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Keep it simple: New rules for health insurance marketing Posted: August 7th, 2012

By Barbara Marquand

Figuring out what a health insurance plan covers and how much you have to pay out-of-pocket should get easier this year when a new health care reform provision goes into effect.

Starting Sept. 23, 2012, health insurance companies and group plans must provide two, standardized documents that spell out information about the plans in plain language:

  • A short, simple-to-understand summary of benefits and coverage must explain what the plan covers and doesn't cover and how much you pay in deductibles, co-payments and coinsurance. The summary also includes examples of how much the insurance plan would pay and how much you would pay in a medical event, such as having a baby or managing Type 2 diabetes. A sample summary of benefits and coverage is available on the federal Center for Consumer Information and Insurance Oversight website.
  • A uniform glossary must define commonly used health insurance terms, such as coinsurance, co-payment, balance billing and preauthorization.

Inspired by nutrition labels

Federal officials say the new requirements will make it easier for employers to compare health insurance plans and for individuals to make apples-to-apples comparisons and know exactly what they're buying. The Nutrition Facts label on packaged foods inspired the design of the summary of benefits and coverage format.

Standard questions in the summary include: What is the overall deductible? Are there other deductibles for specific purposes? Is there any out-of-pocket limit on my expenses? What is not included in the out-of-pocket limit? Is there an overall annual limit on what the plan pays? Does this plan use a network of providers? Do I need a referral to a see a specialist? Are there services this plan doesn't cover? Besides providing answers to these questions, the summary also must explain why each of the issues is important.

You might think providing easy-to-understand information about products would be standard practice, but that hasn't always been the case in health insurance. Marketing materials were sometimes confusing, leading some consumers to buy health insurance plans without understanding important exclusions, limitations and requirements for coverage.

The new provision applies to all individual and group health plans. The plans must provide the documents during certain points in the enrollment process, such as at application and renewal.