Health Reform Requires Group Health Plans to Use Plain Language in Describing Health Plan Benefits Beginning September 23, 2012
Posted on Fri, Feb 10, 2012
The Departments of Health and Human Services, Labor, and the Treasury released final rules yesterday in regards to the Summary of Benefits and Coverage (SBC) requirement of the Patient Protection and Affordable Care Act. This requirement states that group health plans must provide participants and beneficiaries a SBC containing specific information about the plan and coverage in plain language. They must also provide a uniform glossary of terms commonly used in health insurance coverage, as well as notice of material modification of the terms of the plan or coverage. The final rules include changes to a number of requirements proposed in earlier regulations.
Required Dates for Compliance
The new notice requirements apply with respect to participants and beneficiaries who enroll or re-enroll in group health coverage through an open enrollment period (including re-enrollees and late enrollees), beginning on the first day of the first open enrollment period that begins on or after September 23, 2012. The requirements also apply beginning September 23rd for disclosures to participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees).
Summary of Benefits and Coverage (SBC)
Under the final rules, a group health plan (including the plan administrator), and a health insurance issuer offering group health insurance coverage, must provide a written SBC without charge to a participant or beneficiary with respect to each benefit package offered by the plan or issuer for which the participant or beneficiary is eligible. For insured group health plan coverage, the plan satisfies the requirement to provide an SBC if the issuer provides a timely and complete SBC to the individual(s).
The final rules include a list of the information required to be provided in the SBC, including uniform standard definitions of medical and health coverage terms; a description of the coverage and cost sharing requirements, such as deductibles; and information regarding any coverage limitations or exceptions. The SBC also must include coverage examples, similar to the Nutrition Facts labels required for packaged foods, which illustrate sample medical situations and describe how much coverage the plan would provide in an event such as having a baby or managing Type II diabetes.
The summary may be provided in paper form, or electronically if certain requirements are met. The SBC generally must be provided to participants and beneficiaries:
- Prior to initial enrollment in the plan;
- Upon renewal of coverage;
- Within 90 days of special enrollment (as permitted under the Health Insurance Portability and Accountability Act or HIPAA); and
- Within seven business days following receipt of a participant or beneficiary's request.
Additionally, if a group health plan or health insurance issuer offering group health insurance coverage makes any material modifications in any of the terms of the plan or coverage that would affect the content of the SBC, that is not reflected in the most recently provided SBC, and that occurs other than in connection with a renewal or reissuance of coverage, the plan or issuer must provide notice of the modification to enrollees no later than 60 days prior to the date on which such modification will become effective.
Uniform Glossary
The final rules also require that a group health plan, and a health insurance issuer offering group health insurance coverage, make available to participants and beneficiaries a uniform glossary which provides specified uniform definitions of certain health-coverage-related terms and medical terms, such as "deductible" and "co-pay."
- A plan or issuer must make the uniform glossary available upon request, in either paper or electronic form (as requested), within seven business days after receipt of the request.
Templates, Instructions, and Related Materials
Both the SBC and the uniform glossary must comply with certain appearance and format requirements and must use terminology understandable by the average plan enrollee. The SBC may not exceed four double-sided pages in length, with print no smaller than 12-point font.
SBCs provided in connection with group health plan coverage may be provided either as a stand-alone document or in combination with other summary materials (for example, a summary plan description or SPD), if the SBC information is intact and prominently displayed at the beginning of the materials (such as immediately after the Table of Contents in an SPD) and in accordance with the timing requirements for providing an SBC.
An SBC template and uniform glossary that may be used to satisfy these notice requirements for the first year of compliance (i.e., coverage beginning before Jan. 1, 2014) were issued simultaneously with the final rules. Click here to view these materials. Updated materials will be issued for later years to accommodate certain changes under Health Care Reform that are scheduled to take place beginning in 2014.
Additional Information
The final rule and related materials will be published in the February 14th Federal Register. For more information about the new notice requirements, including downloadable templates, please log-in to the Client Resource Center and search the "Health Care Reform" section in the HR & Benefits Library.
The links below contain additional details relating to the summary of benefits and coverage and uniform glossary requirements.
This update is brought to you in conjunction with HR 360. If you have questions, please contact your Benefits & Incentives Group representative.
