51202 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Parts 155 and 157 

[CMS–9974–P] 

RIN 0938–AR25 

Patient Protection and Affordable Care 

Act; Exchange Functions in the 

Individual Market: Eligibility 

Determinations; Exchange Standards 

for Employers 

AGENCY: Department of Health and 

Human Services. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

implement certain functions of the new 

Affordable Insurance Exchanges 

(‘‘Exchanges’’), consistent with title I of 

the Patient Protection and Affordable 

Care Act of 2010, as amended by the 

Health Care and Education 

Reconciliation Act of 2010, referred to 

collectively as the Affordable Care Act. 

The Exchanges will provide competitive 

marketplaces for individuals and small 

employers to directly compare available 

private health insurance options on the 

basis of price, quality, and other factors. 

The Exchanges, which will become 

operational by January 1, 2014, will 

help enhance competition in the health 

insurance market, improve choice of 

affordable health insurance, and give 

small businesses the same purchasing 

clout as large businesses. The specific 

Exchange functions proposed in this 

rule include: Eligibility determinations 

for Exchange participation and 

insurance affordability programs and 

standards for employer participation in 

SHOP. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. Eastern Standard Time 

(EST) on October 31, 2011. 

ADDRESSES: In commenting, please refer 

to file code CMS–9974–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

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

the ‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–9974–P, P.O. Box 8010, Baltimore, 

MD 21244–8010. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Attention: CMS–9974– 

P, Mail Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. Alternatively, 

you may deliver (by hand or courier) 

your written comments ONLY to the 

following addresses prior to the close of 

the comment period: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue, SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, call 

telephone number (410) 786–9994 in 

advance to schedule your arrival with 

one of our staff members. 

Comments erroneously mailed to the 

addresses indicated as appropriate for 

hand or courier delivery may be delayed 

and received after the comment period. 

Submission of comments on 

paperwork requirements. You may 

submit comments on this document’s 

paperwork requirements by following 

the instructions at the end of the 

‘‘Collection of Information 

Requirements’’ section in this 

document. For information on viewing 

public comments, see the beginning of 

the SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT:

Laurie McWright at (301) 492–4372 

for general information matters. 

Alissa DeBoy at (301) 492–4428 for 

general information and matters related 

to part 155. 

Michelle Strollo at (301) 492–4429 for 

matters related to eligibility. 

Naomi Senkeeto at (301) 492–4419 for 

matters related to part 157. 

SUPPLEMENTARY INFORMATION: A detailed 

Preliminary Regulatory Impact Analysis 

associated with this proposed rule is 

available at http://cciio.cms.gov under 

‘‘Regulations and Guidance.’’ A 

summary of the aforementioned analysis 

is included as part of this proposed rule. 

Abbreviations 

CHIP Children’s Health Insurance Program 

CMS Centers for Medicare & Medicaid 

Services 

DOL U.S. Department of Labor 

ERISA Employee Retirement Income 

Security Act (29 U.S.C. section 1001, et 

seq.) 

FPL Federal Poverty Level 

HHS U.S. Department of Health and Human 

Services 

HMO Health Maintenance Organization 

IHS Indian Health Service 

IRS Internal Revenue Service 

NAIC National Association of Insurance 

Commissioners 

OMB Office of Management and Budget 

OPM Office of Personnel Management 

PHS Act Public Health Service Act 

QHP Qualified Health Plan 

SHOP Small Business Health Options 

Program 

SSA Social Security Administration 

The Act Social Security Act 

The Code Internal Revenue Code of 1986 

Executive Summary: Starting in 2014, 

individuals and small businesses will be 

able to purchase private health 

insurance through State-based 

competitive marketplaces called 

Affordable Insurance Exchanges, or 

‘‘Exchanges.’’ Exchanges will offer 

Americans competition, choice, and 

clout. Insurance companies will 

compete for business on a level playing 

field, driving down costs. Consumers 

will have a choice of health plans to fit 

their needs. And Exchanges will give 

individuals and small businesses the 

same purchasing clout as big businesses. 

The Departments of Health and Human 

Services, Labor and the Treasury (the 

Departments) are working in close 

coordination to release guidance related 

to Exchanges. The first in this series was 

a Request for Comment relating to 

Exchanges, published in the Federal 

Register on August 3, 2010 (75 FR 

45584). Second, Initial Guidance to 

States on Exchanges was issued on 

November 18, 2010. Third, a proposed 

rule for the application, review, and 

reporting process for waivers for State 

innovation was published in the 

Federal Register on March 14, 2011 

(76 FR 13553). Fourth, two proposed 

regulations were published in the 

Federal Register on July 15, 2011 (76 FR 

41866 and 76 FR 41930) to implement 

components of the Exchange and health 

insurance premium stabilization 

policies in the Affordable Care Act. 

