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As businesses continue to track more details about customers, products, and sales, it only makes sense that we would begin have more access to these kinds of details about one of the most expensive products we all buy – health insurance. It has been said time and time again, if you are buying something...

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Documents & Requirements: Affordable Care Act Compliance

With the Affordable Care Act (ACA) in full force, now is the time for employers and plan sponsors to comply with documentation and distribution rules. Failure to comply may result in costly penalties.

1. Summary Plan Descriptions (SPDs)
Companies often assume the insurance carrier will provide the SPD or mistake the insurer’s benefits booklet for the SPD. It is the plan sponsor’s responsibility to prepare the SPD and ensure routine and timely distribution to their plan participants.

An SPD must include participant rights and responsibilities under ERISA, eligibility rules, cost-sharing, deductibles, specific notices, and benefit limitations and exclusions, to name just a few provisions. Generally, the SPD must be distributed to each plan participant, including dependents, within 90 days of enrollment and within 30 days of any request.

Potential Fines: The plan administrator/employer/plan sponsor may be charged up to $110 per day if the document is not provided within 30 days of a request.

2. Plan Documents
Separate from the SPD, the plan document describes the plan’s operation, funding, tax ID, plan number(s), and more. The SPD comprises a portion of the plan document, but does not replace it. This document must be available within 30 days of request and must be kept current and on file at all times. Without a plan document, it can be difficult to prove plan terms and thus enforce plan provisions.

Potential Fines: The plan administrator/employer/plan sponsor may be charged up to $110 per day if the document is not provided within 30 days of a request.

3. Notice of Health Insurance Marketplace
This notice informs your employees about the federal or state health insurance marketplace, otherwise known as the insurance exchange (now called Marketplaces). Yes, the federal government requires you to advertise the Marketplaces’ open enrollment periods. In addition, it provides general information about the medical coverage provided by the employer. The notice must be delivered to new employees within 14 days of their hire date.Businessman with money in purse in hands on a gray background

Potential Fines: While the
ACA has a $100/day penalty for noncompliance with its provisions (unless otherwise specified in the statue), it has been generally assumed that it would not apply to a failure to deliver a notice like this one. That assumption was confirmed by the DOL in late 2013. If you’d like to read more about the risks associated with failing to provide this notice, here’s an excellent article from SHRM (Society for Human Resource Management) on this topic.

4. Summary of Benefits and Coverage (SBC)
The SBC is intended to help the plan participant understand how the plan covers certain treatments and if out-of-pocket expenses are incurred. SBCs follow an HHS-approved format and provide an “apples-to-apples” way of comparing one health plan to another health plan (think of them like you would a food label – an easy way to compare the calories and nutritional value of one food to another food). It also provides a glossary of benefits and insurance terms to assist with insurance terminology. The insurance carrier will provide an SBC to the employer for distribution at enrollment. Self-funded plans must develop the SBC and distribute accordingly.

Potential Fines: A penalty of up to $1,000 per failure can be assessed on insurers (for insured health plans) and plan administrators (for insured and self-insured health plans) that “willfully fail” to timely provide the SBC. A failure with respect to each participant or beneficiary constitutes a separate offense. Now is the time to comply! Please discuss your plan’s document requirements with your Account Manager today.

By:  csmith