News Story

Summary of Benefits FAQs Do Not Answer Issue of Effective Date, Practitioners Say, Pension & Benefits Daily

Friday, March 23, 2012

Reproduced with permission from Pension & Benefits Daily, (Mar. 23, 2012). Copyright 2012 by The Bureau of National Affairs, Inc. (800-372-1033) <>

The set of frequently-asked-questions and answers on the summary of benefits and coverage recently released by the Department of Labor's Employee Benefits Security Administration is helpful but does not address the major obstacle to employers, which is the looming effective date of Sept. 23, Andy R. Anderson, a partner at Morgan Lewis in Chicago, told BNA March 22.

"The FAQs help, but they don't address the major issue, which is the effective date. They fixed a lot of the things that the final rule should have addressed and didn't, but again they only go so far and unfortunately don't delay the effective date," Anderson said.

The eighth set of FAQs, posted on EBSA's website March 19 (53 PBD, 3/20/12), state that group health plan sponsors and issuers working in good faith to provide the standardized summary of benefits and coverage required under the Patient Protection and Affordable Care Act (Pub. L. No. 111-148) will not face penalties during the first year of applicability of the requirements.

On Feb. 9, DOL, the Department of Health and Human Services, and Treasury released the final rule stating that health plan insurers and group health plans must provide a standardized, easy-to-understand summary of benefits and coverage for plans as well as a uniform glossary of coverage terms for plan years beginning on or after Sept. 23, 2012(27 PBD, 2/10/12; 39 BPR 297, 2/14/12).

Compliance Approach Expected

Anderson said while it is beneficial that the FAQs state the enforcement approach toward implementing the SBC, it has been a common approach with PPACA implementation.

"I think that helps, on the other hand, I would have anticipated that to be their compliance approach in the first place. It's welcome that they put that in writing, but I didn't expect people to start having to pay fines on Sept. 23 if there was some minor problem with their SBC," he said.

Paul Dennett, senior vice president, health care reform at the American Benefits Council seconded Anderson's assessment of the FAQs, saying they helped clear up a lot of the secondary issues that have come up since the release of the final rule, but said the big issue is giving employers enough time to get the SBC together.

"It provided clarity on the important second tier issues, but the first tier issue continues to be the need for adequate time to get the job done properly, and on that the FAQs basically start by reiterating that the SBCs must be provided by the first day of an open enrollment period beginning on or after Sept. 23," Dennett told BNA March 22.

Changing the Date?

Dennett said by not changing the effective date of the rule, the agencies did not address the "underlying problem."

"The difficulty is that by not changing the actual date for compliance, it doesn't change the underlying problem that employers and health plans, and third party administrators, and all will have, which is that they will now have to really pull out all the stops to try to get the job done," Dennett said.

He added that groups would only ask for a "enforcement safe harbor" as a "last resort."

"Really what they want is to be able to move forward with implementation in a smooth way," Dennett said.

Helpful FAQs

Dennett and Anderson agreed that some of the more helpful answers provided in the FAQs were in reference to the a plan's ability to combine different levels of coverage into one summary.

According to the guidance, plans and issuers are not required to generate separate summaries for each level of coverage within a benefit package. This allows plans to combine information for the different levels of coverage, such as self-only and family coverage, into one summary, as long as the appearance is easy to understand, the FAQs said.

Dennett said when the rule was first issued it was unclear if plans needed to provide four separate SBCs if they offered four different tiers of coverage.

"It was simply unclear in the initial document, the initial guidance of the rule ... [that] if you had that type of situation did [it] require four different SBCs for each tier, or could it be covered under one," Dennett said.

Anderson said the way the FAQs addressed this issue is beneficial because they "allow collapsing what would have been almost a geometrically expanding universe of SBCs that were apparently required, or everyone feared they were required under the final rule. So that's probably one of the best things that came out of the FAQs."

'Culturally and Linguistically Appropriate.'

FAQs 13 and 14 address the issue of providing the SBC in a "culturally and linguistically appropriate manner" by requiring plans to include a sentence in the SBC regarding the availability of language assistance services.

Anderson said this issue is a daunting one for employers because according to the FAQs, SBCs sent to an "address in a county in which ten percent or more of the population is literate only in a non-English language" must be sent with a notice regarding language assistance services. Statements can be provided in Spanish, Chinese, Tagalog and Navajo, depending on the demographics of the county the SBC is sent to, the FAQs said.

"What I think is worrisome about it is that very few employers maintain data on the basis of a county, which is how all this stuff is triggered. So the end result is that any kind of employer that has any kind of national reach, or even a large regional reach, is going to put all four sentences in every one of their documents, because they're not going to come up with customized versions," Anderson said.

Delayed Effective Date?

In spite of the industry outcry from groups like the ABC for a delayed effective date for providing the SBC (38 PBD, 2/28/12; 39 BPR 445, 3/6/12), Anderson said he does not think that will come to fruition.

"My sense is that there will be no change," he said. "I think the White House is under a lot of political pressure from consumer groups to get this up and get it running."