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Feds Issue Summary of Benefits and Material Modification Rules - August 18, 2011

Yesterday the DOL, HHS, and IRS released proposed rules implementing the Affordable Care Act's requirement that group health plans and insurance issuers provide participants and beneficiaries with a written summary of benefits and coverage ("SBC"). These rules also discuss a group health plan or issuer's obligation to notify participants 60 days in advance of any material modifications to the health plan as outlined in the SBC. Of particular note for employers is the clarification that the 60 day material modification notice will not apply to changes made in connection with an employer's health insurance renewal, relieving fears that employers would need to change the timing of their insurance renewal processes and open enrollment periods. Failure to provide an SBC or material modification notice when required results in a fine of $1,000.00 for each participant and beneficiary who failed to receive the SBC. While these rules are in proposed format, we expect the rules to be finalized prior to their March 23, 2012 effective date. Copies of the proposed SBC templates are available here.