The Affordable Care Act introduced Summaries of Benefits and Coverage (“SBCs”) in 2012 as a new participant disclosure requirement for all group health plans. Although there has been no significant change in the legal requirements for SBCs in the two-plus years they have been in effect, 2014 was technically the end of the "non-enforcement period" by the federal Department of Health and Human Services that oversees ACA compliance, including SBCs. The end of the non-enforcement period will likely lead to heightened scrutiny of SBC compliance for 2015 and beyond. Employers should ensure that SBCs are in place for all health plans and made available to participants upon initial eligibility and each year during renewal.
Are employers complying with SBC rules? The results appear to be mixed. The carriers and major medical TPAs are certainly generating SBCs and making them available to employers. Whether employers are actively distributing them to plan participants, particularly by the overly aggressive 60-day advance deadline, is another matter. It seems to be a general consensus among employers and advisors that the SBC rules should be followed as much as possible, but that the 60-day rule (including notice of any substantive plan changes) is not practical and needs to be modified.
Employers sponsoring Health Reimbursement Arrangements (“HRAs”) of any plan design should be aware that the SBC requirement applies to HRAs in the same way as group health insurance plans. Although most HRAs are linked to a group medical plan and participants often consider them to be one plan, the group medical plan SBCs provided by fully insured carriers are typically not modifiable. Thus, for practical reasons, a separate SBC is often required.
How should an employer handle an SBC for HRA plan? There are several options. For our HRA clients, we automatically generate SBCs for the HRA only (stand-alone, with reference to the group health plan) and make available to the plan. This is in our view a necessary method until the carriers provide employers with a modifiable SBC that could be tweaked to incorporate a linked HRA. Until recently, the HRA SBC we provided was a full, 6-page SBC just like the group health insurance version. However, in order to simplify the SBC process and increase employee understanding of the document, we released a new "short form" SBC for HRAs that more clearly supplements the insurance plan version and reduces the length of the HRA version.