The ACA requires group health plans and health insurance issuers to provide participants with advance notice when a material modification to the plan is made outside of the regular renewal (Summary of Benefits and Coverage [SBC]) cycle.
This requirement is designed to ensure employees have sufficient time to evaluate changes and make informed coverage decisions.
What Is a “Material Modification”?
A material modification is any change that would affect the content of the SBC and would be considered important by an average plan participant. This includes:
- Enhancements to benefits or coverage.
- Reductions in benefits or coverage.
- Changes in cost-sharing (e.g., increases to deductibles, copays, or coinsurance).
- Changes to coverage tiers, eligibility rules, or network structures.
- New coverage exclusions or limitations.
Essentially, if the change would alter the information provided in the SBC, it is likely considered a material modification under the ACA.
Timing of the 60-Day Notice
- Notice must be provided at least 60 days before the effective date of the material modification.
- This applies only to mid-year changes (i.e., changes made other than at renewal/open enrollment).
- If the change occurs at renewal, it is typically addressed through the SBC distribution for the new plan year rather than through this separate notice requirement.
How to Distribute the Notice
The 60-Day Notice may be provided through:
- An updated SBC that includes the modification, or
- A separate notice created by the employer/plan that clearly describes the material modification.
It must be distributed using the same methods that apply to SBCs — for example, paper handouts, mail, or electronic distribution that meets DOL electronic disclosure rules.
60-Day Notice vs. ERISA SMM (210-Day Rule)
This ACA requirement is different from ERISA’s Summary of Material Modifications (SMM) rule, which generally requires:
- Notice of material changes within 210 days after the end of the plan year in which the change is adopted (or within 60 days after adoption for material reductions in benefits).
| ACA 60-Day Notice | ERISA SMM |
|---|---|
| Applies to material modifications affecting SBC content. | Applies to any material change to the plan. |
| Required before the effective date (60 days in advance). | Required after the change is adopted (generally within 210 days). |
| Enforced by DOL, HHS, and IRS under ACA rules. | Enforced by DOL under ERISA. |
Employers often satisfy both requirements by issuing an updated SBC and SMM together, but timing is key. The ACA notice must go out before the change takes effect, whereas the ERISA SMM is distributed afterward.
Tips for Employers and Insurance Brokers
- Plan mid-year changes carefully, and only as critically needed, to ensure the 60-day timeline is met.
- Coordinate with carriers and TPAs early to confirm who will prepare the notice.
- Remember ERISA separately; many employers must comply with both.
- Brokers should guide, not prepare. This is a legal disclosure obligation. Make sure employers understand their responsibilities.