Plan sponsors, administrators and insurers have begun planning their strategies to comply with the summary of benefits and coverage (SBC) requirement under the Affordable Care Act (click here for our latest client bulletin). Top action items focus on allocating responsibility, communications strategies, and limiting the cost of compliance.
- Identify the Relevant Parties. For insured group health plans, the plan and insurer are both required to distribute SBCs. Health plans and their insurers should begin discussing whether it is appropriate for one party to satisfy the responsibility. While the rules provide that all parties satisfy the requirement if one party appropriately provides SBCs, the rules do not provide relief from non-compliance penalties for a party that relies on another party fulfilling the requirement. So, the parties should document their agreement and allocate liability for non-compliance. In the case of self-funded health plans, the plan administrator should determine how best to approach compliance, which may include working with a TPA, benefits counsel and/or consultants to draft SBCs and implement a distribution process.
- Determine How SBCs Fit into the Health Plan's Communications Strategy. Many health plans already have significant communication pieces describing benefits, including Summary Plan Descriptions (SPD), open enrollment guides, and online tools. The rules allow SBCs to be combined with SPDs, thus an opportunity for a streamlined approach. However, the timing requirements related to distributing SBCs and SPDs are very different, so plan administrators should carefully consider the pros and cons of such an approach.
- Distribution Process. Distributing SBCs will be an ongoing exercise. Because SBCs are due to health plans and plan participants at various times, the parties must develop a process to determine SBC deadlines, distribute SBCs timely, and maintain records. Likewise, due to the timing rules, even if a plan administrator delegates the actual distribution to a TPA or insurer, it will likely have to remain part of the process and transfer relevant data about participants to the TPA.
- Cost Considerations and Electronic Distribution. Plan administrators should consider distributing SBCs electronically for potential cost savings, especially in light of the ongoing requirement to update and re-distribute SBCs. The electronic distribution guidelines for SBCs appear to be more lenient, in some cases, than the DOL's electronic distribution safe harbor.
- Consider Any Needed Adjustments to Template Format.Plan administrators should consider any benefits for which they may need a separate SBC (e.g., a stand-alone HRA) or that they will have to (or want to) integrate into a health benefit option's SBC (e.g., account-based benefits such as an integrated HRA, FSA or HSA). They should also decide whether they will address separate rate tiers in separate SBCs or combine rate tiers for a benefit option into one SBC.
While industry groups are advocating for a delayed effective date, time is short if an extension is not forthcoming. Initial planning will help identify obstacles to compliance and establish a solid SBC compliance strategy.
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