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Summary of Benefits and Coverage (SBC) for HRA and FSA — Sample by Core Documents, Inc.
Bradenton, FL, June 2, 2014 – Healthcare Reform requires that most Employers with HRAs provide a Summary of Benefits and Coverage (SBC) to each of their employees. The intent of the SBC is to provide a convenient and consistent way for consumers to compare the benefits and costs of different insurance plans so that they can make an informed decision when choosing benefits. Because HRAs and some Flexible Spending Accounts (FSAs) are considered group health plans under ERISA, they were included in the SBC requirement. Most HRAs and Health FSAs are not offered in conjunction with other benefits, but are a “take it or leave it” benefit. There are an infinite number of HRA plan designs, including those that are integrated with a health plan, and those that are not. Some Health FSAs require an SBC. The SBC does not replace the Summary Plan Description (SPD) required for HRAs and FSAs. For most HRAs and Health FSAs, the SBC requirement seems irrelevant, unnecessary, and imposes an additional administrative burden on employers.
The Dept. of Labor (DOL) on their Employee Benefit Security Administration (EBSA) website provides employers with instructions and a template for the SBC. An obvious difficulty is that the SBC and instructions are geared for an insurance plan, and do not lend themselves easily to be used for an HRA or Health FSA. Although they say in their instructions to contact them if you need assistance completing the SBC, ([email protected] or www.askebsa.dol.gov, or phone 866-444-3272), the DOL/EBSA at this time does not offer assistance in completing the SBC other than to “follow the instructions” and to make a “good faith effort to comply”. It is our understanding that they do not review SBCs for compliance prior to distribution by an Employer. If an Employer “willfully fails to provide” the information required they can be fined up to $1,000 for each such failure (a separate fine may be imposed with respect to each enrollee). We also understand that the DOL will not impose penalties during the first year on insurers who are working in good faith to comply with the new compliance rules.
We have been asked by Employers and their Agents if we will prepare an SBC for their HRA or FSA. Because it is not possible to be sure that an SBC that we provide would be considered “compliant”, we are not providing that service at this time. We asked our local DOL office if it would be possible to review a “sample” SBC for any type of HRA and let us know whether it would be compliant, but we were told that they do not have anyone that can review a sample for us.
HERE’S THE GOOD NEWS: Core Documents has chosen not to sell SBCs at this time, however we do wish to provide some support and assistance to our clients. Core Documents is providing free samples or examples of what we believe may be a good faith effort to complete a compliant SBC for distribution to employees. You can view samples or examples of these good faith efforts for several HRA Plan designs and a Health FSA that were prepared using the template provided at https://www.dol.gov/ebsa/healthreform/ .
You are encouraged to review the instructions and template for yourself at the dol.gov website (scroll down to Templates, Instructions, and Related Materials and choose the most recent “Summary of Benefits and Coverage Template” (in Word format) and the most recent Instructions for Completing the SBC – Group Health Plan Coverage (pdf format). You can also view their “Sample Completed SBC” for an insurance plan at the dol.gov website.
To view the example of a good faith effort sample Comprehensive HRA SBC . . .
To view the example of a good faith effort sample Deductible Gap HRA SBC . . .
To view the example of a good faith effort sample Health FSA SBC . .
Things to Keep in Mind . . .
An SBC must be provided by the first day of the first open enrollment period that begins on or after September 23, 2012.
The SBC must be provided in addition to the current SPD that is already required under ERISA.
Under some circumstances, you (or the insurer) will be required to provide a “culturally and linguistically appropriate” notice to individuals who are only fluent in a non-English language. To help plan sponsors meet the language requirements, HHS has provided written translations of the SBC template, sample language, and uniform glossary in Spanish, Tagalog, Chinese, and Navajo at: https://cciio.cms.gov/resources/other/index.html#sbcug.
Current county-by-county data can be accessed at: https://www.cciio.cms.gov/resources/factsheets/clas-data.html .
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Core Documents, Inc. has been providing free consulting, affordable plan documents, and plan updates as needed for Section 125 Cafeteria Plans and Health Reimbursement Arrangements since 1997. See more information about these fringe benefit plans at Core Documents’ website: https://www.coredocuments.com, or call toll free 1-888-755-3373.
Here are some more blog posts and articles about Summary of Benefits and Coverage and related topics:
HSA Plan and Health FSA Combined – What is a Limited-Purpose FSA?
Technical Release No. 2013-03 – Health Care Reform (ACA, ObamaCare) Affects on HRAs, Health FSAs, Individual Premium Reimbursement HRAs, etc.
ERISA Wrap SPD Plan Document just $99 one-time fee from Core Documents