Does the ICHRA require a summary of benefits and coverage?

Since 2012, the federal government has required employers offering a group health plan to provide eligible participants with an easy-to-understand summary of a health plan’s benefits and coverage. The summary of benefits and coverage (SBC) regulation is intended to help individuals better understand their health benefit options.

In this article, we’ll discuss the SBC rules and how the requirement applies to the individual coverage health reimbursement arrangement (ICHRA).

What is the summary of benefits and coverage?

The SBC is a document describing the benefits of a given health plan in plain language. It should also include easy-to-understand charts similar to a nutrition label on a food item. The purpose of the SBC is to allow plan participants to compare their coverage options at a glance.

Historically, insurance providers and group health plans used a standard SBC template to help participants compare health plans. Eligible plan participants have the right to the SBC when shopping for coverage and can request it from the plan issuer or insurance provider.

Does an ICHRA require an SBC?

Yes, employers offering an ICHRA must also follow the regulation. It must include a description of your ICHRA's coverage, limited and excluded services, plan participant rights, and more.

What the SBC means for group health plan providers

This provision applies to all health plans, whether offered through an employer or purchased directly from an insurance company. All health plans must provide an SBC to eligible participants during the enrollment process and at annual renewal.

If your plan is offered to individuals in a county where 10% or more of the population is literate only in the same non-English language, a separate SBC must be made available in that language.

Currently, there are four languages recognized in the rule:

• Spanish
• Chinese
• Tagalog
• Navajo

The U.S. Department of Health and Human Services (HHS) provides a list of applicable counties and languages. The rule applies regardless of whether the plan covers any speakers of the applicable non-English language.

What are the SBC requirements for the ICHRA?

An ICHRA is considered a group health plan by the HHS, so it is subject to the SBC requirements. Employers offering an ICHRA have some flexibility in how they satisfy this requirement.

The HHS states:

"To the extent a plan's terms that are required to be in the SBC template cannot reasonably be described in a manner consistent with the template and instructions, the plan or issuer must accurately describe the relevant plan terms while using its best efforts to do so in a manner that is still consistent with the instructions and template format as reasonably possible. Such situations may occur, for example, if a plan provides a different structure for provider network tiers or drug tiers than is contemplated by the template and these instructions, if a plan provides different benefits based on facility type (such as hospital inpatient versus non-hospital inpatient), in a case where the effects of a health FSA or an HRA are being described, or if a plan provides different cost sharing based on participation in a wellness program."

Essentially, providers of an ICHRA must make their best efforts to make the SBC template work for an HRA plan. Employers offering an ICHRA should provide a summary of the benefit that is easy to understand and follows the template as closely as possible.

HRA plan documents and the SBC aren’t the same things, and a separate summary will need to be created. An online administration tool like PeopleKeep can help employers ensure they are meeting the requirements.

With the correct documents and the right plan, employers can offer employees a benefit they’ll want and stay on budget.