Federal Register / Vol. 76, No. 29 / Friday, February 11, 2011 / Proposed Rules 7767 

2On January 8, 2009, EPA issued an interim 

health advisory to provide guidance to State and 

local officials in their efforts to address perchlorate 

contamination. The interim health advisory 

(USEPA, 2008e) can be found at: http:// 

www.epa.gov/safewater/contaminants/unregulated/ 

pdfs/healthadvisory_perchlorate_interim.pdf and in 

EPA’s docket ID No. EPA–HQ–OW–2009–0297 for 

this notice. EPA expects to make a final decision 

on the interim health advisory at such time as a 

definitive decision has been made with respect to 

the promulgation of a final perchlorate regulation. 

include premature infants and 

hypothyroid women. 

After further consideration of the peer 

review and public comments, EPA 

concludes that the PBPK modeling 

analysis, in the context of the 

perchlorate regulatory determination, is 

useful in examining which life stages 

are most susceptible to the effects of 

perchlorate. For example, the model 

indicates that a fetus may be seven 

times more sensitive to the effects of 

perchlorate than a pregnant woman. The 

model also allows for the estimation of 

the concentration of perchlorate in 

breast milk (thus breast-fed infant 

exposure) at various maternal 

perchlorate exposure levels. However, 

because of the stated limitations, EPA 

has decided the model does not directly 

bear on the current decision regarding 

the need for a NPDWR for perchlorate. 

EPA is continuing to evaluate whether 

the model could be used in setting a 

NPDWR for perchlorate. 

F. Next Steps 

EPA is initiating the development of 

a proposed NPDWR for perchlorate. 

However, this is not the end of a 

decision process but a middle step in a 

process that leads to a final drinking 

water standard. Based on this decision, 

EPA intends to publish a proposed 

NPDWR for public review and comment 

within 24 months of this regulatory 

determination.2 EPA will continue to 

evaluate the science as we develop the 

proposed NPDWR. EPA will, as part of 

the proposed NPDWR, present a health 

risk reduction and cost analyses, an 

analysis of feasible treatment methods, 

and an analysis of small system 

compliance technologies. EPA will also 

consult with the National Drinking 

Water Advisory Council, the Science 

Advisory Board, and the Secretary of 

Health and Human Services, as required 

under SDWA. 

IV. References 

Clewell, R.A., E.A. Merrill, J.M. Gearhart, P.J. 

Robinson, T.R. Sterner, D.R. Mattie, and 

H.J. Clewell, III. 2007. Perchlorate and 

radioiodide kinetics across life stages in 

the human: Using PBPK models to 

predict dosimetry and thyroid inhibition 

and sensitive subpopulations based on 

developmental stage. Journal of 

Toxicology and Environmental Health. 

Part A. Vol. 70. Issue 5. p. 408–428. 

Greer, M.A., G. Goodman, R.C. Pleuss, and 

S.E. Greer. 2002. Health effect 

assessment for environmental 

perchlorate contamination: The dose 

response for inhibition of thyroidal 

radioiodide uptake in humans. Environ 

Health Perspect Vol. 110. p. 927–937. 

Life Sciences Research Office (LSRO), 

Federation of American Studies for 

Experimental Biology Prepared for the 

Interagency Board for Nutrition 

Monitoring and Related Research. 1995. 

Third Report on Nutrition Monitoring in 

the United States: Volume 1. U.S. 

Government Printing Office, 

Washington, DC. 

Merrill, E.A., R.A. Clewell, P.J. Robinson, 

A.M. Jarabek, T.R. Sterner, and J.W. 

Fisher. 2005. PBPK model for radioactive 

iodide and perchlorate kinetics and 

perchlorate-induced inhibition of iodide 

uptake in humans. Toxicological 

Sciences. Vol. 83. p. 25–43. 

National Research Council (NRC). 2005. 

Health Implications of Perchlorate 

Ingestion. National Academies Press, 

Board on Environmental Studies and 

Toxicology. January 2005. p. 276. 

Savin, S., D. Dvejic, O. Nedic, R. 

Radosavljevic. 2003. Thyroid Hormone 

Synthesis and Storage in the Thyroid 

Gland of Human Neonates. J. Pediatric 

Endocrinology & Metabolism. Vol. 16. p. 

521–528. 

U.S. Census Bureau. 2008. U.S. Census 

Bureau Annual Estimates of Resident 

Population by Single-Year of Age and 

Sex for the U.S. and States: April 2, 2000 

to July 1, 2008. Available on the Internet 

at: http://www.census.gov/popest/states/ 

asrh/. 

USEPA. 1998. Announcement of the 

Drinking Water Contaminant Candidate 

List; Notice. Federal Register. Vol. 63, 

No. 40. p. 10273, March 2, 1998. 

USEPA. 2004. Estimated Per Capita Water 

Ingestion and Body Weight in the United 

States—An Update. Office of Science 

and Technology, Washington, DC; 

EPA/822/R–00–001. 

USEPA. 2005a. Drinking Water Contaminant 

Candidate List 2; Final Notice. Federal 

Register. Vol. 70, No. 36. p. 9071, 

February 24, 2005. 

USEPA. 2005b. ‘‘Integrated Risk Information 

System (IRIS), Perchlorate and 

Perchlorate Salts.’’ February 2005. 

Available on the Internet at: http:// 

www.epa.gov/iris/subst/1007.htm. 

Accessed February 2, 2005. 

USEPA. 2007. Drinking Water: Regulatory 

Determinations Regarding Contaminants 

on the Second Drinking Water 

Contaminant Candidate List— 

Preliminary Determinations, Federal 

Register, Vol. 72, No. 83. p. 24016, May 

1, 2007. 

USEPA. 2008a. Drinking Water: Preliminary 

Regulatory Determination on 

Perchlorate, Federal Register, Vol. 73, 

No. 198. p. 60262, October 10, 2008. 

USEPA. 2008b. Child-Specific Exposure 

Factors Handbook. National Center for 

Environmental Assessment, Washington, 

DC; EPA/600/R–06/096F. 

USEPA. 2008c. Scientific Analysis of 

Perchlorate (External Review Draft). 

Office of Inspector General, Washington, 

DC; Assignment No. 2008–0010. 

Available on the Internet at: http:// 

www.epa.gov/oig/reports/2010/ 

20100419-10-P-0101.pdf. 

USEPA. 2008d. Comment Response 

Summary Report, Peer Review of 

Drinking Water Health Advisory for 

Perchlorate. Office of Science and 

Technology, Washington, DC; December 

2008. 

USEPA. 2008e. Interim Drinking Water 

Health Advisory for Perchlorate. Office 

of Science and Technology, Washington, 

DC; EPA 822–R–08–025. 

USEPA. 2009a. Drinking Water Contaminant 

Candidate List 3—Final. Federal 

Register. Vol. 74, No. 194. p. 51850, 

October 8, 2009. 

USEPA. 2009b. Drinking Water: Perchlorate 

Supplemental Request for Comments, 

Federal Register, Vol. 74, No. 159. p. 

41883, August 19, 2009. 

USEPA. 2010a. Comment Response 

Document for the Final Regulatory 

Determination on Perchlorate 

(Categorized Public Comments). EPA 

XXX–XXX. December, 2010. 

USEPA. 2010b. A New Approach to 

Protecting Drinking Water and Public 

Health. EPA 815–F–10–001. Available on 

the Internet at: http://water.epa.gov/ 

lawsregs/rulesregs/sdwa/dwstrategy/ 

index.cfm 

van den Hove, M.F., C. Beckers, H. Devlieger, 

F. de Zegher, P. De Nayer. 1999. 

Hormone synthesis and storage in the 

thyroid of human preterm and term 

newborns: Effect of thyroxine treatment. 

Biochimie. Vol. 81. p. 563–570. 

Zimmerman, M. 2009. Iodide Deficiency. 

Endocrine Reviews. Vol. 30, No. 4. p. 

376–408. 

Dated: February 2, 2011. 

Lisa P. Jackson, 

Administrator. 

[FR Doc. 2011–2603 Filed 2–10–11; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Parts 144 and 147 

[CMS–9981–P] 

RIN 0950–AA20 

Student Health Insurance Coverage 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This document contains a 

proposed regulation that would 

establish rules for student health 

insurance coverage under the Public 

Health Service Act and the Affordable 

Care Act. The proposed rule would 

define ‘‘student health insurance 

mstockstill on DSKH9S0YB1PROD with PROPOSALS

7768 Federal Register / Vol. 76, No. 29 / Friday, February 11, 2011 / Proposed Rules 

1U.S. Government Accountability Office, Most 

College Students Are Covered through EmployerSponsored Coverage, and Some Colleges and States 

are Taking Steps to Increase Coverage, Report 08– 

389 (March 2008). 

coverage’’ as a type of individual health 

insurance coverage, and, pursuant to 

section 1560(c) of the Affordable Care 

Act, specify certain Public Health 

Service Act and Affordable Care Act 

requirements as inapplicable to this 

type of individual health insurance 

coverage. 

DATES: Send your comments on or 

before April 12, 2011. 

ADDRESSES: In commenting, please refer 

to file code CMS–9981–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 instructions under the ‘‘More Search 

Options’’ tab. 

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–9981–P, P.O. Box 8010, Baltimore, 

MD 21244–8010. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–9981–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

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, 

please call telephone number (410) 786– 

9994 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Submission of comments on 

paperwork requirements. You may 

submit comments on this document’s 

paperwork requirements by following 

the instructions at the end of the 

‘‘Collection of Information 

Requirements’’ section in this document. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: For 

questions concerning this proposed 

rule, contact Lisa Campbell or Robert 

Imes, Center for Consumer Information 

and Insurance Oversight, Department of 

Health and Human Services, by phone 

at (301) 492–4489. 

SUPPLEMENTARY INFORMATION: Inspection 

of Public Comments: All comments 

received before the close of the 

comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http://regulations.gov. 

Follow the search instructions on that 

Web site to view public comments. 

Comments received timely will be 

also available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

I. Background 

The Patient Protection and Affordable 

Care Act (Pub. L. 111–148) was enacted 

on March 23, 2010; the Health Care and 

Education Reconciliation Act of 2010 

(Pub. L. 111–152) was enacted on March 

30, 2010. In this proposed rule we refer 

to the two statutes collectively as the 

Affordable Care Act. The Affordable 

Care Act reorganizes, amends, and adds 

to the provisions of Part A of title XXVII 

of the Public Health Service (PHS) Act 

relating to group health plans and 

health insurance issuers in the group 

and individual markets. 

The Department of Health and Human 

Services (HHS or the Department) is 

issuing regulations in several phases in 

order to implement revisions to the PHS 

Act made by the Affordable Care Act. 

Most of the previous regulations were 

issued jointly with the Departments of 

Labor and the Treasury. Interim final 

rules published in 2010 by the three 

Departments included those that 

implemented PHS Act sections 2711 

(regarding lifetime and annual dollar 

limits on benefits) and 2719A (regarding 

patient protections) (75 FR 37188 (June 

28, 2010)), and section 2713 (regarding 

preventive health services) (75 FR 41726 

(July 19, 2010)). HHS published interim 

final rules implementing section 2718, 

regarding medical loss ratio (75 FR 

74864 (December 1, 2010)). A full list of 

the regulations, as well as guidance 

published by the Departments regarding 

various issues related to the 

implementation of the Affordable Care 

Act, is also available at http:// 

www.hhs.gov/cciio and http:// 

www.dol.gov/ebsa. 

Pursuant to the Affordable Care Act 

which requires that ‘‘[N]othing in this 

title (or an amendment made by this 

title) shall be construed to prohibit an 

institution of higher education (as such 

term is defined for purposes of the 

Higher Education Act of 1965) from 

offering a student health insurance plan, 

to the extent that such requirement is 

otherwise permitted under applicable 

Federal, State, or local law,’’ this 

proposed regulation would define the 

term ‘‘student health insurance 

coverage’’ as a specific type of 

individual health insurance coverage, 

and would render certain requirements 

of the PHS Act and the Affordable Care 

Act as inapplicable to student health 

insurance coverage, given their unique 

characteristics. 

