Transcript Title Goes Here - Conner Strong & Buckelew

Summary of Benefits and Coverage and Other Notices
and Disclosures for Group Health Plans
Thursday, October 20, 2011
9:00 am – 10:00 am EST
Today’s Speakers
Joe DiBella
Executive Vice President of the Health & Welfare Practice
Conner Strong & Buckelew
Phyllis Saraceni, Esq.
Senior Vice President and Compliance & Audit Practice Leader
Conner Strong & Buckelew
2
Welcome and Agenda
This is Conner Strong & Buckelew’s sixth webinar focused on The Patient
Protection and Affordable Care Act (“PPACA” or “Affordable Care Act”).
The focus of today’s webinar is on the uniform Summary of Benefits and
Coverage (SBC) required by the Affordable Care Act. We will address the
following:
 Quick review of repeal efforts and latest status on healthcare reform
 Address participant top questions received on general healthcare
reform issues
 Review detailed content requirements and proposed rules for the
Summary of Benefits and Coverage (SBC)
 Quick review of list of other notices and disclosures for group health
plans
3
Latest Healthcare Reform Developments
Our New Healthcare System
5
Healthcare Reform Major Milestones
2011 – age 26 and other mandates take effect
2011 – FSAs can no longer be used for over-the-counter (OTC) medications
2013 – FSA contributions limited to $2,500 per year
2014 – eliminate annual limits on coverage
2014 – eliminate pre-existing condition limitations for everyone
2014 – employer mandates and assessments begin
2014 – automatic enrollment of employees
2017 – states can permit businesses with more than 100 employees to
purchase coverage in the exchanges
2018 – 40% excise tax for high-cost “Cadillac” plans ($10,200 individual and
$27,500 family coverage)
6
Latest Developments with the Law
 The President is unlikely to sign legislation making big changes to the law, so there
is no real possibility of repeal in the short term. However:
>
Major issue in presidential election
>
Still controversial in many circles
>
25+ state legal challenges - some states refusing to begin exchange work
>
Supreme Court likely to consider mandate provisions next term - decision not
likely before June 2012
 In the meantime, certain provisions are subject to delay (nondiscrimination for self
insured benefit, claims/appeals standards, W-2 reporting delay)
 Additional provisions have been repealed piecemeal (CLASS Act, 1099 reporting,
free choice vouchers)
 Future guidance expected on many upcoming reforms including further notice
requirements, auto enrollment, pay or play, exchanges, etc.
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Phase 1 Underway
Immediate/short term provisions:
 Implemented provisions likely to survive repeal efforts, such as the age 26
and annual/lifetime limits
 Certain provisions subject to delay
 Non-grandfathered and new plans must comply with new non-
discrimination rules for self-insured plans (compliance not required until
years after 3/11/11 - earliest effective date would be 1/1/12 for calendar
year plans, but in any event not until after regulations or other
administrative guidance has been issued)
 Non-grandfathered and new plans must comply with new claims and
appeals rules (enforcement grace period for certain of the new internal
claims and appeals standards)
 W-2 reporting delay (reporting requirement applies to 2012 W-2s issued to
employees in 2013, therefore, employers will not be required to report the
cost of health coverage until January 2013)
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Phase II for 2014
 Major elements really begin to “kick in” in 2014
 2014 individual mandate/health insurance exchange provisions:
 What full repeal efforts are all about
 Some proposed guidance being issued (exchanges and premium
credit issues and affordability rules under shared responsibility
provisions)
 Future guidance expected on many issues (essential benefits,
preventive service guidelines, waiver issues)
 Certain provisions repealed or suspended (1099 reporting
provisions repealed, free choice voucher provision repealed,
CLASS Act long term care program suspended)
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Top Participant Questions
Participant Questions
Q.
What are the mandatory changes effective for 2012?
A.
The good news is that there are very few mandated 2012 changes as most health care
reform mandates were implemented during the 2011 plan year. The one significant
