Column 80 SBCs

Alphabet Soup: Is your SBC in compliance and are you distributing them properly?


To say that the employee benefits world is drowning in paperwork is an understatement. I am sure we all have done our part to add to the recycling box with the privacy notices we received from every financial and health care institution. 

Part of the ACA (Affordable Care Act-aka Obamacare) states that benefit plans must distribute a document called a Summary of Benefits and Coverage (SBC).  Generally, it must be distributed when individuals enroll the first time, at the beginning of each plan year and within 7 business days if requested.

On 12/22/14 the Department of Health and Human Services issued proposed changes for this document.  The good news is that the size of the document would be reduced from 4 to 2 ½ two-sided pages.  The department states this will eliminate much information that consumer testing showed to be less useful.

Currently the document shows two claim examples: delivering a baby and managing Type 2 Diabetes.  The newest addition will be a simple fracture treated in the emergency room.  If anyone reads these, it might be the one thing that gets their attention.  I tell my clients constantly, "Stay out of the ER if you can avoid it!  It will cost thousands of dollars."

The current template shows the total cost for this "simple fracture with ER visit" at $2400 of which $1400 is the ER room charge, $400 for equipment, $300 for office visits, $200 for physical therapy,  $90 for lab tests and $10 for Rx.  I wonder how many of our readers have had a broken something, used the ER and had bills totaling only $2400.  Of course, it does say "simple" so it does not include any surgical intervention.  But the bulk of the bills that I see are quite a bit higher for simpler transactions.

The complaint is always something like "Why did it cost $400 for a simple blood test"?  I remind them that the ER must be staffed for trauma patients and life threatening emergencies.  While I agree that it is exorbitant to charge some of these prices, I also remind them that there are often other options to be very careful about using these costly sources of care. I understand that Prestige Urgent Care on Eureka Way charges about $100 for an initial urgent care visit and they are open 7 days/week. 

In addition there are proposed changes to the uniform glossary.  Terms such as "minimum value" and "cost sharing reductions" are some of the new terms in the glossary.  (As an aside, I sure wish that the Covered CA website would have a drop down box to define "affordable coverage".  The law's definition is quite a bit different from that of the general public.)

It is important to remember that SBC's are required for Health Reimbursement Accounts (HRA) and Health Flexible Spending Accounts (FSA) if they are not considered Excepted Benefits.  Employees should read these documents carefully to be sure they are accessing all the benefits that are due to them, especially when you are new to this type of plan.

These documents may be provided electronically to plan participants, but paper must be available on request.  The challenge for small companies is that they may not have established business email accounts for all employees or even obtained personal email addresses for their employees.  We are encouraging our clients to get this information for all employees as it will surely help them distribute this paperwork more efficiently.

These changes are scheduled to be effective for plan years and open enrollments beginning 9/1/2015.  Comments are being accepted until March 2, 2015.  So Employers, HR professionals, and those of you who would like some input on the information that your insurer provides, here's your chance.  Following are two links you can use to obtain more information:   and