ACA: Summary of Benefits and Coverage


Reference

 

SBC Quick Read for Self-Insured Plans

SBC Quick Read for Fully Insured Plans

SBC Geek Out Material

 

SBC Quick Read – Self-Insured Plans

Distribute the SBC when an individual first becomes eligible for the plan and annually at each renewal.

The Summary of Benefits and Coverage (“SBC”) must be provided in conjunction with open enrollment materials. The SBC requirement applies to both grandfathered and non-grandfathered health plans, but does not apply to excepted benefits as that term is defined under HIPAA.

WHAT YOU SHOULD KNOW

An SBC is a concise, straight forward explanation of health plan benefits. Its purpose is to help health plan consumers compare options between different plans and to ensure consumers are comparing apples to apples when making their health coverage decision.

The SBC is to be provided when a plan (or its sponsor) or an individual is comparing health coverage options. Any time changes are made to coverage provided under the plan that affects the information provided in the SBC, a new SBC (and, in certain circumstances, a notice of material modification) must be provided to plan participants within a specified period of time before the change takes effect, as described below. The SBC must be provided along with a four page Uniform Glossary. Click here for more information.

Creating the SBC

Self-Insured Plans

The plan administrator of a self-insured health plan (which is the employer in most cases) is responsible for providing the SBC. The SBC must conform to the format and guidelines provided in the regulation for each health plan coverage option that is offered to employees. If a plan’s terms cannot be reasonably described using the template prescribed in the regulation, the administrator must use “best efforts” to comply.

The SBC must generally describe:

HSAs generally are not group health plans and thus generally are not subject to the SBC requirements.

The DOL provides a template SBC:

Although as a practical matter, third-party administrators may create SBCs for self-insured plans, the plan administrator is ultimately responsible for ensuring the SBC meets regulatory requirements.

NOTE: in certain plans, the ACA requires that SBCs be provided to plan participants in a culturally and linguistically appropriate manner in counties meeting the 10% threshold percentage.

Providing the SBC to Participants and Beneficiaries

The final regulations require that the SBC be provided as follows:

The Department of Labor has clarified that in the context of the regulations, the term “provided” means sent.

Distribution Requirement

Plans should generally follow Department of Labor (DOL) disclosure regulations for distributing the SBC. Unless the plan or issuer has knowledge of a separate address for a beneficiary, the SBC may be provided to the participant on behalf of the beneficiary, including by furnishing the SBC to the participant in electronic form (see below).

Although the rules require distribution to employees and their covered dependents, the plan administrator can satisfy this obligation by sending the SBC to the participant and any beneficiaries at the participant’s last known address. However, if a beneficiary’s last known address is different than the participant’s last known address, a separate SBC is required to be provided to the beneficiary at the beneficiary’s last known address.

Electronic Distribution

Different guidelines apply to the following scenarios:

Uniform Glossary

A plan administrator or insurer must make the Uniform Glossary available to participants within seven days of receiving a request. A plan or issuer may satisfy this disclosure requirement by providing an Internet address where an individual may review and obtain the Uniform Glossary. See reference materials.

Click here to view the Uniform Glossary of Coverage and Medical Terms.

Notice of Material Modification

A group health plan or health insurance issuer must provide written notice to participants if it makes a material modification during the plan or policy year that would affect the content of material required to be included in the SBC. This notice must be provided to enrollees no later than 60 days prior to the date on which the change will become effective (See the Material Modifications section in the Reference Material for more information).

WHAT IS THE RISK

Penalties for noncompliance can range in the thousands of dollars. Click here for the exact penalty amounts for failure to distribute an SBC.

SBC Quick Read – Fully Insured Plans

Distribute the SBC when an individual first becomes eligible for the plan and annually at each renewal. The insurer is jointly responsible with the plan administrator (typically the employer) for furnishing the SBC to participants and beneficiaries.

The Summary of Benefits and Coverage (“SBC”) must be provided in conjunction with open enrollment materials. The SBC requirement applies to both grandfathered and non-grandfathered health plans, but does not apply to excepted benefits as that term is defined under HIPAA.

