Summary of Benefits and Coverage and Uniform Glossary, 78577-78611 [2014-30243]
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Vol. 79
Tuesday,
No. 249
December 30, 2014
Part II
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
DEPARTMENT OF LABOR
Employee Benefits Security Administration
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29 CFR Part 2590
DEPARTMENT OF HEALTH AND HUMAN
SERVICES
45 CFR Part 147
Summary of Benefits and Coverage and Uniform Glossary; Proposed Rule
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Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[REG–145878–14]
RIN 1545–BM53
DEPARTMENT OF LABOR
Employee Benefits Security
Administration
29 CFR Part 2590
RIN 1210–AB69
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
45 CFR Part 147
[CMS–9938–P]
RIN 0938–AS54
Summary of Benefits and Coverage
and Uniform Glossary
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: Notice of proposed rulemaking.
AGENCY:
This document contains
proposed regulations regarding the
summary of benefits and coverage (SBC)
and the uniform glossary for group
health plans and health insurance
coverage in the group and individual
markets under the Patient Protection
and Affordable Care Act. It proposes
changes to the regulations that
implement the disclosure requirements
under section 2715 of the Public Health
Service Act to help plans and
individuals better understand their
health coverage, as well as to gain a
better understanding of other coverage
options for comparison. It proposes
changes to documents required for
compliance with section 2715 of the
Public Health Service Act, including a
template for the SBC, instructions,
sample language, a guide for coverage
example calculations, and the uniform
glossary.
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SUMMARY:
Comment date. Comments are
due on or before March 2, 2015.
ADDRESSES: Written comments on these
proposed regulations and documents
required for compliance (including the
template, instructions, sample language,
guide for coverage example calculations,
and the uniform glossary) may be
DATES:
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submitted to the Department of Labor as
specified below. Any comment that is
submitted will be shared with the
Department of Health and Human
Services and the Department of the
Treasury, and will also be made
available to the public. Warning: Do not
include any personally identifiable
information (such as name, address, or
other contact information) or
confidential business information that
you do not want publicly disclosed. All
comments are posted on the Internet
exactly as received, and can be retrieved
by most Internet search engines. No
deletions, modifications, or redactions
will be made to the comments received,
as they are public records. Comments
may be submitted anonymously.
Comments, identified by ‘‘Summary
of Benefits and Coverage,’’ may be
submitted by one of the following
methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
• Mail or Hand Delivery: Office of
Health Plan Standards and Compliance
Assistance, Employee Benefits Security
Administration, Room N–5653, U.S.
Department of Labor, 200 Constitution
Avenue NW., Washington, DC 20210,
Attention: Summary of Benefits and
Coverage.
Comments received will be posted
without change to https://
www.regulations.gov, and available for
public inspection at the Public
Disclosure Room, N–1513, Employee
Benefits Security Administration, 200
Constitution Avenue NW., Washington,
DC 20210, including any personal
information provided.
FOR FURTHER INFORMATION CONTACT:
Amy Turner or Beth Baum, Employee
Benefits Security Administration,
Department of Labor, at (202) 693–8335;
Karen Levin, Internal Revenue Service,
Department of the Treasury, at (202)
622–6080; Heather Raeburn or Tricia
Beckmann, Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, at (301)
492–4224 or (301) 492–4328.
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 (https://www.dol.gov/ebsa). In
addition, information from HHS on
private health insurance for consumers
can be found on CMS’s Web site
(www.cms.gov/cciio) and information on
health reform can be found at https://
www.healthcare.gov.
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SUPPLEMENTARY INFORMATION:
I. Background
The Patient Protection and Affordable
Care Act, Public Law 111–148, was
enacted on March 23, 2010; the Health
Care and Education Reconciliation Act,
Public Law 111–152, was enacted on
March 30, 2010 (these 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 term ‘‘group health plan’’
includes both insured and self-insured
group health plans.1 The Affordable
Care Act adds section 715(a)(1) to the
Employee Retirement Income Security
Act (ERISA) and section 9815(a)(1) to
the Internal Revenue Code (the Code) to
incorporate the provisions of part A of
title XXVII of the PHS Act into ERISA
and the Code, and make them
applicable to group health plans, and
health insurance issuers providing
health insurance coverage in connection
with group health plans. The PHS Act
sections incorporated by this reference
are sections 2701 through 2728.
Section 2715 of the PHS Act, added
by the Affordable Care Act, directs the
Departments of Labor, Health and
Human Services (HHS), and the
Treasury (the Departments) to develop
standards for use by a group health plan
and a health insurance issuer offering
group or individual health insurance
coverage in compiling and providing a
summary of benefits and coverage (SBC)
that ‘‘accurately describes the benefits
and coverage under the applicable plan
or coverage.’’ PHS Act section 2715 also
calls for the ‘‘development of standards
for the definitions of terms used in
health insurance coverage.’’
In accordance with the statute, the
Departments, in developing such
standards, consulted with the National
Association of Insurance Commissioners
(referred to in this document as the
‘‘NAIC’’) through ‘‘a working group
composed of representatives of health
insurance-related consumer advocacy
organizations, health insurance issuers,
health care professionals, patient
advocates including those representing
individuals with limited English
proficiency, and other qualified
1 The term ‘‘group health plan’’ is used in title
XXVII of the PHS Act, part 7 of ERISA, and chapter
100 of the Code, and is distinct from the term
‘‘health plan,’’ as used in other provisions of title
I of the Affordable Care Act. The term ‘‘health plan’’
does not include self-insured group health plans.
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individuals.’’ 2 On July 29, 2011, the
NAIC provided its final
recommendations to the Departments
regarding the SBC. On August 22, 2011,
the Departments published in the
Federal Register proposed regulations
(2011 proposed regulations) and an
accompanying document with
templates, instructions, and related
materials for implementing the
disclosure provisions under PHS Act
section 2715.3 After consideration of all
the comments received on the 2011
proposed regulations and accompanying
documents, the Departments published
joint final regulations to implement the
disclosure requirements under PHS Act
section 2715 on February 14, 2012 (2012
final regulations) and an accompanying
document soliciting comments on
templates, instructions, and related
materials.4 The 2012 final regulations
implemented standards for use by a
group health plan and a health
insurance issuer offering group or
individual health insurance coverage in
compiling and providing an SBC that
‘‘accurately describes the benefits and
coverage under the applicable plan or
coverage’’ pursuant to PHS Act section
2715.
After the 2012 final regulations were
published, the Departments released
Frequently Asked Question (FAQs)
regarding implementation of the SBC
provisions as part of six issuances. The
Departments released Affordable Care
Act Implementation FAQs Parts VII,
VIII, IX, X, XIV, and XIX to answer
outstanding questions, including
questions related to the SBC.5 These
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2 The
NAIC convened a working group (NAIC
working group) comprised of a diverse group of
stakeholders. This working group met frequently for
over one year while developing its
recommendations. In developing its
recommendations, the NAIC considered the results
of various consumer testing sponsored by both
insurance industry and consumer associations.
Throughout the process, NAIC working group draft
documents and meeting notes were displayed on
the NAIC’s Web site for public review, and several
interested parties filed formal comments. In
addition to participation from the NAIC working
group members, conference calls and in-person
meetings were open to other interested parties and
individuals and provided an opportunity for nonmember feedback. See www.naic.org/committees_b_
consumer_information.htm.
3 See proposed regulations, published at 76 FR
52442 (August 22, 2011) and guidance document
published at 76 FR 52475 (August 22, 2011).
4 See final regulations, published at 77 FR 8668
(February 14, 2012) and guidance document
published at 77 FR 8706 (February 14, 2012).
5 See Affordable Care Act Implementation FAQs
Part VII (available at www.dol.gov/ebsa/faqs/faqaca7.html and https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs7.html); Part VIII (available at
www.dol.gov/ebsa/faqs/faq-aca8.html and https://
www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs8.html); Part IX
(available at www.dol.gov/ebsa/faqs/faq-aca9.html
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FAQs addressed questions related to
compliance with the requirements of the
2012 final regulations, implemented
additional safe harbors,6 and released
updated SBC materials.
The Departments are issuing these
proposed regulations, as well as a new
set of proposed SBC templates,
instructions, an updated uniform
glossary, and other materials to
incorporate some of the feedback the
Departments have received and to make
some improvements to the template.
This will provide guidance necessary to
plans and issuers as they continue to
issue SBCs, and will improve the SBC
for employers, participants and
beneficiaries, and individuals and
dependents for use as a tool in making
important decisions regarding their
health coverage. These modifications
clarify when and how a plan or issuer
must provide an SBC, and streamline
and shorten the SBC template while also
adding certain additional elements that
the Departments believe will be useful
to consumers. The draft updated
template, instructions, and
supplementary materials are available at
https://cciio.cms.gov and https://
www.dol.gov/ebsa/healthreform/
regulations/summaryofbenefits.html.
The Departments invite comments on
all of the documents. Comments should
be submitted as described above.
II. Overview of the Proposed
Regulations
A. Requirement To Provide a Summary
of Benefits and Coverage
1. Providing the SBC
Paragraph (a) of the 2012 final
regulations implements the general
disclosure requirement and sets forth
the standards for who is required to
provide an SBC, to whom, and when.
PHS Act section 2715 generally requires
that an SBC be provided to applicants,
enrollees, and policyholders or
certificate holders, at specified times.
and https://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/aca_implementation_faqs9.html);
Part X (available at www.dol.gov/ebsa/faqs/faqaca10.html and https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs10.html); Part XIV (available at
www.dol.gov/ebsa/faqs/faq-aca14.html and https://
www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs14.html); and Part
XIX (available at www.dol.gov/ebsa/faqs/faqaca19.html and https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs19.html).
6 Some of the enforcement safe harbors and
transitions are proposed to be made permanent
(several with modifications) by these proposed
regulations. The Departments intend to use this
rulemaking to develop a permanent approach to
those issues and, thereby, discontinue all temporary
enforcement policies that were used as a bridge to
a permanent rule.
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PHS Act section 2715(d)(3) places the
responsibility to provide an SBC on ‘‘(A)
a health insurance issuer (including a
group health plan that is not a selfinsured plan) offering health insurance
coverage within the United States; or (B)
in the case of a self-insured group health
plan, the plan sponsor or designated
administrator of the plan (as such terms
are defined in section 3(16) of
ERISA).’’ 7 Accordingly, the 2012 final
regulations interpret PHS Act section
2715 to apply to both group health plans
and health insurance issuers offering
group or individual health insurance
coverage. In addition, consistent with
the statute, the 2012 final regulations
hold the plan administrator of a group
health plan responsible for providing an
SBC. Under the 2012 final regulations,
the SBC must be provided in writing
and free of charge.
There are three general scenarios
under which an SBC will be provided.
An SBC will be provided: (1) By a group
health insurance issuer to a group
health plan; (2) by a group health
insurance issuer or a group health plan
to participants and beneficiaries; and (3)
by a health insurance issuer to
individuals and dependents in the
individual market.
The 2012 final regulations specify
timeframes according to which the SBC
must be provided. After the 2012
regulations were published, the
Departments were asked to clarify the
meaning of the term ‘‘provided.’’ As the
Departments stated in Affordable Care
Act Implementation FAQs Part VIII,
question 7, for purposes of providing an
SBC in the context of these regulations,
the term ‘‘provided’’ means sent.
Accordingly, the SBC is timely if it is
sent within seven business days, even if
not received until after that period.8
a. Provision of the SBC by an Issuer to
a Plan
Paragraph (a)(1)(i) of the 2012 final
regulations requires a health insurance
issuer offering group health insurance
coverage to provide an SBC to a group
health plan (or its sponsor) upon an
application by the plan for health
coverage. The issuer must provide the
SBC as soon as practicable following
7 ERISA section 3(16) defines an administrator as:
(i) the person specifically designated by the terms
of the instrument under which the plan is operated;
(ii) if an administrator is not so designated, the plan
sponsor; or (iii) in the case of a plan for which an
administrator is not designated and plan sponsor
cannot be identified, such other person as the
Secretary of Labor may by regulation prescribe.
8 See Affordable Care Act Implementation FAQs
Part VIII, question 7, available at www.dol.gov/ebsa/
faqs/faq-aca8.html and https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs8.html.
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receipt of the application, but in no
event later than seven business days
following receipt of the application.
These proposed regulations would
clarify when the health insurance issuer
offering group health insurance
coverage (or plan, if applicable, under
paragraph (a)(1)(ii)) must provide the
SBC again if the issuer already provided
the SBC before application to any entity
or individual. If the issuer provides the
SBC before application for coverage
pursuant to paragraph (a)(1)(i)(D) of the
regulations (relating to SBCs upon
request), the requirement to provide an
SBC upon application is deemed
satisfied and such issuer is not required
to automatically provide another SBC
upon application to the same entity or
individual, provided there is no change
to the information required to be in the
SBC. However, if there has been a
change in the information required, a
new SBC that includes the correct
information must be provided upon
application (that is, as soon as
practicable following receipt of the
application, but in no event later than
seven business days following receipt of
the application).
Under the 2012 final regulations and
these proposed regulations, if there is
any change in the information required
to be in the SBC that was provided upon
application and before the first day of
coverage, the issuer must update and
provide a current SBC to the plan (or its
sponsor) no later than the first day of
coverage. If the information is
unchanged, the issuer does not need to
provide the SBC again in connection
with coverage for that plan year, except
upon request. These proposed rules
would provide clarification with respect
to how to satisfy the requirement to
provide an SBC when the terms of
coverage are not finalized. If the plan
sponsor is negotiating coverage terms
after an application has been filed and
the information required to be in the
SBC changes, an updated SBC is not
required to be provided to the plan (or
its sponsor) (unless an updated SBC is
requested) until the first day of
coverage. The updated SBC should
reflect the final coverage terms under
the contract, certificate, or policy of
insurance that was purchased.
b. Provision of the SBC by a Plan or
Issuer to Participants and Beneficiaries
Under paragraph (a)(1)(ii) of the 2012
final regulations, a group health plan
(including the plan administrator), and
a health insurance issuer offering group
health insurance coverage, must provide
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an SBC to a participant or beneficiary 9
with respect to each benefit package
offered by the plan or issuer for which
the participant or beneficiary is
eligible.10 This includes individuals
who are qualified beneficiaries under
the Consolidated Omnibus
Reconciliation Act of 1985 (COBRA).11
In Affordable Care Act Implementation
FAQs Part VIII, question 8, the
Departments clarified that while a
qualifying event does not, itself, trigger
a requirement to provide an SBC, during
an open enrollment period, any COBRA
qualified beneficiary who is receiving
COBRA coverage must be given the
same rights to elect different coverage as
are provided to similarly situated nonCOBRA beneficiaries.12 In this situation,
a COBRA qualified beneficiary who has
elected coverage must be provided an
SBC just as a similarly situated nonCOBRA beneficiary must be provided
with one. There are also limited
situations in which a COBRA qualified
beneficiary may need to be offered
different coverage at the time of the
qualifying event than the coverage he or
she was receiving before the qualifying
event and this may trigger a requirement
to provide an SBC.13
If a plan or issuer distributes any
written application materials for
enrollment, including any forms or
requests for information (in paper form
or through a Web site or email) that
must be completed for enrollment, the
plan or issuer must provide the SBC as
9 ERISA section 3(7) defines a participant as: Any
employee or former employee of an employer, or
any member or former member of an employee
organization, who is or may become eligible to
receive a benefit of any type from an employee
benefit plan which covers employees of such
employers or members of such organization, or
whose beneficiaries may be eligible to receive any
such benefit. ERISA section 3(8) defines a
beneficiary as: a person designated by a participant,
or by the terms of an employee benefit plan, who
is or may become entitled to a benefit thereunder.
10 With respect to insured group health plan
coverage, PHS Act section 2715 generally places the
obligation to provide an SBC on both a plan and
issuer. As discussed below, under section III.A.1.d.,
‘‘Special Rules to Prevent Unnecessary Duplication
with Respect to Group Health Coverage’’, if either
the issuer or the plan provides the SBC, both will
have satisfied their obligations. As they do with
other notices required of both plans and issuers
under Part 7 of ERISA, Title XXVII of the PHS Act,
and Chapter 100 of the Code, the Departments
expect plans and issuers to make contractual
arrangements for sending SBCs. Accordingly, the
remainder of this preamble generally refers to
requirements for plans or issuers.
11 See Affordable Care Act Implementation FAQs
Part VIII, question 7, available at www.dol.gov/ebsa/
faqs/faq-aca8.html and https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs8.html.
12 See 26 CFR 54.4980B–5, Q&A–4(c)
(requirement to provide election) and 54.4980B–3,
Q&A–3 (definition of similarly situated non-COBRA
beneficiary).
13 See 26 CFR 54.4980B–5, Q&A–4(b).
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part of those materials. If the plan or
issuer does not distribute written
application materials for enrollment (in
either paper or electronic form), the SBC
must be provided no later than the first
date on which the participant is eligible
to enroll in coverage for the participant
or any beneficiaries. If there is any
change to the information required to be
in the SBC that was provided upon
application for coverage and before the
first day of coverage, the plan or issuer
must update and provide a current SBC
to a participant or beneficiary no later
than the first day of coverage.
These proposed rules would clarify
when a plan or issuer must provide the
SBC again if the plan or issuer already
provided the SBC prior to application.
If the plan or issuer provides the SBC
prior to application for coverage, the
plan or issuer is not required to
automatically provide another SBC
upon application, if there is no change
to the information required to be in the
SBC. If there is any change to the
information required to be in the SBC by
the time the application is filed, the
plan or issuer must update and provide
a current SBC as soon as practicable
following receipt of the application, but
in no event later than seven business
days following receipt of the
application.
These proposed rules also would
provide clarification with respect to
how to satisfy the requirement to
provide an SBC when the terms of
coverage are not finalized. If the plan
sponsor is negotiating coverage terms
after an application has been filed and
the information required to be in the
SBC changes, the plan or issuer is not
required to provide an updated SBC
(unless an updated SBC is requested)
until the first day of coverage. The
updated SBC should reflect the final
coverage terms under the contract,
certificate, or policy of insurance that
was purchased.
Under the 2012 final regulations, the
plan or issuer must also provide the
SBC to individuals enrolling through a
special enrollment period, also called
special enrollees.14 Special enrollees
must be provided the SBC no later than
when a summary plan description is
required to be provided under the
timeframe set forth in ERISA section
104(b)(1)(A) and its implementing
regulations, which is 90 days from
enrollment. To the extent individuals
who are eligible for special enrollment
and are contemplating their coverage
options would like to receive SBCs
14 Regulations regarding special enrollment are
available at 26 CFR 54.9801–6, 29 CFR 2590.701–
6, and 45 CFR 146.117.
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earlier, they may always request an SBC
with respect to any particular plan,
policy, or benefit package and the SBC
is required to be provided as soon as
practicable, but in no event later than
seven business days following receipt of
the request (as discussed more fully
below).
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c. Provision of the SBC Upon Request in
Group Health Coverage
A health insurance issuer offering
group health insurance coverage must
provide the SBC to a group health plan
or its sponsor (and a plan or issuer must
provide the SBC to a participant or
beneficiary) upon request for an SBC or
summary information about the health
coverage, as soon as practicable, but in
no event later than seven business days
following receipt of the request. The
SBC must be provided upon request to
participants, beneficiaries, and plans (or
plan sponsors), including prior to
submitting an application for coverage,
because the SBC provides information
that not only helps consumers and
employers understand their coverage,
but also helps consumers and employers
compare coverage options prior to
selecting coverage. Health insurance
issuers offering individual market
coverage must also provide the SBC to
individuals upon request, according to
the same timeframe, to allow consumers
the same ability to compare coverage
options in the individual market as the
group market.
Since the issuance of the 2012 final
regulations, the Departments have
continued to receive questions about
providing SBCs upon request, including
whether issuers are required to provide
SBCs to plans or their sponsors who are
‘‘shopping’’ for coverage from different
issuers but have not yet submitted an
application for coverage. In Affordable
Care Act Implementation FAQs Part IX,
question 4, the Departments reiterated
that an SBC must be provided upon
request for an SBC or ‘‘summary
information about a health insurance
product.’’ The latter phrase is intended
to ensure that persons who do not ask
exactly for a ‘‘summary of benefits and
coverage’’ still receive one when they
explicitly ask for a summary document
with respect to a specific health
coverage product.15 The FAQ also
referred to other guidance outlining the
circumstances in which an SBC may be
provided electronically, to assist in
reducing the burden of providing
multiple SBCs in paper form when
15 The FAQ stated that other general questions
about coverage options or discussions about health
products do not trigger the requirement to provide
an SBC.
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requested. Additional information on
electronic disclosure of SBCs is
discussed later in this preamble.
d. Special Rules To Prevent
Unnecessary Duplication With Respect
to Group Health Coverage
Paragraph (a)(1)(iii) of the 2012 final
regulations includes three special rules
to streamline provision of the SBC and
avoid unnecessary duplication with
respect to group health coverage. The
first provides that the requirement to
provide an SBC generally will be
considered satisfied for all applicable
entities if it is provided by any entity,
so long as all timing and content
requirements are satisfied. The second
provides that a single SBC may be
provided to a participant and any
beneficiaries at the participant’s last
known address. However, if a
beneficiary’s last known address is
different than the participant’s last
known address, a separate SBC is
required to be provided to the
beneficiary at the beneficiary’s last
known address. Third, the 2012 final
regulations provide that SBCs are not
required to be provided automatically
upon renewal for each benefit package
option in group health plans that offer
multiple benefit packages. Rather, a
plan or issuer is required to provide an
SBC automatically upon renewal or
reissuance only with respect to the
benefit package in which a participant
or beneficiary is enrolled. In cases in
which an issuer will automatically reenroll participants and beneficiaries,
these proposed rules propose to add that
a new SBC is required to be provided
with respect to the plan or product in
which a participant or beneficiary will
be automatically enrolled in accordance
with the same timing requirements that
apply to a renewal or reissuance.
Consistent with the 2012 final
regulations, if a participant or
beneficiary requests an SBC with
respect to one or more other benefit
packages for which he or she is eligible,
that requested SBC or SBCs must be
provided as soon as practicable, but in
no event later than seven business days
following the receipt of the request.
In addition to retaining these three
existing special rules, these proposed
regulations would add an additional
provision to ensure participants receive
information while preventing
unnecessary duplication. This would
address circumstances where an entity
required to provide an SBC with respect
to an individual has entered into a
binding contract with another party to
provide the SBC to the individual. In
such a case, the proposed regulations
state that the entity would be
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78581
considered to satisfy the requirement to
provide the SBC with respect to the
individual if specified conditions are
met:
(1) The entity monitors performance
under the contract; 16
(2) If the entity has knowledge that
the SBC is not being provided in a
manner that satisfies the requirements
of this section and the entity has all
information necessary to correct the
noncompliance, the entity corrects the
noncompliance as soon as practicable;
and
(3) If the entity has knowledge the
SBC is not being provided in a manner
that satisfies the requirements of this
section and the entity does not have all
information necessary to correct the
noncompliance, the entity
communicates with participants and
beneficiaries who are affected by the
noncompliance regarding the
noncompliance, and begins taking
significant steps as soon as practicable
to avoid future violations.
The proposed regulations would also
add a provision to prevent unnecessary
duplication with respect to a group
health plan that uses two or more
insurance products provided by
separate issuers to insure benefits under
the plan. The proposed regulations
would place responsibility for providing
complete SBCs with respect to the plan
in such a case on the group health plan
administrator. This provision of the
proposed regulations states that the
group health plan administrator may
contract with one of its issuers (or other
service providers) to provide the SBC;
however, absent a contract to perform
the function, an issuer has no obligation
to provide an SBC containing
information for benefits that it does not
insure.
The Departments recognize that a
plan sponsor may purchase an
insurance product for certain coverage
from a particular issuer and purchase a
separate insurance product or selfinsure with respect to other coverage
(such as outpatient prescription drug
16 The selection and monitoring of service
providers for a group health plan, including parties
assuming responsibility to complete, provide
information for, or deliver SBCs, is a fiduciary act
subject to prudence and loyalty duties and
prohibited transaction provisions of ERISA. No
single fiduciary procedure will be appropriate in all
cases; the procedure for selecting and monitoring
service providers may vary in accordance with the
nature of the plan and other facts and
circumstances relevant to the choice of the service
provider. More general information on hiring and
monitoring service providers is contained in the
Department of Labor publication ‘‘Understanding
Your Fiduciary Responsibilities Under a Group
Health Plan,’’ which is available on the
Department’s Web site at: www.dol.gov/ebsa/
publications/ghpfiduciaryresponsibilities.html.
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coverage). In these circumstances, the
first issuer may or may not know of the
existence of other coverage, or whether
the plan sponsor has arranged the two
benefit packages as a single plan or two
separate plans. To address these
arrangements, these proposed rules
propose that, with respect to a group
health plan that uses two or more
insurance products provided by
separate issuers, the group health plan
administrator is responsible for
providing complete SBCs with respect
to the plan. The group health plan
administrator may contract with one of
its issuers (or other service providers) to
perform that function. Absent a contract
to perform the function, an issuer has no
obligation to provide coverage
information for benefits that it does not
insure.
The Departments published an FAQ
on May 11, 2012 17 regarding the
responsibility to provide an SBC in
situations where plans may have
benefits provided by more than one
issuer. This FAQ provides an
enforcement safe harbor for a group
health plan that uses two or more
insurance products provided by
separate issuers with respect to a single
group health plan. Under this
enforcement safe harbor, the group
health plan administrator may
synthesize the information into a single
SBC or provide multiple partial SBCs
that, together, provide all the relevant
information to meet the SBC content
requirements. In such circumstances,
the plan administrator should take steps
(such as a cover letter or a notation on
the SBCs themselves) to indicate that
the plan provides coverage using
multiple insurance products and that
individuals may contact the plan
administrator for more information (and
provide the contact information). The
Departments extended this enforcement
safe harbor for one year on April 23,
2013,18 and indefinitely on May 2,
2014,19 and reiterate that the safe harbor
continues to apply. The Departments
seek comment on whether to codify this
policy in the regulation.
17 See Affordable Care Act Implementation FAQs
Part IX, question 10, available at https://
www.dol.gov/ebsa/faqs/faq-aca9.html and https://
www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs9.html.
18 Affordable Care Act Implementation FAQs Set
XIV, question 5, available at www.dol.gov/ebsa/
faqs/faq-aca14.html and https://www.cms.gov/
CCIIO/Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs14.html.
19 Affordable Care Act FAQ Set XIX, question 8,
available at www.dol.gov/ebsa/faqs/faq-aca19.html
and https://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/aca_implementation_
faqs19.html.
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e. Provision of the SBC by an Issuer
Offering Individual Market Coverage
Paragraph (a)(1)(iv) of the HHS 2012
final regulations sets forth standards
applicable to individual health
insurance coverage, under which the
provision of the SBC by an issuer
offering individual market coverage
largely parallels the group market
requirements described above, with
only those changes necessary to reflect
the differences between the two
markets. The SBC must be provided
upon application. That is, a health
insurance issuer offering individual
health insurance coverage must provide
an SBC to an individual or dependent
upon receiving an application for any
health insurance policy, as soon as
practicable following receipt of the
application, but in no event later than
seven business days following receipt of
the application. If there is any change in
the information required to be in the
SBC that was provided upon application
and before the first day of coverage, the
issuer must update and provide a
current SBC to an individual or
dependent no later than the first day of
coverage. These proposed rules would
clarify when the issuer must provide the
SBC again if the issuer already provided
the SBC prior to application. If the
issuer provides the SBC prior to
application for coverage, the issuer is
not required to automatically provide
another SBC upon application, if there
is no change to the information required
to be in the SBC. If there is any change
to the information required to be in the
SBC that was provided prior to
application for coverage by the time the
application is filed, the issuer must
update and provide a current SBC to the
same individual or dependent as soon
as practicable following receipt of the
application, but in no event later than
seven business days following receipt of
the application. Under the 2012 final
regulations, a health insurance issuer
offering individual health insurance
coverage must provide the SBC to an
individual or dependent upon request
for the SBC or summary information
about the health insurance product, as
soon as practicable, but in no event later
than seven business days following
receipt of the request.
These proposed rules would also
address situations where an issuer
offering individual market insurance
coverage, consistent with applicable
Federal and State law, automatically reenrolls an individual and any
dependents into a different plan or
product than the plan in which these
individuals were previously enrolled. If
the issuer automatically re-enrolls an
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individual covered under a policy,
certificate, or contract of insurance
(including every dependent) into a
policy, certificate, or contract of
insurance under a different plan or
product, HHS proposes that the issuer
would be required to provide an SBC
with respect to the coverage in which
the individual (including every
dependent) will be enrolled, consistent
with the timing requirements that apply
when the policy is renewed or reissued.
f. Special Rules To Prevent Unnecessary
Duplication With Respect to Individual
Health Insurance Coverage
In paragraph (a)(1)(v) of the 2012 final
regulations, the Secretary of HHS states
that, if a single SBC is provided to an
individual and any dependents at the
individual’s last known address, then
the requirement to provide the SBC to
the individual and any dependents is
generally satisfied. However, if a
dependent’s last known address is
different than the individual’s last
known address, a separate SBC is
required to be provided to the
dependent at the dependent’s last
known address.
Student health insurance coverage is
a type of individual health insurance
coverage provided pursuant to a written
agreement between an institution of
higher education and a health insurance
issuer to students enrolled in that
institution of higher education, and
their dependents, that meet certain
specified conditions.20 These proposed
rules propose to extend an antiduplication rule similar to that provided
with respect to group health coverage to
student health insurance coverage, as
defined in in 45 CFR 147.145(a).
Specifically, HHS proposes that the
requirement to provide an SBC with
respect to an individual will be
considered satisfied for an entity (such
as an institution of higher education) if
another party (such as a health
insurance issuer) provides a timely and
complete SBC to the individual. The
Departments are also soliciting
comments on whether or not a
requirement to monitor the provisioning
of the SBC in this circumstance should
be added.
2. Content
PHS Act section 2715(b)(3) generally
provides that the SBC must include:
a. Uniform definitions of standard
insurance terms and medical terms so
that consumers may compare health
coverage and understand the terms of
(or exceptions to) their coverage;
20 See 45 CFR 147.145, published at 77 FR 16453
(March 21, 2012).
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b. A description of the coverage,
including cost sharing, for each category
of essential health benefits, and other
benefits as identified by the
Departments;
c. The exceptions, reductions, and
limitations on coverage;
d. The cost-sharing provisions of the
coverage, including deductible,
coinsurance, and copayment
obligations;
e. The renewability and continuation
of coverage provisions;
f. A coverage facts label that includes
examples to illustrate common benefits
scenarios (including pregnancy and
serious or chronic medical conditions)
and related cost sharing based on
recognized clinical practice guidelines;
g. A statement of whether the plan or
coverage provides minimum essential
coverage (MEC) as defined under
section 5000A(f) of the Code, and
whether the plan’s or coverage’s share of
the total allowed costs of benefits
provided under the plan or coverage is
not less than 60% of such costs;
h. A statement that the SBC is only a
summary and that the plan document,
policy, or certificate of insurance should
be consulted to determine the governing
contractual provisions of the coverage;
and
i. A contact number to call with
questions and an Internet web address
where a copy of the actual individual
coverage policy or group certificate of
coverage can be reviewed and obtained.
Consistent with the Departments’
authority to develop standards with
respect to the SBC and with the
statutory requirement to consult with
the NAIC and other stakeholders, after
considering recommendations by the
NAIC and comments received on the
2011 proposed regulations, the 2012
final regulations added three content
elements: (1) For plans and issuers that
maintain one or more networks of
providers, an Internet address (or
similar contact information) for
obtaining a list of the network
providers; (2) for plans and issuers that
use a formulary in providing
prescription drug coverage, an Internet
address (or similar contact information)
for obtaining information on
prescription drug coverage under the
plan or coverage; and (3) an Internet
address for obtaining the uniform
glossary, as well as a contact phone
number to obtain a paper copy of the
uniform glossary, and a disclosure that
paper copies of the uniform glossary are
available.
The Departments have received
several questions related to content
requirements under the 2012 final
regulations. One such question relates to
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the statements about whether a plan or
coverage provides MEC, as defined
under section 5000A(f) of the Code, and
whether the plan’s or coverage’s share of
the total allowed costs of benefits
provided under the plan or coverage
meets applicable minimum value (MV)
requirements. The preamble to the 2012
final regulations stated that future
guidance would address these
statements. In April 2013, the
Departments issued an updated SBC
template (and sample completed SBC)
with the addition of statements of
whether the plan or coverage provides
MEC (as defined under section 5000A(f)
of the Code) and whether the plan or
coverage meets the MV requirements.21
In Affordable Care Act Implementation
FAQs Part XIV, issued
contemporaneously with the updated
SBC template, the Departments stated
this language is required to be included
in SBCs provided with respect to
coverage beginning on or after January
1, 2014.22
An FAQ issued at that time stated that
if a plan or issuer was unable to modify
the SBC template for these disclosures,
the Departments will not take any
enforcement action against a plan or
issuer for using the original template
authorized at the time the 2012 final
regulations were issued, provided that
the SBC was furnished with a cover
letter or similar disclosure stating
whether the plan or coverage does or
does not provide MEC and whether the
plan’s or coverage’s share of the total
allowed costs of benefits provided
under the plan or coverage does or does
not meet the MV standard under the
Affordable Care Act.23 The Departments
decline to extend this temporary
enforcement safe harbor. Accordingly,
effective for SBCs provided in
21 See Affordable Care Act Implementation FAQs
Part XIV, question 1, available at www.dol.gov/ebsa/
faqs/faq-aca14.html and https://www.cms.gov/
CCIIO/Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs14.html.
22 The guidance with respect to statements
regarding MEC and MV was originally issued for
SBCs provided with respect to coverage beginning
on or after January 1, 2014, and before January 1,
2015 (referred to as the ‘‘second year of
applicability’’). See Affordable Care Act
Implementation FAQs Part XIV, question 1,
available at www.dol.gov/ebsa/faqs/faq-aca14.html
and https://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/aca_implementation_
faqs14.html. This guidance was extended to be
applicable until further guidance was issued. See
Affordable Care Act Implementation FAQs Part
XIX, question 7, available at www.dol.gov/ebsa/
faqs/faq-aca19.html and https://www.cms.gov/
CCIIO/Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs19.html.
23 See Affordable Care Act Implementation FAQs
Part XIV, question 2, available at www.dol.gov/ebsa/
faqs/faq-aca14.html and https://www.cms.gov/
CCIIO/Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs14.html.
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78583
accordance with the applicability date
described below for these proposed
rules, the statements regarding MEC and
MV are required to be included in the
SBC. These statements have been
modified for added clarity and
relevance for consumers, including
consumers in the individual market. As
of the applicability date described
below, the option previously available
to include this information in a cover
letter or similar disclosure furnished
with the SBC is no longer available.
Under section 1303(b)(3)(A) of the
Affordable Care Act and implementing
regulations at 45 CFR 156.280(f), a QHP
issuer that elects to offer a QHP that
provides coverage of abortion services
for which public funding is prohibited
(non-excepted abortion services) must
provide a notice to enrollees, as part of
the SBC provided at the time of
enrollment, of coverage of such services.
In the interest of increasing
transparency for consumers shopping
for coverage, and to assist issuers with
meeting applicable disclosure
requirements under section
1303(b)(3)(A) of the Affordable Care Act
and its implementing regulations, we
are updating the SBC template
published contemporaneously with
these proposed rules. These proposed
rules would require a QHP issuer to
disclose on the SBC whether abortion
services are covered or excluded and
whether coverage is limited to services
for which federal funding is allowed
(excepted abortion services). The draft
instruction guide for individual health
insurance, released concurrently with
these proposed rules, indicates that
coverage of abortion services must be
described in the ‘‘services your plan
does not cover’’ or ‘‘other covered
services’’ section. We seek comments on
this guidance, including whether
coverage of abortion services should be
included in another section of the
template, such as the table occurring
immediately prior.
Neither the 2012 final regulations nor
these proposed regulations require the
SBC to include premium information.
The Departments previously stated their
understanding that it is administratively
and logistically complex to convey
premium information in an SBC due to
a number of variables, including, for
example, when premiums differ based
on family size; when, in the group
market, employer contributions impact
cost of coverage paid by participants
and beneficiaries; and when, for
coverage sold through an individual
market Exchange, advance payments of
the premium tax credit impact the cost
of coverage paid by individuals and
dependents. In Affordable Care Act
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Implementation FAQs Part VIII,
question 16, the Departments clarified
that a plan or issuer may choose to add
premium information to the SBC.24 If a
plan or issuer wishes to include this
information, it should be added at the
end of the SBC template.25
As mentioned above, the statute
provides that the SBC must include ‘‘a
contact number for the consumer to call
with additional questions and an
Internet web address where a copy of
the actual individual coverage policy or
group certificate of coverage can be
reviewed and obtained.’’ The 2012 final
regulations state the SBC must include
‘‘contact information for questions and
obtaining a copy of the plan document
or the insurance policy, certificate, or
contract of insurance (such as a
telephone number for customer service
and an Internet address for obtaining a
copy of the plan document or the
insurance policy, certificate, or contact
of insurance).’’ Questions have arisen as
to whether this provision of the statute
and regulations requires that all plans
and issuers must post underlying plan
documents automatically on an Internet
Web site.
These proposed rules would clarify
that all plans and issuers must include
on the SBC contact information for
questions. However, because the
statutory language regarding Internet
posting uses the terms ‘‘individual
coverage policy’’ and ‘‘group certificate
of coverage,’’ which we interpret to refer
only to insurance, these proposed
regulations propose that only issuers
must also include an Internet web
address where a copy of the actual
individual coverage policy or group
certificate of coverage can be reviewed
and obtained. The Departments note
that this proposal would require these
documents to be easily available to
individuals, plan sponsors, and
participants and beneficiaries shopping
for coverage prior to submitting an
application for coverage. For the group
market only, because the actual
‘‘certificate of coverage’’ is not available
until after the plan sponsor has
negotiated the terms of coverage with
the issuer, an issuer is permitted to
satisfy this requirement with respect to
plan sponsors that are shopping for
coverage by posting a sample group
24 See Affordable Care Act Implementation FAQs
Part VIII, question 16, available at www.dol.gov/
ebsa/faqs/faq-aca8.html and https://www.cms.gov/
CCIIO/Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs8.html.
25 In accordance with section 1303(b)(3)(B) of the
Affordable Care Act and 45 CFR 156.280(f)(2), if the
SBC provided at the time of enrollment notice
includes the QHP premium amount, it must display
only the total premium for the plan, inclusive of all
covered benefits and services.
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certificate of coverage for each
applicable product. After the actual
certificate of coverage is executed, it
must be easily available to plan
sponsors and participants and
beneficiaries via an Internet web
address. The Departments invite
comments on this approach, including
the costs and benefits of also requiring
self-insured plans to post underlying
plan documents on the Internet.
The Departments also note that,
separate from the SBC requirement,
provisions of other applicable law
require disclosure of plan documents
and other instruments governing the
plan. For example, ERISA section 104
and the Department of Labor’s
implementing regulations 26 provide
that, for plans subject to ERISA, the plan
documents and other instruments under
which the plan is established or
operated must generally be furnished by
the plan administrator to plan
participants 27 upon request. In
addition, the Department of Labor’s
claims procedure regulations
(applicable to ERISA plans), as well as
the Departments’ claims and appeals
regulations under the Affordable Care
Act (applicable to all non-grandfathered
group health plans and health insurance
issuers in the group and individual
markets),28 set forth rules regarding
claims and appeals, including the right
of claimants (or their authorized
representatives) upon appeal of an
adverse benefit determination (or a final
internal adverse benefit determination)
to be provided by the plan or issuer,
upon request and free of charge,
reasonable access to and copies of all
documents, records, and other
information relevant to the claimant’s
claim for benefits. Plans and issuers
must continue to comply with these
provisions and any other applicable
laws.
Section 2715(b)(3)(F) of the PHS Act
also requires that an SBC contain a
‘‘coverage facts label.’’ For ease of
reference, the 2012 final regulations
used the term ‘‘coverage examples’’ in
place of the statutory term. Consumer
26 29
CFR 2520.104b–1.
section 3(7) defines a ‘‘participant’’ to
include any employee or former employee who is
or may become eligible to receive a benefit of any
type from an employee benefit plan or whose
beneficiaries may be eligible to receive any such
benefit. Accordingly, employees who are not
enrolled but are, for example, in a waiting period
for coverage, or who are otherwise shopping
amongst benefit package options at open season,
generally are considered plan participants for this
purpose.
28 29 CFR 2560.503–1. See also 29 CFR 2590.715–
2719(b)(2)(i) and 45 CFR 147.136(b)(2)(i), requiring
nongrandfathered plans and issuers to incorporate
the internal claims and appeals processes set forth
in 29 CFR 2560.503–1.
testing performed on behalf of the
NAIC 29 demonstrated that the coverage
examples facilitated individuals’
understanding of the benefits and
limitations of a plan or policy and
helped them make more informed
choices about their options. That testing
also showed that individuals were able
to comprehend that the examples were
only illustrative. Additionally, while
some plans provide useful coverage
calculators to their enrollees to help
them make health coverage decisions,
they are not uniform across all plans
and most are not available to
individuals prior to enrollment, making
it difficult for individuals and
employers to make coverage
comparisons.
The Departments have taken a phased
approach to implementing the coverage
examples. The 2012 final regulations
require the SBC to include two coverage
examples: Having a baby (normal
delivery) and routine maintenance of
well-controlled type 2 diabetes. Each
benefit scenario represents a
hypothetical situation consisting of a
sample treatment plan and medical
costs, based on national average allowed
charges, for each of the conditions
stated above. Each example describes
the sample care costs and how much the
hypothetical patient will be responsible
for paying, including deductibles,
copayments and coinsurance.
In addition to the two existing
coverage examples, these proposed
regulations would require a third
coverage example—a simple foot
fracture (with emergency room visit).
This example is proposed as a health
problem that most individuals could
experience (whereas having a baby and
type 2 diabetes affect a subset of the
population). Comments are welcome on
the choice of this coverage example.
In documents published
contemporaneously with these proposed
rules, the Departments are publishing
draft updated claims and pricing data
underlying the two existing coverage
examples as well as a narrative
description and claims and pricing data
associated with the third proposed
coverage example.30 These materials
27 ERISA
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29 A summary of the focus group testing done by
America’s Health Insurance Plans is available at:
https://www.naic.org/documents/committees_b_
consumer_information_101012_ahip_focus_group_
summary.pdf, a summary of the focus group testing
done by Consumers Union on the coverage
examples is available at: https://prescriptionfor
change.org/wordpress/wp-content/uploads/2011/
08/A_New_Way_of_Comparing_Health_
Insurance.pdf.
30 For further discussion of changes to the claims
and pricing data underlying the two existing
coverage examples, as well as the claims and
pricing data with respect to the new coverage
example, see section III later in this preamble.
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would provide plans and issuers with
the specific information necessary to
simulate benefits covered under the
plan or policy for the coverage example
portion of the SBC (including relevant
medical items and services, dates of
service, billing codes, and allowed
charges). The Departments invite
comment on all aspects of the benefits
scenario proposed as a third coverage
example and on all aspects of the
coverage example materials made
available on the HHS Web site
contemporaneously with the
publication of these proposed
regulations.
In May 2012, the Departments
announced the development of a
calculator that plans and issuers could
use as a safe harbor for the first year of
applicability to complete the coverage
examples in a streamlined fashion.31
The calculator allows plans and issuers
to input a discrete number of
informational elements about the benefit
package, taken from data fields used to
populate the ‘‘Important Questions’’ and
‘‘Common Medical Events’’ chart
sections of the SBC template.’’ The
output of the calculator is a coverage
example that can be added to the SBC.
On its Web site, HHS provided the
coverage examples calculator,
instructions for using the calculator, the
algorithm that was used to create the
calculator, and a checklist providing
information on the inputs needed to use
the coverage calculator.
The original FAQ regarding the
coverage example calculator stated that
because using a limited number of
inputs in the calculator will be less
accurate than the results that a plan or
issuer could obtain by processing the
full list of claims associated with each
coverage example through the plan’s or
issuer’s system, the calculator would be
allowed as a transitional tool for the first
year of applicability of the SBC
requirements. Use of the coverage
example calculator was subsequently
extended for the second year of
applicability, and later extended until
superseded by further guidance.32 Given
31 See ACA Implementation FAQ Set IX, question
9, available at www.dol.gov/ebsa/faqs/faq-aca9.html
and https://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/aca_implementation_faqs9.html.
32 The FAQ with respect to the coverage example
calculator was originally issued for SBCs provided
for coverage beginning before January 1, 2014
(referred to as the ‘‘first year of applicability). See
Affordable Care Act Implementation FAQs Part IX,
question 9, available at www.dol.gov/ebsa/faqs/faqaca9.html and https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs9.html. It was extended for
SBCs provided for coverage beginning on or after
January 1, 2014, and before January 1, 2015
(referred to as the ‘‘second year of applicability’’),
in Affordable Care Act Implementation FAQs Part
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the complexity of the existing coverage
examples, the addition of a proposed
new, third coverage example to the SBC
requirements, and the fact that all
coverage examples are merely
illustrative and will not be an accurate
predictor of a specific individual’s
actual costs, the Departments are
proposing that the coverage example
calculator be authorized for continued
use. The Departments invite comments
on this proposal.
