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Summary of Benefits and Coverage (presentation)
This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP in conjunction with United Benefit Advisors This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP in conjunction with United Benefit Advisors Kansas City Omaha Overland Park St. Louis Jefferson City www.spencerfane.com www.ubabenefits.com Summary of Benefits and Coverage: Complying with the New “SBC” Disclosure Rules Chadron J. Patton Julia M. Vander Weele April 17, 2012 Presenters Chadron Patton, JD Associate cpatton@spencerfane.com 913-327-5137 Julia Vander Weele, JD Partner jvanderweele@spencerfane.com 816-292-8182 3 Agenda Overview Covered Plans Appearance and Language Content and Format Timing and Distribution Penalties and Enforcement Employer Action Steps 4 Overview Health Care Reform legislation created new Summary of Benefits and Coverage (“SBC”) and Uniform Glossary Consistent format intended to allow plan participants to easily understand and compare health coverage options 5 Overview Final regulations issued February 9, 2012 Regulations include template for SBC and Uniform Glossary 24 additional FAQs issued March 19, 2012 www.dol.gov/ebsa/faqs/faq-aca8.html 6 Overview Applies to: Grandfathered Non-grandfathered plans Fully insured Self-funded plans 7 Effective Date Original effective date was March 23, 2012 (but delayed by final regulations) For participants and beneficiaries who enroll (or re-enroll) through an open enrollment period, the first open enrollment period beginning on or after September 23, 2012 For all others (including new hires and special enrollees), the first day of the first plan year that begins on or after September 23, 2012 8 Good Faith Compliance During the first year that SBC requirements apply, Departments will not impose penalties on plans and insurers that are working in good faith to provide the required SBC content The Departments’ goal is to achieve: Maximum uniformity for SBC recipients Certainty for plans and insurers that must provide SBCs 9 Covered Plans Applies to “group health plans” Medical and prescription drug Dental and vision (unless “excepted benefit”) Health Reimbursement Arrangements (“HRAs”) Wellness programs and EAPs (if provide “medical care”) Counseling under EAP Biometric screenings in wellness program 10 Covered Plans - Exceptions Does not apply to: “Excepted benefits” under HIPAA (e.g., standalone dental and vision) Most health FSAs HSAs – generally not considered “group health plans” but information regarding HSA can be included with SBC for the high-deductible health plan 11 Excepted Benefits – Dental/Vision Provided under a separate policy, certificate, or contract of insurance; or Otherwise not an integral part of group health plan Separate election and separate charge 12 Excepted Benefits – Health FSAs Health FSAs that are funded solely through employee salary reductions are excepted benefits, or If employer contribution is either less than $500 or no more than a dollar-for-dollar match If not “excepted benefit” same rules as HRAs (integrated vs. stand-alone) 13 HRAs HRAs are generally considered “group health plans” and not “excepted benefits” Stand-alone HRA must provide its own SBC “Integrated” HRA can combine SBC for major medical plan with description of HRA in appropriate SBC template spaces 14 Physical SBC Requirements SBCs must satisfy specific requirements relating to: Appearance Language Content Format 15 Appearance/Format SBCs must: Be provided in a form authorized by the Departments Be completed consistent with corresponding instructions Be presented in a uniform format Not exceed four pages in length (i.e., four double-sided pages) Not include print smaller than 12-point font 16 Separate SBCs? Employers do not have to provide separate SBCs for each coverage tier (e.g., self, self plus one, or family) within a benefit package Same rule applies to separate cost-sharing structures (e.g., deductibles, copays, or coinsurance) and coverage add-ons (e.g., health flexible spending accounts, health reimbursement arrangements, health savings accounts, or wellness programs) 17 Combined with SPD SBCs may be provided either on a standalone basis or in combination with other summary materials (e.g., the SPD) so long as: The SBC information is intact and prominently displayed at the beginning of the materials (e.g., immediately after the SPD’s table of contents) The timing rules for providing SBCs are satisfied 18 Language SBCs must be provided: In a culturally and linguistically appropriate manner Same standard for providing appeals notices Using terminology that is understandable by the average plan enrollee 19 Non-English Language Requirements If SBCs are provided in US counties in which at least 10% of the population is literate only in the same non-English language, plans and insurers must provide: Interpretive services in the non-English language Written translations of the SBC, on request, in Spanish, Chinese, Tagalog, and Navajo Disclosure, in the English version of SBCs, of the availability of language services in the relevant non-English language 20 Affected Counties The currently affected counties include: San Francisco County, California (Chinese) Two counties in Alaska (Tagalog) Apache County, Arizona; McKinley County, New Mexico; and San Juan County, Utah (Navajo) Numerous counties of 24 states and Puerto Rico (Spanish) The full list of counties may be accessed at: http://www.cciio.cms.gov/resources/factsheets/clas-data.html 