Thank you to everyone who attended our recent Health Care Reform seminar! During the seminar, we mentioned the Summary of Benefits and Coverage, or SBC, required to be distributed as early as Sept. 23, 2012. One of the questions that arose about the SBC was, “Does this mean that the insurers now have to provide us our renewal quotes earlier?” Well, that certainly would be helpful, but unfortunately, it does not look like that will be happening.

An SBC must be provided to participants and beneficiaries for open enrollment periods that begin on or after Sept. 23, 2012.  The SBC must be provided with other open enrollment materials or not later than the first date on which the participant is eligible to enroll if an application is not required. If reenrollment is automatic, the SBC must be provided no later than 30 days before the beginning of the next plan year. However, the regulations provide that with respect to an insured plan, if the policy, certificate or contract of insurance has not been issued or renewed before such 30-day period, the SBC must be provided as soon as practicable but in no event later than seven business days after issuance of the new policy, certificate, or contract of insurance, or the receipt of written confirmation of intent to renew, whichever is earlier.

A notice of material modification of information contained in the most recent SBC is required to be provided 60 days before the date the effective date of any such modification. But the regulations require that this notice be provided only for changes other than in connection with a renewal or reissuance of coverage. Insurers will be required to provide an SBC to the plan and to participants and beneficiaries. The employer will also be required to provide the SBC to participants and beneficiaries, unless the insurer has done so. Consequently, the employer may have very little time to review the SBC for accuracy and completeness before it is distributed to participants and beneficiaries. Nonetheless, the employer is subject to substantial penalties for failure to provide the SBC or other required information: $1,000 per failure, plus potential excise taxes.

For many employers, this year’s open enrollment will be more challenging than in prior years. Further, the SBC will also need to be provided in other circumstances, such as newly eligible participants and beneficiaries, generally effective for plan years beginning on or after Sept. 23, 2012. Accordingly, if you have not yet reviewed the guidance and determined how you will satisfy the requirements, we encourage you to do so!