3. Appearance
PHS Act section 2715 sets forth
standards related to the appearance and
language of the SBC. Specifically, the
statute provides that the SBC is to be
presented in a uniform format, in a
culturally and linguistically appropriate
manner utilizing terminology
understandable by the average plan
enrollee, that does not exceed four
double-sided pages in length, and does
not include print smaller than 12-point
font. Since the issuance of the 2011
proposed regulations, plans and issuers
have informed the Departments that
they are concerned about including all
of the required information in the SBC
while also satisfying the limitation on
the length of the document of four
double-sided pages.
The instruction guides for completing
the SBC template (issued
contemporaneously with the 2012 final
regulations) included a special rule
stating that, to the extent a plan’s terms
that are required to be in the SBC
template cannot reasonably be described
in a manner consistent with the
template format and instructions, the
plan or issuer must accurately describe
the relevant plan terms while using its
best efforts to do so in a manner that is
still as consistent with the instructions
and template format as reasonably
possible. Such situations may occur, for
example, if a plan provides a different
structure for provider network tiers or
drug tiers than is contemplated by the
template and associated instructions, if
a plan provides different benefits based
on facility type (such as hospital
inpatient versus non-hospital inpatient),
in a case where the effects of a health
flexible spending arrangement (health
FSA) or a health reimbursement
arrangement (HRA) are being described,
or if a plan provides different cost
XIV, question 5 (available at www.dol.gov/ebsa/
faqs/faq-aca14.html and https://www.cms.gov/
CCIIO/Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs14.html) and later extended
until superseded by further guidance is issued in
Affordable Care Act Implementation FAQs Part
XIX, question 7 (available at www.dol.gov/ebsa/
faqs/faq-aca19.html and https://www.cms.gov/
CCIIO/Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs19.html).
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78585
sharing based on participation in a
wellness program. The new SBC
template that is being published
contemporaneously with these proposed
regulations eliminates some information
from the SBC that is not required by
statute based on comments from
stakeholders, which is intended to make
it easier for plans to include all of the
required information in the SBC while
also satisfying the statutory page limit.
These reductions are significant; the
sample completed template has been
reduced from four double-sided pages to
two and a half double-sided pages. The
Departments invite comments on
whether the modifications maintain
critical information while shortening it
enough to ensure that SBCs do not
extend beyond the statutory page limit
and, if not, what other changes should
be made to ensure the minimum
content, appearance, and language
requirements are met while also
providing consistency in formatting to
allow comparisons for individuals.
Comments are invited on potential ways
to reconcile the statutory page limit
with the statutory contents, appearance,
and format requirements, particularly
the need for the summary to present
information in an understandable,
accurate, and meaningful way that
facilitates comparisons of health
options, including those that have
disparate and comparatively complex
features. Specifically, comments are
invited on the sorts of plans that have
difficulty meeting the statutory limit,
and what other sorts of accommodations
may be appropriate for those plans.
Paragraph (a)(3) of the 2012 final
regulations requires plans and issuers to
provide the SBC in the form, and in
accordance with the instructions for
completing the SBC, that are specified
by the Secretaries in guidance. A
guidance document published
contemporaneously with the 2012 final
regulations served as such guidance
specified by the Secretaries, and stated
that SBCs provided in connection with
group health plan coverage may be
provided either as a stand-alone
document or in combination with other
summary materials (for example, a
summary plan description (SPD)), if the
SBC information is intact and
prominently displayed at the beginning
of the materials (such as immediately
after the Table of Contents in an SPD)
and in accordance with the timing
requirements for providing an SBC.33
For health insurance coverage offered in
33 Summary of Benefits and Coverage and
Uniform Glossary—Templates, Instructions, and
Related Materials; and Guidance for Compliance, 77
FR 8706, 8707 (February 14, 2012).
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the individual market, the SBC must be
provided as a stand-alone document,
but HHS notes that it can be included
in the same mailing as other plan
materials. These proposed rules do not
make any changes to these
requirements.
In Affordable Care Act
Implementation FAQs Part VIII,
question 8, the Departments stated that
an SBC provided in connection with a
group health plan may include a
reference to the SPD (although not as a
substitute for any required content
element of the SBC).34 Another FAQ
provided that for SBCs provided in
connection with coverage in the
individual market, while it is not
permitted to substitute a reference to
any other document for any content
element of the SBC, an SBC may include
a reference to another document in the
SBC footer.35 In addition, wherever an
SBC provides information that fully
satisfies a particular content element of
the SBC, it may add to that information
a reference to specified pages or
portions of other documents in order to
supplement or elaborate on that
information. As stated in the previous
FAQs, SBCs provided in connection
with a group health plan may include a
reference to the SPD or other documents
and SBCs provided in connection with
individual market coverage may
reference other documents to
supplement or elaborate on information
in the SBC.
Affordable Care Act Implementation
FAQs Part IX, question 7, addressed
combining SBCs or SBC elements to
provide a side-by-side comparison.36
Some plans or issuers provide webbased or print materials to illustrate the
differences between benefit package
options (including comparison charts
and broker comparison Web sites).
Issuers and plans (and agents and
brokers working with such plans) may
display SBCs, or parts of SBCs, in a way
that facilitates comparisons of different
benefit package options by individuals
and employers shopping for coverage.
For example, on a Web site, viewers
could be allowed to select a comparison
34 See Affordable Care Act Implementation FAQs
Part VIII, question 8, available at www.dol.gov/ebsa/
faqs/faq-aca8.html and https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs8.html.
35 See Affordable Care Act Implementation FAQs
Part IX, question 5, available at https://www.dol.gov/
ebsa/faqs/faq-aca9.html and https://www.cms.gov/
CCIIO/Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs9.html.
36 See Affordable Care Act Implementation FAQs
Part IX, question 7, available at https://www.dol.gov/
ebsa/faqs/faq-aca9.html and https://www.cms.gov/
CCIIO/Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs9.html.
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of only the deductibles, out-of-pocket
limits, or other cost sharing information
relating to several benefit package
options. This could be achieved by
providing the information from the
Answers column in the ‘‘What is the
overall deductible?’’ row of the SBC for
several benefit packages, but without
having to repeat the first ‘‘Important
Questions’’ and ‘‘Why this Matters’’
columns, or the other content rows, of
the SBC for each of the benefit packages.
However, such a chart, Web site, or
other comparison would not, itself,
satisfy the requirements under PHS Act
section 2715 and the 2012 final
regulations to provide the SBC. The full
SBC for each of the benefit packages
included in the comparison view or tool
must be made available in accordance
with the statute and regulations.
4. Form
a. Group Health Plan Coverage
To facilitate faster and less
burdensome disclosure of the SBC, and
to be consistent with PHS Act section
2715(d)(2), which permits disclosure in
either paper or electronic form, the 2012
final regulations set forth rules to permit
greater use of electronic transmittal of
the SBC. For SBCs provided
electronically by a plan or issuer to
participants and beneficiaries, the 2012
final regulations make a distinction
between a participant or beneficiary
who is already covered under the group
health plan, and a participant or
beneficiary who is eligible for coverage
but not enrolled in a group health plan.
This distinction should provide new
flexibility in some circumstances, while
also ensuring adequate consumer
protections. For participants and
beneficiaries who are already covered
under the group health plan, the 2012
final regulations permit provision of the
SBC electronically if the requirements of
the Department of Labor’s regulations at
29 CFR 2520.104b–1 are met. (Paragraph
(c) of those regulations includes an
electronic disclosure safe harbor.37) For
participants and beneficiaries who are
eligible for but not enrolled in coverage,
the 2012 final regulations permit the
SBC to be provided electronically if the
format is readily accessible and a paper
copy is provided free of charge upon
37 On April 7, 2011, the Department of Labor
published a Request for Information regarding
electronic disclosure at 76 FR 19285. In it, the
Department of Labor stated that it is reviewing the
use of electronic media by employee benefit plans
to furnish information to participants and
beneficiaries covered by employee benefit plans
subject to ERISA. Because these proposed
regulations propose to adopt the ERISA electronic
disclosure rules by cross-reference, any changes
that may be made to 29 CFR 2520.104b–1 in the
future would also apply to the SBC.
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request. Additionally, to reduce paper
copies that may be unnecessary, if the
electronic form is an Internet posting,
the plan or issuer must timely advise
the individual in paper form (such as a
postcard) or email that the documents
are available on the Internet, provide the
Internet address, and notify the
individual that the documents are
available in paper form upon request.
The Departments note that the rules for
participants and beneficiaries who are
eligible for but not enrolled in coverage
are substantially similar to the
requirements for an issuer providing an
electronic SBC to a group health plan
(or its sponsor) under paragraph (a)(4)(i)
of the regulations. Finally, plans, and
participants and beneficiaries (both
those covered and those eligible but not
enrolled) have the right to receive an
SBC in paper format, free of charge,
upon request.
In Affordable Care Act
Implementation FAQs Part IX, question
1, the Departments adopted an
additional safe harbor related to
electronic delivery of SBCs.38 That FAQ
stated that SBCs may be provided
electronically to participants and
beneficiaries in connection with their
online enrollment or online renewal of
coverage under the plan. The FAQ also
stated SBCs also may be provided
electronically to participants and
beneficiaries who request an SBC
online. In either case, the individual
must have the option to receive a paper
copy upon request. These proposed
regulations would include this
additional safe harbor into the
applicable regulations.
After the publication of the 2012 final
regulations, the Departments were asked
to provide model language to meet the
requirement to advise participants and
beneficiaries that the SBC is available
on the Internet. In Affordable Care Act
FAQs Part VIII, question 12, the
Departments provided the following
model language: 39
Availability of Summary Health Information
As an employee, the health benefits
available to you represent a significant
component of your compensation package.
They also provide important protection for
you and your family in the case of illness or
injury.
38 See Affordable Care Act Implementation FAQs
Part IX, question 4, available at https://www.dol.gov/
ebsa/faqs/faq-aca9.html and https://www.cms.gov/
CCIIO/Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs9.html.
39 See Affordable Care Act Implementation FAQs
Part VIII, question 12, available at https://
www.dol.gov/ebsa/faqs/faq-aca8.html and https://
www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs8.html.
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Your plan offers a series of health coverage
options. Choosing a health coverage option is
an important decision. To help you make an
informed choice, your plan makes available
a Summary of Benefits and Coverage (SBC),
which summarizes important information
about any health coverage option in a
standard format, to help you compare across
options.
The SBC is available on the web at:
www.Web site.com/SBC. A paper copy is also
available, free of charge, by calling 1–XXX–
XXX–XXXX (a toll-free number).
tkelley on DSK3SPTVN1PROD with PROPOSALS2
The FAQ also stated that plans and
issuers have flexibility with respect to
the postcard and may choose to tailor it
in many ways.
b. Individual Health Insurance Coverage
and Self-Insured Non-Federal
Governmental Plans
The HHS 2012 final regulations
established a provision under paragraph
(a)(4)(iii)(C) that deems health insurance
issuers in the individual market to be in
compliance with the requirement to
provide the SBC to an individual
requesting summary information about a
health insurance product prior to
submitting an application for coverage if
the issuer provides the content required
under paragraph (a)(2) of the regulations
to the federal health reform Web portal
described in 45 CFR 159.120. Issuers
must submit all of the content required
under paragraph (a)(2), as specified in
guidance by the Secretary, to be deemed
compliant with the requirement to
provide an SBC to an individual
requesting summary information prior
to submitting an application for
coverage. HHS intends to continue to
facilitate the operation of this deemed
compliance option for individual
market issuers. An issuer must provide
all SBCs other than the ‘‘shopper’’ SBC
contemplated in the deemed
compliance provision as required under
the 2012 final regulations (and any
future final regulations), including
providing the SBC at the time of
application and renewal.
The Departments note that consistent
with the 2012 final regulations, an
issuer in the individual market must
provide the SBC in a manner that can
reasonably be expected to provide
actual notice regardless of the format.
An issuer in the individual market
satisfies the form requirements set forth
in the 2012 final regulations if it does
at least one of the following: (1) Handdelivers a printed copy of the SBC to the
individual or dependent; (2) mails a
printed copy of the SBC to the mailing
address provided to the issuer by the
individual or dependent; (3) provides
the SBC by email after obtaining the
individual’s or dependent’s agreement
to receive the SBC or other electronic
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disclosures by email; (4) posts the SBC
on the Internet and advises the
individual or dependent in paper or
electronic form, in a manner compliant
with 45 CFR 147.200(a)(4)(iii)(A)(1)
through (3), that the SBC is available on
the Internet and includes the applicable
Internet address; or (5) provides the SBC
by any other method that can reasonably
be expected to provide actual notice.
The 2012 final regulations also
provide that the obligation to provide an
SBC cannot be satisfied electronically in
the individual market unless: the format
is readily accessible; the SBC is
displayed in a location that is
prominent and readily accessible; the
SBC is provided in an electronic form
that can be electronically retained and
printed; the SBC is consistent with the
appearance, content and language
requirements; and the issuer notifies the
individual that a paper SBC is available
upon request without charge.
These proposed rules would clarify
the form and manner for SBCs provided
by a self-insured non-Federal
governmental plan. Such SBCs may be
provided in paper form. Alternatively,
such SBCs may be provided
electronically if the plan conforms to
either the substance of the provisions
applicable to ERISA plans (in paragraph
(a)(4)(ii) of the regulations) or to
individual health insurance coverage (in
paragraph (a)(4)(iii) of the regulations).
5. Language
PHS Act section 2715(b)(2) provides
that standards shall ensure that the SBC
‘‘is presented in a culturally and
linguistically appropriate manner.’’ The
2012 final regulations provide that a
plan or issuer for this purpose is
considered to provide the SBC in a
culturally and linguistically appropriate
manner if the thresholds and standards
of 45 CFR 147.136(e), implementing
standards for the form and manner of
notices related to internal claims
appeals and external review, are met as
applied to the SBC.40 At the time of
publication of these proposed
regulations, 268 U.S. counties (78 of
which are in Puerto Rico) meet this
threshold. The overwhelming majority
of these are Spanish; however, Chinese,
Navajo, and Tagalog are present in a few
counties, affecting five states
(specifically, Alaska, Arizona,
California, New Mexico, and Utah).41
40 See 75 FR 43330 (July 23, 2010), as amended
by 76 FR 37208 (June 24, 2011).
41 Guidance on the HHS Web site contains a list
of the counties that meet this threshold. This
information is available at https://www.cms.gov/
CCIIO/Resources/Fact-Sheets-and-FAQs/
Downloads/2009-13-CLAS-County-Data_12-05-14_
clean_508.pdf.
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78587
To help plans and issuers meet the
language requirements of paragraph
(a)(5) of the 2012 final regulations, as
requested by commenters, HHS has
provided written translations of the SBC
template, sample language, and the
uniform glossary in Chinese, Navajo,
Spanish, and Tagalog.42 HHS may also
make these materials available in other
languages to facilitate voluntary
distribution of SBCs to other individuals
with limited English proficiency. We
seek comment on this standard, and on
other potential standards that could
facilitate consistency across the
Departments’ programs. The
Departments anticipate that translations
of the updated SBC template, sample
language, and uniform glossary will be
available when these proposed
regulations are finalized.
Nothing in these proposed regulations
should be construed as limiting an
individual’s rights under Federal or
State civil rights statutes, such as Title
VI of the Civil Rights Act of 1964 (Title
VI) which prohibits recipients of
Federal financial assistance, including
issuers participating in Medicare
Advantage, from discriminating on the
basis of race, color, or national origin.
To ensure non-discrimination on the
basis of national origin, recipients are
required to take reasonable steps to
ensure meaningful access to their
programs and activities by limited
English proficient persons. For more
information, see, ‘‘Guidance to Federal
Financial Assistance Recipients
Regarding Title VI Prohibition Against
National Origin Discrimination
Affecting Limited English Proficient
Persons,’’ available at https://
www.hhs.gov/ocr/civilrights/resources/
specialtopics/lep/
policyguidancedocument.html.
B. Notice of Modification
PHS Act section 2715(d)(4) directs
that a group health plan or health
insurance issuer offering group or
individual health insurance coverage
must provide notice of any material
modification (as defined under ERISA
section 102) in any of the terms of the
plan or coverage involved that is not
reflected in the most recently provided
SBC. For purposes of PHS Act section
2715, the 2012 final regulations
interpret the statutory reference to the
SBC to mean that only a material
modification in the terms of the plan or
coverage that would affect the content of
the SBC, that is not reflected in the most
recently provided SBC, and that occurs
42 Translations are available at https://
cciio.cms.gov/programs/consumer/
summaryandglossary/.
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other than in connection with a renewal
or reissuance of coverage would trigger
the notice. In these circumstances, the
notice would be required to be provided
to enrollees (or, in the individual
market, covered individuals) no later
than 60 days prior to the date on which
such change will become effective. A
material modification, within the
meaning of section 102 of ERISA,
includes any modification to the
coverage offered under a plan or policy
that, independently, or in conjunction
with other contemporaneous
modifications or changes, would be
considered by an average plan
participant (or in the case of individual
market coverage, an average individual
covered under a policy) to be an
important change in covered benefits or
other terms of coverage under the plan
or policy.43 A material modification
could be an enhancement of covered
benefits or services or other more
generous plan or policy terms. It
includes, for example, coverage of
previously excluded benefits or reduced
cost-sharing. A material modification
could also be a material reduction in
covered services or benefits, as defined
in 29 CFR 2520.104b–3(d)(3) of the
Department of Labor’s regulations, or
more stringent requirements for receipt
of benefits. As a result, it also includes
changes or modifications that reduce or
eliminate benefits, increase cost-sharing,
or impose a new referral requirement.44
(However, changes to the information in
the SBC resulting from changes in the
regulatory requirements for an SBC are
not changes to the plan or policy
requiring the mid-year provision of a
notice of modification, unless specified
in such new requirements.)
The 2012 final regulations require that
this notice be provided only for changes
other than in connection with a renewal
or reissuance of coverage. At renewal,
plans and issuers must provide an
updated SBC in accordance with the
requirements otherwise applicable to
SBCs. PHS Act section 2715 and
paragraph (b) of the 2012 final
regulations specify the timing for
providing a notice of modification in
situations other than in connection with
a renewal or reissuance of coverage. To
the extent a plan or policy implements
a mid-year change that is a material
modification that affects the content of
the SBC, and that occurs other than in
43 See DOL Information Letter, Washington Star/
Washington-Baltimore Newspaper Guild to
Munford Page Hall, II, Baker & McKenzie (February
8, 1985).
44 See, e.g., Ward v. Maloney, 386 F.Supp.2d 607,
612 (M.D.N.C. 2005), which discusses judicial
interpretations of when an amendment is and is not
a material modification.
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connection with a renewal or reissuance
of coverage, the 2012 final regulations
require a notice of modification to be
provided 60 days in advance of the
effective date of the change.45 Plans and
issuers are permitted to either provide
an updated SBC reflecting the
modifications or provide a separate
notice describing the material
modifications. These proposed
regulations do not make any changes to
these requirements.
For ERISA-covered group health plans
subject to PHS Act section 2715, this
notice is required in advance of the
timing requirements under the
Department of Labor’s regulations at 29
CFR 2520.104b–3 for providing a
summary of material modification
(SMM) (generally not later than 210
days after the close of the plan year in
which the modification or change was
adopted, or, in the case of a material
reduction in covered services or
benefits, not later than 60 days after the
date of adoption of the modification or
change). In situations where a complete
notice is provided in a timely manner
under PHS Act section 2715(d)(4), an
ERISA-covered plan will also satisfy the
requirement to provide an SMM under
Part 1 of ERISA.
C. Requirement To Provide the Uniform
Glossary
Sections 2715(g)(2) and (g)(3) of the
PHS Act direct the Departments to
develop standards for definitions, at a
minimum, for certain insurance-related
and medical terms (and also directs the
Departments to develop standards for
such other insurance-related and
medical terms as will help consumers
compare the terms of their coverage and
the extent of medical benefits (or
exceptions to those benefits)).46 The
45 In Affordable Care Act Implementation FAQs
Part XX, the Departments addressed notice
requirements triggered by a closely-held for-profit
corporation’s health plan ceasing to provide
coverage for some or all contraceptive services midplan year. The FAQ clarified that, for plans subject
to ERISA that reduce or eliminate coverage of
contraceptive services after having provided such
coverage, expedited disclosure requirements for
material reductions in covered services or benefits
apply. See https://www.dol.gov/ebsa/pdf/faqaca20.pdf and https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs20.html.
46 The insurance-related terms identified in the
statute are: co-insurance, co-payment, deductible,
excluded services, grievance and appeals, nonpreferred provider, out-of-network co-payments,
out-of-pocket limit, preferred provider, premium,
and UCR (usual, customary and reasonable) fees.
The medical terms identified in the statute are:
durable medical equipment, emergency medical
transportation, emergency room care, home health
care, hospice services, hospital outpatient care,
hospitalization, physician services, prescription
drug coverage, rehabilitation services, and skilled
nursing care.
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2012 final regulations included several
additional terms in the uniform
glossary.47 As discussed later in this
preamble, the Departments propose to
revise definitions for several of these
terms and also add several new terms to
the Glossary.48
A plan or issuer must make the
uniform glossary available upon request
within seven business days. To satisfy
this requirement, a plan or issuer must
provide the content described in
paragraph (a)(2)(i)(L) of the 2012 final
regulations, discussed earlier in this
preamble, which requires that the SBC
include an Internet address for
obtaining the uniform glossary, a
contact phone number to obtain a paper
copy of the uniform glossary, and a
disclosure that paper copies are
available upon request. The Internet
address may be a place where the
document can be found on the plan’s or
issuer’s Web site, or the Web site of
either the Department of Labor or HHS.
However, a plan or issuer must make
the glossary available upon request, in
either paper or electronic form (as
requested), within seven business days
after receipt of the request. Group health
plans and health insurance issuers must
provide the uniform glossary in the
appearance specified by the
Departments and without modification,
so that the glossary is presented in a
uniform format and uses terminology
understandable by the average plan
enrollee or individual covered under an
individual policy.
D. Preemption
Section 2715 of the PHS Act is
incorporated into ERISA section 715,
and Code section 9815, and is subject to
the preemption provisions of ERISA
section 731 and PHS Act section 2724
(implemented in 29 CFR 2590.731(a)
and 45 CFR 146.143(a)). Under these
provisions, the requirements of part 7 of
ERISA and part A of title XXVII of the
PHS Act, as amended by the Affordable
Care Act, are not to be ‘‘construed to
supersede any provision of State law
which establishes, implements, or
continues in effect any standard or
requirement solely relating to health
47 The additional terms in the uniform glossary
issued with the 2012 final regulations are: allowed
amount, balance billing, complications of
pregnancy, emergency medical condition,
emergency services, habilitation services, health
insurance, in-network co-insurance, in-network copayment, medically necessary, network, out-ofnetwork co-insurance, plan, preauthorization,
prescription drugs, primary care physician, primary
care provider, provider, reconstructive surgery,
specialist, and urgent care.
48 For further discussion of proposed changes to
the Uniform Glossary, see section III later in this
preamble.
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insurance issuers in connection with
group or individual health insurance
coverage except to the extent that such
standard or requirement prevents the
application of a requirement’’ of part A
of title XXVII of the PHS Act.
Accordingly, State laws that impose
requirements on health insurance
issuers that are stricter than those
imposed by the Affordable Care Act will
not be superseded by the Affordable
Care Act. In addition, PHS Act section
2715(e) provides that the standards
developed under PHS Act section
2715(a), ‘‘shall preempt any related
State standards that require [an SBC]
that provides less information to
consumers than that required to be
provided under this section, as
determined by the [Departments].’’
Reading these two preemption
provisions together, the 2012 final
regulations do not, and these proposed
regulations would not, prevent States
from imposing separate, additional
disclosure requirements on health
insurance issuers.
tkelley on DSK3SPTVN1PROD with PROPOSALS2
E. Failure To Provide
PHS Act section 2715(f), incorporated
into ERISA section 715 and Code
section 9815, provides that a group
health plan (including its
administrator), and a health insurance
issuer offering group or individual
health insurance coverage, that
‘‘willfully fails to provide the
information required under this section
shall be subject to a fine of not more
than $1,000 for each such failure.’’ In
addition, under PHS Act section 2715(f),
a separate fine may be imposed for each
individual or entity for whom there is
a failure to provide an SBC. The 2012
final regulations addressed the different
underlying enforcement structures and
penalty mechanisms for the
Departments.
HHS clarified in the 2012 final
regulations that HHS will enforce these
provisions in a manner consistent with
45 CFR 150.101 through 150.465. In
these proposed regulations, the
Department of Labor proposes to clarify
that it will use the same process and
procedures for assessment of the civil
fine as used for failure to file an annual
report under 29 CFR 2560.502c-2 and 29
CFR part 2570, subpart C. In accordance
with ERISA section 502(b)(3), 29 U.S.C.
1132(b)(3), the Secretary of Labor is not
authorized to assess this fine against a
health insurance issuer. Moreover, in
these proposed regulations, the IRS
proposes to clarify that the IRS will
enforce this section using a process and
procedure consistent with section
4980D of the Code.
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III. Proposed Documents Authorized for
Plan Years Beginning on or After
September 1, 2015
Contemporaneously with the issuance
of these proposed regulations, the
Departments are making available on
their Web sites a proposed revised SBC
template and attendant materials
(including a proposed revised uniform
glossary) to comply with the disclosure
requirements of PHS Act section 2715.
These materials are proposed to be
authorized by the Departments for
disclosure provided in accordance with
the applicability date proposed later in
this preamble.49 This section of the
preamble describes the changes
proposed to each document.
The following documents, available at
https://cciio.cms.gov and www.dol.gov/
ebsa/healthreform, are available for
review and the Departments solicit
comment on them:
1. SBC template. The document is
available in accessible format (PDF) and
modifiable format (MS Word).
2. Sample completed SBC. This
document was completed using
information for sample health coverage
and provides a general illustration of a
completed SBC for coverage under a
group health plan.
3. Instructions. For assistance in
completing the SBC template, separate
instructions are available for group
health coverage and for individual
health insurance coverage. Additionally,
with respect to the individual market
instructions, the Office of Personnel
Management (OPM) may provide
additional instructions for Multi-State
Plan issuers.
4. Why This Matters language. The
SBC instructions include language that
must be used when completing the
‘‘Why This Matters’’ column on the first
page of the SBC template. Two language
options are provided depending on
whether the answer in the applicable
row is ‘‘yes’’ or ‘‘no’’, according to the
terms of the plan or coverage.
5. Coverage examples. Information
provided by HHS at https://cciio.cms.gov
(and accessible via hyperlink from
www.dol.gov/ebsa/healthreform) the
information necessary to perform the
coverage example calculations.
6. Uniform glossary. The uniform
glossary of health coverage and medical
terms may not be modified by plans or
issuers.
Many of the changes proposed in the
updated versions of these documents
streamline the SBC. As discussed earlier
in this preamble, these changes were
made after feedback the Departments
49 See section IV of this preamble for a full
discussion of the proposed applicability date.
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78589
received from stakeholders, and the
revised proposed template and other
documents are intended to make it
easier for plans to satisfy the statutory
page limit. The revised documents also
incorporate information from several
sets of FAQs that addressed
implementation of the SBC provisions.
Additionally, the revised documents
include changes made to conform with
new requirements that have become
applicable since the issuance of the
2012 final regulations. These changes
include the addition of information
regarding minimum value and
minimum essential coverage and
changes to be consistent with the
Affordable Care Act’s requirement to
eliminate all annual limits on essential
health benefits.
Finally, the revised documents reflect
changes to the coverage examples. The
coding and pricing data for the existing
coverage examples (having a baby
through normal delivery and managing
well controlled type 2 diabetes) have
been updated to account for changes in
the data since the issuance of the final
regulations in 2012. Additionally the
Departments proposed to change the
data source for the claims and pricing
information from a data source that used
multiple commercial payor databases, to
one based on a single database, the
Truven Health Analytics MarketScan®
Commercial Claims and Encounters
database, adjusted to estimate 2014
pricing to account for health care
inflation since 2010. The Departments
seek comment on whether to update this
data using more recent 2013
Marketscan® database claims data that
will be available for the final rule, and
on appropriate ways to inform
consumers of the resulting increases in
sample care costs when the pricing data
is updated, for example, through a cover
letter or other disclosure provided along
with the SBC. The Departments also
seek specific comment on two diagnosis
codes in the having a baby (normal
delivery) scenario. The pricing data
associated with these two codes, DRG
775 and DRG 795 (inpatient hospital
charges for the mother, and inpatient
hospital charges for the baby,
respectively), appears higher than
expected. These diagnosis codes
represent bundled services and may
include charges that are duplicated by
other codes currently included in the
scenario. The Departments seek
comment on the accuracy of this pricing
data.
Additionally, the SBC template,
sample completed template, and
coverage example documents have been
updated to reflect that these proposed
regulations would require a third
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coverage example—a simple foot
fracture (with emergency room visit), as
described earlier in this preamble. The
same Marketscan® database has been
used to produce the claim and pricing
data for this scenario.
The Departments invite comment on
all aspects of the proposed changes to
the SBC template and other materials,
and the uniform glossary. The
Departments also request specific
comments regarding the Instruction
Guides about whether plans and issuers
should be permitted to add additional
benefits that are either covered or
excluded in the ‘‘other covered
services’’ and ‘‘excluded services’’
section that are not already required to
be disclosed by the instructions.
IV. Applicability
After publication of the 2012 final
regulations, the Departments received
questions about the applicability of the
SBC requirements to certain types of
group health plans, including expatriate
health plans, Medicare Advantage
plans, and insurance products that are
no longer being offered for purchase
(closed blocks of business). The
Departments addressed the applicability
of the SBC requirements to each of these
types of coverage in FAQs issued after
publication of the 2012 final
regulations. The Departments also
received questions regarding the
applicability of the SBC requirements to
benefits provided under certain
account-type arrangements such as
health FSAs,50 HRAs,51 and health
savings accounts (HSAs),52 as well as
benefits provided through an employee
assistance program (EAP) and other
excepted benefits.
In May 2012, the Departments issued
FAQs that discussed the special
circumstances and considerations faced
by expatriate plans in complying with
the SBC requirements.53 The FAQs
provided temporary relief from
enforcement. Under recently enacted
legislation,54 expatriate health plans are
not subject to the requirement to
provide an SBC. The Departments
intend to issue guidance implementing
this legislation. The temporary relief
from enforcement for expatriate plans
50 See
Code section 106(c)(2).
IRS Notice 2002–45, 2002–2 C.B. 93.
52 See Code section 223.
53 See Affordable Care Act Implementation FAQs
Part IX, question 13, available at https://
www.dol.gov/ebsa/faqs/faq-aca9.html and https://
www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs9.html.
54 See Consolidated and Further Continuing
Appropriations Act, 2015, Division M, Expatriate
Health Coverage Clarification Act of 2014, Section
3(d).
tkelley on DSK3SPTVN1PROD with PROPOSALS2
51 See
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will remain in place until such guidance
is issued.
Moreover, in August 2012, the
Departments issued FAQs that
discussed group health plans providing
Medicare Advantage benefits, which are
Medicare benefits financed by the
Medicare Trust Funds, for which the
benefits are set by Congress and
regulated by the Centers for Medicare &
Medicaid Services. Again, the FAQs
provided a temporary nonenforcement
policy, because Medicare Advantage
benefits are not health insurance
coverage and Medicare Advantage
organizations are not required to
provide an SBC with respect to such
benefits. Additionally, there are
separately required disclosures required
to be provided by Medicare Advantage
organizations, to ensure that enrollees in
these plans receive the necessary
information about their coverage and
benefits. These rules propose to exempt
from the SBC requirements a group
health plan benefit package that
provides Medicare Advantage benefits.
The Departments also issued FAQs in
May 2012 addressing insurance
products that are no longer being offered
for purchase (‘‘closed blocks of
business’’). Some interested
stakeholders had requested enforcement
relief with respect to such products
because the products are no longer
offered for purchase and the SBC is
intended to be a tool to help group
health plans and individuals as they
shop for coverage. The Departments had
provided temporary relief through an
FAQ provided that certain conditions
were met: (1) The insurance product is
no longer being actively marketed; (2)
the health insurance issuer stopped
actively marketing the product prior to
September 23, 2012, when the
requirement to provide an SBC was first
applicable to health insurance issuers;
and (3) the health insurance issuer has
never provided an SBC with respect to
such product. 55 The Departments
reiterate that relief here, but note that if
an insurance product was actively
marketed for business on or after
September 23, 2012, and is no longer
being actively marketed for business, or
if the plan or issuer ever provided an
SBC in connection with the product, the
plan and issuer must provide the SBC
with respect to such coverage, as
required by PHS Act section 2715 and
the regulations.
As under the 2012 final regulations,
an SBC need not be provided for plans,
55 See Affordable Care Act Implementation FAQs
Part IX, question 12, available at https://
www.dol.gov/ebsa/faqs/faq-aca9.html and https://
www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs9.html.
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policies, or benefit packages that
constitute excepted benefits. Thus, for
example, an SBC need not be provided
for stand-alone dental or vision plans or
health FSAs if they constitute excepted
benefits under the Departments’
regulations.56 If benefits under a health
FSA do not constitute excepted benefits,
the health FSA is a group health plan
generally subject to the SBC
requirements. For a health FSA that
does not meet the criteria for excepted
benefits and that is integrated with other
major medical coverage, the SBC is
prepared for the other major medical
coverage, and the effects of the health
FSA can be denoted in the appropriate
spaces on the SBC, including those for
deductibles, copayments, coinsurance,
and benefits otherwise not covered by
the major medical coverage. A standalone health FSA, which does not meet
the criteria for excepted benefits, must
satisfy the SBC requirements
independently.
On October 1, 2014, the Departments
published final rules on excepted
benefits.57 These regulations stated that
an EAP constitutes excepted benefits if
it satisfies certain requirements.58 If an
EAP qualifies as excepted benefits, the
EAP need not separately satisfy the SBC
requirements.
The Departments have issued
guidance regarding HRAs since the
publication of the 2012 final
regulations.59 An HRA is a group health
56 See 26 CFR 54.9831–1(c), 29 CFR 2590.732(c),
45 CFR 146.145(c).
57 79 FR 59130 (October 1, 2014).
58 The first requirement is that the EAP does not
provide significant benefits in the nature of medical
care. For this purpose, the amount, scope, and
duration of covered services are taken into account.
(See preamble discussion at 79 FR 59133 for
examples). The second requirement is that the
EAP’s benefits cannot be coordinated with the
benefits under another group health plan. For this
purpose, participants in the group health plan must
not be required to use and exhaust benefits under
the EAP (making the EAP a ‘‘gatekeeper’’) before an
individual is eligible for benefits under the other
group health plan; and participant eligibility for
benefits under the EAP must not be dependent on
participation in another group health plan. The
third requirement is that no employee premiums or
contributions may be required as a condition of
participation in the EAP. The fourth requirement is
that an EAP that constitutes excepted benefits may
not impose any cost-sharing requirements.
59 On September 13, 2013, DOL and the Treasury
published guidance on the application of the
market reforms and other provisions of the
Affordable Care Act to health reimbursement
arrangements (HRAs), certain health flexible
spending arrangements (health FSAs) and certain
other employer health care arrangements. See DOL
Technical Release 2013–03, available at https://
www.dol.gov/ebsa/newsroom/tr13-03.html, and IRS
Notice 2013–54, available at https://www.irs.gov/
pub/irs-drop/n-13-54.pdf. HHS also issued
guidance to reflect that HHS concurs in the
application of the laws under its jurisdiction as set
forth in the DOL and Treasury Department
guidance. See Insurance Standards Bulletin,
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plan. The Departments’ guidance on
HRAs clarifies that such arrangements
are subject to the group market reform
provisions of the Affordable Care Act,
including the prohibition on annual
limits under PHS Act section 2711 and
the requirement to provide certain
preventive services without cost sharing
under PHS Act section 2713. The
Departments’ guidance further clarifies
that such arrangements will not violate
the market reform provisions when
integrated with a group health plan that
complies with those provisions (and
that such arrangements cannot be
integrated with individual market
policies to satisfy the market reforms).
Benefits under an HRA generally do
not constitute excepted benefits, and
thus HRAs are generally subject to the
SBC requirements. An HRA integrated
with other major medical coverage
under a group health plan need not
separately satisfy the SBC requirements;
the SBC is prepared for the other major
medical coverage, and the effects of
employer allocations to an account
under the HRA can be denoted in the
appropriate spaces on the SBC,
including those for deductibles,
copayments, coinsurance, and benefits
otherwise not covered by the other
major medical coverage.
HSAs generally are not group health
plans and thus generally are not subject
to the SBC requirements. Nevertheless,
an SBC prepared for a high deductible
health plan associated with an HSA can
(but is not required to) mention the
effects of employer contributions to
HSAs in the appropriate spaces on the
SBC, including those for deductibles,
copayments, coinsurance, and benefits
otherwise not covered by the high
deductible health plan.
tkelley on DSK3SPTVN1PROD with PROPOSALS2
V. Applicability Date
Changes to the current requirements
to provide an SBC, notice of
modification, and uniform glossary
under PHS Act section 2715 and the
2012 final regulations are proposed to
apply for disclosures with respect to
participants and beneficiaries who
enroll or re-enroll in group health
Application of Affordable Care Act Provisions to
Certain Healthcare Arrangements, September 16,
2013, available at https://www.cms.gov/CCIIO/
Resources/Regulations-and-Guidance/Downloads/
cms-hra-notice-9-16-2013.pdf. On May 13, 2013,
two FAQs were made available on the IRS Web site
addressing employer healthcare arrangements,
available at: www.irs.gov/uac/Newsroom/EmployerHealth-Care-Arrangements. On November 6, 2014,
the Departments issued three FAQs on the
compliance of premium reimbursement
arrangements. See ACA Implementation FAQs Part
XXII, available at https://www.dol.gov/ebsa/pdf/faqaca22.pdf and https://www.cms.gov/CCIIO/
Resources/Fact-Sheets-and-FAQs/aca_
implementation_faqs22.html.
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coverage through an open enrollment
period (including re-enrollees and late
enrollees) beginning on the first day of
the first open enrollment period that
begins on or after September 1, 2015.
With respect to disclosures to
participants and beneficiaries who
enroll in group health coverage other
than through an open enrollment period
(including individuals who are newly
eligible for coverage and special
enrollees), the requirements of these
proposed regulations are proposed to
apply beginning on the first day of the
first plan year that begins on or after
September 1, 2015. For disclosures to
plans, and to individuals and
dependents in the individual market,
these requirements are proposed to
apply to health insurance issuers
beginning on September 1, 2015. We
solicit comments on these proposed
applicability dates.
VI. Economic Impact and Paperwork
Burden
A. Executive Orders 12866 and 13563—
Departments of Labor and HHS
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, public health and safety
effects; distributive impacts; and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. This rule
has been designated a ‘‘significant
regulatory action’’ under section 3(f) of
Executive Order 12866. Accordingly,
the rule has been reviewed by the Office
of Management and Budget.
A regulatory impact analysis (RIA)
must be prepared for major rules with
economically significant effects ($100
million or more in any one year). As
discussed below, the Departments have
concluded that these proposed
regulations would not have economic
impacts of $100 million or more in any
one year or otherwise meet the
definition of an ‘‘economically
significant rule’’ under Executive Order
12866. Nonetheless, consistent with
Executive Orders 12866 and 13563, the
Departments have provided an
assessment of the potential benefits and
the costs associated with this proposed
regulation.
The primary benefits of these
proposed regulations come from
improved information, which will
enable consumers, both individuals and
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78591
employers, to better understand the
health insurance coverage they have and
provide, and make better coverage
decisions based on their preferences
with respect to benefit design, level of
financial protection, and cost. The
Departments believe that such
improvements will result in a more
efficient, competitive market. These
proposed regulations will also benefit
consumers by reducing the time they
spend searching for and compiling
health plan and coverage information.
The Departments have continued
using the cost methodology that was
used to estimate the costs presented in
the 2012 final regulations. Since
publication of the 2012 final
regulations, the Departments have
refined assumptions and estimates to
incorporate better data. The estimates
presented in these proposed regulations
are a result of those efforts and represent
the Departments’ best estimates.
The primary cost of the proposed
regulations is requiring issuers and
plans to create a third coverage
example, a simple foot fracture (with
emergency room visit). This third
coverage example will fit on the same
page as the two existing coverage
examples in the SBC template, so no
new material costs are required by these
proposed regulations. The quantified
costs of these proposed regulations are
for the actual production of the new
coverage example.
These proposed regulations allow
issuers and plans to continue to use the
‘‘Coverage Example Calculator.’’ 60 This
calculator benefits issuers and plan
sponsors by reducing the required time
to produce the coverage examples. The
calculator allows plans to either
manually populate less than 20 data
points on the plan’s design for one plan
at a time, or to enter the data points for
multiple plans at once. Most of the data
fields needed for the new, proposed
coverage example are already required
to create the other two, already required
coverage examples. While plan sponsors
and issuers are not required to use the
Coverage Example Calculator, the
Departments expect that many will.
Those choosing to perform the
calculations without the calculator will
make their own determination that it is
more efficient and economically
advantageous, or otherwise more
appropriate for them to do so.
Using assumptions similar to those
used in the regulatory impact analysis of
the 2012 final regulations, with respect
60 https://www.cms.gov/cciio/Resources/formsreports-and-other-resources/#sbcug. For
more information on the calculator, see section
II.A.3 earlier in this preamble.
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to plans and issuers that do not use the
Coverage Example Calculator, the
Departments estimate that large issuers
and third-party administrators (TPAs),
for all their plans and products, would
spend a total of approximately 40
additional hours creating the new
coverage example (30 hours for medium
firms, and 20 hours for small firms).
Once the new coverage example is
completed, the Departments estimate
that large firms would spend an
estimated 25 hours in later years
updating, while medium firms would
spend 19 hours and small firms would
spend 13 hours.
This leads to an estimated cost in the
first year of $3.4 million and for each
subsequent year of $2.1 million to
produce the coverage example. Actual
cost could be lower as firms organize
their data in a manner that will allow
them to use the automated functions of
the Coverage Example Calculator.
Tables 1 and 2 detail the calculations
used to obtain the cost estimate for
creating the new, proposed coverage
example. The Paperwork Reduction Act
section below contains a discussion of
additional assumptions and data used to
develop this estimate.
TABLE 1—YEAR 1, CREATING NEW COVERAGE EXAMPLE
Number of
firms
Hours per firm
Cost per hour
Total hour burden
Equivalent
costs of hours
75
75
75
22.0
16.0
2.0
$84
62
130
1,650
1,200
150
$138,584
74,796
19,491
Sub-total ................................................................
Medium:
IT ...................................................................................
Benefits .........................................................................
........................
........................
........................
3,000
232,871
250
250
16.5
12.0
84
62
4,125
3,000
346,459
186,990
Legal .............................................................................
Sub-total ................................................................
Small:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
250
........................
1.5
........................
130
........................
375
7,500
48,728
582,176
175
175
175
11.0
8.0
1.0
84
62
130
1,925
1,400
175
161,681
87,262
22,740
Sub-total ................................................................
........................
........................
........................
3,500
271,682
158
158
158
22.0
16.0
2.0
84
62
130
3,476
2,528
316
291,949
157,570
41,061
Sub-total ................................................................
Medium:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
6,320
490,581
526
526
526
16.5
12.0
1.5
84
62
130
8,679
6,312
789
728,949
393,427
102,523
Sub-total ................................................................
Small:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
15,780
1,224,899
368
368
368
11.0
8.0
1.0
84
62
130
4,048
2,944
368
339,992
183,500
47,818
Sub-total ................................................................
........................
........................
........................
7,360
571,309
Total ................................................................
........................
........................
........................
43,460
3,373,517
Type of labor
Issuers
Large:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
TPAs
Large:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
TABLE 2—YEAR 2, CREATING NEW COVERAGE EXAMPLE
Number of
firms
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Type of labor
Hours per firm
Cost per hour
Total hour
burden
Equivalent
costs of hours
Issuers
Large:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
75
75
75
13.8
10.0
1.3
$84
62
130
1,031
750
94
$86,615
46,748
12,182
Sub-total ................................................................
........................
........................
........................
1,875
145,544
Medium:
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78593
TABLE 2—YEAR 2, CREATING NEW COVERAGE EXAMPLE—Continued
Number of
firms
Type of labor
Hours per firm
Cost per hour
Total hour
burden
Equivalent
costs of hours
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
250
250
250
10.3
7.5
0.9
84
62
130
2,578
1,875
234
216,537
116,869
30,455
Sub-total ................................................................
Small:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
4,688
363,860
175
175
175
6.9
5.0
0.6
84
62
130
1,203
875
109
101,050
54,539
14,212
Sub-total ................................................................
........................
........................
........................
2,188
169,801
158
158
158
13.8
10.0
1.3
84
62
130
2,173
1,580
198
182,468
98,481
25,663
Sub-total ................................................................
Medium:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
3,950
306,613
526
526
526
10.3
7.5
0.9
84
62
130
5,424
3,945
493
455,593
245,892
64,077
Sub-total ................................................................
Small:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
9,863
765,562
368
368
368
6.9
5.0
0.6
84
62
130
2,530
1,840
230
212,495
114,687
29,886
Sub-total ................................................................