II. Provisions of the Proposed Rule 

A. Introduction 

The U.S. Government Accountability 

Office (GAO) has estimated that most 

students enrolled in U.S. colleges and 

universities have health coverage 

through employer-sponsored plans, but 

approximately 7 percent of students 

between ages 18 and 23, around 610,000 

individuals, were covered through other 

private insurance such as student health 

insurance plans in 2006.1 Industry 

estimates put the number of individuals 

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Federal Register / Vol. 76, No. 29 / Friday, February 11, 2011 / Proposed Rules 7769 

2The definition of ‘‘group health plan’’ in PHS Act 

section 2791(a)(1) incorporates the definition of an 

employee welfare benefit plan under the Employee 

Retirement Income Security Act (ERISA) of 1974, 

section 3(1). 

with student health insurance coverage 

significantly higher, at 1.1 to 1.5 million 

individuals. This may be explained, in 

part, by the industry estimates counting 

university students of all ages, not just 

those between ages 18 and 23. 

Furthermore, older students may be 

more likely to have dependents enrolled 

under their student health insurance 

coverage. Altogether, according to 

industry sources, 1,500–2,000 

institutions of higher education offer 

student health coverage. While the same 

sources estimate that 200,000 

individuals have coverage through 

student health plan arrangements that 

are self-funded through colleges or 

universities, the vast majority of student 

plans are insured. 

This generally means that a health 

insurance issuer contracts with a college 

or university to issue a group or an 

association ‘‘blanket’’ health insurance 

policy at a negotiated cost for a defined 

set of benefits for each student who 

desires coverage. While the contract 

between the issuer and the college or 

university usually covers multiple 

years, the contract can be modified on 

an annual basis to make minor benefit 

design modifications and to adjust the 

price for inflation. The policy is 

generally rated on a group basis based 

on the total expected claims experience 

of the college or university’s students 

enrolled in the plan. Students of the 

college or university, in turn, are 

eligible to buy into the policy either on 

an academic term basis or an annual 

basis. 

Insured student health insurance 

plans fall under the regulatory authority 

of the States and the Federal 

government pursuant to the PHS Act. 

Since these student health insurance 

plans are not employment-based, they 

do not meet the definition of a group 

health plan under PHS Act section 

2791(a)(1),2 even though some States 

regulate such plans, for purposes of 

State law, as types of group coverage 

(non-employer group coverage or 

association ‘‘blanket coverage’’). 

Concerns have been raised about the 

quality and value of these plans in some 

cases. For example, the Attorney 

General of New York in April 2010 

released the findings of an investigation 

that concluded in part that some student 

health plans have such low coverage 

limits, exclusions, and limited benefits 

that they place students and their 

families at risk for catastrophic costs for 

medical care. 

The benefits provided by student 

health plans vary widely. For example, 

the GAO study found annual limits 

ranging from $15,000 to $250,000, with 

the median being $50,000. 

Given the variation in benefit designs 

for student health insurance coverage, 

premiums vary significantly. The GAO 

found annual premiums that ranged 

from $28 to $2,397, with the average 

being $850. 

With the passage of the Affordable 

Care Act, several issues have arisen 

regarding the applicability of the PHS 

Act and the Affordable Care Act to 

student health insurance plans. Section 

1560(c) of the Affordable Care Act 

provides that ‘‘[N]othing in this title (or 

an amendment made by this title) shall 

be construed to prohibit an institution 

of higher education (as such term is 

defined for purposes of the Higher 

Education Act of 1965) from offering a 

student health insurance plan, to the 

extent that such requirement is 

otherwise permitted under applicable 

Federal, State, or local law.’’ Were 

certain provisions of the Affordable Care 

Act applied to student health insurance 

coverage, we believe it would effectively 

prohibit institutions of higher education 

from being able to offer these plans. 

Because section 1560(c) of the 

Affordable Care Act instructs HHS not 

to construe any provisions of the 

Affordable Care Act to have this effect, 

this rule discusses which provisions we 

propose construing not to apply to 

student health insurance coverage 

pursuant to section 1560(c). 

B. Definition of Student Health 

Insurance Coverage 

The proposed regulation would define 

student health insurance coverage as a 

type of individual health insurance 

coverage provided pursuant to a written 

agreement between an institution of 

higher education (as defined in the 

Higher Education Act of 1965) and a 

health insurance issuer, which is 

provided to students who are enrolled 

in that institution and their dependents. 

In addition, the definition would 

require that the coverage only be made 

available to students enrolled at the 

institution of higher education and their 

dependents; that eligibility for coverage 

could not be conditioned on any health 

status-related factor; and that it would 

have to satisfy any additional 

requirement that may be imposed under 

State law. 

For purposes of the PHS Act, health 

insurance coverage that is not provided 

in connection with an employer-based 

group health plan is individual market 

coverage, notwithstanding that 

applicable State law might classify such 

non-employer group coverage as 

association blanket or discretionary 

group coverage. Previously, in the 

preamble to the interim final regulations 

implementing the individual market 

requirements of the Health Insurance 

Portability and Accountability Act of 

1996 (HIPAA), the Department clarified 

that ‘‘college plan’’ coverage for students 

was individual market coverage, as 

distinguished from the group health 

plans provided to college employees. 62 

FR 16985, 16992 (April 8, 1997). 

As noted earlier in the introduction, 

it is believed that there are a small 

number of self-funded student health 

plans. The PHS Act and the Affordable 

Care Act give HHS regulatory authority 

over health insurance issuers in the 

group and individual markets and over 

non-Federal governmental group health 

plans. Because self-funded student 

health plans are neither health 

insurance coverage nor group health 

plans, as those terms are defined in the 

PHS Act, HHS has no authority to 

regulate them. Nonetheless, these selffunded student health plans may be 

regulated by the States. The Department 

invites comments on the prevalence, 

structure, and State regulation of these 

self-funded student health plans. 

Under the proposed regulation, the 

term ‘‘student health insurance 

coverage’’ would be defined to include 

only insurance provided pursuant to a 

written agreement between an 

institution of higher education and a 

health insurance issuer. As proposed, 

the agreement could be evidenced by 

the health insurance issuer issuing the 

master insurance policy to the 

institution of higher education. If the 

institution of higher education is not the 

policyholder (that is, the students 

themselves are the policyholders), we 

proposed to require that in order to meet 

the definition of student health 

insurance coverage, there would have to 

be a separate agreement between the 

issuer and the institution of higher 

education clearly indicating the 

institution of higher education’s role 

with respect to factors such as selecting, 

terminating, and replacing the health 

insurance issuer; choosing or 

negotiating policy terms; setting student 

and dependent eligibility terms; 

publicizing, endorsing, or 

recommending the policy to students 

and dependents; and/or providing 

students and dependents with 

assistance with obtaining benefits or 

appealing denials under the coverage. 

Under the proposed rule, if there were 

no written agreement between the 

institution of higher education and the 

health insurance issuer, such coverage 

would be subject to all of the individual 

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7770 Federal Register / Vol. 76, No. 29 / Friday, February 11, 2011 / Proposed Rules 

3For example, U.S. Government Accountability 

Office, Most College Students Are Covered through 

Employer-Sponsored Coverage, and Some Colleges 

and States are Taking Steps to Increase Coverage; 

Stacey Pogue, Covering Uninsured Students in 

Texas: The Role of Student Health Insurance 

Coverage (2005). 

4 ‘‘No qualified handicapped student shall, on the 

basis of handicap, be excluded from participation 

in, be denied the benefits of, or otherwise be 

subjected to discrimination under any * * * health 

insurance * * * to which this subpart applies.’’ 34 

CFR 104.43(a). 

5For example, the Department noted one student 

health insurance policy that was effective from 

12:01 a.m., August 1, to 11:59 p.m., July 31 of the 

following year. Other policies had similar policy 

periods. 

market requirements in the PHS Act and 

the Affordable Care Act. 

The definition of student health 

insurance coverage in this proposed 

regulation would be intended to ensure 

that student health insurance coverage 

is offered only to students enrolled in an 

institution of higher education. Student 

health insurance coverage also could 

cover students’ dependents such as their 

spouses and children, as defined by the 

plan terms. 

In addition, we propose that coverage 

that otherwise met the definition of 

student health insurance coverage could 

still meet the definition even if it also 

provided coverage for limited periods of 

time to individuals who are on breaks 

between academic terms, on temporary 

leaves of absence for medical or other 

reasons, or have recently graduated or 

otherwise ceased enrollment in an 

institution of higher education. The 

institution of higher education and the 

issuer would specify in the documents 

governing the student health insurance 

coverage which individuals could be 

viewed as being enrolled in the 

institution of higher education for 

purposes of eligibility for the student 

health insurance coverage. 

Past research suggests that institutions 

of higher education vary in the extent to 

which part-time students are offered 

student health insurance coverage.3

This proposed regulation would not set 

any minimum threshold for determining 

student status under student health 

insurance coverage (for example, require 

that students take a minimum number 

of course hours each term or be seeking 

a degree), leaving such eligibility 

decisions to each institution of higher 

education and the issuer. 

The proposed regulation would 

provide that coverage offered to nonstudents seeking individual market 

coverage would not meet the definition 

of student health insurance coverage. 

Other individual market coverage that 

incidentally covers a student (such as 

under a parent’s family policy) would 

not meet the definition of student health 

insurance coverage under this proposed 

regulation. 

Lastly, under this proposed 

regulation, in order to meet the 

definition of student health insurance 

coverage, the coverage could not 

condition enrollment on any health 

status-related factor of a student or 

dependent. The term ‘‘health statusrelated factor’’ or ‘‘health factor’’ is 

proposed to have the same meaning as 

that term has in 45 CFR 144.103, 

incorporating 45 CFR 146.121(a), which 

applies with respect to group health 

insurance requirements. That term 

includes health status, medical 

condition (including both physical and 

mental illnesses), claims experience, 

receipt of health care, medical history, 

genetic information, evidence of 

insurability, and disability. 

Incorporation of this non-discrimination 

requirement is modeled on the 

definition of bona fide association 

coverage in 45 CFR 144.103. HHS 

believes that this requirement will have 

a minimal impact on student health 

insurance plans because the Department 

understands that, in the past, student 

health insurance coverage offered by 

institutions of higher education 

receiving Federal funds generally has 

not discriminated against individual 

students or dependents on the basis of 

health status due to requirements under 

section 504 of the Rehabilitation Act of 

1973 and related regulations issued by 

the U.S. Department of Education that 

prohibit discrimination based on 

disability.4

C. Student Health Insurance Coverage 

and Short-Term Limited Duration 

Insurance 

45 CFR 144.103 defines short-term 

limited duration insurance as ‘‘health 

insurance coverage provided pursuant 

to a contract with an issuer that has an 

expiration date specified in the contract 

(taking into account any extensions that 

may be elected by the policyholder 

without the issuer’s consent) that is less 

than 12 months after the original 

effective date of the contract.’’ Shortterm limited duration insurance is 

available to individuals to fill in gaps of 

coverage that otherwise might occur, 

such as when they are between jobs and 

without employer coverage. Since shortterm limited duration insurance is 

specifically excluded from the 

definition of individual health 

insurance coverage in 45 CFR 144.103, 

the individual market protections of the 

PHS Act and the Affordable Care Act do 

not apply to short-term limited duration 

insurance. 

In many student health insurance 

plans, the term of the coverage is for a 

period less than 12 months—sometimes 

for only a day or even minutes less than 

12 months—suggesting an intent to 

claim short-term limited duration 

insurance status and avoid PHS Act and 

Affordable Care Act requirements.5

However, we understand that some of 

these policies are also renewable at the 

option of the student so long as the 

student continues enrollment at the 

school. In fact, in some instances, the 

student’s college or university will 

automatically re-enroll the student in 

such coverage without any affirmative 

action on the student’s part. 

