Vol. 79 Tuesday, 

No. 249 December 30, 2014 

Part II 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 54 

DEPARTMENT OF LABOR 

Employee Benefits Security Administration 

29 CFR Part 2590 

DEPARTMENT OF HEALTH AND HUMAN 

SERVICES 

45 CFR Part 147 

Summary of Benefits and Coverage and Uniform Glossary; Proposed Rule 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
78578 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 

1The term ‘‘group health plan’’ is used in title 

XXVII of the PHS Act, part 7 of ERISA, and chapter 

100 of the Code, and is distinct from the term 

‘‘health plan,’’ as used in other provisions of title 

I of the Affordable Care Act. The term ‘‘health plan’’ 

does not include self-insured group health plans. 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 54 

[REG–145878–14] 

RIN 1545–BM53 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2590 

RIN 1210–AB69 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Part 147 

[CMS–9938–P] 

RIN 0938–AS54 

Summary of Benefits and Coverage 

and Uniform Glossary 

AGENCY: Internal Revenue Service, 

Department of the Treasury; Employee 

Benefits Security Administration, 

Department of Labor; Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: This document contains 

proposed regulations regarding the 

summary of benefits and coverage (SBC) 

and the uniform glossary for group 

health plans and health insurance 

coverage in the group and individual 

markets under the Patient Protection 

and Affordable Care Act. It proposes 

changes to the regulations that 

implement the disclosure requirements 

under section 2715 of the Public Health 

Service Act to help plans and 

individuals better understand their 

health coverage, as well as to gain a 

better understanding of other coverage 

options for comparison. It proposes 

changes to documents required for 

compliance with section 2715 of the 

Public Health Service Act, including a 

template for the SBC, instructions, 

sample language, a guide for coverage 

example calculations, and the uniform 

glossary. 

DATES: Comment date. Comments are 

due on or before March 2, 2015. 

ADDRESSES: Written comments on these 

proposed regulations and documents 

required for compliance (including the 

template, instructions, sample language, 

guide for coverage example calculations, 

and the uniform glossary) may be 

submitted to the Department of Labor as 

specified below. Any comment that is 

submitted will be shared with the 

Department of Health and Human 

Services and the Department of the 

Treasury, and will also be made 

available to the public. Warning: Do not 

include any personally identifiable 

information (such as name, address, or 

other contact information) or 

confidential business information that 

you do not want publicly disclosed. All 

comments are posted on the Internet 

exactly as received, and can be retrieved 

by most Internet search engines. No 

deletions, modifications, or redactions 

will be made to the comments received, 

as they are public records. Comments 

may be submitted anonymously. 

Comments, identified by ‘‘Summary 

of Benefits and Coverage,’’ may be 

submitted by one of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail or Hand Delivery: Office of 

Health Plan Standards and Compliance 

Assistance, Employee Benefits Security 

Administration, Room N–5653, U.S. 

Department of Labor, 200 Constitution 

Avenue NW., Washington, DC 20210, 

Attention: Summary of Benefits and 

Coverage. 

Comments received will be posted 

without change to http://

www.regulations.gov, and available for 

public inspection at the Public 

Disclosure Room, N–1513, Employee 

Benefits Security Administration, 200 

Constitution Avenue NW., Washington, 

DC 20210, including any personal 

information provided. 

FOR FURTHER INFORMATION CONTACT: 

Amy Turner or Beth Baum, Employee 

Benefits Security Administration, 

Department of Labor, at (202) 693–8335; 

Karen Levin, Internal Revenue Service, 

Department of the Treasury, at (202) 

622–6080; Heather Raeburn or Tricia 

Beckmann, Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, at (301) 

492–4224 or (301) 492–4328. 

Customer service information: 

Individuals interested in obtaining 

information from the Department of 

Labor concerning employment-based 

health coverage laws may call the EBSA 

Toll-Free Hotline at 1–866–444–EBSA 

(3272) or visit the Department of Labor’s 

Web site (http://www.dol.gov/ebsa). In 

addition, information from HHS on 

private health insurance for consumers 

can be found on CMS’s Web site 

(www.cms.gov/cciio) and information on 

health reform can be found at http://

www.healthcare.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Patient Protection and Affordable 

Care Act, Public Law 111–148, was 

enacted on March 23, 2010; the Health 

Care and Education Reconciliation Act, 

Public Law 111–152, was enacted on 

March 30, 2010 (these are collectively 

known as the ‘‘Affordable Care Act’’). 

The Affordable Care Act reorganizes, 

amends, and adds to the provisions of 

part A of title XXVII of the Public 

Health Service Act (PHS Act) relating to 

group health plans and health insurance 

issuers in the group and individual 

markets. The term ‘‘group health plan’’ 

includes both insured and self-insured 

group health plans.1 The Affordable 

Care Act adds section 715(a)(1) to the 

Employee Retirement Income Security 

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

the Internal Revenue Code (the Code) to 

incorporate the provisions of part A of 

title XXVII of the PHS Act into ERISA 

and the Code, and make them 

applicable to group health plans, and 

health insurance issuers providing 

health insurance coverage in connection 

with group health plans. The PHS Act 

sections incorporated by this reference 

are sections 2701 through 2728. 

Section 2715 of the PHS Act, added 

by the Affordable Care Act, directs the 

Departments of Labor, Health and 

Human Services (HHS), and the 

Treasury (the Departments) to develop 

standards for use by a group health plan 

and a health insurance issuer offering 

group or individual health insurance 

coverage in compiling and providing a 

summary of benefits and coverage (SBC) 

that ‘‘accurately describes the benefits 

and coverage under the applicable plan 

or coverage.’’ PHS Act section 2715 also 

calls for the ‘‘development of standards 

for the definitions of terms used in 

health insurance coverage.’’ 

In accordance with the statute, the 

Departments, in developing such 

standards, consulted with the National 

Association of Insurance Commissioners 

(referred to in this document as the 

‘‘NAIC’’) through ‘‘a working group 

composed of representatives of health 

insurance-related consumer advocacy 

organizations, health insurance issuers, 

health care professionals, patient 

advocates including those representing 

individuals with limited English 

proficiency, and other qualified 


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2The NAIC convened a working group (NAIC 

working group) comprised of a diverse group of 

stakeholders. This working group met frequently for 

over one year while developing its 

recommendations. In developing its 

recommendations, the NAIC considered the results 

of various consumer testing sponsored by both 

insurance industry and consumer associations. 

Throughout the process, NAIC working group draft 

documents and meeting notes were displayed on 

the NAIC’s Web site for public review, and several 

interested parties filed formal comments. In 

addition to participation from the NAIC working 

group members, conference calls and in-person 

meetings were open to other interested parties and 

individuals and provided an opportunity for nonmember feedback. See www.naic.org/committees_b_

consumer_information.htm. 

3See proposed regulations, published at 76 FR 

52442 (August 22, 2011) and guidance document 

published at 76 FR 52475 (August 22, 2011). 

4See final regulations, published at 77 FR 8668 

(February 14, 2012) and guidance document 

published at 77 FR 8706 (February 14, 2012). 

5See Affordable Care Act Implementation FAQs 

Part VII (available at www.dol.gov/ebsa/faqs/faqaca7.html and http://www.cms.gov/CCIIO/

Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs7.html); Part VIII (available at 

www.dol.gov/ebsa/faqs/faq-aca8.html and http://

www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs8.html); Part IX 

(available at www.dol.gov/ebsa/faqs/faq-aca9.html 

and http://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/aca_implementation_faqs9.html); 

Part X (available at www.dol.gov/ebsa/faqs/faqaca10.html and http://www.cms.gov/CCIIO/

Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs10.html); Part XIV (available at 

www.dol.gov/ebsa/faqs/faq-aca14.html and http://

www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs14.html); and Part 

XIX (available at www.dol.gov/ebsa/faqs/faqaca19.html and http://www.cms.gov/CCIIO/

Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs19.html). 

6Some of the enforcement safe harbors and 

transitions are proposed to be made permanent 

(several with modifications) by these proposed 

regulations. The Departments intend to use this 

rulemaking to develop a permanent approach to 

those issues and, thereby, discontinue all temporary 

enforcement policies that were used as a bridge to 

a permanent rule. 

7ERISA section 3(16) defines an administrator as: 

(i) the person specifically designated by the terms 

of the instrument under which the plan is operated; 

(ii) if an administrator is not so designated, the plan 

sponsor; or (iii) in the case of a plan for which an 

administrator is not designated and plan sponsor 

cannot be identified, such other person as the 

Secretary of Labor may by regulation prescribe. 

8See Affordable Care Act Implementation FAQs 

Part VIII, question 7, available at www.dol.gov/ebsa/ 

faqs/faq-aca8.html and http://www.cms.gov/CCIIO/ 

Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs8.html. 

individuals.’’ 2 On July 29, 2011, the 

NAIC provided its final 

recommendations to the Departments 

regarding the SBC. On August 22, 2011, 

the Departments published in the 

Federal Register proposed regulations 

(2011 proposed regulations) and an 

accompanying document with 

templates, instructions, and related 

materials for implementing the 

disclosure provisions under PHS Act 

section 2715.3 After consideration of all 

the comments received on the 2011 

proposed regulations and accompanying 

documents, the Departments published 

joint final regulations to implement the 

disclosure requirements under PHS Act 

section 2715 on February 14, 2012 (2012 

final regulations) and an accompanying 

document soliciting comments on 

templates, instructions, and related 

materials.4 The 2012 final regulations 

implemented standards for use by a 

group health plan and a health 

insurance issuer offering group or 

individual health insurance coverage in 

compiling and providing an SBC that 

‘‘accurately describes the benefits and 

coverage under the applicable plan or 

coverage’’ pursuant to PHS Act section 

2715. 

After the 2012 final regulations were 

published, the Departments released 

Frequently Asked Question (FAQs) 

regarding implementation of the SBC 

provisions as part of six issuances. The 

Departments released Affordable Care 

Act Implementation FAQs Parts VII, 

VIII, IX, X, XIV, and XIX to answer 

outstanding questions, including 

questions related to the SBC.5 These 

FAQs addressed questions related to 

compliance with the requirements of the 

2012 final regulations, implemented 

additional safe harbors,6 and released 

updated SBC materials. 

The Departments are issuing these 

proposed regulations, as well as a new 

set of proposed SBC templates, 

instructions, an updated uniform 

glossary, and other materials to 

incorporate some of the feedback the 

Departments have received and to make 

some improvements to the template. 

This will provide guidance necessary to 

plans and issuers as they continue to 

issue SBCs, and will improve the SBC 

for employers, participants and 

beneficiaries, and individuals and 

dependents for use as a tool in making 

important decisions regarding their 

health coverage. These modifications 

clarify when and how a plan or issuer 

must provide an SBC, and streamline 

and shorten the SBC template while also 

adding certain additional elements that 

the Departments believe will be useful 

to consumers. The draft updated 

template, instructions, and 

supplementary materials are available at 

http://cciio.cms.gov and http://

www.dol.gov/ebsa/healthreform/

regulations/summaryofbenefits.html. 

The Departments invite comments on 

all of the documents. Comments should 

be submitted as described above. 

II. Overview of the Proposed 

Regulations 

A. Requirement To Provide a Summary 

of Benefits and Coverage 

1. Providing the SBC 

Paragraph (a) of the 2012 final 

regulations implements the general 

disclosure requirement and sets forth 

the standards for who is required to 

provide an SBC, to whom, and when. 

PHS Act section 2715 generally requires 

that an SBC be provided to applicants, 

enrollees, and policyholders or 

certificate holders, at specified times. 

PHS Act section 2715(d)(3) places the 

responsibility to provide an SBC on ‘‘(A) 

a health insurance issuer (including a 

group health plan that is not a selfinsured plan) offering health insurance 

coverage within the United States; or (B) 

in the case of a self-insured group health 

plan, the plan sponsor or designated 

administrator of the plan (as such terms 

are defined in section 3(16) of 

ERISA).’’ 7 Accordingly, the 2012 final 

regulations interpret PHS Act section 

2715 to apply to both group health plans 

and health insurance issuers offering 

group or individual health insurance 

coverage. In addition, consistent with 

the statute, the 2012 final regulations 

hold the plan administrator of a group 

health plan responsible for providing an 

SBC. Under the 2012 final regulations, 

the SBC must be provided in writing 

and free of charge. 

There are three general scenarios 

under which an SBC will be provided. 

An SBC will be provided: (1) By a group 

health insurance issuer to a group 

health plan; (2) by a group health 

insurance issuer or a group health plan 

to participants and beneficiaries; and (3) 

by a health insurance issuer to 

individuals and dependents in the 

individual market. 

The 2012 final regulations specify 

timeframes according to which the SBC 

must be provided. After the 2012 

regulations were published, the 

Departments were asked to clarify the 

meaning of the term ‘‘provided.’’ As the 

Departments stated in Affordable Care 

Act Implementation FAQs Part VIII, 

question 7, for purposes of providing an 

SBC in the context of these regulations, 

the term ‘‘provided’’ means sent. 

Accordingly, the SBC is timely if it is 

sent within seven business days, even if 

not received until after that period.8

a. Provision of the SBC by an Issuer to 

a Plan 

Paragraph (a)(1)(i) of the 2012 final 

regulations requires a health insurance 

issuer offering group health insurance 

coverage to provide an SBC to a group 

health plan (or its sponsor) upon an 

application by the plan for health 

coverage. The issuer must provide the 

SBC as soon as practicable following 


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78580 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 

9ERISA section 3(7) defines a participant as: Any 

employee or former employee of an employer, or 

any member or former member of an employee 

organization, who is or may become eligible to 

receive a benefit of any type from an employee 

benefit plan which covers employees of such 

employers or members of such organization, or 

whose beneficiaries may be eligible to receive any 

such benefit. ERISA section 3(8) defines a 

beneficiary as: a person designated by a participant, 

or by the terms of an employee benefit plan, who 

is or may become entitled to a benefit thereunder. 

10With respect to insured group health plan 

coverage, PHS Act section 2715 generally places the 

obligation to provide an SBC on both a plan and 

issuer. As discussed below, under section III.A.1.d., 

‘‘Special Rules to Prevent Unnecessary Duplication 

with Respect to Group Health Coverage’’, if either 

the issuer or the plan provides the SBC, both will 

have satisfied their obligations. As they do with 

other notices required of both plans and issuers 

under Part 7 of ERISA, Title XXVII of the PHS Act, 

and Chapter 100 of the Code, the Departments 

expect plans and issuers to make contractual 

arrangements for sending SBCs. Accordingly, the 

remainder of this preamble generally refers to 

requirements for plans or issuers. 

11See Affordable Care Act Implementation FAQs 

Part VIII, question 7, available at www.dol.gov/ebsa/ 

faqs/faq-aca8.html and http://www.cms.gov/CCIIO/ 

Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs8.html. 

12See 26 CFR 54.4980B–5, Q&A–4(c) 

(requirement to provide election) and 54.4980B–3, 

Q&A–3 (definition of similarly situated non-COBRA 

beneficiary). 

13See 26 CFR 54.4980B–5, Q&A–4(b). 

14Regulations regarding special enrollment are 

available at 26 CFR 54.9801–6, 29 CFR 2590.701– 

6, and 45 CFR 146.117. 

receipt of the application, but in no 

event later than seven business days 

following receipt of the application. 

These proposed regulations would 

clarify when the health insurance issuer 

offering group health insurance 

coverage (or plan, if applicable, under 

paragraph (a)(1)(ii)) must provide the 

SBC again if the issuer already provided 

the SBC before application to any entity 

or individual. If the issuer provides the 

SBC before application for coverage 

pursuant to paragraph (a)(1)(i)(D) of the 

regulations (relating to SBCs upon 

request), the requirement to provide an 

SBC upon application is deemed 

satisfied and such issuer is not required 

to automatically provide another SBC 

upon application to the same entity or 

individual, provided there is no change 

to the information required to be in the 

SBC. However, if there has been a 

change in the information required, a 

new SBC that includes the correct 

information must be provided upon 

application (that is, as soon as 

practicable following receipt of the 

application, but in no event later than 

seven business days following receipt of 

the application). 

Under the 2012 final regulations and 

these proposed regulations, if there is 

any change in the information required 

to be in the SBC that was provided upon 

application and before the first day of 

coverage, the issuer must update and 

provide a current SBC to the plan (or its 

sponsor) no later than the first day of 

coverage. If the information is 

unchanged, the issuer does not need to 

provide the SBC again in connection 

with coverage for that plan year, except 

upon request. These proposed rules 

would provide clarification with respect 

to how to satisfy the requirement to 

provide an SBC when the terms of 

coverage are not finalized. If the plan 

sponsor is negotiating coverage terms 

after an application has been filed and 

the information required to be in the 

SBC changes, an updated SBC is not 

required to be provided to the plan (or 

its sponsor) (unless an updated SBC is 

requested) until the first day of 

coverage. The updated SBC should 

reflect the final coverage terms under 

the contract, certificate, or policy of 

insurance that was purchased. 

b. Provision of the SBC by a Plan or 

Issuer to Participants and Beneficiaries 

Under paragraph (a)(1)(ii) of the 2012 

final regulations, a group health plan 

(including the plan administrator), and 

a health insurance issuer offering group 

health insurance coverage, must provide 

an SBC to a participant or beneficiary 9

with respect to each benefit package 

offered by the plan or issuer for which 

the participant or beneficiary is 

eligible.10 This includes individuals 

who are qualified beneficiaries under 

the Consolidated Omnibus 

Reconciliation Act of 1985 (COBRA).11

In Affordable Care Act Implementation 

FAQs Part VIII, question 8, the 

Departments clarified that while a 

qualifying event does not, itself, trigger 

a requirement to provide an SBC, during 

an open enrollment period, any COBRA 

qualified beneficiary who is receiving 

COBRA coverage must be given the 

same rights to elect different coverage as 

are provided to similarly situated nonCOBRA beneficiaries.12 In this situation, 

a COBRA qualified beneficiary who has 

elected coverage must be provided an 

SBC just as a similarly situated nonCOBRA beneficiary must be provided 

with one. There are also limited 

situations in which a COBRA qualified 

beneficiary may need to be offered 

different coverage at the time of the 

qualifying event than the coverage he or 

she was receiving before the qualifying 

event and this may trigger a requirement 

to provide an SBC.13

If a plan or issuer distributes any 

written application materials for 

enrollment, including any forms or 

requests for information (in paper form 

or through a Web site or email) that 

must be completed for enrollment, the 

plan or issuer must provide the SBC as 

part of those materials. If the plan or 

issuer does not distribute written 

application materials for enrollment (in 

either paper or electronic form), the SBC 

must be provided no later than the first 

date on which the participant is eligible 

to enroll in coverage for the participant 

or any beneficiaries. If there is any 

change to the information required to be 

in the SBC that was provided upon 

application for coverage and before the 

first day of coverage, the plan or issuer 

must update and provide a current SBC 

to a participant or beneficiary no later 

than the first day of coverage. 

These proposed rules would clarify 

when a plan or issuer must provide the 

SBC again if the plan or issuer already 

provided the SBC prior to application. 

If the plan or issuer provides the SBC 

prior to application for coverage, the 

plan or issuer is not required to 

automatically provide another SBC 

upon application, if there is no change 

to the information required to be in the 

SBC. If there is any change to the 

information required to be in the SBC by 

the time the application is filed, the 

plan or issuer must update and provide 

a current SBC as soon as practicable 

following receipt of the application, but 

in no event later than seven business 

days following receipt of the 

application. 

These proposed rules also would 

provide clarification with respect to 

how to satisfy the requirement to 

provide an SBC when the terms of 

coverage are not finalized. If the plan 

sponsor is negotiating coverage terms 

after an application has been filed and 

the information required to be in the 

SBC changes, the plan or issuer is not 

required to provide an updated SBC 

(unless an updated SBC is requested) 

until the first day of coverage. The 

updated SBC should reflect the final 

coverage terms under the contract, 

certificate, or policy of insurance that 

was purchased. 

Under the 2012 final regulations, the 

plan or issuer must also provide the 

SBC to individuals enrolling through a 

special enrollment period, also called 

special enrollees.14 Special enrollees 

must be provided the SBC no later than 

when a summary plan description is 

required to be provided under the 

timeframe set forth in ERISA section 

104(b)(1)(A) and its implementing 

regulations, which is 90 days from 

enrollment. To the extent individuals 

who are eligible for special enrollment 

and are contemplating their coverage 

options would like to receive SBCs 


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15The FAQ stated that other general questions 

about coverage options or discussions about health 

products do not trigger the requirement to provide 

an SBC. 

16The selection and monitoring of service 

providers for a group health plan, including parties 

assuming responsibility to complete, provide 

information for, or deliver SBCs, is a fiduciary act 

subject to prudence and loyalty duties and 

prohibited transaction provisions of ERISA. No 

single fiduciary procedure will be appropriate in all 

cases; the procedure for selecting and monitoring 

service providers may vary in accordance with the 

nature of the plan and other facts and 

circumstances relevant to the choice of the service 

provider. More general information on hiring and 

monitoring service providers is contained in the 

Department of Labor publication ‘‘Understanding 

Your Fiduciary Responsibilities Under a Group 

Health Plan,’’ which is available on the 

Department’s Web site at: www.dol.gov/ebsa/

publications/ghpfiduciaryresponsibilities.html. 

earlier, they may always request an SBC 

with respect to any particular plan, 

policy, or benefit package and the SBC 

is required to be provided as soon as 

practicable, but in no event later than 

seven business days following receipt of 

the request (as discussed more fully 

below). 

c. Provision of the SBC Upon Request in 

Group Health Coverage 

A health insurance issuer offering 

group health insurance coverage must 

provide the SBC to a group health plan 

or its sponsor (and a plan or issuer must 

provide the SBC to a participant or 

beneficiary) upon request for an SBC or 

summary information about the health 

coverage, as soon as practicable, but in 

no event later than seven business days 

following receipt of the request. The 

SBC must be provided upon request to 

participants, beneficiaries, and plans (or 

plan sponsors), including prior to 

submitting an application for coverage, 

because the SBC provides information 

that not only helps consumers and 

employers understand their coverage, 

but also helps consumers and employers 

compare coverage options prior to 

selecting coverage. Health insurance 

issuers offering individual market 

coverage must also provide the SBC to 

individuals upon request, according to 

the same timeframe, to allow consumers 

the same ability to compare coverage 

options in the individual market as the 

group market. 

Since the issuance of the 2012 final 

regulations, the Departments have 

continued to receive questions about 

providing SBCs upon request, including 

whether issuers are required to provide 

SBCs to plans or their sponsors who are 

‘‘shopping’’ for coverage from different 

issuers but have not yet submitted an 

application for coverage. In Affordable 

Care Act Implementation FAQs Part IX, 

question 4, the Departments reiterated 

that an SBC must be provided upon 

request for an SBC or ‘‘summary 

information about a health insurance 

product.’’ The latter phrase is intended 

to ensure that persons who do not ask 

exactly for a ‘‘summary of benefits and 

coverage’’ still receive one when they 

explicitly ask for a summary document 

with respect to a specific health 

coverage product.15 The FAQ also 

referred to other guidance outlining the 

circumstances in which an SBC may be 

provided electronically, to assist in 

reducing the burden of providing 

multiple SBCs in paper form when 

requested. Additional information on 

electronic disclosure of SBCs is 

discussed later in this preamble. 

d. Special Rules To Prevent 

Unnecessary Duplication With Respect 

to Group Health Coverage 

Paragraph (a)(1)(iii) of the 2012 final 

regulations includes three special rules 

to streamline provision of the SBC and 

avoid unnecessary duplication with 

respect to group health coverage. The 

first provides that the requirement to 

provide an SBC generally will be 

considered satisfied for all applicable 

entities if it is provided by any entity, 

so long as all timing and content 

requirements are satisfied. The second 

provides that a single SBC may be 

provided to a participant and any 

beneficiaries at the participant’s last 

known address. However, if a 

beneficiary’s last known address is 

different than the participant’s last 

known address, a separate SBC is 

required to be provided to the 

beneficiary at the beneficiary’s last 

known address. Third, the 2012 final 

regulations provide that SBCs are not 

required to be provided automatically 

upon renewal for each benefit package 

option in group health plans that offer 

multiple benefit packages. Rather, a 

plan or issuer is required to provide an 

SBC automatically upon renewal or 

reissuance only with respect to the 

benefit package in which a participant 

or beneficiary is enrolled. In cases in 

which an issuer will automatically reenroll participants and beneficiaries, 

these proposed rules propose to add that 

a new SBC is required to be provided 

with respect to the plan or product in 

which a participant or beneficiary will 

be automatically enrolled in accordance 

with the same timing requirements that 

apply to a renewal or reissuance. 

Consistent with the 2012 final 

regulations, if a participant or 

beneficiary requests an SBC with 

respect to one or more other benefit 

packages for which he or she is eligible, 

that requested SBC or SBCs must be 

provided as soon as practicable, but in 

no event later than seven business days 

following the receipt of the request. 

