Guide for Employers

Summary of Benefits and Coverage (SBC) and Uniform Glossary

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What are the Summary of Benefits and Coverage (SBC) and Uniform Glossary? • What does the healthcare reform law require?

• When is the law effective and which plans are impacted?

• What information is included in an SBC?

• What information is included in the Uniform Glossary?

• What is the purpose of SBCs and the Uniform Glossary?

• What do SBCs look like?

• When do insurers and groups have to provide SBCs?

• How does this impact renewals?

• What penalties apply to noncompliance?

How will BCBSAZ help you? • We will create the SBCs and deliver SBCs with member ID cards

• We will provide SBC translations in the required languages

• We will help you understand when you must distribute SBCs (Includes non-grandfathered groups only at this time)

What you need to know and the actions you must take…

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What does the healthcare reform law require? The Affordable Care Act (ACA) requires insurers and group health plans to supply new documents called a Summary of Benefits and Coverage (SBC) and a Uniform Glossary to individuals who are eligible for or enrolled in a group health plan (“members”). This is a substantial new compliance obligation for both insurers and group health plans.

When is the law effective and which plans are impacted?The law’s general effective date is Sept. 23, 2012. However, for distribution to group health plan members, the law is effective on the first day of the first open enrollment that occurs on or after Sept. 23, 2012. If the plan does not have an open enrollment period, the law is effective on the first day that individuals are eligible to enroll for the new plan year.

The requirements apply to most major medical plans, both fully insured and self-funded, and both grandfathered and non-grandfathered. Federal regulators are allowing delayed implementation for fully insured plans that are not actively marketed, which includes most fully insured grandfathered plans.

SBCs generally are not required for retiree-only plans or for separate dental and vision plans that qualify as “excepted benefits”.

What information is included in an SBC?Using plain language and a standardized format, the SBC includes the following key elements:

• Deductible, copay and coinsurance information

• Explanations of these member cost share obligations and how they apply to the benefit plan

• Examples of common medical events and how benefits apply

• Excluded services and benefit limitations with the most significant impact to members

• Two coverage examples showing how cost share generally applies under the specific plan

• Contact information for the insurer, the plan administrator and applicable regulators

• Required warning messages and disclaimer language

• The site where a member can view the Uniform Glossary (www.cciio.cms.gov)

The information must be specific to each separate plan option and coverage level. This means that if you offer members the same plan with a high deductible and low deductible option, you must have separate SBCs for each deductible level. Also, for each deductible level, you must have separate SBCs for coverage of a single individual, and coverage of an individual plus one or more dependents.

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What do SBCs look like? Here are sample pages from a BCBSAZ SBC for the BluePreferred 1500 80/60 plan:

What information is included in the Uniform Glossary? The Uniform Glossary is a companion document that explains common health insurance terms, including terms used in the SBC. It generally needs to be available online and upon request. No one is allowed to change the terminology used in the uniform glossary, even if it does not exactly match the terminology used in a specific benefit plan.

What is the purpose of SBCs and the Uniform Glossary?These documents have two primary purposes:

• SBCs give an apples-to-apples comparison of available health plans – so groups and their members can make an informed choice among plans

• SBCs also help groups and their members better understand the coverage, benefits, cost share obligations and exclusions of specific plans

SBCs are not supposed to exceed eight pages, but federal regulators are allowing some latitude on size during the first year of implementation. BCBSAZ has found that most SBCs run nine pages in length. Due to current limitations in the system that produces the SBCs, BCBSAZ will restrict the length to nine pages.

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When do insurers and groups have to provide SBCs? BCBSAZ is required to distribute SBCs to fully insured group health plans and both BCBSAZ and the group health plan are required to provide the SBC to the group health plan members. As an insurer, BCBSAZ has no legal obligation to create SBCs for self-funded group health plans or their members. For self-funded plans, the obligation to distribute SBCs rests with the group benefit administrator.