It is our understanding that, in the 

past, student health insurance coverage 

was considered in some cases by issuers 

and institutions of higher education to 

be short-term limited duration 

insurance if the initial term of the 

coverage was less than 12 months in 

duration, even if it renewed 

automatically. Accordingly, many 

student health insurance plans do not 

provide some important protections of 

the PHS Act and the Affordable Care 

Act that apply to individual health 

insurance coverage. The proposed 

regulation would clarify that if the 

coverage is renewable each year at the 

option of the student as long as the 

student remains in school, the renewals 

would constitute ‘‘extensions that may 

be elected by the policyholder without 

the issuer’s consent’’ that would not 

expire within a year, and that the 

coverage would not, therefore, meet the 

definition of short-term limited duration 

insurance. We understand that the right 

to renew the insurance coverage, 

provided that the student remains in 

school, is a common practice for student 

health insurance coverage. Thus, this 

proposed regulation would clarify that 

student health insurance coverage that 

is at least 12 months in duration, 

including any potential extension that 

may be elected by the student, is 

individual health insurance coverage 

generally subject to the individual 

market requirements of the PHS Act and 

the Affordable Care Act. This proposed 

regulation would not amend the existing 

definition of short-term limited duration 

insurance. HHS invites comments on 

the prevalence of existing student health 

insurance plans that meet the definition 

of short-term limited duration insurance 

and whether such plans should be 

subject to certain requirements of the 

PHS Act and the Affordable Care Act. 

D. Application of the PHS Act and the 

Affordable Care Act 

In clarifying the general applicability 

of the PHS Act and the Affordable Care 

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6See 45 CFR 148.120(g)(2) and 148.122(c)(5), 

which exempts bona fide associations from the 

guaranteed issue and guaranteed renewability 

requirements, respectively. 

7For purposes of PHS Act sections 2741 and 

2744, an eligible individual is defined in PHS Act 

section 2741(b). These eligible individuals, also 

referred to as ‘‘HIPAA eligible’’ individuals, meet 

certain criteria including having recently lost group 

health coverage and having at least 18 months of 

prior creditable coverage. See 45 CFR §§ 148.103 

through 148.128. 

8We note that the guaranteed availability 

requirement of PHS Act section 2741(a)(1) does not 

apply in States that are implementing an acceptable 

alternative mechanism for HIPAA eligible 

individuals under section 2744 of the PHS Act. In 

those States, State law provides alternative ways to 

guarantee coverage to eligible individuals. We 

doubt that such mechanisms require student health 

insurance coverage to be sold to HIPAA eligible 

individuals who otherwise would not qualify. 

However, if they do, we encourage such States to 

revise their mechanisms so that it would not be 

required. 

9Section 2741(e)(1) of the PHS Act provides that 

‘‘the provisions of subsection (a) of this section shall 

not be construed to require that a health insurance 

issuer offering health insurance coverage only 

* * * through one or more bona fide associations 

* * * offer such health insurance coverage in the 

individual market.’’ Section 2742(b)(5) of the PHS 

Act provides that, in the case of health insurance 

coverage that is made available in the individual 

market only through one or more bona fide 

associations, the membership of the individual in 

the association ceases but only if such coverage is 

terminated under this paragraph uniformly without 

regard to any health status-related factor of covered 

individuals. 

10The full definition of a bona fide association is 

as follows: Bona fide association means, with 

respect to health insurance coverage offered in a 

State, an association that meets the following 

conditions: 

(1) Has been actively in existence for at least 5 

years. 

(2) Has been formed and maintained in good faith 

for purposes other than obtaining insurance. 

(3) Does not condition membership in the 

association on any health status-related factor 

relating to an individual. 

(4) Makes health insurance coverage offered 

through the association available to all members 

regardless of any health status-related factor relating 

to the members (or individuals eligible for coverage 

through a member) 

(5) Does not make health insurance coverage 

offered through the association available other than 

in connection with a member of the association. 

(6) Meets any additional requirements that may 

be imposed under State law. 

Act to student health insurance plans, 

this proposed regulation would also 

specify that a limited number of 

requirements of the PHS Act and the 

Affordable Care Act are inapplicable to 

student health insurance coverage. 

Section 1560(c) of the Affordable Care 

Act provides that ‘‘[N]othing in this title 

(or an amendment made by this title) 

shall be construed to prohibit an 

institution of higher education (as such 

term is defined for purposes of the 

Higher Education Act of 1965) from 

offering a student health insurance plan, 

to the extent that such requirement is 

otherwise permitted under applicable 

Federal, State, or local law.’’ The 

Department interprets this provision of 

the Affordable Care Act to mean that if 

particular requirements in the 

Affordable Care Act would, as a 

practical matter, have the effect of 

prohibiting an institution of higher 

education from offering a student health 

plan otherwise permitted under Federal, 

State or local law, such requirements 

would be inapplicable pursuant to the 

rule of construction in section 1560(c). 

The Department has identified several 

provisions in the PHS Act and the 

Affordable Care Act that we believe 

would have this effect and several 

others that might have this effect. 

For example, the PHS Act guaranteed 

availability and guaranteed renewability 

requirements are incompatible with 

plans that, by definition, are restricted 

to individuals enrolled as students in 

institutions of higher education and 

their dependents. As explained below, 

the proposed regulation would construe 

these provisions as inapplicable to 

student health insurance coverage, for 

purposes of Federal law, so as to avoid 

conflict with section 1560(c) of the 

Affordable Care Act. The PHS Act and 

implementing regulations make clear 

that guaranteed issue and guaranteed 

renewability requirements are 

inapplicable to bona fide association 

plans that, like student health plans, are 

limited by definition to a defined pool 

of beneficiaries. This rule proposes to 

construe student health insurance 

coverage to be offered through a bona 

fide association for this purpose.6

Under this proposed regulation, 

student health insurance coverage 

would be subject to the individual 

market requirements of the PHS Act and 

the Affordable Care Act, with the 

exception of those specific provisions 

that are identified in this proposed rule. 

The specific provisions which would be 

inapplicable to student health plans are 

discussed below. We also discuss other 

Affordable Care Act requirements that 

may so impede the offering of student 

health plans that they may also be found 

inapplicable pursuant to section 1560(c) 

of the Affordable Care Act. We solicit 

comments as to whether this is the case 

with respect to these latter 

requirements. 

1. Guaranteed Availability and 

Guaranteed Renewability 

Section 2741(a) of the PHS Act 

generally requires health insurance 

issuers that offer coverage in the 

individual market in a State to offer 

coverage to certain eligible individuals,7

and prohibits imposing any preexisting 

condition exclusion with respect to 

such individuals.8

Section 2742 of the PHS Act requires 

a health insurance issuer that provides 

individual health insurance coverage to 

any individual to renew or continue the 

coverage in force at the option of the 

individual. This requirement applies 

regardless of whether the policyholder 

obtained the coverage as an eligible 

individual. 

As previously indicated, both the 

guaranteed availability and guaranteed 

renewability requirements provide an 

exception for coverage that is offered 

through a bona fide association. (See 

PHS Act sections 2741(e)(1) and 

2742(b)(5) and §§ 148.120(g)(2) and 

148.122 (c)(5).) 9

Because application of the guaranteed 

issue and guaranteed renewability 

requirements would be inconsistent 

with the provision of student health 

plans, this proposed regulation would 

construe student health insurance 

coverage for purposes of Federal law as 

falling within the bona fide association 

exception as provided in PHS Act 

sections 2741(e)(1) or 2742(b)(5). Such 

plans, by definition, meet the criteria 

described in sections (2) through (5) of 

the definition of a bona fide association, 

contained in 45 CFR 144.103. This is 

because student health insurance 

coverage is provided in a manner 

similar to a bona fide association since 

it only offers enrollment to a closed 

class of similarly situated individuals 

(that is, students and their dependents) 

and is only renewable to individuals 

who remain enrolled in colleges and 

universities as students and their 

dependents.10

In construing student health 

insurance coverage as bona fide 

association plans for purposes of these 

two sections of the PHS Act, we do not 

propose to apply the first criterion in 

§ 144.103, which is that the association 

must have been actively in existence for 

at least five years. That criterion is 

designed to reinforce the requirement 

that an association has been formed for 

purposes other than obtaining 

insurance. However, since it is highly 

unlikely that an institution of higher 

education would, or even could, be 

formed only for the purpose of obtaining 

insurance, we do not believe it is 

necessary to bar institutions of higher 

education that have not yet been in 

existence for five years from providing 

student health insurance coverage. 

We would also note that the sixth 

criterion (meets any additional 

requirement imposed by State law) 

simply duplicates one of the criteria 

under the proposed definition of 

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11Section 1302(b) of the Affordable Care Act 

defines essential health benefits to ‘‘include at least 

the following general categories and the items and 

services covered within the categories: ambulatory 

patient services; emergency services; 

hospitalization; maternity and newborn care; 

mental health and substance use disorder services, 

including behavioral health treatment; prescription 

drugs; rehabilitative and habilitative services and 

devices; laboratory services; preventive and 

wellness services and chronic disease management; 

and pediatric services, including oral and vision 

care.’’ 

student health insurance coverage, so it 

would also be construed to be satisfied 

for this purpose. 

This would be an automatic, 

construed status for purposes of Federal 

law, intended solely to allow student 

health insurance coverage to be limited 

to students and their dependents, 

without imposing any availability 

requirements for non-students, or 

renewability requirements after an 

individual has ceased to be a student, 

similar to how bona fide association 

coverage is limited to association 

members. This construed status does 

not require health insurance issuers 

offering student health insurance 

coverage to revise or amend their 

current business or marketing 

agreements and practices. 

2. Annual Limits 

Section 2711 of the PHS Act prohibits 

group health plans and health insurance 

issuers offering group or individual 

health insurance coverage from 

establishing lifetime limits on the dollar 

value of essential health benefits 11 and 

restricts annual dollar limits on such 

benefits before 2014 for group health 

plans and non-grandfathered individual 

market plans. For plan or policy years 

beginning on or after January 1, 2014, 

annual dollar limits will be prohibited 

on essential health benefits. Interim 

final regulations published on June 28, 

2010 implement the prohibition on 

lifetime dollar limits and set forth 

restrictions on annual dollar limits that 

apply prior to 2014 (75 FR 37188). 

Under the annual limits interim final 

regulations, annual limits on the dollar 

value of essential health benefits 

generally cannot be lower than: 

$750,000 for plan or policy years 

beginning on or after September 23, 

2010 but before September 23, 2011; 

$1.25 million for plan or policy years 

beginning on or after September 23, 

2011 but before September 23, 2012; 

and $2 million for plan or policy years 

beginning on or after September 23, 

2012 but before January 1, 2014. 

Many issuers that have provided 

student health insurance coverage 

customarily imposed low annual limits 

on the student health insurance 

coverage, and this practice apparently 

continued after the enactment of the 

Affordable Care Act and publication of 

the interim final rules because of the 

view by issuers that many of these 

policies were not subject to the 

Affordable Care Act because they were 

short-term limited duration insurance. 

As noted above, for plan years 

beginning after September 23, 2011, the 

minimum annual limit is $1.25 million, 

a level which, if applied immediately to 

student health insurance coverage, is so 

much higher than many current limits 

that it could serve to ‘‘prohibit an 

institution of higher education * * * 

from offering a student health insurance 

plan.’’ In order to avoid this and be 

consistent with section 1560(c) of the 

Affordable Care Act, HHS is proposing 

to provide a transition period for issuers 

of student health insurance coverage to 

comply with the annual limits 

requirements in 45 CFR 147.126. The 

transition period would be for policy 

years beginning before September 23, 

2012. For that period, however, students 

and their dependents should have 

protection from being subjected to 

extremely low annual dollar limits on 

essential health benefits. Accordingly, 

student health insurance coverage 

would be required to have an annual 

limit of no less than $100,000 on 

essential benefits for policy years 

beginning on or after January 1, 2012 

but before September 23, 2012. HHS 

believes that issuers of student health 

insurance coverage should be able to 

fully comply with the annual dollar 

limits requirements of not lower than $2 

million for policy years beginning on or 

after September 23, 2012 without 

incurring undue financial hardship or 

without disruption to the student health 

insurance market given the period of 

time provided under this proposed rule 

for them to comply with the 

requirements. HHS is requesting 

comments on the applicability of the 

annual dollar limits requirements to 

student health insurance coverage, and 

the proposed phase-in of the annual 

dollar limits requirements. 

