Vol. 78 Tuesday, 

No. 14 January 22, 2013 

Part II 

Department of Health and Human Services 

Centers for Medicare & Medicaid Services 

42 CFR Parts 430, 431, 433, et al. 

45 CFR Part 155 

Medicaid, Children’s Health Insurance Programs, and Exchanges: Essential 

Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing 

and Appeal Processes for Medicaid and Exchange Eligibility Appeals and 

Other Provisions Related to Eligibility and Enrollment for Exchanges, 

Medicaid and CHIP, and Medicaid Premiums and Cost Sharing; Proposed 

Rule 


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4594 Federal Register / Vol. 78, No. 14 / Tuesday, January 22, 2013 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 430, 431, 433, 435, 440, 

447, and 457 

Office of the Secretary 

45 CFR Part 155 

[CMS–2334–P] 

RIN 0938–AR04 

Medicaid, Children’s Health Insurance 

Programs, and Exchanges: Essential 

Health Benefits in Alternative Benefit 

Plans, Eligibility Notices, Fair Hearing 

and Appeal Processes for Medicaid 

and Exchange Eligibility Appeals and 

Other Provisions Related to Eligibility 

and Enrollment for Exchanges, 

Medicaid and CHIP, and Medicaid 

Premiums and Cost Sharing 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

implement provisions of the Patient 

Protection and Affordable Care Act of 

2010 and the Health Care and Education 

Reconciliation Act of 2010 (collectively 

referred to as the Affordable Care Act), 

and the Children’s Health Insurance 

Program Reauthorization Act of 2009 

(CHIPRA). This proposed rule reflects 

new statutory eligibility provisions; 

proposes changes to provide states more 

flexibility to coordinate Medicaid and 

the Children’s Health Insurance 

Program (CHIP) eligibility notices, 

appeals, and other related 

administrative procedures with similar 

procedures used by other health 

coverage programs authorized under the 

Affordable Care Act; modernizes and 

streamlines existing rules, eliminates 

obsolete rules, and updates provisions 

to reflect Medicaid eligibility pathways; 

revises the rules relating to the 

substitution of coverage to improve the 

coordination of CHIP coverage with 

other coverage; implements other 

CHIPRA eligibility-related provisions, 

including eligibility for newborns 

whose mothers were eligible for and 

receiving Medicaid or CHIP coverage at 

the time of birth; amends certain 

provisions included in the ‘‘State 

Flexibility for Medicaid Benefit 

Packages’’ final rule published on April 

30, 2010; and implements specific 

provisions including eligibility appeals, 

notices, and verification of eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan for Affordable 

Insurance Exchanges. This rule also 

proposes to update and simplify the 

complex Medicaid premiums and cost 

sharing requirements, to promote the 

most effective use of services, and to 

assist states in identifying cost sharing 

flexibilities. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on February 13, 2013. 

ADDRESSES: In commenting, please refer 

to file code CMS–2334–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the ‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–2334–P, P.O. Box 8016, Baltimore, 

MD 21244–8016. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–2334–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. Alternatively, 

you may deliver (by hand or courier) 

your written comments ONLY to the 

following addresses prior to the close of 

the comment period: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, call 

telephone number (410) 786–7195 in 

advance to schedule your arrival with 

one of our staff members. 

Comments erroneously mailed to the 

addresses indicated as appropriate for 

hand or courier delivery may be delayed 

and received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Sarah deLone, (410) 786–0615, or 

Stephanie Kaminsky, (410) 786–4653, 

for provisions related to revisions to 

eligibility notice and fair hearing appeal 

processes and additional eligibility 

changes for Medicaid and CHIP. 

Melissa Harris, (410)786–3397, for 

provisions related to essential health 

benefits. 

Leigha Basini, (301) 492–4307, for 

provisions related to Affordable 

Insurance Exchanges. 

SUPPLEMENTARY INFORMATION: 

Executive Summary 

This proposed rule would implement 

provisions of the Patient Protection and 

Affordable Care Act of 2010 and the 

Health Care and Education 

Reconciliation Act of 2010 (collectively 

referred to as the Affordable Care Act), 

and the Children’s Health Insurance 

Program Reauthorization Act of 2009 

(CHIPRA). This rule reflects new 

statutory eligibility provisions, proposes 

changes to provide states more 

flexibility to coordinate Medicaid and 

CHIP eligibility notices, appeals, and 

other related administrative procedures 

with similar procedures used by other 

health coverage programs authorized 

under the Affordable Care Act. This 

proposed rule also modernizes and 

streamlines existing rules, eliminates 

obsolete rules, and updates provisions 

to reflect new or revised Medicaid 

eligibility pathways. This rule also 

implements CHIPRA eligibility-related 

provisions, including eligibility for 

newborns whose mothers were eligible 

for and receiving Medicaid or CHIP 

coverage at the time of birth. 

This proposed rule amends the final 

rule published on April 30, 2010, titled 

‘‘State Flexibility for Medicaid Benefit 

Packages,’’ which implemented the 

provisions of section 1937 of the Social 

Security Act (the Act), and established 

a state option to provide Medicaid 

benefits using benchmark or 

benchmark-equivalent coverage. In an 


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effort to bring consistency and clarity to 

part 440, we are removing the terms 

‘‘benchmark and benchmark-equivalent 

plan’’ where they appear together and 

are replacing these terms with 

‘‘Alternative Benefit Plan.’’ 

Beginning in 2014, individuals and 

small businesses will be able to 

purchase private health insurance 

through competitive marketplaces 

called Affordable Insurance Exchanges, 

or ‘‘Exchanges.’’ This proposed rule 

would: (1) Set forth standards for 

adjudicating appeals of individual 

eligibility determinations and 

exemptions from the individual 

responsibility requirements, as well as 

determinations of employer-sponsored 

coverage, and determinations of SHOP 

employer and employee eligibility for 

purposes of implementing section 

1411(f) of the Affordable Care Act, (2) 

set forth standards for adjudicating 

appeals of employer and employee 

eligibility to participate in the SHOP, (3) 

outline criteria related to the 

verification of enrollment in and 

eligibility for minimum essential 

coverage through an eligible employersponsored plan, and (4) further specify 

or amend standards related to other 

eligibility and enrollment provisions. 

The intent of this rule is to afford states 

substantial discretion in the design and 

operation of an Exchange, with greater 

standardization provided where 

directed by the statute or where there 

are compelling practical, efficiency or 

consumer protection reasons. 

This rule also proposes to update and 

simplify the complex Medicaid 

premiums and cost sharing 

requirements to promote the most 

effective use of services and to assist 

states in identifying cost sharing 

flexibilities. To that end, we propose to 

update the maximum allowable cost 

sharing levels, in particular expanding 

upon the flexibilities related to drugs 

and emergency department (ED) usage. 

We propose new options for states to 

establish higher cost sharing for nonpreferred drugs, and to impose higher 

cost sharing for non-emergency use of 

the ED. 

Besides the specific updates to 

nominal amounts, we propose to greatly 

simplify and streamline the entire 

premiums and cost sharing regulation 

‘‘in a manner that is consistent with 

simplicity of administration and the 

best interests of the recipients,’’ in 

accordance with section 1902(a)(19) of 

the Act. This proposed rule would no 

longer distinguish between the two 

statutory authorities for premiums and 

cost sharing (sections 1916 and 1916A 

of the Act) and instead would simply 

lay out the parameters under which 

premiums and cost sharing are 

permitted. 

Finally, this rulemaking provides 

notice that we are considering, for 

purposes of the initial open enrollment 

period for enrollment in a Qualified 

Health Plan through the Exchange, 

whether various provisions of the 

Medicaid and CHIP regulations should 

be effective October 1, 2013, or whether 

a later effective date is appropriate. 

Table of Contents 

To assist readers in referencing 

sections contained in this document, we 

are providing the following table of 

contents. 

Executive Summary 

I. Medicaid Eligibility Expansion Part II 

A. Background 

1. Introduction 

2. Legislative Overview 

3. Overview of the Proposed Rule 

B. Provision of the Proposed Rule 

1. Appeals 

2. Notices 

3. Medicaid Eligibility Changes under the 

Affordable Care Act 

4. Medicaid Enrollment Changes under the 

Affordable Care Act needed to achieve 

coordination with the Exchange 

5. Medicaid Eligibility Requirements and 

Coverage Options established by other 

Federal Statutes 

6. Verification Exceptions for Special 

Circumstances 

7. Verification Procedures for Individuals 

Attesting to Citizenship or Satisfactory 

Immigration Status 

8. Elimination or Changes to Unnecessary 

and Obsolete Regulations 

9. Coordinated Medicaid/CHIP Open 

Enrollment Process 

10. Children’s Health Insurance Program 

Changes 

11. Premium Assistance 

12. Electronic Submission of the Medicaid 

and CHIP State Plan 

13. Changes to Modified Adjusted Gross 

Income and MAGI Screen 

14. Single State Agency: Delegation of 

eligibility determination to Exchanges 

15. Medical Support and Payments 

16. Conversion of Federal Minimum 

Income Standards for Section 1931 

II. Essential Health Benefits in Alternative 

Benefit Plans 

A. Background 

B. Provision of the Proposed Rule: Part 

440—Medicaid Program; State Flexibility 

for Medicaid Benefit Packages 

1. Subpart C—Benchmark Benefit and 

Benchmark-Equivalent Coverage 

2. Other Changes to Simplify, Modernize 

and Clarify Medicaid Benchmark 

Requirements and Make Technical 

Corrections to Coverage Requirements 

III. Eligibility Appeals and Other Provisions 

Related to Eligibility and Enrollment for 

Exchanges 

A. Background 

1. Legislative Overview 

2. Stakeholder Consultation and Input 

3. Structure of the Proposed Rule 

4. Alignment with Related Rules and 

Published Information 

B. Provisions of the Proposed Regulations: 

Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. Definitions 

2. Approval of a State Exchange 

3. Functions of an Exchange 

4. Consumer Assistance Tools and 

Programs of an Exchange 

5. Certified Application Counselors 

6. Authorized Representatives 

7. General standards for Exchange notices 

8. Definitions and general standards for 

eligibility determinations 

9. Options for conducting eligibility 

determinations 

10. Eligibility standards 

11. Eligibility process 

12. Verification process related to 

eligibility for enrollment in a QHP 

through the Exchange 

13. Verifications related to eligibility for 

insurance affordability programs 

14. Eligibility redetermination during a 

benefit year 

15. Annual eligibility redetermination 

16. Administration of advance payments of 

the premium tax credit and cost-sharing 

reductions 

17. Coordination with Medicaid, CHIP, the 

Basic Health Program, and the Preexisting Condition Insurance Plan 

18. Special eligibility standards and 

process for Indians 

19. Enrollment of qualified individuals 

into QHP’s 

20. Special enrollment periods 

21. Termination of coverage 

22. Subpart F—Appeals of Eligibility 

Determinations for Exchange 

Participation and Insurance Affordability 

Programs 

23. Definitions 

24. General Eligibility Appeals 

Requirements 

25. Appeals Coordination 

26. Notice of Appeal Procedures 

27. Appeal Requests 

28. Eligibility Pending Appeal 

29. Dismissals 

30. Informal Resolution and Hearing 

Requirements 

31. Expedited Appeals 

32. Appeal Decisions 

33. Appeal Record 

34. Employer Appeals Process 

35. Functions of a SHOP 

36. SHOP Employer and Employee 

Eligibility Appeals 

IV. Medicaid Premiums and Cost Sharing 

A. Background 

B. Provisions of Proposed Rule 

V. Collection of Information Requirements 

VI. Response to comments 

VII. Summary of Preliminary Regulatory 

Impact Analysis 

Acronyms 

Because of the many organizations 

and terms to which we refer by acronym 

in this proposed rule, we are listing 

these acronyms and their corresponding 

terms in alphabetical order below: 

[the] Act Social Security Act 


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Affordable Care Act The Affordable Care 

Act of 2010 (which is the collective term 

for the Patient Protection and Affordable 

Care Act (Pub. L. 111–148) and the Health 

Care and Education Reconciliation Act 

(Pub. L. 111–152)) 

AFDC Aid to Families with Dependent 

Children 

BBA Balanced Budget Act of 1997 

BHP Basic Health Program 

CHIP Children’s Health Insurance Program 

CHIPRA Children’s Health Insurance 

Program Reauthorization Act of 2009 

CMS Centers for Medicare & Medicaid 

Services 

[the] Code Internal Revenue Code of 1986 

DHS Department of Homeland Security 

DOL U.S. Department of Labor 

DRA Deficit Reduction Act of 2005 

EITC Earned Income Tax Credit 

EPSDT Early and periodic screening, 

diagnosis, and treatment 

FEHBP Federal Employees Health Benefits 

Program (5 U.S.C 8901, et seq.) 

FFE Federally-facilitated Exchange 

FFP Federal financial participation 

FMAP Federal medical assistance 

percentage 

FPL Federal poverty level 

HCERA Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152, enacted March 30, 2010) 

HHS [U.S. Department of] Health and 

Human Services 

IHS Indian Health Service 

INA Immigration and Nationality Act 

IRA Individual Retirement Account 

IRC Internal Revenue Code of 1986 

IRS Internal Revenue Service 

MAGI Modified adjusted gross income 

OMB Office of Management and Budget 

OPM U.S. Office of Personnel Management 

PHS Act Public Health Service Act 

PRA Paperwork Reduction Act of 1985 

PRWORA Personal Responsibility and 

Work Opportunity Reconciliation Act of 

1996 

QHP Qualified Health Plan 

SHOP Small Business Health Options 

Program 

SMD State Medicaid Director 

SNAP Supplemental Nutrition Assistance 

Program 

SPA State Plan Amendment 

SSA Social Security Administration 

SSI Supplemental Security Income 

SSN Social Security number 

TANF Temporary Assistance for Needy 

Families 

I. Medicaid Eligibility Expansion Part II 

A. Background 

1. Introduction 

The Patient Protection and Affordable 

Care Act (Pub. L. 111–148, enacted on 

March 23, 2010), was amended by the 

Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152, enacted on March 30, 2010). These 

laws are collectively referred to as the 

Affordable Care Act. In addition, section 

205 of the Medicare & Medicaid 

Extenders Act of 2010 (Pub. L. 111–309, 

enacted December 15, 2010) (MMEA) 

and the Middle Class Tax Relief and Job 

Creation Act of 2012 (Pub. L. No. 112– 

96, enacted February 22, 2012) made 

additional amendments to the Social 

Security Act (the Act) provisions 

affected by the Affordable Care Act. 

The Affordable Care Act extends and 

simplifies Medicaid eligibility and on 

March 23, 2012, we issued a final rule 

(referred to as the ‘‘Medicaid eligibility 

final rule’’) addressing certain key 

Medicaid eligibility issues. 

This proposed rule provides states 

with additional flexibility in beneficiary 

appeals, notices and related procedures, 

updates CMS regulations to fully reflect 

changes in Medicaid eligibility created 

under the Affordable Care Act and 

existing legislations, and modernizes 

administrative procedures to further 

promote coordination across multiple 

health coverage programs, including 

purchase of coverage through the 

Exchange with advance payments of the 

premium tax credits and cost sharing 

reductions, as authorized by the 

Affordable Care Act, Medicaid and the 

Children’s Health Insurance Program 

(CHIP). These coverage programs are 

collectively referred to as ‘‘insurance 

affordability programs.’’ 

2. Legislative Overview 

This proposed rule reflects and 

implements Medicaid and CHIP 

eligibility and enrollment provisions of 

the Affordable Care Act including: 

• Sections 1411 and 1413, which 

ensure coordination in the eligibility, 

verification, and enrollment systems for 

Medicaid, CHIP, Basic Health Programs, 

and Exchanges. This includes ensuring 

verification of individuals’ citizenship 

status. 

• Section 2001, which provides for 

expanded Medicaid eligibility for adults 

under age 65. 

• Section 2002, which sets out new 

financial eligibility methodologies for 

Medicaid for certain populations. 

• Sections 2004 and 10201, which 

expand Medicaid coverage for 

individuals under age 26 who were 

receiving Medicaid when they aged out 

of foster care. 

• Section 2101, which sets new 

financial eligibility methodologies for 

CHIP. 

• Sections 2201 and 1413, which 

simplify and coordinate eligibility and 

enrollment systems across insurance 

affordability programs. 

• Section 2202, which permits 

hospitals to make presumptive 

eligibility determinations for all 

Medicaid eligible populations. 

• Section 2303, which provides a 

state option for Medicaid coverage 

limited to family planning or family 

planning related services under the state 

plan. 

This proposed rule also makes 

changes to the Children’s Health 

Insurance Program (CHIP) that reflect 

and implement certain provisions of the 

Social Security Act, Affordable Care Act 

and the Children’s Health Insurance 

Program Reauthorization Act of 2009 

(Pub. L 111–3, enacted on February 4, 

2009) (CHIPRA) including: 

• Sections 111, 113, and 211 of 

CHIPRA, which require automatic 

eligibility for newborns whose mothers 

were receiving medical assistance at the 

time of birth. 

• Section 2105(c)(10) of the Social 

Security Act, as well as sections 1906 

and 1906A of the Social Security Act, 

which apply a cost-effectiveness test to 

premium assistance set forth at Section 

10203(b) of the Affordable Care Act. 

3. Overview of the Proposed Rule 

The proposed amendments to 42 CFR 

parts 430, 431, 435, and 457 in this rule 

propose the following policies: 

• Amendments to part 430 subpart B 

propose electronic submission of state 

plans and plan amendments. 

• Amendments to part 431 subpart A 

and part 433 subpart D propose 

updated, streamlined, and coordinated 

eligibility, beneficiary notice and appeal 

functions for Medicaid and CHIP. 

• Amendments to part 435 subparts 

A, B, C and D reflect statutory changes 

to Medicaid eligibility. These 

amendments also add new or revised 

definitions and delete existing 

regulations that are rendered obsolete. 

• Amendments to part 435 subparts E 

and F reflect statutorily-required 

changes to state procedures to verify 

citizenship or non-citizen status. 

• Amendments to part 435 subpart G 

reflect the statutorily-required shift to 

MAGI-based financial eligibility 

methods for most populations, as set 

forth in the final Medicaid eligibility 

final rule issued on March 23, 2012 at 

(77 FR 17144). 

• Amendment to part 435 subparts J 

and K and the addition of a new subpart 

M propose standards to promote the 

establishment by states of a seamless 

and coordinated system to determine 

eligibility of individuals seeking 

assistance and to enroll them in the 

appropriate insurance affordability 

program. Subpart M would delineate the 

responsibilities of the state Medicaid 

agency in the coordinated system of 

eligibility and enrollment established 

under the Affordable Care Act. 

Comparable amendments would be 

made to CHIP requirements at part 457. 

The proposed amendments to 45 CFR 

part 155 in this rule also propose 


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requirements necessary to facilitate the 

creation of the Affordable Insurance 

Exchange eligibility and enrollment 

system established by the Affordable 

Care Act. 

B. Provisions of the Proposed Rule 

The following descriptions are 

structured to explain the provisions 

being proposed and do not necessarily 

follow the order of the regulation’s text. 

1. Appeals 

(a) Generally (§§ 431.10, 431.205, 

431.206, 431.221, 431.242, 431.244, 

435.4, 435.907, 435.1200 and 45 CFR 

155.302) 

The Medicaid eligibility final rule 

published on March 23, 2012 at (77 FR 

17144) (‘‘Medicaid eligibility final 

rule’’), along with the Exchange 

eligibility final rule published on March 

27, 2012 (77 FR 18310), established a 

coordinated system of eligibility and 

enrollment in a QHP through the 

Exchange and for all insurance 

affordability programs, consistent with 

the Affordable Care Act. In this 

proposed rule, we propose 

modifications to Medicaid procedures, 

similar to those finalized in the 

Medicaid eligibility final rule, to 

promote coordination of notices and 

appeals of eligibility determinations. 

Consistent with sections 1413 and 2201 

of the Affordable Care Act, the proposed 

revisions aim to coordinate Medicaid 

fair hearings under section 1902(a)(3) of 

the Act with appeals of eligibility 

determinations for enrollment in a QHP 

and for advance payment of the 

premium tax credit and cost-sharing 

reductions under section 1411(f) of the 

Affordable Care Act. Under the 

authority of section 1943(b)(3) of the 

Act, we propose to provide states with 

options for coordinating appeals to align 

with the options they have for eligibility 

determinations. 

To promote coordination of appeals 

when there are appeals of both the level 

of advance payment of the premium tax 

credit or cost-sharing reductions granted 

for enrollment in a QHP through the 

Exchange and a denial of Medicaid, we 

propose at § 431.10(c)(1)(ii) to permit 

Medicaid agencies to delegate authority 

to conduct fair hearings of eligibility 

denials based on the applicable 

modified adjusted gross income (MAGI) 

standard to an Exchange or Exchange 

appeals entity (hereinafter, when we 

refer to a delegation of authority to 

conduct Medicaid fair hearings to an 

Exchange, we also intend this reference 

to include delegation to an Exchange 

appeals entity), provided that 

individuals are given the option to have 

the fair hearing on the Medicaid denial 

conducted instead by the Medicaid 

agency. Proposed § 431.206(d) directs 

that states delegating authority to 

conduct fair hearings to an Exchange 

must inform individuals of their right to 

opt instead for a fair hearing before the 

Medicaid agency and the method by 

which the individual may do so. 

Individuals would be informed of the 

option to opt into having the appeal 

heard by the Medicaid agency at the 

time the appeal is filed, prior to either 

entity conducting a hearing, and the 

notice provided would need to be 

sufficient to enable an informed choice. 

The beneficiary option is required by 

statute, but we expect that most 

individuals will not opt out of having a 

consolidated appeal of both Medicaid 

and Exchange-related issues before the 

Exchange appeal entity, to choose 

instead to have two separate hearings 

(one before the Exchange appeals entity 

and one before the Medicaid agency). If 

the Exchange appeals entity conducts 

the hearing on the Medicaid denial, that 

hearing decision would be final under 

the proposed rule, subject to the state’s 

option, proposed at § 431.10(c)(3)(iii) 

and discussed further below, to review 

conclusions of law made by the hearing 

officer. 

An Exchange appeals entity, defined 

at proposed § 431.10(a)(2), would 

include a State-based Exchange appeals 

entity, as well as the HHS appeals 

entity, responsible for adjudicating 

appeals of determinations of eligibility 

to enroll in a QHP and for advance 

payment of the premium tax credit and 

cost-sharing reductions under section 

1411(f) of the Affordable Care Act. Per 

proposed § 431.10(c)(2), delegation is 

permitted only to an Exchange that is a 

governmental agency that maintains 

merit protections for its employees. 

Delegation to a governmental agency is 

discussed in more detail at section 

I.B.12 of this proposed regulation, 

related to delegation of authority to 

conduct eligibility determinations. State 

Medicaid agencies may not delegate 

authority to conduct fair hearings to 

other state agencies, such as a sister 

human services agency or independent 

state appeals agency, under 

§ 431.10(c)(1)(ii). States may, however, 

request a waiver under the 

Intergovernmental Cooperation Act of 

1968, as codified at 31 U.S.C. 6504, as 

some states have done in the past. We 

note that these waivers, which may be 

requested by submitting a State Plan 

Amendment (SPA), are subject to the 

state establishing clear oversight over 

the agency conducting the fair hearings, 

similar to the standards set forth in 

§ 431.10(c) and (d). 

Medicaid agencies may delegate 

authority to conduct fair hearings to a 

State-Based Exchange that is also a state 

agency either under the proposed 

regulations or by requesting a waiver 

under the Intergovernmental 

Cooperation Act of 1968. The primary 

difference would be that, under the 

waiver approach, the state would not be 

required to provide individuals with the 

option to have the Medicaid agency 

conduct their fair hearing. We seek 

comments on whether Medicaid 

agencies should have authority under 

the regulations to delegate fair hearing 

authority to any state agency, subject to 

the same limitations as those proposed 

for delegations to a state-based 

Exchange. 

For states choosing to delegate 

Medicaid fair hearing authority to the 

Exchange, we propose at 

§ 431.10(c)(3)(iii) to provide states with 

an additional option under which the 

Medicaid agency would review 

decisions made by the Exchange with 

respect to Medicaid-related conclusions 

of law, including interpretations of state 

or federal policies. This option would 

not extend to reviewing factual 

determinations made by the Exchange 

appeals entity’s hearing officer. Any 

such review by the Medicaid agency 

would need to be accomplished in time 

for a final decision to be made in 

accordance with § 431.244 of this part. 

Under proposed § 431.10(c)(1)(ii), the 

agency must specify in the state plan 

whether it is delegating authority to 

conduct fair hearings to the Exchange 

and the scope of the delegated authority 

(for example, if delegation is limited to 

fair hearings for individuals determined 

ineligible for Medicaid by the Exchange 

or whether the delegation includes 

individuals determined ineligible by the 

Medicaid agency). We note that an 

Exchange must agree to any delegation 

of authority and we do not expect that 

either the federally-facilitated Exchange 

(FFE) or the HHS appeals entity will 

accept delegated authority to adjudicate 

appeals of any Medicaid eligibility 

determinations which were not made by 

the FFE due to resource constraints. 

We propose at § 431.10(c)(3) that any 

delegation of fair hearing authority to 

the Exchange would be subject to 

safeguards to protect the integrity of the 

appeals process, such that beneficiaries 

receive the same due process rights and 

substantive review of their case as is 

provided in hearings conducted by the 

Medicaid agency. The Medicaid agency 

also would exercise appropriate 

oversight over the delegated hearing 

process, and take corrective action if 

necessary. We propose at § 431.10(d) 

that a delegation of fair hearing 


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authority would be effectuated through 

a written agreement specifying the 

respective roles and responsibilities of 

the Medicaid agency and Exchange to 

ensure compliance with the fair hearing 

requirements in subpart E, quality 

control and oversight by the Medicaid 

agency, including any reporting 

requirements to support the Medicaid 

agency’s oversight, as well as assurances 

that the Exchange will comply with the 

terms of the delegation required under 

the proposed regulation. 

In support of the proposed policy, we 

also propose to revise § 431.10(a) to add 

definitions of ‘‘Medicaid agency,’’ 

‘‘appeals decision,’’ ‘‘Exchange’’ and 

‘‘Exchange appeals entity’’ at 

§ 431.10(a)(2), and to make conforming 

changes to existing regulations at 

§ 431.205(b)(1) to reflect the possibility 

of delegated appeals authority to an 

Exchange. We propose to delete the 

requirements currently at § 431.10(e)(2) 

and § 431.10(e)(3), as these provisions 

are not consistent with the option to 

delegate appeals. However, we are 

retaining the current requirement at 

§ 431.10(e)(1), redesignated at proposed 

§ 431.10(e), that only the single state 

agency may supervise the plan and/or 

issue policies, rules and regulations on 

program matters. 

We note that we also have 

streamlined and reorganized the text of 

the paragraphs concerning the 

procedures and safeguards required to 

permit delegation of eligibility 

determinations at § 431.10 in this 

proposed rule. These revisions, 

promulgated in the Medicaid eligibility 

final rule to strengthen the authority 

and oversight of the Medicaid agency, 

are not intended to substantively change 

the policy adopted in that final rule. 

In order to maximize coordination of 

appeals involving different insurance 

affordability programs and minimize 

burden on consumers and states, 

regardless of whether the Medicaid 

agency has retained the authority to 

conduct Medicaid appeals or delegated 

such authority to an Exchange, we 

propose revisions to existing regulations 

at § 431.221 (relating to requests for a 

hearing), § 431.244 (relating to hearing 

decisions) as well as to § 435.4 

(modifying the definition of ‘‘electronic 

account’’) and § 435.1200 (relating to the 

Medicaid agencies’ responsibility to 

ensure a seamless and coordinated 

system of eligibility and enrollment 

between all insurance affordability 

programs). 

Specifically, we propose to add new 

paragraph (e) to § 431.221 to provide 

that the Medicaid agency treat an appeal 

of a determination of eligibility for 

enrollment in a QHP in the Exchange 

and for advance payment of the 

premium tax credit or cost-sharing 

reductions, as a request for a fair hearing 

of the denial of Medicaid. This revision 

is intended to avoid the need for an 

individual to request multiple appeals. 

For example, an individual who is 

denied Medicaid and determined 

eligible for enrollment in a QHP with a 

certain level of advance payment of the 

premium tax credit and cost-sharing 

reductions may believe she should 

receive more assistance, but may not 

know in which program she belongs. So 

that individuals in this situation do not 

have to submit two appeals or hearing 

requests—one to the Exchange appeals 

entity and one to the Medicaid agency— 

we propose in § 431.221(e) that if such 

individual appeals the advance payment 

of the premium tax credit or costsharing reductions level, this appeal 

will automatically be treated as an 

appeal of the Medicaid denial, without 

the individual having to file a separate 

fair hearing request with the Medicaid 

agency. We are considering whether a 

later effective date of this provision, 

such as January 1, 2015, is appropriate 

to provide states with sufficient time to 

operationalize the proposed policy. 

When the Medicaid agency has 

delegated the authority to conduct fair 

hearings to the Exchange and the 

individual does not opt to have the 

Medicaid hearing conducted by the 

Medicaid agency, this appeal of the 

Medicaid denial will be adjudicated by 

the Exchange appeal entity. However, 

where the Exchange appeal entity is not 

adjudicating the Medicaid appeal either 

because the individual opts to have a 

hearing at the Medicaid agency or the 

state has not delegated to the Exchange 

the authority to conduct hearings, we 

propose at § 431.244(f)(2) that a decision 

of the Medicaid fair hearing may be 

issued within 45 days from the date the 

Exchange appeals entity issues its 

decision relating to eligibility to enroll 

in a QHP and for advance payment of 

the premium tax credit and cost-sharing 

reductions. 

In making this proposal, we are 

attempting to balance the interest of the 

individual in receiving a timely 

Medicaid hearing decision with the 

recognition that, in many cases, 

Medicaid fair hearings triggered 

automatically by appeals related to 

advance payment of the premium tax 

credit and cost-sharing reductions will 

involve individuals with income 

significantly over the applicable 

Medicaid income standard, who are 

unlikely to be found eligible for 

Medicaid as a result of the appeal. In 

states that have not delegated authority 

to the Exchange to conduct fair 

hearings, or for individuals who opt to 

have a fair hearing before the Medicaid 

agency, waiting to conduct the Medicaid 

fair hearing until the Exchange appeals 

entity has concluded its hearing may 

reduce burden on all parties in these 

cases. Doing so will give the Medicaid 

agency the benefit of the factual record 

developed by the Exchange appeals 

entity, avoiding the potential for 

duplicative, overlapping requests for 

additional information from the 

individual. In addition, permitting the 

appeals to be sequenced in this way will 

enable individuals satisfied with the 

adjudication their Exchange appeal, as 

well as those with income significantly 

above the Medicaid income standard, to 

withdraw their Medicaid fair hearing 

request. This is similar to how an 

individual may withdraw their 

application for Medicaid when 

accepting an advance payment of the 

premium tax credit under 45 CFR 

155.302(b)(4) during an initial eligibility 

determination. We envision that the 

withdrawal of the appeal would be 

permitted in all modalities listed in 

§ 435.907(a). Withdrawal of a Medicaid 

fair hearing request could be effectuated 

through a simple process, for example 

by checking a box on information 

provided with the Exchange appeals 

decision or in connection with the steps 

the individual needs to take to accept 

advance payment of the premium tax 

credit and effectuate enrollment in a 

QHP. If the opportunity for withdrawal 

of the Medicaid fair hearing is not 

provided electronically initially due to 

operational constraints, it could be 

provided by telephone, through paper 

notification, or other commonly 

available electronic means, such as 

email. 

We recognize that there will be 

situations in which consumers’ interests 

would be better served by the Medicaid 

agency initiating the Medicaid fair 

hearing process simultaneously with the 

Exchange appeal—such as in the case of 

an individual determined eligible for 

advance payment of the premium tax 

credit and cost-sharing reductions at an 

income level relatively close to the 

applicable Medicaid income standard— 

and, while this would be permitted, it 

would not be required, under the 

proposed rule. Recognizing the different 

interests of states and consumers in 

different situations, we considered a 

number of approaches to striking the 

optimal balance, including allowing 30 

or 60 days, instead of the proposed 45 

days, from the date the Exchange 

appeals entity makes its decision for the 

Medicaid agency to render its fair 

hearing decision; extending the 90 day 


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timeframe generally permitted for fair 

hearing decisions to 120 days from the 

date the fair hearing was requested; 

allowing for a decision 45 days from the 

date of the Exchange appeals decision or 

120 days from the date the individual 

requested a fair hearing, whichever is 

earlier; and not modifying the 90-day 

timeframe at all. We solicit comments 

on the different approaches. 

Finally, we anticipate that the HHS 

appeals entity will have an informal 

resolution process that will serve as a 

first level of review prior to the 

Exchange appeals entity engaging in a 

formal hearing process, and State-based 

Exchange appeals entities will have the 

option to adopt such a process, as well. 

See 45 CFR 155.535, discussed in 

section III.A. of the preamble of this 

proposed rule. During this process, a 

review of the initial eligibility 

determination made by the Exchange 

will take place, and the individual will 

have the opportunity to submit 

additional evidence related to his or her 

appeal. States that do not delegate 

authority to conduct Medicaid fair 

hearings to the Exchange, will be able to 

utilize the informal resolution process at 

the Exchange, provided that if an 

individual has requested a fair hearing, 

including a fair hearing triggered 

automatically to the Medicaid agency as 

a result of an appeal related to advance 

payment of the premium tax credit and 

cost-sharing reductions, the fair hearing 

before the agency also proceeds 

automatically if the informal process 

does not result in an approval of 

Medicaid eligibility. An informal 

resolution process at the Exchange 

could resolve a number of individual’s 

appeals without conducting a fair 

hearing at the Medicaid agency, even if 

a state has not delegated authority to 

have fair hearings conducted at an 

Exchange. Use of the informal 

resolution process, which would be 

specified in the agreement between the 

Medicaid agency and the Exchange 

consummated in accordance with 

§ 435.1200(b)(3), would not affect the 

timeliness requirements for a final 

hearing decision in § 431.244. 

We propose to revise the definition of 

‘‘electronic account’’ in § 435.4 of the 

Medicaid eligibility final rule to include 

information collected or generated as 

part of a Medicaid fair hearing process 

or Exchange appeals process, so that 

information generated or collected 

during an appeal and any appeals 

decisions will be transferred between 

programs as part of the individual’s 

electronic account. To align with that 

new definition, we modify 

§ 431.242(a)(1)(i) by adding that 

individuals have access to an electronic 

account, as they currently have access to 

a ‘‘case file.’’ 

In situations in which the Medicaid 

agency has delegated to the Exchange 

authority to make eligibility 

determinations and to conduct 

Medicaid fair hearings, we propose 

revisions at § 435.1200(c) to clarify that 

the Medicaid agency must receive and 

accept a decision of the Exchange 

appeals entity finding an individual 

eligible for Medicaid just as it accepts 

determination of Medicaid eligibility 

made by the Exchange. Moreover, as 

provided in the proposed revisions to 

§ 435.1200(c), if the Exchange appeals 

entity to which Medicaid fair hearing 

authority has been delegated has 

adjudicated both an appeal of advance 

payment of the premium tax credit and 

cost-sharing reductions as well as a 

Medicaid denial, a combined appeals 

decision will be required. 

We also propose modifications to 

§ 435.1200(d) originally added by the 

Medicaid eligibility final rule to 

streamline and coordinate processes 

when the Exchange does not determine 

but conducts an assessment of, potential 

Medicaid eligibility. Under 45 CFR 

155.302(b)(4)(i)(A), when the Exchange 

conducts an assessment, and finds an 

individual potentially ineligible for 

Medicaid and eligible for advance 

payment of the premium tax credit, the 

Exchange will provide the individual 

with an opportunity to withdraw the 

Medicaid application. To ensure 

coordination across the entire eligibility, 

enrollment and appeals process, we 

propose to modify § 435.907 by adding 

a new paragraph (h) to automatically 

reinstate the Medicaid application if the 

individual subsequently files an appeal 

related to the determination of their 

eligibility for enrollment in a QHP or for 

advance payment of the premium tax 

credit or cost-sharing reductions, and 

the Exchange appeals entity assesses the 

individual potentially eligible for 

Medicaid. Reinstatement of the 

application for Medicaid would be 

effective as of the date the application 

was initially received by the Exchange. 

Once assessed as potentially Medicaid 

eligible by the Exchange appeals entity, 

the individual’s electronic account 

would be transferred to the Medicaid 

agency per § 435.1200(d) and the 

Medicaid agency would make a final 

determination. If the agency denies 

Medicaid, the individual would have 

the right to request a Medicaid fair 

hearing at that time. We note that this 

scenario would only arise in states that 

have not delegated to the Exchange the 

ability to conduct eligibility 

determinations under § 431.10(c)(1)(i). 

(Revisions to 45 CFR 155.302(b)(4)(A) 

related to reinstatement of a withdrawn 

application are also proposed in this 

rulemaking and are discussed in section 

III.A. of the preamble.) We also note 

that, under the proposed Exchange 

regulation at 45 CFR 155.510(b), 

discussed in section III.A of the 

preamble, the assessment of Medicaid 

eligibility conducted by an Exchange 

appeals entity will be as comprehensive 

as that performed by the Exchange when 

making the underlying assessment of 

Medicaid eligibility under § 155.302(b). 

Under the proposed revisions to 

§ 435.1200(d)(2), we clarify that when a 

Medicaid agency is determining the 

eligibility of an individual who has been 

assessed as potentially eligible for 

Medicaid by an Exchange appeals 

entity, the Medicaid agency may not 

request information or documentation 

from the individual already provided in 

the electronic account, or to the 

applicable insurance affordability 

program or appeals entity; similarly, as 

clarified in § 435.1200(d)(4), the agency 

must accept any finding relating to a 

criterion of eligibility made by another 

insurance affordability program’s 

appeals entity if such finding was made 

in accordance with the same policies 

and procedures as those applied by or 

approved by the Medicaid agency. 

These procedures parallel those adopted 

in the Medicaid eligibility final rule 

with respect to eligibility 

determinations. 

Similar to the revisions proposed at 

§ 435.1200(d), we also propose revisions 

to § 435.1200(e)(1) to provide that when 

an individual has been determined 

ineligible for Medicaid pursuant to a fair 

hearing conducted by the Medicaid 

agency, the agency must assess the 

individual for potential eligibility for 

other insurance affordability programs, 

just as it must do under § 435.1200(e), 

as originally set forth in the Medicaid 

eligibility final rule for individuals 

determined ineligible for Medicaid by 

the agency at initial application or 

renewal. 

Finally, we propose to add a new 

paragraph (g) to § 435.1200, to ensure 

coordination between appeals entities. 

Proposed paragraph (g)(1), which would 

apply regardless of whether the 

Medicaid agency delegates authority to 

conduct any fair hearings to the 

Exchange, directs the Medicaid agency 

to establish a secure electronic interface 

through which: 

• The Exchange appeals entity can 

notify the Medicaid agency that an 

appeal has been filed related to 

eligibility to enroll in a QHP and for 

advance payment of the premium tax 

credit and cost-sharing reductions when 


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such appeal triggers an automatic 

Medicaid fair hearing request; and 

• The individual’s electronic account, 

including information provided by the 

individual to the Medicaid agency 

during the fair hearing process or the 

Exchange appeals entity can be 

transferred between programs or appeals 

entity. 

Under proposed § 435.1200(g)(1), the 

secure electronic interface established 

between the Medicaid agency and 

Exchange may be used for these 

purposes, or a separate secure interface 

directly between the Medicaid agency 

and Exchange appeals entity may be 

established; therefore this provision 

does not propose any new requirements 

on Medicaid agencies. When the 

Exchange appeals entity conducts a 

Medicaid fair hearing on an individual’s 

Medicaid denial, no notification or 

transfer of information through such 

interface would be needed at the point 

the individual files the appeal. 

Under proposed § 435.1200(g)(2), the 

Medicaid agency must ensure that, as 

part of a Medicaid fair hearing 

conducted under part 431 subpart E, the 

Medicaid agency does not request 

information or documentation from the 

individual already included in the 

individual’s electronic account or 

provided to the Exchange or Exchange 

appeals entity. We propose in 

§ 435.1200(g)(3) that the Medicaid 

agency transmit its Medicaid fair 

hearing decision to the Exchange in two 

situations: (1) When an individual had 

been initially determined ineligible for 

Medicaid by the Exchange, in 

accordance with a delegation of 

authority under § 431.10(c)(i); and (2) 

when an individual who was initially 

determined to be ineligible for Medicaid 

by the Medicaid agency had his or her 

account transferred to the Exchange 

under § 435.1200(e) for evaluation of 

eligibility and financial assistance 

through the Exchange and the 

individual had a fair hearing conducted 

by the Medicaid agency. Because such 

individuals may have enrolled in a QHP 

through the Exchange and be receiving 

advance payment of the premium tax 

credit and/or cost-sharing reductions 

pending the outcome of the Medicaid 

fair hearing, the Exchange will need to 

know the outcome of the Medicaid fair 

hearing so that it will know whether to 

terminate or continue advance payment 

of the premium tax credit and costsharing reductions. 

We also make conforming 

amendments to § 435.1200(b) related to 

the coordination of appeals between the 

Medicaid agency and the Exchange and 

Exchange appeals entity. We propose to 

modify § 435.1200(b)(1) to incorporate 

new paragraph (g) in the delineation of 

general requirements that the Medicaid 

agency must meet to effectuate a 

coordinated eligibility system and to 

revise § 435.1200(b)(3)(i) to clarify that 

the goal of minimizing burden on 

consumers through coordination of 

insurance affordability programs also 

relates to coordination of appeals 

processes. Proposed revisions to 

§ 435.1200(b)(3)(ii) provide that the 

agreement entered into between the 

Medicaid agency and the Exchange 

must ensure compliance with new 

paragraph (g). 

Finally, it is important to note that 

under the proposed Exchange 

regulations at 45 CFR 155.302(b)(5), if 

the decision made by the Exchange 

appeals entity conflicts with a decision 

made by the Medicaid agency regarding 

an individual’s Medicaid eligibility, the 

decision of the Medicaid agency takes 

precedence and is binding on the 

Exchange, just as a determination of 

eligibility or ineligibility made by the 

Medicaid agency takes precedence over 

an assessment made by the Exchange. 

(b) Related Changes to the Medicaid 

Appeals Process (§§ 431.200, 431.201, 

431.205, 431.206, 431.211, 431.213, 

431.220, 431.221, 431.224, 431.230, 

431.231, 431.232, 431.240, 431.241, 

431.242, and 431.244) 

We propose the following 

modifications to our current fair hearing 

regulations at § 431.200, et seq., to align 

with the changes described above, to 

modernize our regulations, and to 

clarify certain provisions consistent 

with the Medicaid eligibility final rule. 

We propose to: 

• Revise § 431.200 to list sections 

1943(b)(3) of the Act and 1413 of the 

Affordable Care Act as statutory 

authority for establishing a system and 

procedures to coordinate eligibility, 

including eligibility appeals that result 

in a final decision about an individual’s 

eligibility. 

• Add a definition for ‘‘local 

evidentiary hearing’’ to § 431.201 to 

clarify terminology in our regulations. 

• Modify § 431.220(a)(1) to clarify 

that a hearing is required when an 

applicant requests it because the 

Medicaid agency has denied the 

individual’s eligibility, level of benefits, 

services, or claim or if the Medicaid 

agency has failed to act with reasonable 

promptness, as required by section 

1902(a)(3) of the Act. We specify that a 

determination of eligibility would 

include, if applicable, a determination 

of a spend down liability or a 

determination of income used to impose 

any premiums, enrollment fees, or cost 

sharing under part 447 of this 

subchapter. We intend these 

modifications as clarifications and do 

not believe they reflect a change in 

policy. We modify the definition of 

action at § 431.201, when information 

be provided at § 431.206, and the issues 

to be considered at a hearing at 

§ 431.241(a) and (b) to align with the 

modification of § 431.220 and do not 

believe that these changes reflect a 

change in policy. 

• Modify § 431.221 to allow an 

individual to request a hearing 

consistent with the ways in which an 

application may be filed: (1) By 

telephone; (2) by mail; (3) in person; (4) 

through other commonly available 

electronic means; and (5) at state option, 

via the Internet Web site at 

§ 435.1200(f). We expect other 

commonly available electronic means to 

include requesting a fair hearing by 

email, and could include facsimile or 

other electronic systems commonly 

available. In contrast to the final 

Medicaid eligibility rule policy related 

to filing applications and renewal forms 

at §§ 435.907 and 435.916, we have 

proposed using the Internet Web site at 

§ 435.1200(f) as a state option in light of 

the operations implications of requiring 

this method for requesting a hearing. We 

are considering instead making this 

option a requirement at a date sometime 

after January 2014 to allow time for 

implementation and we solicit 

comments on this proposal. 

• Add § 431.224, ‘‘Expedited 

Appeals’’ to align our fair hearing 

process at § 431.200, et seq, with that 

already established for appeals in 

managed care at § 438.410, to permit an 

individual who has an urgent health 

need to have their appeal addressed 

under expedited timeframes. We do not 

anticipate that this will be difficult to 

administer or significantly add to state 

costs as states can use existing 

mechanisms such as notices they are 

already issuing to individuals to 

implement this provision. 

• Modify § 431.231 to align the date 

an individual is considered to receive 

notice under this section with that 

proposed for the notice of reasonable 

opportunity period in proposed 

§ 435.956, discussed in section I.B.7 of 

the preamble, to promote consistency 

and ease of administration. We propose 

that the date on which the notice is 

received is considered to be 5 days after 

the date on the notice, unless the 

individual shows that he or she did not 

receive the notice within the 5-day 

period. Five days from the date of notice 

is the standard period used by Social 

Security Administration for the 

Supplemental Security Income (SSI) 

(Title XVI) and Old Age and Disability 


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(Title II) programs to account for 

mailing a notice and receipt by the 

individual (see 20 CFR 416.1401, 20 

CFR 404.901, respectively). This is also 

the standard used by the Exchange in 45 

CFR 155.315(c)(3) regarding notices sent 

to resolve inconsistencies during the 

verification process for citizenship, 

status as a national, and lawful 

presence. 

• Modify § 431.232 to clarify that the 

agency will inform an applicant or 

beneficiary that he or she has 10 days 

from the notice of an adverse decision 

of a local evidentiary hearing to appeal 

that decision. We also adopt in 

proposed § 431.232 the language 

discussed above related to the date an 

individual is considered to receive 

notice. 

• Modify § 431.240 to specify that a 

hearing officer must have access to the 

agency’s information, such as state 

policies and regulations necessary to 

issue a proper hearing decision, 

consistent with our proposed regulation 

to permit delegation of authority to the 

Exchange to conduct fair hearings at 

§ 431.10(c) and (e). 

• Modify § 431.242 to align our 

regulations related to an individual’s 

ability to review an individual case file, 

to include an individual’s ability to 

review his or her electronic account, as 

defined at § 435.4. 

• Modify existing regulations at 

§ 431.244(f)(1) to clarify that the 90-day 

timeframe to issue a decision after an 

individual files an appeal applies 

broadly to appeals decisions, not only to 

managed care appeals decisions. This 

text was inadvertently deleted in a 

previous rulemaking. This codifies this 

long-standing policy and does not 

reflect a change in policy. 

• Revise § 431.244(f)(2) to modify the 

appeals decision timeframe to account 

for the expedited appeals process being 

proposed at § 431.224, aligning with the 

existing expedited decision process for 

managed care appeals decisions at 

§ 431.244(f)(2) and (f)(3). 

(c) Applicability to CHIP (§§ 457.10, 

457.340, 457.348, 457.350, 457.1180, 

457.351) 

Revisions to the regulations for CHIP 

are proposed to achieve similar 

coordination of appeals among 

insurance affordability programs and to 

minimize burden on consumers. 

Regulations governing the CHIP appeals, 

or ‘‘review’’ process, are set forth at 

subpart K of part 457 of the current 

regulations. Under § 457.1120, states 

currently have broad flexibility to 

delegate the CHIP review process, and 

no revision to permit delegation of 

review authority to the Exchange or 

Exchange appeals entity is needed. To 

effectuate the same coordination of 

CHIP appeals with other insurance 

affordability programs, as is proposed 

with respect to Medicaid fair hearings, 

a new § 457.351 (Coordination involving 

appeals entities for different insurance 

affordability programs) is proposed. 

Conforming changes to existing CHIP 

regulations are also proposed. 

• Under § 457.10, we propose to 

revise the definition of electronic 

account to include any information 

collected or generated as part of a 

review, and to add the definition of 

exchange appeals entity, similar to the 

revision to the definition in the 

Medicaid regulations at § 435.4. 

• Section 457.340 (Application for 

and enrollment in CHIP) is revised to 

include provision of notice of an 

individual’s right to review, consistent 

with § 457.1180 and to apply 

§ 435.907(h), proposed for addition to 

the Medicaid regulation in this 

rulemaking (Reinstatement of 

withdrawn applications) to CHIP. 

• Section 457.348, related to the 

provision of CHIP for individuals found 

eligible by other insurance affordability 

programs, is revised to include 

individuals found eligible as a result of 

a decision made by the Exchange 

appeals entity authorized by the state to 

adjudicate reviews of CHIP eligibility 

determinations, similar to the revisions 

proposed for the Medicaid regulations at 

§ 435.1200(c) and to apply the 

provisions for transfer of information 

via secure electronic interface, similar to 

the revisions proposed for Medicaid 

regulations at § 435.1200 (d). 

• Proposed revisions to § 457.350 

apply the rules for eligibility screening 

and enrollment in other insurance 

affordability programs to individuals 

determined not eligible for CHIP 

pursuant to a review conducted in 

accordance with subpart K of this part, 

similar to the revisions proposed for the 

Medicaid regulations at § 435.1200(e). 

• Section 457.1180 is revised to 

propose that states treat an appeal to the 

Exchange appeals entity of a 

determination of eligibility for advanced 

payments of the premium tax credit or 

cost-sharing reductions as a request for 

a review of a denial of CHIP eligibility, 

if the individual was denied eligibility 

for CHIP by the state or other entity 

authorized to make such determination, 

similar to the revisions proposed for the 

Medicaid regulations at § 431.221(e). 

2. Notices 

An effective notification process is 

important to a high quality consumer 

experience and a coordinated eligibility 

and enrollment system, as provided for 

under section 1413 of the Affordable 

Care Act and section 1943 of the Act. 

Without revisions to current regulations, 

many individuals could receive 

multiple, uncoordinated notices from 

the different programs. Someone 

applying through the Exchange who is 

assessed as potentially eligible for 

Medicaid, for example, could receive a 

notice from both Medicaid (approving 

Medicaid) and the Exchange (denying 

advance payment of the premium tax 

credit and cost-sharing reductions). 

Under current rules, if the Medicaid 

agency disapproves rather than 

approves eligibility for an individual 

assessed by the Exchange as potentially 

Medicaid eligible, the individual could 

receive 3 notices (from the Exchange 

denying advance payment of the 

premium tax credit and cost sharing 

reductions, from the Medicaid agency 

denying Medicaid, and subsequently 

from the Exchange reversing its earlier 

denial of advance payment of the 

premium tax credit and cost sharing 

reductions). 

To avoid confusion for consumers and 

duplicative administrative activity we 

propose that, to the maximum extent 

feasible, state Medicaid and CHIP 

agencies and the Exchange produce a 

single combined notice after all MAGIbased eligibility determinations have 

been made. We are also proposing to 

add basic content and accessibility 

standards for all eligibility notices, and 

to ensure that electronic eligibility 

notices are available as an option for 

applicants and beneficiaries. To ensure 

that the federal rules for all programs 

are aligned, we are proposing similar 

regulations for the Exchange. See 

§ 155.230 and § 155.345, discussed in 

section III of the preamble. However, as 

described below, given the time needed 

to allow for systems builds, the 

requirement to provide a combined 

eligibility notice will not be effective 

until January 1, 2015. 

(a) Content and Accessibility Standards 

(§ 435.917 and § 435.918) 

We are proposing to redesignate and 

revise § 435.913 at proposed § 435.917 

to clarify the state agency’s 

responsibilities to communicate specific 

content in a clear and timely manner to 

applicants and beneficiaries when 

issuing either a notice of approved 

eligibility or a notice of denial or other 

adverse action. We also propose to 

delete § 435.919 and to move the 

provisions now contained therein to 

proposed § 435.917. 

Per proposed § 435.917(a), eligibility 

notices must be written in plain 

language and be accessible to 

individuals who are limited English 


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proficient and individuals with 

disabilities and comply with regulations 

relating to notices in part 431 subpart E 

and, if provided in electronic format, 

with § 435.918, newly proposed in this 

rulemaking. Notices of an approval of 

Medicaid eligibility must include clear 

and specific content, as specified in 

proposed § 435.917(b)(1). 

Proposed § 435.917(b)(2) cross 

references § 431.210 for the specific 

notice content required for an adverse 

action—including a denial, termination, 

suspension of or change in eligibility, or 

a change in benefits or services. 

Revisions to § 431.210 are proposed to 

achieve similar clarity and transparency 

for notices of adverse actions as are 

proposed for notices of an approval of 

Medicaid eligibility. We note that a 

citation of the specific regulation(s) that 

support the action, as required by 

§ 431.210(c), does not satisfy the 

requirement to provide ‘‘a clear 

statement’’ explaining the adverse 

action under § 431.210(a), as revised in 

this proposed rulemaking. CMS will 

work with states and other stakeholders 

to develop model notices meeting the 

requirements of the regulations. 

Proposed § 435.917(c) directs that all 

eligibility notices relating to a 

determination of eligibility based on the 

applicable MAGI standard include a 

plain language description of other 

bases of eligibility (such as disability, 

long-term care services need, or 

incurred medical expenses for 

medically needy coverage) as well as the 

level of benefits and services to which 

someone eligible on such other bases is 

entitled. The information provided must 

be sufficient to enable individuals to 

make an informed decision as to 

whether or not to seek a determination 

of eligibility on a MAGI-excepted basis. 

We note that both individuals who are 

approved for, as well as those who are 

denied, Medicaid on the basis of the 

applicable MAGI standard should be 

provided the information specified, as 

eligibility on another basis may better 

meet the individual’s needs. We solicit 

comments on the level of detail which 

should be required for inclusion in the 

notice under § 435.917(c). 

Current notice regulations require 

paper-based, written notices. New 

proposed § 435.918 would maintain the 

requirement for paper-based written 

notices, but would also require states to 

provide individuals with the option to 

receive notices through a secure 

electronic format in lieu of written 

notice by regular mail, which remains 

the default method of notice provision. 

Per proposed § 435.918, after an 

individual elects electronic notification, 

the agency would send a paper 

notification informing the individual of 

his or her election to receive eligibility 

notices electronically. The agency 

would post notices to the individual’s 

secure electronic account, notifying the 

individual by text message, email, or 

other electronic communication that a 

notice had been posted and directing 

the individual to check his or her 

account. We considered permitting 

individuals applying on-line to provide 

electronic confirmation of their election, 

but believe that confirmation via regular 

mail provides stronger consumer 

protection. We welcome comment on 

this, and other consumer safeguards for 

electronic notification. Also, we 

recognize that in addition to eligibility 

notices, there are other communications 

that occur between the applicant/ 

beneficiary and the Medicaid or CHIP 

agency. These communications include 

requests for additional information, 

annual renewal forms and reminders, 

premium payment information, changes 

in benefits or covered services, etc. We 

are considering whether all or some of 

these should be available to the 

consumer electronically by posting to 

the electronic account and seek 

comment. 

As described above, newly proposed 

§ 435.917(a), which establishes content 

and accessibility standards for Medicaid 

notices, requires that notices comply 

with the provisions in § 435.918, if 

provided in electronic format. In 

addition, paragraph (c)(5), which is 

proposed for addition to § 431.206, 

relating to the agency’s responsibility to 

inform applicants and beneficiaries of 

adverse actions, includes a provision to 

permit electronic notices consistent 

with § 435.918. We have also modified 

§§ 431.211, 431.213, 431.230, and 

431.231 to update and modernize the 

language in the regulation to remove the 

term ‘‘mail’’ and instead use ‘‘send,’’ 

which will still require states to provide 

paper-based written notices, but also 

permit states to offer beneficiaries the 

option of receiving notices 

electronically, after obtaining consent 

from the individual, consistent with the 

consumer protections in proposed 

§ 435.918. 

(b) Provision of Coordinated Notice— 

Medicaid Agency Responsibilities 

(§ 435.1200) 

We propose revisions to the Medicaid 

eligibility final rule to provide for a 

coordinated system of notices across all 

insurance affordability programs based 

on MAGI, regardless of where the 

individual initially submits an 

application or whether the Exchange is 

authorized to make Medicaid and CHIP 

eligibility determinations. Under the 

proposed rule, to the maximum extent 

feasible, individuals will receive a 

single notice communicating the 

determination or denial of eligibility for 

all applicable insurance affordability 

programs and for enrollment in a QHP 

through the Exchange, rather than 

separate notices from the Medicaid and/ 

or CHIP agencies and the Exchange. 

Our proposal is effectuated primarily 

in revisions to § 435.1200, as published 

in the Medicaid eligibility final rule. In 

support of our proposed policy, we also 

propose to add definitions of ‘‘combined 

eligibility notice’’ and ‘‘coordinated 

content,’’ in § 435.4. ‘‘Combined 

eligibility notice’’ is an eligibility notice 

that informs an individual, or 

household when appropriate, of his or 

her eligibility for multiple insurance 

affordability programs, including all or 

most of the information required for 

inclusion per proposed § 435.917 and 

§ 431.210, as revised in this proposed 

rule. ‘‘Coordinated content’’ refers to 

information included in an eligibility 

notice relating to the transfer of the 

individual’s electronic account to 

another program, and the status of that 

other program’s review of the account. 

Coordinated content will be important 

when the eligibility determination for 

all programs cannot be finalized for 

inclusion in a single coordinated notice. 

In § 435.1200, we propose adding sub 

paragraph (b)(3)(iv) to provide that the 

agreements between the Medicaid 

agency and other insurance affordability 

programs delineate the responsibilities 

of each program to provide combined 

eligibility notices and coordinated 

content, as appropriate. We note that 

under these agreements, the Medicaid 

and CHIP agencies and the Exchange 

must work together to provide, to the 

maximum extent possible, a single 

combined notice of eligibility that 

includes all family members of the same 

household applying for coverage 

together. We include at paragraph (d) of 

proposed § 435.917, discussed generally 

in section I.B.2.a of the preamble, above, 

that the agency’s responsibility to 

provide an eligibility notice is satisfied 

by a combined notice provided by the 

Exchange or another insurance 

affordability program pursuant to an 

agreement between the agency and the 

Exchange or such program. 

We propose to add sub paragraph (3) 

to § 435.1200(c) to provide that when 

the Exchange or other agency 

administering an insurance affordability 

program is authorized to, and does 

make, a determination of Medicaid 

eligibility, the agreement described in 

paragraph (b)(3) stipulates that the 

Exchange or other agency will provide 

the applicant with a combined 


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eligibility notice including information 

about the individual’s Medicaid 

eligibility (approval or denial). For 

example, if the Exchange receives an 

application and determines the 

applicant eligible for Medicaid, the 

Exchange will issue a combined notice 

including information related both to 

the approval of Medicaid eligibility and 

the denial of eligibility for advanced 

payments of the premium tax credit and 

cost-sharing reductions. 

We propose for clarity to redesignate 

paragraph § 435.1200(d)(5) at paragraph 

(d)(2) and to redesignate the other 

paragraphs of paragraph (d) accordingly. 

We further propose to revise 

redesignated § 435.1200(d)(4) to add 

new language at clause (d)(4)(i) to 

specify that, when an individual is 

assessed by the Exchange or other 

program as potentially Medicaid eligible 

and is transferred to the Medicaid 

agency for a final determination, if the 

Medicaid agency approves eligibility, 

the Medicaid agency will provide the 

combined eligibility notice for all 

applicable programs. For example, if the 

Exchange assesses an individual as 

potentially Medicaid eligible and 

transfers the individual’s electronic 

account to the Medicaid agency, and the 

agency approves eligibility, the agency 

would issue a combined notice, 

including information related to the 

approval of Medicaid eligibility as well 

as the denial of eligibility for advance 

payment of the premium tax credit and 

cost-sharing reductions. 

Finally, we propose revisions to 

§ 435.1200(e) to provide at new 

paragraph (e)(1)(ii) that the Medicaid 

agency include in the agreement 

consummated under § 435.1200(b)(3) 

that the Exchange or other program will 

issue a combined eligibility notice, 

including the Medicaid agency’s denial 

of Medicaid eligibility, for individuals 

denied eligibility by the agency at initial 

application (or terminated at renewal) 

and assessed and transferred to the 

Exchange or other insurance 

affordability program as potentially 

eligible for such program. For example, 

if the Medicaid agency determines that 

an individual is not Medicaid eligible, 

but transfers the individual’s account to 

the Exchange as potentially eligible for 

enrollment in a QHP, the Exchange 

would issue a combined notice of the 

individual’s eligibility for enrollment in 

a QHP, advance payment of the 

premium tax credit, cost-sharing 

reductions, and the denial of Medicaid. 

Our proposed policy of a single 

combined eligibility notice does not 

apply in the case of individuals 

determined eligible on a basis other 

than MAGI, because the Medicaid 

agency may be continuing its evaluation 

of an individual’s eligibility on such 

other bases at the same time that the 

individual is being evaluated for, or is 

enrolled in, another insurance 

affordability program pursuant to 

§ 435.911(c)(2) of the Medicaid 

eligibility final rule. In such cases, 

while a single, combined notice 

containing the agency’s final 

determination on all bases would not be 

required, per proposed 

§ 435.1200(e)(2)(ii), the Medicaid agency 

would provide notice to the individual, 

in accordance with § 431.210(a) and 

§ 435.917, that the agency has 

determined the individual ineligible for 

Medicaid on the basis of MAGI, and that 

the agency is continuing to evaluate 

Medicaid eligibility on other bases. 

Under the proposed regulation, this 

notice also would contain coordinated 

content advising the applicant that the 

agency has assessed the individual as 

potentially eligible for, and transferred 

the individual’s electronic account to, 

another program. Proposed 

§ 435.1200(e)(2)(iii) requires the agency 

to provide the individual with notice of 

the final eligibility determination on the 

non-MAGI bases considered. If the 

individual is later determined eligible 

for Medicaid on a basis other than 

MAGI, the individual would receive a 

combined notice that includes 

information of the approval of Medicaid 

eligibility and ineligibility for advance 

payment of the premium tax credit and 

cost-sharing reductions. 

There are a few additional situations 

we have identified under the proposed 

regulation in which a single notice will 

not be required—in such situations 

notices would include coordinated 

content appropriate to the situation. 

First, when an individual who is 

assessed by the Exchange as not 

potentially Medicaid eligible based on 

MAGI and determined eligible for 

advance payment of the premium tax 

credit and cost-sharing reductions, a 

notice of eligibility for advance payment 

of the premium tax credit and costsharing reductions (issued by the 

Exchange) will be needed. If the 

individual requests a full determination 

of Medicaid or CHIP eligibility by the 

state agency, as permitted under the 

Exchange final regulation at 

§ 155.302(b)(4)(B), a second notice will 

be needed once the Medicaid or CHIP 

agency has made a decision on the 

application. Depending on whether the 

state agency approves or denies 

Medicaid or CHIP, either a coordinated 

notice or coordinated content with 

information relating to the individual’s 

eligibility for advance payment of the 

premium tax credit and cost-sharing 

reductions will be needed. 

Second, when different members of 

the same household are determined 

eligible for different programs, a single 

combined notice for all members of the 

household may not be feasible. In such 

situations, as described in 

§ 435.1200(b)(4), notices would include 

appropriate coordinated content related 

to the status of other members of the 

individual’s household. We welcome 

comments as to whether there are other 

situations, besides the two situations 

identified, when a combined eligibility 

notice is not feasible. 

We also note that, in consultation 

with states, consumer groups and plainlanguage experts, we intend to develop 

language to be released in 2013, which 

could be adapted by states as a model 

for delivering combined eligibility 

notices. Because some states have 

specific content which will need to be 

included in notices issued by an 

Exchange in their state, state Medicaid 

and CHIP agencies will work with the 

Exchange on any state-specific content 

to be included in a combined notice 

and/or may issue supplementary notices 

if the Exchange is unable to deliver all 

required state-specific content. 

Finally, given the time needed to 

allow for systems builds, we are 

proposing that the policy to provide a 

combined eligibility notice will not be 

effective until January 1, 2015. At state 

option, based on the operational 

readiness of all programs, combined 

eligibility notices may be implemented 

earlier. States with an FFE will only be 

able to provide a combined eligibility 

notice prior to January 1, 2015 for 

eligibility determinations made by the 

FFE. In the absence of a combined 

eligibility notice, coordinated content 

ensures that applicants and 

beneficiaries are informed of the status 

of their application with respect to other 

insurance affordability programs. We 

also considered a later effective date of 

October 15, 2015 for the requirement to 

provide a combined eligibility notice in 

all circumstances provided for in the 

proposed rule, which would coincide 

with the beginning of open enrollment 

for January 2016. We welcome 

comments on the proposed effective 

date of January 1, 2015 and the later 

effective date of October 15, 2015. 

We also make a technical correction 

to § 435.1200. We update paragraph (a) 

to correct an erroneous statutory 

citation. 


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(c) CHIP Eligibility Notices and 

Information Requirements (§§ 457.10, 

457.110, § 457.340, 457.348 and 

457.350) 

We propose to modernize and amend 

the existing CHIP regulations pertaining 

to notices at § 457.110 and § 457.340(e) 

to correspond to the regulation changes 

and additions proposed for Medicaid at 

§ 435.917, and § 435.918. We also 

propose to add a definition of 

‘‘combined notice’’ and ‘‘coordinated 

content’’ in § 457.10 and to revise 

paragraphs (a), (b), (c) and (d) of 

§ 457.348 and paragraphs (f) and (i) in 

§ 457.350 to mirror the proposed 

revisions to the Medicaid regulations in 

§ 435.1200 (b), (c), (d), and (e) to 

maximize achievement of a system of 

coordinated notices across all insurance 

affordability programs, including CHIP. 

Per proposed § 457.350(f)(3), we seek 

to clarify that the requirement that a 

state find an individual ineligible, 

provisionally ineligible, or suspend the 

individual’s application for CHIP unless 

and until the Medicaid application for 

the individual is denied applies only at 

application. We propose to clarify this 

provision in response to concerns 

expressed by states that if this provision 

is applied to CHIP enrollees at 

redetermination, a gap in coverage 

could result. 

We also propose to update 

§ 457.350(g), relating to the states’ 

responsibility to provide information to 

CHIP applicants regarding the Medicaid 

program, to extend to all insurance 

affordability programs. We also propose 

to update § 457.350(h)(2), which 

describes the state’s responsibility to 

inform a CHIP applicant on a waiting 

list that if circumstances change, the 

applicant may be eligible for other 

insurance affordability programs, in 

addition to Medicaid, so that the 

Exchange, Medicaid, and CHIP can 

work together to ensure that eligible 

applicants are enrolled in the 

appropriate program. 

A technical correction is made to 

§ 457.350(b). We update paragraph (b) to 

clarify that the requirement to screen for 

potential eligibility for other insurance 

affordability programs applies to any 

applicant or enrollee who submits an 

application or renewal form to the state 

which included sufficient information 

to determine CHIP eligibility. This 

includes not only those determined 

ineligible for CHIP but also individuals 

subject to a waiting period or those 

screened as not potentially eligible for 

Medicaid based on MAGI and enrolled 

in CHIP but also assessed as potentially 

eligible for Medicaid on another basis 

and referred to the Medicaid agency for 

a full Medicaid determination. 

3. Medicaid Eligibility Changes Under 

the Affordable Care Act 

(a) Former Foster Care Children 

(§ 435.150) 

Sections 2004 and 10201(a) and (c) of 

the Affordable Care Act add a new 

section 1902(a)(10)(A)(i)(IX) of the Act, 

under which states must provide 

Medicaid coverage starting in 2014 for 

individuals under age 26 who were in 

foster care and receiving Medicaid. Note 

that states still have the option to cover 

a similar eligibility group for 

independent foster care adolescents, 

which has slightly different 

requirements (see § 435.226 of this 

proposed rule). 

Consistent with the statute, we 

propose to add § 435.150 establishing 

this new mandatory eligibility group for 

individuals who: 

• Are under age 26; 

• Are not eligible for and enrolled in 

mandatory Medicaid coverage under 

sections 1902(a)(10)(A)(i)(I) through 

(VII) of the Act, eligibility under which 

is codified in §§ 435.110 through 

435.118 and §§ 435.120 through 435.145 

of subpart B of the regulations; and 

• Were in foster care under the state’s 

or tribe’s responsibility (whether or not 

under title IV–E of the Act) and also 

enrolled in Medicaid under the state’s 

Medicaid state plan or 1115 

demonstration (or at state option were 

in foster care and Medicaid in any state 

rather than ‘‘the’’ state where the 

individual is now residing and applying 

for Medicaid) when the individual 

attained age 18 or such higher age at 

which the state’s federal foster care 

assistance ends under title IV–E of the 

Act. 

We are proposing an interpretation of 

the statute that an individual qualifies 

for this mandatory Medicaid coverage if 

the individual was concurrently 

enrolled in foster care and Medicaid 

either when attaining age 18 or at the 

point of ‘‘aging out’’ of foster care. This 

interpretation is based on the statute’s 

use of the word ‘‘or’’ to permit either 

alternative. We considered a different 

interpretation that would limit 

eligibility to individuals who ‘‘age out’’ 

of foster care. Among the states that 

have extended foster care programs 

beyond age 18, all but two states end 

foster care at age 21. 

The statute requires that an individual 

be in foster care under the responsibility 

of ‘‘the state’’ and be enrolled in 

Medicaid under ‘‘the state plan’’ or an 

1115 demonstration. In this proposed 

rule, we are interpreting that 

requirement as meaning that the 

individual was in foster care and 

enrolled in Medicaid in the same state 

in which coverage under this eligibility 

group is sought. However, we are 

proposing to give states the option to 

cover individuals under this group who 

were in foster care and Medicaid in any 

state at the relevant point in time. We 

request comments on this interpretation 

of the statute. 

In accordance with the statute, there 

is no income or resource test for this 

group. Individuals may apply and be 

determined eligible at any time between 

attaining age 18 and losing eligibility 

under this group upon attaining age 26. 

In accordance with longstanding general 

Medicaid policy clarified at § 435.916(f) 

of the Medicaid eligibility final rule, 

when an individual loses eligibility 

under this group, coverage shall not be 

terminated unless the individual is not 

eligible under any other group (for 

example, the new adult group at 

§ 435.119 of the Medicaid eligibility 

final rule.) 

Eligibility under the adult group at 

§ 435.119 of the regulations (as specified 

in the March 23, 2012 Medicaid 

eligibility final rule) will not take 

precedence over coverage under the 

mandatory group of former foster care 

children. In accordance with the second 

subclause (XVI) in the matter following 

subparagraph (G) of section 1902(a)(10) 

of the Act, as added by section 

10201(a)(2) of the Affordable Care Act, 

individuals eligible for both the former 

foster care group and the adult group 

should be enrolled in the former foster 

care group. 

(b) Financial Methodologies for 

Individuals Excepted From Application 

of MAGI-Based Methodologies 

(§ 435.601 and § 435.602) 

Due to changes in the Affordable Care 

Act, we propose technical amendments 

to § 435.601(b) and § 435.602(a) to 

specify that these sections, related to 

general application of financial 

eligibility methodologies and financial 

responsibility of relatives and other 

individuals, only apply to individuals 

excepted from application of the MAGIbased methodologies in accordance with 

§ 435.603(j). Also, as required by section 

1902(e)(14)(B) of the Act, which 

prohibits income disregards other than 

those expressly included in MAGI 

methodologies for the MAGI-related 

populations, we propose to amend 

paragraph (d) of § 435.601 to remove 

‘‘MAGI-related’’ eligibility groups 

(financial eligibility for which will be 

determined using MAGI-based 

methodologies set forth in § 435.603) 

from the groups to which a state may 


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use the authority of section 1902(r)(2) of 

the Act to adopt less restrictive income 

and resource methodologies than those 

under the most-closely related cash 

assistance program. 

(c) Family Planning (§ 435.214) 

Section 2303 of the Affordable Care 

Act adds new sections 

1902(a)(10)(A)(ii)(XXI) and 1902(ii) of 

the Act, as well as the first new clause 

(XVI) in the matter following 

1902(a)(10)(G) (there are two paragraph 

(XVI)s; the first is the one related to 

family planning), under which states 

have the option to provide Medicaid 

coverage to women and men that is 

limited to family planning or family 

planning related services under the state 

plan. 

Consistent with the statute, we 

propose to add § 435.214 establishing 

this new eligibility group for 

individuals who: 

• Are not pregnant; 

• Have income that does not exceed 

the income eligibility level established 

by the state, as discussed below. Section 

1902(ii)(1) specifically allows for 

income eligibility up to the highest 

income eligibility level established by 

the state for pregnant women in the 

Medicaid or CHIP state plan. We have 

interpreted this to also include the 

income level established by the state for 

pregnant women under the state’s 

Medicaid or CHIP demonstration 

approved under the authority of section 

1115 of the Act. 

Because section 1902(e)(14) applies a 

‘‘notwithstanding any other provision of 

Title XIX,’’ and individuals eligible for 

family planning are not an exempt 

group listed at 1902(e)(14)(D), beginning 

January 1, 2014, financial eligibility for 

this group will be determined using the 

MAGI-based methodologies set forth at 

§ 435.603 of the regulations. However, 

section 1902(ii)(3) of the Act, permits 

states to consider only the income of the 

individual applying for family planning 

benefits in determining eligibility under 

this section. Accordingly, at § 435.603 

we are proposing to codify the current 

policy outlined in the July 2, 2010 state 

Medicaid Director Letter (http:// 

downloads.cms.gov/cmsgov/archiveddownloads/SMDL/downloads/ 

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defined.). Under this policy about 

determining financial eligibility for the 

new eligibility group at proposed 

§ 435.214, states may consider the 

individual’s household to consist only 

of the individual, may consider only the 

income of the individual applying for 

coverage (while retaining other 

members of the household for purposes 

of determining family size), and may 

increase the family size used for 

determining eligibility for coverage 

under this group by one, similar to the 

increase in family size for pregnant 

women. 

Finally, we are proposing to amend 

the definition of a targeted low income 

child at § 457.310(b)(2) to indicate that 

eligibility for limited coverage of family 

planning services under § 435.214 does 

not preclude an individual from being 

eligible for CHIP. In circumstances 

where an individual is enrolled in both 

CHIP and Medicaid family planning 

coverage, Medicaid would be secondary 

payer to CHIP in accordance with 

1902(a)(25) of the Act and 42 CFR 433 

Subpart D. 

4. Medicaid Enrollment Changes Under 

the Affordable Care Act Needed to 

Achieve Coordination With the 

Exchange 

(a) Certified Application Counselors 

(§ 435.908 and § 457.330) 

Some individuals require assistance 

with completing an application, 

enrolling in coverage or with ongoing 

communications with the agency once 

determined eligible. While many may 

seek informal assistance with 

applications from friends or relatives, 

others may seek assistance from trusted 

community-based organizations, 

providers, or other organizations with 

expertise in social service programs. 

Staff and volunteers from such 

organizations provide important 

assistance in completing application 

and renewal forms, and in explaining 

and helping individuals to meet any 

documentation requirements, but do not 

sign forms, receive notices or other 

communications, or otherwise act on 

behalf of the individual being assisted. 

Individuals able to perform those types 

of functions (often a family member, 

legal guardian, or attorney) are referred 

to as ‘‘authorized representatives’’ and 

are discussed in the next section, below. 

Many state Medicaid and CHIP 

agencies have a long history of enabling 

providers and other organizations to 

serve as ‘‘application assisters,’’ which 

we refer to in this proposed rulemaking 

as ‘‘application counselors’’ to provide 

such direct assistance to individuals 

seeking coverage, and these counselors 

play a key role in promoting enrollment 

among low-income individuals. These 

proposed regulations seek to ensure that 

application counselors, who we expect 

to continue to play an essential role in 

many states, will have the training and 

skills necessary to provide reliable, 

effective assistance to consumers, and 

that they will meet the confidentiality 

requirements that apply to the data they 

will be able to access in their role as 

assisters, including those established in 

accordance with section 6103 of the 

Internal Revenue Code and section 

1902(a)(7) of the Act. 

We anticipate that, beginning with the 

initial open enrollment period, an 

increasing number of individuals will 

seek to apply for coverage on line, and 

while some states already have web 

infrastructure which allows application 

counselors to track their clients’ 

applications and manage caseloads, we 

expect that practice to increase as states 

improve their electronic application 

systems. Other applicants may still 

submit applications on paper. The 

proposed regulation recognizes the role 

that may be played by application 

counselors in helping individuals with 

the process through either the paper or 

online channels. 

To effectively provide application 

assistance, counselors may have access 

to personal data, including tax data from 

the Internal Revenue Service that is 

subject to the confidentiality rules 

established under section 6103 of the 

Internal Revenue Code (‘‘Code’’). State 

Medicaid agencies will need to ensure 

that their application counselors, and 

any web infrastructure used by them, 

comply with applicable privacy and 

security rules associated with the 

disclosure and receipt of this data and 

other personal information as well as 

with the overall eligibility and 

enrollment process. Accordingly, we 

propose to add a new paragraph (c) to 

§ 435.908, as published in the Medicaid 

eligibility final rule, to establish 

standards for authorizing application 

counselors to assist individuals with the 

application and renewal process, 

including use of a dedicated web portal, 

as well as with managing their case 

between the eligibility determination 

and regularly scheduled renewals. We 

apply these provisions to state CHIP 

agencies through the addition of a crossreference in § 457.340, and propose 

similar regulations for certification of 

application counselors for the Exchange 

(see proposed § 155.225 and section 

III.B.4 of this rulemaking). As recipients 

of federal financial participation, state 

Medicaid and CHIP agencies are 

reminded of their obligation to ensure 

that their programs, including their 

application counselor programs, provide 

equal access to individuals with limited 

English proficiency and individuals 

with disabilities under applicable 

federal civil rights laws. As part of this 

obligation, state Medicaid and CHIP 

agencies should ensure the availability 

and provision of appropriate application 

assistance services, such as language 

assistance services and auxiliary aids 


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and services, to meet the needs of these 

populations. Sometimes this obligation 

can be met by referral of individuals 

with limited English proficiency or 

individuals with disabilities to 

appropriate counselors participating in 

the agency’s program. Many people 

applying for coverage also seek informal 

help from family, friends and local 

community-based organizations not 

identified on the application or 

authorized to communicate with the 

agency about the application. The 

proposed regulations do not pertain to 

such informal assistance. 

We note that similar regulations for 

certified application counselors are 

proposed for the Exchange at § 155.225. 

See discussion in section III.B.4. of the 

preamble. Application counselors 

would not need to go through two 

different certification processes. State 

Medicaid and CHIP agencies and the 

Exchange generally are charged under 

the § 435.1200 and § 457.348 of the 

Medicaid eligibility final rule and 

§ 155.345 of the Exchange final rule to 

work together to create a seamless and 

coordinated application and enrollment 

process for individuals applying for all 

insurance affordability programs. To 

achieve this in the case of certified 

application counselors, states could 

elect, for example, to create a single 

certification process for all insurance 

affordability programs, or each program 

could accept application counselors 

certified by another program. 

(b) Authorized Representatives 

(§ 435.923 and § 457.340) 

Authorized representatives have 

historically helped ensure access to 

coverage for vulnerable individuals, 

such as seniors and those with 

disabilities. Although there is no formal 

limit on the number of individuals an 

authorized representative may assist— 

for example, at some institutions or an 

attorney may serve as such a 

representative for several clients—most 

authorized representatives serve in that 

capacity for one individual, for example 

for a parent or incapacitated relative. 

Under current regulations at 42 CFR 

435.907, retained in the Medicaid 

eligibility final rule, states must accept 

applications from authorized 

representatives acting on behalf of an 

applicant. In this rulemaking, we 

propose to add § 435.923 establishing 

minimum requirements for the 

designation of authorized 

representatives. Proposed § 435.923, 

which is applied to state CHIP agencies 

through the addition of a cross reference 

in proposed § 457.340, is intended to 

ensure a consistent set of rules and 

standards for authorized representatives 

across all insurance affordability 

programs. We believe the proposed 

regulation is consistent with current 

policies and practice in most states 

today and therefore will not 

substantially affect state programs. 

Specifically, we propose that, 

consistent with longstanding practice, 

applicants and beneficiaries may choose 

to designate an individual or 

organization to act on the applicant or 

beneficiary’s behalf, or may have such a 

representative through operation of state 

law (for example, through a legal 

guardianship arrangement). The state 

may not restrict the ability of applicants 

and beneficiaries to have an authorized 

representative to only certain groups of 

applicants and beneficiaries. 

Under proposed paragraph 

§ 435.923(a), applicants and 

beneficiaries who do not designate an 

authorized representative on their 

application must be able subsequently 

to do so, through both electronic and 

paper formats, as well as the other 

modalities described in § 435.907(a). 

Legal documentation of authority to act 

on behalf of an applicant or beneficiary 

under state law, such as a court order 

establishing legal guardianship or a 

power of attorney may serve in the place 

of the applicant or beneficiary’s 

designation. The option to submit such 

documentation is intended to enable 

applicants who do not have the capacity 

to provide a signature to authorize 

representation. Authorized 

representatives must agree, or be bound 

by requirements, to maintain the 

confidentiality of any information 

regarding the applicant or beneficiary 

provided by the agency. An applicant or 

beneficiary may authorize the 

representative to act on his or her behalf 

in the activities set forth in proposed 

§ 435.923(b). In accordance with 

proposed paragraph (c), the applicant or 

beneficiary may change or withdraw his 

or her authorization at any time. The 

authorized representative also may 

withdraw his or her authorization of 

representation by notifying the agency. 

Under proposed § 435.923(d), 

authorized representatives are 

responsible for fulfilling the 

responsibilities encompassed within the 

scope of the representation to the same 

extent as the individual he or she 

represents and must agree to maintain 

the confidentiality of information 

provided by the agency. Under 

proposed paragraph (e), providers and 

staff members or volunteers of other 

organizations serving as authorized 

representatives must agree to adhere to 

relevant confidentiality and conflict of 

interest protections, similar to the rules 

applied to eligibility workers at 

outstation locations set forth in 

§ 435.904(e) of the regulations. We note 

that, before data can be released to an 

authorized representative, the 

representative must meet the 

authentication and data security 

standards of the releasing entity. For 

example, information relating to an 

applicant’s modified adjusted gross 

income from the Internal Revenue 

Service cannot be requested by or 

released to an authorized representative 

unless the representative meets the 

authentication and security standards 

established by the IRS under section 

6103 of the Code. In the event that such 

authentication or security standards are 

not met, the agency would need to 

continue to process the individual’s 

application to the extent possible 

without use of the data at issue. 

We intend that the single streamlined 

application described in § 435.907(b)(1) 

of the regulations will provide 

applicants the opportunity to designate 

an authorized representative and will 

collect the information necessary for 

such representative to enter into any 

associated agreements with the agency 

as part of the application process. States 

developing alternative applications 

under § 435.907(b)(2) must collect the 

same information through their 

alternative applications or supplemental 

forms. Per proposed § 435.923(f), the 

agency must accept electronic, 

including telephonically recorded, 

signatures authorizing representation as 

well as handwritten signatures 

transmitted by facsimile or other 

electronic transmission. Designations of 

authorized representatives under the 

proposed regulation must be accepted 

through all of the modalities described 

in § 435.907(a). 

(c) Accessibility for Individuals Who 

Are Limited English Proficient 

(§ 435.905) 

We are proposing to clarify 

regulations at § 435.905(b) relating to 

the provision of information to persons 

who are limited English proficient in 

order to assure access to coverage for 

eligible individuals and to achieve 

alignment between the regulations 

governing Medicaid and CHIP with 

existing Exchange regulations at 45 CFR 

155.205(c), issued in the Exchange 

eligibility final rule on March 27, 2012. 

We propose that providing language 

services means providing oral 

interpretation, written translations, and 

taglines (which are brief statements in a 

non-English language that inform 

individuals how to obtain information 

in their language). These language 

services will allow individuals who are 


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limited English proficient to obtain 

information accessibly. 

Longstanding § 435.901 directs states 

to comply with the Civil Rights Act of 

1964, as well as section 504 of the 

Rehabilitation Act of 1973, and all other 

relevant provisions of federal and state 

laws. Guidance published on August 8, 

2003 (68 FR 47311) provides some 

parameters on language assistance 

services for persons who are limited 

English proficient, including oral 

interpretation and written translation 

services; this guidance is located at 

http://www.justice.gov/crt/about/cor/ 

lep/hhsrevisedlepguidance.pdf. 

Guidance was subsequently released on 

the availability of enhanced federal 

matching funds available for translation 

and interpretation services in 

connection with improving outreach to, 

enrollment of, retention of, and use of 

services by children in Medicaid and 

CHIP. Federal Medicaid reimbursement 

is available for the provision of oral and 

written translation and interpretation 

services provided to Medicaid and CHIP 

beneficiaries as either administration or 

a medical-assistance related 

expenditure, at varying matching rates, 

depending on the specific 

circumstances involved. (For more 

information, see our letter to State 

Health Officials (SHO) dated July 1, 

2010, available at http://www.cms.gov/ 

smdl/downloads/SHO10006.pdf and the 

CMCS Information Bulletin on 

translation services dated April 26, 

2011, available at https://www.cms.gov/ 

CMCSBulletins/downloads/InfoBulletin-4–26–11.pdf.) 

These proposed policies are 

consistent with sections 1413 and 2201 

of the Affordable Care Act, sections 

1902(a)(8), 1902(a)(19) and 1943(b)(1)(F) 

of the Act and § 435.902 and § 435.906 

of the regulations. The proposed 

regulation at § 435.905(b)(1) is designed 

to provide flexibility to states and to 

accommodate differences in populations 

and languages spoken in a state. As 

stated in our Medicaid eligibility final 

rule, after consultation with states and 

stakeholders, future sub-regulatory 

guidance will implement the regulatory 

standards proposed as well as 

coordinate our accessibility standards 

with those applied to other insurance 

affordability programs and other 

programs overseen by HHS, as 

appropriate. We also propose at 

§ 435.905(b)(3) to require the state to 

inform individuals of availability of 

these services, and how to access them. 

Proposed paragraph (b)(3) would apply 

to informing individuals of accessibility 

services described in § 435.905(b)(2) of 

the Medicaid eligibility final rule 

(relating to services available to 

individuals with disabilities). 

We note that under regulations 

adopted in the Medicaid eligibility final 

rule, application and renewal forms, 

Web sites and other electronic systems 

used to enroll individuals, and 

assistance provided to individuals must 

meet the accessibility standard in 

proposed § 435.905(b) (see 

§§ 435.907(g), 435.916(g), 435.908, 

435.1200(f) of the Medicaid eligibility 

final rule). Thus, to align with the 

current Exchange regulations issued in 

the Exchange Eligibility final rule at 

§ 155.205(c) and amending the 

accessibility standards in this proposed 

rule, we would also be modifying the 

standards for such forms, Web sites, and 

systems. In §§ 435.917(a)(2), 431.205(e), 

431.206(d), and 435.956(g), we propose 

to apply these accessibility standards at 

§ 435.905(b) to notices and appeals 

procedures. We note that the proposed 

modification of § 431.206 is intended to 

provide that all notices and 

communications across our regulation at 

part 431, subpart E be accessible to 

people who are limited English 

proficient and with disabilities, 

including but not limited to references 

to notices in §§ 431.211, 431.224, and 

431.245. We also propose to modify 

§ 457.110(a) and § 457.340(e) to apply 

these accessibility standards to the CHIP 

program. 

5. Medicaid Eligibility Requirements 

and Coverage Options Established by 

Other Federal Statutes 

To facilitate development of the 

streamlined eligibility and enrollment 

system envisioned under the Affordable 

Care Act, we propose new or amended 

regulations to simplify several eligibility 

pathways established by other federal 

statutes, as follows: 

(a) Coverage of Children and Families 

(i) Mandatory Coverage of Children 

With Title IV–E Adoption Assistance, 

Foster Care, or Guardianship Care 

Under Title IV–E (§ 435.145) 

Section 471(a)(28) of title IV–E of the 

Act, as added by the Fostering 

Connections to Success and Increasing 

Adoptions Act of 2008 (Pub. L. 110– 

351), gives states and federallyrecognized Tribes the option to provide 

kinship guardianship assistance 

payments on behalf of children placed 

with family members under certain 

conditions. Under section 473(b)(3)(C) 

of the Act, children on whose behalf 

such payments are made are 

mandatorily eligible for Medicaid to the 

same extent as children for whom 

federal foster care maintenance 

payments are made under title IV–E. 

Revisions to current regulations at 

§ 435.145 are proposed to implement 

these statutory provisions. Also, we are 

proposing to eliminate a duplicative 

rule at § 435.115(e) for this group and to 

include in § 435.145 certain provisions 

from § 435.115(e) that are consistent 

with the statutory requirements, namely 

that an adoption assistance agreement is 

considered to be in effect regardless of 

whether adoption assistance is being 

provided or an interlocutory or other 

judicial decree of adoption has been 

issued. These proposed changes clarify 

current policy and have no meaningful 

impact on state programs. 

(ii) Extended Eligibility for Low-Income 

Families (§ 435.112 and § 435.115) 

(1) Families With Medicaid Eligibility 

Extended Because of Increased Earnings 

or Hours of Employment (§ 435.112) 

Sections 408(a)(11)(A), 1902(e)(1)(A), 

and 1931(c)(2) of the Act, implemented 

at existing § 435.112, require a 4-month 

Medicaid extension for low-income 

families (including pregnant women 

without other children) eligible under 

section 1931 of the Act (because they 

met prior AFDC income eligibility 

requirements as modified at state option 

under section 1931(b)(2) of the Act) who 

otherwise would lose coverage due to a 

household member’s increased earnings 

or a parent’s increased working hours. 

This section applies if a Medicaid 

extension for at most 12 months under 

Transitional Medical Assistance (TMA) 

in accordance with section 1925 of the 

Act is not available (for example, 

because the federal authority for TMA 

has sunset). We propose revisions to 

§ 435.112 to align with the 

implementation of section 1931 of the 

Act in the Medicaid eligibility final rule 

for parents and other caretaker relatives 

at § 435.110, pregnant women at 

§ 435.116, and children at § 435.118. 

(2) Families With Medicaid Eligibility 

Extended Because of Increased 

Collection of Spousal Support 

(§ 435.115) 

Sections 408(a)(11)(B) and 1931(c)(1) 

of the Act, implemented at existing 

§ 435.115(f)–(h), require a 4-month 

Medicaid extension for low-income 

families eligible under section 1931 of 

the Act who otherwise would lose 

coverage due to increased income from 

collection of child or spousal support 

under title IV–D of the Act. We propose 

to revise § 435.115 to limit this 

requirement to spousal support because, 

while spousal support is counted as 

income under the MAGI-based 

methodologies described in § 435.603, 


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child support is not. Therefore, 

increased collection of child support 

will not affect Medicaid eligibility for 

parents or children once MAGI-based 

methodologies take effect in 2014. Also, 

we propose to delete the obsolete 

paragraphs (a) through (d) of § 435.115 

relating to individuals ‘‘deemed to be 

receiving AFDC’’ and to delete 

paragraph (e) relating to eligibility for 

children receiving assistance under title 

IV–E of the Act as duplicative of 

§ 435.145. 

(iii) Extended and Continuous 

Eligibility for Pregnant Women 

(§ 435.170) and Hospitalized Children 

(§ 435.172) 

(1) Pregnant Women Eligible for 

Extended or Continuous Eligibility 

(§ 435.170) 

Section 435.170 of the existing 

regulations implements section 

1902(e)(5) of the Act, requiring extended 

Medicaid eligibility through the last day 

of the month in which the 60-day postpartum period ends for women who 

were covered while pregnant. Section 

1902(e)(6) of the Act requires states to 

provide ‘‘continuous eligibility’’ to 

pregnant women, once determined 

eligible under any eligibility group, 

regardless of changes in household 

income through the last day of the 

month in which the post-partum period 

ends. Pregnant women eligible for 

extended coverage under either 

provision are entitled to receive 

pregnancy-related services covered 

under the state plan in accordance with 

§ 435.116(d)(3) of the Medicaid 

eligibility final rule. We further clarify 

in a proposed new paragraph (d) of 

§ 435.170, consistent with section 

1902(e)(6) of the Act, that extended or 

continuous eligibility does not apply to 

pregnant women only covered during a 

period of presumptive eligibility. These 

changes clarify current policy and have 

no meaningful impact on state 

programs. 

(2) Continuous Eligibility for 

Hospitalized Children (§ 435.172) 

Section 1902(e)(7) of the Act requires 

that infants and children under age 19 

eligible under sections 

1902(a)(10)(A)(i)(III), (IV), (VI), and (VII) 

and (ii)(IX) of the Act remain eligible for 

Medicaid until the end of a Medicaidcovered inpatient stay, if they otherwise 

would lose eligibility because of 

attaining the maximum age for coverage 

under the applicable section of the Act. 

We propose to add a new section 

§ 435.172 implementing this 

requirement for children eligible under 

§ 435.118 of the Medicaid eligibility 

final rule. This section clarifies current 

policy and has no meaningful impact on 

state programs. 

(iv) Optional Eligibility Groups and 

Coverage Options 

(1) Optional Eligibility for Parents and 

Other Caretaker Relatives (§ 435.220) 

Optional eligibility for pregnant 

women and parents or other caretaker 

relatives under section 

1902(a)(10)(A)(ii)(I) of the Act is 

currently implemented at § 435.210. 

Optional eligibility for pregnant women, 

effective January 1, 2014, is 

implemented at § 435.116 of the 

Medicaid eligibility final rule. Optional 

eligibility for most parents and other 

caretaker relatives now covered under 

§ 435.210 (those with MAGI-based 

income at or below 133 percent FPL) 

will be subsumed under the adult group 

at § 435.119, if they are not elderly and 

not Medicare eligible. Eligibility for 

parents and other caretaker relatives 

with MAGI-based income above the 

limits for mandatory coverage under 

§ 435.110 and § 435.119 will remain an 

option under § 435.220 as proposed in 

this rule. The eligibility group defined 

in the existing regulations at § 435.220 

(for individuals who would meet the 

income and resource requirements 

under AFDC if child care costs were 

paid from earnings) will be rendered 

obsolete with the prohibition against 

income disregards under MAGI-based 

methods per § 435.603(g). 

Consistent with our efforts to 

streamline and simplify eligibility in the 

Medicaid eligibility final rule, we 

propose in this rulemaking to delete 

pregnant women and parents or other 

caretaker relatives from the scope of the 

current regulation at § 435.210 and to 

replace the obsolete provision currently 

provided for in § 435.220 with optional 

eligibility of parents and other caretaker 

relatives based on MAGI. A state may 

cover parents and other caretaker 

relatives under this section, including 

individuals who are elderly or Medicare 

eligible, if their household income does 

not exceed the income standard 

established by the state for this group. 

The income standard may not exceed 

the higher of the state’s AFDC payment 

standard in effect as of July 16, 1996 or 

the state’s highest effective income level 

for optionally eligible parents and other 

caretaker relatives under the state plan 

or 1115 demonstration as of March 23, 

2010 or December 31, 2013, if higher, 

converted to a MAGI-equivalent 

standard per section 1902(e)(14)(A) and 

(E) of the Act, in accordance with 

guidance as issued by the Secretary. 

States will also have the option to 

provide Medicaid to parents and other 

caretaker relatives, along with other 

individuals under age 65, with income 

above 133 percent FPL under the new 

optional eligibility group codified at 

§ 435.218 of the Medicaid eligibility 

final rule. 

(2) Optional Coverage for Reasonable 

Classifications of Individuals Under Age 

21 (§ 435.222) 

The existing regulation at § 435.222 

implements sections 1902(a)(10)(A)(ii)(I) 

and (IV) of the Act to give states the 

option to cover all individuals under 

age 21 (or, at state option, under age 20, 

19, or 18) or reasonable classifications of 

such individuals, who either meet the 

state’s AFDC income and resource 

requirements or would meet them if not 

institutionalized. We propose revisions 

to § 435.222 to reflect the need for states 

to convert their current AFDC-based net 

income standard to an equivalent 

MAGI-based standard, unless the state 

currently disregards all income for a 

reasonable classification under this 

group. The income standard, if any, 

established by the state for all 

individuals or each reasonable 

classification under this group which 

may not exceed the higher of the state’s 

AFDC payment standard in effect as of 

July 16, 1996 or the state’s highest 

effective income level for the group or 

reasonable classification under the state 

plan or 1115 demonstration as of March 

23, 2010 or December 31, 2013, if 

higher, converted to a MAGI-equivalent 

standard. 

(3) Optional Eligibility for Individuals 

Needing Treatment for Breast or 

Cervical Cancer (§ 435.213) 

We propose to add a new § 435.213 to 

codify section 1902(a)(10)(A)(ii)(XVIII) 

of the Act, consistent with existing 

guidance, which provides states with 

the option to cover individuals needing 

treatment for breast or cervical cancer. 

The eligibility criteria for this optional 

eligibility group are set forth at section 

1902(aa) of the Act. Guidance on this 

group was provided in a state Health 

Official letter (SHO) dated January 4, 

2001, http://downloads.cms.gov/ 

cmsgov/archived-downloads/SMDL/ 

downloads/sho010401.pdf. Inasmuch as 

the proposed regulation codifies this 

guidance, which remains effective, this 

section should not have any meaningful 

impact on state programs. 

This optional eligibility group covers 

individuals under age 65 who are not 

eligible and enrolled for mandatory 

coverage under the Medicaid state plan; 

do not otherwise have creditable 

coverage for treatment of their breast or 

cervical cancer; and have been screened 


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as needing treatment for breast or 

cervical cancer under a state’s Centers 

for Disease Control and Prevention 

(CDC) breast and cervical cancer early 

detection program (BCCEDP). This may 

include any men screened under the 

state’s screening program for breast 

cancer. The state entity administering 

the BCCEDP, not the state Medicaid 

agency, determines who is considered to 

have been ‘‘screened under the 

program’’ and establishes the scope of 

screening provided, regardless of 

funding source, so that if the state entity 

considers a man to have been screened 

under the BCCEDP program, a state 

electing to cover this Medicaid 

eligibility must cover such man under 

this group. 

(4) Optional Eligibility for Independent 

Foster Care Adolescents (§ 435.226) 

We propose to add a new § 435.226 to 

codify section 1902(a)(10)(A)(ii)(XVII) of 

the Act, which provides states with the 

option to cover ‘‘independent foster care 

adolescents’’ as described at section 

1905(w) of the Act. This existing 

optional eligibility group covers 

individuals who are under age 21 (or, at 

state option, under age 20 or 19) and 

were in foster care under the 

responsibility of a state or Tribe on the 

individual’s 18th birthday. As with 

reasonable classifications of individuals 

under § 435.222, states which covered 

such group under the Medicaid state 

plan or an 1115 demonstration as of 

March 23, 2010 or December 31, 2013 

will need to convert the effective 

income level, if any, to a MAGI-based 

standard. The income standard may not 

exceed the higher of the state’s AFDC 

payment standard in effect as of July 16, 

1996 or the state’s highest effective 

income level for this population under 

the state plan or 1115 demonstration as 

of March 23, 2010 or December 31, 

2013, if higher, converted to a MAGIequivalent standard. Many individuals 

now covered under this optional group 

will be eligible for coverage as of 2014 

under either the new group for former 

foster care children at the proposed 

§ 435.150 or the adult group at 

§ 435.119, both of which are mandatory 

eligibility groups under the statute. 

Unlike the group at § 435.150, this 

optional group at § 435.226 does not 

require enrollment in Medicaid upon 

attaining age 18 in foster care, but 

coverage in this group ends upon 

attaining age 21 rather than age 26. 

(5) Optional Eligibility for Individuals 

Under Age 21 Who Are Under State 

Adoption Assistance Agreements 

(§ 435.227) 

We propose to amend § 435.227 for 

children with a state adoption 

assistance agreement in effect (other 

than an agreement under title IV–E of 

the Act) to reflect the need for states to 

convert the current AFDC-based net 

income standard, if any, to an 

equivalent MAGI-based standard. If the 

state covered this group under the 

Medicaid state plan or an 1115 

demonstration as of March 23, 2010 or 

December 31, 2013 with no income test 

or MAGI-based effective income level, 

converted to a MAGI-equivalent 

standard, exceeding the state’s income 

standards for § 435.118 and § 435.119, 

that policy may remain in effect. 

Otherwise, consistent with the existing 

regulation at § 435.227(a)(3)(i) and 

retained at proposed § 435.227(b)(3)(i) of 

this rulemaking, an individual must 

have been eligible under the Medicaid 

state plan prior to the adoption 

agreement being entered into. We 

request comments on our proposal to 

delete the alternative eligibility 

requirement in existing regulations at 

§ 435.227(a)(3)(ii) that the individual 

would have been eligible if the state’s 

title IV–E foster care financial eligibility 

standards and methodologies were used, 

because the Medicaid eligibility 

requirements at § 435.118 of the 

Medicaid eligibility final rule are more 

expansive. Also, we propose language at 

§ 435.227(b)(2), revising the language in 

existing regulations at § 435.227(a)(2), to 

clarify that it is the state agency which 

entered into the adoption agreement 

with the adoptive parents, which is not 

necessarily the state determining the 

child’s Medicaid eligibility, that 

determines whether those eligibility 

requirements are met. 

(6) Optional Targeted Low-Income 

Children (§ 435.229) 

We propose to amend § 435.229 for 

optional targeted low-income children, 

as defined at § 435.4, for whom states 

may claim enhanced match under 

section 1905(b) and title XXI of the Act, 

in order to reflect the need for states to 

convert the current AFDC-based net 

income standard to an equivalent 

MAGI-based standard. A state’s income 

standard may not exceed the higher of 

200 percent FPL; an FPL percentage 

which exceeds the state’s Medicaid 

applicable income level, defined at 

§ 457.10, by no more than 50 percentage 

points; or the highest effective income 

level for this group in effect under the 

Medicaid state plan or an 1115 

demonstration as of March 23, 2010 or 

December 31, 2013, if higher, converted 

to a MAGI-equivalent standard. 