In addition to retaining these three 

existing special rules, these proposed 

regulations would add an additional 

provision to ensure participants receive 

information while preventing 

unnecessary duplication. This would 

address circumstances where an entity 

required to provide an SBC with respect 

to an individual has entered into a 

binding contract with another party to 

provide the SBC to the individual. In 

such a case, the proposed regulations 

state that the entity would be 

considered to satisfy the requirement to 

provide the SBC with respect to the 

individual if specified conditions are 

met: 

(1) The entity monitors performance 

under the contract; 16

(2) If the entity has knowledge that 

the SBC is not being provided in a 

manner that satisfies the requirements 

of this section and the entity has all 

information necessary to correct the 

noncompliance, the entity corrects the 

noncompliance as soon as practicable; 

and 

(3) If the entity has knowledge the 

SBC is not being provided in a manner 

that satisfies the requirements of this 

section and the entity does not have all 

information necessary to correct the 

noncompliance, the entity 

communicates with participants and 

beneficiaries who are affected by the 

noncompliance regarding the 

noncompliance, and begins taking 

significant steps as soon as practicable 

to avoid future violations. 

The proposed regulations would also 

add a provision to prevent unnecessary 

duplication with respect to a group 

health plan that uses two or more 

insurance products provided by 

separate issuers to insure benefits under 

the plan. The proposed regulations 

would place responsibility for providing 

complete SBCs with respect to the plan 

in such a case on the group health plan 

administrator. This provision of the 

proposed regulations states that the 

group health plan administrator may 

contract with one of its issuers (or other 

service providers) to provide the SBC; 

however, absent a contract to perform 

the function, an issuer has no obligation 

to provide an SBC containing 

information for benefits that it does not 

insure. 

The Departments recognize that a 

plan sponsor may purchase an 

insurance product for certain coverage 

from a particular issuer and purchase a 

separate insurance product or selfinsure with respect to other coverage 

(such as outpatient prescription drug 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
78582 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 

17See Affordable Care Act Implementation FAQs 

Part IX, question 10, available at http://

www.dol.gov/ebsa/faqs/faq-aca9.html and http://

www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs9.html. 

18Affordable Care Act Implementation FAQs Set 

XIV, question 5, available at www.dol.gov/ebsa/

faqs/faq-aca14.html and http://www.cms.gov/

CCIIO/Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs14.html. 

19Affordable Care Act FAQ Set XIX, question 8, 

available at www.dol.gov/ebsa/faqs/faq-aca19.html 

and http://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/aca_implementation_

faqs19.html. 

20See 45 CFR 147.145, published at 77 FR 16453 

(March 21, 2012). 

coverage). In these circumstances, the 

first issuer may or may not know of the 

existence of other coverage, or whether 

the plan sponsor has arranged the two 

benefit packages as a single plan or two 

separate plans. To address these 

arrangements, these proposed rules 

propose that, with respect to a group 

health plan that uses two or more 

insurance products provided by 

separate issuers, the group health plan 

administrator is responsible for 

providing complete SBCs with respect 

to the plan. The group health plan 

administrator may contract with one of 

its issuers (or other service providers) to 

perform that function. Absent a contract 

to perform the function, an issuer has no 

obligation to provide coverage 

information for benefits that it does not 

insure. 

The Departments published an FAQ 

on May 11, 2012 17 regarding the 

responsibility to provide an SBC in 

situations where plans may have 

benefits provided by more than one 

issuer. This FAQ provides an 

enforcement safe harbor for a group 

health plan that uses two or more 

insurance products provided by 

separate issuers with respect to a single 

group health plan. Under this 

enforcement safe harbor, the group 

health plan administrator may 

synthesize the information into a single 

SBC or provide multiple partial SBCs 

that, together, provide all the relevant 

information to meet the SBC content 

requirements. In such circumstances, 

the plan administrator should take steps 

(such as a cover letter or a notation on 

the SBCs themselves) to indicate that 

the plan provides coverage using 

multiple insurance products and that 

individuals may contact the plan 

administrator for more information (and 

provide the contact information). The 

Departments extended this enforcement 

safe harbor for one year on April 23, 

2013,18 and indefinitely on May 2, 

2014,19 and reiterate that the safe harbor 

continues to apply. The Departments 

seek comment on whether to codify this 

policy in the regulation. 

e. Provision of the SBC by an Issuer 

Offering Individual Market Coverage 

Paragraph (a)(1)(iv) of the HHS 2012 

final regulations sets forth standards 

applicable to individual health 

insurance coverage, under which the 

provision of the SBC by an issuer 

offering individual market coverage 

largely parallels the group market 

requirements described above, with 

only those changes necessary to reflect 

the differences between the two 

markets. The SBC must be provided 

upon application. That is, a health 

insurance issuer offering individual 

health insurance coverage must provide 

an SBC to an individual or dependent 

upon receiving an application for any 

health insurance policy, as soon as 

practicable following receipt of the 

application, but in no event later than 

seven business days following receipt of 

the application. If there is any change in 

the information required to be in the 

SBC that was provided upon application 

and before the first day of coverage, the 

issuer must update and provide a 

current SBC to an individual or 

dependent no later than the first day of 

coverage. These proposed rules would 

clarify when the issuer must provide the 

SBC again if the issuer already provided 

the SBC prior to application. If the 

issuer provides the SBC prior to 

application for coverage, the issuer is 

not required to automatically provide 

another SBC upon application, if there 

is no change to the information required 

to be in the SBC. If there is any change 

to the information required to be in the 

SBC that was provided prior to 

application for coverage by the time the 

application is filed, the issuer must 

update and provide a current SBC to the 

same individual or dependent as soon 

as practicable following receipt of the 

application, but in no event later than 

seven business days following receipt of 

the application. Under the 2012 final 

regulations, a health insurance issuer 

offering individual health insurance 

coverage must provide the SBC to an 

individual or dependent upon request 

for the SBC or summary information 

about the health insurance product, as 

soon as practicable, but in no event later 

than seven business days following 

receipt of the request. 

These proposed rules would also 

address situations where an issuer 

offering individual market insurance 

coverage, consistent with applicable 

Federal and State law, automatically reenrolls an individual and any 

dependents into a different plan or 

product than the plan in which these 

individuals were previously enrolled. If 

the issuer automatically re-enrolls an 

individual covered under a policy, 

certificate, or contract of insurance 

(including every dependent) into a 

policy, certificate, or contract of 

insurance under a different plan or 

product, HHS proposes that the issuer 

would be required to provide an SBC 

with respect to the coverage in which 

the individual (including every 

dependent) will be enrolled, consistent 

with the timing requirements that apply 

when the policy is renewed or reissued. 

f. Special Rules To Prevent Unnecessary 

Duplication With Respect to Individual 

Health Insurance Coverage 

In paragraph (a)(1)(v) of the 2012 final 

regulations, the Secretary of HHS states 

that, if a single SBC is provided to an 

individual and any dependents at the 

individual’s last known address, then 

the requirement to provide the SBC to 

the individual and any dependents is 

generally satisfied. However, if a 

dependent’s last known address is 

different than the individual’s last 

known address, a separate SBC is 

required to be provided to the 

dependent at the dependent’s last 

known address. 

Student health insurance coverage is 

a type of individual health insurance 

coverage provided pursuant to a written 

agreement between an institution of 

higher education and a health insurance 

issuer to students enrolled in that 

institution of higher education, and 

their dependents, that meet certain 

specified conditions.20 These proposed 

rules propose to extend an antiduplication rule similar to that provided 

with respect to group health coverage to 

student health insurance coverage, as 

defined in in 45 CFR 147.145(a). 

Specifically, HHS proposes that the 

requirement to provide an SBC with 

respect to an individual will be 

considered satisfied for an entity (such 

as an institution of higher education) if 

another party (such as a health 

insurance issuer) provides a timely and 

complete SBC to the individual. The 

Departments are also soliciting 

comments on whether or not a 

requirement to monitor the provisioning 

of the SBC in this circumstance should 

be added. 

2. Content 

PHS Act section 2715(b)(3) generally 

provides that the SBC must include: 

a. Uniform definitions of standard 

insurance terms and medical terms so 

that consumers may compare health 

coverage and understand the terms of 

(or exceptions to) their coverage; 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 78583 

21See Affordable Care Act Implementation FAQs 

Part XIV, question 1, available at www.dol.gov/ebsa/ 

faqs/faq-aca14.html and http://www.cms.gov/

CCIIO/Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs14.html. 

22The guidance with respect to statements 

regarding MEC and MV was originally issued for 

SBCs provided with respect to coverage beginning 

on or after January 1, 2014, and before January 1, 

2015 (referred to as the ‘‘second year of 

applicability’’). See Affordable Care Act 

Implementation FAQs Part XIV, question 1, 

available at www.dol.gov/ebsa/faqs/faq-aca14.html 

and http://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/aca_implementation_

faqs14.html. This guidance was extended to be 

applicable until further guidance was issued. See 

Affordable Care Act Implementation FAQs Part 

XIX, question 7, available at www.dol.gov/ebsa/

faqs/faq-aca19.html and http://www.cms.gov/

CCIIO/Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs19.html. 

23See Affordable Care Act Implementation FAQs 

Part XIV, question 2, available at www.dol.gov/ebsa/ 

faqs/faq-aca14.html and http://www.cms.gov/

CCIIO/Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs14.html. 

b. A description of the coverage, 

including cost sharing, for each category 

of essential health benefits, and other 

benefits as identified by the 

Departments; 

c. The exceptions, reductions, and 

limitations on coverage; 

d. The cost-sharing provisions of the 

coverage, including deductible, 

coinsurance, and copayment 

obligations; 

e. The renewability and continuation 

of coverage provisions; 

f. A coverage facts label that includes 

examples to illustrate common benefits 

scenarios (including pregnancy and 

serious or chronic medical conditions) 

and related cost sharing based on 

recognized clinical practice guidelines; 

g. A statement of whether the plan or 

coverage provides minimum essential 

coverage (MEC) as defined under 

section 5000A(f) of the Code, and 

whether the plan’s or coverage’s share of 

the total allowed costs of benefits 

provided under the plan or coverage is 

not less than 60% of such costs; 

h. A statement that the SBC is only a 

summary and that the plan document, 

policy, or certificate of insurance should 

be consulted to determine the governing 

contractual provisions of the coverage; 

and 

i. A contact number to call with 

questions and an Internet web address 

where a copy of the actual individual 

coverage policy or group certificate of 

coverage can be reviewed and obtained. 

Consistent with the Departments’ 

authority to develop standards with 

respect to the SBC and with the 

statutory requirement to consult with 

the NAIC and other stakeholders, after 

considering recommendations by the 

NAIC and comments received on the 

2011 proposed regulations, the 2012 

final regulations added three content 

elements: (1) For plans and issuers that 

maintain one or more networks of 

providers, an Internet address (or 

similar contact information) for 

obtaining a list of the network 

providers; (2) for plans and issuers that 

use a formulary in providing 

prescription drug coverage, an Internet 

address (or similar contact information) 

for obtaining information on 

prescription drug coverage under the 

plan or coverage; and (3) an Internet 

address for obtaining the uniform 

glossary, as well as a contact phone 

number to obtain a paper copy of the 

uniform glossary, and a disclosure that 

paper copies of the uniform glossary are 

available. 

The Departments have received 

several questions related to content 

requirements under the 2012 final 

regulations. One such question relates to 

the statements about whether a plan or 

coverage provides MEC, as defined 

under section 5000A(f) of the Code, and 

whether the plan’s or coverage’s share of 

the total allowed costs of benefits 

provided under the plan or coverage 

meets applicable minimum value (MV) 

requirements. The preamble to the 2012 

final regulations stated that future 

guidance would address these 

statements. In April 2013, the 

Departments issued an updated SBC 

template (and sample completed SBC) 

with the addition of statements of 

whether the plan or coverage provides 

MEC (as defined under section 5000A(f) 

of the Code) and whether the plan or 

coverage meets the MV requirements.21

In Affordable Care Act Implementation 

FAQs Part XIV, issued 

contemporaneously with the updated 

SBC template, the Departments stated 

this language is required to be included 

in SBCs provided with respect to 

coverage beginning on or after January 

1, 2014.22

An FAQ issued at that time stated that 

if a plan or issuer was unable to modify 

the SBC template for these disclosures, 

the Departments will not take any 

enforcement action against a plan or 

issuer for using the original template 

authorized at the time the 2012 final 

regulations were issued, provided that 

the SBC was furnished with a cover 

letter or similar disclosure stating 

whether the plan or coverage does or 

does not provide MEC and whether the 

plan’s or coverage’s share of the total 

allowed costs of benefits provided 

under the plan or coverage does or does 

not meet the MV standard under the 

Affordable Care Act.23 The Departments 

decline to extend this temporary 

enforcement safe harbor. Accordingly, 

effective for SBCs provided in 

accordance with the applicability date 

described below for these proposed 

rules, the statements regarding MEC and 

MV are required to be included in the 

SBC. These statements have been 

modified for added clarity and 

relevance for consumers, including 

consumers in the individual market. As 

of the applicability date described 

below, the option previously available 

to include this information in a cover 

letter or similar disclosure furnished 

with the SBC is no longer available. 

Under section 1303(b)(3)(A) of the 

Affordable Care Act and implementing 

regulations at 45 CFR 156.280(f), a QHP 

issuer that elects to offer a QHP that 

provides coverage of abortion services 

for which public funding is prohibited 

(non-excepted abortion services) must 

provide a notice to enrollees, as part of 

the SBC provided at the time of 

enrollment, of coverage of such services. 

In the interest of increasing 

transparency for consumers shopping 

for coverage, and to assist issuers with 

meeting applicable disclosure 

requirements under section 

1303(b)(3)(A) of the Affordable Care Act 

and its implementing regulations, we 

are updating the SBC template 

published contemporaneously with 

these proposed rules. These proposed 

rules would require a QHP issuer to 

disclose on the SBC whether abortion 

services are covered or excluded and 

whether coverage is limited to services 

for which federal funding is allowed 

(excepted abortion services). The draft 

instruction guide for individual health 

insurance, released concurrently with 

these proposed rules, indicates that 

coverage of abortion services must be 

described in the ‘‘services your plan 

does not cover’’ or ‘‘other covered 

services’’ section. We seek comments on 

this guidance, including whether 

coverage of abortion services should be 

included in another section of the 

template, such as the table occurring 

immediately prior. 

Neither the 2012 final regulations nor 

these proposed regulations require the 

SBC to include premium information. 

The Departments previously stated their 

understanding that it is administratively 

and logistically complex to convey 

premium information in an SBC due to 

a number of variables, including, for 

example, when premiums differ based 

on family size; when, in the group 

market, employer contributions impact 

cost of coverage paid by participants 

and beneficiaries; and when, for 

coverage sold through an individual 

market Exchange, advance payments of 

the premium tax credit impact the cost 

of coverage paid by individuals and 

dependents. In Affordable Care Act 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
78584 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 

24See Affordable Care Act Implementation FAQs 

Part VIII, question 16, available at www.dol.gov/

ebsa/faqs/faq-aca8.html and http://www.cms.gov/

CCIIO/Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs8.html. 

25 In accordance with section 1303(b)(3)(B) of the 

Affordable Care Act and 45 CFR 156.280(f)(2), if the 

SBC provided at the time of enrollment notice 

includes the QHP premium amount, it must display 

only the total premium for the plan, inclusive of all 

covered benefits and services. 

26 29 CFR 2520.104b–1. 

27ERISA section 3(7) defines a ‘‘participant’’ to 

include any employee or former employee who is 

or may become eligible to receive a benefit of any 

type from an employee benefit plan or whose 

beneficiaries may be eligible to receive any such 

benefit. Accordingly, employees who are not 

enrolled but are, for example, in a waiting period 

for coverage, or who are otherwise shopping 

amongst benefit package options at open season, 

generally are considered plan participants for this 

purpose. 

28 29 CFR 2560.503–1. See also 29 CFR 2590.715– 

2719(b)(2)(i) and 45 CFR 147.136(b)(2)(i), requiring 

nongrandfathered plans and issuers to incorporate 

the internal claims and appeals processes set forth 

in 29 CFR 2560.503–1. 

29A summary of the focus group testing done by 

America’s Health Insurance Plans is available at: 

http://www.naic.org/documents/committees_b_

consumer_information_101012_ahip_focus_group_

summary.pdf, a summary of the focus group testing 

done by Consumers Union on the coverage 

examples is available at: http://prescriptionfor

change.org/wordpress/wp-content/uploads/2011/

08/A_New_Way_of_Comparing_Health_

Insurance.pdf. 

30For further discussion of changes to the claims 

and pricing data underlying the two existing 

coverage examples, as well as the claims and 

pricing data with respect to the new coverage 

example, see section III later in this preamble. 

Implementation FAQs Part VIII, 

question 16, the Departments clarified 

that a plan or issuer may choose to add 

premium information to the SBC.24 If a 

plan or issuer wishes to include this 

information, it should be added at the 

end of the SBC template.25

As mentioned above, the statute 

provides that the SBC must include ‘‘a 

contact number for the consumer to call 

with additional questions and an 

Internet web address where a copy of 

the actual individual coverage policy or 

group certificate of coverage can be 

reviewed and obtained.’’ The 2012 final 

regulations state the SBC must include 

‘‘contact information for questions and 

obtaining a copy of the plan document 

or the insurance policy, certificate, or 

contract of insurance (such as a 

telephone number for customer service 

and an Internet address for obtaining a 

copy of the plan document or the 

insurance policy, certificate, or contact 

of insurance).’’ Questions have arisen as 

to whether this provision of the statute 

and regulations requires that all plans 

and issuers must post underlying plan 

documents automatically on an Internet 

Web site. 

These proposed rules would clarify 

that all plans and issuers must include 

on the SBC contact information for 

questions. However, because the 

statutory language regarding Internet 

posting uses the terms ‘‘individual 

coverage policy’’ and ‘‘group certificate 

of coverage,’’ which we interpret to refer 

only to insurance, these proposed 

regulations propose that only issuers 

must also include an Internet web 

address where a copy of the actual 

individual coverage policy or group 

certificate of coverage can be reviewed 

and obtained. The Departments note 

that this proposal would require these 

documents to be easily available to 

individuals, plan sponsors, and 

participants and beneficiaries shopping 

for coverage prior to submitting an 

application for coverage. For the group 

market only, because the actual 

‘‘certificate of coverage’’ is not available 

until after the plan sponsor has 

negotiated the terms of coverage with 

the issuer, an issuer is permitted to 

satisfy this requirement with respect to 

plan sponsors that are shopping for 

coverage by posting a sample group 

certificate of coverage for each 

applicable product. After the actual 

certificate of coverage is executed, it 

must be easily available to plan 

sponsors and participants and 

beneficiaries via an Internet web 

address. The Departments invite 

comments on this approach, including 

the costs and benefits of also requiring 

self-insured plans to post underlying 

plan documents on the Internet. 

The Departments also note that, 

separate from the SBC requirement, 

provisions of other applicable law 

require disclosure of plan documents 

and other instruments governing the 

plan. For example, ERISA section 104 

and the Department of Labor’s 

implementing regulations 26 provide 

that, for plans subject to ERISA, the plan 

documents and other instruments under 

which the plan is established or 

operated must generally be furnished by 

the plan administrator to plan 

participants 27 upon request. In 

addition, the Department of Labor’s 

claims procedure regulations 

(applicable to ERISA plans), as well as 

the Departments’ claims and appeals 

regulations under the Affordable Care 

Act (applicable to all non-grandfathered 

group health plans and health insurance 

issuers in the group and individual 

markets),28 set forth rules regarding 

claims and appeals, including the right 

of claimants (or their authorized 

representatives) upon appeal of an 

adverse benefit determination (or a final 

internal adverse benefit determination) 

to be provided by the plan or issuer, 

upon request and free of charge, 

reasonable access to and copies of all 

documents, records, and other 

information relevant to the claimant’s 

claim for benefits. Plans and issuers 

must continue to comply with these 

provisions and any other applicable 

laws. 

Section 2715(b)(3)(F) of the PHS Act 

also requires that an SBC contain a 

‘‘coverage facts label.’’ For ease of 

reference, the 2012 final regulations 

used the term ‘‘coverage examples’’ in 

place of the statutory term. Consumer 

testing performed on behalf of the 

NAIC29 demonstrated that the coverage 

examples facilitated individuals’ 

understanding of the benefits and 

limitations of a plan or policy and 

helped them make more informed 

choices about their options. That testing 

also showed that individuals were able 

to comprehend that the examples were 

only illustrative. Additionally, while 

some plans provide useful coverage 

calculators to their enrollees to help 

them make health coverage decisions, 

they are not uniform across all plans 

and most are not available to 

individuals prior to enrollment, making 

it difficult for individuals and 

employers to make coverage 

comparisons. 

The Departments have taken a phased 

approach to implementing the coverage 

examples. The 2012 final regulations 

require the SBC to include two coverage 

examples: Having a baby (normal 

delivery) and routine maintenance of 

well-controlled type 2 diabetes. Each 

benefit scenario represents a 

hypothetical situation consisting of a 

sample treatment plan and medical 

costs, based on national average allowed 

charges, for each of the conditions 

stated above. Each example describes 

the sample care costs and how much the 

hypothetical patient will be responsible 

for paying, including deductibles, 

copayments and coinsurance. 

In addition to the two existing 

coverage examples, these proposed 

regulations would require a third 

coverage example—a simple foot 

fracture (with emergency room visit). 

This example is proposed as a health 

problem that most individuals could 

experience (whereas having a baby and 

type 2 diabetes affect a subset of the 

population). Comments are welcome on 

the choice of this coverage example. 

In documents published 

contemporaneously with these proposed 

rules, the Departments are publishing 

draft updated claims and pricing data 

underlying the two existing coverage 

examples as well as a narrative 

description and claims and pricing data 

associated with the third proposed 

coverage example.30 These materials 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 78585 

31See ACA Implementation FAQ Set IX, question 

9, available at www.dol.gov/ebsa/faqs/faq-aca9.html 

and http://www.cms.gov/CCIIO/Resources/FactSheets-and-FAQs/aca_implementation_faqs9.html. 

32The FAQ with respect to the coverage example 

calculator was originally issued for SBCs provided 

for coverage beginning before January 1, 2014 

(referred to as the ‘‘first year of applicability). See 

Affordable Care Act Implementation FAQs Part IX, 

question 9, available at www.dol.gov/ebsa/faqs/faqaca9.html and http://www.cms.gov/CCIIO/

Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs9.html. It was extended for 

SBCs provided for coverage beginning on or after 

January 1, 2014, and before January 1, 2015 

(referred to as the ‘‘second year of applicability’’), 

in Affordable Care Act Implementation FAQs Part 

XIV, question 5 (available at www.dol.gov/ebsa/

faqs/faq-aca14.html and http://www.cms.gov/

CCIIO/Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs14.html) and later extended 

until superseded by further guidance is issued in 

Affordable Care Act Implementation FAQs Part 

XIX, question 7 (available at www.dol.gov/ebsa/

faqs/faq-aca19.html and http://www.cms.gov/

CCIIO/Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs19.html). 

33Summary of Benefits and Coverage and 

Uniform Glossary—Templates, Instructions, and 

Related Materials; and Guidance for Compliance, 77 

FR 8706, 8707 (February 14, 2012). 

would provide plans and issuers with 

the specific information necessary to 

simulate benefits covered under the 

plan or policy for the coverage example 

portion of the SBC (including relevant 

medical items and services, dates of 

service, billing codes, and allowed 

charges). The Departments invite 

comment on all aspects of the benefits 

scenario proposed as a third coverage 

example and on all aspects of the 

coverage example materials made 

available on the HHS Web site 

contemporaneously with the 

publication of these proposed 

regulations. 

In May 2012, the Departments 

announced the development of a 

calculator that plans and issuers could 

use as a safe harbor for the first year of 

applicability to complete the coverage 

examples in a streamlined fashion.31

The calculator allows plans and issuers 

to input a discrete number of 

informational elements about the benefit 

package, taken from data fields used to 

populate the ‘‘Important Questions’’ and 

‘‘Common Medical Events’’ chart 

sections of the SBC template.’’ The 

output of the calculator is a coverage 

example that can be added to the SBC. 

On its Web site, HHS provided the 

coverage examples calculator, 

instructions for using the calculator, the 

algorithm that was used to create the 

calculator, and a checklist providing 

information on the inputs needed to use 

the coverage calculator. 

The original FAQ regarding the 

coverage example calculator stated that 

because using a limited number of 

inputs in the calculator will be less 

accurate than the results that a plan or 

issuer could obtain by processing the 

full list of claims associated with each 

coverage example through the plan’s or 

issuer’s system, the calculator would be 

allowed as a transitional tool for the first 

year of applicability of the SBC 

requirements. Use of the coverage 

example calculator was subsequently 

extended for the second year of 

applicability, and later extended until 

superseded by further guidance.32 Given 

the complexity of the existing coverage 

examples, the addition of a proposed 

new, third coverage example to the SBC 

requirements, and the fact that all 

coverage examples are merely 

illustrative and will not be an accurate 

predictor of a specific individual’s 

actual costs, the Departments are 

proposing that the coverage example 

calculator be authorized for continued 

use. The Departments invite comments 

on this proposal. 

3. Appearance 

PHS Act section 2715 sets forth 

standards related to the appearance and 

language of the SBC. Specifically, the 

statute provides that the SBC is to be 

presented in a uniform format, in a 

culturally and linguistically appropriate 

manner utilizing terminology 

understandable by the average plan 

enrollee, that does not exceed four 

double-sided pages in length, and does 

not include print smaller than 12-point 

font. Since the issuance of the 2011 

proposed regulations, plans and issuers 

have informed the Departments that 

they are concerned about including all 

of the required information in the SBC 

while also satisfying the limitation on 

the length of the document of four 

double-sided pages. 

