51118 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules 

certified that the collection of 

information contained in this notice of 

proposed rulemaking will not have a 

significant impact on a substantial 

number of small entities. Accordingly, a 

regulatory flexibility analysis is not 

required. The temporary regulations 

will not result in any additional costs to 

affected entities but will provide an 

alternative means for eligible 

organizations to provide notice of their 

religious objection to all, or a subset of, 

contraceptive services. For this reason, 

the information collection requirement 

will not impose a significant impact on 

a substantial number of small entities. 

For further information and for analyses 

relating to the joint rulemaking, see the 

preamble to the joint rulemaking. 

Pursuant to section 7805(f) of the 

Internal Revenue Code, this regulation 

has been submitted to the Chief Counsel 

for Advocacy of the Small Business 

Administration for comment on its 

impact on small business. 

Comments and Requests for a Public 

Hearing 

Before these proposed regulations are 

adopted as final regulations, 

consideration will be given to any 

written comments (a signed original and 

eight (8) copies) or electronic comments 

that are submitted timely to the IRS. 

Comments are specifically requested on 

the clarity of the proposed regulations 

and how they may be made easier to 

understand. All comments will be 

available for public inspection and 

copying. A public hearing may be 

scheduled if requested in writing by a 

person that timely submits written 

comments. If a public hearing is 

scheduled, notice of the date, time, and 

place for the hearing will be published 

in the Federal Register. 

Drafting Information 

The principal author of these 

proposed regulations is Karen Levin, 

Office of the Division Counsel/Associate 

Chief Counsel (Tax Exempt and 

Government Entities), IRS. The 

proposed regulations, as well as the 

temporary regulations, have been 

developed in coordination with 

personnel from the U.S. Department of 

Labor and the U.S. Department of 

Health and Human Services. 

List of Subjects in 26 CFR Part 54 

Excise taxes, Health care, Health 

insurance, Pensions, Reporting and 

recordkeeping requirements. 

Proposed Amendments to the 

Regulations 

Accordingly, 26 CFR part 54 is 

proposed to be amended as follows: 

PART 54—PENSION EXCISE TAXES 

■ Paragraph 1. The authority citation 

for part 54 continues to read, in part, as 

follows: 

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

■ Par. 2. Section 54.9815–2713A is 

revised to read as follows: 

§ 54.9815–2713A Accommodations in 

connection with coverage of preventive 

health services. 

[The text of proposed § 54.9815– 

2713A is the same as the text of 

§ 54.9815–2713AT published elsewhere 

in this issue of the Federal Register]. 

John Dalrymple, 

Deputy Commissioner for Services and 

Enforcement. 

[FR Doc. 2014–20256 Filed 8–22–14; 3:30 pm] 

BILLING CODE 4830–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 54 

[REG 129786–14] 

RIN 1545–BM39 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2590 

RIN 1210–AB67 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Part 147 

[CMS–9940–P] 

RIN 0938–AS50 

Coverage of Certain Preventive 

Services Under the Affordable Care 

Act 

AGENCIES: Internal Revenue Service, 

Department of the Treasury; Employee 

Benefits Security Administration, 

Department of Labor; Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services. 

ACTION: Proposed rules. 

SUMMARY: This document proposes a 

change to the definition of an eligible 

organization that can avail itself of an 

accommodation with respect to 

coverage of certain preventive services 

under section 2713 of the Public Health 

Service Act (PHS Act), added by the 

Patient Protection and Affordable Care 

Act, as amended, and incorporated into 

the Employee Retirement Income 

Security Act of 1974 and the Internal 

Revenue Code. 

Section 2713 of the PHS Act requires 

coverage without cost sharing of certain 

preventive health services by nongrandfathered group health plans and 

health insurance coverage. Among these 

services are women’s preventive health 

services, as specified in guidelines 

supported by the Health Resources and 

Services Administration (HRSA). As 

authorized by the current regulations, 

and consistent with the HRSA 

Guidelines, group health plans 

established or maintained by certain 

religious employers (and group health 

insurance coverage provided in 

connection with such plans) are exempt 

from the otherwise applicable 

requirement to cover certain 

contraceptive services. Additionally, 

under current regulations, 

accommodations are available with 

respect to the contraceptive coverage 

requirement for group health plans 

established or maintained by eligible 

organizations (and group health 

insurance coverage provided in 

connection with such plans), and 

student health insurance coverage 

arranged by eligible organizations that 

are institutions of higher education, that 

effectively exempt them from this 

requirement. The regulations establish a 

mechanism for separately furnishing 

payments for contraceptive services on 

behalf of participants and beneficiaries 

of the group health plans of eligible 

organizations that avail themselves of an 

accommodation, and enrollees and 

dependents of student health insurance 

coverage arranged by eligible 

organizations that are institutions of 

higher education that avail themselves 

of an accommodation. 

These rules propose and seek 

comments on potential changes to the 

definition of ‘‘eligible organization’’ in 

the Departments’ regulations in light of 

the Supreme Court’s decision in Burwell 

v. Hobby Lobby Stores, Inc., 134 S. Ct. 

2751 (2014), to ensure that participants 

and beneficiaries in group health plans 

(and enrollees and dependents in 

student health insurance coverage 

arranged by institutions of higher 

education) obtain, without additional 

cost, coverage of the full range of Food 

and Drug Administration (FDA) 

approved contraceptive services, as 

prescribed by a health care provider, 

while respecting certain closely held 

for-profit entities’ religion-based 

objections to contraceptive coverage. 

These proposed rules also seek 

comments on any additional steps the 

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Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules 51119 

1The HRSA Guidelines for Women’s Preventive 

Services do not include services relating to a man’s 

reproductive capacity, such as vasectomies and 

condoms. 

government should take to help ensure 

coverage of the full range of FDAapproved contraceptives, as prescribed 

by a health care provider, without cost 

sharing, for participants and 

beneficiaries in group health plans of 

such entities (and enrollees and 

dependents in student health insurance 

coverage arranged by such entities that 

are institutions of higher education). 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on October 21, 2014. 

ADDRESSES: In commenting, please refer 

to file code CMS–9940–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on these 

regulations to http://

www.regulations.gov. Follow the 

‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–9940–P, P.O. Box 8010, Baltimore, 

MD 21244–1850. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–9940–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. Alternatively, 

you may deliver (by hand or courier) 

your written comments ONLY to any of 

the following addresses prior to the 

close of the comment period: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244– 

1850. 

If you intend to deliver your 

comments to the Baltimore address, call 

telephone number (410) 786–9994 in 

advance to schedule your arrival with 

one of our staff members. 

Comments erroneously mailed to an 

address indicated as appropriate for 

hand or courier delivery may be delayed 

and received after the close of the 

comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

David Mlawsky, Centers for Medicare & 

Medicaid Services (CMS), Department 

of Health and Human Services (HHS), at 

(410) 786–1565; Amy Turner or Beth 

Baum, Employee Benefits Security 

Administration (EBSA), Department of 

Labor, at (202) 693–8335; Karen Levin, 

Internal Revenue Service (IRS), 

Department of the Treasury, at (202) 

927–9639. 

Customer Service Information: 

Individuals interested in obtaining 

information from the Department of 

Labor concerning employment-based 

health coverage laws may call the EBSA 

Toll-Free Hotline at 1–866–444–EBSA 

(3272) or visit the Department of Labor’s 

Web site (www.dol.gov/ebsa). 

Information from HHS on private health 

insurance coverage can be found on 

CMS’s Web site (www.cms.gov/cciio), 

and information on health care reform 

can be found at www.HealthCare.gov. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period will be available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http://

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

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

appointment to view public comments, 

phone 1–800–743–3951. 

