Health care reform is still alive and kicking. Employer-sponsored health plans have implemented many of its thorny provisions, but one provision now looks like the biggest thorn of all.
We are talking about Section 2715 of the Patient Protection and Affordable Care Act (PPACA). You must, of course, know all about this section … no? Well, Section 2715 explains how employers and insurers are supposed to provide “Uniform Explanation of Coverage Documents.”
Pulled in two directions
Since ERISA was adopted in 1974, summary plan descriptions and health plan documents have gotten longer and more complicated. Who can blame the plan sponsors? Case law and statutes, year after year, told sponsors that in order to exercise a right, or enforce a limit, those rights and limits must be explicitly set forth in writing. Case after case told them: If they don’t include “it” (in detail) in the written plan document, “it” doesn’t exist. Well … these decisions and resulting super-detailed plan “summaries” have finally caught up with us.
All this language may just be too confusing for most people to understand … and now we must trim down our plan descriptions. How fair is that?
As in the past, now again, another document — the Uniform Explanation of Coverage, (called in new proposed rules the Summary of Benefits and Coverage — SBC), must be created that explains what the longer document, (which, by the way, began its existence as a “summary” of an even longer document).
Yes, plan administrators of both ERISA and non-ERISA plans must now boil all of the goodness contained in your hundred-pages-plus document into … (wait for it) … four pages. You heard right! and the print may be no smaller than a 12-point font. And that’s not all. The government has a 34-page proposed rule to explain how we’re supposed to condense 100 pages into a 4-page document!!
Note: This post is adapted from a column by Adam Russo & Ron Peck, writing for Thompson Publishing’s Employer’s Guide to Self-Insuring Health Benefits. Visit Adam’s blog, Passion for Subro.
The four-page summary has an effective date of March 23, 2012. SBCs must disclose:
- definitions of insurance and medical terms;
- descriptions of coverage provisions, benefits and limitations; cost-sharing provisions;
- continuation of coverage provisions;
- a coverage facts label with examples such as pregnancy and chronic disease examples;
- and other disclosures.
Text of HHS/DOL/IRS Proposed Regs on Required Summary of Benefits and Coverage
HHS Fact Sheet on Proposed Regs on Required Summary of Benefits and Coverage
Proposed Template for the Summary of Benefits and Coverage
Plan sponsors must distribute SBCs automatically not only to plan participants, but to other beneficiaries too.
In addition to those and other disclosures, the mini-SPD must display a website address, which can be used by the plan participant to obtain a complete copy of the applicable plan document and, if necessary, a certificate of coverage.
Attorneys Peter Marathas, James Napoli and Stacy Barrow from the law firm Proskauer Rose describe what plan sponsors and insurers must do to comply with new requirements on the SBC.
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