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March 21, 2012

HRB 47 - 1) Summary of Benefits and Coverage; 2) Women’s Preventive Services Update

Released March 21, 2012 I Download as a PDF

March 21, 2012 -- 

Summary of Benefits and Coverage: Clarifying FAQs Issued

About a month ago, final regulations were issued relating to the summary of benefits and coverage (see CBIZ Health Reform Bulletin, Final Rules: Summary of Benefits and Coverage, 2/10/12).  In an on-going effort to assist in compliance with the health care reform law, the governing agencies (Departments of Health and Human Services, Labor and Treasury) issued 24 Frequently Asked Questions relating to implementation of the Summary of Benefits and Coverage (“SBC”).  The agencies have promised to issue more guidance as it becomes appropriate. 

A bit disappointing to many is that the effective date of issuance of the SBCs remains the same. Plans must begin issuing an SBC for the first open enrollment period occurring on or after September 23, 2012.  For calendar year plans, this would be the open enrollment period occurring in late 2012 for 2013 calendar year.   If a plan does not have an open enrollment period, the SBC would be required for special enrollment events occurring on or after the first day of the first plan year after September 23, 2012.

But, the good news is that the governing agencies have indicated their primary motive is to assist and facilitate compliance, rather than impose penalties.  Therefore, a good faith effort to comply with the rules should be the theme of the day.

Below are highlights of some of these FAQs:

Number of SBCs.  FAQs 3 and 4 address the issue of whether a single SBC can be used to describe different tiers of coverage, such as single or family coverage, as well as variable cost-sharing requirements, such as deductibles, co-payments and co-insurance levels.  As long as the tiers of coverage and cost share requirements are presented in an understandable option type format, then only one SBC needs to be prepared.

Further, if a health plan offers component plans such as a medical flexible spending account (FSA), a health savings account (HSA), a health reimbursement account (HRA) or a wellness program, a summary of these component plans can be described in a single SBC (see FAQ #6).

Providing the SBC to COBRA Continuees

Group health plan coverage offered to qualified COBRA continuees cannot differ in any way from the benefits offered to similarly situated active participants under the plan.  This means that the qualified beneficiary must be notified about plan changes just as active participants are so notified.  Open enrollment opportunities available to a non-COBRA participant must likewise be available to a COBRA continuee.  FAQ 8 clarifies that an SBC must be provided to a COBRA continuee upon the occurrence of certain events, such as when the individual participates in a region-specific HMO and moves out of the HMO’s service area.

Timeframe for Providing SBCs

FAQ 9 reiterates the 5 timeframes set forth in the regulations in which SBCs must be provided:

  1. Upon application.  The SBC must be provided together with any written enrollment materials distributed to participants, such as forms or requests for information distributed in paper, through a website, or by e-mail.  If written enrollment materials are not distributed by either paper or electronically, then the SBC must be distributed no later than the first date on which the participant is eligible to enroll in coverage.
  2. By the first day of coverage if there are any changes made to the information contained in the SBC provided upon application.
  3. SBCs must be provided to special enrollees within 90 days from enrollment.
  4. Upon contract renewal. An SBC must be provided at the same time open enrollment information is distributed to participants when the plan requires active election for coverage, or when other coverage options are available.  If the contract automatically renews without an opportunity to elect other coverage options, then the SBC must be provided within 30 days prior to the beginning of the first day of the new plan year.
  5. Upon request.  The SBC must be provided upon the participant’s request as soon as practicable but no later than 7 business days following receipt of the request.

Electronic Distribution of the SBC

FAQ 10 describes how an SBC can be provided electronically. There are three requirements that must be met in order to provide an SBC electronically to participants and beneficiaries who are eligible for coverage but not enrolled:

  1. The SBC must be  prepared in a readily accessible format, such as html, MS Word, or pdf format;
  2. A paper version of the SBC is available free of charge upon the individual’s request; and
  3. The plan sponsor timely notifies participants and beneficiaries about the availability of the SBC on its web portal, and provides the internet address to the SBC.  This disclosure can be accomplished by an e-card or postcard furnished by e-mail.  The FAQ 12 provides model language that can be used in an e-card or postcard to notify individuals about the SBC:

Model Language: Availability of Summary Health Information

As an employee, the health benefits available to you represent a significant component of your compensation package. They also provide important protection for you and your family in the case of illness or injury.