change applies to plans that have an annual limit for essential benefits. The $750,000
limit for plan years beginning on or after September 23, 2010 is increased in the
second year (plan years beginning on or after September 23, 2011) to $1,250,000.
Certain changes would also be required if your plan is losing grandfathered status
(doctor choice, preventive care to 100%, etc.).
Q.
If I now move to non-grandfathered what do I need to complete to meet all the
non-grandfathered requirements? What are the benefits of remaining
grandfathered?
A.
The rules require that grandfathered plans monitor their continued status as a
grandfathered plan and if lost then determine the plan mandates that apply to each
plan. Pros of maintaining status include being exempt from, or enjoying special
treatment under, certain healthcare reform provisions (100% preventive care, appeals,
emergency services, provider choice, age 26 exception for other coverage).
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Participant Questions
Q.
On the W-2s for 2013, should we show employer and employee deductions?
A.
Employers subject to the W-2 reporting mandate must comply for the 2012 tax year,
i.e., for the W-2 issued in early 2013. Employers must report the fair market value of
nontaxable health care coverage made available to the employee. The value includes
both employer and employee contributions (both pre-tax and post-tax).
Q.
What benefits are subject to the W-2 reporting requirement?
A.
Subject to reporting are medical plans, including prescription drug benefits, Medicare
supplement policies, EAPs, and executive physicals; dental and vision benefits, unless
they are stand-alone (HIPAA-excepted) benefits elected separately from medical plans;
on-site clinics, unless they only provide de minimis care; and employer health FSA
contributions (above the amount elected by employees). Employers do not have to
report HRAs, HSAs, and Archer MSA contributions. Employee health FSA
contributions are not reportable (employers must already report them on the W-2).
HIPAA-excepted benefits are not reportable, including stand-alone vision and dental
benefits, accident, disability, supplemental liability, auto and other liability insurance,
auto medical payment insurance, workers’ compensation, hospital or other indemnity
insurance, disease-specific, and similar limited benefits.
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Participant Questions
Q.
Are some states wanting the health care stated on the W-2's for 2011?
A.
There are states that have a reporting requirement for certain health insurance
provisions, such as the New York reporting requirement on the availability of
dependent health care coverage and the Massachusetts reporting requirement on
various health care reform provisions. But these are not W-2 reporting requirements for
state purposes.
Q.
Has there been any clarification on the definition of “essential benefits”?
A.
The essential health benefits (EHB) package will establish the minimum benefits –
including preventive, diagnostic, and therapeutic services and products – that must be
covered by certain health plans, including those participating in state-based health
insurance exchanges. Regulators continue to work to define EHBs for health reform
purposes, and on October 7, the Institute of Medicine of the National Academies (IOM)
provided a set of criteria and approaches for developing a package of EHBs. IOM
urges using benefits offered under a typical small-employer health plan as a starting
point and setting a premium target to keep the EHB package affordable. The IOM
report and public comments will be used to develop the essential benefits package, but
the timing of official guidance is uncertain.
13
Participant Questions
Q.
When should we expect to see the final requirements for the uniform summary of
benefits and coverage (SBC)?
A.
Regulators are seeking comments by 10/21/11, including input on special
considerations for group health plans and the feasibility of meeting the 3/23/12
deadline to begin providing SBCs. Since the proposed rules’ comment period
doesn’t close until 10/21, it is likely that the final rules and SBC materials won’t be
published until late this year or early next. Many are anticipating an extension of the
March 23, 2012 effective date.
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Summary of Benefits and Coverage
(SBC) Overview
Summary of Benefits and Coverage (“SBC”)

