Strengthening the Summary of Benefits and Coverage as a Consumer Tool

As health insurance consumers, one of the most difficult things to understand is what’s covered under our health insurance policies. Unsurprisingly, polls show that many of us don’t understand common terms related to our health insurance coverage, such as “deductible” and “co-insurance.” Our lack of understanding unfortunately limits our ability to buy a health plan that is best able to meet our health and financial needs. It also leaves many of us mystified, and often frustrated, when we try to use our health insurance.

The authors of the Affordable Care Act (ACA) recognized this, and included a provision in the law requiring insurers to create a better tool for consumers to understand what’s covered under a health plan, at the time they’re shopping. It’s called the Summary of Benefits and Coverage (SBC), which we blogged about previously here. Like it sounds, the SBC is meant to be an easy-to-understand standardized summary of what your benefits are and what’s covered under a health plan.

Although the SBC was one of the most popular ACA reforms leading up to implementation, it’s unclear how effective SBCs have actually been as a consumer tool. We’ve heard anecdotally that consumers are receiving inaccurate or incomplete SBCs, and that oversight of this requirement at either the federal or state level is minimal.

There’s a lot of work to be done to make the SBC a tool consumers can really use. Last week we heard the welcome news that one state – Utah – is requiring insurers to provide additional information on exclusions and limitations in their health plans as part of their SBC. We applaud Utah’s decision to make the SBC a more meaningful tool to help consumers understand their coverage, and urge other states to do the same. States can not only require insurers to provide additional information, they can also do a better job monitoring insurer compliance with the SBC requirements as part of their annual review of insurers’ policies.

In addition, when consumers receive a SBC that’s incomplete or incorrect, state insurance departments should be prepared to hold insurers accountable. The ACA intended the SBCs to provide all of us with a simplified reference tool to understand the scope of benefits associated with a health plan. And until the SBC is provided and used as intended, many of us will remain uncertain about exactly what we’re purchasing when we buy health insurance.

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