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Reviewing the Final Regulations for the ACA’s SBC Requirement


Strategic Approach to Health Care Reform

The IRS, Department of Labor (DOL) and Department of Health and Human Services (HHS) have issued final regulations addressing the Affordable Care Act’s summary of benefits and coverage (SBC) requirement. The final regs, which generally apply to group health plans for plan years beginning on or after September 1, 2015, amend the 2012 final regulations while largely following the December 2014 proposed regulations.

6 highlighted areas

Here are six highlighted areas of the regs that employers should be aware of going forward:

  1. When to provide an SBC. The final regulations adopt the proposed clarification that, if an SBC was provided before a plan’s application for insurance coverage or a participant’s eligibility for enrollment, then an SBC isn’t required to be provided again automatically at the time of application or eligibility — as long as the required SBC information hasn’t changed. The regs also clarify that an insurer need not provide a plan with a new SBC during negotiations if provided upon application.
  2. Contractual responsibilities. The final regulations adopt the proposed provision treating an entity that has contracted with another party to provide SBCs as satisfying the SBC requirement if the entity:
  • Monitors the other party’s performance,
  • Corrects any noncompliance determined to have occurred,
  • Communicates with participants and beneficiaries about any noncompliance (if the entity lacks the information necessary to immediately correct it), and
  • Takes “significant” steps as soon as practicable to avoid future violations.

Plan sponsors seeking to rely on this provision should note these requirements — and the agencies’ unwillingness, as expressed in the preamble to the final regs, to remove the obligation to monitor performance.

  1. Previous FAQ guidance. As under the proposed regulations, the final regs incorporate previously issued FAQ guidance to exclude Medicare Advantage plans from the SBC requirement. The final regulations also permit a group health plan with multiple benefit packages to provide either a single SBC or multiple ones, and they allow the SBC to be provided electronically in connection with online enrollment or in response to an online request. (The SBC must still be provided in paper form if so requested.)
  2. Online access to insurance documents. The final regulations clarify that insurers must include an Internet address where a copy of the actual individual coverage policy or group certificate of coverage is “easily available” to individuals shopping for coverage. For insured group coverage, because the actual certificate won’t be available until the plan sponsor has negotiated the terms of coverage, insurers would post a sample group certificate of coverage for each product and make the actual certificate (once executed) available to the plan sponsor, participants and beneficiaries via an Internet address.
  3. Fine for willful violations. The final regulations adopt the proposed approach for IRS and DOL enforcement of the statutory fine for willful failure to provide an SBC: $1,000 per failure. Insurers and governmental plans are subject to enforcement by the HHS, which has regulations already specifying this agency’s enforcement mechanism for SBC failures.
  4. Applicability date. For group health plan enrollments and re-enrollments, the final regulations adopt the proposed applicability dates. They apply to open enrollment periods that begin, as mentioned, on or after September 1, 2015. The final regs also apply to enrollments other than via open enrollment — for example, newly eligible enrollees and special enrollees — on the first day of the first plan year that begins on or after September 1, 2015. For disclosures to plans, the final regulations apply to health insurers beginning on September 1, 2015.

Notes from the preamble

The preamble to the final regulations explains, consistent with the agencies’ March 2015 FAQ guidance, that the agencies anticipate finalizing revisions to the SBC template, instructions and uniform glossary by January 2016. The revised materials will apply to plan or policy years beginning on or after January 1, 2017 — including open enrollment periods that occur in the fall of 2016 for coverage beginning on or after January 1, 2017.

The preamble also explains that, until the new template and associated documents are finalized and applicable, plans and insurers may continue to rely on the agencies’ April 2013 FAQ guidance. The 2013 guidance allows the required statements about “minimum essential coverage” and “minimum value” to be provided in a cover letter or similar disclosure with the SBC instead of in the SBC itself.

Missing pieces remain

The good news — particularly for plans with open enrollment periods just around the corner — is that the final regulations don’t contain any surprises for plan sponsors. And, consistent with the proposed regulations and the agencies’ stated purpose, they should make the SBC more useful to readers and perhaps less burdensome to provide.

But, as noted, the final revisions to the SBC template and related materials remain missing pieces to the puzzle. While plan sponsors and insurers comply with the new final regulations, they’ll have to continue using the old template and glossary. In addition, the final regulations, like the proposed version, don’t address whether the good-faith compliance standard continues to apply until the template and other materials are finalized. (This standard was most recently extended “until further guidance” in the agencies’ May 2014 FAQ guidance.)

Moving target

The ACA’s SBC requirement will remain something of a moving target for another year. If you have questions about how the rules apply to your organization, contact your employee benefits or HR advisor.

Present_RonDo you have questions about the final regulations addressing the Affordable Care Act’s summary of benefits and coverage requirement?

Contact Ron Present, Partner and Health Care Industry Group Leader, at 314.983.1358 or


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