FINAL REGULATIONS ON SUMMARY OF BENEFITS AND COVERAGE RELEASED

Feb. 15, 2012

The IRS, Department of Labor and Health and Human Services (the agencies) released final regulations regarding the Summary of Benefits and Coverage (SBC) requirement contained in the Affordable Care Act (the Act). The agencies had previously released proposed regulations in August 2011, which were scheduled to go into effect in March 2012. However, the agencies subsequently delayed the effective date until after final regulations were released.  

EFFECTIVE DATE FOR GROUP HEALTH PLANS

The final regulations and the requirement to provide the new, standardized SBC are effective for group health plans on the following dates:

• Beginning on the first day of the first open enrollment period that begins on or after Sept. 23, 2012, plans must provide the SBC to participants and beneficiaries who enroll or re-enroll for coverage during the open enrollment period.
• Beginning on the first day of the first plan year that begins on or after Sept. 23, 2012, plans must provide the SBC to participants and beneficiaries who enroll for coverage other than through an open enrollment period, such as newly eligible individuals and special enrollees.  

For example, an employer with a plan year that begins October 1, 2012, but starts their open enrollment period on September 1, 2012, would not be required to provide the SBC during open enrollment, but would be required to use the SBC for new enrollees beginning on the first day of the new plan year.

In addition, calendar year plans with an annual open enrollment period that takes place before the start of the plan year will generally need to start providing the SBC on the first day of the open enrollment period for the 2013 plan year.

NEW SAMPLES AND TEMPLATES ALSO RELEASED

The agencies have also published new samples and templates that can be used as a basis for developing an SBC. The new templates and instructions can be found on the DOL Website.

WHO IS RESPONSIBLE TO CREATE AND SEND THE SBC?

The final regulations confirm that, in the case of fully-insured plans, the insurance carrier is responsible to produce and provide a valid SBC to employers who sponsor group health plans. While self-funded employers are technically responsible to produce their own SBC’s, it is anticipated that firms which assist employers in the administration of self-funded plans are likely to assist with the development of required SBC’s. Employers will have to play a role in the distribution of the SBC to participants during open enrollment periods and to new participants.  

SUMMARY

Since employer group health plan years generally begin on the first of the month, the first employers who will be subject to these new rules will be those with plan years beginning October 1, 2012. Most employers will be able to depend on their carrier or claims administrator to actually produce the SBC’s, but employers will need to adjust their enrollment procedures to comply with the new disclosure rules.