........................
........................
........................
4,600
357,068
Total ................................................................
........................
........................
........................
27,163
2,108,448
TPAs
Large:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
tkelley on DSK3SPTVN1PROD with PROPOSALS2
B. Paperwork Reduction Act
1. Department of Labor and Department
of the Treasury
To implement PHS Act section 2715
and these proposed regulations,
collection of information requirements
relate to the provision of the following:
• Summary of benefits and coverage.
• Coverage examples (as components
of each SBC).
• A uniform glossary of health
coverage and medical terms (uniform
glossary).
• Notice of modifications.
A copy of the information collection
request (ICR) may be obtained by
contacting the PRA addressee: G.
Christopher Cosby, Office of Policy and
Research, U.S. 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.
These are not toll-free numbers. Email:
ebsa.opr@dol.gov. ICRs submitted to
OMB also are available at reginfo.gov
(https://www.reginfo.gov/public/do/
PRAMain).
This analysis includes the coverage
examples that are part of the SBC
VerDate Sep<11>2014
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Jkt 235001
disclosure, therefore, the Departments
calculate a single burden estimate for
purposes of this section, assuming the
information collection request for the
SBC (including coverage examples)
totals eight (8) sides of a page in length.
The Departments assume fullyinsured ERISA plans will rely on health
insurance issuers and self-insured plans
will rely on TPAs to perform these
functions. While self-insured plans may
prepare SBCs internally, the
Departments make this simplifying
assumption because most plans appear
to rely on issuers and TPAs for the
purpose of administrative duties, such
as enrollment and claims processing.
Thus, the Departments use health
insurance issuers and TPAs as the unit
of analysis for the purposes of
estimating administrative costs.
The Departments estimate there are a
total of 500 issuers and 1,050 TPAs
affected by this information
collection.61 Because HHS shares the
61 The estimate for the number of issuers is based
on the number of issuers for the group and
individual market filing with HHS for the Medical
Loss Ratio regulations. See 45 CFR part 158. The
number of TPAs is based on the U.S. Census’s 2011
Statistics of U.S. Businesses that reports there are
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hour and cost burden for fully-insured
plans with the Departments of Labor
and the Treasury, HHS assumes 50
percent of the hour and cost burden
estimates to account for burden for
issuers in the individual market and 15
percent of the burden for TPAs to
account for those TPAs serving selfinsured non-Federal governmental
plans. The Departments of Labor and
the Treasury assume the other 50
percent of the burden related to issuers
to account for burden servicing fully
insured ERISA plans, and 85 percent of
the burden related to TPAs to account
for the burden related to ERISA selfinsured plans.
To account for variation in costs due
to firm size and the number of plans and
individuals they service, the
Departments divide issuers into small,
medium, and large categories.62
3,157 TPA’s. Previous discussions with industry
experts led to assuming about one-third of the
TPA’s (1,052) could be providing services to selfinsured plans.
62 The Departments define small issuers as those
with total earned premiums less than $50 million;
medium issuers as those with total earned
premiums between $50 million and $999 million;
and large issuers as those with total earned
E:\FR\FM\30DEP2.SGM
Continued
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Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules
Accordingly, the Departments estimate
that there are approximately 175 small,
250 medium, and 75 large issuers. The
Departments lack information to create
a similar split for TPAs, so they assume
a similar distribution resulting in an
estimate of approximately 368 small,
526 medium, and 158 large TPAs.
The estimated hour burden and
equivalent cost for the collections of
information are as follows: The
Departments estimate an administrative
burden on issuers and TPAs to make
appropriate changes to IT systems and
processes and make updates to the SBCs
and coverage examples. The
Departments estimate that large firms
would spend 190 hours (40 hours of
which would be new due to the
proposed regulation) in the first year,
medium firms would spend 75 percent
of large firm hour burden, and small
firms would spend 50 percent of the
large firm hour burden to perform these
tasks. The total burden would be split
among IT professionals (55 percent),
benefits professionals (40 percent), and
legal professionals (5 percent), with
hourly labor rates of $83.99, $62.33, and
$129.94 respectively.63 Clerical labor
rates are $30.42 per hour.
Tables 3 (first year) and 4 (subsequent
years) show the calculations used to
obtain the hours burden of 153,600
hours (first year) and 141,600 hours
(subsequent years) and the equivalent
cost burden of $11.9 million (first year)
and $11.0 million (subsequent years) for
issuers and TPAs to prepare the SBCs
and coverage examples. In addition,
clerical employees would spend
653,000 hours with an equivalent cost of
$19.8 million in each year preparing
and distributing the SBCs.
Based on the foregoing, the total hours
burden for this information collection
would be 806,000 hours for the first year
(794,000 hours for subsequent years)
with an equivalent cost of $31.7 million
for the first year ($30.8 million for
subsequent years). This burden is split
evenly between the Departments of
Labor and the Treasury.
TABLE 3—UPDATE SBC INCLUDING COVERAGE EXAMPLES, YEAR 1
Number of
firms
Type of Labor
Total hour
burden
Total cost
burden
Hours per firm
Cost per hour
75
75
75
52.3
38.0
4.8
84
62
130
3,919
2,850
356
329,136
177,641
46,291
Sub-Total ...............................................................
Medium:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
7,125
553,067
250
250
250
39.9
29.0
3.6
84
62
130
9,969
7,250
906
837,275
451,893
117,758
Sub-Total ...............................................................
Small:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
18,125
1,406,926
175
175
175
26.1
19.0
2.4
84
62
130
4,572
3,325
416
383,992
207,247
54,006
Sub-Total ...............................................................
........................
........................
........................
8,313
645,245
158
158
158
88.8
64.6
8.1
84
62
130
14,034
10,207
1,276
1,178,745
636,190
165,784
Sub-Total ...............................................................
Medium:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
25,517
1,980,719
526
526
526
67.8
49.3
6.2
84
62
130
35,656
25,932
3,241
2,994,766
1,616,329
421,197
Sub-Total ...............................................................
........................
........................
........................
64,830
5,032,293
Issuers
Large:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
TPAs
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Large:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
premiums of $1 billion or more. The premium
revenue data come from the 2009 NAIC financial
statements, also known as ‘‘Blanks,’’ where insurers
report information about their various lines of
business.
63 The Departments’ estimated 2015 hourly labor
rates include wages, other benefits, and overhead
are calculated as follows: mean wage from the 2013
National Occupational Employment Survey (April
2014, Bureau of Labor Statistics https://www.bls.gov/
news.release/pdf/ocwage.pdf); wages as a percent of
total compensation from the Employer Cost for
Employee Compensation (June 2014, Bureau of
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19:35 Dec 29, 2014
Jkt 235001
Labor Statistics https://www.bls.gov/news.release/
ecec.t02.htm); overhead as a multiple of
compensation is assumed to be 25 percent of total
compensation for paraprofessionals, 20 percent of
compensation for clerical, and 35 percent of
compensation for professional; annual inflation
assumed to be 2.3 percent annual growth of total
labor cost since 2013 (Employment Costs Index data
for private industry, September 2014 https://
www.bls.gov/news.release/eci.nr0.htm). Computer
Systems Analysts (15–1121): $41.02(2013 BLS Wage
rate)/0.69(ECEC ratio) *1.35(Overhead Load Factor)
*1.023(Inflation rate) ¥2(Inflated 2 years from base
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Fmt 4701
Sfmt 4702
year) = $83.99; Compensation, benefits, and job
analysis specialists (13–1141): $30.44(2013 BLS
Wage rate)/0.69(ECEC ratio) *1.35(Overhead Load
Factor) *1.023(Inflation rate) ¥2(Inflated 2 years
from base year) = $62.33; Legal Professional (23–
1011): $63.46(2013 BLS Wage rate)/0.69(ECEC ratio)
*1.35(Overhead Load Factor) *1.023(Inflation rate)
¥2(Inflated 2 years from base year) = $129.94;
Secretaries, Except Legal, Medical, and Executive
(43–6014): $16.35(2013 BLS Wage rate)/0.675(ECEC
ratio) *1.2(Overhead Load Factor) *1.023(Inflation
rate) ¥2(Inflated 2 years from base year) = $30.42.
E:\FR\FM\30DEP2.SGM
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78595
TABLE 3—UPDATE SBC INCLUDING COVERAGE EXAMPLES, YEAR 1—Continued
Number of
firms
Type of Labor
Hours per firm
Cost per hour
Total hour
burden
Total cost
burden
Small
IT ..........................................................................................
Benefits .........................................................................
Legal .............................................................................
368
368
368
44.4
32.3
4.0
84
62
130
16,344
11,886
1,486
1,372,716
740,879
193,065
Sub-Total ...............................................................
........................
........................
........................
29,716
2,306,660
Total ................................................................
........................
........................
........................
153,625
11,924,910
TABLE 4—UPDATE SBC INCLUDING COVERAGE EXAMPLES, SUBSEQUENT YEARS
Number of
firms
Hours per firm
Cost per hour
Total hour burden
Total cost burden
75
75
75
48.1
35.0
4.4
84
62
130
3,609
2,625
328
303,151
163,616
42,637
Sub-Total ...............................................................
Medium
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
6,563
509,404
250
250
250
36.8
26.8
3.3
84
62
130
9,195
6,688
836
772,314
416,832
108,622
Sub-Total ...............................................................
........................
........................
........................
16,719
1,297,768
Small:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
175
175
175
24.1
17.5
2.2
84
62
130
4,211
3,063
383
353,677
190,886
49,743
Sub-Total ...............................................................
........................
........................
........................
7,656
594,305
158
158
158
81.8
59.5
7.4
84
62
130
12,926
9,401
1,175
1,085,686
585,964
152,696
Sub-Total ...............................................................
Medium:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
23,503
1,824,346
526
526
526
62.5
45.5
5.7
84
62
130
32,890
23,920
2,990
2,762,414
1,490,924
388,518
Sub-Total ...............................................................
........................
........................
........................
59,800
4,641,856
Small
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
368
368
368
40.9
29.8
3.7
84
62
130
15,054
10,948
1,369
1,264,343
682,389
177,823
Sub-Total ...............................................................
........................
........................
........................
27,370
2,124,555
Total ................................................................
........................
........................
........................
141,610
10,992,235
Type of Labor
Issuers
Large
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
TPAs
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Large
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
The Departments also estimate the
cost burden associated with the SBC,
Uniform Glossary and Notice of
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19:35 Dec 29, 2014
Jkt 235001
Modification. These costs are discussed
below.
• SBC—The Departments estimate
that approximately 60.6 million SBCs
will be delivered with 527,000 going to
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Sfmt 4702
ERISA plans and 60.1 million going to
participants and beneficiaries
E:\FR\FM\30DEP2.SGM
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78596
Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules
annually.64 The Departments assume 50
percent of the SBCs going to plans
would be sent electronically while 38
percent of SBCs would be sent
electronically to plan participants.
Accordingly, the Departments estimate
that about 23.4 million SBCs would be
distributed electronically and about 37.2
million SBCs would be distributed on
paper. The Departments assume there
are costs only for paper disclosures,
with de minimis costs for electronic
disclosures. The SBC, with coverage
examples, is assumed to be four doublesided pages (eight page sides) in length.
Paper SBCs sent to participants would
have no postage costs as they could be
included in mailings with other plan
materials, however all notices sent to
beneficiaries living apart from the
participant would be mailed and have a
49 cent postage costs. Printing costs
would be five cents per page. Each
document sent by mail would have a
one minute preparation burden, with
the task performed by a clerical worker.
Based on the foregoing, the total cost
burden to prepare and distribute the
SBC would be $16.4 million.
• Uniform Glossary—The
Departments assume that 2.5 percent of
those who receive paper SBCs will
request glossaries in paper form (that is,
about 1.1 million glossary requests). The
total cost burden to prepare and
distribute paper copies of the Uniform
Glossaries would be $760,000.
• Notice of Modifications—The
Departments assume that issuers and
plans will send notices of modification
to covered participants and
beneficiaries, and that 2 percent of
covered participants and beneficiaries
will receive such notices (1.2 million
notices). As with the SBC, 50 percent of
plans and 38 percent of policy holders
will receive electronic notices. Paper
notices are assumed to be of the same
length as an SBC, and will incur a
postage cost of 49 cents. The total cost
burden to prepare and distribute the
notices of modification would be
$640,000.
Based on the foregoing, the total
annual cost burden is estimated to be
$16.4 million. This burden is split
evenly between the Departments of
Labor and the Treasury.
TABLE 5—PREPARATION AND DISTRIBUTION COSTS: COST BURDEN
Number of disclosures sent
on paper
Number of
disclosures
SBC with Coverage Examples to Group Health Plan:
Renewal or Application .................................................
Material and
printing costs
Postage costs
Total cost
burden
527,328
263,664
$105,466
$0
$105,466
Sub-total ................................................................
SBC with Coverage Examples to Participants and Beneficiaries:
Upon Application or Eligibility .......................................
Upon Renewal ..............................................................
Beneficiaries Living Apart .............................................
527,328
263,664
105,466
0
105,466
2,030,000
58,000,000
90,000
1,015,000
35,960,000
90,000
406,000
14,384,000
36,000
0
0
44,100
406,000
14,384,000
80,100
Sub-total ................................................................
Uniform Glossary .................................................................
Notice of Modification ..........................................................
60,120,000
1,102,000
1,160,000
36,975,000
1,102,000
719,200
14,826,000
220,400
287,680
44,100
539,980
352,408
14,870,100
760,380
640,088
Total ................................................................
62,909,328
39,059,864
15,439,546
936,488
16,376,034
TABLE 6—PREPARATION AND DISTRIBUTION COSTS: HOUR BURDEN
Number of disclosures sent
on paper
Clerical hours
Clerical costs
527,328
263,664
4,394
$130,074
4,394
$130,074
Number of
disclosures
SBC with Coverage Examples to Group
Health Plan:
Renewal or Application .....................
Total hour
burden
Total
equivalent cost
527,328
263,664
4,394
130,074
4,394
130,074
2,030,000
58,000,000
90,000
1,015,000
35,960,000
90,000
16,917
599,333
1,500
500,733
17,740,267
44,400
16,917
599,333
1,500
500,733
17,740,267
44,400
Sub-total ....................................
Uniform Glossary .....................................
Notice of Modification ..............................
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Sub-total ....................................
SBC with Coverage Examples To Participants and Beneficiaries:
Upon Application or Eligibility ...........
Upon Renewal ..................................
Beneficiaries Living Apart .................
60,120,000
1,102,000
1,160,000
36,975,000
1,102,000
719,200
617,750
18,367
11,987
18,285,400
543,653
354,805
617,750
18,367
11,987
18,285,400
543,653
354,805
Total ....................................
62,909,328
39,059,864
652,498
19,313,933
652,498
19,313,933
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
64 Based on the 2012 Current Population Survey
the Department estimates there are 58.0 million
policy holders in ERISA plans https://www.dol.gov/
ebsa/pdf/coveragebulletin2013.pdf table 2.
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the ICR has a valid OMB control
number. The 2015–2017 paperwork
E:\FR\FM\30DEP2.SGM
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burden estimates are summarized as
follows:
Type of Review:
Agencies: Employee Benefits Security
Administration, Department of Labor;
Internal Revenue Service, U.S.
Department of the Treasury.
Title: Affordable Care Act Uniform
Explanation of Coverage Documents
OMB Number: 1210–0147; 1545–
2229.
Affected Public: Business or other for
profit; not-for-profit institutions.
Total Respondents: 2,389,000.
Total Responses: 62,909,000.
Frequency of Response: On-going.
Estimated Total Annual Burden
Hours (three year average): 399,000
hours (Employee Benefits Security
Administration); 399,000 hours (Internal
Revenue Service).
Estimated Total Annual Cost Burden
(three year average): $8,188,000
(Employee Benefits Security
Administration); $8,188,000 (Internal
Revenue Service).
78597
2. Department of Health and Human
Services
The Paperwork Reduction Act (PRA)
section for the Departments of Labor
and the Treasury above contain the
assumptions, data sources, and
explanations of the Departments’
methodology for estimating the PRA
burden. The following tables summarize
the Department of Health and Human
Services’ burden estimates.
TABLE 7—UPDATE SBC INCLUDING COVERAGE EXAMPLES; YEAR 1
Number of
firms
Type of labor
Total hour
burden
Equivalent
costs
Hours per firm
Cost per hour
75
75
75
52.3
38.0
4.8
$84
62
130
3,919
2,850
356
$329,136
177,641
46,291
Sub-Total ...............................................................
Medium:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
7,125
553,067
250
250
250
39.9
29.0
3.6
84
62
130
9,969
7,250
906
837,275
451,893
117,758
Sub-Total ...............................................................
Small:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
18,125
1,406,926
175
175
175
26.1
19.0
2.4
84
62
130
4,572
3,325
416
383,992
207,247
54,006
Sub-Total ...............................................................
........................
........................
........................
8,313
645,245
158
158
158
15.7
11.4
1.4
84
62
130
2,477
1,801
225
208,014
112,269
29,256
Sub-Total ...............................................................
Medium:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
4,503
349,539
526
526
526
12.0
8.7
1.1
84
62
130
6,292
4,576
572
528,488
285,235
74,329
Sub-Total ...............................................................
Small:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
11,441
888,052
368
368
368
7.8
5.7
0.7
84
62
130
2,884
2,098
262
242,244
130,743
34,070
Sub-Total ...............................................................
........................
........................
........................
5,244
407,058
Total ................................................................
........................
........................
........................
54,750
4,249,887
Issuers
Large:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
TPAs
Large:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
tkelley on DSK3SPTVN1PROD with PROPOSALS2
TABLE 8—UPDATE SBC INCLUDING COVERAGE EXAMPLES, SUBSEQUENT YEARS
Number of
firms
Type of labor
Hours per firm
Cost per hour
48.1
35.0
4.4
$84
62
130
Total hour
burden
Equivalent
costs
Issuers
Large:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
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75
75
75
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E:\FR\FM\30DEP2.SGM
30DEP2
3,609
2,625
328
$303,151
163,616
42,637
78598
Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules
TABLE 8—UPDATE SBC INCLUDING COVERAGE EXAMPLES, SUBSEQUENT YEARS—Continued
Type of labor
Number of
firms
Hours per firm
Cost per hour
Total hour
burden
Equivalent
costs
Sub-Total ...............................................................
Medium:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
6,563
509,404
250
250
250
36.8
26.8
3.3
84
62
130
9,195
6,688
836
772,314
416,832
108,622
Sub-Total ...............................................................
Small:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
16,719
1,297,768
175
175
175
24.1
17.5
2.2
84
62
130
4,211
3,063
383
353,677
190,886
49,743
Sub-Total ...............................................................
........................
........................
........................
7,656
594,305
TPAs
Large:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
158
158
158
14.4
10.5
1.3
84
62
130
2,281
1,659
207
191,592
103,405
26,946
Sub-Total ...............................................................
........................
........................
........................
4,148
321,943
Medium:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
526
526
526
11.0
8.0
1.0
84
62
130
5,804
4,221
528
487,485
263,104
68,562
Sub-Total ...............................................................
Small:
IT ...................................................................................
Benefits .........................................................................
Legal .............................................................................
........................
........................
........................
10,553
819,151
368
368
368
7.2
5.3
0.7
84
62
130
2,657
1,932
242
223,119
120,422
31,381
Sub-Total ...............................................................
........................
........................
........................
4,830
374,922
Total ................................................................
........................
........................
........................
50,468
3,917,493
TABLE 9—PREPARATION AND DISTRIBUTION COSTS
Number of
disclosures
Group Health Plan:
SBC with Coverage Examples .................................................................
SBC with Coverage Examples—Participants and Beneficiaries:
Upon Application or Eligibility ...................................................................
Upon Renewal ..........................................................................................
Beneficiaries Living Apart .........................................................................
Number of disclosures sent
on paper
Clerical hour
burden
Total
equivalent cost
15,750
7,875
131.25
$3,885
222,680
17,129,262
33,000
111,340
8,564,631
33,000
1,855.67
142,743.85
550.00
54,928
4,225,218
16,280
17,384,942
428,232
342,585
8,708,971
428,232
171,293
145,150
7,137
2,855
4,296,426
211,261
84,504
21,784,217
762,448
435,684.34
6,535,265
762,448
130,705
108,921
12,707
2,178
3,224,064
376,141
64,481
Total ...........................................................................................
tkelley on DSK3SPTVN1PROD with PROPOSALS2
Sub-Total ...........................................................................................
Uniform Glossary .............................................................................................
Notice of Modification ......................................................................................
Individual Market:
SBC with Coverage Examples .................................................................
Uniform Glossary ......................................................................................
Notice of Modification ...............................................................................
41,153,858
16,744,788
279,080
8,260,762
TABLE 10—PREPARATION AND DISTRIBUTION COSTS
Number of disclosures sent
on paper
Number of
disclosures
Group Health Plan:
SBC with Coverage Examples .....................................
SBC with Coverage Examples—Participants and Beneficiaries:
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15,750
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7,875
Material and
printing costs
$3,150
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Postage costs
........................
Total cost
burden
$3,150
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78599
TABLE 10—PREPARATION AND DISTRIBUTION COSTS—Continued
Number of disclosures sent
on paper
Number of
disclosures
Material and
printing costs
Postage costs
Total cost
burden
Upon Application or Eligibility .......................................
Upon Renewal ..............................................................
Beneficiaries Living Apart .............................................
222,680
17,129,262
33,000
111,340
8,564,631
33,000
44,536
3,425,852
13,200
........................
........................
$16,170
44,536
3,425,852
29,370
Sub-Total ...............................................................
Uniform Glossary .................................................................
Notice of Modification ..........................................................
Individual Market:
SBC with Coverage Examples .....................................
Uniform Glossary ..........................................................
Notice of Modification ...................................................
17,384,942
428,232
342,585
8,708,971
428,232
171,293
3,483,588
85,646
68,517
16,170
209,833
83,933
3,499,758
295,480
152,450
21,784,217
762,448
435,684.34
6,535,265
762,448
130,705
2,614,106
152,490
52,282
........................
373,599
64,046
2,614,106
526,089
116,328
Total ................................................................
41,153,858
16,744,788
6,459,780
747,582
7,207,361
tkelley on DSK3SPTVN1PROD with PROPOSALS2
HHS is proposing that issuers be
required to make available on an
Internet web address a copy of the
actual individual coverage policy or
group certificate of coverage.65 HHS
estimates that the burden of this request
will be de minimis because the
documents will have already been
created and issuers already have web
addresses on which the materials can be
made available.
The Department notes 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 2015–2017 paperwork burden
estimates are summarized as follows:
Type of Review: Revision.
Agency: Department of Health and
Human Services.
Title: Summary of benefits and
Coverage Uniform Glossary
CMS Identifier (OMB Control
Number): CMS–10407 (0938–1146).
Affected Public: State, Local, or Tribal
Governments.
Total Respondents: 126,500.
Total Responses: 41,154,000.
Frequency of Response: On-going.
Estimated Total Annual Burden
Hours (three year average): 331,000
hours.
Estimated Total Annual Cost Burden
(three year average): $7,207,000.
ICRs Related to Deemed Compliance
Reporting (45 CFR 147.200(a)(4)(iii)(C))
Under 45 CFR 147.200(a)(4)(iii)(C), if
individual health insurance issuers
provide the content required for the SBC
to the federal health reform Web portal
described in 45 CFR 159.120
(HealthCare.gov), then they will be
deemed to have satisfied the
requirement to provide an SBC to
individuals who request information
65 See
proposed 45 CFR 147.200(a)(2)(i)(J).
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about coverage prior to submitting an
application for coverage. Individual
health insurance issuers already provide
most SBC content elements to
HealthCare.gov, except for five data
elements related to patient
responsibility for each coverage
example: Deductibles, co-payments, coinsurance, coverage limits or exclusions,
and the total out-of-pocket cost to the
enrollee in view of these cost-sharing
amounts and coverage limits or
exclusions.
Accordingly, the additional burden
associated with the requirements under
§ 147.200(a)(4)(iii)(C) is the time and
effort it would take each of the 320
issuers submitting this data in the
individual market to enter the five
additional data elements into an Excel
spreadsheet. We estimate that it will
take these issuers about 160 hours, at a
total estimated cost of about $4,800, for
each coverage example. For three
coverage examples, the burden and cost
would be about 480 hours at a cost of
about $14,400.
In deriving these figures, we used the
following hourly labor rates and
estimated the time to complete each
task: $ 30.78/hr. and 0.5 hr./issuer for
clerical staff to enter data into an Excel
spreadsheet, or about $15 per
respondent per coverage example.
This information collection
requirement reflects the requirement
that issuers must provide all content
required in the SBC, including the
information necessary for coverage
examples, to HealthCare.gov to be
deemed compliant. The aforementioned
burden estimates will be submitted for
OMB review and approval as a revision
to the information collection request
currently approved under OMB control
number 0938–1086.
To obtain copies of the supporting
statement and any related forms for the
proposed paperwork collections
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referenced above, access CMS’ Web site
at https://www.cms.gov/
PaperworkReductionActof1995/PRAL/
list.asp#TopOfPage or email your
request, including your address, phone
number, OMB control number, and CMS
document identifier, to Paperwork@
cms.hhs.gov, or call the Reports
Clearance Office at 410–786–1326.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (5
U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to
Federal rules that are subject to the
notice and comment requirements of
section 553(b) of the Administrative
Procedure Act (5 U.S.C. 551 et seq.) and
which are likely to have a significant
economic impact on a substantial
number of small entities. Unless the
head of an agency certifies that a
proposed rule is not likely to have a
significant economic impact on a
substantial number of small entities,
section 603 of the RFA requires that the
agency present an initial regulatory
flexibility analysis (IRFA) describing the
rule’s impact on small entities and
explaining how the agency made its
decisions with respect to the application
of the rule to small entities.
The RFA generally defines a ‘‘small
entity’’ as (1) a proprietary firm meeting
the size standards of the Small Business
Administration (SBA) (13 CFR 121.201)
pursuant to the Small Business Act (15
U.S.C. 631 et seq.), (2) a nonprofit
organization that is not dominant in its
field, or (3) a small government
jurisdiction with a population of less
than 50,000. (States and individuals are
not included in the definition of ‘‘small
entity.’’)
There are several different types of
small entities affected by these proposed
regulations. For issuers and TPAs, the
Departments use as their measure of
significant economic impact on a
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substantial number of small entities a
change in revenues of more than 3 to 5
percent. For plans, the Departments
continue to consider a small plan to be
an employee benefit plan with fewer
than 100 participants.66 Further, while
some large employers may have small
plans, in general small employers
maintain most small plans. Thus, the
Departments believe that assessing the
impact of this proposed rule on small
plans is an appropriate substitute for
evaluating the effect on small entities.
The definition of small entity
considered appropriate for this purpose
differs, however, from a definition of
small business that is based on size
standards promulgated by the Small
Business Administration (SBA) (13 CFR
121.201) pursuant to the Small Business
Act (15 U.S.C. 631 et seq.). The
Departments therefore request
comments on the appropriateness of the
size standard used in evaluating the
impact of these proposed regulations on
small entities.
The Departments carefully considered
the likely impact of the rule on small
entities in connection with their
assessment under Executive Order
12866. The Departments believe that the
proposed regulations include flexibility
like allowing use of the Coverage
Example Calculator that would
minimize the burden on small entities.
Also, the Departments believe that the
burden imposed by the proposed
regulation on small insurers and small
TPAs will be 20 hours or less annually.
The Departments hereby certify that
these proposed regulations will not have
a significant economic impact on a
substantial number of small entities, as
described above. Consistent with the
policy of the RFA, the Departments
encourage the public to submit
comments that would allow the
Departments to assess the impacts
specifically on small entities or suggest
alternative rules that accomplish the
stated purpose of PHS Act section 2715
and minimize the impact on small
entities.
D. Unfunded Mandates Reform Act—
Department of Labor and Department of
Health and Human Services
Section 202 of the Unfunded
Mandates Reform Act (UMRA) of 1995
requires that agencies assess anticipated
costs and benefits before issuing any
proposed rule that includes a Federal
mandate that could result in
expenditure in any one year by State,
66 The basis for this definition is found in section
104(a)(2) of ERISA, which permits the Secretary of
Labor to prescribe simplified annual reports for
pension plans that cover fewer than 100
participants.
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local or Tribal governments, in the
aggregate, or by the private sector, of
$100 million in 1995 dollars updated
annually for inflation. In 2014, that
threshold level is approximately $141
million. These proposed regulations
include no mandates on State, local, or
Tribal governments. These proposed
regulations propose requirements
regarding standardized consumer
disclosures that would affect private
sector firms (for example, health
insurance issuers offering coverage in
the individual and group markets, and
third-party administrators providing
administrative services to group health
plans), but we conclude that these costs
would not exceed the $141 million
threshold. Thus, the Departments of
Labor and HHS conclude that these
proposed regulations would not impose
an unfunded mandate on State, local or
Tribal governments or the private sector.
Regardless, consistent with policy
embodied in UMRA, the proposed
requirements described in this notice of
proposed rulemaking has been designed
to be the least burdensome alternative
for State, local and Tribal governments,
and the private sector while achieving
the objectives of the Affordable Care
Act.
E. Federalism Statement—Department
of Labor and Department of Health and
Human Services
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 the
States, the relationship between the
national government and States, or on
the distribution of power and
responsibilities among the various
levels of government. Federal agencies
promulgating regulations that have
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 of Labor’s and
HHS’ view, these proposed rules have
federalism implications because they
would have direct effects on the States,
the relationship between national
governments and States, or on the
distribution of power and
responsibilities among various levels of
government relating to the disclosure of
health insurance coverage information
to consumers. Under these proposed
rules, all group health plans and health
insurance issuers offering group or
individual health insurance coverage,
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including self-funded non-federal
governmental plans as defined in
section 2791 of the PHS Act, would be
required to follow uniform standards for
compiling and providing a summary of
benefits and coverage to consumers.
Such Federal standards developed
under PHS Act section 2715(a) would
preempt any related State standards that
require a summary of benefits and
coverage that provides less information
to consumers than that required to be
provided under PHS Act section
2715(a).
In general, through section 514,
ERISA supersedes State laws to the
extent that they relate to any covered
employee benefit plan, and preserves
State laws that regulate insurance,
banking, or securities. While ERISA
prohibits States from regulating a plan
as an insurance or investment company
or bank, the preemption provisions of
section 731 of ERISA and section 2724
of the PHS Act (implemented in 29 CFR
2590.731(a) and 45 CFR 146.143(a))
apply so that the HIPAA requirements
(including those of the Affordable Care
Act) are not to be ‘‘construed to
supersede any provision of State law
which establishes, implements, or
continues in effect any standard or
requirement solely relating to health
insurance issuers in connection with
group health insurance coverage except
to the extent that such standard or
requirement prevents the application of
a requirement’’ of a Federal standard.
The conference report accompanying
HIPAA indicates that this is intended to
be the ‘‘narrowest’’ preemption of State
laws (See House Conf. Rep. No. 104–
736, at 205, reprinted in 1996 U.S. Code
Cong. & Admin. News 2018).
States may continue to apply State
law requirements except to the extent
that such requirements prevent the
application of the Affordable Care Act
requirements that are the subject of this
rulemaking. Accordingly, States have
significant latitude to impose
requirements on health insurance
issuers that are more restrictive than the
Federal law. However, under these
proposed rules, a State would not be
allowed to impose a requirement that
modifies the summary of benefits and
coverage required to be provided under
PHS Act section 2715(a), because it
would prevent the application of this
proposed rule’s uniform disclosure
requirement.
In compliance with the requirement
of Executive Order 13132 that agencies
examine closely any policies that may
have federalism implications or limit
the policy making discretion of the
States, the Departments of Labor and
HHS have engaged in efforts to consult
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with and work cooperatively with
affected States, including consulting
with, and attending conferences of, the
National Association of Insurance
Commissioners and consulting with
State insurance officials on an
individual basis. It is expected that the
Departments of Labor and HHS will act
in a similar fashion in enforcing the
Affordable Care Act, including the
provisions of section 2715 of the PHS
Act. Throughout the process of
developing these proposed regulations,
to the extent feasible within the specific
preemption provisions of HIPAA as it
applies to the Affordable Care Act, the
Departments of Labor and HHS have
attempted to balance the States’
interests in regulating health insurance
issuers, and Congress’ intent to provide
uniform minimum protections to
consumers in every State. By doing so,
it is the Departments of Labor’s and
HHS ’ view that they have complied
with the requirements of Executive
Order 13132.
Pursuant to the requirements set forth
in section 8(a) of Executive Order
13132, and by the signatures affixed to
this proposed rule, the Departments
certify that the Employee Benefits
Security Administration and the Centers
for Medicare & Medicaid Services have
complied with the requirements of
Executive Order 13132 for the attached
proposed rule in a meaningful and
timely manner.
tkelley on DSK3SPTVN1PROD with PROPOSALS2
F. Special Analyses—Department of the
Treasury
For purposes of the Department of the
Treasury it has been determined that
this notice of proposed rulemaking 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 has also
been determined that section 553(b) of
the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these
proposed regulations. For a discussion
of the impact of this proposed rule on
small entities, please see section V.C. of
this preamble. Pursuant to section
7805(f) of the Code, this notice of
proposed rulemaking has been
submitted to the Small Business
Administration for comment on its
impact on small business.
submit to each House of the Congress
and to the Comptroller General a report
containing a copy of the rule along with
other specified information, and has
been transmitted to Congress and the
Comptroller General for review.
VII. Statutory Authority
The Department of the Treasury
regulations are proposed to be adopted
pursuant to the authority contained in
sections 7805 and 9833 of the Code.
The Department of Labor regulations
are proposed to be adopted pursuant to
the authority contained in 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), 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 1–2011, 77 FR 1088 (January 9,
2012).
The Department of Health and Human
Services regulations are proposed to be
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.
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, and State regulation of
health insurance.
G. Congressional Review Act
This proposed rule is subject to the
Congressional Review Act provisions of
the Small Business Regulatory
Enforcement Fairness Act of 1996 (5
U.S.C. 801 et seq.), which specifies that
before a rule can take effect, the Federal
agency promulgating the rule shall
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78601
Signed this 19th day of December, 2014.
John M. Dalrymple,
Deputy Commissioner for Services and
Enforcement, Internal Revenue Service.
Signed this 18th day of December, 2014.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits
Security Administration, Department of
Labor. CMS–9938–P
Dated: December 18, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare &
Medicaid Services.
Dated: December 19, 2014.
Sylvia Burwell,
Secretary, Department of Health and Human
Services.
Department of the Treasury
Internal Revenue Service
26 CFR Chapter 1
Accordingly, 26 CFR part 54 is
proposed to be amended as follows:
PART 54—PENSION EXCISE TAXES
Paragraph 1. The authority citation
for Part 54 continues to read in part as
follows:
■
Authority: Authority: 26 U.S.C. 7805.
* * *
Section 54.9815–2715 also issued under 26
U.S.C. 9833.
Paragraph 2. Section 54.9815–2715 is
revised to read as follows:
■
§ 54.9815–2715 Summary of benefits and
coverage and uniform glossary.
(a) Summary of benefits and
coverage—(1) In general. A group health
plan (and its administrator as defined in
section 3(16)(A) of the Employee
Retirement Income Security Act of 1974
(ERISA)), and a health insurance issuer
offering group health insurance
coverage, is required to provide a
written summary of benefits and
coverage (SBC) for each benefit package
without charge to entities and
individuals described in this paragraph
(a)(1) in accordance with the rules of
this section.
(i) SBC provided by a group health
insurance issuer to a group health
plan—(A) Upon application. A health
insurance issuer offering group health
insurance coverage must provide the
SBC to a group health plan (or its
sponsor) upon application for health
coverage, as soon as practicable
following receipt of the application, but
in no event later than seven business
days following receipt of the
application. If an SBC was provided
before application pursuant to
paragraph (a)(1)(i)(D) of this section
(relating to SBCs upon request), this
paragraph (a)(1)(i)(A) is deemed
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satisfied, provided there is no change to
the information required to be in the
SBC. However, if there has been a
change in the information required, a
new SBC that includes the correct
information must be provided upon
application pursuant to this paragraph
(a)(1)(i)(A).
(B) By first day of coverage (if there
are changes). If there is any change in
the information required to be in the
SBC that was provided upon application
and before the first day of coverage, the
issuer must update and provide a
current SBC to the plan (or its sponsor)
no later than the first day of coverage.
(C) Upon renewal, reissuance, or reenrollment. If the issuer renews or
reissues a policy, certificate, or contract
of insurance for a succeeding policy
year, or automatically re-enrolls the
policyholder or its participants and
beneficiaries in coverage, the issuer
must provide a new SBC as follows:
(1) If written application is required
(in either paper or electronic form) for
renewal or reissuance, the SBC must be
provided no later than the date the
written application materials are
distributed.
(2) If renewal, reissuance, or reenrollment is automatic, the SBC must
be provided no later than 30 days prior
to the first day of the new plan or policy
year; however, with respect to an
insured plan, if the policy, certificate, or
contract of insurance has not been
issued or renewed before such 30-day
period, the SBC must be provided as
soon as practicable but in no event later
than seven business days after issuance
of the new policy, certificate, or contract
of insurance, or the receipt of written
confirmation of intent to renew,
whichever is earlier.
(D) Upon request. If a group health
plan (or its sponsor) requests an SBC or
summary information about a health
insurance product from a health
insurance issuer offering group health
insurance coverage, an SBC must be
provided as soon as practicable, but in
no event later than seven business days
following receipt of the request.
(ii) SBC provided by a group health
insurance issuer and a group health
plan to participants and beneficiaries—
(A) In general. A group health plan
(including its administrator, as defined
under section 3(16) of ERISA), and a
health insurance issuer offering group
health insurance coverage, must provide
an SBC to a participant or beneficiary
(as defined under sections 3(7) and 3(8)
of ERISA), and consistent with the rules
of paragraph (a)(1)(iii) of this section,
with respect to each benefit package
offered by the plan or issuer for which
the participant or beneficiary is eligible.
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19:35 Dec 29, 2014
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(B) Upon application. The SBC must
be provided as part of any written
application materials that are
distributed by the plan or issuer for
enrollment. If the plan or issuer does
not distribute written application
materials for enrollment, the SBC must
be provided no later than the first date
on which the participant is eligible to
enroll in coverage for the participant or
any beneficiaries. If an SBC was
provided before application pursuant to
paragraph (a)(1)(ii)(F) of this section
(relating to SBCs upon request), this
paragraph (a)(1)(ii)(B) is deemed
satisfied, provided there is no change to
the information required to be in the
SBC. However, if there has been is a
change in the information content, a
new SBC that includes the correct
information must be provided upon
application pursuant to this paragraph
(a)(1)(ii)(B).
(C) By first day of coverage (if there
are changes). If there is any change to
the information required to be in the
SBC that was provided upon application
and before the first day of coverage, the
plan or issuer must update and provide
a current SBC to a participant or
beneficiary no later than the first day of
coverage.
(D) Special enrollees. The plan or
issuer must provide the SBC to special
enrollees (as described in § 54.9801–6)
no later than the date by which a
summary plan description is required to
be provided under the timeframe set
forth in ERISA section 104(b)(1)(A) and
its implementing regulations, which is
90 days from enrollment.
(E) Upon renewal, reissuance, or reenrollment. If the plan or issuer requires
participants or beneficiaries to renew in
order to maintain coverage (for example,
for a succeeding plan year), or
automatically re-enrolls participants
and beneficiaries in coverage, the plan
or issuer must provide a new SBC, as
follows:
(1) If written application is required
for renewal, reissuance, or re-enrollment
(in either paper or electronic form), the
SBC must be provided no later than the
date on which the written application
materials are distributed.
(2) If renewal, reissuance, or reenrollment is automatic, the SBC must
be provided no later than 30 days prior
to the first day of the new plan or policy
year; however, with respect to an
insured plan, if the policy, certificate, or
contract of insurance has not been
issued or renewed before such 30-day
period, the SBC must be provided as
soon as practicable but in no event later
than seven business days after issuance
of the new policy, certificate, or contract
of insurance, or the receipt of written
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Sfmt 4702
confirmation of intent to renew,
whichever is earlier.
(F) Upon request. A plan or issuer
must provide the SBC to participants or
beneficiaries upon request for an SBC or
summary information about the health
coverage, as soon as practicable, but in
no event later than seven business days
following receipt of the request.
(iii) Special rules to prevent
unnecessary duplication with respect to
group health coverage—(A) An entity
required to provide an SBC under this
paragraph (a)(1) with respect to an
individual satisfies that requirement if
another party provides the SBC, but
only to the extent that the SBC is timely
and complete in accordance with the
other rules of this section. Therefore, for
example, in the case of a group health
plan funded through an insurance
policy, the plan satisfies the
requirement to provide an SBC with
respect to an individual if the issuer
provides a timely and complete SBC to
the individual. An entity required to
provide an SBC under this paragraph
(a)(1) with respect to an individual that
contracts with another party to provide
such SBC is considered to satisfy the
requirement to provide such SBC if:
(1) The entity monitors performance
under the contract;
(2) If the entity has knowledge that
the SBC is not being provided in a
manner that satisfies the requirements
of this section and the entity has all
information necessary to correct the
noncompliance, the entity corrects the
noncompliance as soon as practicable;
and
(3) If the entity has knowledge the
SBC is not being provided in a manner
that satisfies the requirements of this
section and the entity does not have all
information necessary to correct the
noncompliance, the entity
communicates with participants and
beneficiaries who are affected by the
noncompliance regarding the regarding
the noncompliance, and begins taking
significant steps as soon as practicable
to avoid future violations.
(B) If a single SBC is provided to a
participant and any beneficiaries at the
participant’s last known address, then
the requirement to provide the SBC to
the participant and any beneficiaries is
generally satisfied. However, if a
beneficiary’s last known address is
different than the participant’s last
known address, a separate SBC is
required to be provided to the
beneficiary at the beneficiary’s last
known address.
(C) With respect to a group health
plan that offers multiple benefit
packages, the plan or issuer is required
to provide a new SBC automatically to
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participants and beneficiaries upon
renewal or re-enrollment only with
respect to the benefit package in which
a participant or beneficiary is enrolled
(or will be automatically re-enrolled
under the plan); SBCs are not required
to be provided automatically upon
renewal or re-enrollment with respect to
benefit packages in which the
participant or beneficiary is not enrolled
(or will not automatically be enrolled).
However, if a participant or beneficiary
requests an SBC with respect to another
benefit package (or more than one other
benefit package) for which the
participant or beneficiary is eligible, the
SBC (or SBCs, in the case of a request
for SBCs relating to more than one
benefit package) must be provided upon
request as soon as practicable, but in no
event later than seven business days
following receipt of the request.
(2) Content—(i) In general. Subject to
paragraph (a)(2)(iii) of this section, the
SBC must include the following:
(A) Uniform definitions of standard
insurance terms and medical terms so
that consumers may compare health
coverage and understand the terms of
(or exceptions to) their coverage, in
accordance with guidance as specified
by the Secretary;
(B) A description of the coverage,
including cost sharing, for each category
of benefits identified by the Secretary in
guidance;
(C) The exceptions, reductions, and
limitations of the coverage;
(D) The cost-sharing provisions of the
coverage, including deductible,
coinsurance, and copayment
obligations;
(E) The renewability and continuation
of coverage provisions;
(F) Coverage examples, in accordance
with the rules of paragraph (a)(2)(ii) of
this section;
(G) With respect to coverage
beginning on or after January 1, 2014, a
statement about whether the plan or
coverage provides minimum essential
coverage as defined under section
5000A(f) and whether the plan’s or
coverage’s share of the total allowed
costs of benefits provided under the
plan or coverage meets applicable
requirements;
(H) A statement that the SBC is only
a summary and that the plan document,
policy, certificate, or contract of
insurance should be consulted to
determine the governing contractual
provisions of the coverage;
(I) Contact information for questions;
(J) For issuers, an Internet web
address where a copy of the actual
individual coverage policy or group
certificate of coverage can be reviewed
and obtained;
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(K) For plans and issuers that
maintain one or more networks of
providers, an Internet address (or
similar contact information) for
obtaining a list of network providers;
(L) For plans and issuers that use a
formulary in providing prescription
drug coverage, an Internet address (or
similar contact information) for
obtaining information on prescription
drug coverage; and
(M) An Internet address for obtaining
the uniform glossary, as described in
paragraph (c) of this section, as well as
a contact phone number to obtain a
paper copy of the uniform glossary, and
a disclosure that paper copies are
available.
(ii) Coverage examples. The SBC must
include coverage examples specified by
the Secretary in guidance that illustrate
benefits provided under the plan or
coverage for common benefits scenarios
(including pregnancy and serious or
chronic medical conditions) in
accordance with this paragraph
(a)(2)(ii).
(A) Number of examples. The
Secretary may identify up to six
coverage examples that may be required
in an SBC.
(B) Benefits scenarios. For purposes of
this paragraph (a)(2)(ii), a benefits
scenario is a hypothetical situation,
consisting of a sample treatment plan
for a specified medical condition during
a specific period of time, based on
recognized clinical practice guidelines
as defined by the National Guideline
Clearinghouse, Agency for Healthcare
Research and Quality. The Secretary
will specify, in guidance, the
assumptions, including the relevant
items and services and reimbursement
information, for each claim in the
benefits scenario.
