Duplication Looms For Employers With Benefits Summary Proposed Rules

By March 23, 2012, both insured and self-funded plans should have available a summary of benefits and coverage (SBC) that "accurately describes the benefits and coverage under the applicable plan or coverage." The SBC and related rules are Part of Public Health Service Act Sec. 2715, as added by the Patient Protection and Affordable Care Act.

On Aug. 22, the Department of Labor's Employee Benefits Security Administration (EBSA), the Internal Revenue Service, and the Department of Health and Human Services issued proposed rules to help construct the SBC.

Employers and administrators that already provide summary plan descriptions are understandably concerned about the duplications and additional costs associated with elements of the new SBC requirement ‑ including a uniform glossary and coverage facts labels.

The new proposed rules acknowledge these concerns and ask for comments on whether the SBC should be allowed to be provided within an SPD if the SBC is intact and prominently displayed at the beginning of the SPD (for example, immediately after a cover page and table of contents), and if the timing requirements for providing the SBC (described in paragraph (a) of the proposed regulations) are satisfied.

Comments also are requested on ways the SBC might be coordinated with other group health plan disclosure materials (for example, application and open season materials).

What’s In The Rules

The proposed regulations provide rules implementing Patient Protection and Affordable Care Act (ACA) provisions that would ensure consumers have access to two forms that will help them understand and evaluate their health insurance choices. These forms include:

an easy to understand Summary of Benefits and Coverage; and

a uniform glossary of terms commonly used in health insurance coverage, such as "deductible" and "co-pay".

The proposed summary form and glossary were developed through a public process led by the National Association of Insurance Commissioners (NAIC) and a working group composed of stakeholders, including representatives of health insurance-related consumer advocacy organizations, health insurers, health care professionals, patient advocates that include those representing individuals with limited English proficiency, and other qualified individuals. The August 22 guidance proposes to adopt the recommendations submitted by the NAIC as a result of that process.

Summary Of Benefits And Coverage

Under the proposed rules, insurance companies and group health plans will provide consumers with a concise document detailing, in plain language, simple and consistent information about health plan benefits and coverage. The proposed regulations contain standards designed to ensure that the Summary of Benefits and Coverage will help consumers better understand the coverage they have and, for the first time, allow them to easily compare different coverage options. It will summarize the key features of the plan or coverage, such as the covered benefits, cost-sharing provisions, and coverage limitations and exceptions. People will receive the summary when shopping for coverage, enrolling in coverage, at each new plan year, and within seven days of requesting a copy from their health insurance issuer or group health plan.

The Summary of Benefits and Coverage will include a new, standardized health plan comparison tool for consumers known as "coverage examples," much like the nutrition facts label required for packaged foods, the EBSA said. The coverage examples would illustrate what proportion of care expenses a health insurance policy or plan would cover for three common benefits scenarios—having a baby, treating breast cancer, and managing diabetes. Using clear standards and guidelines provided by the Center for Consumer Information and Insurance Oversight (CCIIO) in consultation with the National Guideline Clearinghouse, plans and insurers will simulate claims processing for each scenario so consumers can see an illustration of the coverage they get for their premium dollars under a plan. Additional scenarios may be added in the future. The examples will help consumers understand and compare their share of the costs of care under a particular plan and see how valuable the health plan will be at times when they need the coverage.

With the information provided in the Summary of Benefits and Coverage, as well as the specific illustrations of how this coverage will work, consumers can find the best coverage for themselves and their families—and employers can find the best coverage for their business and their employees.

Uniform Glossary Of Terms

Under the proposed regulations, consumers will have a new tool to help them understand some of the jargon that makes it impossible to figure out what is covered and how one insurance plan stacks up compared to another, the EBSA noted. To allow apples-to-apples comparison, terms would be the same across all plans. Insurance companies and group health plans will be required to make available upon request a uniform glossary of terms commonly used in health insurance coverage such as "deductible" and "co-pay." To help ensure the document is easily accessible for consumers, HHS and the DOL also will post the glossary on the new health care reform website, http://www.HealthCare.gov and http://www.dol.gov/ebsa/healthreform/.

Accessing Information

The proposed regulations specify that, beginning on March 23, 2012, all health insurance issuers and group health plans will provide the Summary of Benefits and Coverage and the uniform glossary to consumers, as follows.

Information when shopping for coverage. An issuer or health plan will automatically provide a Summary of Benefits and Coverage to a consumer prior to enrolling in coverage and 30 days prior to reissuance or renewal of their health coverage, so they are informed about the coverage they have.

Information when coverage changes. Individuals enrolled in a health plan must be notified of any significant changes to the terms of coverage reflected in the Summary of Benefits and Coverage at least 60 days prior to the effective date of the change.

Information on demand. A shopper or person enrolled in coverage can request a copy of the Summary of Benefits and Coverage and must receive it within seven days. The uniform glossary will also be made available upon request, as well as in a link provided in the coverage label by the plan or insurance company.

Use of Information Technology and reducing burden on employers and insurers. The Summary of Benefits and Coverage may be provided to consumers in electronic form. Thus, a plan or issuer might post the Summary of Benefits and Coverage on its website or on HealthCare.gov, or provide it by email. Electronic disclosure is expected to reduce costs while consumer safeguards are designed to ensure actual receipt by individuals.

Click here to send comments on the proposed rules. When the comment page opens, select “Proposed Rule” as Document Type and “RIN 1210-AB52” as Keyword or ID. You will then be able to send comments to the EBSA, CMS, or the IRS.

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