Patient Protection and Affordable Care Act; Exchange Functions in the Individual Market: Eligibility Determinations; Exchange Standards for Employers, 51202-51237 [2011-20776]

Agencies

• DEPARTMENT OF HEALTH AND HUMAN SERVICES

[Federal Register Volume 76, Number 159 (Wednesday, August 17, 2011)]
[Proposed Rules]
[Pages 51202-51237]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-20776]



[[Page 51201]]

Vol. 76

Wednesday,

No. 159

August 17, 2011

Part III





Department of Health and Human Services





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45 CFR Parts 155 and 157





Patient Protection and Affordable Care Act; Exchange Functions in the 
Individual Market: Eligibility Determinations; Exchange Standards for 
Employers; Proposed Rule

Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / 
Proposed Rules

[[Page 51202]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 155 and 157

[CMS-9974-P]
RIN 0938-AR25


Patient Protection and Affordable Care Act; Exchange Functions in 
the Individual Market: Eligibility Determinations; Exchange Standards 
for Employers

AGENCY: Department of Health and Human Services.

ACTION: Proposed rule.

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SUMMARY: This proposed rule would implement certain functions of the 
new Affordable Insurance Exchanges (``Exchanges''), consistent with 
title I of the Patient Protection and Affordable Care Act of 2010, as 
amended by the Health Care and Education Reconciliation Act of 2010, 
referred to collectively as the Affordable Care Act. The Exchanges will 
provide competitive marketplaces for individuals and small employers to 
directly compare available private health insurance options on the 
basis of price, quality, and other factors. The Exchanges, which will 
become operational by January 1, 2014, will help enhance competition in 
the health insurance market, improve choice of affordable health 
insurance, and give small businesses the same purchasing clout as large 
businesses. The specific Exchange functions proposed in this rule 
include: Eligibility determinations for Exchange participation and 
insurance affordability programs and standards for employer 
participation in SHOP.

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. Eastern Standard 
Time (EST) on October 31, 2011.

ADDRESSES: In commenting, please refer to file code CMS-9974-P. Because 
of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed):
    1. Electronically. You may submit electronic comments on this 
regulation to https://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-9974-P, P.O. Box 8010, 
Baltimore, MD 21244-8010.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY:
    Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, Attention: CMS-9974-P, Mail Stop C4-26-05, 7500 
Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. Alternatively, you may deliver (by hand or 
courier) your written comments ONLY to the following addresses prior to 
the close of the comment period:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
call telephone number (410) 786-9994 in advance to schedule your 
arrival with one of our staff members.
    Comments erroneously mailed to the addresses indicated as 
appropriate for hand or courier delivery may be delayed and received 
after the comment period.
    Submission of comments on paperwork requirements. You may submit 
comments on this document's paperwork requirements by following the 
instructions at the end of the ``Collection of Information 
Requirements'' section in this document. For information on viewing 
public comments, see the beginning of the SUPPLEMENTARY INFORMATION 
section.

FOR FURTHER INFORMATION CONTACT: 
    Laurie McWright at (301) 492-4372 for general information matters.
    Alissa DeBoy at (301) 492-4428 for general information and matters 
related to part 155.
    Michelle Strollo at (301) 492-4429 for matters related to 
eligibility.
    Naomi Senkeeto at (301) 492-4419 for matters related to part 157.

SUPPLEMENTARY INFORMATION: A detailed Preliminary Regulatory Impact 
Analysis associated with this proposed rule is available at https://cciio.cms.gov under ``Regulations and Guidance.'' A summary of the 
aforementioned analysis is included as part of this proposed rule.

Abbreviations

CHIP Children's Health Insurance Program
CMS Centers for Medicare & Medicaid Services
DOL U.S. Department of Labor
ERISA Employee Retirement Income Security Act (29 U.S.C. section 
1001, et seq.)
FPL Federal Poverty Level
HHS U.S. Department of Health and Human Services
HMO Health Maintenance Organization
IHS Indian Health Service
IRS Internal Revenue Service
NAIC National Association of Insurance Commissioners
OMB Office of Management and Budget
OPM Office of Personnel Management
PHS Act Public Health Service Act
QHP Qualified Health Plan
SHOP Small Business Health Options Program
SSA Social Security Administration
The Act Social Security Act
The Code Internal Revenue Code of 1986

    Executive Summary: Starting in 2014, individuals and small 
businesses will be able to purchase private health insurance through 
State-based competitive marketplaces called Affordable Insurance 
Exchanges, or ``Exchanges.'' Exchanges will offer Americans 
competition, choice, and clout. Insurance companies will compete for 
business on a level playing field, driving down costs. Consumers will 
have a choice of health plans to fit their needs. And Exchanges will 
give individuals and small businesses the same purchasing clout as big 
businesses. The Departments of Health and Human Services, Labor and the 
Treasury (the Departments) are working in close coordination to release 
guidance related to Exchanges. The first in this series was a Request 
for Comment relating to Exchanges, published in the Federal Register on 
August 3, 2010 (75 FR 45584). Second, Initial Guidance to States on 
Exchanges was issued on November 18, 2010. Third, a proposed rule for 
the application, review, and reporting process for waivers for State 
innovation was published in the Federal Register on March 14, 2011 (76 
FR 13553). Fourth, two proposed regulations were published in the 
Federal Register on July 15, 2011 (76 FR 41866 and 76 FR 41930) to 
implement components of the Exchange and health insurance premium 
stabilization policies in the Affordable Care Act. Fifth, a proposed 
regulation for the

[[Page 51203]]