I. Background 

The Patient Protection and Affordable 

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

on March 23, 2010. The Health Care and 

Education Reconciliation Act of 2010 

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

30, 2010. These statutes are collectively 

known as the Affordable Care Act. The 

Affordable Care Act reorganizes, 

amends, and adds to the provisions of 

part A of title XXVII of the Public 

Health Service Act (PHS Act) relating to 

group health plans and health insurance 

issuers in the group and individual 

markets. The Affordable Care Act adds 

section 715(a)(1) to the Employee 

Retirement Income Security Act of 1974 

(ERISA) and section 9815(a)(1) to the 

Internal Revenue Code (Code) to 

incorporate the provisions of part A of 

title XXVII of the PHS Act into ERISA 

and the Code, and to make them 

applicable to group health plans and 

health insurance issuers providing 

health insurance coverage in connection 

with group health plans. The sections of 

the PHS Act incorporated into ERISA 

and the Code are sections 2701 through 

2728. 

Section 2713 of the PHS Act, as added 

by the Affordable Care Act and 

incorporated into ERISA and the Code, 

requires that non-grandfathered group 

health plans and health insurance 

issuers offering non-grandfathered 

group or individual health insurance 

coverage provide coverage of certain 

specified preventive services without 

cost sharing, including under paragraph 

(a)(4), benefits for certain women’s 

preventive health services as provided 

for in comprehensive guidelines 

supported by the Health Resources and 

Services Administration (HRSA). On 

August 1, 2011, HRSA adopted and 

released guidelines for women’s 

preventive health services (HRSA 

Guidelines) based on recommendations 

of the independent Institute of 

Medicine. As relevant here, the HRSA 

Guidelines include all Food and Drug 

Administration (FDA)-approved 

contraceptives, sterilization procedures, 

and patient education and counseling 

for women with reproductive capacity, 

as prescribed by a health care provider 

(collectively, contraceptive services).1

Except as discussed later in this section, 

non-grandfathered group health plans 

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51120 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules 

2 Interim final regulations published by the 

Departments on July 19, 2010, generally provide 

that plans and issuers must cover a newly 

recommended preventive service starting with the 

first plan year (or, in the individual market, policy 

year) that begins on or after the date that is one year 

after the date on which the new recommendation 

is issued. 26 CFR 54.9815–2713T(b)(1); 29 CFR 

2590.715–2713(b)(1); 45 CFR 147.130(b)(1). 

3The 2011 amended interim final regulations 

were issued and effective on August 1, 2011, and 

published in the Federal Register on August 3, 

2011 (76 FR 46621). 

4HRSA subsequently amended the HRSA 

Guidelines to reflect the simplified definition of 

‘‘religious employer’’ contained in the July 2013 

final regulations. 78 FR 39870 (July 2, 2013) 

(discussed below), effective August 1, 2013. 

5The 2012 final regulations were published in the 

Federal Register on February 15, 2012 (77 FR 8725). 

6 Guidance on the Temporary Enforcement Safe 

Harbor for Certain Employers, Group Health Plans, 

and Group Health Insurance Issuers with Respect to 

the Requirement to Cover Contraceptive Services 

Without Cost Sharing Under Section 2713 of the 

Public Health Service Act, Section 715(a)(1) of the 

Employee Retirement Income Security Act, and 

Section 9815(a)(1) of the Internal Revenue Code 

(originally issued on February 10, 2012, and 

reissued on August 15, 2012 and June 28, 2013), 

available at: http://www.cms.gov/CCIIO/Resources/ 

Regulations-and-Guidance/Downloads/preventiveservices-guidance-6-28-2013.pdf. The guidance 

clarified, among other things, that plans that took 

some action before February 10, 2012, to try, 

without success, to exclude or limit contraceptive 

coverage were not precluded from eligibility for the 

safe harbor. The temporary enforcement safe harbor 

was also available to student health insurance 

coverage arranged by nonprofit institutions of 

higher education with religious objections to 

contraceptive coverage that met the conditions set 

forth in the guidance. See ‘‘Student Health 

Insurance Coverage,’’ 77 FR16457 (Mar. 21, 2012). 

and health insurance coverage are 

required to provide coverage consistent 

with the HRSA Guidelines, without cost 

sharing, for plan years (or, in the 

individual market, policy years) 

beginning on or after August 1, 2012.2

Interim final regulations 

implementing section 2713 of the PHS 

Act were published on July 19, 2010 (75 

FR 41726) (2010 interim final 

regulations). On August 1, 2011, the 

Departments of Health and Human 

Services (HHS), Labor, and the Treasury 

(collectively, the Departments) amended 

the 2010 interim final regulations to 

provide HRSA with authority to exempt 

group health plans established or 

maintained by certain religious 

employers (and group health insurance 

coverage provided in connection with 

such plans) from the requirement to 

cover contraceptive services consistent 

with the HRSA Guidelines (76 FR 

46621) (2011 amended interim final 

regulations).3 On the same date, HRSA 

exercised this authority in the HRSA 

Guidelines to exempt group health 

plans established or maintained by 

these religious employers (and group 

health insurance coverage provided in 

connection with such plans) from the 

HRSA Guidelines with respect to 

contraceptive services.4 The 2011 

amended interim final regulations 

specified that, for purposes of this 

exemption, a religious employer was 

one that: (1) Has the inculcation of 

religious values as its purpose; (2) 

primarily employs persons who share 

its religious tenets; (3) primarily serves 

persons who share its religious tenets; 

and (4) is a nonprofit organization 

described in section 6033(a)(1) and 

(a)(3)(A)(i) or (iii) of the Code. Section 

6033(a)(3)(A)(i) and (iii) of the Code 

refers to churches, their integrated 

auxiliaries, and conventions or 

associations of churches, as well as to 

the exclusively religious activities of 

any religious order. Final regulations 

issued on February 10, 2012, adopted 

the definition of religious employer in 

the 2011 amended interim final 

regulations without modification (2012 

final regulations).5

Contemporaneous with the issuance 

of the 2012 final regulations, HHS, with 

the agreement of the Departments of 

Labor and the Treasury, issued guidance 

establishing a temporary safe harbor 

from enforcement of the contraceptive 

coverage requirement by the 

Departments for group health plans 

established or maintained by certain 

nonprofit organizations with religious 

objections to contraceptive coverage 

(and group health insurance coverage 

provided in connection with such 

plans).6 The guidance provided that the 

temporary enforcement safe harbor 

would remain in effect until the first 

plan year beginning on or after August 

1, 2013. At the same time, the 

Departments committed to rulemaking 

to achieve the goals of providing 

coverage of recommended preventive 

services, including contraceptive 

services, without cost sharing, while 

simultaneously ensuring that certain 

additional nonprofit organizations with 

religious objections to contraceptive 

coverage would not have to contract, 

arrange, pay, or refer for such coverage. 

On March 21, 2012, the Departments 

published an advance notice of 

proposed rulemaking (ANPRM) that 

described and solicited comments on 

possible approaches to achieve these 

goals (77 FR 16501). 

On February 6, 2013, following 

review of the comments on the ANPRM, 

the Departments published proposed 

regulations at 78 FR 8456 (proposed 

regulations). The regulations proposed 

to simplify and clarify the definition of 

‘‘religious employer’’ for purposes of the 

religious employer exemption. The 

regulations also proposed 

accommodations for group health plans 

established or maintained or arranged 

by certain nonprofit religious 

organizations with religious objections 

to contraceptive coverage (and group 

health insurance coverage provided in 

connection with such plans). These 

organizations were referred to as 

‘‘eligible organizations.’’ 

