Summaries of. 30 Days and Counting. Janae Schaeffer, JD LBG Compliance Services HEALTH REFORM ADVISORY PRACTICE. Presented by

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1 HEALTH REFORM ADVISORY PRACTICE Summaries of Benefits & Coverage: 30 Days and Counting Presented by Edward d Fensholt, JD Janae Schaeffer, JD LBG Compliance Services Lockton Benefit Group 2012 Images courtesy of Thinkstock Click the Lockton Logo to Access the Presentation 1

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4 HEALTH REFORM ADVISORY PRACTICE Summaries of Benefits & Coverage: 30 Days and Counting Presented by Edward Fensholt, JD Janae Schaeffer, JD LBG Compliance Services Lockton Benefit Group 2012 Images courtesy of Thinkstock Click the Lockton Logo to Access the Presentation 6 Agenda Background Which Plans Must be Summarized in an SBC (and Which are Exempt)? Who Must Supply the SBCs, and to Whom? Construction and Review of SBCs: Keys to Watch For Where the Rubber Meets the Road: Delivery of SBCs Updating the SBC If There s Time A Few Health Reform Tidbits Questions 7 3

5 Background Background Summary of Benefits and Coverage Basic requirement: Plans must provide (affirmatively or, in some cases, by simply making available) 8-page summaries of key benefits, restrictions, etc. Very hard-wired format; 12-point font, etc. Must also make available specific Glossary, upon request Final regulations issued in early February Several sets of FAQs issued since then Detailing special safe harbors and other flexibility, relaxed enforcement standard, etc. Also issued: Model SBC templates (multiple languages) Sample completed SBCs (ditto) Sample glossary Detailed instructions Calculators for coverage examples Etcetera Where? 9 4

6 Background Summary of Benefits and Coverage Free of charge Up to a $1,000 fine, per violation, for failure to meet requirements Feds take relaxed view for first year (and likely later early years) of requirement 10 Background Summary of Benefits and Coverage Effective Date: SBC requirements apply to: Open enrollments beginning on or after September 23, 2012 Enrollments (outside of open enrollment) by newly eligible ibl individuals, special enrollees, etc. in plan years beginning on or after September 23, 2012 Example 1: Plan operates on calendar year plan year (i.e., ERISA plan year) basis; open enrollment commences October 1 SBC requirements apply to the open enrollment period beginning Oct 1, 2012, and to individuals enrolling outside of the open enrollment period if they enroll on or after January 1, 2013 Example 2: Plan operates on July 1-June 30 plan year, and open enrollment begins May 15 SBC requirements apply to the open enrollment period beginning May 15, 2013, and to individuals enrolling outside of the open enrollment period if they enroll on or after July 1,

7 Which Plans Must be Summarized in an SBC? Which Plans Must Be Summarized in an SBC? Requirement to distribute SBCs applies to all group health plans subject to health reform Both insured and self-insured plans Grandfathered and non-grandfathered ERISA and non-erisa But some health plans dodge the requirement because they re not subject to health reform 13 6

8 Which Plans Must Be Summarized in an SBC? Dental and Vision Plans Limited scope dental and vision plans are not required to comply...but SBC requirement will apply if medical plan and dental/vision plans are bundled: Dental and/or vision coverage is provided under same contract as medical OR dental/vision coverage is self-insured; and Employees pay a single premium for medical and dental/vision, with no opportunity to opt out of the dental/vision and pay a lower premium just for medical coverage If SBC requirements apply, then the medical plan s SBC should include a discussion of dental and/or vision benefits 14 Which Plans Must Be Summarized in an SBC? Health Flexible Spending Accounts Health FSAs are not required to provide an SBC if they re a excepted benefits but they won t be considered excepted if the Health FSA: Includes significant employer contributions at least $500 per year or Is available to employees who are not offered comprehensive medical coverage Plan sponsor may refer to Health FSA in medical plan s SBC and explain that dollars available from Health FSA may be used to satisfy deductibles and other out-of-pocket expenses 15 7

9 Which Plans Must Be Summarized in an SBC? Health Savings Accounts HSAs are not considered health plans, so there s no requirement to supply an SBC for an HSA But don t confuse HSAs with companion high deductible health plans (HDHPs), which are subject to the SBC rules A plan sponsor may reference an HSA and that dollars available from them may be used to satisfy deductibles and other out-of-pocket expenses in the comprehensive medical plan s SBC 16 Which Plans Must Be Summarized in an SBC? Stand-Alone Retiree Plans i.e., retiree-only plans are not subject to most health reform provisions, including the SBC requirements Voluntary Benefits Considered Excepted Similarly, these are not subject to the SBC rules Typically, critical illness policies, fixed indemnity policies ($500 per day of hospitalization, etc.) 17 8

