Kilpatrick Townsend Health & Welfare Blog

Legal, Regulatory and Policy Perspectives regarding employer-sponsored health and welfare benefits, including the impact of the Affordable Care Act.

Posted on Wednesday, April 24 2013 at
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11:44 am by

Updated SBC Guidance Released

Yesterday a new model SBC and a new sample completed SBC were released, along with FAQs Part XIV which can be found here.

As you may recall from the last open enrollment period, the Summary of Benefits and Coverage provides information to plan participants about plan design using a required format. The updated SBC is necessary because the template provided last year did not include information regarding whether the benefit option being described provides minimum essential coverage (MEC) or meets the minimum value (MV) requirements. As a reminder, MEC refers to the comprehensive medical coverage individuals must have to avoid paying an additional tax and that employers must provide to avoid paying the employer tax; MV refers to whether the plan pays at least 60% of the allowed charges.

The updated SBC template (and sample completed SBC) can be found here and are to be used for coverage beginning on or after January 1, 2014, and before January 1, 2015. Page 4 of the new SBC contains a section where plans must provide information as to whether it provides MEC or provides MV. If a plan is unable to use the new sample, the prior sample SBC can be used and no enforcement action will be taken, PROVIDED that a cover letter or other notice is provided to participants with the SBC indicating whether or not the plan provides MEC or meets the MV requirements (sample language is provided for this purpose).

No additional changes were made to the SBC, and no new coverage examples were added as some were expecting, which will be a welcome relief to plan sponsors and insurers. In addition, no changes were made to the Glossary or the Instructions for completing the SBC. The enforcement relief provided in previous FAQs, particularly with respect to the provision of SBCs, is being extended. FAQ Question 5 lists the specific relief that is extended, which includes an extension of the basic approach of assisting employers in implementing these new rules as opposed to applying penalties.

Posted on Tuesday, August 21 2012 at
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2:22 pm by

SBC Reminder

I recently spoke at the ECFC meeting last week – with one of the major topics being SBCs. It is important to keep in mind that seperate SBCs will be needed for the following arrangements:

1. Stand-alone HRAs.
2. Integrated HRAs where the HRA is seperately administered (i.e., not administered by the insurer).
3. Employee Assistance Programs (EAPs) where the EAP is providing assessment or treatment.

In these situations, significant revisions will be needed to the SBC template, so that the SBC works for these arrangements and is not misleading. However, you still need to retain the outline of the SBC in order to have good faith compliance with the rules. As always, this will be a delicate balancing act.

Posted on Monday, May 14 2012 at
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10:02 am by

Updated SBC Guidance

As I noted during Friday’s post, the agencies announced additional SBC guidance will be forthcoming.  Ever coy about release dates, the agencies did not happen to say that the release date was right after our Friday meeting!  DOL released the updated guidance in the form of additional FAQs and updated SBC templates.  One of the more shocking issues addressed in this new guidance is relaxed electronic disclosure requirements.  Specifically, the updated guidance provides that SBCs may be provided electronically to participants and beneficiaries in connection with their online enrollment or online renewal of coverage under the plan. SBCs also may be provided electronically to participants and beneficiaries who request an SBC online.  In either case, the individual must have the option to receive a paper copy upon request.   For new enrollees, the final SBC regulations had already adopted what I refer to as the “postcard” method from the comments I submitted to DOL on electronic disclosure last year.   This new guidance now moves the needle closer to the postcard method for existing participants as well, at least for SBCs anyway.  The updated guidance can be found at

Posted on Friday, May 11 2012 at
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1:26 pm by

ABA Section of Taxation Meeting

This morning we held our annual May meeting for the health and welfare subcommittee of the Section of Tax.  I want to thank all the IRS and Treasury people that attended the meeting – at one point I counted at least eight in attendance.  We discussed the usual suspects – SBCs, SPDs, PCOR fees, MEWAs – and a few other acronyms.  The most interesting item was by far the SBC rules.   There will be a lot of issues and headaches to work out for SBCs this summer and fall.  In this regard, there is an unofficial rumor that additional SBC guidance in the form of frequently asked questions will be released soon.  So, stay tuned!

Posted on Monday, March 19 2012 at
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6:42 pm by

Additional SBC Guidance

This afternoon the agencies released additional SBC guidance aimed at easing the compliance burden for group health plans.  Some of the key highlights of this new guidance include:  

1.  Good Faith Standard.  Rather than delaying the requirements for one year, the agencies adopted a good faith compliance standard for 2013.  

2.  Dependent Tiers.  As noted in our prior Legal Alert, the final regulations were unclear regarding whether an SBC was required for each dependent tier.  The new guidance confirmed that a separate SBC is not required for each dependent tier.  

3.  SBCs Distributed with Open Enrollment Materials.  Also, as noted in our Legal Alert, the final regulations suggested that SBCs must be issued with open enrollment materials.  The new guidance confirms that in most situations SBCs must be issued with open enrollment materials.  However, if elections rollover, and the participant has no ability to change elections, SBC are due 30 days prior to the beginning of the plan year – e.g., December 1st for calendar year plans.  

4.  Flexible Language.  THe new gudiance relaxs the requirments around seperate prescription drug benefits, HSA contributions and HRA contributions.  

5.  Foreign Language Requirements.  The new guidance provides additional information regarding how the foreign language requirements apply to SBCs.  

The new guidance can be found at


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