Coverage of Certain Preventive Services Under the Affordable Care Act, 51118-51127 [2014-20254]

Download as PDF 51118 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules certified that the collection of information contained in this notice of proposed rulemaking will not have a significant impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required. The temporary regulations will not result in any additional costs to affected entities but will provide an alternative means for eligible organizations to provide notice of their religious objection to all, or a subset of, contraceptive services. For this reason, the information collection requirement will not impose a significant impact on a substantial number of small entities. For further information and for analyses relating to the joint rulemaking, see the preamble to the joint rulemaking. Pursuant to section 7805(f) of the Internal Revenue Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Comments and Requests for a Public Hearing Before these proposed regulations are adopted as final regulations, consideration will be given to any written comments (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. Comments are specifically requested on the clarity of the proposed regulations and how they may be made easier to understand. All comments will be available for public inspection and copying. A public hearing may be scheduled if requested in writing by a person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the hearing will be published in the Federal Register. mstockstill on DSK4VPTVN1PROD with PROPOSALS Drafting Information The principal author of these proposed regulations is Karen Levin, Office of the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities), IRS. The proposed regulations, as well as the temporary regulations, have been developed in coordination with personnel from the U.S. Department of Labor and the U.S. Department of Health and Human Services. List of Subjects in 26 CFR Part 54 Excise taxes, Health care, Health insurance, Pensions, Reporting and recordkeeping requirements. Proposed Amendments to the Regulations Accordingly, 26 CFR part 54 is proposed to be amended as follows: VerDate Mar<15>2010 17:09 Aug 26, 2014 Jkt 232001 PART 54—PENSION EXCISE TAXES Paragraph 1. The authority citation for part 54 continues to read, in part, as follows: ■ Authority: 26 U.S.C. 7805 * * * Par. 2. Section 54.9815–2713A is revised to read as follows: ■ § 54.9815–2713A Accommodations in connection with coverage of preventive health services. [The text of proposed § 54.9815– 2713A is the same as the text of § 54.9815–2713AT published elsewhere in this issue of the Federal Register]. John Dalrymple, Deputy Commissioner for Services and Enforcement. [FR Doc. 2014–20256 Filed 8–22–14; 3:30 pm] BILLING CODE 4830–01–P DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 54 [REG 129786–14] RIN 1545–BM39 DEPARTMENT OF LABOR Employee Benefits Security Administration 29 CFR Part 2590 RIN 1210–AB67 DEPARTMENT OF HEALTH AND HUMAN SERVICES 45 CFR Part 147 [CMS–9940–P] RIN 0938–AS50 Coverage of Certain Preventive Services Under the Affordable Care Act Internal Revenue Service, Department of the Treasury; Employee Benefits Security Administration, Department of Labor; Centers for Medicare & Medicaid Services, Department of Health and Human Services. ACTION: Proposed rules. AGENCIES: This document proposes a change to the definition of an eligible organization that can avail itself of an accommodation with respect to coverage of certain preventive services under section 2713 of the Public Health Service Act (PHS Act), added by the SUMMARY: PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 Patient Protection and Affordable Care Act, as amended, and incorporated into the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. Section 2713 of the PHS Act requires coverage without cost sharing of certain preventive health services by nongrandfathered group health plans and health insurance coverage. Among these services are women’s preventive health services, as specified in guidelines supported by the Health Resources and Services Administration (HRSA). As authorized by the current regulations, and consistent with the HRSA Guidelines, group health plans established or maintained by certain religious employers (and group health insurance coverage provided in connection with such plans) are exempt from the otherwise applicable requirement to cover certain contraceptive services. Additionally, under current regulations, accommodations are available with respect to the contraceptive coverage requirement for group health plans established or maintained by eligible organizations (and group health insurance coverage provided in connection with such plans), and student health insurance coverage arranged by eligible organizations that are institutions of higher education, that effectively exempt them from this requirement. The regulations establish a mechanism for separately furnishing payments for contraceptive services on behalf of participants and beneficiaries of the group health plans of eligible organizations that avail themselves of an accommodation, and enrollees and dependents of student health insurance coverage arranged by eligible organizations that are institutions of higher education that avail themselves of an accommodation. These rules propose and seek comments on potential changes to the definition of ‘‘eligible organization’’ in the Departments’ regulations in light of the Supreme Court’s decision in Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751 (2014), to ensure that participants and beneficiaries in group health plans (and enrollees and dependents in student health insurance coverage arranged by institutions of higher education) obtain, without additional cost, coverage of the full range of Food and Drug Administration (FDA) approved contraceptive services, as prescribed by a health care provider, while respecting certain closely held for-profit entities’ religion-based objections to contraceptive coverage. These proposed rules also seek comments on any additional steps the E:\FR\FM\27AUP1.SGM 27AUP1 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS government should take to help ensure coverage of the full range of FDAapproved contraceptives, as prescribed by a health care provider, without cost sharing, for participants and beneficiaries in group health plans of such entities (and enrollees and dependents in student health insurance coverage arranged by such entities that are institutions of higher education). DATES: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on October 21, 2014. ADDRESSES: In commenting, please refer to file code CMS–9940–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 these regulations to http:// 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–9940–P, P.O. Box 8010, Baltimore, MD 21244–1850. 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–9940–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 any of 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 VerDate Mar<15>2010 17:09 Aug 26, 2014 Jkt 232001 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 an address indicated as appropriate for hand or courier delivery may be delayed and received after the close of the comment period. For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section. FOR FURTHER INFORMATION CONTACT: David Mlawsky, Centers for Medicare & Medicaid Services (CMS), Department of Health and Human Services (HHS), at (410) 786–1565; Amy Turner or Beth Baum, Employee Benefits Security Administration (EBSA), Department of Labor, at (202) 693–8335; Karen Levin, Internal Revenue Service (IRS), Department of the Treasury, at (202) 927–9639. Customer Service Information: Individuals interested in obtaining information from the Department of Labor concerning employment-based health coverage laws may call the EBSA Toll-Free Hotline at 1–866–444–EBSA (3272) or visit the Department of Labor’s Web site (www.dol.gov/ebsa). Information from HHS on private health insurance coverage can be found on CMS’s Web site (www.cms.gov/cciio), and information on health care reform can be found at www.HealthCare.gov. SUPPLEMENTARY INFORMATION: Inspection of Public Comments: All comments received before the close of the comment period will be available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: http:// www.regulations.gov. Follow the search instructions on that Web site to view public comments. Comments received timely will also be available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 51119 through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1–800–743–3951. I. Background The Patient Protection and Affordable Care Act (Pub. L. 111–148) was enacted on March 23, 2010. The Health Care and Education Reconciliation Act of 2010 (Pub. L. 111–152) was enacted on March 30, 2010. These statutes are collectively known as the Affordable Care Act. The Affordable Care Act reorganizes, amends, and adds to the provisions of part A of title XXVII of the Public Health Service Act (PHS Act) relating to group health plans and health insurance issuers in the group and individual markets. The Affordable Care Act adds section 715(a)(1) to the Employee Retirement Income Security Act of 1974 (ERISA) and section 9815(a)(1) to the Internal Revenue Code (Code) to incorporate the provisions of part A of title XXVII of the PHS Act into ERISA and the Code, and to make them applicable to group health plans and health insurance issuers providing health insurance coverage in connection with group health plans. The sections of the PHS Act incorporated into ERISA and the Code are sections 2701 through 2728. Section 2713 of the PHS Act, as added by the Affordable Care Act and incorporated into ERISA and the Code, requires that non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage provide coverage of certain specified preventive services without cost sharing, including under paragraph (a)(4), benefits for certain women’s preventive health services as provided for in comprehensive guidelines supported by the Health Resources and Services Administration (HRSA). On August 1, 2011, HRSA adopted and released guidelines for women’s preventive health services (HRSA Guidelines) based on recommendations of the independent Institute of Medicine. As relevant here, the HRSA Guidelines include all Food and Drug Administration (FDA)-approved contraceptives, sterilization procedures, and patient education and counseling for women with reproductive capacity, as prescribed by a health care provider (collectively, contraceptive services).1 Except as discussed later in this section, non-grandfathered group health plans 1 The HRSA Guidelines for Women’s Preventive Services do not include services relating to a man’s reproductive capacity, such as vasectomies and condoms. E:\FR\FM\27AUP1.SGM 27AUP1 51120 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules mstockstill on DSK4VPTVN1PROD with PROPOSALS and health insurance coverage are required to provide coverage consistent with the HRSA Guidelines, without cost sharing, for plan years (or, in the individual market, policy years) beginning on or after August 1, 2012.2 Interim final regulations implementing section 2713 of the PHS Act were published on July 19, 2010 (75 FR 41726) (2010 interim final regulations). On August 1, 2011, the Departments of Health and Human Services (HHS), Labor, and the Treasury (collectively, the Departments) amended the 2010 interim final regulations to provide HRSA with authority to exempt group health plans established or maintained by certain religious employers (and group health insurance coverage provided in connection with such plans) from the requirement to cover contraceptive services consistent with the HRSA Guidelines (76 FR 46621) (2011 amended interim final regulations).3 On the same date, HRSA exercised this authority in the HRSA Guidelines to exempt group health plans established or maintained by these religious employers (and group health insurance coverage provided in connection with such plans) from the HRSA Guidelines with respect to contraceptive services.4 The 2011 amended interim final regulations specified that, for purposes of this exemption, a religious employer was one that: (1) Has the inculcation of religious values as its purpose; (2) primarily employs persons who share its religious tenets; (3) primarily serves persons who share its religious tenets; and (4) is a nonprofit organization described in section 6033(a)(1) and (a)(3)(A)(i) or (iii) of the Code. Section 6033(a)(3)(A)(i) and (iii) of the Code refers to churches, their integrated auxiliaries, and conventions or associations of churches, as well as to the exclusively religious activities of any religious order. Final regulations issued on February 10, 2012, adopted the definition of religious employer in the 2011 amended interim final 2 Interim final regulations published by the Departments on July 19, 2010, generally provide that plans and issuers must cover a newly recommended preventive service starting with the first plan year (or, in the individual market, policy year) that begins on or after the date that is one year after the date on which the new recommendation is issued. 26 CFR 54.9815–2713T(b)(1); 29 CFR 2590.715–2713(b)(1); 45 CFR 147.130(b)(1). 3 The 2011 amended interim final regulations were issued and effective on August 1, 2011, and published in the Federal Register on August 3, 2011 (76 FR 46621). 4 HRSA subsequently amended the HRSA Guidelines to reflect the simplified definition of ‘‘religious employer’’ contained in the July 2013 final regulations. 78 FR 39870 (July 2, 2013) (discussed below), effective August 1, 2013. VerDate Mar<15>2010 17:09 Aug 26, 2014 Jkt 232001 regulations without modification (2012 final regulations).5 Contemporaneous with the issuance of the 2012 final regulations, HHS, with the agreement of the Departments of Labor and the Treasury, issued guidance establishing a temporary safe harbor from enforcement of the contraceptive coverage requirement by the Departments for group health plans established or maintained by certain nonprofit organizations with religious objections to contraceptive coverage (and group health insurance coverage provided in connection with such plans).6 The guidance provided that the temporary enforcement safe harbor would remain in effect until the first plan year beginning on or after August 1, 2013. At the same time, the Departments committed to rulemaking to achieve the goals of providing coverage of recommended preventive services, including contraceptive services, without cost sharing, while simultaneously ensuring that certain additional nonprofit organizations with religious objections to contraceptive coverage would not have to contract, arrange, pay, or refer for such coverage. On March 21, 2012, the Departments published an advance notice of proposed rulemaking (ANPRM) that described and solicited comments on possible approaches to achieve these goals (77 FR 16501). On February 6, 2013, following review of the comments on the ANPRM, the Departments published proposed regulations at 78 FR 8456 (proposed regulations). The regulations proposed to simplify and clarify the definition of ‘‘religious employer’’ for purposes of the religious employer exemption. The regulations also proposed accommodations for group health plans established or maintained or arranged 5 The 2012 final regulations were published in the Federal Register on February 15, 2012 (77 FR 8725). 6 Guidance on the Temporary Enforcement Safe Harbor for Certain Employers, Group Health Plans, and Group Health Insurance Issuers with Respect to the Requirement to Cover Contraceptive Services Without Cost Sharing Under Section 2713 of the Public Health Service Act, Section 715(a)(1) of the Employee Retirement Income Security Act, and Section 9815(a)(1) of the Internal Revenue Code (originally issued on February 10, 2012, and reissued on August 15, 2012 and June 28, 2013), available at: http://www.cms.gov/CCIIO/Resources/ Regulations-and-Guidance/Downloads/preventiveservices-guidance-6-28-2013.pdf. The guidance clarified, among other things, that plans that took some action before February 10, 2012, to try, without success, to exclude or limit contraceptive coverage were not precluded from eligibility for the safe harbor. The temporary enforcement safe harbor was also available to student health insurance coverage arranged by nonprofit institutions of higher education with religious objections to contraceptive coverage that met the conditions set forth in the guidance. See ‘‘Student Health Insurance Coverage,’’ 77 FR16457 (Mar. 21, 2012). PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 by certain nonprofit religious organizations with religious objections to contraceptive coverage (and group health insurance coverage provided in connection with such plans). These organizations were referred to as ‘‘eligible organizations.’’ The regulations proposed that, in the case of an insured group health plan established or maintained by an eligible organization, the health insurance issuer providing group health insurance coverage in connection with the plan would be required to assume sole responsibility for providing contraceptive coverage to plan participants and beneficiaries without cost sharing, premium, fee, or other charge to plan participants or beneficiaries or to the eligible organization or its plan. The Departments proposed a comparable accommodation with respect to student health insurance coverage arranged by eligible organizations that are institutions of higher education. In the case of a self-insured group health plan established or maintained by an eligible organization, the proposed regulations presented potential approaches under which the third party administrator of the plan would provide or arrange for a third party to provide contraceptive coverage to plan participants and beneficiaries without cost sharing, premium, fee, or other charge to plan participants or beneficiaries or to the eligible organization or its plan. An issuer (or its affiliate) would be able to offset the costs incurred by the third party administrator and the issuer in the course of arranging and providing such coverage by claiming an adjustment in the Federally-facilitated Exchange (FFE) user fee. The Departments received over 400,000 comments (many of them standardized form letters) in response to the proposed regulations. After consideration of the comments, the Departments published final regulations on July 2, 2013 at 78 FR 39870 (July 2013 final regulations). The July 2013 final regulations simplified and clarified the definition of religious employer for purposes of the religious employer exemption and established accommodations for health coverage established or maintained or arranged by eligible organizations. A contemporaneously re-issued HHS guidance document extended the temporary safe harbor from enforcement of the contraceptive coverage requirement by the Departments to encompass plan years beginning on or after August 1, 2013, and before January 1, 2014. This guidance included a form E:\FR\FM\27AUP1.SGM 27AUP1 mstockstill on DSK4VPTVN1PROD with PROPOSALS Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules to be used by an organization during this temporary period to self-certify that its plan qualified for the temporary enforcement safe harbor. In addition, HHS and the Department of Labor (DOL) issued a self-certification form, EBSA Form 700, to be executed by an organization seeking to be treated as an eligible organization for purposes of an accommodation under the July 2013 final regulations. This self-certification form was provided for use with the accommodation under the July 2013 final regulations, after the expiration of the temporary enforcement safe harbor (that is, for plan years beginning on or after January 1, 2014). On June 30, 2014, the Supreme Court ruled in the case of Burwell v. Hobby Lobby Stores, Inc. that, under the Religious Freedom Restoration Act of 1993 (RFRA), the requirement to provide contraceptive coverage could not be applied to the closely held forprofit corporations before the Court because their owners had religious objections to providing such coverage, and because the Government’s goal of guaranteeing coverage for contraceptive methods without cost sharing could be achieved in a less restrictive manner by offering such closely held for-profit entities the accommodation the Government already provided to religious nonprofit organizations with religious objections to contraceptive coverage. After describing this accommodation, the Court concluded that the accommodation ‘‘does not impinge on the plaintiffs’ religious belief that providing insurance coverage for the contraceptives at issue here violates their religion, and it serves HHS’ stated interests equally well.’’ On July 3, 2014, the Supreme Court issued an interim order in connection with an application for an injunction pending appeal in Wheaton College v. Burwell, 134 S. Ct. 2806 (2014) (the Wheaton order), in which Wheaton College challenged under RFRA the requirement in the July 2013 final regulations that an eligible organization invoking the accommodation send EBSA Form 700 to the insurance issuer or third party administrator. The Court’s order stated that, ‘‘[i]f [Wheaton College] informs the Secretary of Health and Human Services in writing that it is a nonprofit organization that holds itself out as religious and has religious objections to providing coverage for contraceptive services, the [Departments of Labor, Health and Human Services, and the Treasury] are enjoined from enforcing against [Wheaton College]’’ certain provisions of the Affordable Care Act and related regulations requiring coverage without cost sharing of certain VerDate Mar<15>2010 17:09 Aug 26, 2014 Jkt 232001 contraceptive services ‘‘pending final disposition of appellate review.’’ 134 S. Ct. at 2807. The order stated that Wheaton College need not use EBSA Form 700 or send a copy of the executed form to its health insurance issuers or third party administrators to meet the condition for this injunctive relief. Id. The Court also stated that its interim order neither affected ‘‘the ability of [Wheaton College’s] employees and students to obtain, without cost, the full range of FDA approved contraceptives,’’ nor precluded the Government from relying on the notice by Wheaton College ‘‘to facilitate the provision of full contraceptive coverage under the Act.’’ Id. The Court’s order further stated that it ‘‘should not be construed as an expression of the Court’s views on the merits’’ of Wheaton College’s challenge to the accommodations. Id. This notice of proposed rulemaking proposes and invites comments on changes to the definition of an eligible organization in the Departments’ regulations in light of the Supreme Court’s decision in Hobby Lobby. It also solicits comments on any other steps the Government should take to help ensure that participants and beneficiaries in group health plans or enrollees and dependents in student health insurance coverage arranged by institutions of higher education are able to obtain, without cost, the full range of FDAapproved contraceptives, as prescribed by a health care provider, without cost sharing, if enrolled in a group health plan or insurance coverage sponsored or arranged by a closely held for-profit entity that objects on religious grounds to covering contraceptive services. Given the importance of this coverage, initiating this proposed rulemaking now allows for public input and a pathway toward helping to ensure access to contraceptive coverage. The Departments are publishing contemporaneously with this notice of proposed rulemaking interim final regulations in light of the Supreme Court’s interim order in connection with the application for an injunction in the pending case of Wheaton College v. Burwell. The interim final regulations are published elsewhere in this edition of the Federal Register. II. Provisions of the Proposed Regulations As stated above, on June 30, 2014, the Supreme Court ruled in Burwell v. Hobby Lobby Stores, Inc. that, under RFRA, the requirement to provide contraceptive coverage could not be applied to certain closely held for-profit organizations. The individual plaintiffs in Hobby Lobby and the associated case PO 00000 Frm 00007 Fmt 4702 Sfmt 4702 51121 Conestoga Wood Specialties Corp. v. Burwell run closely held businesses that are family-owned and operated and that have adopted statements of mission or purpose to conduct the companies’ affairs in accordance with the owners’ shared religious beliefs and values. See 134 S. Ct. at 2764–2766. In light of the Court’s decision in Hobby Lobby, the Departments propose to amend the definition of an eligible organization under the July 2013 final regulations to include a closely held forprofit entity that has a religious objection to providing coverage for some or all of the contraceptive services otherwise required to be covered. Under these proposed rules, a qualifying closely held for-profit entity that has a religious objection to providing coverage for some or all of the contraceptive services otherwise required to be covered would not be required to contract, arrange, pay or refer for contraceptive coverage; instead, payments for contraceptive services provided to participants and beneficiaries in the eligible organization’s plan would be provided separately by an issuer (if the qualifying entity sponsors an insured group health plan, or if the qualifying entity is an institution of higher education that arranges student health insurance coverage) or arranged separately by a third party administrator (if the qualifying entity is self-insured), consistent with the July 2013 final regulations as amended by interim final regulations published in this same edition of the Federal Register. This proposed change would extend to participants and beneficiaries in group health plans established or maintained by certain closely held for-profit entities with religious objections to contraceptive coverage, and to enrollees and dependents enrolled in student health insurance coverage arranged by certain closely held for-profit entities that are institutions of higher education with religious objections to contraceptive coverage, the same, separate payments for contraceptive services provided to participants and beneficiaries of group health plans (and enrollees and dependents in student health insurance) established or maintained by certain nonprofit religious entities with such objections, while similarly respecting the religious objections of the closely held for-profit entities. Defining a Closely Held For-Profit Entity In considering inclusion of certain closely held for-profit entities among the eligible organizations that may avail themselves of the accommodations, the E:\FR\FM\27AUP1.SGM 27AUP1 mstockstill on DSK4VPTVN1PROD with PROPOSALS 51122 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules Departments are considering and seek comment on how to define a qualifying closely held for-profit entity. In Hobby Lobby, the Supreme Court noted that the companies at issue in the cases were not publicly traded and were owned and controlled by members of a single family and that the companies were operated in accordance with the owners’ shared religious beliefs and values. 134 S. Ct. at 2764–2766. In light of the Supreme Court’s decision, the Departments are proposing for comment two possible approaches to defining a qualifying closely held forprofit entity, although the Departments invite comments on other approaches as well. In common understanding, a closely held corporation—a term often used interchangeably with a ‘‘close’’ or ‘‘closed’’ corporation—is a corporation the stock of which is owned by a small number of persons and for which no active trading market exists. See, for example, American Law Institute, Principles of Corporate Governances section 1.06; Black’s Law Dictionary (9th ed. 2009) (‘‘close corporation’’); Del. Code Tit. 8, Ch.1, Sub. Ch. 14 (‘‘close corporation’’). The examples below are by way of illustration, and the maximum number of shareholders specified in particular examples would not necessarily be borrowed as the standard in this context. Under the first proposed approach, a qualifying closely held for-profit entity would be an entity where none of the ownership interests in the entity is publicly traded and where the entity has fewer than a specified number of shareholders or owners. There is precedent in other areas of federal law for limiting the definition of closely held entities in this context to those with a relatively small number of owners. For example, subchapter S treatment under section 1361 of the Code is currently limited to corporations with 100 or fewer shareholders who are generally individuals and has in the past been limited to corporations with 10 or fewer shareholders. Similarly, certain favorable estate tax treatment is limited to businesses with 45 or fewer partners or shareholders under section 6166 of the Code. Under a second, alternative approach, a qualifying closely held entity would be a for-profit entity in which the ownership interests are not publicly traded, and in which a specified fraction of the ownership interest is concentrated in a limited and specified number of owners. This approach also has precedent in federal law. For example, certain rules governing the taxation of real estate investment trusts, VerDate Mar<15>2010 17:09 Aug 26, 2014 Jkt 232001 passive activity losses, and certain income from foreign entities are limited to organizations that are more than 50 percent owned by or for not more than five individuals. See, for example, sections 856(h), 542(a)(2), and 469(j)(1) of the Code and regulations under these sections. These approaches might serve to identify for-profit entities controlled and operated by individual owners who likely have associational ties, are personally identified with the entity, and can be regarded as conducting personal business affairs through the entity. These appear to be the types of entities the Court sought to accommodate in Hobby Lobby. There may also be useful definitions or principles in state laws governing close corporations, or other areas of law. The Departments invite comments on the appropriate scope of the definition of a qualifying closely held for-profit entity, including but not limited to whether a closely held for-profit entity should be defined with reference to a maximum number of owners (and, if so, what that maximum number should be) or a minimum concentration of ownership (and if so, what that concentration should be) or with reference to additional or other criteria. It would be helpful for comments to address how the selection of a particular approach can be informed by the purposes of the Affordable Care Act and the contraceptive coverage requirement; the range of business structures in the Nation’s economy; background principles of federal and state law applicable to business entities and the relationship of the entities’ owners to the entities; other related or analogous areas of the law; experience regarding accommodations of religion and religious beliefs in various contexts and the rationales for the scope and operation of such accommodations; Hobby Lobby and other court decisions that shed light on these issues; and any other relevant matters. Religious Objection To Providing Coverage for Some or All of the Contraceptive Services Required To Be Covered. In Hobby Lobby, the Supreme Court held that the closely held for-profit corporations at issue in that case could opt not to provide otherwise required contraceptive coverage if doing so runs counter to their owners’ sincerely held religious beliefs. These proposed regulations would require that the qualifying closely held for-profit entity’s objection, based on its owners’ sincerely held religious beliefs, to covering some or all of the contraceptive services PO 00000 Frm 00008 Fmt 4702 Sfmt 4702 otherwise required to be covered, be made in accordance with the entity’s applicable rules of governance. As discussed by the Court in Hobby Lobby, state corporate law dictates how a corporation may establish its governing structure.7 Under the Departments’ proposal, valid corporate action (or similar action by a business that is not organized as a corporation) taken in accordance with the entity’s governing structure in accordance with state law, stating its owners’ religious objection to providing some or all contraceptive coverage otherwise required to be provided, can serve to establish that a closely held forprofit entity has religious objections to providing such coverage. In determining whether a closely held for-profit entity’s decision-making process followed the necessary rules and procedures, the laws of the state in which the entity is incorporated, or, for non-corporate entities, organized, would govern. The Departments invite comments on whether to require documentation of the decision-making process and disclosure of the decision. The Departments seek comment on this approach to determining that a closely held for-profit entity opposes providing coverage for some or all of the contraceptive services otherwise required to be covered on account of the owners’ religious objections. Other Potential Changes The Departments seek comment on other potential changes to the July 2013 final regulations in light of the proposed change to the definition of eligible organization. In particular, the Departments seek comment on applying the approach set forth in the July 2013 final regulations in the context of the expanded definition of eligible organization. The July 2013 final regulations provide for separate payments for contraceptive services for participants and beneficiaries in selfinsured group health plans of eligible organizations in a manner that enables these organizations to completely separate themselves from administration and payment for contraceptive coverage. Specifically, the third party administrator must provide or arrange such payments, and can seek reimbursement for such costs (including an allowance for administrative costs and margin) by making an arrangement with a participating issuer—that is, an issuer offering coverage through a Federally-facilitated Exchange (FFE). The participating issuer can receive an 7 134 E:\FR\FM\27AUP1.SGM S. Ct. at 2774–2775. 