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Alert

Health Care Reform: Relief for Employers on Summary of Benefits and Coverage

By Christine L. Richardson, Mark Jones

Alert

By Christine L. Richardson, Mark Jones

04.02.12

The Departments of Labor, Health and Human Services and Treasury (the “Departments”) have issued administrative guidance giving group health plans a one-year period of relief from enforcement penalties for the failure to provide a complete or timely Summary of Benefits and Coverage (“Summary”). The Departments have also extended temporary relief to group health plans that have delegated the responsibility to provide the Summary to another entity, such as a third-party administrator. In light of this guidance, employers that maintain group health plans are advised to review their vendor contracts to clarify who is responsible for providing information for the Summary, drafting it and distributing it to participants.

On March 19, 2012, the Departments issued a set of 24 frequently asked questions (“FAQs”) relating to the obligation of group health plans and health insurance issuers1 to provide participants with a four-page summary of the benefits available under each of their health care options. The FAQs supplement the final regulations on Summaries issued under the Patient Protection and Affordable Care Act of 2010 (“PPACA”) on February 14, 2012.

The FAQs provide that the Departments will not impose penalties on plans that are working diligently and in good faith to provide Summaries with the required content and in an appearance that is consistent with the final regulations. The FAQs also provide that, until further guidance is issued, a plan that has assigned the obligation to provide the Summary to another party will generally not be subject to any enforcement action for failing to provide a timely or complete Summary, if the plan:

  • Has entered into a binding contract under which the other party has assumed the responsibility for completing the Summary, providing information to complete the Summary or delivering the Summary;
  • Monitors performance under the contract;
  • Corrects any violation of the regulations, if the plan has knowledge of the violation and information to correct it; and
  • Communicates with participants regarding a violation, if the plan does not have the information to correct it, and begins taking significant steps as soon as practicable to avoid future violations.

This relief is significant. But for the relief, employers would be subject to a penalty of $1,000 per participant for any willful failure to provide the required information. In addition, an excise tax of $100 per participant per day would apply.

  1. This advisory focuses on requirements that apply to group health plans. Disclosure requirements that apply to a group health plan effectively apply to that plan’s fiduciary. For simplicity, we have assumed in this Alert that the fiduciary is the employer that maintains the plan.

Download: Health Care Reform: Relief for Employers on Summary of Benefits and Coverage

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