PPACA requires group health plans and health insurance issuers offering coverage to individual or group plans to provide a notice to participants that describes the plan’s coverage and limitations, using uniform definitions.  Sometimes the notice is referred to as the “section 2715” notice.  The statute imposes a $1,000 fine for “each” failure to provide the notice.

When Must Plans Start Delivering the New Summary of Benefits Notice? 

Plans will be required to provide the notice “no later than 24 months after the date of enactment”- March 23, 2012.

What Information Must Be Included in the Notice? 

The notice, which must be “understandable” by the average plan enrollee is limited to 4 pages with 12-point font and must include:

• Uniform definitions of standard insurance and medical terms;
• A description of the coverage, including cost-sharing, for each category of essential health benefits;
• Exceptions, reductions, and limitations in coverage;
• Cost-sharing provisions, including deductible, coinsurance, and copayment obligations;
• Renewability and continuation provisions;
• Examples to illustrate common benefits scenarios;
• A statement as to whether the plan provides minimum essential coverage and whether the plan covers 60% of costs (this is information that will impact the employer mandate in 2014); and
• Contact information.

Is There a Model Notice? 

The Secretary of HHS is required to develop standards for the notice no later than March 23, 2011 (although we have not seen this yet).  The Secretary is required to consult with the National Association of Insurance Commissioners (NAIC) in developing the standards.  The NAIC has issued a sample 4-page notice (notably, the instructions on how to complete the 4-page notice are a little more complicated and span 13 pages).

Got a health-care reform question?  You can ask YOUR health-care reform legislation question online at http://www.surveymonkey.com/s/second_opinions 

You can find a handy list of Key Provisions of the Patient Protection and Affordable Care Act and their effective dates at http://www.groom.com/HCR-Chart.html    

Contributors:  

Christy Tinnes is a Principal in the Health & Welfare Group of Groom Law Group in Washington, D.C.  She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA, and Medicare.  She represents employers designing health plans as well as insurers designing new products.  Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health-care reform legislation.  

Brigen Winters is a Principal at Groom Law Group, Chartered, where he co-chairs the firm’s Policy and Legislation group. He counsels plan sponsors, insurers, and other financial institutions regarding health and welfare, executive compensation, and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health-reform legislation.  

PLEASE NOTE:  This feature is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.