10 Which Plans Must Be Summarized in an SBC? Employee Assistance Programs Tough nut, for practical reasons EAPs appear to be subject to SBC requirement where they supply ppy counseling instead of referrals How do you do an SBC for an EAP? Where EAP is bundled with (considered part of and reflected in the Form 5500 for) the health plan, health plan s SBC may be modified to refer to the EAP (but this requires tinkering with the insurer s or TPA s SBC ) If the EAP is a stand-alone plan, government will likely expect the sponsor or carrier to supply an SBC for the EAP or at least try to Practical problem: EAP vendors are slow to come to the SBC preparation party Mantra for 2013: Do your best 18 Which Plans Must Be Summarized in an SBC? Health Reimbursement Arrangements (HRAs) Will usually be subject to SBC requirements HRAs are often integrated with major medical coverage (when an insurer administers HRA alongside comprehensive medical plan and automatically pays enrollee s out-of pocket expenses from HRA) Integrated HRA benefits should be described in the major medical plan s SBC Do your best to describe benefits and their effect on major medical coverage (for example, how they may be used to offset out-of-pocket expenses) If the HRA is not integrated with major medical coverage i.e., if it s a stand-alone reimbursement program that may be used to offset major medical plan deductibles, etc. and also to reimburse out-ofpocket expenses not covered by major medical Should have its own SBC 19 9

11 Which Plans Must Be Summarized in an SBC? Wellness Programs Where wellness programs are offered as part of major medical plans, and could affect the participant s cost-sharing under the plans (for example because the wellness program supplies premium discounts or surcharges, deductible discounts or surcharges, etc.) then coverage examples in SBC for major medical plans should note effect of the wellness program when discussing assumptions used in creating examples 20 Which Plans Must Be Summarized in an SBC? Expatriate Plans Expat plans enjoy a free pass for the first year the SBC rules are in effect Authorities will no take any enforcement action against a health plan for failing to provide an SBC for expat coverage in the first year After first year, instead of summarizing coverage for items and services provided outside the U.S., a plan may provide an internet address (or similar contact info) for obtaining information about benefits and coverage provided outside the U.S. If the plan provides coverage within the U.S., the plan is still required to provide an SBC that accurately summarizes benefits and coverage available within U.S

12 Which Plans Must Be Summarized in an SBC? Carve-Out Programs Create Special Issues & Hassles Mantra: Do your best Multiple Carrier Coverages or Options, i.e., two or more insurers supply benefits under the plan, and both supply ppy an SBC for their respective parts of the plan At least for the first year of SBC applicability, plan may supply the two (or more) partial SBCs, and call it a day as long as the multiple partial SBCs together supply all necessary SBC information KEY: The plan sponsor should take steps (such as a cover letter or a notation on the SBCs themselves) to indicate that the plan provides coverage using multiple different insurers and that individuals who would like assistance understanding how these products work together may contact the plan administrator for more information KEY: This accommodation appears to apply only to insured coverages 22 Which Plans Must Be Summarized in an SBC? Plans with Multiple Options, and Wrap Plans Must there be a single SBC describing all coverage options? No Supply a separate SBC for each medical coverage option (PPO, HMO, etc.) NO requirement to supply separate SBCs for each coverage tier (e.g., employeeonly, employee + 1, employee + family, etc.) within each option BUT the SBC should assume employee-only coverage and note this assumption when displaying coverage examples May DISPLAY the SBC information for multiple options online, for ease of comparison (as long as it s understandable), but the actual, hard-copy SBC (or the online SBC that individuals may print) should reflect information solely for the relevant coverage option (e.g., just the PPO, or just the HMO option) 23 11

13 Who Must Supply the SBC, and to Whom? Who Must Supply the SBC, and to Whom? Who Must Provide Them? Insured plans: Insurer and plan administrator (usually, plan sponsor) have dual responsibility Self-insured plans: Plan administrator (usually, plan sponsor) Expectation: Insurers will provide them if they insured the plan, or act as third-party administrator May be extra fee in the latter case TPAs will provide them for self-insured plans May be extra fee Some cases will required coordination between the insurer/tpa and employer, regarding certain entries on the SBC Health FSA, HRA, HSA coordination Other unique plan features On-site clinics? 25 12

