QUESTION: How are the requirements for the summary plan description (SPD) different from the summary of benefits and coverage (SBC), and can this summary replace our group health plan SPD?
ANSWER: Most group health plans, including ERISA plans and non-ERISA governmental and church plans, are required to provide an SBC. The SBC requirement is in addition to the SPD requirement, which applies only to ERISA plans and has a different purpose and target audience as well as different content, timing, and other requirements. Thus, the SBC does not replace the SPD.
The stated purpose of the SBC is to help individuals better understand their coverage and easily compare available options. There are strict appearance, language, and content requirements, including the use of an SBC template, which may not exceed four double-sided pages. The SBC generally must be provided at initial enrollment, open enrollment, special enrollment, and upon request. It must be provided to participants and beneficiaries, although if there is no knowledge of a separate address for a beneficiary, it is permissible to provide the SBC to the participant on the beneficiary’s behalf.
In contrast, the SPD is the primary vehicle for informing participants and beneficiaries about their rights and benefits with respect to the plan that covers them. Different style, format, and content requirements apply to the SPD, but there is no prescribed format or limitation on length. Generally, an SPD must be furnished when a participant first becomes covered by a plan, and then at regular intervals thereafter and upon request. Welfare plan SPDs are required to be provided only to participants covered under the plan, not to beneficiaries.
The rules permit an SBC to be provided either on a stand-alone basis or in combination with other summary materials, such as an SPD. Given the different timing and distribution requirements, however, for many plans it may be preferable to maintain a stand-alone version of the SBC.
For more information, see EBIA’s Health Care Reform manual at Section XVI.A (“Overview of the SBC Requirement”); see also EBIA’s ERISA Compliance manual at Section XXVI.E (“Summary of Benefits and Coverage (SBC)”).
Take your tax and accounting research to the next level with Checkpoint Edge and CoCounsel. Get instant access to AI-assisted research, expert-approved answers, and cutting-edge tools like Advisory Maps and State Charts. Try it today and transform the way you work! Subscribe now and discover a smarter way to find answers.
