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Summary of Benefits & Coverage: Are you ready? Submitted 10/3/12


The Summary of Benefits & Coverage is a new disclosure requirement under the Affordable Care Act that is generally effective for group health plan on the first day of open enrollment periods on or after September 23, 2012. For those participants and beneficiaries who enroll outside of an open enrollment period, the SBC must be provided on the first day of the plan year that begins on or after September 23, 2012. The SBC is required for both self-funded and insured ERISA group health plans. The DOL has posted a model SBC which must be exactly followed for the font, shading, column width, and content. Certain minimal changes to the model template are permissible, such as the removal of premium and cost information. For your convenience, please see the link to DOL Model SBC below.


The SBC was established to help consumers better understand their coverage and, in-line with this intent, there are 12 required content elements, including a description of coverage including the cost sharing requirements (such as deductibles, coinsurance, and copayments), and information regarding any exceptions, reductions or limitations under the coverage. The SBC must include examples to help illustrate benefits provided under the plan or coverage for common benefit scenarios, such as pregnancy and serious or chronic medical conditions. It is interesting to note that the SBC cannot reference to the Summary Plan Description (SPD) or other document for any required content element. However, the final regulations do allow the SBC to be included within the SPD as long as the SBC is displayed prominently, follows the same requisite format and satisfies the appropriate timing requirements.


The SBC must be provided (i) upon application of enrollment, (ii) by the first day of coverage (if there are any changes), (iii) for special enrollees, no later than the date on which the SPD is required (within 90 days of enrollment), (iv) upon renewal (if must actively re-enroll, then at the same time that open season materials are distributed, and if evergreen, then within 30 days prior to first day of new plan year), and (v) upon request.


An SBC is also specifically required for COBRA qualified beneficiaries. The disclosure requirements for COBRA participants are slightly different, but a consistent general rule applies - a COBRA QB who has elected coverage has the same rights to receive an SBC as a similarly situated non-COBRA beneficiary. The qualifying event itself does not trigger an SBC disclosure requirement, but during an open enrollment period, a COBRA QB receiving COBRA coverage must be given the same rights to elect different coverage as provided to similarly situated non-COBRA beneficiaries. There are also unique situations when a COBRA QB should be offered different coverage at the time of the qualifying event (than the coverage he/she was receiving before the qualifying event) and this may trigger the right to an SBC.


The failure of compliance could result in some hefty civil penalties for group health plans and health insurance issuers. The DOL has acknowledged that certain contractual relationships to help manage certain benefits, may determine who is responsible for providing the SBC with respect to a plan. However, the civil penalty that can be imposed is $100 per day for each affected individual that does not receive a notice. There is an additional penalty of $1,000 per day for each affected individual for willful violations. Please note, similar to COBRA penalties, this penalty may be reduced for failures due to reasonable cause and not from willful neglect. Note: The Department of Labor (DOL) has stated that penalties on plans and issuers will not be imposed during the first year of applicability as long as such plans and issuers are working diligently and in good faith to provide the required SBC content in an appearance that is consistent with the regulations.


For additional information about the new SBC requirement under the Affordable Care Act, please click on the following links:

DOL Model SBC Template (provided by NAIC):

Final DOL Regulations:
DOL Frequently Asked Questions: