The Department of Labor (DOL) updated the Summary of Benefits and Coverage (SBC) template and instructions that employers and health insurers must use going forward. All employers and health insurers must begin using the new SBC template and the new glossary of terms for all health insurance plans that renew on or after April 1, 2017. This requirement to use the new template remains intact regardless ACA discussions.
Why bother with the new form template?
There are two big reasons. First, the DOL requires that the new form be used. Second, there are penalties for noncompliance. The possible fines include a civil penalty of up to $1,105 (indexed annually) for each willful SBC distribution failure on the part of the employer group plan. In addition, other SBC failures or mistakes could trigger a $100 a day penalty per affected participant.
The DOL has indicated that it will take into account an employer’s good faith effort to comply with the new template form and timely distribution rules which would not result in penalties but the same cannot be said for the willful disregard of not using the new template and/or the failure to prepare and/or distribute the SBCs.
All health insurers and employer-sponsored health insurance plans are required to provide enrollees and eligible applicants with a SBC and a uniform glossary of common health plan terms. The SBC is just as it suggests, a summary of a health plan’s basic coverage terms and cost-sharing requirements using plain and consistent language.
Some of the major changes include: elimination and revisions to some questions on page 1; new answers in the “Why This Matters” section; specific details must be included in the “Common Medical Events” section; and revised underlying cost data and the addition of a third example in the coverage examples. In addition there are several Section 1557 requirements for SBCs but this Section does not apply to the great majority of HNI clients.
The DOL website contains a full library of items on SBCs:
- Summary of Benefits and Coverage (SBC) Template | MS Word Format
- Sample Completed SBC | MS Word Format
- Instructions for Completing the SBC - Group Health Plan Coverage and Consumer Assistance Programs
- Instructions for Completing the SBC - Individual Health Insurance Coverage
- Why This Matters language for "Yes" Answers
- Why This Matters language for "No" Answers
- HHS Information For Simulating Coverage Examples
- HHS Coverage Example Calculator and Related Information
- List of anchors for SBC Uniform Glossary terms
- Uniform Glossary of Coverage and Medical Terms
- SBC and Uniform Glossary Translations - Chinese, Spanish, Tagalog, and Navajo
- HHS News Release
Employers or health insurance issuers must provide SBCs and a glossary to all employees who are offered and who enroll in group coverage at least 30 days prior to the start of the plan year. Thus, if you offer three different health plans and an applicant is eligible for all three plans, he or she should get three different SBCs, one for each plan. Most often, the SBCs are distributed either during annual open enrollment or when a new hire satisfies his or her eligibility requirements.
Fully-Insured & Self-Insured Health Plans
For fully-insured health plans, the health insurance carrier will prepare SBCs using the new template. However, you should confirm this with your carrier so as to avoid this distribution requirement being missed. With respect to self-insured plans, your HNI service team along with any third-party plan administrator will ensure that new SBCs are prepared according to the new template and instructions and distributed to your employees as part of your open enrollment materials or new hire packets or as otherwise requested.