27AUP1 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules adjustment to its FFE user fees to finance such costs. The Departments seek comment on the likely number of closely held forprofit entities that would seek an accommodation, the number of participants and beneficiaries (or in the case of student health insurance coverage, enrollees and dependents) in the plans of such entities, and the number of issuers and third-party administrators affected by the proposed rules. Finally, the Departments seek comment on whether any other aspects of the accommodations in the July 2013 final regulations, including relevant definitions, should be modified in light of the proposed addition of closely held for-profit entities with religious objections to contraceptive coverage to the definition of eligible organization. These proposed regulations, if finalized as proposed, would require a small number of conforming changes to cross-references in the regulations. Any such necessary conforming changes would be incorporated into final regulations. III. Response to Comments Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. The Departments will consider all comments we receive by the date and time specified in the ‘‘DATES’’ section of this preamble, and, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document. IV. Economic Impact and Paperwork Burden mstockstill on DSK4VPTVN1PROD with PROPOSALS A. Executive Orders 12866 and 13563— Department of Health and Human Services and Department of Labor Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, and public health and safety effects; distributive impacts; and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Section 3(f) of Executive Order 12866 defines a ‘‘significant regulatory action’’ as an action that is likely to result in a regulation: (1) Having an annual effect on the economy of $100 million or more in any 1 year, or adversely and materially affecting a sector of the VerDate Mar<15>2010 17:09 Aug 26, 2014 Jkt 232001 economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities (also referred to as ‘‘economically significant’’); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the Executive Order. A regulatory impact analysis must be prepared for major rules with economically significant effects ($100 million or more in any 1 year), and an ‘‘economically significant’’ regulatory action is subject to review by the Office of Management and Budget (OMB). The Departments anticipate that these proposed regulations are not likely to have economic impacts of $100 million or more in any 1 year, and therefore, do not meet the definition of ‘‘economically significant’’ under Executive Order 12866. 1. Need for Regulatory Action The proposed rules would modify the July 2013 final regulations in light of the Supreme Court’s decision in Hobby Lobby. That decision held that a closely held for-profit corporation is exempt from the requirement to provide contraceptive coverage if its owners have religious objections to such coverage, because there is a less restrictive means of furthering the law’s interests, namely the accommodation the Government already provided to nonprofit religious organizations with such objections. Contraceptive coverage is crucial to women’s health and equality for a number of reasons, including but not limited to the psychological toll and compromised financial position, and adverse health consequences, that can result from unplanned or unwanted pregnancies. As documented in a report of the Institute of Medicine, women experiencing an unintended pregnancy may not immediately be aware that they are pregnant, and thus delay prenatal care. They also may not be as motivated to discontinue behaviors that pose pregnancy-related risks (for example, smoking, consumption of alcohol).8 Studies show a greater risk of preterm birth and low birth weight among 8 Inst. Of Med., Clinical Preventive Services for Women: Closing the Gaps, Wash., DC: Nat’l Acad. Press, 2011, at p. 16. PO 00000 Frm 00009 Fmt 4702 Sfmt 4702 51123 unintended pregnancies compared with pregnancies that were planned.9 Contraceptives also have medical benefits for women who are contraindicated for pregnancy, and there are demonstrated preventive health benefits from contraceptives relating to conditions other than pregnancy.10 In addition, there are significant cost savings to employers from the coverage of contraceptives.11 Providing this coverage to participants and beneficiaries affected by the Supreme Court decision is a priority. 2. Anticipated Effects The Departments expect that these proposed regulations would not result in any additional significant burden on or costs to the affected entities. B. Special Analyses—Department of the Treasury For purposes of the Department of the Treasury, it has been determined that this proposed rule is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to this proposed rule. Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that this proposed rule will not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that the regulations merely propose to modify the definition of eligible organization to include certain closely held for-profit entities. This modification, if adopted, would not increase costs to or burdens on the affected organizations. Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business. C. Paperwork Reduction Act— Department of Health and Human Services Under the Paperwork Reduction Act of 1995, we are required to provide 60day notice in the Federal Register and solicit public comment before a collection of information requirement is 9 Gipson, J.D. et al., The Effects of Unintended Pregnancy on Infant, Child and Parental Health: A Review of the Literature, Studies on Family Planning, 2008, 39(1):18–38. 10 Inst. Of Med., Clinical Preventive Services for Women: Closing the Gaps, Wash., DC: Nat’l Acad. Press, 2011, at p. 107. 11 See discussion at 77 FR 8727. E:\FR\FM\27AUP1.SGM 27AUP1 mstockstill on DSK4VPTVN1PROD with PROPOSALS 51124 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues: • The need for the information collection and its usefulness in carrying out the proper functions of our agency. • The accuracy of our estimate of the information collection burden. • The quality, utility, and clarity of the information to be collected. • Recommendations to minimize the information collection burden on the affected public, including automated collection techniques. We are soliciting public comment on each of these issues for the following sections of this document that contain information collection requirements (ICRs): The 2013 final regulations require an eligible organization that seeks an accommodation to self-certify that it meets the definition of an eligible organization using the EBSA Form 700 and providing it directly to each third party administrator or issuer under the plan that would otherwise arrange for or provide the covered contraceptive services. The interim final regulations being published contemporaneously with these proposed regulations continue to allow such eligible organizations to use EBSA Form 700, as set forth in the 2013 final regulations and guidance. In addition, the interim final regulations permit an alternative process, consistent with the Supreme Court’s interim order in Wheaton College, under which an eligible organization may notify HHS in writing of its religious objection to coverage of all or a subset of contraceptive services. These proposed regulations do not change the requirement that an eligible organization that seeks accommodation self-certifies that it meets the definition of an eligible organization, either using the EBSA Form 700 method of selfcertification or the alternative notice to HHS process. HHS is anticipating that 71 for-profit organizations will seek an accommodation. This is based on the number of plaintiffs that are for-profit employers in recent litigation objecting on religious grounds to the provision of contraceptive services. We seek comments on this estimate and welcome any data that may assist us in estimating the number of entities affected by this provision. For each eligible organization it is assumed that, clerical staff will gather and enter the necessary information, send the self-certification VerDate Mar<15>2010 17:09 Aug 26, 2014 Jkt 232001 or the notice to its issuer(s) or third party administrator(s) or to HHS electronically and retain a copy for recordkeeping, a manager and legal counsel will review it, and a senior executive will execute it. It is estimated that an organization will need approximately 50 minutes (30 minutes of clerical labor at a cost of $30.00 per hour, 10 minutes for a manager at a cost of $102 per hour, 5 minutes for legal counsel at a cost of $127 per hour, and 5 minutes for a senior executive at a cost of $121 per hour) to execute the selfcertification. The certification may be electronically transmitted to the issuer or to HHS at minimal cost, but a cost burden of $38.34 is estimated for a paper filing calculated with 5 cents per page printing and material costs and 49 cents postage costs. Therefore, the total one-time burden for preparing and providing the information in the selfcertification is estimated to be approximately $53 for each eligible organization. Based on this estimate of 71 affected entities and the individual burden estimate of $53, we estimate the hour burden to be 59.2 hours with an equivalent cost of $3736 and a paper filing cost burden of $38.34. As the Department of Labor and the Department of Health and Human Services share jurisdiction they are splitting the hour burden so each will account for 29.6 burden hours and a cost burden of $19.17. We welcome comments on any aspect of this burden estimate. If you comment on these information collection and recordkeeping requirements, please submit your comments electronically as specified in the ADDRESSES section of this proposed rule. Comments must be received on/by October 27, 2014. D. Paperwork Reduction Act— Department of Labor As discussed above, the proposed regulations would revise the definition of eligible organization to include qualifying closely held for-profit entities. This action would amend the EBSA Form 700 information collection request (ICR), which is approved under OMB Control number 1210–NEW to allow qualified closely held for-profit entities to avail themselves of the accommodation by self-certifying that they meet the definition of an eligible organization, either using the EBSA Form 700 method of self-certification or the alternative notice to HHS process under the contemporaneous interim final regulations. PO 00000 Frm 00010 Fmt 4702 Sfmt 4702 • Consistent with the HHS analysis presented above, DOL estimates that there will be 71 additional entities that would utilize the accommodation. The Departments are soliciting comments for 60 days regarding the likely number of additional entities seeking an accommodation, the number of participants and beneficiaries in the plans of such organizations, and the number of issuers and third party administrators impacted by the proposed regulations. The Departments will submit a copy of these proposed rules to OMB in accordance with 44 U.S.C. 3507(d) for review of the proposed ICRs. The Departments and OMB are particularly interested in comments that: • Evaluate whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; • Evaluate the accuracy of the agency’s estimate of the burden of the collection of information, including the validity of the methodology and assumptions used; • Enhance the quality, utility, and clarity of the information to be collected; and • Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, for example, by permitting electronic submission of responses. Comments should be sent to the Office of Information and Regulatory Affairs, Attention: Desk Officer for the Employee Benefits Security Administration either by Fax to (202) 395–5806 or by email to oira_submission@omb.eop.gov. A copy of the proposed ICRs may be obtained by contacting the PRA addressee: G. Christopher Cosby, Office of Policy and Research, Department of Labor, Employee Benefits Security Administration, 200 Constitution Avenue NW., Room N–5718, Washington, DC 20210; telephone: (202) 693–8410; Fax: (202) 219–4745 (please note that these numbers are not toll-free numbers); email: ebsa.opr@dol.gov. Proposed ICRs submitted to OMB also are available at www.reginfo.gov (http://www.reginfo.gov/public/do/ PRAMain). The Departments expect that qualified closely held for-profit entities will spend the same time (and incur the same cost) to prepare and send the EBSA Form 700 or the notification to the Secretary of HHS as other eligible E:\FR\FM\27AUP1.SGM 27AUP1 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules organizations under the existing ICR (approximately 50 minutes in preparation time and $0.54 mailing costs). The Departments note that persons are not required to respond to, and generally are not subject to any penalty for failing to comply with, an ICR unless the ICR has a valid OMB control number. The paperwork burden estimates are summarized as follows: Type of Review: Revised Collection. Agencies: Employee Benefits Security Administration, Department of Labor. Title: EBSA Form 700. OMB Number: 1210–NEW. Affected Public: Business or other for profit entity. Total Respondents: 71. Total Responses: 71. Frequency of Response: Once, Variable. Estimated Total Annual Burden Hours: 59 hours (DOL 29.5 hours, HHS 29.5 hours). Estimated Total Annual Burden Cost: $38 (DOL $19, HHS $19). V. Unfunded Mandates Reform Act For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4), as well as Executive Order 12875, these proposed regulations do not include any federal mandate that may result in expenditures by state, local, or tribal governments, nor do they include any federal mandates that may impose an annual burden of $100 million, adjusted for inflation, or more on the private sector.12 mstockstill on DSK4VPTVN1PROD with PROPOSALS VI. Federalism—Department of Health and Human Services and Department of Labor Executive Order 13132 outlines fundamental principles of federalism, and requires the adherence to specific criteria by federal agencies in the process of their formulation and implementation of policies that have ‘‘substantial direct effects’’ on states, the relationship between the federal government and states, or the distribution of power and responsibilities among the various levels of government. Federal agencies promulgating regulations that have these federalism implications must consult with state and local officials, and describe the extent of their consultation and the nature of the concerns of state and local officials in the preamble to the regulation. In the Departments’ view, these proposed regulations have federalism implications, but the federalism implications are substantially mitigated 12 In 2014, that threshold level is approximately $141 million. VerDate Mar<15>2010 17:09 Aug 26, 2014 Jkt 232001 because, with respect to health insurance issuers, 45 states are either enforcing the requirements related to coverage of specified preventive services (including contraception) without cost sharing pursuant to state law or otherwise are working collaboratively with HHS to ensure that issuers meet these standards. In five states, HHS ensures that issuers comply with these requirements. Therefore, the proposed regulations are not likely to require substantial additional oversight of states by HHS. In general, section 514 of ERISA provides that state laws are superseded to the extent that they relate to any covered employee benefit plan, and preserves state laws that regulate insurance, banking, or securities. ERISA also prohibits states from regulating a covered plan as an insurance or investment company or bank. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) added a new preemption provision to ERISA (as well as to the PHS Act) narrowly preempting state requirements on group health insurance coverage. States may continue to apply state law requirements but not to the extent that such requirements prevent the application of the federal requirement that group health insurance coverage provided in connection with certain group health plans provide coverage for specified preventive services without cost sharing. HIPAA’s Conference Report states that the conferees intended the narrowest preemption of state laws with regard to health insurance issuers (H.R. Conf. Rep. No. 104–736, 104th Cong. 2d Session 205, 1996). State insurance laws that are more stringent than the federal requirement are unlikely to ‘‘prevent the application of’’ the preventive services coverage provision, and therefore are unlikely to be preempted. Accordingly, states have significant latitude to impose requirements on health insurance issuers that are more restrictive than those in federal law. Guidance conveying this interpretation was published in the Federal Register on April 8, 1997 (62 FR 16904) and December 30, 2004 (69 FR 78720), and these proposed regulations implement the preventive services coverage provision’s minimum standards and do not significantly reduce the discretion given to states under the statutory scheme. The PHS Act provides that states may enforce the provisions of title XXVII of the PHS Act as they pertain to issuers, but that the Secretary of HHS will enforce any provisions that a state does not have authority to enforce or that a PO 00000 Frm 00011 Fmt 4702 Sfmt 4702 51125 state has failed to substantially enforce. When exercising its responsibility to enforce provisions of the PHS Act, HHS works cooperatively with the state to address the state’s concerns and avoid conflicts with the state’s exercise of its authority. HHS has developed procedures to implement its enforcement responsibilities, and to afford states the maximum opportunity to enforce the PHS Act’s requirements in the first instance. In compliance with Executive Order 13132’s requirement that agencies examine closely any policies that may have federalism implications or limit the policymaking discretion of states, the Departments have engaged in numerous efforts to consult and work cooperatively with affected state and local officials. In conclusion, throughout the process of developing these proposed regulations, to the extent feasible within the specific preemption provisions of ERISA and the PHS Act, the Departments have attempted to balance states’ interests in regulating health coverage and health insurance issuers, and the rights of those individuals intended to be protected in the PHS Act, ERISA, and the Code. VII. Statutory Authority The Department of the Treasury regulations are adopted pursuant to the authority contained in sections 7805 and 9833 of the Code. The Department of Labor regulations are adopted pursuant to the authority contained in 29 U.S.C. 1002(16), 1027, 1059, 1135, 1161–1168, 1169, 1181– 1183, 1181 note, 1185, 1185a, 1185b, 1185d, 1191, 1191a, 1191b, and 1191c; sec. 101(g), Public Law 104–191, 110 Stat. 1936; sec. 401(b), Public Law 105– 200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Public Law 110–343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Public Law 111–148, 124 Stat. 119, as amended by Public Law 111–152, 124 Stat. 1029; Secretary of Labor’s Order 3– 2010, 75 FR 55354 (September 10, 2010). The Department of Health and Human Services regulations are adopted pursuant to the authority contained in sections 2701 through 2763, 2791, and 2792 of the PHS Act (42 U.S.C. 300gg through 300gg–63, 300gg–91, and 300gg–92), as amended; and Title I of the Affordable Care Act, sections 1301– 1304, 1311–1312, 1321–1322, 1324, 1334, 1342–1343, 1401–1402, and 1412, Pub. L. 111–148, 124 Stat. 119 (42 U.S.C. 18021–18024, 18031–18032, 18041–18042, 18044, 18054, 18061, 18063, 18071, 18082, 26 U.S.C. 36B, and 31 U.S.C. 9701). E:\FR\FM\27AUP1.SGM 27AUP1 51126 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules Signed this 20th day of August 2014. John Dalrymple, Deputy Commissioner for Services and Enforcement, Internal Revenue Service. Signed this 20th day of August 2014. Phyllis C. Borzi, Assistant Secretary, Employee Benefits Security Administration. Department of Labor. Dated: August 19, 2014. Marilyn Tavenner, Administrator, Centers for Medicare & Medicaid Services. Approved: August 20, 2014. Sylvia M. Burwell, Secretary, Department of Health and Human Services. List of Subjects 26 CFR Part 54 Excise taxes, Health care, Health insurance, Pensions, Reporting and recordkeeping requirements. 29 CFR Part 2590 Continuation coverage, Disclosure, Employee benefit plans, Group health plans, Health care, Health insurance, Medical child support, Reporting and recordkeeping requirements. 45 CFR Part 147 Health care, Health insurance, Reporting and recordkeeping requirements, State regulation of health insurance. DEPARTMENT OF THE TREASURY Internal Revenue Service Accordingly, 26 CFR part 54 is proposed to be amended as follows: Paragraph 1. The authority citation for part 54 continues to read, in part, as follows: ■ Authority: 26 U.S.C. 7805 * * * Par. 2. Section 54.9815–2713A is amended by revising paragraph (a) to read as follows: ■ mstockstill on DSK4VPTVN1PROD with PROPOSALS § 54.9815–2713A Accommodations in connection with coverage of preventive health services. (a) Eligible organizations. An eligible organization is an organization that meets the criteria of paragraph (a)(1) through (3) of this section. (1) The organization opposes providing coverage for some or all of any contraceptive items or services required to be covered under § 54.9815– 2713(a)(1)(iv) on account of religious objections. (2)(i) The organization is organized and operates as a nonprofit entity and 17:09 Aug 26, 2014 Jkt 232001 DEPARTMENT OF LABOR Employee Benefits Security Administration For the reasons stated in the preamble, the Department of Labor proposes to amend 29 CFR part 2590 as follows: PART 2590—RULES AND REGULATIONS FOR GROUP HEALTH PLANS PART 54—PENSION EXCISE TAXES VerDate Mar<15>2010 holds itself out as a religious organization; or (ii) The organization is organized and operates as a closely held for-profit entity, as defined in paragraph (a)(4) of this section, and the entity’s objection to covering some or all of the contraceptive services on account of its owners’ sincerely held religious beliefs is made in accordance with the organization’s applicable rules of governance, consistent with state law. (3) The organization must self-certify in the form and manner specified by the Secretary or provide notice to the Secretary of Health and Human Services as described in paragraph (b) or (c) of this section. The organization must make such self-certification or notice available for examination upon request by the first day of the first plan year to which the accommodation in paragraph (b) or (c) of this section applies. The self-certification or notice must be executed by a person authorized to make the certification on behalf of the organization, and must be maintained in a manner consistent with the record retention requirements under section 107 of ERISA. (4) [Reserved] * * * * * 1. The authority citation for part 2590 is revised to read as follows: ■ Authority: 29 U.S.C. 1027, 1059, 1135, 1161–1168, 1169, 1181–1183, 1181 note, 1185, 1185a, 1185b, 1185d, 1191, 1191a, 1191b, and 1191c; sec. 101(g), Pub. L. 104– 191, 110 Stat. 1936; sec. 401(b), Pub. L. 105– 200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L. 110–343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111–148, 124 Stat. 119, as amended by Pub. L. 11–152, 124 Stat. 1029; Secretary of Labor’s Order 1– 2011, 77 FR 1088 (January 9, 2012). 2. Section 2590.715–2713A is amended by revising paragraph (a) to read as follows: ■ § 2590.715–2713A Accommodations in connection with coverage of preventive health services. (a) Eligible organizations. An eligible organization is an organization that meets the criteria of paragraph (a)(1) through (3) of this section. PO 00000 Frm 00012 Fmt 4702 Sfmt 4702 (1) The organization opposes providing coverage for some or all of any contraceptive items or services required to be covered under § 2590.715–2713(a)(1)(iv) on account of religious objections. (2)(i) The organization is organized and operates as a nonprofit entity and holds itself out as a religious organization; or (ii) The organization is organized and operates as a closely held for-profit entity, as defined in paragraph (a)(4) of this section, and the entity’s objection to covering some or all of the contraceptive services on account of its owners’ sincerely held religious beliefs is made in accordance with the organization’s applicable rules of governance, consistent with state law. (3) The organization must self-certify in the form and manner specified by the Secretary or provide notice to the Secretary of Health and Human Services as described in paragraph (b) or (c) of this section. The organization must make such self-certification or notice available for examination upon request by the first day of the first plan year to which the accommodation in paragraph (b) or (c) of this section applies. The self-certification or notice must be executed by a person authorized to make the certification on behalf of the organization, and must be maintained in a manner consistent with the record retention requirements under section 107 of ERISA. (4) [Reserved] * * * * * DEPARTMENT OF HEALTH AND HUMAN SERVICES For the reasons stated in the preamble, the Department of Health and Human Services proposes to amend 45 CFR subtitle A, part 147 as follows: PART 147—HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND INDIVIDUAL HEALTH INSRUANCE MARKETS 1. The authority citation for part 147 continues to read as follows: ■ Authority: Secs 2701 through 2763, 2791, and 2792 of the Public Health Service Act (42 U.S.C. 300gg through 300gg–63, 300gg–91, and 300gg–92), as amended. 2. Section 147.131 is amended by revising paragraphs (b) and (f) to read as follows: ■ § 147.131 Exemption and accommodation in connection with coverage of preventive health services. * * * * * (b) Eligible organizations. An eligible organization is an organization that E:\FR\FM\27AUP1.SGM 27AUP1 mstockstill on DSK4VPTVN1PROD with PROPOSALS Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules meets the criteria of paragraph (b)(1) through (3) of this section. (1) The organization opposes providing coverage for some or all of any contraceptive items or services required to be covered under § 147.130(a)(1)(iv) on account of religious objections. (2)(i) The organization is organized and operates as a nonprofit entity and holds itself out as a religious organization; or (ii) The organization is organized and operates as a closely held for-profit entity, as defined in paragraph (b)(4) of this section, and the entity’s objection to covering some or all of the contraceptive services on account of its owners’ sincerely held religious beliefs is made in accordance with the organization’s applicable rules of governance, consistent with state law. (3) The organization must self-certify in the form and manner specified by the Secretary or provide notice to the Secretary of Health and Human Services as described in paragraph (c) of this section. The organization must make such self-certification or notice available for examination upon request by the first day of the first plan year to which the accommodation in paragraph (c) of this section applies. The selfcertification or notice must be executed by a person authorized to make the certification on behalf of the organization, and must be maintained in a manner consistent with the record retention requirements under section 107 of ERISA. (4) [Reserved] * * * * * (f) Application to student health insurance coverage. The provisions of this section apply to student health insurance coverage arranged by an eligible organization that is an institution of higher education as defined in 20 U.S.C. 1002 in a manner comparable to that in which they apply to group health insurance coverage provided in connection with a group health plan established or maintained by an eligible organization that is an employer. In applying this section in the case of student health insurance coverage, a reference to ‘‘plan participants and beneficiaries’’ is a reference to student enrollees and their covered dependents. [FR Doc. 2014–20254 Filed 8–22–14; 3:30 pm] BILLING CODE 4830–01–P; 4510–029–P; 4120–01–P; 6325–64 VerDate Mar<15>2010 17:09 Aug 26, 2014 Jkt 232001 DEPARTMENT OF DEFENSE Office of the Secretary 32 CFR Part 199 [DOD–2006–HA–0207] RIN 0720–AB15 Civilian Health and Medical Program of the Uniformed Services (CHAMPUS); TRICARE Reserve Select; TRICARE Dental Program; Early Eligibility for TRICARE for Certain Reserve Component Members Office of the Secretary, DoD. Proposed rule. AGENCY: ACTION: TRICARE Reserve Select (TRS) is a premium-based TRICARE health plan available for purchase worldwide by qualified members of the Ready Reserve and by qualified survivors of TRS members. TRICARE Dental Program (TDP) is a premiumbased TRICARE dental plan available for purchase worldwide by qualified Service members. This proposed rule revises requirements and procedures for the TRS program to specify the appropriate actuarial basis for calculating premiums in addition to other minor clarifying administrative changes. For a member who is involuntarily separated from the Selected Reserve under other than adverse conditions this proposed rule provides a time-limited exception that allows TRS coverage in effect to continue for up to 180 days after the date on which the member is separated from the Selected Reserve and TDP coverage in effect to continue for no less than 180 days after the separation date. It also expands early TRICARE eligibility for certain Reserve Component members from a maximum of 90 days to a maximum of 180 days prior to activation in support of a contingency for more than 30 days. DATES: Submit comments on or before October 27, 2014. ADDRESSES: You may submit comments, identified by docket number or Regulation Identifier Number (RIN) number and title, by any of the following methods: Federal eRulemaking Portal: http:// www.regulations.gov. Follow the instructions for submitting comments. Mail: Federal Docket Management System Office, 4800 Mark Center Drive, East Tower, Suite 02G09, Alexandria, VA 22350–3100. Instructions: All submissions received must include the agency name and docket number or RIN for this Federal Register document. The general policy SUMMARY: PO 00000 Frm 00013 Fmt 4702 Sfmt 4702 51127 for comments and other submissions from members of the public is to make these submissions available for public viewing on the Internet at http:// www.regulations.gov as they are received without change, including any personal identifiers or contact information. FOR FURTHER INFORMATION CONTACT: Jody Donehoo, Defense Health Agency, TRICARE Health Plan Division, telephone (703) 681–0039. Questions regarding payment of specific claims under the TRICARE allowable charge method should be addressed to the appropriate TRICARE contractor. SUPPLEMENTARY INFORMATION: I. Introduction and Background This proposed rule addresses provisions of the National Defense Authorization Act for Fiscal Year 2009 (NDAA–09) (Pub. L. 110–417), the National Defense Authorization Act for Fiscal Year 2010 (NDAA–10) (Pub. L. 111–84), and the National Defense Authorization Act for Fiscal Year 2013 (NDAA–13) (Pub. L. 112–239). First, section 704 of NDAA–09 specifies that the appropriate actuarial basis for calculating premiums for TRS shall utilize the actual cost of providing benefits to members and their dependents during preceding calendar years. Second, section 702 of NDAA–10 expands early eligibility for Reserve Component members issued delayedeffective-date active duty orders from a maximum of 90 days to a maximum of 180 days prior to activation in support of a contingency for more than 30 days. Third, for a member who is involuntarily separated from the Selected Reserve under other than adverse conditions as characterized by the Secretary concerned, section 701 of NDAA–13 provides a time-limited exception that allows TRS coverage already in effect at time of separation to continue for up to 180 days after the date on which the member is separated from the Selected Reserve and TDP coverage already in effect at time of separation to continue for no less than 180 days after the separation date. This exception expires December 31, 2018. Finally, additional administrative clarifications have been made to 32 CFR 199.24, which implements TRS. II. Provisions of the Rule Regarding Early TRICARE Eligibility Section 199.3(b)(5) implements section 702 of NDAA–10, which specifies that, Reserve Component members issued delayed-effective-date orders for service in support of a E:\FR\FM\27AUP1.SGM 27AUP1