The regulations proposed that, in the 

case of an insured group health plan 

established or maintained by an eligible 

organization, the health insurance issuer 

providing group health insurance 

coverage in connection with the plan 

would be required to assume sole 

responsibility for providing 

contraceptive coverage to plan 

participants and beneficiaries without 

cost sharing, premium, fee, or other 

charge to plan participants or 

beneficiaries or to the eligible 

organization or its plan. The 

Departments proposed a comparable 

accommodation with respect to student 

health insurance coverage arranged by 

eligible organizations that are 

institutions of higher education. 

In the case of a self-insured group 

health plan established or maintained 

by an eligible organization, the 

proposed regulations presented 

potential approaches under which the 

third party administrator of the plan 

would provide or arrange for a third 

party to provide contraceptive coverage 

to plan participants and beneficiaries 

without cost sharing, premium, fee, or 

other charge to plan participants or 

beneficiaries or to the eligible 

organization or its plan. An issuer (or its 

affiliate) would be able to offset the 

costs incurred by the third party 

administrator and the issuer in the 

course of arranging and providing such 

coverage by claiming an adjustment in 

the Federally-facilitated Exchange (FFE) 

user fee. 

The Departments received over 

400,000 comments (many of them 

standardized form letters) in response to 

the proposed regulations. After 

consideration of the comments, the 

Departments published final regulations 

on July 2, 2013 at 78 FR 39870 (July 

2013 final regulations). The July 2013 

final regulations simplified and clarified 

the definition of religious employer for 

purposes of the religious employer 

exemption and established 

accommodations for health coverage 

established or maintained or arranged 

by eligible organizations. A 

contemporaneously re-issued HHS 

guidance document extended the 

temporary safe harbor from enforcement 

of the contraceptive coverage 

requirement by the Departments to 

encompass plan years beginning on or 

after August 1, 2013, and before January 

1, 2014. This guidance included a form 

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Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules 51121 

to be used by an organization during 

this temporary period to self-certify that 

its plan qualified for the temporary 

enforcement safe harbor. In addition, 

HHS and the Department of Labor (DOL) 

issued a self-certification form, EBSA 

Form 700, to be executed by an 

organization seeking to be treated as an 

eligible organization for purposes of an 

accommodation under the July 2013 

final regulations. This self-certification 

form was provided for use with the 

accommodation under the July 2013 

final regulations, after the expiration of 

the temporary enforcement safe harbor 

(that is, for plan years beginning on or 

after January 1, 2014). 

On June 30, 2014, the Supreme Court 

ruled in the case of Burwell v. Hobby 

Lobby Stores, Inc. that, under the 

Religious Freedom Restoration Act of 

1993 (RFRA), the requirement to 

provide contraceptive coverage could 

not be applied to the closely held forprofit corporations before the Court 

because their owners had religious 

objections to providing such coverage, 

and because the Government’s goal of 

guaranteeing coverage for contraceptive 

methods without cost sharing could be 

achieved in a less restrictive manner by 

offering such closely held for-profit 

entities the accommodation the 

Government already provided to 

religious nonprofit organizations with 

religious objections to contraceptive 

coverage. After describing this 

accommodation, the Court concluded 

that the accommodation ‘‘does not 

impinge on the plaintiffs’ religious 

belief that providing insurance coverage 

for the contraceptives at issue here 

violates their religion, and it serves 

HHS’ stated interests equally well.’’ 

On July 3, 2014, the Supreme Court 

issued an interim order in connection 

with an application for an injunction 

pending appeal in Wheaton College v. 

Burwell, 134 S. Ct. 2806 (2014) (the 

Wheaton order), in which Wheaton 

College challenged under RFRA the 

requirement in the July 2013 final 

regulations that an eligible organization 

invoking the accommodation send 

EBSA Form 700 to the insurance issuer 

or third party administrator. The Court’s 

order stated that, ‘‘[i]f [Wheaton College] 

informs the Secretary of Health and 

Human Services in writing that it is a 

nonprofit organization that holds itself 

out as religious and has religious 

objections to providing coverage for 

contraceptive services, the [Departments 

of Labor, Health and Human Services, 

and the Treasury] are enjoined from 

enforcing against [Wheaton College]’’ 

certain provisions of the Affordable Care 

Act and related regulations requiring 

coverage without cost sharing of certain 

contraceptive services ‘‘pending final 

disposition of appellate review.’’ 134 S. 

Ct. at 2807. The order stated that 

Wheaton College need not use EBSA 

Form 700 or send a copy of the executed 

form to its health insurance issuers or 

third party administrators to meet the 

condition for this injunctive relief. Id. 

The Court also stated that its interim 

order neither affected ‘‘the ability of 

[Wheaton College’s] employees and 

students to obtain, without cost, the full 

range of FDA approved contraceptives,’’ 

nor precluded the Government from 

relying on the notice by Wheaton 

College ‘‘to facilitate the provision of 

full contraceptive coverage under the 

Act.’’ Id. The Court’s order further 

stated that it ‘‘should not be construed 

as an expression of the Court’s views on 

the merits’’ of Wheaton College’s 

challenge to the accommodations. Id. 

This notice of proposed rulemaking 

proposes and invites comments on 

changes to the definition of an eligible 

organization in the Departments’ 

regulations in light of the Supreme 

Court’s decision in Hobby Lobby. It also 

solicits comments on any other steps the 

Government should take to help ensure 

that participants and beneficiaries in 

group health plans or enrollees and 

dependents in student health insurance 

coverage arranged by institutions of 

higher education are able to obtain, 

without cost, the full range of FDAapproved contraceptives, as prescribed 

by a health care provider, without cost 

sharing, if enrolled in a group health 

plan or insurance coverage sponsored or 

arranged by a closely held for-profit 

entity that objects on religious grounds 

to covering contraceptive services. 

Given the importance of this coverage, 

initiating this proposed rulemaking now 

allows for public input and a pathway 

toward helping to ensure access to 

contraceptive coverage. 

The Departments are publishing 

contemporaneously with this notice of 

proposed rulemaking interim final 

regulations in light of the Supreme 

Court’s interim order in connection with 

the application for an injunction in the 

pending case of Wheaton College v. 

Burwell. The interim final regulations 

are published elsewhere in this edition 

of the Federal Register. 

II. Provisions of the Proposed 

Regulations 

As stated above, on June 30, 2014, the 

Supreme Court ruled in Burwell v. 

Hobby Lobby Stores, Inc. that, under 

RFRA, the requirement to provide 

contraceptive coverage could not be 

applied to certain closely held for-profit 

organizations. The individual plaintiffs 

in Hobby Lobby and the associated case 

Conestoga Wood Specialties Corp. v. 

Burwell run closely held businesses that 

are family-owned and operated and that 

have adopted statements of mission or 

purpose to conduct the companies’ 

affairs in accordance with the owners’ 

shared religious beliefs and values. See 

134 S. Ct. at 2764–2766. 

In light of the Court’s decision in 

Hobby Lobby, the Departments propose 

to amend the definition of an eligible 

organization under the July 2013 final 

regulations to include a closely held forprofit entity that has a religious 

objection to providing coverage for some 

or all of the contraceptive services 

otherwise required to be covered. Under 

these proposed rules, a qualifying 

closely held for-profit entity that has a 

religious objection to providing 

coverage for some or all of the 

contraceptive services otherwise 

required to be covered would not be 

required to contract, arrange, pay or 

refer for contraceptive coverage; instead, 

payments for contraceptive services 

provided to participants and 

beneficiaries in the eligible 

organization’s plan would be provided 

separately by an issuer (if the qualifying 

entity sponsors an insured group health 

plan, or if the qualifying entity is an 

institution of higher education that 

arranges student health insurance 

coverage) or arranged separately by a 

third party administrator (if the 

qualifying entity is self-insured), 

consistent with the July 2013 final 

regulations as amended by interim final 

regulations published in this same 

edition of the Federal Register. This 

proposed change would extend to 

participants and beneficiaries in group 

health plans established or maintained 

by certain closely held for-profit entities 

with religious objections to 

contraceptive coverage, and to enrollees 

and dependents enrolled in student 

health insurance coverage arranged by 

certain closely held for-profit entities 

that are institutions of higher education 

with religious objections to 

contraceptive coverage, the same, 

separate payments for contraceptive 

services provided to participants and 

beneficiaries of group health plans (and 

enrollees and dependents in student 

health insurance) established or 

maintained by certain nonprofit 

religious entities with such objections, 

while similarly respecting the religious 

objections of the closely held for-profit 

entities. 