Lastly, under the proposed regulation, 

the prohibition on lifetime limits under 

section 2711 of the PHS Act would be 

applicable to student health insurance 

coverage. 

3. Coverage of Preventive Services 

Section 2713 of the PHS Act requires 

that a group health plan and a health 

insurance issuer offering group or 

individual health insurance coverage 

provide benefits for specified 

recommended preventive services and 

prohibits the imposition of cost-sharing 

requirements with respect to such 

services. Interim final regulations 

published on July 19, 2010, 

implemented rules for preventive health 

services (75 FR 41726). Concerns have 

been raised as to whether certain 

administrative fees charged to all 

students to help cover the cost of 

student health clinic operations and 

care delivery (separate from the 

purchase of student health insurance 

coverage by a subset of students) 

constitutes ‘‘cost-sharing,’’ the 

imposition of which could violate the 

no cost-sharing requirements for certain 

preventive services. Such student health 

fees can be charged by the college or 

university to all students on a quarterly, 

semester or annual basis, regardless of 

whether a student utilizes a designated 

clinic or enrolls in student health 

insurance coverage. This type of student 

health fee is different from premiums 

and cost-sharing for group health plans 

and health insurance coverage in that it 

is charged to all students enrolled at the 

college or university, regardless of 

whether the student has student health 

insurance coverage. As a type of 

individual health insurance coverage, 

student health insurance coverage must 

comply with the requirements for 

preventive health services under section 

2713 of the PHS Act, pertaining to the 

prohibition of cost-sharing for 

preventive services. However, because 

of the unique nature of the student 

health fee, the proposed rule would 

provide a definition of a student 

administrative health fee and clarify 

that such fees are not cost-sharing 

requirements under PHS Act section 

2713. 

HHS is requesting comments on the 

applicability of section 2713 to student 

health insurance coverage and the 

interaction of the college health fee and 

the no cost-sharing requirement for 

preventive services. 

4. Choice of Health Care Professional 

Section 2719A of the PHS Act 

provides that if a group health plan, or 

a health insurance issuer offering group 

or individual health insurance coverage, 

requires or provides for designation by 

a participant, beneficiary, or enrollee of 

a participating primary care provider, 

then the plan or issuer must permit each 

participant, beneficiary, or enrollee to 

designate any participating primary care 

provider who is available to accept the 

participant, beneficiary, or enrollee. 

Interim final regulations published on 

June 28, 2010 implemented rules for 

choice of health care professional (75 FR 

37188). Concerns have been expressed 

by stakeholders representing colleges 

and universities that the provisions 

relating to choice of health care 

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professional could be disruptive to the 

college health service system since it is 

a unique system which, although it is 

generally not indemnity coverage, is not 

structured like a traditional HMO or a 

PPO. 

The proposed rule does not provide 

that the requirements of section 2719A 

would be inapplicable to student health 

insurance plans, but HHS is requesting 

comments on the applicability of the 

requirements for choice of health care 

professional to student health insurance 

coverage and the interaction with the 

college health service system. 

5. Affordable Care Act Provisions 

Effective in 2014 

HHS does not address in this 

proposed rule the applicability of PHS 

Act section 2702 (guaranteed issue) and 

section 2703 (guaranteed renewability) 

to student health insurance coverage, 

both of which are effective in the 

individual health insurance market for 

policy years beginning on or after 

January 1, 2014. HHS believes, however, 

that the general policy rationales 

supporting the inapplicability of PHS 

Act sections 2741 and 2742 to student 

health insurance coverage in this 

proposed regulation also would apply 

with respect to PHS Act sections 2702 

and 2703. In addition, HHS could 

address in future regulations whether it 

would be appropriate to specify that 

these provisions would be inapplicable 

to student health insurance coverage 

provisions through the authority under 

section 1560(c) of the Affordable Care 

Act. Since student health insurance 

coverage is designed to be available and 

renewable only to students of colleges 

and universities (and their dependents), 

it is likely that requiring student health 

insurance coverage to be available and 

renewable to individuals other than 

these students could prevent the design 

and development of student health 

insurance coverage. 

HHS requests comments on the 

applicability of PHS Act sections 2702 

and 2703 and other 2014 Affordable 

Care Act provisions to student health 

insurance coverage as defined in this 

proposed regulation. Comments are also 

requested on the interaction of student 

health insurance coverage with the 

health insurance Exchanges that will be 

created in States beginning in 2014. 

6. Medical Loss Ratio (MLR) 

Some issuers have raised concerns 

regarding the application of the medical 

loss ratio (MLR) provisions of section 

2718 of the Affordable Care Act to 

student health insurance plans. This 

provision requires that, in general, at 

least 80% (in the small group and 

individual markets) or 85% (in the large 

group market) of the premiums that 

issuers receive for insurance policies be 

spent on reimbursement for clinical 

services to enrollees (such as hospital 

and physician payments) and activities 

that improve health care quality. The 

issuers assert that the administrative 

cost structure of student health 

insurance plans is higher than the more 

typical individual policies, in part due 

to the customized nature of each college 

or university’s plan, making compliance 

with the 80% MLR standard potentially 

prohibitive. For example, issuers stated 

that, compared to other health insurance 

coverage, student health insurance 

coverage may hold open enrollment 

periods more frequently (for example, 

each academic term rather than 

annually), require unique product 

designs (for example, for foreign 

students), and require more manual 

claims processing than average due to 

the billing and accounting practices of 

college health clinics. There is no public 

data regarding the actual expense 

structure of student health plans or 

regarding their MLRs. 

HHS issued an interim final rule (IFR) 

(75 FR 74864, December 1, 2010, as 

modified by the Correction of IFR (75 

FR 82277, December 30, 2010)), 

implementing section 2718, based on 

the recommendations in the MLR model 

regulation of the National Association of 

Insurance Commissioners (NAIC). In 

that regulation, issuers of policies that 

have a total annual limit of $250,000 or 

less (so-called ‘‘mini-med’’ plans) and 

issuers of expatriate plans are required 

to report their mini-med and expatriate 

plan experience separately from their 

other policies for one year, and, for that 

one-year period, are provided an 

accommodation in the formula for 

determining the MLR for those lines of 

business. This was done because minimed plans and expatriate plans were 

believed to have unique characteristics 

or expense structures and, as here, there 

is limited data regarding the 

administrative cost structures of these 

policies. This accommodation was made 

in order to allow the collection and 

analysis of data to determine if they 

have special circumstances that warrant 

special methodologies. The MLR IFR 

does not provide a special methodology 

for student health insurance plans. 

To the extent that the application of 

the MLR requirements set forth in 45 

CFR part 158 to student health plans 

would ‘‘prohibit an institution of higher 

education * * * from offering a student 

health insurance plan,’’ as section 

1560(c) of the Affordable Care Act 

provides, then student health insurance 

plans may have unique administrative 

expenses that warrant developing 

methodologies that take such expenses 

into account in calculating the measure 

of activities to be reported as part of the 

MLR requirements. HHS is requesting 

comments on PHS Act section 2718 as 

it relates to student health insurance 

coverage. 

E. Notice 

1. Requirement 

This proposed regulation would 

require a health insurance issuer to 

disclose to the student and any 

dependents in the insurance policy or 

certificate and any other written 

materials (for example, enrollment 

materials) that the policy being issued 

does not meet all of the requirements 

under the Affordable Care Act. HHS 

believes that the communication of this 

information is necessary in order for 

students and any dependents to 

understand the value and quality of the 

coverage that is being offered to them, 

and not have expectations that all of the 

requirements under the Affordable Care 

Act will apply. The notice would be 

required to provide a brief description 

of the requirements of the Affordable 

Care Act that do not apply to student 

health insurance coverage, and it would 

be required to be prominently displayed 

in clear, conspicuous 14-point bold 

type. 

HHS is requesting comments on the 

notice requirement for student health 

insurance coverage. 

2. Model Language 

This proposed regulation would 

provide model language that can be 

used by health insurance issuers to 

satisfy the notice requirement. This 

proposed regulation would provide that 

substantially similar language can also 

be used to satisfy the requirement. HHS 

is requesting comments on the model 

language. 

F. Interaction With State Laws 

As indicated earlier, many States do 

not regulate student health insurance as 

individual health insurance coverage 

but as a type of association blanket 

coverage or as non-employer group 

coverage. However, States have been 

aware, ever since the enactment of 

HIPAA in 1996, that health insurance 

coverage that is not sold in connection 

with employment is individual market 

coverage for purposes of the Federal 

statute (unless there is a specific 

exception such as for short-term limited 

duration insurance). The preemption 

provisions of section 2762 of the PHS 

Act (added by HIPAA and implemented 

in 45 CFR 148.210(b)) apply so that the 

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12This estimate is based on data from the 2009 

National Association of Insurance Commissioners 

(NAIC) Annual Accident and Health Policy 

Experience Exhibit and the American Council on 

Education (ACE). The 2009 NAIC filings show that 

there are 58 health insurance issuers offering 

student health coverage; however this data does not 

include managed care plans in California, and may 

include some issuers offering K–12 student 

accidental health coverage. In addition, data from 

the American Council on Education suggests that 

there are several smaller plans offering student 

health plans. 

PHS Act requirements are not to be 

‘‘construed to prevent a State from 

establishing, implementing, or 

continuing in effect standards and 

requirements unless such standards and 

requirements prevent the application or 

requirement’’ of the PHS Act. The 

HIPAA conference report indicates that 

this is intended to be the ‘‘narrowest’’ 

preemption of State laws. (See House 

Conf. Rep. No. 104–736, at 205, 

reprinted in 1996 U.S. Code Cong. & 

Admin. News 2018). 

In applying this preemption standard, 

a State is free to continue to regulate 

student health insurance coverage as 

association coverage or as a form of 

group health insurance provided that 

doing so does not prevent the 

application of any of the applicable 

requirements and protections of the 

individual market provisions of the PHS 

Act and Affordable Care Act. If any 

State law or requirement prevents the 

application of a Federal standard, then 

that particular State law or requirement 

would be preempted. HHS invites 

comments on the interaction of specific 

State laws or requirements with the 

Federal standards regarding student 

health insurance coverage. 

G. Conforming Amendments 

Conforming amendments were made 

to the definitions in 45 CFR 144.103. 

First, this proposed regulation would 

clarify that the definitions apply to part 

147 unless otherwise noted. Second, a 

definition of student health insurance 

coverage is added, which cross 

references the definition of student 

health insurance coverage in 45 CFR 

147.145(a). 

H. Applicability Date 

The applicability date of the proposed 

regulation would be for policy years 

beginning on or after January 1, 2012. 

This is because the Department 

recognizes that health insurance issuers 

will need time to incorporate the 

requirements of individual health 

insurance coverage under the PHS Act 

that would apply to student health 

insurance coverage. HHS believes it 

would be appropriate to provide time 

for transitioning student health 

insurance coverage to comply with the 

PHS Act and Affordable Care Act to the 

extent necessary in order to maintain 

the offering of student health insurance 

coverage to students. To require that 

issuers of student health insurance 

coverage comply with the applicable 

provisions of the PHS Act and 

Affordable Care Act upon the effective 

date of the regulation would be 

disruptive to the student health 

insurance market. 

III. 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. This proposed rule contains 

information collection requirements 

(ICRs) that are subject to review by 

OMB. A description of these provisions 

is given in the following paragraphs 

with an estimate of the annual burden, 

summarized in Table 1. In order to fairly 

evaluate whether an information 

collection should be approved by OMB, 

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

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We are soliciting public comment on 

each of these issues for the following 

sections of this proposed rule that 

contain information collection 

requirements (ICRs). 

