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Updated SBC Guidance

On April 13, 2012, we sent you memoranda on Form W-2 Reporting and the Summary of Benefits and Coverage (SBC) requirements.  Since that time, the government has issued new guidance in the form of Frequently Asked Questions (FAQs) on SBCs.  […]


On April 13, 2012, we sent you memoranda on Form W-2 Reporting and the Summary of Benefits and Coverage (SBC) requirements.  Since that time, the government has issued new guidance in the form of Frequently Asked Questions (FAQs) on SBCs.  Please see below of summary of that guidance, as well as an updated SBC memorandum.  Also, if you did not receive our summary of the United States Supreme Court ruling upholding Health Care Reform (explaining upcoming obligations under that law) and would like that information, please advise.

The SBC memorandum has been updated to include additional guidance contained in recently issued FAQs issued by the Departments.  Notably, the FAQs addressed the following issues:

1) Distribution Methods (Paper / Electronic):  An SBC provided by a group health plan or health insurance issuer to a participant or beneficiary may be provided in paper form.  Alternatively, the SBC may be provided electronically under the following circumstances:

With respect to participants and beneficiaries covered under the plan, the SBC may be provided electronically if the ERISA requirements related to electronic disclosure are met.

With respect to participants and beneficiaries who are eligible but not enrolled for coverage, the SBC may be provided electronically if (a) the format is readily accessible; (b) the SBC is provided in paper form free of charge upon request; and (c) in a case in which the electronic form is an internet posting, the plan or issuer timely notifies the individual in paper form (such as a postcard) or email that the documents are available on the internet, provides the internet address, and notifies the individual that the documents are available in paper form upon request.

To participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan, if the individual has the option to receive a paper copy upon request.

To participants and beneficiaries who request an SBC online, if the individual has the option to receive a paper copy upon request.

2) An updated version of the SBC template became available on May 11, 2012.

3) With respect to insurance products that are no longer being offered for purchase, the Departments have indicated that they will not take any enforcement action against a plan or issuer for failing to provide an SBC before September 23, 2013, provided that the SBC is provided no later than September 23, 2013.

4) If an individual (or plan or its sponsor) receives an SBC prior to application for coverage, the plan or issuer need not provide another SBC upon application if the information required to be in the SBC has not changed (unless requested by the applicant).  However, if by the time the application is filed, there has been a change in the information required to be in the SBC, then the plan or issuer must update and provide a current SBC to the individual (or plan and its sponsor) as soon as practicable following receipt of the application, but in no event later than seven business days following receipt of the application.  If an SBC is provided upon application, there is no requirement to provide the SBC again of the first day of coverage, unless there is a change to the information that is required to be in the SBC or an SBC is requested by the application.

5) A plan administrator that uses two or more insurance products provided by separate issuers with respect to a single group health plan may synthesize the information into a single SBC, or may contract with one of its issuers to perform that function.  During the first year of applicability, for enforcement purposes, with respect to a group health plan that uses two or more issuers, the Departments have indicated that they will consider the provision of multiple partial SBCs that, together, provide all of the relevant information to meet the SBC content requirements.  In such cases, the plan administrator needs to take steps (such as a cover letter or a notation on the SBCs themselves) to indicate that the plan provides coverage using multiple different insurers and that individuals who would like assistance understanding how these products work together may contact the plan administrator for more information (and provide the contact information).

If you would like further information regarding the above matters, health care reform, or employee benefits in general, please feel free to contact our office. You can reach attorney Elizabeth Latchana at elatc@fraserlawfirm.com or 517-377-0826.