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Summary of Benefits and Coverage and the Uniform Glossary

Timeline of Provisions

Summary of Benefits and Coverage and the Uniform Glossary

Summary

The new standards relating to the Summary of Benefits and Coverage (SBC) for group health plans and health insurance issuers offering group or individual health insurance coverage are designed to provide improved information for consumers to better understand the coverage they have and allow them to compare their coverage options across different types of plans and insurance products. The final regulations regarding the SBC and the Uniform Glossary, issued jointly by the Departments of Health and Human Services, Labor and Treasury (the Agencies) on Feb. 9, 2012, require this information is presented in clear language and in a uniform format.

Video: Summary of Benefits and Coverage

The Summary of Benefits and Coverage establishes standards that group health plan sponsors and insurers must use when offering group or individual health insurance. View video

The final regulation provides access to two key documents: 1) the SBC, which provides a common format for describing the benefits and coverage under the applicable plan or coverage so consumers can compare plan benefits among and between carriers, and 2) the Uniform Glossary, which provides standard definitions of terms commonly used in health insurance coverage. Together, these documents allow consumers to evaluate their health insurance choices and make better coverage decisions.

Applicability

The Final Rule implements the disclosure requirements under section 2715 of the Public Health Services Act. These final regulations apply:

  • For disclosures to members of group health plans – For delivery to members of group plans with open enrollment periods, effective the first day of the first open enrollment period beginning on or after Sept. 23, 2012; for delivery to members that enroll other than through an open enrollment period (including special enrollees), effective the first day of the first plan year on or after Sept. 23, 2012.
  • For disclosures by issuers to group health plans – Effective on or after Sept. 23, 2012.
  • For disclosures in the individual market – Effective on Sept. 23, 2012.

Final Regulations

An SBC must be provided in writing and free of charge under several different circumstances, such as upon application for coverage, by the first day of coverage, (if information in the SBC has changed), upon renewal or reissuance, and upon request.

The Affordable Care Act (the Act) and the Final Rule requires that an SBC be provided to applicants, enrollees, and policyholders or certificate holders. The Act and Final Rule place responsibility to provide an SBC on:

  • For delivery to an insured group health plan: The issuer.
  • For delivery to members of insured group plans: The health insurance issuer and the group health plan including the plan administrator as defined by ERISA.
  • For delivery to members of self-insured plans: The group health plan or designated administrator of the plan as that term is defined under ERISA. The Final Rule does not include an exemption for large or self-insured plans.

SBC Provided by Issuer to a Plan

The Final Rule requires a health insurance issuer to provide an SBC to an insured group health plan upon an application by the plan for coverage, as soon as practicable following receipt of the application, but in no event later than seven business days following receipt of the application. If there is any change to the information required to be in the SBC before the first day of coverage, the issuer must update and provide a current SBC to the plan no later than the first day of coverage. The SBC must be provided upon request, as soon as practicable, but in no event later than seven business days. The SBC must be provided upon renewal as follows:

  • Renewal when a reapplication is required: The proposed rule required that, if written application materials are required for renewal, the SBC must be provided no later than the date on which the materials are distributed. This requirement has been retained without change in the Final Rule.
  • Automatic Renewal: The Final Rule requires that, in general, if renewal or reissuance of coverage does not require reapplication, the SBC must be provided no later than 30 days prior to the first day of the new plan or policy year. With respect to insured coverage, the Final Rule provides flexibility with the 30 day rule when the terms of coverage are finalized in fewer than 30 days in advance of the new policy year (e.g., negotiation of coverage terms).

SBC provided by Plan and/or Issuer to Participants and Beneficiaries

The Final Rule requires the issuer (for insured membership) and the group health plan to provide an SBC to participants and beneficiaries as part of written application materials or no later than the first date on which the participant is eligible to enroll if an application is not required. If there is any change to the information required to be in the SBC before the first day of coverage, an updated SBC must be provided no later than the first day of coverage. The SBC must be provided upon renewal and upon request, as described above. The Final Rule provides that "special enrollees" under HIPAA must be provided the SBC no later than when a summary plan description is required to be provided under the timeframe set by ERISA, which is 90 days from enrollment.

