Proposed Regulations Address Summary of Benefits Requirement

On August 17, 2011, the Department of Health and Human Services, Department of Labor ("DOL"), and the Department of the Treasury (the "Agencies") released proposed regulations addressing the new summary of benefits and coverage requirement under the Patient Protection and Affordable Care Act ("PPACA"). As a reminder, under PPACA, group health plans and insurers are required to provide plan participants and beneficiaries with a summary document that "accurately describes the benefits and coverage under the applicable plan or coverage." The proposed regulations address issues such as who should provide the summary, to whom and when the summary should be provided, and the appearance and content requirements of the summary.

For example, under the proposed regulations, the summary of benefits document must provide information about the covered services, including a "uniform glossary" that provides standard, government-approved definitions for specific health coverage-related terms, such as "deductible" and "co-pay." The summary must be no more than four pages in length (double-sided) and must include specific coverage examples such as the cost of having a baby, treating breast cancer, and managing diabetes. Employers or insurers that fail to provide this summary will be subject to civil fines of up to $1,000 for each participant who does not receive the summary.

The summary may be provided to plan participants or beneficiaries electronically, provided that the requirements of the DOL's electronic disclosure rules are met. In the proposed regulations, the Agencies have requested comments on whether and how the summary can be coordinated with summary plan descriptions and other group health plan disclosure materials.

The guidance regarding the summary also includes a proposed template for the summary, including instructions, sample language, a guide for coverage example calculations to be used in completing the template, and a uniform glossary, and can be accessed by clicking here.

The Agencies have estimated that the annual cost of preparing and disseminating the summary will be $50 million. According to the proposed regulations, group health plans and insurers must begin providing the summaries no later than March 23, 2012. However, employers and insurers have already begun protesting this date, stating that they need more time to prepare this summary. We will keep you updated as to the status of this effective date.

PPACA Changes Medicare Part D Annual Enrollment and Notice Period

Under PPACA, the annual enrollment period for Medicare Part D has been changed from November 15 through December 31 to October 15 through December 7. As a result, employers providing prescription drug coverage under their group health plans will be required to (1) update their Medicare Part D notices of creditable/non-creditable coverage to reflect the new enrollment period, and (2) provide these notices to Medicare-eligible participants prior to October 15, 2011.

As a reminder, employers providing prescription drug coverage under their group health plans are required to provide notices to Medicare Part D-eligible individuals regarding whether their prescription drug coverage is "creditable" or "non-creditable" - that is, whether such coverage is actuarially equivalent to Medicare Part D coverage. These notices must be provided prior to the start of the annual enrollment period for Medicare Part D, as well as at certain other times (e.g., upon request by an individual).

The Center for Medicare and Medicaid Services has released revised model notices reflecting the new annual enrollment period. The revised model notices can be accessed by clicking here.