Summary of Benefits and Coverage.

Health care reform expands ERISA's disclosure requirements by requiring that group health plans provide a summary of benefits and coverage (“SBC”) to plan participants and beneficiaries before enrollment or re-enrollment. The primary purpose of the SBC is to enable participants to compare coverage options easily and to help them better understand their health benefits.  The SBC must accurately describe the benefits and coverage available to the participant or beneficiary under the applicable plan. This SBC requirement applies in addition to the SPD and SMM requirements already in place.

On March 19, 2012, the Internal Revenue Service, Department of Labor, and Health and Human Services  jointly issued a set of Frequently Asked Questions (“FAQs”) regarding the final regulations that were issued on February 14, 2012, regarding the SBC.  The requirements are generally effective with open enrollment periods that begin on or after September 23, 2012.  While the agencies did not delay the effective date, the FAQs make it clear that they are focusing on helping plans become compliant, rather than imposing penalties.  Specifically, Q/A-2 provides that no penalties will apply during the first year of applicability to those working diligently and in good faith to provide the required SBC content in an appearance consistent with the final regulations.

While the FAQs provide helpful guidance with respect to the SBC requirements, the basic requirements, including the effective date, are largely unchanged from the final regulations.  For a sample SBC, go to the DOL website.   Remember, the plan sponsor is responsible for ensuring distribution of the SBCs at open enrollment, automatic enrollment, special enrollment (e.g., birth of a baby, COBRA event), and upon request. 

The Office for Civil Rights ("OCR") of the Department of Health and Human Services has announced an audit initiative under which it intends to conduct audits of up to 150 covered entities to review compliance with the Health Insurance Portability and Accountability Act of 1996 ("HIPAA").  The audit will focus on the HIPAA privacy and security requirements.  The OCR will select a broad range of entities, including health plans and health care providers of all sizes.  HIPAA audits begin immediately.

Group health plan sponsors and health care providers should carefully review their HIPAA compliance programs.  Keep in mind that HIPAA mandates training of individuals who have access to protected health information.  Failure to train (and to properly document training) could result in significant liability.  

Similarly, failure to have compliant documents, notices, practices and procedures could subject the covered entity to substantial penalties and well as requirements to provide notification of breaches of the HIPAA requirements. 

HIPAA mandates training. . . audits begin immediately.

Plan sponsors should examine all business associate relationships.  They should ensure too that they have updated their documents and properly documented all relationships.