The Summary of Benefits and Coverage (SBC) is a standardized document created under the Affordable Care Act (ACA) to help individuals understand and compare health plan options. It outlines key plan features in a uniform federal format, making it easier to compare employer coverage with other plans – including individual exchange and small group options.
Purpose of the SBC
The SBC was designed to:
- Present essential plan information clearly and consistently.
- Help employees and their families compare plans and copays/coinsurance across carriers and markets.
- Indicate whether a plan provides Minimum Essential Coverage (MEC) and meets Minimum Value (MV) standards.
- Demonstrate how benefits work in practice through coverage examples of common medical events.
Because SBCs follow a standard federal template, individuals can compare different coverage options side by side – whether offered through an employer or purchased individually.
Who Typically Provides SBCs
- Fully Insured – Small Group and Individual Market
Carriers are required to prepare SBCs for their products using the federal template. Employers distribute these to employees during initial eligibility, open enrollment, or upon request. - Self-Funded and Level-Funded Plans
The plan sponsor is responsible for creating and maintaining the SBC, usually working with a TPA or benefits consultant to complete the federal model. - Fully Insured – Large Group
Issuers are not required to use the standard SBC template for large group plans. Some choose to provide SBCs voluntarily because it simplifies communication and aligns with ACA standards. If a carrier provides an SBC for a large group plan, the employer is responsible for distributing it to employees.
SBC requirements are separate from employer mandate obligations. They apply to plans regardless of ALE status, but how they are implemented varies depending on the funding arrangement and market segment.
Required Content
SBCs must:
- Use the standard federal format, no more than 4 double-sided pages, 12-point font
- Include uniform definitions of common terms
- Outline coverage details, cost-sharing, limitations, and exceptions
- Display coverage examples to illustrate how benefits are applied
- Indicate whether the plan meets MEC and MV standards
- Provide links to provider networks, drug formularies, and the Uniform Glossary
- Include contact information and disclaimers referring to official plan documents for full details
Uniform Glossary
The SBC must be accompanied by a Uniform Glossary of Coverage and Medical Terms, jointly developed by HHS, DOL, and Treasury.
The glossary:
- Explains common insurance terms in plain language.
- Must be available online and upon request, free of charge.
- A link to the glossary must be included on the SBC.
Resources & Templates
- Download the federal SBC templates, instructions, coverage examples, and the Uniform Glossary from the U.S. Department of Labor website.
- Access carrier SBC databases and additional reference tools on our Word & Brown SBC Resource Page.
Distribution Requirements
SBCs must be provided:
- When an individual first becomes eligible
- During open enrollment or renewal
- At special enrollment
- Upon request
Delivery methods include hand delivery, mail, or electronic distribution (following ERISA or consent standards).
Special Considerations
- Fully Insured Large Group: SBCs are not mandatory for issuers, but many carriers offer them voluntarily. Employers are responsible for distributing SBCs they receive.
- Self-Funded Plans: Plan sponsors must ensure SBCs are accurate, updated, and delivered on time. TPAs typically assist, but compliance responsibility remains with the employer.
- Mid-Year Changes: If a material plan change occurs outside renewal, updated SBCs must be issued at least 60 days before the change takes effect.
SBC vs. SPD
An SBC is not the same as an ERISA Summary Plan Description (SPD).
- SBC: A short, standardized summary required by ACA to compare plan features.
- SPD: A comprehensive ERISA disclosure describing plan operations, rights, procedures, and fiduciary details.
Both are required disclosures for ERISA-covered plans but serve different purposes.
Penalties for Noncompliance
Failure to provide SBCs or the Uniform Glossary can lead to:
- DOL enforcement for ERISA violations.
- Excise taxes under the Internal Revenue Code ($100 per day per affected individual).
- Civil penalties under the Public Health Service Act for non-federal governmental plans.