Late last year, the Departments of Labor, Health and Human Services, and Treasury (the “Departments”) revised the Summary of Benefits and Coverage template (“SBC”) and its associated materials (including instructions, coverage example guides and narratives, and the SBC Coverage Examples Calculator) that group health plans and insurers are required to provide to participants and beneficiaries under the Affordable Care Act (“ACA”). In connection with these revisions, the Departments recently issued a new set of Frequently Asked Questions (“FAQ”) to provide group health plans and insurers with explanation regarding the revised SBC and associated materials.
What are the details?
The FAQ summarizes the primary changes made to the revised SBC and associated materials. Specifically, the FAQ explains that the SBC has been revised to update the definition of Minimum Essential Coverage and inform participants that if they are eligible for certain types of Minimum Essential Coverage, they may not be eligible for a premium tax credit. The FAQ also explains that the SBC no longer states that an individual will be subject to a tax payment for failing to have Minimum Essential Coverage due to the fact that as of January 1, 2019, the Individual Mandate’s tax penalty was reduced to zero. The FAQ also highlights changes to the SBC Coverage Examples Calculator, which was created for plans and insurers to provide an estimate of out-of-pocket costs under a plan for three different types of medical situations.
The FAQ clarifies that plans and insurers are not required to use the Calculator; they may create their own or modify the Calculator to incorporate their own plan’s design to estimate the out-of-pocket costs for the coverage examples. Despite the fact that the Calculator uses assumptions that are not always entirely accurate for every plan, the FAQ explains that, until further guidance is issued, plans and insurers can continue to use the Calculator even if it would be possible for a plan or insurer to create a more accurate method of illustrating the coverage examples.
The FAQ also clarifies the effective date of the revised SBC and associated materials. Plans and insurers are required to begin using the revised SBC and associated materials on the first day of the first open enrollment period for any plan year beginning on or after January 1, 2021 with respect to coverage for a plan or policy beginning on or after that date.
What do you need to do?
Plan sponsors who are obligated to complete and distribute the SBC themselves (generally, self-funded and account based plans, like a Health Reimbursement Arrangement or Health Savings Account) should make themselves familiar with the revised SBC and related materials and modify the documents as necessary and appropriate for the coverage provided under their plans. Plan sponsors who rely on another entity to prepare their SBCs (like a third-party administrator or insurance company) should contact these entities to ensure that they are taking steps to update the SBC and associated materials. Plan sponsors should have these materials in place to use on the first day of the first open enrollment period for plan and policy years beginning on or after January 1, 2021.
The revised SBC, associated materials, and FAQ are available at the following links: