United States: Summary Of Benefits And Coverage Update: Release Of New Proposed Template, Instructions And Related Materials

On February 26, 2016, the Department of Labor ("DOL"), Department of Health and Human Services ("HHS") and the Department of the Treasury ("IRS") (collectively, the "Departments") released new proposed versions of the Summary of Benefits and Coverage ("SBC") template, instructions and related materials.

The SBC is a summary document that health insurance issuers and group health plans are required to provide to participants and beneficiaries when they initially enroll or re-enroll in the plan, upon request, and whenever there is a material modification in any of the terms of the plan that is not reflected in the most recently provided SBC. The purpose of the SBC is to provide participants and beneficiaries with consistent, concise and comparable information regarding a health plan's benefits and coverage in order to assist them in better understanding their available coverage options and associated costs.

The current approved version of the SBC template was issued in April 2013 (effective for coverage beginning on or after January 1, 2014) and should continue to be used until the new version of the template is finalized and becomes effective on April 1, 2017, according to an FAQ released on March 11, 2016. In the meantime, employers should:

  • review the recently proposed changes outlined below that were contained in the revised SBC;
  • monitor future guidance from the Departments regarding the implementation of the revised SBC; and
  • work with their health insurance carriers or vendors to ensure that their health plans' SBCs are timely updated to comport with that guidance.

The documents that were impacted by the proposed SBC changes that were issued on February 25, 2016 include the following:

The revised proposed versions of the SBC template and instructions incorporate many improvements to the original documents, including the following changes:

  • The proposed SBC template features a new question: "Are there services covered before you meet your deductible?", highlighting to consumers services that may be covered by their health plans before their plan deductible even applies, such as primary care services and certain specialist visits as well as generic or preferred prescription drugs
  • The proposed SBC template includes changes to disclosures on rights to continued coverage and grievance and appeals rights, where the contact information varies based on whether the group health plan is subject to ERISA
  • The proposed template also includes changes to disclosures describing whether the plan provides Minimum Essential Coverage and meets Minimum Value standards. Following a yes or no answer, the statements explain the implications for participants if a plan does not meet the minimum coverage and/or value standards, including potential tax consequences (individual shared responsibility), exemptions and eligibility for a premium tax credit
  • The proposed instructions mandate the disclosure of "core" limitations and exceptions not previously required, such as:
    • Exclusion from coverage of a service category or substantial part of a category,
    • When cost sharing for covered in-network services does not count toward the out-of-pocket limit,
    • Explicit limits on the number of visits or specific dollar amounts payable under the plan, and
    • Requirement of prior authorization for a service 

However, if these additional disclosures cause the SBC to exceed eight pages, they can be provided by referencing a specific page or section of a plan document, such as the summary plan description, where more information can be found

  • The proposed instructions require disclosures as to whether a plan has "embedded" deductibles (under which family members must meet individual deductibles or out-of-pocket limits before the family deductible or out-of-pocket limit is met) or aggregated deductibles and out-of-pocket limits (where the full family deductible or out-of-pocket limit must be met before any family member benefits) so participants can understand the financial implications of different plans for their families and make more informed decisions
  • The proposed instructions require insurers and plans to disclose tiered networks and explain which provider tiers are most and least expensive on the proposed SBC template in response to the question "Will you pay less if you use a network provider?". The language in the proposed SBC template warns consumers that they may receive services from out-of-network providers at in-network facilities and should therefore confirm with providers that all services are covered in order to avoid receiving a balance bill for services performed by an out-of-network provider
  • The proposed revision of the SBC includes a new coverage example, sample costs for a foot fracture, in addition to the previously featured maternity and diabetes examples. The three varied coverage examples give consumers a comprehensive estimation of cost-sharing amounts for the services received for these three conditions, including out-of-pocket costs for excluded services
  • The proposed instructions incorporate guidance on issues such as combining information for different cost-sharing options and explaining the effect of "add-ons" such as a health FSA, HRA, HSA, or wellness program
  • Modifications to the proposed uniform glossary focus on providing consumers greater clarity and transparency through more expansive definitions
  • For insurers and health plans who intend to distribute electronic SBCs, the proposed template features embedded hyperlinks of all terms defined in the glossary that connect consumers to a federal website for definitions of the terms

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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