Download - Preparing the SBC for Open Enrollment
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Overview
� Why is the SBC Required
� What’s Required to be on the SBC
� How Many SBCs do you have to Distribute
� Who has to Receive an SBC
� Who is Responsible for Compliance
� What Happens if You Don’t Comply
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©2012 Warner Norcross & Judd LLP. All rights reserved.
Why Have an SBC?
� Rationale:� Goal of Health Care Reform Give individuals more choice
regarding health coverage
� Uniform, Basic Information about plan coverage
� Comparison Make it easier for individuals to compare coverage options
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When Must Group Health Plans Start Distributing the SBC?
� For existing employees:� Open enrollment periods
� starting on or after September 23, 2012
� For newly eligible employees:� First day of plan year
� that begins on or after September 23, 2012
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Benefits Subject to SBC Requirement
� Applies to health plan coverage� Medical� Prescription drug� Integrated dental/vision benefits
� Health Reimbursement Arrangements:� Stand-alone HRA must have its own SBC� Integrated HRA can be reported as part of health plan’s SBC
� Health Savings Accounts:� No duty to have an SBC for HSAs� Can choose to report employer contributions to HSA on the
SBC
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©2012 Warner Norcross & Judd LLP. All rights reserved.
Benefits Subject to SBC Requirement
� Exceptions:� Stand-alone dental and
vision plans� Stand-alone long-term
care benefits� Non-coordinated benefits:
� Specified disease or illness (e.g. cancer-only coverage)
� Hospital indemnity or other fixed indemnity coverage
� Accident coverage� Disability coverage � Liability/auto insurance
(including auto medical coverage)
� Workers compensation� Credit-only insurance� Coverage for on-site
medical clinics
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Benefits Subject to SBC Requirement
� Health FSAs that are excepted benefits are exempt.
� When is a health FSA not an excepted benefit?� Offered to class of employees who do not qualify for other health
coverage
� Employer contributes too much money to the health FSA
� How much is too much?
� If Health FSA is not exempt, then must have SBC.� If integrated with medical plan option, can be described in medical
plan SBC
� If stand-alone FSA, then must have its own SBC
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Form of the SBC
� Appearance must be in a uniform format:� Not more than 4 double-sided pages� At least 12 point font size� Understandable terminology� “Culturally and linguistically appropriate”
� Support and Translation services if at least 10% or more of population in the county is literate only in Chinese, Spanish, Tagalog or Navajo
� Can be at the front of the SPD� SBC Samples:
� http://www.dol.gov/ebsa/SBCtemplate.doc� http://www.dol.gov/ebsa/SBCSampleCompleted.doc
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Content of the SBC
� Description of the coverage, including cost-sharing for each category of benefits
� Exceptions, Reductions, and Limitations of coverage, along with cost-sharing information regarding deductibles, co-payments and co-insurance
� Coverage Examples: Hypothetical summaries of how the plan would pay benefits in certain common medical situations: � Birth of a child
� Managing diabetes
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Content of the SBC
� Any renewability and continuation of coverage provisions
� Beginning in 2014: a statement of whether the plan provides minimum essential coverage and whether coverage’s share of total costs of benefits meets applicable requirements (more guidance coming)
� Internet Address for “Glossary” - uniform definitions of standard insurance and medical terms� Must explain that a paper version is available at no cost upon
request
� Must include telephone number to use for requesting paper version
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Content of the SBC
� Internet Address for formulary
� Internet Address for any provider network
� Disclaimer Statement: SBC is only a summary and the plan document, policy or certificate of insurance should be consulted to determine governing provisions
� Contact number to call with questions
� Internet address where copy of group certificate of coverage can be viewed and obtained
� For coverage provided to expatriates outside U.S., internet address for coverage details
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Who Must Receive the SBC?