Defining a Closely Held For-Profit Entity 

In considering inclusion of certain 

closely held for-profit entities among 

the eligible organizations that may avail 

themselves of the accommodations, the 

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51122 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules 

7 134 S. Ct. at 2774–2775. 

Departments are considering and seek 

comment on how to define a qualifying 

closely held for-profit entity. In Hobby 

Lobby, the Supreme Court noted that the 

companies at issue in the cases were not 

publicly traded and were owned and 

controlled by members of a single 

family and that the companies were 

operated in accordance with the owners’ 

shared religious beliefs and values. 134 

S. Ct. at 2764–2766. 

In light of the Supreme Court’s 

decision, the Departments are proposing 

for comment two possible approaches to 

defining a qualifying closely held forprofit entity, although the Departments 

invite comments on other approaches as 

well. In common understanding, a 

closely held corporation—a term often 

used interchangeably with a ‘‘close’’ or 

‘‘closed’’ corporation—is a corporation 

the stock of which is owned by a small 

number of persons and for which no 

active trading market exists. See, for 

example, American Law Institute, 

Principles of Corporate Governances 

section 1.06; Black’s Law Dictionary 

(9th ed. 2009) (‘‘close corporation’’); 

Del. Code Tit. 8, Ch.1, Sub. Ch. 14 

(‘‘close corporation’’). The examples 

below are by way of illustration, and the 

maximum number of shareholders 

specified in particular examples would 

not necessarily be borrowed as the 

standard in this context. 

Under the first proposed approach, a 

qualifying closely held for-profit entity 

would be an entity where none of the 

ownership interests in the entity is 

publicly traded and where the entity has 

fewer than a specified number of 

shareholders or owners. 

There is precedent in other areas of 

federal law for limiting the definition of 

closely held entities in this context to 

those with a relatively small number of 

owners. For example, subchapter S 

treatment under section 1361 of the 

Code is currently limited to 

corporations with 100 or fewer 

shareholders who are generally 

individuals and has in the past been 

limited to corporations with 10 or fewer 

shareholders. Similarly, certain 

favorable estate tax treatment is limited 

to businesses with 45 or fewer partners 

or shareholders under section 6166 of 

the Code. 

Under a second, alternative approach, 

a qualifying closely held entity would 

be a for-profit entity in which the 

ownership interests are not publicly 

traded, and in which a specified fraction 

of the ownership interest is 

concentrated in a limited and specified 

number of owners. This approach also 

has precedent in federal law. For 

example, certain rules governing the 

taxation of real estate investment trusts, 

passive activity losses, and certain 

income from foreign entities are limited 

to organizations that are more than 50 

percent owned by or for not more than 

five individuals. See, for example, 

sections 856(h), 542(a)(2), and 469(j)(1) 

of the Code and regulations under these 

sections. 

These approaches might serve to 

identify for-profit entities controlled 

and operated by individual owners who 

likely have associational ties, are 

personally identified with the entity, 

and can be regarded as conducting 

personal business affairs through the 

entity. These appear to be the types of 

entities the Court sought to 

accommodate in Hobby Lobby. There 

may also be useful definitions or 

principles in state laws governing close 

corporations, or other areas of law. 

The Departments invite comments on 

the appropriate scope of the definition 

of a qualifying closely held for-profit 

entity, including but not limited to 

whether a closely held for-profit entity 

should be defined with reference to a 

maximum number of owners (and, if so, 

what that maximum number should be) 

or a minimum concentration of 

ownership (and if so, what that 

concentration should be) or with 

reference to additional or other criteria. 

It would be helpful for comments to 

address how the selection of a particular 

approach can be informed by the 

purposes of the Affordable Care Act and 

the contraceptive coverage requirement; 

the range of business structures in the 

Nation’s economy; background 

principles of federal and state law 

applicable to business entities and the 

relationship of the entities’ owners to 

the entities; other related or analogous 

areas of the law; experience regarding 

accommodations of religion and 

religious beliefs in various contexts and 

the rationales for the scope and 

operation of such accommodations; 

Hobby Lobby and other court decisions 

that shed light on these issues; and any 

other relevant matters. 

Religious Objection To Providing 

Coverage for Some or All of the 

Contraceptive Services Required To Be 

Covered. 

In Hobby Lobby, the Supreme Court 

held that the closely held for-profit 

corporations at issue in that case could 

opt not to provide otherwise required 

contraceptive coverage if doing so runs 

counter to their owners’ sincerely held 

religious beliefs. These proposed 

regulations would require that the 

qualifying closely held for-profit entity’s 

objection, based on its owners’ sincerely 

held religious beliefs, to covering some 

or all of the contraceptive services 

otherwise required to be covered, be 

made in accordance with the entity’s 

applicable rules of governance. As 

discussed by the Court in Hobby Lobby, 

state corporate law dictates how a 

corporation may establish its governing 

structure.7

Under the Departments’ proposal, 

valid corporate action (or similar action 

by a business that is not organized as a 

corporation) taken in accordance with 

the entity’s governing structure in 

accordance with state law, stating its 

owners’ religious objection to providing 

some or all contraceptive coverage 

otherwise required to be provided, can 

serve to establish that a closely held forprofit entity has religious objections to 

providing such coverage. In determining 

whether a closely held for-profit entity’s 

decision-making process followed the 

necessary rules and procedures, the 

laws of the state in which the entity is 

incorporated, or, for non-corporate 

entities, organized, would govern. The 

Departments invite comments on 

whether to require documentation of the 

decision-making process and disclosure 

of the decision. 

The Departments seek comment on 

this approach to determining that a 

closely held for-profit entity opposes 

providing coverage for some or all of the 

contraceptive services otherwise 

required to be covered on account of the 

owners’ religious objections. 

Other Potential Changes 

The Departments seek comment on 

other potential changes to the July 2013 

final regulations in light of the proposed 

change to the definition of eligible 

organization. In particular, the 

Departments seek comment on applying 

the approach set forth in the July 2013 

final regulations in the context of the 

expanded definition of eligible 

organization. The July 2013 final 

regulations provide for separate 

payments for contraceptive services for 

participants and beneficiaries in selfinsured group health plans of eligible 

organizations in a manner that enables 

these organizations to completely 

separate themselves from administration 

and payment for contraceptive coverage. 

Specifically, the third party 

administrator must provide or arrange 

such payments, and can seek 

reimbursement for such costs (including 

an allowance for administrative costs 

and margin) by making an arrangement 

with a participating issuer—that is, an 

issuer offering coverage through a 

Federally-facilitated Exchange (FFE). 

The participating issuer can receive an 

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Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules 51123 

8 Inst. Of Med., Clinical Preventive Services for 

Women: Closing the Gaps, Wash., DC: Nat’l Acad. 

Press, 2011, at p. 16. 

