Summary of Benefits and Coverage (Uniform Coverage Document) Q&A

Overview

Under the Affordable Care Act (ACA), the Department of Health and Human Services (HHS) was required to develop standards for use by group health plans and health insurance issuers offering group or individual coverage in compiling and providing an accurate summary of benefits and explanation of coverage document to plan participants and beneficiaries, as well individuals and dependents.  Specific under this requirement, failure to do so will result in up to a $1,000 fine per enrollee for each failure. There is also a 60-day notice requirement when a health plan or issuer modifies the terms of the plan or coverage.  The HHS Secretary was required to consult with the statutorily set NAIC Working Group composed of consumer organizations, health care professionals, patient advocates and health insurance issuers, among other qualified individuals. HHS was required to develop the standards by March 23, 2011 with an original implementation date of March 23, 2012.

A final rule was published in the federal register on February 14, 2012.  The rule requires group health plans and insurance issuers to implement the requirements beginning September 23, 2012 (with variations in the application dates and the requirements between the individual and group market segments).

When are plans and issuers required to provide the SBC?

Group Health Plans/Group Health Insurance:

• Effective for member delivery triggers related to open enrollment periods (including re-enrollees) beginning at first open enrollment beginning on or after 9/23/12
• Effective for other member delivery triggers beginning plan years on or after 9/23/12
• Effective for issuers with respect to group health plans related to group health insurance coverage on 9/23/12

Individual Health Insurance:

• Effective for triggers related to individual policies starting on 9/23/12

Is this section of ACA applicable to self-funded plans?

Yes; the requirements outlined herein will apply to both self-funded and insured plans.

What are the general SBC standards?

The standards are designed to guide the construction of the SBC in the following areas: appearance, language, form, and contents.

• Appearance – an SBC must be presented in a “uniform format”, may not exceed four pages in length, and may not include print smaller than 12-point font.  The final rule allows four double-sided pages.
• Language – an SBC must be presented in a culturally and linguistically appropriate manner and must utilize terminology understandable by the average plan enrollee. The final rule follows the same standards for language assistance that was adopted in the internal claims and appeals regulation.  Under this standard, plans and issuers would be required to disclose the availability of language assistance in non-English languages, and support any language assistance requests in such languages, based on county level census data.
• Form – an SBC can always be provided in paper form, and can be provided in electronic form if additional requirements are met.  The final rule varies the requirements for electronic delivery depending on the market involved, and in the group market depending on whether the participant is currently enrolled in coverage or not.
• Content – at a minimum, ACA requires an SBC to include: uniform definitions of standard insurance and medical terms; a description of the coverage, including cost sharing; exceptions, reductions, and limitations on coverage; the cost sharing provisions; renewability and continuation of coverage provisions; coverage examples; with respect to coverage beginning on or after January 1, 2014, a statement of whether the plan or coverage provides minimum essential coverage and a minimum value statement; a statement that the outline is a summary and that the coverage document itself should be consulted to determine the controlling contractual provisions; and a contact number for questions and obtaining a copy of the plan document or policy. The final rule also includes as applicable,contact information for obtaining a list of network providers and information on prescription drug coverage as well as an Internet address and contact number for obtaining the uniform glossary, and a disclosure that paper copies are available.

In addition, the final rule further specifies who should provide the SBC, and who should receive it, and when the requirement is triggered.

What are the general triggers of the SBC?

• Upon application
• By first day of coverage (if there are changes)
• Upon renewal
• During special enrollments
• Upon request
• Upon material modification (during plan year, as defined under ERISA)

The delivery triggers each have particular timing implications that must be met.

Are plans and carriers required to distribute the uniform glossary?

Yes, under the final  rule a plan or issuer would be required to make the uniform glossary available upon request.  The uniform glossary is a standard document that must be provided in the form that was issued by the Departments.

Does the requirement include a penalty for noncompliance?

In addition to existing penalties related to insurance market reform requirements, Section 2715 of the Public Health Services Act (PHSA) allows for the imposition of a $1,000 fine for each willful failure to comply with the section. Each enrollee is considered an independent failure.

What if a health plan or issuer modifies the terms of the plan or coverage involved?

If at any time a health plan or issuer makes any material modification to the terms of the plan or coverage involved that is not reflected in the most recently provided SBC, the plan or issuer must provide notice of the modification to enrollees at least 60 days in advance. The requirement for the Notice of Material Modification is not triggered upon renewal.  The Notice of Material Modification may be satisfied by providing an updated SBC or a separate notice.

Is the requirement to provide the Notice of Material Modification effective before an SBC is triggered?

No. In an FAQ released by the Departments on December 22, 2010, they confirmed that group health plans and health insurance issuers are not required to comply with the 60-day prior notice requirement until plans or issuers are required to provide the SBCs pursuant to the standards issued by the Departments. This notice of modification requirement does not apply to any currently used document or any other document other than the SBC required by PHSA Section 2715.

Are expatriate plans required to provide SBCs pursuant to the standards?

Expatriate plans are not specifically exempted from the SBC requirements; however, the final rule does include a special rule for coverage provided outside of the United States. The final rule states that in lieu of summarizing the coverage provided outside of the U.S, a plan or issuer may provide an Internet address (or similar contact information) for obtaining information about coverage or benefits provided outside of the United States.  To the extent coverage or benefits are available within the United States, the plan or issuer is still required to provide an SBC in accordance with the standards in the final rule.

Are there any special rules for plans that do not fit the SBC template?

Yes. The Guidance for Compliance and the SBC instructions provide for a special rule.  Under this rule, to the extent a plan’s terms that are required to be included in the SBC cannot be reasonably described consistent with the template and the instructions, the plan or issuer are required to accurately describe the plan’s terms while using its best efforts in a manner that is still consistent with the instructions and template.