New SBC Template Will be Required for 2021 Plans

Compliance SBCThe Affordable Care Act (ACA) requires both grandfathered and non-grandfathered health plans and health insurance issuers to provide an SBC to applicants and enrollees, free of charge. The SBC must be produced in accordance with the applicable template. Form language and formatting must be precisely reproduced, unless instructions allow or instruct otherwise. Unless otherwise instructed, the plan or issuer must use 12-point font (as required by federal law), and must replicate all symbols, formatting, bolding and shading.

The DOL and HHS issued the updated SBC template and related materials on Nov. 8, 2019. Plans must start using the new template beginning on the first day of the first open enrollment period for any plan years (or, in the individual market, policy years) that begin on or after Jan. 1, 2021, with respect to coverage for plan or policy years beginning on or after that date.

OVERVIEW OF THE UPDATES

The updated materials include the following:

SBC TEMPLATE FREQUENTLY ASKED QUESTIONSquestions

On Feb. 3, 2020, HHS issued the following frequently asked questions (FAQs) on the updated SBC template and related materials.

Q1. What is the intended implementation date for SBCs using the new template and associated documents?

Group health plans and health insurance issuers of individual and group market coverage will be required to use the 2021 SBC, 2021 Instructions, 2021 Guide and Narratives and, should they choose to use the Calculator, the 2021 Calculator, beginning on the first day of the first open enrollment period for any plan years (or, in the individual market, policy years) that begin on or after Jan. 1, 2021, with respect to coverage for plan or policy years beginning on or after that date.

Q2. Are plans and issuers required to use the updated Calculator?

No. Use of the Calculator is not required. The Calculator was developed by HHS, in consultation with the Departments of Labor and the Treasury, for group health plans and health insurance issuers to use as a tool to generate the estimated out-of-pocket costs that a consumer can expect to pay under the plan or coverage for three hypothetical medical scenarios: maternity care, type II diabetes, and a simple foot fracture.

Plans and issuers may create their own calculator using the Guide and Narratives provided by HHS, or modify the logic of the Calculator to provide their own method of calculating estimated out-of-pocket-costs for the coverage examples, which may be more accurate based on their particular plan or policy design. The Calculator makes several assumptions that may not be accurate for all plan or policy designs. ACA Implementation FAQs Part IX, Q9, announced a Calculator provided by HHS for the completion of the coverage examples, along with a safe harbor for plans and issuers that use the Calculator for the first year of applicability for the SBC requirements.

ACA Implementation FAQs Part XIX, Q8, stated that this safe harbor will continue to be in effect until further guidance is issued. To date, no such further guidance on the Calculator has been issued. Therefore, plans and issuers may continue to use the Calculator, even where it would be possible to develop a more accurate method for generating coverage examples, including applicable cost sharing, for the benefit design for which the plan or issuer is creating an SBC.

For more information on the updated SBC template and related materials—such as the instructions for completing the SBC—see the DOL or HHS websites.

Stay up to date with insurance news and compliance by following our Twitter or LinkedIn. If you are needing more information on any compliance issues or employee benefits, contact us today to speak to a consultant.