Friday, February 10, 2012

Fasten Your Seatbelt, Turblence Ahead

SBC and Glossary Final Rule


On August 17, 2011, the Departments of Health and Human Services (HHS), Labor, and Treasury (the “Agencies”) issued a set of proposed rules relating to the Summary of Benefits and Coverage (“SBC”) and Uniform Glossary requirements, copies of the uniform template documents and instructions, and guidance regarding the timing for issuance of summaries of material plan modifications. On February 9, 2012, the Agencies issued a Final Rule setting forth guidance on several topics covered in the August proposed rule..

Key changes

§ Delays effective date for 6 months -- for group plans with open enrollment periods, effective for open enrollment periods on or after 9/23/2012; for group plans without open enrollment period, effective for plan years on or after 9/23/2012; for individuals, effective on 9/23/2012.

§ No exclusion for self-funded groups

§ Eliminates premium from SBC form

§ Provides more flexibility for electronic distribution, including providing SBC via email or through paper notice (e.g., postcard). Notification about how to access SBC, availability of SBC in paper format upon request. Eliminates requirement to acknowledge receipt

§ Provides flexibility on requirement to provide SBC 30 days prior to renewal, by allowing SBC distribution after issuance of policy when renewal decision is not made 30 days prior

§ Eliminate requirement to provide two SBC versions (initial and final) due to elimination of premium and other format changes

§ Provides exception for certain expatriate plans

§ Provides 7 business days (rather than calendar days) to provide SBC upon request

§ Retains state pre-emption of the SBC rules, but urges states to harmonize state benefit summary requirements with federal rule/forms and requires any state modifications to use a separate addendum

§ Allows flexibility in SBC format to accommodate innovative product design

§ Retains Coverage Example format but eliminates breast cancer as example, now limited to maternity and diabetes

A high-level summary of the Final Rule and supplemental guidance issued by the Agencies (“Final Rule”) follows below.

Applicability Date

When originally passed the Affordable Care Act (the “Act”) required the Agencies to develop standards to provide, by 3/23/2012, “applicants, enrollees, and policyholders or certificate holders” an SBC describing the benefits and coverage under each policy or plan. Due to the late issuance of the Final Rule the Agencies modified the effective dates as follows:

  • Enrollment during open enrollment period: The requirements to provide an SBC, notice of modification, and uniform glossary apply for disclosures to participants and beneficiaries who enroll or re-enroll in group health coverage through an open enrollment period beginning on the first day of the first open enrollment period that begins on or after September 23, 2012.
  • Enrollment other than open enrollment: For SBC distributions to participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period (e.g., special enrollees), the requirements apply beginning on the first day of the first plan year that begins on or after September 23, 2012.
  • Other SBC distributions: For SBC distributions to group health plans by an issuer, and to individuals and dependents in the individual market, these requirements are applicable beginning on September 23, 2012.

When the SBC Must Be Provided

An SBC must be provided under several different circumstances, such as upon application for coverage, by the first day of coverage (if information in the SBC has changed), upon renewal or reissuance, and upon request. The Final Rule also includes guidance to prevent unnecessary duplication in the provision of an SBC. For all scenarios, the Final Rule substitutes a seven business day period for the seven calendar day period noted in the proposed regulation.

Responsibility for Sending the SBC

The Act places the responsibility to provide an SBC on:

A. Insured Plans: "a health insurance issuer (including a group health plan that is not a self-insured plan) offering health insurance coverage within the United States; or

B. Self-insured Plans: in the case of a self-insured group health plan, the plan sponsor or designated administrator of the plan as that term is defined under ERISA. The Federal Rule is consistent with the Act (e.g., holds the plan administrator of a group health plan responsible for providing an SBC). The Final Rule also does not include an exemption for large or self-insured plans as requested.

SBC Provided by Issuer or Plan to Participants and Beneficiaries

The Final Rule retains the requirement that the SBC be provided to both participants and beneficiaries, however it includes an anti-duplication rule under which a single SBC may be provided to a family unless any beneficiaries are known to reside at a different address.