21 Content Uniform definitions of standard insurance and medical terms Description of the coverage, including costsharing, for each of the categories of “essential health benefits” described in PPACA, and for other benefits, as identified by HHS Exceptions, reductions, and limits on coverage 22 Content (continued) Cost-sharing provisions, including deductible, co-insurance and co-payment obligations Renewability and continuation of coverage provisions Examples of common benefits scenarios based on recognized clinical practice guidelines 23 Content (continued) For coverage beginning on or after January 1, 2014, a statement of whether: the plan or coverage provides “minimum essential coverage” the plan or coverage meets applicable minimum value requirements A statement that: the SBC is only a summary; and the plan document, policy, insurance certificate, or contract should be consulted to determine the governing contractual provisions 24 Content (continued) Contact information, such as: a customer service telephone number for questions; or an internet address for obtaining a copy of the plan document or insurance policy, certificate, or contract Internet address or similar contact information for obtaining a list of network providers 25 Content (continued) Internet address or similar contact information for obtaining information on prescription drug coverage A uniform glossary, including: an internet address for obtaining the uniform glossary; a contact phone number for obtaining a paper copy of the uniform glossary; and a disclosure that paper copies of the uniform glossary are available 26 Content (continued) SBCs do not need to include: Information on premiums, or Cost of coverage (for self-insured plans) SBCs are not required to include a statement about whether the plan is grandfathered under health care reform, though plan sponsors may voluntarily choose to include one 27 State Law Requirements Insured plans may need to comply with state laws that require separate, additional disclosure requirements If the required information is in addition to SBC mandated content, it must be provided separate from the SBC but could be distributed at the same time 28 Coverage Examples Regulations allow the Departments to identify up to six coverage examples for inclusion in SBCs However, the compliance guidance includes information for only two coverage examples: Having a baby (normal delivery) Managing Type II diabetes (routine maintenance of a well-controlled condition) 29 Coverage Examples (cont.) The coverage examples include: A brief description of major services related to the condition Sample care costs and related categories Standard assumptions Specific medical condition information, including dates of service, diagnosis and billing codes, and allowed charges associated with each scenario 30 Coverage Under Expatriate Plans SBCs need not summarize coverage for items or services provided outside the US Expatriate plans or their insurers can provide an internet address for obtaining information about benefits and coverage If an expatriate plan provides coverage available inside the US, the plan or insurer must provide a compliant SBC that summarizes the benefits and coverage available inside the US 31 Format The Departments have provided a template for use by group health plans in preparing SBCs: www.dol.gov/ebsa/pdf/SBCtemplate.pdf For an example of a sample completed SBC see: www.dol.gov/ebsa/pdf/SBCSampleCompleted.pdf Authorized for use only with respect to coverage beginning before January 1, 2014 32 Sample Template Important Questions Answers What is the overall deductible? $ Are there other deductibles for specific services? $ Is there an out–of– pocket limit on my expenses? $ Why this Matters: What is not included in the out–of–pocket limit? Is there an overall annual limit on what the plan pays? Does this plan use a network of providers? Do I need a referral to see a specialist? Are there services this plan doesn’t cover? 33 Use of Template The form language and formatting in the SBC template must be precisely reproduced Departments indicated that: Minor adjustments are permitted to the SBC template’s row or column sizes to accommodate the plan’s information, so long as the information is understandable The deletion of columns or rows is not permitted Rolling over information from one page to another is allowed 34 Use of Template (cont.) The ordering of charts and columns should not be changed Only certain abbreviations may be used The SBC template header must be included only on an SBC’s first page The SBC template footer must be included only on the SBC’s first and last pages OMB control number information included in the template should not be displayed Barcodes or control numbers can be added to an SBC for quality control purposes 35 Best Efforts Rule In some cases, plan terms that must be included in the SBC cannot reasonably be described in a manner consistent with the template and the instructions If this occurs, the plan or insurer must accurately describe the relevant plan terms: Using its best efforts In a way that is as consistent with the instructions and template format as reasonably possible 36 Coverage Periods The SBC template requires plans or insurers to include coverage information in SBCs SBCs may reflect the coverage period for a group health plan as a whole Plans or insurers are not required to individualize a coverage period for each individual’s enrollment (e.g., if an individual enrolls in a calendar year plan