Preamble to Prop Reg12/22/2014; Prop Reg § 54.9815-2715; Prop Labor Reg 2590.715-2715

IRS, EBSA, and the Department of Health and Human Services (HHS) (the Departments) have issued proposed regs that would amend final regs concerning disclosure rules for group health plans and health insurance issuers with regard to a “summary of benefits and coverage” (SBC) and a uniform glossary.The proposed regs would clarify when and how a plan or issuer must provide an SBC, and streamline and shorten the SBC template, while also adding certain additional elements that the Departments believe will be useful to consumers.In addition, some enforcement safe harbors and transitions would be made permanent, thereby discontinuing all temporary enforcement policies that the Departments have used as a bridge to a permanent rule.

Background.Section 2715 of the Public Health Service Act (PHSA), incorporated by Code Sec. 9815(a)(1) and ERISA § 715(a)(1) as part of the Affordable Care Act (ACA, P.L. 111-148, P.L. 111-152), directs the Departments, in consultation with the National Association of Insurance Commissioners (NAIC) and a working group comprised of stakeholders, to “develop standards for use by a group health plan and a health insurance issuer in compiling and providing to applicants, enrollees, and policyholders and certificate holders a summary of benefits and coverage explanation that accurately describes the benefits and coverage under the applicable plan or coverage.”

Final regs issued in 2012 establish the standards required to be met under PHSA §2715 and ensure that the information provided in the SBC and the accompanying uniform glossary is presented in clear language, and in a uniform format, so that consumers are better able to understand their coverage and compare coverage options (see Weekly Alert ¶ 7 2/16/2012).In addition, the Departments have issued a series of Frequently Asked Questions (FAQs) regarding implementation of the SBC provisions related to compliance with the final regs.

Proposed changes.The Departments are issuing the proposed regs, as well as a new set of proposed SBC templates, instructions, an updated uniform glossary, and other materials (available online at, to incorporate some of the feedback the Departments have received and to make some improvements to the template.Among other things, the proposed regs would:

…clarify when a health insurance issuer offering group health insurance coverage must provide an SBC again, if the issuer has already provided the SBC before application for coverage. Specifically, if the issuer provides the SBC before application for coverage, the requirement to provide an SBC upon application would be deemed satisfied, and the issuer would not be required to automatically provide another SBC on application to the same entity, provided there is no change to the information required to be in the SBC. However, if there has been a change in the information required, a new SBC that includes the correct information would have to be provided on application. (Prop Reg § 54.9815-2715(a)(1)(i))
…clarify how to satisfy the requirement to provide an SBC when the terms of coverage are not finalized. If the plan sponsor is negotiating coverage terms after an application has been filed and the information required to be in the SBC changes, the plan or issuer would not be required to provide an updated SBC (unless an updated SBC is requested) until the first day of coverage. The updated SBC would have to reflect the final coverage terms under the contract, certificate, or policy of insurance that was purchased. (Prop Reg § 54.9815-2715(a)(1)(ii))
…add an additional provision ensuring against unnecessary duplication. Where an entity required to provide an SBC with respect to an individual has entered into a binding contract with another party to provide the SBC to the individual, the proposed regs provide that specified conditions must be met for the SBC disclosure requirement to be considered satisfied. (Prop Reg § 54.9815-2715(a)(1)(iii)(A))
…end a temporary enforcement safe harbor which permitted statements about minimum essential coverage and minimum value to be included in a cover letter rather than in the SBC. Accordingly, effective for SBCs that are subject to the regs (see “Effective date” below), statements regarding minimum essential coverage and minimum value would have to be included in the SBC. (Preamble to Prop Reg)
…require a qualified health plan issuer to disclose on the SBC whether abortion services are covered or excluded and whether coverage is limited to services for which federal funding is allowed (excepted abortion services). Under the draft instruction guide released concurrently with the proposed regs, coverage of abortion services must be described in the “services your plan does not cover” or “other covered services” section of the SBC. (Preamble to Prop Reg)
…clarify that while all plans and issuers must include on the SBC contact information for questions, only issuers must also include an Internet web address where a copy of the actual individual coverage policy or group certificate of coverage can be reviewed and obtained. For the group market only, because the actual “certificate of coverage” is not available until after the plan sponsor has negotiated the terms of coverage with the issuer, an issuer would be permitted to satisfy this requirement with respect to plan sponsors that are shopping for coverage by posting a sample group certificate of coverage for each applicable product. After the actual certificate of coverage is executed, it would have to be easily available to plan sponsors and participants and beneficiaries via an Internet web address. (Prop Reg § 54.9815-2715(a)(2)(i)(J))

The new SBC template that has been published contemporaneously with the proposed regs would eliminate some information from the SBC that is not required by statute, which would make it easier for plans to include all of the required information in the SBC while also satisfying the statutory page limit.

Effective date.The Departments have proposed that the changes apply, for disclosures with respect to participants and beneficiaries who enroll or re-enroll in group health coverage through an open enrollment period, beginning on the first day of the first open enrollment period that begins on or after Sept. 1, 2015.For disclosures to participants and beneficiaries who enroll in group health coverage other than through an open enrollment period (including those newly eligible for coverage), the revised requirements would apply beginning on the first day of the first plan year that begins on or after Sept. 1, 2015.(Preamble to Prop Reg)

References:For group health plans’ obligation to provide an SBC and uniform glossary, see FTC 2d/FIN ¶ H-1325.67A ; United States Tax Reporter ¶ 98,154.14 .

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