The Final Rule provides that “special enrollees” under HIPAA must be provided the SBC no later than when a summary plan description (SPD) is required to be provided under the timeframe set forth in ERISA, which is 90 days from enrollment.

  • Renewal When a Reapplication is Required: The proposed rule required that, if written application materials are required for renewal, the SBC must be provided no later than the date on which the materials are distributed. This requirement has been retained without change in the Final Rule.
  • Automatic Renewal: The Final Rule requires that, in general, if renewal or reissuance of coverage is automatic, the SBC must be provided no later than 30 days prior to the first day of the new plan or policy year. With respect to insured coverage, the Final Rule provides flexibility with the 30-day rule only when the terms of coverage are finalized in fewer than 30 days in advance of the new policy year (e.g., negotiation of coverage terms); otherwise, the SBC must be provided upon automatic renewal no later than 30 days prior to the first day of coverage under the new plan or policy year.

SBC Provided by Issuer to a Plan

· The Final Rule requires a health insurance issuer to provide an SBC to a group health plan upon an application by the plan for coverage.

· The SBC must be provided as soon as practicable following receipt of the application, but in no event later than seven business days following receipt of the application.

· If there is any change to the information required to be in the SBC before the first day of coverage, the issuer must update and provide a current SBC to the plan no later than the first day of coverage.

Content Elements NAIC

NAIC Recommendations: The proposed regulations generally mirrored the content elements set forth in the Act, with four additional elements recommended by the NAIC:

1. for plans and issuers with one or more provider networks - an Internet address (or similar contact information) for obtaining a list of the network providers;

2. for plans and issuers with a prescription drug formulary, an Internet address where an individual may find more information about the prescription drug coverage under the plan or coverage;

3. an Internet address where an individual may review and obtain the uniform glossary;

4. premiums (or cost of coverage for self-insured group health plans).

The proposed regulations solicited comments on thesel four content elements, and certain changes were made based upon public feedback as outline below.

Final Rule

· The first two proposed additional content elements noted above were retained without change.

· The third content element was modified to include the requirement that the issuer or plan provide a contact phone number to obtain a paper copy of the uniform glossary, and a disclosure that paper copies of the uniform glossary are available.

· The fourth element, requiring the SBC to include premium or cost of coverage information was eliminated.

Additional Content Elements

  • Minimum Essential Coverage and Minimum Value Statement: The Act also required that the SBC include a statement about whether a plan or coverage provides minimum essential coverage, and whether the plan’s share of the total allowed costs of benefits provided under the plan met the applicable minimum value requirements. The Agencies recognize that this content is not relevant until other elements of the Act are implemented, therefore, the Final Rule requires the minimum essential coverage and minimum value statements to be included in SBCs with respect to coverage beginning on or after January 1, 2014

  • Coverage Examples: The proposed regulations included three coverage examples relating to having a baby (normal delivery), breast cancer, and diabetes. The Final Rule indicates only two coverage examples -- having a baby (normal delivery) and managing diabetes -- need to be included in the SBC. Future guidance will likely add and modify these coverage examples.

  • Best Efforts Provision: To the extent a plan’s terms that are required to be in the SBC template “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 maintain the integrity of the uniform template.

Method of Issuance

· Group Plans: SBCs provided in connection with group health plan coverage may be provided either as a stand-alone document or in combination with other summary materials (e.g., an SPD), if the SBC information is intact and prominently displayed at the beginning of the materials, and in accordance with the timing requirements for providing an SBC.

· Individual Plans: For health insurance coverage offered in the individual market, the SBC must be provided as a stand-alone document, but may be included in the same mailing as other plan materials.

Electronic Transmission of the SBC

  • Group Market: The Final Rule makes a distinction between a participant or beneficiary who is already covered under the group health plan, and a participant or beneficiary who is eligible for coverage but not enrolled in a group health plan.

§ For participants and beneficiaries who are already covered under the group health plan, the Final Rule permits distribution of the SBC electronically if the requirements of the Department of Labor’s regulations are met.

