Earlier this week, the Department of Health and Human Services (HHS) issued detailed guidelines regarding women’s health care services that group health plans and health insurance policies must cover without cost-sharing pursuant to Section 2713 of the Patient Protection and Affordable Care Act, as amended (ACA). These guidelines amend and supplement the interim final rules relating to coverage of preventive services that were issued on July 19, 2010 (the Preventive Care Interim Final Rules). The guidelines mandate that group health plans and health insurance policies cover the following women’s health care services without requiring a co-payment, co-insurance or deductible:

The guidelines apply to the first plan year that begins on or after August 1, 2012, which means that for calendar year plans the guidelines will be effective beginning January 1, 2013. The release and effective date were specifically intended to ensure that plans covering college students, which commonly begin new policy years in August, are subject to the guidelines for the 2012-2013 plan year.

In connection with the release of the guidelines, the Department of Treasury, the Department of Labor and HHS jointly issued an additional amendment to the Preventive Care Interim Final Rules that allows HHS to establish an exemption from the requirement to provide contraception for religious employers. A definition of “religious employer” that is based on the existing definition used by most States that require coverage of contraceptives, but exempt religious employers from this requirement, is also included in the amendment.

[1] This likely should have been 9.5 percent, which is the level at which an individual generally becomes eligible for federal premium assistance instead of a free choice voucher.Produced by Proskauer Rose LLP
© 2011 Proskauer Rose LLP. All Rights Reserved

This e-mail is a service to our clients and friends. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.
Benefit Advisors Network and its members are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.

On August 18, 2011, the Departments of Labor, Health and Human Services, and the Treasury released proposed regulations that provide standards for use by group health plans and health insurance carriers in compiling and providing a summary of benefits and coverage (SBC) and a uniform glossary of commonly used health insurance and medical terms, as required by the Affordable Care Act. The Departments also released templates, instructions, and related materials to assist with development of the SBC and disclosure of the uniform glossary. The proposed regulations were published yesterday in the August 22, 2011 Federal Register.

As described below, the Affordable Care Act directs group health plans (including grandfathered plans) and health insurance carriers to comply with the SBC and uniform glossary requirements starting March 23, 2012. These new rules and standards are designed to enable plan participants to “easily understand their health coverage and determine the best health insurance options for themselves and their families.” To that end, the SBC must be presented as a stand-alone document, in a uniform format, use terminology understandable by the average plan enrollee, not exceed four double-sided pages in length, and not include print smaller than 12-point font. The SBC is accompanied by the four page uniform glossary of health insurance and medical terms, which also will be available on the government websites www.healthcare.gov and www.dol.gov/ebsa/healthreform/ .

For fully insured plans, health insurance carriers are responsible for developing the SBC. For self-insured plans, the plan sponsor (or designated administrator) is responsible for developing the SBC. Although the SBC requirement applies jointly to group health plans and health insurance carriers, to avoid duplication of efforts both parties will satisfy the requirement if either party provides a timely and otherwise compliant SBC. Failure to comply with the SBC requirement can result in significant penalties: a group health plan or health insurance carrier that willfully fails to provide an SBC is subject to a fine of not more than $1,000 per offense; however, each failure with respect to a participant or beneficiary constitutes a separate offense. Additional excise tax penalties and reporting obligations (i.e., Form 8928) may also apply.

PROVIDING THE SBC (CARRIER TO PLAN SPONSOR)

Effective March 23, 2012, health insurance carriers are required to provide an SBC to the plan sponsor upon application or request for information. The SBC must be provided as soon as practicable following the request, but in no event later than seven days. A carrier also must provide a new SBC to the plan sponsor each year when the policy is renewed (if renewal is automatic, the SBC must be provided at least 30 days prior to renewal). The Departments seek comments on whether, in the event that the only change to the SBC is a final premium quote, premium information can be provided in another way that is easily understandable and useful to plan sponsors and individuals, other than by sending a new, full SBC.

The proposed regulations also contemplate that changes to the SBC template may be appropriate to accommodate various types of plan and coverage designs, to provide additional information to individuals, or to improve the efficacy of the recommended disclosures. Plan sponsors of self-funded plans also may need to modify the template, as the preamble to the regulations indicates that the SBC template and related documents were drafted primarily for use by health insurance carriers.

PROVIDING THE SBC (PLAN TO PARTICIPANTS)

Effective March 23, 2012, an SBC must be provided by the plan or carrier at the following times and under the following circumstances:

• A group health plan or health insurance carrier must provide an SBC to:
  • participants or beneficiaries upon request, as soon as practicable, but in no event later than seven days following the request;
  • special enrollees within seven days of a request for enrollment pursuant to a special enrollment right under HIPAA; and
  • a participant or beneficiary with respect to each benefit option for which the participant or beneficiary is eligible no later than the first date the participant is eligible to enroll (or with any written application materials distributed prior to enrollment).