14 Who Must Supply the SBC, and to Whom? Who Must Receive Them? Current enrollees Actual delivery Individuals eligible for coverage, but not yet enrolled Must merely have access to the SBCs may be Internet access unless they request an SBC more on this later. Employees and dependents are entitled to an SBC Generally, compliant delivery to the employee is DEEMED to be delivery to the dependent, unless the plan is aware that the dependent does not reside with the employee 26 Summaries of Benefits and Coverage (SBC) Glossary is Not Part of 8-page SBC; it s a Separate Document Consists of Insurance-Related Terms Co-insurance, Deductible, Co-payment, OOP Limit, it UCR), Medical-Related Terms (DME, Emergency Room Care, Rehabilitation Services) and Other Terms Plan or Insurer Must Make Glossary Available Upon Request Within 7 Business Days Disclosure obligation may be met by providing an internet address where an individual may review and obtain glossary (e.g., plan, insurer or DOL or HHS website) Plan or insurer must provide a paper copy upon request Feds have supplied model glossary 27 13

15 Construction and Review of SBCs: Keys to Watch For Construction and Review of SBCs: Keys to Watch For Providing SBCs in a Culturally and Linguistically Appropriate Manner Enrollees residing in a county where according to 2010 census at least 10% of population is fluent in the same, non-english language, and speak English less than very well Notice in that language, offering translation assistance (must be prominent) Insurer or TPA should have residence, for mailing of EOBs Feds have supplied model one-sentence notices, in multiple languages If individual requests translation assistance Offer oral translation assistance (i.e. translation services telephone hotline), and (upon request) supply the SBC in the relevant foreign language Feds have supplied templates and sample completed SBCs, in multiple foreign languages: Spanish, Chinese, Navajo and Tagalog Recommendation: use the one-sentence notice for everyone (or at least all those in the same state) 29 14

16 Construction and Review of SBCs: Keys to Watch For SBCs have very specific language and formatting requirements all symbols, bolding, colors and shading, as well as wording, must be duplicated exactly with limited exceptions. The template and instructions used by the agencies are very detailed, an in most cases, the suggested language must be used Space for overall deductible on first page has several options: No overall deductible Overall deductible Put the amount of the deductible and must specify the major categories of covered services that are not subject to the deductible, other cost-sharing (such as co-insurance and co-payments) For family coverage which has separate deductible amount for each individual and the family, show both individual deductible and family deductible. Limitations and Exceptions column on the second page, you must list significant limitations and exceptions determined by two factors: probability of use and financial impact on the individual 30 Construction and Review of SBCs: Keys to Watch For Cross-references to the SPD An SBC may not use a mere cross-reference to another document, such as an SPD, to supply SBC-required information But the SPD may include a reference to the SBC, and the SBC may refer to the SPD (say, in a footer) for additional information or elaboration 31 15

17 Where the Rubber Meets the Road: Delivery of the SBCs Delivery of the SBCs Timing and Method of Delivery Vary Depending on Whether We re Dealing With An individual who is already enrolled, or An individual merely eligible for coverage but not yet enrolled and Whether, for individuals who are already enrolled, their re-enrollment is: Affirmative or Evergreen But recent FAQs have muddied the water a bit here May the SBC be Included in the SPD? Yes, if the SBC is complete and prominent (i.e., right after table of contents) and delivered timely and in appropriate method 33 16

18 Delivery of the SBCs At Open Enrollment Individuals who are already enrolled, and must either Affirmatively re-enroll (else, coverage lapses) or Have opportunity to affirmatively change coverages (i.e., if does nothing, current coverage option renews, but employee may also affirmatively choose another option) Deliver the SBC as part of open enrollment materials Supply the SBC for the option he or she is already enrolled in What if the current option is being eliminated? Give them the SBC for most analogous option? May supply it electronically with electronic open enrollment process Apparently, not bound by strict DOL e-delivery rules if enrollment is electronic Delivery to the employee is considered d delivery to the dependents, d unless plan is aware a dependent lives elsewhere What if enrollment is not electronic? SBC may be supplied electronically, but in accordance with stricter DOL rules for e-delivery of ERISA notices; may be best to deliver it on paper May the SBC simply refer the reader to the SPD, for relevant, SBC-required information? No. 34 Delivery of the SBCs At Open Enrollment Individuals who are enrolled, but re-enrollment is evergreen and there are no other coverage options to choose Delivery deadline is later; deliver it to the individual at least 30 days prior to the new plan year Exception where the renewal is not finalized or the carrier has not committed to the renewal by that 30-day deadline The SBC should be provided as soon as reasonably possible, but not later than seven business days after the insurer issues the renewed policy or supplies written confirmation of intent to renew, whichever is earlier. The plan satisfies the seven business day rule if it sends the SBC within seven business days Supply the SBC for the option he or she is already enrolled in Presumably may supply it electronically if enrollment process is online; safest play is to deliver hard copy Delivery to the employee is considered delivery to the dependents, unless plan is aware a dependent lives elsewhere What if enrollment is not electronic? SBC may be supplied electronically, but in accordance with stricter DOL rules for e- delivery of ERISA notices 35 17

