Complying with SBC Notice of Material Modifications in Plan Terminations

[401 Chaos]

A thread on this issue was posted in another forum but I wanted to post here as well. I'm curious how others are interpreting / complying with the SBC's 60-day advance notice requirement when required to terminate a health plan with limited lead time.

In looking at the general SBC rules and particularly the requirements for notices of material modification, it would sure seem a termination of a plan altogether should clearly constitute a material modification of the SBC (and the plan / coverages) within the scope of the regulation thus requiring 60 days advance notice to participants in order to terminate.

We have seen similar advance notice requirements in other contexts (state laws) and they can sometimes create real problems in sale situations because the target does not generally have a clear timeline in place until a deal is signed and announced and either cannot provide notice or doesn't want to provide any advance notice prior to that out of fear of disclosing that the company is in play.

We also see this come up in cases where a company is insolvent or otherwise forced to shut down without significant lead time. In those cases the company is often working right up until the end to save the company / right the ship, etc. so doesn't know when / if the plan will actually shut down until just before it does. The employers there are, of course, generally willing to give participants as much notice of the temination as they can--it's just not usually any where close to 60 days.

Curious what position the regulators have taken (may take) in these situations. I know there is a "willful" component here but I'm not sure that is likely to get anyone much quarter.