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Small Business Employee Benefits and HR Blog

Summary of Benefits and Coverage (SBC): 5 New Q&As for Employers

With the end of the year approaching and new plan years starting, it's time again for many employers to distribute the Summary of Benefits and Coverage (SBC). Here's a refresher for employers on the SBC, with new information for 2014.

SBC

Q. What is the SBC?

A. Also known as the "four-page summary", the Summary of Benefits and Coverage (SBC) is a short document that is intended to describe the benefits of health plans in layman's terms, relying heavily on "plain language" and charts reminiscent of the "nutrition facts" charts on the sides of cereal boxes and other foods.

The SBC summarizes the key features of the health plan, such as the covered benefits, cost-sharing provisions, and coverage limitations and exceptions.

The purpose of the SBC is for beneficiaries to compare insurance coverage at a glance, "apples to apples". All insurance companies and group health plans (including HRAs and other Section 105 medical reimbursement plans) use the same standardized SBC form to help consumers compare health plans.

The requirement for plan or issuers to provide the SBC started last year. The SBC must be provided beginning on the first day of the first plan year that began on or after September 23, 2012.

Q. When should the SBC be distributed?

A. Per HHS regulations, the SBC must be offered during the following events:

  • Upon open enrollment. If the plan administrator issues materials for enrollment into the plan, the SBC must be included in the materials. 

  • If there are any changes, by the first day of coverage. If any change occurs between enrollment and the first day of coverage, the SBC must be provided by the plan or issuer no later than the first day of coverage. 

  • Mid-year enrollees. For mid-year enrollees, the SBC must be provided no later than the date the Summary Plan Description (SPD) is distributed. 

  • Upon renewal. During an open enrollment caused by either plan renewal, or plan change, the SBC must be provided during the open enrollment period. 

  • Upon request. 

In addition, if any material modification is made in any of the terms of the plan or coverage that would affect the content of the SBC (and that does not occur in connection with renewal), the plan or issuer generally must provide notice of the modification within 60 days prior to the date the change is becoming effective. This is commonly called the ACA's 60-Day Notice of Material Modification.

Q. What information is required to be included in the SBC?

A. The SBC must contain specific information summarizing key features of the plan and coverage, including:

  • A description of the coverage (including the cost-sharing, for each category of benefits identified by the Departments)
  • The exceptions, reductions, or limitations on coverage

  • The cost-sharing provisions of the coverage, including deductible, coinsurance, and copayment obligations

  • The renewability and continuation of coverage provisions

  • A coverage facts label or coverage examples (common benefits scenarios for having a baby (normal delivery) or managing Type 2 diabetes (routine maintenance, well-controlled)

  • A statement that the SBC is only a summary and that the plan document, policy, or certificate of insurance should be consulted to determine the governing contractual provisions of the coverage

  • A contact number to call with questions and an Internet web address where a copy of the actual individual coverage policy or group certificate of coverage can be reviewed and obtained

  • An Internet address (or other contact information) for obtaining a list of the network providers, an Internet address where an individual may find more information about the prescription drug coverage under the plan or coverage, and an Internet address where an individual may review the Uniform Glossary, and a disclosure that paper copies of the Uniform Glossary are available; and

  • A uniform format, four double-sided pages in length, and 12-point font.

Templates, instructions, and related resources are available from the Center for Consumer Information & Insurance Oversight.

Q. Have the SBC templates changed for 2014?

A. The SBC template for the second year of applicability (2014 and later) is available at http://cciio.cms.gov and http://www.dol.gov/ebsa/healthreform. 

The only change to the SBC template is the addition of statements of whether the plan or coverage provides minimum essential coverage (MEC) and whether the plan or coverage meets the minimum value (MV) requirements (60 percent of costs of benefits for a population). There are no changes to the Uniform Glossary, the Instructions for Completing the SBC, “Why This Matters” language for the SBC, or to the coverage examples.

Q. Is the SBC required for both grandfathered and non-grandfathered plans?

A. Yes. The SBC is required for both grandfathered and non-grandfathered plans in the insured and self-funded market, as well as the individual market.

What questions do you have about the SBC requirement for 2014? Leave a comment below.

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