Uniform summary of benefits
and coverage (SBC) - a new
health plan disclosure required
by the Affordable Care Act.

Agencies provided a proposed
template for the SBC along
with instructions, sample
language, and a guide to be
used in completing the SBC.

Generally, all SBCs will include
the same information in the
same format so that
participants can compare this
information.

The plan is required to
complete the template SBC by
inserting plan details into the
template.
16
Purpose of SBC
é Intended to facilitate shopping and comparison across plans available
to Individuals
Example: Allowing individual to compare his employer
coverage, with spouse’s employer coverage,
with coverage in individual market
é Some consider group health plan materials too complex for the
average reader.
é Belief is that people can better understand and compare plans’ terms,
including cost-sharing requirements and restrictions on covered
benefits if there is a standard SBC format as to content and
appearance.
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SBC Specifications
Proposed template was developed by the National Association of Insurance
Commissioners (NAIC) with insured plans in mind – some editing would be beneficial
to make it more usable by self-insured plans
Template must be used without modification - consists of a series of tables, with
some pre-populated content and blank cells for plan-specific information.
Completed SBC cannot exceed four, double-sided pages and must use at least 12point font.
Must exist as a stand-alone document that adheres to the prescribed content and
format (regulators have invited comments on whether to let employers provide the
SBC as part of an SPD).
Must be written in a “culturally and linguistically appropriate manner”.
A separate SBC must be furnished, free of charge, for each benefit package (so if
employer offers both an HMO and a PPO, two SBCs must be provided).
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SBC Content
The SBC consists of the following:
A Benefit Summary - Four-page, double-sided document that provides a description of
covered benefits and benefit exclusions and limits and restrictions on covered benefits.
There will be distinct versions for each level of coverage (individual, individual and
spouse, family, etc.).
Coverage Examples - Part of the SBC and includes common medical scenarios defined
by HHS (e.g., scenarios for maternity, breast cancer, and diabetes are shown with typical
services provided and cost-sharing for a plan). The actual examples are to be based on
the cost-sharing of the specific plan (including deductible, coinsurance and copayment
obligations).
Phone Number and Website for Additional Information - A phone number and website
must be made available for individuals to get additional information, such as certificates,
booklets, contracts, relevant provider networks, or prescription drug formularies. The SBC
also must list a website to obtain the uniform glossary.
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Required Materials - Glossary
• A separate uniform glossary containing
required definitions, which must be
used without modification.
• Standalone document that includes
uniform definitions for specific medical
and coverage-related terms, as well as
coverage examples showing estimated
plan and enrollee costs for certain
services.
• Must be made available upon request,
in either paper or electronic form (as
requested), within seven days of the
request.
• For electronic disclosures, refer to
plan's or insurer's website or HHS's or
DOL's website (www.HealthCare.gov
and
www.dol.gov/ebsa/healthreform,
respectively)
where the uniform
glossary may be found.
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Other Communication Materials
• SBCs are required in addition to any other disclosure made by the plan.
• No relief currently provided to an employer that communicates the contents
of the SBC in another document (some debate over whether to permit the
actual SBC to appear within a plan’s SPD)
• Group health plans subject to ERISA already must provide extensive
disclosures, including summary plan descriptions (SPDs). The SBC is a
new additional communication mandate.
• Currently provided comparison charts and side-by-side tables comparing
key features of all options available to an employee may be more helpful,
but employers will have to furnish SBCs unless the final rules allow
alternatives.
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Which Plans Need SBCs?

Applies to group health plans (whether grandfathered
or not)

Insured and self-insured group health plans subject
to the Affordable Care Act

Generally, most plans providing medical coverage –
for example, HMOs, PPOs, EPOs, high-deductible
plans and prescription drug plans

Retiree-only plans and some types of dental and
vision plans are exempt.
22
Who Provides SBCs?
 Employers sponsoring self-funded arrangements (or the plan administrator)
must send the SBCs
 Employers with self-insured plans will work with their vendors to
develop the SBC, however, only the employer is responsible for
providing the SBC
 Insurers will provide the SBCs for insured plans
 Both the insurer and the employer are responsible for providing the
SBC, but only one actually needs to furnish the documents to eligible
individuals
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Required Recipients
 All individuals eligible for plan coverage (including family members) must
receive an SBC for every benefit option available to them (can send a
single SBC to families who have the same address).
 An individual eligible for different benefit packages must receive an SBC for
each option.
 Covered individuals need only receive the SBC for the benefit option in
which they are enrolled, unless they request SBCs for other options.
 Plans must offer foreign-language assistance if they have SBC recipients in
certain US counties where at least 10% of residents are only literate in the
same non-English language (SBC may need to state, in the applicable
foreign language, that non-English services and, on request, a translated
SBC are available).
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Required Delivery

Upon request - upon a participant’s request, the SBC must be provided
within 7 days of the request

The uniform glossary must also be made available upon request.

