By Katherine Jett Hayes

Background

The Affordable Care Act included a number of insurance market reforms designed to make health insurance more affordable and available. During consideration of the ACA, one criticism of the private insurance market was that the lack of standardization in descriptions of health insurance policies available made shopping for coverage both difficult and time consuming. The ACA included provisions designed to assist consumers in better understanding their health insurance coverage, and to assist in comparing their insurance policy with other available options. Among those provisions are requirements for plans offered in both the group and individual insurance markets to provide a summary of benefits and coverage and a uniform glossary of terms commonly used in health insurance policies.^[1]

Under the ACA, the Secretaries of the Departments of Health and Human Services (HHS), Labor, and Treasury are directed to develop standards for use by health plans to compile summaries of benefits and coverage, as well as definitions of standard terms.^[2] Proposed rules were issued on August 22, 2011.^[3] The final rule is effective on April 16, 2012 and will apply to plan years beginning on or after September 23, 2012. As required by statute, the three agencies developed the standards taking into consideration recommendations made by the National Association of Insurance Commissioners (NAIC).

Overview of Final Rule

On February 14, 2012 the Secretaries of HHS, Labor, and Treasury issued a final rule establishing federal standards for summaries of benefits and coverage (SBC) and a uniform glossary.^[4] Under the rule, an SBC must be provided:

1) by a group health plan issuer to a group health plan;

2) by a group health plan issuer and by a group health plan to participants and beneficiaries of the plan; and

3) by an individual health plan issuer to individuals and their dependents in the individual (non-group) market.

In each instance, the rule provides the circumstances under which the SPC must be provided. They include, among others: before the first day of coverage, upon renewal or reissuance of the plan, and upon request by the group health plan, participant, or beneficiary. The plan SBC must be provided by the plan administrator of the group health plan and must be provided in writing and at no cost to the covered individual. The Preamble rule notes that several commentators argued that group health plans should not be required to provide the SBC; however, the agencies noted that the statute does not give the agencies the authority to limit provision of an SBC to the individual market.^[5]

The SBC must be provided as part of any written application materials that are distributed by the plan or issuer for enrollment. If the plan does not distribute written application materials, the SBC must be distributed no later than the first date the participant is eligible to enroll in coverage. SBCs must be provided upon request, and must be provided within seven business days following receipt of a request.^[6] SBCs must be provided to participants, beneficiaries and employers, including those who make requests prior to submitting an application for coverage.^[7] Issuers offering in the individual market must also provide the SBC upon request, to allow consumers reviewing coverage options to compare coverage options in the individual market, the Exchanges, and the group markets.^[8] In addition, the SBC must note that the document is a summary, and that the certificate of insurance should be consulted to determine contractual provisions of the coverage.

SBC must include a contact number and Internet web address where a copy of the policy or certificate can be viewed. The rule also notes that the content of the SBC mirrors the requirements under the statute, except that it includes four additional elements recommended by the NAIC, including a list of network providers for plans using networks, a copy of the formulary for those plans that use a formulary, and an internet address where individuals may view the uniform glossary. Generally, the final rule notes that requirements in the individual market parallel the group market.

Treatment of FSAs, HRAs, and HSAs

The final rule notes that the SBC requirement does not apply to excepted benefits, such as stand-alone dental or vision plans, nor to health flexible spending arrangement FSAs, health reimbursement arrangement (HRAs), or health savings accounts (HSAs) to the extent that benefits are limited to excepted benefits. The final rule generally requires FSAs and stand-alone HRAs to meet the SBC requirements, however, and outlines special rules for FSAs that are integrated with other major medical coverage.^[9] In addition, since a HSA is not a group health plan and not subject to the SBC requirement, an SBC prepared for a high deductible health plan paired with an HSA can mention the effects of employer contributions and benefits not otherwise covered by the high deductible health plan.^[10]

Content

Under the ACA, the SBC must include uniform definitions of standard insurance and medical terms, a description of coverage, including cost-sharing for each category of benefits identified, exceptions, reductions and limits on coverage, cost-sharing provisions of the coverage, including deductible, coinsurance, and copayment, the renewability and continuation of coverage provisions, a coverage facts label that includes examples of coverage and related cost sharing, a disclosure statement on whether the plan provides minimum essential coverage and meets actuarial value requirements.^[11] The rule also provides that the SBC cannot exceed four double-sided pages and may not be printed in a font size smaller than 12-point.

Under the rule, if plans make modifications in the policy at a time other than during reissuance or renewal, and the modifications are not reflected in the most recent SBC, the issuer must notify group health plans, as well as group and individual plan beneficiaries. The rule also provides standards for the definition of insurance-related and medical terms. Group health plans and health issuers must provide the uniform glossary in a uniform format and must use terminology that is understandable to the average plan enrollee or individual covered under the policy.

