When must notice of material modification to a “Summary of Benefits and Coverage” be issued?


You are aware of the requirement under the Patient Protection and Affordable Care Act to issue a “Summary of Benefits and Coverage” (SBC) to your health plan enrollees beginning March 23, 2012. But the timeframe for issuing notice of a material modification to an SBC appears to differ from the existing timeframe for issuing such notices. What are the material modification rules for SBCs?


Under proposed regulations, a material modification that would affect the content of the SBC would require plans and issuers to provide notice of material modification to enrollees and policyholders no later than 60 days prior to the date on which such change would become effective, if it is not reflected in the most recent SBC and occurs other than in connection with a renewal or reissuance of coverage.

A material modification would include any modification to coverage that independently or in conjunction with other contemporaneous modifications or changes would be considered by an average plan participant or covered individual to be an important change in covered benefits or other terms of coverage under the plan or policy. This could mean even an enhancement of covered benefits or services or other more generous plan or policy terms.

The IRS, EBSA, and HHS concede that for ERISA-covered group health plans subject to PHSA §2715 (i.e., the new SBC requirement), this notice would be in advance of the timing requirement in ERISA Reg. §2520.104b-3, which generally requires the provision of a summary of material modification not later than 210 days after the close of the plan year in which the modification or change was adopted or, for a material reduction in covered services or benefits, not later than 60 days after the date of adoption of the modification or change.

Source: ERISA Proposed Reg. §2590.715-2715(b).

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