At enrollment (initial and annual) as part of any written enrollment or other
application materials

When special enrollment events prompt new enrollment opportunities SBC must be provided within 7 days of the special enrollment request.
25
When Enrolling for Coverage
 Plan must automatically provide an SBC with all enrollment packets,
whether provided to new hires or during special or annual enrollment.
 If the plan doesn’t distribute written enrollment materials, it must supply
SBC materials by the first day an individual is eligible to enroll.
 For subsequent plan years, SBCs would automatically be provided for
the elected coverage with each year’s open enrollment materials, but
SBCs for other benefit packages can be requested.
 When coverage is renewing, SBC materials must be furnished with any
written enrollment materials for renewal. If the renewal is automatic,
eligible individuals must receive SBCs 30 days before the first day of
the new plan year.
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When Coverage Changes
 If any mid-year material change to a plan affects the SBC’s content, then an updated
SBC must be sent at least 60 days before the change takes effect
 Can also be satisfied by providing a separate notice describing the SBC’s
changed content by this same deadline.
 ERISA’s definition of “material modification” applies for this purpose
 So for employer plans, if there is a material modification to a plan feature or coverage
that would affect the SBC content, notice of the modification would be required no later
than 60 days before the modification’s effective date. Applies only to changes made
during the plan year, and not to changes at annual renewal.
 Compliance with this requirement also satisfies ERISA requirement that plans
provide a summary of material modification (“SMM”) to participants and
beneficiaries
•
Note: Compliance with SMM requirements does not mean compliance with the
new SBC requirement
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Delivery Methods
There are several permissible delivery methods for SBCs
(delivering paper copies of SBCs always satisfies the requirement).
Electronic delivery is permitted in certain cases:
 ERISA plans. Can send SBCs electronically by following DOL’s
safe harbor standards for e-delivery of plan materials (rely on the
DOL safe harbor for recipients who regularly access the
employer’s e-mail system as a part of their jobs, for others such
as retirees and COBRA and those without computer access,
employers often mail paper copies.
 Nonfederal governmental plans. Can deliver SBCs
electronically by meeting the substance of the DOL safe harbor,
or require paper delivery to anyone who did not use electronic
means to request or submit a coverage application. Plans must
implement several safeguards to assure successful e-delivery of
SBCs, including requesting acknowledgment of receipt.
28
Penalties
• DOL, IRS and HHS have enforcement authority over SBC
compliance.
• The enforcement mechanisms and precise penalty amounts may
differ, depending on the circumstances and laws (such as ERISA)
applicable to a particular plan.
• The proposed rules broadly outline each agency’s enforcement
scheme (more specific guidance is expected).
• Willful failure to provide SBCs or the 60-day advance notice of a
material modification could trigger fines up to $1,000 for each
affected individual, which may be in addition to other applicable
penalties.
• A separate fine may be imposed for each individual affected by a
failure to provide the SBC.
29
Effective Date
 Current effective date is March 23, 2012, but look for possible delay of compliance date
given that the law required publication of the SBC rules months ago.
 Regulators are collecting comments on the feasibility of the March 23 deadline,
including practical considerations for employers to comply by that date.
 Proposed rules provide that starting as of March 23, 2012, SBCs must be provided
whenever required (i.e., when written enrollment materials are supplied for new-hire
and special enrollments, when coverage is renewed, and within seven days of a
request).
Note: Often new requirements take effect based on a plan year that begins several
months after the regulation is published, giving employers and carriers time to
implement the change. However, the plan year is not considered for purposes
of this SBC deadline.
30
Employer Next Steps
Consider preliminary steps under the proposed rules:
 Keep an eye out for the final guidance on SBCs and an anticipated delay of the March
23, 2012 effective date.
 Understand the effective date as it applies to your plans.
 SBCs are not required for the 2012 open enrollment for plan years beginning
January 1, 2012. However, even for calendar-year plans, SBCs will be required in
2012 at other times such as at initial (new hire) and special enrollment as well as
upon request on and after March 23, 2012. Note that the requirement is effective
(unless delayed in future guidance) beginning March 23, 2012—not plan years
beginning on or after March 23, 2012.
 List out benefit options and number of SBCs to be prepared.
 Coordinate with vendors and insurers to understand and develop strategies for
preparing and distributing SBC materials.
31
Employer Next Steps
Consider preliminary steps under the proposed rules:
 List out recipient groups entitled to particular benefit package materials.
 Consider eligible population groups to determine if requirements to offer
foreign-language assistance will apply and, if so, to which benefit packages.
 Consider delivery methods to use for which benefits-eligible groups.
 Evaluate the SBC’s impact on existing plan communication strategies (e.g.,
consider whether SBC materials might replace or supplement current
comparison materials).
The website of the Department of Labor's Employee Benefits Security Administration
provides links to the proposed rules and other information related to the SBC and the
Uniform Glossary. The information is available on EBSA's Affordable Care Act
webpage at http://www.dol.gov/ebsa/healthreform/index.html.
32
Other Notices and Disclosures
for Group Health Plans
Other Notices and Disclosures for Group
Health Plans
Consider distributions for other required disclosures:
 Long existing notices required under federal law