(7) Optional Continuous Eligibility for 

Children (§ 435.926 and § 457.342) 

We propose to add a new § 435.926 

codifying section 1902(e)(12) of the Act, 

which provides states with the option to 

provide up to 12 months of continuous 

eligibility for children under age 19, or 

a younger age selected by the state, once 

determined eligible for Medicaid, 

regardless of changes in income or most 

other circumstances which otherwise 

would render the child ineligible for 

Medicaid. These proposed standards 

codify and clarify past guidance on the 

continuous eligibility options and have 

no meaningful impact on state 

programs. Under the option, continuous 

eligibility is provided to all children 

younger than the state’s specified age 

who are covered under subpart B or C 

of this part, but not those covered as 

medically needy under subpart D, those 

eligible only for emergency medical 

services for non-citizens, or those 

eligible during a period of presumptive 

eligibility. Thus, consistent with the 

statute, states electing the option for 

continuous eligibility under proposed 

§ 435.926 must provide such coverage to 

children eligible under § 435.118 as well 

as all children covered under any other 

mandatory or optional group covered by 

the state, including children eligible 

based on receipt of SSI, disability, 

institutionalization, or enrollment in a 

section 1915(c) home and communitybased services waiver. Also proposed is 

§ 457.342 for continuous eligibility of 

children under a state’s separate CHIP. 

Under proposed § 435.926(c), the state 

would specify in its state plan the 

length of a continuous eligibility period, 

not to exceed 12 months. A continuous 

eligibility period begins on the effective 

date of the individual’s most recent 

determination or renewal of eligibility 

and ends at the end of the length of the 

continuous eligibility period specified 

by the state. Under proposed paragraph 

(d), children remain eligible during a 

continuous eligibility period regardless 

of any change in circumstances except 

attaining the maximum age elected by 

the state for this option, death, 

voluntary disenrollment, change in state 

residence, state error in the eligibility 

determination, or fraud, abuse, or 

perjury attributed to the child or the 

child’s representative. 

(8) Optional Tuberculosis Eligibility 

Group (§ 435.215) 

We propose to add a new § 435.215 

for optional tuberculosis (TB)-infected 

individuals to codify section 


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1902(a)(10)(A)(ii)(XII) and (z)(1) of the 

Act. These provisions provide states 

with the option to provide Medicaid to 

TB-infected individuals who are not 

eligible for Medicaid under subpart B of 

this part (relating to Mandatory 

Coverage of the Categorically Needy) 

and meet certain income and resource 

requirements. The medical assistance 

available to individuals eligible in this 

category is limited to TB-related 

services, which are defined in section 

1902(z) of the Act as: prescribed drugs; 

physicians’ services and services 

described in section 1905(a)(2); 

laboratory and X-ray services (including 

services to confirm the presence of 

infection); clinic services and federallyqualified health center services; case 

management services (as defined in 

section 1915(g)(2)); and services (other 

than room and board) designed to 

encourage completion of regimens of 

prescribed drugs by outpatients, 

including services to observe directly 

the intake of prescribed drugs. 

The statute limits eligibility in this 

group to TB-infected individuals whose 

incomes and resources do not exceed 

the maximum amount a disabled 

individual described in subpart B of this 

part may have and obtain medical 

assistance under the state plan. The 

income and resource tests are both 

based on SSI standards and 

methodologies, and these rules remain 

in effect until January 1, 2014. 

However, except as provided in 

section 1902(e)(14)(D) of the Act, 

section 1902(e)(14)(A) of the Act 

provides that notwithstanding any other 

provision of title XIX, financial 

eligibility for Medicaid for all 

individuals effective January 1, 2014, 

will be based on the MAGI-based 

methodologies set forth in section 

1902(e)(14) of the Act. Because TBinfected individuals who qualify for 

Medicaid on that basis do not meet any 

of the exceptions from the MAGI-based 

income rules listed in section 

1902(e)(14)(D) of the Act, implemented 

in § 435.603(j) of the Medicaid 

eligibility final rule, we propose that, 

effective January 1, 2014, income 

eligibility for this group must be 

determined in accordance with the 

MAGI rules in § 435.603. States electing 

to cover this eligibility group need to 

establish an income standard in their 

state plan. Under proposed 

§ 435.215(b)(3), the income standard 

must not exceed the higher of the 

maximum income standard applicable 

to disabled individuals for mandatory 

coverage under subpart B of part 435 of 

the regulations, or the effective income 

level for coverage of TB-infected 

individuals under the state plan in 

effect as of March 23, 2010 or December 

31, 2013, if higher, converted, at state 

option, to a MAGI-equivalent standard 

in accordance with guidance issued by 

the Secretary under section 

1902(e)(14)(A) and (E) of the Act. Per 

§ 435.603(g) of the Medicaid eligibility 

final rule, there will be no resource test 

for eligibility under this section 

effective January 1, 2014. 

We considered an interpretation of 

the statute under which, because section 

1902(z) of the Act currently provides for 

application of the financial standards 

and methods generally used to 

determine eligibility based on disability, 

individuals infected with TB and 

eligible for coverage on such basis 

would be considered to ‘‘qualify for 

medical assistance * * * on the basis of 

being blind or disabled’’ for purposes of 

the exception from application of MAGI 

methodologies set forth in section 

1902(e)(14)(D)(i)(III) of the Act. Under 

this interpretation, application of the 

income standards and methodologies 

applied to coverage of disabled 

individuals, as provided in with section 

1902(z) of Act, would continue to be 

applied to coverage under this eligibility 

group after January 1, 2014. We solicit 

comments on this alternative 

interpretation. 

b. Presumptive Eligibility 

(i) Proposed Amendments to Medicaid 

Regulations for Presumptive Eligibility 

We propose to revise Medicaid 

regulations for children’s presumptive 

eligibility and to add regulations for 

presumptive eligibility for pregnant 

women and individuals needing 

treatment for breast or cervical cancer as 

well as for the six new options for 

Medicaid presumptive eligibility 

provided by the Affordable Care Act. 

The new options become available on 

January 1, 2014, except that 

presumptive eligibility for the family 

planning option became available on 

March 23, 2010. 

(1) FFP for Administration (§ 435.1001) 

We propose to revise paragraph (a)(2) 

of § 435.1001 to clarify, consistent with 

current policy, that federal financial 

participation (FFP) is available for the 

necessary administrative costs a state 

incurs in administering all types of 

presumptive eligibility, not just 

presumptive eligibility for children as 

now specified in this section. 

(2) FFP for Services (§ 435.1002) 

We propose to revise paragraph (c) of 

§ 435.1002 to clarify that FFP is 

available for services covered for all 

individuals determined presumptively 

eligible in accordance with the statute 

and implementing regulations, rather 

than just for children as now specified 

in this section. 

(3) Basis for Presumptive Eligibility 

(§ 435.1100) 

We propose to revise § 435.1100 to 

address the statutory basis of 

presumptive eligibility under sections 

1920, 1920A, 1920B, 1920C, and 

1902(a)(47)(B) of the Act for children, 

pregnant women, and other individuals 

under subpart L, including the six new 

options provided by the Affordable Care 

Act. 

(4) Definitions (§ 435.1101) 

We propose to revise § 435.1101 to 

replace the definition of ‘‘application 

form’’ with ‘‘application’’ to reflect 

current practices and to clarify that the 

definition of ‘‘qualified entity’’ includes 

a health facility operated by the Indian 

Health Service, a Tribe or Tribal 

organization, or an Urban Indian 

Organization. 

(5) Presumptive Eligibility for Children 

(§ 435.1102) 

We propose to revise existing 

regulations at § 435.1102, under which 

states may select qualified entities to 

determine presumptive eligibility for 

children under age 19 or a younger age 

selected by the state. A qualified entity 

determines, based on preliminary 

information, that the child’s gross 

income (or at state option, MAGI 

household income as defined at 

§ 435.603 or a reasonable estimate using 

simplified methods prescribed by the 

state) meets the income requirements at 

§ 435.118(c) of the Medicaid eligibility 

final rule. The proposed changes, which 

are consistent with current policy and 

practice in states, are needed to align 

with the adoption of MAGI-based 

methodologies in 2014 and to ensure 

consistency between the policies 

governing the existing and new 

presumptive eligibility options. 

We propose to amend § 435.1102(b) to 

clarify that a qualified entity may not 

delegate to another entity its authority 

to determine presumptive eligibility and 

that the state must establish oversight 

mechanisms to ensure the integrity of 

presumptive eligibility determinations. 

We propose at § 435.1102(d) that a state 

may require, as a condition of 

presumptive eligibility, that an 

individual, or another person who 

attests to having reasonable basis to 

know the status of the individual 

seeking a presumptive eligibility 

determination, attests that the 

individual is a citizen or a national of 

the United States or is in satisfactory 

immigration status. We seek comment 


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on whether this should be a state option 

or a requirement. A state may also 

require similar attestation that the 

individual is a state resident. Because 

the statute requires qualified entities to 

determine presumptive eligibility ‘‘on 

the basis of preliminary information,’’ 

under the proposed regulations states 

would be prohibited from requiring 

verification of the conditions for 

presumptive eligibility and from 

imposing additional conditions for 

presumptive eligibility. Proposed 

paragraph (e) clarifies that a 

presumptive eligibility determination by 

a qualified entity is not subject to fair 

hearing rights under subpart E of 42 

CFR part 431. 

(6) Presumptive Eligibility for Other 

Individuals (§ 435.1103) 

We propose to add § 435.1103 to 

implement the presumptive eligibility 

for other populations permitted under 

sections 1920, 1920A, 1920B, and 1920C 

of the Act. At paragraph (a), we propose, 

consistent with section 1920 of the Act 

and current policy, that a state may elect 

to provide presumptive eligibility for 

pregnant women in the same manner as 

described for children at the proposed 

§ 435.1101 and § 435.1102, except that 

pregnant women are only covered for 

ambulatory prenatal care during a 

presumptive eligibility period. We also 

propose that pregnant women are 

limited to one presumptive eligibility 

period per pregnancy. As prescribed in 

the statute, if the state has elected to 

provide presumptive eligibility for 

children or pregnant women, the state 

may also elect to provide presumptive 

eligibility for the additional populations 

provided for in the Affordable Care 

Act—that is,—parents and other 

caretaker relatives (described in 

§ 435.110, adults described in § 435.119, 

and individuals under age 65 described 

in § 435.218 of the Medicaid eligibility 

final rule, as well as former foster care 

children described in § 435.150 of this 

proposed rulemaking. We propose at 

paragraph (c) that a state may cover 

presumptive eligibility for individuals 

needing treatment for breast or cervical 

cancer as described at proposed 

§ 435.213 of this rulemaking; and at 

paragraph (d) that a state may provide 

family planning services on a 

presumptive eligibility basis for 

individuals who may be eligible for 

such services under proposed § 435.214 

of this rulemaking. 

(7) Presumptive Eligibility Determined 

by Hospitals (§ 435.1110) 

We propose to add § 435.1110 for 

hospitals electing to determine 

presumptive eligibility. The Affordable 

Care Act added section 1902(a)(47)(B) of 

the Act to give hospitals the option (not 

at state option like for the other types of 

presumptive eligibility), as of January 1, 

2014, to determine presumptive 

eligibility for Medicaid. The Act 

provides hospitals participating in 

Medicaid with this option whether or 

not the state has elected to permit 

qualified entities to make presumptive 

eligibility determinations under other 

sections of the statute. 

At paragraph (a) of § 435.1110, we 

propose that a qualified hospital may 

elect to make presumptive eligibility 

determinations, on the basis of 

preliminary information and according 

to policies and procedures established 

by the state Medicaid agency. Proposed 

paragraph (b) establishes the basic 

criteria which a hospital must meet to 

be a qualified hospital authorized to 

make presumptive eligibility 

determinations, including that the 

hospital (1) participate as a Medicaid 

provider, (2) notify the agency of its 

decision to make presumptive eligibility 

determinations, (3) agree to make 

determinations consistent with state 

policies and procedures, (4) at state 

option, assist individuals in completing 

and submitting the full application and 

in understanding any documentation 

requirements, and (5) not be 

disqualified by the agency under 

proposed paragraph (d) (discussed 

below). 

At paragraph (c) of this section, we 

specify that a state Medicaid agency 

may limit presumptive eligibility 

determinations by qualified hospitals to 

the types of presumptive eligibility that 

the agency may elect to cover, as 

described at proposed § 435.1101 

through § 435.1103. In addition, 

qualified hospitals may be permitted by 

the agency to determine presumptive 

eligibility on other bases under the state 

plan or 1115 demonstration (for 

example, based on disability). 

We propose at paragraph (d) that the 

agency may establish standards for 

qualified hospitals making presumptive 

eligibility determinations related to the 

proportion of individuals determined 

presumptively eligible for Medicaid by 

the hospital that submit a regular 

application before the end of the 

presumptive eligibility period and/or 

are determined eligible for Medicaid 

based on such application. We request 

comments on whether this should be a 

federal requirement, a state option, or 

neither, and what such reasonable 

standards would be. The agency must 

take action as necessary if a hospital 

does not meet the standards established 

by the agency or is not making 

determinations in accordance with 

applicable state policies and 

procedures. 

(ii) Proposed Amendments to CHIP 

Regulations for Presumptive Eligibility 

(§ 457.355) 

In order to align the regulations 

governing presumptive eligibility for 

children under CHIP with Medicaid, we 

revise current regulations at § 457.355 to 

incorporate by cross reference the terms 

of § 435.1101 and § 435.1102 (relating to 

presumptive eligibility for children in 

Medicaid) into our CHIP regulations. In 

addition, prior to passage of CHIPRA, 

states were permitted to claim enhanced 

federal matching funds under their 

CHIP title XXI allotment for coverage of 

children during a Medicaid presumptive 

eligibility period; this authority is 

implemented in the current regulations 

at § 457.355 and § 457.616(a)(3). Section 

113(a) of CHIPRA, however, amended 

section 2105(a)(1) of the Act to 

eliminate this authority, so that, 

effective April 1, 2009, states must 

claim their regular federal financial 

participation under title XIX for services 

provided to children during a Medicaid 

presumptive eligibility period. This 

change is implemented through the 

proposed revisions to § 457.355 and by 

deleting § 457.616(a)(3). 

2. Medically Needy (§§ 435.301, 

435.310, 435.831) 

Under section 1902(e)(14)(D)(i)(IV) to 

the Act, as added by section 2002(a) of 

the Affordable Care Act and codified at 

§ 435.603(j)(6), the determination of 

eligibility for medically needy 

individuals is excepted from application 

of MAGI-based financial methodologies 

set forth at § 435.603. Under section 

1902(a)(10)(C)(i)(III) of the Act, financial 

eligibility under a medically-needy 

group for children, pregnant women, 

parents, and other caretaker relatives 

‘‘shall be no more restrictive than the 

methodology that would be employed 

under the appropriate state plan 

described in [section 1902(a)(10)(A)(i) of 

the Act] to which such group is most 

closely categorically related.’’ Currently, 

for pregnant women, parents, children, 

and other caretaker relatives the 

methods of the former AFDC program 

are applied. For aged, blind, and 

disabled individuals, section 

1902(a)(10)(C)(i)(III) of the Act requires 

the use of a methodology that is no more 

restrictive than the methods applied 

under the SSI program. 

As the former AFDC program has now 

been eliminated, there is no state plan 

described in section 1902(a)(10)(A)(i) of 

the Act that is ‘‘most closely 

categorically related’’ to pregnant 

women, parents, children, and other 


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caretaker relatives. In addition, retaining 

the AFDC methodologies for the 

purpose of determining countable 

income for medically needy coverage 

could be burdensome for states and 

consumers, and could undermine the 

simple streamlined eligibility process 

required under section 1943 of the Act 

and section 1413 of the Affordable Care 

Act, as well as the requirements under 

section 1902(a)(19) of the Act to 

administer the program in a simple and 

efficient manner and in the best interest 

of beneficiaries. Therefore, we are 

proposing to revise § 435.831 to provide 

states with flexibility to apply, at state 

option, either AFDC-based methods or 

MAGI-based methods for determining 

income eligibility for medically needy 

children, pregnant woman, and parents 

and other caretaker relatives— 

individuals whose financial eligibility 

generally will be determined using 

MAGI-based methods. Although section 

1902(e)(14)(A) and 1902(e)(14)(D)(i)(IV) 

of the Act indicates that states cannot be 

required to apply MAGI-based methods 

in determining financial eligibility for 

medically needy individuals, we believe 

that this does not preclude us from 

permitting states to apply MAGI-based 

income methodologies in determining 

medically needy eligibility for these 

populations. 

However, we also recognize that 

section 1902(a)(17)(D) of the Act 

prohibits state plans from taking into 

account the ‘‘financial responsibility of 

any individual for any applicant or 

recipient of assistance under the plan 

unless such applicant or recipient * * * 

is such individual’s spouse or such 

individual’s child who is under age 21, 

* * * or is blind or disabled.’’ 

Thus, states may use a MAGI-based 

methodology in determining household 

income using MAGI-based methods, but 

in doing so, must ensure that there is no 

deeming of income or attribution of 

financial responsibility that would 

conflict with the requirements of section 

1902(a)(17)(D). States could, for 

example, apply the methodology set 

forth in § 435.603 of the Medicaid 

eligibility final rule, and, in cases 

involving impermissible deeming, 

subtract the income of the individual 

whose income may not be counted 

under § 1902(a)(17)(D). States may also, 

but would not be required to, remove 

such individual from the household 

size. We note also that section 1902(r)(2) 

of the Act and § 435.601(d) of the 

current regulations provide states with 

an option to adopt other reasonable 

methodologies, provided that such 

methods are less restrictive than the SSI, 

AFDC or the MAGI-based methods 

permitted under this proposed rule. 

Furthermore, in order to meet the 

maintenance of effort requirements 

(MOE) in section 1902(gg) of the Act, 

states would have to ensure that the 

adoption of MAGI methodologies is no 

more restrictive than the methodology 

currently used by the state in 

determining the eligibility of children as 

medically needy until the MOE expires 

in 2019. For purposes of this section, 

states may replace current disregards 

applied to medically needy individuals, 

some of which may benefit only part of 

its medically needy population (such as 

a disregard for amounts for child care), 

with a single block-of-income disregard 

made available to all medically needy 

individuals such that in the aggregate 

the MOE is satisfied. 

In addition, we are removing the 

reference to ‘‘family’’ in § 435.831(c) to 

be consistent with the implementation 

of eligibility for low-income families 

under section 1931 of the Act in the 

final Eligibility Rule. Since eligibility 

under section 1931 of the Act, like all 

other bases of eligibility, will be 

determined on an individual basis, 

parents and other caretaker relatives 

will be evaluated for medically needy 

eligibility as individuals, as currently is 

the case of pregnant women and 

children. 

d. Optional Eligibility of LawfullyResiding Non-Citizen Children and 

Pregnant Women (§§ 435.4, 435.406, 

457.320) 

Section 214 of CHIPRA amended 

section 1903(v)(4) of the Act to permit 

states to provide Medicaid coverage to 

children, pregnant women, or both who 

are lawfully residing in the United 

States, and otherwise eligible for 

Medicaid. We are proposing to amend 

§ 435.406 by revising paragraph (b) to 

implement this option. Section 214 of 

CHIPRA also amended section 2107 of 

the Act similarly to allow states to cover 

such lawfully residing children and 

pregnant women under CHIP. We also 

propose at 45 CFR 155.20 to align the 

Exchange definition of ‘‘lawfully 

present’’ with the Medicaid/CHIP 

definition in § 435.4. Individuals who 

meet this definition could be eligible for 

enrollment in a QHP through the 

Exchange. 

On July 1, 2010, we issued a State 

Health Official (SHO) letter providing 

guidance implementing section 214 of 

CHIPRA. In the SHO, we interpreted 

‘‘lawfully residing’’ to mean individuals 

who are lawfully present in the United 

States and who are residents of the state 

in which they are applying under the 

state’s Medicaid or CHIP residency 

rules. Because state residency is a 

separate eligibility criteria which must 

be established independent of an 

individual’s immigration status as a 

lawfully present non-citizen, we are 

proposing to use the term ‘‘lawfully 

present’’ in § 435.406(b), without need 

to include a definition of ‘‘lawfully 

residing’’ in these proposed regulations. 

Eligibility for Medicaid under 

§ 435.406(b) cannot be approved for an 

individual who is lawfully present in 

the United States, if the individual is 

not also a resident of the state under the 

state’s residency rules. For example, a 

nonimmigrant visitor for business or 

pleasure may be lawfully present under 

immigration regulations, but not meet 

Medicaid or CHIP residency 

requirements, and therefore will not be 

able to qualify for Medicaid or CHIP 

based on residency. 

Current paragraph (b) of § 435.406 is 

re-designated and revised at proposed 

paragraph (c) and we propose to add a 

new paragraph (b). We also propose new 

definitions of ‘‘lawfully present,’’ ‘‘noncitizen,’’ ‘‘qualified non-citizen’’ at 

§ 435.4. Policies consistent with our 

already-issued July 1, 2010 SHO letter, 

are only briefly discussed and we refer 

readers to the letter for a more in-depth 

discussion (at http:// 

downloads.cms.gov/cmsgov/archiveddownloads/SMDL/downloads/ 

SHO10006.pdf). Explained in more 

depth herein are several modest 

proposed changes in policy as compared 

to the SHO. 

Consistent with the SHO, under 

proposed § 435.406(b)(1), if a state elects 

the CHIPRA 214 option for pregnant 

women and/or children, then it must 

elect the option for all children and/or 

pregnant women who are lawfully 

present, as defined in § 435.4; in other 

words, the state cannot choose among 

‘‘lawfully present’’ children or pregnant 

women and offer Medicaid to some, but 

not others. We propose in § 435.406(c) 

consistent with our current policy, that 

if a state elects to cover lawfully present 

children and/or pregnant women under 

§ 435.406(b), such individuals may be 

eligible for any Medicaid eligibility 

group covered under the state plan for 

which he or she meets all other 

eligibility requirements. 

In accordance with section 

1903(v)(4)(A) and (B) of the Act, 

proposed § 435.406(b)(2) provides that 

various limitations otherwise applicable 

to non-citizen eligibility do not apply to 

lawfully present non-citizens covered 

pursuant to a state’s election of the 

option provided at paragraph (b)(1). The 

restrictions that do not apply to 

individuals under 21 or pregnant 

women covered under this option 

include, the 5-year waiting period 

described in section 403 of PRWORA, 8 


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U.S.C. 1613; the restriction relating to 

the limitation on payment services for 

individuals who are not qualified noncitizens under section 401(a) of 

PRWORA, 8 U.S.C. 1611(a); deeming of 

sponsor income under section 421 of 

PRWORA, 8 U.S.C. 1631; and the state 

option to require Lawful Permanent 

Residents to be credited with 40 

qualifying quarters of work or limitation 

of coverage to seven years, permitted 

under section 402(b) of PRWORA, 8 

U.S.C. 1612(b). We propose a new 

paragraph (c) of § 435.406, revising and 

redesignating current paragraph (b) 

clarifying which non-citizens would be 

eligible to receive coverage of services of 

an emergency medical condition 

including in states that elect to cover 

children and pregnant women under the 

option in paragraph (b)(1). 

The definition of ‘‘lawfully present’’ 

proposed at § 435.4 is substantially the 

same as that contained in our July 1, 

2010 guidance and at 45 CFR 152.2 (the 

current definition used for Exchange 

eligibility) with some minor 

modifications to further simplify the 

rules as well as ensure alignment with 

the eligibility of lawfully present noncitizens for advance payment of the 

premium tax credit, cost-sharing 

reductions, and enrollment in a QHP 

through the Exchange. As these 

modifications do not substantially affect 

eligibility, we do not anticipate an 

impact on state costs. As explained in 

the SHO, our policy is based on the 

definition provided in Department of 

Homeland Security (DHS) regulations at 

8 CFR 1.3, used for purposes of Social 

Security benefits, with some 

modification appropriate to the 

Medicaid and CHIP programs. 

We propose the following limited 

differences in the definition of ‘‘lawfully 

present’’ in this proposed rulemaking as 

compared to our July 1, 2010 SHO. 

We propose inclusion of victims of 

trafficking, at paragraph (9) whose 

eligibility for Medicaid is mandatory 

under federal law under section 107 of 

the Victims of Trafficking and Violence 

Protection Act of 2000 (Pub. L. 106–386) 

as amended 22 U.S.C. 7105). Inclusion 

of victims of trafficking in the definition 

of ‘‘lawfully present’’ is needed to 

ensure alignment of current Medicaid 

rules with eligibility for advance 

payment of the premium tax credit, 

cost-sharing reductions, and enrollment 

through the Exchange. We note that 

these individuals are required to be 

covered in Medicaid, through the 

Victims of Trafficking Act. Thus, 

regardless of whether a state elects to 

cover lawfully residing children or 

pregnant women under the option 

codified at proposed § 435.406(b), 

coverage of these individuals is required 

if they meet all other eligibility 

requirements. 

In the definition of lawfully present 

proposed at § 435.4, with respect to noncitizens with a valid non-immigrant 

status, we propose in paragraph (2) to 

include all non-immigrants who have a 

valid status, rather than limiting 

inclusion to such individuals who also 

have not violated the terms of their 

status, as specified in the SHO. This 

allows coverage to non-immigrants who 

have valid and unexpired status, 

without requiring state Medicaid 

agencies to understand all the terms of 

such status, and to determine whether 

any terms have been violated. This, in 

turn, will enable agencies to verify this 

non-citizen status through a data match 

with DHS through the federal data 

services hub (using that Department’s 

Systematic Alien Verification for 

Entitlements (SAVE) system), for 

virtually all non-immigrant applicants 

or beneficiaries without further 

investigation. 

With respect to individuals granted an 

employment authorization document 

(EAD) under 8 CFR 274a.12(c), we 

propose in the definition of lawfully 

present at paragraph (4)(iii) to include 

most non-citizens granted such 

document, instead of limiting inclusion 

only to specified groups of individuals 

granted an EAD, as was done in the 

SHO, thereby enabling verification of 

satisfactory immigration status through 

SAVE, which typically can verify a 

grant of EAD in three to five seconds. 

We note that this proposed modification 

should not result in an expansion of 

eligibility, but only a simplification of 

verification processes for these 

individuals. It is our understanding that 

all individuals granted an EAD under 

§ 274a.12(c), are already considered 

lawfully present under another category 

under our SHO, with the exception 

provided in the proposed regulation at 

paragraph (10). 

We propose in the definition of 

lawfully present at § 435.4 to add two 

additional categories of non-citizens not 

included in the definition of ‘‘lawfully 

present’’ in the SHO. First, we propose 

in § 435.4 at paragraph (4)(vii) inclusion 

of individuals who have been granted 

an administrative stay of removal by 

DHS. We seek comments on whether we 

should include individuals granted an 

administrative stay by U.S. Department 

of Justice. Such stays provide noncitizens with permission to remain 

living in the United States. We 

considered also adding individuals who 

have been granted stays by a court (as 

opposed to administratively issued by 

DHS). We understand some court stays 

are effective without any consideration 

of the filing, merely by the individual 

filing for such a stay. We seek comments 

on this provision and alternative ways 

to address those for whom a court has 

considered an individual’s situation and 

granted a stay. 

Second, at paragraph (10) of the 

definition, we propose to add an 

exception to the lawfully present 

definition to specify that individuals 

with deferred action under the Deferred 

Action for Childhood Arrivals (DACA) 

process shall not be eligible for 

Medicaid and CHIP under the CHIPRA 

state option with respect to any of the 

categories (1) through (9), in accordance 

with and based on the rationales 

included in the interpretative guidance 

set forth in a SHO letter, #12–002 issued 

August 28, 2012, available at 

www.medicaid.gov/Federal-PolicyGuidance/downloads/SHO–12–002.pdf 

and in the interim final rule with 

request for comments to the Pre-Existing 

Condition Insurance Plan (PCIP) 

Program (77 FR 52614, Aug. 30, 2012). 

We propose that the ‘‘lawfully present’’ 

definition in the Exchange rules would 

also incorporate this exception. 

We note that we propose to remove 

the language contained in our SHO 

specifically related to individuals who 

are lawfully present in the 

Commonwealth of the Northern Mariana 

Islands (CNMI) under 48 U.S.C. 1806(e) 

from our definition of lawfully present 

at § 435.4. We understand this statutory 

provision expired on November 28, 

2011, which was two years after the 

transition program to extend U.S. 

immigration laws to the CNMI’s 

immigration system began. We believe 

that most of these individuals will 

continue to be covered under our 

definition of lawfully present at § 435.4 

in other categories, including as nonimmigrants or parolees. 

We solicit comments on the definition 

of lawfully present in this proposed 

regulation. Codification of other statutes 

relating to categories of non-citizens 

who are eligible for Medicaid (including 

under title IV of PRWORA and 

subsequent federal legislation) that are 

not reflected in our current regulations 

are not included in this proposed 

rulemaking. 

We also propose to amend 

§ 457.320(c) to implement section 

2107(e)(1) of the Act, to permit a 

separate CHIP program to cover 

‘‘lawfully residing’’ children or pregnant 

women otherwise eligible for CHIP. We 

propose to align the terminology and the 

option to provide coverage for ‘‘lawfully 

present’’ children and pregnant women 

in CHIP under § 457.320(c) with policy 

for Medicaid in proposed § 435.406(b). 


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The same definition of ‘‘lawfully 

present’’ proposed for Medicaid also is 

proposed for CHIP. Consistent with the 

statute, states may not choose to cover 

these new groups only in CHIP, without 

also having extended the option to 

Medicaid. As section 1903(v)(4)(A) of 

the Act merely lifts restrictions for 

lawfully residing, otherwise eligible 

individuals, a state must have coverage 

that would otherwise include the 

individual. Thus, lawfully present 

pregnant women could be covered 

under CHIP only if the CHIP program 

has elected to cover pregnant women 

generally, either under a waiver or 

demonstration or under the option 

provided under section 2112 of the Act 

to cover pregnant women under its 

CHIP state plan. 

e. Deemed Newborn Eligibility 

(§ 435.117 and § 457.360) 

(i). Medicaid Deemed Newborn 

Eligibility (§ 435.117) 

Section 1902(e)(4) of the Act and 

existing § 435.117 require that babies 

born to mothers covered under the 

Medicaid state plan for benefits on the 

date of birth, including during a period 

of retroactive eligibility, be 

automatically deemed eligible for 

Medicaid for one year from birth. The 

provision is intended to ensure coverage 

of the newborn without any gaps; no 

application is required. In accordance 

with section 1903(x)(5) of the Act, as 

added by section 211(b)(3)(A)(ii) of 

CHIPRA and consistent with previous 

guidance, we clarify at proposed 

paragraph (b)(1)(i) of § 435.117 that a 

child born to a mother covered by 

Medicaid for labor and delivery as an 

emergency medical service pursuant to 

section 1903(v)(3) of the Act shall be 

deemed eligible for Medicaid during the 

child’s first year of life. 

Section 113(b)(1) of CHIPRA amended 

section 1902(e)(4) of the Act effective 

April 1, 2009 to eliminate the previous 

statutory requirement that eligibility 

under this section continue only so long 

as the baby was a member of the 

mother’s household and the mother 

either remained eligible for Medicaid or 

would remain eligible if still pregnant. 

We propose revisions to § 435.117(b) to 

implement this change in the statute. 

Previous guidance was provided in SHO 

letter #09–009 dated August 31, 2009, 

http://downloads.cms.gov/cmsgov/ 

archived-downloads/SMDL/downloads/ 

SHO083109b.pdf. 

Section 111 of CHIPRA added a new 

section 2112 to title XXI of the Act, 

giving states the option to cover targeted 

low-income pregnant women under a 

separate CHIP state plan. Section 

2112(e) of the Act requires that babies 

born to such pregnant women covered 

under the CHIP state plan for benefits 

for the date of birth are deemed to have 

applied and been determined eligible 

for Medicaid or CHIP, as appropriate, 

and remain eligible for one year. At 

§ 435.117(b)(1)(ii), we interpret this to 

mean that babies born to pregnant 

women on CHIP with household income 

at or below the applicable Medicaid 

income standard for infants under 

§ 435.118 of the Medicaid eligibility 

final rule must be automatically 

enrolled in Medicaid, and those born to 

pregnant women with income above the 

applicable Medicaid income standard 

must be automatically enrolled in CHIP. 

To promote simplicity of 

administration and the best interest of 

beneficiaries, consistent with section 

1902(a)(19) of the Act, we also propose 

at § 435.117(b)(1)(iii) that states be 

provided with the option to treat as 

deemed newborns in Medicaid the 

babies born to mothers covered as a 

child under a separate CHIP for benefits 

for the date of birth. We solicit 

comments on whether states should 

have the option to extend automatic 

Medicaid enrollment to the extent that 

the state determines that, under normal 

circumstances, such babies would be 

likely to meet requirements for 

Medicaid eligibility: (1) To all babies 

born to mothers covered as a targeted 

low-income child under a separate 

CHIP, (2) only to such babies if the state 

has elected the option to cover targeted 

low income pregnant women under its 

CHIP state plan, even if the mother does 

not qualify as a targeted low-income 

pregnant woman, or (3) to no such 

babies born to mothers covered as a 

targeted low-income child under a 

separate CHIP who do not qualify as a 

targeted low-income pregnant woman. 

Also consistent with section 1902(a)(19) 

of the Act, we propose at 

§ 435.117(b)(1)(iv) that states be 

provided with the option to treat as 

deemed newborns in Medicaid the 

babies born to mothers covered under a 

Medicaid or CHIP demonstration under 

section 1115 of the Act, unless the 

demonstration’s special terms and 

conditions (STCs) specifically address 

this issue. 

We also propose a new paragraph (c) 

to give states the option of recognizing 

the deemed newborn status from 

another state for purposes of enrolling 

babies born in another state without 

need for a new application. Although 

the statutory language refers to deemed 

eligibility under ‘‘such state plan’’ 

referring back to the state plan under 

which the mother was covered by 

Medicaid, to read this language so 

narrowly would restrict the rights of 

mothers and children to travel among 

states, similar to a durational residency 

requirement. 

Section 1902(e)(4) of the Act provides 

that for the year of deemed eligibility, 

the Medicaid identification number of 

the mother serves as the identification 

number of the child for Medicaid claims 

purposes, unless the state issues the 

child a separate identification number. 

For babies eligible under proposed 

§ 435.117, proposed paragraph (d)(2) 

directs the agency to promptly issue a 

separate Medicaid identification 

number for the child prior to the date 

of the child’s first birthday or the 

termination of the mother’s Medicaid 

eligibility, whichever is sooner, unless 

the child is determined to be ineligible 

(such as, the child is not a state 

resident). 

Finally, section 1902(e)(4) of the Act 

does not distinguish between babies 

born to pregnant women eligible for 

Medicaid as medically needy under 

section 1902(a)(10)(C) of the Act and 

those born to pregnant women eligible 

for Medicaid as categorically needy 

under section 1902(a)(10)(A) of the Act. 

We propose to revise existing 

regulations at § 435.301 by removing 

paragraph (b)(1)(iii), which provided 

that babies born to medically needy 

pregnant women receive deemed 

newborn eligibility as a medically needy 

child. Under revised § 435.117, as 

proposed in this rulemaking, babies 

born to pregnant women eligible as 

medically needy and receiving covered 

benefits for the date the child is born are 

covered as deemed newborns under 

§ 435.117. These proposed changes are 

consistent with current policy, 

clarifying and simplifying them, and 

should have no meaningful impact on 

state programs. 

(ii) CHIP Deemed Newborn Eligibility 

(§ 457.360) 

As discussed in the previous section 

of this preamble, section 111(a) of 

CHIPRA gives states the option to cover 

pregnant women under a separate CHIP 

and also adds section 2112(e) of the Act, 

requiring states to provide deemed 

newborn eligibility under Medicaid or 

CHIP, as appropriate based on income, 

to newborns of those mothers. 

Consistent with the proposed 

regulations at § 435.117 for Medicaid 

deemed newborn eligibility discussed 

above, we propose a new § 457.360 to 

extend deemed newborn eligibility 

under CHIP to babies born to mothers 

covered as targeted low-income 

pregnant women under a separate CHIP 

for the date of birth, to the extent that 

the state has not extended Medicaid 


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Federal Register / Vol. 78, No. 14 / Tuesday, January 22, 2013 / Proposed Rules 4615 

eligibility to the babies. We are also 

proposing a state option to extend 

deemed newborn eligibility to babies of 

mothers covered as targeted low-income 

children under a separate CHIP (not as 

targeted low-income pregnant women) 

for the date of birth, to the extent that 

the state has not extended Medicaid 

eligibility to the babies. This option 

would relieve the state from any need to 

shift children from one category to 

another, ensuring that benefits are 

delivered in the children’s best interests 

and thus promoting the effective and 

efficient delivery of coverage as required 

by section 2101(a) of the Act. Also, we 

are proposing a state option to provide 

CHIP deemed newborn eligibility to 

babies of mothers who were receiving 

CHIP coverage in another state for the 

date of the child’s birth or to babies of 

mothers covered by Medicaid or CHIP 

under an 1115 demonstration. As 

discussed above in this preamble, if the 

mother’s household income is no more 

than the income standard for infants in 

Medicaid, the baby will be deemed 

eligible and enrolled in Medicaid; 

otherwise, the baby will be deemed 

eligible and enrolled in a separate CHIP. 

6. Verification Exceptions for Special 

Circumstances (§ 435.952) 

Under the final eligibility rule at 

§ 435.952(c), states are permitted to 

request additional information from 

individuals, including documentation, 

to verify most eligibility criteria if data 

obtained electronically by the state is 

not reasonably compatible with attested 

information or electronic data is not 

available, as specified in 

§ 435.952(c)(2)(ii) of the regulation. 

There are, however, individuals for 

whom providing documentation even in 

such limited circumstances would 

create an insurmountable procedural 

barrier to accessing coverage, while 

serving little evidentiary value. To 

ensure that verification procedures are 

consistent with simplicity of 

administration and in the best interest 

of individuals in accordance with 

section 1902(a)(19), we are proposing to 

add an exception at § 435.952(c)(3) to an 

otherwise permissible requirement to 

provide documentation in such 

circumstances. Under paragraph (c)(3), 

except as specifically required under the 

Act (for example, with respect to 

citizenship and immigration status if 

electronic verification is not successful), 

states may not require documentation 

from individuals for whom 

documentation does not exist or is not 

reasonably available at the time of 

application or renewal. Such 

circumstances include, but are not 

limited to, individuals who are 

homeless and victims of domestic 

violence or natural disasters. 

7. Verification Procedures for 

Individuals Attesting to Citizenship or 

Satisfactory Immigration Status 

Verification of citizenship and 

immigration status is governed by 

sections 1137, 1902(a)(46)(B), 1902(ee), 

and 1903(x) of the Act, and by section 

1943 of the Act, which cites to 

section1413(c) of the Affordable Care 

Act. Implemented in current regulations 

at § 435.406, section 1137 of the Act 

requires that individuals seeking an 

eligibility determination make a 

declaration of citizenship or 

immigration status, and that the status 

of non-citizens be verified with the 

Department of Homeland Security 

(DHS). Under section 1902(a)(46)(B), 

states must verify citizenship status of 

applicants either by use of documentary 

evidence in accordance with section 

1903(x) of the Act or through an 

electronic data match with the Social 

Security Administration (SSA) under 

section 1902(ee) of the Act, as added by 

section 211 of CHIPRA. Documentation 

of citizenship status under section 

1903(x) is implemented in current 

regulations at § 435.407. Section 211 of 

CHIPRA also made other changes to 

section 1903(x), for example, exempting 

infants deemed eligible for Medicaid 

under section 1902(e)(4) of the Act from 

the requirement to verify citizenship, 

and adding a statutory requirement to 

provide for a ‘‘reasonable opportunity’’ 

period for individuals declaring U.S. 

citizenship to provide verification, 

similar to the ‘‘reasonable opportunity’’ 

afforded individuals declaring 

satisfactory immigration status under 

section 1137(d) of the Act. We propose 

revisions to § 435.406 and § 435.407 of 

the current regulations and § 435.956 of 

the Medicaid eligibility final rule in 

order to implement section 1902(ee) of 

the Act and other revisions to section 

1903(x) of the Act made by CHIPRA, as 

discussed below and note that we 

redesignate the definition of 

‘‘citizenship’’ from the introductory 

paragraph at § 435.407 to a definition at 

§ 435.4. 

a. Electronic Verification of Citizenship 

and Immigration Status (§ 435.940 and 

§ 435.956) 

Under § 435.949 of final Medicaid 

Eligibility Rule, the Secretary will 

establish an electronic service (referred 

to as the ‘‘federal data services hub’’) 

through which all insurance 

affordability programs can access 

specified data from pertinent federal 

agencies needed to verify eligibility. Per 

§ 435.949, if information related to 

verifying Medicaid eligibility— 

including information to verify 

citizenship from SSA and information 

to verify immigration status from DHS— 

is available through the federal data 

services hub described in § 435.949, 

states will be required to obtain such 

information through that service. We 

therefore clarify at proposed 

§ 435.956(a)(1) that states will be 

required to verify citizenship and 

immigration status through the federal 

data services hub if available. 

Prior to passage of the Affordable Care 

Act, section 211 of CHIPRA, which 

added section 1902(ee) to the Act, has 

provided states with an option to 

conduct an electronic data match 

directly with SSA to satisfy the 

citizenship verification requirements in 

lieu of requiring documentation in 

accordance with section1903(x) of the 

Act. To date, 44 states have adopted this 

option in their Medicaid and CHIP 

programs. Although states will be 

required to conduct electronic 

verification of citizenship primarily 

through the federal data services hub, if 

such verification is not available, the 

option under section 1902(ee) of the Act 

will remain in effect. 

If the agency is unable to verify such 

status through the hub, proposed 

§ 435.956(a)(2) directs the agency to 

verify citizenship by conducting an 

electronic data match directly with SSA 

or by obtaining documentation in 

accordance with § 435.407 of the 

regulations, as modified in this 

proposed rulemaking, and to verify 

immigration status by conducting a 

match directly with DHS’ SAVE system 

in accordance with section 1137 of the 

Act and § 435.406. In such instances, 

verification of citizenship and 

immigration status should be conducted 

in a manner consistent with the 

requirements of § 435.952(c)(2)(ii) of the 

final eligibility rule (permitting states to 

require documentation to verify an 

eligibility criterion only if electronic 

data is not available, as defined in the 

regulation). Note that some of the 

documentary evidence permitted under 

section 1903(x) of the Act and § 435.407 

to verify citizenship may be available 

electronically, such as a match with a 

state’s vital statistics agency, and such 

data also must be accessed when 

available under the standard established 

in § 435.952(c)(2)(ii) before paper 

documentation of citizenship is 

requested. 

Under 8 U.S.C. 1613(b)(2), qualified 

non-citizens who are veterans with a 

discharge characterized as a honorable 

discharge and not on account of 

alienage and who fulfill the minimum 

active-duty service requirements of 


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section 5303A of Title 38 or are in active 

military duty status (other than active 

duty for training), or the spouse or 

dependent child of such a veteran or 

individual in active duty status, are 

exempt from the 5-year waiting period 

applicable to certain qualified noncitizens. We seek comment on 

appropriate verification procedures for 

veteran status. 

In proposed § 435.956(a)(3), we move 

and revise current language at 

§ 435.407(i)(5), which provides that 

verification of citizenship (whether 

through documentation submitted by 

the applicant or through an electronic 

data match) is a one-time activity that 

should be recorded in the individual’s 

file. At a regular eligibility renewal or as 

part of a future application for 

Medicaid, the agency may not re-verify 

citizenship, but must only check its 

records to confirm that the individual’s 

citizenship has already been verified. 

We expect that states will re-verify an 

individual’s immigration status if the 

status is temporary in nature, such as for 

individuals in Temporary Protected 

Status. We solicit comments on 

whether, consistent with existing 

regulations at § 431.17(c), Medicaid 

agencies should be expected to retain 

such records indefinitely or for a more 

limited period of time, such as 5 or 10 

years. 

b. Reasonable Opportunity To Verify 

Citizenship or Immigration Status 

We anticipate that electronic 

verification with SSA or DHS generally 

will occur in real or near-real time. In 

the event that electronic verification 

through the hub or another source is 

delayed or fails, sections 1903(x) and 

1902(ee) of the Act require that states 

provide applicants declaring U.S. 

citizenship with a ‘‘reasonable 

opportunity period’’ to verify their 

citizenship. During the reasonable 

opportunity period, states must try to 

resolve with SSA or the applicant 

inconsistencies that arise from the data 

match, and request additional 

documentation from the applicant if the 

inconsistencies cannot be resolved. 

Under sections 1902(ee) and 1903(x) of 

the Act, states also must furnish 

Medicaid to otherwise eligible 

individuals during the reasonable 

opportunity period. As noted, section 

1137(d)(4) of the Act similarly requires 

states to provide individuals with a 

‘‘reasonable opportunity’’ to establish 

satisfactory immigration status if 

documentation is not provided or 

verification of satisfactory immigration 

status with DHS fails, and to receive 

benefits if otherwise eligible during 

such time. Section 1411(e)(3) of the 

Affordable Care Act requires Exchanges 

to verify an individual’s attestation of 

citizenship and lawful presence in the 

same manner as Medicaid in accordance 

with section 1902(ee) of the Act when 

inconsistencies arise. We anticipate that 

in many cases states may be able to 

resolve inconsistencies in real-time or 

near real-time, in which cases the 

reasonable opportunity period would 

not need to be triggered. 

In accordance with sections 1137, 

1902(ee), and 1903(x) of the Act, we 

propose to add a new paragraph (g) to 

§ 435.956 to implement the reasonable 

opportunity period afforded to 

individuals who declare U.S. 

citizenship or satisfactory immigration 

status. Under § 435.911(c) of the final 

Medicaid Eligibility Rule (revised to 

update a cross reference in this 

proposed rule), states must provide 

benefits to otherwise eligible 

individuals during such reasonable 

opportunity period. Situations which 

may trigger the reasonable opportunity 

period include the following: 

• The individual is unable to provide 

a SSN, needed for electronic verification 

with SSA; 

• Either the federal data services hub 

or SSA or DHS databases are 

temporarily down for maintenance or 

otherwise unavailable, thereby delaying 

electronic verification; 

• There is an inconsistency between 

the data available from an electronic 

source and the individual’s declaration 

of citizenship or immigration status 

which the agency must attempt to 

resolve, including by identifying 

typographical or clerical errors; or 

• Electronic verification is 

unsuccessful, even after agency efforts 

to resolve any inconsistencies, and 

additional information, including 

documentation, is needed. 

Recognizing that electronic 

verification of citizenship and 

immigration status generally will be 

accomplished in real-time, we further 

propose that the reasonable opportunity 

period is triggered if verification of 

citizenship or immigration status cannot 

be concluded ‘‘promptly.’’ This 

standard is consistent with the standard 

applied to the provision of benefits 

generally under § 435.911(c) of the final 

Medicaid Eligibility Rule, pursuant to 

which individuals must be furnished 

benefits ‘‘promptly and without undue 

delay.’’ We expressly apply the standard 

in § 435.911(c) to the provision of 

benefits to individuals during a 

reasonable opportunity period by 

including a cross reference to 

§ 435.911(c) at proposed 

§ 435.956(a)(2)(ii). Thus, if the agency 

cannot resolve inconsistencies in a data 

match with SSA or DHS (performed 

either in accordance with § 435.949 of 

the final Medicaid eligibility final rule 

or proposed § 435.956(a)(1) or (2)) in a 

prompt manner, such that eligibility 

would be determined and benefits 

provided with the same promptness as 

if the agency were able to verify 

citizenship or immigration status in 

real-time, the agency must begin the 

reasonable opportunity period, and 

benefits must be furnished as soon as 

other eligibility criteria are verified, in 

the same manner and as promptly as 

such criteria are verified for applicants 

generally. In the case of an individual 

with respect to whom a temporary 

immigration status was verified at 

application and with respect to whom 

the agency is re-verifying satisfactory 

status, regulations at § 435.911(c) in the 

Medicaid eligibility final rule similarly 

require that benefits be furnished during 

the reasonable opportunity period 

afforded under § 435.956(g). We note 

that in the case of a reasonable 

opportunity period triggered because 

the applicant is unable to provide an 

SSN, resulting in the state’s inability to 

initiate electronic verification of 

citizenship with SSA, states must 

comply with the regulations at 

§ 435.910, relating to assisting 

individuals with obtaining and verifying 

SSNs. We also note that we are making 

a technical correction to § 435.910(g) to 

put back the reference to the verification 

of SSNs with SSA, which was 

inadvertently deleted in the Medicaid 

eligibility final rule. 

We propose a conforming amendment 

to § 435.911(c) of the final Medicaid 

eligibility final rule to clarify that the 

reasonable opportunity period 

encompasses all aspects of the process 

to verify citizenship immigration status, 

including not only time for an 

individual to provide documentation 

but also time for the agency to resolve 

inconsistencies or conclude the 

electronic verification process. This 

proposed rulemaking also replaces the 

cross reference in § 435.911(c) of the 

Medicaid eligibility final rule to the 

statutory provisions governing the 

reasonable opportunity period with a 

cross reference to § 435.956(g), as 

proposed in this rulemaking. 

The proposed rule seeks to balance 

individuals’ ability to access coverage in 

a timely manner and states’ 

administrative interests in not being 

required to take steps to enroll someone 

in the program immediately whenever 

electronic verification is not 

accomplished in real time, if 

inconsistencies can be resolved quickly. 

We note that section 1137(d)(4) of the 

Act seems to require a reasonable 


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opportunity period only in cases where 

the individual has either not provided 

documentation or where verification 

with DHS has failed. This seems to 

indicate that states have at least the 

option of some reasonable time during 

which they can attempt to resolve 

inconsistencies and verify immigration 

status prior to providing the reasonable 

opportunity period, including the 

provision of benefits. Similarly, section 

1902(ee)(1)(B)(ii) discusses the 

reasonable opportunity period only 

once an inconsistency in verification 

cannot be resolved, which is consistent 

with the proposed policy. We also are 

considering a policy—either instead of 

or in addition to the policy described 

above—under which the reasonable 

opportunity period, including provision 

of benefits during such period, would be 

triggered if the agency cannot resolve 

any inconsistencies with the electronic 

match with SSA or DHS within a 

specified number of business days. We 

seek comments on both approaches. 

We propose to apply the same 

reasonable opportunity period of 90 

days that is required under section 

1902(ee) of the Act, and which also is 

required for Exchanges, to all 

citizenship verification procedures, 

whether conducted in accordance with 

§ 435.949, section 1902(ee) of the Act, or 

§ 435.407. We are also proposing this 

same 90-day timeframe to verifying an 

individual’s satisfactory immigration 

status in accordance with § 435.949, 

§ 435.406 or section 1137(d) of the Act. 

This will provide for consistency and 

ease of administration and coordination 

between insurance affordability 

programs and better understanding by 

the public. 

Proposed § 435.956(g)(1) establishes 

the basic requirement to provide a 

reasonable opportunity to individuals to 

verify citizenship or immigration status 

as well as notice of such opportunity. 

We propose in paragraph (g)(2) that the 

reasonable opportunity period extends 

90 days from the date on which such 

notice is received by the individual. We 

are proposing to define the date the 

individual receives the notice to mean 

5 days after the date on the notice, 

unless the individual shows that he or 

she did not receive the notice within the 

5-day period, consistent with the 

proposed revision to § 431.231 (relating 

to receipt of notice of an individual’s 

right to appeal). We also propose (1) to 

codify current policy, outlined in 

previous CMS guidance (SHO–09–016, 

SMD 06–012), to permit states to extend 

the reasonable opportunity period if the 

agency needs more time to complete the 

verification process, or the individual 

requests more time and is acting in good 

faith to obtain the necessary 

documentation; and (2) to permit states 

to begin furnishing benefits during the 

reasonable opportunity period as early 

as the later of the date of application or 

declaration of status; however, the 90- 

day period provided to the individual to 

furnish necessary evidence must always 

be counted from the date notice of the 

reasonable opportunity period is 

received. 

As noted, during the reasonable 

opportunity period, if electronic 

verification directly with SSA or DHS is 

not successful, the agency must first 

utilize other available data sources (for 

example, a data match with vital 

statistic records of birth or the Office of 

Refugee Resettlement telephone line) to 

verify citizenship or immigration status, 

in accordance with § 435.952(c)(2)(ii), 

prior to seeking additional information 

or documentation from an individual. If 

citizenship or immigration status has 

not been verified through efforts by the 

agency and satisfactory documentation 

has not been provided by the individual 

by the end of the reasonable opportunity 

period, the agency must take action to 

terminate benefits. The agency must 

provide timely notice and fair hearing 

rights in accordance with part 431 

subpart E, except we are proposing that 

the provisions at § 431.230 and 

§ 431.231 relating to maintaining and 

reinstating services may be applied at 

state option. We believe making these 

provisions applicable at state option is 

legally permissible under section 

1902(a)(3) of the Act, as well as relevant 

case law on the procedural rights 

associated with denials or terminations. 

Thus, once the individual has been 

provided benefits during a reasonable 

opportunity, the state may consider the 

individual to be a beneficiary, eligible 

for continued benefits pending the 

outcome of an appeal denying 

eligibility. On the other hand, 

individuals provided benefits during a 

reasonable opportunity period have not 

actually been determined eligible for 

Medicaid, as their citizenship or 

immigration status has not been 

established. Therefore, once the 

reasonable opportunity period is over, 

we believe the state can treat such 

individuals the same as those denied 

eligibility for any other reason, which 

are not eligible for benefits pending the 

outcome of a fair hearing. Further, the 

availability of the reasonable 

opportunity period, and the fact that an 

otherwise eligible individual is 

provided eligibility during such period, 

reduces risk of error that eligible 

individuals will be denied or delayed 

benefits, as well as the probable value 

of additional procedural safeguards of 

maintaining services pending the 

outcome of a fair hearing. Thus, once a 

state has (a) already attempted to resolve 

discrepancies associated with 

verification, (b) turned to other 

electronic data sources if verification 

with DHS or SSA is unsuccessful, (c) 

offered an opportunity for the 

individual to resolve discrepancies or 

provide alternative documentation of 

status, including (d) during a reasonable 

opportunity period during which 

benefits are furnished as long as the 

individual meets all other eligibility 

criteria, the state may legitimately 

conclude that the marginal value of 

providing continued benefits to the 

individual pending appeal does not 

outweigh the cost to the state associated 

with maintaining services and 

reinstating services retroactive to the 

date or termination if the individual 

should prevail on his or her appeal. 

We note that the requirement to 

provide a reasonable opportunity period 

for citizens and nationals under 

CHIPRA took effect on July 1, 2006, 

however our proposal to define the 

length of such period—other than those 

done through the process described in 

section 1902(ee) of the Act, for which 

the 90-day timeframe also went into 

effect in January 1, 2010 with the 

passage of CHIPRA—will take effect in 

January 2014. 

Finally, we propose to amend 

§ 435.1008 to reflect the statutory 

requirement that states are entitled to 

receive federal financial participation 

(FFP) for benefits provided to 

individuals declaring U.S. citizenship or 

satisfactory immigration status during 

the reasonable opportunity period, 

regardless of whether eligibility 

ultimately is approved for such period. 

c. Changes to and Clarification of 

Current Policy (§ 435.3, § 435.406, and 

§ 435.407) 

Section 211 of CHIPRA also made 

several technical corrections and 

amendments to section 1903(x) of the 

Act. On December 28, 2009, CMS issued 

a state Health Official Letter, SHO #: 09– 

016, providing guidance regarding 

section 211 of CHIPRA (http:// 

www.cms.gov/smdl/downloads/ 

SHO122809corrected.pdf). We propose 

to codify key aspects of that guidance in 

this rulemaking, as described below. 

These proposed changes clarify current 

policy and will not significantly impact 

current state programs. 


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4618 Federal Register / Vol. 78, No. 14 / Tuesday, January 22, 2013 / Proposed Rules 

(i) Exemption From Citizenship 

Verification Requirement for Deemed 

Newborns (§ 435.406, § 457.380) 

Section 211(b)(3) of CHIPRA amends 

section 1903(x) of the Act to exempt 

from the citizenship verification 

requirement children eligible for 

Medicaid under 1902(e)(4) of the Act 

and § 435.117 because their mothers are 

covered for the child’s birth under 

Medicaid. Such children (often referred 

to as ‘‘deemed newborns’’) are not 

required to document or verify 

citizenship at birth or at any subsequent 

determination or redetermination of 

eligibility, including after a break in 

coverage. As allowed by section 

1903(x)(2)(E) of the Act, under 

435.406(a)(1)(iv)(E), we propose that 

information from the state’s separate 

CHIP as well as information from 

another state that the individual was 

deemed eligible as a newborn under 

either Medicaid or CHIP in that state 

also serves to exempt the individual 

from the requirement to document 

citizenship. This policy satisfies the 

intent of section 211(b)(3) of CHIPRA 

that evidence of deemed newborn 

eligibility for Medicaid is sufficient 

evidence of citizenship. Under section 

1903(x)(5) of the Act, proposed 

§ 435.406(a)(1)(iv)(E) applies equally to 

children born to non-citizen mothers 

covered only for labor and delivery or 

other emergency services. We propose at 

§ 457.380 also to apply this exemption 

to CHIP based on the authority given the 

Secretary under section 1903(x)(2)(E) of 

the Act (as incorporated in CHIP under 

section 2105(c)(9)) to specify the bases 

under which satisfactory documentary 

evidence of citizenship or nationality 

previously has been presented. 

(ii) Types of Acceptable Documentary 

Evidence of Citizenship and Identity 

(§ 435.407) 

The current regulations implementing 

section 1903(x) of the Act, as in effect 

prior to CHIPRA were designed to 

reduce Medicaid costs and prevent 

coverage of individuals who were in the 

country illegally (72 FR 38688 through 

38689). A report by the Government 

Accountability Office (GAO) indicates 

that state experience since the 

regulations were published has 

demonstrated that very few 

undocumented individuals apply for 

Medicaid or falsely claim U.S. 

citizenship (June 2007, GAO–07–889). 

The report and other reports from 

government and non-profit 

organizations and on state experiences 

confirms, that, as implemented, the 

current regulations have resulted in an 

increase in administrative costs as well 

as in large numbers of eligible citizens, 

especially children, being 

inappropriately denied coverage, or 

their enrollment in Medicaid delayed. 

In light of these findings, we are 

proposing to modify the regulations 

governing the verification of citizenship 

and identity under section 1903(x) of 

the Act in the event citizenship cannot 

be verified through the federal data 

services hub or an electronic data match 

directly with SSA, by eliminating nonstatutory requirements in the current 

regulations that increase administrative 

burden and create unnecessary barriers 

to successful documentation, without 

compromising program integrity. 

We are eliminating the 4-tier structure 

in the current regulation and instead 

propose an approach that is consistent 

with section 1903(x) of the Act, which 

establishes 2 tiers of documents: (1) 

Those that provide evidence of 

citizenship; and (2) those that provide 

evidence of citizenship but require an 

additional identity document. 

In § 435.406 of the current 

regulations, we propose to: 

• Revise the introductory paragraph 

(a) to replace the phrase ‘‘residents of 

the United States’’ with ‘‘individuals’’ to 

clarify that § 435.406(a) pertains to an 

individual’s eligibility based on 

citizenship or non-citizen status, not 

residency (standards regarding state 

residency are at § 435.403); 

• Revise paragraphs (a)(1)(i) and (ii) 

to replace the reference to section 1137 

of the Act with a cross reference to 

§ 435.956(a), as proposed in this 

rulemaking. 

• Add a new paragraph (a)(3) to 

revise who is permitted to make the 

declaration of citizenship or 

immigration status required under 

section 1137 of the Act to include: the 

individual, or an adult member of the 

individual’s family or household; an 

authorized representative; and, if the 

applicant is a minor or incapacitated, 

someone acting responsibly for the 

applicant. The proposed revisions aim 

to align with the regulation at § 435.907 

of the Medicaid eligibility final rule 

regarding who is permitted to submit an 

application on behalf of another 

individual. Under proposed 

§ 435.406(a)(3), in order for another 

person to declare citizenship or 

immigration status on behalf of the 

applicant, the person must attest to 

having a reasonable basis for making 

such declaration, such as personal 

knowledge that the individual is a 

citizen or national or in satisfactory 

immigration status. 

• Delete the word ‘‘recipients’’ from 

paragraph (a)(1)(iii) to reflect the policy, 

discussed above, that verification of 

citizenship is a one-time activity and 

therefore only applies to first time 

applicants. 

• Delete paragraph (a)(1)(iv) and 

redesignate paragraph (a)(1)(v) at 

(a)(1)(iv) because we have moved the 

requirement to document the 

verification of citizenship in the 

individuals file to § 435.956, and as 

noted existing regulations provide that 

re-verification of citizenship at regular 

renewals is not needed. 

In § 435.407(f) of the revised 

regulations, we propose to remove the 

requirement that individuals must 

provide an original copy of documents, 

and replace it with a requirement that 

states accept photocopies, facsimiles, 

scanned or other copies of documents, 

unless information on the copy is 

inconsistent with information available 

to the agency, or the agency otherwise 

has reason to question the validity of the 

information on the document. Originals 

are not required under the statute, have 

not been shown to enhance program 

integrity, undermine potential for a realtime online user experience involving 

electronic submission of documents as 

well as submission of complete 

applications by mail, and lead to 

increased administrative costs since 

states must return the originals. We also 

propose to eliminate the requirement 

that records—such as medical, school or 

religious records—containing 

information regarding an individual’s 

place of birth be created within a certain 

period of time before the date of 

application, and to permit states to 

maintain a record (including an 

electronic record) of a successful 

verification in lieu of maintaining paper 

copies of proof of citizenship, consistent 

with section 1943 of the Act and section 

1413 of the Affordable Care Act. These, 

and other proposed revisions to simplify 

the existing regulations in accordance 

with Executive Order 13563’s call for 

streamlining and updating regulations 

to reduce administrative burden on 

states and consumers, in order of 

paragraph letter, are as follows. 

In paragraphs (a) through (e) of 

§ 435.407, we remove all references in 

§ 435.407 to forms and form numbers 

and who can issue certain forms, all of 

which are subject to change, for 

example, the Immigration and 

Naturalization Services (INS) is now 

part of the Department of Homeland 

Security (DHS), and such information is 

not relevant to the probative value of the 

documents as evidence of citizenship; 

delete from the list of acceptable 

documents passports issued through 

1980 that may have included several 

members of the family, as such passport 

has not been issued for over 30 years; 


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delete repetitive, extraneous or obsolete 

language, including reference to 

individuals born in Guam on or after 

April 10, 1899 since that would 

encompass everyone at this time, and 

the delayed effective date for reliance on 

Enhanced Driver’s Licenses, which 

some states have begun to issue, and 

references to tribal documents in 

paragraphs (b), (d) and (e) which will be 

encompassed under a new paragraph 

(a)(5), discussed below. 

In § 435.407(a) we also propose 

revisions to the list of documents that 

can be used to prove citizenship 

without separate proof of identity to 

add: 

• At paragraph (a)(1), a U.S. Passport 

Card, which is issued to U.S. citizens for 

travel across land or sea borders to 

Canada, Mexico, the Caribbean, and 

Bermuda, and delete language 

discussing certain passports issued 

through 1980 since such passports have 

not been issued for over 30 years; and 

• At paragraph (a)(5)(i), add 

documents issued by a federallyrecognized Indian tribe showing 

membership, enrollment or affiliation 

with such tribe to the list of primary 

evidence of citizenship and identity, as 

required under the amendments to 

section1903(x) of the Act made by 

section 211 of CHIPRA (effective July 1, 

2006, as if included in the Deficit 

Reduction Act of 2005) and consistent 

with the policy set forth in the 

December 28, 2009 SHO Letter (SHO 

#09–016). We propose at 

§ 435.407(a)(5)(ii) that such documents 

include, but are not limited to, those 

identified in SHO #09–016. We note 

that this list is not exclusive of other 

tribal documents and, as tribes are 

individual independent governments 

which may not have uniform methods 

of documenting membership, 

enrollment, or affiliation with a 

particular tribe, we encourage states to 

work with tribes located within their 

borders to identify additional 

documents used by those tribes to 

establish tribal membership. 

Section 1903(x)(3)(B)(v)(II) of the Act 

directs the Secretary, after consultation 

with the tribes, to determine the 

documentation necessary for federally 

recognized Indian tribes located within 

states having an international border 

and whose members include 

individuals who are not U.S. citizens. 

Under section 402 of PRWORA, 8 U.S.C. 

1612, individuals who can demonstrate 

that they are members of an Indian 

Tribe, as defined in 25 U.S.C. 450b(e), 

and are not citizens, are eligible for 

Medicaid without being subject to the 5- 

year waiting period. Section 402 of 

PRWORA does not distinguish between 

cross-border and intra-border tribes. 

Accordingly, we propose in 

§ 435.407(a)(5) to permit individuals 

who declare they are citizens and also 

members of an Indian tribe to rely on 

the same tribal documents discussed 

above, regardless of whether the tribe is 

located in a state with an international 

border. In making this proposal, we 

have engaged in the consultation 

discussed above but invite further 

comment on this proposal. 

We reorganize the list of documents 

in current paragraph (b) and consolidate 

and streamline the regulation text 

currently at § 435.407(c) and (d) in the 

revised paragraph (b). We propose that 

revised paragraph (b) would reflect all 

documents that may be used, along with 

proof of identity, to verify citizenship 

and we eliminate the tiered levels of 

documents in the current regulations. 

We also eliminate the requirement that, 

to rely on a document listed in 

paragraph (b), an applicant must first 

show that no document listed in 

paragraph (a) is available. Other changes 

to paragraph (b) are as follows: 

We add a new paragraph (b)(2) to 

move current language in (b)(1) that 

states may use a cross match with a state 

vital statistics agency to document a 

birth record. Reference to original 

documents in paragraph (b)(8) also is 

removed, as is the requirement in 

redesignated paragraph (b)(13) that a 

hospital record of birth be on hospital 

letterhead, as electronic hospital records 

may not contain letterhead. In 

redesignated paragraph (b)(15), we 

eliminate the ‘‘caution’’ regarding 

‘‘questionable cases’’ as such cases will 

now be addressed in revised paragraph 

(f), discussed above, as well as the 

requirement that the religious record 

has to show the applicant’s date of the 

birth or age at the time the record was 

made, since this detail is not required 

for other acceptable documents. We 

revise redesignated paragraph (b)(16) to 

remove the requirement that a school 

record be an ‘‘early’’ record, and contain 

the date of admission to the school, date 

of birth, and names of parent’s and 

places of the parent’s births. A school 

record need only contain information of 

place of U.S. birth. We remove from 

redesignated paragraph (b)(17) the 

requirement that a census record must 

show the applicant’s age. Section 

435.407(d)(2)(v) of the current 

regulations is deleted because a 

statement signed by a physician or 

midwife who was in attendance at the 

time of the birth would be encompassed 

under the new proposed paragraph 

(b)(18) described below, which would 

allow for signed statements or affidavits. 

New paragraph (b)(18) replaces 

current paragraphs (d)(2)(v) and (d)(5) to 

simplify the requirements governing use 

of affidavits to document citizenship. 

Under proposed paragraph (b)(18), an 

individual who does not have one of the 

documents listed in paragraph (a) or 

paragraphs (b)(1) through (17) may 

submit an affidavit, containing the 

individual’s name, date of birth, and 

place of U.S. birth by someone who can 

reasonably attest to the individual’s 

citizenship. Other restrictions on the 

use of affidavits, such as there needing 

to be two affidavits signed by two 

individuals who have personal 

knowledge of the individual’s birth, and 

that individual signing the affidavit 

must prove their citizenship, are 

eliminated as creating unnecessary 

barriers to enrollment for eligible 

applicants and not required under the 

statute. However, we seek comment on 

whether two rather than one affidavit is 

warranted. We are maintaining the 

current policy that the affidavit does not 

need to be notarized. 

Section 435.407(e), relating to 

documentation of identity, is 

redesignated at paragraph (c). We 

propose language in paragraph (c)(1) 

that the documents to prove identity 

must contain a photograph or other 

identifying information including, but 

not limited to, name, age, sex, race, 

height, weight, eye color, or address. 

With this statement we are deleting all 

references currently in § 435.407(c) that 

specific documents must include this 

information. We clarify at redesignated 

(c)(1)(i) that a driver’s license issued by 

a Canadian government authority is not 

a satisfactory document for proving 

identity in the U.S. We also delete the 

current language related to tribal 

documents, which now serve as 

acceptable evidence of citizenship 

under paragraph (a)(5). Use of medical 

and school records to establish a child’s 

identity is moved to paragraph (c)(2), 

where we also propose to change the age 

limit applicable to use of such records 

from under age 16 to age 19 to align the 

age limit used in CHIP, and to remove 

the requirement on states to 

independently verify such records. In 

redesignated paragraph (c)(3), we 

propose to reduce the number of 

corroborating documents from three (in 

existing paragraph (e)(3)) to 2, and 

require states to accept them if 

presented by an applicant based on the 

authority of section 1903(x)(3)(B)(vi) of 

the Act for the Secretary to prescribe 

other documents for verifying 

citizenship and identity. We streamline 

the language in redesignated paragraph 

(c)(4), relating to the permissibility of 


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states’ relying on a finding of identity by 

another federal or state agency, and add 

a new paragraph (c)(5) to permit 

reliance on a finding of identity from an 

Express Lane agency, as defined in 

section 1902(e)(13)(F) of the Act, 

regardless of whether or not the state 

otherwise has exercised the option 

under section 1902(e)(13) of the Act to 

rely on any findings of such agency in 

determining Medicaid eligibility. We 

also propose to remove the sentence 

requiring the Medicaid agency to assure 

the accuracy of the identity 

determinations since this provision 

allows the Medicaid agency to rely on 

the findings of another state agency. We 

also consolidate at redesignated 

paragraph (c)(6), the permissible use of 

affidavits to establish identity in the 

current regulations at § 435.407(f) and 

(g) to apply more broadly to anyone 

unable to produce other identity 

documentation, provided that the affiant 

can reasonably attest to the applicant’s 

identity, consistent with our proposal 

for affidavits demonstrating citizenship. 

Because we propose to move the current 

content of paragraphs (f) and (g) of 

existing § 435.407 to other sections, 

current § 435.407(f) and (g) are deleted 

in this proposed rulemaking. 

To further expand the options states 

have to verify citizenship, we add a new 

paragraph (d) to § 435.407 to permit 

reliance on verification of citizenship by 

another state, provided such verification 

was made on or after July 1, 2006, when 

the requirement to verify citizenship 

under section 1903(x) of the Act went 

into effect. 

Building on previous policy outlined 

in the June 9, 2006 State Medicaid 

Directors Letter, (06–012), and the 2007 

final rule regarding Medicaid 

citizenship documentation requirements 

(72 FR 38662, § 435.407(e) (redesignated 

from paragraph (h) of the current 

regulations) is revised to clarify that 

states must provide individuals needing 

assistance in obtaining required 

documentation. The language in the 

current regulation at § 435.407(h) 

provides that assistance be available to 

individuals who are unable to secure 

documentation due to ‘‘incapacity of 

mind or body’’ and who do not have a 

representative of their own to provide 

the help needed. This language is 

simplified in this proposed rule at 

§ 435.407(e) to reflect that various types 

of individuals may need assistance in 

obtaining documentation of their 

citizenship, even if not ‘‘incapacitated’’ 

(for example, disabled, limited English 

proficient and homeless individuals and 

victims of natural disaster). This 

simplification also removes the 

requirement that someone needing 

assistance to first demonstrate that they 

are mentally or physically 

incapacitated. We also note that, due to 

the increased use of electronic data 

sources to verify citizenship, we 

anticipate the number of individuals 

needing assistance in obtaining 

documentation to be minimal. 

As discussed above, we are revising 

§ 435.956 (f) (redesignated from 

paragraph (i)) to direct states to accept 

photocopies, facsimile, scanned or other 

copies of documents to the same extent 

as original documents, except when the 

documentation is inconsistent with 

other information available to the 

agency or the agency has reason to 

question the validity of the copy or 

information provided. We moved the 

language in § 435.956 (i)(2) to 

§ 435.956(a)(3) related to maintaining 

copies of documents and revised it to 

permit states to maintain a record 

(including an electronic record) of 

verified citizenship in lieu of retaining 

paper copies in the individual’s record. 

We propose to delete paragraph (i)(3) 

related to how individuals can submit 

citizenship documentation and that 

states must not require an individual to 

appear in person because it is redundant 

with language in § 435.907(a) of the 

final eligibility rule. Section 435.907(a) 

allows individuals to submit all 

documents that are required to establish 

eligibility, including any documents 

necessary for verification of citizenship, 

through various modalities, including 

online or by mail. We also propose to 

remove the language in paragraph (i)(4), 

related to the integrity of documents 

presented, because it is duplicative of 

the program integrity requirements in 

Part 455 or this title governing how 

Medicaid agencies deal with possible 

incidences of fraud. Paragraph (i)(6) of 

the current regulations is deleted as 

superseded by the electronic 

verification processes established under 

section 211 of CHIPRA and through the 

data services hub established per 

sections 1412 and 1413 of the 

Affordable Care Act and described in 

§ 435.949 of the final eligibility rule. We 

propose to delete current paragraph (j) 

of § 435.407 because 45 CFR 74.53 is not 

relevant to the retention of citizenship 

records. Finally, § 435.407 (k) is deleted 

because we have revised and moved 

regulations relating to the reasonable 

opportunity period to verify citizenship 

to § 435.956(g) of this proposed rule. 

f. Requirement To Verify Citizenship or 

Nationality and Immigration Status 

Applied to CHIP (§ 457.320 and 

§ 457.380) 

Section 211(c)(1) of CHIPRA amends 

section 2105(c) of the Act to extend the 

Medicaid requirement for verifying 

citizenship to separate CHIP programs. 

To codify this requirement, we propose 

to amend § 457.320(b) and redesignated 

paragraph (d) of § 457.380. We are also 

codifying previous guidance published 

by the Department of Justice (62 FR 

61344, 63 FR 41662), the Department of 

Health and Human Services (63 FR 

41658), and CMS (SHO January 14, 

1998) that requires states to verify 

immigration status for any federal 

public benefit, which includes CHIP. 

We are proposing to amend § 457.320 

(b)(6) to indicate that a state cannot 

exclude otherwise eligible individuals 

from coverage if they are U.S. citizens 

or nationals, or qualified non-citizens as 

long as they have been verified in 

accordance with § 457.380. 

As required by CHIPRA, we are 

proposing to amend § 457.320 to remove 

the option for states to accept selfattestation of citizenship to establish 

eligibility for CHIP. We are also 

proposing to revise the individuals who 

may declare citizenship or immigration 

status in the same manner that is being 

proposed for Medicaid at § 435.406. 

We propose to amend § 457.380(b) to 

indicate that except for those 

populations exempt from the 

citizenship documentation requirement 

under Medicaid, states must follow the 

rules for verifying citizenship and 

immigration status in accordance with 

§ 435.956, including providing such 

reasonable opportunity period in 

accordance with § 435.956(g). This 

change is necessary to achieve 

alignment between Medicaid, CHIP, and 

the Exchange. 

8. Elimination or Changes to 

Unnecessary and Obsolete Regulations 

(§§ 435.113, 435.114, 435.201, 435.210, 

435.211, 435.220, 435.223, 435.401, 

435.510, 435.522, 435.909, 435.1004) 

In response to the President’s 

directive, outlined in Executive Order 

13563, that agencies streamline and 

simplify federal regulations, we propose 

to revise or eliminate various current 

regulations, in whole or in part, as 

obsolete or no longer applicable. The 

following sections are proposed for 

deletion because they have been 

rendered obsolete due to the expansion 

of Medicaid coverage under the 

Affordable Care Act to most individuals 

at or below 133 percent FPL, the delinkage of Medicaid eligibility from 

receipt of AFDC, the replacement of 

AFDC with MAGI-based financial 

methodologies in CY 2014, or the 

proposed simplification of multiple 

eligibility groups: 

• § 435.113 (individuals who are 

ineligible for AFDC because of 


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requirements that do not apply under 

title XIX of the Act); 

• § 435.114 (individuals who would 

be eligible for AFDC except for 

increased OASDI income under Pub. L. 

92–336); 

• § 435.220 (individuals who would 

meet the income and resource 

requirements under AFDC if child care 

costs were paid from earnings) which 

we propose to replace with a new 

§ 435.220 for optional eligibility of 

parents and other caretaker relatives; 

• § 435.223 (individuals who would 

be eligible for AFDC if coverage under 

the state’s AFDC plan were as broad as 

allowed under title IV–A of the Act); 

• § 435.510 (determination of 

dependency); and 

• § 435.522 (determination of age). 

We propose to replace reference to 

‘‘specified relatives’’ as used and 

defined in the current regulations at 

§ 435.201(a)(5), § 435.301(b)(2)(ii), and 

§ 435.310 with references to ‘‘parents 

and other caretaker relatives,’’ as 

defined at § 435.4 of the Medicaid 

eligibility final rule. We also propose to 

revise § 435.201 (individuals included 

in optional groups) to delete the 

reference to pregnant women, because 

optional groups for pregnant women 

will be consolidated under § 435.116 in 

accordance with the Medicaid eligibility 

final rule. We propose to delete 

references to AFDC and to pregnant 

women and parents and other caretaker 

relatives in § 435.210 (individuals who 

meet the income and resource 

requirements of the cash assistance 

programs), § 435.211 (individuals who 

would be eligible for cash assistance if 

they were not in medical institutions), 

§ 435.401 (general eligibility 

requirements), § 435.909 (automatic 

entitlement to Medicaid following a 

determination of eligibility under other 

programs), and § 435.1004 (beneficiaries 

overcoming certain conditions of 

eligibility). 

9. Coordinated Medicaid/CHIP Open 

Enrollment Process (§ 435.1205 and 

§ 457.370) 

Under regulations at 45 CFR 155.410, 

during the initial open enrollment 

period starting on October 1, 2013, the 

Exchange will begin accepting a single 

streamlined application for enrollment 

in a QHP through the Exchange and for 

insurance affordability programs, with 

enrollment effective January 1, 2014. We 

are proposing a new § 435.1205 to 

similarly provide that Medicaid and 

CHIP agencies begin accepting the 

single streamlined application during 

the initial open enrollment period to 

ensure a coordinated transition to new 

coverage that will become available in 

Medicaid and through the Exchange in 

2014. Proposed § 435.1205 implements 

several provisions of the Medicaid 

eligibility final rule effective October 1, 

2013, and ensures the coordinated and 

simplified enrollment system for all 

insurance affordability programs 

envisioned in section 1943 of the Act 

and section 1413 of the Affordable Care 

Act. Our proposed rule seeks to ensure 

that no matter where applicants submit 

the single, streamlined application 

during the initial open enrollment 

period, they will receive an eligibility 

determination for all insurance 

affordability programs and be able to 

enroll in appropriate coverage for 2014, 

if eligible, without delay. In addition, 

under the proposed rule, states will 

need during the initial open enrollment 

period to facilitate a determination of 

Medicaid and CHIP eligibility based on 

the rules in effect in 2013 when a single 

streamlined application is filed. We 

provide states with several options to 

ensure that individuals can be properly 

evaluated for eligibility under the 2013 

rules, to the extent applicable, as 

described below. 

Proposed § 435.1205 (a) incorporates 

certain definitions and references from 

the Medicaid eligibility final rule which 

are pertinent to proposed § 435.1205. 

Proposed § 435.1205 (b) provides that 

pertinent provisions of the Medicaid 

eligibility final rule, as modified in this 

proposed rulemaking, are effective as of 

October 1, 2013 for purposes of 

achieving alignment with the Exchange 

during the open enrollment period. 

Under proposed § 435.1205(c)(1), 

beginning October 1, 2013, state 

Medicaid agencies will accept (i) the 

single streamlined application used to 

make determinations for eligibility for 

enrollment in a QHP through the 

Exchange and all insurance affordability 

programs, or an alternative application 

developed by the state and approved by 

the Secretary per § 435.907(b)(2) of the 

Medicaid eligibility final rule, and (ii) 

electronic accounts transferred from an 

agency administering another insurance 

affordability program, in accordance 

with 42 CFR 435.1200. We expect that 

utilization of the new single streamlined 

application will be in addition to, not in 

lieu of any applications currently in use 

by the state Medicaid and CHIP agency 

to determine eligibility based on 2013 

eligibility rules, but are open to 

discussion with states on transition 

options, discussed below. 

In proposed § 435.1205(c)(2)(i), we 

clarify that, beginning October 1, 2013, 

states must begin either (I) accepting 

determinations based on MAGI made by 

the Exchange for eligibility effective 

January 1, 2014 or (II) receiving 

electronic accounts of applicants 

assessed as potentially Medicaid eligible 

by, and transferred from, the Exchange, 

and determine eligibility for such 

applicants based on MAGI and the 

eligibility requirements to be in effect 

on that date. Whether the agency begins 

accepting Medicaid eligibility 

determinations made by the Exchange 

or receives the electronic accounts of 

individuals assessed by the Exchange as 

potentially Medicaid eligible will 

depend on whether the agency has 

elected to delegate authority to the 

Exchange to make eligibility 

determinations under § 431.10(c) of this 

rulemaking. 

Per paragraph (c)(2)(ii), on October 1, 

2013, state Medicaid agencies also will 

begin (I) making eligibility 

determinations for applicants 

submitting the single streamlined 

application to the agency, based on 

MAGI and eligibility criteria which will 

be in effect as of January 1, 2014, for 

coverage effective on that date and (II) 

assessing potential eligibility for 

enrollment in a QHP through the 

Exchange and for other insurance 

affordability programs for individuals 

determined not Medicaid eligible by the 

agency, and transfer the electronic 

account, including the application, to 

such other program, as appropriate. This 

ensures that electronic accounts for 

individuals determined potentially 

eligible for enrollment in a qualified 

health plan will be transferred to the 

Exchange in a timely manner so that 

eligibility for such enrollment as well as 

for advance payment of the premium tax 

credit and cost-sharing reductions can 

be determined by the Exchange and 

plan selection and enrollment can occur 

in time for January 1, 2014. Per 

proposed paragraph (c)(2)(iii), states 

also will need to provide notice and fair 

hearing rights consistent with part 431 

subpart E of the regulations, as revised 

in this rulemaking, and § 435.1200 of 

the Medicaid eligibility final rule, as 

also revised in this proposed 

rulemaking, regarding coordination of 

eligibility determinations, notice and 

appeals with the Exchange and with 

agencies administering other insurance 

affordability programs. 

Proposed § 435.1205 (c)(3)(i) provides 

that, for each individual determined 

eligible for Medicaid by the agency or 

the Exchange per proposed paragraph 

(c)(2)(i) or (ii), the agency must furnish 

Medicaid effective January 1, 2014. Per 

proposed paragraph (c)(3)(ii), the terms 

of § 435.916 of the Medicaid eligibility 

final rule (relating to beneficiary 

responsibility to inform the agency of 

any changes in circumstances that may 

affect eligibility) and § 435.952 of the 


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Medicaid eligibility final rule (regarding 

use of information received by the 

agency) apply such that individuals 

determined eligible during the initial 

open enrollment period for coverage 

effective January 1, 2014 must report 

changes in circumstances that may 

affect their eligibility, and the agency 

must evaluate the impact of such 

changes on eligibility, consistent with 

§ 435.952. Under the proposed 

regulation, the agency has the option to 

schedule the first regular renewal under 

§ 435.916 for individuals applying 

during the open enrollment period and 

determined eligible effective January 1, 

2014, to occur anytime between 12 

months from the date of application and 

January 1, 2015. States may also 

conduct post-eligibility data matching to 

ensure continued eligibility as of 

January 1, 2014 and/or through the first 

regularly-scheduled renewal. 

Given the outreach efforts anticipated 

around the single, streamlined 

application and the initial open 

enrollment period, some people who are 

eligible for Medicaid under 2013 rules 

can be expected to apply using the 

single, streamlined application. While 

Medicaid agencies are not required to 

adjudicate 2013 eligibility for applicants 

who apply using the single, streamlined 

application, we propose at 

§ 435.1205(c)(4) that states establish a 

process to ensure that individuals 

submitting the single streamlined 

application can be evaluated and 

determined eligible for coverage 

effective in 2013. States are encouraged, 

but not required, to determine eligibility 

effective in 2013 based on the 

information provided on a single 

streamlined application, or to adopt a 

supplemental form or questions to 

obtain any additional information 

needed to do so. Specifically, we 

propose in § 435.1205(c)(4)(i) that the 

agency may determine an applicant’s 

eligibility for 2013 based on the 

information gathered as part of the 

single streamlined application if the 

agency has sufficient information to 

make such a determination, or request 

any additional information (through, for 

example, use of a supplemental form) 

needed to do so, providing notice and 

appeal rights in accordance with the 

regulations. Alternatively, per proposed 

§ 435.1205(c)(4)(ii), the agency may 

notify individuals submitting the single 

streamlined application during the 

initial enrollment period that to be 

considered for eligibility in 2013 they 

must submit a separate application for 

coverage and provide information on 

how to obtain and submit such 

application. We request comment on 

whether states should only notify a 

subset of applicants about the process to 

apply for coverage with an effective date 

in 2013—for example only those 

applicants who appear, on the basis of 

available information provided on the 

single streamlined application, to be 

potentially eligible under 2013 rules. 

Given the value of implementing a 

coordinated the eligibility and 

enrollment process for enrollment in a 

QHP through the Exchange and all 

insurance affordability programs during 

the initial open enrollment period, we 

are considering, for purposes of the 

initial open enrollment period, whether, 

in addition to proposed § 435.1205 and 

§ 457.370, to make some or all of the 

following sections of the regulations, as 

promulgated or revised in the Medicaid 

eligibility final rule or as proposed or 

revised in this rulemaking, effective 

October 1, 2013, or whether an effective 

date of January 1, 2014 for some or all 

of these sections is appropriate: § 431.10 

and § 431.11 (relating to the delegation 

of authority to the Exchange or 

Exchange appeals entity to determine 

eligibility and conduct fair hearings); 

§ 435.603 (MAGI-based methodologies) 

and § 435.911 (MAGI screen) for 

purposes of making eligibility 

determinations effective prior to January 

1, 2014 prior to that date; § 435.907 (use 

of the single streamlined application); 

§ 435.908(c) (use of application 

assisters) and § 435.923 (use of 

authorized representatives); §§ 435.940 

et seq. (verification of eligibility 

criteria); §§ 431.200 et seq., § 435.917 

§ 435.918 and § 435.1200 (coordination 

of eligibility and enrollment, notices 

and appeals between the Exchange, 

Medicaid and CHIP); and corresponding 

CHIP regulations in part 457 

(§§ 457.315, 457.330, 457.340, 457.348, 

457.350, 457.351, 457.380 and 

457.1180). We solicit comments on the 

appropriate effective date for these 

sections to ensure a smooth initial open 

enrollment period. 

We will also work with states 

interested in not having to assess 

eligibility during this limited time 

period based on two different sets of 

rules. For example, some states have 

expressed interest in using the authority 

of section 1115 of the Act to apply 

MAGI-based methods to determinations 

of Medicaid eligibility effective with the 

2013 open enrollment period, or in 

more closely aligning current financial 

methodologies with MAGI-based 

methods through adoption of less 

restrictive methods under their state 

plan. CMS is open to working with 

states to effectuate these or other ideas 

states or other stakeholders may have to 

achieve coordination with the Exchange 

and minimize administrative and 

consumer burden during the 2013 open 

enrollment period. 

Finally, during the initial open 

enrollment period and likely at least 

through 2014, some individuals may 

submit the application used by the state 

to determine eligibility using 2013 rules. 

We seek comment on the best ways for 

states to ensure that individuals 

submitting such applications during the 

initial open enrollment period are 

evaluated for coverage effective January 

1, 2014, and thereafter, to ensure that 

state Medicaid agencies obtain such 

additional information as is necessary to 

determine whether such individuals are 

eligible for Medicaid using the MAGIbased standards, methodologies and 

eligibility categories for coverage 

effective on January 1, 2014. 

Like Medicaid, a separate CHIP 

program will need to align with the 

Exchange’s initial open enrollment 

period. We propose a new § 457.370 to 

apply the same provisions to states 

administering a separate CHIP as 

proposed for Medicaid at § 435.1205. 

10. Children’s Health Insurance Program 

Changes 

a. CHIP Waiting Periods (§ 457.805) 

The Affordable Care Act promotes 

enrollment in and continuity of 

coverage. CHIP was created in the 

absence of the Affordable Care Act and 

allows states to require periods of 

uninsurance between disenrollment 

from private group health coverage and 

the beginning of enrollment in CHIP 

(often referred to as ‘‘waiting periods’’). 

Waiting periods have been permitted, 

although are not required, under section 

2102(b)(3)(C) of the Act, which requires 

states to ensure that coverage provided 

under CHIP does not substitute for (or 

‘‘crowd out’’) coverage under group 

health plans. Implementing regulations 

at § 457.805 specify that CHIP state 

plans must include a description of 

‘‘reasonable procedures’’ to prevent 

substitution. Some 38 states currently 

employ waiting periods—ranging from 

one to twelve months in duration, with 

various state-specified exceptions—as a 

mechanism for preventing such 

substitution. 

While not directly addressed in our 

earlier regulations, we received a 

number of comments suggesting that 

CHIP waiting period policies should be 

revised. Although waiting periods are a 

common strategy in CHIP, states have 

other options to prevent substitution of 

coverage. CHIP waiting periods create 

gaps in coverage that exceed standards 

established under the Affordable Care 

Act. Section 1201 of the Affordable Care 


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Act amends section 2708 of the Public 

Health Service Act to prohibit waiting 

periods exceeding 90 days for health 

plans and health insurance issuers 

offering group or individual coverage, a 

standard which, though not directly 

applicable to CHIP, is exceeded in 

roughly half of the states with a CHIP 

waiting period. If permitted to continue, 

children eligible for a separate CHIP 

program would be the only population 

subject to waiting periods that exceed 

90 days starting in 2014. In addition, 

section 5000A of the Internal Revenue 

Code, as added by section 1501 of the 

Affordable Care Act, applies the 

requirement to maintain ‘‘minimum 

essential coverage’’ to both adults and 

dependents. In families that choose to 

enroll children in coverage through the 

Exchange during a waiting period, the 

child may experience disruption of care 

when the waiting period, and therefore, 

availability of the premium tax credit 

ends and enrollment in CHIP occurs. 

Coordination between the CHIP agency 

and the Exchange will be needed. To 

effectuate this transition, we propose 

revising § 457.350(i) to include those 

individuals subject to a waiting period 

within the requirement to screen for 

potential eligibility for other insurance 

affordability programs. For individuals 

subject to a waiting period, under 

proposed revisions at § 457.350(i)(3), 

states also would need to notify such 

program of the date on which such 

period ends and the individual is 

eligible to enroll in CHIP. In an effort to 

balance the goals of permitting states 

flexibility to employ waiting periods to 

prevent substitution of coverage and 

eliminating barriers and promoting 

continuity of coverage, and based on the 

authority provided in sections 

2102(b)(3)(E) and 2102(c)(2) of the Act 

(requiring that states institute 

procedures to ensure coordination 

between CHIP and other public and 

private coverage programs for lowincome children) and sections 1943 and 

2107(e)(1)(O) of the Act and section 

1413 of the Affordable Care Act 

(requiring coordination of eligibility and 

enrollment between all insurance 

affordability programs), we are 

proposing to allow waiting periods in 

CHIP with limitations effective January 

1, 2014. 

Specifically, we propose revisions to 

existing regulations regarding 

prevention of substitution of coverage at 

§ 457.805 to retain the ability of states 

to impose a waiting period, but limit 

any waiting period to a maximum of 90 

days. States would retain the ability to 

grant state-defined exemptions to the 

imposition of a waiting period. In 

conducting research on the use of statedefined exemptions, we found several 

common exemptions which we propose 

that all states use to waive imposition of 

any such period in the following 

situations: 

(1) The cost of the discontinued 

coverage for the child exceeded 5 

percent of household income; 

(2) The cost of family coverage that 

includes the child exceeds 9.5 percent 

of the household income. 

(3) The employer stopped offering 

coverage of dependents; 

(4) A change in employment, 

including involuntary separation, 

resulted in loss of access to employersponsored insurance (ESI) (other than 

through payment of the full premium by 

the parent under COBRA); 

(5) The child has special health care 

needs; and 

(6) The child lost coverage due to the 

death or divorce of a parent. 

In addition, we clarify that waiting 

periods may not be applied to children 

losing eligibility for other insurance 

affordability programs. Further, we are 

considering whether to add an 

additional affordability exemption when 

the child’s parent is determined eligible 

for advance payment of the premium tax 

credit for enrollment in a QHP through 

the Exchange because the ESI in which 

the family was enrolled is determined 

unaffordable in accordance with 26 CFR 

1.36B–2(c)(3)(v). 

We note that, because of the difficulty 

in verifying the variety of exemptions 

from waiting periods currently applied 

by states (including those described 

under this proposed regulation) the FFE 

will not be able to make final 

determinations of CHIP eligibility in 

states choosing to impose a CHIP 

waiting period in 2014. Instead, the FFE 

would conduct an assessment of CHIP 

eligibility, transferring all individuals 

assessed as likely CHIP eligible to the 

CHIP agency to determine if the child 

meets an exemption and to make a final 

determination of eligibility. 

We also considered proposing to limit 

the application of waiting periods to 

only children with family incomes 

above 200 or 250 percent of the federal 

poverty level, as some states currently 

do, as this is the population more likely 

to have access to affordable coverage 

through an employer, or only allowing 

waiting periods based on evidence of 

substitution of coverage in a state. 

Finally, we also considered proposing to 

eliminate the permissibility of waiting 

periods in 2014 for CHIP-eligible 

children. We invite comments on our 

proposal to allow CHIP waiting periods 

of up to 90 days as well as other options 

considered. We also solicit comments 

on the viability of alternative strategies 

to reduce substitution of coverage to 

best balance the goal of preventing 

coverage gaps for children while 

ensuring that CHIP coverage does not 

substitute for coverage available under 

group health plans. 

Finally, we propose revising § 457.810 

to eliminate the required six month 

waiting period if a state elects to 

provide premium assistance through 

section 2105(c)(3) of the Act. Instead, 

we propose that any waiting period 

imposed under the CHIP state plan for 

direct coverage must apply to the same 

extent to the state’s premium assistance 

program. This provision would align the 

rules relating to the application of 

waiting periods for premium assistance 

with those proposed for direct coverage 

of CHIP-eligible children at § 457.805 

and is consistent with the application of 

waiting periods in the option for 

premium assistance established in 

section 2105(c)(10) of the Act as 

amended by section 301 of CHIPRA. 

Revisions are proposed to 

§ 457.810(a)(1) and (2) and 

§ 457.810(a)(3) and (4) are deleted. 

b. Limiting CHIP Premium Lock-Out 

Periods (§ 457.570) 

The majority (approximately 29) of 

states operating separate CHIPs require 

families to pay premiums, or enrollment 

fees. Over the years, states have 

established different disenrollment 

policies for non-payment of premiums 

and enrollment fees in CHIP. 

Approximately 14 states impose a 

‘‘lock-out period;’’ that is, a specified 

period of time, that a child will have to 

wait until being allowed to reenroll in 

the CHIP program after termination as a 

result of non-payment of premiums. In 

some states, this period can be until the 

unpaid premiums or enrollment fees are 

paid. In other states, the child is barred 

from enrollment for a period of time 

even if the family pays the unpaid 

premiums or enrollment fees. Other 

states require individuals to go without 

CHIP coverage during the premium 

lock-out period, but do not require 

families to pay their premium back at 

the end of the specified time. Lock-out 

periods currently range from 1 to 6 

months. An additional 14 states require 

individuals to reapply for coverage and/ 

or repay outstanding premiums in order 

to re-enroll in CHIP (the majority of 

these states require both, but a few 

require only one or the other), but do 

not characterize their programs as 

having lock-out periods. 

We considered the impact of the use 

of premium lock-out periods relative to 

the objectives of the Affordable Care Act 

to promote enrollment in and continuity 


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of coverage. Prohibiting a child from 

enrollment after the family pays the 

unpaid premium or enrollment fee is 

counter to promoting enrollment in and 

continual coverage through a 

streamlined eligibility process and is 

inconsistent with how the Exchange 

will address nonpayment of premiums. 

However, in an effort to achieve a 

balance between states’ ability to collect 

premium payments and manage 

program costs, and the goal of removing 

barriers to coverage, we propose to 

define a premium lock-out at § 457.10 as 

a period not exceeding 90 days when, at 

state option, a CHIP eligible child may 

not be permitted to reenroll in coverage 

if they have unpaid premiums or 

enrollment fees. We also propose at 

§ 457.570 to permit states to continue to 

impose premium lock-out periods only 

for families that have not paid 

outstanding premiums or enrollment 

fees, and only up to a 90-day period. A 

90-day premium lock-out maximum 

aligns with section 1201 of the 

Affordable Care Act, which prohibits 

periods without insurance exceeding 90 

days for health plans and health 

insurance issuers offering group or 

individual coverage. We also specify 

that past due premiums or enrollment 

fees must be forgiven if a child has been 

subject to a lock-out period, regardless 

of length of the lock -out period. The 

majority of states with premium lockout periods in place do not currently 

exceed 90 days and some states that 

have premium lock-out periods do not 

require the family to pay outstanding 

premiums in order to reenroll in the 

CHIP. 

Under federal regulations, states have 

broad flexibility in determining how to 

notify and collect premiums and 

enrollment fees from families. We 

recognize that most states make efforts 

to facilitate payment of premiums and 

enrollment fees, easing the process for 

CHIP families. We invite comments 

from states on any alternative late 

payment policies to encourage families 

to make their CHIP premium payments 

in a timely manner in order to avoid 

gaps in coverage. 

11. Premium Assistance (§ 435.1015) 

Premium assistance programs use 

federal and state Medicaid and CHIP 

funds to help subsidize the purchase of 

coverage for Medicaid and CHIP-eligible 

individuals who have access to private 

coverage, but may need assistance in 

paying for their premiums. Premium 

assistance can provide a mechanism for 

facilitating the coordinated system of 

coverage between Medicaid, CHIP, and 

the Exchange in 2014. It will provide an 

option for states to assist families who 

wish to enroll in the same health plan 

when some family members are eligible 

for either Medicaid or CHIP while other 

family members obtain coverage on the 

Exchange with advance payments of the 

premium tax credit. Premium assistance 

provides an opportunity for state 

Medicaid and CHIP programs to offer 

coverage to such families through the 

same coverage source, even if supported 

by different payers. States can use 

federal and state Medicaid and CHIP 

funds to deliver Medicaid and CHIP 

coverage through the purchase of 

private health insurance through plans 

in the individual market, which in 2014, 

would include QHPs available through 

the Exchange. 

Premium assistance is authorized for 

group coverage in Medicaid under 

sections 1906 or 1906A of the Act, and 

in CHIP, under sections 2105(c)(3) or 

2105(c)(10) of the Act. Based on 

authority in sections 1905(a) and 

2105(c)(3) of the Act, we propose at 

§ 435.1015 also to authorize premium 

assistance programs to support 

enrollment of individuals eligible for 

Medicaid and CHIP in plans in the 

individual market, including enrollment 

in QHPs in the Exchange. 

Thus, a state Medicaid or CHIP 

program could use existing premium 

assistance authority to purchase 

coverage for a Medicaid or CHIP-eligible 

individual through a QHP, while other 

family members would receive advance 

payment of the premium tax credit. 

However, APTC would not be provided 

for the Medicaid or CHIP-eligible family 

members. Premium assistance could 

help increase the likelihood that 

individuals moving from Exchange 

coverage into Medicaid or CHIP may 

remain in the same QHP in which they 

had been enrolled through the 

Exchange. We invite comments on how 

the state Medicaid and CHIP agency can 

coordinate with the Exchange to 

establish and simplify premium 

assistance arrangements and how these 

arrangements will be operationalized. 

In the matter following section 

1905(a)(29) of the Act, ‘‘medical 

assistance’’ is defined to include 

payment of part or all of the cost of 

‘‘other insurance premiums for medical 

or any other type of remedial care or 

cost thereof.’’ We interpret this 

provision to permit payment of FFP for 

premiums for individual health plans 

for Medicaid-eligible individuals, 

provided the state determines it costeffective to do so, similar to the 

requirement for payment of premiums 

for enrollment in a group health plan 

under sections 1906, 1906A or 2105 of 

the Act. 

Under section 1902(a)(25) of the Act, 

codified in subpart D of part 433 of the 

regulations, the insurer would be 

obligated to be primary payer relative to 

Medicaid for all health care items and 

services for which the insurer is legally 

and contractually responsible under its 

insurance policy. The matter following 

section 1905(a)(29) of the Act does not 

limit the benefits or services to which 

an individual otherwise is eligible. 

Thus, Medicaid-eligible individuals 

enrolled in a private health plan would 

remain qualified for all benefits for 

which the individual is covered under 

the state plan, regardless of whether or 

not the state is providing payment for 

enrollment in the private plan, and a 

state opting to provide premium 

assistance support for enrollment in an 

individual health plan would have to 

provide covered benefits not covered 

under the private policy. In addition, 

the state would need to ensure that 

individuals do not incur cost sharing 

charges in excess of amounts imposed 

by the state under sections 1916, 1916A, 

or 2103(e) of the Act. 

Under proposed § 435.1015, states 

will be expected to demonstrate costeffectiveness in the same manner as is 

required under the sections 1906, 

1906A, 2105(c)(3), and 2105(c)(10) of 

the Act. We believe this is consistent 

with section 10203(b) of the Affordable 

Care Act, which aligned requirements 

for cost-effectiveness for premium 

assistance programs under the 

authorities of sections 1906, 1906A, 

2105(c)(3), and 2105(c)(10), but was 

silent with respect to premium 

assistance under section 1905(a) 

authority. 

To be ‘‘cost-effective’’ under proposed 

§ 435.1015, the cost of purchasing 

coverage under an individual health 

plan for a Medicaid-eligible individual 

in the private market, including 

coverage in a QHP in the Exchange, 

must be comparable to the cost of 

providing direct coverage under the 

state plan (or waiver of the state plan). 

We propose that the test for costeffectiveness includes administrative 

expenditures and the costs of providing 

wraparound benefits for items and 

services otherwise covered under the 

Medicaid state plan. 

In addition, under the sections 1906 

and 1906A premium assistance 

authorities, states may claim FFP for 

payment of premiums for nonMedicaid-eligible family members if 

enrollment in a group health plan of 

such family members is necessary for 

the enrollment of the Medicaid-eligible 

individual, as long as the costeffectiveness test is met. We do not 

anticipate that such arrangements 


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would be necessary to support 

enrollment of a Medicaid-eligible 

individual in a health plan in the 

individual market, and therefore do not 

include provision for payment of 

premiums for non-Medicaid-eligible 

family members under proposed 

§ 435.1015. However, we seek 

comments on this provision. 