The Final Rule retains the requirement that the SBC be provided to both participants and beneficiaries, however it retains an anti-duplication rule under which a single SBC may be provided to a family unless any beneficiaries are known to reside at a different address.

SBC Content

The Agencies consulted with the National Association of Insurance Commissioners (NAIC) to develop standards for providing SBCs. The Final Rule outlines the required content elements for the SBC. These requirements include:

  • A description of the coverage (including the cost-sharing, for each category of benefits identified by the Departments;
  • The exceptions, reductions, or limitations on coverage;
  • The cost-sharing provisions of the coverage, including deductible, coinsurance, and copayment obligations;
  • The renewability and continuation of coverage provisions;
  • A coverage facts label or coverage examples (common benefits scenarios for having a baby (normal delivery) or managing Type 2 diabetes (routine maintenance, well-controlled);
  • A statement that the SBC is only a summary and that the plan document, policy or certificate of insurance should be consulted to determine the governing contractual provisions of the coverage;
  • A contact number to call with questions and an Internet web address where a copy of the actual individual coverage policy or group certificate of coverage can be reviewed and obtained;
  • An Internet address (or other contact information) for obtaining a list of the network providers, an Internet address where an individual may find more information about the prescription drug coverage under the plan or coverage, and an Internet address where an individual may review the Uniform Glossary, and a disclosure that paper copies of the Uniform Glossary are available; and
  • A uniform format, four double-sided pages in length, and 12-point font.

Notice of Modification

The Act directs that a group health plan or insurance issuers (group or individual) provide notice of a material modification of coverage (as defined under ERISA section 102), at least 60 days in advance, if any of the changes in coverage are not reflected in the most recently provided SBC. The notice must be provided to enrollees (or, in the individual market, policyholders) 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 or reissuance of coverage.

The Final Rule does not change the proposed rule's 60 day notice provision. This provision requires that plans and issuers provide at least 60 days advance notice of any material modification that would change the content of the SBC. This applies to mid-year changes only and does not affect changes made in connection with a renewal or reissuance. The notice of modification may consist of a new SBC or a specific notice detailing the change.

For More Information

Reform Guide SBC

Frequently Asked Questions

What is a Summary of Benefits and Coverage (SBC) document?

The Summary of Benefits and Coverage document is intended to provide consumers with a concise document explaining, in plain language, simple and consistent information about health plan benefits and coverage. It will summarize the key features of the plan, such as the covered benefits, cost-sharing provisions, and coverage limitations and exceptions.

What is the purpose of the new Summary of Benefits and Coverage document and the Uniform Glossary of terms?

These two documents are designed to provide health plan information in a uniform format to allow consumers to compare the terms of plans offered by issuers and to assist consumers in understanding the benefits provided.

How was the template Summary of Benefits and Coverage document and glossary developed?

The summary document and glossary were developed through a public process led by the National Association of Insurance Commissioners (NAIC) and a working group composed of stakeholders. These stakeholders included representatives of health insurance-related consumer advocacy organizations, health insurers, health care professionals, patient advocates including those representing individuals with limited English proficiency, and other qualified individuals.

Are the materials described in the guidance document provided by the Departments for first year applicability only?

Yes, the Departments intend to issue updated materials for later years as additional healthcare insurance reforms take effect beginning Jan. 1, 2014, which are expected to prompt additional changes to the SBC. The guidance document issued on Feb. 9, 2012 is prepared for SBCs that must be prepared and delivered beginning Sept. 23, 2012 and will remain in effect until later updates are issued.

What are the new effective dates to provide an SBC, notice of material modification, and Uniform Glossary under the final regulations of PHS section 2715?

The final regulations are effective:

  • For disclosures to members of group health plans – For delivery to members of group plans with open enrollment periods, effective the first day of the first open enrollment period beginning on or after Sept. 23, 2012; for delivery to members that enroll other than through an open enrollment period (including special enrollees), effective the first day of the first plan year on or after Sept. 23, 2012.
  • For disclosures by issuers to group health plans – Effective on or after Sept. 23, 2012.
  • For disclosures in the individual market – Effective on Sept. 23, 2012.
Is the SBC required for both grandfathered and non-grandfathered plans?