Your plan offers a series of health coverage options. Choosing a health coverage option is an important decision. To help you make an informed choice, your plan makes available a Summary of Benefits and Coverage (SBC), which summarizes important information about any health coverage option in a standard format, to help you compare across options.

The SBC is available on the web at: www.website.com/SBC. A paper copy is also available, free of charge, by calling 1-XXX-XXX-XXXX (a toll-free number).

For plans subject to ERISA, the DOL rules relating to electronic disclosure of an SBC must be followed, as described below:

Electronic methods can be used for disclosure not only to participants, but to beneficiaries as well, as long as the affected individual has ready access to a system (a computer).  A plan administrator must ensure receipt of the document.  Suggestions include use of return-receipt or notice of undelivered mail features, or conducting periodic reviews or surveys to confirm receipt of transmitted information.

For electronic disclosure to individuals outside the workplace, certain conditions must be met.  The individual must:

  1. Consent, in writing, to the electronic disclosure.  The consent must identify the type(s) of document to which it applies.  The consent must occur after the individual has been given information about the electronic disclosure.  Individuals have the right to withdraw his/her consent at any time, without charge.
  2. Provide his/her e-mail address to receive the electronic disclosure, if applicable.
  3. Be given applicable hardware and software requirements necessary to access the electronic disclosure.  If any of these parameters change, an updated notice must be provided to the affected individual, and a new consent must be obtained. 

All electronic disclosures must provide a clear statement that a paper copy of the document can be requested. 

Confidentiality.  If a document includes any personal information, appropriate safeguards must be in place to ensure the confidentiality of the information.  Use of a password or an individual identifier, as well as encrypting personal information, would be reasonable methods that could be used to ensure confidentiality.

Use of Specific Language (FAQs 13 and 14)

The final regulations require SBCs to be provided to individuals in a culturally and linguistically appropriate manner, similar to the language requirements applicable to the ACA’s claim and appeal rules.  An SBC sent to an address in a county where 10% or more of its population are literate in a non-English language must meet 3 criteria:

  1. Oral language services in the non-English language must be available;
  2. Notices provided upon request must be in the non-English language; and
  3. In any English versions of notice required to be provided, a plan must also include a statement, in non-English, that its notices can be obtained in the non-English language.

The HHS’ Center for Consumer Information and Insurance Oversight maintains a list of counties in which language translations would be appropriate.  It also provides written translation of the model SBC language in Spanish, Chinese, Tagalog and Navajo languages.


FAQ 15 make it clear that an SBC cannot simply reference a summary plan description (SPD).  In a nutshell, the requirements of an SBC and the requirements of an SPD for plans subject to ERISA must be satisfied.  The regulations do provide that the SBC can be provided as part of an SPD; but one cannot be used in lieu of the other.

Format Changes to the Model SBC

FAQs 17-19 address format changes made to the model SBC.  Certain minor changes to headers and footers, as well as changes to the table or page set-up, are permissible.

Administration Seeks Comments on Women’s Health Preventive Services

On March 21, 2012, the Departments of HHS, Labor and Treasury issued an advanced notice of proposed rulemaking relating to women’s preventive services.  The Agencies are requesting comments on how best to design a program that will ensure women have access to the full scope of preventive care services, including contraceptive coverage, without requiring nonprofit organizations with a religious opposition to contraceptive coverage from having to provide or pay for such services.  Included in the request for comments is how to facilitate this for self-funded plans.  Comments from the public will be accepted through June 19, 2012.

Background CBIZ Health Reform Bulletins about Women’s Health Services:



About the Author:  Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc.  She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law.  Ms. McLeese is based in the CBIZ Leawood, Kansas office.


The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation.

The information contained herein is not intended to replace or substitute for accounting or other professional advice. Attorneys or tax advisors must be consulted for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.

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