Health Care Reform Today

Summary of Benefits and Coverage: Spotlight on Employers

Under health care reform, all health insurers and self-insured employers will be required to provide a Patient Protection and Accountable Care Act (PPACA) standard Summary of Benefits and Coverage (SBC) to shoppers, applicants, enrollees and policyholders by March 23, 2012.

If you are unfamiliar with this, you might want to grab a cup of coffee and take a few minutes to visit our SBC-dedicated SBC-dedicated Informed on Reform page.  

As we interpret it, the intent of the SBC is to provide employers, employees and individuals with standardized, clear and consistent information to help them review health plans, compare carriers and make decisions about which plan to choose.

The SBC focuses on a standardized benefits summary and medical examples. While this is a good concept, it is in a completely different format from current benefit summaries, which already provide similar content The SBC includes specific templates and requirements, which will be new for everyone. Take a look at the National Association of Insurance Commissioners website to view the SBC samples for yourself.

So, while the intention of the SBC is good, some of the details might be administratively challenging. 

In this column, I’d like to focus on how this provision affects employers.

Employer Impact

The implementation date is rapidly approaching: summaries must be provided starting March 23, 2012, without regard to plan year. For fully insured plans and HMOs, the insurer and the employer are responsible for producing and distributing the summaries. For self-insured plans, the responsibility and ownership of SBC development and distribution lie with you, the employer. And there are penalties for non-compliance.

Employer engagement and awareness
Come March 23^rd, all new hires and HIPAA special enrollments will be required to receive the new SBC. Therefore, your current plans will need to be available to these employees in the new format.

If you distribute your documents electronically, your employees will need to acknowledge receipt.

On your next renewal, there are timing requirements regarding the distribution of materials. If you’re considering automatic renewal, employees will need to receive the new SBC 30 days prior to the coverage effective date. If employees are required to enroll, then you can send the new SBC as a separate document within your enrollment package.

You should also be aware that current regulations require the coverage documents to be presented at a coverage tier level, so if you offer four coverage tiers for each plan, you will need to provide four separate documents.

Also, if you carve-out your pharmacy or behavioral health coverage, you may be required to consolidate all benefits into a single plan document.

If you produce your own documents, you’ll want to make sure you have incorporated the content and layout requirements, along with coverage examples reflective of your plan using the costs as defined.   

Depending on when the government publishes the interim final regulations, there will be a few months to develop, implement and completely rework your current coverage plan documents to be compliant.

Penalties
The penalty for ‘willful’ non-compliance is up to $1,000 per enrollee for each failure to comply. Other ERISA and tax penalties may apply.

Cigna will be working with you to help you prepare for the implementation of this provision. 

Cigna’s Perspective

Cigna reviewed the provision, along with the proposed documents, and developed a number of recommendations that we shared with multiple working groups in Washington. Please read our Advocacy white paper for more information about our perspective.