(C) Illustration of benefit provided.
For purposes of this paragraph (a)(2)(ii),
to illustrate benefits provided under the
plan or coverage for a particular benefits
scenario, a plan or issuer simulates
claims processing in accordance with
guidance issued by the Secretary to
generate an estimate of what an
individual might expect to pay under
the plan, policy, or benefit package. The
illustration of benefits provided will
take into account any cost sharing,
excluded benefits, and other limitations
on coverage, as specified by the
Secretary in guidance.
(iii) Coverage provided outside the
United States. In lieu of summarizing
coverage for items and services
provided outside the United States, a
plan or issuer may provide an Internet
address (or similar contact information)
for obtaining information about benefits
and coverage provided outside the
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78603
United States. In any case, the plan or
issuer must provide an SBC in
accordance with this section that
accurately summarizes benefits and
coverage available under the plan or
coverage within the United States.
(3) Appearance. (i) A group health
plan and a health insurance issuer must
provide an SBC in the form, and in
accordance with the instructions for
completing the SBC, that are specified
by the Secretary in guidance. The SBC
must be presented in a uniform format,
use terminology understandable by the
average plan enrollee, not exceed four
double-sided pages in length, and not
include print smaller than 12-point font.
(ii) A group health plan that utilizes
two or more benefit packages (such as
major medical coverage and a health
flexible spending arrangement) may
synthesize the information into a single
SBC, or provide multiple SBCs.
(4) Form—(i) An SBC provided by an
issuer offering group health insurance
coverage to a plan (or its sponsor), may
be provided in paper form.
Alternatively, the SBC may be provided
electronically (such as by email or an
Internet posting) if the following three
conditions are satisfied—
(A) The format is readily accessible by
the plan (or its sponsor);
(B) The SBC is provided in paper form
free of charge upon request; and
(C) If the electronic form is an Internet
posting, the issuer timely advises the
plan (or its sponsor) in paper form or
email that the documents are available
on the Internet and provides the Internet
address.
(ii) An SBC provided by a group
health plan or health insurance issuer to
a participant or beneficiary may be
provided in paper form. Alternatively,
the SBC may be provided electronically
(such as by email or an Internet posting)
if the requirements of this paragraph
(a)(4)(ii) are met.
(A) With respect to participants and
beneficiaries covered under the plan,
the SBC may be provided electronically
as described in this paragraph
(a)(4)(ii)(A). However, in all cases, the
plan must provide the SBC in paper
form if paper form is requested.
(1) In accordance with the Department
of Labor’s disclosure regulations at 29
CFR 2520.104b–1;
(2) In connection with online
enrollment or online renewal of
coverage under the plan; or
(3) In response to an online request
made by a participant or beneficiary for
the SBC.
(B) With respect to participants and
beneficiaries who are eligible but not
enrolled for coverage, the SBC may be
provided electronically if:
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(1) The format is readily accessible;
(2) The SBC is provided in paper form
free of charge upon request; and
(3) In a case in which the electronic
form is an Internet posting, the plan or
issuer timely notifies the individual in
paper form (such as a postcard) or email
that the documents are available on the
Internet, provides the Internet address,
and notifies the individual that the
documents are available in paper form
upon request.
(5) Language. A group health plan or
health insurance issuer must provide
the SBC in a culturally and
linguistically appropriate manner. For
purposes of this paragraph (a)(5), a plan
or issuer is considered to provide the
SBC in a culturally and linguistically
appropriate manner if the thresholds
and standards of 29 CFR 2590.715–
2719(e) are met as applied to the SBC.
(b) Notice of modification. If a group
health plan, or health insurance issuer
offering group health insurance
coverage, makes any material
modification (as defined under section
102 of ERISA) in any of the terms of the
plan or coverage that would affect the
content of the SBC, that is not reflected
in the most recently provided SBC, and
that occurs other than in connection
with a renewal or reissuance of
coverage, the plan or issuer must
provide notice of the modification to
enrollees not later than 60 days prior to
the date on which the modification will
become effective. The notice of
modification must be provided in a form
that is consistent with the rules of
paragraph (a)(4) of this section.
(c) Uniform glossary—(1) In general.
A group health plan, and a health
insurance issuer offering group health
insurance coverage, must make
available to participants and
beneficiaries the uniform glossary
described in paragraph (c)(2) of this
section in accordance with the
appearance and form and manner
requirements of paragraphs (c)(3) and
(c)(4) of this section.
(2) Health-coverage-related terms and
medical terms. The uniform glossary
must provide uniform definitions,
specified by the Secretary in guidance,
of the following health-coverage-related
terms and medical terms:
(i) Allowed amount, appeal, balance
billing, co-insurance, complications of
pregnancy, co-payment, deductible,
durable medical equipment, emergency
medical condition, emergency medical
transportation, emergency room care,
emergency services, excluded services,
grievance, habilitation services, health
insurance, home health care, hospice
services, hospitalization, hospital
outpatient care, in-network co-
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insurance, in-network co-payment,
medically necessary, network, nonpreferred provider, out-of-network coinsurance, out-of-network co-payment,
out-of-pocket limit, physician services,
plan, preauthorization, preferred
provider, premium, prescription drug
coverage, prescription drugs, primary
care physician, primary care provider,
provider, reconstructive surgery,
rehabilitation services, skilled nursing
care, specialist, usual customary and
reasonable (UCR), and urgent care; and
(ii) Such other terms as the Secretary
determines are important to define so
that individuals and employers may
compare and understand the terms of
coverage and medical benefits
(including any exceptions to those
benefits), as specified in guidance.
(3) Appearance. A group health plan,
and a health insurance issuer, must
provide the uniform glossary with the
appearance specified by the Secretary in
guidance to ensure the uniform glossary
is presented in a uniform format and
uses terminology understandable by the
average plan enrollee.
(4) Form and manner. A plan or issuer
must make the uniform glossary
described in this paragraph (c) available
upon request, in either paper or
electronic form (as requested), within
seven business days after receipt of the
request.
(d) Preemption. State laws that
require a health insurance issuer to
provide an SBC that supplies less
information than required under
paragraph (a) of this section are
preempted.
(e) Failure to provide. A group health
plan that willfully fails to provide
information required under this section
to a participant or beneficiary is subject
to a fine of not more than $1,000 for
each such failure. A failure with respect
to each participant or beneficiary
constitutes a separate offense for
purposes of this paragraph (e). The IRS
will enforce this section using a process
and procedure consistent with section
4980D of the Code.
(f) Applicability. The requirements of
this section do not apply to a group
health plan benefit package that
provides Medicare Advantage benefits
pursuant to or 42 U.S.C. Chapter 7,
Subchapter XVIII, Part C.
Department of Labor
Employee Benefits Security
Administration
29 CFR Chapter XXV
Accordingly, 29 CFR part 2590 is
proposed to be amended as follows:
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PART 2590—RULES AND
REGULATIONS FOR GROUP HEALTH
PLANS
1. The authority citation for Part 2590
continues 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. 111–
152, 124 Stat. 1029; Secretary of Labor’s
Order 1–2011, 77 FR 1088 (January 9, 2012).
2. Section 2590.715–2715 is revised to
read as follows:
■
§ 2590.715–2715 Summary of benefits and
coverage and uniform glossary.
(a) Summary of benefits and
coverage—(1) In general. A group health
plan (and its administrator as defined in
section 3(16)(A) of ERISA)), and a health
insurance issuer offering group health
insurance coverage, is required to
provide a written summary of benefits
and coverage (SBC) for each benefit
package without charge to entities and
individuals described in this paragraph
(a)(1) in accordance with the rules of
this section.
(i) SBC provided by a group health
insurance issuer to a group health
plan—(A) Upon application. A health
insurance issuer offering group health
insurance coverage must provide the
SBC to a group health plan (or its
sponsor) upon application for health
coverage, as soon as practicable
following receipt of the application, but
in no event later than seven business
days following receipt of the
application. If an SBC was provided
before application pursuant to
paragraph (a)(1)(i)(D) of this section
(relating to SBCs upon request), this
paragraph (a)(1)(i)(A) is deemed
satisfied, provided there is no change to
the information required to be in the
SBC. However, if there has been a
change in the information required, a
new SBC that includes the correct
information must be provided upon
application pursuant to this paragraph
(a)(1)(i)(A).
(B) By first day of coverage (if there
are changes). If there is any change in
the information required to be in the
SBC that was provided upon application
and before the first day of coverage, the
issuer must update and provide a
current SBC to the plan (or its sponsor)
no later than the first day of coverage.
(C) Upon renewal, reissuance, or reenrollment. If the issuer renews or
reissues a policy, certificate, or contract
of insurance for a succeeding policy
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year, or automatically re-enrolls the
policyholder or its participants and
beneficiaries in coverage, the issuer
must provide a new SBC as follows:
(1) If written application is required
(in either paper or electronic form) for
renewal or reissuance, the SBC must be
provided no later than the date the
written application materials are
distributed.
(2) If renewal, reissuance, or reenrollment is automatic, the SBC must
be provided no later than 30 days prior
to the first day of the new plan or policy
year; however, with respect to an
insured plan, if the policy, certificate, or
contract of insurance has not been
issued or renewed before such 30-day
period, the SBC must be provided as
soon as practicable but in no event later
than seven business days after issuance
of the new policy, certificate, or contract
of insurance, or the receipt of written
confirmation of intent to renew,
whichever is earlier.
(D) Upon request. If a group health
plan (or its sponsor) requests an SBC or
summary information about a health
insurance product from a health
insurance issuer offering group health
insurance coverage, an SBC must be
provided as soon as practicable, but in
no event later than seven business days
following receipt of the request.
(ii) SBC provided by a group health
insurance issuer and a group health
plan to participants and beneficiaries—
(A) In general. A group health plan
(including its administrator, as defined
under section 3(16) of ERISA), and a
health insurance issuer offering group
health insurance coverage, must provide
an SBC to a participant or beneficiary
(as defined under sections 3(7) and 3(8)
of ERISA), and consistent with the rules
of paragraph (a)(1)(iii) of this section,
with respect to each benefit package
offered by the plan or issuer for which
the participant or beneficiary is eligible.
(B) Upon application. The SBC must
be provided as part of any written
application materials that are
distributed by the plan or issuer for
enrollment. If the plan or issuer does
not distribute written application
materials for enrollment, the SBC must
be provided no later than the first date
on which the participant is eligible to
enroll in coverage for the participant or
any beneficiaries. If an SBC was
provided before application pursuant to
paragraph (a)(1)(ii)(F) of this section
(relating to SBCs upon request), this
paragraph (a)(1)(ii)(B) is deemed
satisfied, provided there is no change to
the information required to be in the
SBC. However, if there has been is a
change in the information content, a
new SBC that includes the correct
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information must be provided upon
application pursuant to this paragraph
(a)(1)(ii)(B).
(C) By first day of coverage (if there
are changes). If there is any change to
the information required to be in the
SBC that was provided upon application
and before the first day of coverage, the
plan or issuer must update and provide
a current SBC to a participant or
beneficiary no later than the first day of
coverage.
(D) Special enrollees. The plan or
issuer must provide the SBC to special
enrollees (as described in § 2590.701–6)
no later than the date by which a
summary plan description is required to
be provided under the timeframe set
forth in ERISA section 104(b)(1)(A) and
its implementing regulations, which is
90 days from enrollment.
(E) Upon renewal, reissuance, or reenrollment. If the plan or issuer requires
participants or beneficiaries to renew in
order to maintain coverage (for example,
for a succeeding plan year), or
automatically re-enrolls participants
and beneficiaries in coverage, the plan
or issuer must provide a new SBC, as
follows:
(1) If written application is required
for renewal, reissuance, or re-enrollment
(in either paper or electronic form), the
SBC must be provided no later than the
date on which the written application
materials are distributed.
(2) If renewal, reissuance, or reenrollment is automatic, the SBC must
be provided no later than 30 days prior
to the first day of the new plan or policy
year; however, with respect to an
insured plan, if the policy, certificate, or
contract of insurance has not been
issued or renewed before such 30-day
period, the SBC must be provided as
soon as practicable but in no event later
than seven business days after issuance
of the new policy, certificate, or contract
of insurance, or the receipt of written
confirmation of intent to renew,
whichever is earlier.
(F) Upon request. A plan or issuer
must provide the SBC to participants or
beneficiaries upon request for an SBC or
summary information about the health
coverage, as soon as practicable, but in
no event later than seven business days
following receipt of the request.
(iii) Special rules to prevent
unnecessary duplication with respect to
group health coverage—(A) An entity
required to provide an SBC under this
paragraph (a)(1) with respect to an
individual satisfies that requirement if
another party provides the SBC, but
only to the extent that the SBC is timely
and complete in accordance with the
other rules of this section. Therefore, for
example, in the case of a group health
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plan funded through an insurance
policy, the plan satisfies the
requirement to provide an SBC with
respect to an individual if the issuer
provides a timely and complete SBC to
the individual. An entity required to
provide an SBC under this paragraph
(a)(1) with respect to an individual that
contracts with another party to provide
such SBC is considered to satisfy the
requirement to provide such SBC if:
(1) The entity monitors performance
under the contract;
(2) If the entity has knowledge that
the SBC is not being provided in a
manner that satisfies the requirements
of this section and the entity has all
information necessary to correct the
noncompliance, the entity corrects the
noncompliance as soon as practicable;
and
(3) If the entity has knowledge the
SBC is not being provided in a manner
that satisfies the requirements of this
section and the entity does not have all
information necessary to correct the
noncompliance, the entity
communicates with participants and
beneficiaries who are affected by the
noncompliance regarding the regarding
the noncompliance, and begins taking
significant steps as soon as practicable
to avoid future violations.
(B) If a single SBC is provided to a
participant and any beneficiaries at the
participant’s last known address, then
the requirement to provide the SBC to
the participant and any beneficiaries is
generally satisfied. However, if a
beneficiary’s last known address is
different than the participant’s last
known address, a separate SBC is
required to be provided to the
beneficiary at the beneficiary’s last
known address.
(C) With respect to a group health
plan that offers multiple benefit
packages, the plan or issuer is required
to provide a new SBC automatically to
participants and beneficiaries upon
renewal or re-enrollment only with
respect to the benefit package in which
a participant or beneficiary is enrolled
(or will be automatically re-enrolled
under the plan); SBCs are not required
to be provided automatically upon
renewal or re-enrollment with respect to
benefit packages in which the
participant or beneficiary is not enrolled
(or will not automatically be enrolled).
However, if a participant or beneficiary
requests an SBC with respect to another
benefit package (or more than one other
benefit package) for which the
participant or beneficiary is eligible, the
SBC (or SBCs, in the case of a request
for SBCs relating to more than one
benefit package) must be provided upon
request as soon as practicable, but in no
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event later than seven business days
following receipt of the request.
(2) Content—(i) In general. Subject to
paragraph (a)(2)(iii) of this section, the
SBC must include the following:
(A) Uniform definitions of standard
insurance terms and medical terms so
that consumers may compare health
coverage and understand the terms of
(or exceptions to) their coverage, in
accordance with guidance as specified
by the Secretary;
(B) A description of the coverage,
including cost sharing, for each category
of benefits identified by the Secretary in
guidance;
(C) The exceptions, reductions, and
limitations of the coverage;
(D) The cost-sharing provisions of the
coverage, including deductible,
coinsurance, and copayment
obligations;
(E) The renewability and continuation
of coverage provisions;
(F) Coverage examples, in accordance
with the rules of paragraph (a)(2)(ii) of
this section;
(G) With respect to coverage
beginning on or after January 1, 2014, a
statement about whether the plan or
coverage provides minimum essential
coverage as defined under section
5000A(f) and whether the plan’s or
coverage’s share of the total allowed
costs of benefits provided under the
plan or coverage meets applicable
requirements;
(H) A statement that the SBC is only
a summary and that the plan document,
policy, certificate, or contract of
insurance should be consulted to
determine the governing contractual
provisions of the coverage;
(I) Contact information for questions;
(J) For issuers, an Internet web
address where a copy of the actual
individual coverage policy or group
certificate of coverage can be reviewed
and obtained;
(K) For plans and issuers that
maintain one or more networks of
providers, an Internet address (or
similar contact information) for
obtaining a list of network providers;
(L) For plans and issuers that use a
formulary in providing prescription
drug coverage, an Internet address (or
similar contact information) for
obtaining information on prescription
drug coverage; and
(M) An Internet address for obtaining
the uniform glossary, as described in
paragraph (c) of this section, as well as
a contact phone number to obtain a
paper copy of the uniform glossary, and
a disclosure that paper copies are
available.
(ii) Coverage examples. The SBC must
include coverage examples specified by
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the Secretary in guidance that illustrate
benefits provided under the plan or
coverage for common benefits scenarios
(including pregnancy and serious or
chronic medical conditions) in
accordance with this paragraph
(a)(2)(ii).
(A) Number of examples. The
Secretary may identify up to six
coverage examples that may be required
in an SBC.
(B) Benefits scenarios. For purposes of
this paragraph (a)(2)(ii), a benefits
scenario is a hypothetical situation,
consisting of a sample treatment plan
for a specified medical condition during
a specific period of time, based on
recognized clinical practice guidelines
as defined by the National Guideline
Clearinghouse, Agency for Healthcare
Research and Quality. The Secretary
will specify, in guidance, the
assumptions, including the relevant
items and services and reimbursement
information, for each claim in the
benefits scenario.
(C) Illustration of benefit provided.
For purposes of this paragraph (a)(2)(ii),
to illustrate benefits provided under the
plan or coverage for a particular benefits
scenario, a plan or issuer simulates
claims processing in accordance with
guidance issued by the Secretary to
generate an estimate of what an
individual might expect to pay under
the plan, policy, or benefit package. The
illustration of benefits provided will
take into account any cost sharing,
excluded benefits, and other limitations
on coverage, as specified by the
Secretary in guidance.
(iii) Coverage provided outside the
United States. In lieu of summarizing
coverage for items and services
provided outside the United States, a
plan or issuer may provide an Internet
address (or similar contact information)
for obtaining information about benefits
and coverage provided outside the
United States. In any case, the plan or
issuer must provide an SBC in
accordance with this section that
accurately summarizes benefits and
coverage available under the plan or
coverage within the United States.
(3) Appearance. (i) A group health
plan and a health insurance issuer must
provide an SBC in the form, and in
accordance with the instructions for
completing the SBC, that are specified
by the Secretary in guidance. The SBC
must be presented in a uniform format,
use terminology understandable by the
average plan enrollee, not exceed four
double-sided pages in length, and not
include print smaller than 12-point font.
(ii) A group health plan that utilizes
two or more benefit packages (such as
major medical coverage and a health
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flexible spending arrangement) may
synthesize the information into a single
SBC, or provide multiple SBCs.
(4) Form—(i) An SBC provided by an
issuer offering group health insurance
coverage to a plan (or its sponsor), may
be provided in paper form.
Alternatively, the SBC may be provided
electronically (such as by email or an
Internet posting) if the following three
conditions are satisfied—
(A) The format is readily accessible by
the plan (or its sponsor);
(B) The SBC is provided in paper form
free of charge upon request; and
(C) If the electronic form is an Internet
posting, the issuer timely advises the
plan (or its sponsor) in paper form or
email that the documents are available
on the Internet and provides the Internet
address.
(ii) An SBC provided by a group
health plan or health insurance issuer to
a participant or beneficiary may be
provided in paper form. Alternatively,
the SBC may be provided electronically
(such as by email or an Internet posting)
if the requirements of this paragraph
(a)(4)(ii) are met.
(A) With respect to participants and
beneficiaries covered under the plan,
the SBC may be provided electronically
as described in this paragraph
(a)(4)(ii)(A). However, in all cases, the
plan must provide the SBC in paper
form if paper form is requested.
(1) In accordance with the Department
of Labor’s disclosure regulations at 29
CFR 2520.104b–1;
(2) In connection with online
enrollment or online renewal of
coverage under the plan; or
(3) In response to an online request
made by a participant or beneficiary for
the SBC.
(B) With respect to participants and
beneficiaries who are eligible but not
enrolled for coverage, the SBC may be
provided electronically if:
(1) The format is readily accessible;
(2) The SBC is provided in paper form
free of charge upon request; and
(3) In a case in which the electronic
form is an Internet posting, the plan or
issuer timely notifies the individual in
paper form (such as a postcard) or email
that the documents are available on the
Internet, provides the Internet address,
and notifies the individual that the
documents are available in paper form
upon request.
(5) Language. A group health plan or
health insurance issuer must provide
the SBC in a culturally and
linguistically appropriate manner. For
purposes of this paragraph (a)(5), a plan
or issuer is considered to provide the
SBC in a culturally and linguistically
appropriate manner if the thresholds
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and standards of § 2590.715–2719(e) are
met as applied to the SBC.
(b) Notice of modification. If a group
health plan, or health insurance issuer
offering group health insurance
coverage, makes any material
modification (as defined under section
102 of ERISA) in any of the terms of the
plan or coverage that would affect the
content of the SBC, that is not reflected
in the most recently provided SBC, and
that occurs other than in connection
with a renewal or reissuance of
coverage, the plan or issuer must
provide notice of the modification to
enrollees not later than 60 days prior to
the date on which the modification will
become effective. The notice of
modification must be provided in a form
that is consistent with the rules of
paragraph (a)(4) of this section.
(c) Uniform glossary—(1) In general.
A group health plan, and a health
insurance issuer offering group health
insurance coverage, must make
available to participants and
beneficiaries the uniform glossary
described in paragraph (c)(2) of this
section in accordance with the
appearance and form and manner
requirements of paragraphs (c)(3) and
(c)(4) of this section.
(2) Health-coverage-related terms and
medical terms. The uniform glossary
must provide uniform definitions,
specified by the Secretary in guidance,
of the following health-coverage-related
terms and medical terms:
(i) Allowed amount, appeal, balance
billing, co-insurance, complications of
pregnancy, co-payment, deductible,
durable medical equipment, emergency
medical condition, emergency medical
transportation, emergency room care,
emergency services, excluded services,
grievance, habilitation services, health
insurance, home health care, hospice
services, hospitalization, hospital
outpatient care, in-network coinsurance, in-network co-payment,
medically necessary, network, nonpreferred provider, out-of-network coinsurance, out-of-network co-payment,
out-of-pocket limit, physician services,
plan, preauthorization, preferred
provider, premium, prescription drug
coverage, prescription drugs, primary
care physician, primary care provider,
provider, reconstructive surgery,
rehabilitation services, skilled nursing
care, specialist, usual customary and
reasonable (UCR), and urgent care; and
(ii) Such other terms as the Secretary
determines are important to define so
that individuals and employers may
compare and understand the terms of
coverage and medical benefits
(including any exceptions to those
benefits), as specified in guidance.
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(3) Appearance. A group health plan,
and a health insurance issuer, must
provide the uniform glossary with the
appearance specified by the Secretary in
guidance to ensure the uniform glossary
is presented in a uniform format and
uses terminology understandable by the
average plan enrollee.
(4) Form and manner. A plan or issuer
must make the uniform glossary
described in this paragraph (c) available
upon request, in either paper or
electronic form (as requested), within
seven business days after receipt of the
request.
(d) Preemption. See § 2590.731. In
addition, State laws that require a health
insurance issuer to provide an SBC that
supplies less information than required
under paragraph (a) of this section are
preempted.
(e) Failure to provide. A group health
plan that willfully fails to provide
information required under this section
to a participant or beneficiary is subject
to a fine of not more than $1,000 for
each such failure. A failure with respect
to each participant or beneficiary
constitutes a separate offense for
purposes of this paragraph (e). The
Department will enforce this section
using a process and procedure
consistent with 29 CFR 2560.502c–2 of
this chapter and 29 CFR part 2570,
subpart C.
(f) Applicability. The requirements of
this section do not apply to a group
health plan benefit package that
provides Medicare Advantage benefits
pursuant to or 42 U.S.C. Chapter 7,
Subchapter XVIII, Part C.
Department of Health and Human
Services
45 CFR Subtitle A
For the reasons stated in the
preamble, the Department of Health and
Human Services proposes to amend 45
CFR part 147 as follows:
PART 147—HEALTH INSURANCE
REFORM REQUIREMENTS FOR THE
GROUP AND INDIVIDUAL HEALTH
INSURANCE MARKETS
1. The authority citation for part 147
continues to read as follows:
■
Authority: Sections 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. Revise § 147.200 to read as follows:
§ 147.200 Summary of benefits and
coverage and uniform glossary.
(a) Summary of benefits and
coverage—(1) In general. A group health
plan (and its administrator as defined in
section 3(16)(A) of ERISA)), and a health
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insurance issuer offering group or
individual health insurance coverage, is
required to provide a written summary
of benefits and coverage (SBC) for each
benefit package without charge to
entities and individuals described in
this paragraph (a)(1) in accordance with
the rules of this section.
(i) SBC provided by a group health
insurance issuer to a group health
plan—(A) Upon application. A health
insurance issuer offering group health
insurance coverage must provide the
SBC to a group health plan (or its
sponsor) upon application for health
coverage, as soon as practicable
following receipt of the application, but
in no event later than seven business
days following receipt of the
application. If an SBC was provided
before application pursuant to
paragraph (a)(1)(i)(D) of this section
(relating to SBCs upon request), this
paragraph (a)(1)(i)(A) is deemed
satisfied, provided there is no change to
the information required to be in the
SBC. However, if there has been a
change in the information required, a
new SBC that includes the correct
information must be provided upon
application pursuant to this paragraph
(a)(1)(i)(A).
(B) By first day of coverage (if there
are changes). If there is any change in
the information required to be in the
SBC that was provided upon application
and before the first day of coverage, the
issuer must update and provide a
current SBC to the plan (or its sponsor)
no later than the first day of coverage.
(C) Upon renewal, reissuance, or reenrollment. If the issuer renews or
reissues a policy, certificate, or contract
of insurance for a succeeding policy
year, or automatically re-enrolls the
policyholder or its participants and
beneficiaries in coverage, the issuer
must provide a new SBC as follows:
(1) If written application is required
(in either paper or electronic form) for
renewal or reissuance, the SBC must be
provided no later than the date the
written application materials are
distributed.
(2) If renewal, reissuance, or reenrollment is automatic, the SBC must
be provided no later than 30 days prior
to the first day of the new plan or policy
year; however, with respect to an
insured plan, if the policy, certificate, or
contract of insurance has not been
issued or renewed before such 30-day
period, the SBC must be provided as
soon as practicable but in no event later
than seven business days after issuance
of the new policy, certificate, or contract
of insurance, or the receipt of written
confirmation of intent to renew,
whichever is earlier.
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(D) Upon request. If a group health
plan (or its sponsor) requests an SBC or
summary information about a health
insurance product from a health
insurance issuer offering group health
insurance coverage, an SBC must be
provided as soon as practicable, but in
no event later than seven business days
following receipt of the request.
(ii) SBC provided by a group health
insurance issuer and a group health
plan to participants and beneficiaries—
(A) In general. A group health plan
(including its administrator, as defined
under section 3(16) of ERISA), and a
health insurance issuer offering group
health insurance coverage, must provide
an SBC to a participant or beneficiary
(as defined under sections 3(7) and 3(8)
of ERISA), and consistent with the rules
of paragraph (a)(1)(iii) of this section,
with respect to each benefit package
offered by the plan or issuer for which
the participant or beneficiary is eligible.
(B) Upon application. The SBC must
be provided as part of any written
application materials that are
distributed by the plan or issuer for
enrollment. If the plan or issuer does
not distribute written application
materials for enrollment, the SBC must
be provided no later than the first date
on which the participant is eligible to
enroll in coverage for the participant or
any beneficiaries. If an SBC was
provided before application pursuant to
paragraph (a)(1)(ii)(F) of this section
(relating to SBCs upon request), this
paragraph (a)(1)(ii)(B) is deemed
satisfied, provided there is no change to
the information required to be in the
SBC. However, if there has been is a
change in the information content, a
new SBC that includes the correct
information must be provided upon
application pursuant to this paragraph
(a)(1)(ii)(B).
(C) By first day of coverage (if there
are changes). If there is any change to
the information required to be in the
SBC that was provided upon application
and before the first day of coverage, the
plan or issuer must update and provide
a current SBC to a participant or
beneficiary no later than the first day of
coverage.
(D) Special enrollees. The plan or
issuer must provide the SBC to special
enrollees (as described in § 146.117 of
this subchapter) no later than the date
by which a summary plan description is
required to be provided under the
timeframe set forth in ERISA section
104(b)(1)(A) and its implementing
regulations, which is 90 days from
enrollment.
(E) Upon renewal, reissuance, or reenrollment. If the plan or issuer requires
participants or beneficiaries to renew in
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order to maintain coverage (for example,
for a succeeding plan year), or
automatically re-enrolls participants
and beneficiaries in coverage, the plan
or issuer must provide a new SBC, as
follows:
(1) If written application is required
for renewal, reissuance, or re-enrollment
(in either paper or electronic form), the
SBC must be provided no later than the
date on which the written application
materials are distributed.
(2) If renewal, reissuance, or reenrollment is automatic, the SBC must
be provided no later than 30 days prior
to the first day of the new plan or policy
year; however, with respect to an
insured plan, if the policy, certificate, or
contract of insurance has not been
issued or renewed before such 30-day
period, the SBC must be provided as
soon as practicable but in no event later
than seven business days after issuance
of the new policy, certificate, or contract
of insurance, or the receipt of written
confirmation of intent to renew,
whichever is earlier.
(F) Upon request. A plan or issuer
must provide the SBC to participants or
beneficiaries upon request for an SBC or
summary information about the health
coverage, as soon as practicable, but in
no event later than seven business days
following receipt of the request.
(iii) Special rules to prevent
unnecessary duplication with respect to
group health coverage—(A) An entity
required to provide an SBC under this
paragraph (a)(1) with respect to an
individual satisfies that requirement if
another party provides the SBC, but
only to the extent that the SBC is timely
and complete in accordance with the
other rules of this section. Therefore, for
example, in the case of a group health
plan funded through an insurance
policy, the plan satisfies the
requirement to provide an SBC with
respect to an individual if the issuer
provides a timely and complete SBC to
the individual. An entity required to
provide an SBC under this paragraph
(a)(1) with respect to an individual that
contracts with another party to provide
such SBC is considered to satisfy the
requirement to provide such SBC if:
(1) The entity monitors performance
under the contract;
(2) If the entity has knowledge that
the SBC is not being provided in a
manner that satisfies the requirements
of this section and the entity has all
information necessary to correct the
noncompliance, the entity corrects the
noncompliance as soon as practicable;
and
(3) If the entity has knowledge the
SBC is not being provided in a manner
that satisfies the requirements of this
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section and the entity does not have all
information necessary to correct the
noncompliance, the entity
communicates with participants and
beneficiaries who are affected by the
noncompliance regarding the regarding
the noncompliance, and begins taking
significant steps as soon as practicable
to avoid future violations.
(B) If a single SBC is provided to a
participant and any beneficiaries at the
participant’s last known address, then
the requirement to provide the SBC to
the participant and any beneficiaries is
generally satisfied. However, if a
beneficiary’s last known address is
different than the participant’s last
known address, a separate SBC is
required to be provided to the
beneficiary at the beneficiary’s last
known address.
(C) With respect to a group health
plan that offers multiple benefit
packages, the plan or issuer is required
to provide a new SBC automatically to
participants and beneficiaries upon
renewal or re-enrollment only with
respect to the benefit package in which
a participant or beneficiary is enrolled
(or will be automatically re-enrolled
under the plan); SBCs are not required
to be provided automatically upon
renewal or re-enrollment with respect to
benefit packages in which the
participant or beneficiary is not enrolled
(or will not automatically be enrolled).
However, if a participant or beneficiary
requests an SBC with respect to another
benefit package (or more than one other
benefit package) for which the
participant or beneficiary is eligible, the
SBC (or SBCs, in the case of a request
for SBCs relating to more than one
benefit package) must be provided upon
request as soon as practicable, but in no
event later than seven business days
following receipt of the request.
(iv) SBC provided by a health
insurance issuer offering individual
health insurance coverage—(A) Upon
application. A health insurance issuer
offering individual health insurance
coverage must provide an SBC to an
individual covered under the policy
(including every dependent) upon
receiving an application for any health
insurance policy, as soon as practicable
following receipt of the application, but
in no event later than seven business
days following receipt of the
application. If an SBC was provided
before application pursuant to
paragraph (a)(1)(iv)(D) of this section
(relating to SBCs upon request), this
paragraph (a)(1)(iv)(A) is deemed
satisfied, provided there is no change to
the information required to be in the
SBC. However, if there has been a
change in the information content, a
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new SBC that includes the correct
information must be provided upon
application pursuant to this paragraph
(a)(1)(iv)(A).
(B) By first day of coverage (if there
are changes). If there is any change in
the information required to be in the
SBC that was provided upon application
and before the first day of coverage, the
issuer must update and provide a
current SBC to the individual no later
than the first day of coverage.
(C) Upon renewal, reissuance, or reenrollment. If the issuer renews or
reissues a policy, certificate, or contract
of insurance for a succeeding policy
year, or automatically re-enrolls an
individual (or dependent) covered
under a policy, certificate, or contract of
insurance into a policy, certificate, or
contract of insurance under a different
plan or product, the issuer must provide
an SBC for the coverage in which the
individual (including every dependent)
will be enrolled, as follows:
(1) If written application is required
(in either paper or electronic form) for
renewal, reissuance, or re-enrollment,
the SBC must be provided no later than
the date on which the written
application materials are distributed.
(2) If renewal, reissuance, or reenrollment is automatic, the SBC must
be provided no later than 30 days prior
to the first day of the new policy year;
however, if the policy, certificate, or
contract of insurance has not been
issued or renewed before such 30 day
period, the SBC must be provided as
soon as practicable but in no event later
than seven business days after issuance
of the new policy, certificate, or contract
of insurance, or the receipt of written
confirmation of intent to renew,
whichever is earlier.
(D) Upon request. A health insurance
issuer offering individual health
insurance coverage must provide an
SBC to any individual or dependent
upon request for an SBC or summary
information about a health insurance
product as soon as practicable, but in no
event later than seven business days
following receipt of the request.
(v) Special rule to prevent
unnecessary duplication with respect to
individual health insurance coverage.—
(A) In general. If a single SBC is
provided to an individual and any
dependents at the individual’s last
known address, then the requirement to
provide the SBC to the individual and
any dependents is generally satisfied.
However, if a dependent’s last known
address is different than the individual’s
last known address, a separate SBC is
required to be provided to the
dependent at the dependents’ last
known address.
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(B) Student health insurance
coverage. With respect to student health
insurance coverage as defined at
§ 147.145(a), the requirement to provide
an SBC to an individual will be
considered satisfied for an entity if
another party provides a timely and
complete SBC to the individual.
(2) Content—(i) In general. Subject to
paragraph (a)(2)(iii) of this section, the
SBC must include the following:
(A) Uniform definitions of standard
insurance terms and medical terms so
that consumers may compare health
coverage and understand the terms of
(or exceptions to) their coverage, in
accordance with guidance as specified
by the Secretary;
(B) A description of the coverage,
including cost sharing, for each category
of benefits identified by the Secretary in
guidance;
(C) The exceptions, reductions, and
limitations of the coverage;
(D) The cost-sharing provisions of the
coverage, including deductible,
coinsurance, and copayment
obligations;
(E) The renewability and continuation
of coverage provisions;
(F) Coverage examples, in accordance
with the rules of paragraph (a)(2)(ii) of
this section;
(G) With respect to coverage
beginning on or after January 1, 2014, a
statement about whether the plan or
coverage provides minimum essential
coverage as defined under section
5000A(f) and whether the plan’s or
coverage’s share of the total allowed
costs of benefits provided under the
plan or coverage meets applicable
requirements;
(H) A statement that the SBC is only
a summary and that the plan document,
policy, certificate, or contract of
insurance should be consulted to
determine the governing contractual
provisions of the coverage;
(I) Contact information for questions;
(J) For issuers, an Internet web
address where a copy of the actual
individual coverage policy or group
certificate of coverage can be reviewed
and obtained;
(K) For plans and issuers that
maintain one or more networks of
providers, an Internet address (or
similar contact information) for
obtaining a list of network providers; (L)
For plans and issuers that use a
formulary in providing prescription
drug coverage, an Internet address (or
similar contact information) for
obtaining information on prescription
drug coverage;
(M) An Internet address for obtaining
the uniform glossary, as described in
paragraph (c) of this section, as well as
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a contact phone number to obtain a
paper copy of the uniform glossary, and
a disclosure that paper copies are
available; and
(N) For qualified health plans sold
through an individual market Exchange
that exclude or provide for coverage of
the services described in § 156.280(d)(1)
of this subchapter, a notice of exclusion
or such coverage.
(ii) Coverage examples. The SBC must
include coverage examples specified by
the Secretary in guidance that illustrate
benefits provided under the plan or
coverage for common benefits scenarios
(including pregnancy and serious or
chronic medical conditions) in
accordance with this paragraph
(a)(2)(ii).
(A) Number of examples. The
Secretary may identify up to six
coverage examples that may be required
in an SBC.
(B) Benefits scenarios. For purposes of
this paragraph (a)(2)(ii), a benefits
scenario is a hypothetical situation,
consisting of a sample treatment plan
for a specified medical condition during
a specific period of time, based on
recognized clinical practice guidelines
as defined by the National Guideline
Clearinghouse, Agency for Healthcare
Research and Quality. The Secretary
will specify, in guidance, the
assumptions, including the relevant
items and services and reimbursement
information, for each claim in the
benefits scenario.
(C) Illustration of benefit provided.
For purposes of this paragraph (a)(2)(ii),
to illustrate benefits provided under the
plan or coverage for a particular benefits
scenario, a plan or issuer simulates
claims processing in accordance with
guidance issued by the Secretary to
generate an estimate of what an
individual might expect to pay under
the plan, policy, or benefit package. The
illustration of benefits provided will
take into account any cost sharing,
excluded benefits, and other limitations
on coverage, as specified by the
Secretary in guidance.
(iii) Coverage provided outside the
United States. In lieu of summarizing
coverage for items and services
provided outside the United States, a
plan or issuer may provide an Internet
address (or similar contact information)
for obtaining information about benefits
and coverage provided outside the
United States. In any case, the plan or
issuer must provide an SBC in
accordance with this section that
accurately summarizes benefits and
coverage available under the plan or
coverage within the United States.
(3) Appearance. (i) A group health
plan and a health insurance issuer must
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provide an SBC in the form, and in
accordance with the instructions for
completing the SBC, that are specified
by the Secretary in guidance. The SBC
must be presented in a uniform format,
use terminology understandable by the
average plan enrollee (or, in the case of
individual market coverage, the average
individual covered under a health
insurance policy), not exceed four
double-sided pages in length, and not
include print smaller than 12-point font.
A health insurance issuer offering
individual health insurance coverage
must provide the SBC as a stand-alone
document.
(ii) A group health plan that utilizes
two or more benefit packages (such as
major medical coverage and a health
flexible spending arrangement) may
synthesize the information into a single
SBC, or provide multiple SBCs.
(4) Form—(i) An SBC provided by an
issuer offering group health insurance
coverage to a plan (or its sponsor), may
be provided in paper form.
Alternatively, the SBC may be provided
electronically (such as by email or an
Internet posting) if the following three
conditions are satisfied—
(A) The format is readily accessible by
the plan (or its sponsor);
(B) The SBC is provided in paper form
free of charge upon request; and
(C) If the electronic form is an Internet
posting, the issuer timely advises the
plan (or its sponsor) in paper form or
email that the documents are available
on the Internet and provides the Internet
address.
(ii) An SBC provided by a group
health plan or health insurance issuer to
a participant or beneficiary may be
provided in paper form. Alternatively,
the SBC may be provided electronically
(such as by email or an Internet posting)
if the requirements of this paragraph
(a)(4)(ii) are met.
(A) With respect to participants and
beneficiaries covered under the plan or
coverage, the SBC may be provided
electronically as described in this
paragraph (a)(4)(ii)(A). However, in all
cases, the plan or issuer must provide
the SBC in paper form if paper form is
requested.
(1) In accordance with the Department
of Labor’s disclosure regulations at 29
CFR 2520.104b–1;
(2) In connection with online
enrollment or online renewal of
coverage under the plan; or
(3) In response to an online request
made by a participant or beneficiary for
the SBC.
(B) With respect to participants and
beneficiaries who are eligible but not
enrolled for coverage, the SBC may be
provided electronically if:
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(1) The format is readily accessible;
(2) The SBC is provided in paper form
free of charge upon request; and
(3) In a case in which the electronic
form is an Internet posting, the plan or
issuer timely notifies the individual in
paper form (such as a postcard) or email
that the documents are available on the
Internet, provides the Internet address,
and notifies the individual that the
documents are available in paper form
upon request.
(iii) An issuer offering individual
health insurance coverage must provide
an SBC in a manner that can reasonably
be expected to provide actual notice in
paper or electronic form.
(A) An issuer satisfies the
requirements of this paragraph (a)(4)(iii)
if the issuer:
(1) Hand-delivers a printed copy of
the SBC to the individual or dependent;
(2) Mails a printed copy of the SBC to
the mailing address provided to the
issuer by the individual or dependent;
(3) Provides the SBC by email after
obtaining the individual’s or
dependent’s agreement to receive the
SBC or other electronic disclosures by
email;
(4) Posts the SBC on the Internet and
advises the individual or dependent in
paper or electronic form, in a manner
compliant with paragraphs
(a)(4)(iii)(A)(1) through (3), that the SBC
is available on the Internet and includes
the applicable Internet address; or
(5) Provides the SBC by any other
method that can reasonably be expected
to provide actual notice.
(B) An SBC may not be provided
electronically unless:
(1) The format is readily accessible;
(2) The SBC is placed in a location
that is prominent and readily accessible;
(3) The SBC is provided in an
electronic form which can be
electronically retained and printed;
(4) The SBC is consistent with the
appearance, content, and language
requirements of this section;
(5) The issuer notifies the individual
or dependent that the SBC is available
in paper form without charge upon
request and provides it upon request.
(C) Deemed compliance. A health
insurance issuer offering individual
health insurance coverage that provides
the content required under paragraph
(a)(2) of this section, as specified in
guidance published by the Secretary, to
the federal health reform Web portal
described in § 159.120 of this
subchapter will be deemed to satisfy the
requirements of paragraph (a)(1)(iv)(D)
of this section with respect to a request
for summary information about a health
insurance product made prior to an
application for coverage. However,
PO 00000
Frm 00034
Fmt 4701
Sfmt 4702
nothing in this paragraph should be
construed as otherwise limiting such
issuer’s obligations under this section.
(iv) An SBC provided by a selfinsured non-Federal governmental plan
may be provided in paper form.
Alternatively, the SBC may be provided
electronically if the plan conforms to
either the substance of the provisions in
paragraph (a)(4)(ii) or (a)(4)(iii) of this
section.
(5) Language. A group health plan or
health insurance issuer must provide
the SBC in a culturally and
linguistically appropriate manner. For
purposes of this paragraph (a)(5), a plan
or issuer is considered to provide the
SBC in a culturally and linguistically
appropriate manner if the thresholds
and standards of § 147.136(e) are met as
applied to the SBC.
(b) Notice of modification. If a group
health plan, or health insurance issuer
offering group or individual health
insurance coverage, makes any material
modification (as defined under section
102 of ERISA) in any of the terms of the
plan or coverage that would affect the
content of the SBC, that is not reflected
in the most recently provided SBC, and
that occurs other than in connection
with a renewal or reissuance of
coverage, the plan or issuer must
provide notice of the modification to
enrollees (or, in the case of individual
market coverage, an individual covered
under a health insurance policy) not
later than 60 days prior to the date on
which the modification will become
effective. The notice of modification
must be provided in a form that is
consistent with the rules of paragraph
(a)(4) of this section.
(c) Uniform glossary—(1) In general.
A group health plan, and a health
insurance issuer offering group health
insurance coverage, must make
available to participants and
beneficiaries, and a health insurance
issuer offering individual health
insurance coverage must make available
to applicants, policyholders, and
covered dependents, the uniform
glossary described in paragraph (c)(2) of
this section in accordance with the
appearance and form and manner
requirements of paragraphs (c)(3) and
(c)(4) of this section.
(2) Health-coverage-related terms and
medical terms. The uniform glossary
must provide uniform definitions,
specified by the Secretary in guidance,
of the following health-coverage-related
terms and medical terms:
(i) Allowed amount, appeal, balance
billing, co-insurance, complications of
pregnancy, co-payment, deductible,
durable medical equipment, emergency
medical condition, emergency medical
E:\FR\FM\30DEP2.SGM
30DEP2
Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules
tkelley on DSK3SPTVN1PROD with PROPOSALS2
transportation, emergency room care,
emergency services, excluded services,
grievance, habilitation services, health
insurance, home health care, hospice
services, hospitalization, hospital
outpatient care, in-network coinsurance, in-network co-payment,
medically necessary, network, nonpreferred provider, out-of-network coinsurance, out-of-network co-payment,
out-of-pocket limit, physician services,
plan, preauthorization, preferred
provider, premium, prescription drug
coverage, prescription drugs, primary
care physician, primary care provider,
provider, reconstructive surgery,
rehabilitation services, skilled nursing
care, specialist, usual customary and
reasonable (UCR), and urgent care; and
(ii) Such other terms as the Secretary
determines are important to define so
that individuals and employers may
compare and understand the terms of
coverage and medical benefits
VerDate Sep<11>2014
20:56 Dec 29, 2014
Jkt 235001
(including any exceptions to those
benefits), as specified in guidance.