Fifth, a proposed regulation for the 


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establishment of the Consumer 

Operated and Oriented Plan (CO–OP) 

Program under section 1322 of the 

Affordable Care Act was published in 

the Federal Register on July 20, 2011 

(76 FR 43237). Sixth, three proposed 

rules, including this one, are being 

published in the Federal Register on 

August 17, 2011 to provide guidance on 

the eligibility determination process 

related to enrollment in a qualified 

health plan, advance payments of the 

premium tax credit, cost-sharing 

reductions, Medicaid, the Children’s 

Health Insurance Program (CHIP), and 

participation in SHOP. 

45 CFR 155.200(c) proposes that the 

Exchange perform eligibility 

determinations. This rule proposes the 

specific standards for the Exchange 

eligibility process, in order to 

implement sections 1311, 1312, 1411, 

1412, and 1413 of the Affordable Care 

Act. Further, it supports and 

complements rulemaking conducted by 

the Secretary of the Treasury with 

respect to section 36B of the Internal 

Revenue Code (the Code), as added by 

section 1401(a) of the Affordable Care 

Act, and by the Secretary of HHS with 

respect to several sections of the 

Affordable Care Act regarding Medicaid 

and CHIP. This proposed rule also 

contains standards for employers with 

respect to participation in the Small 

Business Health Options Program 

(SHOP), paralleling the Exchange 

standards for SHOP set forth in the 

previous Exchange rule. 

The aforementioned sections of the 

Affordable Care Act create a central role 

for the Exchange in the process of 

determining an individual’s eligibility 

for enrollment in a qualified health plan 

(QHP), as well as for ‘‘insurance 

affordability programs.’’ In this 

proposed rule, ‘‘insurance affordability 

programs’’ is used to refer to advance 

payments of the premium tax credit, 

cost-sharing reductions, Medicaid, 

CHIP, and any State-established Basic 

Health Program, if applicable, as 

defined in 42 CFR 435.4 of the Medicaid 

proposed rule. We interpret Affordable 

Care Act sections 1311(d)(4)(F), and 

1413, and section 1943 of the Act, as 

added by section 2201 of the Affordable 

Care Act, to establish a system of 

streamlined and coordinated eligibility 

and enrollment through which an 

individual may apply for enrollment in 

a QHP and insurance affordability 

programs and receive a determination of 

eligibility for such programs. We also 

interpret section 1413(b)(2) to mean that 

the eligibility and enrollment function 

should be consumer-oriented, 

minimizing administrative hurdles and 

unnecessary paperwork for applicants. 

Submitting Comments: We welcome 

comments from the public on issues set 

forth in this proposed rule to assist us 

in fully considering issues and 

developing policies. Comments will be 

most useful if they are organized by the 

section of the proposed rule to which 

they apply. You can assist us by 

referencing the file code [CMS–9974–P] 

and the specific ‘‘issue identifier’’ that 

precedes the section on which you 

choose to comment. 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all electronic 

comments received before the close of 

the comment period on the following 

public Web site as soon as possible after 

they have been received at http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. Comments received 

timely will be available for public 

inspection as they are received, 

generally beginning approximately 3 

weeks after publication of a document, 

at Room 445–G, Department of Health 

and Human Services, Hubert H. 

Humphrey Building, 200 Independence 

Avenue, SW., Washington, DC 20201, 

Monday through Friday of each week 

from 8:30 a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

call 1–800–743–3951. 

Table of Contents 

I. Background 

A. Legislative Overview 

B. Request for Comment 

C. Structure of the Proposed Rule 

II. Provisions of the Proposed Regulation 

A. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. Subpart D—Exchange Functions in the 

Individual Market: Eligibility 

Determinations for Exchange 

Participation and Insurance Affordability 

Programs 

B. Part 157—Employer Interactions With 

Exchanges and SHOP Participation 

1. Subpart A—General Provisions 

2. Subpart B—Reserved 

3. Subpart C—Standards for Qualified 

Employers 

III. Collection of Information Requirements 

IV. Summary of Regulatory Impact Analysis 

V. Regulatory Flexibility Act 

VI. Unfunded Mandates 

VII. Federalism 

I. Background 

A. Legislative Overview 

Section 1311(b) and section 1321 of 

the Affordable Care Act outline 

provisions for the establishment of 

Exchanges that will facilitate the 

purchase of insurance coverage by 

qualified individuals through qualified 

health plans (QHPs). 

