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Summary of Coverage Implementation Delayed

UPDATE:  On November 17, 2011, the Department of Labor (DOL) announced that health plan sponsors and health insurers will not be required to comply with this provision until the issuance of the Final Rules and Regulations by the DOL.  As a result, the implementation date of March 23, 2012 will, most likely, be delayed.  No new implementation date has been specified by the DOL.  Banyan Consulting will inform you of the new requirements and implementation date as soon as the DOL issues the Final Rules and Regulations.

One of the provisions of PPACA is the issuance by plan sponsors of Uniform Notices of Coverage AKA Summery of Coverage Notices to plan participants beginning March 23, 2012.  On August 22nd, the Department of Labor (DOL) issued the Interim Final Rules on format and requirements of the notices.  As usual, the DOL is taking comments on the Interim Final Rules for the next 60 days, however, it is unlikely that there will be any major changes to what was released.

You can view the sample template of the notice at: 
 
Effective March 23, 2012, a plan sponsor or the third party administrator (TPA) must provide a copy of the notice:
 
  • At issuance of policy
  • Upon request
  • Mid-plan year material change
  • Renewal
 
As a result, the plan sponsor or TPA will need to be ready to supply the notices on March 23, 2012 to any new enrollees in the health plan and to anyone who requests one.  Participants already in the plan, most likely, will not receive their first notice until the start of the next plan year.  In addition, the notices will have to be incorporated as a separate document into any enrollment and/or open enrollment materials provided to eligible plan participants.
 
For mid-plan year material changes there is also a 60-day advanced notice rule.  If a plan sponsor makes a material change to the health plan such as changing deductibles, copays, coinsurance, etc., the plan sponsor must provide a revised notice to the plan participants 60 days prior to the effective date of the change.  This 60-day advanced notice rule does not apply to renewal of new plan years.
 
Penalty for failure to provide a copy of the notice is $1,000 per enrollee who does not receive.  Also, additional IRS penalties may apply.
 
As a plan sponsor you should coordinate your distribution of the notices with your TPA and/or add the notice to all of your health plan enrollment and communication materials.