No more questions from employees about the difference between a co-pay and co-insurance. Proposed regulations would require that, beginning March 23, 2012, all group health plans—including grandfathered plans, self-insured plans and plans not covered by ERISA—must provide employees and beneficiaries with a simple explanation of their benefits and a uniform glossary covering basic health insurance and medical terms.
This so-called Summary of Benefits and Coverage (SBC) won’t replace summary plan descriptions, but the IRS and the Department of Labor (DOL) have expressed a willingness to try to coordinate the two. These regs won’t become effective until final regs are issued. (76 F.R. 52442, 8-22-11)
Content requirements. SBCs would be required to describe the coverage, including premiums, cost-sharing for each category of benefits, deductibles, co-insurance and co-pays. They would also contain at least three coverage examples, so plans, employees, and beneficiaries can understand their coverage options. The uniform glossary defines nearly 50 terms, including co-payment, deductible, co-insurance, out-of-pocket limit and premium. This list could grow in the future.
Apples = apples. SBCs are intended to allow employees and plans to compare benefits packages. To facilitate shopping at the plan level, the regs would require issuers to provide SBCs to plans when plans apply for or request information on coverage. Plans would receive updated SBCs if information in them changes, and when they renew their policies.
Employees and beneficiaries would receive SBCs for each benefits package in which they’re qualified to enroll. The regs would allow issuers and plans to decide which entity will provide SBCs to employees. SBCs could be posted at an insurer’s website or a link may be provided to the DOL’s website.
Employees would receive SBCs:
√ With written applications for coverage; if applications aren’t required, no later than the first date they’re eligible to enroll
√ With applications to renew coverage; if renewals are automatic, 30 days before the start of the new plan year
√Within seven days, if employees and beneficiaries enroll in the plan as special enrollees or employees request an SBC.
New SBCs would be provided when a material modification to coverage occurs in the middle of a plan year. For ERISA-covered plans, these new SBCs, which would be provided 60 days prior to the effective date of the change, satisfy the requirement to provide a summary of material modifications.
CLICK IT: The DOL has posted templates of the SBC and the glossary on its website: www.dol.gov/ebsa. Click on the “Affordable Care Act Regulations and Guidance” heading.