The instruction guides for completing 

the SBC template (issued 

contemporaneously with the 2012 final 

regulations) included a special rule 

stating that, to the extent a plan’s terms 

that are required to be in the SBC 

template cannot reasonably be described 

in a manner consistent with the 

template format and instructions, the 

plan or issuer must accurately describe 

the relevant plan terms while using its 

best efforts to do so in a manner that is 

still as consistent with the instructions 

and template format as reasonably 

possible. Such situations may occur, for 

example, if a plan provides a different 

structure for provider network tiers or 

drug tiers than is contemplated by the 

template and associated instructions, if 

a plan provides different benefits based 

on facility type (such as hospital 

inpatient versus non-hospital inpatient), 

in a case where the effects of a health 

flexible spending arrangement (health 

FSA) or a health reimbursement 

arrangement (HRA) are being described, 

or if a plan provides different cost 

sharing based on participation in a 

wellness program. The new SBC 

template that is being published 

contemporaneously with these proposed 

regulations eliminates some information 

from the SBC that is not required by 

statute based on comments from 

stakeholders, which is intended to make 

it easier for plans to include all of the 

required information in the SBC while 

also satisfying the statutory page limit. 

These reductions are significant; the 

sample completed template has been 

reduced from four double-sided pages to 

two and a half double-sided pages. The 

Departments invite comments on 

whether the modifications maintain 

critical information while shortening it 

enough to ensure that SBCs do not 

extend beyond the statutory page limit 

and, if not, what other changes should 

be made to ensure the minimum 

content, appearance, and language 

requirements are met while also 

providing consistency in formatting to 

allow comparisons for individuals. 

Comments are invited on potential ways 

to reconcile the statutory page limit 

with the statutory contents, appearance, 

and format requirements, particularly 

the need for the summary to present 

information in an understandable, 

accurate, and meaningful way that 

facilitates comparisons of health 

options, including those that have 

disparate and comparatively complex 

features. Specifically, comments are 

invited on the sorts of plans that have 

difficulty meeting the statutory limit, 

and what other sorts of accommodations 

may be appropriate for those plans. 

Paragraph (a)(3) of the 2012 final 

regulations requires plans and issuers to 

provide the SBC in the form, and in 

accordance with the instructions for 

completing the SBC, that are specified 

by the Secretaries in guidance. A 

guidance document published 

contemporaneously with the 2012 final 

regulations served as such guidance 

specified by the Secretaries, and stated 

that SBCs provided in connection with 

group health plan coverage may be 

provided either as a stand-alone 

document or in combination with other 

summary materials (for example, a 

summary plan description (SPD)), if the 

SBC information is intact and 

prominently displayed at the beginning 

of the materials (such as immediately 

after the Table of Contents in an SPD) 

and in accordance with the timing 

requirements for providing an SBC.33

For health insurance coverage offered in 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
78586 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 

34See Affordable Care Act Implementation FAQs 

Part VIII, question 8, available at www.dol.gov/ebsa/ 

faqs/faq-aca8.html and http://www.cms.gov/CCIIO/ 

Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs8.html. 

35See Affordable Care Act Implementation FAQs 

Part IX, question 5, available at http://www.dol.gov/ 

ebsa/faqs/faq-aca9.html and http://www.cms.gov/

CCIIO/Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs9.html. 

36See Affordable Care Act Implementation FAQs 

Part IX, question 7, available at http://www.dol.gov/ 

ebsa/faqs/faq-aca9.html and http://www.cms.gov/

CCIIO/Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs9.html. 

37On April 7, 2011, the Department of Labor 

published a Request for Information regarding 

electronic disclosure at 76 FR 19285. In it, the 

Department of Labor stated that it is reviewing the 

use of electronic media by employee benefit plans 

to furnish information to participants and 

beneficiaries covered by employee benefit plans 

subject to ERISA. Because these proposed 

regulations propose to adopt the ERISA electronic 

disclosure rules by cross-reference, any changes 

that may be made to 29 CFR 2520.104b–1 in the 

future would also apply to the SBC. 

38See Affordable Care Act Implementation FAQs 

Part IX, question 4, available at http://www.dol.gov/ 

ebsa/faqs/faq-aca9.html and http://www.cms.gov/

CCIIO/Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs9.html. 

39See Affordable Care Act Implementation FAQs 

Part VIII, question 12, available at http://

www.dol.gov/ebsa/faqs/faq-aca8.html and http://

www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs8.html. 

the individual market, the SBC must be 

provided as a stand-alone document, 

but HHS notes that it can be included 

in the same mailing as other plan 

materials. These proposed rules do not 

make any changes to these 

requirements. 

In Affordable Care Act 

Implementation FAQs Part VIII, 

question 8, the Departments stated that 

an SBC provided in connection with a 

group health plan may include a 

reference to the SPD (although not as a 

substitute for any required content 

element of the SBC).34 Another FAQ 

provided that for SBCs provided in 

connection with coverage in the 

individual market, while it is not 

permitted to substitute a reference to 

any other document for any content 

element of the SBC, an SBC may include 

a reference to another document in the 

SBC footer.35 In addition, wherever an 

SBC provides information that fully 

satisfies a particular content element of 

the SBC, it may add to that information 

a reference to specified pages or 

portions of other documents in order to 

supplement or elaborate on that 

information. As stated in the previous 

FAQs, SBCs provided in connection 

with a group health plan may include a 

reference to the SPD or other documents 

and SBCs provided in connection with 

individual market coverage may 

reference other documents to 

supplement or elaborate on information 

in the SBC. 

Affordable Care Act Implementation 

FAQs Part IX, question 7, addressed 

combining SBCs or SBC elements to 

provide a side-by-side comparison.36

Some plans or issuers provide webbased or print materials to illustrate the 

differences between benefit package 

options (including comparison charts 

and broker comparison Web sites). 

Issuers and plans (and agents and 

brokers working with such plans) may 

display SBCs, or parts of SBCs, in a way 

that facilitates comparisons of different 

benefit package options by individuals 

and employers shopping for coverage. 

For example, on a Web site, viewers 

could be allowed to select a comparison 

of only the deductibles, out-of-pocket 

limits, or other cost sharing information 

relating to several benefit package 

options. This could be achieved by 

providing the information from the 

Answers column in the ‘‘What is the 

overall deductible?’’ row of the SBC for 

several benefit packages, but without 

having to repeat the first ‘‘Important 

Questions’’ and ‘‘Why this Matters’’ 

columns, or the other content rows, of 

the SBC for each of the benefit packages. 

However, such a chart, Web site, or 

other comparison would not, itself, 

satisfy the requirements under PHS Act 

section 2715 and the 2012 final 

regulations to provide the SBC. The full 

SBC for each of the benefit packages 

included in the comparison view or tool 

must be made available in accordance 

with the statute and regulations. 

4. Form 

a. Group Health Plan Coverage 

To facilitate faster and less 

burdensome disclosure of the SBC, and 

to be consistent with PHS Act section 

2715(d)(2), which permits disclosure in 

either paper or electronic form, the 2012 

final regulations set forth rules to permit 

greater use of electronic transmittal of 

the SBC. For SBCs provided 

electronically by a plan or issuer to 

participants and beneficiaries, the 2012 

final regulations make a distinction 

between a participant or beneficiary 

who is already covered under the group 

health plan, and a participant or 

beneficiary who is eligible for coverage 

but not enrolled in a group health plan. 

This distinction should provide new 

flexibility in some circumstances, while 

also ensuring adequate consumer 

protections. For participants and 

beneficiaries who are already covered 

under the group health plan, the 2012 

final regulations permit provision of the 

SBC electronically if the requirements of 

the Department of Labor’s regulations at 

29 CFR 2520.104b–1 are met. (Paragraph 

(c) of those regulations includes an 

electronic disclosure safe harbor.37) For 

participants and beneficiaries who are 

eligible for but not enrolled in coverage, 

the 2012 final regulations permit the 

SBC to be provided electronically if the 

format is readily accessible and a paper 

copy is provided free of charge upon 

request. Additionally, to reduce paper 

copies that may be unnecessary, if the 

electronic form is an Internet posting, 

the plan or issuer must timely advise 

the individual in paper form (such as a 

postcard) or email that the documents 

are available on the Internet, provide the 

Internet address, and notify the 

individual that the documents are 

available in paper form upon request. 

The Departments note that the rules for 

participants and beneficiaries who are 

eligible for but not enrolled in coverage 

are substantially similar to the 

requirements for an issuer providing an 

electronic SBC to a group health plan 

(or its sponsor) under paragraph (a)(4)(i) 

of the regulations. Finally, plans, and 

participants and beneficiaries (both 

those covered and those eligible but not 

enrolled) have the right to receive an 

SBC in paper format, free of charge, 

upon request. 

In Affordable Care Act 

Implementation FAQs Part IX, question 

1, the Departments adopted an 

additional safe harbor related to 

electronic delivery of SBCs.38 That FAQ 

stated that SBCs may be provided 

electronically to participants and 

beneficiaries in connection with their 

online enrollment or online renewal of 

coverage under the plan. The FAQ also 

stated SBCs also may be provided 

electronically to participants and 

beneficiaries who request an SBC 

online. In either case, the individual 

must have the option to receive a paper 

copy upon request. These proposed 

regulations would include this 

additional safe harbor into the 

applicable regulations. 

After the publication of the 2012 final 

regulations, the Departments were asked 

to provide model language to meet the 

requirement to advise participants and 

beneficiaries that the SBC is available 

on the Internet. In Affordable Care Act 

FAQs Part VIII, question 12, the 

Departments provided the following 

model language: 39

Availability of Summary Health Information 

As an employee, the health benefits 

available to you represent a significant 

component of your compensation package. 

They also provide important protection for 

you and your family in the case of illness or 

injury. 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 78587 

40See 75 FR 43330 (July 23, 2010), as amended 

by 76 FR 37208 (June 24, 2011). 

41 Guidance on the HHS Web site contains a list 

of the counties that meet this threshold. This 

information is available at http://www.cms.gov/

CCIIO/Resources/Fact-Sheets-and-FAQs/

Downloads/2009-13-CLAS-County-Data_12-05-14_

clean_508.pdf. 

42Translations are available at http://

cciio.cms.gov/programs/consumer/

summaryandglossary/index.html. 

Your plan offers a series of health coverage 

options. Choosing a health coverage option is 

an important decision. To help you make an 

informed choice, your plan makes available 

a Summary of Benefits and Coverage (SBC), 

which summarizes important information 

about any health coverage option in a 

standard format, to help you compare across 

options. 

The SBC is available on the web at: 

www.Web site.com/SBC. A paper copy is also 

available, free of charge, by calling 1–XXX– 

XXX–XXXX (a toll-free number). 

The FAQ also stated that plans and 

issuers have flexibility with respect to 

the postcard and may choose to tailor it 

in many ways. 

b. Individual Health Insurance Coverage 

and Self-Insured Non-Federal 

Governmental Plans 

The HHS 2012 final regulations 

established a provision under paragraph 

(a)(4)(iii)(C) that deems health insurance 

issuers in the individual market to be in 

compliance with the requirement to 

provide the SBC to an individual 

requesting summary information about a 

health insurance product prior to 

submitting an application for coverage if 

the issuer provides the content required 

under paragraph (a)(2) of the regulations 

to the federal health reform Web portal 

described in 45 CFR 159.120. Issuers 

must submit all of the content required 

under paragraph (a)(2), as specified in 

guidance by the Secretary, to be deemed 

compliant with the requirement to 

provide an SBC to an individual 

requesting summary information prior 

to submitting an application for 

coverage. HHS intends to continue to 

facilitate the operation of this deemed 

compliance option for individual 

market issuers. An issuer must provide 

all SBCs other than the ‘‘shopper’’ SBC 

contemplated in the deemed 

compliance provision as required under 

the 2012 final regulations (and any 

future final regulations), including 

providing the SBC at the time of 

application and renewal. 

The Departments note that consistent 

with the 2012 final regulations, an 

issuer in the individual market must 

provide the SBC in a manner that can 

reasonably be expected to provide 

actual notice regardless of the format. 

An issuer in the individual market 

satisfies the form requirements set forth 

in the 2012 final regulations if it does 

at least one of the following: (1) Handdelivers a printed copy of the SBC to the 

individual or dependent; (2) mails a 

printed copy of the SBC to the mailing 

address provided to the issuer by the 

individual or dependent; (3) provides 

the SBC by email after obtaining the 

individual’s or dependent’s agreement 

to receive the SBC or other electronic 

disclosures by email; (4) posts the SBC 

on the Internet and advises the 

individual or dependent in paper or 

electronic form, in a manner compliant 

with 45 CFR 147.200(a)(4)(iii)(A)(1) 

through (3), that the SBC is available on 

the Internet and includes the applicable 

Internet address; or (5) provides the SBC 

by any other method that can reasonably 

be expected to provide actual notice. 

The 2012 final regulations also 

provide that the obligation to provide an 

SBC cannot be satisfied electronically in 

the individual market unless: the format 

is readily accessible; the SBC is 

displayed in a location that is 

prominent and readily accessible; the 

SBC is provided in an electronic form 

that can be electronically retained and 

printed; the SBC is consistent with the 

appearance, content and language 

requirements; and the issuer notifies the 

individual that a paper SBC is available 

upon request without charge. 

These proposed rules would clarify 

the form and manner for SBCs provided 

by a self-insured non-Federal 

governmental plan. Such SBCs may be 

provided in paper form. Alternatively, 

such SBCs may be provided 

electronically if the plan conforms to 

either the substance of the provisions 

applicable to ERISA plans (in paragraph 

(a)(4)(ii) of the regulations) or to 

individual health insurance coverage (in 

paragraph (a)(4)(iii) of the regulations). 

5. Language 

PHS Act section 2715(b)(2) provides 

that standards shall ensure that the SBC 

‘‘is presented in a culturally and 

linguistically appropriate manner.’’ The 

2012 final regulations provide that a 

plan or issuer for this purpose is 

considered to provide the SBC in a 

culturally and linguistically appropriate 

manner if the thresholds and standards 

of 45 CFR 147.136(e), implementing 

standards for the form and manner of 

notices related to internal claims 

appeals and external review, are met as 

applied to the SBC.40 At the time of 

publication of these proposed 

regulations, 268 U.S. counties (78 of 

which are in Puerto Rico) meet this 

threshold. The overwhelming majority 

of these are Spanish; however, Chinese, 

Navajo, and Tagalog are present in a few 

counties, affecting five states 

(specifically, Alaska, Arizona, 

California, New Mexico, and Utah).41

To help plans and issuers meet the 

language requirements of paragraph 

(a)(5) of the 2012 final regulations, as 

requested by commenters, HHS has 

provided written translations of the SBC 

template, sample language, and the 

uniform glossary in Chinese, Navajo, 

Spanish, and Tagalog.42 HHS may also 

make these materials available in other 

languages to facilitate voluntary 

distribution of SBCs to other individuals 

with limited English proficiency. We 

seek comment on this standard, and on 

other potential standards that could 

facilitate consistency across the 

Departments’ programs. The 

Departments anticipate that translations 

of the updated SBC template, sample 

language, and uniform glossary will be 

available when these proposed 

regulations are finalized. 

Nothing in these proposed regulations 

should be construed as limiting an 

individual’s rights under Federal or 

State civil rights statutes, such as Title 

VI of the Civil Rights Act of 1964 (Title 

VI) which prohibits recipients of 

Federal financial assistance, including 

issuers participating in Medicare 

Advantage, from discriminating on the 

basis of race, color, or national origin. 

To ensure non-discrimination on the 

basis of national origin, recipients are 

required to take reasonable steps to 

ensure meaningful access to their 

programs and activities by limited 

English proficient persons. For more 

information, see, ‘‘Guidance to Federal 

Financial Assistance Recipients 

Regarding Title VI Prohibition Against 

National Origin Discrimination 

Affecting Limited English Proficient 

Persons,’’ available at http://

www.hhs.gov/ocr/civilrights/resources/

specialtopics/lep/

policyguidancedocument.html. 

B. Notice of Modification 

PHS Act section 2715(d)(4) directs 

that a group health plan or health 

insurance issuer offering group or 

individual health insurance coverage 

must provide notice of any material 

modification (as defined under ERISA 

section 102) in any of the terms of the 

plan or coverage involved that is not 

reflected in the most recently provided 

SBC. For purposes of PHS Act section 

2715, the 2012 final regulations 

interpret the statutory reference to the 

SBC to mean that only a material 

modification in the terms of the plan or 

coverage that would affect the content of 

the SBC, that is not reflected in the most 

recently provided SBC, and that occurs 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
78588 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 

43See DOL Information Letter, Washington Star/ 

Washington-Baltimore Newspaper Guild to 

Munford Page Hall, II, Baker & McKenzie (February 

8, 1985). 

44See, e.g., Ward v. Maloney, 386 F.Supp.2d 607, 

612 (M.D.N.C. 2005), which discusses judicial 

interpretations of when an amendment is and is not 

a material modification. 

45 In Affordable Care Act Implementation FAQs 

Part XX, the Departments addressed notice 

requirements triggered by a closely-held for-profit 

corporation’s health plan ceasing to provide 

coverage for some or all contraceptive services midplan year. The FAQ clarified that, for plans subject 

to ERISA that reduce or eliminate coverage of 

contraceptive services after having provided such 

coverage, expedited disclosure requirements for 

material reductions in covered services or benefits 

apply. See http://www.dol.gov/ebsa/pdf/faqaca20.pdf and http://www.cms.gov/CCIIO/

Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs20.html. 

46The insurance-related terms identified in the 

statute are: co-insurance, co-payment, deductible, 

excluded services, grievance and appeals, nonpreferred provider, out-of-network co-payments, 

out-of-pocket limit, preferred provider, premium, 

and UCR (usual, customary and reasonable) fees. 

The medical terms identified in the statute are: 

durable medical equipment, emergency medical 

transportation, emergency room care, home health 

care, hospice services, hospital outpatient care, 

hospitalization, physician services, prescription 

drug coverage, rehabilitation services, and skilled 

nursing care. 

47The additional terms in the uniform glossary 

issued with the 2012 final regulations are: allowed 

amount, balance billing, complications of 

pregnancy, emergency medical condition, 

emergency services, habilitation services, health 

insurance, in-network co-insurance, in-network copayment, medically necessary, network, out-ofnetwork co-insurance, plan, preauthorization, 

prescription drugs, primary care physician, primary 

care provider, provider, reconstructive surgery, 

specialist, and urgent care. 

48For further discussion of proposed changes to 

the Uniform Glossary, see section III later in this 

preamble. 

other than in connection with a renewal 

or reissuance of coverage would trigger 

the notice. In these circumstances, the 

notice would be required to be provided 

to enrollees (or, in the individual 

market, covered individuals) no later 

than 60 days prior to the date on which 

such change will become effective. A 

material modification, within the 

meaning of section 102 of ERISA, 

includes any modification to the 

coverage offered under a plan or policy 

that, independently, or in conjunction 

with other contemporaneous 

modifications or changes, would be 

considered by an average plan 

participant (or in the case of individual 

market coverage, an average individual 

covered under a policy) to be an 

important change in covered benefits or 

other terms of coverage under the plan 

or policy.43 A material modification 

could be an enhancement of covered 

benefits or services or other more 

generous plan or policy terms. It 

includes, for example, coverage of 

previously excluded benefits or reduced 

cost-sharing. A material modification 

could also be a material reduction in 

covered services or benefits, as defined 

in 29 CFR 2520.104b–3(d)(3) of the 

Department of Labor’s regulations, or 

more stringent requirements for receipt 

of benefits. As a result, it also includes 

changes or modifications that reduce or 

eliminate benefits, increase cost-sharing, 

or impose a new referral requirement.44

(However, changes to the information in 

the SBC resulting from changes in the 

regulatory requirements for an SBC are 

not changes to the plan or policy 

requiring the mid-year provision of a 

notice of modification, unless specified 

in such new requirements.) 

The 2012 final regulations require that 

this notice be provided only for changes 

other than in connection with a renewal 

or reissuance of coverage. At renewal, 

plans and issuers must provide an 

updated SBC in accordance with the 

requirements otherwise applicable to 

SBCs. PHS Act section 2715 and 

paragraph (b) of the 2012 final 

regulations specify the timing for 

providing a notice of modification in 

situations other than in connection with 

a renewal or reissuance of coverage. To 

the extent a plan or policy implements 

a mid-year change that is a material 

modification that affects the content of 

the SBC, and that occurs other than in 

connection with a renewal or reissuance 

of coverage, the 2012 final regulations 

require a notice of modification to be 

provided 60 days in advance of the 

effective date of the change.45 Plans and 

issuers are permitted to either provide 

an updated SBC reflecting the 

modifications or provide a separate 

notice describing the material 

modifications. These proposed 

regulations do not make any changes to 

these requirements. 

For ERISA-covered group health plans 

subject to PHS Act section 2715, this 

notice is required in advance of the 

timing requirements under the 

Department of Labor’s regulations at 29 

CFR 2520.104b–3 for providing a 

summary of material modification 

(SMM) (generally not later than 210 

days after the close of the plan year in 

which the modification or change was 

adopted, or, in the case of a material 

reduction in covered services or 

benefits, not later than 60 days after the 

date of adoption of the modification or 

change). In situations where a complete 

notice is provided in a timely manner 

under PHS Act section 2715(d)(4), an 

ERISA-covered plan will also satisfy the 

requirement to provide an SMM under 

Part 1 of ERISA. 

C. Requirement To Provide the Uniform 

Glossary 

Sections 2715(g)(2) and (g)(3) of the 

PHS Act direct the Departments to 

develop standards for definitions, at a 

minimum, for certain insurance-related 

and medical terms (and also directs the 

Departments to develop standards for 

such other insurance-related and 

medical terms as will help consumers 

compare the terms of their coverage and 

the extent of medical benefits (or 

exceptions to those benefits)).46 The 

2012 final regulations included several 

additional terms in the uniform 

glossary.47 As discussed later in this 

preamble, the Departments propose to 

revise definitions for several of these 

terms and also add several new terms to 

the Glossary.48

A plan or issuer must make the 

uniform glossary available upon request 

within seven business days. To satisfy 

this requirement, a plan or issuer must 

provide the content described in 

paragraph (a)(2)(i)(L) of the 2012 final 

regulations, discussed earlier in this 

preamble, which requires that the SBC 

include an Internet address for 

obtaining the uniform glossary, a 

contact phone number to obtain a paper 

copy of the uniform glossary, and a 

disclosure that paper copies are 

available upon request. The Internet 

address may be a place where the 

document can be found on the plan’s or 

issuer’s Web site, or the Web site of 

either the Department of Labor or HHS. 

However, a plan or issuer must make 

the glossary available upon request, in 

either paper or electronic form (as 

requested), within seven business days 

after receipt of the request. Group health 

plans and health insurance issuers must 

provide the uniform glossary in the 

appearance specified by the 

Departments and without modification, 

so that the glossary is presented in a 

uniform format and uses terminology 

understandable by the average plan 

enrollee or individual covered under an 

individual policy. 

D. Preemption 

Section 2715 of the PHS Act is 

incorporated into ERISA section 715, 

and Code section 9815, and is subject to 

the preemption provisions of ERISA 

section 731 and PHS Act section 2724 

(implemented in 29 CFR 2590.731(a) 

and 45 CFR 146.143(a)). Under these 

provisions, the requirements of part 7 of 

ERISA and part A of title XXVII of the 

PHS Act, as amended by the Affordable 

Care Act, are not to be ‘‘construed to 

supersede any provision of State law 

which establishes, implements, or 

continues in effect any standard or 

requirement solely relating to health 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 78589 

49See section IV of this preamble for a full 

discussion of the proposed applicability date. 

insurance issuers in connection with 

group or individual health insurance 

coverage except to the extent that such 

standard or requirement prevents the 

application of a requirement’’ of part A 

of title XXVII of the PHS Act. 

Accordingly, State laws that impose 

requirements on health insurance 

issuers that are stricter than those 

imposed by the Affordable Care Act will 

not be superseded by the Affordable 

Care Act. In addition, PHS Act section 

2715(e) provides that the standards 

developed under PHS Act section 

2715(a), ‘‘shall preempt any related 

State standards that require [an SBC] 

that provides less information to 

consumers than that required to be 

provided under this section, as 

determined by the [Departments].’’ 

Reading these two preemption 

provisions together, the 2012 final 

regulations do not, and these proposed 

regulations would not, prevent States 

from imposing separate, additional 

disclosure requirements on health 

insurance issuers. 

E. Failure To Provide 

PHS Act section 2715(f), incorporated 

into ERISA section 715 and Code 

section 9815, provides that a group 

health plan (including its 

administrator), and a health insurance 

issuer offering group or individual 

health insurance coverage, that 

‘‘willfully fails to provide the 

information required under this section 

shall be subject to a fine of not more 

than $1,000 for each such failure.’’ In 

addition, under PHS Act section 2715(f), 

a separate fine may be imposed for each 

individual or entity for whom there is 

a failure to provide an SBC. The 2012 

final regulations addressed the different 

underlying enforcement structures and 

penalty mechanisms for the 

Departments. 

