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Summary of Benefits and Coverage (SBC) – New Template in Effect

 April 11 2017     Diane Cross

As employers plan for their next open enrollment, the updated Summary of Benefits and Coverage (SBC) template is now in effect. The Affordable Care Act remains the “law of the land” for the employee benefits industry and as such, employers must continue to adhere to the SBC requirement. Notably, the finalized template must be used for health insurers and plan years that have open enrollment periods starting on or after April 1, 2017.

SBC Refresher
An SBC is a communication required by the ACA that contains specific information about a group health plan’s benefits coverage and limitations. The purpose is straightforward – to help people understand what is covered under the plan(s) and make it easier for employees to compare coverage options.

For fully-insured plans both the insurer and employer are responsible for distributing the new SBC and for self-funded plans, the employer or plan sponsor is responsible for distributing the new SBC (though many third party administrators provide assistance). The employer or plan sponsor should ensure that the finalized template provided by the Department of Labor (DOL) is being used for open enrollment occurring on or after April 1, 2017. Highlights of the updates include:

  • Family plans must disclose whether or not the plan has embedded deductibles or out-of-pocket limits in the why this matters column in response to the question, What is the overall deductible?
  • Tiered networks must be disclosed in response to the question, Will you pay less if you use a network provider?
  • New question: Are there services covered before you meet your deductible?

Amidst the detailed SBC requirements, the DOL provides several helpful resources:

One of the more challenging aspects of the SBC requirement for employers is not the content of the SBC, but knowing when to provide it to participants. SBCs must generally be distributed at four times. An SBC should be provided:

  • Whenever application materials are provided to new hires;
  • When open enrollment materials are distributed during open enrollment;
  • Within 90 days of a HIPAA special enrollment event like marriage, birth, adoption, or loss of other coverage; and
  • Within 7 days of a request.

In addition, if there is a material modification mid-year to information on the SBC, (e.g., change in deductible, coverage for a new benefit, a new network) a new SBC must be provided 60 days before the effective date of the material change. 

If you have additional questions about the new SBC, please contact your HORAN representative.