establishment of the Consumer Operated and Oriented Plan (CO-OP) 
Program under section 1322 of the Affordable Care Act was published in 
the Federal Register on July 20, 2011 (76 FR 43237). Sixth, three 
proposed rules, including this one, are being published in the Federal 
Register on August 17, 2011 to provide guidance on the eligibility 
determination process related to enrollment in a qualified health plan, 
advance payments of the premium tax credit, cost-sharing reductions, 
Medicaid, the Children's Health Insurance Program (CHIP), and 
participation in SHOP.
    45 CFR 155.200(c) proposes that the Exchange perform eligibility 
determinations. This rule proposes the specific standards for the 
Exchange eligibility process, in order to implement sections 1311, 
1312, 1411, 1412, and 1413 of the Affordable Care Act. Further, it 
supports and complements rulemaking conducted by the Secretary of the 
Treasury with respect to section 36B of the Internal Revenue Code (the 
Code), as added by section 1401(a) of the Affordable Care Act, and by 
the Secretary of HHS with respect to several sections of the Affordable 
Care Act regarding Medicaid and CHIP. This proposed rule also contains 
standards for employers with respect to participation in the Small 
Business Health Options Program (SHOP), paralleling the Exchange 
standards for SHOP set forth in the previous Exchange rule.
    The aforementioned sections of the Affordable Care Act create a 
central role for the Exchange in the process of determining an 
individual's eligibility for enrollment in a qualified health plan 
(QHP), as well as for ``insurance affordability programs.'' In this 
proposed rule, ``insurance affordability programs'' is used to refer to 
advance payments of the premium tax credit, cost-sharing reductions, 
Medicaid, CHIP, and any State-established Basic Health Program, if 
applicable, as defined in 42 CFR 435.4 of the Medicaid proposed rule. 
We interpret Affordable Care Act sections 1311(d)(4)(F), and 1413, and 
section 1943 of the Act, as added by section 2201 of the Affordable 
Care Act, to establish a system of streamlined and coordinated 
eligibility and enrollment through which an individual may apply for 
enrollment in a QHP and insurance affordability programs and receive a 
determination of eligibility for such programs. We also interpret 
section 1413(b)(2) to mean that the eligibility and enrollment function 
should be consumer-oriented, minimizing administrative hurdles and 
unnecessary paperwork for applicants.
    Submitting Comments: We welcome comments from the public on issues 
set forth in this proposed rule to assist us in fully considering 
issues and developing policies. Comments will be most useful if they 
are organized by the section of the proposed rule to which they apply. 
You can assist us by referencing the file code [CMS-9974-P] and the 
specific ``issue identifier'' that precedes the section on which you 
choose to comment.
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all electronic 
comments received before the close of the comment period on the 
following public Web site as soon as possible after they have been 
received at https://www.regulations.gov. Follow the search instructions 
on that Web site to view public comments. Comments received timely will 
be available for public inspection as they are received, generally 
beginning approximately 3 weeks after publication of a document, at 
Room 445-G, Department of Health and Human Services, Hubert H. Humphrey 
Building, 200 Independence Avenue, SW., Washington, DC 20201, Monday 
through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an 
appointment to view public comments, call 1-800-743-3951.

Table of Contents

I. Background
    A. Legislative Overview
    B. Request for Comment
    C. Structure of the Proposed Rule
II. Provisions of the Proposed Regulation
    A. Part 155--Exchange Establishment Standards and Other Related 
Standards Under the Affordable Care Act
    1. Subpart D--Exchange Functions in the Individual Market: 
Eligibility Determinations for Exchange Participation and Insurance 
Affordability Programs
    B. Part 157--Employer Interactions With Exchanges and SHOP 
Participation
    1. Subpart A--General Provisions
    2. Subpart B--Reserved
    3. Subpart C--Standards for Qualified Employers
III. Collection of Information Requirements
IV. Summary of Regulatory Impact Analysis
V. Regulatory Flexibility Act
VI. Unfunded Mandates
VII. Federalism

I. Background

A. Legislative Overview

    Section 1311(b) and section 1321 of the Affordable Care Act outline 
provisions for the establishment of Exchanges that will facilitate the 
purchase of insurance coverage by qualified individuals through 
qualified health plans (QHPs).
    Section 1401 of the Affordable Care Act creates new section 36B of 
the Internal Revenue Code (the Code), which provides for a premium tax 
credit for eligible individuals who enroll in a QHP through an 
Exchange. Section 1402 establishes provisions to reduce the cost-
sharing obligation of certain eligible individuals enrolled in a QHP 
offered through an Exchange.
    Under section 1411 of the Affordable Care Act, the Secretary is 
directed to establish a program for determining whether an individual 
meets the eligibility standards for Exchange participation, advance 
payments of the premium tax credit, cost-sharing reductions, and 
exemptions from the individual responsibility provision.
    Sections 1412 and 1413 of the Affordable Care Act and section 1943 
of the Social Security Act (the Act), as added by section 2201 of the 
Affordable Care Act, contain additional provisions regarding 
eligibility for advance payments of the premium tax credit and cost-
sharing reductions, as well as provisions regarding simplification and 
coordination of eligibility determinations and enrollment with other 
health programs. These provisions of the Affordable Care Act are 
addressed in subpart D of part 155 in this rule.
    Section 1402 of the Affordable Care Act outlines standards for 
determining Indians eligible for certain categories of cost-sharing 
reductions.
    Unless otherwise specified, the provisions in this proposed rule 
related to the establishment of minimum functions of an Exchange are 
based on the general authority of the Secretary under section 
1321(a)(1) of the Affordable Care Act.

B. Stakeholder Consultation and Input

    On August 3, 2010, HHS published a Request for Comment (the RFC) 
inviting the public to provide input regarding the rules that will 
govern the Exchanges. In particular, HHS asked States, tribal 
representatives, consumer advocates, employers, insurers, and other 
interested stakeholders to comment on the types of standards Exchanges 
should meet. The comment period closed on October 4, 2010. While this 
proposed rule does not directly respond to comments from the RFC, the 
comments received are described, where applicable, in discussing 
specific regulatory proposals.
    The public response to the RFC yielded comment submissions from 
consumer advocacy organizations, medical and health care professional

[[Page 51204]]

trade associations and societies, medical and health care professional 
entities, health insurers, insurance trade associations, members of the 
general public, and employer organizations. The majority of the 
comments were related to the general functions and standards for 
Exchanges, QHPs, eligibility and enrollment, and coordination with 
Medicaid. We intend to respond to comments from the RFC, along with 
comments received on this proposed rule, as part of the final rule.
    In addition to the RFC, HHS has consulted with stakeholders through 
regular meetings with the National Association of Insurance 
Commissioners (NAIC), regular contact with States through the Exchange 
grant process, and meetings with tribal representatives, health 
insurance issuers, trade groups, consumer advocates, employers, and 
other interested parties. This consultation will continue throughout 
the development of Exchange guidance.

C. Structure of the Proposed Rule

    The regulations outlined in this notice of proposed rulemaking will 
be codified in 45 CFR part 155 and new part 157. Part 155 outlines the 
proposed standards for States relative to the establishment of 
Exchanges and outlines the proposed standards for Exchanges related to 
minimum Exchange functions. Part 157 outlines the basic standards that 
employers must meet to voluntarily participate in the Small Business 
Health Options Program (SHOP).
    Subjects included in the Affordable Care Act addressed in prior 
proposed rulemaking include but are not limited to: (1) Federal 
standards for States that elect to establish and operate an Exchange; 
(2) minimum standards for health insurance issuers to participate in an 
Exchange and offer qualified health plans (QHPs); and (3) basic 
standards related to the establishment of the Small Business Health 
Options Program (SHOP).
    Subjects included in the Affordable Care Act to be addressed in 
future separate rulemaking include but are not limited to: (1) 
Standards outlining the Exchange process for issuing certificates of 
exemption from the individual responsibility provision and payment 
under section 1411(a)(4); (2) defining essential health benefits, 
actuarial value and other benefit design standards; and (3) standards 
for Exchanges and QHP issuers related to quality.