12. Electronic Submission of the 

Medicaid and CHIP State Plan 

(§§ 430.12, 457.50, and 457.60) 

We are proposing to revise sections 

§§ 430.12, 457.50, and 457.60 to reflect 

our implementation of an automated 

transmission process for the Medicaid 

and CHIP business process. Historically, 

we have accepted state plan 

amendments on paper following paperbased templates. These are submitted to 

the CMS Regional Offices and Central 

office, and adjudicated using a manual 

transmission process, resulting in 

lengthy review times. Additionally, this 

process was not transparent to states or 

other stakeholders. To move to a more 

efficient and transparent business 

process, in consultation with states, we 

are developing the MACPro (Medicaid 

and CHIP Program) system to 

electronically receive and manage state 

plan amendments as well as other 

Medicaid and CHIP business 

documents. The proposed revisions 

direct states to use the automated format 

for submission of state plan 

amendments, replacing previous paper 

based documents, and gives states a 

period of time to make the transition to 

the new system with technical support 

from CMS. 

13. Changes to Modified Adjusted Gross 

Income and MAGI Screen 

a. Changes for Modified Adjusted Gross 

Income 

We propose several revisions to the 

Medicaid eligibility final rule regarding 

the household composition of 

individuals whose financial eligibility is 

determined using the MAGI-based 

methodologies set forth at § 435.603, 

which implement section 1902(e)(14) of 

the Act, as added by section 2002 of the 

Affordable Care Act. 

First, in accordance with sections 

1902(e)(14)(A) and 1943 of the Act and 

section 1413 of the Affordable Care Act, 

we intended in the March 23, 2012 

Medicaid eligibility final rule to apply 

the definitions of ‘‘modified adjusted 

gross income’’ and ‘‘household income’’ 

in section 36B(d)(2) of the Internal 

Revenue Code of 1986 (‘‘36B 

definitions’’) to treat stepparents the 

same as natural and adopted parents, 

and stepchildren and stepsiblings the 

same as biological and adopted children 

and siblings, for purposes of 

determining household composition 

and household income. However, 

whereas virtually everywhere that 

reference in § 435.603 to ‘‘parents’’ is 

made, the Medicaid eligibility final rule 

explicitly refers to ‘‘natural, adopted or 

stepparents,’’ we inadvertently did not 

include such reference in 

§ 435.603(f)(2)(ii), referring instead only 

to children claimed by one ‘‘parent’’ 

who are living with ‘‘both parents.’’ We 

propose to remedy this technical error, 

and simultaneously further streamline 

the regulation text, by adding a 

definition of ‘‘parent’’ in paragraph (b) 

to include natural, adopted and 

stepparents, and to replace all 

references elsewhere throughout 

§ 435.603 to ‘‘natural, adopted or 

stepparents’’ with a reference to 

‘‘parents,’’ as newly defined. We 

propose adding a similar definition and 

to make similar streamlining revisions 

in the case of references in the Medicaid 

eligibility final rule to ‘‘natural, adopted 

and step children’’ and ‘‘natural, 

adopted, half or step siblings.’’ We 

considered ‘‘half siblings’’ to be 

included within the meaning of natural 

and adopted siblings in the Medicaid 

eligibility final rule, but are including 

such siblings explicitly in the definition 

proposed here. 

Second, section 1902(e)(14)(I) of the 

Act requires the application of a 5 

percent disregard for purposes of 

determining the income eligibility of an 

individual for medical assistance whose 

eligibility is determined based on 

MAGI. In the Medicaid eligibility final 

rule, we defined household income in 

§ 435.603(d)(1) with certain exceptions 

as the sum of the MAGI-based income 

of every individual in the individual’s 

household, minus an amount equivalent 

to 5 percentage points of the federal 

poverty level for the applicable family 

size. The result of this disregard policy 

is that individuals determined for 

eligibility under MAGI have a 5 percent 

disregard applied to their income, when 

their eligibility under a particular 

eligibility category is being determined, 

and that disregard can impact the group 

for which such individual is found 

eligible. 

For example, if the income standard 

for eligibility under section 1931 in a 

state were 90 percent of the FPL and a 

parent with 95 percent of the FPL who 

met the categorical requirements for 

coverage applied, the 5 percent 

disregard would apply to that parent 

resulting in eligibility for the section 

1931 category. If the state had expanded 

coverage to the new adult group, such 

that the adult group covered parents 

with income greater than 90 percent of 

the FPL to 133 percent of the FPL, a 

parent with 95 percent FPL would still 

be determined eligible for the section 

1931 category. This would impact the 

Federal Medical Assistance Percentage 

that the state could claim for this 

individual and could impact the 

benefits the individual received. As set 

forth in § 433.10 of our Medicaid 

Eligibility proposed rule, the rate of 

federal financial participation is 

increased for newly eligible individuals, 

provided they are in the adult group. An 

individual cannot meet the definition of 

a newly eligible individual for whom 

the state may claim enhanced FMAP 

unless, at a minimum, that individual 

qualifies for eligibility in the adult 

group. It could also impact the benefits 

available to that parent, because states 

are required to provide benchmark 

benefits for individuals in the adult 

group. 

Since the publication of our Medicaid 

eligibility final rule, we have considered 

an alternative interpretation for section 

1902(e)(14)(I) of the Act. Section 

1902(e)(14)(I) states that the 5 percent 

disregard should be applied, ‘‘for 

purposes of determining the income 

eligibility of an individual for medical 

assistance whose eligibility is 

determined based on the application of 

MAGI’’. Instead of applying the five 

percent disregard to determine 

eligibility for a particular eligibility 

category, we are proposing a policy 

under which the five percent disregard 

should be applied when its application 

affects eligibility on the basis of MAGI. 

Thus the five percent disregard would 

be applied not when eligibility for any 

Medicaid eligibility group is being 

determined but, rather, when an 

applicant or beneficiary would 

otherwise be ineligible for any medical 

assistance (under any MAGI-based 

eligibility category in the program). The 

impact of this change would be that the 

five percent disregard would apply only 

to the highest income threshold under a 

MAGI-based group available for that 

person. 

In the example above, the application 

of the five percent disregard to the 1931 

group would be contingent on whether 

the section 1931 group was the highest 

income threshold available to that 

parent or caretaker relative in the 

Medicaid program. If so—for example, 

in a state that did not expand eligibility 

to the adult group—the five percent 

disregard would be applied, and the 

individual with household income 

equaling 95 percent FPL would be 

determined eligible for the 1931 group. 

If, in the example above, the state did 

expand eligibility to the new adult 


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4626 Federal Register / Vol. 78, No. 14 / Tuesday, January 22, 2013 / Proposed Rules 

group, the five percent disregard would 

not be applied to the parent with 

income at 95 percent FPL, because the 

highest income standard for the parent 

would be the income standard for the 

new adult group (133 percent FPL), and 

the individual would be determined 

eligible for the adult group. If the parent 

met the definition of a newly eligible 

individual, the state could then claim 

the enhanced FMAP for this individual. 

The five percent disregard would, 

however, be applied to a parent with 

income at 138 percent of the FPL, 

because 133 percent FPL would be the 

highest eligibility category for which the 

parent could qualify in the Medicaid 

program. To implement this policy, we 

propose to delete the across-the-board 

application of the deduction of five 

percent FPL from the calculation of 

every household income in 

§ 435.603(d)(1) and to add a new sub 

paragraph § 435.603(d)(4) to apply the 

five percent disregard only when 

determining an individual for the 

eligibility group with the highest 

income standard, using MAGI-based 

methodologies, under which the 

individual may be determined eligible. 

Third, we propose to clarify the 

regulatory exception from application of 

MAGI-based financial methodologies for 

individuals needing long-term care 

services in paragraph (j)(4) of § 435.603 

of the Medicaid eligibility final rule, 

because it could be interpreted in a 

manner to extend the reach of the 

exception beyond that intended either 

under section 1902(e)(14)(D)(iv) of the 

Act, as added by section 2002 of the 

Affordable Care Act, or the Medicaid 

eligibility final rule. As promulgated, 

paragraph (j)(4) could be interpreted to 

except from MAGI-based methods 

individuals requesting long-term care 

services that are covered under an 

eligibility group otherwise subject to 

MAGI-based methodologies, such as 

those for pregnant women and children 

at §§ 435.116 and 435.118, respectively. 

This was not our intention in the 

Medicaid eligibility final rule. Revisions 

to § 435.603(j)(4) therefore are proposed 

to clarify that the exception from 

application of MAGI-based methods 

applies only in the case of individuals 

who request coverage for long-term care 

services and supports for the purpose of 

being evaluated for an eligibility group 

for which meeting a level-of-care need 

is a condition of eligibility or under 

which long-term care services not 

covered for individuals determined 

eligible using MAGI-based financial 

methods are covered. The exception 

does not apply to someone eligible 

using MAGI-based methodologies under 

a MAGI-based eligibility group which 

covers the needed long-term care 

services, simply because the individual 

requests such services. 

We also are considering for comment, 

but have not included here, a couple 

other revisions to the regulations at 

§ 435.603 to address issues stakeholders 

have raised as a result of the Medicaid 

eligibility final rule. First, there are 

situations in which an individual is 

counted as part of two households for 

purposes of determining each 

household’s Medicaid eligibility and 

that individual’s entire income is 

counted as available to each household, 

when, in reality, only a portion of the 

individual’s income may actually be 

available to each household. For 

example, we believe this could occur 

when one or both spouses in a married 

couple not filing jointly claims one or 

more tax dependents, when one or both 

members of an unmarried couple with 

a child in common have tax dependents 

of their own, and in some threegeneration households, depending on 

the tax filing status of the household 

members. Based on the authority 

provided in section 1902(e)(14)(H)(ii) of 

the Act, we are considering revisions to 

§ 435.603 to avoid these results. We are 

seeking comments on this and other 

situations in which this might occur, 

and on revisions that would address this 

issue. 

b. MAGI Screen (§ 435.911) 

Consistent with sections 1902(a)(4), 

(a)(8), (a)(10)(A), (a)(19), and (e)(14) and 

section 1943 of the Act, in § 435.911, we 

established at § 435.911 of the Medicaid 

eligibility final rule a simplified test for 

determining eligibility based on MAGI. 

To effectuate this test, we provided a 

definition of ‘‘applicable MAGI 

standard,’’ which will be at least 133 

percent of the FPL, but in some states, 

based on state-established standards, 

may be higher for pregnant women, 

children, or in a few states, parents and 

caretaker relatives. We propose two 

minor revisions to the definition of 

‘‘applicable MAGI standard’’ at 

§ 435.911(b), and to extend use of the 

MAGI screen to elderly and disabled 

adults who may be eligible as a parent 

or caretaker relative based on MAGI, but 

who are not included in the MAGI 

screen established in the Medicaid 

eligibility final rule. 

The applicable MAGI standard for 

parents and caretaker relatives should 

be the highest income standard which 

can be applied to determining eligibility 

for a parent or caretaker relative under 

any eligibility group using MAGI-based 

household income, as defined in 

§ 435.603 of the Medicaid eligibility 

final rule. Section 435.911(b)(1)(i) of the 

Medicaid eligibility final rule provides 

that this applicable MAGI standard is 

the higher of 133 percent FPL (the 

income standard for the new adult 

group at § 435.119 of the Medicaid 

eligibility final rule) and the income 

standard established by the state for 

mandatory coverage of parents and 

caretaker relatives under section 1931(b) 

of the Act, implemented at § 435.110 of 

the final Eligibility Rule. Because some 

states have expanded coverage to 

parents and caretaker relatives at higher 

income levels through the adoption of 

an optional group for parents and 

caretaker relatives under section 

1902(a)(10)(A)(ii)(I) of the Act, 

implemented at § 435.220 of this 

proposed rulemaking, the income 

standard applied by the state to this 

optional group in accordance with 

proposed § 435.220(c), if higher than 

both 133 percent FPL and the standard 

for coverage under § 435.110, should 

serve as the applicable MAGI standard 

for parents and caretaker relatives. We 

propose revisions at § 435.911(b)(1)(i), 

accordingly, to accurately reflect the 

applicable MAGI standard for parents 

and caretaker relatives. As provided at 

§ 435.911(b)(1)(iv) of the Medicaid 

eligibility final rule, if the state has 

adopted, and phased in coverage of 

parents and caretaker relatives under, 

the optional eligibility group for 

individuals with MAGI-based 

household income over 133 percent 

FPL, the applicable MAGI standard 

under paragraph (b)(1) will be the 

income standard adopted by the state 

for that optional eligibility group in 

accordance with § 435.218(b)(1)(iv). 

Paragraph (c)(1) of § 435.911 of the 

Medicaid eligibility final rule excluded 

from the simplified MAGI screen all 

individuals who are excluded from the 

new adult group because they have 

attained at least age 65 or are entitled to 

or enrolled for Medicare. Such 

individuals may be eligible based on 

MAGI, however, if they also are a parent 

or caretaker relative or are pregnant. We 

therefore clarify at proposed 

§ 435.911(b)(2) that there generally is no 

applicable MAGI standard for 

individuals who have attained at least 

age 65 and individuals ages 19–64 who 

are entitled to or enrolled for Medicare, 

unless such individual also is pregnant 

or is a parent or caretaker relative. For 

such individuals, proposed 

§ 435.911(b)(2) defines the applicable 

MAGI standard, in the case of such 

individuals who are pregnant as the 

applicable MAGI standard established 

for pregnant women under paragraph 

(b)(1) and, for elderly or MedicareVerDate Mar<15>2010 18:53 Jan 18, 2013 Jkt 229001 PO 00000 Frm 00034 Fmt 4701 Sfmt 4702 E:\FR\FM\22JAP2.SGM 22JAP2

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Federal Register / Vol. 78, No. 14 / Tuesday, January 22, 2013 / Proposed Rules 4627 

eligible parents and caretaker relatives, 

the higher of the income standards 

established by the state under the 

mandatory and optional eligibility 

groups for parents and caretaker 

relatives. 

14. Single State Agency—Delegation of 

Eligibility Determination to Exchanges 

(§§ 155.110, 431.10, and 431.11) 

In the Medicaid Eligibility proposed 

rule, published on August 17, 2011 (76 

FR 51148), we proposed to allow 

Medicaid agencies to delegate eligibility 

determinations to Exchanges that are 

public agencies authority to make 

Medicaid eligibility determinations as 

long as the single state Medicaid agency 

retained authority to issue policies, 

rules and regulations on program 

matters and to exercise discretion in the 

administration or supervision of the 

plan. We also noted that if Exchanges 

were established as non-governmental 

entities as allowed by the Affordable 

Care Act, the coordination provisions in 

the law may be more challenging and, 

for example, could require the colocation of Medicaid state workers at 

Exchanges or other accommodations to 

ensure coordination is accomplished. 

We solicited comment on approaches to 

accommodate the statutory option for a 

state to operate an Exchange through a 

private entity, including whether such 

entities should be permitted to conduct 

Medicaid eligibility determinations 

consistent with the law. 

Based on comments we received to 

our proposal, in the Medicaid eligibility 

final rule, we permitted a broader 

delegation of Medicaid eligibility 

determinations that we initially 

proposed, permitting delegation of 

eligibility determinations to any 

Exchange, whether a governmental or 

non-governmental organizations, to 

promote coordination and ensure that 

Exchanges could make Medicaid 

eligibility determinations, even when 

non-governmental. We limited the 

eligibility determination authority of an 

Exchange operated by a nongovernmental entity or that contracted 

with private entities to MAGI-based 

determinations only, provided that the 

single state agency retained its 

responsibilities for supervising the 

administration of the plan and for 

making the rules and regulations for 

administering the plan, and that it 

remained accountable for the proper 

administration of the program 

exercising appropriate control and 

oversight over any entity making final 

eligibility determinations on its behalf. 

Several provisions of the Medicaid 

eligibility final rule were issued on an 

interim final basis. Though the single 

state agency provisions were not issued 

as interim final rules open for comment, 

we received public comments on them 

because they were closely related to the 

interim final regulatory provision at 

§ 435.1200(c) that was subject to 

comment. That provision referred to 

treatment of individuals determined 

eligible for Medicaid by a final 

determination of another insurance 

affordability program. Numerous 

commenters requested that CMS 

reconsider our policy permitting 

delegation of eligibility determinations 

to nongovernmental entities. They 

expressed multiple concerns including 

their belief that determining Medicaid 

eligibility is an inherently governmental 

function that should not be delegated to 

a nongovernmental entity. Some argued 

that even with the stronger standards in 

the Medicaid eligibility final rule, 

Medicaid’s oversight of Exchanges run 

by or contracting with private entities 

would be limited by the lack of a 

contractual relationship between the 

Medicaid agency and the private entity. 

In light of these public comments, we 

are proposing to revert to the policy 

proposed in the Medicaid eligibility 

proposed rule, that state Medicaid 

agencies would be limited to delegating 

eligibility determinations to Exchanges 

that are government agencies 

maintaining personnel standards on a 

merit basis. For purposes of delegation, 

we would treat a public authority 

running an Exchange and employing 

merit system protection principles as a 

government agency such that delegation 

to it would be permitted. We would 

retain many of the provisions 

strengthening the control and oversight 

responsibilities of the single state 

agency. We seek comment to this 

proposed change regarding permissible 

delegations of final Medicaid eligibility 

determinations. In addition, we are 

seeking further comment regarding ways 

states can ensure a coordinated system 

by engaging non-profits and private 

contractors in the process of supporting 

Medicaid and the CHIP eligibility 

determinations while ensuring that any 

final Medicaid eligibility determination 

is made by a government agency. We 

believe this potential change is 

consistent with current state practices 

and plans. 

Thus, we are proposing at 42 CFR 

431.10 to delete the provision at (c)(3) 

added by the Medicaid eligibility final 

rule which provided that Exchanges 

operated as nongovernmental entities as 

permitted under 45 CFR 155.110(c), or 

contracting with a private entity for 

eligibility services, as permitted under 

1311(f)(3) of the Affordable Care Act 

and 45 CFR 155.110(a) are permitted to 

make final determinations of eligibility 

limited to determinations using MAGIbased methods as set forth in § 435.603 

of this subchapter. We propose instead 

to add explicit language to: implement 

1902(a)(3) and (a)(5) of the Act by 

requiring the Medicaid agency remain 

responsible for determining eligibility 

for all individuals applying for or 

receiving benefits and for conducting 

fair hearings; consolidate § 431.10(c)(1) 

and (c)(2) (regarding the other state or 

federal agencies to which the single 

state agency currently is permitted to 

delegate authority to determine 

Medicaid eligibility) into a new 

paragraph (c)(1)(i); and add an Exchange 

established under sections 1311(b)(1) or 

1321(c)(1) of the Affordable Care Act to 

the list of permissible agencies. We 

further propose at § 431.10(c)(2) to 

require that any entity to which such 

authority is delegated be a governmental 

agency which maintains personnel 

standards on a merit basis consistent 

with section 1902(a)(4) of the Act, 

which we add as a basis in 

§ 431.10(a)(1). 

Consistent with the statutory 

authority at 1902(a)(5), we are retaining 

the requirements added in the Medicaid 

eligibility final rule which strengthened 

the controls and oversight of the single 

state agency, but as noted in section II.A 

of the preamble, we have streamlined 

and reorganized the text of those 

paragraphs in this proposed rulemaking. 

We believe that such strengthened 

controls are appropriate for a single 

state agency that delegates eligibility, 

even to another government agency. We 

are also proposing conforming changes 

to § 431.10(d) regarding agreements with 

federal or state and local entities for 

eligibility determinations. 

We note that because delegation will 

only be permitted to an Exchange to the 

extent that the eligibility determinations 

are made by a government agency 

maintaining personnel standards on a 

merit basis consistent with requirements 

set forth in section 1902(a)(4) of the Act, 

the single state agency will be allowed 

to delegate authority for an eligibility 

determination to the Exchange, 

including an eligibility determination 

for MAGI-excepted individuals. 

Alternatively, the single state agency 

may arrange to have the Exchange 

screen for possible Medicaid eligibility 

for MAGI-excepted individuals as set 

forth in § 435.911 and coordinate the 

transfer of the application to the 

Medicaid agency, as set forth in 

§ 435.1200. Because the single state 

agency may delegate eligibility 

determination authority for different 

populations to more than one agency 

(for example, to the Social Security 


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4628 Federal Register / Vol. 78, No. 14 / Tuesday, January 22, 2013 / Proposed Rules 

Administration, the agency 

administering the state’s program under 

title IV–A of the Act, and/or the 

Exchange), we further propose at 

§ 431.10(c)(1)(i) to require that the state 

plan reflect both the agency to which 

authority is delegated as well as the 

individuals whose eligibility can be 

determined by such delegee. 

Finally, we are proposing to make 

changes to § 431.11 regarding state 

organization. We are proposing to delete 

the requirement at § 431.11(b) for the 

state plan to provide for a medical 

assistance unit within the Medicaid 

agency. Similarly, we are proposing to 

delete the requirement at § 431.11(c), 

redesignated as § 431.11(b), for the state 

plan to provide a description of the 

organization and functions of the 

medical assistance unit and an 

organization chart, as well as a 

description of the kinds and numbers of 

professional medical personnel and 

supporting staff used in the 

administration of the plan and their 

responsibilities. We believe that states 

should have maximum flexibility to 

organize themselves however they 

choose, but seek public comment on 

this proposal regarding any reasons we 

should retain this requirement. Finally, 

we are proposing conforming changes to 

§ 431.10(d), redesignated as § 431.10(c) 

to delete the references to 

nongovernmental entities conducting 

eligibility determinations or Exchange 

contractors performing eligibility 

functions. 

15. Medical Support and Payments 

(§§ 433.138, 433.145, 433.147, 433.148, 

433.152 and 435.610) 

Section 1912 of the Act requires, as a 

condition of eligibility for Medicaid, 

that parents seeking coverage cooperate 

with the state in establishing paternity 

and in obtaining medical support and 

payments. These requirements can be 

waived for good cause. While parents 

can be denied Medicaid eligibility or 

terminated from coverage for failure to 

cooperate, children cannot be denied 

Medicaid eligibility or terminated from 

coverage due to a parent’s failure to do 

so. State Medicaid agencies must enter 

into agreements with the child support 

agency in the state, or another 

appropriate state agency, to effectuate 

section 1912 of the Act and the 

collection of medical child support. 

Section 1912 of the Act is implemented 

at § 433.135 through § 433.154 and 

§ 435.610 of the current regulations. 

We propose to revise of 

§ 433.148(a)(2) and § 435.610(a)(2) to 

provide that, consistent with the 

practice in many states today, 

individuals (unless exempt per existing 

regulations) must agree to cooperate in 

establishing paternity and obtaining 

medical support at application, but that 

enforcement of actual measures to 

cooperate happen following enrollment 

in coverage. As discussed in the 

Medicaid eligibility final rule, states 

must align the eligibility rules for all 

insurance affordability programs to the 

maximum extent possible, to achieve a 

highly coordinated and streamlined 

eligibility and enrollment system. 

Important to the achievement of such a 

system is that individuals are enrolled 

in coverage in as close to real time as 

possible. However, in some cases today, 

enrollment in Medicaid for parents who 

are subject to these cooperation 

requirements is often delayed until the 

parent can show that he or she has 

cooperated with the child support 

agency, undermining the goal of realtime processing of applications. 

Cooperation with establishing paternity 

and obtaining medical support is not 

required for purposes of eligibility for 

other insurance affordability programs. 

Because all insurance affordability 

programs will use the same streamlined 

application and eligibility 

determinations and enrollment will be 

coordinated, an eligibility determination 

for Medicaid should not be delayed by 

the cooperation requirements. Further, 

in states which authorize the Exchange 

to make Medicaid eligibility 

determinations, it would not be realistic 

to expect the Exchange to implement 

this Medicaid requirement prior to 

making a determination. Postenrollment enforcement allows the 

Exchange to make Medicaid 

determinations, facilitates coordination 

among the programs, and ensures 

individuals have access to coverage in a 

timely manner. 

Under the proposed revisions, 

individuals must attest on the 

application that they agree to cooperate 

with the state in establishing paternity 

and obtaining medical support 

payments. However, the state should 

not wait until otherwise eligible 

individuals actually begin cooperating 

before finalizing the eligibility 

determination and furnishing benefits. If 

the individual does not cooperate, 

consistent with the requirements 

described in § 433.147 of the 

regulations, the Medicaid agency must 

take action to terminate eligibility in 

accordance with part 431 subpart E 

(relating to notice and fair hearing 

rights). In addition to the change 

described above, we are making 

technical corrections to §§ 433.138, 

433.145, 433.147 and 435.610 to update 

references to pregnant women eligibility 

under section 1902(a)(10)(A)(i) of the 

Act to a reference to § 435.116, as 

promulgated in the Medicaid eligibility 

final rule, and to update or eliminate 

references to verification regulations in 

subpart J of part 435 of the regulations 

which were eliminated or revised in the 

Medicaid eligibility final rule. We also 

propose to delete § 433.152(b)(1) 

because 45 CFR part 306 no longer 

exists. Section 433.147(c)(1) is revised 

and § 433.147(d) is deleted to eliminate 

references to factors applicable to 

waiving the cooperation requirement 

contained in 45 CFR part 232 because 

part 232 of 45 CFR was removed from 

the regulations following with the 

passage of the Personal Responsibility 

and Work Opportunity Reconciliation 

Act (PRWORA). Finally, we propose to 

delete § 435.610(c) as no longer relevant 

since the effective dates referenced were 

at least 25 years ago. 

16. Conversion of Federal Minimum 

Income Standards for Section 1931 

(§§ 435.110 and 435.116) 

Section 1902(e)(14)(A) and (E) of the 

Act, as added by section 2002 of the 

Affordable Care Act, provides for the 

conversion of the income standards in 

effect in the state prior to the Affordable 

Care Act to thresholds that are not less 

than the levels that applied on the date 

of enactment. In our Medicaid 

Eligibility proposed rule published in 

the Federal Register on August 17, 

2011, we proposed to retain the 

minimum income standards specified in 

federal statute for each eligibility group, 

while giving states flexibility to set new 

standards using Modified Adjusted 

Gross Income (MAGI) at a level that 

would take into account a state’s current 

rules regarding how income is counted. 

We discussed that we considered 

whether or not states should convert the 

federal minimum income standards 

prescribed in statute—for example, the 

minimum standard for pregnant women 

and children specified in section 1902(l) 

and for parents and other caretaker 

relatives in section 1931(b) of the Act— 

to a MAGI-equivalent minimum income 

standard based on the income 

disregards currently used by the state. 

We explained that while doing so could 

result in maintaining eligibility for 

individuals who might otherwise lose 

Medicaid due to the elimination of 

income exclusions and disregards under 

MAGI, if a state were to reduce its 

income standard to the minimum 

permitted, it also would result in 

different minimum income eligibility 

standards being applied across states 

and reduce the amount of eligibility 

simplification that could be achieved. 

We finalized the policy in our Medicaid 


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1For more information on status as a 

grandfathered health plans under the Affordable 

Care Act, please see Interim Final Rule, ‘‘Group 

Health Plans and Health Insurance Coverage 

Relating to Status as a Grandfathered Health Plan 

Under the Patient Protection and Affordable Care 

Act.’’ Available at: http://cciio.cms.gov/resources/ 

regulations/index.html#gp. 

eligibility final rule, and further noted 

that the effect of the statute’s 

requirement to raise the statutory 

minimum standards for children ages 6 

to 18 to 133 percent of the FPL under 

section 1902(a)(10)(A)(i)(VII) of the Act 

was to align all age groups of children 

at 133 percent of the FPL, along with 

adults under age 65, and that a policy 

that required conversion of federal 

minimums for younger children would 

defeat such alignment and result in 

children in the same family potentially 

being eligible for different insurance 

affordability programs depending on 

their age. 

Since the publication of the Medicaid 

eligibility final rule, the Supreme Court 

decided in National Federation of 

Independent Business v. Sebelius, ll 

U.S. ll; 132 S. Ct. 2566; 183 L.Ed. 2d 

450 (2012) that the Secretary does not 

have authority to penalize a state for not 

adopting the new adult group, resulting 

in uncertainty regarding whether the 

new adult group coverage will be 

available for parents and other caretaker 

relatives with income at or below 133 

percent FPL who do not meet the 

financial eligibility requirements of 

section 1931 of the Act. We also issued 

a Solicitation of Public Input on the 

Conversion of Net Income Standards to 

Equivalent MAGI Standards 

(Solicitation) and received numerous 

comments on this issue. Commenters 

noted that in states that do not expand 

coverage to the new adult group, and 

who reduce coverage for parents to 

statutory federal minimum thresholds 

(the AFDC standard in effect as of May 

1, 1988 for the applicable family size), 

eligibility for coverage for these parents 

could be restricted if minimum 

eligibility thresholds are not converted. 

They noted that if the federal minimum 

thresholds are less than 100 percent of 

the FPL, parents in a state that does not 

expand may not even have the 

opportunity to receive an advance 

payment of a premium tax credit to 

purchase coverage on the Exchange. 

In light of the comments received to 

our Solicitation, we are proposing to 

require conversion of the federal 

minimum income standard for section 

1931 of the Act. Although the statute is 

silent with respect to conversion of 

federal minimum income standards, the 

intent of sections 1902(e)(14)(A) and (E) 

of the Act is to ensure that in the 

aggregate individuals that would have 

been eligible under Medicaid rules in 

effect prior to the Affordable Care Act 

remain eligible once the new MAGIbased methodologies go into effect. Our 

proposal to direct conversion of the 

federal minimum standard for section 

1931 would implement the conversion 

requirements in the statute more 

consistently, which is particularly 

important in light of the voluntary 

nature of the low income adult 

expansion under the Supreme Court’s 

decision. In addition, because 

pregnancy benefits for pregnant women 

under § 435.116(d)(4)(i) are tied to the 

same May 1, 1988 AFDC income 

standard for the applicable family size, 

we are proposing that this income limit 

should also be converted. However, for 

the reasons stated in the Medicaid 

Eligibility proposed and final rules, we 

are not revisiting our policy with 

respect to the conversion of federal 

minimum income standards and limits 

for all other eligibility groups and 

covered services, which are not required 

to be converted under the Medicaid 

eligibility final rule. 

II. Essential Health Benefits in 

Alternative Benefit Plans 

A. Background 

Beginning in 2014, all nongrandfathered health insurance 

coverage 1 in the individual and small 

group markets, Medicaid benchmark 

and benchmark-equivalent plans (now 

also known as Alternative Benefit 

Plans), and Basic Health Programs (if 

applicable) will cover essential health 

benefits (EHBs), which include items 

and services in 10 statutory benefit 

categories, such as hospitalization, 

prescription drugs, and maternity and 

newborn care, and are equal in scope to 

a typical employer health plan. 

B. Provision of the Proposed Rule: Part 

440—Medicaid Program; State 

Flexibility for Medicaid Benefit 

Packages 

1. Subpart C—Benchmark Benefit and 

Benchmark-Equivalent Coverage 

a. Conforming Changes to Medicaid To 

Align With Essential Health Benefits 

Section 1937 of the Act provides 

states with the flexibility to amend their 

Medicaid state plans to provide for the 

use of benefit packages other than the 

standard Medicaid state plan benefit 

package offered in that state, for certain 

populations as defined by the state. 

These ‘‘Alternative Benefit Plans’’ are 

based on benchmark or benchmarkequivalent packages. There are four 

benchmark packages described in 

section 1937 of the Act: 

• The benefit package provided by 

the Federal Employees Health Insurance 

Benefit plan (FEHB) Standard Blue 

Cross/Blue Shield Preferred Provider 

Option; 

• State employee health coverage that 

is offered and generally available to 

state employees; 

• The health insurance plan offered 

through the Health Maintenance 

Organization (HMO) with the largest 

insured commercial non-Medicaid 

enrollment in the state; and 

• Secretary-approved coverage, 

which is a benefit package the Secretary 

has determined to provide coverage 

appropriate to meet the needs of the 

population provided that coverage. 

Under the Deficit Reduction Act of 

2005 (DRA) (Pub. L. 109–171, enacted 

on February 8, 2006), benchmarkequivalent coverage is provided when 

the aggregate actuarial value of the 

proposed benefit package is at least 

actuarially equivalent to the coverage 

provided by one of the benefit packages 

described above, for the identified 

Medicaid population to which it will be 

offered. Section 1937 of the Act further 

provides that certain categories of 

benefits must be provided in any 

benchmark-equivalent plan, and other 

categories of benefits must include 

‘‘substantial actuarial value’’ compared 

to the benchmark package. 

Section 2001(c) of the Affordable Care 

Act modified the benefit provisions of 

section 1937. Specifically, section 

2001(c) added mental health benefits 

and prescription drug coverage to the 

list of benefits that must be included in 

benchmark-equivalent coverage; 

required the inclusion of Essential 

Health Benefits (EHBs) beginning in 

2014; and directed that section 1937 

benefit plans that include medical/ 

surgical benefits and mental health and/ 

or substance use disorder benefits 

comply with the Mental Health Parity 

and Addiction Equity Act of 2008 

(MHPAEA). 

In addition, section 2001(a)(1) of the 

Affordable Care Act established a new 

adult eligibility group for low-income 

adults age 19 to 64 effective January 1, 

2014. States that implement this new 

eligibility group shall provide medical 

assistance for that group through an 

Alternative Benefit Plan (which must 

include EHBs as of the same date) 

subject to the requirements of section 

1937 of the Act. 

Finally, section 2004 of the Affordable 

Care Act, as amended by section 

10201(a) of the Affordable Care Act, 

added a new optional eligibility group 

for ‘‘former foster care children’’ under 

age 26 that provides that these 

individuals will not be included in the 


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4630 Federal Register / Vol. 78, No. 14 / Tuesday, January 22, 2013 / Proposed Rules 

new adult eligibility group and exempts 

these individuals from mandatory 

enrollment in an Alternative Benefit 

Plan. Section 2303(c) of the Affordable 

Care Act provides that medical 

assistance to individuals described in 

1905(a)(4)(C) of the Act (individuals of 

child bearing age), through enrollment 

in an Alternative Benefit Plan, shall 

include family planning services and 

supplies. 

This proposed rule revises current 

Medicaid regulations to conform to 

these statutory changes; provides further 

interpretation of how EHBs apply to 

Medicaid; and makes other changes to 

further simplify, clarify and align 

regulatory requirements between 

Medicaid and the private insurance 

market, where appropriate. We issued a 

State Medicaid Director letter on the 

above topics on November 20, 2012. 

We propose to make the following 

changes in Medicaid regulations to 

implement new statutory or regulatory 

requirements flowing from these 

provisions. These proposed changes are 

meant to codify statutory requirements 

or to align Medicaid regulations to the 

policies discussed earlier in this 

proposed rule. The proposed changes to 

the regulation are as follows: 

• Amend § 440.305 by re-designating 

the current paragraph (d) as § 440.386 

and to revise sections (a) and (b) to 

address the addition of the new adult 

eligibility group as being eligible for 

coverage under an Alternative Benefit 

Plan. 

• Amend § 440.315(h) to codify the 

provision that, while a new eligibility 

group, former foster care children are 

statutorily exempt from mandatory 

enrollment in an Alternative Benefit 

Plan. 

• Add to § 440.335 Benchmarkequivalent health benefits coverage, new 

paragraphs (b)(7) and (b)(8) to include 

benchmark-equivalent health benefits 

coverage for prescription drugs and 

mental health benefits in accordance 

with section 2001(c) of the Affordable 

Care Act. 

• Add paragraph (b) to § 440.345 to 

codify section 2303(c) of the Affordable 

Care Act to provide that Alternative 

Benefit Plan coverage provided to 

individuals described in section 

1905(a)(4)(C) of the Act (individuals of 

child bearing age), include family 

planning services and supplies. 

• Add a new paragraph § 440.345(c), 

to incorporate section 2001(c)(6) of the 

Affordable Care Act. 

• In § 440.345(d), codify the 

requirement that Alternative Benefit 

Plans provide EHBs and include all 

updates or modifications made 

thereafter by the Secretary to the 

definition of EHBs. 

• In § 440.345(e), allow Alternative 

Benefit Plans that are determined to 

include EHBs as of January 1, 2014 to 

remain effective through December 31, 

2015 without need for updating, at the 

state’s option. We will consult with 

states and stakeholders and evaluate the 

process to determine how often states 

would need to update these types of 

Alternative Benefit Plans after that date. 

• Add a new § 440.347 titled 

‘‘Essential Health Benefits’’ to 

incorporate section 2001(c)(5) of the 

Affordable Care Act. 

• In § 440.347(e), codify section 

1302(b)(4) of the Affordable Care Act 

provides that benefit design cannot 

discriminate ‘‘on the basis of an 

individual’s age, expected length of life, 

or of an individual’s present or 

predicted disability, degree of medical 

dependency, or quality of life or other 

health conditions’’. Benefit design nondiscrimination policies do not prevent 

states from exercising Section 1937 

targeting criteria. 

b. Modifications in Applying the 

Provisions of This Proposed Rule to 

Medicaid 

As reflected above, the definition and 

coverage provisions for EHBs described 

in the ‘‘Standards Related to Essential 

Health Benefits, Actuarial Value, and 

Accreditation’’ proposed rule published 

on November 20, 2012, apply to 

Medicaid except in specific 

circumstances. The conforming changes 

we propose to existing regulations, 

together with the statutory and 

regulatory requirements already existing 

in title XIX and the Federal Register, 

form the basis for how the Medicaid 

program will implement these benefit 

options. 

Given the intersection of section 1937 

of the Act and the provisions in the 

Affordable Care Act relating to EHBs, 

there would be a two-step process in 

Medicaid for designing Alternative 

Benefit Plans. The Affordable Care Act 

modified section 1937 of the Act to 

implement two standards for minimum 

coverage provision; not only must EHBs 

as defined by the Secretary be provided, 

but all requirements of section 1937 of 

the Act continue to apply. States will 

first select a coverage option from the 

choices found in section 1937 of the 

Act. The next step is determining 

whether that coverage option is also one 

of the base-benchmark plan options 

identified by the Secretary as an option 

for defining EHBs. 

• If so, the standards for the provision 

of coverage, including EHBs, would be 

met, as long as all EHB categories are 

covered, including through any 

necessary supplementation of missing 

EHB categories. 

• If not, states will additionally select 

one of the base-benchmark plan options 

identified as defining EHBs. This means 

that states will compare the coverage 

between the 1937 of the Act coverage 

option and the selected base-benchmark 

plan for defining EHBs and if the 1937 

of the Act coverage is missing a category 

of EHB, supplement accordingly. 

In keeping with section 1937 of the 

Act’s waiver of comparability, states 

may choose to target populations for 

receipt of specialized benefit packages, 

allowing for different Alternative 

Benefit Plans to apply to different 

populations. Furthermore, we propose 

at a new § 440.347(c) that a state has the 

option to select a different basebenchmark plan to establish EHBs for 

each Alternative Benefit Plan. 

As described in the ‘‘Standards 

Related to Essential Health Benefits, 

Actuarial Value, and Accreditation’’ 

proposed rule published on November 

20, 2012, the state has the opportunity 

to define habilitative benefits using a 

transitional approach in which states 

may either define the habilitative 

services category or leave it to issuers. 

In § 156.115(a)(4), it was proposed that 

if the EHB-benchmark plan does not 

include coverage for habilitative 

services and the state does not 

determine habilitative benefits, a health 

insurance issuer must select from two 

options: (1) provide parity by covering 

habilitative services benefits that are 

similar in scope, amount, and duration 

to benefits covered for rehabilitative 

services; or (2) decide which habilitative 

services to cover and report on that 

coverage to HHS. The issuer only has to 

supplement habilitative services when 

there are no habilitative services offered 

in in the base benchmark plan or the 

state has not exercised its option to 

define habilitative services under 

§ 156.110(f). We propose that states 

define this benefit for Medicaid. We are 

seeking comments regarding whether 

the state defined habilitative benefit 

definition for the Exchanges should 

apply to Medicaid or whether states 

should be allowed to separately define 

habilitative services for Medicaid. We 

are soliciting comments on the option 

for states to fully define the benefit and 

various approaches for doing so and 

whether the habilitative benefit should 

be offered in parity with the 

rehabilitative benefit as was 

contemplated in the ‘‘Standards Related 

to Essential Health Benefits, Actuarial 

Value, and Accreditation’’ proposed 

rule published on November 20, 2012. 

Thus, we reserved § 440.347(d) to 


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Federal Register / Vol. 78, No. 14 / Tuesday, January 22, 2013 / Proposed Rules 4631 

incorporate an approach after comments 

are received for states to define the 

Medicaid habilitative services EHB. 

We also note two areas where states 

have questioned application of 

proposed rules for EHBs with respect to 

Medicaid, and wish to clarify. Neither 

requires any regulatory change. First, for 

Medicaid, medically necessary services, 

including pediatric oral and vision 

services, must be provided to eligible 

individuals under the age of 21 under 

the Medicaid Early Periodic Screening, 

Diagnostic and Testing (EPSDT) benefit. 

As a result, any limitation relating to 

pediatric services that may apply in a 

base benchmark plan in the context of 

the individual or small group market 

does not apply to Medicaid. Second, 

section 1927 of the Act sets forth 

requirements for covered outpatient 

drugs, whereby drug manufacturers 

must pay statutorily-defined rebates to 

the states through the Medicaid drug 

rebate program. In return, any state that 

provides payment for drugs must cover 

all covered outpatient drugs, which may 

include appropriate limitations on 

amount, duration, and scope, for the 

drug manufacturers that participate in 

the Medicaid drug rebate program. 

Section 1927 of the Act also applies to 

Alternative Benefit Plans. Consistent 

with the current law, states have the 

flexibility within those statutory and 

regulatory constructs to adopt prior 

authorization and other utilization 

control measures, as well as policies 

that promote the use of generic drugs. 

All other provisions under title XIX of 

the Act apply, unless, as spelled out in 

section 1937 of the Act, a state can 

satisfactorily demonstrate that 

implementing such other provisions 

would be directly contrary to their 

ability to implement Alternative Benefit 

Plans under section 1937 of the Act. 

We also clarify that preventive 

services as established in November 20, 

2012 Patient Protection and Affordable 

Care Act; Standards Related to Essential 

Health Benefits, Actuarial Value, and 

Accreditation apply. Specifically, the 

proposed rule requires that all EHB 

Benchmark plans cover a broad range of 

preventive services including: ‘‘A’’ or 

‘‘B’’ services recommended by the 

United States Preventive Services Task 

Force; Advisory Committee for 

Immunization Practices (ACIP) 

recommended vaccines; preventive care 

and screening for infants, children and 

adults recommended by HRSA’s Bright 

Futures program/project; and additional 

preventive services for women 

recommended by Institute of Medicine 

(IOM).Title XIX premium and costsharing provisions apply to preventive 

services. 

2. Other Changes To Simplify, 

Modernize and Clarify Medicaid 

Benchmark Requirements and Make 

Technical Corrections to Coverage 

Requirements 

We also propose to make certain 

changes to the regulations in order to 

promote simplification and clarification 

where needed, and provide some 

additional flexibilities to states 

regarding benefit options. The proposed 

changes to the regulations are as 

follows: 

• In § 440.130, conform our 

regulatory definition relating to who can 

provide preventive services with the 

statute. Our current regulation, 

§ 440.130, states that preventive services 

must be provided by a physician or 

licensed practitioner. This is not in 

alignment with the statutory provision 

at 1905(a)(13) of the Act that defines 

‘‘services * * * recommended by a 

physician or other licensed practitioner 

of healing arts within the scope of their 

practice under State law’’. 

• Add § 440.386 to allow states 

greater flexibility when required to 

publish public notice. We propose 

modifying the public notice requirement 

for Alternative Benefit Plans to require 

that such notice be given prior to 

implementing a state plan amendment 

(SPA) when the new Alternative Benefit 

Plan provides individuals with a benefit 

package equal to or enhanced beyond 

the state’s approved state plan, or adds 

additional services to an existing 

Alternative Benefit Plan. We also 

propose to retain the requirement to 

publish public notice prior to 

submitting a SPA that establishes an 

Alternative Benefit Plan which provides 

less benefits than the state’s approved 

state plan, which includes or increases 

cost sharing of any type, or which 

amends an approved Alternative Benefit 

Plan by adding cost sharing or reducing 

benefits. 

• Revise § 440.315(f) by modifying 

the definition of ‘‘medically frail’’ to 

specifically include individuals with 

disabling mental disorders (to include 

children with serious emotional 

disturbances and adults with serious 

mental illness), individuals with serious 

and complex medical conditions, 

individuals with a physical, intellectual 

or developmental disability that 

significantly impairs their ability to 

perform one or more activities of daily 

living, or individuals with a disability 

determination, based on Social Security 

criteria, or in states that apply more 

restrictive criteria than the 

Supplemental Security Income (SSI) 

program, as the state plan criteria. We 

are clarifying this language to ensure 

that all people with disabilities are 

included in the medically frail 

definition. We are specifically soliciting 

comments on whether individuals with 

a substance use disorder should be 

added to the definition of ‘‘medically 

frail’’ and therefore exempted from 

mandatory enrollment in an Alternative 

Benefit Plan. 

• Amend § 440.330(d) by replacing 

the phrase ‘‘benefits within the scope of 

the categories available under a 

benchmark coverage package’’ with 

‘‘benefits of the type, which are covered 

in one or more of section 1937 of the 

Act benchmark coverage packages 

described in § 440.330(a) through (c)’’ in 

order to clarify that Secretary-approved 

coverage may include benefits of the 

type which are covered in 1 or more of 

the section 1937 of the Act commercial 

coverage packages. We are also 

clarifying § 440.335(c) and § 440.360 in 

the same way. 

• Revise § 440.330(d), § 440.335(c) 

and § 440.360 to indicate that such 

coverage may, at state option, include 

the benefits described in sections 

1915(i), 1915(j), 1915(k) and 1945 of the 

Act, and any other Medicaid state plan 

benefits enacted under title XIX, or 

benefits available under base benchmark 

plans described in section 45 CFR 

156.100, along with the benefits 

described in 1905(a) of the Act. When 

including these benefits, the state must 

comply with all provisions of these 

sections. And, consistent with the 

provisions of sections 1902(k)(1) and 

1903(i)(36) of the Act, we provide that 

the coverage for individuals eligible 

only through section 

1902(a)(10)(A)(i)(VIII) is limited to 

benchmark or benchmark equivalent 

coverage, except that we propose that 

exemptions from mandatory enrollment 

in such coverage would still be 

applicable for individuals eligible on 

that basis consistent with our 

understanding of congressional intent. 

III. Eligibility Appeals and Other 

Provisions Related to Eligibility and 

Enrollment for Exchanges 

A. Background 

This proposed rule supplements and, 

in some respects, amends provisions 

originally published as the March 27, 

2012 rule titled Patient Protection and 

Affordable Care Act; Establishment of 

Exchanges and Qualified Health Plans; 

Exchange Standards for Employers 

(‘‘Exchange Final Rule’’) (77 FR 18310). 

The provisions contained in this 

proposed rule encompass key functions 

of Exchanges related to eligibility and 

enrollment. Given that states have relied 

on the provisions of the Exchange final 


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rule to plan their systems for 2014, we 

intend whenever possible, when we 

finalize this rule, to provide some type 

of transition for such states, and 

welcome comments on its design and 

the length of the transition. 

1. Legislative Overview 

Section 1311(b) and section 1321(b) of 

the Affordable Care Act provide that 

each state has the opportunity to 

establish an Exchange that: (1) 

Facilitates the purchase of insurance 

coverage by qualified individuals 

through qualified health plans (QHPs); 

(2) assists qualified employers in the 

enrollment of their employees in QHPs; 

and (3) meets other standards specified 

in the Affordable Care Act. Section 

1311(k) of the Affordable Care Act 

specifies that Exchanges may not 

establish rules that conflict with or 

prevent the application of regulations 

promulgated by the Secretary. Section 

1311(d) of the Affordable Care Act 

describes the minimum functions of an 

Exchange, including the certification of 

QHPs. 

Section 1321 of the Affordable Care 

Act discusses state flexibility in the 

operation and enforcement of Exchanges 

and related policies. Section 1321(c)(1) 

directs the Secretary to establish and 

operate such Exchanges within states 

that either: (1) do not elect to establish 

an Exchange, or (2) as determined by the 

Secretary on or before January 1, 2013, 

will not have an Exchange operable by 

January 1, 2014. Section 1321(a) also 

provides broad authority for the 

Secretary to establish standards and 

regulations to implement the statutory 

standards related to Exchanges, QHPs, 

and other standards of title I of the 

Affordable Care Act. 

Section 1401 of the Affordable Care 

Act creates new section 36B of the 

Internal Revenue Code (the Code), 

which provides for a premium tax credit 

for eligible individuals who enroll in a 

QHP through an Exchange. Section 1402 

of the Affordable Care Act establishes 

provisions to reduce the cost-sharing 

obligation of certain eligible individuals 

enrolled in a QHP through an Exchange, 

including standards for determining 

whether Indians are eligible for certain 

categories of cost-sharing reductions. 

Under section 1411 of the Affordable 

Care Act, the Secretary is directed to 

establish a program for determining 

whether an individual meets the 

eligibility standards for Exchange 

participation, advance payments of the 

premium tax credit, cost-sharing 

reductions, and exemptions from the 

shared responsibility payment under 

section 5000A of the Code. 

Sections 1412 and 1413 of the 

Affordable Care Act and section 1943 of 

the Social Security Act (the Act), as 

added by section 2201 of the Affordable 

Care Act, contain additional provisions 

regarding eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions, as well as 

provisions regarding simplification and 

coordination of eligibility 

determinations and enrollment with 

other health programs. 

Unless otherwise specified, the 

provisions in this proposed rule related 

to the establishment of minimum 

functions of an Exchange are based on 

the general authority of the Secretary 

under section 1321(a)(1) of the 

Affordable Care Act. 

2. Stakeholder Consultation and Input 

HHS has consulted with interested 

stakeholders on policies related to the 

eligibility provisions and Exchange 

functions. HHS held a number of 

listening sessions with consumers, 

providers, employers, health plans, and 

state representatives to gather public 

input, and released several documents 

for public review and comment. HHS 

also released a bulletin that outlined our 

intended regulatory approach to 

verifying access to employer-sponsored 

coverage and sought public comment on 

the specific approaches. 

Finally, HHS consulted with 

stakeholders through regular meetings 

with the National Association of 

Insurance Commissioners (NAIC), 

regular contact with states through the 

Exchange grant process, Medicaid 

consultation, and meetings with tribal 

leaders and representatives, health 

insurance issuers, trade groups, 

consumer advocates, employers, and 

other interested parties. 

We considered all of these comments 

as we developed the policies in this 

proposed rule. 

3. Structure of the Proposed Rule 

The proposed amendments to 45 CFR 

part 155 in this rule propose standards 

related to eligibility appeals, notices, 

and other eligibility standards for 

insurance affordability programs to 

facilitate a streamlined process for 

eligibility for enrollment in a QHP 

through the Exchange and insurance 

affordability programs. 

Amendments to 45 CFR part 155 

subpart A revise existing definitions and 

propose new definitions. 

A technical correction is made to 45 

CFR part 155 subpart B. 

Amendments to 45 CFR part 155 

subpart C provide for standards related 

to application counselors and 

authorized representatives. 

Amendments to 45 CFR part 155 

subpart D propose standards related to 

eligibility determinations for enrollment 

in a QHP and for insurance affordability 

programs. 

Amendments to 45 CFR part 155 

subpart E propose standards related to 

enrollment-related transactions, special 

enrollment periods, and terminations. 

The addition of 45 CFR part 155 

subpart F proposes standards related to 

the eligibility appeals process. 

Amendments to 45 CFR part 155 

subpart H propose standards related to 

eligibility appeals related to the SHOP. 

4. Alignment With Related Rules and 

Published Information 

As outlined previously in this 

proposed rule, this rule proposes 

Medicaid provisions associated with the 

eligibility changes under the Affordable 

Care Act of 2010. We refer to these 

provisions throughout this section as 

the ‘‘Medicaid proposed provisions.’’ 

B. Provisions of the Proposed 

Regulations: Part 155—Exchange 

Establishment Standards and Other 

Related Standards Under the Affordable 

Care Act 

Throughout this proposed rule, we 

propose technical corrections to 

regulation sections in part 155 to 

replace references to section 36B of the 

Code with the corresponding sections to 

the Department of Treasury’s final rule, 

Health Insurance Premium Tax Credit 

(26 CFR 1.36B), published in the May 

23, 2012 Federal Register (77 FR 

30377). 

1. Definitions (§ 155.20) 

We propose to make a technical 

correction to the definition of the term 

‘‘advance payments of the premium tax 

credit.’’ We note that advance payments 

of the premium tax credit means the 

advance payment of the tax credits 

authorized by section 36B of the Code 

as well as its implementing regulations. 

We also propose to remove the reference 

to section 1402 of the Affordable Care 

Act, as it concerns cost-sharing 

reductions as opposed to the premium 

tax credit. 

We propose to make a technical 

correction to the term ‘‘application 

filer.’’ We clarify that our previous 

inclusion of an authorized 

representative in the definition refers to 

the authorized representative of an 

applicant. We also cite to the applicable 

Treasury regulation instead of section 

36B of the Code. 

We propose to define the term 

‘‘catastrophic plan’’ by reference to 

section 1302(e) of the Affordable Care 

Act. 


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We propose to amend the term 

‘‘lawfully present.’’ As discussed in 

preamble to 45 CFR 155.20, the 

definition of ‘‘lawfully present’’ 

included in the Exchange final rule is 

intended to align with the definition of 

‘‘lawfully residing’’ as used in section 

214 of the Children’s Health Insurance 

Program Reauthorization Act (Pub. L. 

111–3, enacted on February 4, 2009) 

(CHIPRA). As 42 CFR 435.4 of the 

Medicaid proposed provisions 

implements the CHIPRA definition by 

defining the term, ‘‘lawfully present’’, 

we are proposing to adjust our 

definition to define ‘‘lawfully present’’ 

through reference to the Medicaid 

proposed provisions. The definition 

used in 42 CFR 435.4 of the Medicaid 

proposed provisions is substantially the 

same as the definition used in 45 CFR 

152.2, with minor modifications, 

described in more detail in the preamble 

associated with 42 CFR 435.4, 435.406, 

and 457.320 of the Medicaid proposed 

provisions. Generally, these 

modifications are made in order to 

achieve greater operational 

simplification and to align with current 

policies, including a clarification 

regarding eligibility for individuals with 

deferred action under the Deferred 

Action for Childhood Arrivals (DACA) 

process. 

2. Approval of a State Exchange 

(§ 155.105) 

We propose to make a technical 

correction in paragraph (b)(2) to cite to 

the applicable Treasury regulation 

instead of section 36B of the Code. 

3. Functions of an Exchange (§ 155.200) 

We propose to revise paragraph (a) to 

clarify that the Exchange must also 

perform the minimum functions 

described in subpart F. 

4. Consumer Assistance Tools and 

Programs of an Exchange (§ 155.205) 

We propose to split paragraph (d) into 

paragraphs (d)(1) and (d)(2), and revise 

the text to clarify that prior to providing 

the consumer assistance specified in 

paragraph (d)(1) of this section, an 

individual must be trained regarding 

QHP options, insurance affordability 

programs, eligibility, and benefits rules 

and regulations governing all insurance 

affordability programs operated in the 

state, as implemented in the state. This 

is consistent with proposed 

§ 155.225(b)(2), and is designed to 

ensure that all types of assistance 

provided by the Exchange are provided 

by individuals who are appropriately 

trained, in order to ensure quality. 

5. Certified Application Counselors 

(§ 155.225) 

Section 1413 of the Affordable Care 

Act directs the Secretary to establish, 

subject to minimum requirements, a 

streamlined enrollment system for QHPs 

and all insurance affordability 

programs. State Medicaid and CHIP 

agencies have a long history of offering 

application assistance programs through 

which application counselors have had 

a key role in promoting enrollment for 

low-income individuals seeking 

coverage, and we believe that making 

such assistance available for the 

Exchange will be critical to achieving a 

high rate of enrollment. Accordingly, 

the proposed regulation seeks to ensure 

that application counselors will also be 

available in the Exchange to help 

individuals and employees apply for 

enrollment in a QHP and for insurance 

affordability programs by adding 

§ 155.225 to establish the standards for 

Exchange certification of such 

application counselors. This language 

specifies that each Exchange will 

establish an application counselor 

program. The proposed standards 

closely track those for Medicaid 

application counselors so that the 

training can be streamlined. 

In essence, application counselors 

will provide the same core application 

assistance service that is also available 

directly through the Exchange, as well 

as through Navigators and licensed 

agents and brokers; the distinction 

between these entities is that 

application counselors are not funded 

through the Exchange, through grants or 

directly, or licensed by states as agents 

or brokers. We believe that this separate 

class of application counselors is 

important to ensure that skilled 

application assistance is available from 

entities like community health centers 

and community-based organizations 

that may not fit in to the other 

categories. We are proposing a 

certification process so that individuals 

and employees will have assurance of 

the quality and privacy and security of 

the assistance available through these 

certified application counselors 

understanding that individuals may 

receive some level of informal 

assistance from family members and 

others who are not officially certified by 

the Exchange. We are proposing that 

certified application counselors would 

have a relationship with the Exchange 

so that they could officially support the 

process while ensuring the privacy and 

security of personal information. Given 

the overlap in the scope of 

responsibilities between application 

counselors, Navigators, agents and 

brokers, and other entities that provide 

help to consumers, we believe a state 

can develop a single set of core training 

materials that can be utilized by 

Navigators, agents and brokers, and 

application counselors. Additionally, 

we plan to make selected federal 

training and support materials available 

that can be used by states, without the 

need to develop their own, to the extent 

that the state uses the model application 

established by HHS. 

In paragraph (a), we propose that staff 

and volunteers of both Exchangedesignated organizations and 

organizations designated by state 

Medicaid and CHIP agencies as it is 

defined in proposed § 435.908 will be 

certified by the Exchange to act as 

application counselors, subject to the 

conditions in paragraphs (b) and (c). 

The Exchange will certify employees 

and volunteers of organizations as 

application counselors, which may 

include health care providers and 

entities, as well as community-based 

organizations, among other 

organizations. The designation of 

organizations by state Medicaid and 

CHIP agencies is subject to proposed 

§ 435.908. 

We propose that certified application 

counselors: (1) Provide information to 

individuals and employees on insurance 

affordability programs and coverage 

options; (2) assist individuals and 

employees in applying for coverage in a 

QHP through the Exchange and for 

insurance affordability programs; and 

(3) help facilitate enrollment in QHPs 

and insurance affordability programs. 

We acknowledge that certified 

application counselors will not be able 

to sign the application or make any 

attestations on behalf of the individual. 

In contrast, we propose in § 155.227 that 

an authorized representative can 

perform that function. 

In paragraph (b), we propose 

standards for certification of individuals 

seeking to become application 

counselors. These standards will serve 

to ensure that application counselors 

will have the training and skills 

necessary to provide reliable assistance 

to consumers, that they disclose to the 

Exchange and applicant any financial or 

other relationships (either of the 

application counselor personally or of 

the sponsoring organization), that they 

will comply with the confidentiality 

requirements that apply to the data they 

will access in their role as application 

counselors, including section 6103 of 

the Internal Revenue Code and section 

1902(a)(7) of the Act. Accordingly, we 

propose that the Exchange will certify as 

an application counselor any individual 

who: registers with Exchange; is trained 


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prior to providing application 

assistance; complies with applicable 

authentication and data security 

standards, and with the Exchange’s 

privacy and security standards adopted 

consistent with 45 CFR 155.260; 

provides application assistance in the 

best interest of applicants; complies 

with any applicable state law related to 

application counselors, including state 

law related to conflicts of interests; 

provides information with reasonable 

accommodations for those with 

disabilities, if providing in-person 

assistance; and enters into an agreement 

with the Exchange. We seek comment 

on whether the Exchange should have 

the authority to create additional 

standards for certification or otherwise 

limit eligibility of certified application 

counselors beyond what is proposed 

here. 

In paragraph (c) we provide that the 

Exchange will establish procedures to 

withdraw certification from individual 

application counselors, or from all 

application counselors associated with a 

particular organization, when it finds 

noncompliance with the terms and 

conditions of the application counselor 

agreement. 

In paragraph (d), we propose that the 

Exchange establish procedures that 

ensure that applicants are informed of 

the functions and responsibilities of 

certified application counselors and 

provide authorization for the disclosure 

of his or her information to an 

application counselor prior to a 

counselor helping the applicant with 

submitting an application. 

In paragraph (e), we propose that 

certified application counselors may not 

impose any charge on applicants for 

application assistance in order to 

support access for low-income 

individuals. 

6. Authorized Representatives 

(§ 155.227) 

Under 45 CFR 155.405(c)(1), the 

Exchange must accept applications from 

application filers which includes 

authorized representatives acting on 

behalf of an applicant. The proposed 

rules for authorized representatives for 

Exchanges closely track those for 

Medicaid. We propose to add a new 

§ 155.227 establishing minimum 

requirements for the designation of 

authorized representatives who may act 

on an individual’s or employee’s behalf. 

In § 155.227(a), we propose that, 

subject to applicable privacy and 

security requirements, the Exchange 

must permit individuals and employees 

to designate an individual or 

organization to act on that individual or 

employee’s behalf, or may have such a 

representative through operation of state 

law (for example, through a legal 

guardianship arrangement). The 

Exchange must not restrict the option to 

designate an authorized representative 

to only certain groups of individuals or 

employees. We propose the Exchange 

ensures the authorized representative 

agrees to maintain, or be legally bound 

to maintain, the confidentiality of any 

information regarding the individual or 

employee provided by the Exchange, 

and that authorized representatives 

adhere to applicable authentication and 

data security standards. Additionally, 

we propose the Exchange ensures the 

authorized representative is responsible 

for fulfilling all responsibilities 

encompassed within the scope of the 

authorized representation, as described 

in this section, to the same extent as the 

individual he or she represents. 

In § 155.227(b), we propose the times 

during which the Exchange must permit 

an individual or employee may choose 

to designate an authorized 

representative. We intend that the 

single, streamlined application 

described in 45 CFR 155.405 will 

provide applicants the opportunity to 

designate an authorized representative 

and will collect the information 

necessary for such representative to 

enter into any associated agreements 

with the Exchange as part of the 

application process, and any alternative 

application developed by a state under 

45 CFR 155.405(b) must do so as well. 

Individuals and employees who do not 

designate an authorized representative 

on their applications will subsequently 

be able to do so through electronic, 

paper formats and other modalities as 

described in 45 CFR 155.405(c)(2). Legal 

documentation of authority to act on 

behalf of an individual under state law, 

such as a court order establishing legal 

guardianship or a power of attorney, 

may serve in the place of the individual 

or employee’s designation. The option 

to submit such documentation is 

intended to enable these applicants to 

have authorized representation without 

requiring duplicate authorization. 

In § 155.227(c), we propose that the 

Exchange must permit an individual to 

authorize a representative to—(1) Sign 

the application on the individual’s 

behalf; (2) submit an update or respond 

to a redetermination for the individual; 

(3) receive copies of the individual’s 

notices and other communications from 

the Exchange; and (4) act on behalf of 

the individual in all other matters with 

the Exchange. Unlike a certified 

application counselor, the authorized 

representative has the ability to sign the 

application and make attestations on 

behalf of an individual. 

In § 155.227(d), we propose that the 

Exchange must permit an individual or 

employee to change or withdraw their 

authorization at any time. The 

authorized representative also may 

withdraw his or her representation by 

notifying the Exchange and the 

individual. 

In § 155.227(e), we propose that an 

authorized representative acting as 

either a staff member or volunteer of an 

organization and the organization itself 

must sign an agreement meeting the 

requirements in § 155.225(b) of this part. 

While important in instances where an 

authorized representative is a member 

or volunteer of an organization, we 

believe that the protections afforded by 

the agreement are not logical in cases 

where an authorized representative is 

not acting on behalf of an organization. 

For example, a friend or family member 

who is authorized to represent an 

applicant would not be legally obliged 

to keep the applicant or enrollee’s 

eligibility status confidential. We seek 

comments on applying the protections 

in paragraph (e) to authorized 

representatives more broadly. 

In § 155.227(f), we propose that the 

Exchange require authorized 

representatives to comply with any 

applicable state and federal laws 

concerning conflicts of interest and 

confidentiality of information. 

In § 155.227(g),we propose that 

designation of an authorized 

representative must be in writing 

including a signature or through another 

legally binding format and be accepted 

through all of the modalities described 

in 45 CFR 155.405(c) of this part. 

7. General Standards for Exchange 

Notices (§ 155.230) 

We propose to make a technical 

correction in paragraph (a) to clarify that 

the general standards for notices apply 

to all notices sent by the Exchange to 

individuals or employers. The goal of 

this change is to eliminate any 

confusion that may have resulted from 

the multiple categories of individuals, 

employees, and employers that were 

previously listed. 

We also propose to revise paragraph 

(a) by redesignating paragraph (a)(1) as 

paragraph (a)(4) and redesignating 

paragraph (a)(2) as paragraph (a)(5). We 

revise redesignated (a)(2) to change ‘‘; 

and’’ to ‘‘.’’ We propose to add new 

paragraph (a)(1) to indicate that any 

notice required to be sent by the 

Exchange to individuals or employers 

must be written and include an 

explanation of the action that is 

reflected in the notice, including the 

effective date of the action, and we 

propose to add new paragraph (a)(2) to 


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require the notice to include any factual 

findings relevant to the action. We 

revise paragraph (a)(3) to clarify that the 

notice must include the citation to, or 

identification of, the relevant 

regulations that supports the action. 

We propose to add paragraph (d) to 

allow the Exchange to provide notices 

either through standard mail, or if an 

individual or employer elects, 

electronically, provided that standards 

for use of electronic notices are met as 

set forth in § 435.918, which contains a 

parallel provision. These standards 

ensure that individuals have the ability 

to control their preferences regarding 

how they receive notices; additionally, 

since notices will include personally 

identifiable information, these standards 

ensure that proper safeguards for the 

generation and distribution of notices 

are met. Providing an option for 

individuals and employers to receive 

notices electronically allows the 

Exchange to leverage available 

technology to reduce administrative 

costs and improve communication. This 

provision is discussed further in the 

preamble to § 435.918. We note that the 

notice standards described in this 

section apply to notices required 

throughout 45 CFR part 155, including 

notices sent by the SHOP Exchange. We 

propose that the standards specifically 

described under proposed paragraph (d) 

do not apply to the SHOP Exchange, 

because of the distinct nature of the 

relationship between the SHOP 

Exchange, employers, and employees. 

However, we also considered adopting 

an alternative approach whereby we 

would propose the same standard for 

the SHOP Exchange that we propose 

adopting for the individual market 

Exchange under paragraph (d), except 

that the SHOP Exchange would have 

more flexibility to adopt an allelectronic approach. We note that we 

expect that the SHOP Exchange may 

rely more heavily on electronic notices 

than the individual market Exchange. 

We seek comment on the approach we 

have proposed, and whether we should 

adopt the alternative approach. 

8. Definitions and General Standards for 

Eligibility Determinations (§ 155.300) 

We propose to make a technical 

correction to remove the definition of 

‘‘adoption taxpayer identification 

number’’ from paragraph (a), as it will 

not be used in the income verification 

process for advance payments of the 

premium tax credit and cost-sharing 

reductions, in accordance with 

proposed rules issued by the Secretary 

of the Treasury at 77 FR 25381. 

We propose to make a technical 

correction to the definition of, 

‘‘minimum value’’, to add ‘‘employersponsored’’ before the words ‘‘plan 

meets the,’’ replace the word 

‘‘requirements’’ with ‘‘standards’’ and 

cite to applicable Treasury regulations 

instead of section 36B of the Code. We 

also propose corrections to the 

definition of ‘‘modified adjusted gross 

income’’ and ‘‘qualifying coverage in an 

eligible employer-sponsored plan’’ to 

cite to the applicable Treasury 

regulation implementing section 36B of 

the Code. 

9. Options for Conducting Eligibility 

Determinations (§ 155.302) 

In § 155.302, we propose to amend 

paragraphs (a)(1), (b)(4), and (5). We 

note that this section is currently an 

interim final rule (77 FR 18451–52). 

With our proposals below, we intend to 

modify the interim final rule without 

finalizing it at this time. 

We propose to make a technical 

correction in paragraph (a)(1) to align 

the language regarding the Exchange’s 

ability to make eligibility 

determinations for Medicaid and CHIP 

with language proposed in 

§ 431.10(c)(2), which specifies that 

Medicaid eligibility determinations may 

only be made by a government agency 

that maintains personnel standards on a 

merit basis. 

We propose to amend paragraph 

(b)(4)(i)(A), adding language which 

provides that the withdrawal 

opportunity is not applicable in cases in 

which the Exchange has assessed that 

the applicant is potentially eligible for 

Medicaid based on factors other than 

MAGI, in accordance with 45 CFR 

155.345(b). In this situation, the 

application will already be sent to 

Medicaid for a full determination that 

includes a determination based on 

criteria identified in 45 CFR 155.305(c) 

and (d) and other eligibility criteria not 

generally considered by an Exchange, 

such as disability. Therefore, 

withdrawal of the application in this 

instance is not applicable. We also 

propose that an individual’s application 

not be considered withdrawn if the 

individual appeals his or her eligibility 

determination for advance payments of 

the premium tax credit or cost-sharing 

reductions and the Exchange appeals 

entity finds that the individual is 

potentially eligible for Medicaid or 

CHIP. The added language preserves an 

individual’s right to a Medicaid or CHIP 

eligibility determination based on the 

initial date of application, as well as any 

appeal rights related to that 

determination. 

We propose to amend paragraph (b)(5) 

to specify that the Exchange also will 

adhere to the appeals decision for 

Medicaid or CHIP made by the state 

Medicaid or CHIP agency, or the appeals 

entity for such program. The previous 

language only specified that the 

Exchange adhere to the initial eligibility 

determination for Medicaid or CHIP 

made by the state Medicaid or CHIP 

agency. 

10. Eligibility Standards (§ 155.305) 

We propose to amend paragraph (a)(3) 

to add paragraph (a)(3)(v) concerning 

the eligibility standards for residency 

for enrollment in a QHP through the 

Exchange. We propose to specify that 

the Exchange may not deny or terminate 

an individual’s eligibility for enrollment 

in a QHP through the Exchange if the 

individual meets the standards in 

paragraph (a)(3) but for a temporary 

absence from the service area of the 

Exchange and the individual intends to 

return when the purpose of the absence 

has been accomplished, unless another 

Exchange verifies that the individual 

meets the residency standard of such 

Exchange. This proposal is designed to 

align the Exchange eligibility standards 

regarding residency with the Medicaid 

eligibility standards described in 42 

CFR 435.403(j)(3). Both this provision 

and the parallel provision in 42 CFR 

435.403(j)(3) are designed to ensure that 

an individual is not ruled ineligible 

during a period of temporary absence, 

which could create significant issues 

with respect to access to health care, as 

well as administrative burden 

associated with termination and 

reenrollment. 

We propose to make technical 

corrections in paragraphs (f)(1), (f)(2), 

and (f)(5) to cite to the applicable 

Treasury regulation instead of section 

36B of the Code. 

We propose to amend paragraph (f)(3) 

to clarify that advance payments of the 

premium tax credit and cost-sharing 

reductions are available on behalf of a 

tax filer only if one or more applicants 

for whom the tax filer attests that he or 

she expects to claim a personal 

exemption deduction for the benefit 

year, including the tax filer and his or 

her spouse, is enrolled in a QHP, that is 

not a catastrophic plan, through the 

Exchange. This proposal aligns with the 

definition of QHP as provided in section 

36B of the Code. 

We propose to add paragraph (h) to 

outline the eligibility standards for 

enrollment through the Exchange in a 

QHP that is a catastrophic plan, as 

specified in section 1302(e) of the 

Affordable Care Act. We note that 

premium tax credits are not available to 

support enrollment in a catastrophic 

plan. In paragraph (h)(1), we propose to 

add language that an Exchange will 


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determine a qualified individual eligible 

for enrollment through the Exchange in 

a QHP that is a catastrophic plan if he 

or she has not attained the age of 30 

before the beginning of the plan year, in 

accordance with section 1302(e)(2)(A) of 

the Affordable Care Act. In paragraph 

(h)(2), we propose to add language 

specifying that the Exchange will 

determine a qualified individual eligible 

for enrollment through the Exchange in 

a QHP that is a catastrophic plan if he 

or she has a certification that he or she 

is exempt from the shared responsibility 

payment under section 5000A of the 

Code based on a lack of affordable 

coverage or hardship. These standards 

reflect that the Exchange will only make 

eligibility determinations for enrollment 

through the Exchange in a QHP that is 

a catastrophic plan, as opposed to 

enrollment in catastrophic plans outside 

of the Exchange. The eligibility 

standards for exemptions under section 

5000A of the Code will be discussed in 

future regulations. 

11. Eligibility Process (§ 155.310) 

In accordance with section 

1411(e)(4)(B)(iii) of the Affordable Care 

Act, section 155.310(h) specifies that the 

Exchange shall provide a notice to an 

employer if one of the employer’s 

employees has been determined eligible 

for advance payments of the premium 

tax credit or cost-sharing reductions. 

Sections 1411(e)(4)(B)(iii) and 1411(f)(2) 

of the Affordable Care Act establish a 

system of notice to employers and an 

employer appeal when an employee’s 

eligibility for advance payments of the 

premium tax credit is based on either 

the employer’s decision not to offer 

minimum essential coverage to that 

employee or the plan sponsored by the 

employer does not meet the minimum 

value standard or is unaffordable. 

Section 4980H of the Code limits the 

employer’s liability for payment under 

that provision when the employer offers 

coverage to one or more full-time 

employees who are ‘‘certified to the 

employer under section 1411’’ as having 

enrolled in a QHP through the Exchange 

and for whom an applicable premium 

tax credit or cost-sharing reduction is 

allowed or paid. We propose to add new 

paragraph (i) regarding a certification 

program pursuant to the Secretary’s 

program for determining eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions in 

accordance with section 1411(a) of the 

Affordable Care Act. This certification 

program is distinct from the notification 

specified in section 1411(e)(4)(B)(iii) 

and paragraph (h). 

In new § 155.310(i), we propose that 

the certification to the employer will 

consist of methods adopted by the 

Secretary of Treasury as part of the 

determination of potential employer 

liability under section 4980H of the 

Code. In this manner, the certification 

program will address not only 

individuals on whose behalf advance 

payments of the premium tax credit and 

cost-sharing reductions are provided, 

but also individuals claiming the 

premium tax credit only on their tax 

returns. We welcome comments on this 

proposal. 

We also propose to combine previous 

paragraphs (i) and (i)(1) into new 

paragraph (j). We propose to amend 

paragraph (j) in order to align with 

proposed revised language in § 155.335, 

which specifies that the Exchange will 

redetermine eligibility on an annual 

basis for all qualified individuals, not 

only enrollees. This is discussed further 

in the preamble associated with 

§ 155.335(a). We propose to remove the 

previous paragraph (i)(2), as it 

addressed situations in which a 

qualified individual did not select a 

plan before the date on which his or her 

eligibility would have been 

redetermined as a part of the annual 

redetermination process. Since the 

proposed change to § 155.335(a) 

specifies that all qualified individuals 

will be redetermined on an annual 

basis, including paragraph (i)(2) in 

redesignated paragraph (j) would be 

unnecessary. 

12. Verification Process Related to 

Eligibility for Enrollment in a QHP 

Through the Exchange (§ 155.315) 

We propose a technical correction in 

paragraph (b)(2) to clarify that the 

procedures specified for situations in 

which the Exchange is unable to 

validate an individual’s Social Security 

number through the Social Security 

Administration (SSA) also address 

situations in which SSA indicates an 

individual is deceased. 

In paragraph (f), we propose to clarify 

the circumstances that will trigger the 

inconsistency process described in 

paragraphs (f)(1) and (2). We clarify that 

when electronic data are required but 

data on an individual that is relevant to 

the eligibility determination is not 

contained in the electronic data source, 

the Exchange will follow procedures in 

paragraphs (f)(1) and (2). Additionally, 

if electronic data are required but it is 

not reasonably expected that such data 

sources will be available within two 

days of the initial attempt to reach the 

data source, we clarify that the 

Exchange will follow procedures in 

paragraphs (f)(1) and (2), if applicable. 

We propose this change to clarify that 

if the Exchange is unable to reach a 

required electronic data source upon 

initial attempts, the Exchange may 

continue to attempt to reach this 

electronic data source prior to providing 

an eligibility determination. While we 

expect that in the majority of cases, such 

information will be available the next 

day (for example, when data sources are 

unavailable very late at night), we 

include an extra day just to ensure that 

inconsistency processes are not 

triggered unnecessarily in order to 

minimize confusion for individuals and 

administrative burden for the Exchange. 

This proposal will ensure that the 

Exchange completes all possible 

electronic verifications after the two-day 

period before requesting additional 

information from an individual. 

We propose to revise paragraph (f)(4), 

which addresses eligibility for 

enrollment in a QHP and for advance 

payments of the premium tax credit and 

cost-sharing reductions, to clarify that 

the Exchange will determine eligibility 

during the period of time described in 

paragraph (f)(1) of this section based on 

the information provided by the 

applicant along with any information 

that has been verified. Paragraph (f)(1) 

describes the period during which the 

Exchange is required to make a 

reasonable effort to identify and address 

the causes of an inconsistency including 

through typographical or other clerical 

errors, such as by contacting the 

application filer to confirm the accuracy 

of the information submitted by the 

application filer. This effort to resolve 

the inconsistency without 

documentation is required by section 

1411(c)(3) of the Affordable Care Act, 

referencing section 1902(ee)(1)(B)(i) of 

the Act, and section 1411(c)(4)(A)(i) of 

the Affordable Care Act. We also clarify 

that we expect that contact made with 

the individual to resolve typographical 

or other clerical errors under paragraph 

(f)(1) will occur primarily in a real-time 

fashion through the dynamic online 

application or through the call center as 

an application is submitted via phone. 

Therefore, we expect that the initial 

eligibility determination provided to the 

individual who is otherwise eligible but 

for whom inconsistencies are 

outstanding, will occur, for the most 

part, after typographical and clerical 

errors have been addressed. Lastly, we 

note that to the extent that the effort in 

paragraph (f)(1) is unsuccessful, existing 

paragraph (f)(2)(ii) specifies that the 

Exchange will maintain the eligibility 

determination during the 90-day period 

that is provided for an individual to 

provide satisfactory documentation or 

otherwise resolve an inconsistency. 

We propose to add paragraph (j) 

concerning the verification process 


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related to eligibility for enrollment 

through the Exchange in a QHP that is 

a catastrophic plan. As noted above, we 

propose to add language at § 155.305(h) 

to establish the eligibility standards for 

enrollment through the Exchange in a 

QHP that is a catastrophic plan; 

paragraph (j) provides the 

corresponding Exchange verification 

procedures. In paragraph (j)(1), we 

propose to add language concerning the 

verification of the applicant’s age. We 

propose two options for this 

verification. First, the Exchange may 

accept the applicant’s attestation of age 

without further verification, unless 

information provided by the applicant is 

not reasonably compatible with other 

information previously provided by the 

individual or otherwise available to the 

Exchange. Second, the Exchange may 

examine available electronic data 

sources that have been approved by 

HHS for this purpose, based on 

evidence showing that such data 

sources are sufficiently current and 

accurate, and minimize administrative 

costs and burdens. 

In paragraph (j)(2), we propose to add 

language specifying that the Exchange 

will verify that an applicant for 

enrollment through the Exchange in a 

QHP that is a catastrophic plan based on 

an exemption from the shared 

responsibility payment under section 

5000A of the Code due to lack of 

affordable coverage or hardship has a 

certificate of such an exemption issued 

by an Exchange. We anticipate that this 

will be accomplished either through use 

of the Exchange’s records, if the 

exemption was issued by that Exchange, 

or through verification of paper 

documentation if the certificate was 

issued by a different Exchange. We also 

note in paragraph (j)(3) that in the event 

that the Exchange is unable to verify 

information necessary to determine an 

applicant’s eligibility for enrollment 

through the Exchange in a QHP that is 

a catastrophic plan, the Exchange will 

follow the inconsistency process 

described in § 155.315(f), except for 

§ 155.315(f)(4), which does not apply to 

the eligibility criteria for enrollment 

through the Exchange in a QHP that is 

a catastrophic plan. That is, an 

applicant will not be determined 

eligible through the Exchange in a QHP 

that is a catastrophic plan until 

verification of necessary information 

can be completed. We welcome 

comments on these provisions. 

13. Verifications Related to Eligibility 

for Insurance Affordability Programs 

(§ 155.320) 

We propose to make a technical 

correction in paragraph (c)(1)(i) to 

change ‘‘tax return data’’ to ‘‘data 

regarding annual household income.’’ 

We amend paragraph (c)(1)(i)(A) to 

include data regarding Social Security 

benefits as defined in 26 CFR 1.36B– 

1(e)(2)(iii). This reflects the legislative 

change made by Public Law 112–56 

concerning the treatment of Social 

Security benefits related to MAGI. 

Specifically, in some situations, IRS will 

be unable to calculate MAGI for certain 

relevant taxpayers who have nontaxable 

Social Security benefits; the proposed 

new language in this paragraph reflects 

the need to obtain this data from the 

Social Security Administration to 

support the verification of annual 

household income. Section 

155.320(c)(1)(i) establishes a system 

through which the Exchange contacts 

HHS and HHS secures the annual 

household income data available from 

IRS and Social Security Administration, 

for purposes of determining MAGI. We 

anticipate that the Social Security 

Administration will provide the full 

amount of Social Security benefits to 

HHS for disclosure to the Exchange as 

part of the verification process 

described in § 155.320(c). 

We propose to make a technical 

correction in paragraph (c)(1)(i)(A) to 

remove the language concerning an 

adoption taxpayer identification 

number, as it will not be used in the 

income verification process for advance 

payments of the premium tax credit and 

cost-sharing reductions, in accordance 

with proposed rules issued by the 

Secretary of the Treasury at 77 FR 

25381. We also propose to make a 

technical correction to cite to the 

applicable Treasury regulation instead 

of section 36B of the Code. 

We propose to make a technical 

correction in paragraph (c)(1)(ii) to add 

the word ‘‘calculated’’ prior to ‘‘in 

accordance with 42 CFR 435.603(d).’’ 

We also propose to make a technical 

correction to cite to the applicable 

Treasury regulation instead of section 

36B of the Code. 

We propose to make a technical 

correction in paragraph (c)(3)(i)(D) by 

adding the word ‘‘the’’ after the first 

word, ‘‘If,’’ in the paragraph such that it 

now reads ‘‘If the Exchange finds that 

* * *.’’ 

We propose to add paragraph 

(c)(3)(i)(E) to specify that the Exchange 

verify that neither advance payments of 

the premium tax credit nor cost-sharing 

reductions are already being provided 

on behalf of an individual, which is an 

important program integrity measure. 

As proposed, the language specifies that 

the Exchange will use information from 

HHS to support this verification. 

We propose to make a technical 

correction to paragraph (c)(3)(ii)(A) to 

reflect the amendment made to 

paragraph (c)(1)(i)(A) of this section, 

reflecting the legislative change made by 

Public Law 112–56 concerning the 

treatment of Social Security benefits 

related to MAGI. 

We propose to amend paragraph 

(c)(3)(iii) to clarify procedures that the 

Exchange will follow when an applicant 

attests that his or her annual household 

income has increased or is reasonably 

expected to increase from the annual 

household income computed based on 

available data. In general, the proposed 

language does not modify the general 

approach of accepting an applicant’s 

attestation to projected annual 

household income when it exceeds the 

amount indicated by available data 

regarding annual household income; 

however, it provides additional detail 

regarding the Exchange’s procedures to 

ensure that such an attestation does not 

dramatically understate income, by 

checking whether available data 

regarding current household income 

indicates that his or her projected 

annual household income may exceed 

his or her attestation by a significant 

amount, and if so, proceeding in 

accordance with paragraphs (f)(1) 

through (4) of § 155.315 to verify the 

applicant’s attestation. We have 

developed these procedures in 

conjunction with states to clarify an 

existing provision such that it can be 

effectively implemented, and solicit 

comment regarding whether there are 

ways to further simplify the process. 

We propose to amend paragraph 

(c)(3)(iii)(A) to reflect the proposed 

amendments to paragraphs (c)(3)(iii)(B) 

and (C), which are described in more 

detail below. 

We are proposing to redesignate 

current paragraph (c)(3)(iii)(B) as 

paragraph (c)(3)(iii)(C). In new 

paragraph (c)(3)(iii)(B), we propose that 

if the applicant attests that a tax filer’s 

annual household income has increased 

or is reasonably expected to increase 

from annual household income 

computed based on available data, but 

available data regarding current 

household income indicates that his or 

her projected annual household income 

may exceed his or her attestation by a 

significant amount, the Exchange will 

proceed in accordance with paragraphs 

(f)(1) through (4) of § 155.315 to verify 

the applicant’s attestation. In newly 

redesignated paragraph (c)(3)(iii)(C), we 

propose to add to the prior language of 

paragraph (c)(3)(iii)(B) such that if other 

information provided by the application 

filer (for example, an attestation of 

current monthly income) indicates that 


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the applicant’s projected annual 

household income is in excess of his or 

her attestation by a significant amount, 

the Exchange will utilize current 

income data to verify the applicant’s 

attestation. In the event that such data 

are not available or is not reasonably 

compatible with the applicant’s 

attestation, we propose that the 

Exchange follow procedures described 

in paragraphs (f)(1) through (f)(4) of 

§ 155.315 to verify the attestation. 

Together, these procedures are designed 

to provide a common-sense approach to 

ensuring that the Exchange will 

complete additional verification for the 

very limited number of situations in 

which an attestation to projected annual 

household income that is in excess of 

annual household income data may still 

be understated by a significant margin. 

We propose to amend paragraph 

(c)(3)(vi) to provide more specificity 

regarding when electronic data other 

than tax data and information regarding 

Social Security benefits is sufficient to 

verify an applicant’s attestation of 

annual income. Based on consultation 

with a number of states, we propose 

revisions to paragraphs (c)(3)(vi)(A) 

through (F), and add paragraph 

(c)(3)(vi)(G) to better describe the 

process that the Exchange will follow in 

situations in which the applicant’s 

attestation to projected annual 

household income, as described in 

paragraph (c)(3)(ii)(B) of this section, is 

greater than ten percent below the 

annual household income computed in 

accordance with paragraph (c)(3)(ii)(A), 

or if data described in paragraph (c)(1)(i) 

of this section is unavailable when 

comparing an applicant’s attestation to 

annualized data from MAGI-based 

income sources. With the proposed text, 

the process follows the same standards 

that the Exchange will use for 

comparisons with annual income data, 

which is why states recommended that 

we take this approach. 

Specifically, we propose that the 

Exchange consider an applicant’s 

attestation to projected annual 

household income as verified if it is no 

more than ten percent below annual 

household income computed from the 

data sources described in paragraph 

(c)(3)(vi)(A) of this section, which are 

annualized data from MAGI-based 

income sources and any other electronic 

data sources approved by HHS, 

respectively. We believe that this is a 

reasonable threshold given that it is the 

same threshold as is used in comparing 

an applicant’s attestation to tax data and 

information regarding Social Security 

benefits, which are the primary sources 

of verification specified in paragraph 

(c)(3) of this section. 

Consistent with the final rule, the 

Exchange will follow the procedures 

specified in § 155.315(f)(1) through (4) 

for situations in which an applicant’s 

attestation is more than ten percent 

below annual household income 

computed from the data sources 

described in paragraph (c)(3)(vi)(A) of 

this section, or when such data are 

unavailable. Taken together, these 

proposed clarifications are designed to 

provide operational specificity to states 

that are developing Exchanges. We 

solicit comment regarding whether we 

can provide additional clarification to 

further support the design of state 

systems. We propose to make a 

technical correction to paragraph 

(c)(3)(vii) to remove the word ‘‘this’’ 

prior to ‘‘paragraph (c)(3),’’ and clarify 

that we are referring to paragraph (c)(3) 

of this section. We also propose to make 

a technical correction to cite to the 

applicable Treasury regulation instead 

of section 36B of the Code. 

We propose to make a technical 

correction in paragraph (c)(3)(viii) to 

cite to the applicable Treasury 

regulation instead of section 36B of the 

Code. 

We propose to consolidate paragraphs 

(d) and (e), currently entitled 

‘‘Verification related to enrollment in an 

eligible employer-sponsored plan’’ and 

‘‘Verification related to eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan,’’ respectively, 

into new paragraph (d). The new 

proposed paragraph (d) sets forth the 

rules for verifying enrollment in an 

eligible employer-sponsored plan and 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan. The 

consolidated paragraph, entitled 

‘‘Verifications related to enrollment in 

an eligible employer-sponsored plan 

and eligibility for qualifying coverage in 

an eligible employer-sponsored plan’’ 

streamlines the process, provides 

further detail regarding the standards for 

these verification procedures, and 

proposes a process under which an 

Exchange may rely on HHS to complete 

this verification. 

HHS performed a comprehensive 

search to identify potential electronic 

resources to support a real-time 

verification of eligibility for qualifying 

coverage in an eligible employersponsored plan, which involves 

verifying whether an individual has 

access to health coverage through his or 

her employer, as well as information 

regarding the employee’s share of the 

premium amount for and minimum 

value of that health coverage. We 

explored existing data resources at the 

state and federal level, and in the 

private sector, in an effort to pursue a 

strategy that minimizes burden for 

Exchanges, employers, and consumers. 

HHS also published a Request for 

Information on April 30, 2012, 

requesting input from potential vendors 

who might be able to produce a resource 

that comprehensively supports this 

verification (https://www.fbo.gov/?s=

opportunity&mode=form&id=96c359

57187f37da97e40d2c384b666c&tab=

core&_cview=0. Based on the results of 

these efforts, HHS determined that a 

comprehensive data set that could assist 

in verification for the entire Exchange 

population will not be available from a 

single source by October 1, 2013. 

Information released to employees 

under section 18B of the Fair Labor 

Standards Act and the through the 

Summary of Benefits and Coverage 

document specified in section 2715 of 

the Public Health Service Act is not 

sufficient because, among other issues, 

it only requires the disclosure of 

information regarding whether the 

employer provides minimum essential 

coverage, and not whether such 

coverage is affordable as defined in 26 

CFR 1.36B–2(c)(3)(v). Further, the 

information in these disclosures is 

reported directly to employees and not 

reported to the Exchange. Additionally, 

the limited information such as the 

Employer Identification Number and 

aggregate cost of coverage in an eligible 

employer-sponsored plan that will be 

available on the W–2, and reporting 

required under sections 6055 and 6056 

of the Code, is retrospective in nature. 

Since the Exchange must verify whether 

the applicant reasonably expects to have 

access to qualifying coverage 

prospectively at the time of open 

enrollment, this information is not 

useful. Reporting under sections 6055 

and 6056 of the Code will not begin 

until 2015, although it is anticipated 

that this reporting could greatly 

contribute to the integrity of employer 

verification in the future. In response to 

the April 26, 2012 bulletin outlining an 

interim solution for Exchanges to meet 

the standards for verifying eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan (http://cciio.

cms.gov/resources/files/exc-verificationguidance-vach.pdf, commenters also 

suggested that HHS seek information to 

support this verification from insurers. 

However, insurers are not typically 

privy to the relevant data elements 

needed as part of the eligibility 

determination for advance payments of 

premium tax credit. The Administration 

continues to examine ways, both 

administrative and legislative, by which 

employer reporting under the 

Affordable Care Act can be streamlined 


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both in timeframe and in the number of 

elements to prevent inefficient or 

duplicative reporting. We seek comment 

on policies to promote these goals. 

We identified a limited number of 

data sources to verify enrollment in or 

eligibility for employer-sponsored 

coverage at the federal level. HHS will 

make available data regarding eligibility 

and enrollment for coverage under the 

Federal Employee Health Benefit 

Program (FEHBP) for verification 

purposes through HHS. This data will 

only assist in verification for federal 

employees and their dependents. We 

also propose that an Exchange use 

SHOP records to verify enrollment in an 

eligible employer-sponsored plan and 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan. 

We propose to amend § 155.320(d) 

consistent with the interim strategy 

outlined in the April 26, 2012 bulletin, 

with one modification that is described 

in the preamble associated with 

paragraph (d)(3)(iii). It is anticipated 

that the strategy proposed below will 

evolve as additional data and data 

sources will become available; for this 

reason, this verification strategy is 

subject to change in later years. The 

approach for plan years 2016 and 

beyond will depend on the 

identification and or development of 

one or more data sources to promote a 

more comprehensive and automated 

pre-enrollment verification process. 

In paragraph (d), we propose the 

process for verification related to 

enrollment in an eligible employersponsored plan and eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan. In paragraph 

(d)(1), we propose that the Exchange 

must verify whether an applicant 

reasonably expects to be enrolled in an 

eligible employer-sponsored plan or is 

eligible for qualifying coverage in an 

eligible employer-sponsored plan for the 

benefit year for which coverage is 

requested. In the following paragraphs, 

we detail a series of data sources that we 

propose the Exchange will check as a 

component of this verification, the 

verification procedures for situations in 

which data is unavailable or 

inconsistent with an individual’s 

attestation, and an option for the 

Exchange to rely on HHS to complete 

this verification. 

In paragraph (d)(2), we propose the 

data sources the Exchange will use to 

verify access to employer-sponsored 

coverage. We also note that consistent 

with proposed paragraph (d)(4), an 

Exchange can elect to have HHS 

conduct the entire verification process 

described under paragraph (d), 

including obtaining data from the 

proposed data sources. In paragraph 

(d)(2)(i), we propose that the Exchange 

will obtain data about enrollment in an 

eligible employer-sponsored plan and 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan from 

any electronic data sources that are 

available to the Exchange and which 

have been approved by HHS for this 

purpose based on evidence showing that 

such data sources are sufficiently 

current, accurate, and minimize 

administrative burden. This provision is 

designed to support the use of statebased data sources that exist or may be 

developed by states (for example, those 

that support CHIP premium assistance 

programs). 

In paragraph (d)(2)(ii), we specify that 

the Exchange must obtain any available 

data regarding enrollment in an eligible 

employer-sponsored plan or eligibility 

for qualifying coverage in an eligible 

employer-sponsored plan based on 

federal employment by transmitting 

identifying information specified by 

HHS to HHS. HHS will then match this 

request to data maintained by the Office 

of Personnel Management regarding the 

Federal Employees Health Benefits 

Program. Further, in paragraph 

(d)(2)(iii), we propose that the Exchange 

must obtain data from the SHOP that 

operates in the state in which the 

Exchange is operating, which will 

provide a readily available source of 

information with minimal 

administrative burden. 

Finally, in paragraph (d)(2)(iv), we 

specify that the Exchange must obtain 

any available data regarding the 

employment of an applicant and the 

members of his or her household, as 

defined in 26 CFR 1.36B–1(d), from any 

electronic data sources that are available 

to the Exchange and have been 

approved by HHS for this purpose, 

based on evidence showing that such 

data sources are sufficiently current, 

accurate, and minimize administrative 

burden. We anticipate that data sources 

in this category will include state 

quarterly wage data, as well as 

commercial sources of current wage 

data, which we intend to approve for 

these purposes. These existing data 

sources provide information regarding 

employment, which is a basic element 

of verifying information provided by an 

individual regarding access to 

employer-sponsored coverage. Although 

these data sources, which are also used 

by the Exchange to verify household 

income, will only reflect whether an 

individual is employed and with which 

employer, and not whether the 

employer provides health insurance or 

the characteristics of such health 

insurance, they can be used as prompts 

or helpful hints to support accurate 

attestations, or identify situations in 

which employment information is 

inconsistent with an applicant’s 

attestation. Since these data sources do 

not directly address enrollment in an 

eligible employer-sponsored plan or 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan, we 

seek comment on whether they should 

only be used as a point of information 

for applicants, and not as a point of 

comparison for the purposes of 

identifying inconsistencies as part of the 

verification described in this paragraph. 

We believe that the connection to the 

data sources described in paragraph 

(d)(2) will be minimally burdensome for 

Exchanges, considering that data under 

paragraph (d)(2)(i) will not be available 

for the first year of operations unless an 

Exchange proposes an acceptable data 

source to HHS; data under paragraph 

(d)(2)(ii) will be available through HHS; 

data under paragraph (d)(2)(iii) will be 

internal to the Exchange; and data under 

paragraph (d)(2)(iv) will already be used 

to verify current income. We solicit 

comment regarding the feasibility of 

making the necessary connections by 

October 1, 2013, and whether 

alternative approaches should be 

considered for the first year of 

operations. 

In paragraph (d)(3), we propose 

procedures for verifying enrollment in 

an eligible employer-sponsored plan 

and eligibility for qualifying coverage in 

an eligible employer-sponsored plan. In 

paragraph (d)(3)(i), we propose that 

except as specified in paragraphs 

(d)(3)(ii) or (iii) of this section, the 

Exchange must accept an applicant’s 

attestation regarding the verification 

specified in paragraph (d) without 

further verification. 

In paragraph (d)(3)(ii), we propose, if 

an applicant’s attestation is not 

reasonably compatible with the 

information specified in paragraphs 

(d)(2)(i) through (d)(2)(iii) of this 

section, other information provided by 

the application filer, or other 

information in the records of the 

Exchange, the Exchange will follow the 

procedures specified in § 155.315(f) of 

this subpart, which are used throughout 

this subpart to address inconsistencies. 

We note that this process involves 

providing a period of time for an 

applicant to provide satisfactory 

documentation, or otherwise resolve the 

inconsistency, and we solicit comment 

regarding whether we should take this 

approach of relying on the applicant, or 

instead request information directly 

from his or her employer. 

Finally, we propose in paragraph 

(d)(3)(iii) that if the Exchange does not 


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have any of the information specified in 

paragraphs (d)(2)(i) through (d)(2)(iii) 

for an applicant, and either does not 

have the information specified in 

paragraph (d)(2)(iv) for an applicant or 

an applicant’s attestation is not 

reasonably compatible with the 

information specified in (d)(2)(iv) of this 

section, the Exchange must select a 

statistically significant random sample 

of such applicants and follow the 

procedures proposed in paragraphs 

(d)(3)(iii)(A) through (d)(3)(iii)(G), 

which are described below, and are 

generally consistent with the process 

specified in § 155.315(f), with 

modifications to ensure that it suits this 

verification. The April 26, 2012 bulletin 

discussed initiating and conducting this 

review later in the benefit year; 

however, we have proposed that the 

Exchange initiate the review at the point 

of eligibility determination and conduct 

it within the 90-day period that is also 

used for other verification requests, in 

order to allow the Exchange to reuse 

components of the inconsistency 

process to the maximum extent 

possible, streamline communications 

with applicants, and ensure that any 

changes that need to be made are made 

as quickly as possible after initial 

enrollment, and not significantly later in 

the year after advance payment of the 

premium tax credit and CSR have been 

provided for many months. We also 

note that to the extent that multiple 

members of a single tax household are 

selected for the sample, we expect that 

the Exchange will consolidate the 

activities under this section, including 

communications with employers. 

We propose to handle inconsistencies 

with the information specified in 

paragraph (d)(2)(iv) through the 

sampling process, rather than through 

the procedures specified in § 155.315(f) 

because the information specified in 

paragraph (d)(2)(iv) only reflects 

employment, and does not provide 

comprehensive information regarding 

enrollment in an eligible employersponsored plan or eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan; further, we 

anticipate that information that is 

available under paragraph (d)(2)(iv) may 

be somewhat dated. We solicit 

comments regarding whether this is a 

suitable approach, whether the 

information in paragraph (d)(2)(iv) 

should only be used as a point of 

information for applicants and not as a 

point of comparison for the purposes of 

identifying inconsistencies as part of the 

verification described in this paragraph, 

or if we should treat any inconsistency 

regarding an employer as an 

inconsistency that must be resolved in 

order to continue eligibility. 

We believe that requesting and 

reviewing documentation for a 

statistically significant random sample 

of individuals for whom no 

inconsistencies are identified based on 

the data in paragraph (d)(2) is 

appropriate to ensure program integrity 

while minimizing administrative 

burden, and also may inform future 

verification approaches. We request 

comments on a methodology by which 

an Exchange could generate a 

statistically significant sample of 

applicants and whether there are ways 

to focus the sample on individuals who 

are most likely to have access to 

affordable, minimum value coverage. By 

using a process that maintains the 

policy and operational framework of the 

inconsistency process for these 

individuals, we leverage existing 

Exchange processes and also provide an 

option for advance payments of the 

premium tax credit and cost-sharing 

reductions during the period in which 

the Exchange is working to obtain 

additional information. 

First, in paragraph (d)(3)(iii)(A), we 

propose that the Exchange will provide 

notice to an applicant who is selected as 

part of the sample indicating that the 

Exchange will be contacting any 

employer identified on the application 

for the applicant and the members of his 

or her household, as defined in 26 CFR 

1.36B–1(d) to verify whether the 

applicant is enrolled in an eligible 

employer-sponsored plan or is eligible 

for qualifying coverage in an eligible 

employer-sponsored plan for the benefit 

year for which coverage is requested. 

We expect that this notice will not 

specify a time period for the completion 

of these activities, and will notify the 

applicant that the Exchange will 

provide an additional communication 

only if information gathered will change 

anything regarding his or her eligibility. 

We seek comment on ways the 

Exchange may communicate this 

sampling process to consumers with the 

intention of minimizing confusion. 

In paragraph (d)(3)(iii)(B), we propose 

that the Exchange proceed with all other 

elements of eligibility determination 

using the applicant’s attestation, and 

provide eligibility for enrollment in a 

QHP to the extent that an applicant is 

otherwise qualified. And in paragraph 

(d)(3)(iii)(C), we propose that the 

Exchange ensure that advance payments 

of the premium tax credit and costsharing reductions are provided on 

behalf of an applicant who is otherwise 

qualified for such payments and 

reductions, as described in § 155.305 of 

this subpart, if the tax filer attests to the 

Exchange that he or she understands 

that any advance payments of the 

premium tax credit paid on his or her 

behalf are subject to reconciliation. The 

provisions in paragraphs (d)(3)(iii)(B) 

and (C) are identical to those in 

§ 155.315(f), based on the principle that 

an individual should be determined 

eligible based on his or her attestation 

during the period in which the 

Exchange is seeking additional 

information. 

Next, in paragraph (d)(3)(iii)(D), we 

propose that the Exchange make 

reasonable attempts to contact any 

employer identified on the application 

for the applicant and the members of his 

or her household, as defined in 26 CFR 

1.36B–1(d) to verify whether the 

applicant is enrolled in an eligible 

employer-sponsored plan or is eligible 

for qualifying coverage in an eligible 

employer-sponsored plan for the benefit 

year for which coverage is requested. 

We expect that this will involve the 

Exchange using the employment 

information provided by an applicant 

and contacting employers via phone or 

mail. 

One alternative we considered was to 

rely on consumers to obtain information 

from their employer or employers. We 

chose not to take this approach since the 

application will already solicit all 

necessary information from consumers, 

and so it is unclear what would be 

gained through a second information 

request to consumers. We seek comment 

on this alternative and others to 

implement this process while 

minimizing burden on consumers, 

employers, and Exchanges. We also seek 

comment on ways the Exchange can 

most efficiently interact with employers, 

including other entities that employers 

may rely upon to support this process, 

such as third-party administrators. 

