The administrative agencies responsible for implementing the federal healthcare behemoth known as "Obamacare" continue to stumble in their attempts to impose the law's requirements on often reluctant employers within the schedule originally contemplated. This time, the Summary of Benefits and Coverage and Uniform Glossary requirements of § 2715 of the healthcare law, scheduled for a March 23, 2012 effective date, apparently proved impossible to implement on time in the view of the three agencies jointly involved — the Departments of Health and Human Services (HHS), Labor, and Treasury. Thus, in a set of FAQs posted on the Department of Labor website dated November 17, 2011, the agencies announced that they are postponing the date by which this informational requirement must be distributed to employees. That posting is available here.
In general terms, § 2715 of the healthcare law requires group health plans and health insurance issuers to provide a Summary of Benefits and Coverage and Uniform Glossary ("SBC") that must satisfy standards developed by the three federal Departments — HHS, Labor, and Treasury. Therefore, until final regulations are issued and applicable, plans and issuers are not required to comply with § 2715. Regulations were proposed on August 21, 2011, but the agencies' recent announcement effectively concedes their inability to promulgate a final SBC rule by the March 23, 2012 target date.
More specifically, § 2715 requires health plans to provide enrolled employees with a clearer and more inclusive summary of their plan benefits and coverage than employees presently receive in the form of a Summary Plan Description required under current law. In addition, employees must be provided with a "plain-English" glossary of commonly used terms in SBCs — terms such as "co-pay" and "deductible." In keeping with the directive to simplify the information provided, the proposed regulations limit the length of an SBC to four double-sided pages. Both grandfathered and non-grandfathered plans are required to provide compliant SBCs.
The proposed regulations incorporate specific rules governing the timing of distribution of SBCs and other notifications that will be required.
- The SBC must be delivered to employees at least 30 days prior to reissuance or renewal of healthcare coverage and should accompany written open enrollment materials that are distributed to employees.
- At least 60 days notice must be provided by plans and issuers before any significant modification to the healthcare plan or coverage can become effective during the plan year — i.e., a midterm modification. (However, plan changes to become effective on the renewal date should be noted in the new SBC disseminated 30 days before the renewal date. No separate notice is required by the proposed regulations.)
- Plans and insurers will be required to provide an SBC within seven days of an employee request for one.
- Initially, plans and insurers will be required to provide participants with an SBC for each benefit plan for which he/she is eligible. However, at time of renewal, only the SBC for the plan in which a participant is enrolled must be given unless another is requested for comparison.
- Each SBC will be required to include a comparison tool for policies being offered referred to as "Coverage Examples." These will provide information on how much the offered plans will cover and the sum participants will be required to pay out of pocket in three common treatment scenarios — maternity care, diabetes treatment, and breast cancer treatment.
As the three agencies involved say they are continuing to review the proposed rules on SBCs in light of the considerable comment they generated from employers, insurers and others, the parts of the proposed rule summarized above may well change when a final rule is published. In postponing the March effective date of the SBC require ment, the agencies offered no comment on when a final rule might be expected or when it would be effective.
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