August 18, 2011

HHS Issues New Labeling Rules For Health Insurers

Beginning next year, insurers and employers must clearly define the costs and benefits of the health plans they offer, according to new rules announced on Wednesday by the U.S. Department of Health and Human Services (HHS).

"Today, many consumers don't have easy access to information in plain English to help them understand the differences in the coverage and benefits provided by different health plans," said HHS Secretary Kathleen Sebelius.

The new rules are designed to better inform people about their health insurance choices, the department said.

The HHS likened the new standard labeling to that included on most cereal boxes.

Among other things, the label would disclose to customers the amount of their premium, deductible and out-of-pocket costs, along with the costs associated with medical events and procedures, such as doctor visits and cancer treatments.

The new rules require insurers to provide the information before a customer purchases a plan, and whenever any changes are made.

The department said the proposed rules would ensure consumers have access to two forms that will help them understand and evaluate their health insurance choices: a clear "ËœSummary of Benefits and Coverage' and a uniform glossary of terms commonly used in health insurance coverage, such as "deductible" and "co-pay".

The "ËœSummary of Benefits and Coverage' will include a standardized health plan or policy comparison tool known as "Coverage Examples" much like the Nutrition Facts label required for packaged foods, the department said. 

The glossary is designed to replace the jargon that often makes it difficult for consumers to compare plans or determine what is covered in their plans.

Insurers must also provide notice at least 60 days before any significant modifications are made in their plans or coverage during the plan or policy year.

The new forms are scheduled to be available in 2012, and will be a "critical resource for more than 180 million health insurance consumers with private health insurance coverage," the department said in its announcement of the new rules.

The rules will also assist employers in finding the best coverage for their business and their employees, the department said.

"The proposed rules benefit from the public process led by the National Association of Insurance Commissioners (NAIC) and a working group composed of stakeholders. These stakeholders include representatives of health insurance-related consumer advocacy organizations, health insurers, health care professionals, patient advocates including those representing individuals with limited English proficiency, and other qualified individuals," the department said.

Additional information about the proposed regulation can be viewed at: http://www.healthcare.gov/news/factsheets/labels08172011a.html.

The proposed template for the "Summary of Benefits and Coverage" form can be viewed at http://www.healthcare.gov/news/factsheets/labels08172011b.pdf

To view the Notice of Proposed Rulemaking, or to learn how to submit public comment, visit: Summary of Benefits and Coverage and Uniform Glossary (PDF -385 KB) and Templates, Instructions, and Related Materials under Public Health Service Act (PDF "“ 8 MB)