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Proposed Rules on Communications, Affordability, HRAs

New proposed rules springing from the Patient Protection and Affordable Care Act (PPACA) would drastically change how companies communicate information about their employer-sponsored benefits.

The new guidance would require fully insured and self-insured plans to supply a summary of benefits and coverage (SBC) to employees no later than March 23, 2012, according to a report by CCH. The SBC would have to include easy-to-understand language, a comparison tool that would use three real-life examples (having a baby, treating breast cancer, managing diabetes) and a glossary of commonly used health care terms, such as “deductible” and “copay.”

The rules call for the SBC to be distributed with enrollment materials and upon request within seven days. In addition, any updates to the SBC would have to be distributed 60 days prior to the change, according to the law firm Ogletree Deakins. Employers who do not meet these requirements could face a fine of up to $1,000 per failure.

“Employers and administrators that already provide summary plan descriptions [SPDs] are understandably concerned about the duplications and additional costs associated with elements of the new SBC requirement,” the CCH report said.

The Employee Benefits Security Administration, the IRS and the Department of Health and Human Services (HHS) are accepting comments through Oct. 21, 2011, on how this new communication should be coordinated with SPDs and other enrollment materials.

Plan ‘Affordability’
Prior to the release of the proposed SBC rules, the IRS announced it would create new rules to make it easier for employers to determine if their health plans meet the affordability requirements under PPACA, according to a Workforce Management report. Under current rules, plans with single-coverage premium contributions that top 9.5 percent of a worker’s family income would be subject to an annual $3,000 penalty in 2014. The new rules would allow employers to base their calculations on wages instead of income, ensuring a more accurate picture of affordability, the IRS stated.

HRA Update
Meanwhile, the HHS loosened some of the PPACA rules on annual dollar limits as they apply to stand-alone health reimbursement accounts (HRAs). HHS announced that sponsors of stand-alone HRAs are exempt from the annual limit requirements on coverage of essential benefits ($750,000 in 2011, $1.25 million in 2012 and $2 million in 2013). However, the exemption disappears after 2014, according to Buck Consultants.