Yes, the SBC is required for both grandfathered and non-grandfathered plans in the insured and self-funded market, as well as the individual market.

What are the standards required by the Act for the SBC?

The Act requires development of the SBC in accordance with the following standards:

  • A description of the coverage (including the cost-sharing, for each category of benefits identified by the Departments
  • The exceptions, reductions, or limitations on coverage
  • The cost-sharing provisions of the coverage, including deductible, coinsurance, and copayment obligations
  • The renewability and continuation of coverage provisions
  • A coverage facts label or coverage examples (common benefits scenarios for having a baby (normal delivery) or managing Type 2 diabetes (routine maintenance, well-controlled)
  • A statement that the SBC is only a summary and that the plan document, policy or certificate of insurance should be consulted to determine the governing contractual provisions of the coverage
  • A contact number to call with questions and an Internet web address where a copy of the actual individual coverage policy or group certificate of coverage can be reviewed and obtained
  • An Internet address (or other contact information) for obtaining a list of the network providers, an Internet address where an individual may find more information about the prescription drug coverage under the plan or coverage, and an Internet address where an individual may review the Uniform Glossary, and a disclosure that paper copies of the Uniform Glossary are available
  • A uniform format, four double-sided pages in length, and 12-point font
Will premium or cost of coverage information be required to be included in the SBC?

No, the final regulations do not require the SBC to include premium or cost of coverage information. The Departments anticipate that premium information for qualified health plans will be made widely available through Exchanges for coverage effective beginning in 2014.

Does the minimum essential coverage statement need to be included in the SBC?

The final regulations require the minimum essential coverage and minimum value statements to be included in SBC with respect to coverage beginning on or after Jan. 1, 2014. Future guidance will address the minimum essential coverage and minimum value statements.

The SBC will contain a "coverage facts label," now called a "coverage example;" how will this help consumers?

The final regulations require inclusion of coverage examples, which illustrate benefits provided under the plan or coverage for common benefits scenarios – having a baby (normal delivery) and managing Type 2 diabetes (routine maintenance of a well-controlled condition). The examples are designed to help consumers understand and compare their share of the costs of care under a particular plan.

What happens if a plan or issuer cannot describe the plan terms using the SBC template?

The Final Rule includes a "Best Efforts" provision, if a plan's terms that are required to be in the SBC template "cannot reasonably be described in a manner consistent with the template and instructions," the plan or issuer must accurately describe the relevant plan terms while using its "best efforts" to maintain the integrity of the uniform template.

What are the methods of issuance of the SBC for group and individual plans?
  • For group plans: SBCs provided in connection with group health plan coverage may be provided either as a stand-alone document or in combination with other summary materials (e.g., an SPD), if the SBC information is intact and prominently displayed at the beginning of the materials, and in accordance with the timing requirements for providing an SBC.
  • For individual plans: For health insurance coverage offered in the individual market, the SBC must be provided as a stand-alone document, but may be included in the same mailing as other plan materials.
Who is responsible to prepare and deliver the SBC?

The Act and Final Rule place the responsibility to provide an SBC on:

  • For delivery to an insured group health plan: The issuer.
  • For delivery to members of insured group plans: The health insurance issuer and the group health plan including the plan administrator as defined by ERISA.
  • For delivery to members of self-insured plans: The group health plan or designated administrator of the plan as that term is defined under ERISA. The Final Rule does not include an exemption for large or self-insured plans.
The final regulations include an anti-duplication rule, how does this rule affect delivery of the SBC?

The final regulations include an anti-duplication rule under which a single SBC may be provided to a family unless any beneficiaries are known to reside at a different address. In that case, an SBC must be sent to the last known address of that beneficiary.

