Government officials discuss final regulations for Summary of Benefits and Coverage

Employers and health insurers face a number of changes in 2012 introduced by the Patient Protection and Affordable Health Care Act (PPACA), according to speakers at an April 16 American Law Institute-American Bar Association (ALI-ABA) webinar on health plans. Practitioners and government officials discussed in particular the final regulations issued in February 2012 for the standardized Summary of Benefits and Coverage (SBC) offered to applicants and enrollees that is required of employers.

Insurers, employers and other providers of health care plans must now provide an SBC to plan participants and other affected individuals. An SBC must be provided by a group health insurer to a group health plan; by a group health insurer and a group health plan to participants and beneficiaries; and by a health insurer to individuals and dependents in the individual market. An SBC must be provided on application for coverage, upon renewal or reissuance, and upon request.

Page limits. There are 12 required elements for the SBC, including a description of coverage, cost-sharing requirements, exceptions or limits under the plan and coverage examples (but not the cost of coverage). The SBC cannot exceed four double-sided pages. However, Russell Weinheimer, IRS Office of Chief Counsel, mentioned that, in some cases, the four-page requirement would be impractical and more pages might be required. "If you cannot comply, then make your best efforts to comply," he said. But, while fielding a question from Greta Cowart, attorney, Haynes and Boone, LLP, regarding whether information traditionally reported on page one could run over onto page two, if necessary, Weinheimer stated, "If you can't fit everything on page one, well maybe you have to go on to page 2."

Changes from proposed regulations. Weinheimer noted several changes from the proposed regulations on SBCs to the final regulations. "One change that was made from the proposed regulations [is] the requirement where you have to provide the SBC within seven days," he said. The language was changed to "seven business days" to allow the employer or insurer a little extra time.

Additionally, the final regulations introduced language meant to avoid duplication of SBCs. If both the plan provider and the issuer are required to provide an SBC to an individual, and if one provides the SBC, then the other is relieved of the obligation. Weinheimer suggested that employers should arrange with insurers to prepare the SBC.

Stephanie Lewis, Office of the Solicitor, U.S. Department of Labor, also pointed out that SBC drafters should look carefully at the uniform definitions of standard insurance and medical terms prepared by the government. The definitions include commonly used terms such as "deductible," "preferred provider," "hospital outpatient care," and "prescription drug coverage." "You may use a term like ‘deductible’ that means something different in the SBC," she warned. "Pay attention to those definitions."

Weinheimer also offered a tip for employers who are confused about language in the final regulations requiring a health insurance issuer to provide the SBC to the plan administrator "upon request or application" for health coverage." What does it mean ‘upon application’ in the group market?" said Weinheimer. He posed the common scenario where employees select their plan on the computer by putting a check in the box next to an insurance provider company. He explained, "For purposes of the SBC, that is considered an application."