Section 1401 of the Affordable Care 

Act creates new section 36B of the 

Internal Revenue Code (the Code), 

which provides for a premium tax credit 

for eligible individuals who enroll in a 

QHP through an Exchange. Section 1402 

establishes provisions to reduce the 

cost-sharing obligation of certain 

eligible individuals enrolled in a QHP 

offered through an Exchange. 

Under section 1411 of the Affordable 

Care Act, the Secretary is directed to 

establish a program for determining 

whether an individual meets the 

eligibility standards for Exchange 

participation, advance payments of the 

premium tax credit, cost-sharing 

reductions, and exemptions from the 

individual responsibility provision. 

Sections 1412 and 1413 of the 

Affordable Care Act and section 1943 of 

the Social Security Act (the Act), as 

added by section 2201 of the Affordable 

Care Act, contain additional provisions 

regarding eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions, as well as 

provisions regarding simplification and 

coordination of eligibility 

determinations and enrollment with 

other health programs. These provisions 

of the Affordable Care Act are addressed 

in subpart D of part 155 in this rule. 

Section 1402 of the Affordable Care 

Act outlines standards for determining 

Indians eligible for certain categories of 

cost-sharing reductions. 

Unless otherwise specified, the 

provisions in this proposed rule related 

to the establishment of minimum 

functions of an Exchange are based on 

the general authority of the Secretary 

under section 1321(a)(1) of the 

Affordable Care Act. 

B. Stakeholder Consultation and Input 

On August 3, 2010, HHS published a 

Request for Comment (the RFC) inviting 

the public to provide input regarding 

the rules that will govern the Exchanges. 

In particular, HHS asked States, tribal 

representatives, consumer advocates, 

employers, insurers, and other 

interested stakeholders to comment on 

the types of standards Exchanges should 

meet. The comment period closed on 

October 4, 2010. While this proposed 

rule does not directly respond to 

comments from the RFC, the comments 

received are described, where 

applicable, in discussing specific 

regulatory proposals. 

The public response to the RFC 

yielded comment submissions from 

consumer advocacy organizations, 

medical and health care professional 


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trade associations and societies, medical 

and health care professional entities, 

health insurers, insurance trade 

associations, members of the general 

public, and employer organizations. The 

majority of the comments were related 

to the general functions and standards 

for Exchanges, QHPs, eligibility and 

enrollment, and coordination with 

Medicaid. We intend to respond to 

comments from the RFC, along with 

comments received on this proposed 

rule, as part of the final rule. 

In addition to the RFC, HHS has 

consulted with stakeholders through 

regular meetings with the National 

Association of Insurance Commissioners 

(NAIC), regular contact with States 

through the Exchange grant process, and 

meetings with tribal representatives, 

health insurance issuers, trade groups, 

consumer advocates, employers, and 

other interested parties. This 

consultation will continue throughout 

the development of Exchange guidance. 

C. Structure of the Proposed Rule 

The regulations outlined in this notice 

of proposed rulemaking will be codified 

in 45 CFR part 155 and new part 157. 

Part 155 outlines the proposed 

standards for States relative to the 

establishment of Exchanges and outlines 

the proposed standards for Exchanges 

related to minimum Exchange 

functions. Part 157 outlines the basic 

standards that employers must meet to 

voluntarily participate in the Small 

Business Health Options Program 

(SHOP). 

Subjects included in the Affordable 

Care Act addressed in prior proposed 

rulemaking include but are not limited 

to: (1) Federal standards for States that 

elect to establish and operate an 

Exchange; (2) minimum standards for 

health insurance issuers to participate 

in an Exchange and offer qualified 

health plans (QHPs); and (3) basic 

standards related to the establishment of 

the Small Business Health Options 

Program (SHOP). 

Subjects included in the Affordable 

Care Act to be addressed in future 

separate rulemaking include but are not 

limited to: (1) Standards outlining the 

Exchange process for issuing certificates 

of exemption from the individual 

responsibility provision and payment 

under section 1411(a)(4); (2) defining 

essential health benefits, actuarial value 

and other benefit design standards; and 

(3) standards for Exchanges and QHP 

issuers related to quality. 