Proposed 45 CFR 147.145(d)(1) would 

require issuers of student health 

insurance coverage to provide notice to 

enrollees that the policy does not meet 

all of the requirements of the Affordable 

Care Act. In addition, the proposed 

regulation would require that the 

disclosure must be prominently 

displayed in clear, conspicuous 14- 

point bold type. Additionally, the 

proposed regulation provides model 

language that issuers of student health 

insurance coverage can use in order to 

be in compliance with the notice 

requirement. The model language is 

provided in proposed 45 CFR 

147.145(d)(2). 

In order to provide the notices, the 

issuers of student health insurance 

coverage will need to review the model 

language or draft its own language, 

incorporate the plan or issuer’s name 

into the model notice (or a notice that 

is similar to the model), and print the 

notice in any plan or policy documents 

that are regularly sent to student 

enrollees. 

This burden estimate encompasses 

the entire notice process which includes 

assembly of the notice. It is estimated 

that approximately 75 student health 

insurance coverage issuers will have to 

provide such notice.12 We estimate that 

it will take approximately 2 minutes per 

student enrollee or approximately 1,000 

hours per student health insurance 

issuer to prepare and mail the notices to 

students. Including hourly wage and 

printing and mailing costs, we estimate 

the annual cost burden will be $40,840 

per affected issuer for a total cost of 

$3,063,000. In some cases, actual 

burden per notice (for example, postage) 

may be lower because we expect that 

many issuers will insert the model 

language into the existing plan materials 

that they were already intending to send 

to enrollees each year. 

TABLE 1—ANNUAL REPORTING, RECORDKEEPING AND DISCLOSURE BURDEN

Regulation section(s) OMB Control No. Respondents Responses 

Burden 

per response 

(hours) 

Total 

annual burden 

(hours) 

Hourly labor 

cost of 

reporting 

($) 

Total 

labor 

cost of 

reporting 

($) 

Total 

capital/ 

maintenance 

costs 

($) 

Total cost 

($) 

§ 147.145 ......... 0938–New 75 2,250,000 .0333 75,000 26.14 3,063,000 0 3,063,000 

Total .......... ................. 75 2,250,000 ........................ 75,000 ........................ ........................ .......................... 3,063,000 

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Federal Register / Vol. 76, No. 29 / Friday, February 11, 2011 / Proposed Rules 7775 

If you comment on this information 

collection requirement, 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 Office, 

9998–IFC. Fax: (202) 395–6974; or Email: OIRA_submission@omb.eop.gov. 

IV. 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. 

V. Regulatory Impact Analysis 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

A. Summary 

As stated earlier in this preamble, this 

proposed regulation is designed to 

address several issues that have arisen 

regarding the applicability of the 

Affordable Care Act to student health 

insurance coverage, including how this 

coverage is categorized under the PHS 

Act. Specifically, the provisions in this 

proposed regulation clarify which 

protections of the PHS Act and the 

Affordable Care Act would apply to 

student health insurance coverage, and 

to what extent students and their 

dependents enrolled in these plans 

would have the benefit of these 

consumer protection provisions. This 

proposed rule would define student 

health insurance coverage as a type of 

individual health insurance coverage 

and specify certain PHS Act and 

Affordable Care Act requirements as 

inapplicable to this type of individual 

health insurance coverage. These 

provisions are generally effective for 

student health insurance policy years 

beginning on or after January 1, 2012. 

The Department has proposed this 

regulation to implement the protections 

intended by Congress in the most 

economically efficient manner possible. 

We have examined the effects of this 

rule as required by Executive Order 

12866 (58 FR 51735, September 1993, 

Regulatory Planning and Review), the 

Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Social Security 

Act, the Unfunded Mandates Reform 

Act of 1995 (Pub. L. 104–4), Executive 

Order 13132 on Federalism, and the 

Congressional Review Act (5 U.S.C. 

804(2)). In accordance with OMB 

Circular A–4, the Department has 

quantified the benefits, costs and 

transfers where possible, and has also 

provided a qualitative discussion of 

some of the benefits, costs and transfers 

that may stem from this proposed 

regulation. 

B. Executive Orders 13563 and 12866 

Executive Order 12866 (58 FR 51735) 

directs agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects; distributive impacts; and 

equity). Executive Order 13563 (76 FR 

3821, issued on January 21, 2011) is 

supplemental to and reaffirms the 

principles, structures, and definitions 

governing regulatory review as 

established in Executive Order 12866. 

Section 3(f) of Executive Order 12866 

defines a ‘‘significant regulatory action’’ 

as an action that is likely to result in a 

proposed rule: (1) Having an annual 

effect on the economy of $100 million 

or more in any one year, or adversely 

and materially affecting a sector of the 

economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local or Tribal 

governments or communities (also 

referred to as ‘‘economically 

significant’’); (2) creating a serious 

inconsistency or otherwise interfering 

with an action taken or planned by 

another agency; (3) materially altering 

the budgetary impacts of entitlement 

grants, user fees, or loan programs or the 

rights and obligations of recipients 

thereof; or (4) raising novel legal or 

policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

Order. 

A regulatory impact analysis (RIA) 

must be prepared for major rules with 

economically significant effects ($100 

million or more in any 1 year), and a 

‘‘significant’’ regulatory action is subject 

to review by the Office of Management 

and Budget (OMB). 

As discussed below, we have 

concluded that this proposed rule 

would likely not have economic impacts 

of $100 million or more in any one year 

or otherwise meet the definition of an 

‘‘economically significant rule’’ under 

Executive Order 12866. Nevertheless, 

the Department has opted to provide an 

assessment of the potential costs, 

benefits, and transfers associated with 

this proposed regulation. This 

assessment is based primarily on the 

estimated administrative costs to issuers 

associated with providing the required 

notifications to student health plan 

enrollees. As discussed below, we 

believe that this proposed rule will have 

a minimal effect on premiums. The 

Department invites comments on this 

issue. 

1. Need for Regulatory Action 

In order to address several issues that 

have arisen regarding the applicability 

of the Affordable Care Act to student 

health insurance coverage, including 

how this coverage is categorized under 

the PHS Act, this proposed rule 

proposes that student health insurance 

coverage will be defined as a type of 

individual health insurance coverage 

and, with the exception of certain 

specific provisions, be subject to the 

individual market requirements of the 

PHS Act and the Affordable Care Act. 

As discussed elsewhere in the preamble, 

in clarifying the general applicability of 

the PHS Act and the Affordable Care 

Act to student health insurance 

coverage, this proposed regulation 

would also specify that a limited 

number of requirements of the PHS Act 

and the Affordable Care Act are 

inapplicable to student health insurance 

coverage. Section 1560(c) of the 

Affordable Care Act provides that 

‘‘[N]othing in this title (or an 

amendment made by this title) shall be 

construed to prohibit an institution of 

higher education (as such term is 

defined for purposes of the Higher 

Education Act of 1965) from offering a 

student health insurance plan, to the 

extent that such requirement is 

otherwise permitted under applicable 

Federal, State, or local law.’’ The 

Department interprets this provision of 

the Affordable Care Act to mean that if 

particular requirements added by the 

Affordable Care Act would, as a 

practical matter, have the effect of 

prohibiting an institution of higher 

education from offering a student health 

plan otherwise permitted under Federal, 

State or local law, such requirements 

would be inapplicable pursuant to the 

rule of construction in section 1560(c). 

As discussed elsewhere in the preamble, 

based on factual information provided 

by stakeholders representing colleges 

and universities and students, the 

Department has determined that if 

insurance meeting the definition of 

student health insurance coverage were 

required to comply with all of the 

market reform provisions of the 

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13U.S. Department of Education, National Center 

for Education Statistics. (2010). Digest of Education 

Statistics, 2009 Table 265. http://nces.ed.gov/ 

programs/digest/d09/tables/dt09_265.asp. 

14 Government Accountability Office, ‘‘Health 

Insurance: Most College Students Are Covered 

through Employer-Sponsored Plans, and Some 

Colleges and States Are Taking Steps to Increase 

Coverage,’’ March 2008, GAO–08–389, p. 17. 

15 It is estimated that approximately 200,000 

students (less than 1% of the market) are enrolled 

in coverage offered through self-funded health 

plans. As discussed earlier in the preamble, these 

self-funded student plans are not subject to the 

requirements of the PHS Act because they are 

neither health insurance coverage nor group health 

plans, as those terms are defined in the PHS Act. 

Affordable Care Act, this would be the 

functional equivalent of ‘‘prohibiting’’ 

the educational institutions from 

making such coverage available to 

students. This proposed rule specifies 

that the requirements of the PHS Act 

relating to guaranteed availability and 

guaranteed renewability would be 

inapplicable to student health insurance 

coverage; would clarify that student 

administrative health fees are not costsharing requirements under section 

2713 of the PHS Act; and would provide 

for a transition period for issuers of 

student health insurance coverage to 

comply with the restricted annual dollar 

limits requirements under the 

Affordable Care Act. The Department 

believes that the clarifications that are 

included in this proposed rule are 

necessary to facilitate the offering of 

student health insurance plans, 

consistent with the requirements of 

Section 1560(c) of the Affordable Care 

Act. 

2. Summary of Impacts 

In accordance with OMB Circular A– 

4, Table V.1 below depicts an 

accounting statement summarizing the 

Department’s assessment of the benefits, 

costs, and transfers associated with this 

regulatory action. The Department has 

limited the period covered by the 

regulatory impact analysis (RIA) to 

2012–2013. Estimates are not provided 

for subsequent years because there will 

be significant changes in the 

marketplace in 2014 related to the 

offering of new individual and small 

group plans through the health 

insurance Exchanges. Additionally, 

because this proposed regulation would 

clarify that student health insurance 

coverage is and has been subject to the 

provisions in the Affordable Care Act, 

including how these plans are 

categorized under the PHS Act, the RIA 

does not estimate the overall effect of 

imposing the Affordable Care Act 

provisions on these plans. Instead, the 

RIA focuses on the one proposed 

modification to the applicability of 

individual market requirements that 

would have a potential impact during 

the years 2011–2013. That is, providing 

for a transition period for issuers of 

student health insurance coverage to 

comply with the restricted annual dollar 

limits requirements of section 2711 of 

the PHS Act. This modification is 

designed to facilitate the offering of 

student health insurance plans, 

consistent with the requirements of 

section 1560(c) of the Affordable Care 

Act. 

The Department anticipates that the 

provisions of this proposed rule will 

help institutions of higher education to 

maintain the offering of student health 

insurance coverage by clarifying the 

inapplicability of certain requirements 

of the PHS Act and Affordable Care Act 

that would prohibit the offering of such 

coverage. In accordance with Executive 

Order 12866, the Department believes 

that the benefits of this regulatory action 

justify the costs. 

TABLE V.1—ACCOUNTING TABLE

Benefits: 

Qualitative: 

* Continued coverage, access to preventive services, and continuity of care for students. 

* Increased transparency relating to benefits offered in student health insurance coverage. 

Costs and Transfers: Estimate Year dollar Discont rate 

percent 

Period covered 

Annualized Monetized ($ millions/year) ........................................... 3.1 2011 7 2012–2013 

3.1 2011 3 2012–2013 

Annual costs related to providing notifications to enrollees. 

Qualitative: 

* Reduced rate of premium growth for student health insurance coverage from 2011 through 2013 than would have occurred under immediate compliance with the restricted annual dollar limit requirements. 

* Increased out-of-pocket costs for a small number of enrollees. 

3. Estimated Number of Affected 

Entities 

Comprehensive sources of data 

concerning the number of persons 

covered by student health insurance 

plans and the benefit structure of those 

plans are not readily available. 