WHAT YOU SHOULD KNOW

An SBC is a concise, straight forward explanation of health plan benefits. Its purpose is to help health plan consumers compare options between different plans and to ensure consumers are comparing apples to apples when making their health coverage decision.

General Requirement

The SBC is to be provided when a plan (or its sponsor) or an individual is comparing health coverage options. Any time changes are made to coverage provided under the plan that affects the information provided in the SBC, a new SBC (and, in certain circumstances, a notice of material modification) must be provided to plan participants within a specified period of time before the change takes effect, as described below. The SBC must be provided along with a four page Uniform Glossary.

Creating the SBC

New Coverage

The insurance company is required to provide the SBC to the sponsor of the plan (which is in most cases the employer) no later than 7 business days after the plan sponsor applies for the group policy, or requests information about coverage provided under the group policy.

Revised Coverage

The insurance company must update and provide a current SBC to the plan sponsor no later than the date of the revised coverage offer or the first day of coverage, whichever is applicable.

Renewal

In certain plans, the ACA requires that SBCs be provided to plan participants in a culturally and linguistically appropriate manner in counties meeting the 10% threshold percentage.

In the context of the final regulations, the term “provided” means sent. Accordingly, the SBC is timely if sent out within 7 business days, even if it is not received until after that period.

Click here for information on including Health FSA, HRA, HSA, and Wellness Programs

Providing the SBC to Participants and Beneficiaries

The insurer is jointly responsible with the plan administrator (typically the employer) for furnishing the SBC to participants and beneficiaries. Employers should coordinate with their insurer to determine when the insurer will be providing SBCs and if the insurer will be furnishing them directly to participants and beneficiaries.

The final regulations require that the SBC be provided as follows:

Distribution Requirement

Plans should generally follow Department of Labor (DOL) disclosure regulations for distributing the SBC. Unless the plan or issuer has knowledge of a separate address for a beneficiary, the SBC may be provided to the participant on behalf of the beneficiary, including by furnishing the SBC to the participant in electronic form (see below).

Although the rules require distribution to employees and their covered dependents, the plan administrator can satisfy this obligation by sending the SBC to the participant and any beneficiaries at the participant’s last known address. However, if a beneficiary’s last known address is different than the participant’s last known address, a separate SBC is required to be provided to the beneficiary at the beneficiary’s last known address.

Electronic Distribution

Different guidelines apply to the following scenarios:

Uniform Glossary

A plan administrator or insurer must make the Uniform Glossary available to participants within seven days of receiving a request. A plan or issuer may satisfy this disclosure requirement by providing an Internet address where an individual may review and obtain the Uniform Glossary

Notice of Material Modification

A group health plan or health insurance issuer must provide written notice to participants if it makes a material modification during the plan or policy year that would affect the content of material required to be included in the SBC. This notice must be provided to enrollees no later than 60 days prior to the date on which the change will become effective (See the Material Modifications section in the Reference Material for more information).

WHAT IS THE RISK

Penalties for noncompliance can range in the thousands of dollars. Click here for the exact penalty amounts for failure to distribute an SBC.

Reference

The Departments of Labor, Health and Human Services, and the Treasury issued final regulations for group health plans and health insurance carriers to use in providing a Summary of Benefits and Coverage (SBC) and a Uniform Glossary of Commonly Used Health Insurance and Medical Terms (Uniform Glossary), as required by the Affordable Care Act (ACA).

The SBC must be provided in conjunction with open enrollment materials. The Departments have provided templates, instructions, and related materials. The SBC requirement applies to both grandfathered and non-grandfathered health plans, but does not apply to excepted benefits as that term is defined under HIPAA.

General Requirement

The final regulations direct plan sponsors to create an SBC, intended to enable eligible health plan enrollees to easily understand the available health coverage and determine the best benefit options for themselves and their families. The final rules direct that the SBC be provided when an individual is comparing health coverage options. Any time that changes are made to coverage provided under the plan that affects the information provided in the SBC, a new SBC (and, in certain circumstances, a notice of material modification) must be provided to plan participants within a specified period of time before the change takes effect, as described below. The SBC must be provided along with a four page Uniform Glossary.