When must the SBC be delivered?
  • SBC provided by Issuer to a Plan: The Final Rule requires a health insurance issuer to provide an SBC to an insured group health plan upon an application by the plan for coverage, as soon as practicable following receipt of the application, but in no event later than seven business days following receipt of the application. If there is any change to the information required to be in the SBC before the first day of coverage, the issuer must update and provide a current SBC to the plan no later than the first day of coverage. The SBC must be provided upon request, as soon as practicable, but in no event later than seven business days. The SBC must be provided upon renewal as follows:
    • Renewal when a reapplication is required: The proposed rule required that, if written application materials are required for renewal, the SBC must be provided no later than the date on which the materials are distributed. This requirement has been retained without change in the Final Rule.
    • Automatic Renewal: The Final Rule requires that, in general, if renewal or reissuance of coverage does not require reapplication, the SBC must be provided no later than 30 days prior to the first day of the new plan or policy year. With respect to insured coverage, the Final Rule provides flexibility with the 30 day rule when the terms of coverage are finalized in fewer than 30 days in advance of the new policy year (e.g., negotiation of coverage terms).
  • SBC provided by Plan and/or Issuer to Participants and Beneficiaries: The Final Rule requires the issuer (for insured membership) and the group health plan to provide an SBC to participants and beneficiaries as part of written application materials or no later than the first date on which the participant is eligible to enroll if an application is not required. If there is any change to the information required to be in the SBC before the first day of coverage, an updated SBC must be provided no later than the first day of coverage. The SBC must be provided upon renewal and upon request, as described above. The Final Rule provides that "special enrollees" under HIPAA must be provided the SBC no later than when a summary plan description is required to be provided under the timeframe set by ERISA, which is 90 days from enrollment.

    The Final Rule retains the requirement that the SBC be provided to both participants and beneficiaries, however it retains an anti-duplication rule under which a single SBC may be provided to a family unless any beneficiaries are known to reside at a different address.
Do the final regulations allow for electronic transmission of the SBC to participants and beneficiaries?

Yes, if the following standards are met.

Group Market: The Final Rule makes a distinction between a participant or beneficiary who is already covered under the group health plan, and a participant or beneficiary who is eligible for coverage but not enrolled in a group health plan.

  • For participants and beneficiaries who are already covered under the group health plan, the Final Rule permits distribution of the SBC electronically if the requirements of the Department of Labor's regulations are met.
  • For participants and beneficiaries who are eligible for but not enrolled in coverage, the Final Rule permits the SBC to be provided electronically if the format is readily accessible and a paper copy is provided free of charge upon request. Additionally, if the electronic form is an Internet posting, the plan or issuer must timely advise the individual in paper form (such as a postcard), or email, that the documents are available on the Internet, provide the Internet address, and notify the individual that the documents are available in paper form upon request.

Individual Market: The Final Rule substantially retains the safeguards for electronic disclosure in the proposed regulations. Under the Final Rule, an issuer providing the SBC electronically must ensure that:

  • Format is readily accessible.
  • SBC is placed in a location that is prominent and readily accessible.
  • SBC is provided in an electronic form that is consistent with the appearance, content, and language requirements of the Final Rule.
  • The issuer notifies the individual or dependent that the SBC is available in paper form without charge upon request.

The Final Rule removes the "acknowledge receipt" requirement.

Transmission by Issuer to Plan Sponsor: The SBC may be provided in paper form or electronically (such as email transmittal or an Internet posting on the issuer's website).

Will the SBC be required to be provided with respect to all group health plans, including certain account-type arrangements such as health flexible spending arrangements (health FSAs), health reimbursement arrangements (HRAs), and health savings accounts (HSAs)?

An SBC need not be provided for plans, policies, or benefit packages that constitute excepted benefits. Therefore, and SBC need not be provided for stand-alone dental or vision plans or health FSAs if they constitute excepted benefits under the Departments' regulations.

For FSA: If benefits under a health FSA do not constitute excepted benefits, the health FSA is a group health plan generally subject to the SBC requirements.

For HRA: An HRA is a group health plan. Benefits under an HRA generally do not constitute excepted benefits, and thus HRAs are generally subject to the SBC requirements.

For HSA: An HSA is generally not a group health plan and thus generally are not subject to the SBC requirements. An SBC prepared for a high deductible health plan (HDHP) associated with an HSA is a group health plan and requires an SBC. The SBC for the HDHP can include information on employer contributions to HSAs.

