Wednesday, February 15, 2012

Summary of Benefits and Coverage Final Rules

The Departments of Health and Human Services, Labor, and the Treasury (the Departments) have released the final rule and glossary implementing the Summary of Benefits and Coverage (SBC) requirements of the Patient Protection and Affordable Care Act (ACA). The final rule and related materials will be published in the February 14 Federal Register. As provided in the final rule, starting on September 23, 2012 with health plans upcoming open enrollment, health insurers and group health plans will be required to provide the SBC and the uniform glossary to consumers.

The SBC must be a concise summary (limited to four pages) of the key benefits and coverages provided through the health plan, the costs to the participant, lists of excluded services, and other significant conditions or limitations. These documents also must be prepared in a standardized format, type style, font size, and terminology so that comparisons can readily be made between different coverage offerings. The SBCs must be distributed in connection with any initial, special, or open enrollments, and any new plan coverages.

Specifically, the final rules ensure consumers receive two key forms that will help them understand and evaluate their health insurance choices:

  • A short, easy-to-understand SBC; and

  • A list of definitions (called the “Uniform Glossary”) that explains terms commonly used in health insurance coverage such as “deductible” and “copayment”

The final rules require that the SBC be provided to consumers as follows:

  • when they are shopping for coverage;

  • when coverage is renewed, before each new plan or policy year;

  • when there are coverage changes, to enrollees 60 days before the effective date of the changes, and

  • upon the consumer's request for information, within seven business days of the request (including the Glossary of terms).

The glossary and sample SBC is available at

The forms, SBC, and glossary were developed by the Departments based primarily on model forms created through a public process led by the National Association of Insurance Commissioners (NAIC) and a working group including representatives of health insurance-related consumer advocacy organizations, health insurers, health care professionals, patient advocates including those representing individuals with limited English proficiency, and other qualified individuals. The forms also reflect comments that the Departments sought directly from the public.

The SBC will include a new, standardized health plan comparison tool for consumers known as “coverage examples” — using a format modeled on the Nutrition Facts label required for packaged foods. The coverage examples will illustrate, for comparison purposes, what proportion of the cost of care a health insurance policy or plan would cover for a sample patient for two common medical situations — having a baby and managing type 2 diabetes. Additional scenarios will be added in the future as feedback is gathered from consumers. These examples will help consumers understand and compare a sample patient’s share of the costs of care under a particular plan and have a better idea of how valuable the health plan will be at times when they may need the coverage.

The SBC can be provided electronically, allowing a plan or issuer to post the SBC on its website or provide it by email. Electronic disclosure is expected to reduce costs while consumer safeguards are designed to ensure actual receipt by individuals. Additionally, the final rule provides flexibility in the instructions for completing the SBC in recognition of unique plan designs, the Departments asserted.

The SBC will make it easier for health insurance consumers to find the best coverage for themselves and their families — and for employers to find the best coverage for their business and their employees, the Departments said. The new rules also will make it easier for people and employers to directly compare one plan to another. The next step is to hear from the insurance carriers about their proposed delivery of the SBC.