A Quirk in the Effective Date for the New Summary of Benefits and Coverage
This is one of several posts we intend to make on the recently issued guidance on the Summary of Benefits and Coverage (SBC). This is the four (double sided, so actually eight) page uniform summary that will be required for group health plans, as well as for individual insurance policies. It is intended to provide a way for enrollees to compare coverages more easily.
The statutory effective date to provide the SBC is March 23, 2012. The regulators were required to issue regulations at least one year in advance of that date. Proposed regulations were issued in August of 2011; final regulations and other guidance, including templates and forms, were formally published on Valentine’s Day, February 14, 2012.
An important question was the effective date: Under the final regulations, the effective date is postponed for group health plans until the first day of the first open enrollment period that begins on or after September 23, 2012. For employers with calendar year plans, this probably means that the SBC will be needed for the 2013 open enrollment season. For plan years that begin in October, November or December of 2012, compliance might not be needed until the plan year beginning in 2013, if open enrollment for the upcoming year begins before September 23, 2012.
But there is more to the effective date provisions than the above paragraph. The SBC requirement is also effective as of the first day of the plan year that begins on or after September 23, 2012, for newly eligible enrollees and for enrollees entering the plan under special enrollment rights. This means that plans with October 1 (and maybe November 1 or December 1) plan years will have to be prepared to provide the newly eligible and special enrollees with the SBC ahead of the general eligibility date.
In some cases, the plan may have a little extra time to comply with the requirement. Under the regulations, special enrollees must receive the SBC by the date that they are required to receive the Summary Plan Description (SPD) for the plan. That date is 90 days after enrollment. However, that regulatory exception does not include newly eligible enrollees who are not also special enrollees. This means that a newly hired (and therefore newly eligible) employee who enters the plan on or after September 23, 2012 and on or after the first day of the plan year beginning after that date must receive the SBC.
Plan sponsors of health plans with October, November or December plan years should pay special attention to these effective date rules.
Contact Benefits Notes for more information.