� Participants and beneficiaries� One SBC per address� Separate SBC for each available plan option
� Two HMOs, Two PPOs? Four SBCs!� Differences between different tiers of coverage (e.g.,
single and family coverage) can be explained in one SBC
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Distributing the SBC
� Open Enrollment: open enrollment periods beginning on or after September 23, 2012.� Unenrolled employees: SBC for each available coverage option
� Current enrollees: SBC for their current coverage
� Deadlines:� With paper enrollment/application materials� If no paper materials distributed, then by the first day may enroll
� If have automatic renewal of coverage, then at least 30 days prior to start of new plan year (but if insurance contract still under negotiation, within 7 business days that new coverage issues)
� Upon request, as soon as practicable—no more than 7 business days
� If information changes before start of plan year—must distribute updated SBC by first day of plan year
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Distributing the SBC
� Newly eligible employees and special enrollees: starting on the first day of the new plan year beginning on or after September 23, 2012.
� Deadlines:� For newly eligible: with written enrollment materials/first date
may enroll� For special enrollees: within same time frame as SPD (within
90 days of enrollment)� Upon request: as soon as practicable, but no later than 7
business days following receipt of request
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Distributing the SBC� General Rule: method reasonably calculated to ensure receipt� Electronic Distribution Rules
� Those already participating:
� Same DOL rules as apply to an SPD
� Can use ERISA electronic distribution safe harbor rules described on next slide for � Workforce members with ready access to computers� Others who consent
� Those not yet covered under the plan:
� Format must be readily accessible� Paper copy provided free of charge
� If distribution is by Internet (or Intranet) posting, must advise individuals:� Document is available� Internet address where it can be accessed� That paper copy is available upon request free of charge
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DOL Electronic Safe Harbor Distribution
� Participants With Electronic Media Access at Work: The employer must take the following steps: � Notify each individual at the time a document is disclosed electronically in a way
that communicates the significance of the document� Furnish a paper version of the document upon request � Take steps to ensure actual receipt of the documents� Protect the confidentiality of any personal information that may be communicated
in the document being disclosed � Additional steps necessary if Participants do not have electronic media access at
work: � Notify Participant of ability to withhold or revoke consent � Obtain consent� Have Participant consent in a manner that demonstrates ability to utilize
technology � Communicate changes in hardware or software
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©2012 Warner Norcross & Judd LLP. All rights reserved.
Who Must Prepare the SBC?
� Insurers must provide SBC to health plans� Within 7 business days of health plan’s application for
coverage� If information changes before 1st day of coverage, then must
provide updated SBC by the 1st day of coverage
� Upon health plans application to renew coverage� With application materials
� If automatic renewal, at least 30 days before start of new plan/policy year (but if contract still being negotiated, within 7 business days that new coverage issues)
� Within 7 business days of receiving request from group health plan
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Who Must Prepare the SBC?
� Self-insured health plans
� Plan sponsor is primarily responsible, but
� Can delegate out responsibility by contract
� Address contractually
� Drafting responsibility
� Distribution responsibility
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Who Must Prepare the SBC?
� Coordination issues: benefits under same coverage option administered by different insurers/TPAs� Example: insured medical, self-insured pharmacy benefits,
and self-insured HRA
� Plan sponsor may have to consolidate information into one SBC
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Modifications to the SBC
� Must provide a Notice of Modifications whenever:� Material modification to information reported on the SBC� Not already reflected on the most recent SBC� Occurs other than in connection with renewal or
reissuance of coverage
� Timing: no later than 60 days PRIOR to date on which change becomes effective
� Note: change in regulatory requirements as to content of SBC does not trigger duty to notify (unless otherwise specified)
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State Law Preemption
� State laws that require an SBC with less information are preempted
� State laws that require a more detailed SBC are not preempted—but must require additional information be provided in a separate document
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Penalties
� Willful failure to provide SBC: statutory penalty of $1,000 for each violation
� Each individual who fails to receive an SBC is a separate violation
� Potentially larger penalty: Tax code excise tax also applies to non-governmental plans
� $100 per individual for each day the plan fails to comply (with self-reporting obligation)
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©2012 Warner Norcross & Judd LLP. All rights reserved.
Questions?Norbert Kugele(616) [email protected]
April Goff(616) [email protected]