If a plan sponsor (employer) or health insurance issuer makes any material modification in any of the terms of the plan or coverage involved that is not reflected in the most recently provided summary of benefits and coverage (SBC), the issuer must provide notice of the modification to enrollees not later than 60 days prior to the date on which the modification becomes effective.
This is a significant change from current rules, which require provision of a notice of material modification within 60 days after adoption of a material reduction in group health plan covered services or benefits, or within 210 days after adoption of any other type of material modification or change.
The 60-day advance notice rule does not apply to modifications made at renewal/annual open enrollment.
A “material modification” is defined under section 102 of the Employee Retirement Income Security Act of 1974 (ERISA) and includes:
- Any coverage modification that alone or combined with other changes made at the same time would be considered by “an average participant” to be “an important change in covered benefits or other terms of coverage under the plan or policy.”
- An enhancement of covered benefits, services or other more general, plan or policy terms. For example, coverage of previously excluded benefits or reduced cost-sharing.
- A “material reduction in covered services or benefits” or more strict requirements for “receipt of benefits,” including:
- Changes or modifications that reduce or eliminate benefits
- Increases in cost-sharing
- Imposing a new referral requirement
The advance notice may be provided through a separate notice or an updated SBC.