§ For participants and beneficiaries who are eligible for but not enrolled in coverage, the Final Rule permits the SBC to be provided electronically if the format is readily accessible and a paper copy is provided free of charge upon request. Additionally, if the electronic form is an Internet posting, the plan or issuer must timely advise the individual in paper form (such as a postcard), or email, that the documents are available on the Internet, provide the Internet address, and notify the individual that the documents are available in paper form upon request.

  • Individual Market: The Final Rule substantially retains the safeguards for electronic disclosure in the proposed regulations. Under the Final Rule, an issuer providing the SBC electronically must ensure that:

    • Format is readily accessible

§ SBC is placed in a location that is prominent and readily accessible

§ SBC is provided in an electronic form that is consistent with the appearance, content, and language requirements of the Final Rule

§ The issuer notifies the individual or dependent that the SBC is available in paper form without charge upon request.

The Final Rule removes the “acknowledge receipt” requirement.

  • Transmission Between Issuer and Plan Sponsor: With respect to an SBC provided by an issuer to a plan sponsor, the SBC may be provided in paper form or electronically (such as email transmittal or an Internet posting on the issuer’s website).


The Final Rule retains the approach of the proposed regulations and provides that, to satisfy the requirement to provide the SBC in a culturally and linguistically appropriate manner, a plan or issuer follows the rules for providing notices with respect to claims and appeals. Under those rules, plans and issuers must provide notices in a culturally and linguistically appropriate manner when 10 percent or more of the population residing in the claimant’s county are literate only in the same non-English language, as determined based on American Community Survey data published by the United States Census Bureau.

Uniform Glossary Changes

The Agencies made several changes that were suggested in the public comments. Some of these changes were made at the request of self-insured plans, which commented that terminology in the SBC template was appropriate only for insured coverage. For example, terms such as “policy” and “insurer” have been changed to “coverage” and “plan”, respectively. The Agencies also revised the disclaimer language at the beginning of the uniform glossary, to make clear that the glossary is intended to be educational in nature and that the definitions contained in the glossary may not be the same as the definitions used by a particular plan or issuer (e.g., in the SPD).

Summaries of Material Modifications

The Act directs that a group health plan or insurance issuers (group or individual) provide notice of a material modification of coverage (as defined under ERISA section 102), at least 60 days in advance, if any of the changes in coverage are not reflected in the most recently provided SBC. In other words, the notice must be provided to enrollees (or, in the individual market, policyholders) no later than 60 days prior to the date on which such change will become effective, if it is not reflected in the most recent SBC provided, and occurs other than in connection with a renewal or reissuance of coverage.

The Final Rule does not change the proposed rules 60-day notice provision. This provision requires that plans and issuers provide at least 60-days advance notice of any material modification that would change the content of the SBC. This applies to mid-year changes only and does not affect changes made in connection with a renewal or reissuance. The notice of modification may consist of a new SBC or a specific notice detailing the change. Unfortunately the Final Rule does not provide clear guidance surrounding the treatment of certain changes customarily made by group health plans within a reasonable amount of time after the renewal date (such as for clerical error or employer-initiated change describing coverage intent), therefore uncertainty remains surrounding the extent of allowed changes made after renewal without a reissuance of an SBC.

Effective Date

These Final Rules are effective 60-days after publication in the Federal Register.

Friday, February 3, 2012

I have not posted any fishing pictures in quite awhile so here are a few for all those who have not made it out on the water in too long.

Tuesday, January 31, 2012

Peyton's Place

It was never supposed to end this way, Indy is Peyton's town not Eli's. As my Mom used to say "we are not in charge". The Superbowl is in Indianapolis on Sunday and by its conclusion we will have seen as much about Peyton's career being over as Eli Manning going for ring two or Tom Brady for ring number four. And evidently Peyton's career is over or at a minimum his bonus will not be forthcoming.No one really knows but with media day this week opinions will be everywhere. But I digress. For a moment stop and consider all the sickness and injury which occurs everyday throughout the world to employees and family members and consider how everyone has an opinion as to whether the their treatment was appropriate by their employer in a disability context. What happened to their job? Were they paid? Were they treated fairly? Did they have to sue to protect their interests? In the case of an injury arising in the course of employment were they given reasonable accommodation? Was the focus on their impairment or their ability? Did anyone consider what they could do and offer alternative work consistent with their functionality?

