PPACA:  Upcoming Changes to Group Health Plan Coverage Communications

As a result of the Patient Protection and Affordability Act (PPACA), U.S. Departments of Treasury, Labor, and Health and Human Services have crafted three more major changes in the way a group health plan is communicated to employees.  

1.  Summary of Benefits and Coverage
The PPACA will require plan sponsors of self-funded group health plans and health insurance issuers offering group or individual health insurance coverage to use  a standardized form to accurately describe the plan coverage, called the Summary of Benefits and Coverage (SBC).  This “mini-SPD” must be given for each benefit package under the plan at or prior to enrollment to all plan participants and applicants, and presented in a standardized format.  It must meet the culturally and linguistically appropriateness (similar to the PPACA regulations regarding group health plan claims and appeals) using terminology that is understandable by the average plan enrollee. The purpose of the SBC is to make it easier for individuals and employers to directly compare one plan to another.  The SBC is required by insured and self-insured, grandfathered or non-grandfathered plans.   The distribution of the SBC is in addition to and does not replace the Summary Plan Description required by ERISA.

SBC Distribution to Plan Sponsors (Fully Insured)-The health insurance issuer must provide the SBC to the plan sponsor as soon as practical, but no later than seven business days after it receives the plan sponsor’s application for health coverage.   If any changes in coverage relevant to the SBC are made between the application date and the first day of coverage, the health insurance issuer must provide an updated SBC to the plan sponsor by the first day of coverage.  The health insurance issuer must also provide a new SBC upon request (within seven business days following the request) or upon renewal of the coverage, by either the date the written renewal application materials are distributed to the plan sponsor or, in the case of automatic renewal, no later than thirty days prior to the first day of the new policy year.  If the new policy, certificate or contract of insurance has not yet been issued or renewed before this thirty-day period, the issuer must provide the new SBC as soon as practical, but no later than seven business days after the new policy, certificate or contract of insurance is issued, or, if earlier, the date the issuer receives written confirmation of the intent to renew.  The final regulations are applicable to health insurance issuers beginning September 23, 2012.

SBC Distribution to Participants and Beneficiaries-Either the plan administrator or insurer, if applicable, must timely provide an SBC to participants and beneficiaries for each benefit package offered under the group health plan for which the participant or beneficiary is eligible. The SBC must be provided:

• With any written enrollment application materials the plan provides (if no such materials are provided, then no later than the first date the participant is eligible to enroll himself or any beneficiary in coverage).

• No later than the first day of coverage under the plan, if any changes are made to the information in the SBC provided upon enrollment.

• To individuals entitled to special enrollment under the Internal Revenue Code, no later than the 90 days from enrollment.

• Upon renewal, if applicable, only for those benefit options in which the participant or beneficiary is enrolled, by either the date the written renewal application materials are distributed to the plan sponsor or, in the case of automatic renewal, no later than thirty days prior to the first day of the new policy year (a participant or beneficiary can also request an SBC during renewal for an option in which they are not enrolled).   If coverage has not yet been issued or renewed before this thirty-day period, the issuer must provide the new SBC as soon as practical, but no later than seven business   days after the coverage is issued, or, if earlier, the date the issuer receives written confirmation of the intent to renew.

• Upon request (within seven business days following the request).

• A single SBC can be provided to participants and beneficiaries residing at the same last known address.   If a beneficiary’s last known address differs from the participant’s, a separate SBC must be sent to the beneficiary at his or her last known address.

Electronic Distribution-SBCs may be provided electronically to those who are eligible but not enrolled for coverage, if:

• the SBC is provided via an Internet posting (including on the HHS web portal), and

• the issuer timely advises the plan (or the plan or issuer timely advises the participants and beneficiaries) that the SBC is available on the Internet and provides the Internet address

• Plans and issuers may make this disclosure (sometimes referred to as the "e-card" or "postcard" requirement) by email.

SBCs may be provided electronically to participants or beneficiaries covered under the plan:

• who are able to effectively access documents provided in electronic form at the worksite

• in connection with their online enrollment or online renewal of coverage under the plan

• who request an SBC online. In either case, the individual must have the option to receive a paper copy upon request

Excepted Benefits-The preamble to the final regulations clarifies that an SBC is not required to be provided for plans, policies or benefit packages that are “excepted benefits”, such as stand-alone dental or vision plans, and certain health flexible spending arrangements.  The preamble also clarifies that health reimbursement arrangements (HRAs) generally are not “excepted benefits” and are usually subject to the SBC requirements, while health savings accounts (HSAs) generally are not group health plans and are not usually subject to the SBC requirements.

Click here to view the SBC template.

