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Insurance policy writers - watch your language from here on out

Ernie Shannon's picture

The Obama Administration continues to implement in bits and pieces the Affordable Care Act signed into law in March 2010 and planned for full operation by 2014. The latest move by the Department of Health and Human Services (HHS) is a requirement that health insurance companies use plain language in describing in describing health plans and their benefits.

In a noon-day press release, HHS Secretary Kathleen Sebilius said, “All consumers, for the first time, will really be able to clearly comprehend the sometimes confusing language insurance plans often use in marketing. This will give them a new edge in deciding which plans will best suit their needs and those of their families or employees.”

The new rules strike at the marketing materials insurers use to advertise their plans and require companies to explain their benefits in “concise and comprehensible” terms. The guidelines also demand sufficient clarity to allow people to easily compare one plan with another. Another expectation of the ruling involves two documents that will be available for every American shopping for health insurance. The first is what Sebilius called a short, easy to understand Summary of Benefits and Coverage or SBC. The second is a uniform glossary of terms commonly used in health insurance coverage such as deductible and co-payment.

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The new explanations will take effect on or soon after September 23.

A SBC document will constitute a standardized plan comparison tool called coverage examples similar to the Nutrition Facts label required for packaged foods. The coverage examples will illustrate medical situations and describe the coverage the plan provides of having a baby, for example, or managing Type II diabetes. The examples will help consumers understand and compare what they would have to pay under each plan.

Today’s decision to finalize rules first proposed in August 2011 resulted from input from stakeholders such as the National Association of Insurance Commissioners (NAIC) and a working group composed of health insurance-related consumer and advocacy organizations, health insurers, health care professionals, patent advocates, according to Sebilius.

The NAIC is an organization of state insurance commissioners designed to be a forum from which model laws and regulations are created for use by states nationwide. The federal government has used the NAIC as an adviser in the process of developing the Affordable Care Act and although some of its advice appears in the law today, other provisions have been hotly contested by the commissioners such as the medical loss ratio. In this case, the NAIC apparently cooperated with the government in assembling the rule on language and clarity of insurance-related documents.