Your summary of benefits and coverage (SBC) empowers eligible employees with essential information about the medical benefits you offer.
Properly distributing your SBC ensures compliance with the Affordable Care Act (ACA) and avoids potential penalties. Below is a simple guide to help you satisfy your SBC distribution obligations.
What is an SBC?
An SBC is a standardized document that outlines the benefits, coverage options and cost-sharing responsibilities of a particular health plan. Each health plan has its own SBC. For example, if you offer a PPO, an HMO and an HDHP, each option will have its own SBC. This allows employees to quickly compare the services and related costs without having to dig through plan documents or decipher complex definitions.
Who is responsible for distributing the SBC?
The plan administrator is responsible for creating and distributing the SBC. If you offer a fully insured medical plan, the carrier is the plan administrator. If you offer a self-insured or level-funded plan, you are usually the plan administrator. However, the SBC requirements are typically provided and maintained by the third-party administrator (TPA) as part of its contracted service. As a best practice, you should provide oversight and monitor the carrier or TPA’s delivery methods.
Tip: The carrier or TPA does not know all the individuals entitled to receive an SBC. They only know the information of the individuals enrolled in the medical plan. Therefore, you should have a mechanism to deliver SBCs to employees who are eligible but not enrolled. Keep this in mind as you continue through this guide.
How can you distribute your SBC?
Plan administrators have flexibility in delivering their SBC, so long as eligible employees, enrolled employees and dependents receive the SBC timely. The method of distribution varies based on your enrollment method and the employee’s participation status.
Online enrollment: If you use online enrollment, you can distribute the SBC electronically at the time the employee enrolls using the enrollment platform.
Online requests: You can deliver the SBC electronically in response to an online request.
For employees who have not enrolled in your medical plan but are eligible, you can send the SBC electronically if the format is readily accessible and you explain where to access it.
For enrolled employees and dependents, you can distribute the SBC electronically if the employee has work-related computer access as an integral part of their job duties or they affirmatively opt in to electronic distribution.
You must also provide the SBC in paper format, free of charge, if an eligible employee or participant requests it. If the employee lives with their dependent(s), delivering the SBC to the employee’s email address or last known address is sufficient.
When must you distribute the SBC?
SBCs must be distributed at varying times based on these triggering events:
Upon initial eligibility: Provide the SBC when an individual is first eligible to enroll in the plan. If there are multiple plan options, provide each SBC to allow a comparison of the different options.
Before each new plan year: Deliver the SBC at least 30 days before the start of the new plan year, unless the contents of the SBC have not changed.
HIPAA special enrollment periods: Provide the SBC to individuals experiencing a HIPAA special enrollment right within 90 days of the start of coverage.
Tip: The 90-day timing tracks the deadline for delivering a summary plan description (SPD). However, the SBC is not helpful if it is not provided before the conclusion of the special enrollment period.
Upon request: You must deliver the SBC within seven business days of an individual’s request.
What is the penalty for improper SBC distribution?
Failing to provide SBCs appropriately may result in penalties of over $1,100 per participant; this figure is adjusted annually for inflation. Repeated violations can lead to increased scrutiny and audits by the Department of Labor
Looking for help?
If you have any questions about SBC, our employee benefits team is here to help you.
This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.
Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.
This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem.
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