Executive Summary: The Departments of Labor (DOL), Health and Human Services (HHS), and the Treasury recently issued an additional guidance providing answers to frequently asked questions (FAQs) regarding the implementation of the summary and benefits coverage provisions of the Patient Protection and Affordable Care Act (PPACA)[1]. This guidance, entitled "FAQs about Affordable Care Act Implementation Part IX," is available at: http://www.dol.gov/ebsa/faqs/faq-aca9.html.
The SBC requirements become effective for participants who enroll or re-enroll during open enrollment as of the first day of the first annual enrollment period that begins on or after September 23, 2012. For participants or beneficiaries who enroll in the plan outside of open enrollment (for example, newly eligible employees or special enrollees), the effective date is the first day of the first plan year that begins on or after September 23, 2012.
Some of the significant issues addressed in the FAQs include:
Safe Harbor for Electronic SBCs
Previously, the departments discussed a safe harbor for providing the SBC to participants or beneficiaries covered under the plan who are able to effectively access documents provided in electronic form at the worksite. The new FAQs state that SBCs may be provided electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan. Additionally, an SBC may be provided electronically to participants and beneficiaries who request an SBC online. In either case, the individual must have the option to receive a paper copy upon request.[2]
Clarification of when SBCs must be Provided
The regulations require health insurance issuers to provide an SBC upon application for coverage. The FAQs clarify that an SBC must be provided as soon as practicable but no later than seven business days of the receipt of a substantially complete application for a health insurance product.
The FAQs also state that if an individual, plan or plan sponsor is negotiating coverage after an application has been filed and the information contained in the SBC changes, a new SBC is not required to be provided until the first day of coverage (unless a new SBC is requested).
Additionally, if an SBC is provided prior to receipt of an application for coverage, the health insurance issuer is not required to provide a duplicate SBC upon receipt of an application. If there have been changes in the information required to be included in the SBC, a new SBC must be provided as soon as practicable following the receipt of the application, but no later than seven business days of receipt of the application. The FAQs also clarify that if an SBC is provided upon application, the health insurance issuer is not required to provide another SBC on the first day of coverage, unless there has been a change in the information required to be included in the SBC.
Comparison of Benefit Package Options
The FAQs state that issuers and plans may display SBCs or parts of SBCs in a way that facilitates comparison of different benefits package options. However, such documents do not fulfill the requirement to provide an SBC. Full SBCs for all benefit packages included in the comparison documents must be made available.
Penalties for Failure to Provide SBCs or a Uniform Glossary
According to the FAQs, the departments are focusing on assisting (rather than penalizing) plans, issuers and others who are working diligently and in good faith to understand and come into compliance with the new law. Accordingly, the departments will not impose penalties on plans and issuers that are working diligently and in good faith to comply.
The FAQs also state that the departments will not take any enforcement action against a plan or issuer for failing to provide an SBC before September 23, 2013 with respect to an insured product that is no longer being actively marketed for business, provided the SBC is provided no later than September 23, 2013 (at which time, enrollees and small employers will have new opportunities to compare coverage options available through an Exchange).
The Bottom Line:
We expect to see more guidance from the departments regarding the SBC requirement. If you have any questions regarding this issue or other employee benefits related issues, please contact Tiffany Downs, tdowns@fordharrison.com, any member of Ford & Harrison's Employee Benefits practice group, or the Ford & Harrison attorney with whom you usually work.
[2] In addition, for individual market issuers that offer online enrollment or renewal, the SBC may be provided electronically, at all issuances, to consumers who enroll or renew online, consistent with the regulations.