HR Fast Facts: What Are the Requirements for a Summary of Material Modifications and Summary of Material Reduction in Covered Services or Benefits?

If a group health plan or health insurance issuer makes a modification to their plan’s coverage or plan terms, they will need to inform their plan participants via either a Summary of Material Modifications (SMM) or a Summary of Material Reduction in Covered Services or Benefits (SMR).

There are different situations where either an SMM or an SMR are needed.

Instances where an SMM is required

1. Where a group health plan or health insurance issuer makes a non-renewal related “material modification” to the terms of the plan or coverage.

• If the modification to the plan or terms is such that it would normally be included in the plan’s Summary of Benefits and Coverage (SBC), but was not reflected in the most recent SBC document, then the plan or issuer must provide notice of the modification to participants no later than 60 days prior to the effective date.
• For further details on the format of the notice, visit this page.

2. Where a group health plan or health insurance issuer makes a material modification that is not a reduction or SBC alteration.

• If a plan undergoes a material change that 1). does not need to be included in the plan’s SBC documents and 2). does not result in a significant reduction in covered services or benefits, a Summary of Material Modifications must be provided to all participants, free of charge, within 210 days after the close of the plan year in which the modification or change is adopted. A separate SMM document need not be provided if the changes are timely disclosed in the plan’s SPD.
• If you require further clarification as to whether your modifications constitute a material reduction of benefits or require advance notice to participants, we recommend that you work with your legal counsel on this determination.
• For further information on SPD, SMM, and SMR documents, visit this page.

Instances where an SMR is required

1. Where a group health plan or health insurance issuer makes a material modification that results in the reduction of covered services or benefits.

• If the modification results in a reduction of covered services or has an impact on the content of the Summary Plan Description (SPD), such that the average plan participant would consider it a significant change, a Summary of Material Reduction document must be provided to all group health plan participants within 60 days of adoption of the modification or change.
• For further detail on the types of changes that constitute a “material reduction in covered services,” visit this page.

2. Where a group health plan or health insurance issuer makes a material modification that is not a reduction or SBC alteration.

• If a plan undergoes a material change that 1). does not need to be included in the plan’s SBC documents and 2). does not result in a significant reduction in covered services or benefits, a Summary of Material Modifications must be provided to all participants, free of charge, within 210 days after the close of the plan year in which the modification or change is adopted. A separate SMM document need not be provided if the changes are timely disclosed in the plan’s SPD
• If you require further clarification as to whether your modifications constitute a material reduction of benefits or require advance notice to participants, we recommend that you work with your legal counsel on this determination.
• For further information on SPD, SMM, and SMR documents, visit this page.