The Affordable Care Act (ACA) requires group health plans and health insurance issuers offering group or individual health insurance coverage to issue a summary of benefits and coverage (SBC) that "accurately describes plan benefits or coverage." In addition, they must make a uniform glossary available to participants and beneficiaries. On June 16, 2015, the Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury, (collectively, the "Departments"), issued final regulations on the SBC (the "June 2015 regulations"). The June 2015 regulations generally relax the requirement to provide another SBC where the plan or insurer previously provided an accurate SBC per request.

The text of the June 2015 regulations is found at http://www.gpo.gov/fdsys/pkg/FR-2015-06-16/pdf/2015-14559.pdf. These regulations apply for plan years as set forth below.

Action Needed Now:

• Plan sponsors that are comfortable that their SBC distribution procedures and monitoring were consistent with the prior regulations and FAQs should not need to do anything. If uncertain, then
  • Group health plans should review their current SBC distribution procedures to see whether they need to make any changes under the new regulations.
  • Plan sponsors that engage third parties to distribute the SBC should make sure that procedures for monitoring the arrangement and correcting compliance breaches are in place.

Background:

The Departments previously issued SBC regulations on February 14, 2012 (the "2012 regulations"), along with an SBC template and were followed by a series of six Frequently Asked Questions (FAQs) about the SBC requirements. On December 30, 2014, the Departments issued proposed regulations (the "2014 proposed regulations"), as well as a new proposed SBC template, instructions, and an updated uniform glossary. The proposed template includes revisions to the statements whether the plan provides minimum essential coverage or meets the minimum value standard under the ACA. However, as discussed below, the June 2015 regulations do not address the proposed new template and the revised uniform glossary.

No Significant Changes under the June 2015 Regulations:

The June 2015 regulations leave the 2014 proposed regulations largely intact and codify several items previously released in FAQs. Highlights of the June 2015 regulations are as follows:

• Clarification of the following situations for providing the SBC to participants and beneficiaries: The June 2015 regulations adopt the following clarifications that were originally proposed in the 2014 proposed regulations:
  • If the SBC is provided upon request before enrollment for coverage, the plan does not need to provide the SBC again upon enrollment, provided there has been no change to the required information. Under the 2012 regulations, plans had to provide another SBC upon enrollment even if there was no change in the information. Of course, if there has been a change to the required information, upon enrollment the plan must provide a new SBC reflecting the changed information.
  • A group health plan benefit package providing Medicare Advantage benefits is exempt from the requirement to provide an SBC. The June 2012 regulations had not addressed Medicare Advantage plans.
  • Student health insurance coverage is subject to monitoring of the delivery of SBCs like all other situations where SBCs are provided by a third party. The June 2012 regulations had not included Student health insurance in the monitoring list.

• Special rules to prevent unnecessary duplication (The June 2015 regulations summarized all the information provided in the prior regulations and FAQs):
  • The plan administrator of a group health plan that uses two or more insurance products provided by separate issuer, or two or more benefit packages, has the option to either
    • synthesize the information into a single SBC or
    • provide multiple partial SBCs that, together, provide all the relevant information to meet the SBC content requirements.
  • As stated in the 2014 proposed regulations, a group health plan that is required to provide an SBC to employees or former employees is permitted to enter into a binding agreement with a third party to provide the SBC to such individual (and thus satisfy the requirement to provide an SBC via the third party), provided that each of the following conditions is met:
    • The plan must monitor performance under the contract.
    • When the plan or issuer has knowledge that the SBC is not being provided in a compliant manner then:
      • > it must correct the noncompliance as soon as practicable if it has all of the information that is required to make the correction, or
      • > it must communicate the noncompliance to participants and beneficiaries affected by the noncompliance and begin taking significant steps as soon as practicable to avoid future violations if it does not have all of the information that is required to make the correction.

Applicability Dates:

The June 2015 regulations are applicable to group health plans (including grandfathered plans) as follows:

• For participants and beneficiaries who enroll or re-enroll in group health coverage through an open enrollment period (including re-enrollees and late enrollees), the beginning on the first day of the first open enrollment period that begins on or after September 1, 2015.
• For participants and beneficiaries who enroll in group health coverage other than through an open enrollment period (including newly eligible employees and special enrollees), the beginning on the first day of the first plan year that begins on or after September 1, 2015.

Changes to the Model Template Deferred Until Next Year:

The preamble to the June 2015 regulations states that until the new template is finalized and applicable, plans and issuers may continue to rely on the flexibility provided in Affordable Care Act Implementation FAQs Part XIV. Previously, the FAQs issued on March 30, 2015 state that the Departments anticipate finalization of the new template and the revised uniform glossary by January 2016. Once finalized, the new template is anticipated to apply to coverage that renews or begins for plan and policy years beginning on or after January 1, 2017 (including 2016 open enrollments for coverage beginning on or after January 1, 2017). These FAQs also state that the Departments will not take enforcement action against a plan or issuer that provides an SBC as long as a cover letter or similar disclosure setting forth the required minimum essential coverage and minimum value statements is included.

Cheiron Observations: The June 2015 regulations reflect the Departments? past attempts to ease the burden associated with providing an SBC. The more important regulation will be the changes with respect to the uniform glossary and the new template that will be issued later.

Cheiron health consultants can assist plan sponsors with the review and consideration of the impact of the June 2015 regulations on the SBC.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Accordingly, we do not provide legal services or tax advice.