The health care reform law expands ERISA’s disclosure requirements by requiring that a four-page “summary of benefits and coverage” (“SBC”) be provided to applicants and enrollees before enrollment or re-enrollment. The SBC must accurately describe the “benefits and coverage under the applicable plan or coverage.” The SBC applies in addition to ERISA’s SPD and SMM requirements. Although effective for plan years beginning on or after September 23, 2010, this requirement contains a special distribution deadline of 24 months after the enactment of PPACA (March 23, 2010). Last week, new proposed regulations were released and provided important new guidance and clarification. The following reviews are two important questions.
Must the SBC be provided 60 days before the beginning of each renewal?
No. Individuals enrolled in a health plan must be notified of any significant changes to the terms of coverage reflected in the SBC at least 60 days prior to the effective date of the change. This timing applies only to changes that become effective during the plan or policy year but not to changes at renewal (the start of the new plan or policy year).
So if this rule does not apply, when must the SBC be provided?
In general, the proposed regulations direct that the SBC be provided when a plan or individual is comparing health coverage options. If the information in the SBC changes between the time of application, when the coverage is offered, and when a policy is issued (often the case only for individual market coverage), the proposal would require that an updated SBC be provided. If the information is unchanged, the SBC does not need to be provided again, except upon request.
An insurer also must provide a new SBC if and when the policy, certificate, or contract or policy is renewed or reissued. In the case of renewal or reissuance, if the insurer requires written application materials for renewal (in either paper or electronic form), it must provide the SBC no later than the date the materials are distributed. If renewal or reissuance is automatic, the SBC must be provided no later than 30 days prior to the first day of the new policy year.