Agencies

[Federal Register Volume 79, Number 166 (Wednesday, August 27, 2014)]
[Proposed Rules]
[Pages 51118-51127]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-20254]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[REG 129786-14]
RIN 1545-BM39

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2590

RIN 1210-AB67

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 147

[CMS-9940-P]
RIN 0938-AS50


Coverage of Certain Preventive Services Under the Affordable Care 
Act

AGENCIES: Internal Revenue Service, Department of the Treasury; 
Employee Benefits Security Administration, Department of Labor; Centers 
for Medicare & Medicaid Services, Department of Health and Human 
Services.

ACTION: Proposed rules.

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SUMMARY: This document proposes a change to the definition of an 
eligible organization that can avail itself of an accommodation with 
respect to coverage of certain preventive services under section 2713 
of the Public Health Service Act (PHS Act), added by the Patient 
Protection and Affordable Care Act, as amended, and incorporated into 
the Employee Retirement Income Security Act of 1974 and the Internal 
Revenue Code.
    Section 2713 of the PHS Act requires coverage without cost sharing 
of certain preventive health services by non-grandfathered group health 
plans and health insurance coverage. Among these services are women's 
preventive health services, as specified in guidelines supported by the 
Health Resources and Services Administration (HRSA). As authorized by 
the current regulations, and consistent with the HRSA Guidelines, group 
health plans established or maintained by certain religious employers 
(and group health insurance coverage provided in connection with such 
plans) are exempt from the otherwise applicable requirement to cover 
certain contraceptive services. Additionally, under current 
regulations, accommodations are available with respect to the 
contraceptive coverage requirement for group health plans established 
or maintained by eligible organizations (and group health insurance 
coverage provided in connection with such plans), and student health 
insurance coverage arranged by eligible organizations that are 
institutions of higher education, that effectively exempt them from 
this requirement. The regulations establish a mechanism for separately 
furnishing payments for contraceptive services on behalf of 
participants and beneficiaries of the group health plans of eligible 
organizations that avail themselves of an accommodation, and enrollees 
and dependents of student health insurance coverage arranged by 
eligible organizations that are institutions of higher education that 
avail themselves of an accommodation.
    These rules propose and seek comments on potential changes to the 
definition of ``eligible organization'' in the Departments' regulations 
in light of the Supreme Court's decision in Burwell v. Hobby Lobby 
Stores, Inc., 134 S. Ct. 2751 (2014), to ensure that participants and 
beneficiaries in group health plans (and enrollees and dependents in 
student health insurance coverage arranged by institutions of higher 
education) obtain, without additional cost, coverage of the full range 
of Food and Drug Administration (FDA) approved contraceptive services, 
as prescribed by a health care provider, while respecting certain 
closely held for-profit entities' religion-based objections to 
contraceptive coverage. These proposed rules also seek comments on any 
additional steps the

[[Page 51119]]

government should take to help ensure coverage of the full range of 
FDA-approved contraceptives, as prescribed by a health care provider, 
without cost sharing, for participants and beneficiaries in group 
health plans of such entities (and enrollees and dependents in student 
health insurance coverage arranged by such entities that are 
institutions of higher education).

DATES: To be assured consideration, comments must be received at one of 
the addresses provided below, no later than 5 p.m. on October 21, 2014.

ADDRESSES: In commenting, please refer to file code CMS-9940-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 these 
regulations to http://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-9940-P, P.O. Box 8010, 
Baltimore, MD 21244-1850.
    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-9940-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 any of 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 an address indicated as appropriate 
for hand or courier delivery may be delayed and received after the 
close of the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: David Mlawsky, Centers for Medicare & 
Medicaid Services (CMS), Department of Health and Human Services (HHS), 
at (410) 786-1565; Amy Turner or Beth Baum, Employee Benefits Security 
Administration (EBSA), Department of Labor, at (202) 693-8335; Karen 
Levin, Internal Revenue Service (IRS), Department of the Treasury, at 
(202) 927-9639.
    Customer Service Information: Individuals interested in obtaining 
information from the Department of Labor concerning employment-based 
health coverage laws may call the EBSA Toll-Free Hotline at 1-866-444-
EBSA (3272) or visit the Department of Labor's Web site (www.dol.gov/ebsa). Information from HHS on private health insurance coverage can be 
found on CMS's Web site (www.cms.gov/cciio), and information on health 
care reform can be found at www.HealthCare.gov.

SUPPLEMENTARY INFORMATION:
    Inspection of Public Comments: All comments received before the 
close of the comment period will be available for viewing by the 
public, including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

I. Background

    The Patient Protection and Affordable Care Act (Pub. L. 111-148) 
was enacted on March 23, 2010. The Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152) was enacted on March 30, 
2010. These statutes are collectively known as the Affordable Care Act. 
The Affordable Care Act reorganizes, amends, and adds to the provisions 
of part A of title XXVII of the Public Health Service Act (PHS Act) 
relating to group health plans and health insurance issuers in the 
group and individual markets. The Affordable Care Act adds section 
715(a)(1) to the Employee Retirement Income Security Act of 1974 
(ERISA) and section 9815(a)(1) to the Internal Revenue Code (Code) to 
incorporate the provisions of part A of title XXVII of the PHS Act into 
ERISA and the Code, and to make them applicable to group health plans 
and health insurance issuers providing health insurance coverage in 
connection with group health plans. The sections of the PHS Act 
incorporated into ERISA and the Code are sections 2701 through 2728.
    Section 2713 of the PHS Act, as added by the Affordable Care Act 
and incorporated into ERISA and the Code, requires that non-
grandfathered group health plans and health insurance issuers offering 
non-grandfathered group or individual health insurance coverage provide 
coverage of certain specified preventive services without cost sharing, 
including under paragraph (a)(4), benefits for certain women's 
preventive health services as provided for in comprehensive guidelines 
supported by the Health Resources and Services Administration (HRSA). 
On August 1, 2011, HRSA adopted and released guidelines for women's 
preventive health services (HRSA Guidelines) based on recommendations 
of the independent Institute of Medicine. As relevant here, the HRSA 
Guidelines include all Food and Drug Administration (FDA)-approved 
contraceptives, sterilization procedures, and patient education and 
counseling for women with reproductive capacity, as prescribed by a 
health care provider (collectively, contraceptive services).\1\ Except 
as discussed later in this section, non-grandfathered group health 
plans

[[Page 51120]]

and health insurance coverage are required to provide coverage 
consistent with the HRSA Guidelines, without cost sharing, for plan 
years (or, in the individual market, policy years) beginning on or 
after August 1, 2012.\2\
---------------------------------------------------------------------------

    \1\ The HRSA Guidelines for Women's Preventive Services do not 
include services relating to a man's reproductive capacity, such as 
vasectomies and condoms.
    \2\ Interim final regulations published by the Departments on 
July 19, 2010, generally provide that plans and issuers must cover a 
newly recommended preventive service starting with the first plan 
year (or, in the individual market, policy year) that begins on or 
after the date that is one year after the date on which the new 
recommendation is issued. 26 CFR 54.9815-2713T(b)(1); 29 CFR 
2590.715-2713(b)(1); 45 CFR 147.130(b)(1).
---------------------------------------------------------------------------

    Interim final regulations implementing section 2713 of the PHS Act 
were published on July 19, 2010 (75 FR 41726) (2010 interim final 
regulations). On August 1, 2011, the Departments of Health and Human 
Services (HHS), Labor, and the Treasury (collectively, the Departments) 
amended the 2010 interim final regulations to provide HRSA with 
authority to exempt group health plans established or maintained by 
certain religious employers (and group health insurance coverage 
provided in connection with such plans) from the requirement to cover 
contraceptive services consistent with the HRSA Guidelines (76 FR 
46621) (2011 amended interim final regulations).\3\ On the same date, 
HRSA exercised this authority in the HRSA Guidelines to exempt group 
health plans established or maintained by these religious employers 
(and group health insurance coverage provided in connection with such 
plans) from the HRSA Guidelines with respect to contraceptive 
services.\4\ The 2011 amended interim final regulations specified that, 
for purposes of this exemption, a religious employer was one that: (1) 
Has the inculcation of religious values as its purpose; (2) primarily 
employs persons who share its religious tenets; (3) primarily serves 
persons who share its religious tenets; and (4) is a nonprofit 
organization described in section 6033(a)(1) and (a)(3)(A)(i) or (iii) 
of the Code. Section 6033(a)(3)(A)(i) and (iii) of the Code refers to 
churches, their integrated auxiliaries, and conventions or associations 
of churches, as well as to the exclusively religious activities of any 
religious order. Final regulations issued on February 10, 2012, adopted 
the definition of religious employer in the 2011 amended interim final 
regulations without modification (2012 final regulations).\5\
---------------------------------------------------------------------------

    \3\ The 2011 amended interim final regulations were issued and 
effective on August 1, 2011, and published in the Federal Register 
on August 3, 2011 (76 FR 46621).
    \4\ HRSA subsequently amended the HRSA Guidelines to reflect the 
simplified definition of ``religious employer'' contained in the 
July 2013 final regulations. 78 FR 39870 (July 2, 2013) (discussed 
below), effective August 1, 2013.
    \5\ The 2012 final regulations were published in the Federal 
Register on February 15, 2012 (77 FR 8725).
---------------------------------------------------------------------------

    Contemporaneous with the issuance of the 2012 final regulations, 
HHS, with the agreement of the Departments of Labor and the Treasury, 
issued guidance establishing a temporary safe harbor from enforcement 
of the contraceptive coverage requirement by the Departments for group 
health plans established or maintained by certain nonprofit 
organizations with religious objections to contraceptive coverage (and 
group health insurance coverage provided in connection with such 
plans).\6\ The guidance provided that the temporary enforcement safe 
harbor would remain in effect until the first plan year beginning on or 
after August 1, 2013. At the same time, the Departments committed to 
rulemaking to achieve the goals of providing coverage of recommended 
preventive services, including contraceptive services, without cost 
sharing, while simultaneously ensuring that certain additional 
nonprofit organizations with religious objections to contraceptive 
coverage would not have to contract, arrange, pay, or refer for such 
coverage.
---------------------------------------------------------------------------

    \6\ Guidance on the Temporary Enforcement Safe Harbor for 
Certain Employers, Group Health Plans, and Group Health Insurance 
Issuers with Respect to the Requirement to Cover Contraceptive 
Services Without Cost Sharing Under Section 2713 of the Public 
Health Service Act, Section 715(a)(1) of the Employee Retirement 
Income Security Act, and Section 9815(a)(1) of the Internal Revenue 
Code (originally issued on February 10, 2012, and reissued on August 
15, 2012 and June 28, 2013), available at: http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/preventive-services-guidance-6-28-2013.pdf. The guidance clarified, among other things, 
that plans that took some action before February 10, 2012, to try, 
without success, to exclude or limit contraceptive coverage were not 
precluded from eligibility for the safe harbor. The temporary 
enforcement safe harbor was also available to student health 
insurance coverage arranged by nonprofit institutions of higher 
education with religious objections to contraceptive coverage that 
met the conditions set forth in the guidance. See ``Student Health 
Insurance Coverage,'' 77 FR16457 (Mar. 21, 2012).
---------------------------------------------------------------------------