Summary Plan Descriptions (SPDs) – ERISA plans

Summary of Material Modifications (SMMs) – ERISA plans

Summary of Material Reductions (SMRs) – ERISA plans

CMS Creditable Coverage Notice

Women's Health and Cancer Rights Act (WHCRA) Notice

Newborns and Mothers Health Protection (NMHPA) Notice

HIPAA Privacy Notice and Reminder

HIPAA Preexisting Condition Notice (if required)

HIPAA Special Enrollment Rights Notice (updated for CHIP events)

State Premium Assistance Notice (CHIP)

COBRA Notices

USERRA Notice

Certain state reporting mandates (if required)
34
Other Notices and Disclosures for Group
Health Plans
 Newer notice requirements as a result of healthcare reform:
 One-time written notice of age 26 special enrollment
 One-time written notice of removal of lifetime limits (if required)
 One-time written notices regarding provider choice (if required)
 Advance notice of coverage rescission (if required)
 Grandfather plan notice (if required)
 Early Retiree Reinsurance Program (ERRP) notice (if required)
 Annual limit waiver (mini-med plan) notice (if required)
 SBC and material modification notices (March 23, 2012, unless delayed)
 W-2 health coverage reporting (2013 or later for small plans)
 Health insurance exchange notice (2013)
 Employer report of health coverage offerings (2014)
 Employer report of individual health coverage (2014)
 Notice of high-cost coverage subject to excise tax (2018)
 Auto enrollment notice (TBD)
 Disclosure of plan data notice (TBD – for new and non-grandfathered plans)
 Quality-of-care report and employee notice (TBD – for new and non-grandfathered plans)
35
Resources
Help from Conner Strong
Conner Strong
Healthcare Reform website page at:
http://www.connerstrong.com/healthcare_reform
» News updates
» Online library of client updates and alerts
» Summary of major provisions of the new law
» Detailed Year-by-Year timeline of changes
» Outline of all aspects of the new law
Check back for updates, news and analysis, and
updated tools to help you navigate this complex
process.
37
Other Resources from
Conner Strong
Periodic Webinars
- Web-based presentations on health
care legislation,
innovative ideas
regulations
and
Email Alerts and Updates
- High level, quickly produced articles
about emerging issues intended to
alert clients to legislative and
regulatory developments
- Historic library available on line
Perspectives
- Thought pieces intended to identify
trends and issues, helping clients
anticipate challenges
38
Agency Resources
Patient Protection and Affordable Care Act:
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h3590enr.txt.pdf
Reconciliation Bill:
http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h4872eh.txt.pdf
White House Web site for employers and individuals with information about the new reform law:
http://www.whitehouse.gov/healthreform
Agency healthcare reform sites:
Health and Human Services (HHS): http://healthreform.gov/.
Department of Labor (DOL):
http://www.dol.gov/ebsa/healthreform/
Internal Revenue Service (IRS):
http://www.irs.gov/newsroom/article/0,,id=220809,00.html?portlet=6
Call Conner Strong at 877-861-3220
39
Appendix
SBC and Glossary Templates
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42
43
44
45
46
Glossary of
Health Insurance and Medical Terms
47
Glossary of
Health Insurance and Medical Terms
48
Glossary of
Health Insurance and Medical Terms
49
Glossary of
Health Insurance and Medical Terms
50