In 2018, CA passed SB 1008 which requires fully insured dental plans in California to provide a dental Summary of Benefits Coverage. This requirement mirrors the health plan Summary of Benefits Coverage introduced by the Affordable Care Act, only this law applies to dental plans.
The intention behind the ACA provision was to make it easier for employees to compare their medical plan options (in an apples-to-apples format). Now, California has added an equivalent disclosure for dental plans.
Fully Insured Dental Plans Only
This applies to fully insured dental plans only, as self-funded plans are exempt from state legislative authority. Only plans written in California are subject to this disclosure law.
The law prescribes that the Summary of Dental Benefits Coverage (SDBC) follow a very specific format. The law outlines the “uniform benefits and disclosure matrix” down to the requirement to use an Arial 12-point font. This matrix has been dubbed the dental SBC or SDBC.
Who Must Create the SDBC?
Insurance carriers are responsible for creating and providing the dental SBC to employers.
Employers must distribute the dental SBCs to all eligible employees. The dental SBC must be distributed at the following times:
Upon being newly eligible
At open enrollment
At Special Enrollment
The method of distribution must be in one of three formats:
Paper form free of charge to the individual’s mailing address
Electronically by email
Electronically by directing the participant to the insurer’s website for a copy of the dental SBC.
In the case of either electronic distribution option, notice must be provided that a paper copy is available free of charge.
The effective date for this law is January 1, 2022, so dental carriers are now required to provide dental SBCs to employer groups.
How Does ERISA Fit In?
Generally, ERISA preempts state laws that “relate to” employee benefit plans. This typically relegates state legislators to governing (or mandating) insurers, not employers sponsoring employee benefit plans. In this case, legislators have done a bit of an end-run around by including specific “Group Policyholders Obligations” in the law. Most pundits would say that the inclusion of Group Policy Holder Obligations regulates something that “relates to” an employee benefit plan (in this case a dental plan) by specifically requiring employers to provide the dental SBC matrix disclosures to plan participants.
While the insurer provisions are not controversial, the employer disclosure requirements will likely be challenged at some point. That said, in the meantime, employers would be wise to include the dental SBCs with their health plan SBC disclosure materials.
What are Dental Carriers Doing?
At this point, we are seeing dental carriers, well, scrambling. Despite the long runway on this law, as a rule, carriers are not prepared to distribute the customized dental SBC to employers. We are seeing carriers send out “generic” dental SBCs (along with directions to pair it with the plan certificate) despite the law’s very detailed customization instructions. It is our sense that carriers have been expecting the law to be challenged, and thus have been lulled into non-action. But with 2022 here, the carriers are now scrambling to get something out to comply with the law.