Creating the SBC

Fully Insured Plans

The insurance company issuing the group health policy is required to provide the SBC to the sponsor of the plan (which is in most cases the employer) no later than 7 business days after the plan sponsor applies for the group policy, or requests information about coverage provided under the group policy. Thereafter, if the insurer changes the coverage offered under a group policy before the policy is issued or before the first day of coverage, the issuer must update and provide a current SBC to the plan sponsor no later than the date of the revised coverage offer or the first day of coverage, whichever is applicable. In the context of the final regulations, the term “provided” means sent. Accordingly, the SBC is timely if sent out within 7 business days, even if it is not received until after that period.

An insurer also must provide a new SBC to the plan sponsor annually at policy renewal. If the insurer requires written application materials for renewal, it must provide the SBC no later than the date the application materials are distributed to the plan sponsor. If the renewal is automatic, the SBC must be provided no later than 30 days prior to the first day of the new policy year. Click here to learn more about the insurance company’s obligations for providing the SBC to the sponsor of the plan.

If the plan administrator (generally the plan sponsor) and the insurer agree in writing that the insurer will provide a compliant SBC, but the insurer fails to do so, the plan sponsor and the insurer may both be liable for this failure.

Plans Using Multiple Issuers

Plans may use two or more insurance issuers to provide benefits.  However, an issuer has no obligation to provide an SBC for benefits it does not insure.  In these situations, a plan administrator may combine the information into a single SBC or provide multiple partial SBCs that, together, provide all the relevant information to meet the SBC content requirements.

Self-Insured Plans

The plan administrator of a self-insured health plan (which is the employer in most cases) is responsible for providing the SBC. The SBC must conform to the format and guidelines provided in the regulation for each health plan coverage option that is offered to employees. These guidelines are only for use with respect to coverage beginning before January 1, 2014, since ACA required or other changes impacting coverage after this date may affect the SBC (see the Form and Manner section in the Reference Material for additional guidance). If a plan’s terms cannot be reasonably described using the template prescribed in the regulation, the administrator must use “best efforts” to comply.

Coverage Tiers

Different coverage tiers (such as self-only, employee plus one and family) may be combined into one SBC, provided the appearance is understandable. In such circumstances, the coverage examples should be completed using the cost sharing (e.g., deductible and out-of-pocket limits) for the self-only coverage tier and the coverage examples should note this assumption.

Out-of-Pocket Options

In addition, different cost-sharing selections (such as levels of deductibles, copayments, and co-insurance) can be combined into one SBC, provided the appearance is understandable. This information can be presented in the form of options, such as deductible options and out-of-pocket maximum options. In these circumstances, the coverage examples should note the assumptions used in creating them.

Health FSA, HRA, HSA and Wellness Programs

Additional programs that are integrated into the major medical plans can be combined into one SBC. The effects of such add-ons should be denoted in the appropriate spaces on the SBC for deductibles, copayments, coinsurance, and benefits otherwise not covered by the major medical coverage. In such circumstances, the coverage examples should note the assumptions used in creating them.

Please note that a stand-alone health FSA (that does not constitute an excepted benefit) and HRAs are group health plans generally subject to the SBC requirements. HSAs generally are not group health plans and thus generally are not subject to the SBC requirements.

Although as a practical matter, third-party administrators may create SBCs for self-insured plans, the plan administrator is ultimately responsible for ensuring the SBC meets regulatory requirements.  However, if a plan that does use a third party to discharge its SBC obligations, the plan administrator will be excused from liability for the third party’s non-compliance if it takes certain steps to ensure receipt of SBCs.  Specifically:

Providing the SBC to Participants and Beneficiaries

Fully Insured Plans

The insurer is jointly responsible with the plan administrator (typically the employer) for furnishing the SBC to participants and beneficiaries. Employers should coordinate with their insurer to determine when the insurer will be providing SBCs and if the insurer will be furnishing them directly to participants and beneficiaries.

Self-Insured Plans

The plan administrator of a self-insured health plan (which is the employer in most cases) is responsible for providing the SBC.

The final regulations require that the SBC be provided as follows:

The Department of Labor has clarified that in the context of the regulations, the term “provided” means sent.

