Healthcare Reform has raised its head again. Yesterday, federal government issued their final regulation requirements on the Summary of Benefits and Coverage and Uniform Glossary. For HR Professionals these regulations add more compliance requirements to your already full checklist.
There are many components to the 150 page final regulation outline but I have highlighted the key areas employers should be aware of today. As we proceed to dig into the details of the final regulations there will be further insight and clarification and we will provide you with all necessary updates.
The good news is that many employers will only need to make small modifications to their current processes to comply with the notification requirements. However, with the complexity of the law and financial liability with non-compliance it is very important to understand all the requirements and work with a professional consultant who can advise you on best practice.
1. When must I comply with the new regulations?
The effective date to comply is September 23, 2012 but based on when your open enrollment and/or plan year begins you may not need to implement this change until a later date.
- An employer must provide its plan participants who are enrolling or re-enrolling in group health coverage with the required documentation on the first day of an employer's open enrollment period beginning on or after September 23, 2012.
2. What is the Summary of Benefits and Coverage?
- For newly eligible enrollees, such as new hires and special enrollments, the regulations begin to apply for employers with plan years beginning on or after September 23, 2012.
Today the health carriers all produce their own version of a Summary of Benefits and there is no uniformity in structure, terms or layout. The new regulations produce uniformity in an effort to make it easier for the consumer (your employees) to better understand the difference between each plan. The idea behind the new regulations is to help participants make better choices in their health coverage.
The structure of the Summary of Benefits will be in a pre-defined format. The format requires the use of language that is understandable to the average plan participant, it will be limited to four double-sided pages, and be printed in a font no smaller than 12 point.
Each insurer is required to produce the Summary of Benefits. There is an option for employers to continue to consolidate all of their benefit details into one Summary Benefits as long as the medical plan summary complies with the regulations.
Sample Version of Summary of Benefits
Sample Version of Glossary of Health Coverage and Medical Terms
3. What health plans are required to comply with these regulations?
All group health medical plans and stand alone HRA plans must comply with the Summary of Benefits regulations. FSA plans that are integrated into the medical plan must include the effect of the FSA on the medical plan in the Summary of Benefits. HSA, dental and vision plans are not subject to these requirements.
4. When am I required to distribute the Summary of Benefits to the plan participants?
- The Summary of Benefits must be distributed to a new enrollee at the time the new applications are provided. If there are no applications provided to the enrollee then the Summary of Benefits must be distributed no later than the first date of enrollment eligibility.
- The Summary of Benefits must be distributed within seven business days of a plan participant's request
- When the medical plan renews the Summary of Benefits must be distributed no later than 30 days prior to the first date of coverage under the new policy. Except, if the renewal has not been finalized the Summary of Benefits must be distributed as soon as practicable but no later than seven business days after the new policy is issued or written notice of the employer's intent to renew the policy.
5. How may I distribute the Summary of Benefits?
- For Special Elections (marriage or birth of child) the Summary of Benefits must be distributed within 90 days of enrollment. If the participant requests the Summary of Benefits then it must be distributed within seven business days.
The Summary of Benefits may be distributed electronically or by hardcopy. If the Summary of Benefits is posted online then the plan must notify the participants by letter or email that the document is available online, provide the internet address and note the participant may request a hardcopy version.
Employers are required to send one Summary of Benefits per family except if the employer knows that a family member is at a different address. Examples of this situation would include a spouse living at another address or a child dependent living at a different location.
6. What are the penalties for non-compliance?
Employers who do not comply with the final Summary of Benefits regulations may be subject to a penalty of $100 per day per individual and excise tax penalty of $100 per day per individual.
There are many more areas of this law which we will detail in future posts. If you have any questions or would like to learn more please contact our office at 650-363-7237 or firstname.lastname@example.org