The Department of Labor (DOL), Department of the Treasury, and Department of Health and Human Services (HHS) jointly issued proposed regulations regarding the Summary of Benefit Coverage (SBC). The SBC is a new welfare benefit disclosure that insurers and group health plans must provide to participants and enrollees. The SBC is required by the Patient Protection and Affordable Care Act and must be issued by both grandfathered and non-grandfathered plans. The effective date for this new requirement is March 23, 2012.
The SBC is meant to enable participants to better understand the coverage they have and to compare other coverage options by providing welfare benefit information in a standardized and concise format. The proposed regulations provide that the SBC must be written in plain language, be no more than four double-sided pages, and not less than 12-point font.
The SBC will summarize key plan features, such as covered benefits, premiums, cost-sharing provisions, and coverage limitations and exceptions. The SBC must also include certain coverage examples. These coverage examples must illustrate plan coverage for common health scenarios, such as pregnancy, treating breast cancer, and managing diabetes.
To further help participants and enrollees understand the SBC, the SBC must also contain internet addresses to the DOL and HHS websites where participants and beneficiaries can access a uniform glossary of commonly used terms. Insurers and plans must also make this glossary of commonly used terms available on request.
The SBC must be provided (1) when any written materials are provided during open enrollment, (2) 30 days prior to reissuance or renewal of the participant’s health coverage, (3) within seven days of a request for special enrollment, and (4) within seven days of a participant’s or beneficiary's request. If there are any material changes to the SBC, the plan administrator must provide notice to participants and beneficiaries 60 days before the effective date of the change. The SBC can be provided in paper or electronic form. However, if provided electronically, plan administrators must satisfy the DOL’s electronic disclosure safe harbor requirements.
The penalties are significant for failing to provide the SBC, the 60-day advance notice of material changes, or the uniform glossary of terms in a timely manner. Each willful failure is subject to a $1,000 penalty. Failures are also subject to an additional excise tax of $100 per day for each affected individual.
Plan sponsors should coordinate the responsibilities for the preparation and distribution of the SBC with the insurers and third party administrators that provide services for their plans.