  However, upon renewal, an SBC need only be provided for the benefit option in which a participant is enrolled (unless SBCs for other options are requested). If there is any change to the information required to be in the SBC before the first day of coverage, the plan or carrier must update and provide a current SBC to a participant or beneficiary no later than the first day of coverage.

• A group health plan or health insurance carrier also must provide participants with a new SBC each year when the policy is renewed (if renewal is automatic, the SBC must be provided at least 30 days prior to renewal).

The SBC requirement is satisfied if a single SBC is provided to a participant and beneficiary known to reside at the same address. The SBC requirement may be satisfied electronically, provided the distribution complies with ERISA’s electronic disclosure rules.

If a material modification is made to the terms of the plan (other than in connection with a renewal of coverage – e.g., mid-year) that would affect the content of the SBC, and such modification is not reflected in the most recently provided SBC, then the plan or carrier must provide notice of the modification to enrollees not later than 60 days prior to the date on which such modification will become effective. This means that plan sponsors will not be required to distribute a new SBC 60 days in advance of changes made in connection with the renewal (although SBCs must continue to be provided as described above).

CULTURALLY AND LINGUISTICALLY APPROPRIATE

The Affordable Care Act requires that the SBC be presented in a culturally and linguistically appropriate manner and utilize terminology understandable by the average plan enrollee. Under this requirement, a plan must provide the SBC in a non-English language upon request if, with respect to the participant’s home address, ten percent or more of the population residing in the county is literate only in the same non-English language, as determined by guidance published by the Departments. We note that this standard is different from, and will be more difficult to administer than, the standard applicable to summary plan descriptions and other ERISA documents.

English language versions of the SBC must include a statement prominently displayed in an applicable non-English language clearly indicating how to access any language services provided by the plan or carrier.

CONTENT OF THE SBC

The SBC must include the following:

(A)  Uniform definitions of standard insurance terms and medical terms so that consumers may compare health coverage and understand the terms of (or exceptions to) their coverage;

(B)  A description of the coverage, including cost-sharing, for each category of benefits identified by the Departments in the guidance;

(C)  The exceptions, reductions, and limitations of the coverage;

(D)  The cost-sharing provisions of the coverage, including deductible, coinsurance, and copayment obligations;

(E)  The renewability and continuation of coverage provisions;

(F)  Coverage examples to illustrate common benefits scenarios (including pregnancy and serious or chronic medical conditions) and related cost-sharing based on recognized clinical practice guidelines;

(G)  With respect to coverage beginning on or after January 1, 2014, a statement about whether the plan or coverage provides “minimum essential coverage” and whether the plan’s share of the total allowed costs of benefits provided under the plan meets applicable requirements;

(H)  A statement that the SBC is only a summary and that the plan document, policy, or certificate of insurance should be consulted to determine the governing contractual provisions of the coverage;

(I)  Contact information for questions and obtaining a copy of the plan document or the insurance policy, certificate, or contract of insurance (such as a telephone number for customer service and an Internet address for obtaining a copy of the plan document or the insurance policy, certificate, or contract of insurance);

(J)  For plans and carriers that maintain one or more networks of providers, an Internet address (or similar contact information) for obtaining a list of network providers;

(K)  For plans and carriers that use a formulary in providing prescription drug coverage, an Internet address (or similar contact information) for obtaining information on prescription drug coverage;

(L)  An Internet address for obtaining the uniform glossary; and

(M)  Premiums (or in the case of a self-funded group health plan, cost of coverage).

The SBC must include coverage examples that illustrate benefits provided under the plan for common benefits scenarios (including pregnancy and serious or chronic medical conditions). The Departments may identify up to six coverage examples that may be required in an SBC.

The examples will be hypothetical situations, consisting of a sample treatment plan for a specified medical condition during a specific period of time, based on recognized clinical practice guidelines. Future guidance will specify the types of services, dates of service, applicable billing codes, and allowed charges for each claim in the benefits scenario.

NEXT STEPS

Sponsors of fully insured group health plans should check with their insurance carriers and prepare to begin distributing SBCs in accordance with the requirements described above starting March 23, 2012 (note that an immediate complete distribution of SBCs is not required). Also, because an insurance carrier generally satisfies its obligations by providing the form to the plan sponsor, sponsors should confirm with the carrier whether it is delivering the notice directly to participants.

Sponsors of self-funded group health plans should consult with benefits counsel and their plan administrators to develop an SBC that meets the content requirements described above. Also, considering that the SBC was designed primarily for use by health insurance carriers, plan sponsors may need to modify the template to accommodate various types of plan and coverage designs, to provide additional information to individuals, or to improve the efficacy of the recommended disclosures.

