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Sample Summary of Benefits and Coverage (SBC) for Health Reimbursement Arrangements (HRAs) Overview

SBCs are required for all group health plans, including HRAs, beginning with the first open enrollment period beginning on or after September 23, 2012, for participants and beneficiaries enrolling or re-enrolling during open enrollment. The requirement to provide an SBC is effective the first day of the plan year following September 23, 2012, for participants joining the plan after open enrollment. The SBC may be provided in paper format (or electronically under certain circumstances).

The Agency of Health and Human Services created an SBC template that must be used to meet the requirement of health plans. You will need to complete and distribute the SBC using the specific terms and conditions for your HRA. While an HRA qualifies as a health plan, the template provided does not fit the unique circumstances of most HRAs and so the attached information may be confusing. When you distribute the SBC to your participants, you may want to provide a cover letter that indicates this Summary of Benefits Coverage is required under PPACA (Health Care Reform).

Integrated HRAs
If you offer an HRA that is integrated with your major medical plan, you are permitted for this year only to include information regarding the integrated HRA as part of the SBC that is prepared for your major medical plan. This will be the simplest way to meet the requirement. In future years, you may be required to include information regarding the integrated HRA as part of the SBC for your major medical plan. For more information please refer to the instructions at the beginning of the SBC sample for a stand-alone HRA.

WageWorks has prepared sample language for an integrated HRA that may be added to the SBC for your major medical plan:

  • In the "Answers" column to the first row ("What is the overall deductible?") on page 1, please add the following language:

"If you participate in your employer's HRA, the HRA will pay for or reimburse you for certain, qualified medical expenses for amounts under the deductible, up to the balance available in your HRA."

  • A text box should be added following the Coverage Examples on page 6 (or 7) that states as follows:

"If you participate in your employer's HRA, the HRA will pay for or reimburse you for certain, qualified medical expenses (including co-pays and coinsurance) for amounts under the deductible, up to the balance available in your HRA."

Stand-Alone HRAs
If you offer a stand-alone HRA (e.g., one that is not offered in conjunction with your major medical plan), WageWorks has prepared a sample SBC that you may use for your HRA. The sample SBC, along with detailed instructions, is available here. You should complete the SBC using the specific terms and conditions for your HRA. Alternatively, WageWorks can prepare the SBC for you (additional fees apply). In either case, you should have the SBC reviewed by legal counsel as WageWorks cannot provide legal advice to you.

Retiree-only HRAs and HRAs covering only vision or dental expenses are exempt from the SBC requirement. Otherwise, the SBC must be provided:

  • Prior to Open Enrollment or Renewal: The SBC has to be included with any open enrollment materials that are provided to plan participants. For plans that automatically renew, the SBC must be provided to participants 30 days before the plan year begins.
  • When First Eligible for Initial Enrollment: The SBC should be included in any enrollment materials that are provided to a newly eligible employee. If no enrollment materials are provided to new employees, the SBC must be made available to an employee on the first day that they are eligible to enroll in the plan.
  • In the Event of a Special Enrollment: The SBC should be provided to any enrollees that have a mid-year qualifying event no later than 90 days after the qualifying event occurs.
  • Upon Request: Participants may request a copy of the SBC at any point during the plan year. It must be made available to them no later than 7 business days from the original request.

We realize that the SBC requirements, when applied to HRAs, are confusing and will not make sense to participants. We also realize that these are difficult topics. Although we cannot provide legal advice to you, we are available to assist you.

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