(Affordable Care Act - PHS Act Section 2715)

When are plans required to start providing the SBC?

For participants and beneficiaries who enroll or re-enroll through an open enrollment period (including late enrollees and re-enrollees), the SBC must be provided beginning on the first day of the first open enrollment period that begins on or after September 23, 2012.

For participants and beneficiaries who enroll in coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees), the SBC must be provided beginning on the first day of the first plan year that begins on or after September 23, 2012.

What circumstances will trigger the requirement to provide an SBC to a participant or beneficiary?

The final regulations require that the SBC be provided in several instances:

1. At Initial Enrollment:The SBC for each plan option offered for which the participant or beneficiary is eligible must be provided as part of any written application materials that are distributed by the plan for enrollment. For this purpose, written application materials include any forms or requests for information, in paper form or through a website or email, that must be completed for enrollment. If your plan does not distribute written application materials for enrollment, the SBC must be distributed no later than the first date the participant is eligible to enroll in coverage for the participant and any beneficiaries. In the event that there is any change to the information required to be in the SBC before the first day of coverage (e.g. prior to the end of the plan’s waiting period), the plan must update and provide a current SBC to a participant or beneficiary no later than the first day of coverage.
2. At Open Enrollment/Renewal:The SBC must be included with open enrollment materials. The regulations state that if participants are required to re-enroll every year for coverage, the new SBC must be provided no later than the date the open enrollment materials are handed out. If the enrollment is automatic, the SBC must be provided no later than 30 days prior to the first day of the new plan year (e.g. renewal).
3. At Special Enrollment:The SBC must be provided to special enrollees (employees and dependents with the right to enroll in coverage midyear upon specified circumstances) within 90 days after enrollment pursuant to a special enrollment right.
4. Upon Request:The SBC must be provided (e.g. sent) to a participant or beneficiary upon request, as soon as practicable, but no later than 7 business days following the request.

Do I need to provide an updated SBC to my employees if I make a plan change mid-year?

A group health plan must provide notice of a material modification if it makes a material modification in any of the terms of the plan that is not reflected in the most recently provided SBC.

Only material modifications that would affect the content required in the SBC would require plans to provide this notice. In these circumstances, the notice must be provided no later than 60 days prior to the date on which such change will become effective, if it is not reflected in the most recent SBC provided and occurs other than in connection with a renewal (i.e., mid-plan year).

This requirement for an advance notification could be satisfied either by a separate notice describing the material modification or by providing an updated SBC reflecting the modification. It would be RCI’s recommendation to just update your current SBC and distribute a new one.

What Is a Material Modification?

A material modification includes any modification to the coverage offered under a plan that, independently, or in conjunction with other contemporaneous modifications or changes, would be considered by an average plan participant to be an important change in covered benefits or other terms of coverage under the plan.

A material modification could be an enhancement of covered benefits or services or other more generous plan terms.

A material modification could also be a material reduction in covered services or benefits or more stringent requirements for receipt of benefits. As a result, it also includes changes or modifications that reduce or eliminate benefits, increase premiums and cost-sharing, or impose a new referral requirement.

What if I have multiple plan options, do I need to give a participant the SBC for Options A, B and C if he or she is only enrolled in Option A?

If your plan offers multiple benefit options, you are only required to provide the SBC for the plan option which the participant or beneficiary is already enrolled in; SBC’s are not required to be provided with respect to plan options the participant or beneficiary are not enrolled in. However, if the participant or beneficiary requests an SBC for another plan options for which they are eligible for, the SBC must be provided (e.g. sent) as soon as practicable, but no later than 7 business days following the request.

How must the SBC be provided to my Employees? (e.g. Do I have to distribute it in paper form?)

The SBC may be provided in paper form or electronically.

1. Paper Form.The SBC will be provided to you in, electronically, in color. It can be printed in either color or grayscale and cannot exceed 4 pages (front-to-back).
2. Electronic Format to Enrolled Participants.An SBC may be provided in electronic form to participants and beneficiaries covered under the plan if the requirements of the DOL’s electronic disclosure safe harbor are met (as contained in DOL Reg. § 2520.104b-1(c)).

Those regulations include a safe harbor for disclosure through electronic media to participants who have the ability to effectively access documents furnished in electronic form at any location where the participant is reasonably expected to perform duties as an employee and with respect to whom access to the employer's electronic information system is an integral part of those duties.

3. Electronic Format to Eligible Participants (but not enrolled).For participants and beneficiaries who are eligible but not enrolled, the SBC may be provided electronically if the format is readily accessible (such as in an html, MS Word or pdf format) and a paper form is provided free of charge upon request. For these participants and beneficiaries only, the SBC may be provided via Internet posting if the individuals are timely notified that the documents are available on the Internet and provided the Internet address. The postcard or email must provide the Internet address and indicate that the documents are available in paper form upon request. Plans and issuers may make this disclosure (sometimes referred to as the "e-card" or "postcard" requirement) by email.

The Departments have provided the following sample language for postcards and e-cards that can be modified:

Availability of Summary Health Information

As an employee, the health benefits available to you represent a significant component of your compensation package. They also provide important protection for you and your family in the case of illness or injury.

Your plan offers a series of health coverage options. Choosing a health coverage option is an important decision. To help you make an informed choice, your plan makes available a Summary of Benefits and Coverage (SBC), which summarizes important information about any health coverage option in a standard format, to help you compare across options.

The SBC is available on the web at: www.website.com/SBC. A paper copy is also available, free of charge, by calling 1-XXX-XXX-XXXX (a toll-free number).

Do I need to distribute the SBC to COBRA participants?

Yes. You have the same distribution requirements for COBRA participants as you do for active participants.

The information provided in this document is provided for informational purposes only, is not all inclusive and is not intended to advise your Plan how it may comply with any provisions of the referenced legislation or related legislation or regulations, nor it is otherwise intended to impart any legal advice.  If you have any questions about how to comply with this or any other law or regulation, we recommend that you consult with your attorney.