HHS clarified in the 2012 final 

regulations that HHS will enforce these 

provisions in a manner consistent with 

45 CFR 150.101 through 150.465. In 

these proposed regulations, the 

Department of Labor proposes to clarify 

that it will use the same process and 

procedures for assessment of the civil 

fine as used for failure to file an annual 

report under 29 CFR 2560.502c-2 and 29 

CFR part 2570, subpart C. In accordance 

with ERISA section 502(b)(3), 29 U.S.C. 

1132(b)(3), the Secretary of Labor is not 

authorized to assess this fine against a 

health insurance issuer. Moreover, in 

these proposed regulations, the IRS 

proposes to clarify that the IRS will 

enforce this section using a process and 

procedure consistent with section 

4980D of the Code. 

III. Proposed Documents Authorized for 

Plan Years Beginning on or After 

September 1, 2015 

Contemporaneously with the issuance 

of these proposed regulations, the 

Departments are making available on 

their Web sites a proposed revised SBC 

template and attendant materials 

(including a proposed revised uniform 

glossary) to comply with the disclosure 

requirements of PHS Act section 2715. 

These materials are proposed to be 

authorized by the Departments for 

disclosure provided in accordance with 

the applicability date proposed later in 

this preamble.49 This section of the 

preamble describes the changes 

proposed to each document. 

The following documents, available at 

http://cciio.cms.gov and www.dol.gov/

ebsa/healthreform, are available for 

review and the Departments solicit 

comment on them: 

1. SBC template. The document is 

available in accessible format (PDF) and 

modifiable format (MS Word). 

2. Sample completed SBC. This 

document was completed using 

information for sample health coverage 

and provides a general illustration of a 

completed SBC for coverage under a 

group health plan. 

3. Instructions. For assistance in 

completing the SBC template, separate 

instructions are available for group 

health coverage and for individual 

health insurance coverage. Additionally, 

with respect to the individual market 

instructions, the Office of Personnel 

Management (OPM) may provide 

additional instructions for Multi-State 

Plan issuers. 

4. Why This Matters language. The 

SBC instructions include language that 

must be used when completing the 

‘‘Why This Matters’’ column on the first 

page of the SBC template. Two language 

options are provided depending on 

whether the answer in the applicable 

row is ‘‘yes’’ or ‘‘no’’, according to the 

terms of the plan or coverage. 

5. Coverage examples. Information 

provided by HHS at http://cciio.cms.gov 

(and accessible via hyperlink from 

www.dol.gov/ebsa/healthreform) the 

information necessary to perform the 

coverage example calculations. 

6. Uniform glossary. The uniform 

glossary of health coverage and medical 

terms may not be modified by plans or 

issuers. 

Many of the changes proposed in the 

updated versions of these documents 

streamline the SBC. As discussed earlier 

in this preamble, these changes were 

made after feedback the Departments 

received from stakeholders, and the 

revised proposed template and other 

documents are intended to make it 

easier for plans to satisfy the statutory 

page limit. The revised documents also 

incorporate information from several 

sets of FAQs that addressed 

implementation of the SBC provisions. 

Additionally, the revised documents 

include changes made to conform with 

new requirements that have become 

applicable since the issuance of the 

2012 final regulations. These changes 

include the addition of information 

regarding minimum value and 

minimum essential coverage and 

changes to be consistent with the 

Affordable Care Act’s requirement to 

eliminate all annual limits on essential 

health benefits. 

Finally, the revised documents reflect 

changes to the coverage examples. The 

coding and pricing data for the existing 

coverage examples (having a baby 

through normal delivery and managing 

well controlled type 2 diabetes) have 

been updated to account for changes in 

the data since the issuance of the final 

regulations in 2012. Additionally the 

Departments proposed to change the 

data source for the claims and pricing 

information from a data source that used 

multiple commercial payor databases, to 

one based on a single database, the 

Truven Health Analytics MarketScan®

Commercial Claims and Encounters 

database, adjusted to estimate 2014 

pricing to account for health care 

inflation since 2010. The Departments 

seek comment on whether to update this 

data using more recent 2013 

Marketscan® database claims data that 

will be available for the final rule, and 

on appropriate ways to inform 

consumers of the resulting increases in 

sample care costs when the pricing data 

is updated, for example, through a cover 

letter or other disclosure provided along 

with the SBC. The Departments also 

seek specific comment on two diagnosis 

codes in the having a baby (normal 

delivery) scenario. The pricing data 

associated with these two codes, DRG 

775 and DRG 795 (inpatient hospital 

charges for the mother, and inpatient 

hospital charges for the baby, 

respectively), appears higher than 

expected. These diagnosis codes 

represent bundled services and may 

include charges that are duplicated by 

other codes currently included in the 

scenario. The Departments seek 

comment on the accuracy of this pricing 

data. 

Additionally, the SBC template, 

sample completed template, and 

coverage example documents have been 

updated to reflect that these proposed 

regulations would require a third 


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50See Code section 106(c)(2). 

51See IRS Notice 2002–45, 2002–2 C.B. 93. 

52See Code section 223. 

53See Affordable Care Act Implementation FAQs 

Part IX, question 13, available at http://

www.dol.gov/ebsa/faqs/faq-aca9.html and http://

www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs9.html. 

54See Consolidated and Further Continuing 

Appropriations Act, 2015, Division M, Expatriate 

Health Coverage Clarification Act of 2014, Section 

3(d). 

55See Affordable Care Act Implementation FAQs 

Part IX, question 12, available at http://

www.dol.gov/ebsa/faqs/faq-aca9.html and http://

www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/aca_implementation_faqs9.html. 

56See 26 CFR 54.9831–1(c), 29 CFR 2590.732(c), 

45 CFR 146.145(c). 

57 79 FR 59130 (October 1, 2014). 

58The first requirement is that the EAP does not 

provide significant benefits in the nature of medical 

care. For this purpose, the amount, scope, and 

duration of covered services are taken into account. 

(See preamble discussion at 79 FR 59133 for 

examples). The second requirement is that the 

EAP’s benefits cannot be coordinated with the 

benefits under another group health plan. For this 

purpose, participants in the group health plan must 

not be required to use and exhaust benefits under 

the EAP (making the EAP a ‘‘gatekeeper’’) before an 

individual is eligible for benefits under the other 

group health plan; and participant eligibility for 

benefits under the EAP must not be dependent on 

participation in another group health plan. The 

third requirement is that no employee premiums or 

contributions may be required as a condition of 

participation in the EAP. The fourth requirement is 

that an EAP that constitutes excepted benefits may 

not impose any cost-sharing requirements. 

59On September 13, 2013, DOL and the Treasury 

published guidance on the application of the 

market reforms and other provisions of the 

Affordable Care Act to health reimbursement 

arrangements (HRAs), certain health flexible 

spending arrangements (health FSAs) and certain 

other employer health care arrangements. See DOL 

Technical Release 2013–03, available at http://

www.dol.gov/ebsa/newsroom/tr13-03.html, and IRS 

Notice 2013–54, available at http://www.irs.gov/

pub/irs-drop/n-13-54.pdf. HHS also issued 

guidance to reflect that HHS concurs in the 

application of the laws under its jurisdiction as set 

forth in the DOL and Treasury Department 

guidance. See Insurance Standards Bulletin, 

coverage example—a simple foot 

fracture (with emergency room visit), as 

described earlier in this preamble. The 

same Marketscan® database has been 

used to produce the claim and pricing 

data for this scenario. 

The Departments invite comment on 

all aspects of the proposed changes to 

the SBC template and other materials, 

and the uniform glossary. The 

Departments also request specific 

comments regarding the Instruction 

Guides about whether plans and issuers 

should be permitted to add additional 

benefits that are either covered or 

excluded in the ‘‘other covered 

services’’ and ‘‘excluded services’’ 

section that are not already required to 

be disclosed by the instructions. 

IV. Applicability 

After publication of the 2012 final 

regulations, the Departments received 

questions about the applicability of the 

SBC requirements to certain types of 

group health plans, including expatriate 

health plans, Medicare Advantage 

plans, and insurance products that are 

no longer being offered for purchase 

(closed blocks of business). The 

Departments addressed the applicability 

of the SBC requirements to each of these 

types of coverage in FAQs issued after 

publication of the 2012 final 

regulations. The Departments also 

received questions regarding the 

applicability of the SBC requirements to 

benefits provided under certain 

account-type arrangements such as 

health FSAs,50 HRAs,51 and health 

savings accounts (HSAs),52 as well as 

benefits provided through an employee 

assistance program (EAP) and other 

excepted benefits. 

In May 2012, the Departments issued 

FAQs that discussed the special 

circumstances and considerations faced 

by expatriate plans in complying with 

the SBC requirements.53 The FAQs 

provided temporary relief from 

enforcement. Under recently enacted 

legislation,54 expatriate health plans are 

not subject to the requirement to 

provide an SBC. The Departments 

intend to issue guidance implementing 

this legislation. The temporary relief 

from enforcement for expatriate plans 

will remain in place until such guidance 

is issued. 

Moreover, in August 2012, the 

Departments issued FAQs that 

discussed group health plans providing 

Medicare Advantage benefits, which are 

Medicare benefits financed by the 

Medicare Trust Funds, for which the 

benefits are set by Congress and 

regulated by the Centers for Medicare & 

Medicaid Services. Again, the FAQs 

provided a temporary nonenforcement 

policy, because Medicare Advantage 

benefits are not health insurance 

coverage and Medicare Advantage 

organizations are not required to 

provide an SBC with respect to such 

benefits. Additionally, there are 

separately required disclosures required 

to be provided by Medicare Advantage 

organizations, to ensure that enrollees in 

these plans receive the necessary 

information about their coverage and 

benefits. These rules propose to exempt 

from the SBC requirements a group 

health plan benefit package that 

provides Medicare Advantage benefits. 

The Departments also issued FAQs in 

May 2012 addressing insurance 

products that are no longer being offered 

for purchase (‘‘closed blocks of 

business’’). Some interested 

stakeholders had requested enforcement 

relief with respect to such products 

because the products are no longer 

offered for purchase and the SBC is 

intended to be a tool to help group 

health plans and individuals as they 

shop for coverage. The Departments had 

provided temporary relief through an 

FAQ provided that certain conditions 

were met: (1) The insurance product is 

no longer being actively marketed; (2) 

the health insurance issuer stopped 

actively marketing the product prior to 

September 23, 2012, when the 

requirement to provide an SBC was first 

applicable to health insurance issuers; 

and (3) the health insurance issuer has 

never provided an SBC with respect to 

such product. 55 The Departments 

reiterate that relief here, but note that if 

an insurance product was actively 

marketed for business on or after 

September 23, 2012, and is no longer 

being actively marketed for business, or 

if the plan or issuer ever provided an 

SBC in connection with the product, the 

plan and issuer must provide the SBC 

with respect to such coverage, as 

required by PHS Act section 2715 and 

the regulations. 

As under the 2012 final regulations, 

an SBC need not be provided for plans, 

policies, or benefit packages that 

constitute excepted benefits. Thus, for 

example, an SBC need not be provided 

for stand-alone dental or vision plans or 

health FSAs if they constitute excepted 

benefits under the Departments’ 

regulations.56 If benefits under a health 

FSA do not constitute excepted benefits, 

the health FSA is a group health plan 

generally subject to the SBC 

requirements. For a health FSA that 

does not meet the criteria for excepted 

benefits and that is integrated with other 

major medical coverage, the SBC is 

prepared for the other major medical 

coverage, and the effects of the health 

FSA can be denoted in the appropriate 

spaces on the SBC, including those for 

deductibles, copayments, coinsurance, 

and benefits otherwise not covered by 

the major medical coverage. A standalone health FSA, which does not meet 

the criteria for excepted benefits, must 

satisfy the SBC requirements 

independently. 

On October 1, 2014, the Departments 

published final rules on excepted 

benefits.57 These regulations stated that 

an EAP constitutes excepted benefits if 

it satisfies certain requirements.58 If an 

EAP qualifies as excepted benefits, the 

EAP need not separately satisfy the SBC 

requirements. 

The Departments have issued 

guidance regarding HRAs since the 

publication of the 2012 final 

regulations.59 An HRA is a group health 


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Application of Affordable Care Act Provisions to 

Certain Healthcare Arrangements, September 16, 

2013, available at https://www.cms.gov/CCIIO/

Resources/Regulations-and-Guidance/Downloads/

cms-hra-notice-9-16-2013.pdf. On May 13, 2013, 

two FAQs were made available on the IRS Web site 

addressing employer healthcare arrangements, 

available at: www.irs.gov/uac/Newsroom/EmployerHealth-Care-Arrangements. On November 6, 2014, 

the Departments issued three FAQs on the 

compliance of premium reimbursement 

arrangements. See ACA Implementation FAQs Part 

XXII, available at http://www.dol.gov/ebsa/pdf/faqaca22.pdf and http://www.cms.gov/CCIIO/

Resources/Fact-Sheets-and-FAQs/aca_

implementation_faqs22.html. 

60http://www.cms.gov/cciio/Resources/formsreports-and-other-resources/index.html#sbcug. For 

more information on the calculator, see section 

II.A.3 earlier in this preamble. 

plan. The Departments’ guidance on 

HRAs clarifies that such arrangements 

are subject to the group market reform 

provisions of the Affordable Care Act, 

including the prohibition on annual 

limits under PHS Act section 2711 and 

the requirement to provide certain 

preventive services without cost sharing 

under PHS Act section 2713. The 

Departments’ guidance further clarifies 

that such arrangements will not violate 

the market reform provisions when 

integrated with a group health plan that 

complies with those provisions (and 

that such arrangements cannot be 

integrated with individual market 

policies to satisfy the market reforms). 

Benefits under an HRA generally do 

not constitute excepted benefits, and 

thus HRAs are generally subject to the 

SBC requirements. An HRA integrated 

with other major medical coverage 

under a group health plan need not 

separately satisfy the SBC requirements; 

the SBC is prepared for the other major 

medical coverage, and the effects of 

employer allocations to an account 

under the HRA can be denoted in the 

appropriate spaces on the SBC, 

including those for deductibles, 

copayments, coinsurance, and benefits 

otherwise not covered by the other 

major medical coverage. 

HSAs generally are not group health 

plans and thus generally are not subject 

to the SBC requirements. Nevertheless, 

an SBC prepared for a high deductible 

health plan associated with an HSA can 

(but is not required to) mention the 

effects of employer contributions to 

HSAs in the appropriate spaces on the 

SBC, including those for deductibles, 

copayments, coinsurance, and benefits 

otherwise not covered by the high 

deductible health plan. 

V. Applicability Date 

Changes to the current requirements 

to provide an SBC, notice of 

modification, and uniform glossary 

under PHS Act section 2715 and the 

2012 final regulations are proposed to 

apply for disclosures with respect to 

participants and beneficiaries who 

enroll or re-enroll in group health 

coverage through an open enrollment 

period (including re-enrollees and late 

enrollees) beginning on the first day of 

the first open enrollment period that 

begins on or after September 1, 2015. 

With respect to disclosures to 

participants and beneficiaries who 

enroll in group health coverage other 

than through an open enrollment period 

(including individuals who are newly 

eligible for coverage and special 

enrollees), the requirements of these 

proposed regulations are proposed to 

apply beginning on the first day of the 

first plan year that begins on or after 

September 1, 2015. For disclosures to 

plans, and to individuals and 

dependents in the individual market, 

these requirements are proposed to 

apply to health insurance issuers 

beginning on September 1, 2015. We 

solicit comments on these proposed 

applicability dates. 

VI. Economic Impact and Paperwork 

Burden 

A. Executive Orders 12866 and 13563— 

Departments of Labor and HHS 

Executive Orders 12866 and 13563 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects; distributive impacts; and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule 

has been designated a ‘‘significant 

regulatory action’’ under section 3(f) of 

Executive Order 12866. Accordingly, 

the rule has been reviewed by the Office 

of Management and Budget. 

A regulatory impact analysis (RIA) 

must be prepared for major rules with 

economically significant effects ($100 

million or more in any one year). As 

discussed below, the Departments have 

concluded that these proposed 

regulations would not have economic 

impacts of $100 million or more in any 

one year or otherwise meet the 

definition of an ‘‘economically 

significant rule’’ under Executive Order 

12866. Nonetheless, consistent with 

Executive Orders 12866 and 13563, the 

Departments have provided an 

assessment of the potential benefits and 

the costs associated with this proposed 

regulation. 

The primary benefits of these 

proposed regulations come from 

improved information, which will 

enable consumers, both individuals and 

employers, to better understand the 

health insurance coverage they have and 

provide, and make better coverage 

decisions based on their preferences 

with respect to benefit design, level of 

financial protection, and cost. The 

Departments believe that such 

improvements will result in a more 

efficient, competitive market. These 

proposed regulations will also benefit 

consumers by reducing the time they 

spend searching for and compiling 

health plan and coverage information. 

The Departments have continued 

using the cost methodology that was 

used to estimate the costs presented in 

the 2012 final regulations. Since 

publication of the 2012 final 

regulations, the Departments have 

refined assumptions and estimates to 

incorporate better data. The estimates 

presented in these proposed regulations 

are a result of those efforts and represent 

the Departments’ best estimates. 

The primary cost of the proposed 

regulations is requiring issuers and 

plans to create a third coverage 

example, a simple foot fracture (with 

emergency room visit). This third 

coverage example will fit on the same 

page as the two existing coverage 

examples in the SBC template, so no 

new material costs are required by these 

proposed regulations. The quantified 

costs of these proposed regulations are 

for the actual production of the new 

coverage example. 

These proposed regulations allow 

issuers and plans to continue to use the 

‘‘Coverage Example Calculator.’’ 60 This 

calculator benefits issuers and plan 

sponsors by reducing the required time 

to produce the coverage examples. The 

calculator allows plans to either 

manually populate less than 20 data 

points on the plan’s design for one plan 

at a time, or to enter the data points for 

multiple plans at once. Most of the data 

fields needed for the new, proposed 

coverage example are already required 

to create the other two, already required 

coverage examples. While plan sponsors 

and issuers are not required to use the 

Coverage Example Calculator, the 

Departments expect that many will. 

Those choosing to perform the 

calculations without the calculator will 

make their own determination that it is 

more efficient and economically 

advantageous, or otherwise more 

appropriate for them to do so. 

Using assumptions similar to those 

used in the regulatory impact analysis of 

the 2012 final regulations, with respect 


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to plans and issuers that do not use the 

Coverage Example Calculator, the 

Departments estimate that large issuers 

and third-party administrators (TPAs), 

for all their plans and products, would 

spend a total of approximately 40 

additional hours creating the new 

coverage example (30 hours for medium 

firms, and 20 hours for small firms). 

Once the new coverage example is 

completed, the Departments estimate 

that large firms would spend an 

estimated 25 hours in later years 

updating, while medium firms would 

spend 19 hours and small firms would 

spend 13 hours. 

This leads to an estimated cost in the 

first year of $3.4 million and for each 

subsequent year of $2.1 million to 

produce the coverage example. Actual 

cost could be lower as firms organize 

their data in a manner that will allow 

them to use the automated functions of 

the Coverage Example Calculator. 

Tables 1 and 2 detail the calculations 

used to obtain the cost estimate for 

creating the new, proposed coverage 

example. The Paperwork Reduction Act 

section below contains a discussion of 

additional assumptions and data used to 

develop this estimate. 

TABLE 1—YEAR 1, CREATING NEW COVERAGE EXAMPLE

Type of labor Number of 

firms Hours per firm Cost per hour Total hour burden 

Equivalent 

costs of hours 

Issuers 

Large: 

IT ................................................................................... 75 22.0 $84 1,650 $138,584 

Benefits ......................................................................... 75 16.0 62 1,200 74,796 

Legal ............................................................................. 75 2.0 130 150 19,491 

Sub-total ................................................................ ........................ ........................ ........................ 3,000 232,871 

Medium: 

IT ................................................................................... 250 16.5 84 4,125 346,459 

Benefits ......................................................................... 250 12.0 62 3,000 186,990 

Legal ............................................................................. 250 1.5 130 375 48,728 

Sub-total ................................................................ ........................ ........................ ........................ 7,500 582,176 

Small: 

IT ................................................................................... 175 11.0 84 1,925 161,681 

Benefits ......................................................................... 175 8.0 62 1,400 87,262 

Legal ............................................................................. 175 1.0 130 175 22,740 

Sub-total ................................................................ ........................ ........................ ........................ 3,500 271,682 

TPAs 

Large: 

IT ................................................................................... 158 22.0 84 3,476 291,949 

Benefits ......................................................................... 158 16.0 62 2,528 157,570 

Legal ............................................................................. 158 2.0 130 316 41,061 

Sub-total ................................................................ ........................ ........................ ........................ 6,320 490,581 

Medium: 

IT ................................................................................... 526 16.5 84 8,679 728,949 

Benefits ......................................................................... 526 12.0 62 6,312 393,427 

Legal ............................................................................. 526 1.5 130 789 102,523 

Sub-total ................................................................ ........................ ........................ ........................ 15,780 1,224,899 

Small: 

IT ................................................................................... 368 11.0 84 4,048 339,992 

Benefits ......................................................................... 368 8.0 62 2,944 183,500 

Legal ............................................................................. 368 1.0 130 368 47,818 

Sub-total ................................................................ ........................ ........................ ........................ 7,360 571,309 

Total ................................................................ ........................ ........................ ........................ 43,460 3,373,517 

TABLE 2—YEAR 2, CREATING NEW COVERAGE EXAMPLE

Type of labor Number of 

firms Hours per firm Cost per hour Total hour burden 

Equivalent 

costs of hours 

Issuers 

Large: 

IT ................................................................................... 75 13.8 $84 1,031 $86,615 

Benefits ......................................................................... 75 10.0 62 750 46,748 

Legal ............................................................................. 75 1.3 130 94 12,182 

Sub-total ................................................................ ........................ ........................ ........................ 1,875 145,544 

Medium: 


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61The estimate for the number of issuers is based 

on the number of issuers for the group and 

individual market filing with HHS for the Medical 

Loss Ratio regulations. See 45 CFR part 158. The 

number of TPAs is based on the U.S. Census’s 2011 

Statistics of U.S. Businesses that reports there are 

3,157 TPA’s. Previous discussions with industry 

experts led to assuming about one-third of the 

TPA’s (1,052) could be providing services to selfinsured plans. 

62The Departments define small issuers as those 

with total earned premiums less than $50 million; 

medium issuers as those with total earned 

premiums between $50 million and $999 million; 

and large issuers as those with total earned 

Continued 

TABLE 2—YEAR 2, CREATING NEW COVERAGE EXAMPLE—Continued 

Type of labor Number of 

firms Hours per firm Cost per hour Total hour burden 

Equivalent 

costs of hours 

IT ................................................................................... 250 10.3 84 2,578 216,537 

Benefits ......................................................................... 250 7.5 62 1,875 116,869 

Legal ............................................................................. 250 0.9 130 234 30,455 

Sub-total ................................................................ ........................ ........................ ........................ 4,688 363,860 

Small: 

IT ................................................................................... 175 6.9 84 1,203 101,050 

Benefits ......................................................................... 175 5.0 62 875 54,539 

Legal ............................................................................. 175 0.6 130 109 14,212 

Sub-total ................................................................ ........................ ........................ ........................ 2,188 169,801 

TPAs 

Large: 

IT ................................................................................... 158 13.8 84 2,173 182,468 

Benefits ......................................................................... 158 10.0 62 1,580 98,481 

Legal ............................................................................. 158 1.3 130 198 25,663 

Sub-total ................................................................ ........................ ........................ ........................ 3,950 306,613 

Medium: 

IT ................................................................................... 526 10.3 84 5,424 455,593 

Benefits ......................................................................... 526 7.5 62 3,945 245,892 

Legal ............................................................................. 526 0.9 130 493 64,077 

Sub-total ................................................................ ........................ ........................ ........................ 9,863 765,562 

Small: 

IT ................................................................................... 368 6.9 84 2,530 212,495 

Benefits ......................................................................... 368 5.0 62 1,840 114,687 

Legal ............................................................................. 368 0.6 130 230 29,886 

Sub-total ................................................................ ........................ ........................ ........................ 4,600 357,068 

Total ................................................................ ........................ ........................ ........................ 27,163 2,108,448 

B. Paperwork Reduction Act 

1. Department of Labor and Department 

of the Treasury 

To implement PHS Act section 2715 

and these proposed regulations, 

collection of information requirements 

relate to the provision of the following: 

• Summary of benefits and coverage. 

• Coverage examples (as components 

of each SBC). 

• A uniform glossary of health 

coverage and medical terms (uniform 

glossary). 

• Notice of modifications. 

A copy of the information collection 

request (ICR) may be obtained by 

contacting the PRA addressee: G. 

Christopher Cosby, Office of Policy and 

Research, U.S. Department of Labor, 

Employee Benefits Security 

Administration, 200 Constitution 

Avenue NW., Room N–5718, 

Washington, DC 20210. Telephone: 

(202) 693–8410; Fax: (202) 219–4745. 

These are not toll-free numbers. Email: 

ebsa.opr@dol.gov. ICRs submitted to 

OMB also are available at reginfo.gov 

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

PRAMain). 

This analysis includes the coverage 

examples that are part of the SBC 

disclosure, therefore, the Departments 

calculate a single burden estimate for 

purposes of this section, assuming the 

information collection request for the 

SBC (including coverage examples) 

totals eight (8) sides of a page in length. 