(3) Appearance. A group health plan,
and a health insurance issuer, must
provide the uniform glossary with the
appearance specified by the Secretary in
guidance to ensure the uniform glossary
is presented in a uniform format and
uses terminology understandable by the
average plan enrollee (or, in the case of
individual market coverage, an average
individual covered under a health
insurance policy).
(4) Form and manner. A plan or issuer
must make the uniform glossary
described in this paragraph (c) available
upon request, in either paper or
electronic form (as requested), within
seven business days after receipt of the
request.
(d) Preemption. For purposes of this
section, the provisions of section 2724
of the PHS Act continue to apply with
respect to preemption of State law. In
addition, State laws that require a health
PO 00000
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Fmt 4701
Sfmt 9990
78611
insurance issuer to provide an SBC that
supplies less information than required
under paragraph (a) of this section are
preempted.
(e) Failure to provide. A health
insurance issuer or a non-federal
governmental health plan that willfully
fails to provide information to a covered
individual required under this section is
subject to a fine of not more than $1,000
for each such failure. A failure with
respect to each covered individual
constitutes a separate offense for
purposes of this paragraph (e). HHS will
enforce these provisions in a manner
consistent with §§ 150.101 through
150.465 of this subchapter.
(f) Applicability. The requirements of
this section do not apply to a group
health plan benefit package that
provides Medicare Advantage benefits
pursuant to or 42 U.S.C. Chapter 7,
Subchapter XVIII, Part C.
[FR Doc. 2014–30243 Filed 12–22–14; 4:15 pm]
BILLING CODE 4830–01–P; 4150–28–P; 4120–01–P
E:\FR\FM\30DEP2.SGM
30DEP2
]]>Agencies
[Federal Register Volume 79, Number 249 (Tuesday, December 30, 2014)]
[Proposed Rules]
[Pages 78577-78611]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-30243]
[[Page 78577]]
Vol. 79
Tuesday,
No. 249
December 30, 2014
Part II
DEPARTMENT OF THE TREASURY
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Internal Revenue Service
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26 CFR Part 54
DEPARTMENT OF LABOR
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Employee Benefits Security Administration
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29 CFR Part 2590
DEPARTMENT OF HEALTH AND HUMAN SERVICES
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45 CFR Part 147
Summary of Benefits and Coverage and Uniform Glossary; Proposed Rule
Federal Register / Vol. 79 , No. 249 / Tuesday, December 30, 2014 /
Proposed Rules
[[Page 78578]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[REG-145878-14]
RIN 1545-BM53
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AB69
DEPARTMENT OF HEALTH AND HUMAN SERVICES
45 CFR Part 147
[CMS-9938-P]
RIN 0938-AS54
Summary of Benefits and Coverage and Uniform Glossary
AGENCY: 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: Notice of proposed rulemaking.
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SUMMARY: This document contains proposed regulations regarding the
summary of benefits and coverage (SBC) and the uniform glossary for
group health plans and health insurance coverage in the group and
individual markets under the Patient Protection and Affordable Care
Act. It proposes changes to the regulations that implement the
disclosure requirements under section 2715 of the Public Health Service
Act to help plans and individuals better understand their health
coverage, as well as to gain a better understanding of other coverage
options for comparison. It proposes changes to documents required for
compliance with section 2715 of the Public Health Service Act,
including a template for the SBC, instructions, sample language, a
guide for coverage example calculations, and the uniform glossary.
DATES: Comment date. Comments are due on or before March 2, 2015.
ADDRESSES: Written comments on these proposed regulations and documents
required for compliance (including the template, instructions, sample
language, guide for coverage example calculations, and the uniform
glossary) may be submitted to the Department of Labor as specified
below. Any comment that is submitted will be shared with the Department
of Health and Human Services and the Department of the Treasury, and
will also be made available to the public. Warning: Do not include any
personally identifiable information (such as name, address, or other
contact information) or confidential business information that you do
not want publicly disclosed. All comments are posted on the Internet
exactly as received, and can be retrieved by most Internet search
engines. No deletions, modifications, or redactions will be made to the
comments received, as they are public records. Comments may be
submitted anonymously.
Comments, identified by ``Summary of Benefits and Coverage,'' may
be submitted by one of the following methods:
Federal eRulemaking Portal: https://www.regulations.gov.
Follow the instructions for submitting comments.
Mail or Hand Delivery: Office of Health Plan Standards and
Compliance Assistance, Employee Benefits Security Administration, Room
N-5653, U.S. Department of Labor, 200 Constitution Avenue NW.,
Washington, DC 20210, Attention: Summary of Benefits and Coverage.
Comments received will be posted without change to https://www.regulations.gov, and available for public inspection at the Public
Disclosure Room, N-1513, Employee Benefits Security Administration, 200
Constitution Avenue NW., Washington, DC 20210, including any personal
information provided.
FOR FURTHER INFORMATION CONTACT: Amy Turner or Beth Baum, Employee
Benefits Security Administration, Department of Labor, at (202) 693-
8335; Karen Levin, Internal Revenue Service, Department of the
Treasury, at (202) 622-6080; Heather Raeburn or Tricia Beckmann,
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, at (301) 492-4224 or (301) 492-4328.
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 (https://www.dol.gov/ebsa). In addition, information from HHS on private health
insurance for consumers can be found on CMS's Web site (www.cms.gov/cciio) and information on health reform can be found at https://www.healthcare.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The Patient Protection and Affordable Care Act, Public Law 111-148,
was enacted on March 23, 2010; the Health Care and Education
Reconciliation Act, Public Law 111-152, was enacted on March 30, 2010
(these 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 term ``group health plan'' includes
both insured and self-insured group health plans.\1\ The Affordable
Care Act adds section 715(a)(1) to the Employee Retirement Income
Security Act (ERISA) and section 9815(a)(1) to the Internal Revenue
Code (the Code) to incorporate the provisions of part A of title XXVII
of the PHS Act into ERISA and the Code, and make them applicable to
group health plans, and health insurance issuers providing health
insurance coverage in connection with group health plans. The PHS Act
sections incorporated by this reference are sections 2701 through 2728.
---------------------------------------------------------------------------
\1\ The term ``group health plan'' is used in title XXVII of the
PHS Act, part 7 of ERISA, and chapter 100 of the Code, and is
distinct from the term ``health plan,'' as used in other provisions
of title I of the Affordable Care Act. The term ``health plan'' does
not include self-insured group health plans.
---------------------------------------------------------------------------
Section 2715 of the PHS Act, added by the Affordable Care Act,
directs the Departments of Labor, Health and Human Services (HHS), and
the Treasury (the Departments) to develop standards for use by a group
health plan and a health insurance issuer offering group or individual
health insurance coverage in compiling and providing a summary of
benefits and coverage (SBC) that ``accurately describes the benefits
and coverage under the applicable plan or coverage.'' PHS Act section
2715 also calls for the ``development of standards for the definitions
of terms used in health insurance coverage.''
In accordance with the statute, the Departments, in developing such
standards, consulted with the National Association of Insurance
Commissioners (referred to in this document as the ``NAIC'') through
``a working group composed of representatives of health insurance-
related consumer advocacy organizations, health insurance issuers,
health care professionals, patient advocates including those
representing individuals with limited English proficiency, and other
qualified
[[Page 78579]]
individuals.'' \2\ On July 29, 2011, the NAIC provided its final
recommendations to the Departments regarding the SBC. On August 22,
2011, the Departments published in the Federal Register proposed
regulations (2011 proposed regulations) and an accompanying document
with templates, instructions, and related materials for implementing
the disclosure provisions under PHS Act section 2715.\3\ After
consideration of all the comments received on the 2011 proposed
regulations and accompanying documents, the Departments published joint
final regulations to implement the disclosure requirements under PHS
Act section 2715 on February 14, 2012 (2012 final regulations) and an
accompanying document soliciting comments on templates, instructions,
and related materials.\4\ The 2012 final regulations implemented
standards for use by a group health plan and a health insurance issuer
offering group or individual health insurance coverage in compiling and
providing an SBC that ``accurately describes the benefits and coverage
under the applicable plan or coverage'' pursuant to PHS Act section
2715.
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\2\ The NAIC convened a working group (NAIC working group)
comprised of a diverse group of stakeholders. This working group met
frequently for over one year while developing its recommendations.
In developing its recommendations, the NAIC considered the results
of various consumer testing sponsored by both insurance industry and
consumer associations. Throughout the process, NAIC working group
draft documents and meeting notes were displayed on the NAIC's Web
site for public review, and several interested parties filed formal
comments. In addition to participation from the NAIC working group
members, conference calls and in-person meetings were open to other
interested parties and individuals and provided an opportunity for
non-member feedback. See www.naic.org/committees_b_consumer_information.htm.
\3\ See proposed regulations, published at 76 FR 52442 (August
22, 2011) and guidance document published at 76 FR 52475 (August 22,
2011).
\4\ See final regulations, published at 77 FR 8668 (February 14,
2012) and guidance document published at 77 FR 8706 (February 14,
2012).
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After the 2012 final regulations were published, the Departments
released Frequently Asked Question (FAQs) regarding implementation of
the SBC provisions as part of six issuances. The Departments released
Affordable Care Act Implementation FAQs Parts VII, VIII, IX, X, XIV,
and XIX to answer outstanding questions, including questions related to
the SBC.\5\ These FAQs addressed questions related to compliance with
the requirements of the 2012 final regulations, implemented additional
safe harbors,\6\ and released updated SBC materials.
---------------------------------------------------------------------------
\5\ See Affordable Care Act Implementation FAQs Part VII
(available at www.dol.gov/ebsa/faqs/faq-aca7.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs7.html); Part VIII (available at www.dol.gov/ebsa/faqs/faq-aca8.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html); Part IX (available
at www.dol.gov/ebsa/faqs/faq-aca9.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html); Part
X (available at www.dol.gov/ebsa/faqs/faq-aca10.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs10.html); Part XIV (available at www.dol.gov/ebsa/faqs/faq-aca14.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html); and Part XIX
(available at www.dol.gov/ebsa/faqs/faq-aca19.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.html).
\6\ Some of the enforcement safe harbors and transitions are
proposed to be made permanent (several with modifications) by these
proposed regulations. The Departments intend to use this rulemaking
to develop a permanent approach to those issues and, thereby,
discontinue all temporary enforcement policies that were used as a
bridge to a permanent rule.
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The Departments are issuing these proposed regulations, as well as
a new set of proposed SBC templates, instructions, an updated uniform
glossary, and other materials to incorporate some of the feedback the
Departments have received and to make some improvements to the
template. This will provide guidance necessary to plans and issuers as
they continue to issue SBCs, and will improve the SBC for employers,
participants and beneficiaries, and individuals and dependents for use
as a tool in making important decisions regarding their health
coverage. These modifications clarify when and how a plan or issuer
must provide an SBC, and streamline and shorten the SBC template while
also adding certain additional elements that the Departments believe
will be useful to consumers. The draft updated template, instructions,
and supplementary materials are available at https://cciio.cms.gov and
https://www.dol.gov/ebsa/healthreform/regulations/summaryofbenefits.html. The Departments invite comments on all of the
documents. Comments should be submitted as described above.
II. Overview of the Proposed Regulations
A. Requirement To Provide a Summary of Benefits and Coverage
1. Providing the SBC
Paragraph (a) of the 2012 final regulations implements the general
disclosure requirement and sets forth the standards for who is required
to provide an SBC, to whom, and when. PHS Act section 2715 generally
requires that an SBC be provided to applicants, enrollees, and
policyholders or certificate holders, at specified times. PHS Act
section 2715(d)(3) places the responsibility to provide an SBC on ``(A)
a health insurance issuer (including a group health plan that is not a
self-insured plan) offering health insurance coverage within the United
States; or (B) in the case of a self-insured group health plan, the
plan sponsor or designated administrator of the plan (as such terms are
defined in section 3(16) of ERISA).'' \7\ Accordingly, the 2012 final
regulations interpret PHS Act section 2715 to apply to both group
health plans and health insurance issuers offering group or individual
health insurance coverage. In addition, consistent with the statute,
the 2012 final regulations hold the plan administrator of a group
health plan responsible for providing an SBC. Under the 2012 final
regulations, the SBC must be provided in writing and free of charge.
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\7\ ERISA section 3(16) defines an administrator as: (i) the
person specifically designated by the terms of the instrument under
which the plan is operated; (ii) if an administrator is not so
designated, the plan sponsor; or (iii) in the case of a plan for
which an administrator is not designated and plan sponsor cannot be
identified, such other person as the Secretary of Labor may by
regulation prescribe.
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There are three general scenarios under which an SBC will be
provided. An SBC will be provided: (1) By a group health insurance
issuer to a group health plan; (2) by a group health insurance issuer
or a group health plan to participants and beneficiaries; and (3) by a
health insurance issuer to individuals and dependents in the individual
market.
The 2012 final regulations specify timeframes according to which
the SBC must be provided. After the 2012 regulations were published,
the Departments were asked to clarify the meaning of the term
``provided.'' As the Departments stated in Affordable Care Act
Implementation FAQs Part VIII, question 7, for purposes of providing an
SBC in the context of these regulations, the term ``provided'' means
sent. Accordingly, the SBC is timely if it is sent within seven
business days, even if not received until after that period.\8\
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\8\ See Affordable Care Act Implementation FAQs Part VIII,
question 7, available at www.dol.gov/ebsa/faqs/faq-aca8.html and
https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.
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a. Provision of the SBC by an Issuer to a Plan
Paragraph (a)(1)(i) of the 2012 final regulations requires a health
insurance issuer offering group health insurance coverage to provide an
SBC to a group health plan (or its sponsor) upon an application by the
plan for health coverage. The issuer must provide the SBC as soon as
practicable following
[[Page 78580]]
receipt of the application, but in no event later than seven business
days following receipt of the application. These proposed regulations
would clarify when the health insurance issuer offering group health
insurance coverage (or plan, if applicable, under paragraph (a)(1)(ii))
must provide the SBC again if the issuer already provided the SBC
before application to any entity or individual. If the issuer provides
the SBC before application for coverage pursuant to paragraph
(a)(1)(i)(D) of the regulations (relating to SBCs upon request), the
requirement to provide an SBC upon application is deemed satisfied and
such issuer is not required to automatically provide another SBC upon
application to the same entity or individual, provided there is no
change to the information required to be in the SBC. However, if there
has been a change in the information required, a new SBC that includes
the correct information must be provided upon application (that is, as
soon as practicable following receipt of the application, but in no
event later than seven business days following receipt of the
application).
Under the 2012 final regulations and these proposed regulations, if
there is any change in the information required to be in the SBC that
was provided upon application and before the first day of coverage, the
issuer must update and provide a current SBC to the plan (or its
sponsor) no later than the first day of coverage. If the information is
unchanged, the issuer does not need to provide the SBC again in
connection with coverage for that plan year, except upon request. These
proposed rules would provide clarification with respect to how to
satisfy the requirement to provide an SBC when the terms of coverage
are not finalized. If the plan sponsor is negotiating coverage terms
after an application has been filed and the information required to be
in the SBC changes, an updated SBC is not required to be provided to
the plan (or its sponsor) (unless an updated SBC is requested) until
the first day of coverage. The updated SBC should reflect the final
coverage terms under the contract, certificate, or policy of insurance
that was purchased.
b. Provision of the SBC by a Plan or Issuer to Participants and
Beneficiaries
Under paragraph (a)(1)(ii) of the 2012 final regulations, a group
health plan (including the plan administrator), and a health insurance
issuer offering group health insurance coverage, must provide an SBC to
a participant or beneficiary \9\ with respect to each benefit package
offered by the plan or issuer for which the participant or beneficiary
is eligible.\10\ This includes individuals who are qualified
beneficiaries under the Consolidated Omnibus Reconciliation Act of 1985
(COBRA).\11\ In Affordable Care Act Implementation FAQs Part VIII,
question 8, the Departments clarified that while a qualifying event
does not, itself, trigger a requirement to provide an SBC, during an
open enrollment period, any COBRA qualified beneficiary who is
receiving COBRA coverage must be given the same rights to elect
different coverage as are provided to similarly situated non-COBRA
beneficiaries.\12\ In this situation, a COBRA qualified beneficiary who
has elected coverage must be provided an SBC just as a similarly
situated non-COBRA beneficiary must be provided with one. There are
also limited situations in which a COBRA qualified beneficiary may need
to be offered different coverage at the time of the qualifying event
than the coverage he or she was receiving before the qualifying event
and this may trigger a requirement to provide an SBC.\13\
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\9\ ERISA section 3(7) defines a participant as: Any employee or
former employee of an employer, or any member or former member of an
employee organization, who is or may become eligible to receive a
benefit of any type from an employee benefit plan which covers
employees of such employers or members of such organization, or
whose beneficiaries may be eligible to receive any such benefit.
ERISA section 3(8) defines a beneficiary as: a person designated by
a participant, or by the terms of an employee benefit plan, who is
or may become entitled to a benefit thereunder.
\10\ With respect to insured group health plan coverage, PHS Act
section 2715 generally places the obligation to provide an SBC on
both a plan and issuer. As discussed below, under section
III.A.1.d., ``Special Rules to Prevent Unnecessary Duplication with
Respect to Group Health Coverage'', if either the issuer or the plan
provides the SBC, both will have satisfied their obligations. As
they do with other notices required of both plans and issuers under
Part 7 of ERISA, Title XXVII of the PHS Act, and Chapter 100 of the
Code, the Departments expect plans and issuers to make contractual
arrangements for sending SBCs. Accordingly, the remainder of this
preamble generally refers to requirements for plans or issuers.
\11\ See Affordable Care Act Implementation FAQs Part VIII,
question 7, available at www.dol.gov/ebsa/faqs/faq-aca8.html and
https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.
\12\ See 26 CFR 54.4980B-5, Q&A-4(c) (requirement to provide
election) and 54.4980B-3, Q&A-3 (definition of similarly situated
non-COBRA beneficiary).
\13\ See 26 CFR 54.4980B-5, Q&A-4(b).
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If a plan or issuer distributes any written application materials
for enrollment, including any forms or requests for information (in
paper form or through a Web site or email) that must be completed for
enrollment, the plan or issuer must provide the SBC as part of those
materials. If the plan or issuer does not distribute written
application materials for enrollment (in either paper or electronic
form), the SBC must be provided no later than the first date on which
the participant is eligible to enroll in coverage for the participant
or any beneficiaries. If there is any change to the information
required to be in the SBC that was provided upon application for
coverage and before the first day of coverage, the plan or issuer must
update and provide a current SBC to a participant or beneficiary no
later than the first day of coverage.
These proposed rules would clarify when a plan or issuer must
provide the SBC again if the plan or issuer already provided the SBC
prior to application. If the plan or issuer provides the SBC prior to
application for coverage, the plan or issuer is not required to
automatically provide another SBC upon application, if there is no
change to the information required to be in the SBC. If there is any
change to the information required to be in the SBC by the time the
application is filed, the plan or issuer must update and provide a
current SBC as soon as practicable following receipt of the
application, but in no event later than seven business days following
receipt of the application.
These proposed rules also would provide clarification with respect
to how to satisfy the requirement to provide an SBC when the terms of
coverage are not finalized. If the plan sponsor is negotiating coverage
terms after an application has been filed and the information required
to be in the SBC changes, the plan or issuer is not required to provide
an updated SBC (unless an updated SBC is requested) until the first day
of coverage. The updated SBC should reflect the final coverage terms
under the contract, certificate, or policy of insurance that was
purchased.
Under the 2012 final regulations, the plan or issuer must also
provide the SBC to individuals enrolling through a special enrollment
period, also called special enrollees.\14\ Special enrollees must be
provided the SBC no later than when a summary plan description is
required to be provided under the timeframe set forth in ERISA section
104(b)(1)(A) and its implementing regulations, which is 90 days from
enrollment. To the extent individuals who are eligible for special
enrollment and are contemplating their coverage options would like to
receive SBCs
[[Page 78581]]
earlier, they may always request an SBC with respect to any particular
plan, policy, or benefit package and the SBC is required to be provided
as soon as practicable, but in no event later than seven business days
following receipt of the request (as discussed more fully below).
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\14\ Regulations regarding special enrollment are available at
26 CFR 54.9801-6, 29 CFR 2590.701-6, and 45 CFR 146.117.
---------------------------------------------------------------------------
c. Provision of the SBC Upon Request in Group Health Coverage
A health insurance issuer offering group health insurance coverage
must provide the SBC to a group health plan or its sponsor (and a plan
or issuer must provide the SBC to a participant or beneficiary) upon
request for an SBC or summary information about the health coverage, as
soon as practicable, but in no event later than seven business days
following receipt of the request. The SBC must be provided upon request
to participants, beneficiaries, and plans (or plan sponsors), including
prior to submitting an application for coverage, because the SBC
provides information that not only helps consumers and employers
understand their coverage, but also helps consumers and employers
compare coverage options prior to selecting coverage. Health insurance
issuers offering individual market coverage must also provide the SBC
to individuals upon request, according to the same timeframe, to allow
consumers the same ability to compare coverage options in the
individual market as the group market.
Since the issuance of the 2012 final regulations, the Departments
have continued to receive questions about providing SBCs upon request,
including whether issuers are required to provide SBCs to plans or
their sponsors who are ``shopping'' for coverage from different issuers
but have not yet submitted an application for coverage. In Affordable
Care Act Implementation FAQs Part IX, question 4, the Departments
reiterated that an SBC must be provided upon request for an SBC or
``summary information about a health insurance product.'' The latter
phrase is intended to ensure that persons who do not ask exactly for a
``summary of benefits and coverage'' still receive one when they
explicitly ask for a summary document with respect to a specific health
coverage product.\15\ The FAQ also referred to other guidance outlining
the circumstances in which an SBC may be provided electronically, to
assist in reducing the burden of providing multiple SBCs in paper form
when requested. Additional information on electronic disclosure of SBCs
is discussed later in this preamble.
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\15\ The FAQ stated that other general questions about coverage
options or discussions about health products do not trigger the
requirement to provide an SBC.
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d. Special Rules To Prevent Unnecessary Duplication With Respect to
Group Health Coverage
Paragraph (a)(1)(iii) of the 2012 final regulations includes three
special rules to streamline provision of the SBC and avoid unnecessary
duplication with respect to group health coverage. The first provides
that the requirement to provide an SBC generally will be considered
satisfied for all applicable entities if it is provided by any entity,
so long as all timing and content requirements are satisfied. The
second provides that a single SBC may be provided to a participant and
any beneficiaries at the participant's last known address. However, if
a beneficiary's last known address is different than the participant's
last known address, a separate SBC is required to be provided to the
beneficiary at the beneficiary's last known address. Third, the 2012
final regulations provide that SBCs are not required to be provided
automatically upon renewal for each benefit package option in group
health plans that offer multiple benefit packages. Rather, a plan or
issuer is required to provide an SBC automatically upon renewal or
reissuance only with respect to the benefit package in which a
participant or beneficiary is enrolled. In cases in which an issuer
will automatically re-enroll participants and beneficiaries, these
proposed rules propose to add that a new SBC is required to be provided
with respect to the plan or product in which a participant or
beneficiary will be automatically enrolled in accordance with the same
timing requirements that apply to a renewal or reissuance. Consistent
with the 2012 final regulations, if a participant or beneficiary
requests an SBC with respect to one or more other benefit packages for
which he or she is eligible, that requested SBC or SBCs must be
provided as soon as practicable, but in no event later than seven
business days following the receipt of the request.
In addition to retaining these three existing special rules, these
proposed regulations would add an additional provision to ensure
participants receive information while preventing unnecessary
duplication. This would address circumstances where an entity required
to provide an SBC with respect to an individual has entered into a
binding contract with another party to provide the SBC to the
individual. In such a case, the proposed regulations state that the
entity would be considered to satisfy the requirement to provide the
SBC with respect to the individual if specified conditions are met:
(1) The entity monitors performance under the contract; \16\
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\16\ The selection and monitoring of service providers for a
group health plan, including parties assuming responsibility to
complete, provide information for, or deliver SBCs, is a fiduciary
act subject to prudence and loyalty duties and prohibited
transaction provisions of ERISA. No single fiduciary procedure will
be appropriate in all cases; the procedure for selecting and
monitoring service providers may vary in accordance with the nature
of the plan and other facts and circumstances relevant to the choice
of the service provider. More general information on hiring and
monitoring service providers is contained in the Department of Labor
publication ``Understanding Your Fiduciary Responsibilities Under a
Group Health Plan,'' which is available on the Department's Web site
at: www.dol.gov/ebsa/publications/ghpfiduciaryresponsibilities.html.
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(2) If the entity has knowledge that the SBC is not being provided
in a manner that satisfies the requirements of this section and the
entity has all information necessary to correct the noncompliance, the
entity corrects the noncompliance as soon as practicable; and
(3) If the entity has knowledge the SBC is not being provided in a
manner that satisfies the requirements of this section and the entity
does not have all information necessary to correct the noncompliance,
the entity communicates with participants and beneficiaries who are
affected by the noncompliance regarding the noncompliance, and begins
taking significant steps as soon as practicable to avoid future
violations.
The proposed regulations would also add a provision to prevent
unnecessary duplication with respect to a group health plan that uses
two or more insurance products provided by separate issuers to insure
benefits under the plan. The proposed regulations would place
responsibility for providing complete SBCs with respect to the plan in
such a case on the group health plan administrator. This provision of
the proposed regulations states that the group health plan
administrator may contract with one of its issuers (or other service
providers) to provide the SBC; however, absent a contract to perform
the function, an issuer has no obligation to provide an SBC containing
information for benefits that it does not insure.
The Departments recognize that a plan sponsor may purchase an
insurance product for certain coverage from a particular issuer and
purchase a separate insurance product or self-insure with respect to
other coverage (such as outpatient prescription drug
[[Page 78582]]
coverage). In these circumstances, the first issuer may or may not know
of the existence of other coverage, or whether the plan sponsor has
arranged the two benefit packages as a single plan or two separate
plans. To address these arrangements, these proposed rules propose
that, with respect to a group health plan that uses two or more
insurance products provided by separate issuers, the group health plan
administrator is responsible for providing complete SBCs with respect
to the plan. The group health plan administrator may contract with one
of its issuers (or other service providers) to perform that function.
Absent a contract to perform the function, an issuer has no obligation
to provide coverage information for benefits that it does not insure.
The Departments published an FAQ on May 11, 2012 \17\ regarding the
responsibility to provide an SBC in situations where plans may have
benefits provided by more than one issuer. This FAQ provides an
enforcement safe harbor for a group health plan that uses two or more
insurance products provided by separate issuers with respect to a
single group health plan. Under this enforcement safe harbor, the group
health plan administrator may synthesize the information into a single
SBC or provide multiple partial SBCs that, together, provide all the
relevant information to meet the SBC content requirements. In such
circumstances, the plan administrator should take steps (such as a
cover letter or a notation on the SBCs themselves) to indicate that the
plan provides coverage using multiple insurance products and that
individuals may contact the plan administrator for more information
(and provide the contact information). The Departments extended this
enforcement safe harbor for one year on April 23, 2013,\18\ and
indefinitely on May 2, 2014,\19\ and reiterate that the safe harbor
continues to apply. The Departments seek comment on whether to codify
this policy in the regulation.
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\17\ See Affordable Care Act Implementation FAQs Part IX,
question 10, available at https://www.dol.gov/ebsa/faqs/faq-aca9.html
and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
\18\ Affordable Care Act Implementation FAQs Set XIV, question
5, available at www.dol.gov/ebsa/faqs/faq-aca14.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html.
\19\ Affordable Care Act FAQ Set XIX, question 8, available at
www.dol.gov/ebsa/faqs/faq-aca19.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.html.
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e. Provision of the SBC by an Issuer Offering Individual Market
Coverage
Paragraph (a)(1)(iv) of the HHS 2012 final regulations sets forth
standards applicable to individual health insurance coverage, under
which the provision of the SBC by an issuer offering individual market
coverage largely parallels the group market requirements described
above, with only those changes necessary to reflect the differences
between the two markets. The SBC must be provided upon application.
That is, a health insurance issuer offering individual health insurance
coverage must provide an SBC to an individual or dependent upon
receiving an application for any health insurance policy, as soon as
practicable following receipt of the application, but in no event later
than seven business days following receipt of the application. If there
is any change in the information required to be in the SBC that was
provided upon application and before the first day of coverage, the
issuer must update and provide a current SBC to an individual or
dependent no later than the first day of coverage. These proposed rules
would clarify when the issuer must provide the SBC again if the issuer
already provided the SBC prior to application. If the issuer provides
the SBC prior to application for coverage, the issuer is not required
to automatically provide another SBC upon application, if there is no
change to the information required to be in the SBC. If there is any
change to the information required to be in the SBC that was provided
prior to application for coverage by the time the application is filed,
the issuer must update and provide a current SBC to the same individual
or dependent as soon as practicable following receipt of the
application, but in no event later than seven business days following
receipt of the application. Under the 2012 final regulations, a health
insurance issuer offering individual health insurance coverage must
provide the SBC to an individual or dependent upon request for the SBC
or summary information about the health insurance product, as soon as
practicable, but in no event later than seven business days following
receipt of the request.
These proposed rules would also address situations where an issuer
offering individual market insurance coverage, consistent with
applicable Federal and State law, automatically re-enrolls an
individual and any dependents into a different plan or product than the
plan in which these individuals were previously enrolled. If the issuer
automatically re-enrolls an individual covered under a policy,
certificate, or contract of insurance (including every dependent) into
a policy, certificate, or contract of insurance under a different plan
or product, HHS proposes that the issuer would be required to provide
an SBC with respect to the coverage in which the individual (including
every dependent) will be enrolled, consistent with the timing
requirements that apply when the policy is renewed or reissued.
f. Special Rules To Prevent Unnecessary Duplication With Respect to
Individual Health Insurance Coverage
In paragraph (a)(1)(v) of the 2012 final regulations, the Secretary
of HHS states that, if a single SBC is provided to an individual and
any dependents at the individual's last known address, then the
requirement to provide the SBC to the individual and any dependents is
generally satisfied. However, if a dependent's last known address is
different than the individual's last known address, a separate SBC is
required to be provided to the dependent at the dependent's last known
address.
Student health insurance coverage is a type of individual health
insurance coverage provided pursuant to a written agreement between an
institution of higher education and a health insurance issuer to
students enrolled in that institution of higher education, and their
dependents, that meet certain specified conditions.\20\ These proposed
rules propose to extend an anti-duplication rule similar to that
provided with respect to group health coverage to student health
insurance coverage, as defined in in 45 CFR 147.145(a). Specifically,
HHS proposes that the requirement to provide an SBC with respect to an
individual will be considered satisfied for an entity (such as an
institution of higher education) if another party (such as a health
insurance issuer) provides a timely and complete SBC to the individual.
The Departments are also soliciting comments on whether or not a
requirement to monitor the provisioning of the SBC in this circumstance
should be added.
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\20\ See 45 CFR 147.145, published at 77 FR 16453 (March 21,
2012).
---------------------------------------------------------------------------
2. Content
PHS Act section 2715(b)(3) generally provides that the SBC must
include:
a. Uniform definitions of standard insurance terms and medical
terms so that consumers may compare health coverage and understand the
terms of (or exceptions to) their coverage;
[[Page 78583]]
b. A description of the coverage, including cost sharing, for each
category of essential health benefits, and other benefits as identified
by the Departments;
c. The exceptions, reductions, and limitations on coverage;
d. The cost-sharing provisions of the coverage, including
deductible, coinsurance, and copayment obligations;
e. The renewability and continuation of coverage provisions;
f. A coverage facts label that includes examples to illustrate
common benefits scenarios (including pregnancy and serious or chronic
medical conditions) and related cost sharing based on recognized
clinical practice guidelines;
g. A statement of whether the plan or coverage provides minimum
essential coverage (MEC) as defined under section 5000A(f) of the Code,
and whether the plan's or coverage's share of the total allowed costs
of benefits provided under the plan or coverage is not less than 60% of
such costs;
h. A statement that the SBC is only a summary and that the plan
document, policy, or certificate of insurance should be consulted to
determine the governing contractual provisions of the coverage; and
i. A contact number to call with questions and an Internet web
address where a copy of the actual individual coverage policy or group
certificate of coverage can be reviewed and obtained.
Consistent with the Departments' authority to develop standards
with respect to the SBC and with the statutory requirement to consult
with the NAIC and other stakeholders, after considering recommendations
by the NAIC and comments received on the 2011 proposed regulations, the
2012 final regulations added three content elements: (1) For plans and
issuers that maintain one or more networks of providers, an Internet
address (or similar contact information) for obtaining a list of the
network providers; (2) for plans and issuers that use a formulary in
providing prescription drug coverage, an Internet address (or similar
contact information) for obtaining information on prescription drug
coverage under the plan or coverage; and (3) an Internet address for
obtaining the uniform glossary, as well as a contact phone number to
obtain a paper copy of the uniform glossary, and a disclosure that
paper copies of the uniform glossary are available.
The Departments have received several questions related to content
requirements under the 2012 final regulations. One such question
relates to the statements about whether a plan or coverage provides
MEC, as defined under section 5000A(f) of the Code, and whether the
plan's or coverage's share of the total allowed costs of benefits
provided under the plan or coverage meets applicable minimum value (MV)
requirements. The preamble to the 2012 final regulations stated that
future guidance would address these statements. In April 2013, the
Departments issued an updated SBC template (and sample completed SBC)
with the addition of statements of whether the plan or coverage
provides MEC (as defined under section 5000A(f) of the Code) and
whether the plan or coverage meets the MV requirements.\21\ In
Affordable Care Act Implementation FAQs Part XIV, issued
contemporaneously with the updated SBC template, the Departments stated
this language is required to be included in SBCs provided with respect
to coverage beginning on or after January 1, 2014.\22\
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\21\ See Affordable Care Act Implementation FAQs Part XIV,
question 1, available at www.dol.gov/ebsa/faqs/faq-aca14.html and
https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html.
\22\ The guidance with respect to statements regarding MEC and
MV was originally issued for SBCs provided with respect to coverage
beginning on or after January 1, 2014, and before January 1, 2015
(referred to as the ``second year of applicability''). See
Affordable Care Act Implementation FAQs Part XIV, question 1,
available at www.dol.gov/ebsa/faqs/faq-aca14.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html. This guidance was extended to be
applicable until further guidance was issued. See Affordable Care
Act Implementation FAQs Part XIX, question 7, available at
www.dol.gov/ebsa/faqs/faq-aca19.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.html.
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An FAQ issued at that time stated that if a plan or issuer was
unable to modify the SBC template for these disclosures, the
Departments will not take any enforcement action against a plan or
issuer for using the original template authorized at the time the 2012
final regulations were issued, provided that the SBC was furnished with
a cover letter or similar disclosure stating whether the plan or
coverage does or does not provide MEC and whether the plan's or
coverage's share of the total allowed costs of benefits provided under
the plan or coverage does or does not meet the MV standard under the
Affordable Care Act.\23\ The Departments decline to extend this
temporary enforcement safe harbor. Accordingly, effective for SBCs
provided in accordance with the applicability date described below for
these proposed rules, the statements regarding MEC and MV are required
to be included in the SBC. These statements have been modified for
added clarity and relevance for consumers, including consumers in the
individual market. As of the applicability date described below, the
option previously available to include this information in a cover
letter or similar disclosure furnished with the SBC is no longer
available.
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\23\ See Affordable Care Act Implementation FAQs Part XIV,
question 2, available at www.dol.gov/ebsa/faqs/faq-aca14.html and
https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html.
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Under section 1303(b)(3)(A) of the Affordable Care Act and
implementing regulations at 45 CFR 156.280(f), a QHP issuer that elects
to offer a QHP that provides coverage of abortion services for which
public funding is prohibited (non-excepted abortion services) must
provide a notice to enrollees, as part of the SBC provided at the time
of enrollment, of coverage of such services.
In the interest of increasing transparency for consumers shopping
for coverage, and to assist issuers with meeting applicable disclosure
requirements under section 1303(b)(3)(A) of the Affordable Care Act and
its implementing regulations, we are updating the SBC template
published contemporaneously with these proposed rules. These proposed
rules would require a QHP issuer to disclose on the SBC whether
abortion services are covered or excluded and whether coverage is
limited to services for which federal funding is allowed (excepted
abortion services). The draft instruction guide for individual health
insurance, released concurrently with these proposed rules, indicates
that coverage of abortion services must be described in the ``services
your plan does not cover'' or ``other covered services'' section. We
seek comments on this guidance, including whether coverage of abortion
services should be included in another section of the template, such as
the table occurring immediately prior.
Neither the 2012 final regulations nor these proposed regulations
require the SBC to include premium information. The Departments
previously stated their understanding that it is administratively and
logistically complex to convey premium information in an SBC due to a
number of variables, including, for example, when premiums differ based
on family size; when, in the group market, employer contributions
impact cost of coverage paid by participants and beneficiaries; and
when, for coverage sold through an individual market Exchange, advance
payments of the premium tax credit impact the cost of coverage paid by
individuals and dependents. In Affordable Care Act
[[Page 78584]]
Implementation FAQs Part VIII, question 16, the Departments clarified
that a plan or issuer may choose to add premium information to the
SBC.\24\ If a plan or issuer wishes to include this information, it
should be added at the end of the SBC template.\25\
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\24\ See Affordable Care Act Implementation FAQs Part VIII,
question 16, available at www.dol.gov/ebsa/faqs/faq-aca8.html and
https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.
\25\ In accordance with section 1303(b)(3)(B) of the Affordable
Care Act and 45 CFR 156.280(f)(2), if the SBC provided at the time
of enrollment notice includes the QHP premium amount, it must
display only the total premium for the plan, inclusive of all
covered benefits and services.
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As mentioned above, the statute provides that the SBC must include
``a contact number for the consumer to call with additional questions
and an Internet web address where a copy of the actual individual
coverage policy or group certificate of coverage can be reviewed and
obtained.'' The 2012 final regulations state the SBC must include
``contact information for questions and obtaining a copy of the plan
document or the insurance policy, certificate, or contract of insurance
(such as a telephone number for customer service and an Internet
address for obtaining a copy of the plan document or the insurance
policy, certificate, or contact of insurance).'' Questions have arisen
as to whether this provision of the statute and regulations requires
that all plans and issuers must post underlying plan documents
automatically on an Internet Web site.
These proposed rules would clarify that all plans and issuers must
include on the SBC contact information for questions. However, because
the statutory language regarding Internet posting uses the terms
``individual coverage policy'' and ``group certificate of coverage,''
which we interpret to refer only to insurance, these proposed
regulations propose that only issuers must also include an Internet web
address where a copy of the actual individual coverage policy or group
certificate of coverage can be reviewed and obtained. The Departments
note that this proposal would require these documents to be easily
available to individuals, plan sponsors, and participants and
beneficiaries shopping for coverage prior to submitting an application
for coverage. For the group market only, because the actual
``certificate of coverage'' is not available until after the plan
sponsor has negotiated the terms of coverage with the issuer, an issuer
is permitted to satisfy this requirement with respect to plan sponsors
that are shopping for coverage by posting a sample group certificate of
coverage for each applicable product. After the actual certificate of
coverage is executed, it must be easily available to plan sponsors and
participants and beneficiaries via an Internet web address. The
Departments invite comments on this approach, including the costs and
benefits of also requiring self-insured plans to post underlying plan
documents on the Internet.
The Departments also note that, separate from the SBC requirement,
provisions of other applicable law require disclosure of plan documents
and other instruments governing the plan. For example, ERISA section
104 and the Department of Labor's implementing regulations \26\ provide
that, for plans subject to ERISA, the plan documents and other
instruments under which the plan is established or operated must
generally be furnished by the plan administrator to plan participants
\27\ upon request. In addition, the Department of Labor's claims
procedure regulations (applicable to ERISA plans), as well as the
Departments' claims and appeals regulations under the Affordable Care
Act (applicable to all non-grandfathered group health plans and health
insurance issuers in the group and individual markets),\28\ set forth
rules regarding claims and appeals, including the right of claimants
(or their authorized representatives) upon appeal of an adverse benefit
determination (or a final internal adverse benefit determination) to be
provided by the plan or issuer, upon request and free of charge,
reasonable access to and copies of all documents, records, and other
information relevant to the claimant's claim for benefits. Plans and
issuers must continue to comply with these provisions and any other
applicable laws.
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\26\ 29 CFR 2520.104b-1.
\27\ ERISA section 3(7) defines a ``participant'' to include any
employee or former employee who is or may become eligible to receive
a benefit of any type from an employee benefit plan or whose
beneficiaries may be eligible to receive any such benefit.
Accordingly, employees who are not enrolled but are, for example, in
a waiting period for coverage, or who are otherwise shopping amongst
benefit package options at open season, generally are considered
plan participants for this purpose.
\28\ 29 CFR 2560.503-1. See also 29 CFR 2590.715-2719(b)(2)(i)
and 45 CFR 147.136(b)(2)(i), requiring nongrandfathered plans and
issuers to incorporate the internal claims and appeals processes set
forth in 29 CFR 2560.503-1.
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Section 2715(b)(3)(F) of the PHS Act also requires that an SBC
contain a ``coverage facts label.'' For ease of reference, the 2012
final regulations used the term ``coverage examples'' in place of the
statutory term. Consumer testing performed on behalf of the NAIC \29\
demonstrated that the coverage examples facilitated individuals'
understanding of the benefits and limitations of a plan or policy and
helped them make more informed choices about their options. That
testing also showed that individuals were able to comprehend that the
examples were only illustrative. Additionally, while some plans provide
useful coverage calculators to their enrollees to help them make health
coverage decisions, they are not uniform across all plans and most are
not available to individuals prior to enrollment, making it difficult
for individuals and employers to make coverage comparisons.
---------------------------------------------------------------------------
\29\ A summary of the focus group testing done by America's
Health Insurance Plans is available at: https://www.naic.org/documents/committees_b_consumer_information_101012_ahip_focus_group_summary.pdf
, a summary of the focus group testing done by Consumers Union on
the coverage examples is available at: https://prescriptionforchange.org/wordpress/wp-content/uploads/2011/08/A_New_Way_of_Comparing_Health_Insurance.pdf.
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The Departments have taken a phased approach to implementing the
coverage examples. The 2012 final regulations require the SBC to
include two coverage examples: Having a baby (normal delivery) and
routine maintenance of well-controlled type 2 diabetes. Each benefit
scenario represents a hypothetical situation consisting of a sample
treatment plan and medical costs, based on national average allowed
charges, for each of the conditions stated above. Each example
describes the sample care costs and how much the hypothetical patient
will be responsible for paying, including deductibles, copayments and
coinsurance.
In addition to the two existing coverage examples, these proposed
regulations would require a third coverage example--a simple foot
fracture (with emergency room visit). This example is proposed as a
health problem that most individuals could experience (whereas having a
baby and type 2 diabetes affect a subset of the population). Comments
are welcome on the choice of this coverage example.
In documents published contemporaneously with these proposed rules,
the Departments are publishing draft updated claims and pricing data
underlying the two existing coverage examples as well as a narrative
description and claims and pricing data associated with the third
proposed coverage example.\30\ These materials
[[Page 78585]]
would provide plans and issuers with the specific information necessary
to simulate benefits covered under the plan or policy for the coverage
example portion of the SBC (including relevant medical items and
services, dates of service, billing codes, and allowed charges). The
Departments invite comment on all aspects of the benefits scenario
proposed as a third coverage example and on all aspects of the coverage
example materials made available on the HHS Web site contemporaneously
with the publication of these proposed regulations.
---------------------------------------------------------------------------
\30\ For further discussion of changes to the claims and pricing
data underlying the two existing coverage examples, as well as the
claims and pricing data with respect to the new coverage example,
see section III later in this preamble.
---------------------------------------------------------------------------
In May 2012, the Departments announced the development of a
calculator that plans and issuers could use as a safe harbor for the
first year of applicability to complete the coverage examples in a
streamlined fashion.\31\ The calculator allows plans and issuers to
input a discrete number of informational elements about the benefit
package, taken from data fields used to populate the ``Important
Questions'' and ``Common Medical Events'' chart sections of the SBC
template.'' The output of the calculator is a coverage example that can
be added to the SBC. On its Web site, HHS provided the coverage
examples calculator, instructions for using the calculator, the
algorithm that was used to create the calculator, and a checklist
providing information on the inputs needed to use the coverage
calculator.
---------------------------------------------------------------------------
\31\ See ACA Implementation FAQ Set IX, question 9, available at
www.dol.gov/ebsa/faqs/faq-aca9.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
---------------------------------------------------------------------------
The original FAQ regarding the coverage example calculator stated
that because using a limited number of inputs in the calculator will be
less accurate than the results that a plan or issuer could obtain by
processing the full list of claims associated with each coverage
example through the plan's or issuer's system, the calculator would be
allowed as a transitional tool for the first year of applicability of
the SBC requirements. Use of the coverage example calculator was
subsequently extended for the second year of applicability, and later
extended until superseded by further guidance.\32\ Given the complexity
of the existing coverage examples, the addition of a proposed new,
third coverage example to the SBC requirements, and the fact that all
coverage examples are merely illustrative and will not be an accurate
predictor of a specific individual's actual costs, the Departments are
proposing that the coverage example calculator be authorized for
continued use. The Departments invite comments on this proposal.