Are there standards to provide the SBC in a culturally and linguistically appropriate (CLA) manner under the Act?

The Final Rule retains the approach of the proposed regulations and provides that, to satisfy the requirement to provide the SBC in a culturally and linguistically appropriate manner, a plan or issuer follows the rules for providing notices with respect to claims and appeals. Under those rules, plans and issuers must provide notices in a culturally and linguistically appropriate manner when 10 percent or more of the population residing in the claimant's county are literate only in the same non-English language, as determined based on American Community Survey data published by the U.S. Census Bureau.

Will written translation of the SBC template, sample language, and uniform glossary be available?

To help plans and issuers meet the language requirements of the final regulations, HHS will provide written translation (or here) of the SBC template, sample language, and uniform glossary in Spanish, Tagalog, Chinese and Navajo. HHS may also make these materials available in other languages to facilitate voluntary distribution of SBCs to other individuals with limited English proficiency.

What are the requirements to provide an SBC to expatriate plans?

The final regulations include a special provision that provides that, in lieu of summarizing coverage for items and services provided outside the U.S., a plan or issuer may provide an Internet address (or similar contact information) for obtaining information about benefits and coverage provided outside the U.S. Also, to the extent the plan or policy provides coverage available within the U.S., the plan or issuer is still required to provide an SBC.

What is the penalty for failure to provide the SBC?

A group health plan (including its administrator), and a health insurance issuer offering group or individual health insurance coverage, that willfully fails to provide required information will be subject to a fine of not more than $1,000 for each such failure. Each failure to deliver the SBC to an individual constitutes a separate offense under the Act.

What is the Uniform Glossary?

The Uniform Glossary includes many commonly used definitions of health coverage and medical terminology, but isn't a full list. These glossary terms and definitions are intended to be educational and may be different from the terms and definitions for a plan. Some of these terms also might not have exactly the same meaning when used in a policy or plan, and in any such case, the policy or plan governs. The glossary may not be modified by plans or issuers and is to be provided in connection with the SBC.

What tools can consumers use to understand health insurance terminology used on the SBC and in the health insurance industry?

Insurance companies and group health plans are required to make available upon request the Uniform Glossary of terms commonly used in health insurance coverage such as "deductible" and "copay".

What standard definitions are provided in the Uniform Glossary?

Examples of insurance-related terms to be defined are: co-insurance, co-payment, deductible, excluded services, grievance, appeal, non-preferred provider, out-of-network co-payment, out-of-pocket limit, preferred provider, premium, and UCR (usual, customary and reasonable) fees. Examples of medical terms to be defined are: durable medical equipment, emergency medical transportation, emergency room care, home health care, hospice services, hospital outpatient care, hospitalization, physician services, prescription drug coverage, rehabilitation services, and skilled nursing care.

What is a Material Modification?

The Act directs that a group health plan or insurance issuers (group or individual) provide notice of a material modification of coverage (as defined under ERISA section 102), at least 60 days in advance, if any of the changes in coverage are not reflected in the most recently provided SBC. This includes both increases in benefits as well as benefit reductions. The Final Rule gives examples of benefit increases: coverage of previously excluded benefits or reduced cost-sharing. A material modification could also be a material reduction in covered services or benefits as described in the existing Department of Labor guidance at 29 CFR 2520.104b-3(d)(3) and include increases in premium, increase in out-of-pocket amounts, adverse change in an HMO service area and any new, more stringent requirements for receipt of benefits (such as new pre-certification requirements).

When does a plan or issuer have to provide a 60-Day Advance Material Modification Notice to plan members?

The Final Rule requires that the 60-day advance notice be provided only for changes other than in connection with a renewal or reissuance of coverage. This means that the 60-day advance notice requirement for material modifications applies mainly to off-anniversary and mid-year changes that meet the definition of a material modification of the SBC.

What type of notice does the plan have to provide for 60-Day Advance Notice?

The Final Rule allows flexibility for plans and issuers to either provide an updated SBC reflecting the modifications or provide a separate notice describing the material modifications.