II. Provisions of the Proposed Regulation

A. Part 155--Exchange Establishment Standards and Other Related 
Standards Under the Affordable Care Act

1. Subpart D--Exchange Functions in the Individual Market: Eligibility 
Determinations for Exchange Participation and Insurance Affordability 
Programs
    Under the Affordable Care Act, Exchanges will make QHPs available 
to qualified individuals. In accordance with our interpretation of the 
sections of the Affordable Care Act described below; the authority 
provided by, inter alia, section 1321(a); and 45 CFR 155.200(c), which 
specifies that the Exchange will perform eligibility determinations; we 
propose that the Exchange will determine eligibility for Exchange 
participation, as well as for insurance affordability programs. 
Sections 1312, 1331, 1401, 1402, 2001, 2002, and 2201 of the Affordable 
Care Act, by creating new law and amending existing law, in conjunction 
with titles XIX and XXI of the Act, set forth eligibility standards for 
these programs and benefits; and sections 1311, 1411, 1412, and 1413 of 
the Affordable Care Act create a central role for the Exchange in the 
process of determining an individual's eligibility based on those 
standards. In subpart D, we propose standards related to eligibility 
determinations for enrollment in a QHP and for insurance affordability 
programs. Throughout this subpart, we refer to Medicaid and CHIP, but 
we note that for those States that choose to establish a Basic Health 
Program, all provisions applicable to Medicaid and CHIP will also be 
generally applicable to the Basic Health Program. We also note that 
references in this subpart to ``Exchange'' refer specifically to 
functions in connection with the purchase of individual market coverage 
through the Exchange.
    In 45 CFR 155.200(c) (76 FR 41866), we proposed that the Exchange 
perform eligibility determinations. We interpret Affordable Care Act 
sections 1311(d)(4)(F) and 1413, and section 1943 of the Act, as added 
by section 2201 of the Affordable Care Act, to provide for the 
establishment of a system of streamlined and coordinated eligibility 
and enrollment through which an individual may apply for insurance 
affordability programs and receive a determination of eligibility for 
any such program. Section 1413(b)(2) provides that an individual's 
eligibility be determined without unduly burdening the individual with 
unnecessary paperwork. We note that these approaches were supported by 
comments that we received in response to the RFC. One option that we 
considered was whether to establish a system in which the Secretary of 
HHS would determine eligibility for advance payments of the premium tax 
credit, with other eligibility and enrollment functions remaining as 
the responsibility of the Exchange, since premium tax credits are fully 
Federally-funded and the rules are the same across all States. However, 
we chose not to take this approach, because isolating one component of 
the eligibility determination process from the remaining eligibility 
and enrollment functions would pose significant challenges to ensuring 
a seamless experience for applicants. It would also limit the role of 
State Exchanges in this process. We note that States may also work with 
HHS to leverage technological and operational capabilities provided by 
HHS to execute Exchange functions in a way that will meet the needs of 
individuals. We solicit comments on this approach and alternatives.
    We also note that throughout this subpart, we propose several 
transmissions of data, which we intend to occur electronically, using 
secure interfaces. We note that the standards specified in Sec.  
155.260 and Sec.  155.270 regarding privacy and security apply to any 
data sharing processes and agreements under this subpart.
    The proposed eligibility process is designed to minimize 
opportunities for fraud and abuse, including the use of clear 
eligibility standards and processes that rely on data sources in an 
electronic environment. We solicit comments regarding strategies to 
further limit the risk for fraud and abuse, and we look forward to 
working with States toward this goal.
    Consistent with this streamlined, seamless eligibility and 
enrollment system, the Affordable Care Act requires a simplification of 
Medicaid and CHIP eligibility policy and rules, which is in 42 CFR 
435.603 and 42 CFR 457.315, proposed by the Secretary of HHS in the 
Medicaid Program; Eligibility Changes under the Affordable Care Act of 
2010 rule, published in this issue of the Federal Register (the 
Medicaid proposed rule). Pursuant to the Affordable Care Act, this 
simplification aligns most of the rules under which individuals will be 
determined eligible for Medicaid and CHIP with those for advance 
payments of the premium tax credit and cost-sharing reductions, by 
generally using modified adjusted gross income (MAGI) as the basis for 
income

[[Page 51205]]

