The Affordable Care Act requires that everyone eligible for group health care receive a summary of benefits and coverage (“SBC”), along with a uniform glossary of terms, at initial (or special) enrollment, upon renewal of coverage, sixty days before a material mid-year plan change, and upon request. By law, the SBC is required to be provided on and after March 23, 2012, but interested groups have requested a delay pending issuance of final regulations.
A separate SBC must be provided for each health care option offered. Eligible individuals must receive an SBC for each option available to them; current enrollees are entitled to receive the SBC only for the option in which they are enrolled, but may request SBCs for the other options (which must be provided within seven days of the request). Failure to provide the SBC may result in the imposition of significant fines and/or taxes on the Insurer or plan administrator.
There are thirteen line items of disclosure for an SBC, including a description of the coverage and its limitations, and cost and provider information. In addition, the SBC must include “coverage facts labels” for three common benefit scenarios – having a baby, treating breast cancer and managing diabetes. These labels are intended to illustrate what proportion of expenses the plan will cover by answering questions like “What is the premium?, What is the deductible?, and Do I need a referral to see a specialist?” so that the different options may be compared. The DOL has provided a template SBC.
Proposed regulations detail the requirements for the SBC, including font, page limit and that it be written in a “culturally and linguistically appropriate manner.” The SBC can be delivered electronically. Although, the information provided by the SBC likely is contained in the summary plan description (“SPD”), there are differences in both content and distribution requirements. The SBC(s) may become an attachment to the SPD, but not vice versa.
Plans “grandfathered” under PPACA are required to provide SBCs. Plans that only cover retirees, or provide solely dental or vision coverage, do not have to provide SBCs.
Key Plan Limits Increase for 2012
On October 20, 2011, the IRS announced the 2012 limits for retirement plans. Many of the limits are increasing for the first time since 2009. Notable 2012 changes include:
- the annual elective deferral limit for 401 (k), 403(b) and eligible 457 plans has increased from $16,500 to $17,000;
- the annual compensation limit under Code Section 401(a)(17) has increased from $245,000 to $250,000;
- the annual benefit limit for defined benefit plans under Code Section 415 has increased from $195,000 to $200,000;
- the annual contribution limit for defined contribution plans under Code Section 415 has increased from $49,000 to $50,000;
- the compensation limit for determining who is a “highly compensated employee” under Code Section 414 has increased from $110,000 to $115,000; and
- the compensation limit for determining who is a “key employee” under Section 416 of the Code has increased from $160,000 to $165,000.