In paragraph (d)(3)(iii)(E), we propose 

that if the Exchange receives any 

information from an employer relevant 

to the applicant’s enrollment in an 

eligible employer-sponsored plan or 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan, the 

Exchange will determine the applicant’s 

eligibility based on such information 

and in accordance with the effective 

dates specified in § 155.330(f) of this 

subpart and if such information changes 

his or her eligibility determination, 

notify the applicant and his or her 

employer or employers of such 

determination in accordance with the 

notice requirements specified in 

155.310(g) and (h) of this part. We 

propose to limit notifications to 

situations in which the information 

provided by an employer changes an 

applicant’s eligibility determination, as 


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2http://cciio.cms.gov/resources/files/Files2/ 

11282011/exchange_q_and_a.pdf.pdf. 

notifying an applicant that his or her 

eligibility is unchanged requires 

additional effort and could be 

confusing. We anticipate that as an 

alternative, the initial notice that 

indicates that the Exchange will be 

requesting additional information from 

an applicant’s employer will state that 

the Exchange will notify him or her if 

anything changes based on additional 

information received by the Exchange. 

We solicit comments on this approach. 

In paragraph (d)(3)(iii)(F), we propose 

that if, after a period of 90 days from the 

date on which the notice described in 

paragraph (d)(3)(iii)(A) of this section is 

sent to the applicant, the Exchange is 

unable to obtain the necessary 

information from an employer, the 

Exchange will determine the applicant’s 

eligibility based on his or her attestation 

regarding that employer. If an 

individual has multiple employers, and 

not all employers provide information, 

the Exchange would determine 

eligibility based on the information 

provided by the employers that did 

respond, along with the information 

submitted by the applicant with respect 

to the employers that did not respond. 

We note that we do not propose that the 

Exchange provide an additional notice 

to the applicant and his or her employer 

based on the actions specified in 

paragraph (d)(3)(iii)(F), as using the 

applicant’s attestation at the close of the 

90-day period would by definition mean 

that his or her eligibility is unchanged. 

This is consistent with our approach in 

paragraph (d)(3)(iii)(E). As with that 

approach, we seek comment on this 

proposal and whether it is preferable to 

include an additional notice to the 

applicant and employer at the end of the 

90-day period. 

Finally, in paragraph (d)(3)(iii)(G), we 

propose that in order to carry out the 

process described in paragraph 

(d)(3)(iii) of this section, the Exchange 

must only disclose an individual’s 

information to an employer to the extent 

necessary for the employer to identify 

the employee. This is the only 

disclosure that we believe is necessary 

to support this verification process. An 

employer will receive separate notice 

from the Exchange regarding an 

employee who is eligible for advance 

payments of the premium tax credit and 

cost-sharing reductions, as well as the 

employer’s right to appeal. 

We seek comments on this proposed 

approach and whether there are ways 

these procedures can further minimize 

burden on the Exchange, employers, 

and consumers. We also note that 

consistent with proposed paragraph 

(d)(4), an Exchange can elect to have 

HHS conduct the entire verification 

process described under paragraph (d), 

including sampling and inconsistency 

resolution. 

We note that other sections of the 

Exchange final rule and the proposed 

regulation ensure that eligibility 

determinations are being made based on 

the most accurate information available 

regarding enrollment in an eligible 

employer-sponsored plan and eligibility 

for qualifying coverage in an eligible 

employer-sponsored plan. Specifically, 

in § 155.310(h), we specify standards for 

providing employers with a notice 

alerting them of their employee’s 

eligibility for advance payments of the 

premium tax credit or cost-sharing 

reductions. Further, in § 155.555, we 

propose a process through which 

employers can appeal the finding that 

an employee’s coverage is unaffordable 

or does not meet minimum value. The 

verification procedures presented in this 

section along with these notice and 

appeals provisions will ensure that 

employers can challenge eligibility 

determinations for advance payments of 

the premium tax credit that are made 

based on the Exchange’s findings about 

the coverage they offer to their 

employees. This entire system, taken 

together, ensures that consumers and 

employers are protected from adverse 

consequences of inaccurate 

determinations. 

In addition to the verification 

procedures proposed this section, we 

are taking steps to help consumers with 

providing information related to access 

to employer-sponsored coverage on the 

application. We suggest the use of a 

voluntary pre-enrollment template to 

assist applicants in gathering the 

information about access to coverage 

through an eligible employer-sponsored 

plan as required by the Exchange to 

determine eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions. We envision 

that an applicant would download a 

one-page template from the Exchange 

web site and present the document to 

his or her employer (or the employer of 

his or her spouse or parent). This 

template would enable the applicant to 

gather the information necessary from 

the relevant employer regarding the 

employer’s coverage offerings. 

Alternatively, an employer could 

voluntarily download and populate the 

template with information regarding its 

coverage offerings and distribute to 

employees at hiring, upon request, on 

the employer intranet or benefit site, or 

in conjunction with other information 

about employer-sponsored coverage 

provided by the employer to employees. 

When an individual completes his or 

her Exchange application, he or she 

would provide the information from the 

completed template in response to 

relevant questions on the single, 

streamlined application. We seek 

comments on the use of this preenrollment template and ways it can be 

used to assist consumers with providing 

the necessary information to complete 

the verification described in this 

paragraph while minimizing burden on 

employers. Elements of this tool can be 

commented upon as part of the 

information collection request related to 

the Supporting Statement for Data 

Collection to Support Eligibility 

Determinations for Insurance 

Affordability Programs and Enrollment 

through Health Benefits Exchanges, 

Medicaid, and Children’s Health 

Insurance Program Agencies (CMS– 

10440). We intend to release the 

template for comment in the near future. 

We also propose, pursuant to 

authority under section 1411(d) of the 

Affordable Care Act, that an Exchange 

may rely on HHS to complete this 

verification. We first indicated that we 

were exploring this in a set of questions 

and answers released on November 29, 

2011,2 and we received a significant 

amount of feedback from states 

indicating that this would be useful. As 

outlined in paragraph (d)(4), we propose 

that the Exchange may satisfy the 

provisions of this paragraph by 

implementing a verification process 

performed by HHS, provided that the 

Exchange sends the notices described in 

45 CFR 155.310(g) and (h) of this part; 

other activities required in connection 

with the verifications described are 

performed by the Exchange in 

accordance with the standards 

identified in this subpart or by HHS in 

accordance with the agreement 

described in paragraph (d)(4)(iv) or this 

section; the Exchange provides all 

relevant application information to HHS 

through a secure, electronic interface, 

promptly and without undue delay; and 

the Exchange and HHS enter into an 

agreement specifying their respective 

responsibilities in connection with the 

verifications described in this 

paragraph. We anticipate that under this 

option, the Exchange would collect an 

individual’s attestations regarding 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan and 

integrate the verification outcome in to 

the eligibility determination for advance 

payments of the premium tax credit and 

cost-sharing reductions, and HHS would 

provide the other components of the 


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process. We welcome comments on this 

proposed option. 

We propose to remove paragraph (e) 

as it has been incorporated into 

§ 155.320(d). Due to removing this 

paragraph, we propose to redesignate 

paragraph (f) as paragraph (e). 

14. Eligibility Redetermination During a 

Benefit Year (§ 155.330) 

We propose to amend paragraph 

(d)(1)(ii) to clarify that the Exchange 

will conduct periodic examination of 

data sources to identify eligibility 

determinations for Medicare, Medicaid, 

CHIP, or the BHP, if a BHP is operating 

in the service area of the Exchange, only 

for enrollees on whose behalf advance 

payments of the premium tax credit or 

cost-sharing reductions are being 

provided, as opposed to all QHP 

enrollees, since this information is not 

relevant to eligibility for enrollment in 

a QHP without advance payments and 

cost-sharing reductions. 

In 45 CFR 155.330(e)(1)(ii) and 

155.335(c) of the Exchange final rule, 

we describe how the Exchange must 

notify an enrollee of his or her 

redetermination as the result of 

situations in which an enrollee reports 

a change in circumstance, or the 

Exchange conducts limited periodic 

data matching or an annual 

redetermination. We seek comment on 

adding a provision such that if an 

enrollee experiences a change in his or 

her level of cost-sharing reductions as a 

result of a redetermination occurring 

under 45 CFR 155.330(e)(1) or 

155.335(c), the notice issued by the 

Exchange will describe how the 

enrollee’s amount of deductibles, copays, coinsurance, and other forms of 

cost sharing would change as a result of 

the change in level of cost-sharing 

reductions if the enrollee stays in the 

same QHP (and only changes plan 

variations). We note that an enrollee 

who experiences a change in the level 

of cost-sharing reductions as a result of 

a redetermination will qualify for a 

special enrollment period to change 

QHPs, in accordance with 

§ 155.420(d)(6). We believe that 

including this information in the notice 

describing how the enrollee’s amount of 

deductibles, co-pays, coinsurance, and 

other forms of cost sharing would 

change as a result of the change in level 

of cost-sharing reductions if the enrollee 

stays in the same QHP (and only 

changes plan variations) will be 

particularly important in the event an 

individual does not decide to change 

QHPs during the special enrollment 

period. We solicit comment on whether 

HHS should adopt this approach. 

We propose to consolidate and revise 

existing paragraphs (e)(2) and (e)(3) into 

new paragraph (e)(2) to clarify how the 

Exchange should proceed when data 

matching indicates that an individual is 

deceased. In paragraph (e)(2)(i), we 

clarify the procedures that the Exchange 

will follow for data matches that 

indicate that an individual is deceased. 

Clarifying the application of these 

procedures permits the Exchange to 

properly effectuate an eligibility 

redetermination based on death without 

a response from the individual who data 

indicates is deceased, as the deceased 

enrollee will not be able to respond and 

confirm the updated information. We 

also note that the procedures in 

paragraph (e)(2)(i) provide an 

opportunity for an individual to address 

incorrect data matches in the extremely 

limited situations in which they may 

occur. 

In revised paragraph (e)(2)(ii), we 

propose the process the Exchange 

follows after identifying updated 

information regarding income, family 

size, or family composition through data 

matching; we reiterate that information 

regarding death does not require the 

Exchange to follow these procedures. 

The only difference between this 

proposal for paragraph (e)(2)(ii)(B) and 

new paragraph (e)(2)(ii)(D) and the 

regulation text in its current form is to 

clarify that if an enrollee provides more 

up-to-date information in response to 

the notice regarding the information 

identified through periodic data 

matching, the Exchange will proceed in 

accordance with paragraph (c)(1), which 

provides procedures for verification of 

enrollee-reported changes. The prior 

language did not specify that enrolleereported information would be subject 

to verification, which was an oversight 

we propose to rectify here. 

We propose to amend paragraph (f) to 

incorporate changes as a result of 

eligibility appeals decisions, as well as 

changes that affect only enrollment or 

premiums, but do not affect eligibility. 

Changes affecting only enrollment or 

premiums include those changes that 

must be submitted to health insurance 

issuers as part of an enrollment 

transaction, but do not require an 

eligibility redetermination. Examples 

include name changes, phone number 

changes, or changes to the amount of tax 

credit a household elects to apply to its 

premium. Incorporating concerns from 

states, the proposed changes to 

paragraph (f) are designed to bring the 

effective dates under this section in line 

with the effective dates for enrollment, 

as specified in subpart E, which are 

aligned with the typical QHP billing 

cycle. In particular, we note that the 

process used to provide initial 

enrollment information to QHP issuers 

will be the same as the process used to 

provide updates, and so the ability to 

create parallel timing should support 

efficient operations. The modified 

effective dates are also designed to 

accommodate the limited situations in 

which retroactive eligibility may be 

necessary. We note that advance 

payments of the premium tax credit and 

cost-sharing reductions may only be 

provided for a ‘‘coverage month’’ as 

defined in 26 CFR 1.36B–3(c). 

First, in paragraph (f)(1), we propose 

that, except as specified in paragraphs 

(f)(2) through (f)(7), the Exchange must 

implement the changes as described in 

paragraph (f)(1). As proposed here, 

paragraph (f)(1)(i) provides that changes 

resulting from a redetermination under 

this section must be implemented on 

the first day of the month following the 

date of the notice described in 

paragraph (e)(1)(ii) of this section. We 

propose in paragraph (f)(1)(ii) that 

changes resulting from an appeal 

decision under subpart F must be 

implemented on the first day of the 

month following the date of the notices 

described in §§ 155.545(b) and 

155.555(k), or on the date specified in 

the appeal decision pursuant to 

§ 155.545(c)(1). As the Exchange will 

not be required to provide a notice for 

changes affecting only enrollment 

through the Exchange or premiums, the 

Exchange must implement the changes 

as described in paragraph (f)(1)(iii) 

based instead on when the Exchange is 

notified of the change. We anticipate 

that this notice may come from the 

enrollee or the QHP issuer, depending 

on the nature of the change. We propose 

to amend paragraph (f)(2) to clarify that 

except as specified in paragraphs (f)(3) 

through (f)(7) of this section, the 

Exchange may determine a reasonable 

point in a month, no earlier than the 

15th of the month, after which a change 

as described in paragraph (f)(1) of this 

section will not be effective until the 

first day of the month after the month 

specified in paragraph (f)(1) of this 

section. This proposal is designed to 

align the effective dates for 

redeterminations to align with the 

effective dates for enrollment, as 

specified in subpart E of this part, 

which provide that in general, a QHP 

selection will be effective on the first of 

the month following the selection only 

if the selection is made by the 15th of 

the month. 

We propose to redesignate current 

paragraph (f)(3) as paragraph (f)(7), and 

propose a new paragraph (f)(3) to 

provide that except as specified in 

paragraph (f)(7) of this section, the 


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Exchange must implement a change 

described in paragraph (f)(1) of this 

section resulting in a decreased amount 

of advance payments of the premium 

tax credit or cost-sharing reductions, 

including when an individual becomes 

newly ineligible for advance payments 

of the premium tax credit or costsharing reductions, and for which the 

date of the notices described in 

paragraphs (f)(1)(i) and (ii) of this 

section, or the date on which the 

Exchange is notified in accordance with 

paragraph (f)(1)(iii) of this section is 

after the 15th of the month, on the first 

day of the month after the month 

specified in paragraph (f)(1) of this 

section. We provide this exception to 

paragraph (f)(1) because a decrease in 

the amount of cost-sharing reductions 

effectuated after the 15th of the month 

results in operational challenges for 

issuers due to the nature of QHP billing 

cycles. We understand that cost-sharing 

reductions will be applied at the pointin-time in which an enrollee pays for 

their services, and thus the potential for 

a retroactive decrease in cost-sharing 

reductions will pose complications 

regarding services for which the 

enrollee has already paid. Similarly a 

retroactive decrease in advance 

payments of the premium tax credit will 

also create problems for issuers 

regarding the billing of previous 

premiums. Thus, we propose that they 

also be effectuated on the first day of the 

month after the month specified in 

paragraph (f)(1) of this section. 

We propose to add paragraph (f)(4) to 

provide that except as specified in 

paragraph (f)(7) of this section, the 

Exchange must implement changes that 

result in an increased level of costsharing reductions and for which the 

date of the notices described in 

paragraphs (f)(1)(i) and (ii) of this 

section, or the date on which the 

Exchange is notified in accordance with 

paragraph (f)(1)(iii) of this section is 

after the 15th of the month, on the first 

day of the month after the month 

specified in paragraph (f)(1) of this 

section. As discussed above concerning 

paragraph (f)(3) of this section, a 

retroactive increase in the level of costsharing reductions will pose 

complications for issuers regarding 

those services that the enrollee has 

already paid for. As such, we also 

propose that the changes in paragraph 

(f)(4) be implemented effective the first 

day of the month after the month 

specified in paragraph (f)(1) of this 

section. 

We propose to add paragraph (f)(5) to 

provide that the Exchange may 

implement a change associated with the 

events specified in § 155.420(b)(2)(i) and 

(ii) (birth, adoption, placement for 

adoption, marriage, and loss of 

minimum essential coverage) on the 

coverage effective dates described in 

§ 155.420(b)(2)(i) and (ii) respectively, 

and will ensure that advance payments 

of the premium tax credit and costsharing reductions are effective on the 

first day of the month following such 

events, unless the event occurs on the 

first day of the month. These changes 

are to align the effective dates for 

eligibility with those specified in 

§ 155.420. We also considered whether 

to adjust eligibility effective dates for 

the purposes of advance payments of 

the premium tax credit and cost-sharing 

reductions in cases of birth, adoption, or 

placement for adoption such that 

eligibility for APTC and CSR would be 

effective on the date of birth, adoption, 

or placement for adoption. However, we 

do not believe that current regulations 

under section 36B of the Code address 

this situation. We expect that the 

Secretary of the Treasury will provide 

through subsequent guidance that a 

child may be eligible for the premium 

tax credit for the month the child is 

born or is adopted, placed for adoption, 

or placed in foster care. We expect to 

amend our regulations as necessary in 

final rulemaking to match the guidance 

from the Secretary of the Treasury. We 

note that the special enrollment period 

described in § 155.420(b)(2)(i) does not 

currently address children placed in 

foster care, and we solicit comments 

regarding whether we should expand it 

to cover children placed in foster care, 

and then make a corresponding change 

to eligibility effective dates in this 

paragraph. 

We propose to add paragraph (f)(6) 

specifying that notwithstanding 

paragraphs (f)(1) through (f)(5) of this 

section, the Exchange may implement a 

change associated with the events 

described in § 155.420(d)(4), (5), and (9) 

based on the specific circumstances of 

each situation. We seek to provide 

flexibility for the Exchange to respond 

to these potential errors, violations, or 

exceptional circumstances as needed to 

effectuate the appropriate eligibility 

date for enrollees, including those 

situations that impact the amount of 

advance payments of the premium tax 

credit and cost-sharing reductions, 

while also minimizing operational 

complications for issuers associated 

with the QHP billing cycle. We reiterate 

here that advance payments of the 

premium tax credit and cost-sharing 

reductions may only be provided for a 

‘‘coverage month’’ as defined in 26 CFR 

1.36B–3(c), which requires coverage to 

be in place on the first of the month; we 

note that the Exchange may not 

authorize these benefits for periods 

other than when an individual is in a 

coverage month. In redesignated 

paragraph (f)(7), we propose to maintain 

the existing language of paragraph (f)(3) 

in accordance with the proposed 

changes throughout paragraph (f). 

We welcome comments on these 

changes. 

15. Annual Eligibility Redetermination 

(§ 155.335) 

We propose to amend paragraphs (a), 

(b), (c), (e), (f), (g), (h), (k), and (l) of this 

section to specify that subject to the 

limitations specified in paragraph (l) 

and new paragraph (m), the Exchange 

will conduct an annual eligibility 

redetermination for all qualified 

individuals, not only those who are 

enrolled in a QHP. Our proposal thus 

replaces the word ‘‘enrollee’’ with the 

term ‘‘qualified individual’’ in these 

paragraphs. This change accommodates 

situations in which an individual 

submitted an application prior to the 

annual open enrollment period, was 

determined eligible for enrollment in a 

QHP with or without advance payments 

of the premium tax credit and costsharing reductions, and did not meet the 

criteria for a special enrollment period. 

In such situations, this change will 

mean that the Exchange will provide 

such an individual with an annual 

eligibility redetermination notice, which 

means that he or she will not have to 

submit a new application to obtain 

coverage for the following benefit year. 

The annual eligibility determination 

notice projects eligibility for the 

upcoming benefit year, and provides a 

streamlined process for individuals to 

select a QHP for the upcoming year 

during the annual open enrollment 

period. 

We propose to amend paragraph (b) to 

include data regarding Social Security 

benefits as defined under 26 CFR 1.36B– 

1(e)(2)(ii). This reflects the revision we 

propose to make in § 155.320(c)(1)(i)(A). 

We also propose to make technical 

corrections to paragraph (l) to specify 

that if the Exchange does not have 

authorization to use such qualified 

individual’s tax information, the 

Exchange will redetermine the qualified 

individual’s eligibility only for 

enrollment in a QHP, and will notify the 

enrollee in accordance with the timing 

described in paragraph (d) of this 

section. This proposed correction aligns 

with the preamble from the Exchange 

final rule at 77 FR 18376. 

Lastly, we propose to add new 

paragraph (m), which provides that if a 

qualified individual does not select a 

QHP before the redetermination 


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described in this section, and is not 

enrolled in a QHP through the Exchange 

at any time during the benefit year for 

which such redetermination is made, 

the Exchange must not conduct a 

subsequent redetermination of his or her 

eligibility for a future benefit year. This 

proposal is designed to ensure that a 

qualified individual who never selects a 

QHP is not redetermined every year, 

which minimizes burden on the 

Exchange. For example, if a qualified 

individual seeks to enroll in a QHP in 

July, 2014, is determined eligible for a 

QHP but not a special enrollment 

period, and then following an annual 

redetermination in late 2014 for the 

2015 benefit year is again determined 

eligible in a QHP but decides not to 

enroll at any time up to the point at 

which the Exchange would conduct his 

or her next annual redetermination (late 

2015), the Exchange will not conduct 

another annual redetermination in late 

2015. 

16. Administration of Advance 

Payments of the Premium Tax Credit 

and Cost-Sharing Reductions (§ 155.340) 

We propose to make technical 

corrections in paragraphs (b) and (c) to 

cite to the applicable Treasury 

regulation instead of Section 36B of the 

Code. 

17. Coordination With Medicaid, CHIP, 

the Basic Health Program, and the PreExisting Condition Insurance Plan 

(§ 155.345) 

We propose to make a technical 

correction to paragraph (a) to clarify that 

the agreements that the Exchange enters 

into with the agencies administering 

Medicaid, CHIP, and the BHP, if the 

BHP is operating in the service area of 

the Exchange, must include a clear 

delineation of the responsibilities of 

each ‘‘agency’’ as opposed to each 

‘‘program.’’ We propose to amend 

paragraph (a)(2) to specify that the 

agreement the Exchange enters into with 

other agencies administering insurance 

affordability programs addresses the 

responsibilities of each agency to ensure 

prompt determinations of eligibility and 

enrollment in the appropriate program 

without undue delay, based on the date 

the application is submitted to, or 

redetermination is initiated by, the 

Exchange or another agency 

administering an insurance affordability 

program. We propose to change the 

ordering of agencies listed for purposes 

of clarity. We also propose to 

redesignate paragraph (a)(3) as 

paragraph (a)(4), and add a new 

paragraph (a)(3) to ensure that, as of 

January 1, 2015, the agreement provides 

for a combined eligibility notice, as 

defined in § 435.4, to individuals and 

members of the same household, to the 

extent feasible, for enrollment in a QHP 

through the Exchange and for all 

insurance affordability programs. 

Section 155.345(a)(3)(i) includes that 

prior to January 1, 2015, the notice 

include coordinated content, as defined 

in 42 CFR 435.4, while 

§ 155.345(a)(3)(ii) addresses the 

combined eligibility notice requirement 

as of January 1, 2015. As defined in 

§ 435.4, a combined eligibility notice is 

an eligibility notice that informs an 

individual, or household when 

appropriate, of his or her eligibility for 

eligibility for enrollment in a QHP and 

each of the insurance affordability 

programs. We are proposing that in most 

cases the combined notice is issued by 

the last agency to determine the 

individual’s eligibility, not taking into 

account eligibility determinations for 

Medicaid on a non-MAGI basis, and 

regardless of which agency initially 

received the application. Providing a 

combined eligibility notice for eligibility 

determinations for enrollment in a QHP 

and for insurance affordability 

programs, with the exception of 

eligibility determinations for Medicaid 

on a non-MAGI basis, would reduce the 

occurrence of an individual receiving 

multiple eligibility notices from 

agencies administering insurance 

affordability programs based on a single 

application. To the extent that the 

eligibility determinations reflected in a 

combined notice are not made by the 

agency issuing the notice, the notice 

should identify the agency that made 

each eligibility determination that is 

reflected in the combined notice. 

We acknowledge that there are 

situations in which the provision of a 

combined eligibility notice may not be 

appropriate, and expect that agencies 

administering insurance affordability 

programs will limit the use of combined 

eligibility notices to only those 

situations in which it is beneficial to the 

applicant. The preamble associated with 

§ 435.1200 describes situations in which 

the combined eligibility notice may not 

be appropriate. We request comments 

on situations in which the combined 

eligibility notice may or may not be 

particularly appropriate. 

We understand that it may not be 

operationally feasible for the Exchange 

and state agencies administering 

Medicaid, CHIP, and the BHP, if the 

BHP is operating in the service area of 

the Exchange, to deliver combined 

eligibility notices by October, 1, 2013, 

particularly in cases where the 

Exchange is performing assessments of 

eligibility for Medicaid and CHIP based 

on MAGI in accordance with 

§ 155.302(b). Accordingly, we are 

proposing a phased-in approach for the 

provision of a combined eligibility 

notice in cases where the Exchange is 

performing assessments of eligibility for 

Medicaid and CHIP based on MAGI. We 

propose that the agreements between 

the Exchange and other agencies 

administering insurance affordability 

programs provide for provision of 

combined eligibility notices by January 

1, 2015. 

For the period prior to January 1, 

2015, when an individual submits an 

application to the state Medicaid 

agency, is denied eligibility for 

Medicaid, found not potentially eligible 

for CHIP, and is transferred to the 

Exchange, the state Medicaid agency 

would send a first notice to an 

individual, explaining that the 

individual is denied eligibility for 

Medicaid, and that the individual’s 

information is being transferred to the 

Exchange for a determination of 

eligibility for enrollment in a QHP and 

for advance payments of the premium 

tax credit and cost-sharing reductions. 

The Exchange would then send a 

second notice explaining the 

individual’s eligibility for enrollment in 

a QHP and for advance payments of the 

premium tax credit and cost-sharing 

reductions. However, after January 1, 

2015 and to the extent feasible—when 

sending a combined notice is part of the 

agreement among the relevant 

agencies—in the same scenario, the 

Exchange would provide a combined 

eligibility notice that includes 

information about the individual’s 

denial of eligibility for Medicaid and 

eligibility for enrollment in a QHP and 

for advance payments of the premium 

tax credit and cost-sharing reductions 

because the Exchange is the last agency 

to make an eligibility determination. 

The provision of a combined eligibility 

notice would also mean that if the 

Exchange is transferring an individual’s 

information to the state Medicaid or 

CHIP agency and the individual is 

Medicaid or CHIP eligible, the Medicaid 

or CHIP agency would issue the 

combined eligibility notice that reflects 

both the findings of the Exchange (not 

eligible for enrollment in a QHP or 

advance payments of the premium tax 

credit or cost-sharing reductions) and of 

the Medicaid and CHIP agencies 

(eligible for Medicaid or CHIP). 

Under § 155.345(a)(3) and (g)(7) of 

this proposal, we propose that the 

Exchange implement the use of a 

combined eligibility notice as of January 

1, 2015, to the extent feasible, and in the 

interim, provide for the use of 

coordinated content in the eligibility 

notice. The Exchange will work with 


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3Note that the special enrollment periods 

specified in section 9801(f) of the Code are also 

required in section 701 of the Employee Retirement 

Income Security Act of 1974 (ERISA) and section 

2704 of the PHS Act. (Before the amendments made 

Continued 

agencies administering other insurance 

affordability programs to ensure the 

inclusion of coordinated content, 

including coordinated language, in 

eligibility determination notices. An 

example of coordinated content would 

include information about the Exchange 

and about insurance affordability 

programs, including specific program 

names and customer service information 

for each program, as applicable. Based 

on the operational readiness of the 

Exchange and other agencies 

administering insurance affordability 

programs, combined eligibility notices 

may be implemented earlier. However, 

we note that in states where the FFE is 

conducting assessments rather than 

final determinations of eligibility, the 

FFE will only be able to provide an 

eligibility notice prior to January 1, 2015 

for eligibility determinations made by 

the FFE. 

We request comments on the phasedin approach and the standards proposed 

related to the provision of a combined 

eligibility notice and the use of 

coordinated content for eligibility 

notices by the Exchange and agencies 

administering insurance affordability 

programs, which would include 

information about the Exchange and 

about insurance affordability programs, 

including specific program names and 

customer service information for each 

program, as applicable. We have been 

working in consultation with relevant 

stakeholders on model notices, and 

intend to release model notices in early 

2013 for use by states that want to rely 

on HHS’ templates for notices instead of 

developing their own. We also request 

comments regarding how to assess when 

provision of a combined eligibility 

notice is feasible. 

We propose to make a technical 

correction in paragraph (f) to cite to the 

applicable Treasury regulation instead 

of Section 36B of the Code. 

We propose to make a technical 

correction to paragraph (g) to change 

‘‘or’’ to ‘‘and’’ and add ‘‘agency or.’’ 

We propose to add new language at 

paragraph (g)(2) to specify that the 

Exchange will notify the transmitting 

agency of the receipt of an electronic 

account when another agency is 

transmitting the account to the 

Exchange in the situation in which an 

application is submitted directly to the 

transmitting agency, and a 

determination of eligibility is needed for 

enrollment in a QHP, advance payments 

of the premium tax credit, and costsharing reductions. Additionally, we 

propose in (g)(2) that the Exchange 

notify the transmitting agency of an 

individual’s eligibility determination for 

enrollment in a QHP, advance payments 

of the premium tax credit, and costsharing reductions. This aims to ensure 

that the Exchange can provide effective 

customer service, while also aligning 

with proposed § 435.1200(d)(5). 

As such, we propose to make 

technical corrections to redesignate the 

paragraphs following paragraph (g)(2). 

We redesignate paragraph (g)(2) to (g)(3), 

(g)(3) to (g)(4), (g)(4) to (g)(5), and (g)(5) 

to (g)(6). 

We propose to make a technical 

correction in paragraph (g)(3) to change 

‘‘program’’ to ‘‘agency.’’ 

We propose to make technical 

corrections to paragraph (g)(4) to change 

‘‘of’’ to ‘‘or,’’ and to clarify that the rule 

is referring to an agency administering 

an insurance affordability program. 

We propose to make a technical 

correction to remove ‘‘and’’ at the end 

of paragraph (g)(5) and add it at the end 

of paragraph (g)(6) to provide for the 

appropriate transition to paragraph 

(g)(7). 

We propose to add paragraph (g)(7) to 

direct that the Exchange provide the 

combined eligibility notice, as defined 

in § 435.4, for eligibility determinations 

for enrollment in a QHP and for 

insurance affordability programs, 

effective on January 1, 2015. 

We propose to add paragraph (g)(8) to 

direct that prior to January 1, 2015, the 

Exchange include coordinated content, 

as defined in 42 CFR 435.4, into the 

notice of eligibility determination 

provided to the individual when 

another agency administering an 

insurance affordability program 

transfers an individual’s account to the 

Exchange, or that the Exchange issue a 

combined eligibility notice when the 

Exchange is the last agency to make an 

eligibility determination, except for an 

eligibility determination for Medicaid 

on a non-MAGI basis. The intent of this 

provision is to allow the Exchange 

flexibility to provide coordinated 

content or a combined eligibility notice, 

in the event an Exchange is able to 

provide a combined eligibility notice, 

prior to January 1, 2015. As noted 

previously, we understand that the 

Exchange may not be operationally 

ready to issue a combined eligibility 

notice prior to 2015, and so have 

designed this proposal to allow an 

appropriate phase-in period. 

18. Special Eligibility Standards and 

Process for Indians (§ 155.350) 

We propose to make a technical 

correction in paragraph (a)(1)(ii) to cite 

to the applicable Treasury regulation 

instead of section 36B of the Code. 

19. Enrollment of Qualified Individuals 

Into QHPs (§ 155.400) 

We propose to add paragraph (b)(3) to 

clarify the earlier requirement in 45 CFR 

155.400(b)(1) that the Exchange send 

eligibility and enrollment information to 

QHP issuers and HHS promptly and 

without undue delay. In this section, we 

propose that the Exchange send HHS 

updated eligibility and enrollment 

information. We interpret the 

requirement concerning ‘‘updated 

eligibility and enrollment information’’ 

to mean all enrollment-related 

transactions, including, but not limited 

to, enrollments sent to issuers for which 

the qualified individual has not yet 

remitted premiums, enrollments for 

which payment has been made on any 

applicable enrollee premium, 

cancellations of enrollment prior to 

coverage becoming effective, 

terminations of enrollment, and 

enrollment changes (to include 

terminations and cancellations initiated 

by issuers). 

20. Special Enrollment Periods 

(§ 155.420) 

Section 1311(c)(6)(C) of the 

Affordable Care Act specifies that the 

Secretary shall require Exchanges to 

provide for special enrollment periods, 

which allow a qualified individual to 

enroll in a QHP, add or drop 

dependents enrolled with the qualified 

individual, or change from one QHP to 

another outside of the annual open 

enrollment period. We implemented 

this provision in section 155.420 of the 

Exchange final rule published March 27, 

2012 (77 FR 18310). The statute further 

specifies that such periods should be 

those specified in section 9801 of the 

Code, as well as other special 

enrollment periods under circumstances 

similar to such periods under part D of 

title XVIII of the Act. Section 155.420 is 

structured such that the special 

enrollment periods are listed in 

paragraph (d), while the effective dates 

for these special enrollment periods are 

described in paragraph (b). 

In order to clarify the scope of the 

special enrollment periods described in 

paragraph (d), we propose to redesignate 

existing paragraph (a) as paragraph 

(a)(1) and to add paragraph (a)(2) to 

define ‘‘dependent’’ such that it aligns 

with the meaning provided in 26 CFR 

54.9801–2, a regulation implementing 

section 9801(f) of the Code.3 Under this 


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by the Affordable Care Act, the special enrollment 

provisions were located in section 2701(f) of the 

PHS Act; after the amendments made by the 

Affordable Care Act, these requirements are found 

in PHS Act section 2704(f).) Similarly, the special 

enrollment periods specified 26 CFR 54.9801–2 are 

also found in 29 CFR 2590.701–6 and 45 CFR 

146.117. 

proposal, a dependent would include 

any individual who is or who may 

become eligible for coverage under the 

terms of a QHP because of a relationship 

to a qualified individual or enrollee. 

This proposal does not broaden our 

existing use of dependent throughout 

this section; rather, it clarifies our 

existing interpretation such that the 

availability of special enrollment 

periods to dependents is limited to 

those dependents for whom the selected 

QHP would provide coverage. We 

propose to apply this definition 

throughout this section, including for 

the special enrollment periods not 

specified in section 9801(f) of the Code, 

in order to promote efficient operations 

and uniform standards to guide QHP 

issuers and Exchanges. We note that this 

proposal means that those special 

enrollment periods that specifically 

mention dependents will be evaluated 

on a plan-by-plan basis for a given set 

of individuals, and that a special 

enrollment period may be available for 

an individual in some plans but not in 

other plans. 

We also propose to amend paragraph 

(b)(2)(i), which addresses birth, 

adoption, or placement for adoption, to 

clarify that this special enrollment 

period is applicable for either ‘‘a 

qualified individual or an enrollee.’’ 

This revision clarifies the existing 

language in the Exchange final rule, 

which could have been misinterpreted. 

We also propose to remove language 

from paragraph (b)(2)(i) concerning the 

effective dates for advance payments of 

the premium tax credit and cost-sharing 

reductions, which we propose to move 

to § 155.330(f). We solicit comments 

regarding whether we should also 

expand this special enrollment period to 

cover children placed in foster care. 

Similarly, we propose to amend 

paragraph (b)(2)(ii) to clarify that the 

special enrollment period for marriage 

and loss of minimum essential coverage 

is applicable for either a qualified 

individual or an enrollee. 

We propose to add new paragraph 

(b)(2)(iii) regarding effective dates for 

qualified individuals or enrollees 

eligible for a special enrollment period 

under paragraphs (d)(4), (d)(5) or (d)(9) 

(respectively the special enrollment 

period for ‘‘error, misrepresentation, or 

inaction of an officer, employee, or 

agent of the Exchange, HHS, or its 

instrumentalities’’; the special 

enrollment period for when ‘‘the QHP 

* * * substantially violated a material 

provision of its contract in relation to 

the enrollee’’; and the special 

enrollment period for ‘‘exceptional 

circumstances’’). Under this proposal, 

the Exchange will ensure an effective 

date that is tailored based on the 

circumstances around the specific 

events. This will include, in accordance 

with any guidelines issued by HHS, 

providing, when applicable and on a 

case-by-case basis, that coverage will be 

effective in accordance with the regular 

effective dates specified in paragraph 

(b)(1) or on the date of the event that 

triggered the special enrollment period 

under paragraphs (d)(4), (d)(5), or (d)(9) 

of this section. We believe the nature of 

the circumstances that will trigger these 

special enrollment periods make it 

necessary to provide the Exchange with 

appropriate flexibility regarding 

coverage effective dates. We have 

proposed a similar provision in 

§ 155.330(f), and welcome comments on 

standards for effective dates in such 

situations. 

We propose to add paragraph (b)(4) to 

specify that notwithstanding the 

standards otherwise provided in this 

section, the Exchange must ensure that 

the effective dates concerning advance 

payments of the premium tax credit and 

cost-sharing reductions adhere to the 

modified effective dates we have 

proposed in § 155.330(f). This is 

designed to bring the effective dates 

under this section, which are aligned 

with the typical QHP billing cycle, in 

line with the effective dates for 

eligibility, as specified in subpart D. 

While § 155.330(f) concerns 

redeterminations and other changes 

during the benefit year, we clarify that 

the effective enrollment dates 

concerning § 155.420(b) apply to both 

qualified individuals first enrolling in a 

QHP through the Exchange via a special 

enrollment period, as well as to current 

enrollees. We also note that as in 

existing regulations, there are situations 

in which eligibility and enrollment 

effective dates will not perfectly align, 

such that an enrollment effective date 

might be immediate, but advance 

payments of the premium tax credit and 

cost-sharing reductions might not be 

effective until the first of a future 

month. 

Accordingly, as noted above, we 

propose to make a technical correction 

to remove part of paragraph (b)(2)(i), as 

well as paragraphs (b)(3)(i)(A) and (B) to 

remove language concerning advance 

payments of the premium tax credit and 

cost-sharing reductions and propose to 

make a technical correction in 

paragraph (b)(3)(i) to remove the words 

‘‘provided that either’’ at the end of the 

paragraph to reflect this change. 

We next propose to amend paragraph 

(d) to specify that the Exchange must 

allow, when specified in the paragraphs 

therein, for a dependent of a qualified 

individual or enrollee to qualify for a 

special enrollment period. The previous 

language allowed a qualified individual 

or enrollee to qualify for the listed 

special enrollment periods. The 

proposed language allows that for 

certain triggering events specified in 

paragraph (d), the Exchange will 

determine a qualified individual or 

enrollee, as well as his or her 

dependents, eligible for a special 

enrollment period, subject to whether 

the QHP that such individuals wish to 

select covers the dependents. Therefore, 

for specified special enrollment periods, 

a qualified individual or enrollee who 

experiences the triggering event will be 

eligible for the special enrollment 

period, along with any dependents able 

to enroll in the plan selected for the 

qualified individual or enrollee. For 

example, if a 25 year old loses access to 

minimum essential coverage, he will 

qualify for a special enrollment period, 

along with his parents and any other 

dependents who may enroll in the plan 

selected. 

We propose amending this language 

in order to accommodate situations in 

which all members of a household 

would likely need to enroll in or change 

QHPs in response to an event 

experienced by one member of the 

household. We also propose to make 

technical corrections to each paragraph 

within paragraph (d) to replace the 

introductory word ‘‘A’’ with ‘‘The’’ in 

order to reflect that in response to each 

triggering event, the Exchange will 

allow a qualified individual or enrollee, 

and when specified, his or her 

dependent to qualify for a special 

enrollment period, subject to whether 

the QHP covers the dependent. 

We also propose to make a technical 

change to paragraph (d)(1) to add the 

words ‘‘his or her’’ after ‘‘The qualified 

individual or’’. We also propose to 

clarify the triggering events associated 

with a qualified individual or his or her 

dependent losing minimum essential 

coverage. We propose to add paragraph 

(d)(1)(i) to specify that the triggering 

event in the case of a QHP 

decertification is the date of the notice 

of decertification as described in 

§ 155.1080(e)(2). We also propose to add 

paragraph (d)(1)(ii) to specify that the 

triggering event in all other cases is the 

date the individual or dependent loses 

eligibility for minimum essential 

coverage. This proposal adds specificity 


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regarding these triggering events in 

order to minimize gaps in coverage for 

a qualified individual or his or her 

dependent. 

We propose to amend paragraphs 

(d)(3) through (d)(7), as well as (d)(9), to 

clarify the specific individuals that are 

affected by the eligibility of a qualified 

individual for each special enrollment 

period. In paragraph (d)(3), we make a 

technical correction to add the word, 

‘‘qualified’’, before ‘‘individual’’, to 

specify that only a qualified individual 

may be eligible for the special 

enrollment period for an individual who 

was not previously a citizen, national, 

or lawfully present gaining such status. 

In paragraphs (d)(4), (d)(5), (d)(7), and 

(d)(9) (concerning errors in enrollment, 

contract violations, permanent 

relocations, and exceptional 

circumstances), we specify that these 

special enrollment periods apply to a 

qualified individual or enrollee, as well 

as to his or her dependent. This is 

because errors in enrollment, contract 

violations, permanent relocations, and 

exceptional circumstances that affect 

only one individual, to the extent that 

this occurs, will likely result in him or 

her needing to change QHPs for his or 

her entire family. We considered similar 

amendments for other special 

enrollment periods, but decided not to 

revise them, as we do not believe that 

the circumstances of other special 

enrollment periods warrant movement 

of related individuals. However, we 

solicit comment regarding whether we 

should permit such movement of related 

individuals for other special enrollment 

periods. 

We further propose to amend 

paragraph (d)(6) to specify that the 

Exchange will provide a special 

enrollment period for (i) An enrollee in 

a QHP who is determined newly eligible 

or newly ineligible for advance 

payments of the premium tax credit or 

experiences a change in eligibility for 

cost-sharing reductions, (ii) his or her 

dependent who is an enrollee in the 

same QHP and who is determined 

newly eligible or newly ineligible for 

advance payments of the premium tax 

credit or has a change in eligibility for 

cost sharing reductions, or (iii) a 

qualified individual or his or her 

dependent enrolled in qualifying 

coverage in an eligible employersponsored plan who are determined 

newly eligible for advance payments of 

the premium tax credit based in part on 

a finding that such individual will cease 

to be eligible for qualifying coverage in 

an eligible-employer sponsored plan in 

the next 60 days, and is allowed to 

terminate existing coverage. Proposed 

paragraph (d)(6)(iii) differs from 

paragraphs (d)(6)(i) and (ii) in that it 

allows the qualified individual or his or 

her dependent to be determined eligible 

for this special enrollment period and 

the opportunity to enroll in a new QHP 

prior to the end of his or her employersponsored coverage. However, he or she 

is not eligible to receive advance 

payments of the premium tax credit 

until the end of his or her coverage 

through such eligible employersponsored plan. The existing language 

provided this special enrollment period 

regardless of an individual’s current 

coverage status, which could have 

resulted in any individual who did not 

apply during the initial annual open 

enrollment period being able to receive 

a special enrollment period. This could 

have been disruptive to the market, 

because the potential for an individual 

to be eligible for this special enrollment 

period regardless of his or her coverage 

status could heighten adverse selection 

by dissuading more healthy individuals 

from enrolling in a QHP during the 

initial annual open enrollment period. 

We provide this special enrollment 

period for the dependent of an enrollee 

determined newly eligible or newly 

ineligible for advance payments of the 

premium tax credit or an enrollee 

experiencing a change in eligibility for 

cost-sharing reductions to account for 

situations where members of different 

tax households are enrolled together in 

the same plan and otherwise would be 

prevented from enrolling together in a 

new plan during the special enrollment 

period. 

We also specify in paragraph (d)(6) 

that the Exchange must permit a 

qualified individual, or his or her 

dependent, enrolled in qualifying 

coverage in an eligible employersponsored plan who are eligible for this 

special enrollment period due to their 

plan no longer being affordable or 

providing minimum value within the 

next 60 days prior to the end of his or 

her coverage, to access this special 

enrollment period prior to the end of his 

or her coverage through such an eligible 

employer-sponsored plan if he or she is 

allowed to terminate existing coverage. 

This protects those qualified individuals 

from potential gaps in coverage, while 

also outlining a reasonable period of 

time in which they are eligible for this 

special enrollment period such that it 

does not pose significant operational 

complications for the Exchange. 

We propose to make a technical 

correction to paragraph (d)(8) such that 

the beginning of the paragraph now 

reads, ‘‘The qualified individual who is 

an Indian’’. The previous language did 

not specify that this special enrollment 

period was limited to a qualified 

individual. 

Finally, we propose to add a new 

paragraph (d)(10) to provide a special 

enrollment period for a qualified 

individual or his or her dependent, who 

is enrolled in an eligible employersponsored plan that does not provide 

qualifying coverage, as the term is 

defined in § 155.300 of this part, and is 

allowed to terminate his or her existing 

coverage. Under this proposal, the 

Exchange would permit such an 

individual to access this special 

enrollment period 60 days prior to the 

end of his or her coverage in an eligible 

employer-sponsored plan. This protects 

those qualified individuals from 

potential gaps in coverage and ensures 

that a qualified individual and his or 

her dependent would not be prevented 

from enrolling together in a QHP during 

the special enrollment period; we note 

that an individual’s eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions will 

still be subject to termination of existing 

enrollment in an eligible employersponsored plan. 

21. Termination of Coverage (§ 155.430) 

We propose to amend paragraph (b)(1) 

to clarify that it specifically refers to 

enrollee-initiated terminations. We 

further propose to divide paragraph 

(b)(1) into two paragraphs. We propose 

to add paragraph (b)(1)(i) to account for 

circumstances in which, through 

periodic data matching, an Exchange 

finds an enrollee eligible for other 

minimum essential coverage, thus 

resulting in the enrollee’s ineligibility 

for advance payments of the premium 

tax credit. The Exchange final rule 

currently provides that enrollees must 

actively terminate their enrollment in a 

QHP after losing eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions, or otherwise 

the enrollee will remain enrolled in 

multiple plans, since gaining other 

minimum essential coverage does not 

affect eligibility for enrollment in a 

QHP. Under the existing rule, enrollees 

who did not initiate a termination upon 

gaining other minimum essential 

coverage would maintain coverage in a 

QHP without advance payments of the 

premium tax credit. HHS believes that 

the majority of individuals who gain 

other minimum essential coverage will 

not want to maintain coverage in a QHP 

without advance payments of the 

premium tax credit and cost-sharing 

reductions. To accommodate this 

anticipated preference, and allow 

individuals to maintain enrollment in a 

QHP in the limited number of situations 

in which they want to do so, we propose 


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in paragraph (b)(1)(ii) that at the time of 

plan selection, the Exchange will 

provide a qualified individual with the 

opportunity to choose to remain 

enrolled in a QHP if the Exchange 

identifies that they have become eligible 

for other minimum essential coverage 

through data matching and the enrollee 

does not request a termination in 

accordance with paragraph (b)(1)(i). We 

solicit comment on this proposal. 

We propose to amend paragraph (d)(1) 

to specify that changes in advance 

payments of the premium tax credit and 

cost-sharing reductions, including 

terminations, adhere to the effective 

dates specified in § 155.330(f), which 

ensures alignment of processes. 

22. Subpart F—Appeals of Eligibility 

Determinations for Exchange 

Participation and Insurance 

Affordability Programs 

This subpart is proposed to provide 

standards for eligibility appeals, 

including appeals of individual 

eligibility determinations and employer 

determinations as required by section 

1411(f) of the Affordable Care Act, 

which makes clear that the Secretary 

will provide for an appeals process. We 

propose to provide Exchanges with 

options for coordinated appeals to align 

with the options for eligibility 

determinations. In addition, the 

following sections propose standards for 

appeal requests, eligibility pending 

appeal, dismissals, informal resolution 

and hearing requirements, expedited 

appeals, appeal decisions, the appeal 

record, and corresponding provisions 

for employer appeals. 

23. Definitions (§ 155.500) 

In this section, we propose definitions 

for this subpart, in addition to 

incorporating the definitions previously 

established in § 155.20 and § 155.300. 

We propose the term ‘‘appeal record’’ 

to mean the appeal decision, all papers 

and requests filed in the proceeding, 

and, if a hearing was held, the transcript 

or recording of hearing testimony or an 

official report containing the substance 

of what happened at the hearing, and 

any exhibits introduced at hearing. 

We propose the term ‘‘appeal request’’ 

to mean a clear expression, made either 

orally or in writing, by an applicant, 

enrollee, employer, or small business 

employer or employee to have any 

eligibility determination or 

redetermination contained in a notice 

issued in accordance with §§ 155.310(g), 

155.330(e)(1)(ii), 155.335(h)(1)(ii), 

155.715(e) or (f), or pursuant to future 

guidance on section 1311(d)(4)(H) of the 

Affordable Care Act adjudicated by an 

appeals entity. 

We propose the term ‘‘appeals entity’’ 

to mean a body designated to hear 

appeals of eligibility determinations or 

redeterminations contained in notices 

issued in accordance with §§ 155.310(g), 

155.330(e)(1)(ii), 155.335(h)(1)(ii), 

155.715(e) or (f), or notices issued in 

accordance with future guidance on 

exemptions pursuant to section 

1311(d)(4)(H). 

We propose the term ‘‘appellant’’ to 

mean the applicant or enrollee, the 

employer, or the small business 

employer or employee who is requesting 

an appeal. 

We propose the term ‘‘de novo 

review’’ to mean a review of an appeal 

without deference to prior decisions in 

the case. 

We propose the term ‘‘evidentiary 

hearing’’ to mean a hearing conducted 

where new evidence may be presented. 

We propose the term ‘‘vacate’’ to 

mean to set aside a previous action. 

We seek comment on these 

definitions. 

24. General Eligibility Appeals 

Requirements (§ 155.505) 

In § 155.505, we propose the general 

eligibility appeals standards as well as 

the options for an Exchange to conduct 

eligibility appeals. In paragraph (a), we 

propose that, unless otherwise 

specified, the provisions of subpart F 

apply to Exchange eligibility appeals 

processes, regardless of whether the 

appeals process is provided by a statebased Exchange appeals entity or by 

HHS. We seek comment on this 

provision. 

In paragraph (b), we propose to define 

the scope of those determinations that 

an applicant or enrollee may appeal, 

pursuant to § 155.355 and forthcoming 

guidance on exemptions under section 

1311(d)(4)(H) of the Affordable Care 

Act. Specifically, we propose that 

applicants and enrollees have the right 

to appeal eligibility determinations 

made in accordance with subpart D. 

This includes initial eligibility 

determinations made pursuant to 

§ 155.305(a) through (h) (eligibility for 

enrollment in a QHP, Medicaid, CHIP, 

and the BHP, if applicable, and for 

advance payments of the premium tax 

credit, and cost-sharing reductions as 

well as eligibility for QHP enrollment 

periods and eligibility for enrollment in 

a catastrophic plan), and 

redeterminations made pursuant to 

§§ 155.330 and 155.335. Applicants and 

enrollees may also appeal the amount of 

advance payments of the premium tax 

credit and level of cost-sharing 

reductions for which they are eligible. 

In paragraph (b)(2), we propose that 

applicants and enrollees may appeal an 

eligibility determination for an 

exemption made in accordance with 

future guidance on exemptions pursuant 

to 1311(d)(4)(H) of the Affordable Care 

Act. Finally, in paragraph (b)(3), we 

propose that if the Exchange fails to 

provide timely notice of an eligibility 

determination or redetermination under 

§§ 155.310(g), 155.330(e)(1)(ii), or 

155.335(h)(1)(ii), such failure is 

appealable. We seek comment on these 

provisions. 

In paragraph (c), we propose the 

options for Exchange appeals. 

Specifically, we propose that final 

eligibility determinations, after 

exhaustion of any inconsistency period 

under § 155.315(f), may be appealed 

through the Exchange appeals process, 

if the Exchange elects to establish such 

a process, or to HHS. In addition, 

pursuant to the requirements of section 

1411(f)(1) of the Affordable Care Act, all 

Exchange appellants may have their 

appeal reviewed by HHS upon 

exhaustion of the Exchange appeals 

process. Thus, we expect that, where a 

state-based Exchange is operating and 

has established an appeals process, 

appellants will first appeal through the 

state-based process and then, if 

dissatisfied with the outcome, have the 

opportunity to elevate the appeal to the 

HHS appeals process. We anticipate that 

a state-based Exchange may elect to 

establish the appeals function within 

the Exchange or to authorize an eligible 

state entity to carry out the appeals 

function. 

We anticipate that states will have an 

interest in adjudicating appeals of 

eligibility determinations made by their 

state-based Exchanges; therefore, we 

propose to provide flexibility for states 

to provide an appeals process while 

respecting the requirement in section 

1411(f)(1) of the Affordable Care Act 

that a federal appeals process be 

available to appellants in the individual 

market. We seek comment on this 

provision. 

In paragraph (d), we propose that 

appeals entities must comply with the 

standards set forth for providing fair 

hearings established by Medicaid at 42 

CFR 431.10(c)(2). Meeting Medicaid due 

process requirements is part of the 

minimum standard an entity must meet 

to be eligible to process Medicaid 

appeals, which we propose may be 

delegated to Exchange appeals entities. 

We seek comment on this provision. 

In paragraph (e), we propose that an 

appellant may designate an authorized 

representative to act on his or her 

behalf, including making an appeal 

request, as provided in § 155.227. We 

anticipate that many appellants will 

need to or will prefer to rely on an 


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authorized representative to assist them 

with the appellate process. Such 

assistance and representation is 

common in other public benefit appeals 

processes and we seek to offer similar 

accommodation to Exchange appellants. 

We seek comment on this provision. 

In paragraph (f), we propose that 

appeals processes must be accessible to 

appellants who are limited English 

proficient, or who are living with 

disabilities, consistent with the 

requirements in §§ 155.205(c). We 

solicit comments on this provision. 

In paragraph (g), we propose that an 

appellant may seek judicial review to 

the extent allowable by law. We 

anticipate that some appellants may 

wish to pursue legal recourse beyond 

the administrative appeals proposed 

here. We seek comment on this 

provision. 

25. Appeals Coordination (§ 155.510) 

In § 155.510, we propose the general 

coordination requirements for the 

appeals entities and the agencies 

administering insurance affordability 

programs. Similar to the flexibility 

offered to states in choosing an 

eligibility determination process, the 

corresponding flexibility for eligibility 

appeals can ensure that appeals are 

managed in a seamless, consumerfriendly manner. 

In paragraph (a), we propose that the 

appeals entity or the Exchange must 

enter into agreements with the agencies 

administering insurance affordability 

programs regarding the appeals 

processes for such programs as are 

necessary to fulfill the requirements of 

this subpart. The agreements will 

clearly outline the responsibilities of 

each entity to support the eligibility 

appeals process. In paragraph (a)(1), we 

propose the agreements must seek to 

minimize burden on appellants, 

including not requesting the appellant 

provide information previously 

provided in the process. However, we 

note that in the case where the appellant 

has provided information but the 

information cannot be located after a 

careful review of the appellant’s file, 

including all information transmitted 

from other entities, we anticipate that it 

may be reasonable for the receiving 

entity to request the previously 

submitted documentation from the 

appellant. In paragraph (a)(2), we 

propose the agreements must ensure 

prompt issuance of appeal decisions. 

Finally, in paragraph (a)(3), we propose 

the agreements must comply with the 

coordination requirements established 

by Medicaid under 42 CFR 431.10(d). 

We seek comment on these provisions. 

In paragraph (b), we propose 

coordination standards for Medicaid 

and CHIP appeals. In paragraph (b)(1), 

we propose that consistent with 42 CFR 

431.10(c)(1)(ii) (the proposed Medicaid 

rule regarding delegations of authority 

to conduct fair hearings) and § 457.1120, 

the appellant must be informed of the 

option to opt into pursuing his or her 

appeal of an adverse Medicaid or CHIP 

determination made by the Exchange 

directly with the Medicaid or CHIP 

agency, and if the appellant elects to do 

so, the appeals entity transmits the 

eligibility determination and all 

information provided via secure 

electronic interface, promptly and 

without undue delay, to the Medicaid or 

CHIP agency, as applicable. Our goal is 

to achieve a coordinated and integrated 

eligibility and appeals process that 

limits the burden on the appellant, the 

Exchange appeals entity, and the state 

Medicaid and CHIP agencies. The 

proposed regulatory language in 

paragraph (b)(1) provides a general 

requirement that the appellant be 

notified of the option to opt into 

appealing a Medicaid or CHIP denial to 

the Medicaid or CHIP agency rather 

than to the Exchange appeals entity. We 

are also considering a more specific 

requirement to align with the preamble 

proposed by Medicaid in which the 

appellant would be informed at the time 

of the eligibility determination made by 

the Exchange of his or her right to opt 

into an appeal of the denial of Medicaid 

or CHIP eligibility with the state 

Medicaid or CHIP agency. Under this 

approach, we assume that most 

appellants will not opt into having his 

or her appeal heard by the Medicaid 

agency, which would result in two 

separate appeals (one before the 

Exchange appeals entity and one before 

the Medicaid or CHIP agency) and will 

instead choose to have both Medicaid or 

CHIP and Exchange-related issues heard 

before the Exchange appeal entity. If the 

Exchange appeals entity conducts the 

hearing on the Medicaid or CHIP denial 

that hearing decision would be final 

under the proposed rule. We seek 

comment on the proposed provision and 

the alternative for this proposed 

provision. 

In paragraph (b)(2), we propose that 

where the Medicaid or CHIP agency has 

delegated appeals authority to the 

Exchange appeals entity consistent with 

42 CFR 431.10(c)(1)(ii) and the 

appellant has elected to have the 

Exchange appeals entity hear the 

appeal, the appeals entity may include 

in the appeals decision a determination 

of Medicaid and CHIP eligibility. In 

addition, we propose in paragraph 

(b)(2)(i) that the appeals entity must 

apply MAGI-based income standards 

and standards for citizenship and 

immigration status using verification 

rules and procedures consistent with 

Medicaid and CHIP requirements under 

42 CFR parts 435 and 457. In paragraph 

(b)(2)(ii), we propose that notices 

required in connection with an 

eligibility determination for Medicaid or 

CHIP be performed by the appeals entity 

consistent with standards set forth by 

this subpart, subpart D, and by the state 

Medicaid or CHIP agency, consistent 

with applicable law. We seek comment 

on these provisions. 

In paragraph (b)(3), we propose that 

where a state Medicaid or CHIP agency 

has not delegated appeals authority to 

an appeals entity and the appellant 

seeks review of a denial of Medicaid or 

CHIP eligibility, the appeals entity must 

transmit the eligibility determination 

and all information provided as part of 

the appeal via secure electronic 

interface, promptly and without undue 

delay, to the Medicaid or CHIP agency, 

as applicable. We seek comment on this 

provision. 

In paragraph (b)(4), we propose the 

Exchange must consider an appellant 

determined or assessed by the appeals 

entity as not potentially eligible for 

Medicaid or CHIP as ineligible for 

Medicaid and CHIP based on the 

applicable Medicaid and CHIP MAGIbased income standards for the 

purposes of determining eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions. We 

seek comment on this provision. 

In paragraph (c), we propose that 

appeals entities must ensure that all 

data exchanges that are part of the 

appeals process comply with the 

requirements of § 155.260, § 155.270 

and § 155.345(h) and comply with all 

data sharing requests from HHS. We 

anticipate that appeals-related data will 

need to be passed between the 

Exchange, Medicaid, CHIP, and the 

state-based Exchange and HHS appeals 

entities in order to process appeal 

requests and implement appeal 

decisions. In addition, specific appealsrelated information will be shared with 

the Internal Revenue Service via HHS in 

order to facilitate the tax reconciliation 

process under 26 CFR 1.36B–4. 

We solicit comments on the 

provisions regarding appeals 

coordination between the Exchange, the 

appeals entities, and the Medicaid and 

CHIP agencies, where applicable. 

25. Notice of Appeal Procedures 

(§ 155.515) 

In paragraph (a) of this section, we 

propose that an Exchange must provide 


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notice of appeal procedures at the time 

of the application and again when the 

eligibility determination notice is sent 

under § 155.310(g), § 155.330(e)(1)(ii), 

§ 155.335(h)(1)(ii), or future guidance on 

exemptions pursuant to § 1311(d)(4)(H) 

of the Affordable Care Act. We 

anticipate that Exchanges can meet this 

requirement by including a reference to 

the appeals process in the single 

streamlined application required under 

§ 155.405 and in the eligibility 

determination notices required under 

§§ 155.310(g), 155.330(e)(1)(ii), and 

155.335(h)(1)(ii) and future guidance on 

exemptions under section 1311(d)(4)(H) 

of the Affordable Care Act. 

We also propose, in paragraph (b), the 

general content for notices on the right 

to appeal and on appeal procedures. 

Specifically, we propose content 

including an explanation of the 

applicant or enrollee’s appeal rights, 

procedures for requesting an appeal, 

right of representation, and an 

explanation of the circumstances under 

which eligibility may be maintained or 

reinstated pending an appeal. We note 

that the right of representation includes 

both legal counsel and authorized 

representatives. As defined in § 155.227, 

an authorized representative can be 

anyone designated as such by the 

appellant. We also propose that notice 

content should include an explanation 

that the outcome of an appeal decision 

for one household member may result in 

a change in eligibility for other 

household members and that such a 

change may be handled as a 

redetermination in accordance with the 

standards specified in § 155.305. We 

solicit comments on the proposed 

publication of appellate procedures. 

27. Appeal Requests (§ 155.520) 

In paragraph (a) of § 155.520, we 

propose that the Exchange and the 

appeals entity must accept appeal 

requests submitted by telephone, via 

mail, in person (if the Exchange or 

appeals entity is capable of receiving inperson appeal requests), or via the 

Internet. We believe that this is the 

appropriate policy to propose in order 

to provide appellants greater flexibility 

and access to the process. We propose 

that the Exchange and the appeals entity 

may assist the applicant or enrollee in 

making the appeal request. In addition, 

we propose that the appeals entity must 

not limit or interfere with an applicant 

or enrollee’s right to make an appeal 

request. Finally, we propose that an 

appeal request must be considered valid 

for the purposes of this subpart if it is 

submitted in accordance with the 

requirements of paragraphs (b) and (c) of 

this section and § 155.505(b). We seek 

comment on these provisions. 

In paragraph (b), we propose that the 

Exchange or appeals entity must allow 

an applicant or enrollee to request an 

appeal within 90 days of the date of the 

eligibility determination notice. In 

paragraph (c), we propose that 

appellants who disagree with a statebased Exchange appeals entity decision 

may appeal to HHS for further 

administrative review within 30 days of 

the date of the state-based Exchange 

appeals entity’s notice of appeal 

decision. We seek comment on these 

provisions. 

In paragraph (d), we propose 

standards for acknowledging an appeal 

request. In paragraph (d)(1), we propose 

that upon receipt of a valid appeal 

request, the appeals entity must send 

timely acknowledgement to the 

appellant of the receipt of his or her 

valid appeal request, including 

information regarding the appellant’s 

eligibility pending appeal pursuant to 

§ 155.525 and an explanation that any 

advance payments of the premium tax 

credit paid on behalf of the tax filer 

pending appeal are subject to 

reconciliation under 26 CFR 1.36B–4. 

We note that we use the term ‘‘tax filer’’ 

in this instance because the appellant 

may not be the household tax filer; 

therefore, the tax filer will be the 

recipient of the advance payments of the 

premium tax credit on behalf of the 

appellant. In paragraph (d)(1)(ii), we 

propose that the appeal entity must 

send timely notice via secure electronic 

interface of the appeal request and, if 

applicable, instructions to provide 

eligibility pending appeal pursuant to 

§ 155.525 to the Exchange and to the 

agencies administering Medicaid and 

CHIP, where applicable. We anticipate 

that this proposed standard will 

facilitate coordination between the 

appeals entity and the Exchange, 

Medicaid, and CHIP, where applicable, 

so that appellants who qualify for 

continuing eligibility during an appeal 

will not experience a gap in coverage. In 

paragraph (d)(1)(iii), we propose that if 

the appeal request is made pursuant to 

paragraph (c) of this section, the appeals 

entity must send timely notice via 

secure electronic interface of the appeal 

request to the state-based Exchange 

appeals entity. In paragraph (d)(1)(iv), 

we propose that the appeals entity must 

promptly confirm receipt of the records 

transferred pursuant to paragraph (d)(3) 

or (4) of this section to the Exchange or 

the state-based Exchange appeals entity, 

as applicable. 

In paragraph (d)(2), we propose that, 

upon receipt of an appeal request that 

is not valid under § 155.520 or 

§ 155.505(b), the appeals entity must, 

promptly and without undue delay, 

send written notice, either electronically 

or in hard copy, to the applicant or 

enrollee that the appeal request has not 

been accepted and the reason why, so 

that the applicant or enrollee may have 

the opportunity to cure a defect in the 

appeal request. We propose that the 

appeals entity must accepted an 

amended appeal request that meets the 

requirements of § 155.520 and 

§ 155.505(b), including standards for 

timeliness. 

In paragraph (d)(3), we propose that, 

upon receipt of a valid appeal request 

pursuant to paragraph (b) of this section, 

or upon receipt of the notice under 

paragraph (d)(1)(ii) of this section, the 

Exchange must transmit via secure 

electronic interface to the appeals entity 

the appeal request, if the appeal request 

was initially made to the Exchange, and 

the appellant’s eligibility record. 

Because we have provided flexibility for 

the appellant to request an appeal at the 

Exchange or at the appeals entity under 

§ 155.520(a), we anticipate that in some 

cases the Exchange will be the initial 

receiver of the appeal request and, 

therefore, must transmit this 

information to the appeals entity for 

review. However, regardless of whether 

the Exchange receives the appeal 

request first or is notified by the appeals 

entity of such a request, the Exchange 

must transmit the appellant’s eligibility 

record to the appeals entity to use in the 

adjudication of the appeal. In paragraph 

(d)(4), we propose that upon receipt of 

the notice pursuant to paragraph 

(d)(1)(iii), the state-based Exchange 

appeals entity must transmit via secure 

electronic interface the appellant’s 

appeal record, including the appellant’s 

eligibility record as received from the 

Exchange, to HHS. 

We seek comment on the appeal 

acknowledgement and notification 

provisions in § 155.520(d). 

28. Eligibility Pending Appeal 

(§ 155.525) 

In § 155.525, we propose the process 

by which an appellant may receive 

benefits while his or her appeal is 

pending in specific circumstances. In 

paragraph (a), we propose that upon 

receipt of a valid appeal request or 

notice under § 155.520(d)(1)(ii) that 

concerns an appeal of a mid-year or 

annual redetermination, the Exchange, 

or the Medicaid or CHIP agency as 

applicable, must continue to consider 

the appellant eligible while the appeal 

is pending in accordance with the 

standards in paragraph (b) or as 

determined by Medicaid or CHIP, as 

applicable, under 42 CFR parts 435 and 


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457. In paragraph (b), we propose that 

the Exchange must continue the 

appellant’s eligibility for enrollment in 

a QHP, advance payments of the 

premium tax credit, and cost-sharing 

reductions, as applicable, in accordance 

with the level of eligibility immediately 

before the redetermination being 

appealed. For example, if the appellant 

had been eligible for advance payments 

of the premium tax credit in the 

previous coverage year but, upon annual 

redetermination, was denied advance 

payments of premium tax credit, the 

Exchange would consider the appellant 

eligible to continue to receive advance 

payments of premium tax credit at the 

level of the appellant’s prior eligibility 

while the appeal is pending. As stated 

in subpart D of this part, receipt of 

advance payments of the premium tax 

credit may be waived by the tax filer. In 

addition, the continued receipt of 

advance payments of the premium tax 

credit during the appeal may impact the 

amount owed or due at the IRS 

reconciliation process, depending upon 

the appeal decision. 

As is standard in many public 

programs, including Medicaid and the 

private market, we propose that a 

continuation of benefits should be 

available to individuals already enrolled 

in coverage while appealing a change in 

current eligibility. This approach 

ensures continuity of coverage and care 

during an appeal as well as minimizes 

the impact of eligibility errors on 

beneficiaries. Eligibility pending appeal 

will not be offered to appellants who are 

appealing their initial denial of 

eligibility because of the unique 

challenges in identifying the 

appropriate pended benefit (if any) for 

such an appellant. It should be noted 

that while applicants and enrollees may 

receive coverage during the 

inconsistency period prior to receiving 

their final redetermination, as set forth 

in § 155.315, coverage during this 

period is based on a different standard 

than eligibility received while an appeal 

is pending. Specifically, under 

§§ 155.315(f)(4)(i) and (ii), an applicant 

or enrollee in an inconsistency period 

receives the eligibility based on the 

information to which he or she attested. 

However, we propose that during an 

appeal, qualified appellants receive 

eligibility that corresponds to that 

which they had immediately before the 

redetermination being appealed. 

Because of the differences in calculating 

eligibility during these two processes, 

we anticipate that an individual who 

appeals a redetermination following an 

inconsistency period may not receive 

the same eligibility during the appeal as 

during the inconsistency period. 

Finally, we note that for an applicant 

who receives an initial eligibility 

determination that is not a denial and 

requests an appeal, he or she will 

receive eligibility per the original 

determination during the course of his 

or her appeal. We solicit comments on 

the proposed approach, including our 

proposal to not pend benefits to new 

applicants who are denied eligibility. 

29. Dismissals (§ 155.530) 

In paragraph (a) of § 155.530, we 

propose the circumstances under which 

an appeals entity must dismiss the 

appeal. We propose paragraphs (1) 

through (4) that the appeals entity must 

dismiss an appeal if the appellant 

withdraws the appeal request in writing, 

either electronically or in hard copy; 

fails to appear at a scheduled hearing; 

fails to submit a valid appeal request as 

defined in § 155.520(a)(4); or dies while 

the appeal is pending. We note that 

paragraph (a)(4) is only intended to 

exclude those appeal requests which fail 

to meet timeliness standards or are 

clearly requesting an appeal for 

something unrelated to the eligibility 

determinations relevant to this subpart. 

This provision is not intended to 

exclude appeal requests that may have 

other minor deficiencies or are 

submitted without complete 

information. In paragraph (b), we 

propose that an appellant whose appeal 

is dismissed must be provided a timely 

notice by the appeals entity that 

includes the reason for dismissal, an 

explanation of the dismissal’s effect on 

the appellant’s eligibility, and an 

explanation of how the appellant may 

show good cause why the dismissal 

should be vacated in accordance with 

paragraph (d) of this section. In 

paragraph (c), we propose that, if an 

appeal is dismissed, the appeals entity 

must provide timely notice to the 

Exchange and to the agency 

administering Medicaid or CHIP, as 

applicable, which must include 

instructions regarding the appropriate 

eligibility determination to implement 

and the discontinuation of pended 

eligibility provided under § 155.525. 

Finally, in paragraph (d), we that 

propose the appeals entity may vacate a 

dismissal if the appellant makes a 

written request, either electronically or 

in hard copy, within 30 days of the date 

of the notice of dismissal, showing good 

cause why the dismissal should be 

vacated. The option for the appeals 

entity to vacate dismissals allows for 

programmatic flexibility. For example, if 

the appellant can prove that he or she 

was incapacitated and therefore could 

not attend his or her scheduled hearing, 

the appeals entity may vacate a 

dismissal that was based upon the 

appellant’s failure to appear at a 

scheduled hearing. We solicit comments 

on the proposed approach for appeal 

dismissals and vacating an appeal 

dismissal. 

30. Informal Resolution and Hearing 

Requirements (§ 155.535) 

In § 155.535, we propose standards for 

adjudicating eligibility appeals. We 

provide the option for informal 

resolution of appeals as well as 

hearings. In paragraph (a), we propose 

that the HHS appeals process will 

provide an opportunity for informal 

resolution and a hearing, and that a 

state-based Exchange appeals entity may 

also provide an informal resolution 

process prior to a hearing. We anticipate 

that this process will provide appellants 

the opportunity to work with appeals 

staff to try to resolve the appeal prehearing through a review of case 

documents, verification of the accuracy 

of submitted documents, and the 

opportunity for the appellant to submit 

updated information or provide further 

explanation of previously submitted 

documents. Although this subpart does 

not require state-based Exchange 

appeals entities to provide an informal 

resolution process, HHS will provide an 

informal resolution process to all 

appellants who use the HHS appeals 

process. 

In paragraph (a), we propose that 

informal resolution will be offered to 

appellants in the HHS appeals process, 

and may be offered to appellants in a 

state-based Exchange appeals process, 

provided that the process is limited in 

scope to what would be considered at 

hearing, including the information used 

to determine the appellant’s eligibility 

as well as any additional relevant 

evidence provided by the appellant 

during the course of the appeal. In 

addition, the provision of, or an 

appellant’s participation in, an informal 

resolution process must not impair the 

appellant’s right to hearing, where the 

appellant remains dissatisfied with the 

outcome of the informal resolution 

process. We consider that the appellant 

is in the best position to determine 

whether he or she is satisfied with the 

outcome of an informal resolution and, 

therefore, must be afforded a hearing if 

he or she is dissatisfied with the 

outcome of the informal resolution 

process. For example, an appellant may 

continue to be dissatisfied with the level 

of advance payments of the premium 

tax credits for which he or she is 

determined eligible following informal 

resolution and seek to pursue the issue 

at hearing. Furthermore, this parallels 


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the Medicaid fair hearing requirement 

that an appellant must be provided a 

hearing where he or she believes the 

agency has taken an erroneous action. 

We also propose that an appeals entity 

whose process includes an informal 

resolution component must minimize 

the burden on the appellant by not 

requesting that he or she provide 

duplicative information at various 

stages of appeal. We expect a significant 

portion of appeals may be resolved 

through informal resolution. For 

example, some applicants will fail to 

submit all required information or 

documentation during the application 

process (or information or 

documentation submitted will not be 

verified), and will fail to rectify this 

during the statutory inconsistency 

period, but will present such 

information during an appeal. However, 

some appellants will remain dissatisfied 

with the eligibility determination that 

results from the informal resolution 

process, and these appellants must be 

afforded the opportunity for a hearing. 

We note that unless an appellant 

requests a hearing, the decision reached 

through informal resolution by the 

appeals entity is considered final and 

binding. 

In paragraph (b), we propose that 

when a hearing is scheduled the appeals 

entity must send written notice, 

electronically or in hard copy, to the 

appellant of the date, time, and location 

or format of the hearing no later than 15 

days prior to the date of hearing. We 

anticipate that 15 days will provide the 

appellant enough time to contact the 

appeals entity if the date and time are 

prohibitive of participation. If the 

appellant informs the appeals entity that 

the designated date and time are 

prohibitive of participation, we expect 

that the appeals entity will work with 

the appellant to set a reasonable and 

mutually convenient date and time. In 

addition, the format of a hearing 

encompasses telephonic hearings and 

hearings held by video teleconference. 

Again, if an appeal is resolved to the 

appellant’s satisfaction through informal 

resolution, a hearing will not be 

necessary and will not need to be 

scheduled. We do not expect the 

appeals entity to schedule a hearing 

until the appellant has indicated that he 

or she is dissatisfied with the outcome 

of the informal resolution process, if 

such a process is in place; however, if 

the appeals entity does not provide an 

informal resolution process, we expect 

that the appeals entity will schedule a 

hearing upon receipt of the appeal 

request. 

In paragraph (c), we propose 

requirements for conducting hearings, 

including that hearings must be 

conducted at a reasonable date, time, 

and location or format; after notice of 

the hearing has been issued to the 

appellant; as an evidentiary hearing 

where appellants may present evidence; 

and by one or more impartial officials 

who have not been directly involved in 

the eligibility determination or any prior 

Exchange appeal decision in the same 

matter. These requirements are modeled 

off Medicaid’s fair hearing requirements 

and aim to provide the appellant with 

sufficient notice and opportunity to 

participate in the hearing as well as 

ensure the hearing decision is issued by 

an impartial hearing officer. 

In paragraph (d), we propose the 

procedural rights afforded to an 

appellant. These rights are based on 

those provided in Medicaid fair 

hearings under 42 CFR 431.242. In 

paragraph (d)(1), we propose that the 

appeals entity must provide the 

appellant with the opportunity to 

review his or her appeal record and all 

the documents to be used by the appeals 

entity at the hearing, at a reasonable 

time before the date of the hearing as 

well as during the hearing. In paragraph 

(d)(2), we propose that the appellant 

have the ability to bring witnesses to 

testify. In paragraph (d)(3), we propose 

that the appellant have the opportunity 

to establish all relevant facts and 

circumstances. In paragraph, (d)(4), we 

propose that the appellant may present 

arguments without undue interference. 

Finally, in paragraph (d)(5), we propose 

that the appellant may question or 

refute any testimony or evidence, 

including the opportunity to confront 

and cross-examine adverse witnesses. 

Although we have included the ability 

to cross-examine adverse witnesses, we 

anticipate that most hearings will be 

held in a non-adversarial manner 

without an adverse party or 

representative from the agency 

determining eligibility present during 

appeal. However, we understand that 

eligibility representatives are 

occasionally part of Medicaid fair 

hearings, and we do not want to 

foreclose the possibility of cross 

examination for such cases where an 

adverse witness is present. The 

procedural rights we outline correspond 

to those afforded to Medicaid 

appellants. 

In paragraph (e), we propose that the 

appeals entity must consider the 

information used to determine the 

appellant’s eligibility and any relevant 

evidence presented during the course of 

the appeal, including at the hearing. 

This provision will allow the appellant 

to bring forward information at multiple 

points in the process. We seek comment 

on this provision. 

In paragraph (f), we propose that the 

appeals entity review appeals de novo. 

We consider this standard of review 

critical to allow the appellant the 

opportunity for a fresh review at each 

stage of appeal and the opportunity to 

bring new relevant evidence throughout 

the process. 

We seek comment on our informal 

resolution and hearing requirements 

and standards. 

31. Expedited Appeals (§ 155.540) 

In § 155.540, we propose the 

standards for expedited appeals. In 

paragraph (a), we propose that the 

appeals entity must establish and 

maintain an expedited appeals process 

for an appellant to request an expedited 

process where there is an immediate 

need for health services because a 

standard appeal could seriously 

jeopardize the appellant’s life or health 

or ability to attain, maintain, or regain 

maximum function. In paragraph (b), we 

propose that if an appeal entity denies 

a request for an expedited appeal, it 

must handle the appeal under the 

standard process and issue the appeal 

decision in accordance with 

§ 155.545(b)(1) and make reasonable 

efforts to inform the appellant through 

electronic or oral notification of the 

denial and, if notified orally, follow up 

with the appellant by written notice, 

either electronically or in hard copy, 

within two days of the denial. The 

standards proposed for expedited 

appeals parallel those contained in the 

proposed Medicaid regulations in this 

proposed rule at § 431.224 and 

§ 431.244. We seek comment on this 

provision and the timelines associated 

with it. 

32. Appeal Decisions (§ 155.545) 

In section 155.545, we propose 

requirements for the content and 

issuance of appeal decisions. In 

paragraph (a)(1), we propose that appeal 

decisions be based exclusively on the 

application of the eligibility rules 

established in subpart D of this part or 

pursuant to future guidance on section 

1311(d)(4)(H) of the Affordable Care 

Act, as applicable, to the information 

used to make the eligibility 

determination as well as any relevant 

evidence provided by the appellant 

during the course of the appeal. In 

paragraphs (a)(2) through (a)(5), we 

propose that the content of the appeal 

decision must include the decision with 

a plain language description of the effect 

of the decision on the appellant’s 

eligibility, a summary of the facts 

relevant to the appeal, an identification 


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of the legal basis for the decision, and 

the effective date of the decision. The 

above requirements are based on 

Medicaid’s fair hearing standards, and 

we intend each piece to assist the 

appellant in understanding how the 

eligibility standards, applied to the facts 

of his or her case, resulted in the appeal 

decision. 

Finally, in paragraph (a)(6), we 

propose that, if the appeals entity is a 

state-based Exchange appeals entity, the 

appeal decision must include an 

explanation of the appellant’s right to 

pursue an appeal at HHS if the 

appellant remains dissatisfied with the 

post-hearing eligibility determination. 

We seek comment on these provisions 

for the appeal decision. 

In paragraph (b)(1), we propose the 

standards for the appeals entity to issue 

written notice of the appeal decision, 

either electronically or in hard copy, to 

the appellant. We propose that such 

notice to the appellant be issued within 

90 days of the date an appeal request 

under § 155.520(b) or (c) is received, as 

administratively feasible. We anticipate 

the appeals entity may, at times, 

experience significant increases in 

appeals volume, such as during open 

enrollment or high-volume 

redetermination periods, and may also 

require additional time due to 

coordination requirements with 

Medicaid and other agencies and 

appeals entities. In paragraph (b)(2), we 

propose that, in the case of an appeal 

request submitted under § 155.540 that 

the appeals entity determines meets the 

criteria for an expedited appeal, the 

appeals entity must issue notice of the 

appeal decision as expeditiously as the 

appellant’s health condition requires, 

but no later than three working days 

after the appeals entity receives the 

request for an expedited appeal. Finally, 

in paragraph (b)(3), we propose that the 

appeals entity send notice of the appeal 

decision via secure electronic interface 

to the Exchange or the Medicaid or 

CHIP agency, as applicable. This notice 

requirement seeks to connect the 

appeals decision with the entity 

responsible for implementing the appeal 

decision. In addition, the Exchange or 

the Medicaid or CHIP agency, as 

applicable, will need to be notified that 

the appellant no longer should receive 

pended eligibility. We seek comment on 

these proposed appeal decision notice 

requirements. 

In paragraph (c), we propose that the 

Exchange or the Medicaid or CHIP 

agency, as applicable, must promptly 

implement appeal decisions upon 

receiving the notice described in 

paragraph (b). In paragraph (c)(1), we 

propose that the effective dates of the 

changes resulting from an appeal 

correspond with existing timeframes 

established under § 155.330(f) or, where 

applicable, retroactively to the 

eligibility determination date that was 

the subject of the appeal, or in 

accordance with standards set forth by 

Medicaid or CHIP, in 42 CFR parts 435 

or 457, as applicable. The purpose of an 

appeal is to ensure that the appellant 

receives the appropriate benefit 

determination. Therefore, appeal 

decisions that overturn the original 

eligibility determination commonly seek 

to ‘‘right the wrong’’ by making the 

appellant whole, which we believe 

includes retroactive eligibility. In the 

Medicaid context (as with the majority 

of public benefit programs), 42 CFR 

431.246 directs state agencies to 

‘‘promptly make corrective payments, 

retroactive to the date an incorrect 

action was taken.’’ 

We seek comment regarding the 

operational considerations associated 

with retroactive eligibility as a result of 

an appeal, and whether potential 

operational difficulties, if any, could be 

alleviated by limiting the policy on 

retroactive eligibility. For example, we 

considered limiting retroactive 

eligibility to those already enrolled in 

coverage. In addition, we note that an 

individual who is not enrolled and 

receives retroactive eligibility could 

always choose not to enroll 

retroactively. We believe this choice 

might be desirable if an appellant did 

not wish to obtain the retroactive 

coverage, which could involve the 

payment of premiums. We also 

considered specifically limiting the 

scope of retroactive eligibility with 

respect to advance payments of the 

premium tax credit or cost-sharing 

reductions, consistent with our 

approach in 155.330(f)(2)–(7). Finally, 

we note that the inconsistency period 

under § 155.315(f) may mitigate many of 

these operational concerns by allowing 

the resolution of eligibility issues preappeal. We seek comment on the 

retroactive implementation of appeal 

decisions, and specifically on whether 

the ability to enroll in coverage 

retroactively should be optional or 

limited, and if so, in what way. 

In paragraph (c)(2), we propose that 

the Exchange or the Medicaid or CHIP 

agency, as applicable, must promptly 

redetermine the eligibility of other 

members of the appellant’s household 

who have not appealed their own 

eligibility determinations but whose 

eligibility may be affected by the appeal 

decision, in accordance with the 

standards specified in § 155.305. We 

anticipate that evidence received during 

the course of an appeal, for example 

updated income information, may 

indicate that a redetermination is 

required for household members who 

have not appealed their own eligibility 

determinations. For such household 

members, the Exchange, or the Medicaid 

or CHIP agency, as applicable, must 

undertake a redetermination. We seek 

comment on these provisions. 

33. Appeal Record (§ 155.550) 

In § 155.550, we propose 

requirements for accessing the appeal 

record. In paragraph (a), we propose the 

appeal record be made accessible to the 

appellant at a convenient place and time 

subject to the requirements of all 

applicable federal and state laws 

regarding privacy, confidentiality, 

disclosure, and personally identifiable 

information. In paragraph (b), we 

propose the appeals entity must provide 

public access to all appeal records, 

subject to all applicable federal and 

state laws regarding privacy, 

confidentiality, disclosure, and 

personally identifiable information. The 

requirement for access to the appeal 

record by the appellant corresponds to 

a similar Medicaid fair hearing 

requirements under 42 CFR 431.244(c) 

and 431.244(g). We seek comment on 

this provision. 

34. Employer Appeals Process 

(§ 155.555) 

In paragraph (a), pursuant to section 

1411(f)(2) of the Affordable Care Act, we 

propose that an appeals process shall be 

established through which an employer 

may appeal, in response to a notice 

under § 155.310(h) regarding an 

employer’s potential tax liability, a 

determination that the employer does 

not provide minimum essential 

coverage through an employersponsored plan or that the employer 

does provide such coverage but it is not 

affordable coverage with respect to the 

employee referenced in the notice. We 

note that the employer appeal is the 

opportunity for the employer to correct 

any information the Exchange received 

from an employee’s application 

regarding the employer’s offering of 

coverage. The appeals entity is 

responsible for a de novo review of 

whether the employer’s offer of coverage 

is sufficient such that the employee at 

issue is not entitled to advance 

payments of the premium tax credit or 

other cost-sharing reductions under 

section 1402. 

The employer appeals process is 

separate and distinct from the IRS’s 

process determining whether an 

employer is liable for a tax penalty 

under section 4980H of the Code and 

any appeal rights the employer may 


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have under subtitle F of the Code. We 

anticipate that some employers will 

receive a notice of potential tax liability 

from the Exchange even though the 

employer may not in fact have any tax 

liability under section 4980H. For 

example, notices under § 155.310(h) 

must be issued to employers without 

regard to their size, yet tax liability 

under section 4980H arises only against 

applicable large employers, that is, 

generally, those employers with more 

than 50 full-time equivalent employees. 

Our goal is to work closely with the IRS 

to educate and develop notices that help 

employers understand their potential 

tax liabilities and the consequences of a 

successful appeal. We seek comment on 

these provisions. 

In paragraph (b), we propose that 

Exchanges have the flexibility to 

establish an employer appeals process 

in accordance with the requirements of 

§ 155.505(e) through (g), and 

§ 155.510(a)(1), (a)(2), and (c). We 

further propose that, where an Exchange 

has not established an employer appeals 

process, HHS will provide an employer 

appeals process that meets the 

requirements of this section, 

§ 155.505(e) through (g), and 

§ 155.510(a)(1), (a)(2), and (c). 

In paragraph (c), we propose the 

process and standards for requesting an 

appeal. In paragraph (c)(1), we propose 

that an Exchange or appeals entity must 

allow an employer to request an appeal 

within 90 days from the date of the 

notice of the employee’s eligibility for 

advance payments of the premium tax 

credit or cost-sharing reductions is sent. 

In paragraph (c)(2), we propose that the 

Exchange or appeals entity must allow 

an employer to submit relevant 

evidence to support the appeal request. 

We anticipate only a limited set of 

evidence (information already possessed 

by the employer) will be relevant to this 

appeal. For example, employers might 

submit information pertaining to 

whether coverage is offered by the 

employer, whether the employee has 

taken up such coverage, the employee’s 

portion of the lowest cost plan offered, 

and whether or not the employee is in 

fact employed by the employer. In 

paragraph (c)(3), we propose that an 

Exchange or appeals entity must allow 

an employer to submit an appeal request 

to the Exchange or the state-based 

Exchange appeals entity, if the 

Exchange establishes an employer 

appeals process, or to HHS, if the 

Exchange does not offer an employer 

appeals process. This option for filing 

an appeal request reflects the flexibility 

described in paragraph (b) of this 

section that states have to establish an 

employer appeal process. In addition, 

unlike the appeals process for 

individual eligibility determinations, 

section 1411(f)(2) of the Affordable Care 

Act does not require employer appeals 

to be reviewed by a federal officer; 

therefore, an employer does not have 

the right to elevate an appeal decision 

made by a state-based Exchange appeals 

entity to HHS. However, employer 

appeals may be appealed to HHS where 

no appeals process is established by the 

Exchange for employers. We seek 

comment on these provisions. 

In paragraph (c)(4), we propose that 

the Exchange and the appeals entity 

must comply with the requirements of 

§ 155.520(a)(1) through (3), such that an 

employer appeal may be submitted by 

telephone, mail, in person where 

available, or by Internet, and the appeals 

entity may assist the employer with 

making the appeal request and must not 

limit or interfere with the employer’s 

right to request an appeal. We seek 

comment on these provisions. 

In paragraph (c)(5), we propose that 

an appeals entity must consider an 

appeal request valid if it is submitted 

within 90 days of the notice to the 

employer of a determination that the 

employer does not provide minimum 

essential coverage through am 

employer-sponsored plan or that the 

employer does provide that coverage but 

it is not affordable coverage with respect 

to an employee. We seek comment on 

this provision. 

We propose in paragraph (d)(1) that, 

upon receipt of a valid appeal request, 

the appeals entity must send timely 

acknowledgement of the receipt of the 

appeal request to the employer, 

including an explanation of the appeals 

process. We propose in paragraph (d)(2), 

that, upon receipt of a valid appeal 

request, the appeals entity must send 

notice of the request to the employee, 

including an explanation of the appeals 

process, instructions for submitting 

additional evidence for consideration by 

the appeals entity, and an explanation 

of the potential effect of the employer’s 

appeal on the employee’s eligibility. We 

anticipate that the notice to the 

employee under paragraph (d)(2) will be 

the primary means through which the 

employee will learn about the 

employer’s appeal. Just as the employer 

will have the opportunity to submit 

information in support of the appeal to 

the appeals entity, the employee’s 

notice will describe the employee’s 

opportunity to participate in the 

employer appeal process Furthermore, 

we note that the explanation of the 

potential effect of the employer’s appeal 

on the employee’s eligibility proposed 

in (d)(2)(iii) must explain that the 

employer appeal process may result in 

a redetermination that the employee is 

not eligible for advance payments of the 

premium tax credit or cost sharing 

reductions. For example, a 

redetermination may occur if the 

employee attested that he or she was not 

offered employer sponsored coverage 

but the employer establishes the offering 

of coverage through the appeal; the 

employee would be redetermined as 

ineligible for advance payments of the 

premium tax credit and cost sharing 

reductions. 

In paragraph (d)(3), we propose that 

the appeals entity must promptly notify 

the Exchange of the employers’ appeal 

request, if the employer did not initially 

make the appeal request to the 

Exchange. In paragraph (d)(4), we 

propose that, upon receipt of an appeal 

request that is not valid under the same 

section, the appeals entity must, 

promptly and without undue delay, 

send written notice, either electronically 

or in hard copy, to the employer that the 

appeal request has not been accepted 

and the reason why, so that the 

employer may have the opportunity to 

cure a defect in the appeal request. We 

propose that the appeals entity must 

accept an amended appeal request that 

meets the requirements of the same 

section, including standards for 

timeliness. We seek comment on these 

provisions. 

In paragraph (e), we propose that 

upon receipt of a valid appeal request or 

the notice described in paragraph (d)(3) 

of the same section, the Exchange must 

promptly transmit via secure electronic 

interface the employee’s eligibility 

record and the appeals entity must also 

promptly confirm receipt of the records 

transferred by the Exchange. We did not 

propose specified timelines for 

‘‘promptly’’ within this section and seek 

comment on these provisions, including 

on appropriate standards for 

promptness in this context. 

In paragraph (f), we propose the 

process for the dismissal of an employer 

appeal. In paragraph (f)(1), we propose 

that the appeals entity must dismiss an 

appeal under the circumstances 

described in § 155.530(a)(1) or if the 

request fails to comply with the 

standards in paragraph (c)(4) of this 

section. Specifically, this standard 

requires dismissal where the employer 

withdraws the request in writing, either 

electronically or in hard copy, or fails to 

submit a valid appeal request. We note 

that paragraph (f)(1) is only intended to 

exclude those appeal requests which fail 

to meet timeliness standards or are 

clearly requesting an appeal for 

something unrelated to the employer 

determination relevant to this section. 

This provision is not intended to 


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exclude appeal requests that may have 

other minor deficiencies or are 

submitted without complete 

information. In paragraph (f)(2), we 

propose that the appeals entity must 

provide timely notice of the dismissal to 

the employer, employee, and Exchange, 

including the reason for dismissal. In 

paragraph (f)(3), we propose that the 

appeals entity may vacate a dismissal if 

the employer makes a written request, 

either electronically or in hard copy, 

within 30 days of the date of the notice 

of dismissal showing good cause why 

the dismissal should be vacated. We 

seek comment on the provisions 

regarding dismissal and vacatur of a 

dismissal. 

In paragraph (g), we propose the 

procedural rights of the employer 

requesting the appeal. In paragraph 

(g)(1), we propose that the employer 

must have the opportunity to provide 

relevant evidence to the appeals entity 

for review as part of the appeal. In 

paragraph (g)(2), we propose that the 

employer must be able to review the 

information included in the statute and 

described in § 155.310(h) and 26 CFR 

1.36B, which includes the identity of 

the employee, information regarding 

whether the employee has been 

determined eligible for advance 

payments of the premium tax credit, 

and an explanation that the employer 

may be liable for the payment assessed 

under section 4980(H) of the Code. In 

addition, the employer may request 

information regarding whether the 

employee’s income is above or below 

the threshold by which the affordability 

of employer-sponsored minimum 

essential coverage is measured. Finally, 

the employer may have access to other 

data used to determine the employee’s 

eligibility to the extent allowable by 

law, except the information described in 

paragraph (h) of this section. We seek 

comment on these proposed procedural 

rights. 

We propose in paragraph (h) that 

neither the Exchange nor the appeals 

entity may make available to an 

employer any tax return information 

with respect to an employee in relation 

to his or her eligibility for advance 

payments of the premium tax credit or 

cost sharing reductions. We seek 

comment on the employers’ right to 

review data and information used to 

make the employee’s eligibility 

determination. 

In paragraph (i), we propose the 

process and standards for adjudication 

of employer appeals. Specifically, we 

propose that the appeal must be 

reviewed by one or more impartial 

officials not directly involved in the 

employee eligibility determination 

implicated in the appeal, and that the 

appeal must include consideration of 

the information used to determine the 

employee’s eligibility as well as any 

additional relevant evidence provided 

by the employer or the employee during 

the course of the appeal. Additionally, 

we propose that the appeal be reviewed 

de novo. We seek comment on this 

proposed approach. 

In paragraph (j), we propose the 

standards for employer appeal 

decisions. Specifically, we propose that 

the appeal decision must be based 

exclusively on the information used to 

determine the employee’s eligibility as 

well as any relevant evidence provided 

by the employer or the employee during 

the course of the appeal, and on the 

standards for an employer to provide 

minimum essential coverage that meets 

both affordability and minimum value 

standards through an employersponsored plan as stated in 45 CFR part 

155, subpart D. Additionally, we 

propose that the appeal decision must 

state the decision, including a plain 

language description of the effect of the 

decision on the employee’s eligibility, 

and must comply with the requirements 

of § 155.545(a)(3) through (5). We seek 

comment on the proposed approach. 

In paragraph (k), we propose the 

requirements for the content and 

issuance of the notice of the employer 

appeal decision. We propose that the 

appeals entity must provide written 

notice, electronically or in hard copy, of 

the appeal decision within 90 days of 

the date the appeal request is received, 

as administratively feasible, to the 

employer, employee, and the Exchange. 

In paragraph (k)(1), we propose the 

employer’s notice must include the 

appeal decision and an explanation that 

the appeal decision does not foreclose 

any appeal rights the employer may 

have under subtitle F of the Code. In 

paragraph (k)(2), we propose the 

employee’s notice must include the 

appeal decision. Lastly, in paragraph 

(k)(3), we propose the appeals entity 

must provide written notice of the 

appeal decision, either electronically or 

in hard copy, to the Exchange. We seek 

comment on the proposed content of 

and timelines for issuing the notice of 

appeal decision. 

In paragraph (l), we propose the 

requirements for implementation of the 

appeal decision. We propose that, after 

receipt of the notice under paragraph 

(k)(3) of this section, if the appeal 

decision affects the employee’s 

eligibility, the Exchange must promptly 

redetermine the employee’s eligibility in 

accordance with the standards specified 

in § 155.305. We are considering, and 

we solicit comments on, two alternative 

options regarding whether the employee 

may appeal the results from this 

redetermination. Under the first option, 

the employee would be permitted to 

appeal a change in eligibility reflected 

in the redetermination notice generated 

after an employer appeal. However, if 

the employee were subsequently 

determined to be eligible for advance 

payments of the premium tax credit or 

cost-sharing reductions as a result of 

such an appeal, the employer would not 

be able to again appeal that 

determination to the Exchange. We 

believe that this approach would protect 

the interests of both the employee, 

whose appeal rights are determined by 

section 1411(f)(1) of the Affordable Care 

Act, and the employer, whose appeal 

rights are determined by section 

1411(f)(2). Although the employer 

would not have the option to appeal to 

the Exchange a second time, this would 

not foreclose any appeal rights still 

available under subtitle F of the Code. 

Under the second option, the 

employee would not be permitted to 

appeal a change in eligibility reflected 

in the redetermination notice generated 

after an employer appeal. Instead, the 

employee would be issued a 

redetermination notice under this 

section which would not be appealable 

under § 155.505(b)(1)(ii). For example, if 

the employer were able to establish 

during the appeal that it does provide 

coverage that is both affordable and 

meets minimum value standards, the 

employee would be redetermined as 

ineligible for advance payments of the 

premium tax credit and cost-sharing 

reductions. Because the redetermination 

would be the result of an employer 

appeal under this section, the employee 

would not have the appeal rights 

associated with redetermination notices, 

generally. However, under this option, 

the employee’s interests would be 

protected by the opportunity to submit 

information to support his or her 

eligibility determination during the 

employer’s appeal. Moreover, if the 

employee’s circumstances were to 

change following the employer appeal 

decision and redetermination notice, the 

employee could submit information to 

the Exchange as a mid-year update 

under § 155.330 and any resulting 

redetermination would be appealable. 

We believe that either of these two 

approaches would be effective in 

limiting recurring appeals among the 

employee and employer. We seek 

comment on paragraph (l) and, 

specifically, on the two alternative 

options discussed above. 

In paragraph (m), we propose that the 

appeal record be accessible to the 

employer and the employee in a 


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convenient format and at a convenient 

time in accordance all applicable laws 

regarding privacy, confidentiality, 

disclosure, and personally identifiable 

information and the prohibition on 

sharing confidential employee 

information in paragraph (h) of this 

section. We seek comment on paragraph 

(m). 

35. Functions of a SHOP (§ 155.705) 

In accordance with the Secretary’s 

authority in section 1321(A)(1)(A) of the 

Affordable Care Act to establish 

standards related to requirements of the 

Exchange and the SHOP Exchange, we 

propose standards for the SHOP to 

coordinate with the functions of the 

individual market Exchange for 

determining eligibility for insurance 

affordability programs. In paragraph (c) 

we specify that the SHOP will provide 

data to the individual market Exchange 

that corresponds to the service area in 

which the SHOP is operating related to 

eligibility and enrollment for a qualified 

employee, that is, an employee who is 

enrolled in a QHP through the SHOP or 

is eligible to enroll in coverage through 

a SHOP because of an offer of coverage 

from a qualified employer. We propose 

these standards to ensure that the 

Exchange can use SHOP data for 

purposes of verifying enrollment in an 

eligible employer-sponsored plan and 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan as 

specified in § 155.320(d). We expect that 

this will not create significant 

administrative burden since the SHOP 

and individual market Exchange may 

share core information technology 

systems and other supporting 

functionality. We note that like all 

information collected or maintained by 

the individual market Exchange or 

SHOP, this information is subject to the 

privacy and security standards of 45 

CFR 155.260. We seek comment on the 

feasibility of sharing this data and the 

usefulness of this data in determining 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions. 

36. SHOP Employer and Employee 

Eligibility Appeals (§ 155.740) 

We propose to amend subpart H by 

adding proposed § 155.740 to define the 

standards for SHOP employer and 

employee eligibility appeals, pursuant 

to our broad authority to establish 

standards for operating SHOP 

Exchanges under section 1321(a)(1)(A) 

of the Affordable Care Act. Although not 

expressly required by the Affordable 

Care Act, we believe that SHOP 

employers and employees should have 

the opportunity to appeal 

determinations of ineligibility to 

participate in the SHOP. 

In paragraph (a), we propose applying 

the definitions in § 155.20, § 155.300, 

and § 155.500 to this section. 

In paragraph (b), we propose the 

general requirements for establishing a 

SHOP appeals process for both 

employer and employee eligibility. 

First, in paragraph (b)(1), we propose 

that a state, establishing an Exchange 

pursuant to § 155.100 must provide an 

eligibility appeals process for the SHOP. 

Because the SHOP was designed with 

flexibility to meet the individual needs 

of states, we anticipate that each SHOP 

will be in the best position to adjudicate 

SHOP eligibility appeals. The SHOP 

eligibility standards allow for a state to 

require additional verification before 

providing the employer or employee 

with an eligibility determination. We 

propose that, where a state has not 

established an Exchange pursuant to 

§ 155.100, HHS will provide an 

eligibility appeals process for the SHOP. 

In paragraph (b)(2), we propose that 

SHOP appeals entities comply with the 

requirements set forth in this section; 

§ 155.505(e) through (g); and 

§ 155.510(a)(1)–(2) and (c). We seek 

comment on these provisions. 

In paragraph (c), we propose that an 

employer may appeal a notice of denial 

of eligibility under § 155.715(e), or the 

failure of the SHOP to make an 

eligibility determination in a timely 

manner. 

In paragraph (d), we propose an 

employee may appeal a notice of denial 

of eligibility under § 155.715(f), or a 

failure of the SHOP to make an 

eligibility determination in a timely 

manner. We note that, although the 

employer has the option to provide 

information during an employee appeal 

(as stated below in paragraph (g) of this 

section), the employer is not required to 

participate in an employee’s appeal and 

need not submit additional information 

beyond what the employer submitted at 

the time of application. 

In paragraph (e), we propose that the 

SHOP provide notice of the employer or 

employee’s right to appeal a 

determination of denial of eligibility in 

the written notice of eligibility provided 

under § 155.715(e) or (f). We propose in 

paragraph (e)(1) that notice of this right 

must include the reason for the denial 

of eligibility along with a citation to the 

applicable regulations. In paragraph 

(e)(2), we propose that the notice must 

also include an explanation of the 

procedure by which the employer or the 

employee may request an appeal of the 

denial of eligibility. We seek comment 

on these provisions. 

