Summary of Benefits and Coverage

In addition to the multitude of notice obligations already imposed on sponsors of employee benefit plans, health care reform imposes a new notice requirement—a Summary of Benefits and Coverage ("SBC").   Pursuant to the Patient Protection and Affordable Care Act ("PPACA" or "health care reform"), effective March 23, 2012, plan administrators and insurers are required to distribute a SBC to participants and their dependents.  On August 22, 2011, proposed regulations were issued by the Departments of Health and Human Services, Labor and Treasury ("Departments") providing details on the contents of the SBC, the format and the requirements for distribution.

Because the proposed regulations were issued five months late (the PPACA required them to be issued by March 23, 2011), the Departments have now informally stated that the SBC requirements will not become effective until after final regulations are issued.  On November 17, 2011, the Departments issued another set of Frequently Asked Questions providing for a grace period and an "anticipation" that once the final regulations are issued plans and insurers will have sufficient time to comply with the notice requirements. 

Although this reprieve for employers and issuers is good news, employers would be well-served to start planning for the SBC distribution during this enrollment period.   Under the proposed regulations, for fully insured plans, both the insurer and plan administrator are responsible to provide the SBC, but only one party needs to provide it.  Thus, employers should decide now which party will be providing the SBC, when and how it will be distributed. 

For self-funded plans, employers will likely need to contract with the TPA for preparation of the SBC.  Again, this is something that employers should consider now given that the SBC requirement could become effective during the next coverage period.

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