April 30, 2013Health Care Reform Update: Week of April 29Agencies Release FAQs on SBCsThe agencies charged with implementing the health care reform law (the Departments of Labor,Treasury and Health and Human Services) recently released another set of FAQs that addressemployers’ questions regarding compliance with the law. The FAQs, which specifically focus on thesummary of benefits and coverage (SBC) requirement, can be found here:http://www.dol.gov/ebsa/faqs/faq-aca14.html.The SBC is intended to help individuals better understand their health coverage. Information aboutthe SBC requirements can be found in the Willis Human Capital Practice Alert, March 2012, “Summary of Benefits and Coverage: Final Regulations Released.”SBC Changes: Year TwoWhen the agencies released final regulations on the SBC requirements in February 2012, they alsoannounced the availability of templates, instructions, and related materials for implementing thedisclosure requirements for the first year of applicability of the SBC requirements (for SBCs anduniform glossary provided with respect to coverage beginning before January 1, 2014). The recentFAQs provide answers to employers regarding the second-year applicability of the SBC (coveragebeginning on or after January 1, 2104 and before January 1, 2015). Specifically, the SBC templatehas been updated to include required information on whether the coverage “provides minimumessential coverage (MEC) and whether the plans or coverages share of the total allowed costs ofbenefits provided under the plan or coverage meets applicable minimum value (MV) requirements.”For additional information about these requirements, please see Willis’ Human Capital Practice Alert,February 2013, "Employer Pay or Play Excise Taxes - Where Are We Now?"There are no changes to the uniform glossary. There are also no changes to the Instructions forCompleting the SBC (for either group or individual health coverage), the “Why This Matters”language for the SBC or to the coverage examples (additional coverage examples are not required for2014). The FAQs also extend existing safe harbors and enforcement relief related to the requirementto provide an SBC and uniform glossary to the second year of applicability. The agencies hadpreviously provided that, during the first year of applicability, they would not impose penalties ongroup health plans and insurers that were “working diligently and in good faith to provide therequired SBC content in an appearance that is consistent with the final regulations.”An updated SBC template (and sample completed SBC) are now available at cciio.cms.gov andwww.dol.gov/ebsa/healthreform. To the extent the employer or insurer is unable to modify the SBCtemplate for disclosures required to be provided with respect to the second year of applicability (e.g.,because the plan is already in the process of preparing SBCs for issuance in the second year ofapplicability and adding the new information to the template would be an administrative burden), theFAQs state that the agencies will not take any enforcement action against the employer or insurer if
April 30, 2013the SBC is furnished with a cover letter or similar disclosure that provides the required information.The agencies have provided sample language for this disclosure in the FAQs (see FAQ #2).This information is not intended to represent legal or tax advice and has been prepared solely for informationalpurposes. You may wish to consult your attorney or tax adviser regarding issues raised in this publication.