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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