Compliance Alert for Group Health Plans
Annual Notices to Employees/Participants
As we approach 2013, employers should be aware of the following health care-related annual notice requirements.
Summary of Benefits and Coverage ("SBC")
The Patient Protection and Affordable Care Act ("PPACA") imposes a new requirement on group health plans to provide participants and beneficiaries with an SBC. In addition to at enrollment and upon request, the SBC must be provided upon renewal as follows:
- If a participant or beneficiary is required to affirmatively elect to maintain coverage during open enrollment, or has an opportunity to change coverage options during open enrollment, the SBC must be provided no later than the date the open enrollment materials are distributed.
- If renewal is automatic (i.e., there is no requirement to renew and no opportunity to change coverage options), the SBC must be provided no later than 30 days prior to the first day of the plan year.
The SBC must be provided using the prescribed template. The SBC may be provided electronically to individuals covered under the plan, provided the Department of Labor ("DOL") safe harbor for electronic disclosure is satisfied.* The SBC may be provided electronically to individuals eligible but not enrolled for coverage under the plan, provided (a) the format is readily accessible, (b) the SBC is provided in paper form free of charge upon request and (c) if the SBC is provided via Internet posting, the plan timely notifies individuals in paper form (e.g., postcard) or email that the SBC is available on the Internet, provides the Internet address and notifies the individuals that the SBC is available in paper form upon request.
Grandfathered Status Notice
Grandfathered health plans must include a statement, in any materials provided to a participant or beneficiary describing benefits provided under the plan, that the plan believes it is a grandfathered health plan for purposes of PPACA. The applicable regulations include model language that may be used to satisfy this disclosure requirement. Although this is not an annual requirement, plans need to include the notice in any summary of benefits provided, including in connection with open enrollment.
Women's Health and Cancer Rights Act ("WHCRA") Notice
Each year, group health plans must provide notice to participants and beneficiaries describing the plan's coverage of mastectomy-related services, including reconstructive surgery, prosthesis and lymphedema. The DOL published a model WHCRA notice that may be used to fulfill this requirement. The notice may be sent electronically, provided the DOL safe harbor for electronic disclosure is satisfied.*
Employer CHIP Notice
Employers that maintain a group health plan in a State that provides premium assistance under Medicaid or the Children's Health Insurance Program ("CHIP") must provide each employee (regardless of enrollment status) notice of the potential opportunities then currently available in the State in which the employee resides for premium assistance for health coverage of the employee or the employee's dependents. The DOL published a model notice (which is periodically updated) that may be used to fulfill this requirement. The notice may be provided electronically, provided the DOL safe harbor for electronic disclosure is satisfied.*
HIPAA Notice of Privacy Practices
No less frequently than once every three years, group health plans must provide participants with (1) a new copy of the plan's HIPAA Notice of Privacy Practices or (2) notice of the availability of such notice and how to obtain it. The notice may be provided electronically, if the participant agrees to electronic notice and such agreement has not been withdrawn.
Medicare Part D Notice of Creditable or Non-Creditable Coverage
Before October 15 of each year, group health plans that provide prescription drug coverage must disclosure to individuals eligible for Medicare Part D whether their coverage is "creditable" (i.e., at least actuarially equivalent to Medicare Part D coverage). The Centers for Medicare and Medicaid Services have posted model notices that satisfy this disclosure requirement. The notice may be provided electronically, provided the DOL safe harbor for electronic disclosure is satisfied.*
*The DOL safe harbor permits disclosure through electronic media to participants who have the ability to effectively access documents furnished in electronic form at any location where the participant is reasonably expected to perform duties as an employee and with respect to whom access to the employer's or plan sponsor's electronic information system is an integral part of those duties. Under the safe harbor, other individuals may also opt into electronic delivery.
ABOUT SCHIFF HARDIN LLP
Schiff Hardin's Employee Benefits and Executive Compensation Group works with clients to determine which retirement, health/welfare, executive compensation and other benefit plans best suit their needs, and assists in the design and implementation of those plans. In addition, our counseling extends to analyzing benefit formulas, the legal aspects of investment alternatives and procedures, the impact of the tax rules, securities law issues, and fiduciary concerns.