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The Affordable Care Act requires all health plans and health insurance issuers to provide a summary of benefits and coverage (SBC) to applicants and participants, which is a concise explanation of essential health plan information. Meant to help participants understand their coverage options, the SBC applies to both non-grandfathered and grandfathered plans.
If a midyear plan change is implemented, the ACA requires that plans and issuers give at least 60 days’ advance notice of such changes to their plans disclosure of material modifications in plan terms or coverage that affects the content of the SBC. These changes can also affect ERISA-mandated Summary Plan Descriptions (SPDs) as well as corresponding Summaries of Material Modifications (SMMs).
The 60-day advance notice requirement changes existing timeframe regulations under ERISA regarding the disclosure of material modifications, which requires:
- A Summary of Material Modifications (SMM) within 210 days after the end of the plan year in which the change was adopted; or
- Within 60 days after a material reduction in a health plan’s covered services or benefits is adopted.
When must the 60-day advance notice be provided?
The 60-day advance notice regulations come into effect when:
- A material modification is made that would affect the content of the SBC;
- The change is not already included in the most recently provided SBC; and
- The change is a mid-plan year change (that is, it does not occur in connection with a renewal of coverage).
Under the regulations, plans and issuers must provide the SBS each year at the time of renewal.
What are material modifications?
“Material modifications” are defined as any change to a plan’s coverage that independently, or in connection with other changes taking place at the same time, would be considered by the average plan participant to be an important change in covered benefits or other terms of coverage.
Material modifications include:
- An enhancement in covered benefits or services or other more generous plan or policy terms; or
- A material reduction in covered services or benefits or more strict requirements for receiving benefits.