---------------------------------------------------------------------------
\32\ The FAQ with respect to the coverage example calculator was
originally issued for SBCs provided for coverage beginning before
January 1, 2014 (referred to as the ``first year of applicability).
See Affordable Care Act Implementation FAQs Part IX, question 9,
available at www.dol.gov/ebsa/faqs/faq-aca9.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html. It was extended for SBCs provided for
coverage beginning on or after January 1, 2014, and before January
1, 2015 (referred to as the ``second year of applicability''), in
Affordable Care Act Implementation FAQs Part XIV, question 5
(available at www.dol.gov/ebsa/faqs/faq-aca14.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html) and later extended until superseded
by further guidance is issued in Affordable Care Act Implementation
FAQs Part XIX, question 7 (available at www.dol.gov/ebsa/faqs/faq-aca19.html and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.html).
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3. Appearance
PHS Act section 2715 sets forth standards related to the appearance
and language of the SBC. Specifically, the statute provides that the
SBC is to be presented in a uniform format, in a culturally and
linguistically appropriate manner utilizing terminology understandable
by the average plan enrollee, that does not exceed four double-sided
pages in length, and does not include print smaller than 12-point font.
Since the issuance of the 2011 proposed regulations, plans and issuers
have informed the Departments that they are concerned about including
all of the required information in the SBC while also satisfying the
limitation on the length of the document of four double-sided pages.
The instruction guides for completing the SBC template (issued
contemporaneously with the 2012 final regulations) included a special
rule stating that, to the extent a plan's terms that are required to be
in the SBC template cannot reasonably be described in a manner
consistent with the template format and instructions, the plan or
issuer must accurately describe the relevant plan terms while using its
best efforts to do so in a manner that is still as consistent with the
instructions and template format as reasonably possible. Such
situations may occur, for example, if a plan provides a different
structure for provider network tiers or drug tiers than is contemplated
by the template and associated instructions, if a plan provides
different benefits based on facility type (such as hospital inpatient
versus non-hospital inpatient), in a case where the effects of a health
flexible spending arrangement (health FSA) or a health reimbursement
arrangement (HRA) are being described, or if a plan provides different
cost sharing based on participation in a wellness program. The new SBC
template that is being published contemporaneously with these proposed
regulations eliminates some information from the SBC that is not
required by statute based on comments from stakeholders, which is
intended to make it easier for plans to include all of the required
information in the SBC while also satisfying the statutory page limit.
These reductions are significant; the sample completed template has
been reduced from four double-sided pages to two and a half double-
sided pages. The Departments invite comments on whether the
modifications maintain critical information while shortening it enough
to ensure that SBCs do not extend beyond the statutory page limit and,
if not, what other changes should be made to ensure the minimum
content, appearance, and language requirements are met while also
providing consistency in formatting to allow comparisons for
individuals. Comments are invited on potential ways to reconcile the
statutory page limit with the statutory contents, appearance, and
format requirements, particularly the need for the summary to present
information in an understandable, accurate, and meaningful way that
facilitates comparisons of health options, including those that have
disparate and comparatively complex features. Specifically, comments
are invited on the sorts of plans that have difficulty meeting the
statutory limit, and what other sorts of accommodations may be
appropriate for those plans.
Paragraph (a)(3) of the 2012 final regulations requires plans and
issuers to provide the SBC in the form, and in accordance with the
instructions for completing the SBC, that are specified by the
Secretaries in guidance. A guidance document published
contemporaneously with the 2012 final regulations served as such
guidance specified by the Secretaries, and stated that SBCs provided in
connection with group health plan coverage may be provided either as a
stand-alone document or in combination with other summary materials
(for example, a summary plan description (SPD)), if the SBC information
is intact and prominently displayed at the beginning of the materials
(such as immediately after the Table of Contents in an SPD) and in
accordance with the timing requirements for providing an SBC.\33\ For
health insurance coverage offered in
[[Page 78586]]
the individual market, the SBC must be provided as a stand-alone
document, but HHS notes that it can be included in the same mailing as
other plan materials. These proposed rules do not make any changes to
these requirements.
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\33\ Summary of Benefits and Coverage and Uniform Glossary--
Templates, Instructions, and Related Materials; and Guidance for
Compliance, 77 FR 8706, 8707 (February 14, 2012).
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In Affordable Care Act Implementation FAQs Part VIII, question 8,
the Departments stated that an SBC provided in connection with a group
health plan may include a reference to the SPD (although not as a
substitute for any required content element of the SBC).\34\ Another
FAQ provided that for SBCs provided in connection with coverage in the
individual market, while it is not permitted to substitute a reference
to any other document for any content element of the SBC, an SBC may
include a reference to another document in the SBC footer.\35\ In
addition, wherever an SBC provides information that fully satisfies a
particular content element of the SBC, it may add to that information a
reference to specified pages or portions of other documents in order to
supplement or elaborate on that information. As stated in the previous
FAQs, SBCs provided in connection with a group health plan may include
a reference to the SPD or other documents and SBCs provided in
connection with individual market coverage may reference other
documents to supplement or elaborate on information in the SBC.
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\34\ See Affordable Care Act Implementation FAQs Part VIII,
question 8, available at www.dol.gov/ebsa/faqs/faq-aca8.html and
https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.
\35\ See Affordable Care Act Implementation FAQs Part IX,
question 5, available at https://www.dol.gov/ebsa/faqs/faq-aca9.html
and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
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Affordable Care Act Implementation FAQs Part IX, question 7,
addressed combining SBCs or SBC elements to provide a side-by-side
comparison.\36\ Some plans or issuers provide web-based or print
materials to illustrate the differences between benefit package options
(including comparison charts and broker comparison Web sites). Issuers
and plans (and agents and brokers working with such plans) may display
SBCs, or parts of SBCs, in a way that facilitates comparisons of
different benefit package options by individuals and employers shopping
for coverage. For example, on a Web site, viewers could be allowed to
select a comparison of only the deductibles, out-of-pocket limits, or
other cost sharing information relating to several benefit package
options. This could be achieved by providing the information from the
Answers column in the ``What is the overall deductible?'' row of the
SBC for several benefit packages, but without having to repeat the
first ``Important Questions'' and ``Why this Matters'' columns, or the
other content rows, of the SBC for each of the benefit packages.
However, such a chart, Web site, or other comparison would not, itself,
satisfy the requirements under PHS Act section 2715 and the 2012 final
regulations to provide the SBC. The full SBC for each of the benefit
packages included in the comparison view or tool must be made available
in accordance with the statute and regulations.
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\36\ See Affordable Care Act Implementation FAQs Part IX,
question 7, available at https://www.dol.gov/ebsa/faqs/faq-aca9.html
and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
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4. Form
a. Group Health Plan Coverage
To facilitate faster and less burdensome disclosure of the SBC, and
to be consistent with PHS Act section 2715(d)(2), which permits
disclosure in either paper or electronic form, the 2012 final
regulations set forth rules to permit greater use of electronic
transmittal of the SBC. For SBCs provided electronically by a plan or
issuer to participants and beneficiaries, the 2012 final regulations
make a distinction between a participant or beneficiary who is already
covered under the group health plan, and a participant or beneficiary
who is eligible for coverage but not enrolled in a group health plan.
This distinction should provide new flexibility in some circumstances,
while also ensuring adequate consumer protections. For participants and
beneficiaries who are already covered under the group health plan, the
2012 final regulations permit provision of the SBC electronically if
the requirements of the Department of Labor's regulations at 29 CFR
2520.104b-1 are met. (Paragraph (c) of those regulations includes an
electronic disclosure safe harbor.\37\) For participants and
beneficiaries who are eligible for but not enrolled in coverage, the
2012 final regulations permit the SBC to be provided electronically if
the format is readily accessible and a paper copy is provided free of
charge upon request. Additionally, to reduce paper copies that may be
unnecessary, if the electronic form is an Internet posting, the plan or
issuer must timely advise the individual in paper form (such as a
postcard) or email that the documents are available on the Internet,
provide the Internet address, and notify the individual that the
documents are available in paper form upon request. The Departments
note that the rules for participants and beneficiaries who are eligible
for but not enrolled in coverage are substantially similar to the
requirements for an issuer providing an electronic SBC to a group
health plan (or its sponsor) under paragraph (a)(4)(i) of the
regulations. Finally, plans, and participants and beneficiaries (both
those covered and those eligible but not enrolled) have the right to
receive an SBC in paper format, free of charge, upon request.
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\37\ On April 7, 2011, the Department of Labor published a
Request for Information regarding electronic disclosure at 76 FR
19285. In it, the Department of Labor stated that it is reviewing
the use of electronic media by employee benefit plans to furnish
information to participants and beneficiaries covered by employee
benefit plans subject to ERISA. Because these proposed regulations
propose to adopt the ERISA electronic disclosure rules by cross-
reference, any changes that may be made to 29 CFR 2520.104b-1 in the
future would also apply to the SBC.
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In Affordable Care Act Implementation FAQs Part IX, question 1, the
Departments adopted an additional safe harbor related to electronic
delivery of SBCs.\38\ That FAQ stated that SBCs may be provided
electronically to participants and beneficiaries in connection with
their online enrollment or online renewal of coverage under the plan.
The FAQ also stated SBCs also may be provided electronically to
participants and beneficiaries who request an SBC online. In either
case, the individual must have the option to receive a paper copy upon
request. These proposed regulations would include this additional safe
harbor into the applicable regulations.
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\38\ See Affordable Care Act Implementation FAQs Part IX,
question 4, available at https://www.dol.gov/ebsa/faqs/faq-aca9.html
and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
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After the publication of the 2012 final regulations, the
Departments were asked to provide model language to meet the
requirement to advise participants and beneficiaries that the SBC is
available on the Internet. In Affordable Care Act FAQs Part VIII,
question 12, the Departments provided the following model language:
\39\
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\39\ See Affordable Care Act Implementation FAQs Part VIII,
question 12, available at https://www.dol.gov/ebsa/faqs/faq-aca8.html
and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.
Availability of Summary Health Information
As an employee, the health benefits available to you represent a
significant component of your compensation package. They also
provide important protection for you and your family in the case of
illness or injury.
[[Page 78587]]
Your plan offers a series of health coverage options. Choosing a
health coverage option is an important decision. To help you make an
informed choice, your plan makes available a Summary of Benefits and
Coverage (SBC), which summarizes important information about any
health coverage option in a standard format, to help you compare
across options.
The SBC is available on the web at: www.Web site.com/SBC. A
paper copy is also available, free of charge, by calling 1-XXX-XXX-
XXXX (a toll-free number).
The FAQ also stated that plans and issuers have flexibility with
respect to the postcard and may choose to tailor it in many ways.
b. Individual Health Insurance Coverage and Self-Insured Non-Federal
Governmental Plans
The HHS 2012 final regulations established a provision under
paragraph (a)(4)(iii)(C) that deems health insurance issuers in the
individual market to be in compliance with the requirement to provide
the SBC to an individual requesting summary information about a health
insurance product prior to submitting an application for coverage if
the issuer provides the content required under paragraph (a)(2) of the
regulations to the federal health reform Web portal described in 45 CFR
159.120. Issuers must submit all of the content required under
paragraph (a)(2), as specified in guidance by the Secretary, to be
deemed compliant with the requirement to provide an SBC to an
individual requesting summary information prior to submitting an
application for coverage. HHS intends to continue to facilitate the
operation of this deemed compliance option for individual market
issuers. An issuer must provide all SBCs other than the ``shopper'' SBC
contemplated in the deemed compliance provision as required under the
2012 final regulations (and any future final regulations), including
providing the SBC at the time of application and renewal.
The Departments note that consistent with the 2012 final
regulations, an issuer in the individual market must provide the SBC in
a manner that can reasonably be expected to provide actual notice
regardless of the format. An issuer in the individual market satisfies
the form requirements set forth in the 2012 final regulations if it
does at least one of the following: (1) Hand-delivers a printed copy of
the SBC to the individual or dependent; (2) mails a printed copy of the
SBC to the mailing address provided to the issuer by the individual or
dependent; (3) provides the SBC by email after obtaining the
individual's or dependent's agreement to receive the SBC or other
electronic disclosures by email; (4) posts the SBC on the Internet and
advises the individual or dependent in paper or electronic form, in a
manner compliant with 45 CFR 147.200(a)(4)(iii)(A)(1) through (3), that
the SBC is available on the Internet and includes the applicable
Internet address; or (5) provides the SBC by any other method that can
reasonably be expected to provide actual notice.
The 2012 final regulations also provide that the obligation to
provide an SBC cannot be satisfied electronically in the individual
market unless: the format is readily accessible; the SBC is displayed
in a location that is prominent and readily accessible; the SBC is
provided in an electronic form that can be electronically retained and
printed; the SBC is consistent with the appearance, content and
language requirements; and the issuer notifies the individual that a
paper SBC is available upon request without charge.
These proposed rules would clarify the form and manner for SBCs
provided by a self-insured non-Federal governmental plan. Such SBCs may
be provided in paper form. Alternatively, such SBCs may be provided
electronically if the plan conforms to either the substance of the
provisions applicable to ERISA plans (in paragraph (a)(4)(ii) of the
regulations) or to individual health insurance coverage (in paragraph
(a)(4)(iii) of the regulations).
5. Language
PHS Act section 2715(b)(2) provides that standards shall ensure
that the SBC ``is presented in a culturally and linguistically
appropriate manner.'' The 2012 final regulations provide that a plan or
issuer for this purpose is considered to provide the SBC in a
culturally and linguistically appropriate manner if the thresholds and
standards of 45 CFR 147.136(e), implementing standards for the form and
manner of notices related to internal claims appeals and external
review, are met as applied to the SBC.\40\ At the time of publication
of these proposed regulations, 268 U.S. counties (78 of which are in
Puerto Rico) meet this threshold. The overwhelming majority of these
are Spanish; however, Chinese, Navajo, and Tagalog are present in a few
counties, affecting five states (specifically, Alaska, Arizona,
California, New Mexico, and Utah).\41\
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\40\ See 75 FR 43330 (July 23, 2010), as amended by 76 FR 37208
(June 24, 2011).
\41\ Guidance on the HHS Web site contains a list of the
counties that meet this threshold. This information is available at
https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/2009-13-CLAS-County-Data_12-05-14_clean_508.pdf.
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To help plans and issuers meet the language requirements of
paragraph (a)(5) of the 2012 final regulations, as requested by
commenters, HHS has provided written translations of the SBC template,
sample language, and the uniform glossary in Chinese, Navajo, Spanish,
and Tagalog.\42\ HHS may also make these materials available in other
languages to facilitate voluntary distribution of SBCs to other
individuals with limited English proficiency. We seek comment on this
standard, and on other potential standards that could facilitate
consistency across the Departments' programs. The Departments
anticipate that translations of the updated SBC template, sample
language, and uniform glossary will be available when these proposed
regulations are finalized.
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\42\ Translations are available at https://cciio.cms.gov/programs/consumer/summaryandglossary/.
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Nothing in these proposed regulations should be construed as
limiting an individual's rights under Federal or State civil rights
statutes, such as Title VI of the Civil Rights Act of 1964 (Title VI)
which prohibits recipients of Federal financial assistance, including
issuers participating in Medicare Advantage, from discriminating on the
basis of race, color, or national origin. To ensure non-discrimination
on the basis of national origin, recipients are required to take
reasonable steps to ensure meaningful access to their programs and
activities by limited English proficient persons. For more information,
see, ``Guidance to Federal Financial Assistance Recipients Regarding
Title VI Prohibition Against National Origin Discrimination Affecting
Limited English Proficient Persons,'' available at https://www.hhs.gov/ocr/civilrights/resources/specialtopics/lep/policyguidancedocument.html.
B. Notice of Modification
PHS Act section 2715(d)(4) directs that a group health plan or
health insurance issuer offering group or individual health insurance
coverage must provide notice of any material modification (as defined
under ERISA section 102) in any of the terms of the plan or coverage
involved that is not reflected in the most recently provided SBC. For
purposes of PHS Act section 2715, the 2012 final regulations interpret
the statutory reference to the SBC to mean that only a material
modification in the terms of the plan or coverage that would affect the
content of the SBC, that is not reflected in the most recently provided
SBC, and that occurs
[[Page 78588]]
other than in connection with a renewal or reissuance of coverage would
trigger the notice. In these circumstances, the notice would be
required to be provided to enrollees (or, in the individual market,
covered individuals) no later than 60 days prior to the date on which
such change will become effective. A material modification, within the
meaning of section 102 of ERISA, includes any modification to the
coverage offered under a plan or policy that, independently, or in
conjunction with other contemporaneous modifications or changes, would
be considered by an average plan participant (or in the case of
individual market coverage, an average individual covered under a
policy) to be an important change in covered benefits or other terms of
coverage under the plan or policy.\43\ A material modification could be
an enhancement of covered benefits or services or other more generous
plan or policy terms. It includes, for example, coverage of previously
excluded benefits or reduced cost-sharing. A material modification
could also be a material reduction in covered services or benefits, as
defined in 29 CFR 2520.104b-3(d)(3) of the Department of Labor's
regulations, or more stringent requirements for receipt of benefits. As
a result, it also includes changes or modifications that reduce or
eliminate benefits, increase cost-sharing, or impose a new referral
requirement.\44\ (However, changes to the information in the SBC
resulting from changes in the regulatory requirements for an SBC are
not changes to the plan or policy requiring the mid-year provision of a
notice of modification, unless specified in such new requirements.)
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\43\ See DOL Information Letter, Washington Star/Washington-
Baltimore Newspaper Guild to Munford Page Hall, II, Baker & McKenzie
(February 8, 1985).
\44\ See, e.g., Ward v. Maloney, 386 F.Supp.2d 607, 612
(M.D.N.C. 2005), which discusses judicial interpretations of when an
amendment is and is not a material modification.
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The 2012 final regulations require that this notice be provided
only for changes other than in connection with a renewal or reissuance
of coverage. At renewal, plans and issuers must provide an updated SBC
in accordance with the requirements otherwise applicable to SBCs. PHS
Act section 2715 and paragraph (b) of the 2012 final regulations
specify the timing for providing a notice of modification in situations
other than in connection with a renewal or reissuance of coverage. To
the extent a plan or policy implements a mid-year change that is a
material modification that affects the content of the SBC, and that
occurs other than in connection with a renewal or reissuance of
coverage, the 2012 final regulations require a notice of modification
to be provided 60 days in advance of the effective date of the
change.\45\ Plans and issuers are permitted to either provide an
updated SBC reflecting the modifications or provide a separate notice
describing the material modifications. These proposed regulations do
not make any changes to these requirements.
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\45\ In Affordable Care Act Implementation FAQs Part XX, the
Departments addressed notice requirements triggered by a closely-
held for-profit corporation's health plan ceasing to provide
coverage for some or all contraceptive services mid-plan year. The
FAQ clarified that, for plans subject to ERISA that reduce or
eliminate coverage of contraceptive services after having provided
such coverage, expedited disclosure requirements for material
reductions in covered services or benefits apply. See https://www.dol.gov/ebsa/pdf/faq-aca20.pdf and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs20.html.
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For ERISA-covered group health plans subject to PHS Act section
2715, this notice is required in advance of the timing requirements
under the Department of Labor's regulations at 29 CFR 2520.104b-3 for
providing a summary of material modification (SMM) (generally not later
than 210 days after the close of the plan year in which the
modification or change was adopted, or, in the case of a material
reduction in covered services or benefits, not later than 60 days after
the date of adoption of the modification or change). In situations
where a complete notice is provided in a timely manner under PHS Act
section 2715(d)(4), an ERISA-covered plan will also satisfy the
requirement to provide an SMM under Part 1 of ERISA.
C. Requirement To Provide the Uniform Glossary
Sections 2715(g)(2) and (g)(3) of the PHS Act direct the
Departments to develop standards for definitions, at a minimum, for
certain insurance-related and medical terms (and also directs the
Departments to develop standards for such other insurance-related and
medical terms as will help consumers compare the terms of their
coverage and the extent of medical benefits (or exceptions to those
benefits)).\46\ The 2012 final regulations included several additional
terms in the uniform glossary.\47\ As discussed later in this preamble,
the Departments propose to revise definitions for several of these
terms and also add several new terms to the Glossary.\48\
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\46\ The insurance-related terms identified in the statute are:
co-insurance, co-payment, deductible, excluded services, grievance
and appeals, non-preferred provider, out-of-network co-payments,
out-of-pocket limit, preferred provider, premium, and UCR (usual,
customary and reasonable) fees. The medical terms identified in the
statute are: durable medical equipment, emergency medical
transportation, emergency room care, home health care, hospice
services, hospital outpatient care, hospitalization, physician
services, prescription drug coverage, rehabilitation services, and
skilled nursing care.
\47\ The additional terms in the uniform glossary issued with
the 2012 final regulations are: allowed amount, balance billing,
complications of pregnancy, emergency medical condition, emergency
services, habilitation services, health insurance, in-network co-
insurance, in-network co-payment, medically necessary, network, out-
of-network co-insurance, plan, preauthorization, prescription drugs,
primary care physician, primary care provider, provider,
reconstructive surgery, specialist, and urgent care.
\48\ For further discussion of proposed changes to the Uniform
Glossary, see section III later in this preamble.
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A plan or issuer must make the uniform glossary available upon
request within seven business days. To satisfy this requirement, a plan
or issuer must provide the content described in paragraph (a)(2)(i)(L)
of the 2012 final regulations, discussed earlier in this preamble,
which requires that the SBC include an Internet address for obtaining
the uniform glossary, a contact phone number to obtain a paper copy of
the uniform glossary, and a disclosure that paper copies are available
upon request. The Internet address may be a place where the document
can be found on the plan's or issuer's Web site, or the Web site of
either the Department of Labor or HHS. However, a plan or issuer must
make the glossary available upon request, in either paper or electronic
form (as requested), within seven business days after receipt of the
request. Group health plans and health insurance issuers must provide
the uniform glossary in the appearance specified by the Departments and
without modification, so that the glossary is presented in a uniform
format and uses terminology understandable by the average plan enrollee
or individual covered under an individual policy.
D. Preemption
Section 2715 of the PHS Act is incorporated into ERISA section 715,
and Code section 9815, and is subject to the preemption provisions of
ERISA section 731 and PHS Act section 2724 (implemented in 29 CFR
2590.731(a) and 45 CFR 146.143(a)). Under these provisions, the
requirements of part 7 of ERISA and part A of title XXVII of the PHS
Act, as amended by the Affordable Care Act, are not to be ``construed
to supersede any provision of State law which establishes, implements,
or continues in effect any standard or requirement solely relating to
health
[[Page 78589]]
insurance issuers in connection with group or individual health
insurance coverage except to the extent that such standard or
requirement prevents the application of a requirement'' of part A of
title XXVII of the PHS Act. Accordingly, State laws that impose
requirements on health insurance issuers that are stricter than those
imposed by the Affordable Care Act will not be superseded by the
Affordable Care Act. In addition, PHS Act section 2715(e) provides that
the standards developed under PHS Act section 2715(a), ``shall preempt
any related State standards that require [an SBC] that provides less
information to consumers than that required to be provided under this
section, as determined by the [Departments].'' Reading these two
preemption provisions together, the 2012 final regulations do not, and
these proposed regulations would not, prevent States from imposing
separate, additional disclosure requirements on health insurance
issuers.
E. Failure To Provide
PHS Act section 2715(f), incorporated into ERISA section 715 and
Code section 9815, provides that a group health plan (including its
administrator), and a health insurance issuer offering group or
individual health insurance coverage, that ``willfully fails to provide
the information required under this section shall be subject to a fine
of not more than $1,000 for each such failure.'' In addition, under PHS
Act section 2715(f), a separate fine may be imposed for each individual
or entity for whom there is a failure to provide an SBC. The 2012 final
regulations addressed the different underlying enforcement structures
and penalty mechanisms for the Departments.
HHS clarified in the 2012 final regulations that HHS will enforce
these provisions in a manner consistent with 45 CFR 150.101 through
150.465. In these proposed regulations, the Department of Labor
proposes to clarify that it will use the same process and procedures
for assessment of the civil fine as used for failure to file an annual
report under 29 CFR 2560.502c-2 and 29 CFR part 2570, subpart C. In
accordance with ERISA section 502(b)(3), 29 U.S.C. 1132(b)(3), the
Secretary of Labor is not authorized to assess this fine against a
health insurance issuer. Moreover, in these proposed regulations, the
IRS proposes to clarify that the IRS will enforce this section using a
process and procedure consistent with section 4980D of the Code.
III. Proposed Documents Authorized for Plan Years Beginning on or After
September 1, 2015
Contemporaneously with the issuance of these proposed regulations,
the Departments are making available on their Web sites a proposed
revised SBC template and attendant materials (including a proposed
revised uniform glossary) to comply with the disclosure requirements of
PHS Act section 2715. These materials are proposed to be authorized by
the Departments for disclosure provided in accordance with the
applicability date proposed later in this preamble.\49\ This section of
the preamble describes the changes proposed to each document.
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\49\ See section IV of this preamble for a full discussion of
the proposed applicability date.
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The following documents, available at https://cciio.cms.gov and
www.dol.gov/ebsa/healthreform, are available for review and the
Departments solicit comment on them:
1. SBC template. The document is available in accessible format
(PDF) and modifiable format (MS Word).
2. Sample completed SBC. This document was completed using
information for sample health coverage and provides a general
illustration of a completed SBC for coverage under a group health plan.
3. Instructions. For assistance in completing the SBC template,
separate instructions are available for group health coverage and for
individual health insurance coverage. Additionally, with respect to the
individual market instructions, the Office of Personnel Management
(OPM) may provide additional instructions for Multi-State Plan issuers.
4. Why This Matters language. The SBC instructions include language
that must be used when completing the ``Why This Matters'' column on
the first page of the SBC template. Two language options are provided
depending on whether the answer in the applicable row is ``yes'' or
``no'', according to the terms of the plan or coverage.
5. Coverage examples. Information provided by HHS at https://cciio.cms.gov (and accessible via hyperlink from www.dol.gov/ebsa/healthreform) the information necessary to perform the coverage example
calculations.
6. Uniform glossary. The uniform glossary of health coverage and
medical terms may not be modified by plans or issuers.
Many of the changes proposed in the updated versions of these
documents streamline the SBC. As discussed earlier in this preamble,
these changes were made after feedback the Departments received from
stakeholders, and the revised proposed template and other documents are
intended to make it easier for plans to satisfy the statutory page
limit. The revised documents also incorporate information from several
sets of FAQs that addressed implementation of the SBC provisions.
Additionally, the revised documents include changes made to conform
with new requirements that have become applicable since the issuance of
the 2012 final regulations. These changes include the addition of
information regarding minimum value and minimum essential coverage and
changes to be consistent with the Affordable Care Act's requirement to
eliminate all annual limits on essential health benefits.
Finally, the revised documents reflect changes to the coverage
examples. The coding and pricing data for the existing coverage
examples (having a baby through normal delivery and managing well
controlled type 2 diabetes) have been updated to account for changes in
the data since the issuance of the final regulations in 2012.
Additionally the Departments proposed to change the data source for the
claims and pricing information from a data source that used multiple
commercial payor databases, to one based on a single database, the
Truven Health Analytics MarketScan[supreg] Commercial Claims and
Encounters database, adjusted to estimate 2014 pricing to account for
health care inflation since 2010. The Departments seek comment on
whether to update this data using more recent 2013 Marketscan[supreg]
database claims data that will be available for the final rule, and on
appropriate ways to inform consumers of the resulting increases in
sample care costs when the pricing data is updated, for example,
through a cover letter or other disclosure provided along with the SBC.
The Departments also seek specific comment on two diagnosis codes in
the having a baby (normal delivery) scenario. The pricing data
associated with these two codes, DRG 775 and DRG 795 (inpatient
hospital charges for the mother, and inpatient hospital charges for the
baby, respectively), appears higher than expected. These diagnosis
codes represent bundled services and may include charges that are
duplicated by other codes currently included in the scenario. The
Departments seek comment on the accuracy of this pricing data.
Additionally, the SBC template, sample completed template, and
coverage example documents have been updated to reflect that these
proposed regulations would require a third
[[Page 78590]]
coverage example--a simple foot fracture (with emergency room visit),
as described earlier in this preamble. The same Marketscan[supreg]
database has been used to produce the claim and pricing data for this
scenario.
The Departments invite comment on all aspects of the proposed
changes to the SBC template and other materials, and the uniform
glossary. The Departments also request specific comments regarding the
Instruction Guides about whether plans and issuers should be permitted
to add additional benefits that are either covered or excluded in the
``other covered services'' and ``excluded services'' section that are
not already required to be disclosed by the instructions.
IV. Applicability
After publication of the 2012 final regulations, the Departments
received questions about the applicability of the SBC requirements to
certain types of group health plans, including expatriate health plans,
Medicare Advantage plans, and insurance products that are no longer
being offered for purchase (closed blocks of business). The Departments
addressed the applicability of the SBC requirements to each of these
types of coverage in FAQs issued after publication of the 2012 final
regulations. The Departments also received questions regarding the
applicability of the SBC requirements to benefits provided under
certain account-type arrangements such as health FSAs,\50\ HRAs,\51\
and health savings accounts (HSAs),\52\ as well as benefits provided
through an employee assistance program (EAP) and other excepted
benefits.
---------------------------------------------------------------------------
\50\ See Code section 106(c)(2).
\51\ See IRS Notice 2002-45, 2002-2 C.B. 93.
\52\ See Code section 223.
---------------------------------------------------------------------------
In May 2012, the Departments issued FAQs that discussed the special
circumstances and considerations faced by expatriate plans in complying
with the SBC requirements.\53\ The FAQs provided temporary relief from
enforcement. Under recently enacted legislation,\54\ expatriate health
plans are not subject to the requirement to provide an SBC. The
Departments intend to issue guidance implementing this legislation. The
temporary relief from enforcement for expatriate plans will remain in
place until such guidance is issued.
---------------------------------------------------------------------------
\53\ See Affordable Care Act Implementation FAQs Part IX,
question 13, available at https://www.dol.gov/ebsa/faqs/faq-aca9.html
and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
\54\ See Consolidated and Further Continuing Appropriations Act,
2015, Division M, Expatriate Health Coverage Clarification Act of
2014, Section 3(d).
---------------------------------------------------------------------------
Moreover, in August 2012, the Departments issued FAQs that
discussed group health plans providing Medicare Advantage benefits,
which are Medicare benefits financed by the Medicare Trust Funds, for
which the benefits are set by Congress and regulated by the Centers for
Medicare & Medicaid Services. Again, the FAQs provided a temporary
nonenforcement policy, because Medicare Advantage benefits are not
health insurance coverage and Medicare Advantage organizations are not
required to provide an SBC with respect to such benefits. Additionally,
there are separately required disclosures required to be provided by
Medicare Advantage organizations, to ensure that enrollees in these
plans receive the necessary information about their coverage and
benefits. These rules propose to exempt from the SBC requirements a
group health plan benefit package that provides Medicare Advantage
benefits.
The Departments also issued FAQs in May 2012 addressing insurance
products that are no longer being offered for purchase (``closed blocks
of business''). Some interested stakeholders had requested enforcement
relief with respect to such products because the products are no longer
offered for purchase and the SBC is intended to be a tool to help group
health plans and individuals as they shop for coverage. The Departments
had provided temporary relief through an FAQ provided that certain
conditions were met: (1) The insurance product is no longer being
actively marketed; (2) the health insurance issuer stopped actively
marketing the product prior to September 23, 2012, when the requirement
to provide an SBC was first applicable to health insurance issuers; and
(3) the health insurance issuer has never provided an SBC with respect
to such product. \55\ The Departments reiterate that relief here, but
note that if an insurance product was actively marketed for business on
or after September 23, 2012, and is no longer being actively marketed
for business, or if the plan or issuer ever provided an SBC in
connection with the product, the plan and issuer must provide the SBC
with respect to such coverage, as required by PHS Act section 2715 and
the regulations.
---------------------------------------------------------------------------
\55\ See Affordable Care Act Implementation FAQs Part IX,
question 12, available at https://www.dol.gov/ebsa/faqs/faq-aca9.html
and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
---------------------------------------------------------------------------
As under the 2012 final regulations, an SBC need not be provided
for plans, policies, or benefit packages that constitute excepted
benefits. Thus, for example, an SBC need not be provided for stand-
alone dental or vision plans or health FSAs if they constitute excepted
benefits under the Departments' regulations.\56\ If benefits under a
health FSA do not constitute excepted benefits, the health FSA is a
group health plan generally subject to the SBC requirements. For a
health FSA that does not meet the criteria for excepted benefits and
that is integrated with other major medical coverage, the SBC is
prepared for the other major medical coverage, and the effects of the
health FSA can be denoted in the appropriate spaces on the SBC,
including those for deductibles, copayments, coinsurance, and benefits
otherwise not covered by the major medical coverage. A stand-alone
health FSA, which does not meet the criteria for excepted benefits,
must satisfy the SBC requirements independently.
---------------------------------------------------------------------------
\56\ See 26 CFR 54.9831-1(c), 29 CFR 2590.732(c), 45 CFR
146.145(c).
---------------------------------------------------------------------------
On October 1, 2014, the Departments published final rules on
excepted benefits.\57\ These regulations stated that an EAP constitutes
excepted benefits if it satisfies certain requirements.\58\ If an EAP
qualifies as excepted benefits, the EAP need not separately satisfy the
SBC requirements.
---------------------------------------------------------------------------
\57\ 79 FR 59130 (October 1, 2014).
\58\ The first requirement is that the EAP does not provide
significant benefits in the nature of medical care. For this
purpose, the amount, scope, and duration of covered services are
taken into account. (See preamble discussion at 79 FR 59133 for
examples). The second requirement is that the EAP's benefits cannot
be coordinated with the benefits under another group health plan.
For this purpose, participants in the group health plan must not be
required to use and exhaust benefits under the EAP (making the EAP a
``gatekeeper'') before an individual is eligible for benefits under
the other group health plan; and participant eligibility for
benefits under the EAP must not be dependent on participation in
another group health plan. The third requirement is that no employee
premiums or contributions may be required as a condition of
participation in the EAP. The fourth requirement is that an EAP that
constitutes excepted benefits may not impose any cost-sharing
requirements.
---------------------------------------------------------------------------
The Departments have issued guidance regarding HRAs since the
publication of the 2012 final regulations.\59\ An HRA is a group health
[[Page 78591]]
plan. The Departments' guidance on HRAs clarifies that such
arrangements are subject to the group market reform provisions of the
Affordable Care Act, including the prohibition on annual limits under
PHS Act section 2711 and the requirement to provide certain preventive
services without cost sharing under PHS Act section 2713. The
Departments' guidance further clarifies that such arrangements will not
violate the market reform provisions when integrated with a group
health plan that complies with those provisions (and that such
arrangements cannot be integrated with individual market policies to
satisfy the market reforms).
---------------------------------------------------------------------------
\59\ On September 13, 2013, DOL and the Treasury published
guidance on the application of the market reforms and other
provisions of the Affordable Care Act to health reimbursement
arrangements (HRAs), certain health flexible spending arrangements
(health FSAs) and certain other employer health care arrangements.
See DOL Technical Release 2013-03, available at https://www.dol.gov/ebsa/newsroom/tr13-03.html, and IRS Notice 2013-54, available at
https://www.irs.gov/pub/irs-drop/n-13-54.pdf. HHS also issued
guidance to reflect that HHS concurs in the application of the laws
under its jurisdiction as set forth in the DOL and Treasury
Department guidance. See Insurance Standards Bulletin, Application
of Affordable Care Act Provisions to Certain Healthcare
Arrangements, September 16, 2013, available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/cms-hra-notice-9-16-2013.pdf. On May 13, 2013, two FAQs were made available on the
IRS Web site addressing employer healthcare arrangements, available
at: www.irs.gov/uac/Newsroom/Employer-Health-Care-Arrangements. On
November 6, 2014, the Departments issued three FAQs on the
compliance of premium reimbursement arrangements. See ACA
Implementation FAQs Part XXII, available at https://www.dol.gov/ebsa/pdf/faq-aca22.pdf and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs22.html.
---------------------------------------------------------------------------
Benefits under an HRA generally do not constitute excepted
benefits, and thus HRAs are generally subject to the SBC requirements.
An HRA integrated with other major medical coverage under a group
health plan need not separately satisfy the SBC requirements; the SBC
is prepared for the other major medical coverage, and the effects of
employer allocations to an account under the HRA can be denoted in the
appropriate spaces on the SBC, including those for deductibles,
copayments, coinsurance, and benefits otherwise not covered by the
other major medical coverage.
HSAs generally are not group health plans and thus generally are
not subject to the SBC requirements. Nevertheless, an SBC prepared for
a high deductible health plan associated with an HSA can (but is not
required to) mention the effects of employer contributions to HSAs in
the appropriate spaces on the SBC, including those for deductibles,
copayments, coinsurance, and benefits otherwise not covered by the high
deductible health plan.
V. Applicability Date
Changes to the current requirements to provide an SBC, notice of
modification, and uniform glossary under PHS Act section 2715 and the
2012 final regulations are proposed to apply for disclosures with
respect to participants and beneficiaries who enroll or re-enroll in
group health coverage through an open enrollment period (including re-
enrollees and late enrollees) beginning on the first day of the first
open enrollment period that begins on or after September 1, 2015. With
respect to disclosures to participants and beneficiaries who enroll in
group health coverage other than through an open enrollment period
(including individuals who are newly eligible for coverage and special
enrollees), the requirements of these proposed regulations are proposed
to apply beginning on the first day of the first plan year that begins
on or after September 1, 2015. For disclosures to plans, and to
individuals and dependents in the individual market, these requirements
are proposed to apply to health insurance issuers beginning on
September 1, 2015. We solicit comments on these proposed applicability
dates.
VI. Economic Impact and Paperwork Burden
A. Executive Orders 12866 and 13563--Departments of Labor and HHS
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, public
health and safety effects; distributive impacts; and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated a ``significant regulatory
action'' under section 3(f) of Executive Order 12866. Accordingly, the
rule has been reviewed by the Office of Management and Budget.
A regulatory impact analysis (RIA) must be prepared for major rules
with economically significant effects ($100 million or more in any one
year). As discussed below, the Departments have concluded that these
proposed regulations would not have economic impacts of $100 million or
more in any one year or otherwise meet the definition of an
``economically significant rule'' under Executive Order 12866.
Nonetheless, consistent with Executive Orders 12866 and 13563, the
Departments have provided an assessment of the potential benefits and
the costs associated with this proposed regulation.
The primary benefits of these proposed regulations come from
improved information, which will enable consumers, both individuals and
employers, to better understand the health insurance coverage they have
and provide, and make better coverage decisions based on their
preferences with respect to benefit design, level of financial
protection, and cost. The Departments believe that such improvements
will result in a more efficient, competitive market. These proposed
regulations will also benefit consumers by reducing the time they spend
searching for and compiling health plan and coverage information.
The Departments have continued using the cost methodology that was
used to estimate the costs presented in the 2012 final regulations.
Since publication of the 2012 final regulations, the Departments have
refined assumptions and estimates to incorporate better data. The
estimates presented in these proposed regulations are a result of those
efforts and represent the Departments' best estimates.
The primary cost of the proposed regulations is requiring issuers
and plans to create a third coverage example, a simple foot fracture
(with emergency room visit). This third coverage example will fit on
the same page as the two existing coverage examples in the SBC
template, so no new material costs are required by these proposed
regulations. The quantified costs of these proposed regulations are for
the actual production of the new coverage example.
These proposed regulations allow issuers and plans to continue to
use the ``Coverage Example Calculator.'' \60\ This calculator benefits
issuers and plan sponsors by reducing the required time to produce the
coverage examples. The calculator allows plans to either manually
populate less than 20 data points on the plan's design for one plan at
a time, or to enter the data points for multiple plans at once. Most of
the data fields needed for the new, proposed coverage example are
already required to create the other two, already required coverage
examples. While plan sponsors and issuers are not required to use the
Coverage Example Calculator, the Departments expect that many will.
Those choosing to perform the calculations without the calculator will
make their own determination that it is more efficient and economically
advantageous, or otherwise more appropriate for them to do so.
---------------------------------------------------------------------------
\60\ https://www.cms.gov/cciio/Resources/forms-reports-and-other-resources/#sbcug. For more information on the calculator,
see section II.A.3 earlier in this preamble.
---------------------------------------------------------------------------
Using assumptions similar to those used in the regulatory impact
analysis of the 2012 final regulations, with respect
[[Page 78592]]
to plans and issuers that do not use the Coverage Example Calculator,
the Departments estimate that large issuers and third-party
administrators (TPAs), for all their plans and products, would spend a
total of approximately 40 additional hours creating the new coverage
example (30 hours for medium firms, and 20 hours for small firms). Once
the new coverage example is completed, the Departments estimate that
large firms would spend an estimated 25 hours in later years updating,
while medium firms would spend 19 hours and small firms would spend 13
hours.
This leads to an estimated cost in the first year of $3.4 million
and for each subsequent year of $2.1 million to produce the coverage
example. Actual cost could be lower as firms organize their data in a
manner that will allow them to use the automated functions of the
Coverage Example Calculator. Tables 1 and 2 detail the calculations
used to obtain the cost estimate for creating the new, proposed
coverage example. The Paperwork Reduction Act section below contains a
discussion of additional assumptions and data used to develop this
estimate.
Table 1--Year 1, Creating New Coverage Example
----------------------------------------------------------------------------------------------------------------
Number of Total hour Equivalent
Type of labor firms Hours per firm Cost per hour burden costs of hours
----------------------------------------------------------------------------------------------------------------
Issuers
----------------------------------------------------------------------------------------------------------------
Large:
IT.......................... 75 22.0 $84 1,650 $138,584
Benefits.................... 75 16.0 62 1,200 74,796
Legal....................... 75 2.0 130 150 19,491
-------------------------------------------------------------------------------
Sub-total............... .............. .............. .............. 3,000 232,871
Medium:
IT.......................... 250 16.5 84 4,125 346,459
Benefits.................... 250 12.0 62 3,000 186,990
-------------------------------------------------------------------------------
Legal....................... 250 1.5 130 375 48,728
Sub-total............... .............. .............. .............. 7,500 582,176
Small:
IT.......................... 175 11.0 84 1,925 161,681
Benefits.................... 175 8.0 62 1,400 87,262
Legal....................... 175 1.0 130 175 22,740
-------------------------------------------------------------------------------
Sub-total............... .............. .............. .............. 3,500 271,682
----------------------------------------------------------------------------------------------------------------
TPAs
----------------------------------------------------------------------------------------------------------------
Large:
IT.......................... 158 22.0 84 3,476 291,949
Benefits.................... 158 16.0 62 2,528 157,570
Legal....................... 158 2.0 130 316 41,061
-------------------------------------------------------------------------------
Sub-total............... .............. .............. .............. 6,320 490,581
Medium:
IT.......................... 526 16.5 84 8,679 728,949
Benefits.................... 526 12.0 62 6,312 393,427
Legal....................... 526 1.5 130 789 102,523
-------------------------------------------------------------------------------
Sub-total............... .............. .............. .............. 15,780 1,224,899
Small:
IT.......................... 368 11.0 84 4,048 339,992
Benefits.................... 368 8.0 62 2,944 183,500
Legal....................... 368 1.0 130 368 47,818
-------------------------------------------------------------------------------
Sub-total............... .............. .............. .............. 7,360 571,309
-------------------------------------------------------------------------------
Total............... .............. .............. .............. 43,460 3,373,517
----------------------------------------------------------------------------------------------------------------
Table 2--Year 2, Creating New Coverage Example
----------------------------------------------------------------------------------------------------------------
Number of Total hour Equivalent
Type of labor firms Hours per firm Cost per hour burden costs of hours
----------------------------------------------------------------------------------------------------------------
Issuers
----------------------------------------------------------------------------------------------------------------
Large:
IT.......................... 75 13.8 $84 1,031 $86,615
Benefits.................... 75 10.0 62 750 46,748
Legal....................... 75 1.3 130 94 12,182
-------------------------------------------------------------------------------
Sub-total............... .............. .............. .............. 1,875 145,544
Medium:
[[Page 78593]]
IT.......................... 250 10.3 84 2,578 216,537
Benefits.................... 250 7.5 62 1,875 116,869
Legal....................... 250 0.9 130 234 30,455
-------------------------------------------------------------------------------
Sub-total............... .............. .............. .............. 4,688 363,860
Small:
IT.......................... 175 6.9 84 1,203 101,050
Benefits.................... 175 5.0 62 875 54,539
Legal....................... 175 0.6 130 109 14,212
-------------------------------------------------------------------------------
Sub-total............... .............. .............. .............. 2,188 169,801
----------------------------------------------------------------------------------------------------------------
TPAs
----------------------------------------------------------------------------------------------------------------
Large:
IT.......................... 158 13.8 84 2,173 182,468
Benefits.................... 158 10.0 62 1,580 98,481
Legal....................... 158 1.3 130 198 25,663
-------------------------------------------------------------------------------
Sub-total............... .............. .............. .............. 3,950 306,613
Medium:
IT.......................... 526 10.3 84 5,424 455,593
Benefits.................... 526 7.5 62 3,945 245,892
Legal....................... 526 0.9 130 493 64,077
-------------------------------------------------------------------------------
Sub-total............... .............. .............. .............. 9,863 765,562
Small:
IT.......................... 368 6.9 84 2,530 212,495
Benefits.................... 368 5.0 62 1,840 114,687
Legal....................... 368 0.6 130 230 29,886
-------------------------------------------------------------------------------
Sub-total............... .............. .............. .............. 4,600 357,068
-------------------------------------------------------------------------------
Total............... .............. .............. .............. 27,163 2,108,448
----------------------------------------------------------------------------------------------------------------
B. Paperwork Reduction Act
1. Department of Labor and Department of the Treasury
To implement PHS Act section 2715 and these proposed regulations,
collection of information requirements relate to the provision of the
following:
Summary of benefits and coverage.
