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March 7, 2012 Tax Watch: The IRS, U.S. Department of Labor, and U.S. Department of Health and Human Services have issued final regulations requiring that insurers, employers, and other providers of health care plans provide a summary of benefits and coverage (SBC) to plan participants and other affected individuals. The requirement is designed to help plans and individuals better understand the essential provisions of their health care coverage.

Health Care Plans Must Provide Summary of Benefits and Coverage

  • 3/7/2012

Health Care Plans Must Provide Summary of Benefits and Coverage

The IRS, U.S. Department of Labor, and U.S. Department of Health and Human Services have issued final regulations requiring that insurers, employers, and other providers of health care plans provide a summary of benefits and coverage (SBC) to plan participants and other affected individuals. The requirement is designed to help plans and individuals better understand the essential provisions of their health care coverage.

CCH Take Away: The requirements apply to both grandfathered and nongrandfathered health plans. The agencies declined to exempt large plans and self-insured plans from the SBC requirements.

Background

The Patient Protection and Affordable Care Act (PPACA) requires disclosures to individuals enrolling in group health coverage and to individuals and dependents in the individual health care plan market. The law requires that plans and issuers provide a summary of benefits that accurately describes the plan’s benefits and coverage.

Requirements

An SBC must be provided by a group health insurer to a group health plan; by a group health insurer and a group health plan to participants and beneficiaries; and by a health insurer to individuals and dependents in the individual market. An SBC must be provided on application for coverage, upon renewal or reissuance, and upon request.

There are 12 required elements for the SBC, including a description of coverage, cost-sharing requirements, exceptions or limits under the plan, and coverage examples (but not the cost of coverage). The SBC cannot exceed four double-sided pages.

Effective dates

The requirements were scheduled to take effect March 23, 2012. Instead, the rules generally apply on or after September 23, 2012. The provision to provide an SBC notice of modification and uniform glossary, apply to participants and beneficiaries who enroll in group health coverage, beginning on the first day of the first open enrollment period that begins on or after September 23, 2012.

For disclosures other than through an open enrollment period, the rules apply on the first day of the first plan year that begins on or after September 23, 2012. For disclosures in the individual market, the rules apply to health insurance issuers beginning September 23, 2012.

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