9 Gipson, J.D. et al., The Effects of Unintended 

Pregnancy on Infant, Child and Parental Health: A 

Review of the Literature, Studies on Family 

Planning, 2008, 39(1):18–38. 

10 Inst. Of Med., Clinical Preventive Services for 

Women: Closing the Gaps, Wash., DC: Nat’l Acad. 

Press, 2011, at p. 107. 

11See discussion at 77 FR 8727. 

adjustment to its FFE user fees to 

finance such costs. 

The Departments seek comment on 

the likely number of closely held forprofit entities that would seek an 

accommodation, the number of 

participants and beneficiaries (or in the 

case of student health insurance 

coverage, enrollees and dependents) in 

the plans of such entities, and the 

number of issuers and third-party 

administrators affected by the proposed 

rules. Finally, the Departments seek 

comment on whether any other aspects 

of the accommodations in the July 2013 

final regulations, including relevant 

definitions, should be modified in light 

of the proposed addition of closely held 

for-profit entities with religious 

objections to contraceptive coverage to 

the definition of eligible organization. 

These proposed regulations, if 

finalized as proposed, would require a 

small number of conforming changes to 

cross-references in the regulations. Any 

such necessary conforming changes 

would be incorporated into final 

regulations. 

III. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. The Departments will 

consider all comments we receive by the 

date and time specified in the ‘‘DATES’’ 

section of this preamble, and, when we 

proceed with a subsequent document, 

we will respond to the comments in the 

preamble to that document. 

IV. Economic Impact and Paperwork 

Burden 

A. Executive Orders 12866 and 13563— 

Department of Health and Human 

Services and Department of Labor 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, and public health and 

safety effects; distributive impacts; and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, 

reducing costs, harmonizing rules, and 

promoting flexibility. 

Section 3(f) of Executive Order 12866 

defines a ‘‘significant regulatory action’’ 

as an action that is likely to result in a 

regulation: (1) Having an annual effect 

on the economy of $100 million or more 

in any 1 year, or adversely and 

materially affecting a sector of the 

economy, productivity, competition, 

jobs, the environment, public health or 

safety, or state, local, or tribal 

governments or communities (also 

referred to as ‘‘economically 

significant’’); (2) creating a serious 

inconsistency or otherwise interfering 

with an action taken or planned by 

another agency; (3) materially altering 

the budgetary impacts of entitlement 

grants, user fees, or loan programs or the 

rights and obligations of recipients 

thereof; or (4) raising novel legal or 

policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

Order. 

A regulatory impact analysis must be 

prepared for major rules with 

economically significant effects ($100 

million or more in any 1 year), and an 

‘‘economically significant’’ regulatory 

action is subject to review by the Office 

of Management and Budget (OMB). The 

Departments anticipate that these 

proposed regulations are not likely to 

have economic impacts of $100 million 

or more in any 1 year, and therefore, do 

not meet the definition of 

‘‘economically significant’’ under 

Executive Order 12866. 

1. Need for Regulatory Action 

The proposed rules would modify the 

July 2013 final regulations in light of the 

Supreme Court’s decision in Hobby 

Lobby. That decision held that a closely 

held for-profit corporation is exempt 

from the requirement to provide 

contraceptive coverage if its owners 

have religious objections to such 

coverage, because there is a less 

restrictive means of furthering the law’s 

interests, namely the accommodation 

the Government already provided to 

nonprofit religious organizations with 

such objections. Contraceptive coverage 

is crucial to women’s health and 

equality for a number of reasons, 

including but not limited to the 

psychological toll and compromised 

financial position, and adverse health 

consequences, that can result from 

unplanned or unwanted pregnancies. As 

documented in a report of the Institute 

of Medicine, women experiencing an 

unintended pregnancy may not 

immediately be aware that they are 

pregnant, and thus delay prenatal care. 

They also may not be as motivated to 

discontinue behaviors that pose 

pregnancy-related risks (for example, 

smoking, consumption of alcohol).8

Studies show a greater risk of preterm 

birth and low birth weight among 

unintended pregnancies compared with 

pregnancies that were planned.9

Contraceptives also have medical 

benefits for women who are 

contraindicated for pregnancy, and 

there are demonstrated preventive 

health benefits from contraceptives 

relating to conditions other than 

pregnancy.10 In addition, there are 

significant cost savings to employers 

from the coverage of contraceptives.11

Providing this coverage to participants 

and beneficiaries affected by the 

Supreme Court decision is a priority. 

2. Anticipated Effects 

The Departments expect that these 

proposed regulations would not result 

in any additional significant burden on 

or costs to the affected entities. 

B. Special Analyses—Department of the 

Treasury 

For purposes of the Department of the 

Treasury, it has been determined that 

this proposed rule is not a significant 

regulatory action as defined in 

Executive Order 12866, as 

supplemented by Executive Order 

13563. Therefore, a regulatory 

assessment is not required. It also has 

been determined that section 553(b) of 

the Administrative Procedure Act (5 

U.S.C. chapter 5) does not apply to this 

proposed rule. Pursuant to the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6), it is hereby certified that this 

proposed rule will not have a significant 

economic impact on a substantial 

number of small entities. This 

certification is based on the fact that the 

regulations merely propose to modify 

the definition of eligible organization to 

include certain closely held for-profit 

entities. This modification, if adopted, 

would not increase costs to or burdens 

on the affected organizations. Pursuant 

to section 7805(f) of the Code, these 

regulations have been submitted to the 

Chief Counsel for Advocacy of the Small 

Business Administration for comment 

on their impact on small business. 

C. Paperwork Reduction Act— 

Department of Health and Human 

Services 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

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51124 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

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

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We are soliciting public comment on 

each of these issues for the following 

sections of this document that contain 

information collection requirements 

(ICRs): 

The 2013 final regulations require an 

eligible organization that seeks an 

accommodation to self-certify that it 

meets the definition of an eligible 

organization using the EBSA Form 700 

and providing it directly to each third 

party administrator or issuer under the 

plan that would otherwise arrange for or 

provide the covered contraceptive 

services. The interim final regulations 

being published contemporaneously 

with these proposed regulations 

continue to allow such eligible 

organizations to use EBSA Form 700, as 

set forth in the 2013 final regulations 

and guidance. In addition, the interim 

final regulations permit an alternative 

process, consistent with the Supreme 

Court’s interim order in Wheaton 

College, under which an eligible 

organization may notify HHS in writing 

of its religious objection to coverage of 

all or a subset of contraceptive services. 

These proposed regulations do not 

change the requirement that an eligible 

organization that seeks accommodation 

self-certifies that it meets the definition 

of an eligible organization, either using 

the EBSA Form 700 method of selfcertification or the alternative notice to 

HHS process. 

HHS is anticipating that 71 for-profit 

organizations will seek an 

accommodation. This is based on the 

number of plaintiffs that are for-profit 

employers in recent litigation objecting 

on religious grounds to the provision of 

contraceptive services. We seek 

comments on this estimate and welcome 

any data that may assist us in estimating 

the number of entities affected by this 

provision. For each eligible organization 

it is assumed that, clerical staff will 

gather and enter the necessary 

information, send the self-certification 

or the notice to its issuer(s) or third 

party administrator(s) or to HHS 

electronically and retain a copy for 

recordkeeping, a manager and legal 

counsel will review it, and a senior 

executive will execute it. It is estimated 

that an organization will need 

approximately 50 minutes (30 minutes 

of clerical labor at a cost of $30.00 per 

hour, 10 minutes for a manager at a cost 

of $102 per hour, 5 minutes for legal 

counsel at a cost of $127 per hour, and 

5 minutes for a senior executive at a cost 

of $121 per hour) to execute the selfcertification. The certification may be 

electronically transmitted to the issuer 

or to HHS at minimal cost, but a cost 

burden of $38.34 is estimated for a 

paper filing calculated with 5 cents per 

page printing and material costs and 49 

cents postage costs. Therefore, the total 

one-time burden for preparing and 

providing the information in the selfcertification is estimated to be 

approximately $53 for each eligible 

organization. 

