Cox Smith Employee Benefits E-Alert
This month government agencies have issued joint guidance interpreting two major mandates of health care reform: summaries of benefits and coverage and preventive care.
Summary of Benefits and Coverage
Health care reform legislation created a new notice requirement: beginning March 23, 2012, insurance companies and health plans/plan administrators must provide a uniform summary of benefits and coverage to applicants and enrollees for health coverage. The responsible government agencies have now issued a draft template intended to comply with the statute, as well as proposed regulations that flesh out how and when the summary must be provided.
The draft template, referred to as an "SBC," consists of four double-sided pages in two parts: a uniform glossary of important terms in health coverage (deductible, co-insurance, etc.) and a description of the coverage features of a particular plan. The latter portion includes a section describing what a participant would have to pay in several common "benefit scenarios," such as childbirth and managing diabetes.
Generally, an SBC for each benefit package option under a plan must be provided to participants and beneficiaries during open enrollment. (It must also be provided within 7 days of a request or a notice of a special enrollment event.) The SBC may be provided in writing or in an electronic form that meets the Department of Labor’s standards for electronic notifications. A plan administrator has the ultimate obligation to provide the SBC, but that obligation can be satisfied by an underwriting insurance company. Thus, where an insured plan has its insurance company provide open enrollment materials, the insurance company can simply include the SBC with those materials. An administrator of a self-insured plan will have more work, as it must first develop the SBC and then distribute it.
The proposed guidance takes several favorable positions concerning the duty to update an SBC when material modifications are made to a plan. The statute suggested that a new SBC must always be sent 60 days before the effective date of a change, and it was not clear whether the change must affect the current SBC. The proposed regulations provide that when changes are made for a new plan year, it suffices to provide a revised SBC with the open enrollment materials. If a material modification is made during a plan year that alters something in a current SBC, a revised SBC must be sent at least 60 days before the effective date of the change. Even so, the regulations provide a bit of relief: the timely provision of a new SBC will be deemed to meet a plan sponsor’s obligation to provide a summary of material modifications.
This is only a proposed rule; it may be altered when issued in final form after public comments are received. The preamble hints that the statutory deadline for compliance might be delayed. In any event, based on how the proposed regulation is written, it appears that the earliest an SBC would need to be provided is during a plan’s first open enrollment period occurring after March 23, 2012.
Preventive Care Mandate
Health care reform legislation requires that nongrandfathered health plans provide, free of charge, certain physician-prescribed preventive care and screening services. (The mandate of free preventive care does not apply to health plans so long as they maintain grandfathered status.) Some of those preventive care services were specific to women, such as mammograms and cervical cancer screenings.
The legislation required a comprehensive study to provide additional guidelines for women’s health services. Now that this study has been completed, the Department of Health and Human Services has adopted interim final regulations that expand the scope of free preventive care that nongrandfathered health plans must provide. The new rules apply to plan years beginning on or after August 1, 2012. Thus, nongrandfathered plans on a calendar year will become subject to the new rules on January 1, 2013.
Under the new guidance, the free preventive care must include:
- Annual well-woman visits;
- Any contraceptive approved by the FDA, sterilization procedures, and patient education/counseling;
- Breastfeeding support, equipment, and counseling;
- Gestational diabetes screening;
- Domestic violence screening;
- Annual consulting on HIV and other sexually transmitted infections;
- Triennial DNA testing for HPV, to reduce cervical cancer.
Nongrandfathered health plans sponsored by certain religious organizations may be exempted from the mandate to provide free contraception, if such coverage is "inconsistent with their tenets." The mechanism for claiming this exemption has not yet been created.