Whether you’re shopping for an individual insurance policy or evaluating a health plan offered through your job, determining whether a health plan offers the right coverage for you and your family can be tricky.
Thankfully, under the Affordable Care Act (ACA), more health insurance companies and coverage options are available on the individual market than ever before. That’s why the ACA requires insurers and group plan administrators are required to provide you with a summary of benefits and coverage (SBC) to help you understand if a particular policy meets your needs.
Often mistaken for summary plan descriptions (SPDs), SBCs help consumers compare policies so they can make informed decisions when selecting a health coverage option. In this article, we’ll review what an SBC is, what it should include, who provides it, and when you must receive one.
What is a summary of benefits and coverage?
The SBC is a standard document that helps applicants and policyholders research, compare, and enroll in health coverage. It includes a brief outline of a specific policy’s covered services, limitations, exclusions, out-of-pocket healthcare expenses, contact information, and more.
Generally, all health insurers and group plan providers must send an SBC to plan participants. Insurers must also make an SBC available to anyone looking for health insurance on the Health Insurance Marketplace.
The ACA requires the SBC to be easy to understand. Therefore, all SBCs must be fewer than four pages, printed in 12-point font or larger, use basic terminology, and contain the same information. This helps keep comparing different policies clear, simple, and fair.
Insurers and group plan providers must also provide consumers with a Uniform Glossary1 alongside the SBC. The glossary defines common healthcare terms in plain language, like “coinsurance,” “premium,” and “copayment,” so individuals can better understand their coverage.
What type of health plan requires a summary of benefits and coverage?
All major health plans must provide an SBC. This includes plans an individual purchased on their own as well as employer-sponsored health plans.
Health plans that must provide an SBC are:
- Fully-insured plans, like traditional group health plans
- Self-insured plans, including some types of health reimbursement arrangements (HRAs)
- Individual health plans purchased on a public or private health exchange
- Grandfathered plans
- These are individual health plans purchased before the ACA became law on March 23, 2010.
However, not all plans are subject to the SBC requirement. Under the ACA, plans that cover excepted benefits are exempt.
Examples of excepted benefit plans that are exempt from providing an SBC are:
- Supplemental dental or vision plans
- Coverage for a specific chronic condition
- Health flexible savings accounts (FSAs)
- Retiree-only plans
- Health savings accounts (HSAs)
- Supplemental Medicare plans, like Medicare Advantage (Part C) and Part D benefits
What does a summary of benefits and coverage include?
An SBC helps consumers accurately compare health policies based on the same criteria. Therefore, all SBCs include standardized information—regardless of the insurer or policy type. Self-insurers can use the template2 from the Department of Labor3 to ensure their SBC follows the proper format so you receive the same information as fully-insured plans.
All SBCs must contain the following information:
- The Uniform Glossary of standard health insurance and medical terms as it relates to coverage.
- The SBC must also include contact information for individuals to request an electronic or paper copy of the Uniform Glossary.
- A description of the coverage for each benefit category.
- Cost-sharing amounts (i.e., deductibles, coinsurance, and copayments).
- Limited and excluded services under the plan.
- The plan participant’s rights regarding continuing coverage options.
- Common medical situations and how cost-sharing, limitations, and exclusions function in the scenarios under the plan.
- The three scenarios typically included in an SBC are a simple fracture, Type 2 diabetes treatment, and childbirth.
- A statement about whether the plan meets ACA requirements regarding minimum essential coverage (MEC) and minimum value standards.
- A statement that the SBC is only a summary designed to help the consumer choose a health plan.
- Contact information so consumers can reach out with further questions or to request a copy of the policy and complete coverage terms.
- The plan participant’s rights regarding how to process to file grievances and appeals.
- All English copies of the SBC must include a statement with contact information regarding accessing the notices in other languages.
Is a summary plan description the same as a summary of benefits and coverage?
Many people confuse summary plan descriptions (SPDs) and SBCs. But they have their differences. The ACA requires major medical plans to issue SBCs to consumers describing the benefits and coverage under a particular policy.
In contrast, the Employee Retirement Income Security Act of 1974 (ERISA)4 requires employers to provide SPDs to employees with health, retirement, and other benefits. The SPD describes the plan’s details, key features, and obligations.