In paragraph (f), we propose the 

standards through which a SHOP appeal 

may be requested. In paragraph (f)(1), 

we propose the SHOP and appeals 

entity allow an employer or employee a 

90-day window from the date of the 

notice of the denial of eligibility to 

request an appeal. Because the 

eligibility criteria for the SHOP are 

minimal and straightforward, we believe 

that 90 days to request an appeal 

provides ample time for an employer or 

employee to review the determination, 

gather any evidence that he or she may 

want considered in the appeal, and 

submit the appeal. In addition, we 

propose in (f)(1)(i) that employers and 

employees may submit their appeal 

requests to the SHOP or directly to the 

SHOP appeals entity established by the 

Exchange. In (f)(1)(ii), we propose that 

where a state has not established an 

Exchange, employers and employees 

may submit appeal requests to HHS. We 

seek comment on this timeframe. 

In paragraph (f)(2), we propose that 

the SHOP and appeals entity accept 

appeal requests made by telephone, by 

mail, in person where available, or via 

the Internet. This requirement mirrors 

the methods to request an appeal in the 

individual market as provided in 

§ 155.520(a)(1). We seek comment on 

these appeal request methods. 

In paragraph (f)(3), we propose that 

the SHOP and appeals entity comply 

with the requirements of 

§ 155.520(a)(2)–(3), which state that the 

SHOP or appeals entity may assist the 

employer or employee with the 

submission and processing of the appeal 

request and must not limit or interfere 

with an employer or employee’s right to 

request an appeal. These provisions 

ensure the accessibility of the process 

and prohibit appeals entities from 

dissuading an employer or employee 

who wishes to pursue the appeal rights 

provided under this section. We seek 

comment on these provisions. 

In paragraph (f)(4), we propose that 

the SHOP and appeals entity must 

consider an appeal request valid if it is 

submitted within the 90-day timeframe 

described in paragraph (f)(1) of this 

section. We propose these requirements 

so that an appeals entity may dismiss 

appeal requests that do not meet these 

baseline standards. We seek comment 

on this provision. 

We propose in paragraph (g)(1) that 

upon receipt of a valid appeal request, 

the appeals entity must send timely 

acknowledgement to the employer, or 

the employer and employee if an 

employee is appealing, of the receipt of 

the appeal request, including an 

explanation of the appeals process as 

well as instructions for submitting 


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additional evidence for consideration by 

the appeals entity. In the case of an 

appeal by an employee, the employer 

may be able to take action to facilitate 

the employee’s eligibility for coverage 

through the SHOP; accordingly, we 

propose to require that employers be 

notified of employee appeals so that 

employers may assess whether action on 

their part would be helpful. However, 

we note that the employer is not 

required to participate in the employee’s 

appeal and need not submit additional 

information for an employee’s appeal 

beyond what the employer submitted at 

the time of application. In paragraph 

(g)(2), we propose that the appeals 

entity must promptly notify the SHOP 

of the appeal, if the appeal request was 

not initially made to the SHOP. In 

paragraph (g)(3), we propose to require 

that the appeals entity must promptly 

and without undue delay, notify the 

employer or employee in writing upon 

receipt of an invalid appeal request, so 

that the employer or employee may 

have an opportunity to cure the defect, 

and the appeals entity must treat as 

valid an amended appeal request 

meeting all applicable requirements. We 

seek comment on these provisions. 

In paragraph (h), we propose that 

upon receipt of a valid appeal request or 

the notice described in paragraph (g)(2) 

of the same section, the SHOP must 

promptly transmit via secure electronic 

interface to the appeals entity the appeal 

request and the eligibility record of the 

employer or employee that is appealing, 

and the appeals entity must also 

promptly confirm receipt of the records 

transferred by the SHOP. We did not 

propose specified timelines for 

‘‘promptly’’ within this section and seek 

comment on the timelines standard in 

paragraph (h). 

In paragraph (i), we propose the 

standards for the dismissal of an appeal 

request. In paragraph (i)(1)(i), we 

propose that the appeals entity must 

dismiss an appeal if the employer or 

employee that is appealing, or the 

employer or employee’s authorized 

representative, withdraws the request in 

writing, either electronically or in hard 

copy. In paragraph (i)(1)(ii), we propose 

that the appeals entity must dismiss an 

appeal if the request does not meet the 

standards for a valid appeal outlined in 

paragraph (f)(4). We note that paragraph 

(f)(4) is only intended to exclude those 

appeal requests which fail to meet 

timeliness standards or are clearly 

requesting an appeal for something 

unrelated to SHOP eligibility 

determinations. This provision is not 

intended to exclude appeal requests that 

may have other minor deficiencies or 

are submitted without complete 

information. In paragraph (i)(2), we 

propose that the appeals entity must 

provide timely notice of a dismissal to 

the employer or employee that is 

appealing, including the reason for the 

dismissal, and must notify the SHOP of 

the dismissal. Finally, in paragraph 

(i)(3), we propose that the appeals entity 

may vacate a dismissal if the employer 

or employee demonstrates good cause to 

overturn the dismissal in writing within 

30 days of the date of the notice of 

dismissal. We seek comment on these 

provisions and timeframes. 

In paragraph (j), we propose the 

procedural rights of a SHOP appellant; 

specifically, we propose that the 

employer, or the employer and 

employee if an employee is appealing, 

must have the opportunity to submit 

relevant evidence for review of the 

eligibility determination by the appeals 

entity as part of a desk review. We 

anticipate that eligibility for SHOP 

participation can be proven through 

documentary evidence. The proposed 

approach differs from the individual 

market because of the less complex 

nature of the SHOP eligibility criteria. 

We seek comment on this approach. 

In paragraph (k), we propose the 

requirements for adjudicating a SHOP 

appeal. In paragraph (k)(1), we state that 

the appeal must comply with the 

requirements proposed in § 155.555(i)(1) 

and (3), which state that an appeal must 

be reviewed by an impartial official who 

has not been directly involved in the 

eligibility determination subject to the 

appeal, and that appeals must be 

reviewed de novo. In paragraph (k)(2), 

we propose that the information 

considered in the appeal include the 

information used to determine the 

employer or employee’s eligibility as 

well as any additional relevant evidence 

submitted during the appeal by the 

employer or employee. We intend this 

provision to allow employers and 

employees to submit evidence in 

support of their own appeal as well as 

allowing an employer to submit 

evidence during an employee’s appeal. 

We seek comment on these provisions. 

In paragraph (l), we propose SHOP 

appeal decision standards. In paragraph 

(l)(1), we propose that the appeal 

decision must be based solely on the 

evidence referenced in paragraph (k)(2) 

of this section, and the eligibility 

criteria established in § 155.710(b) or 

(e), as applicable. In paragraph (l)(2), we 

propose that the appeal decision must 

comply with the requirements of 

§§ 155.545(a)(2) through (5), which state 

that a decision must be explained 

clearly and in plain language, and must 

summarize the facts relevant to the 

appeal, identify the legal basis for the 

decision, and provide the effective date 

for the decision. These requirements are 

based on common fair hearing 

standards, and we intend each piece to 

assist the employer or employee in 

understanding how the rules of 

eligibility and the facts of the case result 

in the appeal decision. Finally, in 

paragraph (l)(3), we propose that SHOP 

appeal decisions be effective retroactive 

to the date the incorrect eligibility 

determination was made, if the decision 

finds the employer or employee eligible, 

or effective as of the date of the notice 

of the appeal decision, if eligibility is 

denied. We seek comment on these 

provisions pertaining to the appeal 

decision. 

In paragraph (m), we propose 

requirements for issuing notice of the 

SHOP appeals decision. We propose 

that the appeals entity issue written 

notice, electronically or in hard copy 

within 90 days of the receipt of the 

appeal request to the employer, or to the 

employer and employee if an employee 

is appealing, and to the SHOP. The 

notice must include the contents of the 

decision described in paragraph (l). 

Administrative appeal processes within 

public programs allow a broad range of 

timeframes (for example, 30–365 days) 

for submitting appeal requests and 

adjudicating decisions. We anticipate 

that 90 days for resolution will be 

sufficient given the limited criteria 

involved in SHOP eligibility 

determinations. We seek comment on 

these provisions and timeframes. 

In paragraph (n), we propose that the 

SHOP must promptly implement the 

appeal decision upon receiving notice 

under paragraph (m) of this section. We 

did not include a specific timeliness 

requirement for implementation of the 

decision in order to provide flexibility 

for SHOPs, which may vary in their 

capacity for turnaround times. We seek 

comment on this provision. 

In paragraph (o), we propose that, 

subject to the requirements in § 155.550, 

the appeal record must be made 

accessible to the employer, or to the 

employer and employee if an employee 

is appealing, in a convenient format and 

at a convenient time. We anticipate that 

many employers and employees will be 

able to access their appeal records 

electronically through the SHOP. We 

seek comment on these provisions. 

IV. Medicaid Premiums and Cost 

Sharing 

A. Background 

Section 1916 of the Act describes 

long-standing requirements for cost 

sharing, which apply broadly to all 

individuals who are not specifically 


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exempted. Such cost sharing is limited 

to ‘‘nominal’’ amounts. Section 1916 of 

the Act also establishes authority for 

states to impose premiums on specific 

groups of beneficiaries with family 

income above 150 percent of the federal 

poverty level (FPL). The Deficit 

Reduction Act of 2005 (DRA) 

established a new section 1916A of the 

Act, which gives states additional 

flexibility, allowing for alternative 

premiums and cost sharing, beyond 

what is allowed under section 1916 of 

the Act, for somewhat higher income 

beneficiaries. Such alternative cost 

sharing may be targeted to specific 

groups of beneficiaries and payment 

may be required as a condition of 

providing services. Alternative 

premiums and cost sharing imposed 

under section 1916A of the Act, cannot 

exceed five percent of family income. 

The current regulations for Medicaid 

premiums and cost sharing are at 42 

CFR 447.50 through 447.82. The first 11 

provisions apply primarily to premiums 

and cost sharing established under the 

authority of section 1916 of the Act, 

while the remaining provisions apply 

primarily to the authority established by 

section 1916A of the Act. However, 

some provisions apply to all premiums 

and cost sharing regardless of the 

statutory authority, leading to confusion 

about what is permitted for individuals 

at various income limits. The proposed 

regulations make it clear what cost 

sharing is allowed for individuals with 

income under 100 percent of the FPL 

and what flexibilities exist for imposing 

premiums and cost sharing on 

individuals with higher income. This 

proposed rule would eliminate 

redundant provisions and create 

consistency between the two statutory 

authorities where appropriate and 

consistent with the law. To that effect, 

we propose to delete in its entirety the 

current Medicaid premiums and cost 

sharing rules at § 447.50 through 

§ 447.82 and to replace them with new 

§ 447.50 through § 447.57. Sections 

447.58 through 447.82 will be reserved. 

While this streamlined and simplified 

approach generally retains current 

options and limitations consistent with 

the statute, we are proposing some 

changes to increase state flexibility. For 

example, we propose to update the 

maximum nominal cost sharing 

amounts, provide new flexibility to 

impose higher cost sharing for nonpreferred drugs and for non-emergency 

use of the ED, change the exemption for 

Indians to ensure that these protections 

are implemented effectively, and modify 

the public notice provisions. We seek 

comment on any element of the 

proposed rule, which aims to 

significantly streamline and expand 

flexibility regarding premiums and cost 

sharing. 

B. Provisions of Proposed Rule 

1. Definitions (§ 447.51) 

At § 447.51, we propose to add a 

definition for premiums, which 

includes enrollment fees and other 

similar charges. We also propose to add 

a definition for cost sharing to 

encompass deductibles, copayments, 

coinsurance, and other similar charges. 

Because each of these charges would 

now be included within cost sharing, 

we have removed separate requirements 

related to deductibles, copayments, and 

coinsurance; all cost sharing would be 

subject to a single set of parameters as 

discussed below. We also propose new 

definitions specific to the premiums and 

cost sharing rules, for preferred drugs, 

emergency and non-emergency services, 

as well as alternative non-emergency 

service provider, since the cost sharing 

rules vary for these items and services. 

We are considering adding definitions 

of ‘‘inpatient stay’’ and ‘‘outpatient 

services’’ for purposes of cost sharing to 

take into account situations where an 

individual might return to an inpatient 

institution after a brief period when the 

return is for treatment of a condition 

that was present in the initial period. 

We solicit comments as to the utility of 

such a definition. Finally we propose a 

technical correction to the Indian 

definition to correct the citation to 25 

U.S.C. 1603. 

2. Update to Maximum Nominal Cost 

Sharing (§ 447.52) 

Under the authority granted under 

sections 1916(a)(3) and (b)(3) of the Act 

for the Secretary to define nominal cost 

sharing, at § 447.52(b) we propose to 

revise the maximum amount of nominal 

cost sharing for outpatient services, 

which may be imposed on beneficiaries 

with incomes below 100 percent of the 

FPL. Currently, maximum allowable 

cost sharing is tied to what the agency 

pays for the service. This can be 

confusing and burdensome for states, 

providers, and beneficiaries. For 

example, for fiscal year 2013, states may 

charge up to $1.30 for outpatient 

services, if the agency pays $10.01 to 

$25, and up to $3.90 if the agency pays 

more than $50. 

To simplify the rules, we propose to 

remove the state payment as the basis 

for the cost sharing charge and replace 

it with a flat $4 maximum allowable 

charge for outpatient services. The $4 

maximum for outpatient services is 

comparable to the amount, states may 

charge under current rules ($3.90) for 

services for which the state pays more 

than $50. Because the majority of state 

services are reimbursed at more than 

$50, we believe a flat $4 cost sharing 

maximum is reasonable. We seek 

comment on this amount as well as the 

proposed approach in general, including 

the impact on individuals with 

significant service needs, such as those 

with disabilities who are residing in the 

community. 

At § 447.52(b)(3), we propose that the 

maximum cost sharing established by 

the agency should not be equal to or 

exceed the amount the agency pays for 

the service. In accordance with the 

statute, we also propose that these 

proposed nominal amounts continue to 

be updated; however, since we are 

proposing to increase the nominal 

amounts, effective in fiscal year 2014, 

we propose to freeze the next CPI–U 

increase until October 2015. This 

increase is also applied to the nominal 

amounts for drugs and non-emergency 

use of the emergency department in 

§ 447.53 and § 447.54, respectively. 

Current rules permit cost sharing for 

institutional care, up to 50 percent of 

the cost for the first day of care, for 

individuals with incomes below 100 

percent of the FPL. We are not 

proposing a change but are considering 

alternatives for the maximum allowable 

cost sharing related to an inpatient stay 

because this is a relatively high cost for 

very low income people and not a 

service that consumers have the ability 

to avoid or prevent. Options under 

consideration include the $4 maximum 

applied to outpatient services, $50, or 

$100, which would encompass the 

majority of hospital cost sharing 

currently in effect. If we were to revise 

the maximum allowable cost sharing for 

an inpatient stay, we are considering a 

transition period, for example, through 

October 1, 2015, to permit states time to 

make adjustments to their cost sharing 

and payment rate schedules. We seek 

comment on the best approach to cost 

sharing for an inpatient stay for very 

low-income individuals. 

Beyond the differentiation between 

inpatient and outpatient care for 

purposes of establishing nominal levels 

of permissible cost sharing, we are also 

considering a separate distinction for 

nominal levels of cost sharing for 

community-based long-term services 

and supports. Community-based longterm services and supports may include 

services such as personal care, home 

health, and rehabilitative services that 

are furnished over an extended period 

of time pursuant to a coordinated plan 

of care. The delivery of these services 

differs from other outpatient services 

that are furnished in finite increments. 


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As a result, we are considering whether 

it may be more appropriate to define 

nominal cost sharing differently for 

community-based long-term services 

and supports, or perhaps to refine the 

treatment of nominal cost sharing 

generally for a continuous coordinated 

course of care. We seek comment on 

these approaches, including how we 

would define long-term services and 

supports and the unit of service for 

which separate cost sharing could be 

charged. As states exercise their options 

with respect to cost sharing, they should 

continue to be aware of their 

independent obligations under the 

Americans with Disabilities Act and the 

Supreme Court’s Olmstead decision. 

3. Higher Cost Sharing Permitted for 

Individuals With Incomes Above 100 

Percent of the FPL (§ 447.52) 

Proposed § 447.52 consolidates the 

requirements for cost sharing 

established under sections 1916 and 

1916A of the Act. Under the statute, 

states may impose cost sharing at higher 

than nominal levels for nonexempt 

individuals with incomes at or above 

100 percent of the FPL. Section 1916A 

provides that states may establish cost 

sharing for nonexempt services, other 

than drugs and ED services, up to 10 

percent of the cost paid by the state for 

such services, for individuals with 

incomes between 100 and 150 percent 

of the FPL. This option is described in 

the newly proposed § 447.52; cost 

sharing for drugs and emergency 

department services are separately 

addressed. At § 447.52(c), we clarify that 

states may target cost sharing for 

individuals with family income above 

100 percent of the FPL, meaning they 

may have differential cost sharing levels 

for different groups of individuals. We 

seek comment on whether the 

regulations should specifically address 

the types of targeting that would be 

allowed, keeping in mind that such 

targeting must be based on reasonable 

categories of beneficiaries, such as a 

specific income group or population. In 

addition, we seek comment on state 

methodologies or administrative 

processes that would make such 

targeting easier to implement. 

4. Cost Sharing for Drugs (§ 447.53) 

At § 447.53, we propose to establish a 

single provision specific to cost sharing 

for drugs so that the policies related to 

drugs can be clearly referenced. 

Building on current policy allowed by 

statute, proposed § 447.53 would 

specifically authorize states to establish 

differential cost sharing for preferred 

and non-preferred drugs, limited to the 

maximum amounts proposed at 

§ 447.53(b). This cost sharing flexibility 

applies to individuals at all income 

levels. 

Section 1916A(c) of the Act limits 

cost sharing for preferred drugs to 

nominal amounts (at all income levels). 

Section 1916A(c) also limits cost 

sharing for non-preferred drugs to 

nominal amounts, for individuals with 

family income at or below 150 percent 

of the FPL and individuals who are 

otherwise exempt from cost sharing. To 

provide additional flexibility to states, 

and to further encourage the use of 

preferred drugs, we are proposing to 

define nominal for this purpose so as to 

allow cost sharing of up to $8 for nonpreferred drugs for individuals with 

income equal to or less than 150 percent 

of the FPL or who are otherwise exempt 

from cost sharing. States will have the 

flexibility to apply differential cost 

sharing for preferred and non-preferred 

drugs in whatever manner they consider 

most effective. For example, a state may 

charge $2 for preferred and $6 for nonpreferred drugs or $0 for preferred and 

$8 for non-preferred drugs. 

For individuals with family income 

above 150 percent of the FPL, per 

section 1916A(c) of the Act, cost sharing 

for non-preferred drugs may not exceed 

20 percent of the cost the agency pays 

for the drug. 

At § 447.53(a), we clarify our existing 

policy that all drugs will be considered 

preferred drugs if so identified or if the 

agency does not differentiate between 

preferred and non-preferred drugs. 

5. Cost Sharing for Emergency 

Department Services (§ 447.54) 

At § 447.54, we propose a new 

regulatory provision specific to nonemergency services furnished in a 

hospital emergency department (ED). 

Sections 1916(a)(3) and 1916(b)(3) of the 

Act allow states to establish cost sharing 

for non-emergency use of the ED of up 

to twice the nominal amount for 

outpatient services with a waiver. In 

addition, section 1916A(e)(2)(A) of the 

Act allows states to establish targeted 

cost sharing for individuals with family 

income above 100 and at or below 150 

percent of the FPL in an amount not to 

exceed twice the nominal amount for 

such services. In order to make it easier 

for states to utilize existing flexibilities 

to reduce non-emergency use of the ED, 

at § 447.54(a) we propose to allow cost 

sharing of up to $8 for non-emergency 

use of the ED no waiver will be 

required. We seek comment on this 

approach, which can complement a 

range of other strategies available to 

states to reduce nonemergency use of 

the ED. For individuals with family 

income above 150 percent of the FPL, 

per section 1916A(e) of the Act, there is 

no limit on the cost sharing that may be 

imposed for non-emergency use of the 

ED. 

If an emergency condition does not 

exist, § 447.54(d) includes the 

requirements for hospital screening and 

referral currently codified at 

§ 447.80(b)(2), to ensure that 

beneficiaries have appropriate access to 

other sources of care, before cost sharing 

is imposed. Hospitals must assess the 

individual clinically, identify an 

accessible and available alternative 

provider with lesser cost sharing, and 

establish a referral to coordinate 

scheduling. Examples of accessible 

alternative providers are those that are 

located within close proximity, 

accessible via public transportation, 

open extended hours, and able to serve 

individuals with LEP and disabilities. 

(Note that for exempt populations, there 

must be access to an alternative 

provider with no cost sharing). For any 

individual who presents with an 

emergency medical condition, the 

hospital must provide stabilizing 

treatment per the Emergency Medical 

Treatment and Active Labor Act 

(EMTALA), as codified at § 489.24. An 

emergency medical condition is 

currently defined at § 438.114 as having 

‘‘acute symptoms of sufficient severity 

(including severe pain) that a prudent 

layperson, who possesses an average 

knowledge of health and medicine, 

could reasonably expect the absence of 

immediate medical attention’’ to 

seriously jeopardize or impair the 

individual’s health. The EMTALA 

screening requirements combined with 

the prudent layperson standard for an 

emergency medical condition make it 

difficult to determine a service as nonemergency just based on CPT code. 

Chest pains, for example, could easily 

be considered an emergency condition 

under the prudent layperson standard, 

though a medical screening may 

indicate that the individual is suffering 

from heartburn or anxiety, which may 

not otherwise be considered emergency 

medical conditions. While the 

applicable CPT code might indicate a 

non-emergency condition, such chest 

pains would meet the definition of 

emergency medical condition and 

therefore may not be assessed a 

copayment. States have flexibility to 

consider how best to address some of 

these logistical and clinical challenges 

that exist when applying cost sharing to 

non-emergency use of the ED. To better 

understand the approaches used by 

states, at proposed 447.52(f)(5), we 

would request that states describe the 

process by which non-emergency 


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services are identified, when submitting 

a state plan amendment to implement 

such cost sharing. As successful 

approaches are identified, CMS will 

make that information available to 

states. 

We seek comment on these standards 

and procedures, on ways to make this 

provision a viable option for states and 

hospitals, and in particular approaches 

to successfully distinguish between 

emergency and non-emergency services. 

5. Premiums (§ 447.55) 

At proposed § 447.55, we consolidate 

and simplify the requirements for 

premiums established under sections 

1916 and 1916A of the Act. Proposed 

§ 447.56(a) describes the option to 

impose premiums on individuals with 

family income above 150 percent of the 

FPL, as established under section 1916A 

of the Act, while paragraphs (a)(1) 

through (a)(5) describe the options to 

impose premiums for specific 

populations as established under 

section 1916 of the Act. Except for the 

minor revisions described below, we are 

not seeking to change current policy 

related to premiums. 

At § 447.56(a)(1), we propose to 

modify slightly the option under section 

1916 of the Act, which allows states to 

impose premiums on pregnant women 

described in 1902(l)(1)(A) of the Act. 

This option currently applies to 

individuals whose family income equals 

or exceeds 150 percent of the FPL and 

we propose to revise the option to apply 

only to those with family income that 

exceeds 150 percent of the FPL to align 

with other allowable premiums. In 

addition we are removing the reference 

to infants under age one described in 

1902(l)(1)(B) on whom the state may 

impose premiums under 1916 because 

they are included in the group of 

children who may be charged premiums 

under 1916A of the Act. In so doing, as 

with pregnant women, premiums would 

be allowed for infants with family 

income exceeding 150 percent of the 

FPL rather than those with income 

equal to or exceeding 150 percent of the 

FPL. In addition, with this change, 

consistent with current state practice, 

all premiums imposed on infants will be 

subject to the aggregate limit of 5 

percent of family income. We recognize 

that the statutory citations for the 

pregnant women who can be charged 

premiums do not line up with the 

streamlining and collapsing of eligibility 

groups in Medicaid eligibility final rule. 

We are exploring the options we have to 

cite to the new regulation rather than 

the statute. 

To provide clarity and ensure a 

comprehensive policy, at § 447.55 

paragraphs (a)(2) through (4) we add 

language from section 1916 describing 

the basis for charging premiums to 

working disabled individuals described 

at sections 1905(p)(3)(A)(i) and 

1902(a)(10)(A)(ii)(XVI) of the Act and 

disabled children provided medical 

assistance under section 

1902(a)(10)(A)(ii)(XIX) of the Act in 

accordance with the Family 

Opportunity Act. 

At § 447.55(a)(5), we propose to revise 

requirements related to premiums 

imposed on medically needy 

individuals whose income is under 150 

percent of the FPL. We removed the 

current income-related scale currently at 

§ 447.52(b) and instead would provide 

states with the flexibility to determine 

their own sliding scale for establishing 

premiums for the medically needy up to 

maximum of $20 instead of the $19 in 

current regulation. We also propose to 

remove the requirement that premiums 

must be based on gross income, since 

starting in 2014, all income for purposes 

of determining premiums will be based 

on modified adjusted gross income 

(MAGI). 

6. Limitations on Premiums and Cost 

Sharing (§ 447.56) 

At § 447.56, we propose one single 

section that describes the general 

premium and cost sharing limitations. 

The current regulations have 

duplicative provisions specific to 

sections 1916 and 1916A of the Act and 

we propose a single streamlined 

approach wherever the policies align. 

We do not believe that the proposed 

change would have a meaningful impact 

on current state programs. 

Sections 1916(a), (b), and (j), and 

1916A(b)(3) of the Act specify certain 

groups of individuals exempt from 

premiums and/or cost sharing, 

including certain children, pregnant 

women, American Indians and Alaska 

Natives (Indians), individuals residing 

in an institution, individuals receiving 

hospice care and women eligible 

through the Breast and Cervical Cancer 

Treatment and Prevention Program. 

Proposed 447.56(a) would align all of 

these statutory exemptions. 

At § 447.56(a)(1)(v), we propose to 

revise the current exemption at 

§ 447.53(b)(3) and § 447.70(a)(5) for 

individuals in an institution who are 

required to spend all but a minimal 

amount of their income for personal 

needs, to allow a state option to include 

individuals under this exemption who 

are receiving services in a home and 

community-based setting. Since these 

individuals are only allowed to keep a 

personal needs allowance, similar to 

those residing in an institution, we 

propose to allow states to exempt these 

individuals from cost sharing in the 

same manner as those residing in an 

institution in accordance with the 

comparability requirements under 

section 1902(a)(19) of the Act. 

At § 447.56(a)(1)(vii), we propose to 

clarify the exemption of Indians 

currently at § 447.53(b)(6) and 

§ 447.70(a)(10) from cost sharing to 

ensure that Indians are not charged cost 

sharing inappropriately. Section 1916(j) 

of the Act requires that no cost sharing 

‘‘shall be imposed against an Indian 

who is furnished an item or service 

directly by the Indian Health Service, an 

Indian Tribe, Tribal Organization, or 

Urban Indian Organization or through 

referral under contract health services.’’ 

Section 4 of the Indian Health Care 

Improvement Act (25 U.S.C. 1603), as 

amended by the Affordable Care Act, 

further clarified these requirements by 

defining contract health services as any 

health service that is ‘‘delivered based 

on a referral by, or at the expense of, an 

Indian Health Program.’’ Because no 

formal paper trail may occur for the 

Medicaid agency to establish that a 

service has been delivered based on a 

referral under contract health services, 

we propose a broad definition of the 

cost sharing exemption for Indians. We 

propose that those Indians who are 

currently receiving or have ever 

received an item or service furnished by 

the Indian Health Service, an Indian 

Tribe, Tribal Organization, or Urban 

Indian Organization (I/T/U) or through 

referral under contract health services 

are exempt from all cost sharing. With 

this clarification the Medicaid agency 

would not have to know if a particular 

service was provided based on contract 

health service referral and would ensure 

that Indians who should be exempt on 

such bases will not be inadvertently 

charged cost sharing. States could 

implement this exemption by using 

claims payment data to identify Indians 

who have accessed services from an I/ 

T/U, or as many states have done, by 

requesting that eligible Indians submit a 

letter, available through the Indian 

Health Service, designating them as 

Indians who have utilized such services 

and are, therefore, exempt from 

Medicaid cost sharing. We note that this 

provision would not impact contract 

health services eligibility or payment 

regulations. Authorization for payment 

by a contract health service program 

remains subject to all requirements of 42 

CFR part 136. 

We are considering requiring that 

states apply a periodic renewal process 

for exempting Indians from cost sharing, 

such that the exemption would not be 

indefinite, but would instead be limited 


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to a certain period of time following 

utilization of services at an I/T/U or 

under a contract health services referral. 

This would be consistent with a reading 

that the exemption applies for Indians 

who are currently receiving services 

through an I/T/U or contract health 

services referral, to eliminate any 

burden the absence of cost sharing 

would impose on those providers, who 

are not permitted to collect any payment 

from an eligible Indian. We seek 

comment on the feasibility of initiating 

a periodic renewal process for the 

Indian exemption, as well as an 

appropriate time frame for such 

renewals. 

At § 447.56(a)(1)(viii), we propose to 

extend the existing exemption for 

individuals needing treatment for breast 

or cervical cancer, currently applied 

only to alternative cost sharing under 

section 1916A of the Act, to all cost 

sharing, and to cite to § 435.213, as 

added in this proposed rule. With this 

modification, this exemption is 

extended to apply to men as well since 

they are encompassed under § 435.213. 

Consistent with § 435.116(d), which 

describes covered services for pregnant 

women as laid out in the Medicaid 

eligibility final rule (77 FR 17204), at 

§ 447.56(a)(2)(iv) we propose to revise 

the exemption for pregnancy-related 

services so that all services provided to 

pregnant women shall be considered 

pregnancy-related unless specifically 

identified in the state plan as not 

pregnancy-related. We are also 

codifying the requirement in the 

Affordable Care Act to exempt smoking 

cessation counseling and drugs for 

pregnant women from cost sharing. 

We recognize that the statutory 

citations for children who are exempt 

from premiums and cost sharing do not 

line up with the streamlining and 

collapsing of eligibility groups in 

Medicaid eligibility final rule. We are 

exploring the options we have to cite to 

the new regulation rather than the 

statute. 

At § 447.56(b), we propose to codify 

the existing statutory requirement to 

ensure comparability, such that states 

may not exempt additional populations 

from cost sharing, except in the case of 

targeted cost sharing. Any cost sharing 

included in the state plan would be 

applied equally to services provided 

under fee-for-service, managed care, or 

benchmark coverage. At proposed 

§ 447.56(c)(2), we move existing 

regulations at § 447.57 and § 447.82 

requiring the agency to reduce the 

payment it makes to providers by the 

amount of a beneficiary’s cost sharing 

obligation. 

At § 447.56(f) we update the 

requirements around aggregate limits for 

premiums and cost sharing to be based 

on the Medicaid household as defined 

in § 435.603(f) of the Medicaid 

eligibility final rule and revised in this 

proposed rule. Existing regulations at 

§§ 447.64(d)(2) and 447.68(d) provide 

that an agency cannot rely solely on 

families who are risk of reaching the 

aggregate limit to track their own 

premiums and cost sharing, we clarify 

that this means that the agency must 

have an automated system in place to do 

such tracking. At § 447.56(f)(6), we 

indicate that the agency may establish 

additional aggregate limits, including 

but not limited to a monthly limit on 

cost sharing charges for a particular 

service. This new paragraph replaces 

the paragraph related to cumulative 

maximums at § 447.54(d) of the current 

regulations. We seek comment on 

whether there are efficient alternatives 

to using an automated system to 

conduct this tracking. 

7. Beneficiary and Public Notice 

Requirements (§ 447.57) 

At § 447.57 we have included the 

existing requirements for notice 

regarding current premiums and cost 

sharing and changes to such premiums 

and cost sharing, as currently described 

at § 447.76. At proposed 447.57(b) we 

codify existing policy that requires that 

notice be provided in a manner ensuring 

that affected beneficiaries, providers, 

and the general public have access to 

the notice. Appropriate formats for 

providing notice might include, the 

agency Web site, newspapers with wide 

circulation, web and print media 

reaching racial, ethnic, and linguistic 

minorities, stakeholder meetings, and 

formal notice and comment in 

accordance with the state’s 

administrative procedures. With this 

proposed revision, we would no longer 

consider state legislation discussed at a 

public hearing or posted on a Web site 

to be sufficient notice that a beneficiary 

or provider would likely have been 

made aware of the premium or cost 

sharing changes. At proposed 

§ 447.57(c) we clarify that prior to 

submitting to CMS any state plan 

amendment that establishes or 

significantly modifies existing 

premiums or cost sharing, or changes 

the consequences for non-payment of 

cost sharing, the agency must provide 

the public with advance notice of the 

amendment and opportunity to 

comment. We are considering a policy 

that if cost sharing is substantially 

modified during the SPA approval 

process, the agency must provide 

additional public notice and seek 

comment on this approach. 

V. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

This proposed rule continues to 

implement key provisions of the 

Affordable Care Act including the 

appeals process for the Medicaid and 

Children’s Health Insurance Program 

(CHIP) applicants and beneficiaries; 

requirements for combined eligibility 

notices; and completion of the 

streamlining of eligibility for children, 

pregnant women, and adults that was 

initiated in the Medicaid eligibility final 

rule published on March 23, 2012. This 

rule also proposes to streamline the 

citizenship documentation requirement 

rules consistent with the statute and 

proposes a revision regarding Medicaid 

eligibility determinations made by 

Exchanges. The rule proposes to 

implement provisions of the Children’s 

Health Insurance Program 

Reauthorization Act of 2009 (CHIPRA), 

such as those related to deemed 

newborn eligibility, and modifies CHIP 

rules relating to substitution of coverage 

and premium lock-out periods, which 

are important to a coordinated system of 

coverage across programs. 

The policies proposed in this rule will 

result in a reduction in burden for 

individuals applying for and renewing 

coverage, as well as for states. The 

Medicaid program and CHIP will be 

made easier for states to administer and 

for individuals to navigate by 

streamlining Medicaid eligibility and 

simplifying Medicaid and CHIP 

eligibility rules for most individuals, 

Even though there are short-term 

burdens associated with the 

implementation of the proposed rule, 


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the Medicaid program and CHIP will be 

easier for states to administer over time 

due to the streamlined eligibility and 

coordinated efforts for Medicaid, CHIP, 

and the new affordable insurance 

exchanges. 

The proposed rule also continues to 

implement provisions related to the 

establishment of Exchanges. This 

proposed rule would: (1) Set forth 

standards for adjudicating appeals of 

individual eligibility determinations 

and exemptions from the individual 

responsibility requirements, as well as 

determinations of employer-sponsored 

coverage, and determinations of SHOP 

employer and employee eligibility for 

purposes of implementing section 

1411(f) of the Affordable Care Act, (2) 

set forth standards for adjudicating 

appeals of employer and employee 

eligibility to participate in the SHOP, (3) 

outline criteria related to the 

verification of enrollment in and 

eligibility for minimum essential 

coverage through an eligible employersponsored plan, and (4) further specify 

or amend standards related to other 

eligibility and enrollment provisions. 

The description of the burden estimates 

associated with these provisions is 

included in the information collection 

requirements outlined in section D. 

Section A outlines the information 

collection requirements in this proposed 

regulation that will be addressed 

through a separate notice and comment 

process under the Paperwork Reduction 

Act (PRA). Section B outlines the 

information collection requirements that 

involve Medicaid and CHIP eligibility 

and enrollment. We are soliciting public 

comment on each of these issues for the 

following sections of the proposed rule 

that contain information collection 

requirements (ICRs). We used data from 

the Bureau of Labor Statistics to derive 

average costs for all estimates of salary 

in establishing the information 

collection requirements. Salary 

estimates include the cost of fringe 

benefits, calculated at 35 percent of 

salary, which is based on the June 2012 

Employer Costs for Employee 

Compensation report by the U.S. Bureau 

of Labor Statistics. 

A. Medicaid and CHIP Information 

Collection Requirements (ICRs) To Be 

Addressed Through Separate Notices 

and Comment Process Under the 

Paperwork Reduction Act 

1. ICRs Regarding State Plan 

Amendments 

1a. (§§ 430.12, 431.10, 431.11, 

433.138, 433.145, 433.147, 433.148, 

435.110, 435.112, 435.115, 435.116, 

435.117, 435.139, 435.145, 435.150, 

435.170, 435.172, 435.201, 435.210, 

435.211, 435.213, 435.214, 435.215, 

435.220, 435.222, 435.226, 435.227, 

435.229, 435.301, 435.310, 435.406, 

435.407, 435.601, 435.602, 435.603, 

435.610, 435.831, 435.905, 435.910, 

435.917, 435.918, 435.926, 435.952, 

435.955, 435.956, 435.1100–1110, 

435.1200, 440.130, 440.210, 440.220, 

440.305, 440.315, 440.330, 440.335, 

440.345, 457.50, 447.52, 447.55, 447.56, 

457.320, 457.342, 457.348, 457.355, 

457.360, 457.455, 457.460, 457.465, 

457.805, 457.495, and 457.1120). 

These amendments to the Medicaid 

and CHIP state plans are necessary to 

reflect changes in statute and federal 

policy. We are aware of the need to 

estimate the PRA burden associated 

with the submission of state plan 

amendments related to the provisions 

described in the preceding sections of 

the preamble. The state plan 

amendments will be addressed as part 

of the electronic state plan being 

developed by CMS as part of the 

MACPro system. The MACPro system 

will be made available for public 

comment through a separate PRA 

process, along with the estimated 

burden. 

1b. (§§ 435.113, 435.114, 435.223, and 

435.510) 

We are proposing to eliminate the 

following provisions of existing 

regulation: §§ 435.113, 435.114, 

435.223, and 435.510. Because we are 

eliminating these regulations, states will 

not be required to submit state plan 

amendments related to them. Therefore, 

there is no burden associated with these 

provisions of the proposed rule. 

2. ICRs Regarding Authorized 

Representatives (§ 435.923, § 457.340), 

Verification Exception for Special 

Circumstances (§ 435.952, § 457.320) 

and Verification Requirements 

Regarding Citizenship and Immigration 

Status (§§ 435.3, 435.4, 435.406, 

435.407, 435.940, 435.952, 435.956, 

435.1008, 457.320, and 457.380) 

In this rulemaking, we propose to add 

a new § 435.923 establishing minimum 

requirements for the designation of 

authorized representatives. We are also 

applying these provisions to state CHIP 

agencies through the addition of a cross 

reference in § 457.340. At § 435.952 and 

§ 457.320 we are proposing to permit 

self-attestation on a case by case basis in 

special circumstances for individuals 

who do not have access to 

documentation (for example, victims of 

natural disasters). The provisions at 

§§ 435.3, 435.4, 435.406, 435.407, 

435.940, 435.952, 435.956, 435.1008, 

457.320, and 457.380 propose 

guidelines for verification of Medicaid 

and CHIP eligibility based on 

citizenship or immigration status. 

We are aware of the need to estimate 

the PRA burden associated with the 

collection of information related to 

authorizing an individual to act as a 

representative of an applicant, to permit 

self-attestation for individuals who do 

not have access to documentation, and 

the citizenship and immigration 

verification requirements. These 

requirements will be addressed as part 

of the single, streamlined application 

developed by the Secretary. The 

application will be made available for 

public comment through a separate PRA 

process, along with the estimated 

burden. 

B. ICRs Regarding Medicaid Eligibility 

and Enrollment 

1. ICRs Regarding Delegation of 

Eligibility Determinations and Appeals 

(§§ 431.10, 431.11, and 457.1120) 

According to §§ 431.10, 431.11, and 

457.1120 as proposed in this rule, a 

state may delegate authority to make 

eligibility determinations and to 

conduct fair hearings. States generally 

have written agreements with various 

entities for similar purposes. Under the 

proposed rule, agreements may need to 

be modified or new agreements 

established. However, states that use the 

same agency to administer more than 

one program (for example, Medicaid 

and the Exchange) will not need an 

agreement for the determination of 

eligibility by that agency. 

Delegation of eligibility 

determinations was approved under 

OMB control number 0938–1147. This 

rule is proposing minor changes in the 

existing requirement related to the type 

of agencies that can make Medicaid and 

CHIP eligibility determinations. These 

proposed amendments do not change 

the burden associated with the 

requirement and, therefore, are not 

subject to additional OMB review. 

Medicaid and CHIP agencies will need 

to establish new agreements in order to 

delegate authority to conduct eligibility 

appeals. The burden associated with the 

delegation of appeals is the time and 

effort necessary for the Medicaid and 

CHIP agencies to create and execute the 

agreements with the organization to 

which they are delegating authority. 

There are 53 Medicaid agencies (the 

50 states, the District of Columbia, 

Northern Mariana Islands, and 

American Samoa) and 43 CHIP agencies, 

for a total of 96 agencies. For the 

purpose of developing the cost burden, 

we estimate that half of these agencies 

will establish an agreement with an 


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organization to conduct fair hearings. 

We estimate a one-time burden of 50 

hours to develop an agreement that can 

be used with the organization. It will 

take an additional 10 hours for 

Medicaid and 10 hours for a separate 

CHIP agency to negotiate and execute 

the agreement with the organization for 

a total time burden of 2,880 hours across 

all agreements. For the purpose of the 

cost burden, we estimate it will take a 

health policy analyst 40 hours at $49.35 

an hour and a senior manager 10 hours 

at $79.08 an hour to complete the model 

agreement (for a total of $2,764.80) plus 

10 additional hours ($493.50) for a 

health policy analyst to execute a 

completed agreement with each 

organization. The estimated cost burden 

for each agreement is $3,258.30 for a 

total cost burden of $156,398.40. 

2. ICRs Regarding Fair Hearing 

Processes (§§ 431.205(e), 431.206(b)(4) 

and (c)(5), 431.210, 431.221(a), 

431.224(a), 431.232(b), and 431.240(c)) 

In §§ 431.205(e) and 431.206(c)(5), we 

propose to require that the hearing 

system and information must be 

accessible to persons who are limited 

English proficient and persons with 

disabilities. While states would be 

required to make the hearing system 

accessible, we believe the associated 

burden is exempt from the PRA in 

accordance with 5 CFR 1320.3(b)(2). We 

believe that the time, effort, and 

financial resources necessary to comply 

with this requirement would be 

incurred by persons during the normal 

course of their activities and should, 

therefore, be considered as a usual and 

customary business practice. 

In § 431.206(b)(4), states would be 

required to give individuals the choice 

of where to have their hearing held. 

There are 53 Medicaid agencies (the 50 

states, the District of Columbia, 

Northern Mariana Islands, and 

American Samoa) and 43 CHIP agencies 

for a total of 96 agencies that will be 

subject to this requirement. The burden 

associated with providing this choice is 

developing the process and workflow to 

enable the choice and sending the 

request for the fair hearing to the 

appropriate agency. We estimate it will 

take each agency an average of 70 hours 

to create the process and workflow 

required in providing the choice. For 

the purpose of the cost burden, we 

estimate it will take a health policy 

analyst 40 hours at $49.35 an hour, a 

senior manager 10 hours at $79.08 an 

hour, and a computer programmer 20 

hours at $52.50 to complete the process 

and workflow. The estimated cost 

burden for each agency is $3,814.80. 

The total estimated cost burden is 

$366,220.80. 

In §§ 431.210 and 431.232(b), we are 

clarifying the type of information that 

must be included in the fair hearing 

notices. While states will need to 

provide additional explanation of the 

reason for their action and the right and 

timeframe for appealing the decision, 

we believe the associated burden is 

exempt from the PRA in accordance 

with 5 CFR 1320.3(b)(2). We believe that 

the time, effort, and financial resources 

necessary to comply with this 

requirement would be incurred by 

persons during the normal course of 

their activities and should, therefore, be 

considered as a usual and customary 

business practice. 

In § 431.221(a), states would be 

required to establish procedures that 

permit an individual or an authorized 

representative to submit a hearing 

request by telephone, by mail, in 

person, or by the Internet. While states 

would be required to permit an 

individual to submit the request through 

these various means, we believe the 

associated burden is exempt from the 

PRA in accordance with 5 CFR 

1320.3(b)(2). We believe that the time, 

effort, and financial resources necessary 

to comply with this requirement would 

be incurred by persons during the 

normal course of their activities and 

should, therefore, be considered as a 

usual and customary business practice. 

In § 431.224(a), states would be 

required to establish and maintain an 

expedited review process for hearings 

for individuals for whom taking the 

time for a standard hearing could 

seriously jeopardize the individual’s life 

or health. While states would be 

required to have an expedited review 

process for hearings, we believe the 

associated burden is exempt from the 

PRA in accordance with 5 CFR 

1320.3(b)(2). We believe that the time, 

effort, and financial resources necessary 

to comply with this requirement would 

be incurred by persons during the 

normal course of their activities and 

should, therefore, be considered as a 

usual and customary business practice. 

In § 431.240(c), states would be 

required to ensure that a hearing office 

has access to the information necessary 

to issue a proper hearing decision, 

including access to the agency’s policies 

and regulation. While the agency would 

be required to make this information 

available, we believe the associated 

burden is exempt from the PRA in 

accordance with 5 CFR 1320.3(b)(2). We 

believe that the time, effort, and 

financial resources necessary to comply 

with this requirement would be 

incurred by persons during the normal 

course of their activities and should, 

therefore, be considered as a usual and 

customary business practice. 

3. ICRs Regarding Eligibility 

Determination Notices (§§ 435.917, 

435.918, 435.1200, 457.110, 457.340, 

457.348, and 457.350) 

In § 435.917 and § 457.340, the agency 

would be required to provide a timely 

combined notice to individuals 

regarding their eligibility determination. 

The notice is to include reasons for the 

action, the specific supporting action, 

and an explanation of hearing rights. We 

expect that the eligibility determination 

notice will be dynamic and include 

information tailored to all possible 

outcomes of an application or renewal. 

In § 435.918 and § 457.110, states must 

provide electronic notices to individuals 

when elected. 

The burden associated with the 

requirements to deliver notices is the 

time necessary for the state staff to 

understand the requirements related to 

notices; to develop the language for 

approval, denial, termination, 

suspension, and change of benefits 

notices; and to program the language in 

the Medicaid and CHIP notice systems 

so that the notice can be populated and 

generated based on the outcome of the 

eligibility determination. 

We estimate 53 state Medicaid 

agencies (the 50 states, the District of 

Columbia, Northern Mariana Islands, 

and American Samoa) and 43 CHIP 

agencies (in states that have a separate 

or combination CHIP), totaling 96 

agencies, will be subject to this 

requirement. We estimate that it will 

take each Medicaid and CHIP agency 

194 hours annually to develop, 

automate, and distribute the notice of 

eligibility determination. For the 

purpose of the cost burden, we estimate 

it will take a health policy analyst 138 

hours at $49.35 an hour, a senior 

manager 4 hours at $79.08, an attorney 

20 hours at $90.14, and a computer 

programmer 32 hours at $52.50 to 

complete the notices. The estimated cost 

burden for each agency is $10,609.42. 

The total estimated cost burden is 

$1,018,504.30, and the total annual hour 

burden is 18,624 hours. 

In §§ 435.1200, 457.348, and 457.350, 

we propose to permit state Medicaid 

and CHIP agencies to include the 

provision of combined notices or 

notices with coordinated content in the 

agreement established with the 

Exchange or other insurance 

affordability programs. These 

agreements were approved under OMB 

control number 098–1147. This rule is 

proposing only minor changes in the 

existing requirement related to the 


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agreements. These proposed 

amendments do not change the burden 

associated with the requirement and, 

therefore, are not subject to additional 

OMB review. 

4. ICRs Regarding Application Assistors 

(§§ 435.909 and 457.340) 

In § 435.909(a) and § 457.340, states 

would have the option to authorize 

certain staff and volunteers of 

organizations to act as certified 

application assistors. The burden 

associated with the requirements to 

assist individuals with the application 

process is the time and effort necessary 

for the state to create agreements with 

these organizations, to create a 

registration process for assistors, and to 

train staff on the eligibility and 

confidentiality rules and requirements 

and how to assist applicants with the 

completing the application. 

We estimate the 50 states, the District 

of Columbia, Northern Mariana Islands, 

and American Samoa will establish 

agreements with on average 20 

organizations in their state or territory 

for a total of 1,060 agreements related to 

application assistance. As part of this 

estimate, we assumed that state 

Medicaid and CHIP agencies will be 

party to the same agreements and, 

therefore, will not establish separate 

agreements. The first burden associated 

with this provision is the time and effort 

necessary for the state Medicaid and 

CHIP agencies to establish an 

agreement. 

We assume that each state will 

establish an agreement with the 

organization to fulfill the requirements 

of § 435.908 and § 457.340. To develop 

an agreement, we estimate 53 states 

Medicaid agencies (the 50 states, the 

District of Columbia, Northern Mariana 

Islands, and American Samoa) would be 

subject to this requirement. We estimate 

that it would take each state and 

territory 50 hours to develop a model 

agreement. For the purpose of the cost 

burden, we estimate it would take a 

health policy analyst 40 hours at $49.35 

an hour and a senior manager 10 hours 

at $79.08 to develop an agreement. The 

estimated cost burden would be 

$2,764.80 (per state) or $146,534.40 

(total) while the total annual hour 

burden would be 2,650 hours. 

To negotiate and complete the 

agreement, we estimate that each of the 

53 states/territories would execute 20 

agreements. For the purpose of the cost 

burden, we estimate it would take a 

health policy analyst 10 hours at $49.35 

an hour to execute each agreement. The 

estimated cost burden would be $9,870 

(per state) or $523,110 (total) while the 

total annual hour burden would be 

10,600 hours. 

To develop and execute the model 

agreements, the total cost would be 

$669,644.40 for 13,250 hours of labor. 

The next burden associated with this 

provision is the time and effort 

necessary for the states and territories to 

establish the registration process and 

workflow for the application assistors. 

We estimate that the 50 states, the 

District of Columbia, Northern Mariana 

Islands, and American Samoa) will be 

subject to this requirement. 

We estimate it will take each state or 

territory an average of 70 hours to create 

the registration process and workflow 

for the application assistors. For the 

purpose of the cost burden, we estimate 

it will take a health policy analyst 40 

hours, at $49.35 an hour, a senior 

manager 10 hours, at $79.08 an hour, 

and a computer programmer 20 hours at 

$52.50 to complete the registration 

process and workflow. The estimated 

cost burden for each state or territory is 

$3814.80. The total estimated cost 

burden is $202,184.40. 

The next burden associated with this 

provision is the time and effort 

necessary for the state Medicaid and 

CHIP agencies to provide training to the 

application assistors. We estimate 50 

states, the District of Columbia, 

Northern Mariana Islands, and 

American Samoa will be subject to this 

requirement. 

For the purpose of the cost burden, 

we estimate it will take a training 

specialist 40 hours at $26.64 an hour 

and a training and development 

manager 10 hours at $64.43 an hour to 

develop training materials for the 

application assistors, for a total time 

burden of 2,650 hours. The estimated 

cost burden for each state or territory is 

$1,709.90. The total estimated cost 

burden is $90,624.70. 

Lastly, we estimate that each state or 

territory will offer 50 hours of training 

sessions to train individuals to assist 

applicants with Medicaid and CHIP 

applications for a total time burden of 

2650 hours. For the purpose of the cost 

burden, we estimate it will take a 

training specialist 50 hours at $26.64 an 

hour to train the application assistors. 

The estimated cost burden for each 

agency is $1,332. The total estimated 

cost burden is $70,596. 

5. ICRs Regarding the Availability of 

Program Information for Individuals 

who are Limited English Proficient 

(§§ 431.205(e) and 435.905(b)) 

While states would be required to 

provide language services to individuals 

who are limited English proficient, we 

believe the associated burden is exempt 

from the PRA in accordance with 5 CFR 

1320.3(b)(2). We believe that the time, 

effort, and financial resources necessary 

to comply with this requirement would 

be incurred by persons during the 

normal course of their activities and 

should, therefore, be considered as a 

usual and customary business practice. 

6. ICRs Regarding Presumptive 

Eligibility (§§ 435.1101(b) and 457.355) 

In § 435.1101(b) and § 457.355 by 

reference to § 435.1101, states would be 

required to provide qualified entities 

with training in all applicable policies 

and procedures related to presumptive 

eligibility. The burden associated with 

this provision is the time and effort 

necessary for the states and territories to 

provide training to the application 

assistors. We estimate 50 states, the 

District of Columbia, Northern Mariana 

Islands, and American Samoa will be 

subject to this requirement. As part of 

this estimate, we assumed that state 

Medicaid agencies and CHIP agencies, 

where there are separate agencies, will 

develop and use the same training. 

For the purpose of the cost burden, 

we estimate it will take a training 

specialist 40 hours at $26.64 an hour 

and a training and development 

manager 10 hours at $64.43 an hour to 

develop training materials for the 

qualified entities, for a total time burden 

of 2,650 hours. The estimated cost 

burden for each state or territory is 

$1,709.90. The total estimated cost 

burden is $90,624.70. We estimate that 

each state or territory will offer 50 hours 

of training sessions to qualified entities, 

for a total time burden of 2,650 hours. 

For the purpose of the cost burden, we 

estimate it will take a training specialist 

50 hours at $26.64 an hour to train the 

application assistors. The estimated cost 

burden for each agency is $1,332. The 

total estimated cost burden is $70,596. 

7. ICRs Regarding Deemed Newborn 

Children (§§ 435.117(d) and 457.360(d)) 

In § 435.117(d) and § 457.360(d), 

states would be required issue separate 

Medicaid identification numbers to 

babies covered by Medicaid as ‘‘deemed 

newborns’’ if the mother for the date of 

the child’s birth was receiving Medicaid 

in another state, covered in the state’s 

separate CHIP, or covered for only 

emergency medical services. Also, the 

state must issue a separate Medicaid 

identification number to a deemed 

newborn prior to the effective date of 

any termination of the mother’s 

eligibility or prior to the date of the 

child’s first birthday, whichever is 

sooner. Under such circumstances, a 

separate Medicaid identification 

number must be assigned to the infant 


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so the state may reimburse providers for 

covered services, document the state’s 

expenditures, and request federal 

financial participation. 

While states are required to issue 

Medicaid identification numbers to 

these children, we believe the 

associated burden is exempt from the 

PRA in accordance with 5 CFR 

1320.3(b)(2). We believe that the time, 

effort, and financial resources necessary 

to comply with this requirement would 

be incurred by persons during the 

normal course of their activities and 

should, therefore, be considered as a 

usual and customary business practice. 

8. ICRs Regarding Adoption Assistance 

Agreements (§§ 435.145 and 435.227) 

At §§ 435.145 and 435.227, we are 

proposing to amend current regulations 

for these Medicaid eligibility groups for 

consistency with federal statutory 

requirements. Among the eligibility 

requirements and alternatives for these 

groups is that an adoption assistance 

agreement be in effect. As noted in 

section A, Medicaid state plan 

amendments for these and other 

eligibility groups will be addressed 

through a separate notice and comment 

process under PRA. This proposed rule 

is not making any revision to states’ 

adoption assistance agreements. These 

agreements are between state agencies 

and the adoptive parents and are 

specific to the rules and laws in place 

in each state. We do not govern these 

agreements; therefore, there is no 

burden associated with these provisions 

of the proposed rule. 

9. ICRs Regarding Enrollment 

Assistance and Information 

Requirements (§ 457.110) 

While states would be required to 

provide accurate and easily understood 

information and to provide assistance to 

help families make informed decisions 

about their health plans, professionals, 

and facilities, we believe the associated 

burden is exempt from the PRA in 

accordance with 5 CFR 1320.3(b)(2). We 

believe that the time, effort, and 

financial resources necessary to comply 

with this requirement would be 

incurred by persons during the normal 

course of their activities and should, 

therefore, be considered as a usual and 

customary business practice. 

10. ICRs Regarding Medicaid and CHIP 

Agency Responsibilities Related to 

Coordination Involving an Appeals 

Entity (§§ 435.1200(g) and 457.348(d)) 

In § 435.1200(g) and § 457.348(d), the 

state Medicaid and CHIP agencies 

would be required to establish a secure 

electronic interface to enable 

communications when an appeal is 

filed. Transmission of the electronic 

account would contain the outcome of 

the appeal among the data elements. 

The requirement for a secure electronic 

interface, creation of an electronic 

account and transmission of information 

in the account was addressed under 

OMB control number 0938–1147. We 

are only minimally changing this 

requirement to include information on 

eligibility appeals. The inclusion of this 

information does not change the burden 

estimate therefore this provision is not 

subject to further OMB review. 

11. ICRs Regarding Beneficiary and 

Public Notice Requirements (§ 447.57) 

In § 447.57(a), the agency would be 

required to make available a public 

schedule describing current premiums 

and cost sharing requirements 

containing the information in 

paragraphs (a)(1) through (6). In 

§ 447.57(b), the agency would be 

required to make the public schedule 

available to those identified in 

paragraphs (b)(1) through (4). 

Prior to submitting a SPA for 

Secretary approval to establish or 

modify existing premiums or cost 

sharing or change the consequences for 

non-payment, § 447.57(c), would require 

that the state provide the public with 

advance notice of the SPA (specifying 

the amount of premiums or cost sharing 

and who is subject to the charges); 

provide a reasonable opportunity to 

comment on SPAs that propose to 

substantially modify premiums and cost 

sharing; submit documentation to 

demonstrate that these requirements 

were met; and provide additional public 

notice if cost sharing is modified during 

the SPA approval process. 

In § 447.57(d), the information must 

be provided in a manner that ensures 

that affected beneficiaries and providers 

are likely to have access to the notice 

and be able to provide comments on 

proposed state plan amendments. 

The burden associated with this 

requirement is the time and effort it 

would take for a state to provide 

advance notice to the public and 

prepare and submit documentation with 

the state plan amendment. We estimate 

it would take 1 state or territory 

approximately 6 hours to meet this 

requirement; we believe 53 states will 

be affected by this requirement for an 

annual burden of 30 hours. 

C. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

It is important to note that these 

regulations involve several information 

collections that will occur through the 

single, streamlined application for 

enrollment in a QHP and for insurance 

affordability programs described in 45 

CFR 155.405. We have accounted for the 

burden associated with these collections 

in the Supporting Statement for Data 

Collection to Support Eligibility 

Determinations for Insurance 

Affordability Programs and Enrollment 

through Health Benefits Exchanges, 

Medicaid, and Children’s Health 

Insurance Program Agencies (CMS– 

10440). 

We would also like to highlight that 

this supporting statement includes 

several information collections from 

regulatory provisions finalized in the 

Exchange final rule. We have included 

these information collections in this 

PRA package to address PRA 

requirements related to those provisions 

as they were not included in the 

information collection section of the 

Exchange final rule. 

1. ICRs Regarding Appeals (§§ 155.505, 

155.510, 155.520, 155.530, 155.535, 

155.540, 155.545, 155.550, 155.555, 

155.740) 

The eligibility appeals provisions in 

subparts F and H include requirements 

for the collection of information that 

will support processing and 

adjudicating appeals for individuals, 

employers facing potential tax liability, 

and SHOP employers and employees. 

The information collection will be 

largely the same for each type of appeal 

and includes the appeal request, 

expedited appeal request, appeal 

withdrawal, request to vacate, request 

for additional information, hearing 

request form, special considerations 

form, and appointment of authorized 

representative. We anticipate most 

appellants will opt to accept and 

respond to these forms and notices 

electronically; however, appeals entities 

will be equipped to handle the sending 

and submission of paper forms and 

documents. Appellants providing 

information to the appeals entity will 

likely need to search their personal files 

at home or obtain documentation from 

employers or government entities to 

support their appeal. If the appellant is 

an employer, it is likely that the 

employer may rely on human resources 

personnel or an attorney to provide 

information during the appeal. Appeal 

entities will rely on office clerks and 

paralegals or legal assistants to process 

the information submitted. Finally, the 

use of many of these forms and notices 

is dependent on the trajectory of each 

appeal; therefore, not every form will be 

implicated in each appeal. 

The appeal request form will be 

available to each appellant type in hard 


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copy and electronically but appellants 

may also request an appeal 

telephonically. Regardless of the mode 

of transmission, some basic information 

will be required to initiate an appeal, 

including the identity of the appellant 

and the appellant’s contact information. 

Appellants are encouraged, but not 

required, to also submit information 

detailing why they are appealing and 

evidence to support their appeal. We 

anticipate that most appellants will 

choose to submit more than the baselevel of information. We estimate that 

most appellants will complete the form 

within one hour and that the appeals 

entity will require up to 1.5 hours to 

process the form, which includes 0.5 

hours for an office clerk, at an hourly 

cost of $19.97, to digitize and link the 

form to the appellant’s account, and one 

hour for a paralegal or legal assistant, at 

an hourly cost of $34.51, to review the 

information submitted, and notify the 

appropriate appeals workers of a new 

appeal request. Across all types of 

appeals, we estimate a total of 279,055 

appeals requests for each year, which 

will require 418,582 hours, at a total 

cost of $12,416,553. 

Appellants will receive an 

acknowledgement of his or her appeal 

request that includes the invitation to 

submit evidence to support the appeal 

in the form of the Request for 

Additional Information Form. 

Completing this form is optional for all 

appellants. However, we anticipate that 

many appellants will use the 

opportunity to send additional 

information to the appeals entity. Much 

like the appeal request, the appeals 

entity will be responsible for digitizing 

the submitted information, placing it in 

the proper account, and reviewing it. 

The burden on the appellant is 

dependent on how easily he or she can 

access information relevant eligibility. 

We estimate this may require up to two 

hours for the appellant. To process 

additional information submitted, we 

estimate that the appeals entity will 

require 0.5 hours for an office clerk, at 

an hourly cost of $19.97, to digitize and 

link the form to the appellant’s account, 

and 0.5 hours for a paralegal or legal 

assistant, at an hourly cost of $34.51, to 

review the information submitted, and 

notify the appropriate appeals workers 

of the updated information, for a total 

cost of about $27 per appellant. 

Other forms the appellant may 

encounter during the appeals process 

include the appeal withdrawal form, 

request to vacate a dismissal, special 

considerations form, hearing request 

form, and appointment of authorized 

representative form. Each of these 

include information collections that are 

initiated by the appellant when he or 

she, for example, wishes to withdraw an 

appeal or intends to have another 

person act on his or her behalf. In most 

cases, the information submitted for 

these actions will require little more 

than acknowledging the appellant’s 

intentions and including contact 

information. The Request to Vacate a 

Dismissal will entail slightly more effort 

because, to successfully vacate a 

dismissal, the appellant must show 

good cause. We anticipate that these 

forms may require as little as 15 minutes 

or up to 2 hours for the appellant to 

complete and approximately 30 minutes 

to 1.5 hours for the appeals entity to 

process for a cost of approximately $10– 

$45 per submission. 

The appeals process also includes 

several instances where notice of 

appeals actions must be sent to the 

Exchange, the SHOP, or Medicaid or 

CHIP agencies. For example, the appeals 

entity is required to notify the Exchange 

or the SHOP when an appeal request 

has been submitted and when an appeal 

decision has been issued. This notice 

will be sent via secure electronic 

interface. In addition, eligibility records 

and, in some instances, appeals records 

must be transmitted electronically to the 

appeals entity from the Exchange, the 

SHOP, or the Medicaid or CHIP agency. 

To accommodate these electronic 

notifications and transfers of records, 

we estimate the Exchange will need to 

include language in agreements with 

other agencies administering insurance 

affordability programs. We estimate that 

the creation of the necessary agreements 

will necessitate 35 hours from a health 

policy analyst at an hourly cost of 

$49.35, and 35 hours from an operations 

analyst at an hourly cost of $54.45 to 

develop the agreement; and 30 hours 

from an attorney at an hourly cost of 

$90.14 and five hours from a senior 

manager at an hourly cost of $79.14 to 

review the agreement. Accordingly, the 

total burden on the Exchange associated 

with the creation of the necessary 

agreements will be approximately 105 

hours and $6,733 per Exchange, for a 

total cost of $343,382 for 51 Exchanges. 

We also propose that appeals entities 

maintain appeals records and provide 

the appellant and the public access to 

those records, subject to applicable state 

and federal privacy and confidentiality 

laws. We estimate that an individual 

requesting access to appeal records may 

require up to 30 minutes to submit the 

request form. An employer submitting a 

similar request may require up to an 

hour to complete the form at a 

maximum cost of $62.65, which 

includes 0.5 hours of time from a 

human resources specialist at an hourly 

cost of $40.68 to complete the record 

request; and 0.25 hours of time from an 

attorney at an hourly cost of $90.14 and 

0.25 hours from a senior manager at an 

hourly cost of $79.08 to review the 

request before submission. In order to 

process record requests, we anticipate 

the appeals entity will require two 

hours for a total cost of $42.98 with an 

additional dollar for the cost of printing 

and mailing hard copy records. We 

estimate that the development of the 

records storage system will necessitate 

15 hours from a health policy analyst at 

an hourly cost of $49.35, and 20 hours 

from an operations analyst at an hourly 

cost of $54.45 to provide specifications 

for the records that need to be 

maintained; 20 hours from an attorney 

at an hourly cost of $90.14 and five 

hours from a senior manager at an 

hourly cost of $79.14 to provide 

oversight and supervision; and 120 

hours from a computer programmer at 

an hourly cost of $52.50 to conduct the 

necessary system development. 

Accordingly, the total burden on the 

Exchange associated with the 

development of the records storage 

system will be 159 labor hours with a 

cost of approximately $9,159 per 

Exchange and a total cost of $467,131 

for 51 Exchanges. 

Finally, the appeals process will 

require the sending of notices to the 

appellant and other parties throughout 

the process. Notices include notice of 

dismissal, notice of hearing, notice of 

denial of an expedited hearing request, 

and notice of appeals decision. We 

expect that the appeal decision notice 

will be dynamic and include 

information tailored to the appellant’s 

case. We estimate that the development 

of each of the necessary notices will 

necessitate 44 hours from a health 

policy analyst at an hourly cost of 

$49.35 to learn appeals rules and draft 

notice text; 20 hours from an attorney at 

an hourly cost of $90.14 and four hours 

from a senior manager at an hourly cost 

of $79.08 to review the notice; and 32 

hours from a computer programmer at 

an hourly cost of $52.50 to conduct the 

necessary development. In total, we 

estimate that the development of each 

notice specified as part of the appeals 

process will require 100 hours to 

complete in the first year, at a cost of 

$5,971 per Exchange, for a total of 

$304,497 for 51 Exchanges. 

2. ICRs Regarding Notices (§§ 155.302, 

155.310, 155.315, 155.320, 155.330, 

155.335, 155.345, 155.410, 155.715, 

155.722, 155.725, 155.1080) 

Several provisions in subparts D and 

E outline specific notices that the 

Exchange will send to individuals and 


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employers throughout the eligibility and 

enrollment process. The purpose of 

these notices is to alert the individuals 

and employers of actions taken by the 

Exchange. When possible, we anticipate 

that the Exchange will consolidate this 

notice when multiple members of a 

household are applying together and 

receive an eligibility determination at 

the same time. The notice may be in 

paper or electronic format but must be 

in writing and will be sent after an 

eligibility determination has been made 

by the Exchange. We anticipate that a 

large volume of enrollees will request 

electronic notification while others will 

opt to receive the notice by mail. As a 

result of certain enrollees opting to 

receiving the notice by mail in some 

instances, we estimated the associated 

mailing costs for the time and effort 

needed to mail notices in bulk to 

enrollees as appropriate. 

We expect that the electronic 

eligibility determination notice will be 

dynamic and include information 

tailored to all possible outcomes of an 

application throughout the eligibility 

determination process. To develop the 

paper and electronic notices, Exchange 

staff would need to learn eligibility 

rules and draft notice text for various 

decision points, follow up, referrals, and 

appeals procedures. A peer analyst, 

manager, and legal counsel would 

review the notice. The Exchange would 

then engage in review and editing to 

incorporate changes from the 

consultation and user testing including 

review to ensure compliance with plain 

writing, translation, and readability 

standards. The Exchange will also 

consult with the state Medicaid or CHIP 

agency in order to develop coordinated 

notices. Finally, a developer would 

program the template notice into the 

eligibility system so that the notice may 

be populated and generated in the 

correct format according to an 

individual’s preference to receive 

notices, via paper or electronically, as 

the applicant moves through the 

eligibility process. 

HHS is currently developing model 

eligibility determination notices and 

several other models for notices 

described in this subpart which will 

also decrease the burden on Exchanges 

to establish such notices. If a state opts 

to use the model notices provided by 

HHS, we estimate that the Exchange 

effort related to the development and 

implementation of the eligibility notice 

will necessitate 44 hours from a health 

policy analyst at an hourly cost of 

$49.35 to learn appeals rules and draft 

notice text; 20 hours from an attorney at 

an hourly cost of $90.14 and four hours 

from a senior manager at an hourly cost 

of $79.08 to review the notice; and 32 

hours from a computer programmer at 

an hourly cost of $52.50 to conduct the 

necessary development. In total, we 

estimate that this will take a total of 100 

hours for each Exchange, at a cost of 

approximately $5,971 per Exchange and 

a total cost of $304,497 for 51 

Exchanges. We expect that the burden 

on the Exchange to maintain this notice 

will be significantly lower than to 

develop it. 

Section 155.310(h) specifies that the 

Exchange will notify an enrollee’s 

employer that an employee has been 

determined eligible for advance 

payments of the premium tax credits 

and/or cost-sharing reductions. Upon 

making such an eligibility 

determination, the Exchange will send a 

notice to the employer with information 

identifying the employee, along with a 

notification that the employer may be 

liable for the payment under section 

4980H of the Code, and that the 

employer has a right to appeal this 

determination. Because this notice will 

be sent to an employer at the address as 

provided by an application filer on the 

application, we anticipate all of these 

notices will be sent by mail. As a result, 

we estimated the associated mailing 

costs for the time and effort needed to 

mail notices in bulk to employers. Like 

the eligibility notice, the employer 

notice above will be developed and 

programmed into the eligibility system. 

However, unlike the eligibility notice, 

we expect the information on the 

employer notice to be minimal in 

comparison to the eligibility notice and 

therefore the burden on the Exchange to 

develop the notice to be substantially 

less. Further, as with the individual 

eligibility notice, HHS will provide 

model notice text for Exchanges to use 

in developing this notice. 

3. ICRs Regarding Verification of 

Enrollment in an Eligible EmployerSponsored Plan and Eligibility for 

Qualifying Coverage in an Eligible 

Employer-Sponsored Plan (§ 155.320) 

Section 155.320(d) proposes the 

process for the verification of 

enrollment in an eligible employersponsored plan and eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan. Paragraph 

(d)(2) specifies that the Exchange will 

obtain relevant data from any electronic 

data source available to the Exchange 

which has been approved by HHS, as 

well as data from certain specified 

electronic data sources. This will 

involve the development and execution 

of data sharing agreements; however, 

this burden is already captured in the 

data sharing agreements described in 

§ 155.315. As these verification 

activities will all be electronic, we do 

not expect for there to be any additional 

burden than that which is required to 

design the overall eligibility and 

enrollment system. 

Paragraph (d)(3)(iii)(A) proposes that 

the Exchange provide notice to the 

applicant indicating that the Exchange 

will be contacting any employer 

identified on the application to verify 

whether the applicant is enrolled in an 

eligible employer-sponsored plan or is 

eligible for qualifying coverage in an 

eligible employer-sponsored plan for the 

benefit year for which coverage is 

requested. The burden associated with 

this notice is addressed in 155.310(g) as 

this will not be a separate notice, but 

incorporated into the eligibility 

determination notice described in the 

above paragraph. 

In paragraph (d)(3)(iii)(D), we propose 

that the Exchange make reasonable 

attempts to contact any employer to 

which the applicant attested 

employment to verify whether the 

applicant is enrolled in an eligible 

employer-sponsored plan or is eligible 

for qualifying coverage in an eligible 

employer-sponsored plan for the benefit 

year for which coverage is requested. It 

is difficult to estimate the burden 

associated with this information 

collection as the calculation involves 

identifying the number of individuals 

for whom employer-sponsored coverage 

information will be unavailable. As 

such, below, we estimate the time and 

cost associated with the Exchange 

making a reasonable attempt to contact 

one employer. We estimate the time 

associated with this information 

collection to be a total of 2.2 hours per 

employer at a total cost of $34. 

Section 155.320(d)(4) proposes that 

Exchange may satisfy the provisions in 

this paragraph by relying on a 

verification process performed by HHS. 

The burden associated with this 

provision is the time and effort 

necessary for the Exchange to establish 

or modify an agreement for eligibility 

determinations and coordination of 

eligibility functions. The burden 

associated with this provision is 

included in § 155.345. 

4. ICRs Regarding Application 

Counselors and Authorized 

Representatives (§ 155.225 and 

§ 155.227) 

Section 155.225 of the regulation 

provides the standards on which an 

Exchange will certify application 

counselors to facilitate enrollment in the 

Exchange. Section 155.225(b) outlines 

the standards for certification of 

individuals seeking to become 


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application counselors. Section 155.227 

of the regulation gives an individual or 

employee the ability to designate an 

authorized representative to act on the 

individual or employee’s behalf. Section 

155.227(e) outlines the standards for 

certification if the authorized 

representative is acting as either a staff 

member or volunteer of an organization. 

The burden associated with these 

provisions is the time and effort 

necessary for the Exchange to develop 

and execute agreements with applicable 

application counselors. For each 

provision we estimate that it will take 

105 hours per Exchange to meet these 

reporting requirements. This includes a 

mid-level health policy analyst drafting 

the agreement with managerial oversight 

and comprehensive review of the 

agreement. The estimated cost for each 

Exchange is $6,733 and a total cost of 

$343,383 for 51 Exchanges. 

5. ICRs Regarding Electronic 

Transmissions (§§ 155.310, 155.315, 

155.320, 155.330, 155.340, 155.705) 

Sections 155.310, 155.315, 155.320, 

155.330, 155.340, and 155.705 involve 

the electronic transmission of data in 

order to determine eligibility for 

enrollment in a QHP and for insurance 

affordability programs. Section 

155.310(d)(3) specifies that the 

Exchange must notify the state Medicaid 

or CHIP agency and transmit all 

information from the records of the 

Exchange to the Medicaid or CHIP 

agency to ensure that the Medicaid or 

CHIP agency can provide the applicant 

with coverage promptly and without 

undue delay. This applicant information 

will be transmitted electronically from 

the Exchange to the agency 

administering Medicaid or CHIP upon 

receiving an indication that the 

Exchange has determined an applicant 

eligible for such program. The purpose 

of this data transmission is to notify the 

agency administering Medicaid or CHIP 

that an individual is newly eligible and 

thus the agency should facilitate 

enrollment in a plan or delivery system. 

Data will be transmitted through a 

secure electronic interface. 

Sections 155.315 and 155.320 include 

transactions necessary to verify 

applicant information. We expect there 

to be no transactional burden associated 

with the electronic transactions needed 

to implement § 155.315 and § 155.320. 

As these transmission functions will all 

be electronic, we do not expect for there 

to be any additional burden than that 

which is required to design the overall 

eligibility and enrollment system. 

In section 155.340, the Exchange must 

provide the relevant information, such 

as the dollar amount of the advance 

payment and the cost-sharing 

reductions eligibility category, to enable 

advance payments of the premium tax 

credit and cost-sharing reductions, 

reconciliation of the advance payments 

of the premium tax credit, and employer 

responsibility. As we hope that these 

transmissions of information will all be 

electronic, we do not expect for there to 

be any additional burden than that 

which is required to design the overall 

eligibility and enrollment system. 

6. ICRs Regarding Reporting Changes 

(§§ 155.315, 155. 330, 155.335) 

Section 155.315(f) outlines the 

process for resolving inconsistencies 

identified through the verification 

process. In § 155.330(c)(1), we state that 

the Exchange will verify any 

information reported by an enrollee in 

accordance with the processes specified 

in §§ 155.315 and 155.320 prior to using 

such information in an eligibility 

redetermination. Section 155.335(e) 

provides that the Exchange will require 

a qualified individual to report any 

changes with respect to the information 

listed in the notice described in 

paragraph (c) of this section within 30 

days from the date of the notice. It is not 

possible at this time to provide 

estimates for the number of applicants 

for whom a reported change will 

necessitate the adjudication of 

documentation, but we anticipate that 

this number will decrease as applicants 

become more familiar with the 

eligibility process and as more data 

become available. As such, for now, we 

note that the burden associated with 

this provision is one hour for an 

individual to collect and submit 

documentation, and 12 minutes for 

eligibility support staff to review the 

documentation. 

7. ICRs Regarding Enrollment and 

Termination (§§ 155.400, 155.405, 

155.430) 

In Part 155, subpart E of the Exchange 

final rule, we describe the requirements 

for Exchanges in connection with 

enrollment and disenrollment of 

qualified individuals through the 

Exchange. These information collections 

are associated with sending eligibility 

and enrollment information to QHP 

issuers and to HHS, maintaining records 

of all enrollments in QHPs through the 

Exchange, reconciling enrollment 

information with QHP issuers and HHS, 

and retaining and tracking coverage 

termination information. The burden 

estimates associated with these 

provisions include the time and cost to 

meet these record requirements. We 

estimate that it will take 142 hours for 

an Exchange to meet these 

recordkeeping requirements for a total 

of 7,242 hours. 

In the case of the requirement related 

to termination standards, the burden 

includes estimates related to the 

maintenance and transmission of 

coverage termination information, as 

well as the time and effort needed to 

develop the system to collect and store 

the information. We estimate that it will 

take approximately 70 hours annually 

for the time and effort to meet this 

requirement for a total of 3,570 hours. 

8. ICRs Regarding Agreements (§§ 155. 

302, 155.225, 155.227, 155.345, 155.510) 

These provisions propose that 

Exchanges and appeals entities will 

enter into written agreements with 

agencies administering other insurance 

affordability programs. These 

agreements are necessary to minimize 

burden on individuals, ensure prompt 

determinations of eligibility and 

enrollment in the appropriate program 

without undue delay, prompt issuance 

of appeal decisions, and to provide 

standards for transferring an application 

from an insurance affordability program 

to the Exchange. Agencies will also 

develop agreements to share data 

between insurance affordability 

programs. The specific number of 

agreements needed may vary depending 

on how states choose to divide 

responsibilities regarding eligibility 

determinations. 

The burden associated with this 

provision is the time and effort 

necessary for the Exchange to establish 

or modify an agreement for eligibility 

determinations and coordination of 

eligibility and enrollment functions. If 

an Exchange chooses to draft separate 

agreements for each insurance 

affordability program or a subset of 

insurance affordability programs, then 

the estimate would likely increase. We 

estimate it will take each Exchange an 

average of 105 hours to create a new 

agreement, although we assume that 

such agreements will be largely 

standardized across states, and that HHS 

will provide initial drafts. This includes 

a mid-level health policy analyst and an 

operations analyst reviewing the 

agreement with managerial oversight 

and comprehensive review of the 

agreement an operations analyst. We 

estimate a cost burden of $6,733 per 

Exchange. 

9. ICRs Regarding Notices to QHP 

Issuers (§§ 156.260, 156.265, 156.270, 

156.290) 

First, section 156.260(b) provides that 

QHP issuers will notify a qualified 

individual of his or her effective date of 

coverage, in accordance with the 


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effective dates of coverage established 

by the Exchange in accordance with 

§ 155.410(c) and (f). Second, under 

§ 156.270(b), QHP issuers will send a 

notice of termination of coverage to an 

enrollee if the enrollee’s coverage in the 

QHP is being terminated for any reason. 

Third, section 156.270(f) provides that 

QHP issuers will provide enrollees with 

a notice about the grace period for nonpayment of premiums. QHP issuers will 

send this notice to enrollees who are 

delinquent on premium payments. 

Fourth, section 156.265(e) provides that 

QHP issuers will provide new enrollees 

with an enrollment information 

package, which we anticipate that 

issuers may combine with the 

notification of coverage effective date 

described in § 156.260(b). Lastly, under 

§ 156.290(b), QHP issuers will provide a 

notice to enrollees if the issuer elects 

not to seek recertification of a QHP. 

We anticipate that some of the above 

QHP issuer required notices are similar 

in nature to the notices that issuers 

currently send to enrollees. For 

example, it is standard practice for 

issuers to provide new enrollees with 

information about their enrollment in a 

plan, their effective date of coverage, 

and if and when their coverage is 

terminating. Accordingly, we anticipate 

that QHP issuers will review, update, 

and revise notice templates that they 

utilize currently as they work to address 

the notice requirements described below 

and to ensure that the notices include 

the appropriate information. Similar to 

notices that will be issued by the 

Exchange, we expect that for QHPissued notices, an analyst will develop 

text, and a peer analyst, manager, and 

legal counsel for the issuer will review 

the notices, including a review to ensure 

compliance with plain writing, language 

access, and readability standards as 

required under § 156.250(c). Finally, a 

developer will need to incorporate 

programming changes into the issuer’s 

noticing system to account for the 

changes and updates that will be 

necessary to ensure that the QHP issuer 

is in compliance with the notice 

standards set forth in this rule and to 

ensure the notice can be populated and 

generated according to an individual’s 

preference to receive notices. We 

estimate that the burden related to the 

development and implementation of 

this notice will necessitate 44 hours 

from a health policy analyst at an hourly 

cost of $49.35 to learn appeals rules and 

draft notice text; 20 hours from an 

attorney at an hourly cost of $90.14 and 

four hours from a senior manager at an 

hourly cost of $79.08 to review the 

notice; and 32 hours from a computer 

programmer at an hourly cost of $52.50 

to conduct the necessary development. 

In total, we estimate that this will take 

a total of 100 hours for each QHP issuer, 

at a cost of approximately $5,971 per 

issuer. We expect that the burden on 

QHP issuers to maintain this notice will 

be significantly lower than to develop it. 

However, we believe that the burden 

estimate described under § 155.310(g) 

likely represents an upper bound 

estimate of the burden on issuers to 

develop each of these notices as in some 

cases the notice described under 

§ 155.310(g) will be somewhat more 

dynamic in order to address the 

additional information we expect to be 

included in that notice. 

Since the above estimate applies to 

one notice, and we described five 

notices under part 156, the total burden 

estimate is $40,710. Due to uncertainty 

regarding the number of individuals 

who will choose to receive paper 

notices, as well as some uncertainty 

regarding the frequency of 

circumstances that will trigger notices 

in accordance with this part, we have 

only included an estimate of the 

printing and mailing costs for a QHP 

issuer to send one notice to a qualified 

individual or enrollee. 

We have submitted a copy of this 

proposed rule to the OMB for its review 

of the rule’s information collection and 

recordkeeping requirements. These 

requirements are not effective until they 

have been approved by the OMB. 

10. ICRs Regarding Notices and ThirdParty Disclosures in the SHOP 

(§§ 157.205(e), 157.205(f)) 

45 CFR part 157 includes several 

instances in which qualified employers 

participating in the SHOP Exchange will 

need to provide information to 

employees or to the SHOP Exchange. 

We include the data elements for these 

notifications in appendix A of this PRA 

package. For the individual market 

Exchange, we anticipate that a large 

share of enrollees will elect to receive 

electronic notices while the rest will 

receive notices by mail. We do not make 

this assumption for notices described 

here as we expect that qualified 

employers will provide notices to 

employees in whatever format the 

qualified employer usually provides 

notices to employees; in paper, 

electronically, or in a combination of 

both formats. We estimate that the 

associated printing costs for paper 

notices will be approximately $0.10 per 

notice. We do not take mailing costs 

into consideration for notices provided 

by qualified employers, as we expect 

that if qualified employers provide 

notices in paper format, the employer 

may provide the employee with the 

notice in person, as opposed to mailing 

the notice. We do not have a reasonable 

way to estimate total printing costs for 

notices provided by qualified employers 

in the SHOP Exchange due to 

uncertainty regarding the number of 

employees who will choose to receive 

paper notices, as well as some 

uncertainty regarding the frequency of 

circumstances that will trigger notices 

in accordance with this part. 

First, § 157.205(e) specifies that a 

qualified employer provide an employee 

with information about the enrollment 

process. A qualified employer will 

inform each employee that he or she has 

an offer of coverage through the SHOP 

Exchange, and instructions for how the 

employee can apply for and enroll in 

coverage. We anticipate that the 

qualified employer will also provide 

information about the acceptable 

formats in which an employee may 

submit an application; online, on paper, 

or by phone, as described under 

§ 157.205(c). If the employee being 

offered coverage was hired outside an 

initial or annual enrollment period, the 

notice will also inform the employee if 

he or she is qualified for a special 

enrollment period. Second, in 

§ 157.205(f) we provide that a qualified 

employer will notify the SHOP 

Exchange regarding an employee’s 

change in eligibility for enrollment in a 

QHP through the SHOP Exchange, 

including when a dependent or 

employee is newly eligible, or is no 

longer eligible. 

We expect that the information that 

qualified employers will provide to 

employees and the SHOP Exchange, as 

described above, will be somewhat 

standardized. Additionally, we 

anticipate that qualified employers may 

be more likely to manually develop the 

notices described in this part, as 

compared to the other notices described 

in part 155 and 156 which we anticipate 

are more likely to be automatically 

generated. We expect that in order for a 

qualified employer to establish a notice, 

the qualified employer will need 20 

hours from a human resources specialist 

at an hourly cost of $40.68 to develop 

the text; and four hours from a human 

resources manager at an hourly cost of 

$75.01 and ten hours from an attorney 

at an hourly cost of $90.14 to review the 

notices. We do not anticipate that a 

developer will be needed to develop the 

notices described in this part since we 

expect that in most cases, these notices 

will be manually generated on demand. 

Accordingly, we expect that the burden 

hours for developing each of the notices 

will be approximately 34 hours, for a 

total of 68 hours per qualified employer, 


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at a total cost of $4,030. We expect that 

the burden on the qualified employer to 

maintain the notices will be 

significantly lower than to develop the 

notices. 

D. Summary of Annual Burden 

Estimates for Proposed Requirements 


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TABLE 1—PROPOSED

ANNUAL

RECORDKEEPING AND

REPORTING

REQUIREMENTS

Regulation section(s) OMB & CMS ID Nos. Respondents Responses (total) Burden per response (hours) Total annual burden (hours) Labor cost of reporting ($) Total cost ($) 

42 CFR 431.10, 431.11, and 457.1120 ............ OCN 0938–New; CMS–10456 .. 48 48 60 2,880 3,258 (per respondent) 156,398 § 431.206(b)(4) .................................................. OCN 0938–New; CMS–10456 .. 96 96 70 6,720 3,815 (per respondent) 366,221 §§ 435.917, 435.918, 457.110, and 457.340 .... OCN 0938–New; CMS–10456 .. 96 96 194 18,624 10,609 (per respondent) 1,018,504 §§ 435.923 and 457.340 (develop and execute 

agreements).

OCN 0938–New; CMS–10456 .. 53 1060 12.5 13,250 12,635 (per respondent) 669,644 

§§ 435.923 and 457.340 (create registration 

process and work flow).

OCN 0938–New; CMS–10456 .. 53 53 70 3,710 3,815 (per respondent) 202,184 

§§ 435.923 and 457.340 (develop training materials). OCN 0938–New; CMS–10456 .. 53 53 50 2,650 1,710 (per respondent) 90,625 §§ 435.923 and 457.340 (train application 

assistors).

OCN 0938–New; CMS–10456 .. 53 53 50 2,650 1,332 (per respondent) 70,596 

§§ 435.1101(b) and 457.355 ............................. OCN 0938–New; CMS–10456 .. 53 53 50 2,650 1,710 (per respondent) 90,625 447.57 ................................................................ 0938–New; CMS–10456 ........... 53 53 6 318 210 (per respondent) 11,130 §§ 155.225 and 155.227 .................................... OCN 0938–New; CMS–10400 .. 51 51 105 5,355 6,733 (per respondent) 343,382 §§ 155.302, 155.225, 155.227, 155.345, 

155.510.

OCN 0938–New; CMS–10400 .. 51 51 105 5,355 6,733 (per respondent) 343,382 

§§ 155.302, 155.310, 155.315, 155.320, 

155.330, 155.335, 155.345, 155.410, 155.715, 155.722, 155.725, and 155.1080.

OCN 0938–New; CMS–10400 .. 51 51 100 5,100 5,971 (per respondent) 304,497 

§§ 155.315, 155. 330, 155.335 .......................... OCN 0938–New; CMS–10400 .. 51 51 .2 .................... 29 (for one respondent) 5.73 § 155.320 ........................................................... OCN 0938–New; CMS–10400 .. 1 .................... 2.2 .................... 34 (for one respondent) ....................§§ 155.400, 405, and 430 .................................. OCN 0938–New; CMS–10400 .. 51 51 142 7242 7,254 (per respondent) 369,958§§ 155.505, 155.510, 155.520, 155.530, 

155.535, 155.540, 155.545, 155.550, 155.555, 155.740 (Processing Appeal Request Forms).

OCN 0938–New; CMS–10400 .. 51 279,055 1.5 418,582 243,461 (per respondent) 12,416,553 

§§ 155.505, 155.510, 155.520, 155.530, 

155.535, 155.540, 155.545, 155.550, 155.555, 155.740 (Processing Request for Additional Information Forms).

OCN 0938–New; CMS–10400 .. 51 .................... 1 .................... 27 (per appellant) ....................

§§ 155.505, 155.510, 155.520, 155.530, 

155.535, 155.540, 155.545, 155.550, 155.555, 155.740 (Processing Other Appeals-Related Forms).

OCN 0938–New; CMS–10400 .. 51 .................... 0.5–1.5 .................... 10–45 (per appellant) ....................

§§ 155.505, 155.510, 155.520, 155.530, 

155.535, 155.540, 155.545, 155.550, 155.555, 155.740 (Creating Agreements (Medicaid, CHIP) for Appeals).

OCN 0938–New; CMS–10400 .. 51 51 105 5,355 6,733 (per respondent) 343,382 

§§ 155.505, 155.510, 155.520, 155.530, 

155.535, 155.540, 155.545, 155.550, 155.555, 155.740 (Developing Records Storage System for Appeals).

OCN 0938–New; CMS–10400 .. 51 51 159 8,109 9,159 (per respondent) 467,131 

§§ 155.505, 155.510, 155.520, 155.530, 

155.535, 155.540, 155.545, 155.550, 155.555, 155.740 (Developing Appeals-Related Notices).

OCN 0938–New; CMS–10400 .. 51 51 100 5,100 5,971 (per respondent) 304,497 

§§ 156.260, 156.265, 156.270, and 156.290 .... OCN 0938–New; CMS–10400 .. 51 51 100 5,100 5,971 (per respondent) 304,497 § 157.205(e) and (f) ........................................... OCN 0938–New; CMS–10400 .. ........................ .................... 68 .................... 4,030 (per respondent) ....................

Total ............................................................ .................................................... ........................ .................... .................... 518,432 .............................................. 17,862,082 


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E. Submission of PRA-Related 

Comments 

We have submitted a copy of this 

proposed rule to OMB for its review of 

the rule’s information collection and 

recordkeeping requirements. These 

requirements are not effective until they 

have been approved by the OMB. 

To obtain copies of the supporting 

statement and any related forms for the 

proposed paperwork collections 

referenced above, access the CMS Web 

site at http://www.cms.gov/Regulationsand-Guidance/Legislation/ 

PaperworkReductionActof1995/PRAListing.html or call the Reports 

Clearance Office at 410–786–1326. 

We invite public comments on these 

potential information collection 

requirements. If you comment on these 

information collection and 

recordkeeping requirements, please do 

either of the following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Attention: CMS Desk Officer, 

(CMS–2334–P) Fax: (202) 395–6974; or 

Email: OIRA_submission@omb.eop.gov. 

PRA-specific comments must be 

received by March 15, 2013. 

VI. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the ‘‘DATES’’ section 

of this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

VII. Regulatory Impact Analysis 

A. Overall Impact 

We have examined the impact of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993) and 

Executive Order 13563 on Improving 

Regulation and Regulatory Review 

(January 18, 2011). 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). A regulatory impact analysis 

(RIA) must be prepared for rules with 

economically significant effects ($100 

million or more in any 1 year). The 

Office of Management and Budget has 

determined that this rulemaking is 

‘‘economically significant’’ within the 

meaning of section 3(f)(1) of Executive 

Order 12866, because it is likely to have 

an annual effect of $100 million in any 

one year. Accordingly, we have 

prepared a Regulatory Impact Analysis 

that presents the costs and benefits of 

this rulemaking. The Department invites 

comments on this assessment and its 

conclusions. 

In the April 30, 2010, final rule on 

State Flexibility for Medicaid Benefit 

Packages, the assumptions utilized in 

modeling the estimated economic 

impact of the associated provisions took 

into perspective the costs of the benefit 

package for the new adult group. 

Coverage of these benefits was already 

accounted for in the April 30, 2010, 

final rule, and therefore, does not need 

to be repeated here. A central aim of 

Title I of the Affordable Care Act is to 

expand access to health insurance 

coverage through the establishment of 

Exchanges. The number of uninsured 

Americans is rising due to lack 

affordable insurance, barriers to 

insurance for people with pre-existing 

conditions, and high prices due to 

limited competition and market failures. 

Millions of people without health 

insurance use health care services for 

which they do not pay, shifting the 

uncompensated cost of their care to 

health care providers. Providers pass 

much of this cost to insurance 

companies, resulting in higher 

premiums that make insurance 

unaffordable to even more people. The 

Affordable Care Act includes a number 

of policies to address these problems, 

including the creation of Affordable 

Insurance Exchanges. 

Beginning in 2014, individuals and 

small businesses will be able to 

purchase private health insurance— 

known as qualified health plans— 

through competitive marketplaces 

called Affordable Insurance Exchanges, 

or ‘‘Exchanges.’’ This proposed rule 

would: (1) Set forth standards for 

adjudicating appeals of eligibility 

determinations, including eligibility for 

enrollment in a qualified health plan 

through the Exchange and insurance 

affordability programs, certificates of 

exemption from the shared 

responsibility payment, and SHOP 

eligibility, for purposes of implementing 

section 1411(f) of the Affordable Care 

Act; (2) outline criteria related to the 

verification of enrollment in an eligible 

employer-sponsored plan and eligibility 

for qualifying coverage in an eligible 

employer-sponsored plan; and (3) 

further specify or amend other 

eligibility and enrollment provisions to 

provide detail necessary for state 

implementation. This rule continues to 

afford states substantial discretion in the 

design and operation of an Exchange, 

with greater standardization provided 

where directed by the statute or where 

there are compelling practical, 

efficiency or consumer protection 

reasons. 

B. Estimated Impact of the Medicaid 

and CHIP Eligibility Provisions 

The RIA published with the March 

2012 Medicaid eligibility final rule 

detailed the impact of the Medicaid 

eligibility changes related to 

implementation of the Affordable Care 

Act. The majority of provisions 

included in this proposed rule were 

described in that detailed RIA. 

1. Anticipated Effects on Medicaid 

Enrollment 

The Affordable Care Act’s anticipated 

effects on Medicaid enrollment were 

described in the March 2012 RIA, with 

the exception of the new eligibility 

group for former foster care children. 

The former foster care group was not 

covered in the March 2012 rule and 

therefore was not included in the RIA 

for that rule. Estimates for this new 

group are provided below. We note that 

the estimates included in the March 

2012 RIA, and those for the former 

foster care group, reference the 

Medicaid baseline for the FY 2013 

President’s Budget. 

As described in Table 2, the CMS 

Office of the Actuary (OACT) estimates 

that by 2017, an additional 74,000 

individuals will be enrolled in Medicaid 

under the new eligibility group for 

former foster care children. 


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4Amy Finkelstein, et al, ‘‘The Oregon Health 

Insurance Experiment: Evidence from the First 

Year,’’ National Bureau of Economic Research 

Working Paper No. 17190, July 2011. 

5 Institute of Medicine, Care without coverage: too 

little, too late (National Academies Press, 2002). 6E.A. Anum, et al, ‘‘Medicaid and Preterm Birth 

and Low Birth Weight: The Last Two Decades’’ 

Journal of Women’s Health Vol. 19 (November 

2010). 7S.K. Long, et al., ‘‘How well does Medicaid work 

in improving access to care?’’ HSR: Health Services 

Research 40:1 (February 2005). 8Henry J. Kaiser Family Foundation, ‘‘Children’s 

Health—Why Health Insurance Matters.’’ 

Washington, DC: KFF, 2002. 

9C. Keane, et al., ‘‘The impact of Children’s 

Health Insurance Program by age,’’ Pediatrics 104:5 

(1999). 10 D.U. Himmelstein, et al., ‘‘Medical bankruptcy 

in the United States, 2007: Results of a National 

Study,’’ The American Journal of Medicine 122 no. 

8, (2009). 

11ASPE. The Value of Health Insurance: Few of 

the Uninsured Have Adequate Resources to Pay 

Potential Hospital Bills. (2011). 

12Cook, K. et al., ‘‘Does major illness cause 

financial catastrophe?,’’ Health Services Research 

45, no. 2 (2010). 

TABLE 2—ESTIMATED EFFECTS OF THIS PROPOSED RULE ON MEDICAID ENROLLMENT, 2013–2017 

[In thousands] 

2013 2014 2015 2016 2017 

Enrollment ............................................................................ 0 55 72 73 74 

Source: CMS Office of the Actuary. 

OACT prepared this estimate using 

data on individuals, together with their 

income levels and insured status, from 

the Current Population Survey and the 

Medical Expenditure Panel Survey. In 

addition, they made assumptions as to 

the actions of individuals in response to 

the new coverage options under the 

Affordable Care Act and the operations 

of the new enrollment processes and the 

Exchanges. OACT notes that such 

estimates are inherently uncertain, since 

they depend on future economic, 

demographic, and other factors that 

cannot be precisely determined in 

advance. Moreover, the actual behavior 

of individuals and the actual operation 

of the new enrollment processes and 

Exchanges could differ from OACT’s 

assumptions. 

The net increase in enrollment in the 

Medicaid program and the resulting 

reduction in the number of uninsured 

individuals will produce several 

benefits. For new enrollees, eligibility 

for Medicaid will improve access to 

medical care. Evidence suggests that 

improved access to medical care will 

result in improved health outcomes and 

greater financial security for these 

individuals and families. Evidence on 

how Medicaid coverage affects medical 

care utilization, health, and financial 

security comes from a recent evaluation 

of an expansion of Oregon’s Medicaid 

program.4 In 2008, Oregon conducted a 

lottery to expanded access to uninsured 

adults with incomes below 100 percent 

of the FPL. Approximately 10,000 lowincome adults were newly enrolled in 

Medicaid as a result. The evaluation is 

particularly strong because it was able 

to compare outcomes for those who won 

the lottery with outcomes for those who 

did not win, and contains an estimate of 

the benefits of Medicaid coverage. The 

evaluation concluded that for lowincome uninsured adults, Medicaid 

coverage has the following effects: 

• Significantly higher utilization of 

preventive care (mammograms, 

cholesterol monitoring, etc.), 

• A significant increase in the 

probability of having a regular office or 

clinic for primary care, and 

• Significantly better self-reported 

health. 

While there are limitations on the 

ability to extrapolate from these results 

to the likely impacts of the Affordable 

Care Act’s expansion of Medicaid 

coverage, these results provide evidence 

of health and financial benefits 

associated with coverage expansions for 

a population of non-elderly adults. 

The results of the Oregon study are 

consistent with prior research, which 

has found that health insurance 

coverage improves health outcomes. 

The Institute of Medicine (2002) 

analyzed several population studies and 

found that people under the age 65 who 

were uninsured faced a 25 percent 

higher risk of mortality than those with 

private coverage. This pattern was 

found when comparing deaths of 

uninsured and insured patients from 

heart attack, cancer, traumatic injury, 

and HIV infection.5 The Institute of 

Medicine also concluded that having 

insurance leads to better clinical 

outcomes for diabetes, cardiovascular 

disease, end-stage renal disease, HIV 

infection and mental illness, and that 

uninsured adults were less likely to 

have regular checkups, recommended 

health screening services and a usual 

source of care to help manage their 

disease than a person with coverage. 

Other research has found that birth 

outcomes for women covered by 

Medicaid are not different than those 

achieved for privately insured patients, 

adjusting for risk variables.6

In addition to being able to seek 

treatment for illnesses when they arise, 

Medicaid beneficiaries will be able to 

more easily obtain preventive care, 

which will help maintain and improve 

their health. Research demonstrates that 

when uninsured individuals obtain 

coverage (including Medicaid), the rate 

at which they obtain needed care 

increases substantially.789 Having 

health insurance also provides 

significant financial security. 

Comprehensive health insurance 

coverage provides a safety net against 

the potentially high cost of medical 

care, and the presence of health 

insurance can mitigate financial risk. 

The Oregon study found people who 

gained coverage were less likely to have 

unpaid medical bills referred to a 

collection agency. Again, this study is 

consistent with prior research showing 

the high level of financial insecurity 

associated with lack of insurance 

coverage. Some recent research 

indicates that illness and medical bills 

contribute to a large and increasing 

share of bankruptcies in the United 

States.10 Another recent analysis found 

that more than 30 percent of the 

uninsured report having zero (or 

negative) financial assets and uninsured 

families at the 90th percentile of the 

asset distribution report having total 

financial assets below $13,000—an 

amount that can be quickly depleted 

with a single hospitalization.11 Other 

research indicates that uninsured 

individuals who experience illness 

suffer on average a loss of 30 to 50 

percent of assets relative to households 

with insured individuals.12

2. Anticipated Effects on States 

The major state impacts from this 

proposed rule were covered in the RIA 

of the March 2012 Medicaid eligibility 

final rule. However, OACT estimates 

that state expenditures on behalf of the 

additional individuals gaining Medicaid 

coverage as a result of the establishment 

of the new eligibility group for former 

foster care children will total $72 

million in FY 2014 and $399 million 

over five years (2013–2017), as 

described in Table 3. These estimates do 

not consider offsetting savings that will 

result, to a varying degree depending on 


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13A Finkelstein, et al., ‘‘The Oregon Health 

Insurance Experiment: Evidence from the First 

Year,’’ National Bureau of Economic Research 

Working Paper Series No. 17190 (2011). 

14 D. Bachrach, et al., ‘‘Medicaid’s role in the 

Health Benefits Exchange: A road map for States,’’ 

A Maximizing Enrollment Report, National 

Academy for State Health Policy and Robert Wood 

Johnson Foundation (March 2011). Available online 

at http://www.nashp.org/sites/default/files/ 

maxenroll%20Bachrach%20033011.pdf. 

the state, from less uncompensated care, 

less need for state-financed health 

services and coverage programs, and 

greater efficiencies in the delivery of 

care. 

TABLE 3—ESTIMATED STATE BUDGETARY EFFECTS OF INCREASED MEDICAID BENEFIT SPENDING FY 2013–2017 

[In millions of dollars] 

2013 2014 2015 2016 2017 2013–2017 

Net Effect on Medicaid Benefit Spending 0 72 101 109 117 399 

Source: Office of the Actuary. 

