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Preparing for Health Care Reform: The Summary of Benefits and Coverage |
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The battle over health care reform is still raging in various federal and state courts and may even make its way to the Supreme Court. But insurers and plan administrators still have to prepare for the eventuality that the new law will take effect as scheduled in 2014.
In August 2011, the Treasury Department, the Department of Labor, and the Department of Health and Human Services jointly issued proposed regulations under the mandate that requires plan administrators and health insurers to distribute a uniform summary of benefits and coverage (SBC) to all eligible employees and their dependents. The effective date for the requirement is currently March 23, 2012; however, there is some indication that the agencies may push the date out by several months.
While much of the onus falls on the health insurance providers, plan administrators are ultimately responsible for ensuring that the SBC has been distributed. If the plan is self-funded, the responsibility lies solely with the administrator. The rules apply to both grandfathered and non-grandfathered group health plans. Penalties for noncompliance with these requirements can be as high as $1,000 per failure.
What's in the SBC?
The SBC is a stand-alone document that is required to include all of the following:
- Uniform definitions of standard insurance and medical terms.
- A description of coverage for specified benefit categories, including any exceptions, reductions, and limitations on coverage.
- The plan's cost-sharing requirements, including deductibles, coinsurance, and copayments.
- The plan's renewability and coverage continuation provisions.
- Examples that illustrate the coverage and cost-sharing for a number of key treatments and procedures, including breast cancer treatment, normal childbirth, and diabetes management.
- An internet address to obtain a copy of the policy and view a uniform glossary of terms.
- Contact information for the prescription drug provider and provider network (if applicable).
The SBC must be provided at an employee's initial eligibility, during special and annual enrollment periods, when material modifications are made, and upon request. The document may be provided in paper form or electronically (electronic delivery must comply with the safe harbor electronic notice regulations under ERISA).
More information on the proposed SBC rules is available here.
© 2011 Standard & Poor's Financial Communications. All rights reserved.
© 2011, Kelly Ruggles, Spokane, WA. Web site
Kelly C. Ruggles, Spokane, WA. is a fee-based financial planner located in Spokane.
Kelly C. Ruggles, Spokane, WA. President of American Reliance Group, Inc., a registered investment advisor.
Kelly Ruggles, Spokane, WA. is the author of "The Financial Playbook" for Retirement
Kelly C. Ruggles, Spokane, WA. Does not intend to provide personalized investment advice through this publication and does not represent the strategies or services discussed are suitable for any investor. Investors should consult with their financial advisors prior to making any investment decisions.
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