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Event Timeline for SBC Distribution Requirements


  11:25:52 am, by MedBen5   , 642 words,  
Categories: News, Health Plan Management

Event Timeline for SBC Distribution Requirements

We have previously discussed on this blog the new Summary of Coverage and Benefits (SBC) that are required to be furnished by all health plans after September 21, 2012, either in time for distribution with their materials for their next open enrollment, or 30 days prior to the beginning of their next plan year, whichever is first. What you may not be aware of is that there are additional distribution requirements for these SBCs that could affect how you handle future plan changes.

In addition to the initial distribution requirement listed above, a plan is also required to distribute new SBCs to their eligible plan members in accordance with the following chart:

SBC Timeline

The SBC must be provided to all persons covered under the plan, but one copy sent to the employee’s address is sufficient for all family members residing at that address.

If the employee is already enrolled in the coverage, the employee only needs to receive the SBC for the plan option in which he or she is actually enrolled. In this situation, the SBC must be provided in the manner required for the furnishing of important documents under ERISA to ensure the actual receipt of the documents (if you are not familiar with these requirements, you can download a summary from

If the employee is not currently enrolled in the coverage, but is eligible to enroll, he or she must be provided with the SBC for all plan options for which such employee is eligible. For individuals who are not enrolled, the documents can be provided in an Internet posting or e-mail if the employee is provided with a written notice of where the document can be found, and informed that a paper copy is available upon request.

As noted above, the SBC rules impose a new notification requirement on plan sponsors. Now, plan sponsors must notify participants of plan changes described on the SBC no later than 60 days prior to any benefit change that is made other than changes made on the group’s plan/renewal year. Notification of changes made on a plan/renewal year must be made no later than 30 days prior to such change, if the change affected the benefits listed on the SBC. Both of these requirements apply if the changes either increase or decrease the benefits offered.

In the past, the ERISA notification requirements were met if the notification was provided to plan members within 60 days following any change that significantly reduced benefits, or within 210 days of the end of the plan year, if the change did not reduce benefits. This effectively means that plan sponsors must now contemplate their plan changes well in advance of when they expect the changes to take effect in order to obtain any necessary stop-loss or other approval, but also to allow MedBen at least two weeks to prepare the revised SBC in time for the new distribution deadlines described above. This also imposes this type of requirements for the first time on groups that were not previously subject to similar ERISA requirements, such as groups sponsored by governmental entities, cities or school districts.

Penalties can be imposed for failure to properly comply with these requirements, but the applicable federal agencies (DOL, HHS and IRS) have stated that they will be applying a “good faith” compliance standard during the first year of implementation of these new rules to allow us all to get used to these requirements. This essentially means that you will be safe from having to pay these penalties during this year if you can demonstrate that you made a reasonable effort to comply. The law imposes these requirements on the employers sponsoring the plan. MedBen will provide whatever assistance clients may need to understand these new requirements.

MedBen clients with questions about the SBC timeline may contact MedBen Director of Compliance Annette McNair at (740) 522-7410.

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