Additionally, available survey data do 

not adequately capture this population 

due to small sample sizes and the 

difficulty of differentiating student 

health plans from other individual 

coverage. However, we were able to 

develop some estimates based on a 

Government Accountability Office 

(GAO) report and data provided by the 

American Council on Education (ACE). 

a. Estimated Number of Plans Offering 

Student Health Insurance Coverage 

There were 4,409 degree-granting 

institutions in 2009, including two-year 

and four-year institutions.13 The GAO 

found that 57 percent of colleges and 

universities offered student insurance 

plans in 2007–08,14 suggesting that 

approximately 2,500 colleges and 

universities offered such an insurance 

plan. According to industry sources, 

approximately 1,500 to 2,000 

institutions offer student health plans, 

and the vast majority of these plans are 

insured (rather than self-insured) 

plans.15

In a survey of colleges with student 

health plans, GAO found that all but 4 

percent established some maximum 

benefit amount during the 2007–08 

academic year. Most (68 percent of 

plans) defined the maximum in terms of 

per condition per lifetime. 

Approximately 24 percent of the plans 

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16 Government Accountability Office, March 

2008, pp. 24, 27. 

17 Government Accountability Office, March 

2008, p. 10. 

18U.S. Department of Education, National Center 

for Education Statistics. (2009), Digest of Education 

Statistics, 2008, Table 190. http://nces.ed.gov/ 

fastfacts/display.asp?id=98. 

19Based on information compiled by the 

American Council on Education, primarily from the 

American College Health Association and the 

health insurance industry, September 2010. 

20This represents data for 32 health insurance 

issuers (e.g., licensed entities with unique NAIC 

company codes) that reported earned premiums and 

enrollment for student business in the individual or 

group markets on the NAIC Accident & Health 

(A&H) Policy Experience Exhibit for 2009, and 

excludes experience for companies regulated by the 

California Department of Managed Health Care. 

These issuers represent a subset of the 58 total 

issuers who reported any kind of student business 

on the NAIC A&H Policy Experience Exhibit for that 

year. The Department estimates that 16 issuers 

whose average premium per enrollee was 

approximately $200 or less were primarily reporting 

data for K–12 student accidental health coverage, 

which is not subject to the provisions of this rule. 

The Department also excluded 10 issuers that did 

not report valid premium and/or enrollment data 

for student business from this analysis. In cases 

where data for member years were unavailable for 

certain issuers, the Department used data that were 

reported for covered lives or number of policies/ 

certificates as a proxy. 

21These four percentages do not sum to 100 due 

to rounding. 

defined an annual limit (including plans 

with a per year or per-condition-peryear limit).16

Additionally, as discussed earlier in 

the Collection of Information 

Requirements section, the Department 

estimates that there are approximately 

75 health insurance issuers that offer 

student health insurance coverage that 

is provided to eligible students and their 

dependents through written agreements 

that are negotiated with the 

abovementioned colleges and 

universities that offer such coverage. 

b. Estimated Number of Individuals 

Enrolled in Student Health Insurance 

Coverage 

The GAO has estimated the 

percentage of college students aged 18 

through 23 years old who are insured 

through nonemployer-sponsored private 

health insurance programs, including 

student health insurance programs. 

GAO found that 7 percent of college 

students aged 18 through 23 were 

covered by nonemployer-sponsored 

private health insurance programs, 

including student health insurance 

programs.17 However, almost one-half of 

all college students are not in this age 

group. 

The National Center for Education 

statistics (NCES) has projected that there 

will be 19.0 million college students in 

2012, approximately one-half of whom 

will be in the 18–23 age range.18 Based 

on the previous GAO findings, a 

reasonable estimate of the total number 

of persons with student health 

insurance is approximately 1.3 million 

(approximately 7 percent of the 

estimated 19.0 million total college 

students). A separate source of 

information estimates that the five 

largest carriers offering student health 

insurance account for approximately 1.2 

to 1.5 million enrollees; in addition, 

industry sources estimate that 

approximately 200,000 students are 

covered through student health plan 

arrangements that are self-funded 

through colleges and universities, and a 

relatively small number by insurers 

beyond the five largest carriers.19 By 

comparison, 2009 data from the 

National Association of Insurance 

Commissioners’ (NAIC) Accident and 

Health (A&H) Policy Experience Exhibit 

suggest that health insurance issuers 

offered college student policies with 

approximately 1.1 million enrollees 

(based on estimated member years, 

including dependents).20 There is 

clearly some uncertainty about the 

number of people enrolled in student 

health insurance coverage, but it 

appears likely that there are between 1.1 

million and 1.5 million enrollees. 

Table V.2 presents the estimated 

distribution of persons covered by 

student health insurance according to 

the annual limits of their policies, based 

on two different data sources. 

Regardless of which data source is used, 

the estimated number of students 

affected by this regulation is small. The 

first data source represents the 

distribution of annual limits in the 

individual market, as presented in Table 

3.3 of the interim final regulation 

relating to section 2711 of the 

Affordable Care Act, regarding lifetime 

and annual dollar limits on benefits (75 

FR 37188 (June 28, 2010)). Because that 

table did not use the annual limits 

thresholds relevant to this regulation, 

the estimated number of persons in each 

cell was prorated. Because the 

Affordable Care Act prohibits group 

health plans and health insurance 

issuers offering group or individual 

health insurance coverage from 

establishing lifetime limits on the dollar 

value of essential benefits, for purposes 

of this analysis we assume that the 

plans with such limits (for example, 

71.9 percent of the 199 plans in the 

GAO survey) have no annual limit. 

Another 4.0 percent of plans have had 

no limit of any type. Of the plans (13.6 

percent) with per-condition-per-year 

limits, none had limits exceeding 

$100,000. The distribution of the 

remaining 10.6 percent of plans was 

estimated based on three statistics 

reported in the GAO report.21

The second data source represents the 

findings from the 2008 GAO report. 

According to the GAO’s analysis, only 

24 percent of student health plans had 

an annual limit of any sort. Although 

the GAO found that most student health 

insurance coverage included other 

forms of maximum benefits during the 

2007–2008 academic year (for example, 

per condition per lifetime), such limits 

are prohibited under current law and 

hence are not relevant to this analysis. 

The GAO estimate suggests that 

approximately 300,000 students would 

potentially be affected by the proposal 

in this regulation to allow student 

health insurance coverage to have 

annual dollar limits lower than the 

$750,000 that would be required in the 

absence of this rule. 

TABLE V.2—ESTIMATED NUMBER OF PERSONS WITH STUDENT HEALTH INSURANCE COVERAGE SUBJECTED TO ANNUAL

LIMITS, BY DATA SOURCE

Annual limit 

HHS estimated distribution for all 

plans offered in the individual market 

GAO distribution for student health 

plans with annual limits, 2007–2008 

Percent Number 

(in thousands) Percent Number (in thousands) 

Less Than $100,000 ........................................................................ 0.2 3 21.6 281 

$100,000–$749,999 ......................................................................... 2.2 29 2.5 33 

$750,000–$1,999,999 ...................................................................... 12.8 166 0.0 0 

$2,000,000 or Higher ....................................................................... 84.8 1,102 75.9 986 

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22Andrews, Michelle, ‘‘Health-Care Overhaul 

Offers Insurance Benefits to Young Adults,’’ The 

Washington Post, May 25, 2010, accessed at http:// 

www.washingtonpost.com/wp-dyn/content/article/ 

2010/05/24/AR2010052403141.html. 

TABLE V.2—ESTIMATED NUMBER OF PERSONS WITH STUDENT HEALTH INSURANCE COVERAGE SUBJECTED TO ANNUAL

LIMITS, BY DATA SOURCE—Continued 

Annual limit 

HHS estimated distribution for all 

plans offered in the individual market 

GAO distribution for student health 

plans with annual limits, 2007–2008 

Percent Number 

(in thousands) Percent Number (in thousands) 

Total .......................................................................................... 100.0 1,300 100.0 1,300 

Note: The estimated number of persons in each cell has been prorated. 

Sources: The HHS distribution was derived from HHS, 75 FR 37188, Table 3.3; the GAO distribution was derived from GAO, March 2008, 

GAO–08–389, pp. 24, 27. 

Given that provisions of this proposed 

regulation would be applicable for 

policy years beginning on or after 

January 1, 2012, and assuming that most 

students enrolling in student health 

insurance coverage do so at the 

beginning of the fall semester, we 

believe that this proposed regulation is 

not likely to impact a significant 

number of students until late summer of 

2012, at which point approximately 

280,000 enrollees will see their annual 

limits increase to no less than $100,000 

on essential benefits (for student health 

insurance coverage policy years 

beginning on or after January 1, 2012, 

but before September 23, 2012), 

according to the GAO-based results. 

Because this proposed regulation 

includes a phased transition to the 

restricted annual dollar limits 

thresholds that are required under the 

Affordable Care Act, some students that 

would have otherwise experienced 

increases in their annual dollar limits 

for policy years beginning before 

September 23, 2012 under current law 

will not experience those increases. 

This includes an estimated 33,000 

persons with coverage offering annual 

limits between $100,000 and $749,999. 

Additionally, in the late summer of 

2013, an estimated 314,000 persons 

enrolled in coverage with annual dollar 

limits below $2,000,000 will experience 

an increase in their annual dollar limits 

(to no less than $2,000,000 for essential 

health benefits, consistent with the 

Affordable Care Act requirement for 

policy years beginning on or after 

September 23, 2012). Consistent with 

the provisions of the Affordable Care 

Act, no nongrandfathered student health 

insurance coverage will be allowed to 

have annual dollar limits for policy 

years beginning on or after January 1, 

2014. 

4. Anticipated Benefits, Costs and 

Transfers 

As discussed earlier, because this 

proposed regulation is clarifying that 

student health insurance coverage 

policies are and have been subject to the 

provisions in the Affordable Care Act, 

the RIA does not estimate the overall 

effect of imposing the Affordable Care 

Act provisions on these plans. 

Therefore, the discussion of anticipated 

benefits, costs and transfers focuses on 

the impacts associated with the 

clarification in this proposed rule that a 

limited number of requirements of the 

PHS Act and the Affordable Care Act are 

inapplicable to student health insurance 

coverage, in order to facilitate the 

offering of student health insurance 

plans, consistent with the requirements 

of section 1560(c) of the Affordable Care 

Act. 

a. Benefits 

The proposed regulation defines 

student health insurance coverage as a 

type of individual health insurance 

coverage and specifies certain PHS Act 

and Affordable Care Act requirements as 

inapplicable to this type of individual 

health insurance coverage. One such 

provision of this regulation is to provide 

for a transition period for issuers of 

student health insurance coverage to 

comply with the restricted annual dollar 

limits requirements under the 

Affordable Care Act. For example, 

student health insurance coverage will 

be allowed to impose an annual dollar 

limit of no less than $100,000 on 

essential health benefits for policy years 

beginning on or after January 1, 2012, 

but prior to September 23, 2012. While 

we cannot quantify them at this time, 

we believe there would be economic 

benefits to this rule resulting from 

improved coverage and access to health 

services for students because in the 

absence of the provisions in this 

proposed regulation, it is likely that 

there may have been some reductions in 

student health insurance availability— 

for example, due to the higher restricted 

annual dollar limits that otherwise 

would have applied in these years. 

One rationale for the provision of a 

transition period for issuers of student 

health insurance coverage to comply 

with the restricted annual dollar limits 

requirements is that many student plans 

currently have annual limits 

substantially lower than the $1.25 

million requirement that will be in 

effect for plan years beginning on or 

after September 23, 2011. Concerns have 

been expressed that some institutions of 

higher education would not be able to 

offer student health insurance coverage 

if the annual dollar limits were 

immediately to increase by those 

amounts. While some students will have 

access to dependent coverage through 

their parents’ health insurance plans up 

to age 26, this may not be an option for 

older students and students whose 

parents do not have coverage.22 In the 

absence of the provisions of this 

proposed rule, it is likely that some 

affected students would not be able to 

find affordable alternative coverage and 

become uninsured. To the extent that 

the transition period for issuers of 

student health insurance coverage to 

comply with the annual dollar limits 

requirements results in these 

institutions of higher education 

continuing to offer coverage, there 

would be benefits in terms of 

maintaining student health. Students 

who would otherwise might have been 

uninsured will have continued 

coverage, access to preventive services 

and be able to continue care plans for 

acute and chronic illnesses. 

