Reformed Benefit Summary Will Make Comparison Shopping Easier, Regulators Claim

The summary of benefits and coverage (SBC), while still a work in process, will improve plan participants’ ability to comparison-shop for coverage.

That fills a currently unmet need, federal regulators told a recent conference. They were responding to concerns that the SBC — mandated by the health reform law — is redundant, confusing or even regressive.

The SBC will help consumers “compare coverage across plans,” said Russell Weinheimer of the Internal Revenue Service (IRS). “It’s a little bit of an oversimplification of what the plan provides,” he noted, but it will give users “a very quick comparison” of covered benefits, out-of-pocket expenses, grievance and appeal rights and sample coverage scenarios. This will help consumers access more than just premium information, he said.

When the IRS and other health reform agencies published proposed rules on the SBC Aug. 22, they also released an SBC template that the National Association of Insurance Commissioners (NAIC) had developed. Because of the agencies’ tight deadlines for issuing these rules, they didn’t have a chance to make many changes to the template to adapt it better to the group health market, said Weinheimer, a senior attorney with the IRS’ Tax Exempt and Government Entities Division (he spoke on his own behalf, not on the agency’s).

Some questions on the template are clearly geared to the individual insurance market (such as “What is the premium?”) and others ask whether the plan covers services or conditions (such as pregnancy) for which coverage is required in the group market. Conversely, common group health plan features like wellness discounts are not addressed. “These are things I think you have some flexibility for,” but be brief, Weinheimer said.

SBCs would have to be provided at annual enrollment and, if a plan amendment is made mid-year that would alter their contents, 60 days in advance of that change. This would be separate from any ERISA requirements, such as a summary of material modifications (SMM), that also were triggered, Weinheimer noted.

During the public comment period, which ended Oct. 21, plan sponsor and other business groups were broadly critical of the rules as applied to group health plans. See our last story on this topic.

Not only is the health reform law’s March 23, 2012, deadline unachievable (especially since the agencies are late with the rulemaking), the American Benefits Council (ABC) contended in comments to the agency, but the SBCs are pointless for group health plans until the law’s requirements for individual insurers and state-based exchanges take effect in 2014. “This is because in nearly all instances group health coverage will be a favorable coverage option to coverage that can be purchased through the individual insurance market.”

ABC also called on the U.S. Departments of Labor, Health and Human Services and the Treasury to grant a “safe harbor” to employers whose enrollment materials included all the SBC-required information. In addition to the ERISA-required summary plan descriptions and SMMs, employers “very often provide a host of tools to eligible participants to allow such participants a meaningful opportunity to compare their coverage options,” ABC explained. “Flexibility is needed to allow employers to continue to innovate and implement such practices.”

“For us those rules are a step backwards,” said Tami Graham, Intel Corp.’s global benefits design manager. By now most Intel employees get benefits information through blogs and social media, often from each other, she said. She and Weinheimer spoke Oct. 31 at the National Institute on Health and Welfare Benefit Plans presented by the American Bar Association’s Joint Committee on Employee Benefits.