To view the proposed template for the summary of benefits and coverage, visit www.healthcare.gov/news/factsheets/labels08172011b.pdf.

Please contact your Proskauer attorney or any member of our Health Care Reform Task Force should you have questions regarding this or any other aspect of health care reform

Produced by Proskauer Rose LLP

This e-mail is a service to our clients and friends. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.

Benefit Advisors Network and its members are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.

Seitlin Benefits is pleased to extend to you an invitation to participate in this month’s FREE webinar in conjunction with BAN (Benefits Advisors Network).  This month’s webinar will be held on March 16th at noon (EST) and will focus on PPACA’s notice requirements and what amendments may be required to an employer’s group health plans, as well as a discussion of “best practices” regarding disclosure of information to employees. To register, visit our 2011 Compliance Webinar Series and click on Health Care Reform Update – Review of Required Notices and Other Reporting or Disclosure Requirement.

To request a recording contact, aflaifel@seitlin.com.

On June 17, 2010, the Departments of Labor, Health and Human Services, and Treasury (the “Departments”) released interim final regulations relating to the status of grandfathered health plans under the Patient Protection and Affordable Care Act (the “IFRs”).  The IFRs set forth the rules for determining whether a group health plan or health insurance coverage qualifies as a grandfathered health plan, how that status is maintained, and how a grandfathered health plan may lose its grandfathered status.  One such rule provided that a group health plan would lose its grandfathered status if the plan entered into a new policy, certificate, or contract of insurance after March 23, 2010.

On November 15, 2010, the Departments issued an amendment to the IFRs (the “Amendment”) generally allowing group health plans to switch insurance companies without forfeiting grandfathered status, so long as the plan is not otherwise changed in a manner that violates one of the other rules for maintaining grandfathered plan status.  [click here to see our 6/21 Alert on grandfathering].   However, the Amendment makes clear that a group health plan (including a group health plan that was self-funded on March 23, 2010) that enters into a new policy, certificate, or contract of insurance after March 23, 2010 loses its grandfathered status to the extent the new policy, certificate, or contract of insurance is effective prior to November 15, 2010, the date of the Amendment.  For example, if a group health plan enters into an agreement on September 28, 2010 for a new policy to be effective on January 1, 2011, then January 1, 2011 is the relevant date for purposes of determining application of the amended rule.  In this example, the amended rule would apply and the plan would remain grandfathered.  If, however, the group health plan entered into an agreement on July 1, 2010 for a new policy to be effective on September 1, 2010, then the amended rule would not apply and the plan would cease to be grandfathered.

The Amendment also provides that, to maintain grandfathered status, a group health plan that enters into a new policy, certificate, or contract of insurance must provide the new insurance issuer documentation describing the prior health coverage sufficient for the issuer to determine whether any change made to the coverage triggers a loss of grandfathering under the other rules set forth in the IFRs.  For this purpose, the documentation provided may include a copy of the prior policy or summary plan description.

The Amendment does not apply to the individual market.  Thus, an individual policy, certificate, or contract of insurance issued after March 23, 2010 would not be a grandfathered health plan.

The Amendment also includes a new example illustrating that a non-collectively bargained plan loses its grandfathered status on the date the offending change to the plan is made.  For example, if a plan increases co-insurance effective July 1, 2013 in a manner that triggers a loss of grandfathering under the IFRs, then the loss of grandfathering is itself effective July 1, 2013.  With respect to insured collectively bargained plans, the Amendment clarifies that if the plan is maintained pursuant to a collective bargaining agreement in effect on March 23, 2010, the plan will remain grandfathered at least until the collective bargaining agreement terminates. At that time, the terms of the plan are compared with the terms of the plan on March 23, 2010 to determine if the plan will remain grandfathered.

The Amendment affirms that each benefit option is evaluated separately in terms of grandfathered status. For example, a plan offers two benefit packages on March 23, 2010, Options A and B. Beginning January 1, 2011, the plan increases coinsurance under Option A from 10% to 15%. Coverage under Option A will cease to be grandfathered as of January 1, 2011. Whether the coverage under Option B is grandfathered is determined separately.

As with previous guidance in this area, the Departments encourage comments on the Amendment, which itself was a product of comments received by the Departments with respect to the IFRs.

We will continue to update our clients on new developments in this rapidly changing area of the law. In the meantime, please feel free to contact your Proskauer attorney or any member of our Health Care Reform Task Force should you have questions regarding any aspect of health care reform.

Produced by Proskauer Rose LLP © 2010 Proskauer Rose LLP. All Rights Reserved.
This e-mail is a service to our clients and friends. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion.
Benefit Advisors Network and its members are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.