A systematic focus on stay at work addresses abilities matching restrictions and limitations with available work while affording the injured and sick to transition in spite of their conditions. Its a lot less expensive to retain talent than to continually replace it. Adjustments in compensation naturally follow most hall of fame quarterbacks who do not end up working for themselves. It is only prudent for employers to have processes in place to accommodate injured and sick employees. In Peyton's case if he cannot play he could most definitely coach. He has been a coach on the field for years. Imagine the insight he can provide divisional opponents into the Colts offense. If you were the Colts would you want him working for the competition?

Peyton manning is a warrior. Not everyone injured or sick is or was(?) as highly compensated but his situation is one that occurs routinely in business. Good organizations have contingency plans to attract and retain top talent. As you are watching Peyton this weekend in the Manning box consider what the stay-at-work and return-to-work plans your organization utilizes would hold up on media day at the Superbowl and how your current approach is either contributing or taxing your bottom line.
As baby boomers age a focus on ability becomes more critical. How would your organization treat Peyton? If you do not like the answer call me next week and I will consult on your organizational redemption by offering a systematic methodology to implement stay-at-work. Enjoy the game.

Tuesday, October 4, 2011

Failed Risk Transfer Policy

If there is a single lesson I would focus employers on in todays regulatory environment it is your disabilty benefit plan design actually does matter and needs to be integrated with your overall human resources practices to assure ADA exposure is mitigated via a fundamentally sound and well understood claim process that transfers risk.

It is common in this era to see self-funded and ASO Short Term Disability and salary continuance. The risk lends itself to self funding it is wholly predictable and high frequency, low indemnity in nature. But just because you choose to self fund the claim risk does not mean you have adequeately transferred all your exposure.

Consider Maxim Healthcare Services, Inc. who is now under a three year consent decree from the EEOC for enforcing a policy that requires employees to be unrestricted before returning to work. Many employers still take an all or nothing view of restrictions. In other words an employee must have no restrictions before returning to work. Such a policy clearly violates the Federal Law under ADA.

Lets look at the press release from the EEOC emphasis mine;


Maxim Healthcare Services Settles EEOC Disability Discrimination Suit

Maxim to Pay $160,000 to Estate of Former Employee
MINNEAPOLIS – The Equal Employment Opportunity Commission (EEOC) announced today that a federal court has approved a consent decree between the EEOC and Maxim Healthcare Services, Inc., which resolves the EEOC’s disability discrimination lawsuit against the company. The lawsuit, filed in U.S. District Court for the District of Minnesota, alleged that Maxim had failed to provide reasonable accommodations and ultimately discharged Anne Whitledge, director of clinical services, because she had brain cancer. The lawsuit is captioned, Equal Employment Opportunity Commission and Larry Williams as Trustee and Personal Representative of the Estate of Anne Marie Alderson Whitledge, decedent, v. Maxim Healthcare Services, Inc., Civil No. 10-03998 (JNE/JSM).
Under the decree, Maxim will pay $160,000 to Whitledge’s estate. In addition, Maxim agrees to conduct anti-discrimination training and monitor complaints in the Minneapolis facility, where Whitledge worked, as well as in the five other Maxim facilities that were under some of the same management. Specifically, the three-year decree provides that in those locations:
•Maxim is enjoined from discriminating based upon disability in violation of the ADA by not providing reasonable accommodations to persons desiring to return to work from disability leave.

•Maxim shall not engage in any form of retaliation against any person because such person has opposed any practice made unlawful under ADA, filed a discrimination charge under ADA, testified or participated in any manner in any investigation, proceeding, or hearing under that statute, or asserted any rights under this decree.

•Maxim is enjoined from failing or refusing to engage in the interactive process with applicants or employees who Maxim knows or should know, may require reasonable accommodation to perform the essential functions of the jobs for which they seek to return after medical leave.