2.  Uniform Glossary
In addition to the SBC, the PPACA requires group health plans and health insurance issuers to make available a uniform glossary of health-coverage and medical terms commonly used in the group health plan documents, such as “deductible” and “co-pay”. The uniform glossary may not be modified and must be provided in either paper or electronic form upon request by a participant or beneficiary within seven business days.

The health coverage-related terms and medical terms that need to appear in the uniform glossary are terms the Secretary of Health and Human Services determines important to define, so that individuals and employers may compare and understand the terms of coverage and medical benefits (including any exceptions to those benefits). To help ensure the document is easily accessible for consumers, the Departments of Health and Human Services and Labor will also post the glossary on www.HealthCare.gov, www.cciio.cms.gov, and www.dol.gov/ebsa/healthreform.

The Uniform Glossary template is provided on our website.  Click Here to preview and/or download

3.  Advance Notice of Material Modification
If a group health plan or health insurance issuer makes a mid-year material modification to coverage that affects the content of an SBC, the group health plan or health insurance issuer must provide a 60-day advance notice of the modification to enrollees.  This is a significant change from current ERISA rules, which require provision of a summary of material modification within 60 days after adoption of a material reduction in group health plan covered services or benefits, or within 210 days after adoption of any other type of material modification or change.  The 60-day advance notice rule does not apply to modifications made at renewal/annual open enrollment.  A “material modification” is the same as a “material modification” under ERISA Section 102 (any change to the coverage offered that independently or in conjunction with other contemporaneous changes would be considered by the average plan participant to be an important change, including changes that enhance or reduce benefits, increase premiums or cost-sharing, or impose new referral requirements).

The advance notice may be provided through a separate notice or an updated SBC.  For ERISA plans, the rules regarding the timing of a summary of material modification still apply for modifications that do not affect information provided in an SBC.

Applicability Date
The regulations state “The requirements to provide an SBC, notice of modification, and uniform glossary under PHS Act section 2715 and these final regulations apply for disclosures to participants and beneficiaries who enroll or re-enroll in group health coverage through an open enrollment period (including re-enrollees and late enrollees) beginning on the first day of the first open enrollment period that begins on or after September 23, 2012.

For disclosures to participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees), the requirements under PHS Act section 2715 and these final regulations apply beginning on the first day of the first plan year that begins on or after September 23, 2012. For disclosures to plans, and to individuals and dependents in the individual market, these requirements are applicable to health insurance issuers beginning on September 23, 2012.

Penalty
A group health plan or health insurance issuer that willfully fails to provide an SBC will be subject to a fine of up to $1,000 per participant or beneficiary who does not receive the SBC.  Excise taxes and self-reporting requirements under Section 4980D of the Internal Revenue Code also apply. 

Please call us at 704-525-9666 if you have any questions. 

 Overview
The FMLA entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. Eligible employees are entitled to:

• Twelve workweeks of leave in a 12-month period for:
• the birth of a child and to care for the newborn child within one year of birth;
• the placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement;
• to care for the employee’s spouse, child, or parent who has a serious health condition;
• a serious health condition that makes the employee unable to perform the essential functions of his or her job;
• any qualifying exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty;” or
Twenty-six workweeks of leave during a single 12-month period to care for a covered servicemember with a serious injury or illness if the eligible employee is the servicemember’s spouse, son, daughter, parent, or next of kin (military caregiver leave).

Key News
• The U.S. Department of Labor’s Wage and Hour Division has published a Notice of Proposed Rulemaking(NPRM) to implement statutory amendments to the Family and Medical Leave Act of 1993 (FMLA). The proposal expands the military family leave provisions and incorporates a special eligibility provision for airline flight crew employees, as well as making some additional regulatory changes. All interested parties are invited to submit written comments on the proposed rule on or before April 16, 2012 at www.regulations.gov. More information is available at the Wage and Hour Division’s Proposed Rule Website. (February 15, 2012)
 
• The U.S. Department of Labor announced that it is taking the first step towards conducting surveys regarding the FMLA. The surveys are designed to update and expand the Department’s knowledge about FMLA leave-taking and close current data gaps remaining from previously conducted surveys. For more information on the survey, please visit the FMLA Survey Web page. (April 1, 2011)
 
• The Wage and Hour Division issued an Administrator Interpretation clarifying the definition of "son and daughter" under the Family and Medical Leave Act to ensure that an employee who assumes the role of caring for a child receives parental rights to family leave regardless of the legal or biological relationship. FMLA AI 2010-3, Press Release (June 22, 2010)

If you have any questions, please call us at 704-525-9666.