Coverage examples (as components of each SBC).
A uniform glossary of health coverage and medical terms
(uniform glossary).
Notice of modifications.
A copy of the information collection request (ICR) may be obtained
by contacting the PRA addressee: G. Christopher Cosby, Office of Policy
and Research, U.S. 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. These are not
toll-free numbers. Email: ebsa.opr@dol.gov. ICRs submitted to OMB also
are available at reginfo.gov (https://www.reginfo.gov/public/do/PRAMain).
This analysis includes the coverage examples that are part of the
SBC disclosure, therefore, the Departments calculate a single burden
estimate for purposes of this section, assuming the information
collection request for the SBC (including coverage examples) totals
eight (8) sides of a page in length.
The Departments assume fully-insured ERISA plans will rely on
health insurance issuers and self-insured plans will rely on TPAs to
perform these functions. While self-insured plans may prepare SBCs
internally, the Departments make this simplifying assumption because
most plans appear to rely on issuers and TPAs for the purpose of
administrative duties, such as enrollment and claims processing. Thus,
the Departments use health insurance issuers and TPAs as the unit of
analysis for the purposes of estimating administrative costs.
The Departments estimate there are a total of 500 issuers and 1,050
TPAs affected by this information collection.\61\ Because HHS shares
the hour and cost burden for fully-insured plans with the Departments
of Labor and the Treasury, HHS assumes 50 percent of the hour and cost
burden estimates to account for burden for issuers in the individual
market and 15 percent of the burden for TPAs to account for those TPAs
serving self-insured non-Federal governmental plans. The Departments of
Labor and the Treasury assume the other 50 percent of the burden
related to issuers to account for burden servicing fully insured ERISA
plans, and 85 percent of the burden related to TPAs to account for the
burden related to ERISA self-insured plans.
---------------------------------------------------------------------------
\61\ The estimate for the number of issuers is based on the
number of issuers for the group and individual market filing with
HHS for the Medical Loss Ratio regulations. See 45 CFR part 158. The
number of TPAs is based on the U.S. Census's 2011 Statistics of U.S.
Businesses that reports there are 3,157 TPA's. Previous discussions
with industry experts led to assuming about one-third of the TPA's
(1,052) could be providing services to self-insured plans.
---------------------------------------------------------------------------
To account for variation in costs due to firm size and the number
of plans and individuals they service, the Departments divide issuers
into small, medium, and large categories.\62\
[[Page 78594]]
Accordingly, the Departments estimate that there are approximately 175
small, 250 medium, and 75 large issuers. The Departments lack
information to create a similar split for TPAs, so they assume a
similar distribution resulting in an estimate of approximately 368
small, 526 medium, and 158 large TPAs.
---------------------------------------------------------------------------
\62\ The Departments define small issuers as those with total
earned premiums less than $50 million; medium issuers as those with
total earned premiums between $50 million and $999 million; and
large issuers as those with total earned premiums of $1 billion or
more. The premium revenue data come from the 2009 NAIC financial
statements, also known as ``Blanks,'' where insurers report
information about their various lines of business.
---------------------------------------------------------------------------
The estimated hour burden and equivalent cost for the collections
of information are as follows: The Departments estimate an
administrative burden on issuers and TPAs to make appropriate changes
to IT systems and processes and make updates to the SBCs and coverage
examples. The Departments estimate that large firms would spend 190
hours (40 hours of which would be new due to the proposed regulation)
in the first year, medium firms would spend 75 percent of large firm
hour burden, and small firms would spend 50 percent of the large firm
hour burden to perform these tasks. The total burden would be split
among IT professionals (55 percent), benefits professionals (40
percent), and legal professionals (5 percent), with hourly labor rates
of $83.99, $62.33, and $129.94 respectively.\63\ Clerical labor rates
are $30.42 per hour.
---------------------------------------------------------------------------
\63\ The Departments' estimated 2015 hourly labor rates include
wages, other benefits, and overhead are calculated as follows: mean
wage from the 2013 National Occupational Employment Survey (April
2014, Bureau of Labor Statistics https://www.bls.gov/news.release/pdf/ocwage.pdf); wages as a percent of total compensation from the
Employer Cost for Employee Compensation (June 2014, Bureau of Labor
Statistics https://www.bls.gov/news.release/ecec.t02.htm); overhead
as a multiple of compensation is assumed to be 25 percent of total
compensation for paraprofessionals, 20 percent of compensation for
clerical, and 35 percent of compensation for professional; annual
inflation assumed to be 2.3 percent annual growth of total labor
cost since 2013 (Employment Costs Index data for private industry,
September 2014 https://www.bls.gov/news.release/eci.nr0.htm).
Computer Systems Analysts (15-1121): $41.02(2013 BLS Wage rate)/
0.69(ECEC ratio) *1.35(Overhead Load Factor) *1.023(Inflation rate)
-2(Inflated 2 years from base year) = $83.99; Compensation,
benefits, and job analysis specialists (13-1141): $30.44(2013 BLS
Wage rate)/0.69(ECEC ratio) *1.35(Overhead Load Factor)
*1.023(Inflation rate) -2(Inflated 2 years from base year) = $62.33;
Legal Professional (23-1011): $63.46(2013 BLS Wage rate)/0.69(ECEC
ratio) *1.35(Overhead Load Factor) *1.023(Inflation rate)
-2(Inflated 2 years from base year) = $129.94; Secretaries, Except
Legal, Medical, and Executive (43-6014): $16.35(2013 BLS Wage rate)/
0.675(ECEC ratio) *1.2(Overhead Load Factor) *1.023(Inflation rate)
-2(Inflated 2 years from base year) = $30.42.
---------------------------------------------------------------------------
Tables 3 (first year) and 4 (subsequent years) show the
calculations used to obtain the hours burden of 153,600 hours (first
year) and 141,600 hours (subsequent years) and the equivalent cost
burden of $11.9 million (first year) and $11.0 million (subsequent
years) for issuers and TPAs to prepare the SBCs and coverage examples.
In addition, clerical employees would spend 653,000 hours with an
equivalent cost of $19.8 million in each year preparing and
distributing the SBCs.
Based on the foregoing, the total hours burden for this information
collection would be 806,000 hours for the first year (794,000 hours for
subsequent years) with an equivalent cost of $31.7 million for the
first year ($30.8 million for subsequent years). This burden is split
evenly between the Departments of Labor and the Treasury.
Table 3--Update SBC Including Coverage Examples, Year 1
----------------------------------------------------------------------------------------------------------------
Number of Total hour Total cost
Type of Labor firms Hours per firm Cost per hour burden burden
----------------------------------------------------------------------------------------------------------------
Issuers
----------------------------------------------------------------------------------------------------------------
Large:
IT.......................... 75 52.3 84 3,919 329,136
Benefits.................... 75 38.0 62 2,850 177,641
Legal....................... 75 4.8 130 356 46,291
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 7,125 553,067
Medium:
IT.......................... 250 39.9 84 9,969 837,275
Benefits.................... 250 29.0 62 7,250 451,893
Legal....................... 250 3.6 130 906 117,758
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 18,125 1,406,926
Small:
IT.......................... 175 26.1 84 4,572 383,992
Benefits.................... 175 19.0 62 3,325 207,247
Legal....................... 175 2.4 130 416 54,006
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 8,313 645,245
----------------------------------------------------------------------------------------------------------------
TPAs
----------------------------------------------------------------------------------------------------------------
Large:
IT.......................... 158 88.8 84 14,034 1,178,745
Benefits.................... 158 64.6 62 10,207 636,190
Legal....................... 158 8.1 130 1,276 165,784
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 25,517 1,980,719
Medium:
IT.......................... 526 67.8 84 35,656 2,994,766
Benefits.................... 526 49.3 62 25,932 1,616,329
Legal....................... 526 6.2 130 3,241 421,197
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 64,830 5,032,293
----------------------------------------------------------------------------------------------------------------
[[Page 78595]]
Small
----------------------------------------------------------------------------------------------------------------
IT.............................. 368 44.4 84 16,344 1,372,716
Benefits.................... 368 32.3 62 11,886 740,879
Legal....................... 368 4.0 130 1,486 193,065
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 29,716 2,306,660
-------------------------------------------------------------------------------
Total............... .............. .............. .............. 153,625 11,924,910
----------------------------------------------------------------------------------------------------------------
TABLE 4--Update SBC Including Coverage Examples, Subsequent Years
----------------------------------------------------------------------------------------------------------------
Number of Total hour Total cost
Type of Labor firms Hours per firm Cost per hour burden burden
----------------------------------------------------------------------------------------------------------------
Issuers
----------------------------------------------------------------------------------------------------------------
Large
IT.......................... 75 48.1 84 3,609 303,151
Benefits.................... 75 35.0 62 2,625 163,616
Legal....................... 75 4.4 130 328 42,637
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 6,563 509,404
Medium
IT.......................... 250 36.8 84 9,195 772,314
Benefits.................... 250 26.8 62 6,688 416,832
Legal....................... 250 3.3 130 836 108,622
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 16,719 1,297,768
-------------------------------------------------------------------------------
Small:
IT.......................... 175 24.1 84 4,211 353,677
Benefits.................... 175 17.5 62 3,063 190,886
Legal....................... 175 2.2 130 383 49,743
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 7,656 594,305
----------------------------------------------------------------------------------------------------------------
TPAs
----------------------------------------------------------------------------------------------------------------
Large
IT.......................... 158 81.8 84 12,926 1,085,686
Benefits.................... 158 59.5 62 9,401 585,964
Legal....................... 158 7.4 130 1,175 152,696
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 23,503 1,824,346
Medium:
IT.......................... 526 62.5 84 32,890 2,762,414
Benefits.................... 526 45.5 62 23,920 1,490,924
Legal....................... 526 5.7 130 2,990 388,518
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 59,800 4,641,856
-------------------------------------------------------------------------------
Small
IT.......................... 368 40.9 84 15,054 1,264,343
Benefits.................... 368 29.8 62 10,948 682,389
Legal....................... 368 3.7 130 1,369 177,823
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 27,370 2,124,555
-------------------------------------------------------------------------------
Total............... .............. .............. .............. 141,610 10,992,235
----------------------------------------------------------------------------------------------------------------
The Departments also estimate the cost burden associated with the
SBC, Uniform Glossary and Notice of Modification. These costs are
discussed below.
SBC--The Departments estimate that approximately 60.6
million SBCs will be delivered with 527,000 going to ERISA plans and
60.1 million going to participants and beneficiaries
[[Page 78596]]
annually.\64\ The Departments assume 50 percent of the SBCs going to
plans would be sent electronically while 38 percent of SBCs would be
sent electronically to plan participants. Accordingly, the Departments
estimate that about 23.4 million SBCs would be distributed
electronically and about 37.2 million SBCs would be distributed on
paper. The Departments assume there are costs only for paper
disclosures, with de minimis costs for electronic disclosures. The SBC,
with coverage examples, is assumed to be four double-sided pages (eight
page sides) in length. Paper SBCs sent to participants would have no
postage costs as they could be included in mailings with other plan
materials, however all notices sent to beneficiaries living apart from
the participant would be mailed and have a 49 cent postage costs.
Printing costs would be five cents per page. Each document sent by mail
would have a one minute preparation burden, with the task performed by
a clerical worker. Based on the foregoing, the total cost burden to
prepare and distribute the SBC would be $16.4 million.
---------------------------------------------------------------------------
\64\ Based on the 2012 Current Population Survey the Department
estimates there are 58.0 million policy holders in ERISA plans
https://www.dol.gov/ebsa/pdf/coveragebulletin2013.pdf table 2.
---------------------------------------------------------------------------
Uniform Glossary--The Departments assume that 2.5 percent
of those who receive paper SBCs will request glossaries in paper form
(that is, about 1.1 million glossary requests). The total cost burden
to prepare and distribute paper copies of the Uniform Glossaries would
be $760,000.
Notice of Modifications--The Departments assume that
issuers and plans will send notices of modification to covered
participants and beneficiaries, and that 2 percent of covered
participants and beneficiaries will receive such notices (1.2 million
notices). As with the SBC, 50 percent of plans and 38 percent of policy
holders will receive electronic notices. Paper notices are assumed to
be of the same length as an SBC, and will incur a postage cost of 49
cents. The total cost burden to prepare and distribute the notices of
modification would be $640,000.
Based on the foregoing, the total annual cost burden is estimated
to be $16.4 million. This burden is split evenly between the
Departments of Labor and the Treasury.
Table 5--Preparation and Distribution Costs: Cost Burden
----------------------------------------------------------------------------------------------------------------
Number of
Number of disclosures Material and Postage costs Total cost
disclosures sent on paper printing costs burden
----------------------------------------------------------------------------------------------------------------
SBC with Coverage Examples to
Group Health Plan:
Renewal or Application...... 527,328 263,664 $105,466 $0 $105,466
-------------------------------------------------------------------------------
Sub-total............... 527,328 263,664 105,466 0 105,466
SBC with Coverage Examples to
Participants and Beneficiaries:
Upon Application or 2,030,000 1,015,000 406,000 0 406,000
Eligibility................
Upon Renewal................ 58,000,000 35,960,000 14,384,000 0 14,384,000
Beneficiaries Living Apart.. 90,000 90,000 36,000 44,100 80,100
-------------------------------------------------------------------------------
Sub-total............... 60,120,000 36,975,000 14,826,000 44,100 14,870,100
Uniform Glossary................ 1,102,000 1,102,000 220,400 539,980 760,380
Notice of Modification.......... 1,160,000 719,200 287,680 352,408 640,088
-------------------------------------------------------------------------------
Total............... 62,909,328 39,059,864 15,439,546 936,488 16,376,034
----------------------------------------------------------------------------------------------------------------
Table 6--Preparation and Distribution Costs: Hour Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Total
Number of disclosures Clerical hours Clerical costs Total hour equivalent
disclosures sent on paper burden cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
SBC with Coverage Examples to Group Health Plan:
Renewal or Application.............................. 527,328 263,664 4,394 $130,074 4,394 $130,074
-----------------------------------------------------------------------------------------------
Sub-total....................................... 527,328 263,664 4,394 130,074 4,394 130,074
SBC with Coverage Examples To Participants and
Beneficiaries:
Upon Application or Eligibility..................... 2,030,000 1,015,000 16,917 500,733 16,917 500,733
Upon Renewal........................................ 58,000,000 35,960,000 599,333 17,740,267 599,333 17,740,267
Beneficiaries Living Apart.......................... 90,000 90,000 1,500 44,400 1,500 44,400
-----------------------------------------------------------------------------------------------
Sub-total....................................... 60,120,000 36,975,000 617,750 18,285,400 617,750 18,285,400
Uniform Glossary........................................ 1,102,000 1,102,000 18,367 543,653 18,367 543,653
Notice of Modification.................................. 1,160,000 719,200 11,987 354,805 11,987 354,805
-----------------------------------------------------------------------------------------------
Total....................................... 62,909,328 39,059,864 652,498 19,313,933 652,498 19,313,933
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 2015-
2017 paperwork
[[Page 78597]]
burden estimates are summarized as follows:
Type of Review:
Agencies: Employee Benefits Security Administration, Department of
Labor; Internal Revenue Service, U.S. Department of the Treasury.
Title: Affordable Care Act Uniform Explanation of Coverage
Documents
OMB Number: 1210-0147; 1545-2229.
Affected Public: Business or other for profit; not-for-profit
institutions.
Total Respondents: 2,389,000.
Total Responses: 62,909,000.
Frequency of Response: On-going.
Estimated Total Annual Burden Hours (three year average): 399,000
hours (Employee Benefits Security Administration); 399,000 hours
(Internal Revenue Service).
Estimated Total Annual Cost Burden (three year average): $8,188,000
(Employee Benefits Security Administration); $8,188,000 (Internal
Revenue Service).
2. Department of Health and Human Services
The Paperwork Reduction Act (PRA) section for the Departments of
Labor and the Treasury above contain the assumptions, data sources, and
explanations of the Departments' methodology for estimating the PRA
burden. The following tables summarize the Department of Health and
Human Services' burden estimates.
Table 7--Update SBC Including Coverage Examples; Year 1
----------------------------------------------------------------------------------------------------------------
Number of Total hour Equivalent
Type of labor firms Hours per firm Cost per hour burden costs
----------------------------------------------------------------------------------------------------------------
Issuers
----------------------------------------------------------------------------------------------------------------
Large:
IT.......................... 75 52.3 $84 3,919 $329,136
Benefits.................... 75 38.0 62 2,850 177,641
Legal....................... 75 4.8 130 356 46,291
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 7,125 553,067
Medium:
IT.......................... 250 39.9 84 9,969 837,275
Benefits.................... 250 29.0 62 7,250 451,893
Legal....................... 250 3.6 130 906 117,758
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 18,125 1,406,926
Small:
IT.......................... 175 26.1 84 4,572 383,992
Benefits.................... 175 19.0 62 3,325 207,247
Legal....................... 175 2.4 130 416 54,006
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 8,313 645,245
----------------------------------------------------------------------------------------------------------------
TPAs
----------------------------------------------------------------------------------------------------------------
Large:
IT.......................... 158 15.7 84 2,477 208,014
Benefits.................... 158 11.4 62 1,801 112,269
Legal....................... 158 1.4 130 225 29,256
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 4,503 349,539
Medium:
IT.......................... 526 12.0 84 6,292 528,488
Benefits.................... 526 8.7 62 4,576 285,235
Legal....................... 526 1.1 130 572 74,329
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 11,441 888,052
Small:
IT.......................... 368 7.8 84 2,884 242,244
Benefits.................... 368 5.7 62 2,098 130,743
Legal....................... 368 0.7 130 262 34,070
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 5,244 407,058
-------------------------------------------------------------------------------
Total............... .............. .............. .............. 54,750 4,249,887
----------------------------------------------------------------------------------------------------------------
Table 8--Update SBC Including Coverage Examples, Subsequent Years
----------------------------------------------------------------------------------------------------------------
Number of Total hour Equivalent
Type of labor firms Hours per firm Cost per hour burden costs
----------------------------------------------------------------------------------------------------------------
Issuers
----------------------------------------------------------------------------------------------------------------
Large:
IT.......................... 75 48.1 $84 3,609 $303,151
Benefits.................... 75 35.0 62 2,625 163,616
Legal....................... 75 4.4 130 328 42,637
-------------------------------------------------------------------------------
[[Page 78598]]
Sub-Total............... .............. .............. .............. 6,563 509,404
Medium:
IT.......................... 250 36.8 84 9,195 772,314
Benefits.................... 250 26.8 62 6,688 416,832
Legal....................... 250 3.3 130 836 108,622
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 16,719 1,297,768
Small:
IT.......................... 175 24.1 84 4,211 353,677
Benefits.................... 175 17.5 62 3,063 190,886
Legal....................... 175 2.2 130 383 49,743
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 7,656 594,305
----------------------------------------------------------------------------------------------------------------
TPAs
----------------------------------------------------------------------------------------------------------------
Large:
IT.......................... 158 14.4 84 2,281 191,592
Benefits.................... 158 10.5 62 1,659 103,405
Legal....................... 158 1.3 130 207 26,946
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 4,148 321,943
-------------------------------------------------------------------------------
Medium:
IT.......................... 526 11.0 84 5,804 487,485
Benefits.................... 526 8.0 62 4,221 263,104
Legal....................... 526 1.0 130 528 68,562
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 10,553 819,151
Small:
IT.......................... 368 7.2 84 2,657 223,119
Benefits.................... 368 5.3 62 1,932 120,422
Legal....................... 368 0.7 130 242 31,381
-------------------------------------------------------------------------------
Sub-Total............... .............. .............. .............. 4,830 374,922
-------------------------------------------------------------------------------
Total............... .............. .............. .............. 50,468 3,917,493
----------------------------------------------------------------------------------------------------------------
Table 9--Preparation and Distribution Costs
----------------------------------------------------------------------------------------------------------------
Number of Total
Number of disclosures Clerical hour equivalent
disclosures sent on paper burden cost
----------------------------------------------------------------------------------------------------------------
Group Health Plan:
SBC with Coverage Examples.................. 15,750 7,875 131.25 $3,885
SBC with Coverage Examples--Participants and
Beneficiaries:
Upon Application or Eligibility............. 222,680 111,340 1,855.67 54,928
Upon Renewal................................ 17,129,262 8,564,631 142,743.85 4,225,218
Beneficiaries Living Apart.................. 33,000 33,000 550.00 16,280
---------------------------------------------------------------
Sub-Total............................... 17,384,942 8,708,971 145,150 4,296,426
Uniform Glossary................................ 428,232 428,232 7,137 211,261
Notice of Modification.......................... 342,585 171,293 2,855 84,504
Individual Market:
SBC with Coverage Examples.................. 21,784,217 6,535,265 108,921 3,224,064
Uniform Glossary............................ 762,448 762,448 12,707 376,141
Notice of Modification...................... 435,684.34 130,705 2,178 64,481
---------------------------------------------------------------
Total............................... 41,153,858 16,744,788 279,080 8,260,762
----------------------------------------------------------------------------------------------------------------
Table 10--Preparation and Distribution Costs
----------------------------------------------------------------------------------------------------------------
Number of
Number of disclosures Material and Postage costs Total cost
disclosures sent on paper printing costs burden
----------------------------------------------------------------------------------------------------------------
Group Health Plan:
SBC with Coverage Examples.. 15,750 7,875 $3,150 .............. $3,150
SBC with Coverage Examples--
Participants and Beneficiaries:
[[Page 78599]]
Upon Application or 222,680 111,340 44,536 .............. 44,536
Eligibility................
Upon Renewal................ 17,129,262 8,564,631 3,425,852 .............. 3,425,852
Beneficiaries Living Apart.. 33,000 33,000 13,200 $16,170 29,370
-------------------------------------------------------------------------------
Sub-Total............... 17,384,942 8,708,971 3,483,588 16,170 3,499,758
Uniform Glossary................ 428,232 428,232 85,646 209,833 295,480
Notice of Modification.......... 342,585 171,293 68,517 83,933 152,450
Individual Market:
SBC with Coverage Examples.. 21,784,217 6,535,265 2,614,106 .............. 2,614,106
Uniform Glossary............ 762,448 762,448 152,490 373,599 526,089
Notice of Modification...... 435,684.34 130,705 52,282 64,046 116,328
-------------------------------------------------------------------------------
Total............... 41,153,858 16,744,788 6,459,780 747,582 7,207,361
----------------------------------------------------------------------------------------------------------------
HHS is proposing that issuers be required to make available on an
Internet web address a copy of the actual individual coverage policy or
group certificate of coverage.\65\ HHS estimates that the burden of
this request will be de minimis because the documents will have already
been created and issuers already have web addresses on which the
materials can be made available.
---------------------------------------------------------------------------
\65\ See proposed 45 CFR 147.200(a)(2)(i)(J).
---------------------------------------------------------------------------
The Department notes 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 2015-2017 paperwork burden estimates are summarized as follows:
Type of Review: Revision.
Agency: Department of Health and Human Services.
Title: Summary of benefits and Coverage Uniform Glossary
CMS Identifier (OMB Control Number): CMS-10407 (0938-1146).
Affected Public: State, Local, or Tribal Governments.
Total Respondents: 126,500.
Total Responses: 41,154,000.
Frequency of Response: On-going.
Estimated Total Annual Burden Hours (three year average): 331,000
hours.
Estimated Total Annual Cost Burden (three year average):
$7,207,000.
ICRs Related to Deemed Compliance Reporting (45 CFR
147.200(a)(4)(iii)(C))
Under 45 CFR 147.200(a)(4)(iii)(C), if individual health insurance
issuers provide the content required for the SBC to the federal health
reform Web portal described in 45 CFR 159.120 (HealthCare.gov), then
they will be deemed to have satisfied the requirement to provide an SBC
to individuals who request information about coverage prior to
submitting an application for coverage. Individual health insurance
issuers already provide most SBC content elements to HealthCare.gov,
except for five data elements related to patient responsibility for
each coverage example: Deductibles, co-payments, co-insurance, coverage
limits or exclusions, and the total out-of-pocket cost to the enrollee
in view of these cost-sharing amounts and coverage limits or
exclusions.
Accordingly, the additional burden associated with the requirements
under Sec. 147.200(a)(4)(iii)(C) is the time and effort it would take
each of the 320 issuers submitting this data in the individual market
to enter the five additional data elements into an Excel spreadsheet.
We estimate that it will take these issuers about 160 hours, at a total
estimated cost of about $4,800, for each coverage example. For three
coverage examples, the burden and cost would be about 480 hours at a
cost of about $14,400.
In deriving these figures, we used the following hourly labor rates
and estimated the time to complete each task: $ 30.78/hr. and 0.5 hr./
issuer for clerical staff to enter data into an Excel spreadsheet, or
about $15 per respondent per coverage example.
This information collection requirement reflects the requirement
that issuers must provide all content required in the SBC, including
the information necessary for coverage examples, to HealthCare.gov to
be deemed compliant. The aforementioned burden estimates will be
submitted for OMB review and approval as a revision to the information
collection request currently approved under OMB control number 0938-
1086.
To obtain copies of the supporting statement and any related forms
for the proposed paperwork collections referenced above, access CMS'
Web site at https://www.cms.gov/PaperworkReductionActof1995/PRAL/list.asp#TopOfPage or email your request, including your address, phone
number, OMB control number, and CMS document identifier, to
Paperwork@cms.hhs.gov, or call the Reports Clearance Office at 410-786-
1326.
C. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to Federal rules that are subject to
the notice and comment requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C. 551 et seq.) and which are
likely to have a significant economic impact on a substantial number of
small entities. Unless the head of an agency certifies that a proposed
rule is not likely to have a significant economic impact on a
substantial number of small entities, section 603 of the RFA requires
that the agency present an initial regulatory flexibility analysis
(IRFA) describing the rule's impact on small entities and explaining
how the agency made its decisions with respect to the application of
the rule to small entities.
The RFA generally defines a ``small entity'' as (1) a proprietary
firm meeting the size standards of the Small Business Administration
(SBA) (13 CFR 121.201) pursuant to the Small Business Act (15 U.S.C.
631 et seq.), (2) a nonprofit organization that is not dominant in its
field, or (3) a small government jurisdiction with a population of less
than 50,000. (States and individuals are not included in the definition
of ``small entity.'')
There are several different types of small entities affected by
these proposed regulations. For issuers and TPAs, the Departments use
as their measure of significant economic impact on a
[[Page 78600]]
substantial number of small entities a change in revenues of more than
3 to 5 percent. For plans, the Departments continue to consider a small
plan to be an employee benefit plan with fewer than 100
participants.\66\ Further, while some large employers may have small
plans, in general small employers maintain most small plans. Thus, the
Departments believe that assessing the impact of this proposed rule on
small plans is an appropriate substitute for evaluating the effect on
small entities. The definition of small entity considered appropriate
for this purpose differs, however, from a definition of small business
that is based on size standards promulgated by the Small Business
Administration (SBA) (13 CFR 121.201) pursuant to the Small Business
Act (15 U.S.C. 631 et seq.). The Departments therefore request comments
on the appropriateness of the size standard used in evaluating the
impact of these proposed regulations on small entities.
---------------------------------------------------------------------------
\66\ The basis for this definition is found in section 104(a)(2)
of ERISA, which permits the Secretary of Labor to prescribe
simplified annual reports for pension plans that cover fewer than
100 participants.
---------------------------------------------------------------------------
The Departments carefully considered the likely impact of the rule
on small entities in connection with their assessment under Executive
Order 12866. The Departments believe that the proposed regulations
include flexibility like allowing use of the Coverage Example
Calculator that would minimize the burden on small entities. Also, the
Departments believe that the burden imposed by the proposed regulation
on small insurers and small TPAs will be 20 hours or less annually.
The Departments hereby certify that these proposed regulations will
not have a significant economic impact on a substantial number of small
entities, as described above. Consistent with the policy of the RFA,
the Departments encourage the public to submit comments that would
allow the Departments to assess the impacts specifically on small
entities or suggest alternative rules that accomplish the stated
purpose of PHS Act section 2715 and minimize the impact on small
entities.
D. Unfunded Mandates Reform Act--Department of Labor and Department of
Health and Human Services
Section 202 of the Unfunded Mandates Reform Act (UMRA) of 1995
requires that agencies assess anticipated costs and benefits before
issuing any proposed rule that includes a Federal mandate that could
result in expenditure in any one year by State, local or Tribal
governments, in the aggregate, or by the private sector, of $100
million in 1995 dollars updated annually for inflation. In 2014, that
threshold level is approximately $141 million. These proposed
regulations include no mandates on State, local, or Tribal governments.
These proposed regulations propose requirements regarding standardized
consumer disclosures that would affect private sector firms (for
example, health insurance issuers offering coverage in the individual
and group markets, and third-party administrators providing
administrative services to group health plans), but we conclude that
these costs would not exceed the $141 million threshold. Thus, the
Departments of Labor and HHS conclude that these proposed regulations
would not impose an unfunded mandate on State, local or Tribal
governments or the private sector. Regardless, consistent with policy
embodied in UMRA, the proposed requirements described in this notice of
proposed rulemaking has been designed to be the least burdensome
alternative for State, local and Tribal governments, and the private
sector while achieving the objectives of the Affordable Care Act.
E. Federalism Statement--Department of Labor and Department of Health
and Human Services
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 the States, the
relationship between the national government and States, or on the
distribution of power and responsibilities among the various levels of
government. Federal agencies promulgating regulations that have
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 of Labor's and HHS' view, these proposed rules
have federalism implications because they would have direct effects on
the States, the relationship between national governments and States,
or on the distribution of power and responsibilities among various
levels of government relating to the disclosure of health insurance
coverage information to consumers. Under these proposed rules, all
group health plans and health insurance issuers offering group or
individual health insurance coverage, including self-funded non-federal
governmental plans as defined in section 2791 of the PHS Act, would be
required to follow uniform standards for compiling and providing a
summary of benefits and coverage to consumers. Such Federal standards
developed under PHS Act section 2715(a) would preempt any related State
standards that require a summary of benefits and coverage that provides
less information to consumers than that required to be provided under
PHS Act section 2715(a).
In general, through section 514, ERISA supersedes State laws to the
extent that they relate to any covered employee benefit plan, and
preserves State laws that regulate insurance, banking, or securities.
While ERISA prohibits States from regulating a plan as an insurance or
investment company or bank, the preemption provisions of section 731 of
ERISA and section 2724 of the PHS Act (implemented in 29 CFR
2590.731(a) and 45 CFR 146.143(a)) apply so that the HIPAA requirements
(including those of the Affordable Care Act) are not to be ``construed
to supersede any provision of State law which establishes, implements,
or continues in effect any standard or requirement solely relating to
health insurance issuers in connection with group health insurance
coverage except to the extent that such standard or requirement
prevents the application of a requirement'' of a Federal standard. The
conference report accompanying HIPAA indicates that this is intended to
be the ``narrowest'' preemption of State laws (See House Conf. Rep. No.
104-736, at 205, reprinted in 1996 U.S. Code Cong. & Admin. News 2018).
States may continue to apply State law requirements except to the
extent that such requirements prevent the application of the Affordable
Care Act requirements that are the subject of this rulemaking.
Accordingly, States have significant latitude to impose requirements on
health insurance issuers that are more restrictive than the Federal
law. However, under these proposed rules, a State would not be allowed
to impose a requirement that modifies the summary of benefits and
coverage required to be provided under PHS Act section 2715(a), because
it would prevent the application of this proposed rule's uniform
disclosure requirement.
In compliance with the requirement of Executive Order 13132 that
agencies examine closely any policies that may have federalism
implications or limit the policy making discretion of the States, the
Departments of Labor and HHS have engaged in efforts to consult
[[Page 78601]]
with and work cooperatively with affected States, including consulting
with, and attending conferences of, the National Association of
Insurance Commissioners and consulting with State insurance officials
on an individual basis. It is expected that the Departments of Labor
and HHS will act in a similar fashion in enforcing the Affordable Care
Act, including the provisions of section 2715 of the PHS Act.
Throughout the process of developing these proposed regulations, to the
extent feasible within the specific preemption provisions of HIPAA as
it applies to the Affordable Care Act, the Departments of Labor and HHS
have attempted to balance the States' interests in regulating health
insurance issuers, and Congress' intent to provide uniform minimum
protections to consumers in every State. By doing so, it is the
Departments of Labor's and HHS ' view that they have complied with the
requirements of Executive Order 13132.
Pursuant to the requirements set forth in section 8(a) of Executive
Order 13132, and by the signatures affixed to this proposed rule, the
Departments certify that the Employee Benefits Security Administration
and the Centers for Medicare & Medicaid Services have complied with the
requirements of Executive Order 13132 for the attached proposed rule in
a meaningful and timely manner.
F. Special Analyses--Department of the Treasury
For purposes of the Department of the Treasury it has been
determined that this notice of proposed rulemaking 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 has also been determined that section 553(b) of the
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to
these proposed regulations. For a discussion of the impact of this
proposed rule on small entities, please see section V.C. of this
preamble. Pursuant to section 7805(f) of the Code, this notice of
proposed rulemaking has been submitted to the Small Business
Administration for comment on its impact on small business.
G. Congressional Review Act
This proposed rule is subject to the Congressional Review Act
provisions of the Small Business Regulatory Enforcement Fairness Act of
1996 (5 U.S.C. 801 et seq.), which specifies that before a rule can
take effect, the Federal agency promulgating the rule shall submit to
each House of the Congress and to the Comptroller General a report
containing a copy of the rule along with other specified information,
and has been transmitted to Congress and the Comptroller General for
review.
VII. Statutory Authority
The Department of the Treasury regulations are proposed to be
adopted pursuant to the authority contained in sections 7805 and 9833
of the Code.
The Department of Labor regulations are proposed to be adopted
pursuant to the authority contained in 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), 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 1-2011,
77 FR 1088 (January 9, 2012).
The Department of Health and Human Services regulations are
proposed to be 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.
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, and State regulation of health insurance.
Signed this 19th day of December, 2014.
John M. Dalrymple,
Deputy Commissioner for Services and Enforcement, Internal Revenue
Service.
Signed this 18th day of December, 2014.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration,
Department of Labor. CMS-9938-P
Dated: December 18, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
Dated: December 19, 2014.
Sylvia Burwell,
Secretary, Department of Health and Human Services.
Department of the Treasury
Internal Revenue Service
26 CFR Chapter 1
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: Authority: 26 U.S.C. 7805. * * *
Section 54.9815-2715 also issued under 26 U.S.C. 9833.
0
Paragraph 2. Section 54.9815-2715 is revised to read as follows:
Sec. 54.9815-2715 Summary of benefits and coverage and uniform
glossary.
(a) Summary of benefits and coverage--(1) In general. A group
health plan (and its administrator as defined in section 3(16)(A) of
the Employee Retirement Income Security Act of 1974 (ERISA)), and a
health insurance issuer offering group health insurance coverage, is
required to provide a written summary of benefits and coverage (SBC)
for each benefit package without charge to entities and individuals
described in this paragraph (a)(1) in accordance with the rules of this
section.
(i) SBC provided by a group health insurance issuer to a group
health plan--(A) Upon application. A health insurance issuer offering
group health insurance coverage must provide the SBC to a group health
plan (or its sponsor) upon application for health coverage, as soon as
practicable following receipt of the application, but in no event later
than seven business days following receipt of the application. If an
SBC was provided before application pursuant to paragraph (a)(1)(i)(D)
of this section (relating to SBCs upon request), this paragraph
(a)(1)(i)(A) is deemed
[[Page 78602]]
satisfied, provided there is no change to the information required to
be in the SBC. However, if there has been a change in the information
required, a new SBC that includes the correct information must be
provided upon application pursuant to this paragraph (a)(1)(i)(A).
(B) By first day of coverage (if there are changes). If there is
any change in the information required to be in the SBC that was
provided upon application and before the first day of coverage, the
issuer must update and provide a current SBC to the plan (or its
sponsor) no later than the first day of coverage.
(C) Upon renewal, reissuance, or re-enrollment. If the issuer
renews or reissues a policy, certificate, or contract of insurance for
a succeeding policy year, or automatically re-enrolls the policyholder
or its participants and beneficiaries in coverage, the issuer must
provide a new SBC as follows:
(1) If written application is required (in either paper or
electronic form) for renewal or reissuance, the SBC must be provided no
later than the date the written application materials are distributed.
(2) If renewal, reissuance, or re-enrollment is automatic, the SBC
must be provided no later than 30 days prior to the first day of the
new plan or policy year; however, with respect to an insured plan, if
the policy, certificate, or contract of insurance has not been issued
or renewed before such 30-day period, the SBC must be provided as soon
as practicable but in no event later than seven business days after
issuance of the new policy, certificate, or contract of insurance, or
the receipt of written confirmation of intent to renew, whichever is
earlier.
(D) Upon request. If a group health plan (or its sponsor) requests
an SBC or summary information about a health insurance product from a
health insurance issuer offering group health insurance coverage, an
SBC must be provided as soon as practicable, but in no event later than
seven business days following receipt of the request.
(ii) SBC provided by a group health insurance issuer and a group
health plan to participants and beneficiaries--(A) In general. A group
health plan (including its administrator, as defined under section
3(16) of ERISA), and a health insurance issuer offering group health
insurance coverage, must provide an SBC to a participant or beneficiary
(as defined under sections 3(7) and 3(8) of ERISA), and consistent with
the rules of paragraph (a)(1)(iii) of this section, with respect to
each benefit package offered by the plan or issuer for which the
participant or beneficiary is eligible.
(B) Upon application. The SBC must be provided as part of any
written application materials that are distributed by the plan or
issuer for enrollment. If the plan or issuer does not distribute
written application materials for enrollment, the SBC must be provided
no later than the first date on which the participant is eligible to
enroll in coverage for the participant or any beneficiaries. If an SBC
was provided before application pursuant to paragraph (a)(1)(ii)(F) of
this section (relating to SBCs upon request), this paragraph
(a)(1)(ii)(B) is deemed satisfied, provided there is no change to the
information required to be in the SBC. However, if there has been is a
change in the information content, a new SBC that includes the correct
information must be provided upon application pursuant to this
paragraph (a)(1)(ii)(B).
(C) By first day of coverage (if there are changes). If there is
any change to the information required to be in the SBC that was
provided upon application and before the first day of coverage, the
plan or issuer must update and provide a current SBC to a participant
or beneficiary no later than the first day of coverage.
(D) Special enrollees. The plan or issuer must provide the SBC to
special enrollees (as described in Sec. 54.9801-6) no later than the
date by which a summary plan description is required to be provided
under the timeframe set forth in ERISA section 104(b)(1)(A) and its
implementing regulations, which is 90 days from enrollment.
(E) Upon renewal, reissuance, or re-enrollment. If the plan or
issuer requires participants or beneficiaries to renew in order to
maintain coverage (for example, for a succeeding plan year), or
automatically re-enrolls participants and beneficiaries in coverage,
the plan or issuer must provide a new SBC, as follows:
(1) If written application is required for renewal, reissuance, or
re-enrollment (in either paper or electronic form), the SBC must be
provided no later than the date on which the written application
materials are distributed.
(2) If renewal, reissuance, or re-enrollment is automatic, the SBC
must be provided no later than 30 days prior to the first day of the
new plan or policy year; however, with respect to an insured plan, if
the policy, certificate, or contract of insurance has not been issued
or renewed before such 30-day period, the SBC must be provided as soon
as practicable but in no event later than seven business days after
issuance of the new policy, certificate, or contract of insurance, or
the receipt of written confirmation of intent to renew, whichever is
earlier.
(F) Upon request. A plan or issuer must provide the SBC to
participants or beneficiaries upon request for an SBC or summary
information about the health coverage, as soon as practicable, but in
no event later than seven business days following receipt of the
request.
(iii) Special rules to prevent unnecessary duplication with respect
to group health coverage--(A) An entity required to provide an SBC
under this paragraph (a)(1) with respect to an individual satisfies
that requirement if another party provides the SBC, but only to the
extent that the SBC is timely and complete in accordance with the other
rules of this section. Therefore, for example, in the case of a group
health plan funded through an insurance policy, the plan satisfies the
requirement to provide an SBC with respect to an individual if the
issuer provides a timely and complete SBC to the individual. An entity
required to provide an SBC under this paragraph (a)(1) with respect to
an individual that contracts with another party to provide such SBC is
considered to satisfy the requirement to provide such SBC if:
(1) The entity monitors performance under the contract;
(2) If the entity has knowledge that the SBC is not being provided
in a manner that satisfies the requirements of this section and the
entity has all information necessary to correct the noncompliance, the
entity corrects the noncompliance as soon as practicable; and
(3) If the entity has knowledge the SBC is not being provided in a
manner that satisfies the requirements of this section and the entity
does not have all information necessary to correct the noncompliance,
the entity communicates with participants and beneficiaries who are
affected by the noncompliance regarding the regarding the
noncompliance, and begins taking significant steps as soon as
practicable to avoid future violations.
(B) If a single SBC is provided to a participant and any
beneficiaries at the participant's last known address, then the
requirement to provide the SBC to the participant and any beneficiaries
is generally satisfied. However, if a beneficiary's last known address
is different than the participant's last known address, a separate SBC
is required to be provided to the beneficiary at the beneficiary's last
known address.
(C) With respect to a group health plan that offers multiple
benefit packages, the plan or issuer is required to provide a new SBC
automatically to
[[Page 78603]]
participants and beneficiaries upon renewal or re-enrollment only with
respect to the benefit package in which a participant or beneficiary is
enrolled (or will be automatically re-enrolled under the plan); SBCs
are not required to be provided automatically upon renewal or re-
enrollment with respect to benefit packages in which the participant or
beneficiary is not enrolled (or will not automatically be enrolled).
However, if a participant or beneficiary requests an SBC with respect
to another benefit package (or more than one other benefit package) for
which the participant or beneficiary is eligible, the SBC (or SBCs, in
the case of a request for SBCs relating to more than one benefit
package) must be provided upon request as soon as practicable, but in
no event later than seven business days following receipt of the
request.
(2) Content--(i) In general. Subject to paragraph (a)(2)(iii) of
this section, the SBC must include the following:
(A) Uniform definitions of standard insurance terms and medical
terms so that consumers may compare health coverage and understand the
terms of (or exceptions to) their coverage, in accordance with guidance
as specified by the Secretary;
(B) A description of the coverage, including cost sharing, for each
category of benefits identified by the Secretary in guidance;
(C) The exceptions, reductions, and limitations of the coverage;
(D) The cost-sharing provisions of the coverage, including
deductible, coinsurance, and copayment obligations;
(E) The renewability and continuation of coverage provisions;
(F) Coverage examples, in accordance with the rules of paragraph
(a)(2)(ii) of this section;
(G) With respect to coverage beginning on or after January 1, 2014,
a statement about whether the plan or coverage provides minimum
essential coverage as defined under section 5000A(f) and whether the
plan's or coverage's share of the total allowed costs of benefits
provided under the plan or coverage meets applicable requirements;
(H) A statement that the SBC is only a summary and that the plan
document, policy, certificate, or contract of insurance should be
consulted to determine the governing contractual provisions of the
coverage;
(I) Contact information for questions;
(J) For issuers, an Internet web address where a copy of the actual
individual coverage policy or group certificate of coverage can be
reviewed and obtained;
(K) For plans and issuers that maintain one or more networks of
providers, an Internet address (or similar contact information) for
obtaining a list of network providers;
(L) For plans and issuers that use a formulary in providing
prescription drug coverage, an Internet address (or similar contact
information) for obtaining information on prescription drug coverage;
and
(M) An Internet address for obtaining the uniform glossary, as
described in paragraph (c) of this section, as well as a contact phone
number to obtain a paper copy of the uniform glossary, and a disclosure
that paper copies are available.
(ii) Coverage examples. The SBC must include coverage examples
specified by the Secretary in guidance that illustrate benefits
provided under the plan or coverage for common benefits scenarios
(including pregnancy and serious or chronic medical conditions) in
accordance with this paragraph (a)(2)(ii).
(A) Number of examples. The Secretary may identify up to six
coverage examples that may be required in an SBC.
(B) Benefits scenarios. For purposes of this paragraph (a)(2)(ii),
a benefits scenario is a hypothetical situation, consisting of a sample
treatment plan for a specified medical condition during a specific
period of time, based on recognized clinical practice guidelines as
defined by the National Guideline Clearinghouse, Agency for Healthcare
Research and Quality. The Secretary will specify, in guidance, the
assumptions, including the relevant items and services and
reimbursement information, for each claim in the benefits scenario.