Would a retroactive change be subject to the 60-day Advance Notification?

The 60-day advance notification requirement will have an impact on retroactive plan changes. If a plan sponsor decides to make a retroactive change and the plan members have an SBC in hand that does not include the change, the plan sponsor will have to determine whether the change is a "material modification" of a provision that is included in the SBC. If that is the case, the plan sponsor must have the change made prospectively so that the proper notice may be provided to members (in the form of a new SBC or a notice describing the change).

Must the header and footer be repeated on every page of the SBC?

No. If a plan or issuer chooses, it may include the header only on the first page of the SBC. In addition, a plan or issuer may include the footer only on the first and last page of the SBC, instead of on every page.

How long can plans and issuers use the calculator developed by the Departments as a safe harbor?

The Departments developed a calculator for plans and issuers to use as a safe harbor for the first year of applicability to complete the coverage examples in a streamlined fashion. This tool is intended to provide plans and issuers with time to develop accurate methods to populate the coverage examples treatment tables in the SBC template. Plans and issuers will be required to provide comprehensive coverage examples that are based on the coverage information specific to the benefit package no later than Jan. 1, 2014.

The deductible amount is $250, but the Coverage Example is showing $300, why is there a difference?

The calculator instructions provided by the Department of Health and Human Services (HHS) indicate that any dollar amount over $100 is rounded to the nearest hundredth and any amount under $100 to the nearest tenth.

Other than the FAQs, are there any updates to the SBC template and related documents on the Departments' websites that I need to know about?

Yes. In the diabetes treatment scenario, the version originally posted contained a typographical error, listing the allowed amount for insulin as $11.92, rather than $119.20 – a difference that impacts the total cost of care for diabetes in the coverage example calculations.

To correct this error, the Departments have posted updated versions of the SBC template, the sample completed SBC, and the guide for coverage examples calculations – diabetes scenario. The updated SBC template and sample completed SBC also include sample taglines for obtaining translated documents, to be included if appropriate consistent with paragraph (a)(5) of the regulations, as well as updated Sample Care Costs amounts for the diabetes coverage example, due to more accurate rounding in making these calculations. Finally, the updated versions include some appearance modifications (such as changes in bolding, underlining, shading, capitalization, margin justification, use of hyphens, and row and column sizing) to ensure the document is accessible to individuals with disabilities, consistent with section 508 of the Rehabilitation Act. Plans and issuers may use either version, or may make similar modifications to their own SBCs, without violating the appearance requirements for an SBC.

The updated versions of these documents are labeled "corrected on May 11, 2012" in the lower right corner of the first page. These three documents replace the prior versions issued contemporaneously with the final regulations in February 2012.

Under what circumstances can penalties be imposed for failure to provide the SBC or the uniform glossary?

PHS Act section 2715(f) states that an entity is subject to a fine if the entity "willfully fails to provide the information required under this section."

As stated in previous FAQs, the Departments' basic approach to ACA implementation is: "[to work] together with employers, issuers, States, providers and other stakeholders to help them come into compliance with the new law and [to work] with families and individuals to help them understand the new law and benefit from it, as intended. Compliance assistance is a high priority for the Departments. Our approach to implementation is and will continue to be marked by an emphasis on assisting (rather than imposing penalties on) plans, issuers and others that are working diligently and in good faith to understand and come into compliance with the new law." Accordingly, consistent with this guidance, during this first year of applicability, the Departments will not impose penalties on plans and issuers that are working diligently and in good faith to comply.

Are all insured plans obligated to include the Actuarial Value of the plan on the SBC in compliance with the Minimum Value provision of Pay or Play?

No. There is no requirement at this time to include Actuarial Value on the SBC. While the statute requires that there be a statement regarding whether the plan meets MINIMUM ESSENTIAL COVERAGE requirements, the final regulations indicate that this information was not required until 2014, when additional health care reform requirements go into effect. The government agencies will provide a revised template for 2014 plans in the near future, which may include the minimum essential coverage language or other required changes. However, at this time, we do not have the exact requirements.