M*A*S*H* taught us how to do triage, and MacGyver taught us to creatively think our way out of an impossible situation. Both are skills that may come in handy for the many employers who maintain calendar year health plans and who were in the process of preparing for annual enrollment when the Summary of Benefit and Coverage (SBC) proposed regulations were recently announced.

The SBC requirements do not apply to this year’s enrollment process, and, as a practical matter, this proposed guidance is probably too late and incomplete for many employers to address right now. Further, for an insured plan, it appears that the responsibility for developing the SBC is on the insurer. So, as you look to prioritize and “triage” your plan, your time and effort may be best directed toward your current annual enrollment before you get to SBC.

Just do not wait too long, as the SBC requirements which become effective March 23, 2012, come with severe penalties for failure to comply (apparently up to $1,100 per enrolled employee per day, including fines and excise taxes). If you want to make comments about the proposed regulations, particularly about the compliance deadline, you need to do so by October 21, 2011.


The Patient Protection and Affordable Care Act (PPACA), enacted March 23, 2010, required Health and Human Services to issue SBC “standards” (a model), by March 23, 2011, giving health insurance issuers and health plans a minimum of one year to work with the model and to come into compliance before the March 23, 2012 deadline. March 23, 2011 came and went with no standards. On August 17, 2011, the U.S. Departments of Treasury, Labor and Health and Human Services issued guidance, but only in the form of proposed regulations and standards, primarily for insured plans. Apparently the standards will not be finalized until some time in 2012. Thus, the time period for working with the standards to create a compliant SBC could be reduced from one year to same-day.

The Departments have sought comments about a number of issues, and a good number of uncertainties remain. This includes, for example, how self-insured plans comply, whether the deadline will be extended, how soon non-calendar year plans must provide an SBC with open enrollment materials, how the SBC is coordinated with summary plan description requirements for ERISA plans, and what information should be provided about employer subsidies for coverage options.

One of the key issues, we believe, is how to handle conflicting definitions. PPACA assumed that there are “uniform definitions of standard insurance terms and medical terms” that could be set forth by Health and Human Services as part of the SBC, and that would define the terms used in the SBC. The Glossary of Health Insurance and Medical Terms is the Departments’ effort to satisfy this requirement. But to the best of our understanding, group health insurance plans are not required to be amended to define terms in a uniform manner. Therefore, pounding square pegs into round holes cause confusion. For example, it may be necessary to keep the SBC separate from the governing plan documentation to make these distinctions.

PPACA required that the SBC model contain nine elements in print no smaller than 12-point font, in a maximum of four pages. We call this “SBC Mission Impossible,” because all that information was simply not going to fit in four pages. In providing this draft guidance, the Departments applied their own M*A*S*H* and MacGyver skills. Specifically, someone decided:

  1. The first of nine elements required to be set forth in the four-page SBC (uniform definitions of standard insurance terms and medical terms) is not really part of the SBC, but is a separate four-page “Glossary of Health Insurance and Medical Terms” that does not count towards the SBC four-page limit.
  2. Four pages means eight pages, provided they are printed on double-sided paper.
  3. 11.5 font is not smaller than 12, apparently due to rounding. In the model at this site, the font types and sizes vary quite a bit, but as far was we can tell, most is 11.5-point.

Bottom Line

You have to give the Departments credit for creativity on this SBC Mission Impossible. But the statute clearly intended for health insurance issuers and health plans to have a minimum of one year to work with the standards after they were issued. The preambles estimate over 1.5 million hours will be required to comply with the standards in 2012. A little recognition that even the most conscientious insurers and employers cannot “M*A*S*H*” and “MacGyver” their way into compliance with standards that the Departments have not yet issued would help. If you don’t have time for anything else this fall, you may want to provide the Departments with your comments on the feasibility of this March 23, 2012 deadline, by October 21, 2011. (You may submit electronic comments on this regulation at http://www.regulations.gov. Follow the instructions under the ‘‘More Search Options’’ tab. Page 1 of the linked preamble provides other options for submitting comments, such as by regular mail.)