Form and Language

SBCs may be provided electronically from an issuer to a plan, and may be provided electronically to participants and beneficiaries who are already covered under the group plan, as well as for those who are eligible but not enrolled, provided the format is readily accessible and a paper copy is provided free of charge upon request. In addition, the plan or issuer must advise the participant or beneficiary in paper form or by email that the SBC is available online. All participants and beneficiaries, both covered and eligible but not enrolled have the right to receive an SBC in paper format, free of charge upon request^[12]. Finally, the final rule permits issuers in the individual market to provide an SBC in the manner that can reasonably be expected to provide actual notice, regardless of format.^[13] In addition, issuers in the individual market will be deemed in compliance for meeting the SBC requirements if the SBC is provided to the HealthCare.gov website. The final rule also clarifies that certain additional requirements must be met in order to be deemed in compliance.^[14] The statute also requires that SBCs be provided in a culturally or linguistically appropriate manner, and the final rule requires compliance with section 2719 of the Public Health Service Act, relating to similar requirements for claims and appeals.^[15]

Notice of Modification

Plans must provide notice of any material modification (as defined under section 102 of the Employee Retirement Income Security Act) in any of the terms of the plan or coverage that is not reflected in the SBC. The notice requirement would apply to only a material modification in the terms of the plan or coverage that would affect the content of the SBC, that is not reflected in the most recent SBC, and that occurs at a point other than in connection with a renewal or reissuance of coverage. Notice would be made no later than 60 days prior to the effective date of the change.^[16]

Uniform Glossary

The ACA directed the agencies to develop standard definitions for certain insurance-related and medical terms.^[17] In addition, the agencies adopted additional terms recommended by the NAIC.^[18] The final uniform glossary is available online. Plans and issuers must make the final uniform director available upon request within seven business days, and as outlined in the regulation, must include in the SBC an internet address where an individual may review the glossary, as well as a contact phone number to obtain a paper copy.^[19]

Changes from the Proposed Rule

Timing of provision of the SBC

Under the proposed rule, upon automatic renewal of coverage the proposed regulation would have required a new SBC to be provided no later than 30 days prior to the first day of coverage under the new plan or policy year. Under the final rule, the requirement is retained, however, in the event that the issuer and purchaser have not yet finalized the new terms of coverage, the SBC must be provided as soon as practicable, but no later than seven business days after issuance of the policy, or the receipt of written confirmation of intent to renew, whichever is earlier. This exception applies only when the terms of coverage are finalized in fewer than 30 days in advance of the new policy year.^[20]

Availability of Uniform Glossary of Terms

The final rule includes a requirement that the plan SBC also include information regarding how individuals may obtain copies of the uniform glossary of terms, including an Internet address, a contact phone number to obtain a paper copy and a requirement to inform individuals that the paper copy is available. The final rule also noted that the proposed rule solicited comments on this and whether a plan should be required to include the cost of the premium in the SBC. The agencies note that the final rule does not require the SBC to include premium or cost of coverage information due to administrative and logistic complexity in both the individual and group markets.^[21]

SBC as a Stand-alone Document

The proposed rule requested comments on whether the SBC should be a stand-alone document, or whether it may be included alongside or within a summary and plan description. The final rule requires the plans to provide the SBC in the form specified in a separate guidance, and requires that the SBC for group health plans may be provided as either a stand-alone document, or in combination with other summary materials, provided that the SBC is intact and is prominently displayed at the beginning of materials. For the individual insurance market, the SBC must be provided as a stand-alone document, but may be included in the same mailing as other plan materials.

SBCs Provided Electronically

Under the proposed rule, issuers were permitted to provide the SBC to plans electronically, and required plans and issuers providing an electronic SBC to comply with federal requirements. Plans and issuers were also permitted to provide the SBC in paper form. Under the final rule, issuers may provide SBCs electronically to group health plans, and group health plans and issuers may provide the SBC electronically, and to notify by beneficiaries or participants by regular or electronic mail, that the SBC is available online. In the individual market, plans are required to provide the SBC in a manner that can reasonably be expected to provide actual notice regardless of the format.^[22]

Issues Raised

Although the rule now provides for uniform definitions of insurance-related terms and services, the rule notes that beneficiaries must refer to their own policies and contracts for the definitions of covered services. Actual coverage may bear little relation to the terms included in the uniform definitions. Accordingly, the uniform definitions should be used for a high-level comparison of plan coverage only, but should not be relied upon to determine actual plan coverage.