A Closer Look at ERISA Requirements – A Review of the Summary of Benefits and Coverage
December 20, 2023
What is the Summary of Benefits and Coverage?
A Summary of Benefits and Coverage (SBC) is a document that health insurance companies are required to provide to plan participants and beneficiaries under the Affordable Care Act (ACA). It's designed to help individuals better understand their health insurance coverage by providing a summary of key information in a standardized format.
The goal of the SBC is to provide individuals with a concise and easy-to-understand summary of what a health insurance plan covers, what it costs, and any limitations or restrictions it might have, helping consumers make more informed decisions about their healthcare choices.
Must all benefit plans provide an SBC?
All health plans other than those determined to be “excepted” must provide an SBC. See our chart to determine if your plan is “excepted”. Excepted benefits include plans that provide benefits for dental or vision only, as well as most health flexible spending accounts (FSAs). SBCs are required for all major medical plans, most health reimbursement arrangements (HRAs), and non-excepted health FSAs.
Use this helpful chart to determine whether your health FSA is considered “excepted”:
What does the SBC include?
The SBC is a four-page, double-sided document containing information about covered benefits, cost sharing, and exclusions. The SBC must be provided in the specific format outlined in the template, and use the terms outlined in the SBC Uniform Glossary.
Non-English translations of the SBC must also be available in counties where 10% or more of the population residing in the county is literate only in the same non-English language (as determined based on U.S. Census data).
Who receives the SBC?
Plans and issuers must provide the SBC to all participants and beneficiaries at certain times (see below).
When must the SBC be provided?
Under the regulations of the ACA, health insurance issuers and group health plans are required to provide a Summary of Benefits and Coverage (SBC) at certain key times:
- Initial Enrollment: For new enrollees, the SBC for each benefit package for which the individual is eligible must be provided during the initial enrollment period when they first become eligible to enroll in the health plan.
- Annual Open Enrollment: Before the start of each annual open enrollment period, individuals who are already enrolled in the health plan must receive an updated SBC. This allows them to review any changes in coverage, costs, or benefits for the upcoming plan year.
- Special Enrollment Situations: For individuals who enroll pursuant to a special enrollment right, the SBC must be provided to the enrollee within 90 days after enrollment.
- Upon Request: Participants must be able to obtain an SBC from the issuer or plan administrator upon request. This allows individuals to have access to the summary of benefits and coverage when needed, beyond the regular distribution schedule. The plan administrator or insurer must provide the SBC within seven business days following a request.
The purpose of these timelines is to ensure that individuals have access to clear and updated information about their health insurance coverage at key decision-making points, such as when they initially enroll, during open enrollment, or when there are significant changes to the plan. This helps consumers make informed decisions about their healthcare choices.
What are the penalties for non-delivery of an SBC?
A penalty of up to $1,362 per failure can be assessed on plan administrators and insurers that “willfully fail” to timely provide the SBC. Each failure to provide the SBC to a participant or beneficiary constitutes a separate offense.
The above information is for general educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own legal counsel, tax and investment advisers.