Summary of Benefits and Coverage and the Uniform Glossary

The Patient Protection and Affordable Care Act (ACA) requires plan sponsors to provide two new government-developed documents to plan participants. The "Summary of Benefits and Coverage" (SBC) and the "Uniform Glossary" are intended to provide high-level descriptions of group health coverage (and definitions of standard terms) and are in addition to the ERISA requirement to provide a Summary Plan Description (SPD). An SBC does not need to be provided for plans, policies, or benefits packages that are HIPAA excepted benefits. If a plan sponsor intends to make any mid-year material modifications in coverage listed on the SBC, such as increases in cost-sharing or benefit reductions, the law requires the sponsor to notify participants at least 60 days before the modifications become effective. Penalties for non-compliance are significant.

The Federal agencies have published template versions of the SBC and Uniform Glossary. If the plan's terms cannot reasonably be described "in a manner consistent with the template and instructions, the plan or issuer must accurately describe the relevant plan terms while using its best efforts to do so in a manner that is still consistent with the instructions and template format as reasonably possible." Plan sponsors (or their health insurance carriers) were required to begin distributing the SBC to participants and beneficiaries eligible to enroll in group health coverage through an open enrollment period beginning on the first day of the first open enrollment period that began on or after September 23, 2012. For participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period, the requirements began on the first day of the first plan year that began on or after September 23, 2012. Distribution is required with all enrollment materials (including initial, annual, and special enrollments), following a special enrollment event (such as having a baby or getting married) and upon request. An SBC may be distributed in paper or electronic form. The Uniform Glossary may also be distributed in paper or electronic form, but distribution is required only upon request.  View a completed SBC template.

Note: SBCs only apply to certain types of health plans, such as major medical insurance. It does not apply to HIPAA excepted benefits, such as disability, cancer, hospital indemnity, or accident insurance. More information about the types of benefits that are exempt from the ACA plan design mandates.

Neither American Fidelity Assurance Company nor American Fidelity Administrative Services provides tax or legal advice and, given the complexity of these laws, we always recommend working with your legal counsel on how the laws impact your specific situation.