    On March 21, 2012, the Departments published an advance notice of 
proposed rulemaking (ANPRM) that described and solicited comments on 
possible approaches to achieve these goals (77 FR 16501).
    On February 6, 2013, following review of the comments on the ANPRM, 
the Departments published proposed regulations at 78 FR 8456 (proposed 
regulations). The regulations proposed to simplify and clarify the 
definition of ``religious employer'' for purposes of the religious 
employer exemption. The regulations also proposed accommodations for 
group health plans established or maintained or arranged by certain 
nonprofit religious organizations with religious objections to 
contraceptive coverage (and group health insurance coverage provided in 
connection with such plans). These organizations were referred to as 
``eligible organizations.''
    The regulations proposed that, in the case of an insured group 
health plan established or maintained by an eligible organization, the 
health insurance issuer providing group health insurance coverage in 
connection with the plan would be required to assume sole 
responsibility for providing contraceptive coverage to plan 
participants and beneficiaries without cost sharing, premium, fee, or 
other charge to plan participants or beneficiaries or to the eligible 
organization or its plan. The Departments proposed a comparable 
accommodation with respect to student health insurance coverage 
arranged by eligible organizations that are institutions of higher 
education.
    In the case of a self-insured group health plan established or 
maintained by an eligible organization, the proposed regulations 
presented potential approaches under which the third party 
administrator of the plan would provide or arrange for a third party to 
provide contraceptive coverage to plan participants and beneficiaries 
without cost sharing, premium, fee, or other charge to plan 
participants or beneficiaries or to the eligible organization or its 
plan. An issuer (or its affiliate) would be able to offset the costs 
incurred by the third party administrator and the issuer in the course 
of arranging and providing such coverage by claiming an adjustment in 
the Federally-facilitated Exchange (FFE) user fee.
    The Departments received over 400,000 comments (many of them 
standardized form letters) in response to the proposed regulations. 
After consideration of the comments, the Departments published final 
regulations on July 2, 2013 at 78 FR 39870 (July 2013 final 
regulations). The July 2013 final regulations simplified and clarified 
the definition of religious employer for purposes of the religious 
employer exemption and established accommodations for health coverage 
established or maintained or arranged by eligible organizations. A 
contemporaneously re-issued HHS guidance document extended the 
temporary safe harbor from enforcement of the contraceptive coverage 
requirement by the Departments to encompass plan years beginning on or 
after August 1, 2013, and before January 1, 2014. This guidance 
included a form

[[Page 51121]]

to be used by an organization during this temporary period to self-
certify that its plan qualified for the temporary enforcement safe 
harbor. In addition, HHS and the Department of Labor (DOL) issued a 
self-certification form, EBSA Form 700, to be executed by an 
organization seeking to be treated as an eligible organization for 
purposes of an accommodation under the July 2013 final regulations. 
This self-certification form was provided for use with the 
accommodation under the July 2013 final regulations, after the 
expiration of the temporary enforcement safe harbor (that is, for plan 
years beginning on or after January 1, 2014).
    On June 30, 2014, the Supreme Court ruled in the case of Burwell v. 
Hobby Lobby Stores, Inc. that, under the Religious Freedom Restoration 
Act of 1993 (RFRA), the requirement to provide contraceptive coverage 
could not be applied to the closely held for-profit corporations before 
the Court because their owners had religious objections to providing 
such coverage, and because the Government's goal of guaranteeing 
coverage for contraceptive methods without cost sharing could be 
achieved in a less restrictive manner by offering such closely held 
for-profit entities the accommodation the Government already provided 
to religious nonprofit organizations with religious objections to 
contraceptive coverage. After describing this accommodation, the Court 
concluded that the accommodation ``does not impinge on the plaintiffs' 
religious belief that providing insurance coverage for the 
contraceptives at issue here violates their religion, and it serves 
HHS' stated interests equally well.''
    On July 3, 2014, the Supreme Court issued an interim order in 
connection with an application for an injunction pending appeal in 
Wheaton College v. Burwell, 134 S. Ct. 2806 (2014) (the Wheaton order), 
in which Wheaton College challenged under RFRA the requirement in the 
July 2013 final regulations that an eligible organization invoking the 
accommodation send EBSA Form 700 to the insurance issuer or third party 
administrator. The Court's order stated that, ``[i]f [Wheaton College] 
informs the Secretary of Health and Human Services in writing that it 
is a nonprofit organization that holds itself out as religious and has 
religious objections to providing coverage for contraceptive services, 
the [Departments of Labor, Health and Human Services, and the Treasury] 
are enjoined from enforcing against [Wheaton College]'' certain 
provisions of the Affordable Care Act and related regulations requiring 
coverage without cost sharing of certain contraceptive services 
``pending final disposition of appellate review.'' 134 S. Ct. at 2807. 
The order stated that Wheaton College need not use EBSA Form 700 or 
send a copy of the executed form to its health insurance issuers or 
third party administrators to meet the condition for this injunctive 
relief. Id. The Court also stated that its interim order neither 
affected ``the ability of [Wheaton College's] employees and students to 
obtain, without cost, the full range of FDA approved contraceptives,'' 
nor precluded the Government from relying on the notice by Wheaton 
College ``to facilitate the provision of full contraceptive coverage 
under the Act.'' Id. The Court's order further stated that it ``should 
not be construed as an expression of the Court's views on the merits'' 
of Wheaton College's challenge to the accommodations. Id.
    This notice of proposed rulemaking proposes and invites comments on 
changes to the definition of an eligible organization in the 
Departments' regulations in light of the Supreme Court's decision in 
Hobby Lobby. It also solicits comments on any other steps the 
Government should take to help ensure that participants and 
beneficiaries in group health plans or enrollees and dependents in 
student health insurance coverage arranged by institutions of higher 
education are able to obtain, without cost, the full range of FDA-
approved contraceptives, as prescribed by a health care provider, 
without cost sharing, if enrolled in a group health plan or insurance 
coverage sponsored or arranged by a closely held for-profit entity that 
objects on religious grounds to covering contraceptive services. Given 
the importance of this coverage, initiating this proposed rulemaking 
now allows for public input and a pathway toward helping to ensure 
access to contraceptive coverage.
    The Departments are publishing contemporaneously with this notice 
of proposed rulemaking interim final regulations in light of the 
Supreme Court's interim order in connection with the application for an 
injunction in the pending case of Wheaton College v. Burwell. The 
interim final regulations are published elsewhere in this edition of 
the Federal Register.

II. Provisions of the Proposed Regulations

    As stated above, on June 30, 2014, the Supreme Court ruled in 
Burwell v. Hobby Lobby Stores, Inc. that, under RFRA, the requirement 
to provide contraceptive coverage could not be applied to certain 
closely held for-profit organizations. The individual plaintiffs in 
Hobby Lobby and the associated case Conestoga Wood Specialties Corp. v. 
Burwell run closely held businesses that are family-owned and operated 
and that have adopted statements of mission or purpose to conduct the 
companies' affairs in accordance with the owners' shared religious 
beliefs and values. See 134 S. Ct. at 2764-2766.
    In light of the Court's decision in Hobby Lobby, the Departments 
propose to amend the definition of an eligible organization under the 
July 2013 final regulations to include a closely held for-profit entity 
that has a religious objection to providing coverage for some or all of 
the contraceptive services otherwise required to be covered. Under 
these proposed rules, a qualifying closely held for-profit entity that 
has a religious objection to providing coverage for some or all of the 
contraceptive services otherwise required to be covered would not be 
required to contract, arrange, pay or refer for contraceptive coverage; 
instead, payments for contraceptive services provided to participants 
and beneficiaries in the eligible organization's plan would be provided 
separately by an issuer (if the qualifying entity sponsors an insured 
group health plan, or if the qualifying entity is an institution of 
higher education that arranges student health insurance coverage) or 
arranged separately by a third party administrator (if the qualifying 
entity is self-insured), consistent with the July 2013 final 
regulations as amended by interim final regulations published in this 
same edition of the Federal Register. This proposed change would extend 
to participants and beneficiaries in group health plans established or 
maintained by certain closely held for-profit entities with religious 
objections to contraceptive coverage, and to enrollees and dependents 
enrolled in student health insurance coverage arranged by certain 
closely held for-profit entities that are institutions of higher 
education with religious objections to contraceptive coverage, the 
same, separate payments for contraceptive services provided to 
participants and beneficiaries of group health plans (and enrollees and 
dependents in student health insurance) established or maintained by 
certain nonprofit religious entities with such objections, while 
similarly respecting the religious objections of the closely held for-
profit entities.

Defining a Closely Held For-Profit Entity

    In considering inclusion of certain closely held for-profit 
entities among the eligible organizations that may avail themselves of 
the accommodations, the

[[Page 51122]]

Departments are considering and seek comment on how to define a 
qualifying closely held for-profit entity. In Hobby Lobby, the Supreme 
Court noted that the companies at issue in the cases were not publicly 
traded and were owned and controlled by members of a single family and 
that the companies were operated in accordance with the owners' shared 
religious beliefs and values. 134 S. Ct. at 2764-2766.
    In light of the Supreme Court's decision, the Departments are 
proposing for comment two possible approaches to defining a qualifying 
closely held for-profit entity, although the Departments invite 
comments on other approaches as well. In common understanding, a 
closely held corporation--a term often used interchangeably with a 
``close'' or ``closed'' corporation--is a corporation the stock of 
which is owned by a small number of persons and for which no active 
trading market exists. See, for example, American Law Institute, 
Principles of Corporate Governances section 1.06; Black's Law 
Dictionary (9th ed. 2009) (``close corporation''); Del. Code Tit. 8, 
Ch.1, Sub. Ch. 14 (``close corporation''). The examples below are by 
way of illustration, and the maximum number of shareholders specified 
in particular examples would not necessarily be borrowed as the 
standard in this context.
    Under the first proposed approach, a qualifying closely held for-
profit entity would be an entity where none of the ownership interests 
in the entity is publicly traded and where the entity has fewer than a 
specified number of shareholders or owners.
    There is precedent in other areas of federal law for limiting the 
definition of closely held entities in this context to those with a 
relatively small number of owners. For example, subchapter S treatment 
under section 1361 of the Code is currently limited to corporations 
with 100 or fewer shareholders who are generally individuals and has in 
the past been limited to corporations with 10 or fewer shareholders. 
Similarly, certain favorable estate tax treatment is limited to 
businesses with 45 or fewer partners or shareholders under section 6166 
of the Code.
    Under a second, alternative approach, a qualifying closely held 
entity would be a for-profit entity in which the ownership interests 
are not publicly traded, and in which a specified fraction of the 
ownership interest is concentrated in a limited and specified number of 
owners. This approach also has precedent in federal law. For example, 
certain rules governing the taxation of real estate investment trusts, 
passive activity losses, and certain income from foreign entities are 
limited to organizations that are more than 50 percent owned by or for 
not more than five individuals. See, for example, sections 856(h), 
542(a)(2), and 469(j)(1) of the Code and regulations under these 
sections.
    These approaches might serve to identify for-profit entities 
controlled and operated by individual owners who likely have 
associational ties, are personally identified with the entity, and can 
be regarded as conducting personal business affairs through the entity. 
These appear to be the types of entities the Court sought to 
accommodate in Hobby Lobby. There may also be useful definitions or 
principles in state laws governing close corporations, or other areas 
of law.
    The Departments invite comments on the appropriate scope of the 
definition of a qualifying closely held for-profit entity, including 
but not limited to whether a closely held for-profit entity should be 
defined with reference to a maximum number of owners (and, if so, what 
that maximum number should be) or a minimum concentration of ownership 
(and if so, what that concentration should be) or with reference to 
additional or other criteria.
    It would be helpful for comments to address how the selection of a 
particular approach can be informed by the purposes of the Affordable 
Care Act and the contraceptive coverage requirement; the range of 
business structures in the Nation's economy; background principles of 
federal and state law applicable to business entities and the 
relationship of the entities' owners to the entities; other related or 
analogous areas of the law; experience regarding accommodations of 
religion and religious beliefs in various contexts and the rationales 
for the scope and operation of such accommodations; Hobby Lobby and 
other court decisions that shed light on these issues; and any other 
relevant matters.

Religious Objection To Providing Coverage for Some or All of the 
Contraceptive Services Required To Be Covered.