Several other provisions in this 

proposed rule will also help colleges 

and universities to continue offering 

student health insurance coverage by 

maintaining current industry 

practices—including the clarifications 

relating to the inapplicability of the 

guaranteed availability and renewability 

requirements in the PHS Act before 

2014 (in order to allow student health 

insurance coverage to be limited to 

eligible students and their dependents), 

and the clarification that student 

administrative health fees are not costsharing requirements under Section 

2713 of the PHS Act. Additionally, the 

notice requirements in this proposed 

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regulation will provide increased 

transparency relating to the benefits that 

are offered in student health insurance 

coverage. This will assist students in 

making the best selection among their 

available coverage options. 

b. Costs and Transfers 

In addition to maintaining coverage as 

described above, the transition period 

for issuers of student health insurance 

coverage to comply with the restricted 

annual dollar limits requirements will 

likely result in a somewhat reduced rate 

of premium growth for student health 

insurance coverage from 2011 through 

2013 than would have occurred if the 

higher annual dollar limits were 

required for these years. As discussed 

earlier in the preamble, for plan years 

beginning after September 23, 2011, the 

minimum annual limit under the 

Affordable Care Act is $1.25 million. 

This level is so much higher than many 

of the current annual dollar limits that 

if applied immediately to student health 

insurance coverage benefit designs, it 

could require large premium increases 

that would effectively ‘‘prohibit an 

institution of higher education... from 

offering a student health insurance 

plan.’’ 

At the same time, a small number of 

student enrollees are likely to face 

increased out-of-pocket costs than they 

would have faced if there were no 

transition period for issuers of student 

health insurance coverage to comply 

with the restricted annual dollar limits. 

Thus, there is a small transfer from this 

group which would have had higher 

out-of-pocket costs to the population of 

students purchasing student plans 

through lower premiums. 

There may also be some costs 

associated with the provisions in this 

proposed rule. Those adversely affected 

by the higher out-of-pocket costs may 

seek less care than they would have 

under higher annual dollar limits. 

Finally, the Department estimates that 

there will be some administrative costs 

to issuers associated with the notice 

requirements. As discussed in the 

Collection of Information Requirements 

section, we estimate that approximately 

75 student health plan health insurance 

issuers will have to provide notices to 

students and any dependents indicating 

that the coverage does not meet all of 

the requirements of the Affordable Care 

Act. We estimate that it will take 

approximately 2 minutes per student 

enrollee or approximately 1,000 hours 

per student health plan insurance issuer 

to prepare and mail the notices to 

student enrollees. Including hourly 

wage and printing and mailing costs, we 

estimate the annual cost burden will be 

$40,840 per affected issuer, for a total 

cost of $3,063,000. We believe that these 

cost estimates are conservative, as some 

issuers are likely to insert the model 

notice language into the existing plan 

documents that they distribute to their 

enrollees, thus reducing their estimated 

costs. 

C. Regulatory Alternatives 

Under the Executive Order, HHS is 

required to consider alternatives to 

issuing regulations and alternative 

regulatory approaches. HHS considered 

the two regulatory alternatives below. 

1. Require Student Health Insurance 

Coverage To Be Offered Through a Bona 

Fide Association 

HHS considered requiring student 

health insurance coverage to meet the 

definition of a bona fide association, as 

that term is defined at 45 CFR 144.103, 

in order to be exempt from guaranteed 

availability and guaranteed renewability 

requirements under current law 

provisions before 2014. This approach 

would have required issuers of student 

health insurance coverage to comply 

with all of the individual market 

requirements of the PHS Act and the 

Affordable Care Act except for 

guaranteed availability and guaranteed 

renewability. However, the approach 

would have been cost-prohibitive on 

some institutions of higher education, 

causing them to drop coverage since 

student health insurance coverage today 

rarely is offered through associations 

(that is, student associations). In 

addition, associations affiliated with 

newly-established institutions of higher 

education would have been unable to 

satisfy the requirement that a bona fide 

association be in existence for five 

years. 

2. Change the Definition of Short-Term 

Limited Duration Coverage 

HHS also considered modifying the 

definition of short-term limited-duration 

insurance in 45 CFR 144.103 to make it 

more difficult for student health 

insurance coverage to qualify as such 

(for example, shorten the time limit 

from 12 months to 6 months). However, 

this change would have had broader 

implications for the health insurance 

market and not only for coverage offered 

by institutions of higher education 

because there are currently health 

insurance policies being offered in the 

general market that meet the current 

definition of short-term limited duration 

insurance. As indicated earlier, these 

products serve as stop-gap coverage for 

individuals who need health coverage 

for short periods of time. To change the 

definition of short-term limited duration 

insurance would have implications for 

this type of coverage. 

HHS believes that the option adopted 

for this proposed rule (defining student 

health insurance coverage as individual 

health insurance coverage and limiting 

the applicability of the PHS Act and the 

Affordable Care Act through its 

authority under Affordable Care Act 

section 1560(c)) strikes the best balance 

of extending certain protections of the 

Affordable Care Act to students and 

their dependents enrolled in the student 

health insurance plans while preserving 

the availability and affordability of such 

coverage. 

D. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

requires agencies that issue a regulation 

to analyze options for regulatory relief 

of small businesses if a proposed rule 

has a significant impact on a substantial 

number of small entities. The RFA 

generally defines a ‘‘small entity’’ as 

(1) a proprietary firm meeting the size 

standards of the Small Business 

Administration (SBA), (2) a nonprofit 

organization that is not dominant in its 

field, or (3) a small government 

jurisdiction with a population of less 

than 50,000 (States and individuals are 

not included in the definition of ‘‘small 

entity’’). 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. 

The RFA requires agencies to analyze 

options for regulatory relief of small 

businesses, if a proposed rule has a 

significant impact on a substantial 

number of small entities. For purposes 

of the RFA, small entities include small 

businesses, nonprofit organizations, and 

small government jurisdictions. Small 

businesses are those with sizes below 

thresholds established by the Small 

Business Administration (SBA). 

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 

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7780 Federal Register / Vol. 76, No. 29 / Friday, February 11, 2011 / Proposed Rules 

23 ‘‘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. 

24As discussed earlier in this regulatory impact 

analysis, these 32 health insurance issuers are 

licensed entities with unique NAIC company codes 

that reported earned premiums and enrollment for 

student business in the individual and group 

markets on the NAIC Accident & Health Policy 

Experience Exhibit in 2009, and exclude experience 

for companies regulated by the California 

Department of Managed Health Care. This 

represents a subset of the 58 total issuers who 

reported any kind of student business on the NAIC 

A&H Policy Experience Exhibit for that year 

(including some that the Department estimates are 

primarily offering K–12 student accident health 

coverage that is not subject to the provisions of this 

proposed regulation). 

Industry Classification System Code 

524114).23

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 A&H 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, since it 

does not include receipts from these 

companies’ other lines of business. 

As discussed earlier in this regulatory 

impact analysis, comprehensive sources 

of data concerning the student health 

insurance market are not readily 

available. However, for purposes of this 

regulatory flexibility analysis, the 

Department has used data for issuers 

who reported offering student coverage 

on the 2009 NAIC A&H Policy 

Experience exhibit as a proxy for 

estimating the potential number of small 

issuers that could be affected by the 

provisions in this proposed rule. Based 

on these data, the Department estimates 

that there are 4 small entities with less 

than $7 million in A&H earned 

premiums that offer student health 

insurance coverage that is the subject of 

this proposed regulation. These small 

entities account for 13 percent of the 

estimated 32 total issuers who reported 

offering such coverage.24

The Department estimates that 100 

percent of these small issuers are 

subsidiaries of larger carriers, and 100 

percent also offer other types of A&H 

coverage. On average, the Department 

estimates that student health insurance 

coverage in the group market accounts 

for approximately 29 percent of total 

A&H earned premiums for these small 

issuers. Additionally, the Department 

estimates that the annual cost burden 

for these small entities relating to the 

notice requirements in this proposed 

rule will be $40,840 per issuer 

(accounting for 2.3 percent of their total 

A&H earned premiums). As discussed 

earlier, the Department believes that 

these estimates overstate the number of 

small entities that will be affected by the 

requirements in this proposed 

regulation, as well as the relative impact 

of these requirements on these entities 

because the Department has based its 

analysis on issuers’ total A&H earned 

premiums (rather than their total annual 

receipts). Therefore, the Secretary 

certifies that this proposed rule will not 

have a significant impact on a 

substantial number of small entities. 

In addition, section 1102(b) of the 

Social Security 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 604 of the 

RFA. This notice of proposed 

rulemaking would not affect small rural 

hospitals. Therefore, the Secretary has 

determined that this proposed rule 

would not have a significant impact on 

the operations of a substantial number 

of small rural hospitals. 

E. Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act (UMRA) of 1995 

requires that agencies assess anticipated 

costs and benefits before issuing any 

proposed rule that includes a Federal 

mandate that could result in 

expenditure in any one year by State, 

local or Tribal governments, in the 

aggregate, or by the private sector, of 

$100 million in 1995 dollars, updated 

annually for inflation. In 2011, that 

threshold level is approximately $136 

million. 

UMRA does not address the total cost 

of a proposed rule. Rather, it focuses on 

certain categories of cost, mainly those 

‘‘Federal mandate’’ costs resulting from: 

(1) Imposing enforceable duties on 

State, local, or Tribal governments, or 

on the private sector; or (2) increasing 

the stringency of conditions in, or 

decreasing the funding of, State, local, 

or Tribal governments under 

entitlement programs. 

This proposed rule includes no 

mandates on State, local, or Tribal 

governments. Under the proposed rule, 

issuers will be required to provide 

important Affordable Care Act and PHS 

Act protections for students enrolled in 

student health insurance coverage. 

Further, the estimated annual costs 

associated with the provisions of this 

proposed rule are approximately 

$40,840 per affected entity (or 

approximately $3,063,000 per year 

across all affected entities). Thus, this 

proposed regulation does not impose an 

unfunded mandate on State, local or 

Tribal governments or the private sector. 

However, consistent with policy 

embodied in UMRA, this notice for 

proposed rulemaking has been designed 

to be the least burdensome alternative 

for State, local and Tribal governments, 

and the private sector while achieving 

the objectives of the Affordable Care 

Act. 

F. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

In HHS’ view, while the requirements 

proposed in this notice for proposed 

rulemaking would not impose 

substantial direct costs on State and 

local governments, this notice for 

proposed rulemaking has federalism 

implications due to direct effects on the 

distribution of power and 

responsibilities among the State and 

Federal governments relating to the 

regulation of student health insurance 

coverage. 

As discussed earlier in the preamble, 

some States do not regulate student 

health insurance as individual health 

insurance coverage, but rather as a type 

of association ‘‘blanket coverage’’ or as 

non-employer group coverage. Under 

this proposed regulation, student health 

insurance coverage will be defined as a 

type of individual health insurance 

coverage, and will therefore be subject 

to the individual market requirements of 

the PHS Act and the Affordable Care 

Act, with the exception of certain 

specific provisions that are identified in 

the proposed rule. States would 

continue to apply State law 

requirements regarding student health 

insurance coverage. However, if any 

State law or requirement prevents the 

application of a Federal standard, then 

that particular State law or requirement 

would be preempted. Additionally, 

State requirements that are more 

stringent than the Federal requirements 

would be consistent with the 

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Federal Register / Vol. 76, No. 29 / Friday, February 11, 2011 / Proposed Rules 7781 

requirements under this proposed rule. 

Accordingly, States have significant 

latitude to impose requirements with 

respect to student health insurance 

coverage that are more restrictive than 

the Federal law. 

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, HHS has engaged in efforts to 

consult with and work cooperatively 

with affected States, including 

consulting with State insurance officials 

on an individual basis. 

Throughout the process of developing 

this notice of proposed rulemaking, 

HHS has attempted to balance the 

States’ interests in regulating health 

insurance issuers, and Congress’ intent 

to provide uniform protections to 

consumers in every State. By doing so, 

it is HHS’ view that it has complied 

with the requirements of Executive 

Order 13132. Under the requirements 

set forth in section 8(a) of Executive 

Order 13132, and by the signatures 

affixed to this regulation, HHS certifies 

that the CMS Center for Consumer 

Information and Insurance Oversight 

has complied with the requirements of 

Executive Order 13132 for the attached 

notice for proposed rulemaking in a 

meaningful and timely manner. 

