Summary of Benefits & Coverage

ACA and Summary of Benefits and Coverage

ERISA, the federal law that governs employee benefit plans, requires that plan terms be written in a document and summarized in a Summary Plan Description (SPD), which is the document most employees refer to for questions. Health care reform requires a new document called the Summary of Benefits and Coverage (SBC), which is even shorter than the SPD and is designed to provide employees an apples-to-apples comparison of key benefit details, including understanding and comparing health plan benefits among employer-sponsored plans. 

Frequently Asked Questions (FAQs) regarding implementation of the summary of benefits and coverage (SBC) provisions of the Affordable Care Act are provided here. These FAQs have been prepared jointly by the Departments of Labor, Health and Human Services (HHS) and the Treasury (the Departments). Like previously issued FAQs these FAQs answer questions from stakeholders to help people understand the new law and benefit from it.

Health Exchanges – now called the Health Insurance Marketplace

Employee Benefits Advisors – A recent article on the importance of communicating about health exchanges to employees indicates that communication efforts should be centered on education across various formats, including videos, online support tools and booklets describing what the exchange offers.  The following items are those that employers are required to communicate:

  1. A description of the state exchange, what services it provides and how to contact the exchange (web site and customer service number) 
  2. Whether employees will receive at least 60% coverage of essential health benefits and whether an employee might be eligible for a premium tax credit if they purchase a plan on the state exchange
  3. Tax implications – because the money an individual spent on employer-sponsored coverage is not taxed, buying coverage through the state exchange may change the individual’s tax obligation