Summary of Benefits and Coverage and the Uniform Glossary

The Health Care Reform law requires plan sponsors to provide two new government-developed documents to plan participants. The "Summary of Benefits and Coverage" (SBC) and the "Uniform Glossary" are intended to provide high-level descriptions of a plan (and definitions of standard terms) and are in addition to the ERISA requirement to provide a Summary Plan Description (SPD). An SBC need not be provided for plans, policies, or benefits packages that constitute excepted benefits. If a plan sponsor intends to make any material modifications in coverage, such as increases in cost-sharing or benefit reductions, the law requires the sponsor to notify participants at least 60 days before the modifications become effective. Penalties for non-compliance are significant.

The federal agencies published final regulations and template versions of the SBC and Uniform Glossary on February 9, 2012. The final regulations are very similar to the proposed regulations. The templates were developed by the National Association of Insurance commissioners for insurance policies and the final regulations relaxed the requirement about completing the template "as is". If the plan's terms cannot reasonably be described "in a manner consistent with the template and instructions, the plan or issuer must accurately describe the relevant plan terms while using its best efforts to do so in a manner that is still consistent with the instructions and template format as reasonably possible.". Plan sponsors (or their health insurance carriers) must begin distributing the SBC to participants and beneficiaries eligible to enroll in group health coverage through an open enrollment period beginning on the first day of the first open enrollment period that begins on or after September 23, 2012. For participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period, the requirements begin on the first day of the first plan year that begins on or after September 23, 2012. Distribution is required with enrollment materials, by the first day of coverage if there are changes since the enrollment, upon renewal, and upon request. An SBC may be distributed in paper or electronic form. The Uniform Glossary may also be distributed in paper or electronic form, but distribution is required only upon request. Click here to see a completed SBC template.