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Blog By: Beth Ede, SPHR

What is an SBC and what is its purpose?

In simplified terms, an SBC is a new additional plan document required by the Affordable Care Act.  The purpose – to provide uniform information about a health plan’s benefits to enable individuals to compare plans and make better informed health coverage decisions.  

 

Who needs to comply with the SBC requirement?

SBC requirements apply to both fully-insured and self-insured group health plans – regardless of grandfathered status, and employers with a group health plan are responsible for distribution.  

 

What must the SBC look like and what information does it need to contain?

The Department of Labor (DOL) has provided supporting guidance and documents - click here.  

 

When are the effective dates for SBC compliance and distribution?

First day of the first open enrollment period begins on or after September 23, 2012.  If no open enrollment period, then the first plan year that begins on or after September 23, 2012.  Beginning with the first day of the first plan year on or after September 23, 2012, specific events carry specific additional distribution requirements. 

 

How must SBCs be distributed?

SBCs must be distributed “in a manner that can reasonably be expected to provide actual notice” to those enrolled in or eligible to be covered by an applicable plan.  In paper format, distribution is approved via first-class mail, interoffice mail, or hand delivery.  SBCs may also be delivered electronically – but special electronic distribution rules apply.

 

What is considered a “group health plan” for the purposes of the SBC requirement?

Common plans and programs are listed in the following chart, but consideration needs to be given to all other plans such as employee assistance programs (EAPs) and wellness programs. 

 

Type of Plan*

SBC Required?

Explanation

Major Medical

Yes

 

Stand-Alone Dental

No

Considered an “excepted benefits” – SBC requirements do not apply

Stand-Alone Vision

No

Considered an “excepted benefits” – SBC requirements do not apply

Health Savings Account (HSA)

No

Generally not considered group health plans – generally not subject to SBC

Limited Purpose Flexible Spending Arrangement

No

LP FSAs cover “excepted benefits” – SBC requirement do not apply to excepted benefits

Flexible Spending Account (FSA) – Medical

Possibly

FSAs that cover non-excepted benefits but are integrated with another major medical plan don’t need separate SBCs – FSA information can be integrated into the major medical SBC. Stand-alone FSAs that covers non-excepted benefits must satisfy the SBC requirement separately.

Health Reimbursement Arrangement (HRA)

Possibly

HRAs that cover non-excepted benefits but are integrated with another major medical plan don’t need separate SBCs – HRA information can be integrated into the major medical SBC. Stand-alone HRAs that covers non-excepted benefits must satisfy the SBC requirement separately.

*A thorough review of all benefit plans/programs must be done in order to determine if SBC requirements apply

 

Are there consequences for failing to provide timely SBCs?

Penalty for failure to provide timely SBCs is from $100 to $1,000 per participant per occurrence.   For the initial year, enforcement will be lenient but employer compliance with this requirement is essential. 

 

 

Posted 9:50 AM  View Comments

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