What is a Summary of Benefits and Coverage (SBC) and Why is it Important?

When you are new to the world of health insurance things can be confusing.  What is my deductible?  What is the most that I have to pay out of pocket?  Do my copays count toward my out of pocket maximum?  With many medical plans, the language of the plan summaries are hard to understand, and is can be difficult to compare plans on an apples-to-apples basis.  Under the rules and regulations of the Patient Protection and Affordable Care Act (PPACA), more commonly referred to as Obamacare, plans can be more easily compared using the Summary of Benefits and Coverage (SBC).

The entity that is insuring the plan is responsible for supplying the SBC.

How Does a Summary of Benefits and Coverage Make Things Easier?

An SBC is no longer than 4 pages (can be front and back, so really it is 8 pages long) and should be written in plain language.  It should also be in 12-point font.

All health insurers (whether insurance companies or self-funded plan sponsors) must insert plan design wording in predetermined rows and columns using the exact same wording, format, and layout.

These two features of the SBC make reading and comparing benefit designs an easier process than it used to be.

What All Must Be Included in a Summary of Benefits and Coverage?

An SBC must also include the following:

  • Coverage examples and expected out of pocket expenses for having a baby and managing Type 2 Diabetes.
  • A glossary of common medical and insurance terms.  This glossary must be provided upon request. <link to my own glossary>
  • A website and phone number where plan subscribers can receive additional information about their medical insurance plan.
  • The exceptions, reductions, or limitations of coverage
  • Provisions of renewability and continuation of coverage

Who Is Responsible for Supplying the Summary of Benefits and Coverage?

The entity that is insuring the plan is responsible for supplying the SBC.  That means that if the plan is an individual plan, then the insurance company provides the SBC.  If the plan is a fully-insured employer group plan, the insurance company provides the SBC.  If the plan is a self-funded employer group plan, then the employer provides the SBC.  If you are not sure if your employer plan is fully-insured or self-funded, ask your benefits department representative.

When Should a Summary of Benefits and Coverage be Supplied?

The SBC must be provided in electronic or paper format.  There are several scenarios about when it should be distributed to plan subscribers, but in all cases it must be provided near enrollment, or within 7 days of being requested.

Why Is a Summary of Benefits and Coverage Important?

One of the biggest complaints about health insurance is that it is too complicated for many people to understand.  With a Summary of Benefits and Coverage, a subscriber to an insurance plan, or someone considering an insurance plan, can easily read the plan benefits available to them.  When the decisions must be made about which plan to choose, the Summary of Benefits and Coverage helps people weigh the plan design and premiums to determine what is right for them and their family.

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So What is Cover Oregon All About?

By now, many of you have seen the Cover Oregon commercial that tries to make Oregonians aware of health insurance plans that will be available in 2014 (with Open Enrollment set to begin in October) under the state’s exchange, or marketplace.  If you have not seen the advertisement, here it is:

http://www.youtube.com/watch?v=Xv2UUcXCo9g&width=500

 

What is Cover Oregon?

Cover Oregon is a central online location where the people of Oregon can shop for and compare health insurance plans through the state’s exchange, or marketplace.  In addition, the site will assist potential customers with determining their eligibility for subsidies to make the insurance plans in the marketplace more affordable.

Gotcha.  Now What is a Health Insurance Marketplace?

The Patient Protection and Affordable Care Act (PPACA), or as most people know it, Obamacare, outlined what are called health insurance exchanges.  The terminology has been changed to marketplaces, but the idea is the same.  With one stated goal of the Affordable Care Act being to help more people obtain medical insurance coverage, lawmakers wanted to create a simple way for customers to compare plans while eliminating as much confusion as possible.  Enter the marketplaces.

The marketplaces will be set up by each state, but not all states are participating.  Citizens of states that do not have a marketplace will be allowed to purchase insurance through a federal marketplace.  Once set up, Americans will be allowed to go online to these exchanges, and compare health insurance plans.  The plans will have the same benefits, just different levels of potential out of pocket expenses.

The plans will be called Gold, Silver, Bronze, and Platinum.  The Platinum plan will have the least out of pocket exposure but will cost more than the other plans.  Conversely, the Bronze plan will have the most out of pocket exposure but will cost less than the other plans.

Will These Exchanges Cost More than My Group or Individual Plan?

Maybe, maybe not.  It is very hard to compare insurance plans on an apples-to-apples basis since there are so many variables that go into an insurance premium.  If you look for plans at an online marketplace like Cover Oregon and you are not satisfied with the premium, you are still free to look for insurance elsewhere.

Will I Be Able To Get Financial Assistance for the Premiums?

Financial assistance will be available to people if they make less than certain thresholds.  Individuals earning less than 400% of the federal poverty level will definitely be eligible for financial subsidies.  The subsidies work like a tax credit, but if you cannot wait until tax time to receive your money then there are options available to get the help immediately.

Will Other States Have Sites Like Cover Oregon?

For states that have marketplaces, then yes, they will have an online site where their citizens can buy medical insurance.  As time goes on, the sites will become easier to navigate and will truly be a one stop shop for finding solutions to your healthcare needs.  There is just no guarantee that they will have as catchy a tune as Cover Oregon.

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