Distribution Requirement

Plans should generally follow Department of Labor (DOL) disclosure regulations for distributing the SBC. Unless the plan or issuer has knowledge of a separate address for a beneficiary, the SBC may be provided to the participant on behalf of the beneficiary, including by furnishing the SBC to the participant in electronic form (see below).

Although the rules require distribution to employees and their covered dependents, the plan administrator can satisfy this obligation by sending the SBC to the participant and any beneficiaries at the participant’s last known address. However, if a beneficiary’s last known address is different than the participant’s last known address, a separate SBC is required to be provided to the beneficiary at the beneficiary’s last known address.

Electronic Distribution

Participants and beneficiaries who are eligible but not enrolled for coverage

The SBC may be provided electronically: (1) by an issuer to a plan, and (2) by a plan or issuer to participants and beneficiaries if:

Participants or beneficiaries who are covered under a plan

Disclosure through electronic media is always allowed to those participants who have the ability to effectively access documents furnished in electronic form at any location where the participant is reasonably expected to perform duties as an employee and with respect to whom access to the employer’s or plan sponsor’s electronic information system is an integral part of those duties. Under the safe harbor in the regulations, other individuals may also opt into electronic delivery.

SBC’s may be provided electronically in connection with a participant’s online enrollment or renewal of coverage. They may also be provided to individuals who request an SBC online.

Although the rules require distribution to employees and their covered dependents, the plan administrator can satisfy this obligation by sending the SBC to the participant and any beneficiaries at the participant’s last known address. However, if a beneficiary’s last known address is different than the participant’s last known address, a separate SBC is required to be provided to the beneficiary at the beneficiary’s last known address.

Uniform Glossary

A plan administrator or insurer must make the Uniform Glossary available to participants within seven days of receiving a request. A plan or issuer may satisfy this disclosure requirement by providing an Internet address where an individual may review and obtain the Uniform Glossary. This Internet address may be a place the document can be found on the plan or issuer website, or may refer to the location of the Uniform Glossary on the DOL website. However, a plan or issuer must make a paper copy of the Uniform Glossary available upon request.

Click here to view the Uniform Glossary of Coverage and Medical Terms.

Notice of Material Modification

A material modification includes any modification to coverage that, independently or in conjunction with other modifications or changes, would be considered by an average plan participant to be an important change in covered benefits or other terms of coverage under the plan.

A group health plan or health insurance issuer must provide written notice to participants if it makes a material modification during the plan or policy year that would affect the content of material required to be included in the SBC. This notice must be provided to enrollees no later than 60 days prior to the date on which the change will become effective (See the Material Modifications section in the Reference Material for more information).

This notice requirement can also be satisfied by providing an updated SBC reflecting the modification. In addition, the notice of material modification does not apply to a change that occurs in conjunction with an open enrollment or renewal, because an updated SBC (reflecting any changes since the last SBC was issued) must be provided at this time.

Form and Manner

Content

The ACA describes specific content requirements for the SBC, including:

  1. Uniform definitions of standard insurance terms and medical terms so that participants and beneficiaries may compare health coverage and understand the terms of (or exceptions to) their coverage;
  2. A description of the coverage, including cost-sharing for each category of benefits as identified in guidance issued by the Departments of Labor, Health and Human Services and Treasury (Departments);
  3. The exceptions, reductions, and limitations on coverage;
  4. The cost-sharing provisions of the coverage, including deductible, coinsurance, and copayment obligations;
  5. The renewability and continuation of coverage provisions;
  6. Coverage examples to illustrate common benefit coverage scenarios (including pregnancy and management of diabetes) and related cost-sharing based on recognized clinical practice guidelines (Click here for information on simulating coverage examples);
  7. For coverage beginning on or after January 1, 2014, a statement about whether the plan provides “minimum essential coverage” (as defined in the Internal Revenue Code) and whether the plan’s share of the total allowed costs of benefits provided under the plan or coverage meets applicable requirements;
  8. A statement that the SBC is only a summary and the plan document, policy or certificate should be consulted to determine the governing contractual provisions of coverage.  Pending issuance of a new SBC template, this statement may be provided through a cover letter or similar disclosure
  9. A contact number to call with questions and an Internet address where a copy of the actual individual coverage plan document, policy, self-insured benefit arrangement or certificate of coverage can be reviewed and obtained;
  10. For plans and issuers that maintain networks of providers, an Internet address for obtaining a list of network providers;
  11. For plans and issuers that use a formulary when providing coverage for prescription drugs, an Internet address for obtaining information on that coverage; and
  12. An Internet address for obtaining the Uniform Glossary and a disclosure that a paper copy of the Uniform Glossary is available.