Simplifying Medicaid and CHIP 

eligibility policies, such as by 

eliminating obsolete and unnecessary 

eligibility groups and establishing 

streamlined verification procedures and 

notice and appeals processes, would 

reduce administrative burdens for states 

and for individuals. Medicaid’s current 

patchwork of eligibility rules is complex 

for states to administer, requiring 

significant state resources and staff 

attention. The coordination of Medicaid 

and CHIP eligibility policy and 

processes with those of the new 

Exchanges, including processes to allow 

for consistency in the provision of 

notices and appeal rights, and the 

movement to simplify verification 

processes with less reliance on paper 

documentation should all result in a 

Medicaid eligibility system that is far 

easier for states to administer than 

Medicaid’s current, more complex 

system. These changes could generate 

administrative savings and increase 

efficiency. The new system through 

which states will verify certain 

information with other federal agencies, 

such as income data from the IRS, will 

also relieve state Medicaid agencies of 

some current responsibilities, creating 

further efficiencies for the states. 

Currently more than 40 states use an 

electronic data match with the Social 

Security Administration in lieu of 

requiring paper documentation, and 

many states have found savings from 

this electronic verification process. In 

addition, the option to provide 

electronic notices, combined with 

coordination of notice processes among 

all insurance affordability programs, 

may improve consumer access to 

information while decreasing burden 

and costs to the states. 

These administrative simplifications 

are expected to lower state 

administrative costs, although we 

expect that states may incur short term 

increases in administrative costs 

(depending on their current systems and 

practices) as they implement these 

changes. The extent of these initial costs 

will depend on current state policy and 

practices. Federal support is available to 

help states finance these system 

modifications. Notably, in previous 

rulemaking, CMS increased federal 

funding to states to better support state 

efforts to develop significantly upgraded 

eligibility and enrollment systems. To 

anticipate and support these efforts, 

CMS published the Federal Funding for 

Medicaid Eligibility Determination and 

Enrollment Activities final rule (75 FR 

21950) in the April 19, 2011 Federal 

Register. That rule amended the 

definition of Mechanized Claims 

Processing and Information Retrieval 

Systems to include systems used for 

eligibility determination, enrollment, 

and eligibility reporting activities by 

Medicaid, and made this work eligible 

for enhanced funding with a federal 

matching rate of 90 percent for 

development through 2015 and 75 

percent for ongoing maintenance and 

operations costs. Systems must meet 

certain standards and conditions in 

order to qualify for the enhanced match. 

3. Anticipated Effects on Providers 

As expansion and simplification of 

Medicaid and CHIP eligibility could 

result in more individuals obtaining 

health insurance coverage, health 

centers, hospitals, clinics, physicians, 

and other providers are likely to 

experience a significant increase in their 

insured patient volume. We expect 

providers that serve a substantial share 

of the low-income population to realize 

the most substantial increase in insured 

patients. Providers, such as hospitals 

that serve a low-income population, 

may financially benefit from having a 

higher insured patient population and 

providing less uncompensated care, and 

the establishment of a presumptive 

eligibility option for hospitals will 

further simplify access to coverage for 

patients. In addition, we expect 

continuity of coverage to improve 

providers’ ability to maintain their 

relationship with patients and to reduce 

provider administrative burdens such as 

time spent helping patients to access 

information on coverage options and to 

apply for Medicaid or CHIP. 

The improved financial security 

provided by health insurance also helps 

ensure that patients can pay their 

medical bills. The Oregon study found 

that coverage significantly reduces the 

level of unpaid medical bills sent to a 

collection agency.13 Most of these bills 

are never paid, so this reduction in 

unpaid bills means that one of the 

important effects of expanded health 

insurance coverage, such as the 

coverage that will be provided through 

the Exchanges, is a reduction in the 

level of uncompensated care provided. 

Because the majority of individuals 

gaining coverage under this provision 

are likely to have been previously 

uninsured, we do not anticipate that the 

provisions of this proposed rule will 

impose new costs on providers. 

Medicaid generally reimburses 

providers at a lower rate than employersponsored health insurance or other 

forms of private health insurance. For 

the minority of individuals who become 

eligible for Medicaid under this 

provision who are currently covered by 

employer-sponsored health insurance, 

there is thus a possibility that their 

providers may experience lower 

payment rates. Conversely, Medicaid 

generally reimburses federally qualified 

health centers at a higher rate than 

employer-sponsored insurance and 

many new Medicaid enrollees may seek 

treatment in this setting, which would 

increase payment to these providers. At 

the same time, the increased federal 

financial support for Medicaid, the 

growth in Medicaid enrollment, and the 

potential that many plans will operate 

in both the Exchange and in Medicaid 

may result in states electing to increase 

Medicaid payment rates to providers.14

4. Anticipated Effects on Federal Budget 

Table 4 presents estimates of the 

federal budget effect of this rule beyond 


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15Finkelstein, A., et al., ‘‘The Oregon Health 

Insurance Experiment: Evidence from First Year,’’ 

National Bureau of Economic Research Working 

Paper Series No. 17190 (2011).’’ 

the impact provided in the March 2012 

Medicaid eligibility final rule RIA. The 

federal financial impact of proposed 

changes to CHIP will be small; as CHIP 

expenditures are capped under current 

law, any increases in spending could be 

expected to be offset by less available 

funding in the future. The costs 

provided below are primarily 

attributable to the impact of the 

eligibility group for former foster care 

children on net federal spending for 

Medicaid benefits. The impact of other 

Affordable Care Act provisions was 

detailed in the prior Medicaid eligibility 

final rule RIA. As a result of the 

establishment of the eligibility group for 

former foster care children, OACT 

estimates an increase in net federal 

spending on Medicaid benefits for the 

period FY 2014 and later, with the 

increase estimated to be about $95 

million in 2014 and about $528 million 

over the 4-year period from FY 2014 

through 2017. 

TABLE 4—ESTIMATED NET INCREASE IN FEDERAL MEDICAID BENEFIT SPENDING, FY 2013–2017 

[In millions of dollars] 

2013 2014 2015 2016 2017 2013–2017 

Net Effect on Medicaid Benefit Spending 0 95 134 144 155 528 

Source: Office of the Actuary. 

C. Estimated Impact of the Medicaid 

Premiums and Cost Sharing Provisions 

1. Overall Impact 

The changes proposed to Medicaid 

premiums and cost sharing clarify and 

update existing flexibilities and provide 

new flexibility for states to increase 

beneficiaries’ cost sharing obligations. 

The DRA provided states new authority 

to implement increased cost sharing and 

premiums for beneficiaries with 

incomes above 100 percent of the 

federal poverty line, but to date, most 

states have not taken advantage of these 

flexibilities. As states contemplate the 

changes required under the Affordable 

Care Act, more states may consider 

these authorities, as well as the new 

flexibility proposed by these regulations 

to impose higher copayments for nonpreferred drugs and non-emergency use 

of emergency department services. 

Based on our policy analysis, we do not 

anticipate significant costs or savings 

from these proposed changes at the 

program level given the targeted nature 

of the cost sharing. We believe these 

proposed policies would encourage less 

costly care and decreased use of 

unnecessary services, which may reduce 

state and federal costs for the specified 

services. In addition, any nominal 

increase in the beneficiary share of costs 

would result in a small reduction in the 

state and federal share of costs. A full 

analysis by OACT is currently under 

development. 

2. Anticipated Effects 

As states better understand their 

options for imposing premiums and cost 

sharing, more states may take advantage 

of existing flexibilities, such as cost 

sharing of up to 20 percent of the cost 

of the service, and the option of 

allowing providers to deny services for 

unpaid cost sharing, both of which are 

targeted to somewhat higher income 

beneficiaries. Research has shown that 

higher-than-nominal cost sharing on 

very low-income individuals can have 

an adverse impact on access to services 

by discouraging or preventing such 

individuals from seeking needed care. 

However, such impacts are not likely to 

result from the changes proposed here 

as they are largely focused on services 

where there are more appropriate and 

less costly alternatives. Increased cost 

sharing may have a negative impact on 

providers, as uncollected cost sharing 

reduces provider reimbursement, to the 

extent that the beneficiary cannot or 

does not pay the cost sharing and 

services are nonetheless provided. 

Under the DRA provisions and this 

proposed rule, however, states may 

minimize this impact by allowing 

providers to deny services for failure to 

pay the required cost sharing in certain 

circumstances. 

D. Estimated Impact of Exchange 

Provisions 

The provisions in this proposed rule 

amend certain provisions of the 

Exchange final rule as well as add new 

provisions, mainly those related to 

eligibility appeals. Our approach in this 

regulatory impact analysis was to build 

off of the analysis conducted as part of 

the Exchange final rule, available at 

http://cciio.cms.gov/resources/files/ 

Files2/03162012/hie3r-ria-032012.pdf as 

we do not believe this proposed rule 

significantly alters the estimates of the 

impact of Exchanges on the budget or on 

enrollment in health insurance and 

therefore does not significantly alter the 

regulatory impact analysis drafted as 

part of such rulemaking. This section 

summarizes benefits and costs of this 

proposed rule. 

1. Methods of Analysis 

The estimates in this analysis reflect 

estimates from the FY 2013 President’s 

Budget for State Planning and 

Establishment Grants, which 

incorporate the costs associated with 

state implementation of the provisions 

proposed in this rule. 

2. Benefits of the Proposed Regulation 

This RIA focuses on the effects of the 

proposed standards implementing the 

provisions in the Affordable Care Act 

related to eligibility appeals and other 

elements of the eligibility and 

enrollment process. It is difficult to 

isolate the benefits of these provisions 

from other provisions related to the 

establishment and operations of 

Exchanges and the Affordable Care Act 

more generally. Moreover, the benefits 

and costs of the proposed regulation are 

affected by the other elements of the 

Exchange Establishment final rule and 

related policies in the Affordable Care 

Act. Accordingly, in this section, we 

provide a discussion of the benefits of 

increased health coverage, which is the 

primary impact of the creation of 

Affordable Insurance Exchanges. 

Exchanges are expected to reduce the 

complexity of information regarding 

available choices and increase the 

ability of consumers to easily access 

insurance. Therefore, we believe, for 

example, that the eligibility appeals 

process and the streamlined notice 

standards included in this proposed 

rule will support the development and 

implementation of a streamlined 

eligibility process, and in doing so, 

increase enrollment in health insurance. 

As discussed in full above regarding 

the anticipated effect on Medicaid 

enrollment, the best available evidence 

on how health insurance affects medical 

care utilization, health, and financial 

security comes from a recent evaluation 

of an expansion of Oregon’s Medicaid 

program.15 These same benefits apply to 


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16For example, CMS has awarded a number of 

Early Innovator grants to develop efficient and 

replicable IT systems that can provide the 

foundation for other states’ work in this area. These 

amounts vary from $6 million to $48 million per 

state. 

17Federal Funding for Medicaid Eligibility 

Determination and Enrollment Activities. Final 

Rule. April 19, 2011 [42 CFR Part 433, 75 FR 68583, 

pg 21950]. 

the proposed Exchange provisions 

which, when taken together with the 

provisions in the Exchange final rule, 

will increase access to health coverage. 

The benefits concluded in the study 

included significantly better selfreported health. 

The regulations proposed here in 

subparts D and E are consistent with the 

overall theme of the entire Exchange 

rule adopted in March 2012, in that they 

continue to rely on the use of 

information technology and data 

matching to minimize administrative 

burden on applicants, states, and plans. 

For example, section 155.320(d) of the 

proposed rule outlines the process to 

verify enrollment in an eligible 

employer-sponsored plan and eligibility 

for qualifying coverage in an eligible 

employer-sponsored plan. In this 

section, we specify that the Exchange 

must first rely on electronic data sources 

wherever possible, using paper 

documentation only in situations in 

which electronic data is unavailable or 

is not reasonably compatible with the 

applicant’s attestation. Further, in 

§ 155.230(d), we propose that the 

Exchange will provide eligibility notices 

electronically to the extent that the 

recipient elects electronic notices. 

Together, this emphasis on the use of 

technology in place of paper-driven 

processes minimizes costs for all 

involved parties. 

Subpart F of the proposed rule 

outlines standards and processes for 

Exchange eligibility appeals. For 

individual eligibility determinations, 

applicants and enrollees may appeal 

eligibility determinations made through 

the eligibility process at the state level, 

if the state opts to establish an appeals 

process, or at the federal level, if the 

state opts not to establish an appeals 

process or upon exhaustion of a statebased appeals process. An effective 

eligibility appeals process improves 

access to health insurance, by providing 

recourse for issues that arise in the 

eligibility process that can disrupt 

coverage, and also reduces 

administrative costs, by providing 

resolution options that enable the vast 

majority of issues to be resolved by 

lower-level staff. 

The Exchange appeals entity may 

provide an opportunity for an informal 

resolution process prior to a hearing, 

where appellants work with appeals 

staff to resolve issues, and the proposed 

appeals process for individuals 

conducted by HHS will be handled 

initially through an informal process. If 

the appellant is not satisfied with the 

outcome of the informal resolution, he 

or she has the right to a hearing. The 

proposed appeals process is based on 

best practices to provide flexible, 

transparent, and consumer-centric 

appeals review and resolution. By 

providing an efficient, but 

comprehensive appeals process, the 

provisions of this proposed rule will 

ensure accurate and fair appeals of 

eligibility determinations. 

Subpart F of the proposed rule also 

includes standards for employers 

related to notices and appeals. 

Employers will receive notice when an 

employee is determined eligible for 

advance payments of the premium tax 

credit or cost-sharing reductions. This 

notice indicates that the employer may 

be liable for a penalty through the IRS 

because the employee has been 

determined eligible for advance 

payments of the premium tax credit 

based, in part, on a determination that 

the employer does not provide 

qualifying coverage. Employers may 

appeal the determination about the 

nature of the coverage they offer to 

employees to the Exchange before the 

penalty is imposed by the IRS. We 

propose that employer appeals will be 

conducted through a record review. 

States may choose to establish an 

employer appeals process, or HHS will 

provide such a process if a state fails to 

do so. However, unlike the individual 

appeals process, we propose that 

employers will not elevate an appeal 

decision by a state-based Exchange 

appeals entity to the HHS process. 

Subpart H includes standards for 

SHOP eligibility appeals. We propose 

that employers and employees will have 

a similar system for appealing denials of 

eligibility by the SHOP. These appeals 

will be conducted through a record 

review by the appeals entity. Any state 

that chooses to operate an Exchange will 

also operate a SHOP and provide a 

SHOP eligibility appeals process. HHS 

will handle SHOP eligibility appeals in 

the federally facilitated SHOP. SHOP 

appellants do not have the option to 

elevate state-based SHOP appeal 

decisions to HHS. By providing a 

separate appeals process for small 

businesses, the provisions of this 

proposed rule will help ensure accurate 

and satisfactory determinations are 

made for small businesses complying 

with their responsibilities as defined in 

the Affordable Care Act. 

3. Costs of the Proposed Regulation 

The Affordable Care Act and the 

implementing regulations found in 

subpart D of the proposed rule provide 

for a streamlined system based on 

simplified eligibility rules, and an 

expedited process that will enhance 

enrollment of eligible individuals and 

minimize costs to states, Exchanges and 

to the federal government. To support 

this new eligibility structure, states 

seeking to operate Exchanges are 

expected to build new or modify 

existing information technology (IT) 

systems. We believe that how each state 

constructs and assembles the 

components necessary to support its 

Exchange and Medicaid infrastructure 

will vary and depend on the level of 

maturity of current systems, current 

governance and business models, size, 

and other factors. It is important to note 

that, although states have the option to 

establish and operate an Exchange, there 

is no federal requirement that each state 

establish an Exchange. We believe the 

proposed provisions provide options 

and flexibility to states that minimize 

costs and burden on Exchanges, 

consumers, employers and other 

entities. We also believe that overall 

administrative costs may increase in the 

short term as states build IT systems; 

however, in the long term, states may 

see savings through the use of more 

efficient systems. 

Any administrative costs incurred in 

the development of IT infrastructure to 

support the Exchange may be funded 

through Exchange Planning and 

Establishment Grants to states. The 

federal government expects that these 

grants will fund the development of IT 

systems that can be used by many states 

who either develop their own 

Exchanges or who partner with the 

federal government to provide a subset 

of Exchage services.16 Costs for IT 

infrastructure that will also support 

Medicaid must be allocated to 

Medicaid, but are eligible for a 90 

percent federal matching rate to assist in 

development.17

In addition to costs associated with IT 

infrastructure, potential costs associated 

with this proposed rule relate to the 

appeals process. States that form their 

own appeals entities will incur costs of 

staff labor to conduct informal 

resolution proceedings, if a state 

voluntarily takes up the option to offer 

informal resolution, and to conduct 

hearings. Other costs will be borne by 

HHS when hearing appeals for states 

without a state-based appeals entity, or 

when hearing secondary appeals from 

individuals who have exhausted their 

state-based appeals process. In addition, 


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18Finkelstein, A. et al., (2011). The Oregon Health 

Insurance Experiment: Evidence from the First 

Year,’’ National Bureau of Economic Research 

Working Paper Series, 17190. 

costs will be borne by HHS and statebased Exchange appeals entities when 

adjudicating employer and SHOP 

appeals. However, the proposed rule is 

designed to facilitate the ability of states 

to choose to consolidate appeals 

operations with similar functions that 

exist today for Medicaid and CHIP, 

which could reduce one-time and 

ongoing costs. 

In general, as noted in our discussion 

of benefits, we anticipate that the 

proposed rule would increase take-up of 

health insurance; therefore, one type of 

rule-induced cost would be associated 

with providing additional medical 

services to newly enrolled individuals. 

A recent study found that insured 

individuals received more hospital care 

and more outpatient care than their 

uninsured counterparts.18

Below we include estimated federal 

government payments related to grants 

for Exchange startup. States’ initial costs 

due to the creation of Exchanges will be 

funded by these grants. Eligibility 

determination is a minimum function of 

the Exchange; therefore the Exchange 

costs to develop the infrastructure for 

the provisions included in this 

proposed rule are covered by these grant 

outlays. 

TABLE 5—ESTIMATED FEDERAL GOVERNMENT OUTLAYS FOR THE AFFORDABLE INSURANCE EXCHANGES

FY 2013–FY2017, in Billions of Dollars 

Year 2013 2014 2015 2016 2017 2013–2017 

Grant Authority for Exchange Start up a .......................... 1.1 0.8 0.4 0.1 0.01 2.41 

aFY 2013 President’s Budget 

E. Alternatives Considered 

The majority of Medicaid and CHIP 

eligibility provisions proposed in this 

rule serve to implement the Affordable 

Care Act. All of the provisions in this 

final rule are a result of the recent 

passage of the Affordable Care Act and 

are largely self-implementing. 

Therefore, alternatives considered for 

this proposed rule were constrained due 

to the statutory provisions. With 

publication of this proposed rule, we 

desire to make our implementing 

regulations available to states and the 

public as soon as possible to facilitate 

continued efficient operation of the state 

flexibility authorized under section 

1937 of the Act. 

In developing this rule, we considered 

alternatives to some of the simplified 

eligibility policies proposed here, as 

well as to the streamlined, coordinated 

process and eligibility policies this rule 

established between Medicaid, the 

Exchange, and other insurance 

affordability programs. One alternative 

would be to allow Medicaid agencies to 

provide notices to individuals 

independently of the notices provided 

by other insurance affordability 

programs. This option would allow 

states to maintain current Medicaid 

notice practices, but could result in 

multiple communications from different 

entities regarding each individual’s 

eligibility determination process. This 

could create significant confusion for 

applicants and beneficiaries. Another 

alternative would be to consolidate all 

notice responsibilities within the 

Exchanges and require one clear line of 

communication between applicants and 

the entities determining eligibility for 

insurance affordability programs. 

However, this would reduce state 

flexibility relative to the flexibility 

already offered in the prior Medicaid 

eligibility rule and would mandate 

significant coordination among 

insurance affordability programs that 

could stretch beyond just the provision 

of notices. 

In developing the provisions related 

to Medicaid premiums and cost sharing, 

we considered maintaining the current 

structure of the regulations and limiting 

proposed changes to simple updates of 

maximum nominal cost sharing 

amounts. However, the current 

structure, with its duplicative and 

sometimes overlapping provisions, 

makes it much more difficult for states 

to establish a simple, straightforward 

cost sharing policy. We believe the 

proposed approach will assist states, 

providers, and beneficiaries in 

understanding their obligations. 

We considered three alternatives on 

Exchange provisions. 

• Alternative #1: Establish only a 

federal appeals process 

States are not required to establish an 

Exchange, and those that do not will 

rely on a federally facilitated Exchange. 

States that do form a state-based 

Exchange likewise have the option to 

establish a state-based Exchange appeals 

entity; however, states without an 

appeals process may rely on the HHS 

appeals process for individual and 

employer appeals. If states do form a 

state-based appeals entity, HHS will 

serve as a second level of appeal for 

individuals unsatisfied with the 

outcome of their state-based Exchange 

appeal. All state-based Exchanges must 

establish an appeals process for 

employers and employees in the SHOP. 

One alternative considered was to 

establish only a federal appeals process, 

as prescribed in statute, and not to offer 

state-based Exchanges the option to 

establish their own appeal programs. 

However, this alternative was not 

selected because it would limit state 

flexibility, and negate the administrative 

efficiencies available through the use of 

existing appeals processes. 

• Alternative #2: Require paper 

documentation to verify access to 

employer-sponsored coverage. 

Section 155.320(d) of the proposed 

rule provides a process for verification 

related to enrollment in an eligible 

employer-sponsored plan and eligibility 

for qualifying coverage in an eligible 

employer-sponsored plan. The proposed 

process relies on available electronic 

data sources, with the use of paper 

documentation in situations in which 

information submitted by an applicant 

is not reasonably compatible with 

information in electronic data sources, 

along with a sample-based review for 

situations in which no data is available. 

The alternative model would require 

the Exchange to require individuals to 

submit paper documentation to verify 

this information. This would not only 

increase the burden on individuals to 

identify and collect this information, 

which may not be readily available to 

the applicant, but on employers, who 

would have to produce this information 

at the request of applicants, and would 

also require additional time and 

resources for Exchanges to accept and 

process the paper documentation 

needed for an eligibility determination. 

In addition, it could ultimately increase 

the amount of time it would take for an 

individual to receive health coverage 

through the Exchange or an insurance 

affordability program, would reduce the 


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number of states likely to operate an 

Exchange due to increased 

administrative costs, and would 

dissuade individuals from seeking 

coverage through the Exchange. 

• Alternative #3: Require Paper 

Notices 

In § 155.230(d), we provide that the 

Exchange will provide the option to an 

individual or employer to receive 

notices electronically. We anticipate 

that this will be accommodated by the 

Exchange generating electronic notices, 

storing them on a secure Web site, and 

notifying individuals and employers 

through a generic email or text message 

communication that a notice is available 

for review. 

The alternative model would require 

the Exchange to send all notices via U.S. 

mail. This would significantly increase 

administrative costs for printing and 

mailing, and also generate significant 

volumes of undeliverable mail which 

would be returned to the Exchange. 

Summary of Costs for Each Alternative 

Alternative 1 would add additional 

costs as it does not allow the use of 

existing state resources to administer 

appeals. The paper-driven process 

outlined under alternatives 2 and 3 

would ultimately increase the amount of 

time it would take for an individual to 

receive health coverage through the 

Exchange or an insurance affordability 

program, would increase administrative 

costs, and would dissuade individuals 

from seeking coverage through the 

Exchange. 

F. Limitations of the Analysis 

A number of challenges face 

estimators in projecting Medicaid and 

CHIP benefits and costs under the 

Affordable Care Act and the proposed 

rule. Health care cost growth is difficult 

to project, especially for people who are 

currently not in the health care 

system—the population targeted for the 

Medicaid eligibility changes. Such 

individuals could have pent-up demand 

and thus have costs that may be initially 

higher than other Medicaid enrollees, 

while they might also have better health 

status than those who have found a way 

(for example, ‘‘spent down’’) to enroll in 

Medicaid. 

There is also considerable uncertainty 

about behavioral responses to the 

Medicaid and CHIP changes. 

Individuals’ participation rates are 

particularly uncertain. Medicaid 

participation rates for people already 

eligible tend to be relatively low 

(estimates range from 75 to 86 percent), 

despite the fact that there are typically 

no premiums and low to no cost sharing 

for comprehensive services. It is not 

clear how the proposed changes will 

affect those already eligible, or the 

interest in participating for those newly 

eligible, as previously described. 

G. Accounting Statement 

As required by OMB Circular A–4 

(available at http:// 

www.whitehouse.gov/omb/ 

circulars_a004_a-4/), in Table 6 we have 

prepared an accounting statement table 

showing the classification of the 

impacts associated with implementation 

of this proposed rule. 

TABLE 6—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED NET COSTS, FROM FY 2013 TO FY 2017 

[In millions] 

Category Estimates 

Units 

Year dollar Discount rate 

(Percent) 

Period 

covered 

Benefits 

Annualized Monetized ($million/year) ..................................... Not Estimated ........................ 2012 7 2013–2017 

Not Estimated ........................ 2012 3 2013–2017 

Qualitative ................................................................................ The Exchanges, combined with other actions being taken to implement the Affordable Care Act, will improve access to health insurance, with numerous positive effects, including reduced morbidity and fewer bankruptcies. The Exchange 

will also serve as a distribution channel for insurance reducing administrative 

costs as a part of premiums and providing comparable information on health 

plans to allow for a more efficient shopping experience. 

Costs* 

Annualized Monetized ($million/year) ..................................... 521 ......................................... 2012 7 2013–2017 

499 ......................................... 2012 3 2013–2017 

Qualitative ................................................................................ Unquantified costs include State implementation costs above the amount covered 

by Federal grants, costs associated with hearings, and increased medical costs 

associated with more widespread enrollment in health insurance. 

Transfers** 

Annualized Monetized ($million/year) ..................................... 101 ......................................... 2012 7 2013–2017 

103 ......................................... 2012 3 2013–2017 

From Whom to Whom ............................................................. The transfer is from Federal Government to States on Behalf of Beneficiaries. 

Annualized Monetized ($million/year) ..................................... 76 ........................................... 2012 7 2013–2017 

78 ........................................... 2012 3 2013–2017 


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16 ‘‘Table of Size Standards Matched To North 

American Industry Classification System Codes,’’ 

effective November 5, 2010, U.S. Small Business 

Administration, available at http://www.sba.gov. 

TABLE 6—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED NET COSTS, FROM FY 2013 TO FY 2017— 

Continued 

[In millions] 

Category Estimates 

Units 

Year dollar Discount rate 

(Percent) 

Period 

covered 

From Whom to Whom ............................................................. The transfer is from States on Behalf of Beneficiaries. 

* These costs include grant outlays to States to establish Exchanges; most of these Exchange-establishment costs have been included in the 

accounting statement for the Exchange final rule. 

** Source: Office of the Actuary. 

H. Regulatory Flexibility Analysis 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) requires 

agencies to prepare an initial regulatory 

flexibility analysis to describe the 

impact of the proposed rule on small 

entities, unless the head of the agency 

can certify that the rule will not have a 

significant economic impact on a 

substantial number of small entities. 

The Act generally defines a ‘‘small 

entity’’ as (1) A proprietary firm meeting 

the size standards of the Small Business 

Administration (SBA); (2) a not-forprofit 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.’’ HHS uses as its measure of 

significant economic impact on a 

substantial number of small entities a 

change in revenues of more than 3 to 5 

percent. 

As discussed above, this proposed 

rule is necessary to implement certain 

standards related to the establishment 

and operation of Exchanges as 

authorized by the Affordable Care Act. 

Specifically, this proposed rule would: 

(1) Set forth standards for adjudicating 

appeals of eligibility determinations, 

including eligibility for enrollment in a 

QHP through the Exchange and 

insurance affordability programs, 

certificates of exemption from the 

shared responsibility payment, and 

SHOP eligibility, for purposes of 

implementing section 1411(f) of the 

Affordable Care Act, (2) outline criteria 

related to the verification of enrollment 

in an eligible employer-sponsored plan 

and eligibility for qualifying coverage in 

an eligible employer-sponsored plan, 

and (3) further specify or amend 

standards related to other eligibility and 

enrollment provisions to provide detail 

necessary for state implementation. 

The intent of this rule is to continue 

to afford states substantial discretion in 

the design and operation of an 

Exchange, with greater standardization 

provided where directed by the statute 

or where there are compelling practical, 

efficiency or consumer protection 

reasons. 

For the purposes of the regulatory 

flexibility analysis, we expect the 

following types of entities to be affected 

by this proposed rule—(1) QHP issuers; 

and (2) employers. We believe that 

health insurers would be classified 

under the North American Industry 

Classification System (NAICS) Code 

524114 (Direct Health and CMS–9989– 

P 166 Medical Insurance Carriers). 

According to SBA size standards, 

entities with average annual receipts of 

$7 million or less would be considered 

small entities this NAICS code. Health 

issuers could also possibly be classified 

in 621491 (HMO Medical Centers) and, 

if this is the case, the SBA size standard 

would be $10 million or less. 

QHP Issuers 

This rule proposes standards for 

Exchanges that affect eligibility 

determinations for enrollment in a QHP, 

advance payments of the premium tax 

credit, cost-sharing reductions, 

Medicaid, and CHIP. Although these 

standards are for Exchanges, they also 

affect health plan issuers that choose to 

participate in an Exchange. QHP issuers 

receive information from an Exchange 

about an enrollee in order to enable the 

QHP issuer to provide the correct level 

of advance payments of the premium 

tax credit and cost-sharing reductions. 

The issuer of the QHP will adjust an 

enrollee’s net premium to reflect the 

advance payments of the premium tax 

credit, as well as make any changes 

required to ensure that cost-sharing 

reflects the appropriate level of 

reductions. Issuers benefit significantly 

from advance payments of the premium 

tax credit and cost-sharing reductions, 

but may face some administrative costs 

relating to receiving enrollee 

information from an Exchange. 

As discussed in the Web Portal 

interim final rule (75 FR 24481), HHS 

examined the health insurance industry 

in depth in the Regulatory Impact 

Analysis we prepared for the proposed 

rule on establishment of the Medicare 

Advantage program (69 FR 46866, 

August 3, 2004). In that analysis we 

determined that there were few, if any, 

insurance firms underwriting 

comprehensive health insurance 

policies (in contrast, for example, to 

travel insurance policies or dental 

discount policies) that fell below the 

size thresholds for ‘‘small’’ business 

established by the SBA (currently $7 

million in annual receipts for health 

insurers, based on North American 

Industry Classification System Code 

524114).16

Additionally, as discussed in the 

Medical Loss Ratio interim final rule (75 

FR 74918), the Department used a data 

set created from 2009 National 

Association of Insurance Commissioners 

(NAIC) Health and Life Blank annual 

financial statement data to develop an 

updated estimate of the number of small 

entities that offer comprehensive major 

medical coverage in the individual and 

group markets. For purposes of that 

analysis, the Department used total 

Accident and Health (A&H) earned 

premiums as a proxy for annual 

receipts. The Department estimated that 

there were 28 small entities with less 

than $7 million in accident and health 

earned premiums offering individual or 

group comprehensive major medical 

coverage; however, this estimate may 

overstate the actual number of small 

health insurance issuers offering such 

coverage, because it does not include 

receipts from these companies’ other 

lines of business. 

Employers 

The establishment of SHOP in 

conjunction with tax incentives for 

some employers will provide new 

opportunities for employers to offer 

affordable health insurance to their 

employees. A detailed discussion of the 

impact on employers related to the 

establishment of the SHOP is found in 

the RIA for the Exchange final rule, 


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4680 Federal Register / Vol. 78, No. 14 / Tuesday, January 22, 2013 / Proposed Rules 

available at http://cciio.cms.gov/ 

resources/files/Files2/03162012/hie3rria-032012.pdf. 

Subpart F of part 155 proposes to 

establish an appeals process through 

which an employer may appeal a 

determination that the employer does 

not provide qualifying coverage in an 

eligible employer-sponsored plan with 

respect to the employee referenced in 

the notice pursuant to section 1411(f)(2) 

of the Affordable Care Act, or an 

eligibility determination for SHOP. This 

rule proposes standards for employers 

that choose to participate in a SHOP. 

The SHOP is limited by statute to 

employers with at least one but not 

more than 100 employees. For this 

reason, we expect that many employers 

would meet the SBA standard for small 

entities. However, since participation in 

the SHOP is voluntary, this proposed 

rule does not place any requirements on 

small employers. 

We request comment on whether the 

small entities affected by this rule have 

been fully identified. We also request 

comment and information on potential 

costs for these entities and on any 

alternatives that we should consider. 

Except in the Exchange provisions, 

few of the entities that meet the 

definition of a small entity as that term 

is used in the RFA (for example, small 

businesses, nonprofit organization, and 

small governmental jurisdictions with a 

population of less than 50,000) would 

be impacted directly by this proposed 

rule. Individuals and states are not 

included in the definition of a small 

entity. In addition, the impact of the 

majority of this rule was addressed in 

the RIA accompanying the March 2012 

Medicaid eligibility rule. Therefore, the 

Secretary has determined that this final 

rule will not have a significant 

economic impact on a substantial 

number of small entities, and we have 

not prepared a regulatory flexibility 

analysis. 

Additionally, section 1102(b) of the 

Act requires us to prepare a regulatory 

impact analysis if a proposed rule may 

have a significant economic impact on 

the operations of a substantial number 

of small rural hospitals. This analysis 

must conform to the provisions of 

section 603. For purposes of section 

1102(b) of the Act, we define a small 

rural hospital as a hospital that is 

located outside of a metropolitan 

statistical area and has fewer than 100 

beds. We are not preparing an analysis 

for section 1102(b) of the Act because 

the Secretary has determined that this 

proposed rule would not have a direct 

economic impact on the operations of a 

substantial number of small rural 

hospitals. 

I. Unfunded Mandates 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation, 

by state, local, or tribal governments, in 

the aggregate, or by the private sector. 

Currently, that threshold is 

approximately $139 million. This final 

rule does not mandate expenditures by 

state governments, local governments, 

tribal governments, in the aggregate, or 

the private sector, of $139 million. The 

majority of state, local, and private 

sector costs related to implementation of 

the Affordable Care Act were described 

in the RIA accompanying the March 

2012 Medicaid eligibility rule. 

Furthermore, the proposed rule does not 

set any mandate on states to set up an 

Exchange. 

J. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule that imposes substantial 

direct effects on states, preempts state 

law, or otherwise has federalism 

implications. We wish to note again that 

the impact of changes related to 

implementation of the Affordable Care 

Act were described in the RIA of the 

March 2012 Medicaid eligibility rule. As 

discussed in the March 2012 RIA, we 

have consulted with states to receive 

input on how the various Affordable 

Care Act provisions codified in this 

proposed rule would affect states. We 

continue to engage in ongoing 

consultations with Medicaid and CHIP 

Technical Advisory Groups (TAGs), 

which have been in place for many 

years and serve as a staff level policy 

and technical exchange of information 

between CMS and the states. Through 

consultations with these TAGs, we have 

been able to get input from states 

specific to issues surrounding the 

changes in eligibility groups and rules 

that will become effective in 2014. 

Because states have flexibility in 

designing their Exchange, state 

decisions will ultimately influence both 

administrative expenses and overall 

premiums. However, because states are 

not required to create an Exchange, 

these costs are not mandatory. For states 

electing to create an Exchange, the 

initial costs of the creation of the 

Exchange will be funded by Exchange 

Planning and Establishment Grants. 

After this time, Exchanges will be 

financially self-sustaining with revenue 

sources left to the discretion of the state. 

In the Department’s view, while this 

proposed rule does not impose 

substantial direct on state and local 

governments, it has federalism 

implications due to direct effects on the 

distribution of power and 

responsibilities among the state and 

federal governments relating to 

determining standards relating to health 

insurance coverage (that is, for QHPs) 

that is offered in the individual and 

small group markets. Each state electing 

to establish a state-based Exchange must 

adopt the federal standards contained in 

the Affordable Care Act and in this 

proposed rule, or have in effect a state 

law or regulation that implements these 

federal standards. However, the 

Department anticipates that the 

federalism implications (if any) are 

substantially mitigated because states 

have choices regarding the structure and 

governance of their Exchanges. 

Additionally, the Affordable Care Act 

does not require states to establish an 

Exchange; but if a state elects not to 

establish an Exchange or the state’s 

Exchange is not approved, HHS, will 

establish and operate an Exchange in 

that state. Additionally, states will have 

the opportunity to participate in state 

Partnership Exchanges that would allow 

states to leverage work done by other 

states and the federal government. 

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 Department has engaged in 

efforts to consult with and work 

cooperatively with affected states, 

including participating in conference 

calls with and attending conferences of 

the National Association of Insurance 

Commissioners, and consulting with 

state officials on an individual basis. 

Pursuant to the requirements set forth 

in section 8(a) of Executive Order 

13132, and by the signatures affixed to 

this regulation, the Department certifies 

that CMS has complied with the 

requirements of Executive Order 13132 

for the attached proposed regulation in 

a meaningful and timely manner. 

K. 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 


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been transmitted to Congress and the 

Comptroller General for review. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects 

42 CFR Part 430 

Administrative practice and 

procedure, Grant programs—health, 

Medicaid, Reporting and recordkeeping 

requirements. 

42 CFR Part 431 

Grant programs—health, Health 

facilities, Medicaid, Privacy, Reporting 

and recordkeeping requirements. 

42 CFR Part 433 

Administrative practice and 

procedure, Child support Claims, Grant 

programs—health, Medicaid, Reporting 

and recordkeeping requirements. 

42 CFR Part 435 

Aid to Families with Dependent 

Children, Grant programs—health, 

Medicaid, Reporting and recordkeeping 

requirements, Supplemental Security 

Income (SSI), Wages. 

42 CFR Part 440 

Grant programs-health, Medicaid. 

42 CFR Part 447 

Accounting, Administrative practice 

and procedure, Drugs, Grant programs— 

health, Health facilities, Health 

professions, Medicaid, Reporting and 

recordkeeping requirements, Rural 

areas. 

42 CFR Part 457 

Administrative practice and 

procedure, Grant programs—health, 

Health insurance, Reporting and 

recordkeeping requirements. 

45 CFR Part 155 

Administrative practice and 

procedure, Advertising, Brokers, 

Conflict of interest, Consumer 

protection, Grant programs-health, 

Grants administration, Health care, 

Health insurance, Health maintenance 

organization (HMO), Health records, 

Hospitals, Indians, Individuals with 

disabilities, Loan programs—health, 

Organization and functions 

(Government agencies), Medicaid, 

Public assistance programs, Reporting 

and recordkeeping requirements, Safety, 

State and local governments, Technical 

assistance, Women, and Youth. 

For the reasons set forth in the 

preamble, the Centers for Medicare & 

Medicaid Services proposes to amend 

42 CFR chapter IV as set forth below: 

PART 430—GRANTS TO STATES FOR 

MEDICAL ASSISTANCE PROGRAMS 

■ 1. The authority citation for part 430 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

■ 2. Section 430.12 is amended by 

revising paragraph (a) to read as follows: 

§ 430.12 Submittal of State plans and plan 

amendments. 

(a) Format. A State plan for Medicaid 

consists of a standardized automated 

template, issued and periodically 

updated by CMS, that includes both 

basic requirements and individualized 

content that reflects the characteristics 

of the State’s program. 

(1) States with approved paper State 

plans shall submit plans to comply with 

the required automated format with full 

compliance not later than one year 

following the availability of the 

automated template. 

(2) Thereafter, approved paper State 

plans or plan amendments shall be valid 

only temporarily to the extent 

specifically authorized and incorporated 

by reference under the approved 

automated State plan. 

* * * * * 

PART 431—STATE ORGANIZATION 

AND GENERAL ADMINISTRATION 

■ 3. The authority citation for part 431 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

■ 4. Section 431.10 is amended by— 

■ A. Revising paragraphs (a), (c), (d), 

and (e). 

■ B. Adding paragraph (b)(3). 

The revisions and additions read as 

follows: 

§ 431.10 Single State agency. 

(a) Basis, purpose, and definitions. (1) 

This section implements section 

1902(a)(4) and (5) of the Act. 

(2) For purposes of this part— 

Appeals decision means a decision 

made by a hearing officer adjudicating 

a fair hearing under subpart E of this 

part, including by a hearing officer 

employed an Exchange appeals entity to 

which the agency has delegated 

authority to conduct such hearings 

under this section. 

Exchange has the meaning given to 

the term in 45 CFR 155.20. 

Exchange appeals entity has the 

meaning given to the term ‘‘appeals 

entity,’’ as defined in 45 CFR 155.500. 

Medicaid agency is the single State 

agency for the Medicaid program. 

(b) * * * 

(3) The single State agency is 

responsible for determining eligibility 

for all individuals applying for or 

receiving benefits in accordance with 

regulations in part 435 of this chapter 

and for fair hearings filed in accordance 

with subpart E of this part. 

(c) Delegations. (1) Subject to the 

requirement in paragraph (c)(2) of this 

section, the Medicaid agency may, in 

the approved state plan— 

(i)(A) Delegate authority to determine 

eligibility for all or a defined subset of 

individuals to— 

(1) The single State agency for the 

financial assistance program under title 

IV–A (in the 50 States or the District of 

Columbia), or under title I or XVI 

(AABD), in Guam, Puerto Rico, or the 

Virgin Islands; 

(2) The Federal agency administering 

the supplemental security income 

program under title XVI of the Act; or 

(3) The Exchange. 

(B) The plan must specify to which 

agency or public authority and the 

individuals with respect to which, 

authority to determine eligibility is 

delegated. 

(ii) Delegate authority to conduct fair 

hearings in accordance with subpart E 

of this part for denials of eligibility 

based on the applicable modified 

adjusted gross income standard, as 

described in § 435.911 of this chapter, to 

an Exchange or Exchange appeals entity, 

provided that individuals who have 

requested a fair hearing of such a denial 

are given the choice to have their fair 

hearing conducted by the Medicaid 

agency or the Exchange or Exchange 

appeals entity. 

(2) The Medicaid agency may delegate 

authority to make eligibility 

determinations or to conduct fair 

hearings under this section only to a 

government agency or public authority 

which maintains personnel standards 

on a merit basis. 

(3) The Medicaid agency— 

(i) Must ensure that any agency or 

public authority to which eligibility 

determinations or appeals decisions are 

delegated— 

(A) Complies with all relevant Federal 

and State law, regulations and policies, 

including, but not limited to, those 

related to the eligibility criteria applied 

by the agency under part 435 of this 

chapter; prohibitions against conflicts of 

interest and improper incentives; and 

safeguarding confidentiality, including 

regulations set forth at subpart F of this 

part. 

(B) Informs applicants and 

beneficiaries how they can directly 

contact and obtain information from the 

agency; and 


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(ii) Must exercise appropriate 

oversight over the eligibility 

determinations and appeals decisions 

made by such agencies to ensure 

compliance with paragraphs (c)(2) and 

(c)(3)(i) of this section and institute 

corrective action as needed, including, 

but not limited to, rescission of the 

authority delegated under this section. 

(iii) If authority to conduct fair 

hearings is delegated to the Exchange or 

Exchange appeals entity under 

paragraph (c)(1)(ii) of this section, the 

agency may establish a review process 

whereby the agency reviews appeals 

decisions made by the Exchange or 

Exchange appeals entity, but only with 

respect to conclusions of law, including 

interpretations of State or Federal 

requirements. 

(d) Agreement with Federal, State or 

local entities making eligibility 

determinations or appeals decisions. 

The plan must provide for written 

agreements between the Medicaid 

agency and the Exchange or any other 

State or local agency that has been 

delegated authority under paragraph 

(c)(1)(i) of this section to determine 

Medicaid eligibility and for written 

agreements between the agency and the 

Exchange or Exchange appeals entity 

that has been delegated authority to 

conduct Medicaid fair hearings under 

paragraph (c)(1)(ii) of this section. Such 

agreements must be available to the 

Secretary upon request and must 

include provisions for: 

(1) The relationships and respective 

responsibilities of the parties, including 

but not limited to the respective 

responsibilities to effectuate the fair 

hearing rules in subpart E of this part; 

(2) Quality control and oversight by 

the Medicaid agency, including any 

reporting requirements needed to 

facilitate such control and oversight; 

(3) Assurances that the entity to 

which authority to determine eligibility 

or conduct fair hearings will comply 

with the provisions set forth in 

paragraph (c)(3) of this section. 

(4) For appeals, procedures to ensure 

that individuals have notice and a full 

opportunity to have their fair hearing 

conducted by either the Exchange or 

Exchange appeals entity or the Medicaid 

agency. 

(e) Authority of the single State 

agency. The Medicaid agency may not 

delegate, to other than its own officials, 

the authority to supervise the plan or to 

develop or issue policies, rules, and 

regulations on program matters. 

■ 5. Section 431.11 is amended by— 

■ A. Removing paragraph (b). 

■ B. Redesignating paragraphs (c) and 

(d), as paragraphs (b) and (c), 

respectively. 

■ C. Revising newly redesignated 

paragraphs (b) and (c). 

The revisions read as follows: 

§ 431.11 Organization for administration. 

* * * * * 

(b) Description of organization. The 

plan must include a description of the 

organization and functions of the 

Medicaid agency. 

(c) Eligibility determined or appeals 

decided by other entities. If eligibility is 

determined or appeals decided by 

Federal or State entities other than the 

Medicaid agency or by local agencies 

under the supervision of other State 

agencies, the plan must include a 

description of the staff designated by 

those other entities and the functions 

they perform in carrying out their 

responsibilities. 

■ 6. Section 431.200 is amended by 

adding paragraph (d) to read as follows: 

§ 431.200 Basic and scope. 

* * * * * 

(d) Implements section 1943(b)(3) of 

the Act and section 1413 of the 

Affordable Care Act to permit 

coordinated hearings and appeals 

among insurance affordability programs. 

■ 7. Section 431.201 is amended by — 

■ A. Revising the definition of 

‘‘Action.’’ 

■ B. Adding the definition of ‘‘Local 

evidentiary hearing’’ in alphabetical 

order 

The revisions and addition to read as 

follows: 

§ 431.201 Definitions. 

* * * * * 

Action means a termination, 

suspension, or reduction of Medicaid 

eligibility or a reduction in the level of 

benefits and services, including a 

determination of the amount of medical 

expenses which must be incurred to 

establish income eligibility in 

accordance with § 435.121(e)(4) or 

§ 435.831 of this chapter, or a 

determination of income for the 

purposes of imposing any premiums, 

enrollment fees, or cost-sharing under 

subpart A of part 447 of this chapter. It 

also means determinations by skilled 

nursing facilities and nursing facilities 

to transfer or discharge residents and 

adverse determinations made by a State 

with regard to the preadmission 

screening and resident review 

requirements of section 1919(e)(7) of the 

Act. 

* * * * * 

Local evidentiary hearing means a 

hearing held on the local or county level 

serving a specified portion of the State. 

* * * * * 

■ 8. Section 431.205 is amended by— 

■ A. Revising paragraphs (b)(1)and 

(b)(2). 

■ B. Adding paragraph (e). 

The revisions and additions read as 

follows: 

§ 431.205 Provision of hearing system. 

* * * * * 

(b) * * * 

(1) A hearing before— 

(i) The Medicaid agency; or 

(ii) For the denial of eligibility based 

on the applicable modified adjusted 

gross income standard, the Exchange or 

Exchange appeals entity to which 

authority to conduct fair hearings under 

this subpart has been delegated under 

§ 431.10(c)(1)(ii) of this subpart, 

provided that individuals who have 

requested a fair hearing are given the 

choice to have their fair hearing 

conducted by the agency or the 

Exchange or Exchange appeals; or 

(2) An evidentiary hearing at the local 

level, with a right of appeal to the 

Medicaid agency. 

* * * * * 

(e) The hearing system must be 

accessible to persons who are limited 

English proficient and persons who 

have disabilities, consistent with 

§ 435.905(b) of this chapter. 

■ 9. Section 431.206 is amended by— 

■ A. Revising paragraph (b) introductory 

text and paragraph (c)(2). 

■ B. Adding paragraphs (d) and (e). 

The revisions and additions read as 

follows: 

§ 431.206 Informing applicants and 

beneficiaries. 

* * * * * 

(b) The agency or entity taking action 

must, at the time specified in paragraph 

(c) of this section, inform every 

applicant or beneficiary in writing— 

* * * * * 

(c) * * * 

(2) At the time the agency or entity 

denies eligibility or services, or takes 

other action affecting the individual’s 

eligibility, level of benefits and services, 

or claims; 

* * * * * 

(d) If, in accordance with 

§ 431.10(c)(1)(ii) of this part, the agency 

has delegated authority to the Exchange 

or Exchange appeals entity to conduct 

the fair hearing, that the individual has 

the right to have his or her hearing 

before the agency, Exchange or the 

Exchange appeals entity, and the 

method by which the individual may 

make such election. 

(e) The information required under 

this section must be accessible to 

individuals who are limited English 

proficient and to individuals with 

disabilities, consistent with § 435.905(b) 


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of this chapter, and may be provided in 

electronic format in accordance with 

§ 435.918 of this chapter. 

■ 10. Section 431.210 is amended by 

revising paragraphs (a), (b), and (d)(1) to 

read as follows: 

§ 431.210 Content of notice. 

* * * * * 

(a) A Statement of what action the 

agency, skilled nursing facility, or 

nursing facility intends to take and the 

effective date of such action; 

(b) A clear Statement of the specific 

reasons supporting the intended action; 

* * * * * 

(d) * * * 

(1) The individual’s right to request a 

local evidentiary hearing if one is 

available, or a State agency hearing; or 

* * * * * 

■ 11. Section 431.211 is revised to read 

as follows: 

§ 431.211 Advance notice. 

The State or local agency must send 

a notice at least 10 days before the date 

of action, except as permitted under 

§ 431.213 and § 431.214 of this part. 

■ 12. Section 431.213 is amended by 

revising the introductory text to read as 

follows: 

§ 431.213 Exceptions from advance notice. 

The agency may send a notice not 

later than the date of action if — 

* * * * * 

■ 13. Section 431.220 is amended by 

revising paragraph (a)(1) to read as 

follows: 

§ 431.220 When a hearing is required. 

(a) * * * 

(1) Any applicant who requests it 

because the agency denies his or her 

eligibility, level of benefits, services or 

claims, or such claim is not acted upon 

with reasonable promptness including, 

if applicable — 

(i) A determination of the amount of 

medical expenses which must be 

incurred to establish eligibility in 

accordance with § 435.121(e)(4) or 

§ 435.831 of this part; or 

(ii) A determination of income for the 

purposes of imposing any premiums, 

enrollment fees, and cost sharing under 

subpart A of part 447 of this chapter. 

* * * * * 

■ 14. Section 431.221 is amended by — 

■ A. Revising paragraph (a). 

■ B. Adding paragraph (e). 

The revisions and additions read as 

follows: 

§ 431.221 Request for hearing. 

(a) The agency must establish 

procedures that permit an individual, or 

an authorized representative acting on 

behalf of an individual to submit a 

hearing request: 

(1) By telephone; 

(2) Via mail; 

(3) In person; 

(4) Through other commonly available 

electronic means; and 

(5) Via the internet Web site described 

in § 435.1200(f) of this chapter, at State 

option. 

* * * * * 

(e) If an individual has been denied 

eligibility for Medicaid by the agency or 

other entity authorized, in accordance 

with § 431.10(c)(1) of this part, to make 

such determination, the agency must 

treat an appeal to the Exchange appeals 

entity of a determination of eligibility 

for advanced payments of the premium 

tax credit or cost-sharing reduction, as 

a request for a hearing, under this 

section. 

■ 15. Section 431.224 is added to read 

as follows: 

§ 431.224 Expedited appeals. 

(a) General rule. The agency must 

establish and maintain an expedited 

review process for hearings, when an 

individual requests or a provider 

requests, or supports the individual’s 

request, that the time otherwise 

permitted for a hearing could jeopardize 

the individual’s life or health or ability 

to attain, maintain, or regain maximum 

function. 

(b) Action following denial of a 

request for expedited hearing. If the 

agency denies a request for an expedited 

appeal, it must— 

(1) Use the standard appeal 

timeframe, in accordance with 

§ 431.244(f)(1) of this part. 

(2) Notify the individual orally or 

through electronic means of the denial 

and, if oral notification is provided, 

follow up with written notice within 2 

calendar days of the denial. Provision of 

electronic notice must be consistent 

with § 435.918 of this subchapter. 

§ 431.230 [Amended] 

■ 16. In § 431.230, amend paragraph (a) 

by removing the term ‘‘mails’’ and 

adding in its place the term ‘‘sends.’’ 

■ 17. Section 431.231 is amended by 

revising the section heading and 

paragraph (c)(2) to read as follows: 

§ 431.231 Reinstating services. 

* * * * * 

(c) * * * 

(2) The beneficiary requests a hearing 

within 10 days that the individual 

receives the notice of action. The date 

on which the notice is received is 

considered to be 5 days after the date on 

the notice, unless the beneficiary shows 

that he or she did not receive the notice 

within the 5-day period; and 

* * * * * 

■ 18. Section 431.232 is amended by 

revising the introductory language and 

paragraph (b) to read as follows: 

§ 431.232 Adverse decision of local 

evidentiary hearing. 

If the decision of a local evidentiary 

hearing is adverse to the applicant or 

beneficiary, the agency must— 

* * * * * 

(b) Inform the applicant or beneficiary 

that he or she has a right to appeal the 

decision to the State agency, in writing, 

within 10 days after the individual 

receives the notice of the adverse 

decision. The date on which the notice 

is received is considered to be 5 days 

after the date on the notice, unless the 

individual shows that he or she received 

the notice at a later date; and 

* * * * * 

■ 19. Section 431.240 is amended by 

adding paragraph (c) to read as follows. 

§ 431.240 Conducting the hearing. 

* * * * * 

(c) A hearing officer must have access 

to agency information necessary to issue 

a proper hearing decision, including 

information concerning State policies 

and regulations. 

■ 20. Section 431.241 is amended by 

revising paragraphs (a) and (b) to read 

as follows: 

§ 431.241 Matters to be considered at the 

hearing. 

* * * * * 

(a) An Agency denial of, or action 

affecting, a claim for eligibility or 

services, or failure to act with 

reasonable promptness on such claim, 

including: 

(1) An initial and subsequent decision 

regarding eligibility; 

(2) A determination of the amount of 

medical expenses which must be 

incurred to establish income eligibility 

in accordance with § 435.121(e)(4) or 

§ 435.821 of this part; or 

(3) A determination of income for the 

purposes of imposing any premiums, 

enrollment fees, deductibles, 

copayments, coinsurance or other cost 

sharing under subpart A of part 447 of 

this subchapter. 

(b) An Agency decision regarding 

changes in the type or level of benefits 

and services; 

* * * * * 

■ 21. Section 431.242 is amended by— 

■ A. Revising paragraph (a)(1). 

■ B. Adding paragraph (f). 

The revisions and additions read as 

follows: 


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§ 431.242 Procedural rights of the 

applicant or beneficiary. 

* * * * * 

(a) * * * 

(1) The content of the applicant’s or 

beneficiary’s case file and electronic 

account, as defined in § 435.4 of this 

part; and 

* * * * * 

(f) Request an expedited hearing, if 

appropriate. 

■ 22. Section 431.244 is amended by— 

■ A. Revising paragraph (f)(1)(ii). 

■ B. Redesignating paragraphs (f)(2) and 

(f)(3) as paragraphs (f)(4) and (f)(5), 

respectively. 

■ C. Adding new paragraphs (f)(2) and 

(f)(3). 

The revisions and additions read as 

follows: 

§ 431.244 Hearing decisions. 

* * * * * 

(f) * * * 

(1) * * * 

(ii) The date the applicant, 

beneficiary, or enrollee (in a State that 

permits an MCO or PIHP enrollee direct 

access to a State fair hearing) requests a 

State fair hearing. 

(2) Within 45 days from the date of 

the appeal decision issued by the 

Exchange appeals entity if— 

(i) The individual’s appeal to the 

Exchange appeals entity of a 

determination of eligibility for advanced 

payments of the premium tax credit or 

cost-sharing reductions is treated as a 

request for a fair hearing in accordance 

with § 431.221(e) of this part, or the 

individual otherwise has both requested 

a fair hearing of an adverse Medicaid 

determination and appealed a 

determination of eligibility for advance 

payment of the premium tax credit or 

cost-sharing reductions; and 

(ii) The Exchange appeals entity is not 

conducting the fair hearing for the 

individual, in accordance with 

§ 431.10(c)(1)(ii) of this part. 

(3) As expeditiously as the 

individual’s health condition requires, 

but no later than 3 working days after 

the agency receives a request from an 

individual or provider for an expedited 

hearing under § 431.221 of this subpart, 

unless the agency determines that the 

request does not meet the criteria for 

expedited appeals and notifies the 

individual of such determination in 

accordance with § 431.224(b)(2) of this 

part; or 

* * * * * 

PART 433—STATE FISCAL 

ADMINISTRATION 

■ 23. The authority citation for part 433 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

■ 24. Section 433.138 is amended by 

revising paragraphs (d)(1) introductory 

text, (d)(3), (f), and (g)(1)(i) to read as 

follows: 

§ 433.138 Identifying liable third parties. 

* * * * * 

(d) * * * 

(1) Except as specified in paragraph 

(d)(2) of this section, as part of the data 

exchange requirements under § 435.945 

of this chapter, from the State wage 

information collection agency (SWICA) 

defined in § 435.4 of this chapter and 

from the SSA wage and earnings files 

data as specified in § 435.948(a)(1) of 

this chapter, the agency must— 

* * * * * 

(3) The agency must request, as 

required under § 435.948(a)(2), from the 

State title IV–A agency, information not 

previously reported that identifies those 

Medicaid beneficiaries that are 

employed and their employer(s). 

* * * * * 

(f) Data exchanges and trauma code 

edits: Frequency. Except as provided in 

paragraph (l) of this section, the agency 

must conduct the data exchanges 

required in paragraphs (d)(1) and (d)(3) 

of this section, and diagnosis and 

trauma edits required in paragraphs 

(d)(4) and (e) of this section on a routine 

and timely basis. The State plan must 

specify the frequency of these activities. 

(g) * * * 

(1) * * * 

(i) Within 45 days, the agency must 

follow up (if appropriate) on such 

information in order to identify legally 

liable third party resources and 

incorporate such information into the 

eligibility case file and into its third 

party data base and third party recovery 

unit so the agency may process claims 

under the third party liability payment 

procedures specified in § 433.139 (b) 

through (f); and 

* * * * * 

■ 25. Section § 433.145 is amended by 

revising paragraph (a)(2) to read as 

follows: 

§ 433.145 Assignment of rights to 

benefits—State plan requirements. 

(a) * * * 

(2) Cooperate with the agency in 

establishing paternity and in obtaining 

medical support and payments, unless 

the individual establishes good cause 

for not cooperating, and except for 

individuals described in § 435.116 

(pregnant women), who are exempt 

from cooperating in establishing 

paternity and obtaining medical support 

and payments from, or derived from, the 

father of the child born out of wedlock; 

and 

* * * * * 

■ 26. Section § 433.147 is amended by— 

■ A. Revising paragraph (a)(1), 

paragraph (c) introductory text, and 

paragraph (c)(1). 

■ B. Removing paragraph (d). 

The revisions read as follows: 

§ 433.147 Cooperation in establishing 

paternity and in obtaining medical support 

and payments and in identifying and 

providing information to assist in pursuing 

third parties who may be liable to pay. 

(a) * * * 

(1) Except as exempt under 

§ 433.145(a)(2), establishing paternity of 

a child born out of wedlock and 

obtaining medical support and 

payments for himself or herself and any 

other person for whom the individual 

can legally assign rights; and 

* * * * * 

(c) Waiver of cooperation for good 

cause. (1) With respect to establishing 

paternity of a child born out of wedlock 

or obtaining medical care support and 

payments, or identifying or providing 

information to assist the State in 

pursuing any liable third party for a 

child for whom the individual can 

legally assign rights, the agency must 

find the cooperation is against the best 

interests of the child. 

* * * * * 

■ 27. Section 433.148 is amended by 

revising paragraph (a)(2) to read as 

follows: 

§ 433.148 Denial or termination of 

eligibility. 

* * * * * 

(a) * * * 

(2) In the case of an applicant, does 

not attest to willingness to cooperate, 

and in the case of a beneficiary, refuses 

to cooperate in establishing paternity, 

obtaining medical child support and 

pursuing liable third parties, as required 

under § 433.147(a) of this part unless 

cooperation has been waived; 

* * * * * 

■ 28. Section 433.152 is amended by 

revising paragraph (b) to read as follows: 

§ 433.152 Requirements for cooperative 

agreements for third party collections. 

* * * * * 

(b) Agreements with title IV–D 

agencies must specify that the Medicaid 

agency will provide reimbursement to 

the IV–D agency only for those child 

support services performed that are not 

reimbursable by the Office of Child 

Support Enforcement under title IV–D 

of the Act and that are necessary for the 

collection of amounts for the Medicaid 

program. 


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PART 435—ELIGIBILITY IN THE 

STATES, DISTRICT OF COLUMBIA, 

THE NORTHERN MARIANA ISLANDS, 

AND AMERICAN SAMOA 

■ 29. The authority citation for part 435 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

■ 30. Section 435.3 is amended by – 

■ A. In paragraph (a), adding section 

1902(a)(46)(B), 1902(ee) and 1905(a) in 

numerical order. 

■ B. Revising section 1903(v). 

The revisions and additions read as 

follows: 

§ 435.3 Basis. 

(a) * * * 

1902(a)(46)(B) Requirement to verify 

citizenship. 

* * * * * 

1902(ee) Option to verify citizenship 

through electronic data sharing with the 

Social Security Administration. 

* * * * * 

1903(v) Optional coverage of lawfully 

residing children and pregnant women 

in Medicaid and payment for emergency 

services under Medicaid provided to 

certain non-citizens. 

* * * * * 

1905(a) (third sentence; text below 

paragraph (29) Payment of other 

insurance premiums for medical or any 

other type of remedial care. 

* * * * * 

■ 31. Section 435.4 is amended by— 

■ A. Revising the definition of 

‘‘Electronic account’’ 

■ B. Adding the definitions of 

‘‘Citizenship,’’ ‘‘Combined eligibility 

notice,’’ ‘‘Coordinated content,’’ 

‘‘Lawfully present,’’ ‘‘Non-citizen,’’ and 

‘‘Qualified non-citizen’’ in alphabetical 

order. 

The revision and additions read as 

follows: 

§ 435.4 Definitions and use of terms. 

* * * * * 

Citizenship includes status as a 

‘‘national of the United States’’ defined 

in 8 U.S.C. 1101(a)(22) that includes 

both citizens of the United States and 

non-citizen nationals of the United 

States. 

Combined eligibility notice means an 

eligibility notice that informs an 

individual, or multiple family members 

of a household when feasible, of 

eligibility for each of the insurance 

affordability programs and enrollment 

in a qualified health plan through the 

Exchange, for which a determination or 

denial was made. A combined eligibility 

notice shall be issued by the last agency 

to make a determination of eligibility, 

regardless of which entity received the 

application. A combined notice must 

meet the requirements of § 435.917(a) of 

this part and contain the content 

described in § 435.917(b) and (c) of this 

part, except that information described 

in § 435.917(b)(1)(iii)(D) of this part 

must be included in a combined notice 

issued by another insurance 

affordability program only if known to 

that program. 

Coordinated content means 

information included in an eligibility 

notice regarding the transfer of the 

individual’s or households’ electronic 

account to another insurance 

affordability program for a 

determination of eligibility. 

* * * * * 

Electronic account means an 

electronic file that includes all 

information collected and generated by 

the agency regarding each individual’s 

Medicaid eligibility and enrollment, 

including all documentation required 

under § 435.914 of this part and 

including any information collected or 

generated as part of a fair hearing 

process conducted under subpart E of 

this chapter or through the Exchange 

appeals process conducted under 45 

CFR part 155, Subpart F. 

* * * * * 

Lawfully present means an individual 

who is a non-citizen and who— 

(1) Is a qualified non-citizen, as 

defined in this section; 

(2) Is in a valid nonimmigrant status, 

as defined in 8 U.S.C. 1101(a)(15) or 

otherwise under the immigration laws 

(as defined in 8 U.S.C. 1101(a)(17)); 

(3) Is paroled into the United States in 

accordance with 8 U.S.C. 1182(d)(5) for 

less than 1 year, except for an 

individual paroled for prosecution, for 

deferred inspection or pending removal 

proceedings; 

(4) Belongs to one of the following 

classes: 

(i) Granted temporary resident status 

in accordance with 8 U.S.C. 1160 or 

1255a, respectively; 

(ii) Granted Temporary Protected 

Status (TPS) in accordance with 8 

U.S.C. 1254a, and individuals with 

pending applications for TPS who have 

been granted employment authorization; 

(iii) Granted employment 

authorization under 8 CFR 274a.12(c); 

(iv) Family Unity beneficiaries in 

accordance with section 301 of Public 

Law 101–649, as amended; 

(v) Under Deferred Enforced 

Departure (DED) in accordance with a 

decision made by the President; 

(vi) Granted Deferred Action status; 

(vii) Granted an administrative stay of 

removal under 8 CFR part 241; 

(viii) Beneficiary of approved visa 

petition who has a pending application 

for adjustment of status; 

(5) Is an individual with a pending 

application for asylum under 8 U.S.C. 

1158, or for withholding of removal 

under 8 U.S.C. 1231, or under the 

Convention Against Torture who— 

(i) Has been granted employment 

authorization; or 

(ii) Is under the age of 14 and has had 

an application pending for at least 180 

days; 

(6) Has been granted withholding of 

removal under the Convention Against 

Torture; 

(7) Is a child who has a pending 

application for Special Immigrant 

Juvenile status as described in 8 U.S.C. 

1101(a)(27)(J); 

(8) Is lawfully present in American 

Samoa under the immigration laws of 

American Samoa; 

(9) Is a victim of a severe form of 

trafficking in persons, in accordance 

with the Victims of Trafficking and 

Violence Protection Act of 2000, Public 

Law 106–386, as amended (22 U.S.C. 

7105(b)); or 

(10) Exception. An individual with 

deferred action under the Department of 

Homeland Security’s deferred action for 

childhood arrivals process, as described 

in the Secretary of Homeland Security’s 

June 15, 2012 memorandum, shall not 

be considered to be lawfully present 

with respect to any of the above 

categories in paragraphs (1) through (9) 

of this definition. 

* * * * * 

Non-citizen has the same meaning as 

the term ‘‘alien,’’ as defined in section 

101(a)(3) of the Immigration and 

Nationality Act (INA), (8 U.S.C. 

1101(a)(3)) and includes any individual 

who is not a citizen or national of the 

United States, defined at 8 U.S.C. 

1101(a)(22). 

* * * * * 

Qualified non-citizen has the same 

meaning as the term ‘‘qualified alien’’ as 

defined at 8 U.S.C. 1641(b) and (c). 

* * * * * 

■ 32. Section 435.110 is amended by— 

■ A. Republishing paragraph (c) 

introductory text. 

■ B. Revising paragraph (c)(1). 

The revisions read as follows: 

§ 435.110 Parents and other caretaker 

relatives. 

* * * * * 

(c) Income standard. The agency must 

establish in its State plan the income 

standard as follows: 

(1) The minimum income standard is 

a State’s AFDC income standard in 

effect as of May 1, 1988 for the 


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applicable family size converted to a 

MAGI-equivalent standard in 

accordance with guidance issued by the 

Secretary under section 1902(e)(14)(A) 

and (E) of the Act. 

* * * * * 

■ 33. Section 435.112 is revised to read 

as follows: 

§ 435.112 Families with Medicaid eligibility 

extended because of increased earnings or 

hours of employment. 

(a) Basis and scope. (1) This section 

implements sections 408(a)(11)(A), 

1902(e)(1)(A), and 1931(c)(2) of the Act. 

(2) If Transitional Medical Assistance 

under section 1925 of the Act is not 

available or applicable, extended 

eligibility must be provided in 

accordance with this section, if 

applicable. 

(b) Eligibility. (1) The extended 

eligibility period is for 4 months. 

(2) The agency must provide coverage 

during an extended eligibility period 

to— 

(i) A pregnant woman who was 

eligible and enrolled for Medicaid under 

§ 435.116 of this part with household 

income at or below the income limit 

described in paragraph (c) of this 

section in at least 3 out of the 6 months 

immediately preceding the month that 

eligibility under such section was lost 

due to increased earnings; and 

(ii) A parent or other caretaker relative 

who was eligible and enrolled for 

Medicaid under § 435.110 of this part, 

and any dependent child of such parent 

or other caretaker relative who was 

eligible and enrolled under § 435.118 of 

this part, in at least 3 out of the 6 

months immediately preceding the 

month that eligibility for the parent or 

other caretaker relative under § 435.110 

of this part is lost due to— 

(A) Increased earnings; or 

(B) Increased hours from a parent’s 

employment resulting in the parent no 

longer having a ‘‘dependent child,’’ as 

defined at § 435.4 of this part, living in 

his or her home. 

(c) Income limit for potential 

extended eligibility is a State’s income 

standard for coverage of parents and 

other caretaker relatives under 

§ 435.110(c) of this part. 

§ 435.113 [Removed] 

■ 34. Section 435.113 is removed. 

§ 435.114 [Removed] 

■ 35. Section 435.114 is removed. 

■ 36. Section 435.115 is revised to read 

as follows: 

§ 435.115 Families with Medicaid eligibility 

extended because of increased collection of 

spousal support. 

(a) Basis. This section implements 

sections 408(a)(11)(B) and 1931(c)(1) of 

the Act. 

(b) Eligibility. (1) The extended 

eligibility period is for 4 months. 

(2) The agency must provide coverage 

during an extended eligibility period 

to— 

(i) A pregnant woman who was 

eligible and enrolled for Medicaid under 

§ 435.116 of this part with household 

income at or below the income limit 

described in paragraph (c) of this 

section in at least 3 out of the 6 months 

immediately preceding the month that 

eligibility under such section was lost 

due to increased income from collection 

of spousal support under title IV–D of 

the Act; and 

(ii) A parent or other caretaker relative 

who was eligible and enrolled for 

Medicaid under § 435.110 of this part, 

and any dependent child of such parent 

or other caretaker relative who was 

eligible and enrolled under § 435.118 of 

this part, in at least 3 out of the 6 

months immediately preceding the 

month that eligibility for the parent or 

other caretaker relative under § 435.110 

of this part is lost due to increased 

collection of spousal support under title 

IV–D of the Act. 

(c) Income limit for potential 

extended eligibility is a State’s income 

standard for coverage of parents and 

other caretaker relatives under 

§ 435.110(c) of this part. 

■ 37. Section 435.116 is amended by— 

A. Republishing paragraph (d)(4) 

introductory text. 

B. Revising paragraph (d)(4)(i). 

The revisions read as follows: 

§ 435.116 Pregnant women. 

* * * * * 

(d) * * * 

(4) Applicable income limit for full 

Medicaid coverage of pregnant women. 

For purposes of paragraph (d)(1) of this 

section— 

(i) The minimum applicable income 

limit is the State’s AFDC income 

standard in effect as of May 1, 1988 for 

the applicable family size converted to 

a MAGI-equivalent standard in 

accordance with guidance issued by the 

Secretary under section 1902(e)(14)(A) 

and (E) of the Act. 

* * * * * 

■ 38. Section 435.117 is revised to read 

as follows: 

§ 435.117 Deemed newborn children. 

(a) Basis. This section implements 

sections 1902(e)(4) and 2112(e) of the 

Act. 

(b) Eligibility. (1) The agency must 

provide Medicaid to children from birth 

until the child’s first birthday without 

application if, for the date of the child’s 

birth, the child’s mother was eligible for 

and received covered services under— 

(i) The Medicaid State plan (including 

during a period of eligibility under 

§ 435.914) regardless of whether 

payment for services for the mother is 

limited to services necessary to treat an 

emergency medical condition, as 

defined in section 1903(v)(3) of the Act; 

(ii) The State’s separate CHIP State 

plan as a targeted low-income pregnant 

woman in accordance with section 2112 

of the Act, with household income at or 

below the income standard established 

by the agency under § 435.118 of this 

part for infants under age 1; 

(iii) At State option, the State’s 

separate CHIP State plan as a targeted 

low-income child with household 

income at or below the income standard 

established by the agency under 

§ 435.118 for infants under age 1; or 

(iv) At State option, the State’s 

demonstration under section 1115 of the 

Act as a Medicaid or CHIP population, 

with household income at or below the 

income standard established by the 

agency under § 435.118 for infants 

under age 1. 

(2) The child is deemed to have 

applied and been determined eligible 

under the Medicaid State plan effective 

as of the date of birth, and remains 

eligible regardless of changes in 

circumstances (except if the child dies 

or ceases to be a resident of the State or 

the child’s representative requests a 

voluntary termination of the child’s 

eligibility) until the child’s first 

birthday. 

(c) At State option, the agency may 

provide deemed newborn eligibility 

under this section to a child if the 

child’s mother was eligible for and 

receiving Medicaid in another State for 

the date of the child’s birth. 

(d) Medicaid identification number. 

(1) The Medicaid identification number 

of the mother serves as the child’s 

identification number, and all claims for 

covered services provided to the child 

may be submitted and paid under such 

number, unless and until the State 

issues the child a separate identification 

number in accordance with paragraph 

(d)(2) of this section. 

(2) The State must issue a separate 

Medicaid identification number for the 

child prior to the effective date of any 

termination of the mother’s eligibility or 

prior to the date of the child’s first 

birthday, whichever is sooner, unless 

the child is determined to be ineligible 

(such as, because the child is not a State 

resident), except that the State must 


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issue a separate Medicaid identification 

number for the child promptly after the 

agency is notified of a child under 1 

year of age, residing in the State and 

born to a mother: 

(i) Whose coverage is limited to 

services necessary for the treatment of 

an emergency medical condition, 

consistent with § 435.139 or § 435.350 of 

this part; 

(ii) Covered under the State’s separate 

CHIP; or 

(iii) Who received Medicaid in 

another State on the date of birth. 

■ 39. Section 435.145 is revised to read 

as follows: 

§ 435.145 Children with adoption 

assistance, foster care, or guardianship 

care under title IV–E. 

(a) Basis. This section implements 

sections 1902(a)(10)(A)(i)(I) and 

473(b)(3) of the Act. 

(b) Eligibility. The agency must 

provide Medicaid to individuals for 

whom— 

(1) An adoption assistance agreement 

is in effect with a State or tribe under 

title IV–E of the Act, regardless of 

whether adoption assistance is being 

provided or an interlocutory or other 

judicial decree of adoption has been 

issued; or 

(2) Foster care or kinship 

guardianship assistance maintenance 

payments are being made by a State or 

Tribe under title IV–E of the Act. 

■ 40. Section 435.150 is added to read 

as follows: 

§ 435.150 Former foster care children. 

(a) Basis. This section implements 

section 1902(a)(10)(A)(i)(IX) of the Act. 

(b) Eligibility. The agency must 

provide Medicaid to individuals who: 

(1) Are under age 26; 

(2) Are not eligible and enrolled for 

mandatory coverage under §§ 435.110 

through 435.118 or §§ 435.120 through 

435.145 of this part; and 

(3) Were in foster care under the 

responsibility of the State or Tribe and 

enrolled in Medicaid under the State’s 

Medicaid State plan or 1115 

demonstration (or at State option were 

in foster care and Medicaid in any State) 

upon attaining: 

(i) Age 18; or 

(ii) Such higher age at which the 

State’s or Tribe’s foster care assistance 

ends under title IV–E of the Act. 

■ 41. Section 435.170 is revised to read 

as follows: 

§ 435.170 Pregnant women eligible for 

extended or continuous eligibility. 

(a) Basis. This section implements 

sections 1902(e)(5) and 1902(e)(6) of the 

Act. 

(b) Extended eligibility for pregnant 

women. For a pregnant woman who was 

eligible and enrolled under subpart B, C, 

or D of this part on the date her 

pregnancy ends, the agency must 

provide coverage for pregnancy-related 

services in accordance with 

§ 435.116(d)(3) of this part through the 

last day of the month in which the 60- 

day post-partum period ends. 

(c) Continuous eligibility for pregnant 

women. For a pregnant woman who was 

eligible and enrolled under subpart B, C, 

or D of this part and who, because of a 

change in household income, would not 

otherwise remain eligible, the agency 

must provide coverage for pregnancyrelated services in accordance with 

§ 435.116(d)(3) of this part through the 

last day of the month in which the 60- 

day post-partum period ends. 

(d) This section does not apply to— 

(1) Pregnant women covered during a 

presumptive eligibility period under 

section 1920 of the Act. 

(2) [Reserved] 

■ 42. Section 435.172 is added to read 

as follows: 

§ 435.172 Continuous eligibility for 

hospitalized children. 

(a) Basis. This section implements 

section 1902(e)(7) of the Act. 

(b) The agency must provide 

Medicaid to a child eligible and 

enrolled under § 435.118 until the end 

of an inpatient stay for which inpatient 

services are furnished, if the child: 

(1) Was receiving inpatient services 

covered by Medicaid on the date the 

child is no longer eligible under 

§ 435.118 of this part based on the 

child’s age or household income; and 

(2) Would remain eligible but for 

attaining such age. 

■ 43. Section 435.201 is amended by— 

A. Revising paragraph (a) introductory 

text and paragraph (a)(5). 

B. Removing paragraph (a)(6). 

The revisions read as follows: 

§ 435.201 Individuals included in optional 

groups. 

(a) The agency may choose to cover an 

optional group or groups of individuals 

who are not eligible and enrolled for 

mandatory coverage under the State’s 

Medicaid State plan in accordance with 

subpart B of this part and who meet the 

appropriate eligibility criteria for groups 

specified in the separate sections of this 

subpart: 

* * * * * 

(5) Parents and other caretaker 

relatives (as defined in § 435.4 of this 

part). 

* * * * * 

■ 44. The undesignated center heading 

immediately preceding § 435.210 is 

revised to read as follows: 

Options for Coverage of Families, 

Children, Adults, and the Aged, Blind, 

or Disabled 

■ 45. Section 435.210 is revised to read 

as follows: 

§ 435.210 Optional eligibility for 

individuals who meet the income and 

resource requirements of the cash 

assistance programs. 

(a) Basis. This section implements 

section 1902(a)(10)(A)(ii)(I) of the Act. 

(b) Eligibility. The agency may 

provide Medicaid to any group or 

groups of individuals specified in 

§ 435.201(a)(1) through (a)(3) of this part 

who meet the income and resource 

requirements of SSI or an optional State 

supplement program in States that 

provide Medicaid to optional State 

supplement recipients. 

■ 46. Section 435.211 is revised to read 

as follows: 

§ 435.211 Optional eligibility for 

individuals who would be eligible for cash 

assistance if they were not in medical 

institutions. 

(a) Basis. This section implements 

section 1902(a)(10)(A)(ii)(IV) of the Act. 

(b) Eligibility. The agency may 

provide Medicaid to any group or 

groups of individuals specified in 

§ 435.201(a)(1) through (a)(3) of this part 

who are institutionalized in a title XIX 

reimbursable medical institution and 

who: 

(1) Are ineligible for the SSI or an 

optional State supplement program in 

States that provide Medicaid to optional 

State supplement recipients, because of 

lower income standards used under the 

program to determine eligibility for 

institutionalized individuals; but 

(2) Would be eligible for aid or 

assistance under SSI or an optional 

State supplement program (as specified 

in § 435.232 or § 435.234 of this part) if 

they were not institutionalized. 

■ 47. Section 435.213 is added to read 

as follows: 

§ 435.213 Optional eligibility for 

individuals needing treatment for breast or 

cervical cancer. 

(a) Basis. This section implements 

sections 1902(a)(10)(A)(ii)(XVIII) and 

1902(aa) of the Act. 

(b) Eligibility. The agency may 

provide Medicaid to individuals who— 

(1) Are under age 65; 

(2) Are not eligible and enrolled for 

mandatory coverage under the State’s 

Medicaid State plan in accordance with 

subpart B of this part; 

(3) Have been screened under the 

Centers for Disease Control and 

Prevention (CDC) breast and cervical 

cancer early detection program 

(BCCEDP), established in accordance 


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with the requirements of section 1504 of 

the Public Health Service Act, and 

determined by such screen to need 

treatment for breast or cervical cancer; 

and 

(4) Do not otherwise have creditable 

coverage, as defined in section 2704(c) 

of the Public Health Service Act, for 

treatment of their breast or cervical 

cancer, but creditable coverage is not 

considered to be available just because 

the individual may: 

(i) Receive medical services provided 

by the Indian Health Service, a tribal 

organization, or an Urban Indian 

organization; or 

(ii) Obtain health insurance coverage 

only after a waiting period of 

uninsurance. 

(c) An individual is considered to 

need treatment for breast or cervical 

cancer if the screen determines that: 

(1) Definitive treatment for breast or 

cervical cancer is needed, including a 

precancerous condition or early stage 

cancer, and which may include 

diagnostic services as necessary to 

determine the extent and proper course 

of treatment; and 

(2) More than routine diagnostic 

services or monitoring services for a 

precancerous breast or cervical 

condition are needed. 

■ 48. Section 435.214 is added to read 

as follows: 

§ 435.214 Eligibility for family planning 

services. 

(a) Basis. This section implements 

section 1902(a)(10)(A)(ii)(XXI) and 

1902(ii) and clause (XVI) in the matter 

following 1902(a)(10)(G) of the Act. 

(b) Eligibility. The agency may 

provide Medicaid to individuals (male 

and female) who meet all of the 

following requirements: 

(1) Are not pregnant. 

(2) Meet the income eligibility 

requirements at paragraph (c) of this 

section. 

(c) Income standard. (1) The income 

standard established in the State plan 

may not exceed the higher of the income 

standard for pregnant women in effect 

under— 

(i) The Medicaid State plan in 

accordance with § 435.116 of this part. 

(ii) A Medicaid demonstration under 

section 1115 of the Act. 

(iii) The CHIP State plan under 

section 2112 of the Act 

(iv) A CHIP demonstration under 

section 1115 of the Act. 

(2) The individual’s household 

income is determined in accordance 

with § 435.603 of this part. The agency 

must indicate in its state plan the 

options selected by it under paragraph 

(k) of that section. 

(d) Covered services. Individuals 

eligible under this section are covered 

for family planning and family 

planning-related benefits as described in 

clause (XVI) of the matter following 

1902(a)(10)(G) of the Act. 

■ 49. Section 435.215 is added to read 

as follows: 

§ 435.215 Individuals infected with 

tuberculosis. 

(a) Basis. This section implements 

sections 1902(a)(10)(A)(XII) and 

1902(z)(1) of the Act. 

(b) Eligibility. The agency may 

provide Medicaid to individuals who— 

(1) Are infected with tuberculosis; 

(2) Are not otherwise eligible for 

mandatory coverage under the State’s 

Medicaid plan; 

(3) Have household income that does 

not exceed the income standard 

established by the state in its State plan, 

which standard must not exceed the 

higher of— 

(i) The maximum income standard 

applicable to disabled individuals for 

mandatory coverage under subpart B of 

this part; or 

(ii) The effective income level for 

coverage of individuals infected with 

tuberculosis under the state plan in 

effect as of March 23, 2010 or December 

31, 2013, if higher, converted, at State 

option, to a MAGI-equivalent standard 

in accordance with guidance issued by 

the Secretary under section 

1902(e)(14)(A) and (E) of the Act; and 

(c) Individuals eligible under this 

section are covered for the following 

services related to the treatment of 

infection with tuberculosis: 

(1) Prescribed drugs, described in 

§ 440.120 of this subchapter; 

(2) Physician’s services, described in 

§ 440.50 of this subchapter; 

(3) Outpatient hospital and rural 

health clinic described in § 440.20 of 

this subchapter, and Federally-qualified 

health center services; 

(4) Laboratory and x-ray services 

(including services to confirm the 

presence of the infection), described in 

§ 440.30 of this subchapter; 

(5) Clinic Services, described in 

§ 440.90 of this subchapter; 

(6) Case management services defined 

in § 440.169 of this subchapter; and 

(7) Services other than room and 

board designated to encourage 

completion of regimens of prescribed 

drugs by outpatients including services 

to observe directly the intake of 

prescription drugs. 

■ 50. Section 435.220 is revised to read 

as follows: 

§ 435.220 Optional eligibility for parents 

and other caretaker relatives. 

(a) Basis. This section implements 

section 1902(a)(10)(A)(ii)(I) of the Act 

for optional eligibility of parents and 

other caretaker relatives. 

(b) Eligibility. The agency may 

provide Medicaid to parents and other 

caretaker relatives defined in § 435.4 of 

this part and, if living with such parent 

or other caretaker relative, his or her 

spouse, whose household income is at 

or below the income standard 

established by the agency in its State 

plan, in accordance with paragraph (c) 

of this section. 

(c) Income standard. The income 

standard under this section— 

(1) Must exceed the income standard 

established by the agency under 

§ 435.110(c) of this part; and 

(2) May not exceed the higher of the 

State’s AFDC payment standard in effect 

as of July 16, 1996, or the State’s highest 

effective income level for optional 

eligibility of parents and other caretaker 

relatives in effect under the Medicaid 

State plan or demonstration program 

under section 1115 of the Act as of 

March 23, 2010 or December 31, 2013, 

if higher, converted to a MAGIequivalent standard in accordance with 

guidance issued by the Secretary under 

section 1902(e)(14)(A) and (E) of the 

Act. 

■ 51. Section 435.222 is revised to read 

as follows: 

§ 435.222 Optional eligibility for 

reasonable classifications of individuals 

under age 21. 

(a) Basis. This section implements 

sections 1902(a)(10)(A)(ii)(I) and (IV) of 

the Act for optional eligibility of 

individuals under age 21. 

(b) Eligibility. The agency may 

provide Medicaid to all—or to one or 

more reasonable classifications, as 

defined in the State plan, of— 

individuals under age 21 (or, at State 

option, under age 20, 19 or 18) who 

have household income at or below the 

income standard established by the 

agency in its State plan in accordance 

with paragraph (c) of this section. 

(c) Income standard. The income 

standard established under this section 

may not exceed the higher of the State’s 

AFDC payment standard in effect as of 

July 16, 1996 or the State’s highest 

effective income level, if any, for such 

individuals under the Medicaid State 

plan or a demonstration program under 

section 1115 of the Act as of March 23, 

2010 or December 31, 2013, if higher, 

converted to a MAGI-equivalent 

standard in accordance with guidance 

issued by the Secretary under section 

1902(e)(14)(A) and (E) of the Act. 


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§ 435.223 [Removed] 

■ 52. Section 435.223 is removed. 

■ 53. Section 435.226 is added to read 

as follows: 

§ 435.226 Optional eligibility for 

independent foster care adolescents. 

(a) Basis. This section implements 

section 1902(a)(10)(A)(ii)(XVII) of the 

Act. 

(b) Eligibility. The agency may 

provide Medicaid to individuals under 

age 21 (or, at State option, under age 20 

or 19) who were in foster care under the 

responsibility of a State or Tribe (or, at 

State or Tribe option, only with respect 

to whom assistance under title IV–E of 

the Act was being provided) on the 

individual’s 18th birthday and have 

household income at or below the 

income standard established by the 

agency in its State plan in accordance 

with paragraph (c) of this section. 

(c) Income standard. The income 

standard established under this section 

may not exceed the higher of the State’s 

AFDC payment standard in effect as of 

July 16, 1996 or the State’s highest 

effective income level, if any, for such 

individuals under the Medicaid State 

plan or a demonstration program under 

section 1115 of the Act as of March 23, 

2010 or December 31, 2013, if higher, 

converted to a MAGI-equivalent 

standard in accordance with guidance 

issued by the Secretary under section 

1902(e)(14)(A) and (E) of the Act. 

■ 54. Section 435.227 is revised to read 

as follows: 

§ 435.227 Optional eligibility for 

individuals under age 21 who are under 

State adoption assistance agreements. 

(a) Basis. This section implements 

section 1902(a)(10)(A)(ii)(VIII) of the 

Act. 

(b) Eligibility. The agency may 

provide Medicaid to individuals under 

age 21 (or, at State option, under age 20, 

19, or 18): 

(1) For whom an adoption assistance 

agreement (other than an agreement 

under title IV–E of the Act) between a 

State and the adoptive parent or parents 

is in effect; 

(2) Who the State agency which 

entered into the adoption agreement 

determined could not be placed for 

adoption without Medicaid coverage 

because the child has special needs for 

medical or rehabilitative care; and 

(3) Who, prior to the adoption 

agreement being entered into— 

(i) Were eligible under the Medicaid 

State plan; or 

(ii) Had household income at or below 

the income standard established by the 

agency in its State plan in accordance 

with paragraph (c) of this section. 

(c) Income standard. The income 

standard established under this section 

may not exceed the higher of the State’s 

AFDC payment standard in effect as of 

July 16, 1996 or the State’s highest 

effective income level, if any, for such 

individuals under the Medicaid State 

plan or a demonstration program under 

section 1115 of the Act as of March 23, 

2010 or December 31, 2013, if higher, 

converted to a MAGI-equivalent 

standard in accordance with guidance 

issued by the Secretary under section 

1902(e)(14)(A) and (E) of the Act. 

(d) The agency may limit eligibility 

under this section to children with 

respect to whom the State and such 

other States as are identified in the State 

plan have entered into an adoption 

assistance agreement. 

■ 55. Section 435.229 is revised to read 

as follows: 

§ 435.229 Optional targeted low-income 

children. 

(a) Basis. This section implements 

section 1902(a)(10)(A)(ii)(XIV) of the 

Act. 

(b) Eligibility. The agency may 

provide Medicaid to individuals under 

age 19, or at State option within a range 

of ages under age 19 established in the 

State plan, who meet the definition of 

an optional targeted low-income child 

in § 435.4 of this part and have 

household income at or below the 

income standard established by the 

agency in its State plan in accordance 

with paragraph (c) of this section. 

(c) Income standard. The income 

standard established under this section 

may not exceed the higher of— 

(1) 200 percent FPL; 

(2) A percentage of the Federal 

poverty level which exceeds the State’s 

Medicaid applicable income level, 

defined at § 457.10 of this chapter, by no 

more than 50 percentage points; and 

(3) The highest effective income level 

for such individuals under the Medicaid 

State plan or a demonstration program 

under section 1115 of the Act as of 

March 23, 2010 or December 31, 2013, 

if higher, converted to a MAGIequivalent standard in accordance with 

guidance issued by the Secretary under 

section 1902(e)(14)(A) and (E) of the 

Act. 

■ 56. Section 435.301 is amended by— 

■ A. Removing paragraph (b)(1)(iii). 

■ B. Redesignating paragraph (b)(1)(iv) 

as paragraph (b)(1)(iii). 

■ C. Republishing paragraph (b)(2) 

introductory text. 

■ D. Revising paragraph (b)(2)(ii). 

The revisions read as follows: 

§ 435.301 General rules. 

* * * * * 

(b) * * * 

(2) The agency may provide Medicaid 

to any of the following groups of 

individuals: 

* * * * * 

(ii) Parents and other caretaker 

relatives (§ 435.310 of this part). 

* * * * * 

■ 57. Section 435.310 is amended by 

revising the section heading and 

paragraph (a) to read as follows: 

§ 435.310 Medically needy coverage of 

parents and other caretaker relatives. 

(a) If the agency provides Medicaid 

for the medically needy, it may provide 

Medicaid to parents and other caretaker 

relatives who meet: 

(1) The definition of ‘‘caretaker 

relative’’ at § 435.4 of the part, or are the 

spouse of a parent or caretaker relative; 

and 

(2) The medically needy income and 

resource requirements at subpart I of 

this part. 

* * * * * 

§ 435.401 [Amended] 

■ 58. Section 435.401 is amended by 

removing and reserving paragraph (c)(1). 

■ 59. Section 435.406 is amended by— 

■ A. Revising the section heading. 

■ B. Revising paragraph (a) introductory 

text, and paragraphs (a)(1) introductory 

text, (a)(1)(i), (a)(1)(ii), (a)(1)(iii). 

■ C. Removing paragraph (a)(1)(iv) and 

redesignating paragraph (a)(1)(v) as 

paragraph (a)(1)(iv). 

■ D. Republishing newly redesignated 

paragraph (a)(1)(iv) introductory text. 

■ E. Adding newly redesignated 

paragraph (a)(1)(iv)(E). 

■ F. In paragraph (a)(2), removing the 

terms ‘‘alien’’ or ‘‘aliens’’ and adding in 

their place the terms, ‘‘non-citizen’’ or 

‘‘non-citizens’’ respectively. 

■ G. In paragraph (a)(2)(ii), removing the 

reference to paragraph ‘‘(b)’’ and adding 

in its place a reference to paragraph 

‘‘(c)’’. 

■ H. Adding a new paragraph (a)(3). 

■ I. Revising paragraph (b). 

■ J. Adding paragraph (c). 

The revisions read as follows: 

§ 435.406 Citizenship and non-citizen 

eligibility. 

(a) The agency must provide Medicaid 

to otherwise eligible individuals who 

are— 

(1) Citizens, provided that— 

(i) The individual has declared that he 

or she is a citizen or national of the 

United States; and 

(ii) The agency has verified such 

declaration in accordance with 

§ 435.956(a) of this part. 

(iii) For purposes of the declaration 

and citizenship verification 


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requirements discussed in paragraphs 

(a)(1)(i) and (a)(1)(ii) of this section, an 

individual includes applicants under a 

section 1115 demonstration (including a 

family planning demonstration project) 

for which a State receives Federal 

financial participation in its 

expenditures. 

(iv) The following groups of 

individuals are exempt from the 

requirements in paragraph (a)(1)(ii) of 

this section: 

* * * * * 

(E) Newborns who are eligible for 

coverage under § 435.117 or § 457.360, 

and individuals who received medical 

assistance on such basis in any State on 

or after July 1, 2006. 

* * * * * 

(3) For purposes of paragraphs (a)(1) 

and (a)(2) of this section, the declaration 

of citizenship or immigration status may 

be provided by the individual, or an 

adult member of the individual’s family 

or household, an authorized 

representative, or if the applicant is a 

minor or incapacitated, someone acting 

responsibly for the applicant provided 

that such individual attests to having a 

reasonable basis to make a declaration 

of such status. 

(b) State option to provide Medicaid 

to Lawfully Residing Non-Citizen 

Children or Pregnant Women. 

(1) Basic Rule. The agency may 

provide Medicaid to all individuals 

under 21 and/or all pregnant women 

who are lawfully present, as defined in 

§ 435.4 of this part, and who otherwise 

meet the eligibility requirements under 

this part; 

(2) 5-Year Waiting Period and Other 

Restrictions Do Not Apply. The 

following restrictions on the provision 

of Medicaid do not apply to lawfully 

present non-citizen individuals under 

age 21 or pregnant women in States 

electing to provide eligibility in 

accordance with this paragraph: 8 

U.S.C. 1611(a) (relating to the limitation 

on payment services for individuals 

who are not qualified non-citizens, 8 

U.S.C. 1612(b) (relating to state option 

to limit eligibility of certain Lawful 

Permanent Residents to those credited 

with 40 qualifying quarters of work or 

seven year limitation), and 8 U.S.C. 

1613 (relating to the 5-year waiting 

period), as implemented at paragraph 

(a)(2) of this section; and 8 U.S.C. 1631 

(relating to sponsor deeming). 

(c) Non-citizens whom the agency 

elects to cover under paragraph (b)(1) of 

this section and non-citizens whose 

eligibility is not restricted, as described 

in paragraph (b)(2) of this section, are 

covered for the same benefits as citizens 

who are eligible under the same section 

of subpart B, C or D of this part under 

which the non-citizen is eligible. For all 

other non-citizens who otherwise meet 

the eligibility requirements in this part, 

provisions of sections 1903(v)(2) and 

1903(v)(3) of the Act, implemented at 

§ 440.255 of this subchapter, apply, 

■ 60. Section 435.407 is revised to read 

as follows: 

§ 435.407 Types of acceptable 

documentary evidence of citizenship. 

(a) Stand-alone evidence of 

citizenship. The following must be 

accepted as satisfactory documentary 

evidence of citizenship: 

(1) A U.S. passport, including a U.S. 

Passport Card issued by the Department 

of State, without regard to any 

expiration date as long as such passport 

or Card was issued without limitation. 

(2) A Certificate of Naturalization. 

(3) A Certificate of U.S. Citizenship. 

(4) A valid State-issued driver’s 

license if the State issuing the license 

requires proof of U.S. citizenship, or 

obtains and verifies a social security 

number from the applicant who is a 

citizen before issuing such license. 

(5)(i) Documentary evidence issued by 

a Federally recognized Indian Tribe, as 

published in the Federal Register by the 

Bureau of Indian Affairs within the U.S. 

Department of the Interior, and 

including Tribes located in a State that 

has an international border, which— 

(A) Identifies the Federally recognized 

Indian Tribe that issued the document; 

(B) Identifies the individual by name; 

and 

(C) Confirms the individual’s 

membership, enrollment, or affiliation 

with the Tribe. 

(ii) Documents described in paragraph 

(a)(5)(i) of this section include, but are 

not limited to: 

(A) A Tribal enrollment card; 

(B) A Certificate of Degree of Indian 

Blood; 

(C) A Tribal census document; 

(D) Documents on Tribal letterhead, 

issued under the signature of the 

appropriate Tribal official, that meet the 

requirements of paragraph (a)(5)(i) of 

this section. 

(b) Evidence of citizenship. If an 

applicant does not provide documentary 

evidence from the list in paragraph (a) 

of this section, the following must be 

accepted as satisfactory evidence to 

establish citizenship if also 

accompanied by an identity document 

listed in paragraph (c) of this section— 

(1) A U.S. public birth certificate 

showing birth in one of the 50 States, 

the District of Columbia, Puerto Rico (if 

born on or after January 13, 1941), 

Guam, the Virgin Islands of the U.S. (on 

or after January 17, 1917), American 

Samoa, Swain’s Island, or the 

Commonwealth of the Northern Mariana 

Islands (CNMI) (after November 4, 1986 

(CNMI local time)). The birth record 

document may be issued by the State, 

Commonwealth, Territory, or local 

jurisdiction. If the document shows the 

individual was born in Puerto Rico, the 

Virgin Islands of the U.S., or the CNMI 

before these areas became part of the 

U.S., the individual may be a 

collectively naturalized citizen. 

(2) At State option, a cross match with 

a State vital statistics agency 

documenting a record of birth. 

(3) A Certification of Report of Birth, 

issued to U.S. citizens who were born 

outside the U.S. 

(4) A Report of Birth Abroad of a U.S. 

Citizen. 

(5) A Certification of birth. 

(6) A U.S. Citizen I.D. card. 

(7) A Northern Marianas 

Identification Card, issued to a 

collectively naturalized citizen, who 

was born in the CNMI before November 

4, 1986. 

(8) A final adoption decree showing 

the child’s name and U.S. place of birth, 

or if an adoption is not final, a 

Statement from a State-approved 

adoption agency that shows the child’s 

name and U.S. place of birth. 

(9) Evidence of U.S. Civil Service 

employment before June 1, 1976. 

(10) U.S. Military Record showing a 

U.S. place of birth. 

(11) A data match with the Systematic 

Alien Verification for Entitlements 

(SAVE) Program or any other process 

established by the Department of 

Homeland Security to verify that an 

individual is a citizen. 

(12) Documentation that a child meets 

the requirements of section 101 of the 

Child Citizenship Act of 2000 (8 U.S.C. 

1431). 

(13) Medical records, including, but 

not limited to, hospital, clinic, or doctor 

records or admission papers from a 

nursing facility, skilled care facility, or 

other institution that indicate a U.S. 

place of birth. 

(14) Life, health, or other insurance 

record that indicates a U.S. place of 

birth. 

(15) Official religious record recorded 

in the U.S. showing that the birth 

occurred in the U.S. 

(16) School records, including preschool, Head Start and daycare, showing 

the child’s name and U.S. place of birth. 

(17) Federal or State census record 

showing U.S. citizenship or a U.S. place 

of birth. 

(18) If the applicant does not have one 

of the documents listed in paragraphs 

(a) or (b)(1) through (17) of this section, 

he or she may submit an affidavit signed 


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by another individual under penalty of 

perjury who can reasonably attest to the 

applicant’s citizenship, and that 

contains the applicant’s name, date of 

birth, and place of U.S. birth. The 

affidavit does not have to be notarized. 

(c) Evidence of identity. (1) The 

agency must accept the following as 

proof of identity, provided such 

document has a photograph or other 

identifying information including, but 

not limited to, name, age, sex, race, 

height, weight, eye color, or address: 

(i) Identity documents listed at 8 CFR 

274a.2(b)(1)(v)(B)(1), except a driver’s 

license issued by a Canadian 

government authority. 

(ii) Driver’s license issued by a State 

or Territory. 

(iii) School identification card. 

(iv) U.S. military card or draft record. 

(v) Identification card issued by the 

Federal, State, or local government. 

(vi) Military dependent’s 

identification card. 

(vii) U.S. Coast Guard Merchant 

Mariner card. 

(2) For children under age 19, a clinic, 

doctor, hospital, or school record, 

including preschool or day care records. 

(3) Two documents containing 

consistent information that corroborates 

an applicant’s identity. Such documents 

include, but are not limited to, employer 

identification cards, high school and 

college diplomas (including high school 

equivalency diplomas), marriage 

certificates, divorce decrees, and 

property deeds or titles. 

(4) Finding of identity from a Federal 

or State governmental agency. The 

agency may accept as proof of identity— 

(i) A finding of identity from a Federal 

agency or another State agency, 

including but not limited to a public 

assistance, law enforcement, internal 

revenue or tax bureau, or corrections 

agency, if the agency has verified and 

certified the identity of the individual. 

(ii) [Reserved] 

(5) A finding of identity from an 

Express Lane agency, as defined in 

section 1902(e)(13)(F) of the Act. 

(6) If the applicant does not have any 

document specified in paragraphs (c)(1) 

through (c)(3) of this section and 

identity is not verified under paragraph 

(c)(4) or (c)(5) of this section, the 

applicant may submit an affidavit 

signed, under penalty of perjury, by 

another person who can reasonably 

attest to the applicant’s identity. Such 

affidavit must contain the applicant’s 

name and other identifying information 

establishing identity, as describe in 

paragraph (c)(1) of this section. The 

affidavit does not have to be notarized. 

(d) Verification of citizenship by a 

Federal agency or another State. (1) The 

agency may rely, without further 

documentation of citizenship or 

identity, on a verification of citizenship 

made by a Federal agency or another 

State agency, if such verification was 

done on or after July 1, 2006. 

(2) [Reserved] 

(e) Assistance with obtaining 

documentation. States must provide 

assistance to individuals who need 

assistance in securing satisfactory 

documentary evidence of citizenship in 

a timely manner. 