Based on this estimate of 71 affected 

entities and the individual burden 

estimate of $53, we estimate the hour 

burden to be 59.2 hours with an 

equivalent cost of $3736 and a paper 

filing cost burden of $38.34. As the 

Department of Labor and the 

Department of Health and Human 

Services share jurisdiction they are 

splitting the hour burden so each will 

account for 29.6 burden hours and a 

cost burden of $19.17. We welcome 

comments on any aspect of this burden 

estimate. 

If you comment on these information 

collection and recordkeeping 

requirements, please submit your 

comments electronically as specified in 

the ADDRESSES section of this proposed 

rule. 

Comments must be received on/by 

October 27, 2014. 

D. Paperwork Reduction Act— 

Department of Labor 

As discussed above, the proposed 

regulations would revise the definition 

of eligible organization to include 

qualifying closely held for-profit 

entities. This action would amend the 

EBSA Form 700 information collection 

request (ICR), which is approved under 

OMB Control number 1210–NEW to 

allow qualified closely held for-profit 

entities to avail themselves of the 

accommodation by self-certifying that 

they meet the definition of an eligible 

organization, either using the EBSA 

Form 700 method of self-certification or 

the alternative notice to HHS process 

under the contemporaneous interim 

final regulations. 

• Consistent with the HHS analysis 

presented above, DOL estimates that 

there will be 71 additional entities that 

would utilize the accommodation. The 

Departments are soliciting comments for 

60 days regarding the likely number of 

additional entities seeking an 

accommodation, the number of 

participants and beneficiaries in the 

plans of such organizations, and the 

number of issuers and third party 

administrators impacted by the 

proposed regulations. The Departments 

will submit a copy of these proposed 

rules to OMB in accordance with 44 

U.S.C. 3507(d) for review of the 

proposed ICRs. The Departments and 

OMB are particularly interested in 

comments that: 

• Evaluate whether the collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

• Evaluate the accuracy of the 

agency’s estimate of the burden of the 

collection of information, including the 

validity of the methodology and 

assumptions used; 

• Enhance the quality, utility, and 

clarity of the information to be 

collected; and 

• Minimize the burden of the 

collection of information on those who 

are to respond, including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology, 

for example, by permitting electronic 

submission of responses. 

Comments should be sent to the 

Office of Information and Regulatory 

Affairs, Attention: Desk Officer for the 

Employee Benefits Security 

Administration either by Fax to (202) 

395–5806 or by email to 

oira_submission@omb.eop.gov. A copy 

of the proposed ICRs may be obtained 

by contacting the PRA addressee: G. 

Christopher Cosby, Office of Policy and 

Research, Department of Labor, 

Employee Benefits Security 

Administration, 200 Constitution 

Avenue NW., Room N–5718, 

Washington, DC 20210; telephone: (202) 

693–8410; Fax: (202) 219–4745 (please 

note that these numbers are not toll-free 

numbers); email: ebsa.opr@dol.gov. 

Proposed ICRs submitted to OMB also 

are available at www.reginfo.gov 

(http://www.reginfo.gov/public/do/

PRAMain). 

The Departments expect that qualified 

closely held for-profit entities will 

spend the same time (and incur the 

same cost) to prepare and send the 

EBSA Form 700 or the notification to 

the Secretary of HHS as other eligible 

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12 In 2014, that threshold level is approximately 

$141 million. 

organizations under the existing ICR 

(approximately 50 minutes in 

preparation time and $0.54 mailing 

costs). The Departments note that 

persons are not required to respond to, 

and generally are not subject to any 

penalty for failing to comply with, an 

ICR unless the ICR has a valid OMB 

control number. The paperwork burden 

estimates are summarized as follows: 

Type of Review: Revised Collection. 

Agencies: Employee Benefits Security 

Administration, Department of Labor. 

Title: EBSA Form 700. 

OMB Number: 1210–NEW. 

Affected Public: Business or other for 

profit entity. 

Total Respondents: 71. 

Total Responses: 71. 

Frequency of Response: Once, 

Variable. 

Estimated Total Annual Burden 

Hours: 59 hours (DOL 29.5 hours, HHS 

29.5 hours). 

Estimated Total Annual Burden Cost: 

$38 (DOL $19, HHS $19). 

V. Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), as well as Executive Order 

12875, these proposed regulations do 

not include any federal mandate that 

may result in expenditures by state, 

local, or tribal governments, nor do they 

include any federal mandates that may 

impose an annual burden of $100 

million, adjusted for inflation, or more 

on the private sector.12

VI. Federalism—Department of Health 

and Human Services and Department of 

Labor 

Executive Order 13132 outlines 

fundamental principles of federalism, 

and requires the adherence to specific 

criteria by federal agencies in the 

process of their formulation and 

implementation of policies that have 

‘‘substantial direct effects’’ on states, the 

relationship between the federal 

government and states, or the 

distribution of power and 

responsibilities among the various 

levels of government. Federal agencies 

promulgating regulations that have 

these federalism implications must 

consult with state and local officials, 

and describe the extent of their 

consultation and the nature of the 

concerns of state and local officials in 

the preamble to the regulation. 

In the Departments’ view, these 

proposed regulations have federalism 

implications, but the federalism 

implications are substantially mitigated 

because, with respect to health 

insurance issuers, 45 states are either 

enforcing the requirements related to 

coverage of specified preventive 

services (including contraception) 

without cost sharing pursuant to state 

law or otherwise are working 

collaboratively with HHS to ensure that 

issuers meet these standards. In five 

states, HHS ensures that issuers comply 

with these requirements. Therefore, the 

proposed regulations are not likely to 

require substantial additional oversight 

of states by HHS. 

In general, section 514 of ERISA 

provides that state laws are superseded 

to the extent that they relate to any 

covered employee benefit plan, and 

preserves state laws that regulate 

insurance, banking, or securities. ERISA 

also prohibits states from regulating a 

covered plan as an insurance or 

investment company or bank. The 

Health Insurance Portability and 

Accountability Act of 1996 (HIPAA) 

added a new preemption provision to 

ERISA (as well as to the PHS Act) 

narrowly preempting state requirements 

on group health insurance coverage. 

States may continue to apply state law 

requirements but not to the extent that 

such requirements prevent the 

application of the federal requirement 

that group health insurance coverage 

provided in connection with certain 

group health plans provide coverage for 

specified preventive services without 

cost sharing. HIPAA’s Conference 

Report states that the conferees intended 

the narrowest preemption of state laws 

with regard to health insurance issuers 

(H.R. Conf. Rep. No. 104–736, 104th 

Cong. 2d Session 205, 1996). State 

insurance laws that are more stringent 

than the federal requirement are 

unlikely to ‘‘prevent the application of’’ 

the preventive services coverage 

provision, and therefore are unlikely to 

be preempted. Accordingly, states have 

significant latitude to impose 

requirements on health insurance 

issuers that are more restrictive than 

those in federal law. 

Guidance conveying this 

interpretation was published in the 

Federal Register on April 8, 1997 (62 FR 

16904) and December 30, 2004 (69 FR 

78720), and these proposed regulations 

implement the preventive services 

coverage provision’s minimum 

standards and do not significantly 

reduce the discretion given to states 

under the statutory scheme. 