G. Congressional Review Act 

This proposed regulation is subject to 

the Congressional Review Act 

provisions of the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (5 U.S.C. 801 et seq.), which 

specifies that before a rule can take 

effect, the Federal agency promulgating 

the rule shall submit to each House of 

the Congress and to the Comptroller 

General a report containing a copy of 

the rule along with other specified 

information, and has been transmitted 

to Congress and the Comptroller General 

for review. 

List of Subjects 

45 CFR Part 144 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements. 

45 CFR Part 147 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, and State regulation of 

health insurance. 

For the reasons stated in the 

preamble, the Department of Health and 

Human Services proposes to amend 45 

CFR chapter I as set forth below: 

PART 144—REQUIREMENTS 

RELATING TO HEALTH INSURANCE 

COVERAGE 

1. The authority citation for part 144 

continues to read as follows: 

Authority: Secs. 2701 through 2763, 2791, 

and 2792 of the Public Health Service Act (42 

U.S.C. 300gg through 300gg–63, 300gg–91, 

and 300gg–92), as amended. 

2. Section 144.103 is amended by— 

a. Revising the introductory text. 

b. Adding the definition of ‘‘Student 

Health Insurance Coverage’’ in 

alphabetical order. 

The revisions and additions read as 

follows: 

§ 144.103 Definitions. 

For purposes of parts 146 (group 

market), 147 (health reform 

requirements for the group and 

individual markets), 148 (individual 

markets), and 150 (enforcement) of this 

subchapter, the following definitions 

apply unless otherwise provided: 

* * * * * 

Student Health Insurance Coverage 

has the meaning given the term in 

§ 147.145. 

PART 147—HEALTH INSURANCE 

REFORM REQUIREMENTS FOR THE 

GROUP AND INDIVIDUAL HEALTH 

INSURANCE MARKETS 

3. The authority citation for part 147 

continues to read as follows: 

Authority: Secs. 2701 through 2763, 2791, 

and 2792 of the Public Health Service Act (42 

U.S.C. 300gg through 300gg–63, 300gg–91, 

and 300gg–92), as amended. 

4. A new § 147.145 is added to 

subchapter B to read as follows: 

§ 147.145 Student Health Insurance 

Coverage. 

(a) Definition. Student Health 

Insurance Coverage is a type of 

individual health insurance coverage (as 

defined in § 144.103) that is provided 

pursuant to a written agreement 

between an institution of higher 

education (as defined in the Higher 

Education Act of 1965) and a health 

insurance issuer, and provided to 

students enrolled in that institution of 

higher education and their dependents, 

that meets the following conditions: 

(1) Does not make health insurance 

coverage available other than in 

connection with enrollment as a student 

(or as a dependent of a student) in the 

institution of higher education. 

(2) Does not condition eligibility for 

the health insurance coverage on any 

health status-related factor (as defined 

in § 146.121(a)) relating to a student (or 

a dependent of a student). 

(3) Meets any additional requirement 

that may be imposed under State law. 

(b) Exemptions from the Public Health 

Service Act. 

(1) Guaranteed Availability and 

Guaranteed Renewability. For purposes 

of section 2741(e)(1) and 2742(b)(5) of 

the Public Health Service Act, Student 

Health Insurance Coverage as defined in 

paragraph (a) of this section is construed 

to be available only through a bona fide 

association. 

(2) Annual Limits. (i) Notwithstanding 

the annual dollar limits requirements of 

§ 147.126, for policy years beginning 

before September 23, 2012, a health 

insurance issuer offering student health 

insurance coverage as defined in 

paragraph (a) of this section may not 

establish an annual dollar limit on 

essential health benefits that is lower 

than $100,000. 

(ii) For policy years beginning on or 

after September 23, 2012, a health 

insurance issuer offering student health 

insurance coverage must comply with 

the annual dollar limits requirements in 

§ 147.126. 

(c) Student Administrative Health 

Fees. (1) Definition. A student 

administrative health fee is a fee 

charged by the institution of higher 

education on a periodic basis to 

students of the institution of higher 

education to offset the cost of providing 

healthcare through health clinics 

regardless of whether the students 

utilize the health clinics or enroll in 

student health insurance coverage. 

(2) Preventive Services. 

Notwithstanding the requirements 

under 2713 of the PHS Act and its 

implementing regulations, student 

administrative health fees as defined in 

paragraph (c)(1) of this section are not 

considered cost-sharing requirements 

with respect to specified recommended 

preventive services. 

(d) Notice—(1) Requirements. (i) A 

health insurance issuer that provides 

student health insurance coverage must 

provide a notice informing students that 

the policy does not meet the 

requirements described in paragraph (b) 

of this section. 

(ii) The notice must be prominently 

displayed in clear, conspicuous 14- 

point bold type on the front of the 

insurance policy or certificate and any 

other plan materials. 

(2) Model language. The following 

model language, or substantially similar 

language, can be used to satisfy the 

notice requirement of this paragraph 

(d)(1): ‘‘Your student health insurance 

coverage, offered by [name of health 

insurance issuer], may not meet the 

minimum standards required by title 

XXVII of the Public Health Service Act. 

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7782 Federal Register / Vol. 76, No. 29 / Friday, February 11, 2011 / Proposed Rules 

Specifically, the coverage will not be 

renewed when you are no longer 

enrolled as a student at [name of 

institution of higher education]; and the 

restrictions on annual dollar limits on 

your benefits may not be the same as 

other types of coverage. For policy years 

beginning before September 23, 2012, if 

a policy for student health insurance 

coverage applies a dollar limit on the 

coverage it provides for key benefits in 

a year, that limit must be at least 

$100,000. Your student health insurance 

coverage put an annual limit of: [dollar 

amount] on [which covered benefits— 

notice should describe all annual limits 

that apply]. If you have any questions or 

concerns about this notice, contact 

[provide contact information for the 

health insurance issuer].’’ 

(e) Applicability. The provisions of 

this section apply for policy years 

beginning on or after January 1, 2012. 

Dated: February 2, 2011. 

Donald M. Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: February 8, 2011. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2011–3109 Filed 2–9–11; 11:15 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF DEFENSE 

Defense Acquisition Regulations 

System 

48 CFR Chapter 2 

Defense Federal Acquisition 

Regulation Supplement; Rules of the 

Armed Services Board of Contract 

Appeals 

AGENCY: Defense Acquisition 

Regulations System, Department of 

Defense (DoD). 

ACTION: Proposed rule. 

SUMMARY: DoD is issuing a proposed 

rule to update the Rules of the Armed 

Services Board of Contract Appeals 

(ASBCA). The proposed rule 

implements statutory increases in the 

thresholds relating to the submission 

and processing of contract appeals and 

updates statutory references and other 

administrative information. 

DATES: Comment date: Interested parties 

should submit comments in writing to 

the address shown below on or before 

March 14, 2011. 

ADDRESSES: You may submit comments, 

identified by ‘‘DFARS ASBCA Rules’’, 

using any of the following methods: 

Æ Regulations.gov:http:// 

www.regulations.gov. Submit comments 

via the Federal eRulemaking portal by 

inputting ‘‘DFARS ASBCA Rules’’ under 

the heading ‘‘Enter keyword or ID’’ and 

selecting ‘‘Search.’’ Select the link 

‘‘Submit a Comment’’ that corresponds 

with ‘‘DFARS ASBCA Rules.’’ Follow 

the instructions provided at the ‘‘Submit 

a Comment’’ screen. Please include your 

name, company name (if any), and 

‘‘DFARS ASBCA Rules’’ on your 

attached document. 

Æ E-mail: dfars@osd.mil. Include 

DFARS ASBCA Rules in the subject line 

of the message. 

Æ Fax: 703–681–8535 

Æ Mail: Armed Services Board of 

Contract Appeals, Attn: Catherine 

Stanton, Skyline Six, Room 703, 5109 

Leesburg Pike, Falls Church, VA 22041– 

3208. 

Comments received generally will be 

posted without change to http:// 

www.regulations.gov, including any 

personal information provided. To 

confirm receipt of your comment, please 

check http://www.regulations.gov 

approximately two to three days after 

submission to verify posting (except 

allow 30 days for posting of comments 

submitted by mail. 

FOR FURTHER INFORMATION CONTACT: 

Catherine Stanton, Executive Director, 

ASBCA, 703–681–8503, Internet 

address: catherine.stanton@asbca.mil; 

or David Houpe, Chief Counsel, ASBCA, 

703–681–8510, Internet address: 

david.houpe@asbca.mil. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The rule is being issued on behalf of 

Mr. Paul Williams, Chairman, Armed 

Services Board of Contract Appeals. It 

proposes to amend DFARS Appendix A, 

Armed Services Board of Contract 

Appeals, Part 2—Rules, to update 

thresholds related to requirements for 

contractor claims and to update 

information as follows: 

Æ The Preface, section II(a), is 

amended to update the Board’s address 

and telephone number. 

Æ In Rule 1, subsections (b) and (c) 

implement section 2351(b) of Public 

Law 103–355, 108 Stat. 3322 (1994). 

Section 2351(b) amended 41 U.S.C. 

605(c) to increase, from $50,000 to 

$100,000, the threshold relating to 

certification, decision, and notification 

requirements for contractor claims. 

Æ Rule 12.1, subsection (a), and Rule 

12.3, subsection (b), implement section 

2351(d) of Public Law 103–355, 108 

Stat. 3322 (1994). Section 2351(d) 

amended 41 U.S.C. 608(a) to increase, 

from $10,000 to $50,000, the threshold 

for applicability of small claims 

procedures for disposition of appeals. 

Æ Rule 12.1, subsection (a) 

implements section 857 of Public Law 

109–364, 120 Stat. 2349 (2006). Section 

857 amended 41 U.S.C. 608(a) to insert 

after ‘‘$50,000 or less’’ the following 

language: ‘‘or, in the case of a small 

business concern (as defined in the 

Small Business Act and regulations 

under that Act), $150,000 or less.’’ 

Æ Rule 12.1, subsection (b), 

implements section 2351(c) of Public 

Law 103–355, 108 Stat. 3322 (1994). 

Section 2351(c) amended 41 U.S.C. 

607(f) to increase, from $50,000 to 

$100,000, the threshold for applicability 

of accelerated procedures for 

disposition of appeals. 

Æ Rule 28, subsection (b), implements 

section 4322(b)(7) of Public Law 104– 

106, 110 Stat. 677 (1996). Section 

4322(b)(7) amended 41 U.S.C. 612 to 

update statutory references relating to 

payment of claims. Rule 28, subsection 

(b), also contains changes for 

consistency with the judgment fund 

certification process specified in the 

Treasury Financial Manual, Financial 

Management Service, Department of the 

U.S. Treasury. 

Æ Minor changes were made 

throughout the Rules to ensure 

uniformity and to correct typographical 

errors. 

II. Executive Order 12866 

This rule was not subject to Office of 

Management and Budget review under 

Executive Order 12866, dated 

September 30, 1993. This rule is not a 

major rule under 5 U.S.C. 804. 

III. Regulatory Flexibility Act 

DoD does not expect this rule to have 

a significant economic impact on a 

substantial number of small entities 

within the meaning of the Regulatory 

Flexibility Act, 5 U.S.C. 601, et seq., 

because the rule implements current 

statutory provisions relating to the 

submission and processing of contract 

appeals, primarily adjusting current 

dollar limits affecting the processing of 

contract appeals to keep pace with 

inflation. Therefore, the adjustment of 

thresholds just maintains the status quo. 

Accordingly, DoD has not performed an 

initial regulatory flexibility analysis. 

DoD invites comments from small 

businesses and other interested parties 

on the expected impact of this rule on 

small entities. 

IV. Paperwork Reduction Act 

The rule does not impose any 

information collection requirements that 

require the approval of the Office of 

Management and Budget under the 

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