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4 ways the PPACA benefits summary regs could affect your clients

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Obama administration officials have tweaked the rules for a popular but underachieving Patient Protection and Affordable Care Act of 2010 (PPACA) program: the Summary of Benefits and Coverage (SBC) benefits summary.

The SBC is supposed to be a standardized “milk carton nutrition label” for major medical coverage.

But insurers say PPACA requires them to squeeze too much information into too little space, consumer groups say the SBC is hard to read, and most consumers just stare blankly when asked whether they’ve actually seen an SBC.

The U.S. Department of Health and Human Services (HHS), the Internal Revenue Service (IRS) and the Employee Benefits Security Administration (EBSA) dealt with some SBC distribution procedure questions, but not the complaints, in a final version of new SBC program regulations they released Friday.

The final regulations are set to appear in the Federal Register Tuesday.

Drafters of PPACA included the provision in an effort to help consumers shop for health coverage on an apples-to-apples basis. Health insurers and most other interest groups supported the SBC provision. Shortly after PPACA was signed into law, analysts at the Henry J. Kaiser Family Foundation surveyed consumers about the SBC requirement, without telling participants that the SBC requirement was part of PPACA. The analysts found that 76 percent of the Republicans polled said they supported the SBC requirement.

But, in practice, the SBC has turned out to be a disappointment.

In the new final rule, federal regulators have adjusted how individual coverage issuers and group health plans distribute the SBCs, but they haven’t gotten into the more controversial questions, about what SBC issuers should really put in the SBCs, and what SBCs should look like.

The National Association of Insurance Commissioners (NAIC) is preparing to develop and test new ways of presenting the SBC information. Federal regulators say they hope to use the results of the NAIC testing to release new SBC content and formatting standards in January 2016.

The new SBC distribution procedure rules coming out Tuesday will apply starting the first day of a group plan’s first open enrollment period that begins on or after Sept. 1, 2015, and for individual coverage that begins or after Jan. 1, 2016.

For a look at how the procedural rules might affect your health insurance clients, while they’re waiting for the more exciting changes to roll out, read on.

Earth

1. Your group health plan sponsors will not have to get SBCs translated into Punjabi or Arabic, even if many workers speak those languages.

PPACA requires health insurers and employer-sponsored group plans to offer information in enrollees can understand. The federal agencies tried to deal with language translation issues in draft regulations released in December 2014, by agreeing to have HHS provide SBC translations in Spanish, Chinese, Tagalog and Navajo, because each of those languages is a very common language in at least one U.S. county.

Some commenters wanted the agencies to impose stricter requirements.

One proposal called for SBC issuers to provide SBCs in any language spoken by at least 500 individuals, or 5 percent of the individuals, in a plan’s service area, or an employer’s workforce, and for the issuers to provide brief taglines announcing the availability of help in at least 15 other languages.

The federal agencies stuck with making SBCs available in Spanish, Chinese, Tagalog and Navajo, saying in the regulation preamble that they have to balance the need for making SBCs understandable with a need to hold administrative costs down.

See also: States ramp up exchange marketing campaigns

Eyes

2. Your group health plan sponsors will have to check to see whether the entities that are supposed to send SBCs send the SBCs.

A group plan sponsor can delegate responsibility for sending SBCs, but it has to try to monitor the performance of the SBC sender and step in if any problems appear, officials say in the preamble.

Officials encourage employers to take the job of picking an SBC issuer seriously.

“The selection and monitoring of service providers for a group health plan, including parties assuming responsibility to complete, provide information for, or deliver SBCs, is a fiduciary act subject to prudence and loyalty duties and prohibited transactions” under the Employee Retirement Income Security Act (ERISA), officials say in a preamble footnote.

See also: What If the Contractor Fails to Send SBCs? 

Laptop computer

3. Someone will have to post individual coverage policy documents and sample group coverage certificates on the Web, in a location that the enrollees can get to.

Some commenters told federal agencies that requiring plans to put full policies and group coverage certificates on the Web would be a headache.

Agency officials said that the coverage sponsors and plan issuers all have the plan documents and all have websites, and that they ought to post the documents.

But officials said employers can post the sample documents used to get state regulatory approval for a plan, rather than posting the exact version of the group coverage certificate used for the enrollee’s own plan.

See also: 27 PPACA reporting obligations employers need to know

Bad dog

4. Your employer plan clients will know more about the possible consequences of failing to make sure SBCs go out.

Officials say EBSA’s parent, the U.S. Department of Labor, will punish employers that intentionally fail to send out SBCs using the same process and procedures it would use to punish an employer for failing to send out an annual plan report.

The IRS will enforce the requirement that insurers send SBCs using the rules spelled out in Section 4980D of the Internal Revenue Code.

Federal regulators described that approach in the draft regulations, and they say they received no comments on that section of the draft.

See also: ERISA’s mid-life crisis

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