(f) Documentary evidence. A 

photocopy, facsimile, scanned or other 

copy of a document must be accepted to 

the same extent as an original document 

under this section, unless information 

on the submitted document is 

inconsistent with other information 

available to the agency or the agency 

otherwise has reason to question the 

validity of the document or the 

information on the document. 

§ 435.510 [Removed] 

■ 61. Remove § 435.510 and the 

undesignated center heading of 

‘‘Dependency.’’ 

§ 435.522 [Removed] 

■ 62. Remove § 435.522 and the 

undesignated center heading of ‘‘Age.’’ 

■ 63. Section 435.601 is amended by— 

■ A. Revising paragraph (b). 

■ B. Removing paragraphs (d)(1)(i) and 

(d)(1)(ii). 

■ C. Redesignating paragraphs (d)(1)(iii) 

through (d)(1)(vi) as paragraphs (d)(1)(i) 

through (d)(1)(iv), respectively. 

The revision reads as follows: 

§ 435.601 Application of financial eligibility 

methodologies. 

* * * * * 

(b) Basic rule for use of cash 

assistance methodologies. (1) This 

section only applies to individuals 

excepted from application of MAGIbased methods in accordance with 

§ 435.603(j) of this subpart. 

(2) Except as specified in paragraphs 

(c) and (d) of this section or in § 435.121 

of this part in determining financial 

eligibility of individuals as categorically 

or medically needy, the agency must 

apply the financial methodologies and 

requirements of the cash assistance 

program that is most closely 

categorically related to the individual’s 

status. 

* * * * * 

■ 64. Section 435.602 is amended by 

revising paragraph (a) to read as follows: 

■ A. Redesignating and republishing the 

introductory language in paragraph (a) 

as introductory language in paragraph 

(a)(2). 

■ B. Redesignating paragraphs (a)(1) 

through (a)(4) as paragraphs (a)(2)(i) 

through (a)(2)(iv). 

■ C. Adding paragraphs (a) introductory 

text and (a)(1). 

The addition reads as follows: 

§ 435.602 Financial responsibility of 

relatives and other individuals. 

(a) Basic requirements. (1) This 

section only applies to individuals 

excepted from application of MAGIbased methods in accordance with 

§ 435.603(j) of this part. 

(2) Subject to the provisions of 

paragraphs (b) and (c) of this section, in 

determining financial responsibility of 

relatives and other persons for 

individuals under Medicaid, the agency 

must apply the following requirements 

and methodologies: 

(i) Except for a spouse of an 

individual or a parent for a child who 

is under age 21 or blind or disabled, the 

agency must not consider income and 

resources of any relative as available to 

an individual. 

(ii) In relation to individuals under 

age 21 (as described in section 1905(a)(i) 

of the Act), the financial responsibility 

requirements and methodologies that 

apply include considering the income 

and resources of parents or spouses 

whose income and resources would be 

considered if the individual under age 

21 were dependent under the State’s 

approved AFDC plan, whether or not 

they are actually contributed, except as 

specified under paragraphs (c) and (d) of 

this section. These requirements and 

methodologies must be applied in 

accordance with the provisions of the 

State’s approved AFDC plan. 

(iii) When a couple ceases to live 

together, the agency must count only the 

income of the individual spouse in 

determining his or her eligibility, 

beginning the first month following the 

month the couple ceases to live 

together. 

(iv) In the case of eligible 

institutionalized spouses who are aged, 

blind, and disabled and who have 

shared the same room in a title XIX 

Medicaid institution, the agency has the 

option of considering these couples as 

eligible couples for purposes of 

counting income and resources or as 

eligible individuals, whichever is more 

advantageous to the couple. 

* * * * * 

■ 65. Section 435.603 is amended by— 

■ A. In paragraph (b), adding the 

definitions of ‘‘Child,’’ ‘‘Parent,’’ and 

‘‘Sibling’’ in alphabetical order. 

■ B. Adding paragraphs (d)(4) and (k). 

■ C. Revising paragraphs (c), (d)(1), 

(f)(2)(i), (f)(3)(ii) and (iii), and (j)(4). 


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The revisions and additions read as 

follows: 

§ 435.603 Application of modified adjusted 

gross income (MAGI). 

* * * * * 

(b) Definitions. For purposes of this 

section— 

Child means a natural or biological, 

adopted or step child. 

* * * * * 

Parent means a natural or biological, 

adopted or step parent. 

Sibling means natural or biological, 

adopted, half or step sibling. 

* * * * * 

(c) Basic rule. Except as specified in 

paragraph (i), (j) and (k) of this section, 

the agency must determine financial 

eligibility for Medicaid based on 

‘‘household income’’ as defined in 

paragraph (d) of this section. 

(d) * * * 

(1) General rule. Except as provided 

in paragraphs (d)(2) through (d)(4) of 

this section, household income is the 

sum of the MAGI-based income, as 

defined in paragraph (e) of this section, 

of every individual included in the 

individual’s household. 

* * * * * 

(4) In determining the eligibility of an 

individual for medical assistance under 

the eligibility group with the highest 

income standard under which the 

individual may be determined eligible 

using MAGI-based methodologies, an 

amount equivalent to 5 percentage 

points of the Federal poverty level for 

the applicable family size is deducted 

from household income. 

* * * * * 

(f) 

* * * * * 

(2) 

* * * * * 

(i) Individuals other than a spouse or 

child who expect to be claimed as a tax 

dependent by another taxpayer; and 

* * * * * 

(3) Rules for individuals who neither 

file a tax return nor are claimed as a tax 

dependent. 

* * * * * 

(ii) The individual’s children under 

the age specified in paragraph (f)(3)(iv) 

of this section; and 

(iii) In the case of individuals under 

the age specified in paragraph (f)(3)(iv) 

of this section, the individual’s parents 

and siblings under the age specified in 

paragraph (f)(3)(iv) of this section. 

* * * * * 

(j) * * * 

(4) Individuals who request coverage 

for long-term care services and supports 

for the purpose of being evaluated for an 

eligibility group for which meeting a 

level-of-care need is a condition of 

eligibility or under which long-term 

care services not covered for individuals 

determined eligible using MAGI-based 

financial methods are covered. ‘‘Longterm care services’’ include nursing 

facility services, a level of care in any 

institution equivalent to nursing facility 

services; home and community-based 

services furnished under a waiver or 

State plan under sections 1915 or 1115 

of the Act; home health services as 

described in sections 1905(a)(7) of the 

Act and personal care services described 

in sections 1905(a)(24) of the Act. 

* * * * * 

(k) In the case of an individual whose 

eligibility is being determined under 

§ 435.214 of this part, the agency may— 

(1) Consider the household to consist 

of only the individual for purposes of 

paragraph (f) of this section.); 

(2) Count only the MAGI-based 

income of the individual for purposes of 

paragraph (d) of this section.). 

(3) Increase the family size of the 

individual, as defined in paragraph (b) 

of the section, by one. 

■ 66. Section 435.610 is amended by— 

■ A. Revising paragraph (a) introductory 

text and paragraph (a)(2). 

■ B. Removing paragraph (c). 

The revisions read as follows: 

§ 435.610 Assignment of rights to benefits. 

(a) Consistent with § 433.145 through 

§ 433.148 of this chapter, as a condition 

of eligibility, the agency must require 

legally able applicants and beneficiaries 

to: 

* * * * * 

(2) In the case of applicants, attest that 

they will cooperate, and, in the case of 

beneficiaries, cooperate with the agency 

in— 

(i) Establishing paternity and in 

obtaining medical support and 

payments, unless the individual 

establishes good cause for not 

cooperating or is a pregnant woman 

described in § 435.116; and 

(ii) Identifying and providing 

information to assist the Medicaid 

agency in pursuing third parties who 

may be liable to pay for care and 

services under the plan, unless the 

individual establishes good cause for 

not cooperating. 

* * * * * 

■ 67. Section 435.831 is amended by 

revising paragraph (b) introductory text, 

(b)(1), and (c) to read as follows: 

§ 435.831 Income eligibility. 

* * * * * 

(b) Determining countable income. 

For purposes of determining medically 

needy eligibility under this part, the 

agency must determine an individual’s 

countable income as follows: 

(1) For individuals under age 21, 

pregnant women, and parents and other 

caretaker relatives, the agency may 

apply the AFDC methodologies in effect 

in the State as of August 16, 1996 or the 

MAGI-based methodologies defined in 

§ 435.603(e) of this part; except that, the 

agency must comply with the terms of 

§ 435.602 of this part (relating to the 

financial responsibility of relatives and 

other individuals). 

* * * * * 

(c) Eligibility based on countable 

income. If countable income determined 

under paragraph (b) of this section is 

equal to or less than that applicable 

income standard under § 435.814 of this 

part, the individual is eligible for 

Medicaid. 

* * * * * 

■ 68. Section 435.905 is amended by— 

■ A. Revising paragraph (b)(1). 

■ B. Adding paragraph (b)(3). 

The revisions and additions read as 

follows: 

§ 435.905 Availability of program 

information. 

* * * * * 

(b) * * * 

(1) Individuals who are limited 

English proficient through the provision 

of language services at no cost to the 

individual including, oral 

interpretation, written translations, and 

taglines in non-English languages 

indicating the availability of language 

services. 

* * * * * 

(3) Individuals must be informed of 

the availability of the services described 

in paragraph (b) of this section and how 

to access such services. 

■ 69. Section 435.907 is amended by 

adding paragraph (h) to read as follows. 

§ 435.907 Application. 

* * * * * 

(h) Reinstatement of withdrawn 

applications. (1) In the case of 

individuals described in paragraph 

(h)(2) of this section, the agency must 

reinstate the application submitted by 

the individual, effective as of the date 

the application was first received by the 

Exchange. 

(2) Individuals described in this 

paragraph are individuals who— 

(i) Submitted an application described 

in paragraph (b) of this section to the 

Exchange; 

(ii) Withdrew their application for 

Medicaid in accordance with 45 CFR 

155.302(b)(4)(A); 


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(iii) Are assessed as potentially 

eligible for Medicaid by the Exchange 

appeals entity. 

■ 70. Section 435.908 is amended by 

adding paragraph (c) to read as follows: 

§ 435.908 Assistance with application and 

renewal. 

* * * * * 

(c) Certified Application Assisters. (1) 

At State option, the agency may certify 

staff and volunteers of State-designated 

organizations to act as application 

assisters, authorized to provide 

assistance to applicants and 

beneficiaries with the application 

process and during renewal of 

eligibility. To be certified, application 

assisters must be— 

(i) Authorized and registered by the 

agency to provide assistance at 

application and renewal; 

(ii) Effectively trained in the 

eligibility and benefits rules and 

regulations governing enrollment in a 

QHP through the Exchange and all 

insurance affordability programs 

operated in the State, as implemented in 

the State; and 

(iii) Trained in and subject to 

regulations relating to the safeguarding 

and confidentiality of information and 

conflict of interest, including 

regulations set forth at part 431, subpart 

F of this chapter, and at 45 CFR 

155.260(f), regulations relating to the 

prohibition against reassignment of 

provider claims specified in § 447.10 of 

this chapter, and all other State and 

Federal laws concerning conflicts of 

interest and confidentiality of 

information. 

(2) For purposes of this section, 

assistance includes providing 

information on insurance affordability 

programs and coverage options, helping 

individuals complete an application or 

renewal, gathering required 

documentation, submitting applications 

and renewals to the agency, interacting 

with the agency on the status of such 

applications and renewals, assisting 

individuals with responding to any 

requests from the agency, and managing 

their case between the eligibility 

determination and regularly scheduled 

renewals. Application assisters may be 

certified by the agency to act on behalf 

of applicants and beneficiaries with 

respect to one, some or all of the 

permitted assistance activities. 

(3) If the agency elects to certify 

application assisters, it must establish— 

(i) A designated web portal to which 

only certified application assisters have 

access and through which the assisters 

may provide the assistance described in 

paragraph (c)(2) of this section. The 

agency must develop a secure 

mechanism to ensure that certified 

application assisters are able to perform 

only those activities for which they are 

certified. 

(ii) Procedures to ensure that— 

(A) Applicants and beneficiaries are 

informed of the functions and 

responsibilities of certified application 

assisters; 

(B) Individuals are able to authorize 

application assisters to receive 

confidential information about the 

individual related to the individual’s 

application for or renewal of Medicaid; 

and 

(C) The agency does not disclose 

confidential applicant or beneficiary 

information to an application assister 

unless the applicant or beneficiary has 

authorized the application assister to 

receive such information. 

(4) Application assisters may not 

impose any charge on applicants or 

beneficiaries for application assistance. 

§ 435.909 [Amended] 

■ 71. Paragraph (a) is removed and 

reserved. 

■ 72. Section 435.910 is amended by 

revising paragraph (g) to read as follows: 

§ 435.910 Use of social security number. 

* * * * * 

(g) The agency must verify the SSN 

furnished by an applicant or beneficiary 

with SSA to insure the SSN was issued 

to that individual, and to determine 

whether any other SSNs were issued to 

that individual. 

* * * * * 

■ 73. Section § 435.911 is amended by— 

■ A. Revising paragraph (b)(1) 

introductory text, paragraph (b)(1)(i), 

paragraph (c) introductory text, and 

paragraph (c)(1). 

■ B. Adding paragraph (b)(2). 

The revisions and addition read as 

follows: 

§ 435.911 Determination of eligibility. 

* * * * * 

(b)(1) Except as provided in paragraph 

(b)(2) of this section, applicable 

modified adjusted gross income 

standard means 133 percent of the 

Federal poverty level or, if higher— 

(i) In the case of parents and other 

caretaker relatives described in 

§ 435.110(b) of this part, the income 

standard established in accordance with 

§ 435.110(c) or § 435.220(c) of this part; 

* * * * * 

(2) In the case of individuals who 

have attained at least age 65 and 

individuals who have attained at least 

age 19 and who are entitled to or 

enrolled for Medicare benefits under 

part A or B or title XVIII of the Act, 

there is no applicable modified adjusted 

gross income standard, except that in 

the case of such individuals— 

(i) Who are also pregnant, the 

applicable modified adjusted gross 

income standard is the standard 

established under paragraph (b)(1) of 

this section; and 

(ii) Who are also a parent or caretaker 

relative, as described in § 435.4 of this 

part, the applicable modified adjusted 

gross income standard is the higher of 

the income standard established in 

accordance with § 435.110(c) or 

§ 435.220(c) of this part. 

(c) For each individual who has 

submitted an application described in 

§ 435.907 or whose eligibility is being 

renewed in accordance with § 435.916 

and who meets the non-financial 

requirements for eligibility (or for whom 

the agency is providing a reasonable 

opportunity to verify citizenship or 

immigration status in accordance with 

§ 435.956(g) of this part), the state 

Medicaid agency must comply with the 

following— 

(1) The agency must, promptly and 

without undue delay consistent with 

timeliness standards established under 

§ 435.912, furnish Medicaid to each 

such individual whose household 

income is at or below the applicable 

modified adjusted gross income 

standard. 

* * * * * 

§ 435.913 [Removed] 

■ 74. Section 435.913 is removed. 

■ 75. Section § 435.917 is added to read 

as follows. 

§ 435.917 Notice of agency’s decision 

concerning eligibility. 

(a) Notice of eligibility determinations. 

Consistent with §§ 431.206 through 

431.214 of this chapter, the agency must 

provide all applicants and beneficiaries 

with timely and adequate written notice 

of any decision affecting their eligibility, 

including a denial, termination or 

suspension of eligibility, or a denial or 

change in benefits and services. Such 

notice must— 

(1) Be written in plain language; 

(2) Be accessible to persons who are 

limited English proficient and 

individuals with disabilities, consistent 

with § 435.905(b) of this subpart, and 

(3) If provided in electronic format, 

comply with § 435.918 of this subpart. 

(b) Content of eligibility notice. 

(1) Notice of approved eligibility. Any 

notice of an approval of Medicaid 

eligibility must include, but is not 

limited to, the following information— 

(i) The basis and effective date of 

eligibility; 

(ii) The circumstances under which 

the individual must report, and 


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procedures for reporting, any changes 

that may affect the individual’s 

eligibility; 

(iii) If applicable, the amount of 

medical expenses which must be 

incurred to establish eligibility in 

accordance with § 435.121 or § 435.831 

of this part. 

(iv) Information on the level of 

benefits and services approved, 

including, if applicable, the notice 

relating to any premiums, enrollment 

fees, and cost sharing required under 

Part 447 Subpart A of this chapter, and 

the right to appeal the level of benefits 

and services approved. 

(2) Notice of adverse action including 

denial, termination or suspension of 

eligibility or change in benefits or 

services. Any notice of denial, 

termination or suspension of Medicaid 

eligibility or change in benefits or 

services must be consistent § 431.210 of 

this chapter. 

(c) Whenever an approval, denial, or 

termination of eligibility is based on an 

applicant’s or beneficiary’s having 

household income at or below the 

applicable modified adjusted gross 

income standard in accordance with 

§ 435.911 of this subpart, the eligibility 

notice must contain— 

(1) Information regarding bases of 

eligibility other than the applicable 

modified adjusted gross income 

standard and the benefits and services 

afforded to individuals eligible on such 

other bases, sufficient to enable the 

individual to make an informed choice 

as to whether to request a determination 

on such other bases; and 

(2) Information on how to request a 

determination on such other bases; 

(d) The agency’s responsibility to 

provide notice under this section is 

satisfied by a combined eligibility 

notice, as defined in § 435.4 of this 

chapter, provided by the Exchange or 

other insurance affordability program in 

accordance with an agreement between 

the agency and such program 

consummated in accordance with 

§ 435.1200(b)(3) of this chapter, except 

that, if the information described in 

paragraph (b)(1)(iii) through (iv) of this 

section is not included in such 

combined eligibility notice, the agency 

must provide the individual with a 

supplemental notice of such 

information, consistent with this 

section. 

■ 76. Section 435.918 is added to read 

as follows: 

§ 435.918 Use of electronic notices. 

(a) The agency must provide 

individuals with a choice to receive 

notices and information required under 

this part or subpart E of part 431 of this 

chapter in electronic format or by 

regular mail. If the individual elects to 

receive communications from the 

agency electronically, the agency 

must— 

(1) Confirm by regular mail the 

individual’s election to receive notices 

electronically; 

(2) Inform the individual of his or her 

right to change such election, at any 

time, to receive notices through regular 

mail; 

(3) Post notices to the individual’s 

electronic account within 1 business 

day of notice generation; 

(4) Send an email or other electronic 

communication alerting the individual 

that a notice has been posted to his or 

her account. The agency may not 

include confidential information in the 

email or electronic alert. 

(5) If an electronic communication is 

undeliverable, send any notice by 

regular mail within three business days 

of the date of the failed electronic 

communication; 

(6) At the individual’s request, 

provides through regular mail any 

notice posted to the individual’s 

electronic account. 

(b) The agency may provide notice or 

other communications electronically 

only if the individual— 

(1) Has affirmatively elected to receive 

electronic communications in 

accordance with paragraph (a) of this 

section; and 

(2) Is permitted to change such 

election at any time. 

§ 435.919 [Removed] 

■ 77. Section 435.919 is removed. 

■ 78. Section 435.923 is added to read 

as follows: 

§ 435.923 Authorized Representatives. 

(a) The agency must permit applicants 

and beneficiaries to designate an 

individual or organization to act 

responsibly on their behalf in assisting 

with the individual’s application and 

renewal of eligibility and other ongoing 

communications with the agency. Such 

a designation must be in writing 

including the applicant’s signature, and 

must be permitted at the time of 

application and at other times. Legal 

documentation of authority to act on 

behalf of an applicant or beneficiary 

under state law, such as a court order 

establishing legal guardianship or a 

power of attorney, shall serve in the 

place of written authorization by the 

applicant or beneficiary. 

(b) Representatives may be authorized 

to— 

(1) Sign an application on the 

applicant’s behalf; 

(2) Complete and submit a renewal 

form; 

(3) Receive copies of the applicant or 

beneficiary’s notices and other 

communications from the agency; 

(4) Act on behalf of the applicant or 

beneficiary in all other matters with the 

agency. 

(c) The power to act as an authorized 

representative is valid until the 

applicant or beneficiary modifies the 

authorization or notifies the agency that 

the representative is no longer 

authorized to act on his or her behalf, 

or the authorized representative informs 

the agency that he or she no longer is 

acting in such capacity, or there is a 

change in the legal authority upon 

which the individual or organization’s 

authority was based. Such notice must 

be in writing and should include the 

applicant or authorized representative’s 

signature as appropriate. 

(d) The authorized representative— 

(1) Is responsible for fulfilling all 

responsibilities encompassed within the 

scope of the authorized representation, 

as described in paragraph (b)(2) of this 

section, to the same extent as the 

individual he or she represents; 

(2) Must agree to maintain, or be 

legally bound to maintain, the 

confidentiality of any information 

regarding the applicant or beneficiary 

provided by the agency. 

(e) The agency must require that, as a 

condition of serving as an authorized 

representative, a provider or staff 

member or volunteer of an organization 

must sign an agreement that he or she 

will adhere to the regulations in part 

431, subpart F of this chapter and at 45 

CFR 155.260(f) (relating to 

confidentiality of information), § 447.10 

of this chapter (relating to the 

prohibition against reassignment of 

provider claims as appropriate for a 

health facility or an organization acting 

on the facility’s behalf), as well as other 

relevant State and Federal laws 

concerning conflicts of interest and 

confidentiality of information. 

(f) For purposes of this section, the 

agency must accept electronic, 

including telephonically recorded, 

signatures and handwritten signatures 

transmitted by facsimile or other 

electronic transmission. Designations of 

authorized representatives must be 

accepted through all of the modalities 

described in § 435.907(a) of this part. 

■ 79. Section 435.926 is added to read 

as follows: 

§ 435.926 Continuous eligibility for 

children. 

(a) Basis. This section implements 

section 1902(e)(12) of the Act. 

(b) Eligibility. The agency may 

provide continuous eligibility for the 

length of a continuous eligibility period 


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specified in paragraph (c) of this section 

for an individual who is: 

(1) Under age 19 or under a younger 

age specified by the agency in its State 

plan; and 

(2) Eligible and enrolled for 

mandatory or optional coverage under 

the State plan in accordance with 

subpart B or C of this part. 

(c) Continuous eligibility period. (1) 

The agency must specify in the State 

plan the length of the continuous 

eligibility period, not to exceed 12 

months. 

(2) A continuous eligibility period 

begins on the effective date of the 

individual’s most recent determination 

or renewal of eligibility at the end of the 

length of the continuous eligibility 

period specified in the State plan. 

(d) Applicability. A child’s eligibility 

may not be terminated during a 

continuous eligibility period, regardless 

of any changes in circumstances, unless: 

(1) The child attains the maximum 

age specified in accordance with 

paragraph (b)(1) of this section; 

(2) The child or child’s representative 

requests a voluntary termination of 

eligibility; 

(3) The child ceases to be a resident 

of the State; 

(4) The agency determines that 

eligibility was erroneously granted at 

the most recent determination or 

renewal of eligibility because of agency 

error or fraud, abuse, or perjury 

attributed to the child or the child’s 

representative; or 

(5) The child dies. 

■ 80. Section 435.940 is amended by 

revising the first sentence to read as 

follows: 

§ 435.940 Basis and scope. 

The income and eligibility 

verification requirements set forth at 

§ 435.940 through § 435.960 of this part 

are based on sections 1137, 1902(a)(4), 

1902(a)(19), 1902(a)(46)(B), 1902(ee), 

1903(r)(3), 1903(x), and 1943(b)(3) of the 

Act, and section 1413 of the Affordable 

Care Act. * * * 

■ 81. Section 435.952 is amended by 

adding paragraph (c)(3) to read as 

follows: 

§ 435.952 Use of information and requests 

of additional information from individuals. 

* * * * * 

(c) * * * 

(3) Exception for Special 

Circumstances: The agency must 

establish an exception to permit, on a 

case-by-case basis, self-attestation of 

individuals for all eligibility criteria 

when documentation does not exist at 

the time of application or is not 

reasonably available, such as for 

individuals who are homeless or have 

experienced domestic violence or a 

natural disaster. Except that this does 

not apply if documentation is 

specifically required under title XIX, 

such as is the case of verifying 

citizenship and immigration status, as 

implemented at § 435.956(a) of this part. 

* * * * * 

■ 82. Section 435.956 is amended by— 

■ A. Adding paragraph (a). 

■ B. Adding paragraph (g). 

The revision and addition read as 

follows: 

§ 435.956 Verification of other nonfinancial information. 

(a) Citizens and Non-citizens. (1) The 

agency must verify citizenship and 

immigration status through the 

electronic service established in 

§ 435.949 if available. If the agency is 

unable to verify citizenship or 

immigration status through such service 

the agency must— 

(i) Verify citizenship in accordance 

with section 1902(ee) of the Act or 

§ 435.407 of this part consistent with the 

requirements of § 435.952(c)(2)(ii) of 

this part. 

(ii) Verify immigration status in 

accordance with section 1137(d) of the 

Act and § 435.406 of this part, 

consistent with the requirements of 

§ 435.952(c)(2)(ii) of this part. 

(2) If the agency cannot promptly 

verify the citizenship or immigration 

status of an individual in accordance 

with paragraph (a)(1) of this section, the 

agency— 

(i) Must comply with paragraph (g) of 

this section; and 

(ii) May not delay, deny, reduce or 

terminate benefits for an individual who 

is otherwise eligible for Medicaid 

during the reasonable opportunity 

period described in paragraph (g) of this 

section, in accordance with § 435.911(c) 

of this part. 

(3) The agency must maintain a record 

of having verified citizenship or 

immigration status for each individual, 

in a case record or electronic database. 

The agency may not re-verify or require 

an individual to re-verify citizenship at 

a renewal of eligibility or subsequent 

application following a break in 

coverage. 

* * * * * 

(g) Reasonable opportunity period. (1) 

The agency must provide a reasonable 

opportunity period to individuals for 

whom the agency is unable to promptly 

verify citizenship or satisfactory 

immigration status in accordance with 

paragraph (a) of this section, as well as 

notice of such opportunity. Such notice 

must be accessible to persons who are 

limited English proficient and 

individuals with disabilities, consistent 

with § 435.905(b) of this chapter. During 

such reasonable opportunity period, the 

agency must, if relevant to verification 

of the individual’s status— 

(i) Assist the individual in obtaining 

an SSN, in accordance with § 435.910; 

(ii) Attempt to resolve any 

inconsistencies, including typographical 

or other clerical errors, between 

information provided by the individual 

and data from an electronic data source, 

and resubmit corrected information to 

the electronic data source. 

(iii) Provide the individual with 

information on how to contact the 

source of the electronic data so he or she 

can attempt to resolve such 

inconsistencies directly with such 

source; and 

(iv) Permit the individual to provide 

other documentation of citizenship or 

immigration status, in accordance with 

section 1137(d) of the Act and § 435.406 

and § 435.407 of this part. 

(2) The reasonable opportunity 

period— 

(i) Begins on, and must extend 90 

days from, the date on which the notice 

described in paragraph (g)(1) of this 

section is received by the individual. 

The date on which the notice is received 

is considered to be 5 days after the date 

on the notice, unless the individual 

shows that he or she did not receive the 

notice within the 5-day period. 

(ii) At state option, may be extended 

beyond 90 days if the individual is 

making a good faith effort to resolve any 

inconsistencies or obtain any necessary 

documentation in accordance with 

paragraph (g)(1) of this section or the 

agency needs more time to complete the 

verification process. 

(3) At State option, the agency may 

begin to furnish benefits to otherwise 

eligible individuals during the 

reasonable opportunity period under 

paragraph (a)(2)(ii) of this section on an 

earlier date, up to and including the 

date the notice is sent or the date of 

application containing the declaration 

of citizenship or immigration status by 

or on behalf of the individual. 

(4) If, by the end of the reasonable 

opportunity period, the individual’s 

citizenship or immigration status has 

not been verified in accordance with 

paragraph (a) of this section, the agency 

must take action within 30 days to 

terminate eligibility in accordance with 

part 431 subpart E (relating to notice 

and appeal rights), except that § 431.230 

and § 431.231 of this part (relating to 

maintaining and reinstating services) 

may be applied at State option. 

■ 83. Section 435.1001 is amended by— 

■ A. Republishing paragraph (a) 

introductory language. 


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4696 Federal Register / Vol. 78, No. 14 / Tuesday, January 22, 2013 / Proposed Rules 

■ B. Revising paragraph (a)(2). 

The revisions read as follows: 

§ 435.1001 FFP for administration. 

(a) FFP is available in the necessary 

administrative costs the State incurs 

in— 

* * * * * 

(2) Administering presumptive 

eligibility. 

* * * * * 

■ 84. Section 435.1002 is amended by— 

■ A. Republishing paragraph (c) 

introductory language. 

■ B. Revising paragraphs (c)(1) and 

(c)(4). 

The revisions read as follows: 

§ 435.1002 FFP for services. 

* * * * * 

(c) FFP is available in expenditures 

for services covered under the plan that 

are furnished— 

(1) During a presumptive eligibility 

period to individuals who are 

determined to be presumptively eligible 

for Medicaid in accordance with subpart 

L of this part; 

* * * * * 

(4) Regardless of whether such 

individuals file an application for a full 

eligibility determination or are 

determined eligible for Medicaid 

following the presumptive eligibility 

period. 

■ 85. Section 435.1004 is amended by 

revising paragraph (b) to read as follows: 

§ 435.1004 Beneficiaries overcoming 

certain conditions of eligibility. 

* * * * * 

(b) FFP is available for a period not 

to exceed— 

(1) The period during which a 

recipient of SSI or an optional State 

supplement continues to receive cash 

payments while these conditions are 

being overcome; or 

(2) For beneficiaries, eligible for 

Medicaid only and recipients of SSI or 

an optional State supplement who do 

not continue to receive cash payments, 

the second month following the month 

in which the beneficiary’s Medicaid 

coverage would have been terminated. 

■ 86. Section 435.1008 is revised to read 

as follows: 

§ 435.1008 FFP in expenditures for 

medical assistance for individuals who 

have declared citizenship or nationality or 

satisfactory immigration status. 

(a) This section implements sections 

1137 and 1902(a)(46)(B)of the Act. 

(b) Except as provided in paragraph 

(c) of this section, FFP is not available 

to a State for expenditures for medical 

assistance furnished to individuals 

unless the State has verified citizenship 

or immigration status in accordance 

with § 435.956 of this part. 

(c) FFP is available to States for 

otherwise eligible individuals whose 

declaration of U.S. citizenship or 

satisfactory immigration status in 

accordance with section 1137(d) of the 

Act and § 435.406(a)(1)(i) of this part 

has been verified in accordance with 

§ 435.956, or for whom benefits are 

provided during a reasonable 

opportunity period to verify citizenship, 

nationality, or immigration status in 

accordance with section § 435.956(a)(2) 

of this part. 

FFP for Premium Assistance 

■ 87. Add a new undesignated center 

heading immediately following 

§ 435.1012 as set forth above. 

■ 88. Section 435.1015 is added to read 

as follows: 

§ 435.1015 FFP for premium assistance for 

plans in the individual market. 

(a) FFP is available for payment of the 

costs of insurance premiums for an 

individual health plan on behalf of an 

individual who is eligible for Medicaid 

under this part, subject to the following 

conditions: 

(1) The insurer is obligated to pay 

primary to Medicaid for all health care 

items and services for which the insurer 

is legally and contractually responsible 

under the individual health plan, as 

required under part 433 subpart D of 

this chapter; 

(2) The agency furnishes all benefits 

for which the individual is covered 

under the State plan that are not 

available through the individual health 

plan; 

(3) The individual does not incur any 

cost sharing charges in excess of any 

amounts imposed by the agency under 

subpart A of part 447; and 

(4) The cost of purchasing such 

coverage, including administrative 

expenditures and the costs of providing 

wraparound benefits for items and 

services covered under the Medicaid 

State plan, but not covered under the 

individual health plan, must be 

comparable to the cost of providing 

direct coverage under the State plan. 

(b) A State may not require an 

individual who is eligible for services 

under the Medicaid State plan to enroll 

in premium assistance under this 

section as a condition of eligibility 

under this part. 

Subpart L—Options for Coverage of 

Special Groups Under Presumptive 

Eligibility 

■ 89. The heading for subpart L is 

revised as set forth above. 

■ 90. Section 435.1100 is revised to read 

as follows: 

§ 435.1100 Basis for presumptive 

eligibility. 

This subpart implements sections 

1920, 1920A, 1920B, 1920C, and 

1902(a)(47)(B) of the Act. 

■ 91. Remove the undesignated center 

heading ‘‘Presumptive Eligibility for 

Children’’ that is immediately before 

§ 435.1101. 

■ 92. Section 435.1101 is amended by— 

■ A. Removing the definition of 

‘‘Application form.’’ 

■ C. Adding the definition of 

‘‘Application.’’ 

■ D. Amending the definition of 

‘‘Qualified entity’’ by redesignating 

paragraph (10) as paragraph (11), and 

adding a new paragraph (10). 

The additions read as follows: 

§ 435.1101 Definitions related to 

presumptive eligibility for children. 

Application means, consistent with 

the definition at § 435.4 of this part, the 

single streamlined application adopted 

by the agency under § 435.907(a) of this 

part. 

* * * * * 

Qualified entity * * * 

(10) Is a health facility operated by the 

Indian Health Service, a Tribe or Tribal 

organization under the Indian Self 

Determination and Education 

Assistance Act (25 U.S.C. 450 et seq.), 

or an Urban Indian Organization under 

title V of the Indian Health Care 

Improvement Act (25 U.S.C. 1651 et 

seq.). 

* * * * * 

■ 93. Section 435.1102 is amended by— 

■ A. Revising the section heading. 

■ B. Revising paragraphs (a) and (b)(3). 

■ C. Removing ‘‘and’’ at the end of 

paragraph (b)(2)(iv)(B) and adding 

‘‘and’’ at the end of paragraph 

(b)(2)(v)(B); 

■ D. Adding paragraphs (b)(2)(vi), (d) 

and (e). 

■ E. Removing paragraph (b)(4). 

The revisions and additions read as 

follows: 

§ 435.1102 Children covered under 

presumptive eligibility. 

(a) The agency may elect to provide 

Medicaid services for children under 

age 19 or a younger age specified by the 

State during a presumptive eligibility 

period following a determination by a 

qualified entity, on the basis of 

preliminary information, that the 

individual has gross income (or, at state 

option, a reasonable estimate of 

household income, as defined in 

§ 435.603 of this part, determined using 

simplified methods prescribed by the 


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agency) at or below the income standard 

established by the State for the age of 

the child under § 435.118(c) or under 

§ 435.229 if applicable and higher. 

(b) * * * 

(2) * * * 

(vi) Do not delegate the authority to 

determine presumptive eligibility to 

another entity. 

(3) Establish oversight mechanisms to 

ensure that presumptive eligibility 

determinations are being made 

consistent with the statute and 

regulations. 

* * * * * 

(d) The agency— 

(1) May require, for purposes of 

making a presumptive eligibility 

determination under this section, that 

the individual has attested to being, or 

another person who attests to having 

reasonable knowledge of the 

individual’s status has attested to the 

individual being, a— 

(i) Citizen or national of the United 

States or in satisfactory immigration 

status; or 

(ii) Resident of the State; and 

(2) May not— 

(i) Impose other conditions for 

presumptive eligibility not specified in 

this section; or 

(ii) Require verification of the 

conditions for presumptive eligibility. 

(e) Notice and fair hearing regulations 

in subpart E of part 431 of this chapter 

do not apply to determinations of 

presumptive eligibility under this 

section. 

■ 94. Section 435.1103 is added to read 

as follows: 

§ 435.1103 Presumptive eligibility for other 

individuals. 

(a) The terms of § 435.1101 and 

§ 435.1102 of this subpart apply to 

pregnant women such that the agency 

may provide Medicaid to pregnant 

women during a presumptive eligibility 

period following a determination by a 

qualified entity that the pregnant 

woman has income at or below the 

income standard established by the 

State under § 435.116(c), except that 

coverage of services provided to such 

women are limited to ambulatory 

prenatal care and the number of 

presumptive eligibility periods that may 

be authorized for pregnant women is 

one per pregnancy. 

(b) If the agency provides Medicaid 

during a presumptive eligibility period 

to children under § 435.1102 of this 

subpart or to pregnant women under 

paragraph (a) of this section, the agency 

may also apply the terms of § 435.1101 

and § 435.1102 of this subpart to the 

individuals described in one or more of 

the following sections of this part, based 

on the income standard established by 

the state for such individuals and 

providing the benefits covered under 

that section: §§ 435.110 (parents and 

caretaker relatives), 435.119 

(individuals aged 19 or older and under 

age 65), 435.150 (former foster care 

children), and 435.218 (individuals 

under age 65 with income above 133 

percent FPL). 

(c)(1) The terms of § 435.1101 and 

§ 435.1102 of this subpart apply to 

individuals who may be eligible under 

§ 435.213 of this part (relating to 

individuals with breast or cervical 

cancer) or § 435.214 of this part (relating 

to eligibility for limited family planning 

benefits) such that the agency may 

provide Medicaid during a presumptive 

eligibility period following a 

determination by a qualified entity 

described in paragraph (c)(2) of this 

section that— 

(i) The individual meets the eligibility 

requirements of § 435.213; or 

(ii) The individual meets the 

eligibility requirements of § 435.214, 

except that coverage provided during a 

presumptive eligibility period to such 

individuals is limited to the services 

described in § 435.214(d). 

(2) Qualified entities described in this 

paragraph include qualified entities 

which participate as a provider under 

the State plan and which the agency 

determines are capable of making 

presumptive eligibility determinations. 

■ 95. Section 435.1110 is added to read 

as follows: 

§ 435.1110 Presumptive eligibility 

determined by hospitals. 

(a) Basic rule. The agency must 

provide Medicaid during a presumptive 

eligibility period to individuals who are 

determined by a qualified hospital, on 

the basis of preliminary information, to 

be presumptively eligible in accordance 

with the policies and procedures 

established by the State consistent with 

this section and §§ 435.1102 and 

435.1103 of this part, but regardless of 

whether the agency provides Medicaid 

during a presumptive eligibility period 

under such sections. 

(b) Qualified hospitals. A qualified 

hospital is a hospital that— 

(1) Participates as a provider under 

the State plan or a demonstration under 

section 1115 of the Act, notifies the 

agency of its election to make 

presumptive eligibility determinations 

under this section, and agrees to make 

presumptive eligibility determinations 

consistent with State policies and 

procedures; 

(2) At State option, assists individuals 

in completing and submitting the full 

application and understanding any 

documentation requirements; and 

(3) Has not been disqualified by the 

agency in accordance with paragraph (d) 

of this section. 

(c) State options for bases of 

presumptive eligibility. The agency 

may— 

(1) Limit the determinations of 

presumptive eligibility which hospitals 

may elect to make under this section to 

determinations based on income for 

children, pregnant women, parents and 

caretaker relatives, and other adults, 

consistent with § 435.1102 and 

§ 435.1103 of this subpart; or 

(2) Permit hospitals to elect to make 

presumptive eligibility determinations 

on additional bases under the State plan 

or an 1115 demonstration. 

(d) Disqualification of hospitals. (1) 

The agency may establish standards for 

qualified hospitals related to the 

proportion of individuals determined 

presumptively eligible for Medicaid by 

the hospital who: 

(i) Submit a regular application, as 

described in § 435.907 of this part, 

before the end of the presumptive 

eligibility period; or 

(ii) Are determined eligible for 

Medicaid by the agency based on such 

application. 

(2) The agency must take action, 

including, but not limited to, 

disqualification of a hospital as a 

qualified hospital under this section, if 

the agency determines that the hospital 

is not— 

(i) Making, or is not capable of 

making, presumptive eligibility 

determinations in accordance with 

applicable state policies and 

procedures; or 

(ii) Meeting the standard or standards 

established by the agency under 

paragraph (d)(1) of this section. 

■ 96. Section 435.1200 is amended by— 

■ A. Revising the section heading. 

■ B. Revising paragraphs (a), (b), (c) 

introductory text, (c)(3), (d), and (e). 

■ C. Adding paragraphs (g). 

The revisions and additions read as 

follows. 

§ 435.1200 Medicaid agency 

responsibilities for a coordinated eligibility 

and enrollment process with other 

insurance affordability programs. 

(a) Statutory basis, purpose, and 

definitions. (1) Statutory basis and 

purpose. This section implements 

sections 1943(b)(3) and 2201(b)(3)(B) of 

the Affordable Care Act to ensure 

coordinated eligibility and enrollment 

among insurance affordability programs. 

(2) Definitions. 

(i) Combined eligibility notice has the 

meaning as provided in § 435.4 of this 

part. 


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(ii) Coordinated content has the 

meaning as provided in § 435.4 of this 

part. 

(b) General requirements and 

definitions. The State Medicaid agency 

must— 

(1) Fulfill the responsibilities set forth 

in paragraphs (d) through (g) and, if 

applicable, paragraph (c) of this section. 

(2) Certify for the Exchange and other 

insurance affordability programs the 

criteria applied in determining 

Medicaid eligibility. 

(3) Enter into and, upon request, 

provide to the Secretary one or more 

agreements with the Exchange, 

Exchange appeals entity and the 

agencies administering other insurance 

affordability programs as are necessary 

to fulfill the requirements of this 

section, including a clear delineation of 

the responsibilities of each program to— 

(i) Minimize burden on individuals 

seeking to obtain or renew eligibility or 

to appeal a determination of eligibility 

for enrollment in a QHP or with respect 

to one or more insurance affordability 

program; 

(ii) Ensure compliance with 

paragraphs (d) through (g) of this section 

and, if applicable, paragraph (c) of this 

section; 

(iii) Ensure prompt determinations of 

eligibility and enrollment in the 

appropriate program without undue 

delay, consistent with timeliness 

standards established under § 435.912, 

based on the date the application is 

submitted to any insurance affordability 

program. 

(iv) Provide for a combined eligibility 

notice to individuals, as well as 

multiple members of the same 

household applying on the same 

application to the maximum extent 

feasible, for enrollment in a QHP 

through the Exchange and all insurance 

affordability programs. 

(4) To the extent to which a combined 

eligibility notice is not feasible for all 

members of the same household, 

applying on the same application, 

coordinated content must be provided 

for those household members whose 

eligibility status is not yet determined. 

(c) Provision of Medicaid for 

individuals found eligible for Medicaid 

by another insurance affordability 

program. If the agency has entered into 

an agreement in accordance with 

§ 431.10(d) of this chapter under which 

the Exchange or other insurance 

affordability program makes final 

determinations of Medicaid eligibility, 

for each individual determined so 

eligible by the Exchange (including as a 

result of a decision made by the 

Exchange or Exchange appeals entity 

authorized under § 431.10(c) of this 

chapter to adjudicate appeals of 

Medicaid eligibility determinations) or 

other program, the agency must— 

* * * * * 

(3) Include in the agreement into 

which the agency has entered under 

paragraph (b)(3) of this section that the 

Exchange or other insurance 

affordability program will provide 

combined eligibility notice of final 

eligibility determinations and appeals 

decisions made by it; and 

(d) Transfer from other insurance 

affordability programs to the State 

Medicaid agency. For individuals for 

whom another insurance affordability 

program has not made a determination 

of Medicaid eligibility, but who have 

been assessed by such program 

(including as a result of a decision made 

by the Exchange appeals entity) as 

potentially Medicaid eligible, and for 

individuals not so assessed, but who 

otherwise request a full determination 

by the Medicaid agency, the agency 

must— 

(1) Accept, via secure electronic 

interface, the electronic account for the 

individual and notify such program of 

the receipt of the electronic account. 

(2) Not request information or 

documentation from the individual 

provided in the individual’s electronic 

account, or to another insurance 

affordability program or appeals entity. 

(3) Promptly and without undue 

delay, consistent with timeliness 

standards established under § 435.912, 

determine the Medicaid eligibility of the 

individual, in accordance with 

§ 435.911 of this part, without requiring 

submission of another application, 

and— 

(i) Effective January 1, 2015, for 

individuals determined eligible for 

Medicaid, provide combined eligibility 

notice, including notice of a denial or 

termination of the individual’s 

eligibility for enrollment in a QHP 

through the Exchange or other insurance 

affordability programs, as applicable. 

(ii) For individuals determined not 

eligible for Medicaid, comply with 

paragraph (e) of this section as if the 

individual had submitted an application 

to the agency. 

(4) Accept any finding relating to a 

criterion of eligibility made by such 

program or appeals entity, without 

further verification, if such finding was 

made in accordance with policies and 

procedures which are the same as those 

applied by the agency or approved by it 

in the agreement described in paragraph 

(b)(3) of this section; and 

(5) Notify such program of the final 

determination of the individual’s 

eligibility or ineligibility for Medicaid. 

(e) Evaluation of eligibility for other 

insurance affordability programs. 

(1) Individuals determined not eligible 

for Medicaid. For individuals who 

submit an application or return a 

renewal form to the agency which 

includes sufficient information to 

determine Medicaid eligibility, or 

whose eligibility is being renewed 

pursuant to a change in circumstance in 

accordance with § 435.916(d) of this 

part, and whom the agency determines 

are not eligible for Medicaid, and for 

individuals determined ineligible for 

Medicaid pursuant to fair hearing under 

subpart E of part 431 of this chapter, the 

agency must— 

(i) Promptly and without undue 

delay, consistent with timeliness 

standards established under § 435.912 of 

this part, determine potential eligibility 

for, and, as appropriate, transfer via a 

secure electronic interface the 

individual’s electronic account to, other 

insurance affordability programs; 

(ii) Include in any agreement into 

which the agency enters in accordance 

with paragraph (b)(3) of this section, 

that, effective January 1, 2015, such 

other program will issue a combined 

eligibility notice, including the agency’s 

denial of Medicaid eligibility. 

(iii) Prior to January 1, 2015— 

(A) Include coordinated content, as 

defined in § 435.4 of the part, in the 

notice of Medicaid denial or 

termination, provided to the individual 

in accordance with § 435.917 of this 

part, relating to the transfer of the 

individual’s account; or 

(B) Include in the agreement into 

which the agency enters in accordance 

with (b)(3) of this section, that such 

other program will issue a combined 

eligibility notice, including the agency’s 

denial of Medicaid eligibility. 

(2) Individuals undergoing a Medicaid 

eligibility determination on a basis other 

than MAGI. In the case of an individual 

with household income greater than the 

applicable MAGI standard and for 

whom the agency is determining 

eligibility on another basis in 

accordance with § 435.911(c)(2) of this 

part, the agency must promptly and 

without undue delay, consistent with 

timeliness standards established under 

§ 435.912 of this part— 

(i) Determine potential eligibility for, 

and as appropriate, transfer via secure 

electronic interface the individual’s 

electronic account to, other insurance 

affordability programs and provide 

timely notice to such other program— 

(A) That the individual is not 

Medicaid eligible on the basis of the 

applicable MAGI standard, but that a 

final determination of Medicaid 


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eligibility on other bases is still 

pending; and 

(B) Of the agency’s final 

determination of eligibility or 

ineligibility for Medicaid. 

(ii) Provide notice to the individual, 

consistent with § 435.917 of this part, 

that the agency— 

(A) Has determined the individual 

ineligible for Medicaid on the basis of 

having household income at or below 

the applicable MAGI standard; and 

(B) Is continuing to evaluate Medicaid 

eligibility on other bases, including a 

plain language explanation of the other 

bases being considered. 

(C) Such notice must include 

coordinated content relating to the 

transfer of the individual’s electronic 

account to the other insurance 

affordability program and explanation 

that eligibility for or enrollment in such 

program will not affect the 

determination of Medicaid eligibility on 

other bases; and 

(iii) Provide the individual with 

notice, consistent with § 435.917 of this 

part, of the final determination of 

eligibility on the other bases. In the case 

of individuals determined eligible for 

Medicaid on a basis other than having 

income at or below the applicable 

modified adjusted gross income 

standard, such notice also must contain 

coordinated content informing the 

individual of the notice provided to the 

Exchange or other program in 

accordance with paragraph (e)(2)(i)(II) of 

this section and that approval of 

Medicaid eligibility will result in 

termination of eligibility for and by the 

other program if the individual is 

enrolled in such program. 

(3) The agency may enter into an 

agreement with the Exchange to make 

determinations of eligibility for 

enrollment in a QHP through the 

Exchange, advance payments of the 

premium tax credit and cost-sharing 

reductions, consistent with 45 CFR 

155.110(a)(2). 

* * * * * 

(g) Coordination involving appeals 

entities. The agency must— 

(1) Establish a secure electronic 

interface the through which— 

(i) The Exchange can notify the 

agency that an appeal of eligibility for 

enrollment in a QHP through the 

Exchange, advance payments of the 

premium tax credit, or cost-sharing 

reductions, has been filed; and 

(ii) The individual’s electronic 

account, including any information 

provided by the individual as part of an 

appeal to either the agency or Exchange 

appeals entity, can be transferred from 

one program or appeals entity to the 

other. 

(2) In conducting a fair hearing in 

accordance with subpart E or part 431 

of this chapter, not request information 

or documentation from the individual 

included in the individual’s electronic 

account or provided to the Exchange or 

Exchange appeals entity. 

(3)(i) In the case of individuals 

described in paragraph (g)(3)(ii) of this 

section, transmit to the Exchange, 

through the electronic interface 

established under paragraph (g)(1)(i) of 

this section, the hearing decision made 

by the agency under part 431 subpart E; 

(ii) Individuals described in this 

paragraph include individuals 

determined ineligible for Medicaid— 

(A) By the Exchange; or 

(B) By the agency and transferred to 

the Exchange in accordance with 

paragraph (e)(1) or (2) of this section. 

■ 97. Section 435.1205 is added to read 

as follows: 

§ 435.1205 Alignment with exchange initial 

open enrollment period. 

(a) References and definitions. For 

purposes of this section— 

(1) March 23, 2012 final rule refers to 

the Final rule; Interim final rule 

published on March 23, 2012 at 77 

Federal Register 17144. 

(2) Eligibility based on MAGI means 

Medicaid eligibility based on the 

eligibility requirements which will be 

effective under the State plan, or waiver 

of such plan, as of January 1, 2014, 

consistent with §§ 435.110—435.119, 

435.218 and 435.603 of the March 23, 

2012 final rule, as revised in subsequent 

rulemaking. 

(3) Electronic account, insurance 

affordability program and secure 

electronic interface have the meanings 

provided in § 435.4 of the March 23, 

2012 final rule, as revised in subsequent 

rulemaking. 

(b) The following are effective for 

purposes of this section as of October 1, 

2013: 

(1) Provisions of § 431.10(c) of this 

chapter, as revised in the March 23, 

2012 rule and subsequent rulemaking, 

relating to the agency’s ability to 

delegate authority to make eligibility 

determinations to the Exchange; 

(2) Sections 435.916 and 435.952 of 

the March 23, 2012 final rule, as revised 

in subsequent rulemaking. 

(c) Medicaid agency responsibilities to 

achieve coordinated open enrollment. 

For the period beginning October 1, 

2013 through December 31, 2013, the 

agency must 

(1) Accept— 

(i) The single streamlined application 

described in § 435.907 of the March 23, 

2012 final rule, as revised in subsequent 

rulemaking; and 

(ii) Via secure electronic interface, an 

electronic account transferred from 

another insurance affordability program. 

(2) With respect to eligibility based on 

MAGI effective January 1, 2014, comply 

with the terms of § 435.1200 of this part, 

such that— 

(i) For each electronic account 

transferred to the agency under 

paragraph (c)(1)(ii) of this section, the 

agency either— 

(A) Consistent with § 435.1200(c), 

accepts a determination of Medicaid 

eligibility based on MAGI, effective 

January 1, 2014, made by another 

insurance affordability program; or 

(B) Consistent with § 435.1200(d), 

determines eligibility for Medicaid 

based on MAGI, effective January 1, 

2014. 

(ii) Consistent with § 435.1200(e), for 

each single streamlined application 

submitted directly to the agency under 

paragraph (b)(1)(i) of this section— 

(A) Determine eligibility based on 

MAGI effective January 1, 2014; and 

(B) For each individual determined 

not Medicaid eligible based on MAGI, 

determine potential eligibility for other 

insurance affordability programs, based 

on the requirements which will be 

effective for each program as of January 

1, 2014, and transfer the individual’s 

electronic account to such program via 

secure electronic interface. 

(iii) Provide notice and fair hearing 

rights, in accordance with § 435.917 of 

this part, part 431 subpart E of this 

chapter, and § 435.1200 for those 

determined ineligible for Medicaid 

effective January 1, 2014. 

(3) For each individual determined 

eligible based on MAGI in accordance 

with paragraph (c)(2) of this section— 

(i) Provide notice, including the 

effective date of eligibility, to such 

individual, consistent with § 435.917 of 

this part, and furnish Medicaid effective 

January 1, 2014. 

(ii) Apply the terms of § 435.916 

(relating to beneficiary responsibility to 

inform the agency of any changes in 

circumstances that may affect eligibility) 

and § 435.952 (regarding use of 

information received by the agency) of 

the March 23, 2012 final rule, as revised 

in subsequent rulemaking. The first 

renewal under § 435.916 of this part 

may, at State option, be scheduled to 

occur anytime between 12 months from 

the date of application and 12 months 

from January 1, 2014. 

(4) With respect to eligibility effective 

in 2013, for all applicants— 

(i) Consistent with the requirements 

of subpart J of this part, and applying 

the eligibility requirements in effect 

under the State plan, or waiver of such 

plan, as of the date the individual 


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submits an application to any insurance 

affordability program— 

(A) Determine the individual’s 

eligibility based on the information 

provided on the application or in the 

electronic account; or 

(B) Request additional information 

from the individual needed by the 

agency to determine eligibility based on 

the eligibility requirements in effect on 

such date, including on a basis excepted 

from application of MAGI-based 

methods, as described in § 435.603 of 

the March 23, 2012 final rule, as revised 

in subsequent rulemaking, and 

determine such eligibility if such 

information is provided; and 

(C) Furnish Medicaid to individuals 

determined eligible pursuant to this 

clause or provide notice and fair hearing 

rights in accordance with part 431 

subpart E of this part if eligibility 

effective in 2013 is denied; or 

(ii) Notify the individual of the 

opportunity to submit a separate 

application for coverage effective in 

2013 and information on how to obtain 

and submit such application. 

PART 440—SERVICES: GENERAL 

PROVISIONS 

■ 98. The authority citation for part 440 

continues to read as follows: 

Authority: Sec. 1102 of the Social Security 

Act (42 U.S.C. 1302). 

■ 99. Section 440.130 is amended by 

revising paragraph (c) to read as follows: 

§ 440.130 Diagnostic, screening, 

preventive, and rehabilitative services. 

* * * * * 

(c) Preventive services means services 

recommended by a physician or other 

licensed practitioner of the healing arts 

acting within the scope of authorized 

practice under State law. 

■ 100. Section 440.305 is amended by 

revising paragraphs (a) and (b) to reads 

as follows: 

§ 440.305 Scope. 

(a) General. This subpart sets out 

requirements for States that elect to 

provide medical assistance to certain 

Medicaid eligible individuals within 

one or more groups of individuals 

specified by the State, through 

enrollment of the individuals in 

coverage, identified as ‘‘benchmark’’ or 

‘‘benchmark-equivalent.’’ Groups must 

be identified by characteristics of 

individuals rather than the amount or 

level of Federal matching funding. 

(b) Limitations. A State may only 

apply the option in paragraph (a) of this 

section for an individual whose 

eligibility is based on an eligibility 

category under section 1905(a) of the 

Act that could have been covered under 

the State’s plan on or before February 8, 

2006, except that individuals who are 

eligible under 1902(a)(10)(A)(i)(VIII) 

must enroll in an Alternative Benefit 

Plan, unless meeting one of the 

exemptions listed in § 440.315. 

* * * * * 

■ 101. Section 440.315 is amended by 

revising the introductory text and 

paragraphs (f) and (h) to read as follows: 

§ 440.315 Exempt individuals. 

Individuals within one (or more) of 

the following categories are exempt 

from mandatory enrollment in an 

Alternative Benefit Plan. 

* * * * * 

(f) The individual is medically frail or 

otherwise an individual with special 

medical needs. For these purposes, the 

State’s definition of individuals who are 

medically frail or otherwise have special 

medical needs must at least include 

those individuals described in 

§ 438.50(d)(3) of this chapter, 

individuals with disabling mental 

disorders (including children with 

serious emotional disturbances and 

adults with serious mental illness), 

individuals with serious and complex 

medical conditions, individuals with a 

physical, intellectual or developmental 

disability that significantly impairs their 

ability to perform 1 or more activities of 

daily living, or individuals with a 

disability determination based on Social 

Security criteria or in States that apply 

more restrictive criteria than the 

Supplemental Security Income program, 

the State plan criteria. 

* * * * * 

(h) The individual is eligible and 

enrolled for Medicaid under § 435.145 

of this title based on current eligibility 

for assistance under title IV–E of the Act 

or under § 435.150 of this title based on 

current status as a former foster care 

child. 

* * * * * 

■ 102. Section 440.330 is amended by 

revising paragraph (d) to read as 

follows: 

§ 440.330 Benchmark health benefits 

coverage. 

* * * * * 

(d) Secretary-approved coverage. Any 

other health benefits coverage that the 

Secretary determines, upon application 

by a State, provides appropriate 

coverage to meet the needs of the 

population provided that coverage. 

Secretarial coverage may include 

benefits of the type that are available 

under 1 or more of the standard 

benchmark coverage packages defined 

in § 440.330(a) through (c) of this 

chapter, State plan benefits described in 

section 1905(a), 1915(i), 1915(j), 1915(k) 

or section 1945 of the Act, any other 

Medicaid State plan benefits enacted 

under title XIX, or benefits available 

under base benchmark plans described 

in 45 CFR 156.100. 

(1) States wishing to elect Secretarial 

approved coverage should submit a full 

description of the proposed coverage 

(including a benefit-by-benefit 

comparison of the proposed plan to one 

or more of the three other benchmark 

plans specified above or to the State’s 

standard full Medicaid coverage 

package), and of the population to 

which coverage would be offered. In 

addition, the State should submit any 

other information that would be 

relevant to a determination that the 

proposed health benefits coverage 

would be appropriate for the proposed 

population. 

(2) [Reserved] 

■ 103. Section 440.335 is amended by— 

■ A. Adding paragraphs (b)(7)and (b)(8). 

■ B. Revising paragraph (c)(1). 

The revisions and additions read as 

follows: 

§ 440.335 Benchmark-equivalent health 

benefits coverage. 

* * * * * 

(b) * * * 

(7) Prescription drugs. 

(8) Mental health benefits. 

(c)(1) Additional Coverage. In 

addition to the types of benefits of this 

section, benchmark-equivalent coverage 

may include coverage for any additional 

benefits of the type which are covered 

in 2 or more of the standard benchmark 

coverage packages described in 

§ 440.330(a through c) of this part or 

State plan benefits, described in section 

1905(a), 1915(i), 1915(j), 1915(k) and 

1945 of the Act, any other Medicaid 

State plan benefits enacted under title 

XIX, or benefits available under base 

benchmark plans described in 

§ 156.100. 

* * * * * 

■ 104. Section 440.345 is amended by— 

■ A. Revising the section heading. 

■ B. Adding paragraphs (b) through (e). 

The revision and additions read as 

follows: 

§ 440.345 EPSDT and other required 

benefits. 

* * * * * 

(b) Family planning. Alternative 

Benefit Plans must include coverage for 

family planning services and supplies. 

(c) Mental health parity. Alternative 

Benefit Plans that provide both medical 

and surgical benefits, and mental health 

or substance use disorder benefits, must 

comply with the Mental Health Parity 

and Addiction Equity Act. 


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(d) Essential health benefits. 

Alternative Benefit Plans must include 

at least the essential health benefits 

described in § 440.347, and include all 

updates or modifications made 

thereafter by the Secretary to the 

definition of essential health benefits. 

(e) Updating of benefits. States are not 

required to update Alternative Benefit 

Plans that have been determined to 

include essential health benefits as of 

January 1, 2014, until December 31, 

2015. States will adhere to future 

guidance for updating benefits beyond 

that date, as described by the Secretary. 

■ 105. Section 440.347 is added to read 

as follows: 

§ 440.347 Essential health benefits. 

(a) Alternative benefit plans must 

contain essential health benefits 

coverage, including benefits in each of 

the following ten categories, consistent 

with the requirements set forth in 45 

CFR Part 156: 

(1) Ambulatory patient services; 

(2) Emergency services; 

(3) Hospitalization; 

(4) Maternity and newborn care; 

(5) Mental health and substance use 

disorders, including behavioral health 

treatment; 

(6) Prescription drugs; 

(7) Rehabilitative and habilitative 

services and devices; 

(8) Laboratory services; 

(9) Preventive and wellness services 

and chronic disease management; and 

(10) Pediatric services, including oral 

and vision care. 

(b) Alternative benefit plans must 

include at least the essential health 

benefits included in one of the state 

options for establishing essential health 

benefits described in 45 CFR part 156. 

(c) States may select more than one 

option for establishing essential health 

benefits in keeping with the flexibility 

for States to implement more than one 

alternative benefit plan for targeted 

populations. 

(d) [Reserved] 

(e) Essential health benefits cannot be 

based on a benefit design or 

implementation of a benefit design that 

discriminates on the basis of an 

individual’s age, expected length of life, 

or of an individual’s present or 

predicted disability, degree of medical 

dependency, or quality of life or other 

health conditions. 

■ 106. Section 440.360 is revised to read 

as follows: 

§ 440.360 State plan requirements for 

providing additional services. 

In addition to the requirements of 

§ 440.345, the State may elect to provide 

additional coverage to individuals 

enrolled in alternative benefit plans, 

except that the coverage for individuals 

eligible only through section 

1902(a)(10)(A)(i)(VIII) of the Act who 

are not exempt is limited to benchmark 

or benchmark equivalent coverage. The 

State must describe the populations 

covered and the payment methodology 

for these benefits. Additional benefits 

must be benefits of the type, which are 

covered in one or more of the standard 

benchmark coverage packages described 

in § 440.330(a) through (c) or State plan 

benefits including those described in 

sections 1905(a), 1915(i), 1915(j), 

1915(k) and 1945 of the Act and any 

other Medicaid State plan benefits 

enacted under title XIX, or benefits 

available under base benchmark plans 

described in section § 156.100. 

■ 107. Section 440.386 is added to read 

as follows: 

§ 440.386 Public notice. 

States submitting to a State plan 

amendment to establish an alternative 

benefit plan, or an amendment to 

modify an existing alternative benefit 

plan, must provide the public with 

notification of such an amendment and 

reasonable opportunity to comment 

with respect to such amendment, have 

included in the notice a description of 

the method of assuring compliance with 

§ 440.345 of this part related to full 

access to EPSDT services and the 

method for complying with the 

provisions of section 5006(e) of the 

American Recovery and Reinvestment 

Act of 2009. 

(a) Public notice must take place no 

less than 2 weeks prior to submission of 

any SPA that seeks to: 

(1) Establish an alternative benefit 

plan that would provide coverage that is 

less than the coverage provided by the 

State’s approved State plan or includes 

cost sharing of any type. 

(2) Modify an approved alternative 

benefit plan by adding or increasing 

cost-sharing, or reducing benefits. 

(b) Public notice must take place prior 

to the implementation of any SPA that 

seeks to: 

(1) Establish an alternative benefit 

plan that provides the same or more 

benefits than currently are provided in 

the State’s approved State plan. 

(2) Modify an approved alternative 

benefit plan by reducing cost-sharing or 

adding additional benefits. 

PART 447—PAYMENTS FOR 

SERVICES 

■ 108. The authority citation for part 

447 continues to read as follows: 

Authority: Section 1102 of the Social 

Security Act (42 U.S.C. 1302). 

■ 109. Section 447.50 is revised to read 

as follows: 

§ 447.50 Premiums and cost sharing: 

Basis and purpose 

Sections 1902(a)(14), 1916 and 1916A 

of the Act permit states to require 

certain beneficiaries to share in the costs 

of providing medical assistance through 

premiums and cost sharing. Sections 

447.52 through 447.56 specify the 

standards and conditions under which 

states may impose such premiums and 

or cost sharing. 

■ 110. Section 447.51 is revised to read 

as follows: 

§ 447.51 Definitions 

As used in this part— 

Alternative non-emergency services 

provider means a Medicaid provider, 

such as a physician’s office, health care 

clinic, community health center, 

hospital outpatient department, or 

similar provider that can provide 

clinically appropriate services in a 

timely manner. 

Cost sharing means any copayment, 

coinsurance, deductible, or other similar 

charge. 

Emergency services has the same 

meaning as in § 438.114 of this part. 

Indian means any individual defined 

at 25 U.S.C. 1603 or 1679(b), or who has 

been determined eligible as an Indian, 

pursuant to § 136.12 of this part, or 

meets any of the following criteria: 

(1) Is a member of a Federallyrecognized Indian tribe; 

(2) Resides in an urban center and 

meets one or more of the following four 

criteria: 

(i) Is a member of a tribe, band, or 

other organized group of Indians, 

including those tribes, bands, or groups 

terminated since 1940 and those 

recognized now or in the future by the 

State in which they reside, or who is a 

descendant, in the first or second 

degree, of any such member; 

(ii) Is an Eskimo or Aleut or other 

Alaska Native; 

(iii) Is considered by the Secretary of 

the Interior to be an Indian for any 

purpose; or 

(iv) Is determined to be an Indian 

under regulations promulgated by the 

Secretary; 

(3) Is considered by the Secretary of 

the Interior to be an Indian for any 

purpose; or 

(4) Is considered by the Secretary of 

Health and Human Services to be an 

Indian for purposes of eligibility for 

Indian health care services, including as 

a California Indian, Eskimo, Aleut, or 

other Alaska Native. 

Indian health care provider means a 

health care program operated by the 


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Indian Health Service (IHS) or by an 

Indian Tribe, Tribal Organization, or 

Urban Indian Organization (otherwise 

known as an I/T/U) as those terms are 

defined in section 4 of the Indian Health 

Care Improvement Act (25 U.S.C. 1603). 

Non-emergency services means any 

care or services that are not considered 

emergency services as defined in this 

section and any services furnished in a 

hospital emergency department that do 

not constitute an appropriate medical 

screening examination or stabilizing 

examination and treatment required to 

be provided by the hospital under 

section 1867 of the Act. 

Preferred drugs means drugs that the 

state has identified on a publicly 

available schedule as being determined 

by a pharmacy and therapeutics 

committee for clinical efficacy as the 

most cost effective drugs within each 

therapeutically equivalent or 

therapeutically similar class of drugs, or 

all drugs if the agency does not 

differentiate between preferred and nonpreferred drugs. 

Premium means any enrollment fee, 

premium, or other similar charge. 

■ 111. Section 447.52 is revised to read 

as follows: 

§ 447.52 Cost sharing. 

(a) Except as provided in § 447.56 of 

this part, the agency may impose cost 

sharing for any service under the state 

plan. 

(b) Maximum Allowable Cost Sharing. 

(1) At State option, cost sharing 

imposed for any service (other than for 

drugs and emergency department 

services, as described in §§ 447.53 and 

447.54 respectively) may be established 

at or below the amounts shown in the 

following table (except that the 

maximum allowable cost for individuals 

with family income at or below 100 

percent of the FPL shall be increased 

each year, beginning October 1, 2015, by 

the percentage increase in the medical 

care component of the CPI–U for the 

period of September to September of the 

preceding calendar year, rounded to the 

next higher 5-cent increment): 

Individuals with family income 

≤100% FPL 

Individuals with family income 

101–150% FPL 

Individuals with family income 

>150% FPL 

Outpatient Services (physician 

visit, physical therapy, etc.).

$4 .................................................. 10% of cost the agency pays ....... 20% of cost the agency pays. 

Inpatient Stay ................................. 50% of cost the agency pays for 

the first day of care.

50% of cost the agency pays for 

the first day of care or 10% of 

total cost the agency pays for 

the entire stay.

50% of cost the agency pays for 

the first day of care or 20% of 

total cost the agency pays for 

the entire stay. 

(2) In states that do not have fee-forservice payment rates, any cost sharing 

imposed may not exceed the maximum 

amount established in paragraph (b)(1) 

of this section, for individuals with 

income at or below 100 percent of the 

applicable Federal Poverty Guidelines. 

(3) In no case shall the maximum cost 

sharing established by the agency be 

equal to or exceed the amount the 

agency pays for the service. 

(c) Targeted cost sharing. For 

individuals with family income above 

100 percent of the applicable Federal 

Poverty Guidelines, cost sharing may be 

targeted to specified groups of 

individuals within the applicable 

income group. 

(d) Denial of service for nonpayment. 

(1) The agency may permit a provider, 

including a pharmacy or hospital, to 

require an individual to pay cost sharing 

as a condition for receiving the item or 

service if— 

(i) The individual has family income 

above 100 percent of the applicable 

Federal Poverty Guidelines, 

(ii) The individual is not part of an 

exempted group under § 447.56(a) of 

this part, and 

(iii) With respect to cost sharing 

imposed for non-emergency services 

furnished in an emergency department, 

the conditions under § 447.54(d) have 

been satisfied. 

(2) Except as provided under 

paragraph (d)(1) of this section, the state 

plan must specify that no provider may 

deny services to an eligible individual 

on account of the individual’s inability 

to pay the cost sharing. 

(3) Nothing in this section shall be 

construed as prohibiting a provider from 

choosing to reduce or waive such cost 

sharing on a case-by-case basis. 

(e) Prohibition against multiple 

charges. For any service, the agency 

may not impose more than one type of 

cost sharing. 

(f) State Plan Specifications. For each 

cost sharing charge imposed under this 

section, the state plan must specify— 

(1) The service for which the charge 

is made; 

(2) The group or groups of individuals 

that may be subject to the charge; 

(3) The amount of the charge; 

(4) The process used by the state to 

identify which beneficiaries are subject 

to cost sharing and to ensure 

individuals exempt from cost sharing 

are not charged, including the process 

used by the state to identify for 

providers whether cost sharing for a 

specific item or service may be imposed 

on an individual beneficiary and 

whether the provider may require the 

beneficiary, as a condition for receiving 

the item or service, to pay the cost 

sharing charge; and 

(5) If the agency imposes cost sharing 

under § 447.54, the process by which 

services are identified as non-emergent. 

■ 112. Section 447.53 is revised to read 

as follows: 

§ 447.53 Cost sharing for drugs. 

(a) The agency may establish 

differential cost sharing for preferred 

and non-preferred drugs. The provisions 

in § 447.56(a) shall apply except as the 

agency exercises the option under 

paragraph (d) of this section. All drugs 

will be considered preferred drugs if so 

identified or if the agency does not 

differentiate between preferred and nonpreferred drugs. 

(b) At state option, cost sharing for 

drugs may be established at or below the 

amounts shown in the following table 

(except that the maximum allowable 

cost sharing shall be increased each 

year, beginning October 1, 2015, by the 

percentage increase in the medical care 

component of the CPI–U for the period 

of September to September of the 

preceding calendar year, rounded to the 

next higher 5-cent increment. Such 

increase shall not be applied to any cost 

sharing that is based on the amount the 

agency pays for the service): 

Individuals 

with family income 

≤ 150% FPL 

Individuals 

with family income 

>150% FPL 

Preferred 

Drugs.

$4 $4. 

Non-Preferred 

Drugs.

8 20% of cost 

the agency 

pays. 

(c) In states that do not have fee-forservice payment rates upon which to 

base the payment, cost sharing may not 


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exceed the maximum amount 

established under paragraph (b) of this 

section for individuals with income at 

or below 150 percent of the FPL. 

(d) For individuals otherwise exempt 

from cost sharing under § 447.56(a), the 

agency may impose cost sharing for 

non-preferred drugs, not to exceed the 

maximum amount established in 

paragraph (b) of this section for 

preferred drugs. 

(e) In the case of a drug that is 

identified by the agency as a nonpreferred drug within a therapeutically 

equivalent or therapeutically similar 

class of drugs, the agency must have a 

process in place so that cost sharing is 

limited to the amount imposed for a 

preferred drug if the individual’s 

prescribing physician determines that 

the preferred drug for treatment of the 

same condition either would be less 

effective for the individual or would 

have adverse effects for the individual 

or both. In such cases the agency must 

ensure that reimbursement to the 

pharmacy is based on the appropriate 

cost sharing amount. 

■ 113. Section 447.54 is revised to read 

as follows: 

§ 447.54 Cost sharing for services 

furnished in a hospital emergency 

department. 

(a) The agency may impose cost 

sharing for non-emergency services 

provided in a hospital emergency 

department (ED). The provisions in 

§ 447.56(a) shall apply except as the 

agency exercises the option under 

paragraph (c) of this section. 

(b) At state option, cost sharing for 

non-emergency services provided in an 

ED may be established at or below the 

amounts shown in the following table 

(except that the maximum allowable 

cost sharing identified for individuals 

with family income at or below 150 

percent of the FPL shall be increased 

each year, beginning October 1, 2015, by 

the percentage increase in the medical 

care component of the CPI–U for the 

period of September to September of the 

preceding calendar year, rounded to the 

next higher 5-cent increment): 

Individuals 

with family income 

≤150% FPL 

Individuals 

with family income 

>150% FPL 

Non-emergency Use 

of the 

Emergency Department.

$8 No Limit. 

(c) For individuals otherwise exempt 

from cost sharing under § 447.56(a), the 

agency may impose cost sharing for 

non-emergency use of the ED, not to 

exceed the maximum amount 

established in paragraph (a) of this 

section for individuals with income at 

or below 150 percent of the FPL. 

(d) In order for the agency to impose 

cost sharing under paragraph (a) or (c) 

of this section for non-emergency use of 

the ED, the hospital providing the care 

must— 

(1) Conduct an appropriate medical 

screening pursuant to § 489.24 of this 

chapter to determine that the individual 

does not need emergency services. 

(2) Before providing treatment and 

imposing cost sharing on an individual: 

(i) Provide the individual with the 

name and location of an available and 

accessible alternative non-emergency 

services provider; 

(ii) Ensure that the alternative 

provider can provide services to the 

individual in a timely manner with the 

imposition of a lesser cost sharing 

amount or no cost sharing if the 

individual is otherwise exempt from 

cost sharing; and 

(iii) Coordinate scheduling and 

provide a referral for treatment by this 

provider. 

(e) Nothing in this section shall be 

construed to: 

(1) Limit a hospital’s obligations with 

respect to screening and stabilizing 

treatment of an emergency medical 

condition under section 1867 of the Act; 

or 

(2) Modify any obligations under 

either state or federal standards relating 

to the application of a prudentlayperson standard with respect to 

payment or coverage of emergency 

medical services by any managed care 

organization. 

■ 114. Section 447.55 is revised to read 

as follows: 

§ 447.55 Premiums. 

(a) The agency may impose premiums 

upon individuals whose income 

exceeds 150 percent of the FPL, subject 

to the exemptions set forth in 

§ 447.56(a) and the aggregate limitations 

set forth in § 447.56(f), except that: 

(1) Pregnant women described in 

subparagraph (A) of section 1902(l)(1) of 

the Act who are receiving medical 

assistance on the basis of section 

1902(a)(10)(A)(ii)(IX) of the Act, whose 

income exceeds 150 percent of the FPL, 

may be charged premiums that do not 

exceed 10 percent of the amount by 

which their family income exceeds 150 

percent of the FPL after deducting 

expenses for care of a dependent child. 

(2) Individuals provided medical 

assistance only under section 

1902(a)(10)(A)(ii)(XV) or section 

1902(a)(10)(A)(ii)(XVI) of the Act and 

the Ticket to Work and Work Incentives 

Improvement Act of 1999 (TWWIIA), 

may be charged premiums on a sliding 

scale based on income. 

(3) Disabled children provided 

medical assistance under section 

1902(a)(10)(A)(ii)(XIX) of the Act in 

accordance with the Family 

Opportunity Act, may be charged 

premiums on a sliding scale based on 

income. The aggregate amount of the 

child’s premium imposed under this 

paragraph and any premium that the 

parent is required to pay for family 

coverage under section 1902(cc)(2)(A)(i) 

of the Act, and other cost sharing 

charges may not exceed: 

(i) 5 percent of the family’s income if 

the family’s income is no more than 200 

percent of the FPL. 

(ii) 7.5 percent of the family’s income 

if the family’s income exceeds 200 

percent of the FPL but does not exceed 

300 percent of the FPL. 

(4) Qualified disabled and working 

individuals described in section 1905(s) 

of the Act, may be charged premiums on 

a sliding scale based on income, 

expressed as a percentage of Medicare 

cost sharing described at section 

1905(p)(3)(A)(i) of the Act. 

(5) Medically needy individuals, as 

defined in §§ 435.4 and 436.3 of this 

subchapter, may be charged on a sliding 

scale not to exceed $20 per month. 

(b) State plan specifications. For each 

premium, enrollment fee, or similar 

charge imposed under paragraph (a) or 

(b) of this section, the plan must 

specify— 

(1) The group or groups of individuals 

that may be subject to the charge; 

(2) The amount and frequency of the 

charge; 

(3) The process used by the state to 

identify which beneficiaries are subject 

to premiums and to ensure individuals 

exempt from premiums are not charged; 

and 

(4) The consequences for an 

individual or family who does not pay. 

(c) Consequences for non-payment. (1) 

With respect to premiums imposed 

under paragraph (a) (1) of this section, 

the agency may— 

(i) Require a group or groups of 

individuals to prepay; and 

(ii) Terminate an individual from 

medical assistance on the basis of 

failure to pay for 60 days or more. 

(2) With respect to premiums imposed 

under paragraphs (a)(2) and (4), the 

agency— 

(i) May not require prepayment; 

(ii) May terminate an individual from 

medical assistance on the basis of 

failure to pay the premium for 60 days 

or more; and 

(iii) Specific to premiums imposed 

under paragraph (a)(2) of this section, 


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permit state or local funds available 

under other programs to be used for 

payment of a premium. Such funds 

shall not be counted as income to the 

individual with respect to whom such 

payment is made. 

(3) With respect to premiums imposed 

under paragraph (a)(3) of this section— 

(i) For individuals with annual 

income exceeding 250 percent of the 

FPL, the agency may require payment of 

100 percent of the premiums imposed 

under this paragraph for a year, such 

that payment is only required up to 7.5 

percent of annual income for 

individuals whose annual income does 

not exceed 450 percent of the FPL. 

(ii) For individuals whose annual 

adjusted gross income (as defined in 

section 62 of the Internal Revenue Code 

of 1986) exceeds $75,000, increased by 

inflation each calendar year after 2000, 

the agency must require payment of 100 

percent of the premiums for a year, 

except that the agency may choose to 

subsidize the premiums using state 

funds which may not be federally 

matched by Medicaid. 

(4) With respect to any premiums 

imposed under this section, the agency 

may waive payment of a premium in 

any case where the agency determines 

that requiring the payment would create 

an undue hardship for the individual or 

family. 

■ 115. Section 447.56 is revised to read 

as follows: 

§ 447.56 Limitations on premiums and 

cost sharing. 

(a) Exemptions. (1) The agency may 

not impose premiums or cost sharing 

upon the following groups of 

individuals: 

(i) Children under 18 years of age 

(and, at the option of the State, 

individuals under 21, 20, or 19 years of 

age, or any reasonable category of 

individuals 18 years of age or over but 

under 21) who either have family 

income at or below 100 percent of the 

FPL or are described in section 

1902(a)(10)(A)(i) of the Act. 

(ii) Children for whom child welfare 

services are made available under Part 

B of title IV of the Act on the basis of 

being a child in foster care and 

individuals with respect to whom 

adoption or foster care assistance is 

made available under Part E of that title, 

without regard to age. 

(iii) Disabled children, except as 

provided at § 447.55(a)(4)(premiums), 

who are receiving medical assistance by 

virtue of the application of the Family 

Opportunity Act in accordance with 

sections 1902(a)(10)(A)(ii)(XIX) and 

1902(cc) of the Act. 

(iv) Pregnant women, except as 

provided in paragraph (2)(cost sharing) 

and § 447.55(a)(2)(premiums), during 

the pregnancy and through the 

postpartum period which begins on the 

last day of pregnancy and extends 

through the end of the month in which 

the 60-day period following termination 

of pregnancy ends. 

(v) Any individual who, as a 

condition of receiving services in an 

institution is required to spend all but 

a minimal amount of the individual’s 

income required for personal needs. At 

state option, this exemption may be 

applied to individuals receiving services 

in a home and community-based setting 

if they are required to contribute to the 

cost of their care. 

(vi) An individual receiving hospice 

care, as defined in section 1905(o) of the 

Act. 

(vii) An Indian who is eligible to 

receive or has received an item or 

service furnished by an Indian health 

care provider or through referral under 

contract health services is exempt from 

premiums. Indians who are currently 

receiving or have ever received an item 

or service furnished by an Indian health 

care provider or through referral under 

contract health services are exempt from 

all cost sharing. 

(viii) Individuals who are receiving 

Medicaid because of the state’s election 

to extend coverage as authorized by 

§ 435.213 (Breast and Cervical Cancer). 

(2) The agency may not impose cost 

sharing for the following services: 

(i) Emergency services as defined at 

section 1932(b)(2) of the Act and 

§ 438.114(a); 

(ii) Family planning services and 

supplies described in section 

1905(a)(4)(C) of the Act, including 

contraceptives and pharmaceuticals for 

which the State claims or could claim 

Federal match at the enhanced rate 

under section 1903(a)(5) of the Act for 

family planning services and supplies; 

(iii) Preventive services, at a 

minimum the services specified at 

§ 457.520, provided to children under 

18 years of age regardless of family 

income, which reflect the well-baby and 

well child care and immunizations in 

the Bright Futures guidelines issued by 

the American Academy of Pediatrics; 

and 

(iv) Pregnancy-related services, 

including those defined at 

§§ 440.210(a)(2) and 440.250(p), and 

counseling and drugs for cessation of 

tobacco use All services provided to 

pregnant women will be considered as 

pregnancy-related, except those services 

specifically identified in the state plan 

as not being related to the pregnancy. 

(b) Applicability. Except as permitted 

under § 447.52(c) (targeted cost sharing), 

the agency may not exempt additional 

individuals from cost sharing 

obligations that apply generally to the 

population at issue. 

(c) Payments to providers. (1) Except 

as provided under paragraphs (c)(2) and 

(c)(3) of this section, the agency must 

reduce the payment it makes to a 

provider by the amount of a 

beneficiary’s cost sharing obligation, 

regardless of whether the provider has 

collected the payment or waived the 

cost sharing. 

(2) For items and services provided to 

Indians who are exempt from cost 

sharing under paragraph (a)(1)(vii) of 

this section, the agency may not reduce 

the payment it makes to a provider, 

including an Indian health care 

provider, by the amount of cost sharing 

that would otherwise be due from the 

Indian. 

(3) For those providers that the agency 

reimburses under Medicare reasonable 

cost reimbursement principles, in 

accordance with subpart B of this part, 

an agency may increase its payment to 

offset uncollected deductible, 

coinsurance, copayment, or similar 

charges that are bad debts of providers. 

(d) Payments to managed care 

organizations. If the agency contracts 

with a managed care organization, the 

agency must calculate its payments to 

the organization to include cost sharing 

established under the state plan, for 

beneficiaries not exempt from cost 

sharing under paragraph (a) of this 

section, regardless of whether the 

organization imposes the cost sharing 

on its recipient members or the cost 

sharing is collected. 

(e) Payments to states. No FFP in the 

state’s expenditures for services is 

available for— 

(1) Any premiums or cost sharing 

amounts that recipients should have 

paid under §§ 447.52 through 447.55 

(except for amounts that the agency 

pays as bad debts of providers under 

paragraph (a)(3) of this section; and 

(2) Any amounts paid by the agency 

on behalf of ineligible individuals, 

whether or not the individual had paid 

any required premium, except for 

amounts for premium assistance to 

obtain coverage for eligible individuals 

through family coverage that may 

include ineligible individuals when 

authorized in the approved state plan. 

(f) Aggregate limits. (1) Subject to 

paragraph (f)(2) of this section, any 

Medicaid premiums and cost sharing 

incurred by all individuals in the 

Medicaid household may not exceed an 

aggregate limit of 5 percent of the 

family’s income applied on either a 


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quarterly or monthly basis, as specified 

by the agency. 

(2) The aggregate limit in paragraph 

(f)(1) of this section shall apply when 

premiums and cost sharing are imposed 

on any of the following individuals: 

(i) Individuals who are subject to 

targeted cost sharing under § 447.52(c); 

(ii) Individuals who are subject to 

enforceable cost sharing under 

§ 447.52(d); 

(iii) Individuals who are subject to 

premiums under § 447.55(a)(1); and 

(iv) Individuals exempt from 

premiums and cost sharing under 

paragraph (a) of this section who are 

subject to cost sharing for non-preferred 

drugs under § 447.53 or non-emergency 

services furnished in an emergency 

department under § 447.54. 

(3) If the state adopts premiums or 

cost sharing rules that could place 

beneficiaries at risk of reaching the 

aggregate family limit, the state plan 

must indicate a process to track each 

family’s incurred premiums and cost 

sharing through an automated 

mechanism that does not rely solely on 

beneficiary documentation. 

(4) The agency must notify 

beneficiaries and providers when a 

beneficiary has incurred out-of-pocket 

expenses up to the aggregate family 

limit and individual family members are 

no longer subject to cost sharing for the 

remainder of the family’s current 

monthly or quarterly cap period. 

(5) The agency must have a process in 

place for beneficiaries to request a 

reassessment of their family aggregate 

limit if they have a change in 

circumstances or if they are being 

terminated for failure to pay a premium. 

(6) Nothing in this paragraph shall 

preclude the agency from establishing 

additional aggregate limits, including 

but not limited to a monthly limit on 

cost sharing charges for a particular 

service. 

■ 116. Section 447.57 is revised to read 

as follows: 

§ 447.57 Beneficiary and public notice 

requirements. 

(a) The agency must make available a 

public schedule describing current 

premiums and cost sharing 

requirements containing the following 

information: 

(1) The group or groups of individuals 

who are subject to premiums and/or 

cost sharing and the current amounts; 

(2) Mechanisms for making payments 

for required premiums and cost sharing 

charges; 

(3) The consequences for an applicant 

or recipient who does not pay a 

premium or cost sharing charge; 

(4) A list of hospitals charging cost 

sharing for non-emergency use of the 

emergency department; and 

(5) A list of preferred drugs or a 

mechanism to access such a list, 

including the agency Web site. 

(b) The agency must make the public 

schedule available to the following in a 

manner that ensures that affected 

applicants, beneficiaries, and providers 

are likely to have access to the notice: 

(1) Beneficiaries, at the time of their 

enrollment and reenrollment after a 

redetermination of eligibility, and when 

premiums, cost sharing charges, or 

aggregate limits are revised, notice to 

beneficiaries must be in accordance 

with § 435.905(b); 

(2) Applicants, at the time of 

application; 

(3) All participating providers; and 

(4) The general public. 

(c) Prior to submitting to the Centers 

for Medicare & Medicaid Services for 

approval a state plan amendment (SPA) 

to establish or substantially modify 

existing premiums or cost sharing, or 

change the consequences for nonpayment, the agency must provide the 

public with advance notice of the SPA, 

specifying the amount of premiums or 

cost sharing and who is subject to the 

charges. The agency must provide a 

reasonable opportunity to comment on 

such SPAs. The agency must submit 

documentation with the SPA to 

demonstrate that these requirements 

were met. 

§ 447.58 [Removed and Reserved] 

■ 117. Section 447.58 is removed and 

reserved. 

§ 447.59 [Removed and Reserved] 

■ 118. Section 447.59 is removed and 

reserved. 

§ 447.60 [Removed and Reserved] 

■ 119. Section 447.60 is removed and 

reserved. 

§ 447.62 [Removed and Reserved] 

■ 120. Section 447.62 is removed and 

reserved. 

§ 447.64 [Removed and Reserved] 

■ 121. Section 447.64 is removed and 

reserved. 

PART 457—ALLOTMENTS AND 

GRANTS TO STATES 

■ 122. The authority citation for part 

457 continues to read as follows: 

Authority: Section 1102 of the Social 

Security Act (42 U.S.C. 1302). 

■ 123. Section 457.10 is amended by— 

■ A. Revising the definition of 

‘‘electronic account.’’ 

■ B. Adding the definitions of 

‘‘Combined eligibility notice,’’ 

‘‘Coordinated content,’’ ‘‘Exchange 

appeals entity,’’ and ‘‘Premium Lock 

Out’’ in alphabetical order. 

The additions and revisions read as 

follows: 

§ 457.10 Definitions and use of terms. 

* * * * * 

Combined eligibility notice means an 

eligibility notice that informs an 

individual, or multiple family members 

of a household when feasible, of 

eligibility for each of the insurance 

affordability programs and enrollment 

in a qualified health plan through the 

Exchange, for which a determination or 

denial was made. A combined eligibility 

notice shall be issued by the last agency 

to make a determination of eligibility, 

regardless of which entity received the 

application. A combined notice must 

meet the requirements of § 457.340(e) of 

this part and contain the content 

described in § 457.340(e)(1) of this part, 

except that information described in 

§ 457.340(e)(1)(i)(C) must be included in 

a combined notice issued by another 

insurance affordability program only if 

known to that program. 

Coordinated content means 

information included in an eligibility 

notice regarding the transfer of the 

individual’s or households’ electronic 

account to another insurance 

affordability program for a 

determination of eligibility. 

* * * * * 

Electronic account means an 

electronic file that includes all 

information collected and generated by 

the State regarding each individual’s 

CHIP eligibility and enrollment, 

including all documentation required 

under § 457.380 of this part and 

including any information collected or 

generated as part of a review conducted 

in accordance with subpart K of this 

part. 

* * * * * 

Exchange appeals entity has the 

meaning given to the term ‘‘appeals 

entity,’’ as defined in 45 CFR 155.500. 

* * * * * 

Premium Lock-Out is defined as a 

State-specified period of time not to 

exceed 90 days that a CHIP eligible 

child who has an unpaid premium or 

enrollment fee (as applicable) will not 

be permitted to reenroll for coverage in 

CHIP. Premium lock-out periods are not 

applicable to children who have paid 

outstanding premiums or enrollment 

fees. 

* * * * * 

■ 124. Section 457.50 is revised to read 

as follows: 


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§ 457.50 State plan. 

The State plan is a comprehensive 

Statement, submitted using an 

automated process by the State to CMS. 

(a) States with approved paper State 

plans shall submit conversion plans to 

comply with the required automated 

format, with full compliance not later 

than 1 year following the availability of 

the automated template. 

(b) Thereafter, approved paper State 

plans or plan amendments shall be valid 

only temporarily to the extent 

specifically authorized and incorporated 

by reference under the approved 

automated State plan. 

■ 125. Section 457.60 is amended by 

revising the introductory text to read as 

follows: 

§ 457.60 Amendments. 

A State may seek to amend its 

approved State plan in whole or in part 

at any time through the automated 

submission of an amendment to CMS. 

* * * * * 

■ 126. Section 457.110 is amended by 

revising paragraph (a) to read as follows: 

§ 457.110 Enrollment assistance and 

information requirements. 

(a) Information disclosure. The State 

must make accurate, easily understood, 

information available to families of 

potential applicants, applicants and 

enrollees, and provide assistance to 

these families in making informed 

decisions about their health plans, 

professionals, and facilities. This 

information shall be provided in plain 

language and is accessible to 

individuals with disabilities and 

persons who are limited English 

proficient, consistent with § 435.905(b) 

of this part. 

(1) The State may provide notices to 

applicants and beneficiaries in 

electronic format, provided that the 

State establish safeguards in accordance 

with § 435.918 of this chapter. 

(2) [Reserved] 

* * * * * 

■ 127. Section § 457.310 is amended by 

revising paragraph (b)(2)(i) to read as 

follows: 

§ 457.310 Targeted low-income child. 

* * * * * 

(b) * * * 

(2) * * * 

(i) Found eligible or potentially 

eligible for Medicaid under policies of 

the State plan (determined through 

either the Medicaid application process 

or the screening process described at 

§ 457.350 of this part), except for 

eligibility under § 435.214 of this 

chapter (related to coverage for family 

planning services). 

* * * * * 

■ 128. Section 457.320 is amended by— 

■ A. Republishing paragraph (b) 

introductory text. 

■ B. Revising paragraph (b)(6). 

■ C. Redesignating paragraphs (c), (d), 

and (e) as paragraphs (d), (e), and (f), 

respectively. 

■ D. Adding paragraph (c). 

■ E. Revising newly redesignated 

paragraph (d). 

The addition and revisions read as 

follows: 

§ 457.320 Other eligibility standards. 

* * * * * 

(b) Prohibited eligibility standards. In 

establishing eligibility standards and 

methodologies, a State may not— 

* * * * * 

(6) Exclude individuals based on 

citizenship or nationality, to the extent 

that the children are U.S. citizens or 

U.S. nationals, or qualified non-citizens 

as defined in § 435.4 of this chapter, 

(except to the extent that 8 U.S.C. 

sections 1611, 1613, and 1641 precludes 

them from receiving Federal meanstested public benefits), as verified in 

accordance with § 457.380 of this part. 

* * * * * 

(c) Option to Cover Non-citizen 

Children and/or Pregnant Women. The 

State may cover non-citizen children or 

pregnant women who are lawfully 

present in the United States, as defined 

in § 435.4 of this chapter, but whose 

CHIP eligibility would otherwise be 

prohibited under § 457.320(b)(6) of this 

part, and otherwise meet the eligibility 

requirements for the CHIP program 

under this part or section 2112 of the 

Act, provided that the State has elected 

to provide Medicaid to the same 

population. 

(d) Citizenship and immigration 

status. All individuals, themselves or an 

adult member of the individual’s family 

or household, an authorized 

representative, or if the individual is a 

minor or incapacitated, someone acting 

responsibly for the individual, provided 

that such individual attests to having 

reasonable basis to make a declaration 

of such status, seeking coverage under a 

separate child health plan, must declare 

to be a citizen or national of the United 

States or a non-citizen in a satisfactory 

immigration status. 

* * * * * 

■ 129. Section 457.340 is amended by 

revising paragraphs (a) and (e) to read as 

follows: 

§ 457.340 Application for and enrollment in 

CHIP. 

(a) Application and renewal 

assistance, availability of program 

information, and Internet Web site. The 

terms of § 435.905, § 435.906, 

§ 435.907(h), § 435.908, 435.909, and 

§ 435.1200(f) of this chapter apply 

equally to the State in administering a 

separate CHIP. 

* * * * * 

(e) Notice of eligibility determinations. 

The State must provide each applicant 

or enrollee with timely and adequate 

written notice of any decision affecting 

their eligibility, including denial or 

termination, or suspension of eligibility, 

consistent with § 457.315, 457.348, and 

457.350 of this part. The notice must be 

written in plain language; and 

accessible to persons who are limited 

English proficient and individuals with 

disabilities, consistent with § 435.905(b) 

of this chapter and § 457.110 of this 

part. 

(1) Content of eligibility notice. 

(i) Notice of approved eligibility. Any 

notice of an approval of CHIP eligibility 

must include, but is not limited to the 

following information— 

(A) The basis and effective date of 

eligibility; 

(B) The circumstances under which 

the individual must report, and 

procedures for reporting, any changes 

that may affect the individual’s 

eligibility; 

(C) Information on benefits and 

services and if applicable, information 

relating to any premiums, enrollment 

fees, and cost sharing required, and 

information on the enrollee’s right and 

responsibilities, including the 

opportunity for review of matters 

described in § 457.1130 of this part. 

(ii) Notice of adverse action including 

denial, termination or suspension of 

eligibility. Any notice of denial, 

termination, or suspension of CHIP 

eligibility must contain—— 

(A) The basis supporting the action 

and the effective date, 

(B) Information on the individual’s 

right to a review process, in accordance 

with § 457.1180 of this part; 

(iii) In the case of a suspension or 

termination of eligibility, the State must 

provide sufficient notice to enable the 

child’s parent or other caretaker to take 

any appropriate actions that may be 

required to allow coverage to continue 

without interruption. 

* * * * * 

■ 130. Section 457.342 is added to read 

as follows: 


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§ 457.342 Continuous eligibility for 

children. 

(a) A State may provide continuous 

eligibility for children under CHIP 

consistent with § 435.926. 

(b) Besides as provided in 

§ 435.926(d) of this chapter, continuous 

eligibility may also be terminated for 

failure to pay required premiums or 

enrollment fees as provided for in the 

CHIP State plan. 

■ 131. Section 457.348 is amended by— 

A. Redesignating paragraphs (a) 

through (d) as paragraphs (b) through 

(e), respectively. 

B. Adding new paragraph (a). 

C. Revising newly redesignated 

paragraphs (b), (c) and (d). 

The revisions and additions read as 

follows: 

§ 457.348 Determinations of Children’s 

Health Insurance Program eligibility by 

other insurance affordability programs. 

(a) Definitions. 

Combined eligibility notice has the 

meaning as provided in § 457.10 of this 

part. 

Coordinated content has the meaning 

as provided in § 457.10 of this part. 

(b) Agreements with other insurance 

affordability programs. The State must 

enter into and, upon request, provide to 

the Secretary one or more agreements 

with the Exchange and the agencies 

administering other insurance 

affordability programs as are necessary 

to fulfill the requirements of this 

section, including a clear delineation of 

the responsibilities of each program to— 

(1) Minimize burden on individuals 

seeking to obtain or renew eligibility or 

to appeal a determination of eligibility 

with respect to one or more insurance 

affordability program; 

(2) Ensure compliance with paragraph 

(c) of this section, § 457.350 of this part, 

and if applicable, paragraph (d) of this 

section; 

(3) Ensure prompt determination of 

eligibility and enrollment in the 

appropriate program without undue 

delay, consistent with the timeliness 

standards established under 

§ 457.340(d) of this part, based on the 

date the application is submitted to any 

insurance affordability program, and 

(i) Provide for a combined notice to 

individuals, as well as multiple 

members of the same households 

applying on the same application to the 

maximum extent feasible and as 

expressly required in this section, for all 

insurance affordability programs. 

(ii) To the extent to which a combined 

eligibility notice is not feasible for all 

members of the same household, 

applying on the same application, 

coordinated content must be provided 

for those household members whose 

eligibility status is not yet determined. 

(c) Provision of CHIP for individuals 

found eligible for CHIP by another 

insurance affordability program. If a 

State accepts final determinations of 

CHIP eligibility made by another 

insurance affordability program, for 

each individual determined so eligible 

by the other insurance affordability 

program (including as a result of a 

decision made by the Exchange appeals 

entity authorized by the State to 

adjudicate reviews of CHIP eligibility 

determinations), the State must— 

(1) Establish procedures to receive, 

via secure electronic interface, the 

electronic account containing the 

determination of CHIP eligibility; 

(2) Comply with the provisions of 

§ 457.340 of this part to the same extent 

as if the application had been submitted 

to the State. 

(3) Include in the agreement into 

which the State has entered under 

paragraph (b) of this section that the 

Exchange or other insurance 

affordability program will provide 

combined eligibility notice of final 

eligibility determinations made by it; 

and 

(4) Maintain proper oversight of the 

eligibility determinations made by the 

other program. 

(d) Transfer from other insurance 

affordability programs to CHIP. For 

individuals for whom another insurance 

affordability program has not made a 

determination of CHIP eligibility, but 

who have been screened as potentially 

CHIP eligible by such program 

(including as a result of a decision made 

by the Exchange appeals entity), the 

State must— 

(1) Accept, via secure electronic 

interface, the electronic account for the 

individual and notify such program of 

the receipt of the electronic account. 

(2) Not request information or 

documentation from the individual 

already provided to the other insurance 

affordability program and included in 

the individual’s electronic account or 

other transmission from the other 

program or appeals entity; 

(3) Promptly and without undue 

delay, consistent with the timeliness 

standards established under 

§ 457.340(d) of this part, determine the 

CHIP eligibility of the individual, in 

accordance with § 457.340 of this part, 

without requiring submission of another 

application; 

(i) Effective January 1, 2015, for 

individuals determined eligible for 

CHIP, provide combined eligibility 

notice, including of a denial or 

termination of eligibility for other 

insurance affordability programs, as 

applicable. 

(ii) For individuals determined not 

eligible for CHIP, comply with 

§ 457.350(i) of this section. 

(4) Accept any finding relating to a 

criterion of eligibility made by such 

program or appeals entity, without 

further verification, if such finding was 

made in accordance with policies and 

procedures which are the same as those 

applied by the State in accordance with 

§ 457.380 of this part or approved by it 

in the agreement described in paragraph 

(a) of this section; 

(5) Notify such program of the final 

determination of the individual’s 

eligibility or ineligibility for CHIP. 

* * * * * 

132. Section 457.350 is amended by 

revising paragraph (b) introductory text 

and paragraphs (f), (g), (h), (i), and (j) to 

read as follows: 

§ 457.350 Eligibility screening and 

enrollment in other insurance affordability 

programs. 

* * * * * 

(b) A State must, promptly and 

without undue delay, consistent with 

the timeliness standards established 

under § 457.340(d) of this subpart, 

identify potential eligibility for other 

insurance affordability programs of any 

applicant, enrollee, or other individual 

who submits an application or renewal 

form to the State which includes 

sufficient information to determine 

CHIP eligibility, or whose eligibility is 

being renewed under a change in 

circumstance in accordance with 

§ 457.343 of this subpart or who is 

determined not eligible for CHIP 

pursuant to a review conducted in 

accordance with subpart K of this part, 

as follows: 

* * * * * 

(f) Applicants found potentially 

eligible for Medicaid based on modified 

adjusted gross income. For individuals 

identified in paragraph (b)(1), the State 

must— 

(1) Promptly and without undue 

delay, consistent with the timeliness 

standards established under 

§ 457.340(d) of this part, transfer the 

individual’s electronic account to the 

Medicaid agency via a secure electronic 

interface; 

(2) Include in any agreement into 

which the agency enters in accordance 

with paragraph § 457.348(a) of this 

section, that, effective January 1, 2015, 

such other program will issue a 

combined eligibility notice, including 

the State’s denial of CHIP eligibility; 

(3) Except as provided in § 457.355 of 

this subpart, find the individual at 

application ineligible, provisionally 


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ineligible, or suspend the individual’s 

application for CHIP unless and until 

the Medicaid application for the 

individual is denied; and 

(4) Determine or redetermine 

eligibility for CHIP, consistent with the 

timeliness standards established under 

§ 457.340(d) of this part, if— 

(i) The State is notified, in accordance 

with § 435.1200(d)(5) of this chapter 

that the applicant has been found 

ineligible for Medicaid; or 

(ii) The State is notified prior to the 

final Medicaid eligibility determination 

that the applicant’s circumstances have 

changed and another screening shows 

that the applicant is no longer 

potentially eligible for Medicaid. 