eligibility, effective January 1, 2014. While the use of this standard 
is referenced throughout this subpart, the use of a MAGI-based standard 
for Medicaid and CHIP is proposed in the Medicaid proposed rule, 
pursuant to section 2002 of the Affordable Care Act, and the definition 
of MAGI will be proposed by the Department of the Treasury in the 
Health Insurance Premium Tax Credit rule, scheduled for publication in 
this issue of the Federal Register.\1\
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    \1\ Section 3308 of the Affordable Care Act also defines 
``modified adjusted gross income''; this definition is different 
from the definitions that are applicable to advance payments of the 
premium tax credit, cost-sharing reductions, Medicaid, and CHIP.
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    In this subpart, we have organized the standards we propose for the 
Exchange in determining eligibility as follows: Eligibility standards, 
eligibility determination process, and applicant information 
verification process.
a. Definitions and General Standards for Eligibility Determinations 
(Sec.  155.300)
    In this section, we propose definitions for this subpart. We note 
that virtually all of the definitions in this section are from other 
proposed regulations, including many proposed in the Establishment of 
Exchanges and Qualified Health Plans rule, published at 76 FR 41866 
(July 15, 2011), (Exchange proposed rule).
    In paragraph (a), we propose the definition for ``adoption taxpayer 
identification number'' to have the same meaning as it does in 26 CFR 
301.6109-3(a).
    We propose the definition for ``applicable Medicaid modified 
adjusted gross income (MAGI)-based income standard'' to have the same 
meaning as ``applicable Medicaid modified adjusted gross income 
standard'' as defined in 42 CFR 435.911(b), applied under the State 
Medicaid plan or waiver of such plan, and as certified by the State 
Medicaid agency pursuant to 42 CFR 435.1200(c)(2), for determining 
Medicaid eligibility. Both 42 CFR 435.911(b) and 435.1200(c)(2) are 
proposed in the Medicaid proposed rule.
    In support of our proposal that the Exchange determine an 
applicant's eligibility for CHIP, we propose to define ``applicable 
CHIP modified adjusted gross income (MAGI)-based income standard'' as 
the income standard applied under the State plan under Title XXI of the 
Act, or waiver of such plan, as defined at 42 CFR 457.305(a), and as 
certified by the State CHIP Agency pursuant to 42 CFR 457.348(d), for 
determining eligibility for child health assistance and enrollment in a 
separate child health program. The applicable CHIP MAGI-based standard 
will also vary from State to State depending on the threshold 
established by the State CHIP agency. Both 42 CFR 457.305 and 
457.348(d) are proposed in the Medicaid proposed rule.
    We propose to define ``application filer'' to mean an individual 
who submits an application for health insurance coverage to the 
Exchange and responds to inquiries about the application. An 
application filer may be an applicant or a non-applicant, and may or 
may not be a primary taxpayer.
    We propose to define ``Federal Poverty Level'' (FPL) to mean the 
most recently published FPL, updated periodically in the Federal 
Register by the Secretary of Health and Human Services under the 
authority of 42 U.S.C. 9902(2), as of the first day of the annual open 
enrollment period for coverage in a qualified health plan through the 
Exchange; the open enrollment period is specified in 45 CFR 155.410. 
This definition is used for eligibility for advance payments of the 
premium tax credit and cost-sharing reductions, and matches the 
definition in the Treasury proposed rule. We note that the Medicaid 
proposed rule does not specify that FPL is based on the data published 
as of the first day of the Exchange open enrollment period, which means 
that the FPL table used in eligibility determinations for Medicaid and 
CHIP may be different from that used for advance payments of the 
premium tax credit and cost-sharing reductions, depending on the date 
of the eligibility determination. However, we note that for the annual 
open enrollment period for coverage, the FPL tables for Medicaid, CHIP, 
and advance payments of the premium tax credit and cost-sharing 
reductions should be the same.
    For purposes of determining eligibility for cost-sharing 
provisions, we propose to codify the definition of ``Indian'' to mean 
any individual defined in section 4(d) of the Indian Self-Determination 
and Education Assistance Act (ISDEAA) (Pub. L. 93-638, 88 Stat. 2203), 
in accordance with section 1402(d)(1) of the Affordable Care Act. This 
definition means an individual who is a member of a Federally-
recognized tribe. Applicants meeting this definition are eligible for 
cost-sharing reductions or special cost-sharing rules on the basis of 
Indian status, which are described in Sec.  155.350 of this subpart.
    We propose to define ``insurance affordability programs'' as 
described earlier in this section.
    We propose that the definition of the term ``minimum value'' has 
the meaning given to the term in section 36B(c)(2)(C) of the Code.
    We propose to define ``non-citizen'' to mean any individual who is 
not a citizen or national of the United States, which is the same 
meaning as the term alien as defined in section 101(a)(3) of the 
Immigration and Nationality Act.
    We propose to define ``primary taxpayer'' to mean an individual who 
(1) attests that he or she will file a tax return for the benefit year, 
in accordance with 26 CFR 1.6011-8; (2) if married (within the meaning 
of 26 CFR 1.7703-1), attests that he or she expects to file a joint tax 
return for the benefit year; (3) attests that he or she expects that no 
other taxpayer will be able to claim him or her as a tax dependent for 
the benefit year; and (4) attests that he or she expects to claim a 
personal exemption deduction on his or her tax return for the family 
members listed on his or her application, including the primary 
taxpayer and his or her spouse. We use this term in Sec.  155.305 and 
Sec.  155.320(c) of this subpart to describe the individual who would 
receive advance payments of the premium tax credit and would file a tax 
return to reconcile such advance payments.
    We propose to define ``State CHIP Agency'' to mean the agency that 
administers a separate child health program established by the State 
under Title XXI of the Act in accordance with implementing regulations 
at 42 CFR part 457.
    We propose to define ``State Medicaid Agency'' to mean the agency 
that administers a Medicaid program established by the State under 
Title XIX of the Act in accordance with implementing regulations at 42 
CFR 430.
    We propose to define ``tax dependent'' to mean a dependent in 
accordance with section 152 of the Code.
    In paragraph (b), we propose to clarify that, in general, 
references to Medicaid and CHIP regulations in this subpart refer to 
Medicaid and CHIP State plan provisions implementing those regulations. 
To the extent that the regulations outlined in this section refer to 
Medicaid and CHIP regulations, the Exchange would adhere to the rules 
of the Medicaid and CHIP agencies operating within the service area of 
the Exchange.
    Lastly, in paragraph (c)(1), we propose that except as specified in 
paragraph (c)(2), for purposes of this subpart, an attestation may be 
made by the applicant (self-attestation), an application filer, or in 
cases in which an

[[Page 51206]]