on January 19, the coverage period can be the calendar year) 37 Standardized Insurance and Medical Terms Health care reform requires SBCs to include uniform definitions of: Insurance-related terms Medical terms 38 Uniform Definitions The regulations adopt a two-part approach for satisfying the uniform definitions requirement First, the regulations include a uniform glossary of health coverage terms and definitions, which must: Be made available to participants and beneficiaries in connection with the SBC Satisfy the appearance and form requirements for SBCs Second, the SBC template includes a “Why This Matters” column 39 Uniform Glossary Includes definitions of insurance, medical and additional terms, to be provided with SBCs Provides simple, descriptive definitions intended to: assist consumers in understanding terms and concepts commonly used in health coverage be educational in nature www.dol.gov/ebsa/pdf/SBCUniformGlossary.pdf 40 Distribution – Responsible Party Self-funded plans Plan Administrator (but may look to TPA for assistance) Fully insured plans Insurer responsible for providing SBC to plan sponsor Insurer and plan administrator jointly responsible for distribution to participants and beneficiaries If one complies, both comply If neither comply, both liable 41 Distribution – Responsible Party Carve-Out Arrangements (pharmacy benefit manager, behavioral health organization) Plans and issuers must coordinate with service providers and each other to ensure that the SBC is accurate Plan or issuer may enter into binding contractual arrangement with respect to SBC and will generally not be subject to enforcement for service provider’s failure 42 Distribution - Recipients SBC must be distributed to: Participants Beneficiaries Prospective enrollees Special enrollees COBRA qualified beneficiaries COBRA qualifying event does not, itself, trigger SBC requirement, but during open enrollment period, COBRA beneficiary has same right to SBC as an active employee 43 Distribution - Timing Insurers to plan sponsor: As soon as practicable following receipt of application, but no later than 7 business days after receipt of application If subsequent changes, insurer must update and provide new SBC no later than first day of coverage Upon request, as soon as practicable, but no later than 7 business days after request Upon renewal (similar rules as participants) 44 Distribution - Timing Plan to Participants/Beneficiaries: At initial enrollment (all benefit package options) With initial enrollment materials If none, no later than first day of eligibility For special enrollees, within 90 days of enrollment (same as SPD) 45 Distribution - Timing Plan to Participants/Beneficiaries: At renewal or reenrollment (only current benefit package) If renewal requires written application (or opportunity to change coverage), with written application materials If renewal is automatic (and no opportunity to change coverage), at least 30 days prior to the first day of the new plan year 46 Distribution - Timing SBC must also be provided, upon request, as soon as practicable, but no later than 7 business days following the request Provided = sent 47 Distribution – Timing Mid-year changes to SBC that constitute “material modification” require 60-day advance notice “Material modification” = change that would be considered by average plan participant to be important change in covered benefits or other terms of coverage 48 Distribution - Methods Distribution within workplace may not be sufficient if dependents are covered Single SBC sent by mail to family’s last known address if dependents are covered Multiple SBCs must be sent if beneficiary is “known” to reside at a different address 49 Distribution - Methods For current enrollees, must satisfy ERISA electronic disclosure rules OK for participants who can effectively access electronic documents at any location where they are reasonably expected to perform their work duties and for whom access to the employer’s electronic information system is an integral part of those duties For others, need affirmative consent 50 Distribution - Methods For eligible but not enrolled participants and beneficiaries, more lenient standard for electronic distribution SBC can be provided electronically if all options “readily accessible” Must provide paper copy, free of charge, upon request If Internet posting, must send paper or electronic notice about how to access (model postcard language available) 51 Penalties Fine of up to $1,000 Each failure to provide an SBC is a separate violation Excise tax for group health plans under Code Section 4980D 52 Enforcement Three federal agencies share enforcement: Department of Labor; IRS; and Department of Health and Human Services As a result, enforcement mechanisms and precise penalty amounts may differ More guidance is expected 53 Employer Action Steps Coordinate with insurers and TPAs Determine number of SBCs that must be prepared (depending on number of plans and benefit packages) Prepare and/or review SBC Distribute 54 Thank you for your participation in the Employer Webinar Series. This program, has been approved for 1.5 (General) recertification credit hours toward PHR, SPHR and GPHR To obtain a recording of this presentation, or to register for future presentations, contact your local UBA Member Firm. This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP in conjunction with United Benefit Advisors Kansas City Omaha Overland Park St. Louis Jefferson City www.spencerfane.com www.ubabenefits.com 55
