New Federal Rules Require Insurers to Use Plain Language to Describe Coverage

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Feb 10th, 2012

New Federal Rules Require Insurers to Use Plain Language to Describe Coverage

On February 9, the Departments of Health and Human Services, Labor, and Treasury jointly released the final regulations for the Summary of Benefits and Coverage requirements in the Affordable Care Act.  The new rules, effective for all plans issued on or after September 23, 2012, will require all private insurers to provide consumers with understandable and straightforward information on what health plans will cover, what limitations or conditions will apply, and what they will pay for services. The rules are also intended to make it easier for people and employers to directly compare one plan to another.

“All consumers, for the first time, will really be able to clearly comprehend the sometimes confusing language insurance plans often use in marketing,” said HHS Secretary Kathleen Sebelius in a statement about the new rules.  “This will give them a new edge in deciding which plan will best suit their needs and those of their families or employees.”

Under the regulation announced yesterday, health insurers must provide consumers with clear, consistent and comparable summary information about their health plan benefits and coverage.  The new explanations, which will be available beginning, or soon after, September 23, 2012 will be an important resource for the roughly 150 million Americans with private health insurance today.

Specifically, these rules will ensure consumers have access to two key documents that will help them understand and evaluate their health insurance choices:

·      A short, easy-to-understand Summary of Benefits and Coverage ( or “SBC”); and

·       A uniform glossary of terms commonly used in health insurance coverage, such as “deductible” and “co-payment.”

All health plans and insurers will provide an SBC to shoppers and enrollees at important points in the enrollment process, such as upon application and at renewal. 

A key feature of the SBC is a new, standardized plan comparison tool called “coverage examples,” similar to the Nutrition Facts label required for packaged foods.  The coverage examples will illustrate sample medical situations and describe how much coverage the plan would provide in an event such as having a baby (normal delivery) or managing Type II diabetes (routine maintenance, well-controlled)  These examples will help consumers understand and compare what they would have to pay under each plan they are considering.

Consumer representatives were generally pleased with the new rule, but expressed disappointment that health insurers will not be required to include premium information in the Summary of Benefits and Coverage, and that a paper copy of the SBC was required only at the request of the consumer.  A statement from the consumer advocacy organization Families USA said in part:

“The Summary of Benefits and Coverage final regulation will significantly improve consumer information in the health care marketplace. This standard disclosure will give consumers the information they need to compare health plans and choose the best coverage for themselves and their families.”

To view the template for the Summary of Benefits and Coverage and the glossary, visit: http://cciio.cms.gov/resources/other/index.html#sbcug

To view the Final Rule, visit: http://www.ofr.gov/inspection.aspx

For more information on the rules announced today, visit: http://www.healthcare.gov/news/factsheets/2011/08/labels08172011a.html

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Coalition Partners