individual cannot attest, the attestation of a parent, caretaker, or 
someone acting responsibly on behalf of such an individual. In 
paragraph (c)(2), we propose that the attestations specified in Sec.  
155.310(d)(2)(ii) and Sec.  155.315(e)(4)(ii), which result in the 
authorization of advance payments of the premium tax credit, must be 
made by the primary taxpayer. This is because these attestations are 
designed to ensure that the primary taxpayer appreciates and accepts 
the tax consequences that follow from receipt of advance payments.
b. Eligibility Standards (Sec.  155.305)
    In Sec.  155.305, we propose to codify the eligibility standards 
for enrollment in a QHP and for insurance affordability programs.
    In paragraph (a), we propose that the Exchange determine an 
applicant eligible for enrollment in a QHP if he or she meets the basic 
standards for enrollment in a QHP, which are taken from section 1312(f) 
of the Affordable Care Act. First, in paragraph (a)(1), we propose to 
codify section 1312(f)(3) that in order to be eligible for enrollment 
in a QHP, an individual must be a citizen, national, or a non-citizen 
lawfully present, and be reasonably expected to remain so for the 
entire period for which enrollment is sought. In proposed Sec.  155.20, 
the term ``lawfully present'' is adopted as defined in 45 CFR 152.2. 
Since the Exchange will also be determining eligibility for Medicaid 
and CHIP, we intend to align the requirements for lawful presence with 
that of the State option for Medicaid and CHIP under section 1903(v)(4) 
of the Act, as added by section 214 of the Children's Health Insurance 
Program Reauthorization Act (Pub. L. 111-3, 123 Stat. 8); to the extent 
that the Secretary amends the definition for Medicaid and CHIP in 
future rulemaking, we intend to adjust the Exchange rules accordingly.
    We solicit comments regarding the codified language in paragraph 
(a)(1) that an individual be ``reasonably expected,'' for the entire 
period for which enrollment is sought, to be a citizen, national, or 
non-citizen lawfully present, which comes directly from section 
1312(f)(3) of the Affordable Care Act. We clarify that the period for 
which enrollment is sought does not have to be an entire benefit year. 
In particular, we seek comment on how this policy can be implemented in 
a way that is straightforward for individuals to understand and for the 
Exchange to implement.
    In paragraph (a)(2), we propose to codify section 1312(f)(1)(B) 
that in order to be eligible for enrollment in a QHP, an individual 
must not be incarcerated, with the exception of incarceration pending 
the disposition of charges.
    In paragraph (a)(3), we propose the standard regarding residency. 
Section 1312(f) of the Affordable Care Act provides that in order to 
enroll in a QHP, an individual must reside in the State that 
established the Exchange. When discussing the residency standard for 
the Exchange, we use the term ``service area of the Exchange'' to 
account for regional or subsidiary Exchanges that serve broader or 
narrower geographic areas than a single State, as well as for 
situations in which a Federally-facilitated Exchange is operating in a 
State. We clarify that this residency standard is designed to apply to 
all Exchanges, including regional and subsidiary Exchanges. In order to 
codify the residency standard of section 1312(f) to take account of the 
options under sections 1311(f)(1) and 1311(f)(2), in paragraph 
(a)(3)(i), we propose that an individual aged 21 or older who is not 
institutionalized, is capable of indicating intent, and is not 
receiving a State supplementary payment (State-funded cash assistance 
for certain individuals receiving SSI) meets the residency standard for 
enrollment in a QHP if the applicant intends to reside in the State 
within the service area of the Exchange through which the individual is 
requesting coverage.
    In general, we propose to align the Exchange residency standard 
with the residency standards proposed for Medicaid, which are proposed 
in 42 CFR 435.403 of the Medicaid proposed rule. Such Medicaid 
residency standards include an ``intent to reside'' standard. This 
``intent to reside'' standard applies to individuals 21 and over who 
are seeking coverage through the Exchange and who intend to reside 
within the service area of the Exchange provided that an individual 
does not fall into special residency categories described in paragraph 
(a)(3)(iii). This phrase precludes visitors to the service area of an 
Exchange from meeting the residency standard, but accommodates those 
individuals who may transition between service areas of different 
Exchanges, such as seasonal workers and individuals seeking employment 
in the State or service area of the Exchange. This also allows 
individuals who are absent temporarily from the service area of an 
Exchange to remain within the same Exchange during the temporary 
absence. Furthermore, while we do not include the words ``live'' or 
``living'' in the proposed residency requirements, we will interpret 
these proposed regulations such that an adult's residency will be based 
on where he or she is living, and expect that he or she must also 
maintain the present intent to reside in the State within the service 
area of the Exchange that is being claimed. Along these lines and in 
accordance with the language in section 1312(f)(3) of the Affordable 
Care Act, which we interpret to allow an applicant to request coverage 
for less than a full calendar year, we clarify that this residency 
standard does not require an individual to intend to reside for the 
entire benefit year. In paragraph (a)(3)(ii), we propose that an 
individual under age 21 who is not institutionalized, is not receiving 
payments under Title IV-E of the Act (such as foster care assistance 
and adoption assistance), is not emancipated, and is not receiving a 
State supplementary payment, meets the residency standard for 
enrollment in a QHP if he or she resides within the service area of the 
Exchange through which he or she is requesting coverage, to account for 
situations in which an individual under age 21 is unable to express 
intent.
    We note that Medicaid has adopted a number of additional rules 
regarding residency for special populations, including 
institutionalized individuals, individuals receiving Title IV-E 
payments, individuals receiving State supplementary payments, 
individuals incapable of expressing intent, and emancipated minors. In 
paragraph (a)(3)(iii) of this section, we propose that the Exchange 
follow these Medicaid residency standards (which are proposed in the 
Medicaid proposed rule at 42 CFR 435.403) and the policy of the State 
Medicaid or CHIP agency to the extent that an individual is 
specifically described in that section and not in paragraphs (a)(3)(i) 
or (ii). We continue to work across HHS to ensure that the Exchange, 
Medicaid, and CHIP can reach a definition or set of definitions of 
residency that will enable a uniform eligibility determination process 
for the vast majority of individuals to reduce complexity and confusion 
for all involved parties; we solicit comments on this topic.
    We also recognize that there are a number of situations in which a 
tax household may include members residing in different service areas 
served by different Exchanges. In paragraph (a)(3)(iv) of this section, 
we propose that for a spouse or a tax dependent who resides outside the 
service area of the primary taxpayer's Exchange, such as when a non-
custodial parent claims a child as a tax dependent, the spouse or tax 
dependent will be permitted to either: (1) Enroll in a QHP through the 
Exchange that services the area in which

[[Page 51207]]

he or she resides or intends to reside; or (2) enroll in a QHP through 
the Exchange that services the area in which his or her primary 
taxpayer intends to reside or resides, as applicable. In either case, 
if the spouse or tax dependent is covered, he or she will still count 
as part of the tax household and the advance payment calculation will 
take account of the policy or policies needed to cover the tax 
household consistent with the rules proposed in the Treasury proposed 
rule. We believe that this will provide flexibility to an individual 
who does not live in the service area of the Exchange in which his or 
her primary taxpayer lives but want to remain in the same Exchange as 
the primary taxpayer, including but not limited to students attending 
out-of-State schools or tax dependents who do not live with their 
primary taxpayer.
    We note that section 1334 of the Affordable Care Act directs the 
Office of Personnel Management to contract with health insurance 
issuers to offer at least two private multi-State plans in each 
Exchange, which we believe may create opportunities for households with 
members in multiple States to remain covered by the same QHP. We also 
solicit comment as to whether there are any standards regarding in-
network adequacy for out-of-State dependents we should consider.\2\ We 
also note that the preamble to 42 CFR 435.403, proposed in the Medicaid 
proposed rule, clarifies that HHS intends to allow State Medicaid 
agencies to continue to have State-specific rules with respect to 
residency for students under the Medicaid program, which is not 
consistent with our approach for the Exchange. We recognize that under 
the Medicaid proposed rule, State Medicaid agencies will continue to 
have flexibility with regard to residency for students and we solicit 
comments on whether different rules should be maintained or whether a 
unified approach should be adopted.
---------------------------------------------------------------------------

    \2\ Network adequacy is addressed in the Exchange proposed rule 
at 76 FR 41866, 41893-94.
---------------------------------------------------------------------------

