Employers and their benefits advisors may have to scramble to start using the proposed Summary of Benefits and Coverage (SBC) and a proposed Uniform Glossary on time.
Members of the employee benefits and executive compensation group at Ballard Spahr L.L.P., Philadelphia, a law firm, have included that observation in a comment on draft versions of the SBC and the glossary.
Federal agencies – the Internal Revenue Service (IRS), an arm of the U.S. Treasury Department; the Employee Benefits Security Administration (EBSA), an arm of the U.S. Labor Department; and the Centers for Medicare & Medicaid Services (CMS), an arm of the U.S. Department of Health and Human Services (HHS) – posted the drafts on the Web last week.
The agencies developed the SBC and glossary drafts to implement Section 2715 of the Patient Protection and Affordable Care Act of 2010 (PPACA).
PPACA Section 2715 calls for the parent departments of the IRS, EBSA and CMS to work with the National Association of Insurance Commissioners (NAIC), Kansas City, Mo., to develop SBC and glossary standards. The agencies say they based the SBC and glossary proposals almost entirely on drafts created by the NAIC.
The proposed SBC template includes items such as descriptions of cost-sharing provisions and limits on coverage, and a detailed list of what a consumer might have to pay for the services associated with a scenario such as having a baby or dealing with diabetes.
The glossary includes definitions of terms such as “deductible” and co-pay.
The federal agencies published the SBC and glossary proposals later than expected, but they have not said anything about pushing back the original March 23, 2012, compliance date, the Ballard Spahr legal analysts note.
“The departments specifically solicit comments on the new rules and indicate that the guidance will likely be changed before it is issued in final form,” the analysts say. “Plan sponsors should begin to consider the process by which they will prepare and communicate SBCs by the March 23, 2012, deadline and pay close attention to any changes in the final guidance, which will be issued in the next several months.”
Plans and administrators are supposed to provide the SBC and glossary with plan enrollment materials, when the information in the SBC changes, when a special enrollment event takes place, or within 7 days of a plan participant or beneficiary asking for the materials.
A plan or administrator “that willfully fails to provide an SBC may be fined up to $1,000 for each failure,” the analysts warn.