The Departments assume fullyinsured ERISA plans will rely on health 

insurance issuers and self-insured plans 

will rely on TPAs to perform these 

functions. While self-insured plans may 

prepare SBCs internally, the 

Departments make this simplifying 

assumption because most plans appear 

to rely on issuers and TPAs for the 

purpose of administrative duties, such 

as enrollment and claims processing. 

Thus, the Departments use health 

insurance issuers and TPAs as the unit 

of analysis for the purposes of 

estimating administrative costs. 

The Departments estimate there are a 

total of 500 issuers and 1,050 TPAs 

affected by this information 

collection.61 Because HHS shares the 

hour and cost burden for fully-insured 

plans with the Departments of Labor 

and the Treasury, HHS assumes 50 

percent of the hour and cost burden 

estimates to account for burden for 

issuers in the individual market and 15 

percent of the burden for TPAs to 

account for those TPAs serving selfinsured non-Federal governmental 

plans. The Departments of Labor and 

the Treasury assume the other 50 

percent of the burden related to issuers 

to account for burden servicing fully 

insured ERISA plans, and 85 percent of 

the burden related to TPAs to account 

for the burden related to ERISA selfinsured plans. 

To account for variation in costs due 

to firm size and the number of plans and 

individuals they service, the 

Departments divide issuers into small, 

medium, and large categories.62


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premiums of $1 billion or more. The premium 

revenue data come from the 2009 NAIC financial 

statements, also known as ‘‘Blanks,’’ where insurers 

report information about their various lines of 

business. 63The Departments’ estimated 2015 hourly labor 

rates include wages, other benefits, and overhead 

are calculated as follows: mean wage from the 2013 

National Occupational Employment Survey (April 

2014, Bureau of Labor Statistics http://www.bls.gov/ 

news.release/pdf/ocwage.pdf); wages as a percent of 

total compensation from the Employer Cost for 

Employee Compensation (June 2014, Bureau of 

Labor Statistics http://www.bls.gov/news.release/

ecec.t02.htm); overhead as a multiple of 

compensation is assumed to be 25 percent of total 

compensation for paraprofessionals, 20 percent of 

compensation for clerical, and 35 percent of 

compensation for professional; annual inflation 

assumed to be 2.3 percent annual growth of total 

labor cost since 2013 (Employment Costs Index data 

for private industry, September 2014 http://

www.bls.gov/news.release/eci.nr0.htm). Computer 

Systems Analysts (15–1121): $41.02(2013 BLS Wage 

rate)/0.69(ECEC ratio) *1.35(Overhead Load Factor) 

*1.023(Inflation rate) ¥2(Inflated 2 years from base 

year) = $83.99; Compensation, benefits, and job 

analysis specialists (13–1141): $30.44(2013 BLS 

Wage rate)/0.69(ECEC ratio) *1.35(Overhead Load 

Factor) *1.023(Inflation rate) ¥2(Inflated 2 years 

from base year) = $62.33; Legal Professional (23– 

1011): $63.46(2013 BLS Wage rate)/0.69(ECEC ratio) 

*1.35(Overhead Load Factor) *1.023(Inflation rate) 

¥2(Inflated 2 years from base year) = $129.94; 

Secretaries, Except Legal, Medical, and Executive 

(43–6014): $16.35(2013 BLS Wage rate)/0.675(ECEC 

ratio) *1.2(Overhead Load Factor) *1.023(Inflation 

rate) ¥2(Inflated 2 years from base year) = $30.42. 

Accordingly, the Departments estimate 

that there are approximately 175 small, 

250 medium, and 75 large issuers. The 

Departments lack information to create 

a similar split for TPAs, so they assume 

a similar distribution resulting in an 

estimate of approximately 368 small, 

526 medium, and 158 large TPAs. 

The estimated hour burden and 

equivalent cost for the collections of 

information are as follows: The 

Departments estimate an administrative 

burden on issuers and TPAs to make 

appropriate changes to IT systems and 

processes and make updates to the SBCs 

and coverage examples. The 

Departments estimate that large firms 

would spend 190 hours (40 hours of 

which would be new due to the 

proposed regulation) in the first year, 

medium firms would spend 75 percent 

of large firm hour burden, and small 

firms would spend 50 percent of the 

large firm hour burden to perform these 

tasks. The total burden would be split 

among IT professionals (55 percent), 

benefits professionals (40 percent), and 

legal professionals (5 percent), with 

hourly labor rates of $83.99, $62.33, and 

$129.94 respectively.63 Clerical labor 

rates are $30.42 per hour. 

Tables 3 (first year) and 4 (subsequent 

years) show the calculations used to 

obtain the hours burden of 153,600 

hours (first year) and 141,600 hours 

(subsequent years) and the equivalent 

cost burden of $11.9 million (first year) 

and $11.0 million (subsequent years) for 

issuers and TPAs to prepare the SBCs 

and coverage examples. In addition, 

clerical employees would spend 

653,000 hours with an equivalent cost of 

$19.8 million in each year preparing 

and distributing the SBCs. 

Based on the foregoing, the total hours 

burden for this information collection 

would be 806,000 hours for the first year 

(794,000 hours for subsequent years) 

with an equivalent cost of $31.7 million 

for the first year ($30.8 million for 

subsequent years). This burden is split 

evenly between the Departments of 

Labor and the Treasury. 

TABLE 3—UPDATE SBC INCLUDING COVERAGE EXAMPLES, YEAR 1 

Type of Labor Number of 

firms Hours per firm Cost per hour Total hour burden 

Total cost 

burden 

Issuers 

Large: 

IT ................................................................................... 75 52.3 84 3,919 329,136 

Benefits ......................................................................... 75 38.0 62 2,850 177,641 

Legal ............................................................................. 75 4.8 130 356 46,291 

Sub-Total ............................................................... ........................ ........................ ........................ 7,125 553,067 

Medium: 

IT ................................................................................... 250 39.9 84 9,969 837,275 

Benefits ......................................................................... 250 29.0 62 7,250 451,893 

Legal ............................................................................. 250 3.6 130 906 117,758 

Sub-Total ............................................................... ........................ ........................ ........................ 18,125 1,406,926 

Small: 

IT ................................................................................... 175 26.1 84 4,572 383,992 

Benefits ......................................................................... 175 19.0 62 3,325 207,247 

Legal ............................................................................. 175 2.4 130 416 54,006 

Sub-Total ............................................................... ........................ ........................ ........................ 8,313 645,245 

TPAs 

Large: 

IT ................................................................................... 158 88.8 84 14,034 1,178,745 

Benefits ......................................................................... 158 64.6 62 10,207 636,190 

Legal ............................................................................. 158 8.1 130 1,276 165,784 

Sub-Total ............................................................... ........................ ........................ ........................ 25,517 1,980,719 

Medium: 

IT ................................................................................... 526 67.8 84 35,656 2,994,766 

Benefits ......................................................................... 526 49.3 62 25,932 1,616,329 

Legal ............................................................................. 526 6.2 130 3,241 421,197 

Sub-Total ............................................................... ........................ ........................ ........................ 64,830 5,032,293 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
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TABLE 3—UPDATE SBC INCLUDING COVERAGE EXAMPLES, YEAR 1—Continued 

Type of Labor Number of 

firms Hours per firm Cost per hour Total hour burden 

Total cost 

burden 

Small 

IT .......................................................................................... 368 44.4 84 16,344 1,372,716 

Benefits ......................................................................... 368 32.3 62 11,886 740,879 

Legal ............................................................................. 368 4.0 130 1,486 193,065 

Sub-Total ............................................................... ........................ ........................ ........................ 29,716 2,306,660 

Total ................................................................ ........................ ........................ ........................ 153,625 11,924,910 

TABLE 4—UPDATE SBC INCLUDING COVERAGE EXAMPLES, SUBSEQUENT YEARS

Type of Labor Number of 

firms Hours per firm Cost per hour Total hour burden 

Total cost burden 

Issuers 

Large 

IT ................................................................................... 75 48.1 84 3,609 303,151 

Benefits ......................................................................... 75 35.0 62 2,625 163,616 

Legal ............................................................................. 75 4.4 130 328 42,637 

Sub-Total ............................................................... ........................ ........................ ........................ 6,563 509,404 

Medium 

IT ................................................................................... 250 36.8 84 9,195 772,314 

Benefits ......................................................................... 250 26.8 62 6,688 416,832 

Legal ............................................................................. 250 3.3 130 836 108,622 

Sub-Total ............................................................... ........................ ........................ ........................ 16,719 1,297,768 

Small: 

IT ................................................................................... 175 24.1 84 4,211 353,677 

Benefits ......................................................................... 175 17.5 62 3,063 190,886 

Legal ............................................................................. 175 2.2 130 383 49,743 

Sub-Total ............................................................... ........................ ........................ ........................ 7,656 594,305 

TPAs 

Large 

IT ................................................................................... 158 81.8 84 12,926 1,085,686 

Benefits ......................................................................... 158 59.5 62 9,401 585,964 

Legal ............................................................................. 158 7.4 130 1,175 152,696 

Sub-Total ............................................................... ........................ ........................ ........................ 23,503 1,824,346 

Medium: 

IT ................................................................................... 526 62.5 84 32,890 2,762,414 

Benefits ......................................................................... 526 45.5 62 23,920 1,490,924 

Legal ............................................................................. 526 5.7 130 2,990 388,518 

Sub-Total ............................................................... ........................ ........................ ........................ 59,800 4,641,856 

Small 

IT ................................................................................... 368 40.9 84 15,054 1,264,343 

Benefits ......................................................................... 368 29.8 62 10,948 682,389 

Legal ............................................................................. 368 3.7 130 1,369 177,823 

Sub-Total ............................................................... ........................ ........................ ........................ 27,370 2,124,555 

Total ................................................................ ........................ ........................ ........................ 141,610 10,992,235 

The Departments also estimate the 

cost burden associated with the SBC, 

Uniform Glossary and Notice of 

Modification. These costs are discussed 

below. 

• SBC—The Departments estimate 

that approximately 60.6 million SBCs 

will be delivered with 527,000 going to 

ERISA plans and 60.1 million going to 

participants and beneficiaries 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
78596 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 

64Based on the 2012 Current Population Survey 

the Department estimates there are 58.0 million 

policy holders in ERISA plans http://www.dol.gov/ 

ebsa/pdf/coveragebulletin2013.pdf table 2. 

annually.64 The Departments assume 50 

percent of the SBCs going to plans 

would be sent electronically while 38 

percent of SBCs would be sent 

electronically to plan participants. 

Accordingly, the Departments estimate 

that about 23.4 million SBCs would be 

distributed electronically and about 37.2 

million SBCs would be distributed on 

paper. The Departments assume there 

are costs only for paper disclosures, 

with de minimis costs for electronic 

disclosures. The SBC, with coverage 

examples, is assumed to be four doublesided pages (eight page sides) in length. 

Paper SBCs sent to participants would 

have no postage costs as they could be 

included in mailings with other plan 

materials, however all notices sent to 

beneficiaries living apart from the 

participant would be mailed and have a 

49 cent postage costs. Printing costs 

would be five cents per page. Each 

document sent by mail would have a 

one minute preparation burden, with 

the task performed by a clerical worker. 

Based on the foregoing, the total cost 

burden to prepare and distribute the 

SBC would be $16.4 million. 

• Uniform Glossary—The 

Departments assume that 2.5 percent of 

those who receive paper SBCs will 

request glossaries in paper form (that is, 

about 1.1 million glossary requests). The 

total cost burden to prepare and 

distribute paper copies of the Uniform 

Glossaries would be $760,000. 

• Notice of Modifications—The 

Departments assume that issuers and 

plans will send notices of modification 

to covered participants and 

beneficiaries, and that 2 percent of 

covered participants and beneficiaries 

will receive such notices (1.2 million 

notices). As with the SBC, 50 percent of 

plans and 38 percent of policy holders 

will receive electronic notices. Paper 

notices are assumed to be of the same 

length as an SBC, and will incur a 

postage cost of 49 cents. The total cost 

burden to prepare and distribute the 

notices of modification would be 

$640,000. 

Based on the foregoing, the total 

annual cost burden is estimated to be 

$16.4 million. This burden is split 

evenly between the Departments of 

Labor and the Treasury. 

TABLE 5—PREPARATION AND DISTRIBUTION COSTS: COST BURDEN

Number of 

disclosures 

Number of disclosures sent 

on paper 

Material and 

printing costs Postage costs Total cost burden 

SBC with Coverage Examples to Group Health Plan: 

Renewal or Application ................................................. 527,328 263,664 $105,466 $0 $105,466 

Sub-total ................................................................ 527,328 263,664 105,466 0 105,466 

SBC with Coverage Examples to Participants and Beneficiaries: 

Upon Application or Eligibility ....................................... 2,030,000 1,015,000 406,000 0 406,000 

Upon Renewal .............................................................. 58,000,000 35,960,000 14,384,000 0 14,384,000 

Beneficiaries Living Apart ............................................. 90,000 90,000 36,000 44,100 80,100 

Sub-total ................................................................ 60,120,000 36,975,000 14,826,000 44,100 14,870,100 

Uniform Glossary ................................................................. 1,102,000 1,102,000 220,400 539,980 760,380 

Notice of Modification .......................................................... 1,160,000 719,200 287,680 352,408 640,088 

Total ................................................................ 62,909,328 39,059,864 15,439,546 936,488 16,376,034 

TABLE 6—PREPARATION AND DISTRIBUTION COSTS: HOUR BURDEN

Number of 

disclosures 

Number of disclosures sent 

on paper 

Clerical hours Clerical costs Total hour 

burden 

Total 

equivalent cost 

SBC with Coverage Examples to Group 

Health Plan: 

Renewal or Application ..................... 527,328 263,664 4,394 $130,074 4,394 $130,074 

Sub-total .................................... 527,328 263,664 4,394 130,074 4,394 130,074 

SBC with Coverage Examples To Participants and Beneficiaries: 

Upon Application or Eligibility ........... 2,030,000 1,015,000 16,917 500,733 16,917 500,733 

Upon Renewal .................................. 58,000,000 35,960,000 599,333 17,740,267 599,333 17,740,267 

Beneficiaries Living Apart ................. 90,000 90,000 1,500 44,400 1,500 44,400 

Sub-total .................................... 60,120,000 36,975,000 617,750 18,285,400 617,750 18,285,400 

Uniform Glossary ..................................... 1,102,000 1,102,000 18,367 543,653 18,367 543,653 

Notice of Modification .............................. 1,160,000 719,200 11,987 354,805 11,987 354,805 

Total .................................... 62,909,328 39,059,864 652,498 19,313,933 652,498 19,313,933 

The Departments note that persons 

are not required to respond to, and 

generally are not subject to any penalty 

for failing to comply with, an ICR unless 

the ICR has a valid OMB control 

number. The 2015–2017 paperwork 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 78597 

burden estimates are summarized as 

follows: 

Type of Review: 

Agencies: Employee Benefits Security 

Administration, Department of Labor; 

Internal Revenue Service, U.S. 

Department of the Treasury. 

Title: Affordable Care Act Uniform 

Explanation of Coverage Documents 

OMB Number: 1210–0147; 1545– 

2229. 

Affected Public: Business or other for 

profit; not-for-profit institutions. 

Total Respondents: 2,389,000. 

Total Responses: 62,909,000. 

Frequency of Response: On-going. 

Estimated Total Annual Burden 

Hours (three year average): 399,000 

hours (Employee Benefits Security 

Administration); 399,000 hours (Internal 

Revenue Service). 

Estimated Total Annual Cost Burden 

(three year average): $8,188,000 

(Employee Benefits Security 

Administration); $8,188,000 (Internal 

Revenue Service). 

2. Department of Health and Human 

Services 

The Paperwork Reduction Act (PRA) 

section for the Departments of Labor 

and the Treasury above contain the 

assumptions, data sources, and 

explanations of the Departments’ 

methodology for estimating the PRA 

burden. The following tables summarize 

the Department of Health and Human 

Services’ burden estimates. 

TABLE 7—UPDATE SBC INCLUDING COVERAGE EXAMPLES; YEAR 1 

Type of labor Number of 

firms Hours per firm Cost per hour Total hour burden 

Equivalent 

costs 

Issuers 

Large: 

IT ................................................................................... 75 52.3 $84 3,919 $329,136 

Benefits ......................................................................... 75 38.0 62 2,850 177,641 

Legal ............................................................................. 75 4.8 130 356 46,291 

Sub-Total ............................................................... ........................ ........................ ........................ 7,125 553,067 

Medium: 

IT ................................................................................... 250 39.9 84 9,969 837,275 

Benefits ......................................................................... 250 29.0 62 7,250 451,893 

Legal ............................................................................. 250 3.6 130 906 117,758 

Sub-Total ............................................................... ........................ ........................ ........................ 18,125 1,406,926 

Small: 

IT ................................................................................... 175 26.1 84 4,572 383,992 

Benefits ......................................................................... 175 19.0 62 3,325 207,247 

Legal ............................................................................. 175 2.4 130 416 54,006 

Sub-Total ............................................................... ........................ ........................ ........................ 8,313 645,245 

TPAs 

Large: 

IT ................................................................................... 158 15.7 84 2,477 208,014 

Benefits ......................................................................... 158 11.4 62 1,801 112,269 

Legal ............................................................................. 158 1.4 130 225 29,256 

Sub-Total ............................................................... ........................ ........................ ........................ 4,503 349,539 

Medium: 

IT ................................................................................... 526 12.0 84 6,292 528,488 

Benefits ......................................................................... 526 8.7 62 4,576 285,235 

Legal ............................................................................. 526 1.1 130 572 74,329 

Sub-Total ............................................................... ........................ ........................ ........................ 11,441 888,052 

Small: 

IT ................................................................................... 368 7.8 84 2,884 242,244 

Benefits ......................................................................... 368 5.7 62 2,098 130,743 

Legal ............................................................................. 368 0.7 130 262 34,070 

Sub-Total ............................................................... ........................ ........................ ........................ 5,244 407,058 

Total ................................................................ ........................ ........................ ........................ 54,750 4,249,887 

TABLE 8—UPDATE SBC INCLUDING COVERAGE EXAMPLES, SUBSEQUENT YEARS

Type of labor Number of 

firms Hours per firm Cost per hour Total hour burden 

Equivalent 

costs 

Issuers 

Large: 

IT ................................................................................... 75 48.1 $84 3,609 $303,151 

Benefits ......................................................................... 75 35.0 62 2,625 163,616 

Legal ............................................................................. 75 4.4 130 328 42,637 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
78598 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 

TABLE 8—UPDATE SBC INCLUDING COVERAGE EXAMPLES, SUBSEQUENT YEARS—Continued 

Type of labor Number of 

firms Hours per firm Cost per hour Total hour burden 

Equivalent 

costs 

Sub-Total ............................................................... ........................ ........................ ........................ 6,563 509,404 

Medium: 

IT ................................................................................... 250 36.8 84 9,195 772,314 

Benefits ......................................................................... 250 26.8 62 6,688 416,832 

Legal ............................................................................. 250 3.3 130 836 108,622 

Sub-Total ............................................................... ........................ ........................ ........................ 16,719 1,297,768 

Small: 

IT ................................................................................... 175 24.1 84 4,211 353,677 

Benefits ......................................................................... 175 17.5 62 3,063 190,886 

Legal ............................................................................. 175 2.2 130 383 49,743 

Sub-Total ............................................................... ........................ ........................ ........................ 7,656 594,305 

TPAs 

Large: 

IT ................................................................................... 158 14.4 84 2,281 191,592 

Benefits ......................................................................... 158 10.5 62 1,659 103,405 

Legal ............................................................................. 158 1.3 130 207 26,946 

Sub-Total ............................................................... ........................ ........................ ........................ 4,148 321,943 

Medium: 

IT ................................................................................... 526 11.0 84 5,804 487,485 

Benefits ......................................................................... 526 8.0 62 4,221 263,104 

Legal ............................................................................. 526 1.0 130 528 68,562 

Sub-Total ............................................................... ........................ ........................ ........................ 10,553 819,151 

Small: 

IT ................................................................................... 368 7.2 84 2,657 223,119 

Benefits ......................................................................... 368 5.3 62 1,932 120,422 

Legal ............................................................................. 368 0.7 130 242 31,381 

Sub-Total ............................................................... ........................ ........................ ........................ 4,830 374,922 

Total ................................................................ ........................ ........................ ........................ 50,468 3,917,493 

TABLE 9—PREPARATION AND DISTRIBUTION COSTS

Number of 

disclosures 

Number of disclosures sent 

on paper 

Clerical hour 

burden 

Total 

equivalent cost 

Group Health Plan: 

SBC with Coverage Examples ................................................................. 15,750 7,875 131.25 $3,885 

SBC with Coverage Examples—Participants and Beneficiaries: 

Upon Application or Eligibility ................................................................... 222,680 111,340 1,855.67 54,928 

Upon Renewal .......................................................................................... 17,129,262 8,564,631 142,743.85 4,225,218 

Beneficiaries Living Apart ......................................................................... 33,000 33,000 550.00 16,280 

Sub-Total ........................................................................................... 17,384,942 8,708,971 145,150 4,296,426 

Uniform Glossary ............................................................................................. 428,232 428,232 7,137 211,261 

Notice of Modification ...................................................................................... 342,585 171,293 2,855 84,504 

Individual Market: 

SBC with Coverage Examples ................................................................. 21,784,217 6,535,265 108,921 3,224,064 

Uniform Glossary ...................................................................................... 762,448 762,448 12,707 376,141 

Notice of Modification ............................................................................... 435,684.34 130,705 2,178 64,481 

Total ........................................................................................... 41,153,858 16,744,788 279,080 8,260,762 

TABLE 10—PREPARATION AND DISTRIBUTION COSTS

Number of 

disclosures 

Number of disclosures sent 

on paper 

Material and 

printing costs Postage costs Total cost burden 

Group Health Plan: 

SBC with Coverage Examples ..................................... 15,750 7,875 $3,150 ........................ $3,150 

SBC with Coverage Examples—Participants and Beneficiaries: 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
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65See proposed 45 CFR 147.200(a)(2)(i)(J). 

TABLE 10—PREPARATION AND DISTRIBUTION COSTS—Continued 

Number of 

disclosures 

Number of disclosures sent 

on paper 

Material and 

printing costs Postage costs Total cost burden 

Upon Application or Eligibility ....................................... 222,680 111,340 44,536 ........................ 44,536 

Upon Renewal .............................................................. 17,129,262 8,564,631 3,425,852 ........................ 3,425,852 

Beneficiaries Living Apart ............................................. 33,000 33,000 13,200 $16,170 29,370 

Sub-Total ............................................................... 17,384,942 8,708,971 3,483,588 16,170 3,499,758 

Uniform Glossary ................................................................. 428,232 428,232 85,646 209,833 295,480 

Notice of Modification .......................................................... 342,585 171,293 68,517 83,933 152,450 

Individual Market: 

SBC with Coverage Examples ..................................... 21,784,217 6,535,265 2,614,106 ........................ 2,614,106 

Uniform Glossary .......................................................... 762,448 762,448 152,490 373,599 526,089 

Notice of Modification ................................................... 435,684.34 130,705 52,282 64,046 116,328 

Total ................................................................ 41,153,858 16,744,788 6,459,780 747,582 7,207,361 

HHS is proposing that issuers be 

required to make available on an 

Internet web address a copy of the 

actual individual coverage policy or 

group certificate of coverage.65 HHS 

estimates that the burden of this request 

will be de minimis because the 

documents will have already been 

created and issuers already have web 

addresses on which the materials can be 

made available. 

The Department notes that persons 

are not required to respond to, and 

generally are not subject to any penalty 

for failing to comply with, an ICR unless 

the ICR has a valid OMB control 

number. 

The 2015–2017 paperwork burden 

estimates are summarized as follows: 

Type of Review: Revision. 

Agency: Department of Health and 

Human Services. 

Title: Summary of benefits and 

Coverage Uniform Glossary 

CMS Identifier (OMB Control 

Number): CMS–10407 (0938–1146). 

Affected Public: State, Local, or Tribal 

Governments. 

Total Respondents: 126,500. 

Total Responses: 41,154,000. 

Frequency of Response: On-going. 

Estimated Total Annual Burden 

Hours (three year average): 331,000 

hours. 

Estimated Total Annual Cost Burden 

(three year average): $7,207,000. 

ICRs Related to Deemed Compliance 

Reporting (45 CFR 147.200(a)(4)(iii)(C)) 

Under 45 CFR 147.200(a)(4)(iii)(C), if 

individual health insurance issuers 

provide the content required for the SBC 

to the federal health reform Web portal 

described in 45 CFR 159.120 

(HealthCare.gov), then they will be 

deemed to have satisfied the 

requirement to provide an SBC to 

individuals who request information 

about coverage prior to submitting an 

application for coverage. Individual 

health insurance issuers already provide 

most SBC content elements to 

HealthCare.gov, except for five data 

elements related to patient 

responsibility for each coverage 

example: Deductibles, co-payments, coinsurance, coverage limits or exclusions, 

and the total out-of-pocket cost to the 

enrollee in view of these cost-sharing 

amounts and coverage limits or 

exclusions. 

