The Importance of Including the Summary of Benefits and Coverage (SBC) in Open Enrollment Materials

As Open Enrollment season approaches, HR professionals play a pivotal role in ensuring employees understand their health plan options. One key compliance document that must be included in every Open Enrollment package is the Summary of Benefits and Coverage (SBC). While it may seem like another piece of paperwork, the SBC serves as an essential tool for both compliance and employee education.

What the SBC Is
The Summary of Benefits and Coverage is a standardized document required under the Affordable Care Act (ACA). Its purpose is to help employees clearly understand what each health plan covers and what it costs. By using consistent formatting and terminology, the SBC makes it easier for employees to compare plans side by side and make informed enrollment decisions.

Each SBC includes:

• An overview of covered services, exclusions, and limitations
• Cost-sharing details such as deductibles, copayments, and coinsurance
• Examples of how the plan pays for common medical situations (like childbirth or managing diabetes)
• Information about provider networks and obtaining additional plan documents

Why It Matters for Employers
Including the SBC with your Open Enrollment materials isn’t just a best practice, it’s a legal requirement. Group health plans and insurers must distribute SBCs:

• At the start of Open Enrollment each year
• When employees first become eligible for coverage
• When special enrollment events occur
• Upon employee request

Failure to provide an SBC can lead to penalties of up to $1,000 per participant per violation under ACA rules. Beyond compliance, providing clear and accessible SBCs demonstrates an employer’s commitment to transparency and employee support.

How the SBC Helps Employees
Health plan details can be complex. The SBC simplifies the information in a way that employees can understand without having to interpret lengthy policy documents. During Open Enrollment, the SBC allows employees to compare costs and coverage across available options, helping them choose the plan that best meets their needs and budget.

By reviewing the SBC, employees can better anticipate their potential out-of-pocket costs and understand how their plan handles common healthcare needs, which reduces confusion and questions later in the year.

Best Practices for HR Teams

• Include all SBCs in Open Enrollment communications. Whether you distribute materials electronically or in print, make sure the SBC for each available plan is included and easy to locate.
• Ensure timeliness. SBCs must be provided before employees make their plan elections.
• Keep copies accessible year-round. Employees should be able to request and receive an SBC within seven business days.
• Coordinate with carriers. Insurance carriers are required to prepare the SBC, but employers must ensure it’s properly distributed to employees.

In Summary
The SBC is a key component of Open Enrollment that supports both compliance and employee understanding. Including it in your Open Enrollment materials not only fulfills an ACA requirement but also promotes informed decision-making, transparency, and employee confidence in your benefits program. A clear SBC helps employees choose wisely and helps HR departments demonstrate their ongoing commitment to compliance and care.

Benefit Allocation Systems (BAS) provides best-in-class, online solutions for: Employee Benefits Enrollment; COBRA; Flexible Spending Accounts (FSAs); Health Reimbursement Accounts (HRAs); Leave of Absence Premium Billing (LOA); Affordable Care Act Record Keeping, Compliance & IRS Reporting (ACA); Group Insurance Premium Billing; Property & Casualty Premium Billing; and Payroll Integration.

MyEnroll360 can Integrate with any insurance carrier for enrollment eligibility management (e.g., Blue Cross, Blue Shield, Aetna, United Health Care, Kaiser, CIGNA and many others), and integrate with any payroll system for enrollment deduction management (e.g., Workday, ADP, Paylocity, PayCor, UKG, and many others).

This article is for informational purposes only and is not intended as legal, tax, or benefits advice. Readers should not rely on this information for taking (or not taking) any action relating to employment, compliance, or benefits. Always consult with a qualified professional before making decisions based on this content.