The PHS Act provides that states may 

enforce the provisions of title XXVII of 

the PHS Act as they pertain to issuers, 

but that the Secretary of HHS will 

enforce any provisions that a state does 

not have authority to enforce or that a 

state has failed to substantially enforce. 

When exercising its responsibility to 

enforce provisions of the PHS Act, HHS 

works cooperatively with the state to 

address the state’s concerns and avoid 

conflicts with the state’s exercise of its 

authority. HHS has developed 

procedures to implement its 

enforcement responsibilities, and to 

afford states the maximum opportunity 

to enforce the PHS Act’s requirements 

in the first instance. In compliance with 

Executive Order 13132’s requirement 

that agencies examine closely any 

policies that may have federalism 

implications or limit the policymaking 

discretion of states, the Departments 

have engaged in numerous efforts to 

consult and work cooperatively with 

affected state and local officials. 

In conclusion, throughout the process 

of developing these proposed 

regulations, to the extent feasible within 

the specific preemption provisions of 

ERISA and the PHS Act, the 

Departments have attempted to balance 

states’ interests in regulating health 

coverage and health insurance issuers, 

and the rights of those individuals 

intended to be protected in the PHS Act, 

ERISA, and the Code. 

VII. Statutory Authority 

The Department of the Treasury 

regulations are adopted pursuant to the 

authority contained in sections 7805 

and 9833 of the Code. 

The Department of Labor regulations 

are adopted pursuant to the authority 

contained in 29 U.S.C. 1002(16), 1027, 

1059, 1135, 1161–1168, 1169, 1181– 

1183, 1181 note, 1185, 1185a, 1185b, 

1185d, 1191, 1191a, 1191b, and 1191c; 

sec. 101(g), Public Law 104–191, 110 

Stat. 1936; sec. 401(b), Public Law 105– 

200, 112 Stat. 645 (42 U.S.C. 651 note); 

sec. 512(d), Public Law 110–343, 122 

Stat. 3881; sec. 1001, 1201, and 1562(e), 

Public Law 111–148, 124 Stat. 119, as 

amended by Public Law 111–152, 124 

Stat. 1029; Secretary of Labor’s Order 3– 

2010, 75 FR 55354 (September 10, 

2010). 

The Department of Health and Human 

Services regulations are adopted 

pursuant to the authority contained in 

sections 2701 through 2763, 2791, and 

2792 of the PHS Act (42 U.S.C. 300gg 

through 300gg–63, 300gg–91, and 

300gg–92), as amended; and Title I of 

the Affordable Care Act, sections 1301– 

1304, 1311–1312, 1321–1322, 1324, 

1334, 1342–1343, 1401–1402, and 1412, 

Pub. L. 111–148, 124 Stat. 119 (42 

U.S.C. 18021–18024, 18031–18032, 

18041–18042, 18044, 18054, 18061, 

18063, 18071, 18082, 26 U.S.C. 36B, and 

31 U.S.C. 9701). 

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51126 Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules 

Signed this 20th day of August 2014. 

John Dalrymple, 

Deputy Commissioner for Services and 

Enforcement, Internal Revenue Service. 

Signed this 20th day of August 2014. 

Phyllis C. Borzi, 

Assistant Secretary, Employee Benefits 

Security Administration. Department of 

Labor. 

Dated: August 19, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: August 20, 2014. 

Sylvia M. Burwell, 

Secretary, Department of Health and Human 

Services. 

List of Subjects 

26 CFR Part 54 

Excise taxes, Health care, Health 

insurance, Pensions, Reporting and 

recordkeeping requirements. 

29 CFR Part 2590 

Continuation coverage, Disclosure, 

Employee benefit plans, Group health 

plans, Health care, Health insurance, 

Medical child support, Reporting and 

recordkeeping requirements. 

45 CFR Part 147 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, State regulation of health 

insurance. 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

Accordingly, 26 CFR part 54 is 

proposed to be amended as follows: 

PART 54—PENSION EXCISE TAXES 

■ Paragraph 1. The authority citation 

for part 54 continues to read, in part, as 

follows: 

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

■ Par. 2. Section 54.9815–2713A is 

amended by revising paragraph (a) to 

read as follows: 

§ 54.9815–2713A Accommodations in 

connection with coverage of preventive 

health services. 

(a) Eligible organizations. An eligible 

organization is an organization that 

meets the criteria of paragraph (a)(1) 

through (3) of this section. 

(1) The organization opposes 

providing coverage for some or all of 

any contraceptive items or services 

required to be covered under § 54.9815– 

2713(a)(1)(iv) on account of religious 

objections. 

(2)(i) The organization is organized 

and operates as a nonprofit entity and 

holds itself out as a religious 

organization; or 

(ii) The organization is organized and 

operates as a closely held for-profit 

entity, as defined in paragraph (a)(4) of 

this section, and the entity’s objection to 

covering some or all of the contraceptive 

services on account of its owners’ 

sincerely held religious beliefs is made 

in accordance with the organization’s 

applicable rules of governance, 

consistent with state law. 

(3) The organization must self-certify 

in the form and manner specified by the 

Secretary or provide notice to the 

Secretary of Health and Human Services 

as described in paragraph (b) or (c) of 

this section. The organization must 

make such self-certification or notice 

available for examination upon request 

by the first day of the first plan year to 

which the accommodation in paragraph 

(b) or (c) of this section applies. The 

self-certification or notice must be 

executed by a person authorized to 

make the certification on behalf of the 

organization, and must be maintained in 

a manner consistent with the record 

retention requirements under section 

107 of ERISA. 

(4) [Reserved] 

* * * * * 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

For the reasons stated in the 

preamble, the Department of Labor 

proposes to amend 29 CFR part 2590 as 

follows: 

PART 2590—RULES AND 

REGULATIONS FOR GROUP HEALTH 

PLANS 

■ 1. The authority citation for part 2590 

is revised to read as follows: 

Authority: 29 U.S.C. 1027, 1059, 1135, 

1161–1168, 1169, 1181–1183, 1181 note, 

1185, 1185a, 1185b, 1185d, 1191, 1191a, 

1191b, and 1191c; sec. 101(g), Pub. L. 104– 

191, 110 Stat. 1936; sec. 401(b), Pub. L. 105– 

200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 

512(d), Pub. L. 110–343, 122 Stat. 3881; sec. 

1001, 1201, and 1562(e), Pub. L. 111–148, 

124 Stat. 119, as amended by Pub. L. 11–152, 

124 Stat. 1029; Secretary of Labor’s Order 1– 

2011, 77 FR 1088 (January 9, 2012). 

■ 2. Section 2590.715–2713A is 

amended by revising paragraph (a) to 

read as follows: 

§ 2590.715–2713A Accommodations in 

connection with coverage of preventive 

health services. 

(a) Eligible organizations. An eligible 

organization is an organization that 

meets the criteria of paragraph (a)(1) 

through (3) of this section. 

(1) The organization opposes 

providing coverage for some or all of 

any contraceptive items or services 

required to be covered under 

§ 2590.715–2713(a)(1)(iv) on account of 

religious objections. 

(2)(i) The organization is organized 

and operates as a nonprofit entity and 

holds itself out as a religious 

organization; or 

(ii) The organization is organized and 

operates as a closely held for-profit 

entity, as defined in paragraph (a)(4) of 

this section, and the entity’s objection to 

covering some or all of the contraceptive 

services on account of its owners’ 

sincerely held religious beliefs is made 

in accordance with the organization’s 

applicable rules of governance, 

consistent with state law. 