Accordingly, the additional burden 

associated with the requirements under 

§ 147.200(a)(4)(iii)(C) is the time and 

effort it would take each of the 320 

issuers submitting this data in the 

individual market to enter the five 

additional data elements into an Excel 

spreadsheet. We estimate that it will 

take these issuers about 160 hours, at a 

total estimated cost of about $4,800, for 

each coverage example. For three 

coverage examples, the burden and cost 

would be about 480 hours at a cost of 

about $14,400. 

In deriving these figures, we used the 

following hourly labor rates and 

estimated the time to complete each 

task: $ 30.78/hr. and 0.5 hr./issuer for 

clerical staff to enter data into an Excel 

spreadsheet, or about $15 per 

respondent per coverage example. 

This information collection 

requirement reflects the requirement 

that issuers must provide all content 

required in the SBC, including the 

information necessary for coverage 

examples, to HealthCare.gov to be 

deemed compliant. The aforementioned 

burden estimates will be submitted for 

OMB review and approval as a revision 

to the information collection request 

currently approved under OMB control 

number 0938–1086. 

To obtain copies of the supporting 

statement and any related forms for the 

proposed paperwork collections 

referenced above, access CMS’ Web site 

at http://www.cms.gov/

PaperworkReductionActof1995/PRAL/

list.asp#TopOfPage or email your 

request, including your address, phone 

number, OMB control number, and CMS 

document identifier, to Paperwork@

cms.hhs.gov, or call the Reports 

Clearance Office at 410–786–1326. 

C. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) imposes 

certain requirements with respect to 

Federal rules that are subject to the 

notice and comment requirements of 

section 553(b) of the Administrative 

Procedure Act (5 U.S.C. 551 et seq.) and 

which are likely to have a significant 

economic impact on a substantial 

number of small entities. Unless the 

head of an agency certifies that a 

proposed rule is not likely to have a 

significant economic impact on a 

substantial number of small entities, 

section 603 of the RFA requires that the 

agency present an initial regulatory 

flexibility analysis (IRFA) describing the 

rule’s impact on small entities and 

explaining how the agency made its 

decisions with respect to the application 

of the rule to small entities. 

The RFA generally defines a ‘‘small 

entity’’ as (1) a proprietary firm meeting 

the size standards of the Small Business 

Administration (SBA) (13 CFR 121.201) 

pursuant to the Small Business Act (15 

U.S.C. 631 et seq.), (2) a nonprofit 

organization that is not dominant in its 

field, or (3) a small government 

jurisdiction with a population of less 

than 50,000. (States and individuals are 

not included in the definition of ‘‘small 

entity.’’) 

There are several different types of 

small entities affected by these proposed 

regulations. For issuers and TPAs, the 

Departments use as their measure of 

significant economic impact on a 


tkelley on DSK3SPTVN1PROD with PROPOSALS2
78600 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 

66The basis for this definition is found in section 

104(a)(2) of ERISA, which permits the Secretary of 

Labor to prescribe simplified annual reports for 

pension plans that cover fewer than 100 

participants. 

substantial number of small entities a 

change in revenues of more than 3 to 5 

percent. For plans, the Departments 

continue to consider a small plan to be 

an employee benefit plan with fewer 

than 100 participants.66 Further, while 

some large employers may have small 

plans, in general small employers 

maintain most small plans. Thus, the 

Departments believe that assessing the 

impact of this proposed rule on small 

plans is an appropriate substitute for 

evaluating the effect on small entities. 

The definition of small entity 

considered appropriate for this purpose 

differs, however, from a definition of 

small business that is based on size 

standards promulgated by the Small 

Business Administration (SBA) (13 CFR 

121.201) pursuant to the Small Business 

Act (15 U.S.C. 631 et seq.). The 

Departments therefore request 

comments on the appropriateness of the 

size standard used in evaluating the 

impact of these proposed regulations on 

small entities. 

The Departments carefully considered 

the likely impact of the rule on small 

entities in connection with their 

assessment under Executive Order 

12866. The Departments believe that the 

proposed regulations include flexibility 

like allowing use of the Coverage 

Example Calculator that would 

minimize the burden on small entities. 

Also, the Departments believe that the 

burden imposed by the proposed 

regulation on small insurers and small 

TPAs will be 20 hours or less annually. 

The Departments hereby certify that 

these proposed regulations will not have 

a significant economic impact on a 

substantial number of small entities, as 

described above. Consistent with the 

policy of the RFA, the Departments 

encourage the public to submit 

comments that would allow the 

Departments to assess the impacts 

specifically on small entities or suggest 

alternative rules that accomplish the 

stated purpose of PHS Act section 2715 

and minimize the impact on small 

entities. 

D. Unfunded Mandates Reform Act— 

Department of Labor and Department of 

Health and Human Services 

Section 202 of the Unfunded 

Mandates Reform Act (UMRA) of 1995 

requires that agencies assess anticipated 

costs and benefits before issuing any 

proposed rule that includes a Federal 

mandate that could result in 

expenditure in any one year by State, 

local or Tribal governments, in the 

aggregate, or by the private sector, of 

$100 million in 1995 dollars updated 

annually for inflation. In 2014, that 

threshold level is approximately $141 

million. These proposed regulations 

include no mandates on State, local, or 

Tribal governments. These proposed 

regulations propose requirements 

regarding standardized consumer 

disclosures that would affect private 

sector firms (for example, health 

insurance issuers offering coverage in 

the individual and group markets, and 

third-party administrators providing 

administrative services to group health 

plans), but we conclude that these costs 

would not exceed the $141 million 

threshold. Thus, the Departments of 

Labor and HHS conclude that these 

proposed regulations would not impose 

an unfunded mandate on State, local or 

Tribal governments or the private sector. 

Regardless, consistent with policy 

embodied in UMRA, the proposed 

requirements described in this notice of 

proposed rulemaking has been designed 

to be the least burdensome alternative 

for State, local and Tribal governments, 

and the private sector while achieving 

the objectives of the Affordable Care 

Act. 

E. Federalism Statement—Department 

of Labor and Department of Health and 

Human Services 

Executive Order 13132 outlines 

fundamental principles of federalism, 

and requires the adherence to specific 

criteria by Federal agencies in the 

process of their formulation and 

implementation of policies that have 

‘‘substantial direct effects’’ on the 

States, the relationship between the 

national government and States, or on 

the distribution of power and 

responsibilities among the various 

levels of government. Federal agencies 

promulgating regulations that have 

federalism implications must consult 

with State and local officials and 

describe the extent of their consultation 

and the nature of the concerns of State 

and local officials in the preamble to the 

regulation. 

In the Departments of Labor’s and 

HHS’ view, these proposed rules have 

federalism implications because they 

would have direct effects on the States, 

the relationship between national 

governments and States, or on the 

distribution of power and 

responsibilities among various levels of 

government relating to the disclosure of 

health insurance coverage information 

to consumers. Under these proposed 

rules, all group health plans and health 

insurance issuers offering group or 

individual health insurance coverage, 

including self-funded non-federal 

governmental plans as defined in 

section 2791 of the PHS Act, would be 

required to follow uniform standards for 

compiling and providing a summary of 

benefits and coverage to consumers. 

Such Federal standards developed 

under PHS Act section 2715(a) would 

preempt any related State standards that 

require a summary of benefits and 

coverage that provides less information 

to consumers than that required to be 

provided under PHS Act section 

2715(a). 

In general, through section 514, 

ERISA supersedes State laws to the 

extent that they relate to any covered 

employee benefit plan, and preserves 

State laws that regulate insurance, 

banking, or securities. While ERISA 

prohibits States from regulating a plan 

as an insurance or investment company 

or bank, the preemption provisions of 

section 731 of ERISA and section 2724 

of the PHS Act (implemented in 29 CFR 

2590.731(a) and 45 CFR 146.143(a)) 

apply so that the HIPAA requirements 

(including those of the Affordable Care 

Act) are not to be ‘‘construed to 

supersede any provision of State law 

which establishes, implements, or 

continues in effect any standard or 

requirement solely relating to health 

insurance issuers in connection with 

group health insurance coverage except 

to the extent that such standard or 

requirement prevents the application of 

a requirement’’ of a Federal standard. 

The conference report accompanying 

HIPAA indicates that this is intended to 

be the ‘‘narrowest’’ preemption of State 

laws (See House Conf. Rep. No. 104– 

736, at 205, reprinted in 1996 U.S. Code 

Cong. & Admin. News 2018). 

States may continue to apply State 

law requirements except to the extent 

that such requirements prevent the 

application of the Affordable Care Act 

requirements that are the subject of this 

rulemaking. Accordingly, States have 

significant latitude to impose 

requirements on health insurance 

issuers that are more restrictive than the 

Federal law. However, under these 

proposed rules, a State would not be 

allowed to impose a requirement that 

modifies the summary of benefits and 

coverage required to be provided under 

PHS Act section 2715(a), because it 

would prevent the application of this 

proposed rule’s uniform disclosure 

requirement. 

In compliance with the requirement 

of Executive Order 13132 that agencies 

examine closely any policies that may 

have federalism implications or limit 

the policy making discretion of the 

States, the Departments of Labor and 

HHS have engaged in efforts to consult 


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with and work cooperatively with 

affected States, including consulting 

with, and attending conferences of, the 

National Association of Insurance 

Commissioners and consulting with 

State insurance officials on an 

individual basis. It is expected that the 

Departments of Labor and HHS will act 

in a similar fashion in enforcing the 

Affordable Care Act, including the 

provisions of section 2715 of the PHS 

Act. Throughout the process of 

developing these proposed regulations, 

to the extent feasible within the specific 

preemption provisions of HIPAA as it 

applies to the Affordable Care Act, the 

Departments of Labor and HHS have 

attempted to balance the States’ 

interests in regulating health insurance 

issuers, and Congress’ intent to provide 

uniform minimum protections to 

consumers in every State. By doing so, 

it is the Departments of Labor’s and 

HHS ’ view that they have complied 

with the requirements of Executive 

Order 13132. 

Pursuant to the requirements set forth 

in section 8(a) of Executive Order 

13132, and by the signatures affixed to 

this proposed rule, the Departments 

certify that the Employee Benefits 

Security Administration and the Centers 

for Medicare & Medicaid Services have 

complied with the requirements of 

Executive Order 13132 for the attached 

proposed rule in a meaningful and 

timely manner. 

F. Special Analyses—Department of the 

Treasury 

For purposes of the Department of the 

Treasury it has been determined that 

this notice of proposed rulemaking is 

not a significant regulatory action as 

defined in Executive Order 12866, as 

supplemented by Executive Order 

13563. Therefore, a regulatory 

assessment is not required. It has also 

been determined that section 553(b) of 

the Administrative Procedure Act (5 

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

proposed regulations. For a discussion 

of the impact of this proposed rule on 

small entities, please see section V.C. of 

this preamble. Pursuant to section 

7805(f) of the Code, this notice of 

proposed rulemaking has been 

submitted to the Small Business 

Administration for comment on its 

impact on small business. 

G. Congressional Review Act 

This proposed rule is subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (5 

U.S.C. 801 et seq.), which specifies that 

before a rule can take effect, the Federal 

agency promulgating the rule shall 

submit to each House of the Congress 

and to the Comptroller General a report 

containing a copy of the rule along with 

other specified information, and has 

been transmitted to Congress and the 

Comptroller General for review. 

VII. Statutory Authority 

The Department of the Treasury 

regulations are proposed to be adopted 

pursuant to the authority contained in 

sections 7805 and 9833 of the Code. 

The Department of Labor regulations 

are proposed to be adopted pursuant to 

the authority contained in 29 U.S.C. 

1027, 1059, 1135, 1161–1168, 1169, 

1181–1183, 1181 note, 1185, 1185a, 

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

1191c; sec. 101(g), Public Law 104–191, 

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

105–200, 112 Stat. 645 (42 U.S.C. 651 

note); sec. 512(d), Public Law 110–343, 

122 Stat. 3881; sec. 1001, 1201, and 

1562(e), Public Law 111–148, 124 Stat. 

119, as amended by Public Law 111– 

152, 124 Stat. 1029; Secretary of Labor’s 

Order 1–2011, 77 FR 1088 (January 9, 

2012). 

The Department of Health and Human 

Services regulations are proposed to be 

adopted pursuant to the authority 

contained in sections 2701 through 

2763, 2791, and 2792 of the PHS Act (42 

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

91, and 300gg–92), as amended. 

List of Subjects 

26 CFR Part 54 

Excise taxes, Health care, Health 

insurance, Pensions, Reporting and 

recordkeeping requirements. 

29 CFR Part 2590 

Continuation coverage, Disclosure, 

Employee benefit plans, Group health 

plans, Health care, Health insurance, 

Medical child support, Reporting and 

recordkeeping requirements. 

45 CFR Part 147 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, and State regulation of 

health insurance. 

Signed this 19th day of December, 2014. 

John M. Dalrymple, 

Deputy Commissioner for Services and 

Enforcement, Internal Revenue Service. 

Signed this 18th day of December, 2014. 

Phyllis C. Borzi, 

Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. CMS–9938–P 

Dated: December 18, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: December 19, 2014. 

Sylvia Burwell, 

Secretary, Department of Health and Human 

Services. 

Department of the Treasury 

Internal Revenue Service 

26 CFR Chapter 1 

Accordingly, 26 CFR part 54 is 

proposed to be amended as follows: 

PART 54—PENSION EXCISE TAXES 

■ Paragraph 1. The authority citation 

for Part 54 continues to read in part as 

follows: 

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

* * * 

Section 54.9815–2715 also issued under 26 

U.S.C. 9833. 

■ Paragraph 2. Section 54.9815–2715 is 

revised to read as follows: 

§ 54.9815–2715 Summary of benefits and 

coverage and uniform glossary. 

(a) Summary of benefits and 

coverage—(1) In general. A group health 

plan (and its administrator as defined in 

section 3(16)(A) of the Employee 

Retirement Income Security Act of 1974 

(ERISA)), and a health insurance issuer 

offering group health insurance 

coverage, is required to provide a 

written summary of benefits and 

coverage (SBC) for each benefit package 

without charge to entities and 

individuals described in this paragraph 

(a)(1) in accordance with the rules of 

this section. 

(i) SBC provided by a group health 

insurance issuer to a group health 

plan—(A) Upon application. A health 

insurance issuer offering group health 

insurance coverage must provide the 

SBC to a group health plan (or its 

sponsor) upon application for health 

coverage, as soon as practicable 

following receipt of the application, but 

in no event later than seven business 

days following receipt of the 

application. If an SBC was provided 

before application pursuant to 

paragraph (a)(1)(i)(D) of this section 

(relating to SBCs upon request), this 

paragraph (a)(1)(i)(A) is deemed 


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satisfied, provided there is no change to 

the information required to be in the 

SBC. However, if there has been a 

change in the information required, a 

new SBC that includes the correct 

information must be provided upon 

application pursuant to this paragraph 

(a)(1)(i)(A). 

(B) By first day of coverage (if there 

are changes). If there is any change in 

the information required to be in the 

SBC that was provided upon application 

and before the first day of coverage, the 

issuer must update and provide a 

current SBC to the plan (or its sponsor) 

no later than the first day of coverage. 

(C) Upon renewal, reissuance, or reenrollment. If the issuer renews or 

reissues a policy, certificate, or contract 

of insurance for a succeeding policy 

year, or automatically re-enrolls the 

policyholder or its participants and 

beneficiaries in coverage, the issuer 

must provide a new SBC as follows: 

(1) If written application is required 

(in either paper or electronic form) for 

renewal or reissuance, the SBC must be 

provided no later than the date the 

written application materials are 

distributed. 

(2) If renewal, reissuance, or reenrollment is automatic, the SBC must 

be provided no later than 30 days prior 

to the first day of the new plan or policy 

year; however, with respect to an 

insured plan, if the policy, certificate, or 

contract of insurance has not been 

issued or renewed before such 30-day 

period, the SBC must be provided as 

soon as practicable but in no event later 

than seven business days after issuance 

of the new policy, certificate, or contract 

of insurance, or the receipt of written 

confirmation of intent to renew, 

whichever is earlier. 

(D) Upon request. If a group health 

plan (or its sponsor) requests an SBC or 

summary information about a health 

insurance product from a health 

insurance issuer offering group health 

insurance coverage, an SBC must be 

provided as soon as practicable, but in 

no event later than seven business days 

following receipt of the request. 

(ii) SBC provided by a group health 

insurance issuer and a group health 

plan to participants and beneficiaries— 

(A) In general. A group health plan 

(including its administrator, as defined 

under section 3(16) of ERISA), and a 

health insurance issuer offering group 

health insurance coverage, must provide 

an SBC to a participant or beneficiary 

(as defined under sections 3(7) and 3(8) 

of ERISA), and consistent with the rules 

of paragraph (a)(1)(iii) of this section, 

with respect to each benefit package 

offered by the plan or issuer for which 

the participant or beneficiary is eligible. 

(B) Upon application. The SBC must 

be provided as part of any written 

application materials that are 

distributed by the plan or issuer for 

enrollment. If the plan or issuer does 

not distribute written application 

materials for enrollment, the SBC must 

be provided no later than the first date 

on which the participant is eligible to 

enroll in coverage for the participant or 

any beneficiaries. If an SBC was 

provided before application pursuant to 

paragraph (a)(1)(ii)(F) of this section 

(relating to SBCs upon request), this 

paragraph (a)(1)(ii)(B) is deemed 

satisfied, provided there is no change to 

the information required to be in the 

SBC. However, if there has been is a 

change in the information content, a 

new SBC that includes the correct 

information must be provided upon 

application pursuant to this paragraph 

(a)(1)(ii)(B). 

(C) By first day of coverage (if there 

are changes). If there is any change to 

the information required to be in the 

SBC that was provided upon application 

and before the first day of coverage, the 

plan or issuer must update and provide 

a current SBC to a participant or 

beneficiary no later than the first day of 

coverage. 

(D) Special enrollees. The plan or 

issuer must provide the SBC to special 

enrollees (as described in § 54.9801–6) 

no later than the date by which a 

summary plan description is required to 

be provided under the timeframe set 

forth in ERISA section 104(b)(1)(A) and 

its implementing regulations, which is 

90 days from enrollment. 

(E) Upon renewal, reissuance, or reenrollment. If the plan or issuer requires 

participants or beneficiaries to renew in 

order to maintain coverage (for example, 

for a succeeding plan year), or 

automatically re-enrolls participants 

and beneficiaries in coverage, the plan 

or issuer must provide a new SBC, as 

follows: 

(1) If written application is required 

for renewal, reissuance, or re-enrollment 

(in either paper or electronic form), the 

SBC must be provided no later than the 

date on which the written application 

materials are distributed. 

(2) If renewal, reissuance, or reenrollment is automatic, the SBC must 

be provided no later than 30 days prior 

to the first day of the new plan or policy 

year; however, with respect to an 

insured plan, if the policy, certificate, or 

contract of insurance has not been 

issued or renewed before such 30-day 

period, the SBC must be provided as 

soon as practicable but in no event later 

than seven business days after issuance 

of the new policy, certificate, or contract 

of insurance, or the receipt of written 

confirmation of intent to renew, 

whichever is earlier. 

(F) Upon request. A plan or issuer 

must provide the SBC to participants or 

beneficiaries upon request for an SBC or 

summary information about the health 

coverage, as soon as practicable, but in 

no event later than seven business days 

following receipt of the request. 

(iii) Special rules to prevent 

unnecessary duplication with respect to 

group health coverage—(A) An entity 

required to provide an SBC under this 

paragraph (a)(1) with respect to an 

individual satisfies that requirement if 

another party provides the SBC, but 

only to the extent that the SBC is timely 

and complete in accordance with the 

other rules of this section. Therefore, for 

example, in the case of a group health 

plan funded through an insurance 

policy, the plan satisfies the 

requirement to provide an SBC with 

respect to an individual if the issuer 

provides a timely and complete SBC to 

the individual. An entity required to 

provide an SBC under this paragraph 

(a)(1) with respect to an individual that 

contracts with another party to provide 

such SBC is considered to satisfy the 

requirement to provide such SBC if: 

(1) The entity monitors performance 

under the contract; 

(2) If the entity has knowledge that 

the SBC is not being provided in a 

manner that satisfies the requirements 

of this section and the entity has all 

information necessary to correct the 

noncompliance, the entity corrects the 

noncompliance as soon as practicable; 

and 

(3) If the entity has knowledge the 

SBC is not being provided in a manner 

that satisfies the requirements of this 

section and the entity does not have all 

information necessary to correct the 

noncompliance, the entity 

communicates with participants and 

beneficiaries who are affected by the 

noncompliance regarding the regarding 

the noncompliance, and begins taking 

significant steps as soon as practicable 

to avoid future violations. 

(B) If a single SBC is provided to a 

participant and any beneficiaries at the 

participant’s last known address, then 

the requirement to provide the SBC to 

the participant and any beneficiaries is 

generally satisfied. However, if a 

beneficiary’s last known address is 

different than the participant’s last 

known address, a separate SBC is 

required to be provided to the 

beneficiary at the beneficiary’s last 

known address. 

(C) With respect to a group health 

plan that offers multiple benefit 

packages, the plan or issuer is required 

to provide a new SBC automatically to 


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participants and beneficiaries upon 

renewal or re-enrollment only with 

respect to the benefit package in which 

a participant or beneficiary is enrolled 

(or will be automatically re-enrolled 

under the plan); SBCs are not required 

to be provided automatically upon 

renewal or re-enrollment with respect to 

benefit packages in which the 

participant or beneficiary is not enrolled 

(or will not automatically be enrolled). 

However, if a participant or beneficiary 

requests an SBC with respect to another 

benefit package (or more than one other 

benefit package) for which the 

participant or beneficiary is eligible, the 

SBC (or SBCs, in the case of a request 

for SBCs relating to more than one 

benefit package) must be provided upon 

request as soon as practicable, but in no 

event later than seven business days 

following receipt of the request. 

(2) Content—(i) In general. Subject to 

paragraph (a)(2)(iii) of this section, the 

SBC must include the following: 

(A) Uniform definitions of standard 

insurance terms and medical terms so 

that consumers may compare health 

coverage and understand the terms of 

(or exceptions to) their coverage, in 

accordance with guidance as specified 

by the Secretary; 

(B) A description of the coverage, 

including cost sharing, for each category 

of benefits identified by the Secretary in 

guidance; 

(C) The exceptions, reductions, and 

limitations of the coverage; 

(D) The cost-sharing provisions of the 

coverage, including deductible, 

coinsurance, and copayment 

obligations; 

(E) The renewability and continuation 

of coverage provisions; 

(F) Coverage examples, in accordance 

with the rules of paragraph (a)(2)(ii) of 

this section; 

(G) With respect to coverage 

beginning on or after January 1, 2014, a 

statement about whether the plan or 

coverage provides minimum essential 

coverage as defined under section 

5000A(f) and whether the plan’s or 

coverage’s share of the total allowed 

costs of benefits provided under the 

plan or coverage meets applicable 

requirements; 

(H) A statement that the SBC is only 

a summary and that the plan document, 

policy, certificate, or contract of 

insurance should be consulted to 

determine the governing contractual 

provisions of the coverage; 

(I) Contact information for questions; 

(J) For issuers, an Internet web 

address where a copy of the actual 

individual coverage policy or group 

certificate of coverage can be reviewed 

and obtained; 

(K) For plans and issuers that 

maintain one or more networks of 

providers, an Internet address (or 

similar contact information) for 

obtaining a list of network providers; 

(L) For plans and issuers that use a 

formulary in providing prescription 

drug coverage, an Internet address (or 

similar contact information) for 

obtaining information on prescription 

drug coverage; and 

(M) An Internet address for obtaining 

the uniform glossary, as described in 

paragraph (c) of this section, as well as 

a contact phone number to obtain a 

paper copy of the uniform glossary, and 

a disclosure that paper copies are 

available. 

(ii) Coverage examples. The SBC must 

include coverage examples specified by 

the Secretary in guidance that illustrate 

benefits provided under the plan or 

coverage for common benefits scenarios 

(including pregnancy and serious or 

chronic medical conditions) in 

accordance with this paragraph 

(a)(2)(ii). 

(A) Number of examples. The 

Secretary may identify up to six 

coverage examples that may be required 

in an SBC. 

(B) Benefits scenarios. For purposes of 

this paragraph (a)(2)(ii), a benefits 

scenario is a hypothetical situation, 

consisting of a sample treatment plan 

for a specified medical condition during 

a specific period of time, based on 

recognized clinical practice guidelines 

as defined by the National Guideline 

Clearinghouse, Agency for Healthcare 

Research and Quality. The Secretary 

will specify, in guidance, the 

assumptions, including the relevant 

items and services and reimbursement 

information, for each claim in the 

benefits scenario. 

(C) Illustration of benefit provided. 

For purposes of this paragraph (a)(2)(ii), 

to illustrate benefits provided under the 

plan or coverage for a particular benefits 

scenario, a plan or issuer simulates 

claims processing in accordance with 

guidance issued by the Secretary to 

generate an estimate of what an 

individual might expect to pay under 

the plan, policy, or benefit package. The 

illustration of benefits provided will 

take into account any cost sharing, 

excluded benefits, and other limitations 

on coverage, as specified by the 

Secretary in guidance. 