The SBC law requires distribution of SBCs at certain “trigger” points in the insurance cycle, which generally occur:

• When enrollment materials are first distributed to an employee

• When an employee is first eligible to enroll if such materials weren’t distributed

• By the first date of coverage, if information has changed from the information in the SBC provided at time of enrollment, (for example, the group chooses a different plan, or a different deductible level of the same plan, or increases member cost share amounts)

• With renewal materials

• Upon request

• No later than 60 days before implementation of any off-renewal change that affects the SBC content

BCBSAZ will provide the SBC to the group and in some cases, distribute the SBC to members at required times. The group, however, will need to distribute the SBCs at open enrollment, to newly eligible individuals and to special enrollees.

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How does this impact renewals?

For current groups, the earlier we have your renewal information, the sooner we can produce

and send you an SBC. Please work directly with your BCBSAZ Account Manager or Account Executive to finalize your renewal benefits.

We will need your renewal information to create your SBCs:

• If you hold an open enrollment period, your employees must receive finalized SBCs with their open enrollment materials but no later than the first day of the open enrollment period.

• If your benefits will renew automatically (i.e. without application or paperwork to maintain coverage AND employees cannot switch plan options), your employees must receive a finalized SBC no later than 30 days prior to your renewal date.

If you decide to change your benefits after your renewal, this may be defined as a material modification. If you make a material modification to your plan, and the change affects the content of the SBC, you are required to send an updated SBC at least 60 days prior to the effective date of the change.

What is a “material modification”? A material modification is any change to an employee’s coverage that he or she would consider as an important change in covered benefits or other terms of coverage.

What penalties apply to noncompliance?

Various fines and penalties apply if an SBC is not distributed at required times.

• A fine of up to $1,000 per individual may be imposed when an employer or insurer willfully fails to supply an SBC.

• In addition, a penalty of $100 per day per individual may be assessed until an employer or insurer complies (regardless if the insurer or employer is willfully out of compliance or not).

• To be in compliance, groups and insurers must be sure that members receive their plan SBC at the times specified in the table in the “Distribution of SBCs” section that follows.

We will create the SBCs and deliver SBCs with member ID cards

BCBSAZ will create SBCs for all fully insured and self-funded group health plans, for each plan option, and coverage tier (though implementation will be delayed for fully insured grandfathered plans). We will distribute SBCs with ID cards, which means that members will generally receive their current SBC by the first date of coverage. The group administrator must distribute the SBC at open enrollment, to newly eligible individuals and to special enrollees. Additionally, SBCs for small group (2-99) are available on azblue.com.

How will BCBSAZ help you?

We will provide SBC translations in the required languages

The law also states that the SBC must be available in the following non-English languages: Spanish, Navajo, Mandarin and Tagalog. We are committed to meeting the SBC foreign language translation requirement that went into effect on Sept. 23, 2012.

On request, we will translate an SBC to meet the culturally and linguistically appropriate (CLA) language provision. Please contact your BCBSAZ Account Manager or Account Executive, who can help arrange this. You can learn more about the SBC requirements for alternate languages at http://cciio.cms.gov/resources/other/index.html#sbcug.

Electronic Delivery Regulations allow electronic

delivery of SBCs when

enrollment or renewal of

coverage is electronic.

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* Federal regulators are allowing delayed implementation for fully insured plans that are not actively marketed, which includes most fully insured grandfathered plans.

* SBCs for 100+ groups with custom benefits will not be prepared until needed for the group’s open enrollment.

We will help you understand when you must distribute SBCs (Includes non-grandfathered groups only at this time)

When BCBSAZ will provide SBCs to Groups (insured or self-funded)

• At renewal• With open enrollment packets• Through the employer portal at azblue.com for small groups (2-99)• When BCBSAZ receives a group’s application• Upon request, your broker or BCBSAZ Account Representative can supply the SBCs

When BCBSAZ will provide SBCs to Group Members (insured or self-funded)

• BCBSAZ will supply an SBC with the member’s ID card• Upon request, BCBSAZ will provide the SBC if available*

When the Group will need to provide SBCs to Members

• With enrollment materials

• To newly eligible employee with enrollment packet or by first day employee is eligible to enroll

• To special enrollees• Within 7 business days of request

Where can you and your employees get answers? The SBC requirements present a significant change and challenge for employers and insurers. We’re here to help.

If your employees have questions that you’re unable to answer, please have them contact our Customer Service team at the number on the back of their ID card.

We’re here to help. If you have any questions, please contact your BCBSAZ Account Manager or Account Executive.

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