A new set of federal rules aims to make examining different health-insurance plans less like brain surgery and more like comparison shopping for cars.
The rules set up a Summary of Benefits and Coverage (SBC), a document containing basic information for an insurance plan ranging from its deductible to its required co-pay fees for common medical services like eye examinations. The U.S. Department of Health and Human Services (HHS), U.S Department of Labor, and the U.S. Department of the Treasury unveiled the final version of the SBC rule Feb. 9.
Insurers will have to start providing SBCs for policyholders and prospective policyholders on Sept. 23. The summaries are required by the Patient Protection and Affordable Care Act, the 2010 federal health-care reform law.
HHS has compared SBCs to nutrition-facts labels on packaged foods. All insurers will use the same SBC template, and SBCs for different plans will contain details in the same place, so the top line on each SBC will list a plan’s overall deductible, and the third line will hold information on out-of-pocket expense limits, for example.
That will make it easier for businesses and individuals to see the different benefits available with various carriers and plans, according to Renee Guariglia, executive vice president at Syracuse–based Falcone Associates, Inc. and a member of the Independent Insurance Agents and Brokers of New York, Inc.’s (IIABNY) health-care reform task force.
“When you’ve got each carrier using a different format, and you’re trying to explain the deductible and the out-of-pocket expenses, it is difficult,” Guariglia says. “Now you will have uniform benefit summaries.”
Insurance brokers and agents will benefit from SBCs, contends Guariglia, who also sits on the board of directors of the New York State Association of Health Underwriters and the board of directors of IAAC, Inc., which is IIABNY’s membership-services division. In addition, the benefit summaries will be a help to businesses and consumers, she says.
“Having that summary is going to make our jobs easier, but is really going to allow us to educate people as to what the plan is that they’re selecting,” Guariglia says. “And they’ll understand to a better degree what benefits they have, what it’s going to cost them to go to a doctor, [and] to have a procedure done.”
In the past, an agent or broker would have had to create a spreadsheet to allow groups to easily compare different insurance options, according to Guariglia. That was a common practice, but it’s a step that now often won’t be necessary with the new SBCs, she says.
SBCs will be helpful for businesses that don’t use an insurance broker, Guariglia predicts. The information on the sheets will make it easier for those companies to discuss their options with carrier representatives, she says.
However, the summaries will not take the place of brokers and agents, she adds. Some carriers will likely provide more details on SBCs than others, leaving brokers and agents to fill in the gaps for their clients. And groups of employees will still ask questions that can’t be answered by a prefabricated sheet of paper.
“At the end of the day, the broker is still there to educate the consumer,” she says. “We’re there in front of the group. They know us. They call us.”
Reaction to the SBC rules was not universally positive, however. Karen Ignagni, the CEO of America’s Health Insurance Plans, a national trade association representing the health-insurance industry, said in a news release that the regulations could increase administrative burdens for insurers, consumers, and employers.
“The rule requires that a separate document be available for each potential family size and for every possible benefit design option, including different cost-sharing levels, prescription drug formularies, and network designs,” Ignagni said. “Requiring a separate document for each coverage scenario will significantly increase administrative costs and potentially result in consumers having to sort through scores of pages of coverage information.”
Glossary of terms
The rules issued Feb. 9 also establish a uniform glossary of terms that are commonly used in health-insurance coverage — terms like co-payment and co-insurance. That glossary will help employees better understand their coverage, Guariglia says.
“When you’re doing a meeting and that employee goes home to speak to their spouse, they’re going to have the SBC, they’re going to have the uniform glossary to say, OK, I have a $15 co-pay — let me look up what a co-pay is,” she says.
The uniform glossary will be posted online. It is currently available at www.dol.gov/ebsa/healthreform.