Get Ready for the Summary of Benefits Coverage under PPACA

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On March 23, 2012, another requirement under the Patient Protection and Affordable Care Act (the “Act”) will be effective-the requirement to provide group health plan participants and beneficiaries with a summary of benefits coverage that accurately describes the benefits and coverage available under the plan and a uniform glossary of terms (“SBC”). These requirements were incorporated under the Internal Revenue Code and ERISA (in addition to existing summary plan description requirements). Under currently proposed regulations, health insurance issuers will also be required to provide this type of information to group health plan sponsors at the time of application or request for information regarding coverage within seven days of the request (including an obligation to update such information should it change); this information must also be provided upon renewal (30 days in advance of a new policy year in a case of an automatic renewal).

It is important for plan sponsors of group health plans (both insured and self-insured) to become familiar with these requirements as the effective date will soon be here. Some of the key elements of the SBC are as follows. The SBC must address each benefit package offered and be provided with application materials for enrollment or no later than the time of enrollment (with additional rules for special enrollment periods) and no later than 7 days following a request. If the health insurance issuer offering the coverage provides a complete, timely SBC to the plan’s participants and beneficiaries, the plan’s requirement to provide the SBC will be satisfied. The SBC must include such information as uniform definitions of insurance and medical terms, description of coverage (as well as cost-sharing information, exceptions and limitations on coverage), continuation of coverage and renewability provisions, examples of coverage/cost for common scenarios (e.g., pregnancy, chronic conditions), premiums and various other statements and contact information. A statement must also be included regarding whether the plan provides minimum essential coverage-although this requirement will be effective January 1, 2014 to coordinate with other requirements under the Act.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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