QUESTION: Does the summary of benefits and coverage requirement apply to account-based arrangements like health FSAs, HRAs, and HSAs?
ANSWER: Whether a summary of benefits and coverage (SBC) is required for a particular account-based arrangement generally depends on the type of arrangement. Note that the SBC requirements do not apply to excepted benefits, which generally include health FSAs and certain HRAs.
Health FSAs. Health FSAs generally are excepted benefits (they generally must qualify as excepted benefits to comply with health care reform). As such, they are not required to provide an SBC. Health FSA sponsors may nonetheless choose to describe the plan’s effects in the SBC for the related major medical coverage.
HSAs. Since HSAs are generally not group health plans, an SBC is not required. However, a high-deductible health plan (HDHP) associated with an HSA must provide an SBC. This SBC can mention the effects of employer contributions to HSAs in the appropriate spaces on the SBC for deductibles, copayments, coinsurance, and benefits otherwise not covered by the HDHP.
HRAs. HRAs are subject to the SBC requirement unless an exception applies, such as for excepted benefit HRAs (EBHRAs) or HRAs providing only dental or vision benefits. However, for HRAs that are integrated with other group coverage, incorporating information regarding the HRA into the SBC for the primary medical coverage satisfies the SBC requirement, and a separate SBC is not needed for the HRA. And even if the HRA is not subject to the SBC requirement, the employer might choose to describe its effects in the SBC for a related medical plan.
Strict appearance, content, and language requirements apply to SBCs, including the use of a prescribed SBC template. Satisfying these form and content rules can be a challenge for account-based arrangements, as the rules were crafted with traditional health plans in mind. However, best efforts must be used to provide the information in a manner that is as consistent with the template format and instructions as reasonably possible. Note also that an updated SBC template and related materials must be used beginning with the first open enrollment period for plan years beginning on or after January 1, 2021, with respect to coverage for plan years beginning on or after that date (see our Checkpoint article).
For more information, see EBIA’s Health Care Reform manual at Sections XVI.B (“Which Plans Are Required to Provide the SBC?”), V.E (“Small Group Health Plans, Including Retiree-Only Plans”), V.F (“Excepted Benefits: Certain Health FSAs, Dental, Vision, and Others”), and V.K (“Health Reimbursement Arrangements (HRAs)”). See also EBIA’s Consumer-Driven Health Care manual at Sections XXV.D.4.f (“Application of SBC Requirement to HRAs”) and XXVIII.C (“Excepted Benefit HRAs (EBHRAs)”), and EBIA’s Cafeteria Plans manual at Section XXXV.C (“Health FSA Disclosure Requirements”).
Contributing Editors: EBIA Staff.