ACA Summary of Benefits And Coverage Final Rule Applies Beginning September 23

The Departments of Health and Human Services, Labor, and the Treasury (the Departments) have released the final rule and glossary implementing the Summary of Benefits and Coverage (SBC) requirements of the Patient Protection and Affordable Care Act (ACA). The final rule and related materials will be published in the February 14 Federal Register. As provided in the final rule, starting on Sept. 23, 2012, health insurers and group health plans will be required to provide the SBC and the uniform glossary to consumers.

The ACA added a Public Health Service Act Sec. 2715 introducing new reporting and disclosure requirements for group health plans and health insurers. These new reporting and disclosure provisions require group health plans and health insurers to provide an SBC that clearly and accurately describes the benefits and coverage under the applicable plan or coverage. In August 2011, the Departments provided standards on communications and model forms that health insurers and group health plans may use to provide an SBC to those covered. Although the requirements were scheduled to become effective on March 23, 2012, but in frequently asked questions (FAQs) published on Nov. 17, 2011, the Departments had indicated that this compliance date may be delayed until final regulations are issued.

The SBC must be a concise summary (limited to four pages) of the key benefits and coverages provided through the health plan, the costs to the participant, lists of excluded services, and other significant conditions or limitations. These documents also must be prepared in a standardized format, type style, font size, and terminology so that comparisons can readily be made between different coverage offerings. The SBCs must be distributed in connection with any initial, special, or open enrollments, and any new plan coverages.

Specifically, the final rules ensure consumers receive two key forms that will help them understand and evaluate their health insurance choices:

• A short, easy-to-understand SBC; and
• A list of definitions (called the “Uniform Glossary”) that explains terms commonly used in health insurance coverage such as “deductible” and “copayment”

The final rules require that the SBC be provided to consumers as follows:

• when they are shopping for coverage;
• when coverage is renewed, before each new plan or policy year;
• when there are coverage changes, to enrollees 60 days before the effective date of the changes, and
• upon the consumer’s request for information, within seven business days of the request (including the Glossary of terms).

The glossary also will be publicly displayed at http://www.HealthCare.gov, http://www.cciio.cms.gov, and http://www.dol.gov/ebsa/healthreform.

The forms, SBC, and glossary were developed by the Departments based primarily on model forms created through a public process led by the National Association of Insurance Commissioners (NAIC) and a working group including representatives of health insurance-related consumer advocacy organizations, health insurers, health care professionals, patient advocates including those representing individuals with limited English proficiency, and other qualified individuals. The forms also reflect comments that the Departments sought directly from the public.

The SBC will include a new, standardized health plan comparison tool for consumers known as “coverage examples”—using a format modeled on the Nutrition Facts label required for packaged foods. The coverage examples will illustrate, for comparison purposes, what proportion of the cost of care a health insurance policy or plan would cover for a sample patient for two common medical situations—having a baby and managing type 2 diabetes. Additional scenarios will be added in the future as feedback is gathered from consumers. These examples will help consumers understand and compare a sample patient’s share of the costs of care under a particular plan and have a better idea of how valuable the health plan will be at times when they may need the coverage.

Assuming certain consumer safeguards are met, the final rule ensures that in the vast majority of cases, the SBC can be provided electronically, allowing a plan or issuer to post the SBC on its website or provide it by email. Electronic disclosure is expected to reduce costs while consumer safeguards are designed to ensure actual receipt by individuals. Additionally, the final rule provides flexibility in the instructions for completing the SBC in recognition of unique plan designs, the Departments asserted.

The SBC will make it easier for health insurance consumers to find the best coverage for themselves and their families—and for employers to find the best coverage for their business and their employees, the Departments said.

The SBC and glossary are meant to eliminate technical or confusing language from insurers’ marketing materials that sometimes make it difficult for consumers to understand exactly what they are buying, the Department explained. The new rules also will make it easier for people and employers to directly compare one plan to another.

“Consumers, for the first time, will really be able to clearly comprehend the sometimes confusing language insurance plans often use in marketing,” said Kathleen Sebelius, HHS Secretary. “This will give them a new edge in deciding which plan will best suit their needs and those of their families or employees.”

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