Open enrollment is the time of the year that fill employers and employees alike with dread. No matter how prepared employers are, every time they have some new laws and amendments to look into. Although, many employers started understanding the ACA requisites and came into practice of practicing the law perfectly and formulate strategies to handle open enrollment seamlessly. But, this year again brings in some pain for employers.

The new challenge – restructured Summary of Benefits and Coverage (SBC) Template. As per the final rule of PPACA, health insurers and group health plan providers are required to provide the summary of benefits and coverage to consumers. Since the time the document was made mandatory to be presented by the employer, the template has gone under its first modification this year.

SBC is the Responsibility of:

For fully insured plans, it is the insurer’s responsibility to provide SBC to the plan administrator (usually employer) but for self-funded plans, the whole SBC responsibility rests with the plan administrator.

SBC Updates at a Glance:

The new finalized SBC guidance was issued by DOL and IRS in April, 2016 incorporating certain language and formatting modifications along with some “add-ons” to uniform glossary.

Here are listed most significant variations done in SBC with which employers need to remain compliant:

“Embedded” or “Non-Embedded” Deductibles

According to revised SBC guidelines, it is mandatory to disclose whether the deductibles and out-of-pocket maximums for family coverage plans are “embedded” or “non-embedded”. If embedded, family members can meet individual deductibles or out-of-pocket maximums before the full family requirement is met. And if non-embedded, full family deductible or out-of-pocket maximums must be met before any family member gets benefits.

“Limitation & Exceptions” Revised to “Limitations, Exceptions & Other Important Information”

“Limitations & Exceptions” now include:

ü  Prior authorization for a service

ü  Certain limits on the number of visits and dollar amount payable

ü  Removal of service category or substantial part of a category from coverage

ü  Cost-sharing for covered in-network services is not included in out-of-pocket limits.

Disclose Whether a Tiered Network or Not

Revised instructions require the plans and insurers to disclose most and least expensive provider tiers. Consumers may receive services from out-of-network providers even in in-network facilities but employers need to make sure that all services are covered in order to avoid any additional balance bill for services performed by an out-of-network provider.  

SPD Cross-References:

Several new disclosure modifications might have pushed SBC to exceed more than eight pages. In this scenario, additional vital information can be referenced to a specific page or section of plan document known as summary plan description.

Failure to Meet SBC Guidelines Can Be Costly for Employers:

It is employer’s responsibility to submit required SBC for employees. Missing any “good-faith” effort to present employees with the mandated documents can trigger unexpected penalties which is- $1087 per failure for employers. Providing non-discrimination notice to the employees along with the SBC helps employers escape from further potential penalties.

Putting It All Together:

Ever-changing rules and regulations have surrounded employers with two options “pay or play”. At the bottom line of compliance, SBC is another component that employers need to consider. The article describes some variations that SBC has undergone for the time after it came into effect in the year 2012, which employers should not miss in order to avoid any rack up in substantial penalties.