Your insurer or plan sponsor can’t include specific SBC information in your SPD and vice versa. But, if you have a plan that requires an SPD and SBC, you may see a notation in your SBC about where to find a copy of your SPD.
Who provides the summary of benefits and coverage?
Where your SBC will come from depends on who is issuing your health insurance plan. We’ll go over each scenario in the sections below.
For fully-insured plans
Because fully-insured plans involve the health insurance company and the employer, both parties are responsible for providing you with the SBC. After your employer applies for the group health plan, the insurer will send them the SBC in no later than seven business days. From there, the insurer may send the SBC directly to policyholders, or the document may come from your employer as the plan sponsor.
If you don’t receive a copy of your SBC, your health insurer and plan sponsor are out of compliance. They may be subject to a penalty under the Public Health Services Act of $1,362 per failure5 with a potential excise tax of $100 per failure per day until they comply.
For self-insured plans
If you have a self-insured health policy, like an HRA, the SBC will come from the plan sponsor, which is typically your employer.
You'll receive an SPD and SBC if you have a qualified small employer HRA (QSHERA) or individual coverage HRA (ICHRA)6. If you have an integrated HRA, you’ll receive an SPD and SBC—although the SBC may come directly from the issuer of your group health plan.
If you have an excepted benefit HRA (EBHRA), you won’t receive an SBC. This is because plans that only cover excepted benefits don’t require an SBC. However, employers must provide an SPD if you have an EBHRA.
Like fully-insured plans, your plan administrator will be subject to a fine under the Public Health Services Act if you don’t receive your SBC.
Plans with multiple insurers
Sometimes, you may enroll in a plan with multiple issuers. For example, your plan may have one issuer that covers medical services and another that provides prescription drug coverage. However, insurers only have to provide an SBC for the services and items they cover.
Your insurers may send you one SBC with all the coverage information combined or multiple SBCs containing the portion each insurer covers. If you receive multiple SBCs, you’ll also receive a statement outlining your plan’s multiple insurers, how the coverage and items work together, and contact information if you have questions.
When must consumers receive a summary of benefits and coverage?
Insurers, employers, and plan administrators must provide you with an SBC in the following situations:
- During open enrollment: The SBC must accompany open enrollment application documents, whether on paper or electronic. If there are no enrollment application documents, you’ll receive it by your first day of coverage.
- If an insurer modifies the original SBC you received during enrollment, they must send you an updated copy by the first day of coverage.
- During a special enrollment: If you qualify for a special enrollment period, you’ll receive an SBC no later than 90 days before your first day of coverage. However, you can request to receive it earlier, and the insurer or plan sponsor must send it as soon as possible but no later than seven business days after the request.
- Before renewal: If you decide to change health plans, you’ll receive your SBC along with any necessary open enrollment materials to compare, apply, and enroll in new coverage. If you’ve elected to auto-renew your policy, you’ll receive your SBC no later than 30 days before the first day of the new policy year.
- Upon request: You can request a paper copy of your SBC anytime. Your insurer or plan sponsor must send it as soon as possible but no later than seven business days after the request. Most health insurers also have electronic copies of your SBC on their website or customer portal.
- Material modification changes: According to ACA, material modifications are adjustments to a health plan during the plan year that reflect an essential change in benefits. If this happens, you’ll receive a notice listing the modifications or an updated SBC no later than 60 days before the change occurs.
How should consumers receive a summary of benefits and coverage?
You’ll receive your SBC either in paper form or electronically.
Your insurer or plan sponsor can provide your SBC electronically if they meet the following conditions:
- The SBC is accessible
- Policyholders can receive a paper copy of the SBC for free if they request it
- It’s available online
If you didn’t enroll in your plan online, you can only receive the SBC electronically if you consent to electronic delivery.
According to government guidelines, a policyholder’s covered dependents, or beneficiaries, must also receive an SBC. Insurers or plan sponsors can send dependents a paper copy of the SBC to the policyholder’s last known address unless they know the dependent’s address differs from the policyholder’s address.
As a consumer, it’s important to consider all the facts when shopping for health insurance plans. With an SBC, you can better understand coverage options, cost-sharing expenses, common medical terminology, network limitations, and other factors that may impact your healthcare choices. Comparing plans may seem time-consuming, but it’s worth it to help you find a plan that suits you and your family’s needs and budget.
This blog article was originally published on September 17, 2012. It was last updated on September 15, 2023.