(3) The organization must self-certify 

in the form and manner specified by the 

Secretary or provide notice to the 

Secretary of Health and Human Services 

as described in paragraph (b) or (c) of 

this section. The organization must 

make such self-certification or notice 

available for examination upon request 

by the first day of the first plan year to 

which the accommodation in paragraph 

(b) or (c) of this section applies. The 

self-certification or notice must be 

executed by a person authorized to 

make the certification on behalf of the 

organization, and must be maintained in 

a manner consistent with the record 

retention requirements under section 

107 of ERISA. 

(4) [Reserved] 

* * * * * 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

For the reasons stated in the 

preamble, the Department of Health and 

Human Services proposes to amend 45 

CFR subtitle A, part 147 as follows: 

PART 147—HEALTH INSURANCE 

REFORM REQUIREMENTS FOR THE 

GROUP AND INDIVIDUAL HEALTH 

INSRUANCE MARKETS 

■ 1. The authority citation for part 147 

continues to read as follows: 

Authority: Secs 2701 through 2763, 2791, 

and 2792 of the Public Health Service Act (42 

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

and 300gg–92), as amended. 

■ 2. Section 147.131 is amended by 

revising paragraphs (b) and (f) to read as 

follows: 

§ 147.131 Exemption and accommodation 

in connection with coverage of preventive 

health services. 

* * * * * 

(b) Eligible organizations. An eligible 

organization is an organization that 

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Federal Register / Vol. 79, No. 166 / Wednesday, August 27, 2014 / Proposed Rules 51127 

meets the criteria of paragraph (b)(1) 

through (3) of this section. 

(1) The organization opposes 

providing coverage for some or all of 

any contraceptive items or services 

required to be covered under 

§ 147.130(a)(1)(iv) on account of 

religious objections. 

(2)(i) The organization is organized 

and operates as a nonprofit entity and 

holds itself out as a religious 

organization; or 

(ii) The organization is organized and 

operates as a closely held for-profit 

entity, as defined in paragraph (b)(4) of 

this section, and the entity’s objection to 

covering some or all of the contraceptive 

services on account of its owners’ 

sincerely held religious beliefs is made 

in accordance with the organization’s 

applicable rules of governance, 

consistent with state law. 

(3) The organization must self-certify 

in the form and manner specified by the 

Secretary or provide notice to the 

Secretary of Health and Human Services 

as described in paragraph (c) of this 

section. The organization must make 

such self-certification or notice available 

for examination upon request by the 

first day of the first plan year to which 

the accommodation in paragraph (c) of 

this section applies. The selfcertification or notice must be executed 

by a person authorized to make the 

certification on behalf of the 

organization, and must be maintained in 

a manner consistent with the record 

retention requirements under section 

107 of ERISA. 

(4) [Reserved] 

* * * * * 

(f) Application to student health 

insurance coverage. The provisions of 

this section apply to student health 

insurance coverage arranged by an 

eligible organization that is an 

institution of higher education as 

defined in 20 U.S.C. 1002 in a manner 

comparable to that in which they apply 

to group health insurance coverage 

provided in connection with a group 

health plan established or maintained 

by an eligible organization that is an 

employer. In applying this section in the 

case of student health insurance 

coverage, a reference to ‘‘plan 

participants and beneficiaries’’ is a 

reference to student enrollees and their 

covered dependents. 

[FR Doc. 2014–20254 Filed 8–22–14; 3:30 pm] 

BILLING CODE 4830–01–P; 4510–029–P; 4120–01–P; 

6325–64 

DEPARTMENT OF DEFENSE 

Office of the Secretary 

32 CFR Part 199 

[DOD–2006–HA–0207] 

RIN 0720–AB15 

Civilian Health and Medical Program of 

the Uniformed Services (CHAMPUS); 

TRICARE Reserve Select; TRICARE 

Dental Program; Early Eligibility for 

TRICARE for Certain Reserve 

Component Members 

AGENCY: Office of the Secretary, DoD. 

ACTION: Proposed rule. 

SUMMARY: TRICARE Reserve Select 

(TRS) is a premium-based TRICARE 

health plan available for purchase 

worldwide by qualified members of the 

Ready Reserve and by qualified 

survivors of TRS members. TRICARE 

Dental Program (TDP) is a premiumbased TRICARE dental plan available 

for purchase worldwide by qualified 

Service members. This proposed rule 

revises requirements and procedures for 

the TRS program to specify the 

appropriate actuarial basis for 

calculating premiums in addition to 

other minor clarifying administrative 

changes. For a member who is 

involuntarily separated from the 

Selected Reserve under other than 

adverse conditions this proposed rule 

provides a time-limited exception that 

allows TRS coverage in effect to 

continue for up to 180 days after the 

date on which the member is separated 

from the Selected Reserve and TDP 

coverage in effect to continue for no less 

than 180 days after the separation date. 

It also expands early TRICARE 

eligibility for certain Reserve 

Component members from a maximum 

of 90 days to a maximum of 180 days 

prior to activation in support of a 

contingency for more than 30 days. 

DATES: Submit comments on or before 

October 27, 2014. 

ADDRESSES: You may submit comments, 

identified by docket number or 

Regulation Identifier Number (RIN) 

number and title, by any of the 

following methods: 

Federal eRulemaking Portal: http://

www.regulations.gov. Follow the 

instructions for submitting comments. 

Mail: Federal Docket Management 

System Office, 4800 Mark Center Drive, 

East Tower, Suite 02G09, Alexandria, 

VA 22350–3100. 

Instructions: All submissions received 

must include the agency name and 

docket number or RIN for this Federal 

Register document. The general policy 

for comments and other submissions 

from members of the public is to make 

these submissions available for public 

viewing on the Internet at http://

www.regulations.gov as they are 

received without change, including any 

personal identifiers or contact 

information. 

FOR FURTHER INFORMATION CONTACT: Jody 

Donehoo, Defense Health Agency, 

TRICARE Health Plan Division, 

telephone (703) 681–0039. 

Questions regarding payment of 

specific claims under the TRICARE 

allowable charge method should be 

addressed to the appropriate TRICARE 

contractor. 

SUPPLEMENTARY INFORMATION: 

I. Introduction and Background 

This proposed rule addresses 

provisions of the National Defense 

Authorization Act for Fiscal Year 2009 

(NDAA–09) (Pub. L. 110–417), the 

National Defense Authorization Act for 

Fiscal Year 2010 (NDAA–10) (Pub. L. 

111–84), and the National Defense 

Authorization Act for Fiscal Year 2013 

(NDAA–13) (Pub. L. 112–239). First, 

section 704 of NDAA–09 specifies that 

the appropriate actuarial basis for 

calculating premiums for TRS shall 

utilize the actual cost of providing 

benefits to members and their 

dependents during preceding calendar 

years. Second, section 702 of NDAA–10 

expands early eligibility for Reserve 

Component members issued delayedeffective-date active duty orders from a 

maximum of 90 days to a maximum of 

180 days prior to activation in support 

of a contingency for more than 30 days. 

Third, for a member who is 

involuntarily separated from the 

Selected Reserve under other than 

adverse conditions as characterized by 

the Secretary concerned, section 701 of 

NDAA–13 provides a time-limited 

exception that allows TRS coverage 

already in effect at time of separation to 

continue for up to 180 days after the 

date on which the member is separated 

from the Selected Reserve and TDP 

coverage already in effect at time of 

separation to continue for no less than 

180 days after the separation date. This 

exception expires December 31, 2018. 

Finally, additional administrative 

clarifications have been made to 32 CFR 

199.24, which implements TRS. 

II. Provisions of the Rule Regarding 

Early TRICARE Eligibility 

Section 199.3(b)(5) implements 

section 702 of NDAA–10, which 

specifies that, Reserve Component 

members issued delayed-effective-date 

orders for service in support of a 

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