(iii) Coverage provided outside the 

United States. In lieu of summarizing 

coverage for items and services 

provided outside the United States, a 

plan or issuer may provide an Internet 

address (or similar contact information) 

for obtaining information about benefits 

and coverage provided outside the 

United States. In any case, the plan or 

issuer must provide an SBC in 

accordance with this section that 

accurately summarizes benefits and 

coverage available under the plan or 

coverage within the United States. 

(3) Appearance. (i) A group health 

plan and a health insurance issuer must 

provide an SBC in the form, and in 

accordance with the instructions for 

completing the SBC, that are specified 

by the Secretary in guidance. The SBC 

must be presented in a uniform format, 

use terminology understandable by the 

average plan enrollee, not exceed four 

double-sided pages in length, and not 

include print smaller than 12-point font. 

(ii) A group health plan that utilizes 

two or more benefit packages (such as 

major medical coverage and a health 

flexible spending arrangement) may 

synthesize the information into a single 

SBC, or provide multiple SBCs. 

(4) Form—(i) An SBC provided by an 

issuer offering group health insurance 

coverage to a plan (or its sponsor), may 

be provided in paper form. 

Alternatively, the SBC may be provided 

electronically (such as by email or an 

Internet posting) if the following three 

conditions are satisfied— 

(A) The format is readily accessible by 

the plan (or its sponsor); 

(B) The SBC is provided in paper form 

free of charge upon request; and 

(C) If the electronic form is an Internet 

posting, the issuer timely advises the 

plan (or its sponsor) in paper form or 

email that the documents are available 

on the Internet and provides the Internet 

address. 

(ii) An SBC provided by a group 

health plan or health insurance issuer to 

a participant or beneficiary may be 

provided in paper form. Alternatively, 

the SBC may be provided electronically 

(such as by email or an Internet posting) 

if the requirements of this paragraph 

(a)(4)(ii) are met. 

(A) With respect to participants and 

beneficiaries covered under the plan, 

the SBC may be provided electronically 

as described in this paragraph 

(a)(4)(ii)(A). However, in all cases, the 

plan must provide the SBC in paper 

form if paper form is requested. 

(1) In accordance with the Department 

of Labor’s disclosure regulations at 29 

CFR 2520.104b–1; 

(2) In connection with online 

enrollment or online renewal of 

coverage under the plan; or 

(3) In response to an online request 

made by a participant or beneficiary for 

the SBC. 

(B) With respect to participants and 

beneficiaries who are eligible but not 

enrolled for coverage, the SBC may be 

provided electronically if: 


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(1) The format is readily accessible; 

(2) The SBC is provided in paper form 

free of charge upon request; and 

(3) In a case in which the electronic 

form is an Internet posting, the plan or 

issuer timely notifies the individual in 

paper form (such as a postcard) or email 

that the documents are available on the 

Internet, provides the Internet address, 

and notifies the individual that the 

documents are available in paper form 

upon request. 

(5) Language. A group health plan or 

health insurance issuer must provide 

the SBC in a culturally and 

linguistically appropriate manner. For 

purposes of this paragraph (a)(5), a plan 

or issuer is considered to provide the 

SBC in a culturally and linguistically 

appropriate manner if the thresholds 

and standards of 29 CFR 2590.715– 

2719(e) are met as applied to the SBC. 

(b) Notice of modification. If a group 

health plan, or health insurance issuer 

offering group health insurance 

coverage, makes any material 

modification (as defined under section 

102 of ERISA) in any of the terms of the 

plan or coverage that would affect the 

content of the SBC, that is not reflected 

in the most recently provided SBC, and 

that occurs other than in connection 

with a renewal or reissuance of 

coverage, the plan or issuer must 

provide notice of the modification to 

enrollees not later than 60 days prior to 

the date on which the modification will 

become effective. The notice of 

modification must be provided in a form 

that is consistent with the rules of 

paragraph (a)(4) of this section. 

(c) Uniform glossary—(1) In general. 

A group health plan, and a health 

insurance issuer offering group health 

insurance coverage, must make 

available to participants and 

beneficiaries the uniform glossary 

described in paragraph (c)(2) of this 

section in accordance with the 

appearance and form and manner 

requirements of paragraphs (c)(3) and 

(c)(4) of this section. 

(2) Health-coverage-related terms and 

medical terms. The uniform glossary 

must provide uniform definitions, 

specified by the Secretary in guidance, 

of the following health-coverage-related 

terms and medical terms: 

(i) Allowed amount, appeal, balance 

billing, co-insurance, complications of 

pregnancy, co-payment, deductible, 

durable medical equipment, emergency 

medical condition, emergency medical 

transportation, emergency room care, 

emergency services, excluded services, 

grievance, habilitation services, health 

insurance, home health care, hospice 

services, hospitalization, hospital 

outpatient care, in-network coinsurance, in-network co-payment, 

medically necessary, network, nonpreferred provider, out-of-network coinsurance, out-of-network co-payment, 

out-of-pocket limit, physician services, 

plan, preauthorization, preferred 

provider, premium, prescription drug 

coverage, prescription drugs, primary 

care physician, primary care provider, 

provider, reconstructive surgery, 

rehabilitation services, skilled nursing 

care, specialist, usual customary and 

reasonable (UCR), and urgent care; and 

(ii) Such other terms as the Secretary 

determines are important to define so 

that individuals and employers may 

compare and understand the terms of 

coverage and medical benefits 

(including any exceptions to those 

benefits), as specified in guidance. 

(3) Appearance. A group health plan, 

and a health insurance issuer, must 

provide the uniform glossary with the 

appearance specified by the Secretary in 

guidance to ensure the uniform glossary 

is presented in a uniform format and 

uses terminology understandable by the 

average plan enrollee. 

(4) Form and manner. A plan or issuer 

must make the uniform glossary 

described in this paragraph (c) available 

upon request, in either paper or 

electronic form (as requested), within 

seven business days after receipt of the 

request. 

(d) Preemption. State laws that 

require a health insurance issuer to 

provide an SBC that supplies less 

information than required under 

paragraph (a) of this section are 

preempted. 

(e) Failure to provide. A group health 

plan that willfully fails to provide 

information required under this section 

to a participant or beneficiary is subject 

to a fine of not more than $1,000 for 

each such failure. A failure with respect 

to each participant or beneficiary 

constitutes a separate offense for 

purposes of this paragraph (e). The IRS 

will enforce this section using a process 

and procedure consistent with section 

4980D of the Code. 

(f) Applicability. The requirements of 

this section do not apply to a group 

health plan benefit package that 

provides Medicare Advantage benefits 

pursuant to or 42 U.S.C. Chapter 7, 

Subchapter XVIII, Part C. 

Department of Labor 

Employee Benefits Security 

Administration 

29 CFR Chapter XXV 

Accordingly, 29 CFR part 2590 is 

proposed to be amended as follows: 

PART 2590—RULES AND 

REGULATIONS FOR GROUP HEALTH 

PLANS 

■ 1. The authority citation for Part 2590 

continues to read as follows: 

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

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

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

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

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

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

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

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

124 Stat. 119, as amended by Pub. L. 111– 

152, 124 Stat. 1029; Secretary of Labor’s 

Order 1–2011, 77 FR 1088 (January 9, 2012). 

■ 2. Section 2590.715–2715 is revised to 

read as follows: 

§ 2590.715–2715 Summary of benefits and 

coverage and uniform glossary. 

(a) Summary of benefits and 

coverage—(1) In general. A group health 

plan (and its administrator as defined in 

section 3(16)(A) of ERISA)), and a health 

insurance issuer offering group health 

insurance coverage, is required to 

provide a written summary of benefits 

and coverage (SBC) for each benefit 

package without charge to entities and 

individuals described in this paragraph 

(a)(1) in accordance with the rules of 

this section. 

(i) SBC provided by a group health 

insurance issuer to a group health 

plan—(A) Upon application. A health 

insurance issuer offering group health 

insurance coverage must provide the 

SBC to a group health plan (or its 

sponsor) upon application for health 

coverage, as soon as practicable 

following receipt of the application, but 

in no event later than seven business 

days following receipt of the 

application. If an SBC was provided 

before application pursuant to 

paragraph (a)(1)(i)(D) of this section 

(relating to SBCs upon request), this 

paragraph (a)(1)(i)(A) is deemed 

satisfied, provided there is no change to 

the information required to be in the 

SBC. However, if there has been a 

change in the information required, a 

new SBC that includes the correct 

information must be provided upon 

application pursuant to this paragraph 

(a)(1)(i)(A). 

(B) By first day of coverage (if there 

are changes). If there is any change in 

the information required to be in the 

SBC that was provided upon application 

and before the first day of coverage, the 

issuer must update and provide a 

current SBC to the plan (or its sponsor) 

no later than the first day of coverage. 

(C) Upon renewal, reissuance, or reenrollment. If the issuer renews or 

reissues a policy, certificate, or contract 

of insurance for a succeeding policy 


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year, or automatically re-enrolls the 

policyholder or its participants and 

beneficiaries in coverage, the issuer 

must provide a new SBC as follows: 

(1) If written application is required 

(in either paper or electronic form) for 

renewal or reissuance, the SBC must be 

provided no later than the date the 

written application materials are 

distributed. 

(2) If renewal, reissuance, or reenrollment is automatic, the SBC must 

be provided no later than 30 days prior 

to the first day of the new plan or policy 

year; however, with respect to an 

insured plan, if the policy, certificate, or 

contract of insurance has not been 

issued or renewed before such 30-day 

period, the SBC must be provided as 

soon as practicable but in no event later 

than seven business days after issuance 

of the new policy, certificate, or contract 

of insurance, or the receipt of written 

confirmation of intent to renew, 

whichever is earlier. 

(D) Upon request. If a group health 

plan (or its sponsor) requests an SBC or 

summary information about a health 

insurance product from a health 

insurance issuer offering group health 

insurance coverage, an SBC must be 

provided as soon as practicable, but in 

no event later than seven business days 

following receipt of the request. 

(ii) SBC provided by a group health 

insurance issuer and a group health 

plan to participants and beneficiaries— 

(A) In general. A group health plan 

(including its administrator, as defined 

under section 3(16) of ERISA), and a 

health insurance issuer offering group 

health insurance coverage, must provide 

an SBC to a participant or beneficiary 

(as defined under sections 3(7) and 3(8) 

of ERISA), and consistent with the rules 

of paragraph (a)(1)(iii) of this section, 

with respect to each benefit package 

offered by the plan or issuer for which 

the participant or beneficiary is eligible. 

(B) Upon application. The SBC must 

be provided as part of any written 

application materials that are 

distributed by the plan or issuer for 

enrollment. If the plan or issuer does 

not distribute written application 

materials for enrollment, the SBC must 

be provided no later than the first date 

on which the participant is eligible to 

enroll in coverage for the participant or 

any beneficiaries. If an SBC was 

provided before application pursuant to 

paragraph (a)(1)(ii)(F) of this section 

(relating to SBCs upon request), this 

paragraph (a)(1)(ii)(B) is deemed 

satisfied, provided there is no change to 

the information required to be in the 

SBC. However, if there has been is a 

change in the information content, a 

new SBC that includes the correct 

information must be provided upon 

application pursuant to this paragraph 

(a)(1)(ii)(B). 

(C) By first day of coverage (if there 

are changes). If there is any change to 

the information required to be in the 

SBC that was provided upon application 

and before the first day of coverage, the 

plan or issuer must update and provide 

a current SBC to a participant or 

beneficiary no later than the first day of 

coverage. 

(D) Special enrollees. The plan or 

issuer must provide the SBC to special 

enrollees (as described in § 2590.701–6) 

no later than the date by which a 

summary plan description is required to 

be provided under the timeframe set 

forth in ERISA section 104(b)(1)(A) and 

its implementing regulations, which is 

90 days from enrollment. 

(E) Upon renewal, reissuance, or reenrollment. If the plan or issuer requires 

participants or beneficiaries to renew in 

order to maintain coverage (for example, 

for a succeeding plan year), or 

automatically re-enrolls participants 

and beneficiaries in coverage, the plan 

or issuer must provide a new SBC, as 

follows: 

(1) If written application is required 

for renewal, reissuance, or re-enrollment 

(in either paper or electronic form), the 

SBC must be provided no later than the 

date on which the written application 

materials are distributed. 

(2) If renewal, reissuance, or reenrollment is automatic, the SBC must 

be provided no later than 30 days prior 

to the first day of the new plan or policy 

year; however, with respect to an 

insured plan, if the policy, certificate, or 

contract of insurance has not been 

issued or renewed before such 30-day 

period, the SBC must be provided as 

soon as practicable but in no event later 

than seven business days after issuance 

of the new policy, certificate, or contract 

of insurance, or the receipt of written 

confirmation of intent to renew, 

whichever is earlier. 

(F) Upon request. A plan or issuer 

must provide the SBC to participants or 

beneficiaries upon request for an SBC or 

summary information about the health 

coverage, as soon as practicable, but in 

no event later than seven business days 

following receipt of the request. 

(iii) Special rules to prevent 

unnecessary duplication with respect to 

group health coverage—(A) An entity 

required to provide an SBC under this 

paragraph (a)(1) with respect to an 

individual satisfies that requirement if 

another party provides the SBC, but 

only to the extent that the SBC is timely 

and complete in accordance with the 

other rules of this section. Therefore, for 

example, in the case of a group health 

plan funded through an insurance 

policy, the plan satisfies the 

requirement to provide an SBC with 

respect to an individual if the issuer 

provides a timely and complete SBC to 

the individual. An entity required to 

provide an SBC under this paragraph 

(a)(1) with respect to an individual that 

contracts with another party to provide 

such SBC is considered to satisfy the 

requirement to provide such SBC if: 

(1) The entity monitors performance 

under the contract; 

(2) If the entity has knowledge that 

the SBC is not being provided in a 

manner that satisfies the requirements 

of this section and the entity has all 

information necessary to correct the 

noncompliance, the entity corrects the 

noncompliance as soon as practicable; 

and 

(3) If the entity has knowledge the 

SBC is not being provided in a manner 

that satisfies the requirements of this 

section and the entity does not have all 

information necessary to correct the 

noncompliance, the entity 

communicates with participants and 

beneficiaries who are affected by the 

noncompliance regarding the regarding 

the noncompliance, and begins taking 

significant steps as soon as practicable 

to avoid future violations. 

(B) If a single SBC is provided to a 

participant and any beneficiaries at the 

participant’s last known address, then 

the requirement to provide the SBC to 

the participant and any beneficiaries is 

generally satisfied. However, if a 

beneficiary’s last known address is 

different than the participant’s last 

known address, a separate SBC is 

required to be provided to the 

beneficiary at the beneficiary’s last 

known address. 

(C) With respect to a group health 

plan that offers multiple benefit 

packages, the plan or issuer is required 

to provide a new SBC automatically to 

participants and beneficiaries upon 

renewal or re-enrollment only with 

respect to the benefit package in which 

a participant or beneficiary is enrolled 

(or will be automatically re-enrolled 

under the plan); SBCs are not required 

to be provided automatically upon 

renewal or re-enrollment with respect to 

benefit packages in which the 

participant or beneficiary is not enrolled 

(or will not automatically be enrolled). 

However, if a participant or beneficiary 

requests an SBC with respect to another 

benefit package (or more than one other 

benefit package) for which the 

participant or beneficiary is eligible, the 

SBC (or SBCs, in the case of a request 

for SBCs relating to more than one 

benefit package) must be provided upon 

request as soon as practicable, but in no 


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78606 Federal Register / Vol. 79, No. 249 / Tuesday, December 30, 2014 / Proposed Rules 

event later than seven business days 

following receipt of the request. 

(2) Content—(i) In general. Subject to 

paragraph (a)(2)(iii) of this section, the 

SBC must include the following: 

(A) Uniform definitions of standard 

insurance terms and medical terms so 

that consumers may compare health 

coverage and understand the terms of 

(or exceptions to) their coverage, in 

accordance with guidance as specified 

by the Secretary; 

(B) A description of the coverage, 

including cost sharing, for each category 

of benefits identified by the Secretary in 

guidance; 

(C) The exceptions, reductions, and 

limitations of the coverage; 

(D) The cost-sharing provisions of the 

coverage, including deductible, 

coinsurance, and copayment 

obligations; 

(E) The renewability and continuation 

of coverage provisions; 

(F) Coverage examples, in accordance 

with the rules of paragraph (a)(2)(ii) of 

this section; 

(G) With respect to coverage 

beginning on or after January 1, 2014, a 

statement about whether the plan or 

coverage provides minimum essential 

coverage as defined under section 

5000A(f) and whether the plan’s or 

coverage’s share of the total allowed 

costs of benefits provided under the 

plan or coverage meets applicable 

requirements; 

(H) A statement that the SBC is only 

a summary and that the plan document, 

policy, certificate, or contract of 

insurance should be consulted to 

determine the governing contractual 

provisions of the coverage; 

(I) Contact information for questions; 

(J) For issuers, an Internet web 

address where a copy of the actual 

individual coverage policy or group 

certificate of coverage can be reviewed 

and obtained; 

(K) For plans and issuers that 

maintain one or more networks of 

providers, an Internet address (or 

similar contact information) for 

obtaining a list of network providers; 

(L) For plans and issuers that use a 

formulary in providing prescription 

drug coverage, an Internet address (or 

similar contact information) for 

obtaining information on prescription 

drug coverage; and 

(M) An Internet address for obtaining 

the uniform glossary, as described in 

paragraph (c) of this section, as well as 

a contact phone number to obtain a 

paper copy of the uniform glossary, and 

a disclosure that paper copies are 

available. 

(ii) Coverage examples. The SBC must 

include coverage examples specified by 

the Secretary in guidance that illustrate 

benefits provided under the plan or 

coverage for common benefits scenarios 

(including pregnancy and serious or 

chronic medical conditions) in 

accordance with this paragraph 

(a)(2)(ii). 

(A) Number of examples. The 

Secretary may identify up to six 

coverage examples that may be required 

in an SBC. 

(B) Benefits scenarios. For purposes of 

this paragraph (a)(2)(ii), a benefits 

scenario is a hypothetical situation, 

consisting of a sample treatment plan 

for a specified medical condition during 

a specific period of time, based on 

recognized clinical practice guidelines 

as defined by the National Guideline 

Clearinghouse, Agency for Healthcare 

Research and Quality. The Secretary 

will specify, in guidance, the 

assumptions, including the relevant 

items and services and reimbursement 

information, for each claim in the 

benefits scenario. 

(C) Illustration of benefit provided. 

For purposes of this paragraph (a)(2)(ii), 

to illustrate benefits provided under the 

plan or coverage for a particular benefits 

scenario, a plan or issuer simulates 

claims processing in accordance with 

guidance issued by the Secretary to 

generate an estimate of what an 

individual might expect to pay under 

the plan, policy, or benefit package. The 

illustration of benefits provided will 

take into account any cost sharing, 

excluded benefits, and other limitations 

on coverage, as specified by the 

Secretary in guidance. 

(iii) Coverage provided outside the 

United States. In lieu of summarizing 

coverage for items and services 

provided outside the United States, a 

plan or issuer may provide an Internet 

address (or similar contact information) 

for obtaining information about benefits 

and coverage provided outside the 

United States. In any case, the plan or 

issuer must provide an SBC in 

accordance with this section that 

accurately summarizes benefits and 

coverage available under the plan or 

coverage within the United States. 

(3) Appearance. (i) A group health 

plan and a health insurance issuer must 

provide an SBC in the form, and in 

accordance with the instructions for 

completing the SBC, that are specified 

by the Secretary in guidance. The SBC 

must be presented in a uniform format, 

use terminology understandable by the 

average plan enrollee, not exceed four 

double-sided pages in length, and not 

include print smaller than 12-point font. 

(ii) A group health plan that utilizes 

two or more benefit packages (such as 

major medical coverage and a health 

flexible spending arrangement) may 

synthesize the information into a single 

SBC, or provide multiple SBCs. 

(4) Form—(i) An SBC provided by an 

issuer offering group health insurance 

coverage to a plan (or its sponsor), may 

be provided in paper form. 

Alternatively, the SBC may be provided 

electronically (such as by email or an 

Internet posting) if the following three 

conditions are satisfied— 

(A) The format is readily accessible by 

the plan (or its sponsor); 

(B) The SBC is provided in paper form 

free of charge upon request; and 

(C) If the electronic form is an Internet 

posting, the issuer timely advises the 

plan (or its sponsor) in paper form or 

email that the documents are available 

on the Internet and provides the Internet 

address. 

(ii) An SBC provided by a group 

health plan or health insurance issuer to 

a participant or beneficiary may be 

provided in paper form. Alternatively, 

the SBC may be provided electronically 

(such as by email or an Internet posting) 

if the requirements of this paragraph 

(a)(4)(ii) are met. 

(A) With respect to participants and 

beneficiaries covered under the plan, 

the SBC may be provided electronically 

as described in this paragraph 

(a)(4)(ii)(A). However, in all cases, the 

plan must provide the SBC in paper 

form if paper form is requested. 

(1) In accordance with the Department 

of Labor’s disclosure regulations at 29 

CFR 2520.104b–1; 

(2) In connection with online 

enrollment or online renewal of 

coverage under the plan; or 

(3) In response to an online request 

made by a participant or beneficiary for 

the SBC. 

(B) With respect to participants and 

beneficiaries who are eligible but not 

enrolled for coverage, the SBC may be 

provided electronically if: 

(1) The format is readily accessible; 

(2) The SBC is provided in paper form 

free of charge upon request; and 

(3) In a case in which the electronic 

form is an Internet posting, the plan or 

issuer timely notifies the individual in 

paper form (such as a postcard) or email 

that the documents are available on the 

Internet, provides the Internet address, 

and notifies the individual that the 

documents are available in paper form 

upon request. 

(5) Language. A group health plan or 

health insurance issuer must provide 

the SBC in a culturally and 

linguistically appropriate manner. For 

purposes of this paragraph (a)(5), a plan 

or issuer is considered to provide the 

SBC in a culturally and linguistically 

appropriate manner if the thresholds 


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and standards of § 2590.715–2719(e) are 

met as applied to the SBC. 

(b) Notice of modification. If a group 

health plan, or health insurance issuer 

offering group health insurance 

coverage, makes any material 

modification (as defined under section 

102 of ERISA) in any of the terms of the 

plan or coverage that would affect the 

content of the SBC, that is not reflected 

in the most recently provided SBC, and 

that occurs other than in connection 

with a renewal or reissuance of 

coverage, the plan or issuer must 

provide notice of the modification to 

enrollees not later than 60 days prior to 

the date on which the modification will 

become effective. The notice of 

modification must be provided in a form 

that is consistent with the rules of 

paragraph (a)(4) of this section. 

(c) Uniform glossary—(1) In general. 

A group health plan, and a health 

insurance issuer offering group health 

insurance coverage, must make 

available to participants and 

beneficiaries the uniform glossary 

described in paragraph (c)(2) of this 

section in accordance with the 

appearance and form and manner 

requirements of paragraphs (c)(3) and 

(c)(4) of this section. 

(2) Health-coverage-related terms and 

medical terms. The uniform glossary 

must provide uniform definitions, 

specified by the Secretary in guidance, 

of the following health-coverage-related 

terms and medical terms: 

(i) Allowed amount, appeal, balance 

billing, co-insurance, complications of 

pregnancy, co-payment, deductible, 

durable medical equipment, emergency 

medical condition, emergency medical 

transportation, emergency room care, 

emergency services, excluded services, 

grievance, habilitation services, health 

insurance, home health care, hospice 

services, hospitalization, hospital 

outpatient care, in-network coinsurance, in-network co-payment, 

medically necessary, network, nonpreferred provider, out-of-network coinsurance, out-of-network co-payment, 

out-of-pocket limit, physician services, 

plan, preauthorization, preferred 

provider, premium, prescription drug 

coverage, prescription drugs, primary 

care physician, primary care provider, 

provider, reconstructive surgery, 

rehabilitation services, skilled nursing 

care, specialist, usual customary and 

reasonable (UCR), and urgent care; and 

(ii) Such other terms as the Secretary 

determines are important to define so 

that individuals and employers may 

compare and understand the terms of 

coverage and medical benefits 

(including any exceptions to those 

benefits), as specified in guidance. 

(3) Appearance. A group health plan, 

and a health insurance issuer, must 

provide the uniform glossary with the 

appearance specified by the Secretary in 

guidance to ensure the uniform glossary 

is presented in a uniform format and 

uses terminology understandable by the 

average plan enrollee. 

(4) Form and manner. A plan or issuer 

must make the uniform glossary 

described in this paragraph (c) available 

upon request, in either paper or 

electronic form (as requested), within 

seven business days after receipt of the 

request. 

(d) Preemption. See § 2590.731. In 

addition, State laws that require a health 

insurance issuer to provide an SBC that 

supplies less information than required 

under paragraph (a) of this section are 

preempted. 

(e) Failure to provide. A group health 

plan that willfully fails to provide 

information required under this section 

to a participant or beneficiary is subject 

to a fine of not more than $1,000 for 

each such failure. A failure with respect 

to each participant or beneficiary 

constitutes a separate offense for 

purposes of this paragraph (e). The 

Department will enforce this section 

using a process and procedure 

consistent with 29 CFR 2560.502c–2 of 

this chapter and 29 CFR part 2570, 

subpart C. 