    In paragraph (b), we propose that the Exchange determine an 
applicant eligible for an enrollment period if he or she meets the 
criteria for an enrollment period, as specified in Sec.  155.410 and 
Sec.  155.420 of this part. The purpose of this provision is to clarify 
that in addition to determining whether an applicant meets the 
eligibility standards for enrollment in a QHP specified in paragraph 
(a) of this section, the Exchange will determine whether or not the 
applicant is permitted to enroll in a QHP at the time the applicant 
actually seeks coverage.
    Based on sections 1311(d)(4)(F) and 1413 of the Affordable Care Act 
and section 1943(b)(1)(B) of the Act, we propose that the Exchange 
determine applicants' eligibility for Medicaid and CHIP, and enroll 
eligible applicants into these programs. In paragraph (c), we propose 
the criteria under which the Exchange will determine eligibility for 
Medicaid for an applicant seeking an eligibility determination for 
insurance affordability programs as described in Sec.  155.310(b). We 
propose that the Exchange determine an applicant's eligibility for 
Medicaid for eligibility categories that use the applicable Medicaid 
MAGI-based income standard defined in Sec.  155.300.
    Specifically, we propose that the Exchange determine an applicant 
eligible for Medicaid if he or she: (1) Meets the citizenship and 
immigration requirements described in 42 CFR 435.406 and 1903(v)(4) of 
the Social Security Act, as certified by the State Medicaid agency 
under 435.1200(c)(3); (2) meets the proposed requirements described in 
42 CFR 435.403 regarding residency; (3) has a household income, as 
defined in proposed 42 CFR 435.911(b), that is at or below the 
applicable Medicaid MAGI-based income standard; and (4) falls into one 
of the categories described in the definition of ``applicable Medicaid 
MAGI-based income standard'' in Sec.  155.300(a). We note that 42 CFR 
435.406(a), 435.403, and 435.911(b) are proposed in the Medicaid 
proposed rule and we intend to fully align the standards to which the 
Exchange will adhere for purposes of Medicaid eligibility with those 
standards as implemented in the State Medicaid plan.
    In paragraph (d), we propose that the Exchange determine an 
applicant eligible for CHIP if he or she meets the requirements of 42 
CFR 457.310 through 457.320 and has a household income within the 
applicable CHIP MAGI-based income standard.
    Section 1331 of the Affordable Care Act provides a State with the 
option to create a Basic Health Program to provide coverage to some 
qualified individuals in lieu of Exchange coverage. In paragraph (e), 
we propose to codify that if a Basic Health Program is operating in the 
service area of the Exchange, the Exchange will determine an 
individual's eligibility for the Basic Health Program. We intend to 
address policies for the Basic Health Program in future rulemaking.
    Sections 1401, which creates a new section 36B of the Code, and 
1402 of the Affordable Care Act establish a premium tax credit and 
cost-sharing reductions that are available to certain individuals, and 
section 1412 of the Affordable Care Act provides that advance payments 
of the premium tax credit may be made to QHP issuers on behalf of 
eligible individuals. In paragraph (f), we propose the eligibility 
standards for advance payments of the premium tax credit. These 
provisions are drawn from the standards in section 36B of the Code and 
implementing regulations at 26 CFR 1.36B-1 through 1.36B-5, in the 
Treasury proposed rule.
    First, in paragraph (f)(1), we propose the eligibility standards 
for a primary taxpayer, as defined in Sec.  155.300(a), to receive 
advance payments of the premium tax credit on behalf of him or herself, 
for his or her spouse, or for one or more of his or her tax dependents. 
We clarify that while these standards are described in terms of a 
primary taxpayer, because the primary taxpayer actually receives the 
premium tax credit on his or her tax return for the benefit year, an 
individual who is not a primary taxpayer may apply for coverage without 
the presence of a primary taxpayer throughout the application process. 
The primary taxpayer's involvement is necessary only at the point at 
which the Exchange will authorize an advance payment, which is 
discussed in Sec.  155.310(d)(2)(ii).
    We propose that the Exchange determine a primary taxpayer eligible 
to receive advance payments if the Exchange determines that he or she 
is expected to have a household income, as defined in proposed 26 CFR 
1.36B-1(e), of at least 100 percent but not more than 400 percent of 
the FPL, as specified in proposed 26 CFR 1.36B-2(b)(1), for the benefit 
year for which coverage is requested, and one or more applicants for 
whom the primary taxpayer expects to claim a personal exemption 
deduction on his or her tax return for the benefit year, including the 
primary taxpayer and his or her spouse (1) meets the standards for 
eligibility for enrollment in a QHP through the Exchange; and (2) is 
not eligible for minimum essential coverage, in accordance with 
proposed 26 CFR 1.36B-2(a)(2) (which excludes coverage purchased 
through the individual market, as well as employer-sponsored minimum 
essential coverage for which the employee's contribution exceeds 9.5 
percent (in 2014, and indexed in future years) of household income or 
for which the plan's share of the total allowed costs of benefits 
provided under the plan is less than 60 percent of such costs, unless 
an individual is enrolled in such employer-sponsored minimum essential 
coverage). We clarify that the definition of household income in 26

[[Page 51208]]