    In Hobby Lobby, the Supreme Court held that the closely held for-
profit corporations at issue in that case could opt not to provide 
otherwise required contraceptive coverage if doing so runs counter to 
their owners' sincerely held religious beliefs. These proposed 
regulations would require that the qualifying closely held for-profit 
entity's objection, based on its owners' sincerely held religious 
beliefs, to covering some or all of the contraceptive services 
otherwise required to be covered, be made in accordance with the 
entity's applicable rules of governance. As discussed by the Court in 
Hobby Lobby, state corporate law dictates how a corporation may 
establish its governing structure.\7\
---------------------------------------------------------------------------

    \7\ 134 S. Ct. at 2774-2775.
---------------------------------------------------------------------------

    Under the Departments' proposal, valid corporate action (or similar 
action by a business that is not organized as a corporation) taken in 
accordance with the entity's governing structure in accordance with 
state law, stating its owners' religious objection to providing some or 
all contraceptive coverage otherwise required to be provided, can serve 
to establish that a closely held for-profit entity has religious 
objections to providing such coverage. In determining whether a closely 
held for-profit entity's decision-making process followed the necessary 
rules and procedures, the laws of the state in which the entity is 
incorporated, or, for non-corporate entities, organized, would govern. 
The Departments invite comments on whether to require documentation of 
the decision-making process and disclosure of the decision.
    The Departments seek comment on this approach to determining that a 
closely held for-profit entity opposes providing coverage for some or 
all of the contraceptive services otherwise required to be covered on 
account of the owners' religious objections.

Other Potential Changes

    The Departments seek comment on other potential changes to the July 
2013 final regulations in light of the proposed change to the 
definition of eligible organization. In particular, the Departments 
seek comment on applying the approach set forth in the July 2013 final 
regulations in the context of the expanded definition of eligible 
organization. The July 2013 final regulations provide for separate 
payments for contraceptive services for participants and beneficiaries 
in self-insured group health plans of eligible organizations in a 
manner that enables these organizations to completely separate 
themselves from administration and payment for contraceptive coverage. 
Specifically, the third party administrator must provide or arrange 
such payments, and can seek reimbursement for such costs (including an 
allowance for administrative costs and margin) by making an arrangement 
with a participating issuer--that is, an issuer offering coverage 
through a Federally-facilitated Exchange (FFE). The participating 
issuer can receive an

[[Page 51123]]

adjustment to its FFE user fees to finance such costs.
    The Departments seek comment on the likely number of closely held 
for-profit entities that would seek an accommodation, the number of 
participants and beneficiaries (or in the case of student health 
insurance coverage, enrollees and dependents) in the plans of such 
entities, and the number of issuers and third-party administrators 
affected by the proposed rules. Finally, the Departments seek comment 
on whether any other aspects of the accommodations in the July 2013 
final regulations, including relevant definitions, should be modified 
in light of the proposed addition of closely held for-profit entities 
with religious objections to contraceptive coverage to the definition 
of eligible organization.
    These proposed regulations, if finalized as proposed, would require 
a small number of conforming changes to cross-references in the 
regulations. Any such necessary conforming changes would be 
incorporated into final regulations.

III. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. The Departments will consider all 
comments we receive by the date and time specified in the ``DATES'' 
section of this preamble, and, when we proceed with a subsequent 
document, we will respond to the comments in the preamble to that 
document.

IV. Economic Impact and Paperwork Burden

A. Executive Orders 12866 and 13563--Department of Health and Human 
Services and Department of Labor

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, and public 
health and safety effects; distributive impacts; and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility.
    Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a 
regulation: (1) Having an annual effect on the economy of $100 million 
or more in any 1 year, or adversely and materially affecting a sector 
of the economy, productivity, competition, jobs, the environment, 
public health or safety, or state, local, or tribal governments or 
communities (also referred to as ``economically significant''); (2) 
creating a serious inconsistency or otherwise interfering with an 
action taken or planned by another agency; (3) materially altering the 
budgetary impacts of entitlement grants, user fees, or loan programs or 
the rights and obligations of recipients thereof; or (4) raising novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.
    A regulatory impact analysis must be prepared for major rules with 
economically significant effects ($100 million or more in any 1 year), 
and an ``economically significant'' regulatory action is subject to 
review by the Office of Management and Budget (OMB). The Departments 
anticipate that these proposed regulations are not likely to have 
economic impacts of $100 million or more in any 1 year, and therefore, 
do not meet the definition of ``economically significant'' under 
Executive Order 12866.
1. Need for Regulatory Action
    The proposed rules would modify the July 2013 final regulations in 
light of the Supreme Court's decision in Hobby Lobby. That decision 
held that a closely held for-profit corporation is exempt from the 
requirement to provide contraceptive coverage if its owners have 
religious objections to such coverage, because there is a less 
restrictive means of furthering the law's interests, namely the 
accommodation the Government already provided to nonprofit religious 
organizations with such objections. Contraceptive coverage is crucial 
to women's health and equality for a number of reasons, including but 
not limited to the psychological toll and compromised financial 
position, and adverse health consequences, that can result from 
unplanned or unwanted pregnancies. As documented in a report of the 
Institute of Medicine, women experiencing an unintended pregnancy may 
not immediately be aware that they are pregnant, and thus delay 
prenatal care. They also may not be as motivated to discontinue 
behaviors that pose pregnancy-related risks (for example, smoking, 
consumption of alcohol).\8\ Studies show a greater risk of preterm 
birth and low birth weight among unintended pregnancies compared with 
pregnancies that were planned.\9\ Contraceptives also have medical 
benefits for women who are contraindicated for pregnancy, and there are 
demonstrated preventive health benefits from contraceptives relating to 
conditions other than pregnancy.\10\ In addition, there are significant 
cost savings to employers from the coverage of contraceptives.\11\ 
Providing this coverage to participants and beneficiaries affected by 
the Supreme Court decision is a priority.
---------------------------------------------------------------------------

    \8\ Inst. Of Med., Clinical Preventive Services for Women: 
Closing the Gaps, Wash., DC: Nat'l Acad. Press, 2011, at p. 16.
    \9\ Gipson, J.D. et al., The Effects of Unintended Pregnancy on 
Infant, Child and Parental Health: A Review of the Literature, 
Studies on Family Planning, 2008, 39(1):18-38.
    \10\ Inst. Of Med., Clinical Preventive Services for Women: 
Closing the Gaps, Wash., DC: Nat'l Acad. Press, 2011, at p. 107.
    \11\ See discussion at 77 FR 8727.
---------------------------------------------------------------------------

2. Anticipated Effects
    The Departments expect that these proposed regulations would not 
result in any additional significant burden on or costs to the affected 
entities.

B. Special Analyses--Department of the Treasury

    For purposes of the Department of the Treasury, it has been 
determined that this proposed rule is not a significant regulatory 
action as defined in Executive Order 12866, as supplemented by 
Executive Order 13563. Therefore, a regulatory assessment is not 
required. It also has been determined that section 553(b) of the 
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to 
this proposed rule. Pursuant to the Regulatory Flexibility Act (5 
U.S.C. chapter 6), it is hereby certified that this proposed rule will 
not have a significant economic impact on a substantial number of small 
entities. This certification is based on the fact that the regulations 
merely propose to modify the definition of eligible organization to 
include certain closely held for-profit entities. This modification, if 
adopted, would not increase costs to or burdens on the affected 
organizations. Pursuant to section 7805(f) of the Code, these 
regulations have been submitted to the Chief Counsel for Advocacy of 
the Small Business Administration for comment on their impact on small 
business.

C. Paperwork Reduction Act--Department of Health and Human Services

    Under the Paperwork Reduction Act of 1995, we are required to 
provide 60-day notice in the Federal Register and solicit public 
comment before a collection of information requirement is

[[Page 51124]]

submitted to the Office of Management and Budget (OMB) for review and 
approval. In order to fairly evaluate whether an information collection 
should be approved by OMB, section 3506(c)(2)(A) of the Paperwork 
Reduction Act of 1995 requires that we solicit comment on the following 
issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    We are soliciting public comment on each of these issues for the 
following sections of this document that contain information collection 
requirements (ICRs):
    The 2013 final regulations require an eligible organization that 
seeks an accommodation to self-certify that it meets the definition of 
an eligible organization using the EBSA Form 700 and providing it 
directly to each third party administrator or issuer under the plan 
that would otherwise arrange for or provide the covered contraceptive 
services. The interim final regulations being published 
contemporaneously with these proposed regulations continue to allow 
such eligible organizations to use EBSA Form 700, as set forth in the 
2013 final regulations and guidance. In addition, the interim final 
regulations permit an alternative process, consistent with the Supreme 
Court's interim order in Wheaton College, under which an eligible 
organization may notify HHS in writing of its religious objection to 
coverage of all or a subset of contraceptive services.
    These proposed regulations do not change the requirement that an 
eligible organization that seeks accommodation self-certifies that it 
meets the definition of an eligible organization, either using the EBSA 
Form 700 method of self-certification or the alternative notice to HHS 
process.
    HHS is anticipating that 71 for-profit organizations will seek an 
accommodation. This is based on the number of plaintiffs that are for-
profit employers in recent litigation objecting on religious grounds to 
the provision of contraceptive services. We seek comments on this 
estimate and welcome any data that may assist us in estimating the 
number of entities affected by this provision. For each eligible 
organization it is assumed that, clerical staff will gather and enter 
the necessary information, send the self-certification or the notice to 
its issuer(s) or third party administrator(s) or to HHS electronically 
and retain a copy for recordkeeping, a manager and legal counsel will 
review it, and a senior executive will execute it. It is estimated that 
an organization will need approximately 50 minutes (30 minutes of 
clerical labor at a cost of $30.00 per hour, 10 minutes for a manager 
at a cost of $102 per hour, 5 minutes for legal counsel at a cost of 
$127 per hour, and 5 minutes for a senior executive at a cost of $121 
per hour) to execute the self-certification. The certification may be 
electronically transmitted to the issuer or to HHS at minimal cost, but 
a cost burden of $38.34 is estimated for a paper filing calculated with 
5 cents per page printing and material costs and 49 cents postage 
costs. Therefore, the total one-time burden for preparing and providing 
the information in the self-certification is estimated to be 
approximately $53 for each eligible organization.
    Based on this estimate of 71 affected entities and the individual 
burden estimate of $53, we estimate the hour burden to be 59.2 hours 
with an equivalent cost of $3736 and a paper filing cost burden of 
$38.34. As the Department of Labor and the Department of Health and 
Human Services share jurisdiction they are splitting the hour burden so 
each will account for 29.6 burden hours and a cost burden of $19.17. We 
welcome comments on any aspect of this burden estimate.
    If you comment on these information collection and recordkeeping 
requirements, please submit your comments electronically as specified 
in the ADDRESSES section of this proposed rule.
    Comments must be received on/by October 27, 2014.

D. Paperwork Reduction Act--Department of Labor

    As discussed above, the proposed regulations would revise the 
definition of eligible organization to include qualifying closely held 
for-profit entities. This action would amend the EBSA Form 700 
information collection request (ICR), which is approved under OMB 
Control number 1210-NEW to allow qualified closely held for-profit 
entities to avail themselves of the accommodation by self-certifying 
that they meet the definition of an eligible organization, either using 
the EBSA Form 700 method of self-certification or the alternative 
notice to HHS process under the contemporaneous interim final 
regulations.
     Consistent with the HHS analysis presented above, DOL 
estimates that there will be 71 additional entities that would utilize 
the accommodation. The Departments are soliciting comments for 60 days 
regarding the likely number of additional entities seeking an 
accommodation, the number of participants and beneficiaries in the 
plans of such organizations, and the number of issuers and third party 
administrators impacted by the proposed regulations. The Departments 
will submit a copy of these proposed rules to OMB in accordance with 44 
U.S.C. 3507(d) for review of the proposed ICRs. The Departments and OMB 
are particularly interested in comments that:
     Evaluate whether the collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the collection of information, including the validity of the 
methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, for example, by 
permitting electronic submission of responses.
    Comments should be sent to the Office of Information and Regulatory 
Affairs, Attention: Desk Officer for the Employee Benefits Security 
Administration either by Fax to (202) 395-5806 or by email to 
oirasubmission@omb.eop.gov. A copy of the proposed ICRs may be 
obtained by contacting the PRA addressee: G. Christopher Cosby, Office 
of Policy and Research, Department of Labor, Employee Benefits Security 
Administration, 200 Constitution Avenue NW., Room N-5718, Washington, 
DC 20210; telephone: (202) 693-8410; Fax: (202) 219-4745 (please note 
that these numbers are not toll-free numbers); email: ebsa.opr@dol.gov. 
Proposed ICRs submitted to OMB also are available at www.reginfo.gov 
(http://www.reginfo.gov/public/do/PRAMain).
    The Departments expect that qualified closely held for-profit 
entities will spend the same time (and incur the same cost) to prepare 
and send the EBSA Form 700 or the notification to the Secretary of HHS 
as other eligible

[[Page 51125]]

organizations under the existing ICR (approximately 50 minutes in 
preparation time and $0.54 mailing costs). The Departments note that 
persons are not required to respond to, and generally are not subject 
to any penalty for failing to comply with, an ICR unless the ICR has a 
valid OMB control number. The paperwork burden estimates are summarized 
as follows:
    Type of Review: Revised Collection.
    Agencies: Employee Benefits Security Administration, Department of 
Labor.
    Title: EBSA Form 700.
    OMB Number: 1210-NEW.
    Affected Public: Business or other for profit entity.
    Total Respondents: 71.
    Total Responses: 71.
    Frequency of Response: Once, Variable.
    Estimated Total Annual Burden Hours: 59 hours (DOL 29.5 hours, HHS 
29.5 hours).
    Estimated Total Annual Burden Cost: $38 (DOL $19, HHS $19).

V. Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4), as well as Executive Order 12875, these proposed regulations do 
not include any federal mandate that may result in expenditures by 
state, local, or tribal governments, nor do they include any federal 
mandates that may impose an annual burden of $100 million, adjusted for 
inflation, or more on the private sector.\12\
---------------------------------------------------------------------------

    \12\ In 2014, that threshold level is approximately $141 
million.
---------------------------------------------------------------------------

VI. Federalism--Department of Health and Human Services and Department 
of Labor

    Executive Order 13132 outlines fundamental principles of 
federalism, and requires the adherence to specific criteria by federal 
agencies in the process of their formulation and implementation of 
policies that have ``substantial direct effects'' on states, the 
relationship between the federal government and states, or the 
distribution of power and responsibilities among the various levels of 
government. Federal agencies promulgating regulations that have these 
federalism implications must consult with state and local officials, 
and describe the extent of their consultation and the nature of the 
concerns of state and local officials in the preamble to the 
regulation.
    In the Departments' view, these proposed regulations have 
federalism implications, but the federalism implications are 
substantially mitigated because, with respect to health insurance 
issuers, 45 states are either enforcing the requirements related to 
coverage of specified preventive services (including contraception) 
without cost sharing pursuant to state law or otherwise are working 
collaboratively with HHS to ensure that issuers meet these standards. 
In five states, HHS ensures that issuers comply with these 
requirements. Therefore, the proposed regulations are not likely to 
require substantial additional oversight of states by HHS.
    In general, section 514 of ERISA provides that state laws are 
superseded to the extent that they relate to any covered employee 
benefit plan, and preserves state laws that regulate insurance, 
banking, or securities. ERISA also prohibits states from regulating a 
covered plan as an insurance or investment company or bank. The Health 
Insurance Portability and Accountability Act of 1996 (HIPAA) added a 
new preemption provision to ERISA (as well as to the PHS Act) narrowly 
preempting state requirements on group health insurance coverage. 
States may continue to apply state law requirements but not to the 
extent that such requirements prevent the application of the federal 
requirement that group health insurance coverage provided in connection 
with certain group health plans provide coverage for specified 
preventive services without cost sharing. HIPAA's Conference Report 
states that the conferees intended the narrowest preemption of state 
laws with regard to health insurance issuers (H.R. Conf. Rep. No. 104-
736, 104th Cong. 2d Session 205, 1996). State insurance laws that are 
more stringent than the federal requirement are unlikely to ``prevent 
the application of'' the preventive services coverage provision, and 
therefore are unlikely to be preempted. Accordingly, states have 
significant latitude to impose requirements on health insurance issuers 
that are more restrictive than those in federal law.
    Guidance conveying this interpretation was published in the Federal 
Register on April 8, 1997 (62 FR 16904) and December 30, 2004 (69 FR 
78720), and these proposed regulations implement the preventive 
services coverage provision's minimum standards and do not 
significantly reduce the discretion given to states under the statutory 
scheme.
    The PHS Act provides that states may enforce the provisions of 
title XXVII of the PHS Act as they pertain to issuers, but that the 
Secretary of HHS will enforce any provisions that a state does not have 
authority to enforce or that a state has failed to substantially 
enforce. When exercising its responsibility to enforce provisions of 
the PHS Act, HHS works cooperatively with the state to address the 
state's concerns and avoid conflicts with the state's exercise of its 
authority. HHS has developed procedures to implement its enforcement 
responsibilities, and to afford states the maximum opportunity to 
enforce the PHS Act's requirements in the first instance. In compliance 
with Executive Order 13132's requirement that agencies examine closely 
any policies that may have federalism implications or limit the 
policymaking discretion of states, the Departments have engaged in 
numerous efforts to consult and work cooperatively with affected state 
and local officials.
    In conclusion, throughout the process of developing these proposed 
regulations, to the extent feasible within the specific preemption 
provisions of ERISA and the PHS Act, the Departments have attempted to 
balance states' interests in regulating health coverage and health 
insurance issuers, and the rights of those individuals intended to be 
protected in the PHS Act, ERISA, and the Code.

VII. Statutory Authority

    The Department of the Treasury regulations are adopted pursuant to 
the authority contained in sections 7805 and 9833 of the Code.
    The Department of Labor regulations are adopted pursuant to the 
authority contained in 29 U.S.C. 1002(16), 1027, 1059, 1135, 1161-1168, 
1169, 1181-1183, 1181 note, 1185, 1185a, 1185b, 1185d, 1191, 1191a, 
1191b, and 1191c; sec. 101(g), Public Law 104-191, 110 Stat. 1936; sec. 
401(b), Public Law 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 
512(d), Public Law 110-343, 122 Stat. 3881; sec. 1001, 1201, and 
1562(e), Public Law 111-148, 124 Stat. 119, as amended by Public Law 
111-152, 124 Stat. 1029; Secretary of Labor's Order 3-2010, 75 FR 55354 
(September 10, 2010).
    The Department of Health and Human Services regulations are adopted 
pursuant to the authority contained in sections 2701 through 2763, 
2791, and 2792 of the PHS Act (42 U.S.C. 300gg through 300gg-63, 300gg-
91, and 300gg-92), as amended; and Title I of the Affordable Care Act, 
sections 1301-1304, 1311-1312, 1321-1322, 1324, 1334, 1342-1343, 1401-
1402, and 1412, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-18024, 
18031-18032, 18041-18042, 18044, 18054, 18061, 18063, 18071, 18082, 26 
U.S.C. 36B, and 31 U.S.C. 9701).


[[Page 51126]]


    Signed this 20th day of August 2014.
John Dalrymple,
Deputy Commissioner for Services and Enforcement, Internal Revenue 
Service.

    Signed this 20th day of August 2014.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration. 
Department of Labor.
    Dated: August 19, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.

    Approved: August 20, 2014.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.

List of Subjects

26 CFR Part 54

    Excise taxes, Health care, Health insurance, Pensions, Reporting 
and recordkeeping requirements.

29 CFR Part 2590

    Continuation coverage, Disclosure, Employee benefit plans, Group 
health plans, Health care, Health insurance, Medical child support, 
Reporting and recordkeeping requirements.

45 CFR Part 147

    Health care, Health insurance, Reporting and recordkeeping 
requirements, State regulation of health insurance.

DEPARTMENT OF THE TREASURY

Internal Revenue Service

    Accordingly, 26 CFR part 54 is proposed to be amended as follows:

PART 54--PENSION EXCISE TAXES

0
Paragraph 1. The authority citation for part 54 continues to read, in 
part, as follows:

    Authority: 26 U.S.C. 7805 * * *

0
Par. 2. Section 54.9815-2713A is amended by revising paragraph (a) to 
read as follows:


Sec.  54.9815-2713A  Accommodations in connection with coverage of 
preventive health services.

    (a) Eligible organizations. An eligible organization is an 
organization that meets the criteria of paragraph (a)(1) through (3) of 
this section.
    (1) The organization opposes providing coverage for some or all of 
any contraceptive items or services required to be covered under Sec.  
54.9815-2713(a)(1)(iv) on account of religious objections.
    (2)(i) The organization is organized and operates as a nonprofit 
entity and holds itself out as a religious organization; or
    (ii) The organization is organized and operates as a closely held 
for-profit entity, as defined in paragraph (a)(4) of this section, and 
the entity's objection to covering some or all of the contraceptive 
services on account of its owners' sincerely held religious beliefs is 
made in accordance with the organization's applicable rules of 
governance, consistent with state law.
    (3) The organization must self-certify in the form and manner 
specified by the Secretary or provide notice to the Secretary of Health 
and Human Services as described in paragraph (b) or (c) of this 
section. The organization must make such self-certification or notice 
available for examination upon request by the first day of the first 
plan year to which the accommodation in paragraph (b) or (c) of this 
section applies. The self-certification or notice must be executed by a 
person authorized to make the certification on behalf of the 
organization, and must be maintained in a manner consistent with the 
record retention requirements under section 107 of ERISA.
    (4) [Reserved]
* * * * *

DEPARTMENT OF LABOR

Employee Benefits Security Administration

    For the reasons stated in the preamble, the Department of Labor 
proposes to amend 29 CFR part 2590 as follows:

PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS

0
1. The authority citation for part 2590 is revised to read as follows:

    Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a, 1185b, 1185d, 1191, 1191a, 1191b, and 
1191c; sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b), 
Pub. L. 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), 
Pub. L. 110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. 
L. 111-148, 124 Stat. 119, as amended by Pub. L. 11-152, 124 Stat. 
1029; Secretary of Labor's Order 1-2011, 77 FR 1088 (January 9, 
2012).

0
2. Section 2590.715-2713A is amended by revising paragraph (a) to read 
as follows:


Sec.  2590.715-2713A  Accommodations in connection with coverage of 
preventive health services.

    (a) Eligible organizations. An eligible organization is an 
organization that meets the criteria of paragraph (a)(1) through (3) of 
this section.
    (1) The organization opposes providing coverage for some or all of 
any contraceptive items or services required to be covered under Sec.  
2590.715-2713(a)(1)(iv) on account of religious objections.
    (2)(i) The organization is organized and operates as a nonprofit 
entity and holds itself out as a religious organization; or
    (ii) The organization is organized and operates as a closely held 
for-profit entity, as defined in paragraph (a)(4) of this section, and 
the entity's objection to covering some or all of the contraceptive 
services on account of its owners' sincerely held religious beliefs is 
made in accordance with the organization's applicable rules of 
governance, consistent with state law.
    (3) The organization must self-certify in the form and manner 
specified by the Secretary or provide notice to the Secretary of Health 
and Human Services as described in paragraph (b) or (c) of this 
section. The organization must make such self-certification or notice 
available for examination upon request by the first day of the first 
plan year to which the accommodation in paragraph (b) or (c) of this 
section applies. The self-certification or notice must be executed by a 
person authorized to make the certification on behalf of the 
organization, and must be maintained in a manner consistent with the 
record retention requirements under section 107 of ERISA.
    (4) [Reserved]
* * * * *

DEPARTMENT OF HEALTH AND HUMAN SERVICES

    For the reasons stated in the preamble, the Department of Health 
and Human Services proposes to amend 45 CFR subtitle A, part 147 as 
follows:

PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND 
INDIVIDUAL HEALTH INSRUANCE MARKETS

0
1. The authority citation for part 147 continues to read as follows:

    Authority: Secs 2701 through 2763, 2791, and 2792 of the Public 
Health Service Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and 
300gg-92), as amended.

0
2. Section 147.131 is amended by revising paragraphs (b) and (f) to 
read as follows:


Sec.  147.131  Exemption and accommodation in connection with coverage 
of preventive health services.

* * * * *
    (b) Eligible organizations. An eligible organization is an 
organization that

[[Page 51127]]

meets the criteria of paragraph (b)(1) through (3) of this section.
    (1) The organization opposes providing coverage for some or all of 
any contraceptive items or services required to be covered under Sec.  
147.130(a)(1)(iv) on account of religious objections.
    (2)(i) The organization is organized and operates as a nonprofit 
entity and holds itself out as a religious organization; or
    (ii) The organization is organized and operates as a closely held 
for-profit entity, as defined in paragraph (b)(4) of this section, and 
the entity's objection to covering some or all of the contraceptive 
services on account of its owners' sincerely held religious beliefs is 
made in accordance with the organization's applicable rules of 
governance, consistent with state law.
    (3) The organization must self-certify in the form and manner 
specified by the Secretary or provide notice to the Secretary of Health 
and Human Services as described in paragraph (c) of this section. The 
organization must make such self-certification or notice available for 
examination upon request by the first day of the first plan year to 
which the accommodation in paragraph (c) of this section applies. The 
self-certification or notice must be executed by a person authorized to 
make the certification on behalf of the organization, and must be 
maintained in a manner consistent with the record retention 
requirements under section 107 of ERISA.
    (4) [Reserved]
* * * * *
    (f) Application to student health insurance coverage. The 
provisions of this section apply to student health insurance coverage 
arranged by an eligible organization that is an institution of higher 
education as defined in 20 U.S.C. 1002 in a manner comparable to that 
in which they apply to group health insurance coverage provided in 
connection with a group health plan established or maintained by an 
eligible organization that is an employer. In applying this section in 
the case of student health insurance coverage, a reference to ``plan 
participants and beneficiaries'' is a reference to student enrollees 
and their covered dependents.

[FR Doc. 2014-20254 Filed 8-22-14; 3:30 pm]
BILLING CODE 4830-01-P; 4510-029-P; 4120-01-P; 6325-64