Patient Protection and Affordable Care Act(PPACA) Summary Benefits of Coverage | Annual Notices

This will be the first of many notices Visor sends out to assist in the transitions you will need to make as the Patient Protection and Accountable Care Act(PPACA) becomes fully implemented. Many have delayed taking any action to comply with provisions of the new law for several reasons; “It will be repealed.” or “The insurance company will take care of it.”, are a couple of the responses I frequently hear. I admit that the sheer volume and complexity of PPACA would make anyone apprehensive. The deadlines for compliance are upon us and there will be many changes over the next 14 months.

Fortunately, it seems that the regulatory agencies understand the complexities of PPACA implementation and have made several public statements that penalties will be abated for a “good faith effort” to comply with PPACA’s provisions. So even if you don’t get it exactly right or you miss a deadline, you won’t have worry about the financially crippling penalties that will eventually be applied. However, the agencies do require an effort be made and this letter is designed to help you make that “good faith effort” until you become familiar with the processes.

Summary of Benefit and Coverage (SBC)

Please become familiar with the above name. SBC is the name of a new document that must be sent out upon the renewal of any group plan after October 1, 2012. The burden for compliance with this portion of PPACA is entirely on the Employer that offers a group medical plan regardless of size. Insurance companies are required to make the information available but the employer must distribute it to employees and dependents. SBC’s must be distributed for any of the following events:

  • Enrollment or Re-enrollment
  • Upon Request
  • Any changes to the SBC since the last distribution

SBC’s can be delivered electronically, but employers must follow Department of Labor rules for electronic distribution to enrolled group members. Eligible employees that are not yet enrolled can be sent an email from the employer identifying the website location of the SBC. SBC’s must be distributed no later than the first day of the open enrollment and 30 days prior to the effective date.

Earlier Renewals

Look for the renewal process to change dramatically. Insurers will have to issue renewal notices at least 60 days before the renewal date so changes can be completed before the 30 day notice is due to the group. If any changes are made to the plan within 30 days of the effective date, the insurers will most likely have to delay the plan effective date by 30 days to prevent the employer from being fined. If a change is made after the renewal date, PPACA classifies this change as a material modification meaning the changes cannot take effect less than 60 days after the new SBC is sent to employees. It appears that the days of last minute or post-date renewal dates are over. And for good reason:

Penalties

There are substantial penalties for non-compliance. If a plan’s sponsor willfully fails to provide an SBC, the Department of Labor will issue a fine for a $1,000 per eligible recipient. The State Department of Insurance can also issue a fine for the same infraction. If the State Department of Insurance does not act, Health and Human Services or the Department of Labor can issue an additional $100 fine per day, per eligible recipient. The group administrator is responsible for the distribution but the employer is responsible for the fines. As with most fines issued under PPACA, they are not deductible. This could have tax consequences for the owners depending on the tax structure.

Visor’s Response

Visor will make every effort to keep you apprised of the new responsibilities imposed by PPACA, provide you with sourced documentation, and answer questions to help you with the logistics of compliance. Our offices are open nine hours a day and I can be reached via cell phone anytime.

Please review the sample SBC and other model notices below. These notices must go out during open enrollment this year with the exception of the “Drug Credible Coverage”. This document must be sent to Medicare eligible employees and dependents by October 15th. If your plan utilizes a Health Reimbursement Account(HRA), the plan administrator is responsible for creating the SBC to reflect those benefits. The insurance company will not do it! Please call if you have any questions about these documents.

Visor is committed to assisting every client in order to comply with PPACA. Many of our clients can simply disregard this notice and most of the new requirements, as they have already made the switch to BetterFits, the only health insurance financing solution that gives control back to the employers and employees. As pioneers in Defined Contribution health plans, Visor is one of the few companies in the nation that can help you successfully implement a healthcare financing plan that helps eliminate PPACA responsibilities and gives you budgetary control!

Bill Hill

President