Summary of Benefits and Coverage (SBC) Update

NOTE: This is a follow-up to a previous Capital Connection entry (Much more than a “summary”) dated Dec. 22, 2011. The post below discusses the recent release of the final rule.

Although the health system overhaul continues to divide the public, a poll conducted by the Kaiser Family Foundation found that an overwhelming majority of Americans (84%) support insurance summaries. With that near consensus in mind, officials from three federal agencies have determined that starting later this year health plans will have to do exactly that…provide consumers with nationally standardized coverage descriptions. 

The requirement takes effect Sept. 23, 2012, applies to ALL private insurance (including employer coverage and plans purchased individually), and must be delivered at important points in the enrollment process, such as upon application and at renewal. It is estimated that this provision will affect between approximately 150 and 180 million Americans.

But the bottom line—a policy’s price—is missing. Although an estimated premium price was included in the draft rules, it has been dropped and won’t be required on the form. Another provision that was abandoned in the final rule is the mandate that insurers provide all of the required information in only four pages. The new guidance issued last week apparently will allow more lengthy disclosures (up to six pages) if absolutely necessary. Further, any “fine print” will be unacceptable, and all information must be printed in 12-point type, a size larger than the typical newspaper font.    

The forms will also include estimated out-of-pocket costs for two basic examples of care: pregnancy and Type 2 diabetes care. This too is a change from the earlier rule, as it reduces the number of coverage scenarios from three down to two (had previously included breast cancer).

How will the SBC be provided?  Last year’s proposed regulations would have required that plans/issuers provide the SBC as a stand-alone document only. As now modified in the final rule, group plans may provide the SBC together with the summary plan description if prominently displayed at the beginning of the document, such as immediately after the table of contents. This is not the case for non-group plans, which must continue to provide the SBC as a separate document.

Another popular query concerned whether the SBC may be provided electronically, as insurers and employers had complained about the huge expense of providing paper copies. The administration’s final rule appears to provide flexibility, while still addressing the information needs of consumers. Assuming certain “consumer safeguards”[1] are met, the rule ensure that in the vast majority of cases, the SBC may be provided electronically, thereby allowing it to be posted online or delivered via email. 

For additional guidance related to specific SBC documents (i.e. template, instructions, samples, the uniform glossary, etc.), please visit: http://www.dol.gov/ebsa/healthreform or http://www.cciio.cms.gov/programs/consumer/summaryandglossary/index.html.

[1] These requirements include written notice of availability to be sent via mail or emailed together, as well as the right to request a paper copy at any time.

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