19 Delivery of the SBCs At Open Enrollment Individuals eligible for coverage but not yet enrolled Make available the SBC for each coverage option the individual is eligible for Could also simply pyinclude them in enrollment packets Make the SBCs available not later than first day of open enrollment The SBCs may be made available online if the plan satisfies certain requirements: The document must be in a readily accessible format (such as in an HTML, MS Word, or PDF format) The SBC must be provided in paper form free of charge upon request; and The plan must timely advise eligible individuals that the SBC is available on the web and provide the web address This disclosure (sometimes referred to as the "e-card" or "postcard" requirement) may be made by , but unless the participant accesses the employer s electronic data system at the workplace or unless the employer has a valid address for the participant, the more prudent play may be to send the card by regular mail Federal authorities have offered the following model language for the postcard supplied to eligible individuals: 36 Delivery of the SBCs Availability of Summary Health Information As an employee, the health benefits available to you represent a significant component of your compensation package. They also provide important protection for you and your family in the case of illness or injury. Your plan offers a series of health coverage options. Choosing a health coverage option is an important decision. To help you make an informed choice, your plan makes available a Summary of Benefits and Coverage (SBC), which summarizes important information about any health coverage option in a standard format, to help you compare across options. The SBC is available on the web at: A paper copy is also available, free of charge, by calling 1-XXX-XXX-XXXX (a toll-free number)

20 Delivery of the SBCs At Open Enrollment What happens after the individual enrolls at open enrollment? There does not appear to be an obligation to affirmatively reach out to the individual and deliver the SBC for the option the person is enrolling in But the SBC must be available online (and the individual must understand how to obtain the SBC), and must be affirmatively sent (e.g., mailed) to the individual within 7 days after request for an SBC The next affirmative obligation to reach out to the individual, and deliver an SBC, is at the next open enrollment period (unless the individual requests one sooner) 38 Delivery of the SBCs Initial Enrollments and Special Enrollments Occurring Outside the Open Enrollment Window Newly eligible employees, eligible employees who enroll under a HIPAA special enrollment window, etc. Eligible individuals who are not currently enrolled must have access to the SBCs for the options they re eligible for, once they become merely eligible for coverage (i.e., as of they date they may first enroll) The SBC may be made available online (woo-hoo!!!) The document must be in a readily accessible format (such as in an HTML, MS Word, or PDF format) The SBC must be provided in paper form free of charge upon request; and The plan must timely advise eligible individuals that the SBC is available on the web and provide the web address (the e-card or postcard requirement) 39 19

21 Delivery of the SBCs Initial Enrollments and Special Enrollments Occurring Outside the Open Enrollment Window What happens upon actual enrollment? If the individual is a special enrollee, plan must reach out to him or her and deliver the SBC for the option in which he or she enrolled, within 90 days The SBC may be delivered electronically, but apparently only in accordance with stricter DOL rules for e-disclosure of ERISA-required documents 40 Delivery of the SBCs Individuals who Request an SBC The plan must provide the requested SBC(s) as soon as practicable, but no later than seven business days after the request Federal authorities say that a plan meets this deadline if it sends the SBC within seven business days If the individual requests an SBC online, the SBC may be provided electronically 41 20

22 Delivery of the SBCs COBRA Beneficiaries COBRA beneficiaries are entitled to receive an SBC during the plan s open enrollment periods, too Remember that COBRA beneficiaries have the same rights as active employees to change coverage options, etc., during an open enrollment period If the COBRA re-enrollment is evergreen, and there s no other option the COBRA beneficiary may choose, then the plan would have to supply the SBC, for the option the COBRA beneficiary is currently enrolled in, not later than 30 days prior to the beginning of the new plan year (subject to the exception for insured plans where renewal is running late, etc.) 42 Updating the SBC 21

23 Updating the SBC Mid-Year Plan Amendments If the amendment is material And changes the information required to be reflected in an SBC The plan must supply an updated SBC, or a notice of the change (consistent with SBC content and formatting rules) At least 60 days before the effective date of the change SUBSTANTIAL acceleration of current notice deadline This 60-Day Advance Notice Rule Does Not Apply to Renewals But because SBCs are required to be supplied at open enrollments, and some open enrollments occur 60+ days before the beginning of the new plan year, this will often be a moot point 44 Updating the SBC Other Updates If the plan supplied an SBC to an individual during the enrollment process, but before the first day of coverage there is any change in the information required to be in the SBC, the plan must update and provide a current SBC no later than the first day of coverage 45 22

