Employers and health insurance issuers must provide the Summary of Benefits and Coverage (SBC) and Glossary to all employees who are offered and who enroll in group coverage, per the ACA. The SBC is a standard document that explains all of a health plan’s basic coverage terms and cost-sharing requirements using simple and consistent language. The common template and instructions all health insurers and employers must use to create their SBCs and accompanying glossary, were recently updated. All employer groups and health insurers must begin using the new template and glossary for all plans that renew on or after April 1, 2017.
For employer groups with fully-insured health coverage, the health insurance carrier will prepare the new SBCs. For employers who self-fund all or part of their group benefits, the third-party plan administrator should ensure that new SBCs are prepared for all applicable components of the plan.
The Department of Labor (DOL) penalties for employers whose SBCs include willful mistakes or for groups who willfully do not follow SBC and uniform glossary distribution rules include a civil penalty $1087 for each willful distribution failure, and a $100 per day per affected beneficiary federal excise tax for group health plan compliance violations for failures and mistakes. The DOL has stated, however, that their intended approach to SBC enforcement is in assisting, rather than penalizing, employers, health insurance issuers and other related third-parties, when a good faith effort towards compliance is has been made.