Minor adjustments are permitted to the row or column size in order to accommodate the plan’s information, as long as the information is understandable. The deletion of columns or rows is not permitted. Rolling over information from one page to another is permitted.

The SBC is not permitted to substitute a reference to the SPD or other document for any content element of the SBC. However, an SBC may include a reference to the SPD in the SBC footer. (For example, “Questions: Call 1-800-[insert] or visit us at www.[insert].com for more information, including a copy of your plan’s summary plan description.”) In addition, wherever an SBC provides information that fully satisfies a particular content element of the SBC, it may add to that information a reference to specified pages or portions of the SPD in order to supplement or elaborate on that information.  An SBC may also contain premium information at the end of the form and may also add a statement as to whether the plan is grandfathered.

Coverage Tiers

Different coverage tiers (such as self-only, employee plus one and family) may be combined into one SBC, provided the appearance is understandable. In such circumstances, the coverage examples should be completed using the cost sharing (e.g., deductible and out-of-pocket limits) for the self-only coverage tier and the coverage examples should note this assumption.

Out-of-Pocket Options

In addition, different cost-sharing selections (such as levels of deductibles, copayments, and co-insurance) can be combined into one SBC, provided the appearance is understandable. This information can be presented in the form of options, such as deductible options and out-of-pocket maximum options. In these circumstances, the coverage examples should note the assumptions used in creating them.

Health FSA, HRA, HSA and Wellness Programs

Additional programs that are integrated into the major medical plans can be combined into one SBC. The effects of such add-ons should be denoted in the appropriate spaces on the SBC for deductibles, copayments, coinsurance, and benefits otherwise not covered by the major medical coverage. In such circumstances, the coverage examples should note the assumptions used in creating them.

Please note that a stand-alone health FSA (that does not constitute an excepted benefit) and HRAs are group health plans generally subject to the SBC requirements. HSAs generally are not group health plans and thus generally are not subject to the SBC requirements.

Click here to view a sample completed SBC. 

Appearance

The ACA statutory provision requires that the plan or issuer accurately describe the relevant plan terms while using its best efforts to do so in a manner that is consistent with the instructions and format template:

Language

The SBC must be written in a culturally and linguistically appropriate manner.  The final SBC regulations provide that a plan or issuer is considered to provide the SBC in a culturally and linguistically appropriate manner if the thresholds and standards of the claims and appeals regulations are met. The claims and appeals regulations outline three requirements that must be satisfied for notices sent to an address in a county in which ten percent or more of the population is literate only in a non-English language. In such cases, the plan or issuer is generally required to provide oral language services in the non-English language, provide notices upon request in the non-English language, and include in all English versions of the notices a statement in the non-English language clearly indicating how to access the language services provided by the plan or issuer.

Accordingly, plans and issuers must include, in the English versions of SBCs sent to an address in a county in which ten percent or more of the population is literate only in a non-English language, a statement prominently displayed in the applicable non-English language clearly indicating how to access the language services provided by the plan or issuer. In this circumstance, the plan or issuer should include this statement on the page of the SBC with the “Your Rights to Continue Coverage” and “Your Grievance and Appeals Rights” sections.

For additional information on county information click here.

Even in counties where no non-English language meets the ten percent threshold, a plan or issuer can voluntarily include such a statement in the SBC in any non-English language. Moreover, nothing in the SBC regulations limits an individual’s rights to meaningful access protections under other applicable Federal or State law, including Title VI of the Civil Rights Act of 1964.

Written translations in Spanish, Chinese, Tagalog and Navajo will be available at http://cciio.cms.gov/programs/consumer/summaryandglossary/index.html. 

