The Department of Labor (DOL) and the Department of Health and Human Services (HHS) released a new model template, updated instructions, and new information impacting coverage examples for the Summary of Benefits and Coverage (SBC) notice requirement. The updated materials must be used in SBCs for plan years beginning on or after January 1, 2021.

Under the Affordable Care Act (ACA), plans are required to distribute an SBC to employees eligible for coverage during open enrollment. The SBC is a summary of the plan’s benefits and coverage that must be presented in a specific format, contain specific information, and written in a way that is easy to understand for consumers.

SBCs must contain “coverage examples,” which shows consumers what their cost-sharing would be under the plan in common medical scenarios, including having a baby (normal delivery) and routine maintenance of well-controlled type 2 diabetes. HHS has a model calculator that plans can use to produce these coverage examples by inputting certain benefit information (e.g. the plan’s cost-sharing, deductibles, and coverage limits). HHS has released new information and guidance for simulating these coverage examples that must be included in SBCs for plan years beginning on or after January 1, 2021.

Employer Action

Plan sponsors (i.e. employers) are required to distribute SBCs to employees eligible for coverage during open enrollment (or to special enrollees within 90 days for mid-year enrollments). Carriers typically provide SBCs to employers who have fully insured plans. Thus, carriers should be providing fully insured employers with SBCs that have the updated information released by the DOL and HHS.

For self-insured plans, employers are responsible for supplying the SBC. Self-insured employers usually work with their third-party administrator (TPA) or contract with an insurer to generate an SBC. Employers with self-insured plans may want to reach out to their TPA to ensure their SBCs for the 2021 plan year will include the updated information.

Additional Resources

Disclaimer: This content is intended for informational purposes only and should not be construed as legal, medical or tax advice. It provides general information and is not intended to encompass all compliance and legal obligations that may be applicable. This information and any questions as to your specific circumstances should be reviewed with your respective legal counsel and/or tax advisor as we do not provide legal or tax advice. Please note that this information may be subject to change based on legislative changes. © 2020 Sequoia Benefits & Insurance Services, LLC. All Rights Reserved

Emerald Law – Emerald is a Client Compliance Consultant for Sequoia, where she works with our clients to optimize and streamline benefits compliance. In her free time, Emerald enjoys stand-up comedy, live music and writing non-fiction.