Final summary of benefit coverage guidelines released

As of September 23, 2012, health insurers and self insured employers will be required to comply with the benefits communication mandates of health care reform. This implementation date is one of several updates announced in the final guidelines on employee communications that were released on February 9th by the U.S. Department of Health and Human Services. (The implementation date was initially delayed in November 2011, pending this release of information.)

Insurers or self-insured employers who do not comply with this mandate will have to pay penalties of up to $1,000 for each individual enrolled in a plan.

This mandate is designed to make health insurance communications more friendly and free of insurance jargon. This part of the law requires that employers provide an “easy-to-understand” Summary of Benefits and Coverage for all employees with private health insurance. This document must summarize the key features of the plan or coverage, such as the:

• Covered benefits
• Cost-sharing provisions
• Coverage limitations and exceptions

Employers also need to make available upon request a glossary of commonly used health care coverage terms, such as deductible and copays. This glossary will be publicly displayed on the healthcare.gov website.

New rules, a bit of relief
The final guidelines include one change that should make things a bit easier for employers. According to the release, the Summary of Benefits and Coverage does not need to be provided as a stand-alone document, as the law initially required. It can be part of a health plan’s summary plan description, as long as the required information is presented together and is displayed prominently at the beginning of the summary description. The Summary does not have to provide information on premiums.

Another change: The final guidelines for the Summary require examples showing the portion of expenses a health care plan would cover for an insured individual who is having a baby and another for an insured individual who is managing diabetes. Originally the law required examples of the expenses an employee would face if being treated for breast cancer, but HHS decided that example was too complicated because treatment options can vary widely.

Four occasions that require Summaries
The guidelines specify that the Summary must be provided:

• When employees are applying for coverage
• Every year when coverage is renewed
• At least 60 days before significant changes in coverage take effect
• Any time an employee requests it, within seven days of the request. This seven day period also applies if an employee requests a copy of the glossary of terms

Presentation style unchanged
Some of the original requirements remain the same. The Summary of Benefits and Coverage must:

• Be provided in a consistent four double-sided-page format
• Present text in a 12-point font
• Include a customer service phone number and internet address
• Include copies of plan documents

You can find a template for the Summary of Benefits and Coverage, on the government’s website.

Impact on employers — Employers who are self-insured and create their own benefits documents will have to meet the federal guidelines for 2012 benefits enrollments. For employers who rely on enrollment firms or health insurers to provide benefits communications, the employer may need to distribute these documents to employees if the enroller or insurer does not do so.

Impact on employees and individuals — Employees should benefit from the clearly written and culturally relevant information, as well as the examples of how their coverage works. These materials can help employees compare coverage “apples to apples.” In 2014, when the Health Insurance Exchanges open, these communications will make it easier for employees to compare their workplace plan with coverage available on the Exchange.