On Feb. 9, 2012, three federal agencies issued a final rule under the Patient Protection and Affordable Care Act that will require U.S. health insurers and group health plans to provide concise and comprehensible information about health plan benefits and coverage to current and potential health plan participants, for plan years beginning after the fall 2012 open enrollment season.
The final rule, published in the Federal Register on Feb. 14, 2012, is intended to make it easier for consumers to compare one plan directly to another. It finalizes a proposed rule issued in August 2011. In November 2011, the U.S. departments of Health and Human Services (HHS), Labor, and Treasury announced a delay of the original March 23, 2012, statutory deadline for distributing a Summary of Benefits and Coverage, pending issuance of a final rule.
“All consumers, for the first time, will really be able to clearly comprehend the sometimes confusing language insurance plans often use in marketing,” said HHS Secretary Kathleen Sebelius in a released statement. “This will give them a new edge in deciding which plan will best suit their needs and those of their families or employees.”
However, not everyone welcomed the new rule. “The final regulation on the Summary of Benefits and Coverage makes some important improvements over the preliminary rule, but additional time and flexibility are needed to avoid imposing costs that outweigh the benefits to consumers," commented Karen Ignagni, president and CEO of America’s Health Insurance Plans, an industry group.
The new explanations are to be made available to participants and beneficiaries who enroll or re-enroll in group health coverage through open enrollment periods starting after Sept 22, 2012. For disclosures to participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period (including those newly eligible for coverage and special enrollees), the requirements apply beginning on the first day of the plan year starting after Sept. 22, 2012.
Specifically, the final rule mandates that consumers have access to two key documents that will help them understand and evaluate their health insurance choices:
• A Summary of Benefits and Coverage (SBC). Twelve content elements must be included in the SBC, including a description of cost-sharing requirements such as deductibles, co-insurance and co-payments, and information regarding any exceptions, reductions or limitations under the coverage.
• A Uniform Glossary of terms used commonly in health insurance coverage, such as “deductible” and “co-payment.”
“The rule requires that a separate document be available for each potential family size and for every possible benefit design option, including different cost-sharing levels, prescription drug formularies and network designs," said Ignagni, who expressed concern that requiring a separate document for each coverage scenario would significantly increase administrative costs.
A key feature of the SBC is a standardized plan comparison tool called “coverage examples.” The coverage examples are meant to illustrate sample medical situations and describe how much coverage the plan would provide in an event such as having a baby (normal delivery) or managing Type II diabetes (routine maintenance, well-controlled). These examples are intended to help consumers understand and compare what they would have to pay under each plan they are considering.
Format and Appearance
The rule specifies requirements related to the appearance of the SBC, which generally must be presented in a uniform format, cannot exceed four double-sided pages and must not include print smaller than a 12-point font.
Templates and Samples
HHS's Centers for Medicaid and Medicare Services has posted a sample SBC template, a sample completed SBC and a sample Uniform Glossary, along with additional SBC instructions and guidance. In addition, HHS posted a new fact sheet.
Update: On April 23, 2013, the DOL posted a new set of frequently asked questions that extends certain safe harbors for required summaries of benefits and coverage (SBCs). The DOL also provided an updated SBC template and sample completed form. See the SHRM Online article DOL Extends Safe Harbors for SBCs.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Related SHRM Articles:
DOL Extends Safe Harbors for SBCs, SHRM Online Benefits, April 2013
HR Should Review Summary of Benefits and Coverage Carefully, SHRM Online Benefits Discipline, February 2012
Preparation Steps for Summaries of Benefits and Coverage, SHRM Online Benefits Discipline, October 2011
Get Ready for Summary of Benefits and Coverage Rule, SHRM Online Benefits Discipline, September 2011
SHRM Online Benefits Discipline