability & Accountability Act), open enrollment, and upon request.
The SBC can be provided as a stand-alone document, or may be included with other summary plan materials (such as the summary plan description) provided the SBC information is intact and is prominently displayed at the beginning of the materials.