24 Who When What How Notes Current Enrollees (including COBRA enrollees) Special Enrollees At open enrollment: with open enrollment materials, if must affirmatively re-enroll or re-enrollment is evergreen but individual may select other options. NLT 30 days prior to new plan year, if re-enrollment is automatic and no opportunity to choose other option; may be later for insured plans where renewal is late (7 business days after renewal issued or committed to by insurer). Upon request, SBC should be sent within 7 business days. The SBC for the coverage option in which he or she is currently enrolled. The SBC for the coverage option in which he or she is currently enrolled. The requested SBC. Hard copy, or electronically if enrollment is electronic; if paper enrollment, may supply SBC electronically in accordance with stricter DOL s rules. Hard copy, or electronically if reenrollment is electronic (presumably), otherwise in accordance with DOL s rules. Where the enrollee s current coverage option is being eliminated, we presume the plan supplies the SBC for the option to which the enrollee s coverage is being mapped. Better play may be to simply supply SBCs for each co e age option fo which the enrollee is eligible. Typically, SBC delivered to employee is deemed delivery to dependents unless plan knows a dependent does not reside with the employee. Plan may combine SBC with other materials, such as SPD or enrollment guide, if prominently displayed at beginning of document. DOL rules for electronic disclosure require e ee to have workstation access to network, or consent to e- delivery. l t i ll if each coverage option for Hard copy, or electronically if individual makes request electronically. NLT 60 days prior to any mid- Either an updated SBC, Hard copy, or year material change to or a summary of the electronically in coverage, that changes change (but consistent accordance with DOL s information reflected in the SBC. with style and format of rules. SBC). Within 90 days after special enrollment. The SBC for the coverage option in which he or she enrolled. Hard copy, or electronically in accordance with DOL s rules. 46 Who When What How Notes Individuals Eligible for Coverage but Not Yet Enrolled Upon or prior to eligibility to enroll. At open enrollment: with or at time open enrollment materials are The SBC for each coverage option for which he or she is eligible. The SBC for each coverage option for which he or she is Hard copy, or make available electronically in accordance with relaxed rules (see Notes). Hard copy, or make available electronically in accordance with supplied. eligible. relaxed rules (see Notes). Auto-enrollment under health reform: unclear, where an eligible employee is defaulted into a coverage option. Upon request, SBC should be sent within 7 business days. Presumably, the SBC for the coverage option into which the employee is defaulted, under yet-to-be issued auto-enrollment rules. The requested SBC. Hard copy, or electronically in accordance with DOL s more stringent rules, presumably. Hard copy, or electronically in accordance with relaxed rules (see Notes). Typically, SBC delivered to employee is deemed delivery to dependents unless plan knows a dependent does not reside with the employee. Plan may combine SBC with other materials, such as SPD or enrollment guide, if prominently displayed at beginning of document. Electronic disclosure for individuals not yet enrolled requires merely that the SBCs be readily accessible. For SBCs posted on the Internet, this means the SBC must be in an accessible format (Word, PDF, HTML, etc.), and plan must timely notify the individual via or in writing (e.g., a postcard) about how to obtain the e- version, and that a paper version is available upon request. Apparently, no obligation to affirmatively supply the SBC for the option in which the individual enrolls

25 Look Ahead Look for our SBC Guide will distribute next week! Detailed overview Explanation of various safe harbors and other accommodations reflected in Regulations, FAQs, etc. EXCELLENT shots of SBC template pages, with detailed instructions for how the various boxes should be completed. 48 Look Ahead 2012 Coverage values reflected on W-2s Exception for employers who filed fewer than 250 W-2s last year $1 per covered life fee to fund comparative effectiveness (best practices) research (payable in 2013) 2013 FSA Limits Additional Medicare taxes on high wage earners Notices about insurance exchanges (March 1, 2013 where s the model notice?) $2 per covered life fee to fund comparative effectiveness (best practices) research (payable in 2014) 49 24

26 Look Ahead 2014 $8 billion in taxes on insurers (expected to add 2.2% to commercial group insurance costs) $12 billion in fees on insurers and TPAs to: Repay the government $5 billion for the Early Retiree Reinsurance Program Disburse billions to insurers providing coverage to high-risk individuals Expected to add $10-15 per employee per month to insured and self-insured group insurance costs Cost sharing limits? $2k/$4k limits on deductibles OOP maximums tied to HDHP (i.e., HSA-compatible) coverage 50 Questions? 51 25

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