- Posted by Jessica Waltman
- On November 15, 2019
Open enrollment is a busy time of year for employers and employees alike. When a lot is going on, it is easy to forget things. One thing businesses do not want to let slide is making sure that all health plan participants receive all mandatory legal notices. During open enrollment, there are certain documents that must be distributed according to federal law; otherwise employers can face fines and other legal consequences. We’ve prepared an overview of the notice distribution requirements for you to keep on hand.
Certain notices must be distributed to all plan participants during open enrollment. These are:
Summary of Benefits and Coverage (SBC) and Uniform Glossary—These documents provide an overview of each plan option a group offers and definitions of standard health insurance terms. SBCs must follow a standardized four-page template and add customized detail particular to the coverage option. For fully-insured plans, the carrier prepares the document. In self-funded arrangements, the administrative services organization often drafts the SBC. However, employers have distribution liability, too, and the penalty for willful noncompliance is up to $1,000 per enrollee for each failure. In most cases, employers that offer consumer-directed coverage with an account-based plan option can provide enrollees with one SBC. Still, some health reimbursement arrangements (HRAs) will require two separate documents.
Women’s Health and Cancer Rights Act Notice—This notice provides enrollees with information about a federal law that provides protections to patients who have breast reconstructive surgery in connection with a mastectomy. The Department of Labor has made a template available for employers to use to produce their notices.
Notice of Special Enrollment Rights—The Health Insurance Portability and Accountability Act requires group health plans to notify all eligible employees about their special enrollment rights at the time of enrollment. The Department of Labor’s health plan notice guide includes model language for employers to use as a guide.
Some notices only need to be distributed if a group health plan includes specific components or covers certain people:
Grandfathered Plan Notice—If a business offers any coverage option that has “grandfathered status” according to the Affordable Care Act (ACA), it must provide a grandfathered plan notice that follows the federal template to maintain grandfathered status.
Children’s Health Insurance Program Premium Assistance (CHIPRA) Notice—This notice informs plan participants about the potential availability of premium assistance programs for Medicaid and Children’s Health Insurance Program participants. Participants who live in a state that offers premium assistance must get a copy. There is a federal model notice for employers to use, and it includes a current listing of all the applicable states.
Wellness Program Disclosures — If a group health benefits package includes a wellness program discussed in open enrollment materials, two different notice requirements could apply. All companies that offer a wellness program that requires participants to meet a standard based on a health factor before they get a reward need to provide enrollees with an annual disclosure that complies with federal guidance. Any employer wellness programs that ask about medical conditions or ask employees to engage in any therapeutic activity (like tests to detect high blood pressure, high cholesterol, or diabetes) must provide notice about how employee medical information is kept confidential. There is a federal template for this notice too.
HIPAA Privacy Notice for Self-Funded Plans – If an employer operates a self-funded health plan (including health reimbursement arrangements or health flexible spending arrangements), then that plan is subject to the HIPAA privacy requirements and related data security rules. These plans need to give participants privacy notifications at different times, including during plan enrollment. Federal templates are available for self-funded plan administrators to use.
Finally, plans must distribute some notices within 90 days of the start of coverage. Employer groups can provide these notices at open enrollment, but there is a longer distribution timeframe.
Summary Plan Description – The SPD is a comprehensive description of the plan required by Section 402 of the Employee Retirement Income Security Act (ERISA). Its purpose is to inform participants what the group health plan provides and how it operates in straightforward language. The SPD comes from the employer, not the health insurer, because it contains a great deal of group-specific information and liability for the SPD and its distribution rests with the employer only. New plan participants must be given a copy within 90 days of the start of coverage. Also, all plan participants must get one every time the SPD is modified or updated, as well as a copy every five years if the plan is modified or ten if the plan stays the same. If an employee requests an SPD, then they must get one within 30 days of their request. If a non-grandfathered plan requires participants to designate a primary care provider, they must get a notice of patient protections whenever the group gives out the SPD. This notice can be part of the SPD, and there is model language for employers to use.
COBRA General Notice – Group health plans subject to COBRA must give each employee and each spouse of an employee who becomes covered under the policy a general notice describing COBRA rights. Distribution of the general notice must occur within the first 90 days of coverage. The Department of Labor makes a template available for employers to use in meeting their notice obligations.
And remember – your Kistler Tiffany Benefits’ Employee Benefits Consultant is always available to assist you with notice distribution and answer any questions you might have.