(f) Applicability. The requirements of 

this section do not apply to a group 

health plan benefit package that 

provides Medicare Advantage benefits 

pursuant to or 42 U.S.C. Chapter 7, 

Subchapter XVIII, Part C. 

Department of Health and Human 

Services 

45 CFR Subtitle A 

For the reasons stated in the 

preamble, the Department of Health and 

Human Services proposes to amend 45 

CFR part 147 as follows: 

PART 147—HEALTH INSURANCE 

REFORM REQUIREMENTS FOR THE 

GROUP AND INDIVIDUAL HEALTH 

INSURANCE MARKETS 

■ 1. The authority citation for part 147 

continues to read as follows: 

Authority: Sections 2701 through 2763, 

2791, and 2792 of the Public Health Service 

Act (42 U.S.C. 300gg through 300gg–63, 

300gg–91, and 300gg–92), as amended. 

■ 2. Revise § 147.200 to read as follows: 

§ 147.200 Summary of benefits and 

coverage and uniform glossary. 

(a) Summary of benefits and 

coverage—(1) In general. A group health 

plan (and its administrator as defined in 

section 3(16)(A) of ERISA)), and a health 

insurance issuer offering group or 

individual health insurance coverage, is 

required to provide a written summary 

of benefits and coverage (SBC) for each 

benefit package without charge to 

entities and individuals described in 

this paragraph (a)(1) in accordance with 

the rules of this section. 

(i) SBC provided by a group health 

insurance issuer to a group health 

plan—(A) Upon application. A health 

insurance issuer offering group health 

insurance coverage must provide the 

SBC to a group health plan (or its 

sponsor) upon application for health 

coverage, as soon as practicable 

following receipt of the application, but 

in no event later than seven business 

days following receipt of the 

application. If an SBC was provided 

before application pursuant to 

paragraph (a)(1)(i)(D) of this section 

(relating to SBCs upon request), this 

paragraph (a)(1)(i)(A) is deemed 

satisfied, provided there is no change to 

the information required to be in the 

SBC. However, if there has been a 

change in the information required, a 

new SBC that includes the correct 

information must be provided upon 

application pursuant to this paragraph 

(a)(1)(i)(A). 

(B) By first day of coverage (if there 

are changes). If there is any change in 

the information required to be in the 

SBC that was provided upon application 

and before the first day of coverage, the 

issuer must update and provide a 

current SBC to the plan (or its sponsor) 

no later than the first day of coverage. 

(C) Upon renewal, reissuance, or reenrollment. If the issuer renews or 

reissues a policy, certificate, or contract 

of insurance for a succeeding policy 

year, or automatically re-enrolls the 

policyholder or its participants and 

beneficiaries in coverage, the issuer 

must provide a new SBC as follows: 

(1) If written application is required 

(in either paper or electronic form) for 

renewal or reissuance, the SBC must be 

provided no later than the date the 

written application materials are 

distributed. 

(2) If renewal, reissuance, or reenrollment is automatic, the SBC must 

be provided no later than 30 days prior 

to the first day of the new plan or policy 

year; however, with respect to an 

insured plan, if the policy, certificate, or 

contract of insurance has not been 

issued or renewed before such 30-day 

period, the SBC must be provided as 

soon as practicable but in no event later 

than seven business days after issuance 

of the new policy, certificate, or contract 

of insurance, or the receipt of written 

confirmation of intent to renew, 

whichever is earlier. 


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(D) Upon request. If a group health 

plan (or its sponsor) requests an SBC or 

summary information about a health 

insurance product from a health 

insurance issuer offering group health 

insurance coverage, an SBC must be 

provided as soon as practicable, but in 

no event later than seven business days 

following receipt of the request. 

(ii) SBC provided by a group health 

insurance issuer and a group health 

plan to participants and beneficiaries— 

(A) In general. A group health plan 

(including its administrator, as defined 

under section 3(16) of ERISA), and a 

health insurance issuer offering group 

health insurance coverage, must provide 

an SBC to a participant or beneficiary 

(as defined under sections 3(7) and 3(8) 

of ERISA), and consistent with the rules 

of paragraph (a)(1)(iii) of this section, 

with respect to each benefit package 

offered by the plan or issuer for which 

the participant or beneficiary is eligible. 

(B) Upon application. The SBC must 

be provided as part of any written 

application materials that are 

distributed by the plan or issuer for 

enrollment. If the plan or issuer does 

not distribute written application 

materials for enrollment, the SBC must 

be provided no later than the first date 

on which the participant is eligible to 

enroll in coverage for the participant or 

any beneficiaries. If an SBC was 

provided before application pursuant to 

paragraph (a)(1)(ii)(F) of this section 

(relating to SBCs upon request), this 

paragraph (a)(1)(ii)(B) is deemed 

satisfied, provided there is no change to 

the information required to be in the 

SBC. However, if there has been is a 

change in the information content, a 

new SBC that includes the correct 

information must be provided upon 

application pursuant to this paragraph 

(a)(1)(ii)(B). 

(C) By first day of coverage (if there 

are changes). If there is any change to 

the information required to be in the 

SBC that was provided upon application 

and before the first day of coverage, the 

plan or issuer must update and provide 

a current SBC to a participant or 

beneficiary no later than the first day of 

coverage. 

(D) Special enrollees. The plan or 

issuer must provide the SBC to special 

enrollees (as described in § 146.117 of 

this subchapter) no later than the date 

by which a summary plan description is 

required to be provided under the 

timeframe set forth in ERISA section 

104(b)(1)(A) and its implementing 

regulations, which is 90 days from 

enrollment. 

(E) Upon renewal, reissuance, or reenrollment. If the plan or issuer requires 

participants or beneficiaries to renew in 

order to maintain coverage (for example, 

for a succeeding plan year), or 

automatically re-enrolls participants 

and beneficiaries in coverage, the plan 

or issuer must provide a new SBC, as 

follows: 

(1) If written application is required 

for renewal, reissuance, or re-enrollment 

(in either paper or electronic form), the 

SBC must be provided no later than the 

date on which the written application 

materials are distributed. 

(2) If renewal, reissuance, or reenrollment is automatic, the SBC must 

be provided no later than 30 days prior 

to the first day of the new plan or policy 

year; however, with respect to an 

insured plan, if the policy, certificate, or 

contract of insurance has not been 

issued or renewed before such 30-day 

period, the SBC must be provided as 

soon as practicable but in no event later 

than seven business days after issuance 

of the new policy, certificate, or contract 

of insurance, or the receipt of written 

confirmation of intent to renew, 

whichever is earlier. 

(F) Upon request. A plan or issuer 

must provide the SBC to participants or 

beneficiaries upon request for an SBC or 

summary information about the health 

coverage, as soon as practicable, but in 

no event later than seven business days 

following receipt of the request. 

(iii) Special rules to prevent 

unnecessary duplication with respect to 

group health coverage—(A) An entity 

required to provide an SBC under this 

paragraph (a)(1) with respect to an 

individual satisfies that requirement if 

another party provides the SBC, but 

only to the extent that the SBC is timely 

and complete in accordance with the 

other rules of this section. Therefore, for 

example, in the case of a group health 

plan funded through an insurance 

policy, the plan satisfies the 

requirement to provide an SBC with 

respect to an individual if the issuer 

provides a timely and complete SBC to 

the individual. An entity required to 

provide an SBC under this paragraph 

(a)(1) with respect to an individual that 

contracts with another party to provide 

such SBC is considered to satisfy the 

requirement to provide such SBC if: 

(1) The entity monitors performance 

under the contract; 

(2) If the entity has knowledge that 

the SBC is not being provided in a 

manner that satisfies the requirements 

of this section and the entity has all 

information necessary to correct the 

noncompliance, the entity corrects the 

noncompliance as soon as practicable; 

and 

(3) If the entity has knowledge the 

SBC is not being provided in a manner 

that satisfies the requirements of this 

section and the entity does not have all 

information necessary to correct the 

noncompliance, the entity 

communicates with participants and 

beneficiaries who are affected by the 

noncompliance regarding the regarding 

the noncompliance, and begins taking 

significant steps as soon as practicable 

to avoid future violations. 

(B) If a single SBC is provided to a 

participant and any beneficiaries at the 

participant’s last known address, then 

the requirement to provide the SBC to 

the participant and any beneficiaries is 

generally satisfied. However, if a 

beneficiary’s last known address is 

different than the participant’s last 

known address, a separate SBC is 

required to be provided to the 

beneficiary at the beneficiary’s last 

known address. 

(C) With respect to a group health 

plan that offers multiple benefit 

packages, the plan or issuer is required 

to provide a new SBC automatically to 

participants and beneficiaries upon 

renewal or re-enrollment only with 

respect to the benefit package in which 

a participant or beneficiary is enrolled 

(or will be automatically re-enrolled 

under the plan); SBCs are not required 

to be provided automatically upon 

renewal or re-enrollment with respect to 

benefit packages in which the 

participant or beneficiary is not enrolled 

(or will not automatically be enrolled). 

However, if a participant or beneficiary 

requests an SBC with respect to another 

benefit package (or more than one other 

benefit package) for which the 

participant or beneficiary is eligible, the 

SBC (or SBCs, in the case of a request 

for SBCs relating to more than one 

benefit package) must be provided upon 

request as soon as practicable, but in no 

event later than seven business days 

following receipt of the request. 

(iv) SBC provided by a health 

insurance issuer offering individual 

health insurance coverage—(A) Upon 

application. A health insurance issuer 

offering individual health insurance 

coverage must provide an SBC to an 

individual covered under the policy 

(including every dependent) upon 

receiving an application for any health 

insurance policy, as soon as practicable 

following receipt of the application, but 

in no event later than seven business 

days following receipt of the 

application. If an SBC was provided 

before application pursuant to 

paragraph (a)(1)(iv)(D) of this section 

(relating to SBCs upon request), this 

paragraph (a)(1)(iv)(A) is deemed 

satisfied, provided there is no change to 

the information required to be in the 

SBC. However, if there has been a 

change in the information content, a 


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new SBC that includes the correct 

information must be provided upon 

application pursuant to this paragraph 

(a)(1)(iv)(A). 

(B) By first day of coverage (if there 

are changes). If there is any change in 

the information required to be in the 

SBC that was provided upon application 

and before the first day of coverage, the 

issuer must update and provide a 

current SBC to the individual no later 

than the first day of coverage. 

(C) Upon renewal, reissuance, or reenrollment. If the issuer renews or 

reissues a policy, certificate, or contract 

of insurance for a succeeding policy 

year, or automatically re-enrolls an 

individual (or dependent) covered 

under a policy, certificate, or contract of 

insurance into a policy, certificate, or 

contract of insurance under a different 

plan or product, the issuer must provide 

an SBC for the coverage in which the 

individual (including every dependent) 

will be enrolled, as follows: 

(1) If written application is required 

(in either paper or electronic form) for 

renewal, reissuance, or re-enrollment, 

the SBC must be provided no later than 

the date on which the written 

application materials are distributed. 

(2) If renewal, reissuance, or reenrollment is automatic, the SBC must 

be provided no later than 30 days prior 

to the first day of the new policy year; 

however, if the policy, certificate, or 

contract of insurance has not been 

issued or renewed before such 30 day 

period, the SBC must be provided as 

soon as practicable but in no event later 

than seven business days after issuance 

of the new policy, certificate, or contract 

of insurance, or the receipt of written 

confirmation of intent to renew, 

whichever is earlier. 

(D) Upon request. A health insurance 

issuer offering individual health 

insurance coverage must provide an 

SBC to any individual or dependent 

upon request for an SBC or summary 

information about a health insurance 

product as soon as practicable, but in no 

event later than seven business days 

following receipt of the request. 

(v) Special rule to prevent 

unnecessary duplication with respect to 

individual health insurance coverage.— 

(A) In general. If a single SBC is 

provided to an individual and any 

dependents at the individual’s last 

known address, then the requirement to 

provide the SBC to the individual and 

any dependents is generally satisfied. 

However, if a dependent’s last known 

address is different than the individual’s 

last known address, a separate SBC is 

required to be provided to the 

dependent at the dependents’ last 

known address. 

(B) Student health insurance 

coverage. With respect to student health 

insurance coverage as defined at 

§ 147.145(a), the requirement to provide 

an SBC to an individual will be 

considered satisfied for an entity if 

another party provides a timely and 

complete SBC to the individual. 

(2) Content—(i) In general. Subject to 

paragraph (a)(2)(iii) of this section, the 

SBC must include the following: 

(A) Uniform definitions of standard 

insurance terms and medical terms so 

that consumers may compare health 

coverage and understand the terms of 

(or exceptions to) their coverage, in 

accordance with guidance as specified 

by the Secretary; 

(B) A description of the coverage, 

including cost sharing, for each category 

of benefits identified by the Secretary in 

guidance; 

(C) The exceptions, reductions, and 

limitations of the coverage; 

(D) The cost-sharing provisions of the 

coverage, including deductible, 

coinsurance, and copayment 

obligations; 

(E) The renewability and continuation 

of coverage provisions; 

(F) Coverage examples, in accordance 

with the rules of paragraph (a)(2)(ii) of 

this section; 

(G) With respect to coverage 

beginning on or after January 1, 2014, a 

statement about whether the plan or 

coverage provides minimum essential 

coverage as defined under section 

5000A(f) and whether the plan’s or 

coverage’s share of the total allowed 

costs of benefits provided under the 

plan or coverage meets applicable 

requirements; 

(H) A statement that the SBC is only 

a summary and that the plan document, 

policy, certificate, or contract of 

insurance should be consulted to 

determine the governing contractual 

provisions of the coverage; 

(I) Contact information for questions; 

(J) For issuers, an Internet web 

address where a copy of the actual 

individual coverage policy or group 

certificate of coverage can be reviewed 

and obtained; 

(K) For plans and issuers that 

maintain one or more networks of 

providers, an Internet address (or 

similar contact information) for 

obtaining a list of network providers; (L) 

For plans and issuers that use a 

formulary in providing prescription 

drug coverage, an Internet address (or 

similar contact information) for 

obtaining information on prescription 

drug coverage; 

(M) An Internet address for obtaining 

the uniform glossary, as described in 

paragraph (c) of this section, as well as 

a contact phone number to obtain a 

paper copy of the uniform glossary, and 

a disclosure that paper copies are 

available; and 

(N) For qualified health plans sold 

through an individual market Exchange 

that exclude or provide for coverage of 

the services described in § 156.280(d)(1) 

of this subchapter, a notice of exclusion 

or such coverage. 

(ii) Coverage examples. The SBC must 

include coverage examples specified by 

the Secretary in guidance that illustrate 

benefits provided under the plan or 

coverage for common benefits scenarios 

(including pregnancy and serious or 

chronic medical conditions) in 

accordance with this paragraph 

(a)(2)(ii). 

(A) Number of examples. The 

Secretary may identify up to six 

coverage examples that may be required 

in an SBC. 

(B) Benefits scenarios. For purposes of 

this paragraph (a)(2)(ii), a benefits 

scenario is a hypothetical situation, 

consisting of a sample treatment plan 

for a specified medical condition during 

a specific period of time, based on 

recognized clinical practice guidelines 

as defined by the National Guideline 

Clearinghouse, Agency for Healthcare 

Research and Quality. The Secretary 

will specify, in guidance, the 

assumptions, including the relevant 

items and services and reimbursement 

information, for each claim in the 

benefits scenario. 

(C) Illustration of benefit provided. 

For purposes of this paragraph (a)(2)(ii), 

to illustrate benefits provided under the 

plan or coverage for a particular benefits 

scenario, a plan or issuer simulates 

claims processing in accordance with 

guidance issued by the Secretary to 

generate an estimate of what an 

individual might expect to pay under 

the plan, policy, or benefit package. The 

illustration of benefits provided will 

take into account any cost sharing, 

excluded benefits, and other limitations 

on coverage, as specified by the 

Secretary in guidance. 

(iii) Coverage provided outside the 

United States. In lieu of summarizing 

coverage for items and services 

provided outside the United States, a 

plan or issuer may provide an Internet 

address (or similar contact information) 

for obtaining information about benefits 

and coverage provided outside the 

United States. In any case, the plan or 

issuer must provide an SBC in 

accordance with this section that 

accurately summarizes benefits and 

coverage available under the plan or 

coverage within the United States. 

(3) Appearance. (i) A group health 

plan and a health insurance issuer must 


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provide an SBC in the form, and in 

accordance with the instructions for 

completing the SBC, that are specified 

by the Secretary in guidance. The SBC 

must be presented in a uniform format, 

use terminology understandable by the 

average plan enrollee (or, in the case of 

individual market coverage, the average 

individual covered under a health 

insurance policy), not exceed four 

double-sided pages in length, and not 

include print smaller than 12-point font. 

A health insurance issuer offering 

individual health insurance coverage 

must provide the SBC as a stand-alone 

document. 

(ii) A group health plan that utilizes 

two or more benefit packages (such as 

major medical coverage and a health 

flexible spending arrangement) may 

synthesize the information into a single 

SBC, or provide multiple SBCs. 

(4) Form—(i) An SBC provided by an 

issuer offering group health insurance 

coverage to a plan (or its sponsor), may 

be provided in paper form. 

Alternatively, the SBC may be provided 

electronically (such as by email or an 

Internet posting) if the following three 

conditions are satisfied— 

(A) The format is readily accessible by 

the plan (or its sponsor); 

(B) The SBC is provided in paper form 

free of charge upon request; and 

(C) If the electronic form is an Internet 

posting, the issuer timely advises the 

plan (or its sponsor) in paper form or 

email that the documents are available 

on the Internet and provides the Internet 

address. 

(ii) An SBC provided by a group 

health plan or health insurance issuer to 

a participant or beneficiary may be 

provided in paper form. Alternatively, 

the SBC may be provided electronically 

(such as by email or an Internet posting) 

if the requirements of this paragraph 

(a)(4)(ii) are met. 

(A) With respect to participants and 

beneficiaries covered under the plan or 

coverage, the SBC may be provided 

electronically as described in this 

paragraph (a)(4)(ii)(A). However, in all 

cases, the plan or issuer must provide 

the SBC in paper form if paper form is 

requested. 

(1) In accordance with the Department 

of Labor’s disclosure regulations at 29 

CFR 2520.104b–1; 

(2) In connection with online 

enrollment or online renewal of 

coverage under the plan; or 

(3) In response to an online request 

made by a participant or beneficiary for 

the SBC. 

(B) With respect to participants and 

beneficiaries who are eligible but not 

enrolled for coverage, the SBC may be 

provided electronically if: 

(1) The format is readily accessible; 

(2) The SBC is provided in paper form 

free of charge upon request; and 

(3) In a case in which the electronic 

form is an Internet posting, the plan or 

issuer timely notifies the individual in 

paper form (such as a postcard) or email 

that the documents are available on the 

Internet, provides the Internet address, 

and notifies the individual that the 

documents are available in paper form 

upon request. 

(iii) An issuer offering individual 

health insurance coverage must provide 

an SBC in a manner that can reasonably 

be expected to provide actual notice in 

paper or electronic form. 

(A) An issuer satisfies the 

requirements of this paragraph (a)(4)(iii) 

if the issuer: 

(1) Hand-delivers a printed copy of 

the SBC to the individual or dependent; 

(2) Mails a printed copy of the SBC to 

the mailing address provided to the 

issuer by the individual or dependent; 

(3) Provides the SBC by email after 

obtaining the individual’s or 

dependent’s agreement to receive the 

SBC or other electronic disclosures by 

email; 

(4) Posts the SBC on the Internet and 

advises the individual or dependent in 

paper or electronic form, in a manner 

compliant with paragraphs 

(a)(4)(iii)(A)(1) through (3), that the SBC 

is available on the Internet and includes 

the applicable Internet address; or 

(5) Provides the SBC by any other 

method that can reasonably be expected 

to provide actual notice. 

(B) An SBC may not be provided 

electronically unless: 

(1) The format is readily accessible; 

(2) The SBC is placed in a location 

that is prominent and readily accessible; 

(3) The SBC is provided in an 

electronic form which can be 

electronically retained and printed; 

(4) The SBC is consistent with the 

appearance, content, and language 

requirements of this section; 

(5) The issuer notifies the individual 

or dependent that the SBC is available 

in paper form without charge upon 

request and provides it upon request. 

(C) Deemed compliance. A health 

insurance issuer offering individual 

health insurance coverage that provides 

the content required under paragraph 

(a)(2) of this section, as specified in 

guidance published by the Secretary, to 

the federal health reform Web portal 

described in § 159.120 of this 

subchapter will be deemed to satisfy the 

requirements of paragraph (a)(1)(iv)(D) 

of this section with respect to a request 

for summary information about a health 

insurance product made prior to an 

application for coverage. However, 

nothing in this paragraph should be 

construed as otherwise limiting such 

issuer’s obligations under this section. 

(iv) An SBC provided by a selfinsured non-Federal governmental plan 

may be provided in paper form. 

Alternatively, the SBC may be provided 

electronically if the plan conforms to 

either the substance of the provisions in 

paragraph (a)(4)(ii) or (a)(4)(iii) of this 

section. 

(5) Language. A group health plan or 

health insurance issuer must provide 

the SBC in a culturally and 

linguistically appropriate manner. For 

purposes of this paragraph (a)(5), a plan 

or issuer is considered to provide the 

SBC in a culturally and linguistically 

appropriate manner if the thresholds 

and standards of § 147.136(e) are met as 

applied to the SBC. 

(b) Notice of modification. If a group 

health plan, or health insurance issuer 

offering group or individual health 

insurance coverage, makes any material 

modification (as defined under section 

102 of ERISA) in any of the terms of the 

plan or coverage that would affect the 

content of the SBC, that is not reflected 

in the most recently provided SBC, and 

that occurs other than in connection 

with a renewal or reissuance of 

coverage, the plan or issuer must 

provide notice of the modification to 

enrollees (or, in the case of individual 

market coverage, an individual covered 

under a health insurance policy) not 

later than 60 days prior to the date on 

which the modification will become 

effective. The notice of modification 

must be provided in a form that is 

consistent with the rules of paragraph 

(a)(4) of this section. 

(c) Uniform glossary—(1) In general. 

A group health plan, and a health 

insurance issuer offering group health 

insurance coverage, must make 

available to participants and 

beneficiaries, and a health insurance 

issuer offering individual health 

insurance coverage must make available 

to applicants, policyholders, and 

covered dependents, the uniform 

glossary described in paragraph (c)(2) of 

this section in accordance with the 

appearance and form and manner 

requirements of paragraphs (c)(3) and 

(c)(4) of this section. 

(2) Health-coverage-related terms and 

medical terms. The uniform glossary 

must provide uniform definitions, 

specified by the Secretary in guidance, 

of the following health-coverage-related 

terms and medical terms: 

(i) Allowed amount, appeal, balance 

billing, co-insurance, complications of 

pregnancy, co-payment, deductible, 

durable medical equipment, emergency 

medical condition, emergency medical 


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transportation, emergency room care, 

emergency services, excluded services, 

grievance, habilitation services, health 

insurance, home health care, hospice 

services, hospitalization, hospital 

outpatient care, in-network coinsurance, in-network co-payment, 

medically necessary, network, nonpreferred provider, out-of-network coinsurance, out-of-network co-payment, 

out-of-pocket limit, physician services, 

plan, preauthorization, preferred 

provider, premium, prescription drug 

coverage, prescription drugs, primary 

care physician, primary care provider, 

provider, reconstructive surgery, 

rehabilitation services, skilled nursing 

care, specialist, usual customary and 

reasonable (UCR), and urgent care; and 

(ii) Such other terms as the Secretary 

determines are important to define so 

that individuals and employers may 

compare and understand the terms of 

coverage and medical benefits 

(including any exceptions to those 

benefits), as specified in guidance. 

(3) Appearance. A group health plan, 

and a health insurance issuer, must 

provide the uniform glossary with the 

appearance specified by the Secretary in 

guidance to ensure the uniform glossary 

is presented in a uniform format and 

uses terminology understandable by the 

average plan enrollee (or, in the case of 

individual market coverage, an average 

individual covered under a health 

insurance policy). 

(4) Form and manner. A plan or issuer 

must make the uniform glossary 

described in this paragraph (c) available 

upon request, in either paper or 

electronic form (as requested), within 

seven business days after receipt of the 

request. 

(d) Preemption. For purposes of this 

section, the provisions of section 2724 

of the PHS Act continue to apply with 

respect to preemption of State law. In 

addition, State laws that require a health 

insurance issuer to provide an SBC that 

supplies less information than required 

under paragraph (a) of this section are 

preempted. 

(e) Failure to provide. A health 

insurance issuer or a non-federal 

governmental health plan that willfully 

fails to provide information to a covered 

individual required under this section is 

subject to a fine of not more than $1,000 

for each such failure. A failure with 

respect to each covered individual 

constitutes a separate offense for 

purposes of this paragraph (e). HHS will 

enforce these provisions in a manner 

consistent with §§ 150.101 through 

150.465 of this subchapter. 

(f) Applicability. The requirements of 

this section do not apply to a group 

health plan benefit package that 

provides Medicare Advantage benefits 

pursuant to or 42 U.S.C. Chapter 7, 

Subchapter XVIII, Part C. 

[FR Doc. 2014–30243 Filed 12–22–14; 4:15 pm] 

BILLING CODE 4830–01–P; 4150–28–P; 4120–01–P 


tkelley on DSK3SPTVN1PROD with PROPOSALS2