(C) Illustration of benefit provided. For purposes of this
paragraph (a)(2)(ii), to illustrate benefits provided under the plan or
coverage for a particular benefits scenario, a plan or issuer simulates
claims processing in accordance with guidance issued by the Secretary
to generate an estimate of what an individual might expect to pay under
the plan, policy, or benefit package. The illustration of benefits
provided will take into account any cost sharing, excluded benefits,
and other limitations on coverage, as specified by the Secretary in
guidance.
(iii) Coverage provided outside the United States. In lieu of
summarizing coverage for items and services provided outside the United
States, a plan or issuer may provide an Internet address (or similar
contact information) for obtaining information about benefits and
coverage provided outside the United States. In any case, the plan or
issuer must provide an SBC in accordance with this section that
accurately summarizes benefits and coverage available under the plan or
coverage within the United States.
(3) Appearance. (i) A group health plan and a health insurance
issuer must provide an SBC in the form, and in accordance with the
instructions for completing the SBC, that are specified by the
Secretary in guidance. The SBC must be presented in a uniform format,
use terminology understandable by the average plan enrollee, not exceed
four double-sided pages in length, and not include print smaller than
12-point font.
(ii) A group health plan that utilizes two or more benefit packages
(such as major medical coverage and a health flexible spending
arrangement) may synthesize the information into a single SBC, or
provide multiple SBCs.
(4) Form--(i) An SBC provided by an issuer offering group health
insurance coverage to a plan (or its sponsor), may be provided in paper
form. Alternatively, the SBC may be provided electronically (such as by
email or an Internet posting) if the following three conditions are
satisfied--
(A) The format is readily accessible by the plan (or its sponsor);
(B) The SBC is provided in paper form free of charge upon request;
and
(C) If the electronic form is an Internet posting, the issuer
timely advises the plan (or its sponsor) in paper form or email that
the documents are available on the Internet and provides the Internet
address.
(ii) An SBC provided by a group health plan or health insurance
issuer to a participant or beneficiary may be provided in paper form.
Alternatively, the SBC may be provided electronically (such as by email
or an Internet posting) if the requirements of this paragraph
(a)(4)(ii) are met.
(A) With respect to participants and beneficiaries covered under
the plan, the SBC may be provided electronically as described in this
paragraph (a)(4)(ii)(A). However, in all cases, the plan must provide
the SBC in paper form if paper form is requested.
(1) In accordance with the Department of Labor's disclosure
regulations at 29 CFR 2520.104b-1;
(2) In connection with online enrollment or online renewal of
coverage under the plan; or
(3) In response to an online request made by a participant or
beneficiary for the SBC.
(B) With respect to participants and beneficiaries who are eligible
but not enrolled for coverage, the SBC may be provided electronically
if:
[[Page 78604]]
(1) The format is readily accessible;
(2) The SBC is provided in paper form free of charge upon request;
and
(3) In a case in which the electronic form is an Internet posting,
the plan or issuer timely notifies the individual in paper form (such
as a postcard) or email that the documents are available on the
Internet, provides the Internet address, and notifies the individual
that the documents are available in paper form upon request.
(5) Language. A group health plan or health insurance issuer must
provide the SBC in a culturally and linguistically appropriate manner.
For purposes of this paragraph (a)(5), a plan or issuer is considered
to provide the SBC in a culturally and linguistically appropriate
manner if the thresholds and standards of 29 CFR 2590.715-2719(e) are
met as applied to the SBC.
(b) Notice of modification. If a group health plan, or health
insurance issuer offering group health insurance coverage, makes any
material modification (as defined under section 102 of ERISA) in any of
the terms of the plan or coverage that would affect the content of the
SBC, that is not reflected in the most recently provided SBC, and that
occurs other than in connection with a renewal or reissuance of
coverage, the plan or issuer must provide notice of the modification to
enrollees not later than 60 days prior to the date on which the
modification will become effective. The notice of modification must be
provided in a form that is consistent with the rules of paragraph
(a)(4) of this section.
(c) Uniform glossary--(1) In general. A group health plan, and a
health insurance issuer offering group health insurance coverage, must
make available to participants and beneficiaries the uniform glossary
described in paragraph (c)(2) of this section in accordance with the
appearance and form and manner requirements of paragraphs (c)(3) and
(c)(4) of this section.
(2) Health-coverage-related terms and medical terms. The uniform
glossary must provide uniform definitions, specified by the Secretary
in guidance, of the following health-coverage-related terms and medical
terms:
(i) Allowed amount, appeal, balance billing, co-insurance,
complications of pregnancy, co-payment, deductible, durable medical
equipment, emergency medical condition, emergency medical
transportation, emergency room care, emergency services, excluded
services, grievance, habilitation services, health insurance, home
health care, hospice services, hospitalization, hospital outpatient
care, in-network co-insurance, in-network co-payment, medically
necessary, network, non-preferred provider, out-of-network co-
insurance, out-of-network co-payment, out-of-pocket limit, physician
services, plan, preauthorization, preferred provider, premium,
prescription drug coverage, prescription drugs, primary care physician,
primary care provider, provider, reconstructive surgery, rehabilitation
services, skilled nursing care, specialist, usual customary and
reasonable (UCR), and urgent care; and
(ii) Such other terms as the Secretary determines are important to
define so that individuals and employers may compare and understand the
terms of coverage and medical benefits (including any exceptions to
those benefits), as specified in guidance.
(3) Appearance. A group health plan, and a health insurance issuer,
must provide the uniform glossary with the appearance specified by the
Secretary in guidance to ensure the uniform glossary is presented in a
uniform format and uses terminology understandable by the average plan
enrollee.
(4) Form and manner. A plan or issuer must make the uniform
glossary described in this paragraph (c) available upon request, in
either paper or electronic form (as requested), within seven business
days after receipt of the request.
(d) Preemption. State laws that require a health insurance issuer
to provide an SBC that supplies less information than required under
paragraph (a) of this section are preempted.
(e) Failure to provide. A group health plan that willfully fails to
provide information required under this section to a participant or
beneficiary is subject to a fine of not more than $1,000 for each such
failure. A failure with respect to each participant or beneficiary
constitutes a separate offense for purposes of this paragraph (e). The
IRS will enforce this section using a process and procedure consistent
with section 4980D of the Code.
(f) Applicability. The requirements of this section do not apply to
a group health plan benefit package that provides Medicare Advantage
benefits pursuant to or 42 U.S.C. Chapter 7, Subchapter XVIII, Part C.
Department of Labor
Employee Benefits Security Administration
29 CFR Chapter XXV
Accordingly, 29 CFR part 2590 is proposed to be amended as follows:
PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS
0
1. The authority citation for Part 2590 continues 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. 111-152, 124 Stat.
1029; Secretary of Labor's Order 1-2011, 77 FR 1088 (January 9,
2012).
0
2. Section 2590.715-2715 is revised to read as follows:
Sec. 2590.715-2715 Summary of benefits and coverage and uniform
glossary.
(a) Summary of benefits and coverage--(1) In general. A group
health plan (and its administrator as defined in section 3(16)(A) of
ERISA)), and a health insurance issuer offering group health insurance
coverage, is required to provide a written summary of benefits and
coverage (SBC) for each benefit package without charge to entities and
individuals described in this paragraph (a)(1) in accordance with the
rules of this section.
(i) SBC provided by a group health insurance issuer to a group
health plan--(A) Upon application. A health insurance issuer offering
group health insurance coverage must provide the SBC to a group health
plan (or its sponsor) upon application for health coverage, as soon as
practicable following receipt of the application, but in no event later
than seven business days following receipt of the application. If an
SBC was provided before application pursuant to paragraph (a)(1)(i)(D)
of this section (relating to SBCs upon request), this paragraph
(a)(1)(i)(A) is deemed satisfied, provided there is no change to the
information required to be in the SBC. However, if there has been a
change in the information required, a new SBC that includes the correct
information must be provided upon application pursuant to this
paragraph (a)(1)(i)(A).
(B) By first day of coverage (if there are changes). If there is
any change in the information required to be in the SBC that was
provided upon application and before the first day of coverage, the
issuer must update and provide a current SBC to the plan (or its
sponsor) no later than the first day of coverage.
(C) Upon renewal, reissuance, or re-enrollment. If the issuer
renews or reissues a policy, certificate, or contract of insurance for
a succeeding policy
[[Page 78605]]
year, or automatically re-enrolls the policyholder or its participants
and beneficiaries in coverage, the issuer must provide a new SBC as
follows:
(1) If written application is required (in either paper or
electronic form) for renewal or reissuance, the SBC must be provided no
later than the date the written application materials are distributed.
(2) If renewal, reissuance, or re-enrollment is automatic, the SBC
must be provided no later than 30 days prior to the first day of the
new plan or policy year; however, with respect to an insured plan, if
the policy, certificate, or contract of insurance has not been issued
or renewed before such 30-day period, the SBC must be provided as soon
as practicable but in no event later than seven business days after
issuance of the new policy, certificate, or contract of insurance, or
the receipt of written confirmation of intent to renew, whichever is
earlier.
(D) Upon request. If a group health plan (or its sponsor) requests
an SBC or summary information about a health insurance product from a
health insurance issuer offering group health insurance coverage, an
SBC must be provided as soon as practicable, but in no event later than
seven business days following receipt of the request.
(ii) SBC provided by a group health insurance issuer and a group
health plan to participants and beneficiaries--(A) In general. A group
health plan (including its administrator, as defined under section
3(16) of ERISA), and a health insurance issuer offering group health
insurance coverage, must provide an SBC to a participant or beneficiary
(as defined under sections 3(7) and 3(8) of ERISA), and consistent with
the rules of paragraph (a)(1)(iii) of this section, with respect to
each benefit package offered by the plan or issuer for which the
participant or beneficiary is eligible.
(B) Upon application. The SBC must be provided as part of any
written application materials that are distributed by the plan or
issuer for enrollment. If the plan or issuer does not distribute
written application materials for enrollment, the SBC must be provided
no later than the first date on which the participant is eligible to
enroll in coverage for the participant or any beneficiaries. If an SBC
was provided before application pursuant to paragraph (a)(1)(ii)(F) of
this section (relating to SBCs upon request), this paragraph
(a)(1)(ii)(B) is deemed satisfied, provided there is no change to the
information required to be in the SBC. However, if there has been is a
change in the information content, a new SBC that includes the correct
information must be provided upon application pursuant to this
paragraph (a)(1)(ii)(B).
(C) By first day of coverage (if there are changes). If there is
any change to the information required to be in the SBC that was
provided upon application and before the first day of coverage, the
plan or issuer must update and provide a current SBC to a participant
or beneficiary no later than the first day of coverage.
(D) Special enrollees. The plan or issuer must provide the SBC to
special enrollees (as described in Sec. 2590.701-6) no later than the
date by which a summary plan description is required to be provided
under the timeframe set forth in ERISA section 104(b)(1)(A) and its
implementing regulations, which is 90 days from enrollment.
(E) Upon renewal, reissuance, or re-enrollment. If the plan or
issuer requires participants or beneficiaries to renew in order to
maintain coverage (for example, for a succeeding plan year), or
automatically re-enrolls participants and beneficiaries in coverage,
the plan or issuer must provide a new SBC, as follows:
(1) If written application is required for renewal, reissuance, or
re-enrollment (in either paper or electronic form), the SBC must be
provided no later than the date on which the written application
materials are distributed.
(2) If renewal, reissuance, or re-enrollment is automatic, the SBC
must be provided no later than 30 days prior to the first day of the
new plan or policy year; however, with respect to an insured plan, if
the policy, certificate, or contract of insurance has not been issued
or renewed before such 30-day period, the SBC must be provided as soon
as practicable but in no event later than seven business days after
issuance of the new policy, certificate, or contract of insurance, or
the receipt of written confirmation of intent to renew, whichever is
earlier.
(F) Upon request. A plan or issuer must provide the SBC to
participants or beneficiaries upon request for an SBC or summary
information about the health coverage, as soon as practicable, but in
no event later than seven business days following receipt of the
request.
(iii) Special rules to prevent unnecessary duplication with respect
to group health coverage--(A) An entity required to provide an SBC
under this paragraph (a)(1) with respect to an individual satisfies
that requirement if another party provides the SBC, but only to the
extent that the SBC is timely and complete in accordance with the other
rules of this section. Therefore, for example, in the case of a group
health plan funded through an insurance policy, the plan satisfies the
requirement to provide an SBC with respect to an individual if the
issuer provides a timely and complete SBC to the individual. An entity
required to provide an SBC under this paragraph (a)(1) with respect to
an individual that contracts with another party to provide such SBC is
considered to satisfy the requirement to provide such SBC if:
(1) The entity monitors performance under the contract;
(2) If the entity has knowledge that the SBC is not being provided
in a manner that satisfies the requirements of this section and the
entity has all information necessary to correct the noncompliance, the
entity corrects the noncompliance as soon as practicable; and
(3) If the entity has knowledge the SBC is not being provided in a
manner that satisfies the requirements of this section and the entity
does not have all information necessary to correct the noncompliance,
the entity communicates with participants and beneficiaries who are
affected by the noncompliance regarding the regarding the
noncompliance, and begins taking significant steps as soon as
practicable to avoid future violations.
(B) If a single SBC is provided to a participant and any
beneficiaries at the participant's last known address, then the
requirement to provide the SBC to the participant and any beneficiaries
is generally satisfied. However, if a beneficiary's last known address
is different than the participant's last known address, a separate SBC
is required to be provided to the beneficiary at the beneficiary's last
known address.
(C) With respect to a group health plan that offers multiple
benefit packages, the plan or issuer is required to provide a new SBC
automatically to participants and beneficiaries upon renewal or re-
enrollment only with respect to the benefit package in which a
participant or beneficiary is enrolled (or will be automatically re-
enrolled under the plan); SBCs are not required to be provided
automatically upon renewal or re-enrollment with respect to benefit
packages in which the participant or beneficiary is not enrolled (or
will not automatically be enrolled). However, if a participant or
beneficiary requests an SBC with respect to another benefit package (or
more than one other benefit package) for which the participant or
beneficiary is eligible, the SBC (or SBCs, in the case of a request for
SBCs relating to more than one benefit package) must be provided upon
request as soon as practicable, but in no
[[Page 78606]]
event later than seven business days following receipt of the request.
(2) Content--(i) In general. Subject to paragraph (a)(2)(iii) of
this section, the SBC must include the following:
(A) Uniform definitions of standard insurance terms and medical
terms so that consumers may compare health coverage and understand the
terms of (or exceptions to) their coverage, in accordance with guidance
as specified by the Secretary;
(B) A description of the coverage, including cost sharing, for each
category of benefits identified by the Secretary in guidance;
(C) The exceptions, reductions, and limitations of the coverage;
(D) The cost-sharing provisions of the coverage, including
deductible, coinsurance, and copayment obligations;
(E) The renewability and continuation of coverage provisions;
(F) Coverage examples, in accordance with the rules of paragraph
(a)(2)(ii) of this section;
(G) With respect to coverage beginning on or after January 1, 2014,
a statement about whether the plan or coverage provides minimum
essential coverage as defined under section 5000A(f) and whether the
plan's or coverage's share of the total allowed costs of benefits
provided under the plan or coverage meets applicable requirements;
(H) A statement that the SBC is only a summary and that the plan
document, policy, certificate, or contract of insurance should be
consulted to determine the governing contractual provisions of the
coverage;
(I) Contact information for questions;
(J) For issuers, an Internet web address where a copy of the actual
individual coverage policy or group certificate of coverage can be
reviewed and obtained;
(K) For plans and issuers that maintain one or more networks of
providers, an Internet address (or similar contact information) for
obtaining a list of network providers;
(L) For plans and issuers that use a formulary in providing
prescription drug coverage, an Internet address (or similar contact
information) for obtaining information on prescription drug coverage;
and
(M) An Internet address for obtaining the uniform glossary, as
described in paragraph (c) of this section, as well as a contact phone
number to obtain a paper copy of the uniform glossary, and a disclosure
that paper copies are available.
(ii) Coverage examples. The SBC must include coverage examples
specified by the Secretary in guidance that illustrate benefits
provided under the plan or coverage for common benefits scenarios
(including pregnancy and serious or chronic medical conditions) in
accordance with this paragraph (a)(2)(ii).
(A) Number of examples. The Secretary may identify up to six
coverage examples that may be required in an SBC.
(B) Benefits scenarios. For purposes of this paragraph (a)(2)(ii),
a benefits scenario is a hypothetical situation, consisting of a sample
treatment plan for a specified medical condition during a specific
period of time, based on recognized clinical practice guidelines as
defined by the National Guideline Clearinghouse, Agency for Healthcare
Research and Quality. The Secretary will specify, in guidance, the
assumptions, including the relevant items and services and
reimbursement information, for each claim in the benefits scenario.
(C) Illustration of benefit provided. For purposes of this
paragraph (a)(2)(ii), to illustrate benefits provided under the plan or
coverage for a particular benefits scenario, a plan or issuer simulates
claims processing in accordance with guidance issued by the Secretary
to generate an estimate of what an individual might expect to pay under
the plan, policy, or benefit package. The illustration of benefits
provided will take into account any cost sharing, excluded benefits,
and other limitations on coverage, as specified by the Secretary in
guidance.
(iii) Coverage provided outside the United States. In lieu of
summarizing coverage for items and services provided outside the United
States, a plan or issuer may provide an Internet address (or similar
contact information) for obtaining information about benefits and
coverage provided outside the United States. In any case, the plan or
issuer must provide an SBC in accordance with this section that
accurately summarizes benefits and coverage available under the plan or
coverage within the United States.
(3) Appearance. (i) A group health plan and a health insurance
issuer must provide an SBC in the form, and in accordance with the
instructions for completing the SBC, that are specified by the
Secretary in guidance. The SBC must be presented in a uniform format,
use terminology understandable by the average plan enrollee, not exceed
four double-sided pages in length, and not include print smaller than
12-point font.
(ii) A group health plan that utilizes two or more benefit packages
(such as major medical coverage and a health flexible spending
arrangement) may synthesize the information into a single SBC, or
provide multiple SBCs.
(4) Form--(i) An SBC provided by an issuer offering group health
insurance coverage to a plan (or its sponsor), may be provided in paper
form. Alternatively, the SBC may be provided electronically (such as by
email or an Internet posting) if the following three conditions are
satisfied--
(A) The format is readily accessible by the plan (or its sponsor);
(B) The SBC is provided in paper form free of charge upon request;
and
(C) If the electronic form is an Internet posting, the issuer
timely advises the plan (or its sponsor) in paper form or email that
the documents are available on the Internet and provides the Internet
address.
(ii) An SBC provided by a group health plan or health insurance
issuer to a participant or beneficiary may be provided in paper form.
Alternatively, the SBC may be provided electronically (such as by email
or an Internet posting) if the requirements of this paragraph
(a)(4)(ii) are met.
(A) With respect to participants and beneficiaries covered under
the plan, the SBC may be provided electronically as described in this
paragraph (a)(4)(ii)(A). However, in all cases, the plan must provide
the SBC in paper form if paper form is requested.
(1) In accordance with the Department of Labor's disclosure
regulations at 29 CFR 2520.104b-1;
(2) In connection with online enrollment or online renewal of
coverage under the plan; or
(3) In response to an online request made by a participant or
beneficiary for the SBC.
(B) With respect to participants and beneficiaries who are eligible
but not enrolled for coverage, the SBC may be provided electronically
if:
(1) The format is readily accessible;
(2) The SBC is provided in paper form free of charge upon request;
and
(3) In a case in which the electronic form is an Internet posting,
the plan or issuer timely notifies the individual in paper form (such
as a postcard) or email that the documents are available on the
Internet, provides the Internet address, and notifies the individual
that the documents are available in paper form upon request.
(5) Language. A group health plan or health insurance issuer must
provide the SBC in a culturally and linguistically appropriate manner.
For purposes of this paragraph (a)(5), a plan or issuer is considered
to provide the SBC in a culturally and linguistically appropriate
manner if the thresholds
[[Page 78607]]
and standards of Sec. 2590.715-2719(e) are met as applied to the SBC.
(b) Notice of modification. If a group health plan, or health
insurance issuer offering group health insurance coverage, makes any
material modification (as defined under section 102 of ERISA) in any of
the terms of the plan or coverage that would affect the content of the
SBC, that is not reflected in the most recently provided SBC, and that
occurs other than in connection with a renewal or reissuance of
coverage, the plan or issuer must provide notice of the modification to
enrollees not later than 60 days prior to the date on which the
modification will become effective. The notice of modification must be
provided in a form that is consistent with the rules of paragraph
(a)(4) of this section.
(c) Uniform glossary--(1) In general. A group health plan, and a
health insurance issuer offering group health insurance coverage, must
make available to participants and beneficiaries the uniform glossary
described in paragraph (c)(2) of this section in accordance with the
appearance and form and manner requirements of paragraphs (c)(3) and
(c)(4) of this section.
(2) Health-coverage-related terms and medical terms. The uniform
glossary must provide uniform definitions, specified by the Secretary
in guidance, of the following health-coverage-related terms and medical
terms:
(i) Allowed amount, appeal, balance billing, co-insurance,
complications of pregnancy, co-payment, deductible, durable medical
equipment, emergency medical condition, emergency medical
transportation, emergency room care, emergency services, excluded
services, grievance, habilitation services, health insurance, home
health care, hospice services, hospitalization, hospital outpatient
care, in-network co-insurance, in-network co-payment, medically
necessary, network, non-preferred provider, out-of-network co-
insurance, out-of-network co-payment, out-of-pocket limit, physician
services, plan, preauthorization, preferred provider, premium,
prescription drug coverage, prescription drugs, primary care physician,
primary care provider, provider, reconstructive surgery, rehabilitation
services, skilled nursing care, specialist, usual customary and
reasonable (UCR), and urgent care; and
(ii) Such other terms as the Secretary determines are important to
define so that individuals and employers may compare and understand the
terms of coverage and medical benefits (including any exceptions to
those benefits), as specified in guidance.
(3) Appearance. A group health plan, and a health insurance issuer,
must provide the uniform glossary with the appearance specified by the
Secretary in guidance to ensure the uniform glossary is presented in a
uniform format and uses terminology understandable by the average plan
enrollee.
(4) Form and manner. A plan or issuer must make the uniform
glossary described in this paragraph (c) available upon request, in
either paper or electronic form (as requested), within seven business
days after receipt of the request.
(d) Preemption. See Sec. 2590.731. In addition, State laws that
require a health insurance issuer to provide an SBC that supplies less
information than required under paragraph (a) of this section are
preempted.
(e) Failure to provide. A group health plan that willfully fails to
provide information required under this section to a participant or
beneficiary is subject to a fine of not more than $1,000 for each such
failure. A failure with respect to each participant or beneficiary
constitutes a separate offense for purposes of this paragraph (e). The
Department will enforce this section using a process and procedure
consistent with 29 CFR 2560.502c-2 of this chapter and 29 CFR part
2570, subpart C.
(f) Applicability. The requirements of this section do not apply to
a group health plan benefit package that provides Medicare Advantage
benefits pursuant to or 42 U.S.C. Chapter 7, Subchapter XVIII, Part C.
Department of Health and Human Services
45 CFR Subtitle A
For the reasons stated in the preamble, the Department of Health
and Human Services proposes to amend 45 CFR part 147 as follows:
PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND
INDIVIDUAL HEALTH INSURANCE MARKETS
0
1. The authority citation for part 147 continues to read as follows:
Authority: Sections 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. Revise Sec. 147.200 to read as follows:
Sec. 147.200 Summary of benefits and coverage and uniform glossary.
(a) Summary of benefits and coverage--(1) In general. A group
health plan (and its administrator as defined in section 3(16)(A) of
ERISA)), and a health insurance issuer offering group or individual
health insurance coverage, is required to provide a written summary of
benefits and coverage (SBC) for each benefit package without charge to
entities and individuals described in this paragraph (a)(1) in
accordance with the rules of this section.
(i) SBC provided by a group health insurance issuer to a group
health plan--(A) Upon application. A health insurance issuer offering
group health insurance coverage must provide the SBC to a group health
plan (or its sponsor) upon application for health coverage, as soon as
practicable following receipt of the application, but in no event later
than seven business days following receipt of the application. If an
SBC was provided before application pursuant to paragraph (a)(1)(i)(D)
of this section (relating to SBCs upon request), this paragraph
(a)(1)(i)(A) is deemed satisfied, provided there is no change to the
information required to be in the SBC. However, if there has been a
change in the information required, a new SBC that includes the correct
information must be provided upon application pursuant to this
paragraph (a)(1)(i)(A).
(B) By first day of coverage (if there are changes). If there is
any change in the information required to be in the SBC that was
provided upon application and before the first day of coverage, the
issuer must update and provide a current SBC to the plan (or its
sponsor) no later than the first day of coverage.
(C) Upon renewal, reissuance, or re-enrollment. If the issuer
renews or reissues a policy, certificate, or contract of insurance for
a succeeding policy year, or automatically re-enrolls the policyholder
or its participants and beneficiaries in coverage, the issuer must
provide a new SBC as follows:
(1) If written application is required (in either paper or
electronic form) for renewal or reissuance, the SBC must be provided no
later than the date the written application materials are distributed.
(2) If renewal, reissuance, or re-enrollment is automatic, the SBC
must be provided no later than 30 days prior to the first day of the
new plan or policy year; however, with respect to an insured plan, if
the policy, certificate, or contract of insurance has not been issued
or renewed before such 30-day period, the SBC must be provided as soon
as practicable but in no event later than seven business days after
issuance of the new policy, certificate, or contract of insurance, or
the receipt of written confirmation of intent to renew, whichever is
earlier.
[[Page 78608]]
(D) Upon request. If a group health plan (or its sponsor) requests
an SBC or summary information about a health insurance product from a
health insurance issuer offering group health insurance coverage, an
SBC must be provided as soon as practicable, but in no event later than
seven business days following receipt of the request.
(ii) SBC provided by a group health insurance issuer and a group
health plan to participants and beneficiaries--(A) In general. A group
health plan (including its administrator, as defined under section
3(16) of ERISA), and a health insurance issuer offering group health
insurance coverage, must provide an SBC to a participant or beneficiary
(as defined under sections 3(7) and 3(8) of ERISA), and consistent with
the rules of paragraph (a)(1)(iii) of this section, with respect to
each benefit package offered by the plan or issuer for which the
participant or beneficiary is eligible.
(B) Upon application. The SBC must be provided as part of any
written application materials that are distributed by the plan or
issuer for enrollment. If the plan or issuer does not distribute
written application materials for enrollment, the SBC must be provided
no later than the first date on which the participant is eligible to
enroll in coverage for the participant or any beneficiaries. If an SBC
was provided before application pursuant to paragraph (a)(1)(ii)(F) of
this section (relating to SBCs upon request), this paragraph
(a)(1)(ii)(B) is deemed satisfied, provided there is no change to the
information required to be in the SBC. However, if there has been is a
change in the information content, a new SBC that includes the correct
information must be provided upon application pursuant to this
paragraph (a)(1)(ii)(B).
(C) By first day of coverage (if there are changes). If there is
any change to the information required to be in the SBC that was
provided upon application and before the first day of coverage, the
plan or issuer must update and provide a current SBC to a participant
or beneficiary no later than the first day of coverage.
(D) Special enrollees. The plan or issuer must provide the SBC to
special enrollees (as described in Sec. 146.117 of this subchapter) no
later than the date by which a summary plan description is required to
be provided under the timeframe set forth in ERISA section 104(b)(1)(A)
and its implementing regulations, which is 90 days from enrollment.
(E) Upon renewal, reissuance, or re-enrollment. If the plan or
issuer requires participants or beneficiaries to renew in order to
maintain coverage (for example, for a succeeding plan year), or
automatically re-enrolls participants and beneficiaries in coverage,
the plan or issuer must provide a new SBC, as follows:
(1) If written application is required for renewal, reissuance, or
re-enrollment (in either paper or electronic form), the SBC must be
provided no later than the date on which the written application
materials are distributed.
(2) If renewal, reissuance, or re-enrollment is automatic, the SBC
must be provided no later than 30 days prior to the first day of the
new plan or policy year; however, with respect to an insured plan, if
the policy, certificate, or contract of insurance has not been issued
or renewed before such 30-day period, the SBC must be provided as soon
as practicable but in no event later than seven business days after
issuance of the new policy, certificate, or contract of insurance, or
the receipt of written confirmation of intent to renew, whichever is
earlier.
(F) Upon request. A plan or issuer must provide the SBC to
participants or beneficiaries upon request for an SBC or summary
information about the health coverage, as soon as practicable, but in
no event later than seven business days following receipt of the
request.
(iii) Special rules to prevent unnecessary duplication with respect
to group health coverage--(A) An entity required to provide an SBC
under this paragraph (a)(1) with respect to an individual satisfies
that requirement if another party provides the SBC, but only to the
extent that the SBC is timely and complete in accordance with the other
rules of this section. Therefore, for example, in the case of a group
health plan funded through an insurance policy, the plan satisfies the
requirement to provide an SBC with respect to an individual if the
issuer provides a timely and complete SBC to the individual. An entity
required to provide an SBC under this paragraph (a)(1) with respect to
an individual that contracts with another party to provide such SBC is
considered to satisfy the requirement to provide such SBC if:
(1) The entity monitors performance under the contract;
(2) If the entity has knowledge that the SBC is not being provided
in a manner that satisfies the requirements of this section and the
entity has all information necessary to correct the noncompliance, the
entity corrects the noncompliance as soon as practicable; and
(3) If the entity has knowledge the SBC is not being provided in a
manner that satisfies the requirements of this section and the entity
does not have all information necessary to correct the noncompliance,
the entity communicates with participants and beneficiaries who are
affected by the noncompliance regarding the regarding the
noncompliance, and begins taking significant steps as soon as
practicable to avoid future violations.
(B) If a single SBC is provided to a participant and any
beneficiaries at the participant's last known address, then the
requirement to provide the SBC to the participant and any beneficiaries
is generally satisfied. However, if a beneficiary's last known address
is different than the participant's last known address, a separate SBC
is required to be provided to the beneficiary at the beneficiary's last
known address.
(C) With respect to a group health plan that offers multiple
benefit packages, the plan or issuer is required to provide a new SBC
automatically to participants and beneficiaries upon renewal or re-
enrollment only with respect to the benefit package in which a
participant or beneficiary is enrolled (or will be automatically re-
enrolled under the plan); SBCs are not required to be provided
automatically upon renewal or re-enrollment with respect to benefit
packages in which the participant or beneficiary is not enrolled (or
will not automatically be enrolled). However, if a participant or
beneficiary requests an SBC with respect to another benefit package (or
more than one other benefit package) for which the participant or
beneficiary is eligible, the SBC (or SBCs, in the case of a request for
SBCs relating to more than one benefit package) must be provided upon
request as soon as practicable, but in no event later than seven
business days following receipt of the request.
(iv) SBC provided by a health insurance issuer offering individual
health insurance coverage--(A) Upon application. A health insurance
issuer offering individual health insurance coverage must provide an
SBC to an individual covered under the policy (including every
dependent) upon receiving an application for any health insurance
policy, as soon as practicable following receipt of the application,
but in no event later than seven business days following receipt of the
application. If an SBC was provided before application pursuant to
paragraph (a)(1)(iv)(D) of this section (relating to SBCs upon
request), this paragraph (a)(1)(iv)(A) is deemed satisfied, provided
there is no change to
[[Page 78609]]
the information required to be in the SBC. However, if there has been a
change in the information content, a new SBC that includes the correct
information must be provided upon application pursuant to this
paragraph (a)(1)(iv)(A).
(B) By first day of coverage (if there are changes). If there is
any change in the information required to be in the SBC that was
provided upon application and before the first day of coverage, the
issuer must update and provide a current SBC to the individual no later
than the first day of coverage.
(C) Upon renewal, reissuance, or re-enrollment. If the issuer
renews or reissues a policy, certificate, or contract of insurance for
a succeeding policy year, or automatically re-enrolls an individual (or
dependent) covered under a policy, certificate, or contract of
insurance into a policy, certificate, or contract of insurance under a
different plan or product, the issuer must provide an SBC for the
coverage in which the individual (including every dependent) will be
enrolled, as follows:
(1) If written application is required (in either paper or
electronic form) for renewal, reissuance, or re-enrollment, the SBC
must be provided no later than the date on which the written
application materials are distributed.
(2) If renewal, reissuance, or re-enrollment is automatic, the SBC
must be provided no later than 30 days prior to the first day of the
new policy year; however, if the policy, certificate, or contract of
insurance has not been issued or renewed before such 30 day period, the
SBC must be provided as soon as practicable but in no event later than
seven business days after issuance of the new policy, certificate, or
contract of insurance, or the receipt of written confirmation of intent
to renew, whichever is earlier.
(D) Upon request. A health insurance issuer offering individual
health insurance coverage must provide an SBC to any individual or
dependent upon request for an SBC or summary information about a health
insurance product as soon as practicable, but in no event later than
seven business days following receipt of the request.
(v) Special rule to prevent unnecessary duplication with respect to
individual health insurance coverage.--(A) In general. If a single SBC
is provided to an individual and any dependents at the individual's
last known address, then the requirement to provide the SBC to the
individual and any dependents is generally satisfied. However, if a
dependent's last known address is different than the individual's last
known address, a separate SBC is required to be provided to the
dependent at the dependents' last known address.
(B) Student health insurance coverage. With respect to student
health insurance coverage as defined at Sec. 147.145(a), the
requirement to provide an SBC to an individual will be considered
satisfied for an entity if another party provides a timely and complete
SBC to the individual.
(2) Content--(i) In general. Subject to paragraph (a)(2)(iii) of
this section, the SBC must include the following:
(A) Uniform definitions of standard insurance terms and medical
terms so that consumers may compare health coverage and understand the
terms of (or exceptions to) their coverage, in accordance with guidance
as specified by the Secretary;
(B) A description of the coverage, including cost sharing, for each
category of benefits identified by the Secretary in guidance;
(C) The exceptions, reductions, and limitations of the coverage;
(D) The cost-sharing provisions of the coverage, including
deductible, coinsurance, and copayment obligations;
(E) The renewability and continuation of coverage provisions;
(F) Coverage examples, in accordance with the rules of paragraph
(a)(2)(ii) of this section;
(G) With respect to coverage beginning on or after January 1, 2014,
a statement about whether the plan or coverage provides minimum
essential coverage as defined under section 5000A(f) and whether the
plan's or coverage's share of the total allowed costs of benefits
provided under the plan or coverage meets applicable requirements;
(H) A statement that the SBC is only a summary and that the plan
document, policy, certificate, or contract of insurance should be
consulted to determine the governing contractual provisions of the
coverage;
(I) Contact information for questions;
(J) For issuers, an Internet web address where a copy of the actual
individual coverage policy or group certificate of coverage can be
reviewed and obtained;
(K) For plans and issuers that maintain one or more networks of
providers, an Internet address (or similar contact information) for
obtaining a list of network providers; (L) For plans and issuers that
use a formulary in providing prescription drug coverage, an Internet
address (or similar contact information) for obtaining information on
prescription drug coverage;
(M) An Internet address for obtaining the uniform glossary, as
described in paragraph (c) of this section, as well as a contact phone
number to obtain a paper copy of the uniform glossary, and a disclosure
that paper copies are available; and
(N) For qualified health plans sold through an individual market
Exchange that exclude or provide for coverage of the services described
in Sec. 156.280(d)(1) of this subchapter, a notice of exclusion or
such coverage.
(ii) Coverage examples. The SBC must include coverage examples
specified by the Secretary in guidance that illustrate benefits
provided under the plan or coverage for common benefits scenarios
(including pregnancy and serious or chronic medical conditions) in
accordance with this paragraph (a)(2)(ii).
(A) Number of examples. The Secretary may identify up to six
coverage examples that may be required in an SBC.
(B) Benefits scenarios. For purposes of this paragraph (a)(2)(ii),
a benefits scenario is a hypothetical situation, consisting of a sample
treatment plan for a specified medical condition during a specific
period of time, based on recognized clinical practice guidelines as
defined by the National Guideline Clearinghouse, Agency for Healthcare
Research and Quality. The Secretary will specify, in guidance, the
assumptions, including the relevant items and services and
reimbursement information, for each claim in the benefits scenario.
(C) Illustration of benefit provided. For purposes of this
paragraph (a)(2)(ii), to illustrate benefits provided under the plan or
coverage for a particular benefits scenario, a plan or issuer simulates
claims processing in accordance with guidance issued by the Secretary
to generate an estimate of what an individual might expect to pay under
the plan, policy, or benefit package. The illustration of benefits
provided will take into account any cost sharing, excluded benefits,
and other limitations on coverage, as specified by the Secretary in
guidance.
(iii) Coverage provided outside the United States. In lieu of
summarizing coverage for items and services provided outside the United
States, a plan or issuer may provide an Internet address (or similar
contact information) for obtaining information about benefits and
coverage provided outside the United States. In any case, the plan or
issuer must provide an SBC in accordance with this section that
accurately summarizes benefits and
[[Page 78610]]
coverage available under the plan or coverage within the United States.
(3) Appearance. (i) A group health plan and a health insurance
issuer must provide an SBC in the form, and in accordance with the
instructions for completing the SBC, that are specified by the
Secretary in guidance. The SBC must be presented in a uniform format,
use terminology understandable by the average plan enrollee (or, in the
case of individual market coverage, the average individual covered
under a health insurance policy), not exceed four double-sided pages in
length, and not include print smaller than 12-point font. A health
insurance issuer offering individual health insurance coverage must
provide the SBC as a stand-alone document.
(ii) A group health plan that utilizes two or more benefit packages
(such as major medical coverage and a health flexible spending
arrangement) may synthesize the information into a single SBC, or
provide multiple SBCs.
(4) Form--(i) An SBC provided by an issuer offering group health
insurance coverage to a plan (or its sponsor), may be provided in paper
form. Alternatively, the SBC may be provided electronically (such as by
email or an Internet posting) if the following three conditions are
satisfied--
(A) The format is readily accessible by the plan (or its sponsor);
(B) The SBC is provided in paper form free of charge upon request;
and
(C) If the electronic form is an Internet posting, the issuer
timely advises the plan (or its sponsor) in paper form or email that
the documents are available on the Internet and provides the Internet
address.
(ii) An SBC provided by a group health plan or health insurance
issuer to a participant or beneficiary may be provided in paper form.
Alternatively, the SBC may be provided electronically (such as by email
or an Internet posting) if the requirements of this paragraph
(a)(4)(ii) are met.
(A) With respect to participants and beneficiaries covered under
the plan or coverage, the SBC may be provided electronically as
described in this paragraph (a)(4)(ii)(A). However, in all cases, the
plan or issuer must provide the SBC in paper form if paper form is
requested.
(1) In accordance with the Department of Labor's disclosure
regulations at 29 CFR 2520.104b-1;
(2) In connection with online enrollment or online renewal of
coverage under the plan; or
(3) In response to an online request made by a participant or
beneficiary for the SBC.
(B) With respect to participants and beneficiaries who are eligible
but not enrolled for coverage, the SBC may be provided electronically
if:
(1) The format is readily accessible;
(2) The SBC is provided in paper form free of charge upon request;
and
(3) In a case in which the electronic form is an Internet posting,
the plan or issuer timely notifies the individual in paper form (such
as a postcard) or email that the documents are available on the
Internet, provides the Internet address, and notifies the individual
that the documents are available in paper form upon request.
(iii) An issuer offering individual health insurance coverage must
provide an SBC in a manner that can reasonably be expected to provide
actual notice in paper or electronic form.
(A) An issuer satisfies the requirements of this paragraph
(a)(4)(iii) if the issuer:
(1) Hand-delivers a printed copy of the SBC to the individual or
dependent;
(2) Mails a printed copy of the SBC to the mailing address provided
to the issuer by the individual or dependent;
(3) Provides the SBC by email after obtaining the individual's or
dependent's agreement to receive the SBC or other electronic
disclosures by email;
(4) Posts the SBC on the Internet and advises the individual or
dependent in paper or electronic form, in a manner compliant with
paragraphs (a)(4)(iii)(A)(1) through (3), that the SBC is available on
the Internet and includes the applicable Internet address; or
(5) Provides the SBC by any other method that can reasonably be
expected to provide actual notice.
(B) An SBC may not be provided electronically unless:
(1) The format is readily accessible;
(2) The SBC is placed in a location that is prominent and readily
accessible;
(3) The SBC is provided in an electronic form which can be
electronically retained and printed;
(4) The SBC is consistent with the appearance, content, and
language requirements of this section;
(5) The issuer notifies the individual or dependent that the SBC is
available in paper form without charge upon request and provides it
upon request.
(C) Deemed compliance. A health insurance issuer offering
individual health insurance coverage that provides the content required
under paragraph (a)(2) of this section, as specified in guidance
published by the Secretary, to the federal health reform Web portal
described in Sec. 159.120 of this subchapter will be deemed to satisfy
the requirements of paragraph (a)(1)(iv)(D) of this section with
respect to a request for summary information about a health insurance
product made prior to an application for coverage. However, nothing in
this paragraph should be construed as otherwise limiting such issuer's
obligations under this section.
(iv) An SBC provided by a self-insured non-Federal governmental
plan may be provided in paper form. Alternatively, the SBC may be
provided electronically if the plan conforms to either the substance of
the provisions in paragraph (a)(4)(ii) or (a)(4)(iii) of this section.
(5) Language. A group health plan or health insurance issuer must
provide the SBC in a culturally and linguistically appropriate manner.
For purposes of this paragraph (a)(5), a plan or issuer is considered
to provide the SBC in a culturally and linguistically appropriate
manner if the thresholds and standards of Sec. 147.136(e) are met as
applied to the SBC.
(b) Notice of modification. If a group health plan, or health
insurance issuer offering group or individual health insurance
coverage, makes any material modification (as defined under section 102
of ERISA) in any of the terms of the plan or coverage that would affect
the content of the SBC, that is not reflected in the most recently
provided SBC, and that occurs other than in connection with a renewal
or reissuance of coverage, the plan or issuer must provide notice of
the modification to enrollees (or, in the case of individual market
coverage, an individual covered under a health insurance policy) not
later than 60 days prior to the date on which the modification will
become effective. The notice of modification must be provided in a form
that is consistent with the rules of paragraph (a)(4) of this section.
(c) Uniform glossary--(1) In general. A group health plan, and a
health insurance issuer offering group health insurance coverage, must
make available to participants and beneficiaries, and a health
insurance issuer offering individual health insurance coverage must
make available to applicants, policyholders, and covered dependents,
the uniform glossary described in paragraph (c)(2) of this section in
accordance with the appearance and form and manner requirements of
paragraphs (c)(3) and (c)(4) of this section.
(2) Health-coverage-related terms and medical terms. The uniform
glossary must provide uniform definitions, specified by the Secretary
in guidance, of the following health-coverage-related terms and medical
terms:
[[Page 78611]]
(i) Allowed amount, appeal, balance billing, co-insurance,
complications of pregnancy, co-payment, deductible, durable medical
equipment, emergency medical condition, emergency medical
transportation, emergency room care, emergency services, excluded
services, grievance, habilitation services, health insurance, home
health care, hospice services, hospitalization, hospital outpatient
care, in-network co-insurance, in-network co-payment, medically
necessary, network, non-preferred provider, out-of-network co-
insurance, out-of-network co-payment, out-of-pocket limit, physician
services, plan, preauthorization, preferred provider, premium,
prescription drug coverage, prescription drugs, primary care physician,
primary care provider, provider, reconstructive surgery, rehabilitation
services, skilled nursing care, specialist, usual customary and
reasonable (UCR), and urgent care; and
(ii) Such other terms as the Secretary determines are important to
define so that individuals and employers may compare and understand the
terms of coverage and medical benefits (including any exceptions to
those benefits), as specified in guidance.
(3) Appearance. A group health plan, and a health insurance issuer,
must provide the uniform glossary with the appearance specified by the
Secretary in guidance to ensure the uniform glossary is presented in a
uniform format and uses terminology understandable by the average plan
enrollee (or, in the case of individual market coverage, an average
individual covered under a health insurance policy).
(4) Form and manner. A plan or issuer must make the uniform
glossary described in this paragraph (c) available upon request, in
either paper or electronic form (as requested), within seven business
days after receipt of the request.
(d) Preemption. For purposes of this section, the provisions of
section 2724 of the PHS Act continue to apply with respect to
preemption of State law. In addition, State laws that require a health
insurance issuer to provide an SBC that supplies less information than
required under paragraph (a) of this section are preempted.
(e) Failure to provide. A health insurance issuer or a non-federal
governmental health plan that willfully fails to provide information to
a covered individual required under this section is subject to a fine
of not more than $1,000 for each such failure. A failure with respect
to each covered individual constitutes a separate offense for purposes
of this paragraph (e). HHS will enforce these provisions in a manner
consistent with Sec. Sec. 150.101 through 150.465 of this subchapter.
(f) Applicability. The requirements of this section do not apply to
a group health plan benefit package that provides Medicare Advantage
benefits pursuant to or 42 U.S.C. Chapter 7, Subchapter XVIII, Part C.
[FR Doc. 2014-30243 Filed 12-22-14; 4:15 pm]
BILLING CODE 4830-01-P; 4150-28-P; 4120-01-P