CFR 1.36B-1(e) of the Treasury proposed rule does not include the 
income of an individual in a primary taxpayer's family who is not 
required to file.
    In addition, in paragraph (f)(2), we propose that the Exchange 
determine a primary taxpayer eligible for advance payments of the 
premium tax credit if the Exchange determines that (1) he or she meets 
the standards specified in paragraph (f)(1) (regarding eligibility for 
advance payments of the premium tax credit) except for paragraph 
(f)(1)(i) (household income of at least 100 percent but not more than 
400 percent of the FPL); (2) he or she is expected to have a household 
income of less than 100 percent of the FPL; and (3) one or more 
applicants, including the primary taxpayer and his or her spouse, for 
whom the primary taxpayer expects to claim a personal exemption 
deduction on his or her tax return for the benefit year, including the 
primary taxpayer and his or her spouse, is a non-citizen who is 
lawfully present and ineligible for Medicaid by reason of immigration 
status.
    In paragraph (f)(3), we propose that the Exchange may provide 
advance payments of the premium tax credit only for an applicant who is 
enrolled in a QHP through the Exchange. The intent of this provision is 
to clarify that an applicant does not need to be enrolled in a QHP to 
be determined eligible for advance payments of the premium tax credit; 
however, an applicant must be enrolled prior to advance payments being 
made to a QHP issuer.
    In paragraph (f)(4), we propose that the Exchange determine a 
primary taxpayer ineligible to receive advance payments of the premium 
tax credit if HHS notifies the Exchange that the primary taxpayer or 
his or her spouse received advance payments for a prior year for which 
tax data would be utilized for income verification and did not comply 
with the requirement to file a tax return for such year, as proposed in 
26 CFR 1.6011-8. For example, this requirement means that for open 
enrollment for coverage in calendar year 2016, which will take place in 
the fall of 2015, a primary taxpayer on whose behalf advance payments 
were made for calendar year 2014 must have filed a tax return for 2014. 
This proposal is intended to prevent a primary taxpayer or spouse who 
has failed to comply with tax filing rules from accumulating additional 
Federal tax liabilities due to advance payments of the premium tax 
credit. An individual may remove this restriction by filing a tax 
return for the year in question.
    In paragraph (f)(5), we propose that in the event the Exchange 
determines that a primary taxpayer is eligible to receive advance 
payments of the premium tax credit, the Exchange will calculate advance 
payments of the premium tax credit in accordance with 26 CFR 1.36B-3 of 
the Treasury proposed rule. Our proposal to adopt the IRS premium tax 
credit rules for advance payments ensures that, to the extent the 
information used to calculate a primary taxpayer's advance payments is 
consistent with the information reporting on the primary taxpayer's 
income tax return at the end of the taxable year, the advance payment 
calculation will be consistent with the ultimate premium tax credit 
calculation, reducing the potential for differences at the time of 
reconciliation. We also note that in Sec.  155.310(d)(2), we propose 
the Exchange permit a primary taxpayer to accept less than the full 
amount of advance payments of the premium tax credit for which he or 
she is determined eligible.
    Lastly, in paragraph (f)(6), we propose that the Exchange must 
require an application filer to provide the Social Security number 
(SSN) of the primary taxpayer if an application filer attests that the 
primary taxpayer has a SSN and filed a tax return for the year for 
which tax data would be utilized for verification of household income 
and family size. Sections 1412(b)(1) and 1411(b)(3) of the Affordable 
Care Act together provide that eligibility determinations for advance 
payments of the premium tax credit are to be made based on tax return 
data, to the extent that reasonably recent and representative tax 
return data is available; the Secretary of the Treasury is only able to 
provide tax data for primary taxpayers for whom the Exchange provides a 
SSN or an adoption taxpayer identification number (ATIN). We clarify 
that taxpayers who have SSNs and who have tax data available that would 
be used for verification of household income and family size must 
provide them to the Exchange for purposes of eligibility for advance 
payments of the premium tax credit. We note that, because the 
eligibility standards for cost-sharing reductions proposed at Sec.  
155.305(g) incorporate the eligibility standards for advance payments 
of the premium tax credit, this standard also applies for the purposes 
of eligibility for cost-sharing reductions. Like all other data 
collections, the use and disclosure of SSNs is subject to the privacy 
and security safeguards proposed in Sec.  155.260 and Sec.  155.270.
    We highlight two key differences between Medicaid and CHIP and 
advance payments of the premium tax credit. First, while eligibility 
for Medicaid and CHIP is based on current income, eligibility for 
advance payments of the premium tax credit is based on annual income. 
Second, unlike Medicaid and CHIP, the premium tax credit is paid on an 
advance basis and then reconciled based on information reported on an 
individual's tax return for the entire year. That is, to the extent 
that an individual receives advance payments of the premium tax credit 
based on an initial eligibility determination at 150 percent of the FPL 
and his or her actual annual household income as reported on his or her 
tax return is 300 percent of the FPL, he or she will be liable to repay 
advance payments of the premium tax credit to reduce the credit to the 
300 percent level, subject to the statutory caps on repayment proposed 
in 26 CFR 1.36B-4 of the Treasury proposed rule.
    Commenters to the RFC raised concerns regarding the potential for 
the statutory reconciliation process, in combination with the annual 
basis of household income for advance payments of the premium tax 
credit, to render coverage unaffordable for individuals who have 
substantial decreases in income during the benefit year. A related 
concern is that the fear of large repayments due to reconciliation 
after an increase in income could deter enrollment. Both effects could 
result in a lower participation and a negative impact on the Exchange 
risk pool. To address these concerns, the Exchange can decrease the 
difference between the amount of advance payments and the premium tax 
credit amount based on actual income at the end of the year through a 
strong initial eligibility process that maximizes accuracy and a strong 
process by which individuals can report changes that occur during the 
year. We solicit comments on ways of achieving this outcome.
    In paragraph (g), we propose that the Exchange determine an 
applicant eligible for cost-sharing reductions if he or she meets 
eligibility standards that we propose to codify from section 1402 of 
the Affordable Care Act. In accordance with sections 1402(b) and (c) of 
the Affordable Care Act, in paragraph (g)(1) of this section, we 
propose that the Exchange must determine an applicant eligible for 
cost-sharing reductions if he or she is (i) eligible for enrollment in 
a QHP in accordance with paragraph (a) of this section; (ii) is 
eligible for advance payments of the premium tax credit in

[[Page 51209]]

