Understanding Employee Benefits and key developments in the employee benefits field and items of interest to our clients. MORE

The Departments of Labor, Health and Human Services, and Treasury have jointly issued another set of FAQs on the Patient Protection and Affordable Care Act (PPACA), the health care reform law. These are part nine of FAQs issued on different PPACA topics. This particular set discusses the Summary of Benefits and Coverage or SBC, about which we have previously blogged.

Many employer sponsors of group health plans will be relying on their vendors for compliance with the SBC requirement. Those vendors creating the SBCs will want to review the new FAQs.

Employers who use multiple vendors for their plan will need to work with those vendors to create an integrated SBC. The FAQs make clear that a plan administrator (often the employer, with respect to a group health plan) is responsible for preparing the SBC for the plan, even if the plan uses multiple vendors. For example, if a plan “carves out” certain coverages so that one vendor provides most of the health plan coverage, but another vender provides a particular benefit, such as prescription drug coverage, the plan administrator is responsible for providing a single SBC for the plan as a whole. The plan administrator may contract with one of its vendors to prepare the single SBC or may itself synthesize the information into a single SBC.

The Departments have provided some relief during the first year of applicability. During that first year, for enforcement purposes the Departments will permit plans to provide multiple partial SBCs describing different insured components of the health plan so long as the plan administrator takes steps, such as providing a cover letter or a notation on the SBC itself to the effect that the plan uses multiple insurers for its coverage and that participants needing assistance understanding how the coverage fits together should contact the plan administrator. Contact information for the plan administrator must also be included. The Departments also said in the FAQs that during the first year of applicability, they will not impose penalties on plans and insurers that are working diligently and in good faith to comply with the SBC requirement.

According to the Departments, the “first year of applicability” refers to SBCs provided with respect to coverage beginning before January 1, 2014.

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