EBSA’s Latest FAQs Include Guidance On SBCs

The Employee Benefits Security Administration (EBSA) has issued frequently asked questions (FAQs) that focus on requirements for summaries of benefits and coverage (SBCs), and include information on templates and sample language. The EBSA has provided an updated SBC template and an updated sample completed SBC at http://cciio.cms.gov and http://www.dol.gov/ebsa/healthreform. The templates are to be used for group health plans and group and individual health insurance coverage for SBCs provided with respect to coverage beginning on or after Jan. 1, 2014 and before Jan. 1, 2015 (also known as the second year of applicability).

Starting Sept. 23, 2012, the Patient Protection and Affordable Care Act (ACA) required group health plans and health insurers to meet the reporting and disclosure requirements of Public Health Service Act Sec. 2715, namely, to provide a summary of benefits and coverage (SBC) that accurately describes the benefits and coverage under the applicable plan or coverage.

In the new FAQs, the EBSA stated that the updated template and sample contain no changes to the uniform glossary, to the instructions for completion, to the “Why This Matters” language, or to the coverage examples. The only changes, in fact, involve the addition of statements regarding whether or not the plan or insurance coverage provides minimum essential coverage (MEC) under Code Sec. 5000A(f) and whether or not it meets minimum value (MV) requirements, so that the plan’s or insurance coverage’s share of total allowed costs of benefits is not less than 60 percent of those costs.

The EBSA advises that plans and issuers should indicate in the designated entry on page four of the template that it “does” or “does not” provide MEC and whether it “does” or “does not” meet the MV requirements.

However, the EBSA noted that, if a plan or issuer is unable for some reason to modify their SBC template for these disclosures required for the second year of applicability, the plan or issuer may use the template that was already issued for the first year of applicability, but the plan or issuer must provide a cover letter or similar disclosure containing the following, and indicating whether or not MEC is provided and whether or not the MV requirement has been met, as follows:

Does this Coverage Provide Minimum Essential Coverage?The ACA requires most people to have health care coverage that qualifies as “minimum essential coverage.” This plan or policy [does/does not] provide minimum essential coverage.

Does this Coverage Meet the Minimum Value Standard?
In order for certain types of health coverage (for example, individually purchased insurance or job-based coverage) to qualify as minimum essential coverage, the plan must pay, on average, at least 60 percent of allowed charges for covered services. This is called the “minimum value standard.” This health coverage [does/does not] meet the minimum value standard for the benefits it provides.

Annual limits. The EBSA states that it has not made any changes related to the requirement to eliminate all annual limits on essential health benefits, and advises plans and issuers to continue to complete the SBC template so that, in the Important Questions chart on page 1, in the Answers column, the response to “Is there an overall annual limit on what the plan pays” is “No,” and “The chart starting on page 2 describes any limits on what the plan will pay for specific covered services, such as office visits” is included in the Why This Matters column. To the extent permitted by applicable federal or state law, plans and issuers are not prohibited from placing annual or lifetime dollar limits on non-essential health benefits.

The FAQs note, however, that, if a plan or issuer wants to modify the SBC template by removing the entire row of the Important Questions chart on page one of the SBC that contains the question “Is there an overall annual limit on what the plan pays?” it will not take any enforcement action against that plan or issuer.

The EBSA cautioned that plans and issuers should continue to include annual and lifetime dollar limits on specific covered benefits as required by the Limitations & Exceptions column on page 2 of the SBC.

The EBSA has not provided any additional coverage examples beyond the two already issued, for having a baby and for managing type 2 diabetes.

The EBSA also stated that it has extended the following previously-issued relief, originally provided on the EBSA’s website, for the first year of applicability, to the second year of applicability:

• The EBSA’s, HHS’, and IRS’ basic approach to implementation of the SBC requirements (see FAQs Part VIII, Q2);

• Circumstances in which an SBC may be provided electronically (see FAQs Part IX, Q1);

• Penalties for failure to provide the SBC or uniform glossary (FAQs Part IX, Q8);

• Use of the coverage examples calculator (see FAQs Part IX, Q9);

• Issuers’ obligations to provide SBCs with respect to benefits they do not insure (see FAQs Part IX, Q10); and

• Expatriate coverage (see FAQs Part IX, Q13).

Also available throughout the second year of applicability is the enforcement relief for The Special Rule in the Instruction Guides for Group and Individual Coverage (see http://www.dol.gov/ebsa/pdf/SBCInstructionsGroup.pdf and http://cciio.cms.gov/resources/files/Files2/02102012/instructions-group-final.pdf) and the ACA Implementation FAQs Part X, Q1 on Medicare Advantage, despite any guidance stating that the enforcement relief is limited to only the first year of applicability.

Closed blocks of business. The FAQs also provide that an enforcement safe harbor for insurance products that are no longer being offered for purchase (known as “closed blocks of business”) has been extended, from Sept. 23, 2013 to Sept. 23, 2014, as long as the insured product meets all three of these conditions:

• It is no longer being actively marketed;

• The relevant health insurance issuer stopped actively marketing the product before Sept. 23, 2012; and

• The health insurance issuer never provided an SBC for the insured product.

• However, the EBSA states that an SBC must still be provided for the product no later than Sept. 23, 2014.

Student health coverage. Finally, the EBSA stated that it is not necessary for an entity such as an institution of higher learning to provide an SBC to an individual as long as another party, such as a health insurance issuer, provides that individual with a timely and complete SBC. This “anti-duplication rule” is similar to one found in previously-issued final regulations (see ERISA Reg. Sec. 2590.715-2715(a)(1)(iii)(A)) relating to group health coverage.

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