(g) Informed application decisions. To 

enable a family to make an informed 

decision about applying or completing 

the application process for Medicaid, or 

other insurance affordability programs, 

a State must provide the child’s family 

with information, in writing, about— 

(1) The State’s Medicaid program and 

other insurance affordability programs, 

including the benefits covered, and 

restrictions on cost sharing; and 

(2) Eligibility rules that prohibit 

children who have been screened 

eligible for Medicaid from being 

enrolled in a separate child health 

program, other than provisional 

temporary enrollment while a final 

Medicaid eligibility determination is 

being made. 

(3) The State will determine the 

written format and timing of the 

information regarding Medicaid, or 

other insurance affordability program, 

eligibility, benefits, and the application 

processes required under this paragraph 

(g) of this section. 

(h) Waiting lists, enrollment caps and 

closed enrollment. The State must 

establish procedures to ensure that— 

(1) The procedures developed in 

accordance with this section have been 

followed for each child applying for a 

separate child health program before 

placing the child on a waiting list or 

otherwise deferring action on the child’s 

application for the separate child health 

program; and 

(2) Families are informed that a child 

may be eligible for Medicaid, or other 

insurance affordability programs, if 

circumstances change while the child is 

on a waiting list for separate child 

health program. 

(i) Applicants found potentially 

eligible for other insurance affordability 

programs. For individuals identified in 

paragraph (b)(3) of this section, 

including during a period of 

uninsurance imposed by the State under 

§ 457.805 of this part, the State must— 

(1) Promptly and without undue 

delay, consistent with the timeliness 

standards established under 

§ 457.340(d) of this part, transfer the 

electronic account to the applicable 

program via a secure electronic 

interfaces. 

(2) Include in any agreement into 

which the agency enters in accordance 

with paragraph § 457.348(a) of this 

section, that, effective January 1, 2015, 

such other program will issue a 

combined eligibility notice, including 

the State’s denial of CHIP eligibility. 

(3) In the case of individuals subject 

to a period of uninsurance under this 

part, the State must notify such program 

of the date on which such period ends 

and the individual is eligible to enroll 

in CHIP. 

(i) Prior to January 1, 2015— 

(A) Include coordinated content, as 

defined in § 457.104 of the part, in the 

notice of CHIP denial or termination, 

provided to the individual in 

accordance with § 457.340 of this part, 

relating to the transfer of the 

individual’s account; or 

(B) Include in the agreement into 

which the agency enters in accordance 

with 457.348(a) of this section, that such 

other program will issue a combined 

eligibility notice, including the State’s 

denial of CHIP eligibility. 

(ii) [Reserved] 

(j) Applicants potentially eligible for 

Medicaid on a basis other than modified 

adjusted gross income. For individuals 

identified in paragraph (b)(2) of this 

section, the State must— 

(1) Promptly and without undue 

delay, consistent with the timeliness 

standards established under 

§ 457.340(d) of this section, transfer the 

electronic account to the Medicaid 

agency via a secure electronic interface; 

(2) Complete the determination of 

eligibility for CHIP in accordance with 

§ 457.340 of this part; 

(3) Include in any agreement into 

which the agency enters in accordance 

with paragraph § 457.348(a) of this 

section, that, effective January 1, 2015, 

such other program will issue a 

combined eligibility notice, including 

the State’s denial of CHIP eligibility. 

(i) Prior to January 1, 2015— 

(A) Include coordinated content, as 

defined in § 457.104 of the part, in the 

notice of CHIP denial or termination, 

provided to the individual in 

accordance with § 457.340 of this part, 

relating to the transfer of the 

individual’s account; or 

(B) Include in the agreement into 

which the agency enters in accordance 

with 457.348(a) of this section, that such 

other program will issue a combined 

eligibility notice, including the State’s 

denial of CHIP eligibility. 

(ii) [Reserved] 

(4) Dis-enroll the enrollee from CHIP 

if the State is notified in accordance 

with § 435.1200(d)(5) of this chapter 

that the applicant has been determined 

eligible for Medicaid. 

* * * * * 

■ 133. Section 457.351 is added to read 

as follows: 

§ 457.351 Coordination involving appeals 

entities for different insurance affordability 

programs. 

The State must— 

(a) Establish a secure electronic 

interface the through which— 

(1) The Exchange can notify the State 

that an appeal of eligibility for 

enrollment in a QHP through the 

Exchange, advance payments of the 

premium tax credit, or cost-sharing 

reductions, has been filed; and 

(2) An individual’s electronic 

account, including any information 

provided by the individual as part of 

review under subpart K of this part or 

an appeal to the Exchange appeals 

entity, can be transferred from one 

program or appeals entity or review 

body to the other. 

(b) In conducting review in 

accordance with subpart K of this part, 

not request information or 

documentation from the individual 

included in the individual’s electronic 

account or provided to the Exchange or 

Exchange appeals entity. 

(c)(1) In the case of individuals 

described in paragraph (c)(2) of this 

section, transmit to the Exchange, 

through the electronic interface 

established under paragraph (a) of this 

section, a review decision issued per 

subpart K of this part; 

(2) Individuals described in this 

paragraph include individuals 

determined ineligible for CHIP. 

(i) By the Exchange or 

(ii) By the State and transferred to the 

Exchange in accordance with 

§ 457.350(i) of this part. 

■ 134. Section 457.355 is revised to read 

as follows: 

§ 457.355 Presumptive eligibility for 

children. 

The State may pay costs of coverage 

under a separate child health program 

during a presumptive eligibility period, 

determined in the same manner as 

Medicaid presumptive eligibility at 

§ 435.1102 of this chapter, for children 

applying for coverage under the separate 

child health program. 

■ 135. Section 457.360 is added to read 

as follows: 


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§ 457.360 Deemed newborn children. 

(a) Basis. This section implements 

section 2112(e) of the Act. 

(b) Eligibility. (1) The agency must 

provide CHIP to children from birth 

until the child’s first birthday without 

application if— 

(i) The child’s mother was eligible for 

and received covered services for the 

date of the child’s birth under the 

State’s separate CHIP State plan as a 

targeted low-income pregnant woman in 

accordance with section 2112 of the Act, 

or at State option as a targeted lowincome child; and 

(ii) The child is not eligible for 

Medicaid under § 435.117 of this 

chapter. 

(2) The child is deemed to have 

applied and been determined eligible 

under the State’s separate CHIP State 

plan effective as of the date of birth, and 

remains eligible regardless of changes in 

circumstances (except if the child dies 

or ceases to be a resident of the State or 

the child’s representative requests a 

voluntary termination of the child’s 

eligibility) until the child’s first 

birthday. 

(c) At State option, the agency may 

provide deemed newborn eligibility 

under CHIP to a child whose mother for 

the date of the child’s birth was eligible 

for and receiving: 

(1) CHIP coverage in another State; or 

(2) Coverage under the State’s 

demonstration under section 1115 of the 

Act as a Medicaid or CHIP population. 

(d) CHIP identification number. (1) 

The CHIP identification number of the 

mother serves as the child’s 

identification number, and all claims for 

covered services provided to the child 

may be submitted and paid under such 

number, unless and until the State 

issues a separate identification number 

for the child in accordance with 

paragraph (d)(2) of this section. 

(2) The State must issue a separate 

CHIP identification number for the child 

prior to the effective date of any 

termination of the mother’s CHIP 

eligibility or prior to the date of the 

child’s first birthday, whichever is 

sooner, unless the child is determined 

to be ineligible, except that the State 

must issue a separate CHIP 

identification number for the child if the 

mother was covered in another State at 

the time of birth. 

■ 136. Section 457.370 is added to read 

as follows: 

§ 457.370 Alignment with Exchange initial 

open enrollment period. 

The terms of § 435.1205 apply equally 

to the State in administering a separate 

CHIP, except that the State shall make 

available and accept the application 

described in § 457.330 of this part, shall 

accept electronic accounts as described 

in § 457.348 of this part, and furnish 

coverage in accordance with § 457.340 

of this part. 

■ 137. Section 457.380 is amended by 

revising paragraph (b) to read as follows: 

§ 457.380 Eligibility verification. 

* * * * * 

(b) Status as a citizen or a non-citizen. 

(1) Except with respect to newborns 

identified in § 435.406(a)(1)(iv) of this 

chapter who are exempt from any 

requirement to verify citizenship, States 

must verify citizenship or immigration 

status in accordance with § 435.956(a) 

and provide a reasonable opportunity to 

verify such status in accordance 

§ 435.956(g) of this chapter. 

(2) [Reserved] 

■ 138. Section § 457.570 is revised as 

follows: 

§ 457.570 Disenrollment protections. 

(a) The State must give enrollees 

reasonable notice of and an opportunity 

to pay past due premiums, copayments, 

coinsurance, deductibles, or similar fees 

prior to disenrollment. 

(b) The disenrollment process must 

afford the enrollee an opportunity to 

show that the enrollee’s family income 

has declined prior to disenrollment for 

non-payment of cost-sharing charges, 

and in the event that such a showing 

indicates that the enrollee may have 

become eligible for Medicaid or for a 

lower level of cost sharing, the State 

must facilitate enrolling the child in 

Medicaid or adjust the child’s costsharing category as appropriate. 

(c) The State must ensure that 

disenrollment policies, such as policies 

related to non-payment of premiums, do 

not present barriers to the timely 

determination of eligibility and 

enrollment in coverage of an eligible 

child in the appropriate insurance 

affordability program. A State may not— 

(1) Establish a premium lock-out 

period that exceeds 90-days in 

accordance with § 457.10 of this part. 

(2) Require the collection of past due 

premiums or enrollment fees as a 

condition of eligibility for reenrollment 

once the State-defined lock out period 

has expired, regardless of the length of 

the lock out period. 

(d) The State must provide the 

enrollee with an opportunity for an 

impartial review to address 

disenrollment from the program in 

accordance with § 457.1130(a)(3) of this 

part. 

§ 457.616 [Amended] 

■ 139. Section 457.616 is amended by 

removing and reserving paragraph (a)(3). 

■ 140. Section 457.805 is revised to read 

as follows: 

§ 457.805 State plan requirement: 

Procedures to address substitution under 

group health plans. 

(a) State plan requirements. The State 

plan must include a description of 

reasonable procedures to ensure that 

health benefits coverage provided under 

the State plan does not substitute for 

coverage provided under group health 

plans as defined at § 457.10 of this part. 

(b) Limitations. (1) A state may not, 

under this section, impose a period of 

uninsurance which exceeds 90 days 

from date a child otherwise eligible for 

CHIP is disenrolled from coverage under 

a group health plan. 

(2) A waiting period may not be 

applied to a child following the loss of 

eligibility for and enrollment in 

Medicaid or another insurance 

affordability program. 

(3) If a state elects to impose a period 

of uninsurance following the loss of 

coverage under a group health plan 

under this section, such period may not 

be imposed in the case of any child if: 

(i) The premium paid by the family 

for coverage of the child under the 

group health plan exceeded 5 percent of 

household income; 

(ii) The cost of family coverage that 

includes the child exceeds 9.5 percent 

of the household income. 

(iii) The employer stopped offering 

coverage of dependents (or any 

coverage) under an employer-sponsored 

health insurance plan; 

(iv) A change in employment, 

including involuntary separation, 

resulted in the child’s loss of employersponsored insurance (other than 

through full payment of the premium by 

the parent under COBRA); 

(v) The child has special health care 

needs; and 

(vi) The child lost coverage due to the 

death or divorce of a parent. 

■ 141. Section 457.810 is amended by 

revising paragraph (a) to read as follows: 

§ 457.810 Premium assistance programs: 

Required protections against substitution. 

* * * * * 

(a) Minimum period without coverage 

under a group health plan. For health 

benefits coverage provided through 

premium assistance for group health 

plans, the following rules apply: 

(1) Any waiting period imposed under 

the state child health plan prior to the 

provision of child health assistance to a 

targeted low-income child under the 

state plan shall apply to the same extent 

to the provision of a premium assistance 

subsidy for the child. 

(2) States must permit the same 

exemptions to the required waiting 


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period for premium assistance as are 

permitted under the state plan for the 

provision of child health assistance to a 

targeted low-income child. 

* * * * * 

■ 142. Section 457.1180 is revised to 

read as follows: 

§ 457.1180 Program specific review 

process: Notice. 

(a) A State must provide enrollees and 

applicants timely written notice of any 

determinations required to be subject to 

review under § 457.1130 that includes 

the reasons for the determination, an 

explanation of the applicable rights to 

review of that determination, the 

standard and expedited time frames for 

review, the manner in which a review 

can be requested, and the circumstances 

under which enrollment may continue 

pending review. If an individual has 

been denied eligibility for CHIP by the 

State or other entity authorized to make 

such determination, the State must treat 

an appeal to the Exchange appeals 

entity of a determination of eligibility 

for advanced payments of the premium 

tax credit or cost-sharing reductions, as 

a request for a review of a denial of 

CHIP eligibility under this subpart. 

(b) [Reserved] 

For the reasons set forth in the 

preamble, the Department of Health and 

Human Services amends 45 CFR subtitle 

A, subchapter B, as set forth below: 

PART 155 —EXCHANGE 

ESTABLISHMENT STANDARDS AND 

OTHER RELATED STANDARDS 

UNDER THE AFFORDABLE CARE ACT 

■ 143. The authority citation for part 

155 is revised to read as follows: 

Authority: Sections 1301, 1302, 1303, 

1304, 1311, 1312, 1313, 1321, 1322, 1331, 

1332, 1334, 1402, 1413, 1321, 1322, 1331, 

1332, 1334, 1402, 1411, 1412, 1413 of the 

Affordable Care Act, Pub. L. 111–148, 124 

Stat 199. 

■ 144. Section 155.20 is amended by: 

■ A. Revising the definitions of 

‘‘Advance payments of the premium tax 

credit,’’ ‘‘Application filer,’’ and 

‘‘Lawfully present’’ 

■ B. Adding a new definition of 

‘‘Catastrophic plan,’’ 

The revisions and addition read as 

follows: 

§ 155.20 Definitions. 

* * * * * 

Advance payments of the premium 

tax credit means payment of the tax 

credits authorized by 26 U.S.C. 36B and 

its implementing regulations, which are 

provided on an advance basis to an 

eligible individual enrolled in a QHP 

through an Exchange in accordance 

with section 1412 of the Affordable Care 

Act. 

* * * * * 

Application filer means an applicant, 

an adult who is in the applicant’s 

household, as defined in 42 CFR 

435.603(f), or family, as defined in 26 

CFR 1.36B–1(d); an authorized 

representative of an applicant; or if the 

applicant is a minor or incapacitated, 

someone acting responsibly for an 

applicant. 

* * * * * 

Catastrophic plan means a health 

plan described in section 1302(e) of the 

Affordable Care Act. 

* * * * * 

Lawfully present has the meaning 

given the term in 42 CFR 435.4. 

* * * * * 

■ 145. Section 155.105 is amended by 

revising paragraph (b)(2) to read as 

follows: 

§ 155.105 Approval of a State Exchange. 

* * * * * 

(b) * * * 

(2) The Exchange is capable of 

carrying out the information reporting 

requirements of 26 CFR 1.36B–5; 

* * * * * 

■ 146. Section 155.200 is amended by 

revising paragraph (a) to read as follows: 

§ 155.200 Functions of an Exchange. 

(a) General requirements. The 

Exchange must perform the minimum 

functions described in this subpart and 

in subparts D, E, F, H, and K of this part. 

* * * * * 

■ 147. Section 155.205 is amended by 

revising paragraph (d) to read as 

follows: 

§ 155.205 Consumer assistance tools and 

programs of an Exchange. 

* * * * * 

(d) Consumer assistance. (1) The 

Exchange must have a consumer 

assistance function that meets the 

standards in paragraph (c) of this 

section, including the Navigator 

program described in § 155.210. Any 

individual providing such consumer 

assistance must be trained regarding 

QHP options, insurance affordability 

programs, eligibility, and benefits rules 

and regulations governing all insurance 

affordability programs operated in the 

state, as implemented in the state, prior 

to providing such assistance. 

(2) The Exchange must refer 

consumers to consumer assistance 

programs in the state when available 

and appropriate. 

■ 148. Section 155.225 is added to read 

as follows: 

§ 155.225 Certified application counselors. 

(a) General rule. The Exchange must 

certify staff and volunteers of Exchangedesignated organizations and 

organizations designated by state 

Medicaid and CHIP agencies pursuant 

to 42 CFR 435.908 to act as application 

counselors to— 

(1) Provide information about 

insurance affordability programs and 

coverage options; 

(2) Assist individuals and employees 

to apply for coverage in a QHP through 

the Exchange and for insurance 

affordability programs; and 

(3) Help to facilitate enrollment of 

eligible individuals in QHPs and 

insurance affordability programs. 

(b) Standards of certification. The 

Exchange must certify an individual to 

become an application counselor if he 

or she: 

(1) Registers with the Exchange; 

(2) Is trained regarding QHP options, 

insurance affordability programs, 

eligibility, and benefits rules and 

regulations governing all insurance 

affordability programs operated in the 

state, as implemented in the state, prior 

to functioning as an application 

counselor; 

(3) Discloses to the Exchange and 

potential applicants any relationships 

the application assister or sponsoring 

agency has with QHPs or insurance 

affordability programs, or other 

potential conflicts of interest; 

(4) Complies with the Exchange’s 

privacy and security standards adopted 

consistent with 45 CFR 155.260, and 

applicable authentication and data 

security standards; 

(5) Agrees to act in the best interest of 

the applicants assisted; 

(6) Complies with applicable state law 

related to application counselors, 

including but not limited to state law 

related to conflicts of interest; 

(7) Provides information with 

reasonable accommodations for those 

with disabilities, as defined by the 

Americans with Disabilities Act, if 

providing in-person assistance; and 

(8) Enters into an agreement with the 

Exchange regarding compliance with 

the standards specified in this 

paragraph. 

(c) Withdrawal of certification. The 

Exchange must establish procedures to 

withdraw certification from individual 

application counselors, or from all 

application counselors associated with a 

particular organization, when it finds 

noncompliance with the terms and 

conditions of the application counselor 

agreement. 

(d) Availability of information; 

authorization. The Exchange must 


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establish procedures to ensure that 

applicants— 

(1) Are informed of the functions and 

responsibilities of certified application 

counselors; and 

(2) Provide authorization for the 

disclosure of applicant information to 

an application counselor prior to a 

counselor helping the applicant with 

submitting an application. 

(e) Fees. Certified application 

counselors may not impose any charge 

on applicants for application assistance. 

■ 149. Section 155.227 is added to read 

as follows: 

§ 155.227 Authorized representatives. 

(a) General rule. (1) The Exchange 

must permit an individual or employee, 

subject to applicable privacy and 

security requirements, to designate an 

individual or organization to act on his 

or her behalf in applying for an 

eligibility determination or 

redetermination, under subpart D of this 

part, and in carrying out other ongoing 

communications with the Exchange. 

(2) Designation of an authorized 

representative must be in writing, 

including a signature or through another 

legally binding format subject to 

applicable authentication and data 

security standards. If submitted, legal 

documentation of authority to act on 

behalf of an individual under state law, 

such as a court order establishing legal 

guardianship or a power of attorney for, 

shall serve in the place of the 

applicant’s signature. 

(3) The Exchange ensures the 

authorized representative agrees to 

maintain, or be legally bound to 

maintain, the confidentiality of any 

information regarding the individual or 

employee provided by the Exchange. 

(4) The Exchange ensures the 

authorized representative is responsible 

for fulfilling all responsibilities 

encompassed within the scope of the 

authorized representation, as described 

in this section, to the same extent as the 

individual he or she represents. 

(b) Timing of designation. The 

Exchange must permit an individual or 

employee to designate an authorized 

representative: 

(1) At the time of application. 

(2) At other times and through 

methods as described in 45 CFR 

155.405(c)(2). 

(c) Duties. The Exchange must permit 

an individual to authorize their 

representative to: 

(1) Sign an application on the 

individual’s behalf; 

(2) Submit an update or respond to a 

redetermination for the individual in 

accordance with § 155.330 or § 155.335; 

(3) Receive copies of the individual’s 

notices and other communications from 

the Exchange; and 

(4) Act on behalf of the individual in 

all other matters with the Exchange. 

(d) Duration. The Exchange must 

consider an authorized representative 

valid until the applicant or enrollee: 

(1) Modifies the authorization; 

(2) Notifies the Exchange and the 

representative that the representative is 

no longer authorized to act on his or her 

behalf using one of the methods 

available for the submission of an 

application, as described in 45 CFR 

155.405(c); or 

(3) The authorized representative 

informs the Exchange and the 

individual that he or she no longer is 

acting in such capacity. 

(e) Agreement. When an organization 

is designated as an authorized 

representative, staff or volunteers of that 

organization that exercise that capacity 

for an applicant before the Exchange 

and the organization itself must enter 

into an agreement with the Exchange to 

comply with the requirements set forth 

at § 155.225(b). 

(f) Compliance with State and federal 

law. The Exchange require an 

authorized representative to comply 

with applicable state and federal laws 

concerning conflicts of interest and 

confidentiality of information. 

(g) Signature. For purposes of this 

section, designation of an authorized 

representative must be in writing 

including a signature or through another 

legally binding format and be accepted 

through all of the modalities described 

in 45 CFR 155.405(c) of this part. 

■ 150. Section 155.230 is amended by— 

■ A. Revising paragraph (a). 

■ B. Adding paragraph (d). 

The revision and addition read as 

follows: 

§ 155.230 General standards for Exchange 

notices. 

(a) General requirement. Any notice 

required to be sent by the Exchange to 

individuals or employers must be 

written and include: 

(1) An explanation of the action 

reflected in the notice, including the 

effective date of the action. 

(2) Any factual findings relevant to 

the action. 

(3) Citations to, or identification of, 

the relevant regulations supporting the 

action. 

(4) Contact information for available 

customer service resources. 

(5) An explanation of appeal rights, if 

applicable. 

* * * * * 

(d) Electronic notices. The Exchange, 

with the exception of the SHOP 

Exchange, must provide required 

notices either through standard mail, or 

if an individual or employer elects, 

electronically, provided that the 

requirements for electronic notices in 42 

CFR 435.918 are met. 

■ 151. Section 155.300(a) is amended 

by— 

■ A. Removing the definition of 

‘‘Adoption taxpayer identification 

number.’’ 

■ B. Revising the definitions of 

‘‘Minimum value,’’ ‘‘Modified Adjusted 

Gross Income (MAGI),’’ and ‘‘Qualifying 

coverage in an eligible employersponsored plan.’’ 

The revisions read as follows: 

§ 155.300 Definitions and general 

standards for eligibility determinations. 

(a) * * * 

Minimum value when used to 

describe coverage in an eligible 

employer-sponsored plan, means that 

the employer-sponsored plan meets the 

standards with respect to coverage of 

the total allowed costs of benefits set 

forth in 26 CFR 1.36B–2(c)(3)(vi). 

Modified Adjusted Gross Income 

(MAGI) has the same meaning as it does 

in 26 CFR 1.36B–1(e)(2). 

* * * * * 

Qualifying coverage in an eligible 

employer-sponsored plan means 

coverage in an eligible employersponsored plan that meets the 

affordability and minimum value 

standards specified in 26 CFR 1.36B– 

2(c)(3). 

* * * * * 

■ 152. Section 155.302 is amended by 

revising paragraphs (a)(1), (b)(4)(i)(A) 

and (b)(5) to read as follows: 

§ 155.302 Options for conducting eligibility 

determinations. 

(a) * * * 

(1) Directly or through contracting 

arrangements in accordance with 

§ 155.110(a), provided that the 

standards in 42 CFR 431.10(c)(2) are 

met; or 

* * * * * 

(b) * * * 

(4) * * * 

(i) * * * 

(A) Withdraw his or her application 

for Medicaid and CHIP, unless the 

Exchange has assessed the applicant as 

potentially eligible for Medicaid based 

on factors not otherwise considered in 

this subpart, in accordance with 

§ 155.345(b), and provided that the 

application will not be considered 

withdrawn if he or she appeals his or 

her eligibility determination for advance 

payments of the premium tax credit or 

cost-sharing reductions and the appeals 

entity described in § 155.500(a) finds 


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that the individual is potentially eligible 

for Medicaid or CHIP; or 

* * * * * 

(5) The Exchange adheres to the 

eligibility determination or appeals 

decision for Medicaid or CHIP made by 

the State Medicaid or CHIP agency, or 

the appeals entity for such agency. 

* * * * * 

■ 153. Section 155.305 is amended by— 

■ A. Revising paragraphs (f)(1)(i), 

(f)(1)(ii)(B), (f)(2)(ii), (f)(2)(iii), (f)(3), and 

(f)(5). 

■ B. Adding paragraphs (a)(3)(v), and 

(h). 

The revisions and additions read as 

follows: 

§ 155.305 Eligibility standards. 

(a) * * * 

(3) * * * 

(v) Temporary absence. The Exchange 

may not deny or terminate an 

individual’s eligibility for enrollment in 

a QHP through the Exchange if the 

individual meets the standards in 

paragraph (a)(3) of this section but for a 

temporary absence from the service area 

of the Exchange and intends to return 

when the purpose of the absence has 

been accomplished, unless another 

Exchange verifies that the individual 

meets the residency standard of such 

Exchange. 

* * * * * 

(f) * * * 

(1) * * * 

(i) He or she is expected to have a 

household income, as defined in 26 CFR 

1.36B–1(e), of greater than or equal to 

100 percent but not more than 400 

percent of the FPL for the benefit year 

for which coverage is requested; and 

(ii) * * * 

(B) Is not eligible for minimum 

essential coverage, with the exception of 

coverage in the individual market, in 

accordance with section 26 CFR 1.36B– 

2(a)(2) and (c). 

(2) * * * 

(ii) He or she is expected to have a 

household income, as defined in 26 CFR 

1.36B–1(e) of less than 100 percent of 

the FPL for the benefit year for which 

coverage is requested; and 

(iii) One or more applicants for whom 

the tax filer expects to claim a personal 

exemption deduction on his or her tax 

return for the benefit year, including the 

tax filer and his or her spouse, is a noncitizen who is lawfully present and 

ineligible for Medicaid by reason of 

immigration status, in accordance with 

26 CFR 1.36B–2(b)(5). 

(3) Enrollment required. The 

Exchange may provide advance 

payments of the premium tax credit on 

behalf of a tax filer only if one or more 

applicants for whom the tax filer attests 

that he or she expects to claim a 

personal exemption deduction for the 

benefit year, including the tax filer and 

his or her spouse, is enrolled in a QHP 

that is not a catastrophic plan, through 

the Exchange. 

* * * * * 

(5) Calculation of advance payments 

of the premium tax credit. The 

Exchange must calculate advance 

payments of the premium tax credit in 

accordance with 26 CFR 1.36B–3. 

* * * * * 

(h) Eligibility for enrollment through 

the Exchange in a QHP that is a 

catastrophic plan. The Exchange must 

determine an applicant eligible for 

enrollment in a QHP through the 

Exchange in a QHP that is a catastrophic 

plan as defined by section 1302(e) of the 

Affordable Care Act, if he or she— 

(1) Has not attained the age of 30 

before the beginning of the plan year; or 

(2) Has a certification in effect for any 

plan year that he or she is exempt from 

the requirement to maintain minimum 

essential coverage under section 5000A 

of the Code by reason of— 

(i) Section 5000A(e)(1) of the Code 

(relating to individuals without 

affordable coverage); or 

(ii) Section 5000A(e)(5) of the Code 

(relating to individuals with hardships). 

■ 154. Section 155.310 is amended by— 

■ A. Redesignating paragraph (i) as 

paragraph (j). 

■ B. Adding new paragraph (i). 

■ C. Revising newly redesignated 

paragraph (j). 

The addition reads as follows: 

§ 155.310 Eligibility process. 

* * * * * 

(i) Certification program for 

employers. As part of its determination 

of whether an employer has a liability 

under section 4980H of the Code, the 

Internal Revenue Service will adopt 

methods to certify to an employer that 

one or more employees has enrolled for 

one or more months during a year in a 

QHP with respect to which a premium 

tax credit or cost-sharing reduction is 

allowed or paid. 

(j) Duration of eligibility 

determinations without enrollment. To 

the extent that an applicant who is 

determined eligible for enrollment in a 

QHP does not select a QHP within his 

or her enrollment period, or is not 

eligible for an enrollment period, in 

accordance with subpart E, and seeks a 

new enrollment period prior to the date 

on which his or her eligibility is 

redetermined in accordance with 

§ 155.335 the Exchange must require the 

applicant to attest as to whether 

information affecting his or her 

eligibility has changed since his or her 

most recent eligibility determination 

before determining his or her eligibility 

for a special enrollment period, and 

must process any changes reported in 

accordance with the procedures 

specified in § 155.330. 

■ 155. Section 155.315 is amended by— 

■ A. Revising paragraph (b)(2), 

paragraph (f) introductory text, and 

paragraph (f)(4). 

■ B. Adding paragraph (j). 

The revisions and addition read as 

follows: 

§ 155.315 Verification process related to 

eligibility for enrollment in a QHP through 

the Exchange. 

* * * * * 

(b) * * * 

(2) To the extent that the Exchange is 

unable to validate an individual’s Social 

Security number through the Social 

Security Administration, or the Social 

Security Administration indicates that 

the individual is deceased, the 

Exchange must follow the procedures 

specified in paragraph (f) of this section, 

except that the Exchange must provide 

the individual with a period of 90 days 

from the date on which the notice 

described in paragraph (f)(2)(i) of this 

section is received for the applicant to 

provide satisfactory documentary 

evidence or resolve the inconsistency 

with the Social Security Administration. 

The date on which the notice is received 

means 5 days after the date on the 

notice, unless the individual 

demonstrates that he or she did not 

receive the notice within the 5 day 

period. 

* * * * * 

(f) Inconsistencies. Except as 

otherwise specified in this subpart, for 

an applicant for whom the Exchange 

cannot verify information required to 

determine eligibility for enrollment in a 

QHP through the Exchange, advance 

payments of the premium tax credit, 

and cost-sharing reductions, including 

when electronic data is required in 

accordance with this subpart but data 

for individuals relevant to the eligibility 

determination are not included in such 

data sources or when electronic data is 

required but it is not reasonably 

expected that data sources will be 

available within 2 days of the initial 

request to the data source, the Exchange: 

* * * * * 

(4) During the periods described in 

paragraphs (f)(1) and (f)(2)(ii) of this 

section, must: 

* * * * * 

(j) Verification related to eligibility for 

enrollment through the Exchange in a 


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QHP that is a catastrophic plan. The 

Exchange must verify an applicant’s 

attestation that he or she meets the 

requirements of § 155.305(h) by— 

(1) Verifying the applicant’s 

attestation of age as follows— 

(i) Except as provided in paragraph 

(j)(1)(iii) of this section, accepting his or 

her attestation without further 

verification; or 

(ii) Examining electronic data sources 

that are available to the Exchange and 

which have been approved by HHS for 

this purpose, based on evidence 

showing that such data sources are 

sufficiently current and accurate, and 

minimize administrative costs and 

burdens. 

(iii) If information regarding age is not 

reasonably compatible with other 

information provided by the individual 

or in the records of the Exchange, the 

Exchange must examine information in 

data sources that are available to the 

Exchange and which have been 

approved by HHS for this purpose based 

on evidence showing that such data 

sources are sufficiently current and 

accurate. 

(2) Verifying that an applicant has 

received a certificate of exemption as 

described in § 155.305(h)(2). 

(3) To the extent that the Exchange is 

unable to verify the information 

required to determine eligibility for 

enrollment through the Exchange in a 

QHP that is a catastrophic plan as 

described in paragraphs (j)(1) and (j)(2) 

of this section, the Exchange must 

follow the procedures specified in 

§ 155.315(f), except for § 155.315(f)(4). 

■ 156. Section 155.320 is amended by— 

■ A. Revising the introductory text of 

paragraph (c)(1)(i). 

■ B. Revising paragraphs (c)(1)(i)(A), 

(c)(1)(ii), (c)(3)(i)(D), (c)(3)(ii)(A), 

(c)(3)(iii)(A) and (B), (c)(3)(vi), 

(c)(3)(vii), (c)(3)(viii), and (d). 

■ C. Adding paragraphs (c)(3)(i)(E) and 

(c)(3)(iii)(C). 

■ D. Removing paragraph (e). 

■ E. Redesignating paragraph (f) as 

paragraph (e). 

The revisions and additions read as 

follows: 

§ 155.320 Verification process related to 

eligibility for insurance affordability 

programs. 

* * * * * 

(c) * * * 

(1) * * * 

(i) Data regarding annual household 

income. 

(A) For all individuals whose income 

is counted in calculating a tax filer’s 

household income, as defined in 26 CFR 

1.36B–1(e), or an applicant’s household 

income, calculated in accordance with 

42 CFR 435.603(d), and for whom the 

Exchange has a Social Security number, 

the Exchange must request tax return 

data regarding MAGI and family size 

from the Secretary of the Treasury and 

data regarding Social security benefits 

described in 26 CFR 1.36B–1(e)(2)(iii) 

from the Commissioner of Social 

Security by transmitting identifying 

information specified by HHS to HHS. 

* * * * * 

(ii) Data regarding MAGI-based 

income. For all individuals whose 

income is counted in calculating a tax 

filer’s household income, as defined in 

26 CFR 1.36B–1(e), or an applicant’s 

household income, calculated in 

accordance with 42 CFR 435.603(d), the 

Exchange must request data regarding 

MAGI-based income in accordance with 

42 CFR 435.948(a). 

* * * * * 

(3) * * * 

(i) * * * 

(D) If the Exchange finds that an 

applicant’s attestation of a tax filer’s 

family size is not reasonably compatible 

with other information provided by the 

application filer for the family or in the 

records of the Exchange, with the 

exception of the data described in 

paragraph (c)(1)(i) of this section, the 

Exchange must utilize data obtained 

through other electronic data sources to 

verify the attestation. If such data 

sources are unavailable or information 

in such data sources is not reasonably 

compatible with the applicant’s 

attestation, the Exchange must request 

additional documentation to support the 

attestation within the procedures 

specified in § 155.315(f) of this part. 

(E) The Exchange must verify that 

neither advance payments of the 

premium tax credit nor cost-sharing 

reductions are being provided on behalf 

of an individual using information 

obtained by transmitting identifying 

information specified by HHS to HHS. 

* * * * * 

(ii) * * * 

(A) The Exchange must compute 

annual household income for the family 

described in paragraph (c)(3)(i)(A) of 

this section based on the data described 

in paragraph (c)(1)(i) of this section; 

* * * * * 

(iii) * * * 

(A) Except as specified in paragraph 

(c)(3)(iii)(B) and (C) of this section, if an 

applicant’s attestation, in accordance 

with paragraph (c)(3)(ii)(B) of this 

section, indicates that a tax filer’s 

annual household income has increased 

or is reasonably expected to increase 

from the data described in paragraph 

(c)(3)(ii)(A) of this section for the benefit 

year for which the applicant(s) in the 

tax filer’s family are requesting coverage 

and the Exchange has not verified the 

applicant’s MAGI-based income through 

the process specified in paragraph 

(c)(2)(ii) of this section to be within the 

applicable Medicaid or CHIP MAGIbased income standard, the Exchange 

must accept the applicant’s attestation 

regarding a tax filer’s annual household 

income without further verification. 

(B) If data available to the Exchange 

in accordance with paragraph (c)(1)(ii) 

of this section indicate that a tax filer’s 

projected annual household income is 

in excess of his or her attestation by a 

significant amount, the Exchange must 

proceed in accordance with 

§ 155.315(f)(1) through (4) of this part. 

(C) If other information provided by 

the application filer indicates that a tax 

filer’s projected annual household 

income is in excess of his or her 

attestation by a significant amount, the 

Exchange must utilize data available to 

the Exchange in accordance with 

paragraph (c)(1)(ii) of this section to 

verify the attestation. If such data is 

unavailable or are not reasonably 

compatible with the applicant’s 

attestation, the Exchange must proceed 

in accordance with § 155.315(f)(1) 

through (4) of this part. 

(vi) Alternate verification process for 

decreases in annual household income 

and situations in which tax return data 

is unavailable. If a tax filer qualifies for 

an alternate verification process based 

on the requirements specified in 

paragraph (c)(3)(iv) of this section and 

the applicant’s attestation to projected 

annual household income, as described 

in paragraph (c)(3)(ii)(B) of this section, 

is greater than ten percent below the 

annual household income computed in 

accordance with paragraph (c)(3)(ii)(A), 

or if data described in paragraph (c)(1)(i) 

of this section is unavailable, the 

Exchange must attempt to verify the 

applicant’s attestation of the tax filer’s 

projected annual household income by 

following the procedures specified in 

paragraph (c)(3)(vi)(A) through (G). 

(A) Data. The Exchange must 

annualize data from the MAGI-based 

income sources specified in paragraph 

(c)(1)(ii) of this section, and obtain any 

data available from other electronic data 

sources that have been approved by 

HHS, based on evidence showing that 

such data sources are sufficiently 

accurate and offer less administrative 

complexity than paper verification. 

(B) To the extent that the applicant’s 

attestation indicates that the 

information described in paragraph 

(c)(3)(vi)(A) of this section represents an 

accurate projection of the tax filer’s 

household income for the benefit year 

for which coverage is requested, the 


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Exchange must determine the tax filer’s 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions based on the household 

income data in paragraph (c)(3)(vi)(A) of 

this section. 

(C) Increases in annual household 

income. If an applicant’s attestation, in 

accordance with paragraph (c)(3)(ii)(B) 

of this section, indicates that a tax filer’s 

annual household income has increased 

or is reasonably expected to increase 

from the data described in paragraph 

(c)(3)(vi)(A) of this section to the benefit 

year for which the applicant(s) in the 

tax filer’s family are requesting coverage 

and the Exchange has not verified the 

applicant’s MAGI-based income through 

the process specified in paragraph 

(c)(2)(ii) of this section to be within the 

applicable Medicaid or CHIP MAGIbased income standard, the Exchange 

must accept the applicant’s attestation 

for the tax filer’s family without further 

verification, unless the Exchange finds 

that an applicant’s attestation of a tax 

filer’s annual household income is not 

reasonably compatible with other 

information provided by the application 

filer or available to the Exchange in 

accordance with paragraph (c)(1)(ii) of 

this section, in which case the Exchange 

must request additional documentation 

using the procedures specified in 

§ 155.315(f). 

(D) Decreases in annual household 

income and situations in which 

electronic data is unavailable. If 

electronic data are unavailable or an 

applicant’s attestation to projected 

annual household income, as described 

in paragraph (c)(3)(ii)(B) of this section, 

is more than ten percent below the 

annual household income as computed 

using data sources described in 

paragraphs (c)(3)(vi)(A) of this section, 

the Exchange must follow the 

procedures specified in § 155.315(f)(1) 

through (4). 

(E) If, following the 90-day period 

described in paragraph (c)(3)(vi)(D) of 

this section, an applicant has not 

responded to a request for additional 

information from the Exchange and the 

data sources specified in paragraph 

(c)(1) of this section indicate that an 

applicant in the tax filer’s family is 

eligible for Medicaid or CHIP, the 

Exchange must not provide the 

applicant with eligibility for advance 

payments of the premium tax credit, 

cost-sharing reductions, Medicaid, CHIP 

or the BHP, if a BHP is operating in the 

service area of the Exchange. 

(F) If, at the conclusion of the period 

specified in paragraph (c)(3)(vi)(D) of 

this section, the Exchange remains 

unable to verify the applicant’s 

attestation, the Exchange must 

determine the applicant’s eligibility 

based on the information described in 

paragraph (c)(3)(ii)(A) of this section, 

notify the applicant of such 

determination in accordance with the 

notice requirements specified in 

§ 155.310(g), and implement such 

determination in accordance with the 

effective dates specified in § 155.330(f). 

(G) If, at the conclusion of the period 

specified in paragraph (c)(3)(vi)(D) of 

this section, the Exchange remains 

unable to verify the applicant’s 

attestation for the tax filer and the 

information described in paragraph 

(c)(3)(ii)(A) of this section is 

unavailable, the Exchange must 

determine the tax filer ineligible for 

advance payments of the premium tax 

credit and cost-sharing reductions, 

notify the applicant of such 

determination in accordance with the 

notice requirement specified in 

§ 155.310(g), and discontinue any 

advance payments of the premium tax 

credit and cost-sharing reductions in 

accordance with the effective dates 

specified in § 155.330(f). 

(vii) For the purposes of paragraph 

(c)(3) of this section, ‘‘household 

income’’ means household income as 

specified in 26 CFR 1.36B–1(e). 

(viii) For the purposes of paragraph 

(c)(3) of this section, ‘‘family size’’ 

means family size as specified in 26 

CFR 1.36B–1(d). 

(d) Verification related to enrollment 

in an eligible employer-sponsored plan 

and eligibility for qualifying coverage in 

an eligible employer-sponsored plan. 

(1) General requirement. The 

Exchange must verify whether an 

applicant reasonably expects to be 

enrolled in an eligible employersponsored plan or is eligible for 

qualifying coverage in an eligible 

employer-sponsored plan for the benefit 

year for which coverage is requested. 

(2) Data. The Exchange must— 

(i) Obtain data about enrollment in 

and eligibility for an eligible employersponsored plan from any electronic data 

sources that are available to the 

Exchange and which have been 

approved by HHS, based on evidence 

showing that such data sources are 

sufficiently current, accurate, and 

minimize administrative burden. 

(ii) Obtain any available data 

regarding enrollment in employersponsored coverage or eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan based on 

federal employment by transmitting 

identifying information specified by 

HHS to HHS. 

(iii) Obtain data from the SHOP that 

corresponds to the State in which the 

Exchange is operating. 

(iv) Obtain any available data 

regarding the employment of an 

applicant and the members of his or her 

household, as defined in 26 CFR 1.36B– 

1(d), from any electronic data sources 

that are available to the Exchange and 

have been approved by HHS for this 

purpose, based on evidence showing 

that such data sources are sufficiently 

current, accurate, and minimize 

administrative burden. 

(3) Verification procedures. (i) Except 

as specified in paragraphs (d)(3)(ii) or 

(iii) of this section, the Exchange must 

accept an applicant’s attestation 

regarding the verification specified in 

paragraph (d) without further 

verification. 

(ii) If an applicant’s attestation is not 

reasonably compatible with the 

information specified in paragraphs 

(d)(2)(i) through (d)(2)(iii) of this 

section, other information provided by 

the application filer, or other 

information in the records of the 

Exchange, the Exchange must follow the 

procedures specified in § 155.315(f) of 

this subpart. 

(iii) If the Exchange does not have any 

of the information specified in 

paragraphs (d)(2)(i) through (d)(2)(iii) 

for an applicant, and either does not 

have the information specified in 

paragraph (d)(2)(iv) for an applicant or 

an applicant’s attestation is not 

reasonably compatible with the 

information specified in (d)(2)(iv) of this 

section, the Exchange must select a 

statistically significant random sample 

of such applicants and— 

(A) Provide notice to the applicant 

indicating that the Exchange will be 

contacting any employer identified on 

the application for the applicant and the 

members of his or her household, as 

defined in 26 CFR 1.36B–1(d), to verify 

whether the applicant is enrolled in an 

eligible employer-sponsored plan or is 

eligible for qualifying coverage in an 

eligible employer-sponsored plan for the 

benefit year for which coverage is 

requested; 

(B) Proceed with all other elements of 

eligibility determination using the 

applicant’s attestation, and provide 

eligibility for enrollment in a QHP to the 

extent that an applicant is otherwise 

qualified; 

(C) Ensure that advance payments of 

the premium tax credit and cost-sharing 

reductions are provided on behalf of an 

applicant who is otherwise qualified for 

such payments and reductions, as 

described in § 155.305 of this subpart, if 

the tax filer attests to the Exchange that 

he or she understands that any advance 

payments of the premium tax credit 

paid on his or her behalf are subject to 

reconciliation; 


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(D) Make reasonable attempts to 

contact any employer identified on the 

application for the applicant and the 

members of his or her household, as 

defined in 26 CFR 1.36B–1(d), to verify 

whether the applicant is enrolled in an 

eligible employer-sponsored plan or is 

eligible for qualifying coverage in an 

eligible employer-sponsored plan for the 

benefit year for which coverage is 

requested; 

(E) If the Exchange receives any 

information from an employer relevant 

to the applicant’s enrollment in an 

eligible employer-sponsored plan or 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan, the 

Exchange must determine the 

applicant’s eligibility based on such 

information and in accordance with the 

effective dates specified in 155.330(f) of 

this subpart, and if such information 

changes his or her eligibility 

determination, notify the applicant and 

his or her employer or employers of 

such determination in accordance with 

the notice requirements specified in 

§ 155.310(g) and (h) of this part; 

(F) If, after a period of 90 days from 

the date on which the notice described 

in paragraph (d)(3)(iii)(A) of this section 

is sent to the applicant, the Exchange is 

unable to obtain the necessary 

information from an employer, the 

Exchange must determine the 

applicant’s eligibility based on his or 

her attestation regarding that employer. 

(G) In order to carry out the process 

described in paragraph (d)(3)(iii) of this 

section, the Exchange must only 

disclose an individual’s information to 

an employer to the extent necessary for 

the employer to identify the employee. 

(4) Option to rely on verification 

performed by HHS. The Exchange may 

satisfy the provisions of this paragraph 

by relying on a verification process 

performed by HHS, provided that— 

(i) The Exchange sends the notices 

described in § 155.310(g) and (h) of this 

part; 

(ii) Other activities required in 

connection with the verifications 

described in this paragraph are 

performed by the Exchange in 

accordance with the standards 

identified in this subpart or by HHS in 

accordance with the agreement 

described in paragraph (d)(4)(iv) of this 

section; 

(iii) The Exchange provides all 

relevant application information to HHS 

through a secure, electronic interface, 

promptly and without undue delay; and 

(iv) The Exchange and HHS enter into 

an agreement specifying their respective 

responsibilities in connection with the 

verifications described in this 

paragraph. 

* * * * * 

■ 157. Section 155.330 is amended by— 

■ A. Revising paragraphs (d)(1)(ii), 

(e)(2), (f). 

■ D. Removing paragraph (e)(3). 

The revisions and additions read as 

follows: 

§ 155.330 Eligibility redetermination during 

a benefit year. 

* * * * * 

(d) * * * 

(1) * * * 

(ii) For an enrollee on whose behalf 

advance payments of the premium tax 

credit or cost-sharing reductions are 

being provided, eligibility 

determinations for Medicare, Medicaid, 

CHIP, or the BHP, if a BHP is operating 

in the service area of the Exchange. 

* * * * * 

(e) * * * 

(2) Data matching. 

(i) If the Exchange identifies updated 

information regarding death, in 

accordance with paragraph (d)(1)(i) of 

this section, or regarding any factor of 

eligibility not regarding income, family 

size, or family composition, the 

Exchange must— 

(A) Notify the enrollee regarding the 

updated information, as well as the 

enrollee’s projected eligibility 

determination after considering such 

information. 

(B) Allow an enrollee 30 days from 

the date of the notice to notify the 

Exchange that such information is 

inaccurate. 

(C) If the enrollee responds contesting 

the updated information, proceed in 

accordance with § 155.315(f) of this 

part. 

(D) If the enrollee does not respond 

within the 30-day period specified in 

paragraph (e)(2)(i)(B) proceed in 

accordance with paragraphs (e)(1)(i) and 

(ii) of this section. 

(ii) If the Exchange identifies updated 

information regarding income, family 

size, or family composition, with the 

exception of information regarding 

death, the Exchange must— 

(A) Follow procedures described in 

paragraph (e)(2)(i)(A) and (B) of this 

section; and 

(B) If the enrollee responds 

confirming the updated information, 

proceed in accordance with paragraphs 

(e)(1)(i) and (ii) of this section. 

(C) If the enrollee does not respond 

within the 30-day period specified in 

paragraph (e)(2)(i)(B) of this section, 

maintain the enrollee’s existing 

eligibility determination without 

considering the updated information. 

(D) If the enrollee provides more upto-date information, proceed in 

accordance with paragraph (c)(1) of this 

section. 

* * * * * 

(f) Effective dates. (1) Except as 

specified in paragraphs (f)(2) through 

(f)(7) of this section, the Exchange must 

implement changes— 

(i) Resulting from a redetermination 

under this section on the first day of the 

month following the date of the notice 

described in paragraph (e)(1)(ii) of this 

section; or 

(ii) Resulting from an appeal decision, 

on the first day of the month following 

the date of the notices described in 

§§ 155.545(b) and 155.555(k), or on the 

date specified in the appeal decision 

pursuant to § 155.545(c)(1), as 

applicable; or 

(iii) Affecting enrollment or premiums 

only, on the first day of the month 

following the date on which the 

Exchange is notified of the change; 

(2) Except as specified in paragraphs 

(f)(3) through (f)(7) of this section, the 

Exchange may determine a reasonable 

point in a month after which a change 

described in paragraph (f)(1) of this 

section will not be effective until the 

first day of the month after the month 

specified in paragraph (f)(1) of this 

section. Such reasonable point in a 

month must be no earlier than the 15th 

of the month. 

(3) Except as specified in paragraphs 

(f)(6) and (f)(7) of this section, the 

Exchange must implement a change 

described in paragraph (f)(1) of this 

section that results in a decreased 

amount of advance payments of the 

premium tax credit or level of costsharing reductions, and for which the 

date of the notices described in 

paragraphs (f)(1)(i) and (ii) of this 

section, or the date on which the 

Exchange is notified in accordance with 

paragraph (f)(1)(iii) of this section is 

after the 15th of the month, on the first 

day of the month after the month 

specified in paragraph (f)(1) of this 

section. 

(4) Except as specified in paragraph 

(f)(6) of this section, the Exchange must 

implement a change described in 

paragraph (f)(1) of this section that 

results in an increased level of costsharing reductions, including when an 

individual becomes newly eligible for 

cost-sharing reductions, and for which 

the date of the notices described in 

paragraphs (f)(1)(i) and (ii) of this 

section, or the date on which the 

Exchange is notified in accordance with 

paragraph (f)(1)(iii) of this section is 

after the 15th of the month, on the first 

day of the month after the month 

specified in paragraph (f)(1) of this 

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(5) The Exchange must implement a 

change associated with the events 

described in § 155.420(b)(2)(i) and (ii) of 

this part on the coverage effective dates 

described in § 155.420(b)(2)(i) and (ii) of 

this part respectively, and ensure that 

advance payments of the premium tax 

credit and cost-sharing reductions are 

effective on the first day of the month 

following such events, unless the event 

occurs on the first day of the month. 

(6) Notwithstanding paragraphs (f)(1) 

through (f)(5) of this section, the 

Exchange may provide the effective date 

of a change associated with the events 

described in § 155.420(d)(4), (d)(5) of 

this part, and (d)(9) based on the 

specific circumstances of each situation. 

(7) Notwithstanding paragraphs (f)(1) 

through (f)(6) of this section, when a 

change described in paragraph (f)(1) 

results in an enrollee being ineligible to 

continue his or her enrollment in a QHP 

through the Exchange, the Exchange 

must maintain his or her eligibility for 

enrollment in a QHP without advance 

payments of the premium tax credit and 

cost-sharing reductions, in accordance 

with the effective dates described in 

§ 155.430(d)(3) of this part. 

■ 158. Section 155.335 is amended by— 

■ A. Revising paragraphs (a), (b), (c), (e), 

(f), (g), (h), (k)(1), and (l). 

■ B. Adding paragraph (m). 

The revisions and addition read as 

follows: 

§ 155.335 Annual eligibility 

redetermination. 

(a) General requirement. Except as 

specified in paragraphs (l) and (m) of 

this section, the Exchange must 

redetermine the eligibility of a qualified 

individual on an annual basis. 

(b) Updated income and family size 

information. In the case of a qualified 

individual who requested an eligibility 

determination for insurance 

affordability programs in accordance 

with § 155.310(b) of this part, the 

Exchange must request updated tax 

return information, if the qualified 

individual has authorized the request of 

such tax return information, data 

regarding Social Security benefits, and 

data regarding MAGI-based income as 

described in § 155.320(c)(1) of this part 

for use in the qualified individual’s 

eligibility redetermination. 

(c) Notice to qualified individual. The 

Exchange must provide a qualified 

individual with an annual 

redetermination notice including the 

following: 

(1) The data obtained under paragraph 

(b) of this section, if applicable. 

(2) The data used in the qualified 

individual’s most recent eligibility 

determination. 

(3) The qualified individual’s 

projected eligibility determination for 

the following year, after considering any 

updated information described in 

paragraph (c)(1) of this section, 

including, if applicable, the amount of 

any advance payments of the premium 

tax credit and the level of any costsharing reductions or eligibility for 

Medicaid, CHIP or BHP. 

* * * * * 

(e) Changes reported by qualified 

individuals. (1) The Exchange must 

require a qualified individual to report 

any changes with respect to the 

information listed in the notice 

described in paragraph (c) of this 

section within 30 days from the date of 

the notice. 

(2) The Exchange must allow a 

qualified individual, or an application 

filer, on behalf of the qualified 

individual, to report changes via the 

channels available for the submission of 

an application, as described in 

§ 155.405(c)(2). 

(f) Verification of reported changes. 

The Exchange must verify any 

information reported by a qualified 

individual under paragraph (e) of this 

section using the processes specified in 

§ 155.315 and § 155.320, including the 

relevant provisions in those sections 

regarding inconsistencies, prior to using 

such information to determine 

eligibility. 

(g) Response to redetermination 

notice. (1) The Exchange must require a 

qualified individual, or an application 

filer, on behalf of the qualified 

individual, to sign and return the notice 

described in paragraph (c) of this 

section. 

(2) To the extent that a qualified 

individual does not sign and return the 

notice described in paragraph (c) of this 

section within the 30-day period 

specified in paragraph (e) of this 

section, the Exchange must proceed in 

accordance with the procedures 

specified in paragraph (h)(1) of this 

section. 

(h) Redetermination and notification 

of eligibility. (1) After the 30-day period 

specified in paragraph (e) of this section 

has elapsed, the Exchange must— 

(i) Redetermine the qualified 

individual’s eligibility in accordance 

with the standards specified in 

§ 155.305 using the information 

provided to the qualified individual in 

the notice specified in paragraph (c) of 

this section, as supplemented with any 

information reported by the qualified 

individual and verified by the Exchange 

in accordance with paragraphs (e) and 

(f) of this section. 

(ii) Notify the qualified individual in 

accordance with the requirements 

specified in § 155.310(g). 

(iii) If applicable, notify the qualified 

individual employer, in accordance 

with the requirements specified in 

§ 155.310(h). 

(2) If a qualified individual reports a 

change with respect to the information 

provided in the notice specified in 

paragraph (c) of this section that the 

Exchange has not verified as of the end 

of the 30-day period specified in 

paragraph (e) of this section, the 

Exchange must redetermine the 

qualified individual’s eligibility after 

completing verification, as specified in 

paragraph (f) of this section. 

* * * * * 

(k) Authorization of the release of tax 

data to support annual redetermination. 

(1) The Exchange must have 

authorization from a qualified 

individual to obtain updated tax return 

information described in paragraph (b) 

of this section for purposes of 

conducting an annual redetermination. 

* * * * * 

(l) Limitation on redetermination. To 

the extent that a qualified individual 

has requested an eligibility 

determination for insurance 

affordability programs in accordance 

with § 155.310(b) and the Exchange 

does not have an active authorization to 

obtain tax data as a part of the annual 

redetermination process, the Exchange 

must redetermine the qualified 

individual’s eligibility only for 

enrollment in a QHP and notify the 

enrollee in accordance with the timing 

described in paragraph (d) of this 

section. The Exchange may not proceed 

with a redetermination for insurance 

affordability programs until such 

authorization has been obtained or the 

qualified individual continues his or her 

request for an eligibility determination 

for insurance affordability programs in 

accordance with § 155.310(b). 

(m) Special rule. The Exchange must 

not redetermine a qualified individual’s 

eligibility in accordance with this 

section if the qualified individual’s 

eligibility was redetermined under this 

section during the prior year, and the 

qualified individual was not enrolled in 

a QHP through the Exchange at the time 

of such redetermination, and has not 

enrolled in a QHP through the Exchange 

since such redetermination. 

■ 159. Section 155.340 is amended by 

revising paragraphs (b) introductory 

text, (b)(1) and (c) to read as follows: 

§ 155.340 Administration of advance 

payments of the premium tax credit and 

cost-sharing reductions. 

* * * * * 


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(b) Requirement to provide 

information related to employer 

responsibility. (1) In the event that the 

Exchange determines that an individual 

is eligible for advance payments of the 

premium tax credit or cost-sharing 

reductions based in part on a finding 

that an individual’s employer does not 

provide minimum essential coverage, or 

provides minimum essential coverage 

that is unaffordable, within the standard 

of 26 CFR 1.36B–2(c)(3)(v)(A)(1), or 

provide minimum essential coverage 

that does not meet the minimum value 

standard of 26 CFR 1.36B–2(c)(3)(vi), 

the Exchange must transmit the 

individual’s name and taxpayer 

identification number to HHS. 

* * * * * 

(c) Requirement to provide 

information related to reconciliation of 

advance payments of the premium tax 

credit. The Exchange must comply with 

the requirements of 26 CFR 1.36B–5 

regarding reporting to the IRS and to 

taxpayers. 

* * * * * 

■ 160. Section 155.345 is amended by— 

■ A. Revising paragraphs (a) 

introductory text, (a)(2), (f), (g) 

introductory text and (g)(2) hrough 

(g)(5). 

■ B. Redesignating paragraph (a)(3) as 

paragraph (a)(5). 

■ C. Adding new paragraphs (a)(3), 

(a)(4), g)(6), (g)(7). 

The revisions and addition read as 

follows: 

§ 155.345 Coordination with Medicaid, 

CHIP, the basic Health Program, and the 

Pre-existing Condition Insurance Plan. 

(a) Agreements. The Exchange must 

enter into agreements with agencies 

administering Medicaid, CHIP, and the 

BHP, if a BHP is operating in the service 

area of the Exchange, as are necessary to 

fulfill the requirements of this subpart 

and provide copies of any such 

agreements to HHS upon request. Such 

agreements must include a clear 

delineation of the responsibilities of 

each agency to— 

* * * * * 

(2) Ensure prompt determinations of 

eligibility and enrollment in the 

appropriate program without undue 

delay, based on the date the application 

is submitted to or redetermination is 

initiated by the Exchange or the agency 

administering Medicaid, CHIP, or the 

BHP; 

(3) Notices. (i) Prior to January 1, 

2015, include coordinated content, as 

defined in 42 CFR 435.4, in the notice 

of eligibility determination provided to 

the individual in accordance with 

§ 155.310(g) of this part; 

(ii) As of January 1, 2015 and to the 

extent feasible, provide for a combined 

eligibility notice, as defined in 42 CFR 

435.4 and which meets the requirements 

of § 155.230(a) and (b), promptly and 

without undue delay, to an applicant 

and the members of his or her 

household, as defined in 42 CFR 

435.603(f) and 26 CFR 1.36B–1(d), who 

apply together, for enrollment in a 

qualified health plan through the 

Exchange and for all insurance 

affordability programs. To the extent 

appropriate, such a notice will be issued 

by the last agency to determine the 

individual’s eligibility except for 

eligibility for Medicaid based on 

standards other than those specified in 

§ 155.305(c), regardless of which agency 

receives the application, and must 

specify the agency which actually made 

each included eligibility determination. 

(4) Ensure compliance with 

paragraphs (c), (d), (e), and (g) of this 

section. 

* * * * * 

(f) Special rule. If the Exchange 

verifies that a tax filer’s household 

income, as defined in 26 CFR 1.36B– 

1(e), is less than 100 percent of the FPL 

for the benefit year for which coverage 

is requested, determines that the tax 

filer is not eligible for advance 

payments of the premium tax credit 

based on § 155.305(f)(2), and one or 

more applicants in the tax filer’s 

household has been determined 

ineligible for Medicaid and CHIP based 

on income, the Exchange must— 

* * * * * 

(g) Determination of eligibility for 

individuals submitting applications 

directly to an agency administering 

Medicaid, CHIP, or the BHP. The 

Exchange, in consultation with the 

agency or agencies administering 

Medicaid, CHIP, and the BHP if a BHP 

is operating in the service area of the 

Exchange, must establish procedures to 

ensure that an eligibility determination 

for enrollment in a QHP, advance 

payments of the premium tax credit, 

and cost-sharing reductions is 

performed when an application is 

submitted directly to an agency 

administering Medicaid, CHIP, or the 

BHP if a BHP is operating in the service 

area of the Exchange. Under such 

procedures, the Exchange must— 

* * * * * 

(2) Notify such agency of the receipt 

of the information described in 

paragraph (g)(1) of this section and final 

eligibility determination for enrollment 

in a QHP, advance payments of the 

premium tax credit, and cost-sharing 

reductions; 

(3) Not duplicate any eligibility and 

verification findings already made by 

the transmitting agency, to the extent 

such findings are made in accordance 

with this subpart; 

(4) Not request information or 

documentation from the individual 

already provided to another agency 

administering an insurance affordability 

program and included in the 

transmission of information provided on 

the application or other information 

transmitted from the other agency; 

(5) Determine the individual’s 

eligibility for enrollment in a QHP, 

advance payments of the premium tax 

credit, and cost-sharing reductions, 

promptly and without undue delay, and 

in accordance with this subpart; 

(6) Follow a streamlined process for 

eligibility determinations regardless of 

the agency that initially received an 

application; and 

(7) Effective January 1, 2015, provide 

a combined eligibility notice, as defined 

in 42 CFR 435.4, for eligibility 

determinations for enrollment in a QHP 

and for insurance affordability 

programs, except for eligibility for 

Medicaid based on standards other than 

those specified in § 155.305(c), when 

another agency administering an 

insurance affordability program 

transfers the information described in 

paragraph (g)(1) of this section to the 

Exchange. 

* * * * * 

■ 161. Section 155.350 is amended by 

revising paragraph (a)(1)(ii) to read as 

follows: 

§ 155.350 Special eligibility standards and 

process for Indians. 

(a) * * * 

(1) * * * 

(ii) Is expected to have a household 

income, as defined in 26 CFR 1.36B–1(e) 

that does not exceed 300 percent of the 

FPL for the benefit year for which 

coverage is requested. 

* * * * * 

■ 162. Section 155.400 is amended by 

adding paragraph (b)(3) to read as 

follows: 

§ 155.400 Enrollment of qualified 

individuals into QHPs. 

* * * * * 

(b) * * * 

(3) Send updated eligibility and 

enrollment information to HHS 

promptly and without undue delay, in 

a manner and timeframe as specified by 

HHS. 

* * * * * 

■ 163. Section 155.420 is amended by— 

■ A. Revising paragraphs (a), (b)(2), 

(b)(3), and (d)(1) through (d)(9). 


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■ B. Adding paragraphs (b)(4) and 

(d)(10). 

The revisions and additions read as 

follows: 

§ 155.420 Special enrollment periods. 

* * * * * 

(a) General requirements. (1) The 

Exchange must provide special 

enrollment periods consistent with this 

section, during which qualified 

individuals may enroll in QHPs and 

enrollees may change QHPs. 

(2) For the purpose of this section, 

‘‘dependent’’, has the same meaning as 

it does in 26 CFR 54.9801–2, referring 

to any individual who is or who may 

become eligible for coverage under the 

terms of a QHP because of a relationship 

to a qualified individual or enrollee. 

(b) * * * 

(2) Special effective dates. (i) In the 

case of birth, adoption, or placement for 

adoption, the Exchange must ensure 

that coverage is effective for a qualified 

individual or enrollee on the date of 

birth, adoption, or placement for 

adoption. 

(ii) In the case of marriage, or in the 

case where a qualified individual loses 

minimum essential coverage, as 

described in paragraph (d)(1) of this 

section, the Exchange must ensure that 

coverage is effective for a qualified 

individual or enrollee on the first day of 

the following month. 

(iii) In the case of a qualified 

individual or enrollee eligible for a 

special enrollment period as described 

in paragraphs (d)(4), (d)(5), or (d)(9) of 

this section, the Exchange must ensure 

that coverage is effective on an 

appropriate date based on the 

circumstances of the special enrollment 

period, in accordance with guidelines 

issued by HHS. Such date much be 

either— 

(A) The date of the event that 

triggered the special enrollment period 

under (d)(4), (d)(5), or (d)(9) of this 

section; or 

(B) In accordance with the regular 

effective dates specified in paragraph 

(b)(1) of this section. 

(3) Option for earlier effective dates. 

Subject to the Exchange demonstrating 

to HHS that all of its participating QHP 

issuers agree to effectuate coverage in a 

timeframe shorter than discussed in 

paragraph (b)(1) or (b)(2)(ii) of this 

section, the Exchange may do one or 

both of the following for all applicable 

individuals: 

(i) For a QHP selection received by 

the Exchange from a qualified 

individual in accordance with the dates 

specified in paragraph (b)(1) or (b)(2)(ii) 

of this section, the Exchange may 

provide a coverage effective date for a 

qualified individual earlier than 

specified in such paragraphs. 

(ii) For a QHP selection received by 

the Exchange from a qualified 

individual on a date set by the Exchange 

after the fifteenth of the month, the 

Exchange may provide a coverage 

effective date of the first of the following 

month. 

(4) Advance payments of the premium 

tax credit and cost-sharing reductions. 

Notwithstanding the standards of this 

section, the Exchange must ensure that 

advance payments of the premium tax 

credit and cost-sharing reductions 

adhere to the effective dates specified in 

§ 155.330(f). 

* * * * * 

(d) The Exchange must allow a 

qualified individual or enrollee, and, 

when specified below, his or her 

dependent, to enroll in or change from 

one QHP to another if one of the 

following triggering events occur: 

(1) The qualified individual or his or 

her dependent loses minimum essential 

coverage: 

(i) In the case of a QHP 

decertification, the triggering event is 

the date of the notice of decertification 

as described in § 155.1080(e)(2); or 

(ii) In all other cases, the triggering 

event is the date the individual or 

dependent loses eligibility for minimum 

essential coverage; 

(2) The qualified individual gains a 

dependent or becomes a dependent 

through marriage, birth, adoption or 

placement for adoption; 

(3) The qualified individual, who was 

not previously a citizen, national, or 

lawfully present individual gains such 

status; 

(4) The qualified individual’s or his or 

her dependent’s, enrollment or nonenrollment in a QHP is unintentional, 

inadvertent, or erroneous and is the 

result of the error, misrepresentation, or 

inaction of an officer, employee, or 

agent of the Exchange or HHS, or its 

instrumentalities as evaluated and 

determined by the Exchange. In such 

cases, the Exchange may take such 

action as may be necessary to correct or 

eliminate the effects of such error, 

misrepresentation, or inaction; 

(5) The enrollee or, his or her 

dependent adequately demonstrates to 

the Exchange that the QHP in which he 

or she is enrolled substantially violated 

a material provision of its contract in 

relation to the enrollee; 

(6) Newly eligible or ineligible for 

advance payments of the premium tax 

credit, or change in eligibility for costsharing reductions. (i) The enrollee is 

determined newly eligible or newly 

ineligible for advance payments of the 

premium tax credit or has a change in 

eligibility for cost-sharing reductions; 

(ii) The enrollee’s dependent enrolled 

in the same QHP is determined newly 

eligible or newly ineligible for advance 

payments of the premium tax credit or 

has a change in eligibility for costsharing reductions; or 

(iii) A qualified individual or his or 

her dependent who is enrolled in 

qualifying coverage in an eligible 

employer-sponsored plan is determined 

newly eligible for advance payments of 

the premium tax credit based in part on 

a finding that such individual will cease 

to be eligible for qualifying coverage in 

an eligible-employer sponsored plan in 

the next 60 days and is allowed to 

terminate existing coverage. The 

Exchange must permit an individual 

whose existing coverage through an 

eligible employer-sponsored plan will 

no longer be affordable or provide 

minimum value to access this special 

enrollment period prior to the end of his 

or her coverage through such eligible 

employer-sponsored plan, although he 

or she is not eligible for advance 

payments of the premium tax credit 

until the end of his or her coverage 

through such eligible employersponsored plan; 

(7) The qualified individual or 

enrollee, or his or her dependent, gains 

access to new QHPs as a result of a 

permanent move; 

(8) The qualified individual who is an 

Indian, as defined by section 4 of the 

Indian Health Care Improvement Act, 

may enroll in a QHP or change from one 

QHP to another one time per month; 

and 

(9) The qualified individual or 

enrollee, or his or her dependent, 

demonstrates to the Exchange, in 

accordance with guidelines issued by 

HHS, that the individual meets other 

exceptional circumstances as the 

Exchange may provide. 

(10) The qualified individual or his or 

her dependent is enrolled in an eligible 

employer-sponsored plan that is not 

qualifying coverage in an eligible 

employer-sponsored plan, as the term is 

defined in § 155.300 of this part, and is 

allowed to terminate existing coverage. 

The Exchange must permit such an 

individual to access this special 

enrollment period 60 days prior to the 

end of his or her coverage through such 

eligible employer-sponsored plan. 

■ 164. Section 155.430 is amended by 

revising paragraphs (b)(1) and (d)(1) to 

read as follows: 

§ 155.430 Termination of coverage. 

* * * * * 

(b) * * * 


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(1) Enrollee-initiated terminations. (i) 

The Exchange must permit an enrollee 

to terminate his or her coverage in a 

QHP, including as a result of the 

enrollee obtaining other minimum 

essential coverage, with appropriate 

notice to the Exchange or the QHP. 

(ii) The Exchange must provide an 

opportunity at the time of plan selection 

for an enrollee to choose to remain 

enrolled in a QHP if the Exchange 

identifies that he or she has become 

eligible for other minimum essential 

coverage through the data matching 

described in § 155.330(d) and the 

enrollee does not request termination in 

accordance with paragraph (b)(1)(i) of 

this section. If an enrollee does not 

choose to remain enrolled in a QHP in 

such a situation, the Exchange must 

initiate termination of his or her 

coverage upon completion of the 

redetermination process specified in 

§ 155.330. 

* * * * * 

(d) * * * 

(1) For purposes of this section— 

(i) Reasonable notice is defined as 

fourteen days from the requested 

effective date of termination; and 

(ii) Changes in eligibility for advance 

payments of the premium tax credit and 

cost sharing reductions, including 

terminations, must adhere to the 

effective dates specified in § 155.330(f). 

* * * * * 

■ 165. Add Subpart F to read as follows: 

Subpart F—Appeals of Eligibility 

Determinations for Exchange Participation 

and Insurance Affordability Programs 

Sec. 

155.500 Definitions. 

155.505 General eligibility appeals 

requirements. 

155.510 Appeals coordination. 

155.515 Notice of appeal procedures. 

155.520 Appeal requests. 

155.525 Eligibility pending appeal. 

155.530 Dismissals. 

155.535 Informal resolution and hearing 

requirements. 

155.540 Expedited appeals. 

155.545 Appeal decisions. 

155.550 Appeal record. 

155.555 Employer appeals process. 

Subpart F—Appeals of Eligibility 

Determinations for Exchange 

Participation and Insurance 

Affordability Programs 

§ 155.500 Definitions. 

In addition to those definitions in 

§ 155.20 and § 155.300, for purposes of 

this subpart and § 155.740 of subpart H, 

the following terms have the following 

meanings: 

Appeal record means the appeal 

decision, all papers and requests filed in 

the proceeding, and, if a hearing was 

held, the transcript or recording of 

hearing testimony or an official report 

containing the substance of what 

happened at the hearing, and any 

exhibits introduced at the hearing. 

Appeal request means a clear 

expression, either orally or in writing, 

by an applicant, enrollee, employer, or 

small business employer or employee to 

have any eligibility determination or 

redetermination contained in a notice 

issued in accordance with § 155.310(g), 

§ 155.330(e)(1)(ii), § 155.335(h)(1)(ii), 

§ 155.715(e) or (f), or pursuant to future 

guidance on section 1311(d)(4)(H) of the 

Affordable Care Act, reviewed by an 

appeals entity. 

Appeals entity means a body 

designated to hear appeals of eligibility 

determinations or redeterminations 

contained in notices issued in 

accordance with §§ 155.310(g), 

155.330(e)(1)(ii), 155.335(h)(1)(ii), 

155.715(e) and (f), or notices issued in 

accordance with future guidance on 

exemptions pursuant to section 

1311(d)(4)(H). 

Appellant means the applicant or 

enrollee, the employer, or the small 

business employer or employee who is 

requesting an appeal. 

De novo review means a review of an 

appeal without deference to prior 

decisions in the case. 

Evidentiary hearing means a hearing 

conducted where new evidence may be 

presented. 

Vacate means to set aside a previous 

action. 

§ 155.505 General eligibility appeals 

requirements. 

(a) General requirements. Unless 

otherwise specified, the provisions of 

this subpart apply to Exchange 

eligibility appeals processes, regardless 

of whether the appeals process is 

provided by a state-based Exchange 

appeals entity or by HHS. 

(b) Right to appeal. In accordance 

with § 155.355 and future guidance on 

section 1311(d)(4)(H) of the Affordable 

Care Act, an applicant or enrollee must 

have the right to appeal— 

(1) An eligibility determination made 

in accordance with subpart D, 

including— 

(i) An initial determination of 

eligibility, including the amount of 

advance payments of the premium tax 

credit and level of cost-sharing 

reductions, made in accordance with 

the standards specified in 45 CFR 

155.305(a) through (h); and 

(ii) A redetermination of eligibility, 

including the amount of advance 

payments of the premium tax credit and 

level of cost-sharing reductions, made in 

accordance with 45 CFR 155.330 and 

§ 155.335; 

(2) An eligibility determination for an 

exemption made in accordance with 

future guidance on exemptions pursuant 

to section 1311(d)(4)(H) of the 

Affordable Care Act; and 

(3) A failure by the Exchange to 

provide timely notice of an eligibility 

determination in accordance with 

§ 155.310(g), § 155.330(e)(1)(ii), or 

§ 155.335(h)(1)(ii). 

(c) Options for Exchange appeals. 

Exchange eligibility appeals may be 

conducted by— 

(1) The Exchange, if the Exchange 

establishes an appeals process in 

accordance with the requirements of 

this subpart; or 

(2) HHS, upon exhaustion of the statebased Exchange appeals process, or if 

the Exchange has not established an 

appeals process in accordance with the 

requirements of this subpart. 

(d) Eligible entities. An appeals 

process established under this subpart 

must comply with the requirements of 

42 CFR 431.10(c)(2). 

(e) Authorized representatives. An 

appellant may designate an authorized 

representative to act on his or her 

behalf, including in making an appeal 

request, as provided in § 155.227. 

(f) Accessibility requirements. 

Appeals processes established under 

this subpart must comply with the 

accessibility requirements in 

§ 155.205(c). 

(g) Judicial review. An appellant may 

seek judicial review to the extent it is 

available by law. 

§ 155.510 Appeals coordination. 

(a) Agreements. The appeals entity or 

the Exchange must enter into 

agreements with the agencies 

administering insurance affordability 

programs regarding the appeals 

processes for such programs as are 

necessary to fulfill the requirements of 

this subpart. Such agreements will 

include a clear delineation of the 

responsibilities of each entity to support 

the eligibility appeals process, and 

must— 

(1) Minimize burden on appellants, 

including not asking the appellant to 

provide duplicative information or 

documentation that he or she already 

provided to an agency administering an 

insurance affordability program or 

eligibility appeals process; 

(2) Ensure prompt issuance of appeal 

decisions consistent with timeliness 

standards established under this 

subpart; and 

(3) Comply with the requirements set 

forth in 42 CFR 431.10(d). 

(b) Coordination for Medicaid and 

CHIP appeals. (1) Consistent with 42 


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CFR 431.10(c)(1)(ii) and § 457.1120, the 

appellant must be informed of the 

option to opt into pursuing his or her 

appeal of an adverse Medicaid or CHIP 

determination made by the Exchange 

directly with the Medicaid or CHIP 

agency, and if the appellant elects to do 

so, the appeals entity transmits the 

eligibility determination and all 

information provided via secure 

electronic interface, promptly and 

without undue delay, to the Medicaid or 

CHIP agency, as applicable. 

(2) Where the Medicaid or CHIP 

agency has delegated appeals authority 

to the Exchange appeals entity 

consistent with 42 CFR 431.10(c)(1)(ii) 

and the appellant has elected to have 

the Exchange appeals entity hear the 

appeal, the appeals entity may include 

in the appeal decision a determination 

of Medicaid and CHIP eligibility, 

provided that— 

(i) The appeals entity applies 

Medicaid and CHIP MAGI-based income 

standards and standards for citizenship 

and immigration status, using 

verification rules and procedures 

consistent with 42 CFR parts 435 and 

457. 

(ii) Notices required in connection 

with an eligibility determination for 

Medicaid or CHIP are performed by the 

appeals entity consistent with the 

standards identified in this subpart, 

subpart D, and the State Medicaid or 

CHIP agency consistent with applicable 

law. 

(3) Where the Medicaid or CHIP 

agency has not delegated appeals 

authority to the appeals entity and the 

appellant seeks review of a denial of 

Medicaid or CHIP eligibility, the 

appeals entity must transmit the 

eligibility determination and all 

information provided as part of the 

appeal via secure electronic interface, 

promptly and without undue delay, to 

the Medicaid or CHIP agency, as 

applicable. 

(4) The Exchange must consider an 

appellant determined or assessed by the 

appeals entity as not potentially eligible 

for Medicaid or CHIP as ineligible for 

Medicaid and CHIP based on the 

applicable Medicaid and CHIP MAGIbased income standards for purposes of 

determining eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions. 

(c) Data exchange. The appeals entity 

must— 

(1) Ensure that all data exchanges that 

are part of the appeals process, comply 

with the data exchange requirements in 

§ 155.260, § 155.270, and § 155.345(h); 

and 

(2) Comply with all data sharing 

requests made by HHS. 

§ 155.515 Notice of appeal procedures. 

(a) Requirement to provide notice of 

appeal procedures. The Exchange must 

provide notice of appeal procedures at 

the time that the— 

(1) Applicant submits an application; 

and 

(2) Notice of eligibility determination 

is sent under § 155.310(g), 

§ 155.330(e)(1)(ii), § 155.335(h)(1)(ii), or 

future guidance on exemptions pursuant 

to section 1311(d)(4)(H) of the 

Affordable Care Act. 

(b) General content on right to appeal 

and appeal procedures. Notices 

described in paragraph (a) of this 

section must contain— 

(1) An explanation of the applicant or 

enrollee’s appeal rights under this 

subpart; 

(2) A description of the procedures by 

which the applicant or enrollee may 

request an appeal; 

(3) Information on the applicant or 

enrollee’s right to represent himself or 

herself, or to be represented by legal 

counsel or an authorized representative; 

(4) An explanation of the 

circumstances under which the 

appellant’s eligibility may be 

maintained or reinstated pending an 

appeal decision, as described in 

§ 155.525; and 

(5) An explanation that an appeal 

decision for one household member 

may result in a change in eligibility for 

other household members and may be 

handled as a redetermination in 

accordance with the standards specified 

in § 155.305. 

§ 155.520 Appeal requests. 

(a) General standards for appeal 

requests. The Exchange and the appeals 

entity— 

(1) Must accept appeal requests 

submitted— 

(i) By telephone; 

(ii) By mail; 

(iii) In person, if the Exchange or the 

appeals entity, as applicable, is capable 

of receiving in-person appeal requests; 

or 

(iv) Via the Internet. 

(2) May assist the applicant or 

enrollee in making the appeal request; 

(3) Must not limit or interfere with the 

applicant or enrollee’s right to make an 

appeal request; and 

(4) Must consider an appeal request to 

be valid for the purpose of this subpart, 

if it is submitted in accordance with the 

requirements of paragraphs (b) and (c) of 

this section and § 155.505(b). 

(b) Appeal request. The Exchange and 

the appeals entity must allow an 

applicant or enrollee to request an 

appeal within 90 days of the date of the 

notice of eligibility determination. 

(c) Appeal of a state-based Exchange 

appeals entity decision to HHS. If the 

appellant disagrees with the appeal 

decision of a state-based Exchange 

appeals entity, he or she may make an 

appeal request to HHS within 30 days 

of the date of the state-based Exchange 

appeals entity’s notice of appeal 

decision through any of the methods 

described in paragraph (a)(1) of this 

section. 

(d) Acknowledgement of appeal 

request. (1) Upon receipt of a valid 

appeal request pursuant to paragraph 

(b), (c), or (d)(3)(i) of this section, the 

appeals entity— 

(i) Must send timely acknowledgment 

to the appellant of the receipt of his or 

her valid appeal request, including— 

(A) Information regarding the 

appellant’s eligibility pending appeal 

pursuant to § 155.525; and 

(B) An explanation that any advance 

payments of the premium tax credit 

paid on behalf of the tax filer pending 

appeal are subject to reconciliation 

under 26 CFR 1.36B–4. 

(ii) Must send timely notice via secure 

electronic interface of the appeal request 

and, if applicable, instructions to 

provide eligibility pending appeal 

pursuant to § 155.525, to the Exchange 

and to the agencies administering 

Medicaid or CHIP, where applicable. 

(iii) If the appeal request is made 

pursuant to paragraph (c) of this section, 

must send timely notice via secure 

electronic interface of the appeal request 

to the state-based Exchange appeals 

entity. 

(iv) Must promptly confirm receipt of 

the records transferred pursuant to 

paragraph (d)(3) or (4) of this section to 

the Exchange or the state-based 

Exchange appeals entity, as applicable. 

(2) Upon receipt of an appeal request 

that is not valid because it fails to meet 

the requirements of this section or 

§ 155.505(b), the appeals entity must— 

(i) Promptly and without undue 

delay, send written notice to the 

applicant or enrollee that the appeal 

request has not been accepted and of the 

nature of the defect in the appeal 

request; and 

(ii) Treat as valid an amended appeal 

request that meets the requirements of 

this section and of § 155.505(b). 

(3) Upon receipt of a valid appeal 

request pursuant to paragraph (b) of this 

section, or upon receipt of the notice 

under paragraph (d)(1)(ii) of this 

section, the Exchange must transmit via 

secure electronic interface to the 

appeals entity— 

(i) The appeal request, if the appeal 

request was initially made to the 

Exchange; and 

(ii) The appellant’s eligibility record. 


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(4) Upon receipt of the notice 

pursuant to paragraph (d)(1)(iii) of this 

section, the state-based Exchange 

appeals entity must transmit via secure 

electronic interface the appellant’s 

appeal record, including the appellant’s 

eligibility record as received from the 

Exchange, to HHS. 

§ 155.525 Eligibility pending appeal. 

(a) General standards. After receipt of 

a valid appeal request or notice under 

§ 155.520(d)(1)(ii) that concerns an 

appeal of a redetermination under 

§ 155.330(e) or § 155.335(h), the 

Exchange or the Medicaid or CHIP 

agency, as applicable, must continue to 

consider the appellant eligible while the 

appeal is pending in accordance with 

standards set forth in paragraph (b) of 

this section or as determined by the 

Medicaid or CHIP agency consistent 

with 42 CFR parts 435 and 457, as 

applicable. 

(b) Implementation. The Exchange 

must continue the appellant’s eligibility 

for enrollment in a QHP, advance 

payments of the premium tax credit, 

and cost-sharing reductions, as 

applicable, in accordance with the level 

of eligibility immediately before the 

redetermination being appealed. 

§ 155.530 Dismissals. 

(a) Dismissal of appeal. The appeals 

entity must dismiss an appeal if the 

appellant— 

(1) Withdraws the appeal request in 

writing; 

(2) Fails to appear at a scheduled 

hearing; 

(3) Fails to submit a valid appeal 

request as specified in § 155.520(a)(4); 

or 

(4) Dies while the appeal is pending. 

(b) Notice of dismissal to the 

appellant. If an appeal is dismissed 

under paragraph (a) of this section, the 

appeals entity must provide timely 

notice to the appellant, including— 

(1) The reason for dismissal; 

(2) An explanation of the dismissal’s 

effect on the appellant’s eligibility; and 

(3) An explanation of how the 

appellant may show good cause why the 

dismissal should be vacated in 

accordance with paragraph (d) of this 

section. 

(c) Notice of the dismissal to the 

Exchange, Medicaid, or CHIP. If an 

appeal is dismissed under paragraph (a) 

of this section, the appeals entity must 

provide timely notice to the Exchange, 

and to the agency administering 

Medicaid or CHIP, as applicable, 

including instruction regarding— 

(1) The eligibility determination to 

implement; and 

(2) Discontinuing eligibility provided 

under § 155.525. 

(d) Vacating a dismissal. The appeals 

entity may vacate a dismissal if the 

appellant makes a written request 

within 30 days of the date of the notice 

of dismissal showing good cause why 

the dismissal should be vacated. 

§ 155.535 Informal resolution and hearing 

requirements. 

(a) Informal resolution. The HHS 

appeals process will provide an 

opportunity for informal resolution and 

a hearing in accordance with the 

requirements of this section. A statebased Exchange appeals entity may also 

provide an informal resolution process 

prior to a hearing, provided that— 

(1) The process complies with the 

scope of review specified in paragraph 

(e) of this section; 

(2) The appellant’s right to a hearing 

is preserved in any case in which the 

appellant remains dissatisfied with the 

outcome of the informal resolution 

process; 

(3) If the appeal advances to hearing, 

the appellant is not asked to provide 

duplicative information or 

documentation that he or she previously 

provided during the application or 

informal resolution process; and 

(4) If the appeal does not advance to 

hearing, the informal resolution 

decision is final and binding. 

(b) Notice of hearing. When a hearing 

is scheduled, the appeals entity must 

send written notice to the appellant of 

the date, time, and location or format of 

the hearing no later than 15 days prior 

to the hearing date. 

(c) Conducting the hearing. All 

hearings under this subpart must be 

conducted— 

(1) At a reasonable date, time, and 

location or format; 

(2) After notice of the hearing, 

pursuant to paragraph (b) of this section; 

(3) As an evidentiary hearing, 

consistent with paragraph (e) of this 

section; and 

(4) By one or more impartial officials 

who have not been directly involved in 

the eligibility determination or any prior 

Exchange appeal decisions in the same 

matter. 

(d) Procedural rights of an appellant. 

The appeals entity must provide the 

appellant with the opportunity to— 

(1) Review his or her appeal record, 

including all documents and records to 

be used by the appeals entity at the 

hearing, at a reasonable time before the 

date of the hearing as well as during the 

hearing; 

(2) Bring witnesses to testify; 

(3) Establish all relevant facts and 

circumstances; 

(4) Present an argument without 

undue interference; and 

(5) Question or refute any testimony 

or evidence, including the opportunity 

to confront and cross-examine adverse 

witnesses. 

(e) Information and evidence to be 

considered. The appeals entity must 

consider the information used to 

determine the appellant’s eligibility as 

well as any additional relevant evidence 

presented during the course of the 

appeal, including at the hearing. 

(f) Standard of review. The appeals 

entity will review the appeal de novo 

and will consider all relevant facts and 

evidence adduced during the appeal. 

§ 155.540 Expedited appeals. 

(a) Expedited appeals. The appeals 

entity must establish and maintain an 

expedited appeals process for an 

appellant to request an expedited 

process where there is an immediate 

need for health services because a 

standard appeal could seriously 

jeopardize the appellant’s life or health 

or ability to attain, maintain, or regain 

maximum function. 

(b) Denial of a request for expedited 

appeal. If the appeals entity denies a 

request for an expedited appeal, it 

must— 

(1) Handle the appeal request under 

the standard process and issue the 

appeal decision in accordance with 

§ 155.545(b)(1); and 

(2) Make reasonable efforts to inform 

the appellant through electronic or oral 

notification of the denial and, if notified 

orally, follow up with the appellant by 

written notice within 2 days of the 

denial. 

§ 155.545 Appeal decisions. 

(a) Appeal decisions. Appeal 

decisions must— 

(1) Be based exclusively on the 

information and evidence specified in 

§ 155.535(e) and the eligibility 

requirements under subpart D of this 

part or pursuant to future guidance on 

section 1311(d)(4)(H) of the Affordable 

Care Act, as applicable; 

(2) State the decision, including a 

plain language description of the effect 

of the decision on the appellant’s 

eligibility; 

(3) Summarize the facts relevant to 

the appeal; 

(4) Identify the legal basis, including 

the regulations that support the 

decision; 

(5) State the effective date of the 

decision; and 

(6) If the appeals entity is a statebased Exchange appeals entity, provide 

an explanation of the appellant’s right to 

pursue the appeal at HHS, if the 

appellant remains dissatisfied with the 

eligibility determination. 


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(b) Notice of appeal decision. The 

appeals entity— 

(1) Must issue written notice of the 

appeal decision to the appellant within 

90 days of the date an appeal request 

under § 155.520(b) or (c) is received, as 

administratively feasible. 

(2) In the case of an appeal request 

submitted under § 155.540 that the 

appeals entity determines meets the 

criteria for an expedited appeal, must 

issue the notice as expeditiously as the 

appellant’s health condition requires, 

but no later than 3 working days after 

the appeals entity receives the request 

for an expedited appeal. 

(3) Must provide notice of the appeal 

decision and instructions to cease 

pended eligibility to the appellant, if 

applicable, via secure electronic 

interface, to the Exchange or the 

Medicaid or CHIP agency, as applicable. 

(c) Implementation of appeal 

decisions. The Exchange or the 

Medicaid or CHIP agency, as applicable, 

upon receiving the notice described in 

paragraph (b) of this section, must 

promptly— 

(1) Implement the appeal decision 

retroactive to the date the incorrect 

eligibility determination was made or at 

a time determined under § 155.330(f), as 

applicable, or in accordance with the 

applicable Medicaid or CHIP standards 

in 42 CFR parts 435 or 457; and 

(2) Redetermine the eligibility of 

household members who have not 

appealed their own eligibility 

determinations but whose eligibility 

may be affected by the appeal decision, 

in accordance with the standards 

specified in § 155.305. 

§ 155.550 Appeal record. 

(a) Appellant access to the appeal 

record. Subject to the requirements of 

all applicable federal and state laws 

regarding privacy, confidentiality, 

disclosure, and personally identifiable 

information, the appeals entity must 

make the appeal record accessible to the 

appellant at a convenient place and 

time. 

(b) Public access to the appeal record. 

The appeals entity must provide public 

access to all appeal records, subject to 

all applicable federal and state laws 

regarding privacy, confidentiality, 

disclosure, and personally identifiable 

information. 

§ 155.555 Employer appeals process. 

(a) General requirements. The 

provisions of this section apply to 

employer appeals processes through 

which an employer may, in response to 

a notice under § 155.310(h), appeal a 

determination that the employer does 

not provide minimum essential 

coverage through an employersponsored plan or that the employer 

does provide that coverage but it is not 

affordable coverage with respect to an 

employee. 

(b) Exchange employer appeals 

process. An Exchange may establish an 

employer appeals process in accordance 

with the requirements of this section, 

§ 155.505(e) through (g), and 

§ 155.510(a)(1), (a)(2), and (c). Where an 

Exchange has not established an 

employer appeals process, HHS will 

provide an employer appeals process 

that meets the requirements of this 

section, § 155.505(e) through (g), and 

§ 155.510(a)(1), (a)(2), and (c). 

(c) Appeal request. The Exchange and 

appeals entity, as applicable, must— 

(1) Allow an employer to request an 

appeal within 90 days from the date the 

notice described under § 155.310(h) is 

sent; 

(2) Allow an employer to submit 

relevant evidence to support the appeal; 

(3) Allow an employer to submit an 

appeal request to— 

(i) The Exchange or the Exchange 

appeals entity, if the Exchange 

establishes an employer appeals 

process; or 

(ii) HHS, if the Exchange has not 

established an employer appeals 

process; 

(4) Comply with the requirements of 

§ 155.520(a)(1) through (3); and 

(5) Consider an appeal request valid if 

it is submitted in accordance with 

paragraph (c)(1) of this section and with 

the purpose of appealing the 

determination identified in the notice 

specified in § 155.310(h). 

(d) Notice of appeal request. Upon 

receipt of a valid appeal request, the 

appeals entity must— 

(1) Send timely acknowledgement of 

the receipt of the appeal request to the 

employer, including an explanation of 

the appeals process; 

(2) Send timely notice to the 

employee of the receipt of the appeal 

request, including— 

(i) An explanation of the appeals 

process; 

(ii) Instructions for submitting 

additional evidence for consideration by 

the appeals entity; and 

(iii) An explanation of the potential 

effect of the employer’s appeal on the 

employee’s eligibility. 

(3) Promptly notify the Exchange of 

the appeal, if the employer did not 

initially make the appeal request to the 

Exchange. 

(4) Upon receipt of an appeal request 

that is not valid because it fails to meet 

the requirements of this section, the 

appeals entity must— 

(i) Promptly and without undue 

delay, send written notice to the 

employer that the appeal request has not 

been accepted and of the nature of the 

defect in the appeal request; and 

(ii) Treat as valid an amended appeal 

request that meets the requirements of 

this section, including standards for 

timeliness. 

(e) Transmittal and receipt of records. 

(1) Upon receipt of a valid appeal 

request under this section, or upon 

receipt of the notice under paragraph 

(d)(3) of this section, the Exchange must 

promptly transmit via secure electronic 

interface to the appeal entity— 

(i) The appeal request, if the appeal 

request was initially made to the 

Exchange; and 

(ii) The employee’s eligibility record. 

(2) The appeals entity must promptly 

confirm receipt of records transmitted 

pursuant to paragraph (e)(1) of this 

section to the entity that transmitted the 

records. 

(f) Dismissal of appeal. The appeals 

entity— 

(1) Must dismiss an appeal under the 

circumstances specified in 

§ 155.530(a)(1) or if the request fails to 

comply with the standards in paragraph 

(c)(4) of this section. 

(2) Must provide timely notice of the 

dismissal to the employer, employee, 

and Exchange including the reason for 

dismissal; and 

(3) May vacate a dismissal if the 

employer makes a written request 

within 30 days of the date of the notice 

of dismissal showing good cause why 

the dismissal should be vacated. 

(g) Procedural rights of the employer. 

The appeals entity must provide the 

employer the opportunity to— 

(1) Provide relevant evidence for 

review of the determination of an 

employee’s eligibility for advance 

payments of the premium tax credit or 

cost-sharing reductions; 

(2) Review— 

(i) The information described in 

§ 155.310(h)(1); 

(ii) Information regarding whether the 

employee’s income is above or below 

the threshold by which the affordability 

of employer-sponsored minimum 

essential coverage is measured, as set 

forth by standards described in 26 CFR 

1.36B; and 

(iii) Other data used to make the 

determination described in § 155.305(f) 

or (g), to the extent allowable by law, 

except the information described in 

paragraph (h) of this section. 

(h) Confidentiality of employee 

information. Neither the Exchange nor 

the appeals entity may make available to 

an employer any tax return information 

of an employee as prohibited by § 6103 

of the Code. 

(i) Adjudication of employer appeals. 

Employer appeals must— 


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(1) Be reviewed by one or more 

impartial officials who have not been 

directly involved in the employee 

eligibility determination implicated in 

the appeal; 

(2) Consider the information used to 

determine the employee’s eligibility as 

well as any additional relevant evidence 

provided by the employer or the 

employee during the course of the 

appeal; and 

(3) Be reviewed de novo. 

(j) Appeal decisions. Employer appeal 

decisions must— 

(1) Be based exclusively on the 

information and evidence described in 

paragraph (i)(2) and the eligibility 

standards in 45 CFR part 155, subpart D; 

(2) State the decision, including a 

plain language description of the effect 

of the decision on the employee’s 

eligibility; and 

(3) Comply with the requirements set 

forth in § 155.545(a)(3) through (5). 

(k) Notice of appeal decision. The 

appeals entity must provide written 

notice of the appeal decision within 90 

days of the date the appeal request is 

received, as administratively feasible, 

to— 

(1) The employer. Such notice must 

include— 

(i) The appeal decision; and 

(ii) An explanation that the appeal 

decision does not foreclose any appeal 

rights the employer may have under 

subtitle F of the Code. 

(2) The employee. Such notice must 

include the appeal decision. 

(3) The Exchange. 

(l) Implementation of the appeal 

decision. After receipt of the notice 

under paragraph (k)(3) of this section, if 

the appeal decision affects the 

employee’s eligibility, the Exchange 

must promptly redetermine the 

employee’s eligibility in accordance 

with the standards specified in 

§ 155.305. 

(m) Appeal record. Subject to the 

requirements of § 155.550 and 

paragraph (h) of this section, the appeal 

record must be accessible to the 

employer and to the employee in a 

convenient format and at a convenient 

time. 

Subpart H—Exchange Functions: 

Small Business Health Options 

Program (SHOP) 

■ 166. Section 155.705 is amended by 

adding paragraph (c) to read as follows: 

§ 155.705 Functions of a SHOP. 

* * * * * 

(c) Coordination with individual 

market Exchange for eligibility 

determinations. A SHOP must provide 

data to the individual market Exchange 

that corresponds to the service area of 

the SHOP related to eligibility and 

enrollment of a qualified employee. 

* * * * * 

■ 167. Section 155.740 is added to 

Subpart H to read as follows: 

§ 155.740 SHOP employer and employee 

eligibility appeals requirements. 

(a) Definitions. The definitions in 

§ 155.20, § 155.300, and § 155.500 apply 

to this section. 

(b) General requirements. (1) A state, 

establishing an Exchange pursuant to 

§ 155.100, must provide an eligibility 

appeals process for the SHOP. Where a 

state has not established an Exchange 

pursuant to § 155.100, HHS will provide 

an eligibility appeals process for the 

SHOP that meets the requirements of 

this section and the requirements in 

paragraph (b)(2) of this section. 

(2) The SHOP appeals entity must 

conduct appeals in accordance with the 

requirements established in this section, 

§ 155.505(e) through (g), and 

§ 155.510(a)(1), (a)(2), and (c). 

(c) Employer right to appeal. An 

employer may appeal— 

(1) A notice of denial of eligibility 

under § 155.715(e); or 

(2) A failure of the SHOP to make an 

eligibility determination in a timely 

manner. 

(d) Employee right to appeal. An 

employee may appeal— 

(1) A notice of denial of eligibility 

under § 155.715(f); or 

(2) A failure of the SHOP to make an 

eligibility determination in a timely 

manner. 

(e) Appeals notice requirement. 

Notices of the right to appeal a denial 

of eligibility under § 155.715(e) or (f) 

must be written and include— 

(1) The reason for the denial of 

eligibility, including a citation to the 

applicable regulations; and 

(2) The procedure by which the 

employer or employee may request an 

appeal of the denial of eligibility. 

(f) Appeal request. The SHOP and 

appeals entity must— 

(1) Allow an employer or employee to 

request an appeal within 90 days from 

the date of the notice of denial of 

eligibility to— 

(i) The SHOP or the appeals entity; or 

(ii) HHS, if no State-based Exchange 

has been established. 

(2) Accept appeal requests submitted 

through any of the methods described in 

§ 155.520(a)(1); 

(3) Comply with the requirements of 

§ 155.520(a)(2) and (3); and 

(4) Consider an appeal request valid if 

it is submitted in accordance with 

paragraph (f)(1) of this section. 

(g) Notice of appeal request. Upon 

receipt of a valid appeal request, the 

appeals entity must— 

(1) Send timely acknowledgement to 

the employer, or employer and 

employee if an employee is appealing, 

of the receipt of the appeal request, 

including— 

(i) An explanation of the appeals 

process; and 

(ii) Instructions for submitting 

additional evidence for consideration by 

the appeals entity. 

(2) Promptly notify the SHOP of the 

appeal, if the appeal request was not 

initially made to the SHOP. 

(3) Upon receipt of an appeal request 

that is not valid because it fails to meet 

the requirements of this section, the 

appeals entity must— 

(i) Promptly and without undue 

delay, send written notice to the 

employer or employee that is appealing 

that the appeal request has not been 

accepted and of the nature of the defect 

in the appeal request; and 

(ii) Treat as valid an amended appeal 

request that meets the requirements of 

this section. 

(h) Transmittal and receipt of records. 

(1) Upon receipt of a valid appeal 

request under this section, or upon 

receipt of the notice under paragraph 

(g)(2) of this section, the SHOP must 

promptly transmit, via secure electronic 

interface, to the appeals entity— 

(i) The appeal request, if the appeal 

request was initially made to the SHOP; 

and 

(ii) The eligibility record of the 

employer or employee that is appealing. 

(2) The appeals entity must promptly 

confirm receipt of records transmitted 

pursuant to paragraph (h)(1) of this 

section to the SHOP that transmitted the 

records. 

(i) Dismissal of appeal. The appeals 

entity— 

(1) Must dismiss an appeal if the 

employer or employee that is 

appealing— 

(i) Withdraws the request in writing; 

or 

(ii) Fails to submit an appeal request 

meeting the standards specified in 

paragraph (f)(4) of this section. 

(2) Must provide timely notice to the 

employer or employee that is appealing 

of the dismissal of the appeal request, 

including the reason for dismissal, and 

must notify the SHOP of the dismissal. 

(3) May vacate a dismissal if the 

employer or employee makes a written 

request within 30 days of the date of the 

notice of dismissal showing good cause 

why the dismissal should be vacated. 

(j) Procedural rights of the employer 

or employee. The appeals entity must 

provide the employer, or the employer 


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4724 Federal Register / Vol. 78, No. 14 / Tuesday, January 22, 2013 / Proposed Rules 

and employee if an employee is 

appealing, the opportunity to submit 

relevant evidence for review of the 

eligibility determination. 

(k) Adjudication of SHOP appeals. 

SHOP appeals must— 

(1) Comply with the standards set 

forth in § 155.555(i)(1) and (3); and 

(2) Consider the information used to 

determine the employer or employee’s 

eligibility as well as any additional 

relevant evidence submitted during the 

course of the appeal by the employer or 

employee. 

(l) Appeal decisions. Appeal 

decisions must— 

(1) Be based solely on— 

(i) The evidence referenced in 

paragraph (k)(2) of this section; 

(ii) The eligibility requirements for 

the SHOP under § 155.710(b) or (e), as 

applicable. 

(2) Comply with the standards set 

forth in § 155.545(a)(2) through (5); and 

(3) Be effective retroactive to the date 

the incorrect eligibility determination 

was made, if the decision finds the 

employer or employee eligible, or 

effective as of the date of the notice of 

the appeal decision, if eligibility is 

denied. 

(m) Notice of appeal decision. The 

appeals entity must issue written notice 

of the appeal decision to the employer, 

or to the employer and employee if an 

employee is appealing, and to the SHOP 

within 90 days of the date the appeal 

request is received. 

(n) Implementation of SHOP appeal 

decisions. The SHOP must promptly 

implement the appeal decision upon 

receiving the notice under paragraph 

(m) of this section. 

(o) Appeal record. Subject to the 

requirements of § 155.550, the appeal 

record must be accessible to the 

employer, or employer and employee if 

an employee is appealing, in a 

convenient format and at a convenient 

time. 

(Catalog of Federal Domestic Assistance 

Program No. 93.778, Medical Assistance 

Program) 

Dated: December 6, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: December 19, 2012. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2013–00659 Filed 1–14–13; 11:15 am] 

BILLING CODE 4120–01–P 


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