Maxim is enjoined from maintaining any policy that requires an employee with a disability to be free from restrictions before returning to work after a medical leave of absence.

Maxim shall evaluate whether individuals seeking to return to work after a medical leave pose a direct threat to themselves or others based on objective evidence and information.

•Maxim will train all of its management personnel on the law against disability discrimination and will post a webinar training module on its online training system to train its external employees on their rights as employees to be free from discrimination and retaliation under the ADA. At the beginning of each training session held under this decree, Maxim’s highest-ranking executive-level employee at the facility shall introduce the outside trainer and state that Maxim takes its obligations under all EEO laws and prohibitions seriously. Also at this time, such official shall also state Maxim’s policy of non-retaliation for people who oppose acts made unlawful by federal EEO laws and people who participate in protected activity under federal EEO laws.

Maxim will maintain a record of its attempts to accommodate all employees with a disability who have been on a disability or medical leave who have notified Maxim that they are released to work with restrictions and will provide the EEOC with a copy of its accommodation reports on a semi-annual basis.

•Maxim shall send a letter of condolences to the children of Anne Whitledge.

“This was a heartbreaking case,” said John Hendrickson, regional attorney for the EEOC’s Chicago District. “Anne Whitledge battled cancer and lost the job she loved because of it. Ultimately, Anne lost her battle to cancer. The EEOC is proud that it helped her wage the battle against the fears and stereotypes that some employers maintain about the ability of people with cancer to perform their job.”
The EEOC’s litigation efforts were led by trial attorneys Laurie Vasichek, Nick Pladson, and Jessica Palmer-Denig of the EEOC’s Minneapolis Area Office, and supervised by Associate Regional Attorney Jean Kamp of the EEOC’s Chicago District Office. The EEOC’s Chicago District office is responsible for processing charges of discrimination, administrative enforcement, and the conduct of agency litigation in North Dakota, Minnesota, South Dakota, Wisconsin, Illinois and Iowa, with Area Offices in Milwaukee and Minneapolis.
The EEOC enforces federal laws prohibiting employment discrimination. Further information about the EEOC is available on its website at

Friday, September 30, 2011

Eagle Ford Shale

Mayan's had a sick humor which is something operators in South Texas's new Eagle Ford Shale might want to keep in mind as they send forth service workers. Violence is not new in Mexico and as its spreads north through a porous border it serves as a reminder that Back to The Future may also be true as you view the ritual executions now becoming commonplace in Mexico.

Don't show up with a knife at a gunfight. Do have serious security and safety procedures embedded with your personnel. Do have kidnapping and ransom coverage. Have some modicum of historical perspective and know that Texas Rangers are hard men for a reason.

Friday, April 15, 2011

Dear Uncle Sam

I absolutely despise big government. I have no respect for the political advocates who espouse the expansion of government. What network will soon air a biggest loser reality show for the elected official who most successfully wields a chain saw to spending on behalf of their constituents? Check the chain saw maybe somebody can borrow some  oridinance from the army to use on their budget one of the tracked vehicles that shoots explosives 1/4 mile to clear lethal minefields of government. My money is on Fox here. But I am hoping its C-SPAN in 2012 and Paul Ryan gets nightly face time. I hope Nancy Pelosi is ordered to fly coach like her constituents.

I started my business the old fashioned way from savings. Nobody gave me anything. At every turn government obstructs small business with regulation and chokes it with economic policy designed to create an uneven playing field for its bankers in big business. Small business is tapped for funding but we are all in reality just slaves fueling the Leviathan and Uncle Sam is always hungry. But know this Big Government today Americans who work for a living are targeting your destruction. We are getting involved politically and we are united in a belief you are rapidly outgrowing our ability to feed you and we are planning firebreaks to contain your growth regardless of the political winds. You will not turn our nation into a balkanized free for all where radical experimentation and social engineering on an unprecedented scale run rampant. Our children will not be saddled with your debt. We are coming for you. Soon. And there is going to be an arse whipping when we arrive.Yours.