Notice of Plan Modifications

Plan Modification

A plan modification includes any modification to the coverage offered under a plan or policy that, independently, or in conjunction with other modifications or changes, would be considered by an average plan participant to be an important change in covered benefits or other terms of coverage under the plan or policy. This could be an enhancement of covered benefits or services and could include, for example, coverage of previously excluded benefits or reduced cost-sharing. A plan modification could also be a material reduction in covered services or benefits and could include changes or modifications that reduce or eliminate benefits, increase premiums and cost-sharing, or impose a new referral requirement.  

Notice Requirement

A group health plan or health insurance issuer must provide written notice to participants if it makes a material modification during the plan or policy year that is not reflected in the most recently provided SBC.  The regulations provide that only a material modification which affects the content of the SBC would cause plans and issuers to be required to provide this notice.   The notice requirement may be satisfied either by a issuing a separate notice describing the material modification or by providing an updated SBC reflecting the modification.

Timing of Notice

This notice must be provided to enrollees no later than 60 days prior to the date on which the change will become effective.  However, the 60-day advance notice requirement does not apply to modifications made in connection with a renewal or reissuance of coverage.   For modifications made at plan or policy renewal, the general SBC distribution requirements apply and a separate notice of material modifications is not required.

Second Year of Applicability

The only change to the SBC template and sample completed SBC is the addition of statements of whether the plan or coverage provides Minimum Essential Coverage (MEC) (as defined under section 5000A(f) of the Internal Revenue Code 1986) and whether the plan or coverage meets the Minimum Value (MV) standard (that is, the plan’s or coverage’s share of the total allowed costs of benefits provided under the plan or coverage is not less than 60 percent of such costs). On page 4 of the SBC template (and illustrated on page 6 of the sample completed SBC), a plan or issuer should indicate in the designated entry on the SBC template that the plan or coverage “does” or “does not” provide MEC and whether the plan or coverage “does” or “does not” meet applicable MV requirements.

SBCs in Transition

To the extent a plan or issuer is unable to modify the SBC template, the Departments will not take any enforcement action against a plan or issuer for using the template authorized for the first year of applicability, provided that the SBC is furnished with a cover letter or similar disclosure stating whether the plan or coverage does or does not provide MEC and whether the plan’s or coverage’s share of the total allowed costs of benefits provided under the plan or coverage does or does not meet the MV requirement under the ACA. The language for these statements is as follows:

Does this Coverage Provide Minimum Essential Coverage?

The Affordable Care Act requires most people to have health care coverage that qualifies as “minimum essential coverage.” This plan or policy [does/does not] provide minimum essential coverage.

Does this Coverage Meet the Minimum Value Standard?

The Affordable Care Act establishes a minimum value standard of benefits of a health plan. The minimum value standard is 60% (actuarial value). This health coverage [does/does not] meet the minimum value standard for the benefits it provides.

Other Changes and Safe Harbors

There are no changes to the uniform glossary. There are also no changes to the Instructions for Completing the SBC (for either group or individual health coverage), “Why This Matters” language for the SBC, or to the coverage examples.

For more information on changes and extensions of previous compliance relief, see FAQs about the Affordable Care Act Implementation Part XIV.

Penalties for Noncompliance

A penalty of up to $1,156 per failure can be assessed on plan administrators and insurers that “willfully fail” to timely provide the SBC. A failure to provide the SBC to each participant or beneficiary constitutes a separate offense.

No penalties will be imposed during the first year on plans and issuers that are working diligently and in good faith to provide the required SBC in an appearance that is consistent with the final regulations.

Any fine imposed on a plan administrator or insurer cannot be paid from plan or trust assets.

Additional Resources

 

SBC Effective on or after 1/1/21

SBC Template eff. 1/1/21

Sample Completed SBC eff. 1/1/21

Instructions for Completing the SBC – Group Health Plan Coverage eff. 1/1/21

Why This Matters Language for “Yes” Answers

Why This Matters Language for “No” Answers

HHS Information for Simulating Coverage Examples

Guide for Maternity Scenario

Uniform Glossary of Coverage and Medical Terms

SBC and Uniform Glossary Translations – Chinese, Spanish, Tagalog, and Navajo