accordance with paragraph (f) of this section; and (iii) has household 
income for the taxable year that does not exceed 250 percent of the 
FPL. We note that there are also special eligibility standards for 
cost-sharing reductions based on Indian status, which are described in 
Sec.  155.350 of this subpart.
    Section 1402(b) of the Affordable Care Act explicitly provides that 
an individual is eligible for reduced cost-sharing if his or her 
household income exceeds 100 percent of the FPL, but does not exceed 
400 percent of the FPL. However, section 1402(c)(1)(B)(i)(IV) specifies 
that cost-sharing reductions for an individual with household income 
that exceeds 250 percent of the FPL but does not exceed 400 percent of 
the FPL may not result in the QHP's share of costs exceeding 70 
percent, which is the actuarial value standard for a silver-level QHP 
pursuant to section 1302(d)(1)(B) of the Affordable Care Act, 
regardless of cost-sharing reductions. Since an individual has to 
enroll in a silver-level QHP in order to receive cost-sharing 
reductions, and the actuarial value of a silver-level QHP without cost-
sharing reductions is 70 percent, an individual with household income 
that exceeds 250 percent of the FPL who is not an Indian is not 
eligible for cost-sharing reductions, which is reflected in paragraph 
(g)(1)(iii).
    Lastly, in paragraph (g)(2), we propose to codify section 
1402(b)(1) of the Affordable Care Act, which specifies that an 
applicant must be enrolled in a QHP in the silver level of coverage in 
order to receive cost-sharing reductions.
    In paragraph (h), we propose three eligibility categories for cost-
sharing reductions in accordance with paragraph (g) and section 1402 of 
the Affordable Care Act. In Sec.  155.340, we propose that the Exchange 
transmit information about an enrollee's category to his or her QHP 
issuer in order to enable the QHP issuer to provide the correct level 
of reductions. The proposed categories are as follows: In paragraph 
(h)(1), an individual who has household income greater than 100 percent 
of the FPL and less than or equal to 150 percent of the FPL; in 
paragraph (h)(2), an individual who has household income greater than 
150 percent of the FPL and less than or equal to 200 percent of the 
FPL; and in paragraph (h)(3), an individual who has household income 
greater than 200 percent of the FPL and less than or equal to 250 
percent of the FPL. Additional information regarding the implementation 
of cost-sharing reductions will be provided in the future. Eligibility 
standards for cost-sharing provisions that are based in whole and in 
part on whether an individual is an Indian are described in Sec.  
155.350 of this subpart.
c. Eligibility Determination Process (Sec.  155.310)
    In Sec.  155.310, consistent with sections 1411-1413 of the 
Affordable Care Act, we propose the process by which the Exchange will 
determine an individual's eligibility for enrollment in a QHP and for 
insurance affordability programs.
    In paragraph (a)(1), we propose that the Exchange accept 
applications from individuals in the form and manner described in 
proposed 45 CFR Sec.  155.405, published in the Exchange proposed rule 
at 76 FR 41866. Furthermore, in paragraph (a)(2), we propose to 
prohibit the Exchange from requiring an individual who is not seeking 
coverage for himself or herself (a `non-applicant'), including an 
individual who is applying for coverage on behalf of another party, to 
provide information regarding the non-applicant's citizenship, status 
as a national, or immigration status on any application or supplemental 
form. We also propose that the Exchange may not require such an 
individual to provide a SSN, except as specified in Sec.  
155.305(f)(6), which addresses, for the purposes of eligibility for 
advance payments of the premium tax credit, primary taxpayers who have 
SSNs and have tax data on file with the IRS that would be used in the 
verification of household income and family size. This exception is 
based on sections 1412(b)(1) and 1411(b)(3) of the Affordable Care Act 
and is discussed further above.
    In paragraph (b), we propose that the Exchange permit an individual 
to decline an eligibility determination for insurance affordability 
programs. This proposal is designed to ensure that an individual can 
bypass the additional steps required for such screening and proceed 
directly to selecting and enrolling in a QHP. We clarify that this 
proposal does not allow an applicant to choose to seek a determination 
only for advance payments of the premium tax credit and cost-sharing 
reductions (and not for Medicaid and CHIP) or vice versa. Section 
36B(c)(2)(B) of the Code states that an applicant is ineligible for 
advance payments of the premium tax credit to the extent that he or she 
is eligible for other minimum essential coverage, which includes 
Medicaid and CHIP. This provision means that the Exchange will consider 
an applicant's eligibility for Medicaid and CHIP as part of an 
eligibility determination for advance payments of the premium tax 
credit.
    In paragraph (c), we propose that the Exchange accept an 
application and make an eligibility determination for an applicant 
seeking an eligibility determination at any point in time during a 
benefit year. An eligibility determination is a necessary precursor to 
enrollment; after an applicant is determined eligible for enrollment in 
a QHP, he or she may select a QHP and will then be able to receive 
covered health care services. We clarify that this does not supersede 
the limited enrollment periods in 45 CFR subpart E. In addition, 
subpart E does not limit an applicant's ability to request and receive 
an eligibility determination, including an eligibility determination 
for advance payments of the premium tax credit or cost-sharing 
reductions, if he or she has previously declined such a determination. 
We also note that Sec.  155.330 directs the Exchange to accept and 
process changes reported by enrollees during the benefit year as well.
    In paragraph (d)(1), we propose that after the Exchange has 
collected and verified all necessary data, the Exchange conduct an 
eligibility determination in accordance with the standards described in 
Sec.  155.305 of this part.
    In paragraph (d)(2)(i), we propose that the Exchange allow an 
applicant who is determined eligible for advance payments of the 
premium tax credit to accept less than the expected annual amount of 
advance payments authorized. This proposal is designed to reduce the 
enrollee's risk of repayment at the point of reconciliation.
    In paragraph (d)(2)(ii), we propose to clarify that the Exchange 
may provide advance payments on behalf of a primary taxpayer only if 
the primary taxpayer first attests that he or she will meet the tax-
related provisions discussed in the definition of primary taxpayer, 
including that he or she will claim a personal exemption deduction on 
his or her tax return for the applicants identified as members of his 
or her tax family. In a scenario in which more than one tax household 
is covered through a single policy, 26 CFR 1.36B-3 of the Treasury 
proposed rule proposes that advance payments will be split between the 
two primary taxpayers; that is, a primary taxpayer may not receive 
advance payments for which another primary taxpayer is eligible. This 
proposal also clarifies that while an application filer who is not the 
primary taxpayer may complete the application process on the primary 
taxpayer's behalf, the primary taxpayer must actively attest that he or 
she will comply with the standards for advance payments that are 
related to tax filing prior to advance payments being made

[[Page 51210]]

for his or her family. This is designed to ensure that the primary 
taxpayer appreciates and accepts the tax consequences that follow from 
receipt of advance payments.
    In paragraph (d)(3), we propose that if the Exchange determines an 
applicant is eligible for Medicaid or CHIP, the Exchange will notify 
the State Medicaid or CHIP agency and transmit relevant information, 
including information from the application and the results of 
verifications, to such agency promptly and without undue delay in order 
to enable the applicant to receive benefits.
    In paragraph (e), we clarify that upon making eligibility 
determinations for enrollment in a QHP, advance payments of the premium 
tax credit, and cost-sharing reductions, the Exchange will implement 
the eligibility determinations in accordance with the coverage 
effective dates specified in subpart E, which are found at 45 CFR 
155.410(c) and (f), and 45 CFR 155.420(b). This is designed to ensure 
that an applicant's entire eligibility determination and any financial 
assistance to support the purchase of coverage are effective 
simultaneously.
    After the Exchange determines eligibility, in paragraph (f) we 
propose that the Exchange provide an applicant with a timely, written 
notice of his or her eligibility determination. For an applicant who 
requests an eligibility determination for insurance affordability 
programs, the Exchange will provide information in the notice regarding 
the applicant's eligibility for all such programs. While we expect that 
the Exchange will provide an applicant who is applying online with 
information regarding his or her eligibility determination as the 
process progresses, we clarify that the Exchange must provide a single 
written notice to each applicant when the eligibility determination is 
final. The written notice of eligibility is intended to provide an 
individual with a record of the steps taken and remaining actions 
needed to complete the eligibility and enrollment process, as well as 
information regarding his or her right to appeal. We note that written 
notice is not necessary at every step of the eligibility process; 
rather, the Exchange will provide a single notice at the conclusion of 
the determination, as well as notices when additional information is 
required. We note that in Sec.  155.230, we proposed general rules 
regarding notices under this part, which include provisions regarding 
ensuring that notices be written in plain language and in a manner that 
meets the needs of diverse populations by providing meaningful access 
to limited English proficient individuals and ensure effective 
communication for people with disabilities. We anticipate proposing 
additional information to be included in notices in future rulemaking.
    In paragraph (g), we propose to codify the reporting rules in 
section 1411(e)(4)(B)(iii) of the Affordable Care Act, which support 
the employer responsibility provisions of the Affordable Care Act. We 
propose that when the Exchange determines an applicant is eligible to 
receive advance payments of the premium tax credit or cost-sharing 
reductions based in part on a finding that his or her employer does not 
provide minimum essential coverage, or provides coverage that is not 
affordable, as specified in section 36B(c)(2)(C)(i) of the Code, or 
does not meet the minimum value standard as specified in section 
36B(c)(2)(C)(ii) of the Code, the Exchange will notify the employer and 
identify the employee. We anticipate providing additional information 
on the content of this notice in future rulemaking.
    In paragraph (h), we propose rules regarding the duration of an 
eligibility determination for an applicant who is determined eligible 
for enrollment in a QHP but does not select a QHP within his or her 
enrollment period in accordance with subpart E of this part.