II. Provisions of the Proposed 

Regulation 

A. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. Subpart D—Exchange Functions in 

the Individual Market: Eligibility 

Determinations for Exchange 

Participation and Insurance 

Affordability Programs 

Under the Affordable Care Act, 

Exchanges will make QHPs available to 

qualified individuals. In accordance 

with our interpretation of the sections of 

the Affordable Care Act described 

below; the authority provided by, inter 

alia, section 1321(a); and 45 CFR 

155.200(c), which specifies that the 

Exchange will perform eligibility 

determinations; we propose that the 

Exchange will determine eligibility for 

Exchange participation, as well as for 

insurance affordability programs. 

Sections 1312, 1331, 1401, 1402, 2001, 

2002, and 2201 of the Affordable Care 

Act, by creating new law and amending 

existing law, in conjunction with titles 

XIX and XXI of the Act, set forth 

eligibility standards for these programs 

and benefits; and sections 1311, 1411, 

1412, and 1413 of the Affordable Care 

Act create a central role for the 

Exchange in the process of determining 

an individual’s eligibility based on 

those standards. In subpart D, we 

propose standards related to eligibility 

determinations for enrollment in a QHP 

and for insurance affordability 

programs. Throughout this subpart, we 

refer to Medicaid and CHIP, but we note 

that for those States that choose to 

establish a Basic Health Program, all 

provisions applicable to Medicaid and 

CHIP will also be generally applicable to 

the Basic Health Program. We also note 

that references in this subpart to 

‘‘Exchange’’ refer specifically to 

functions in connection with the 

purchase of individual market coverage 

through the Exchange. 

In 45 CFR 155.200(c) (76 FR 41866), 

we proposed that the Exchange perform 

eligibility determinations. We interpret 

Affordable Care Act sections 

1311(d)(4)(F) and 1413, and section 

1943 of the Act, as added by section 

2201 of the Affordable Care Act, to 

provide for the establishment of a 

system of streamlined and coordinated 

eligibility and enrollment through 

which an individual may apply for 

insurance affordability programs and 

receive a determination of eligibility for 

any such program. Section 1413(b)(2) 

provides that an individual’s eligibility 

be determined without unduly 

burdening the individual with 

unnecessary paperwork. We note that 

these approaches were supported by 

comments that we received in response 

to the RFC. One option that we 

considered was whether to establish a 

system in which the Secretary of HHS 

would determine eligibility for advance 

payments of the premium tax credit, 

with other eligibility and enrollment 

functions remaining as the 

responsibility of the Exchange, since 

premium tax credits are fully Federallyfunded and the rules are the same across 

all States. However, we chose not to 

take this approach, because isolating 

one component of the eligibility 

determination process from the 

remaining eligibility and enrollment 

functions would pose significant 

challenges to ensuring a seamless 

experience for applicants. It would also 

limit the role of State Exchanges in this 

process. We note that States may also 

work with HHS to leverage 

technological and operational 

capabilities provided by HHS to execute 

Exchange functions in a way that will 

meet the needs of individuals. We 

solicit comments on this approach and 

alternatives. 

We also note that throughout this 

subpart, we propose several 

transmissions of data, which we intend 

to occur electronically, using secure 

interfaces. We note that the standards 

specified in § 155.260 and § 155.270 

regarding privacy and security apply to 

any data sharing processes and 

agreements under this subpart. 

The proposed eligibility process is 

designed to minimize opportunities for 

fraud and abuse, including the use of 

clear eligibility standards and processes 

that rely on data sources in an electronic 

environment. We solicit comments 

regarding strategies to further limit the 

risk for fraud and abuse, and we look 

forward to working with States toward 

this goal. 

Consistent with this streamlined, 

seamless eligibility and enrollment 

system, the Affordable Care Act requires 

a simplification of Medicaid and CHIP 

eligibility policy and rules, which is in 

42 CFR 435.603 and 42 CFR 457.315, 

proposed by the Secretary of HHS in the 

Medicaid Program; Eligibility Changes 

under the Affordable Care Act of 2010 

rule, published in this issue of the 

Federal Register (the Medicaid 

proposed rule). Pursuant to the 

Affordable Care Act, this simplification 

aligns most of the rules under which 

individuals will be determined eligible 

for Medicaid and CHIP with those for 

advance payments of the premium tax 

credit and cost-sharing reductions, by 

generally using modified adjusted gross 

income (MAGI) as the basis for income 


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1Section 3308 of the Affordable Care Act also 

defines ‘‘modified adjusted gross income’’; this 

definition is different from the definitions that are 

applicable to advance payments of the premium tax 

credit, cost-sharing reductions, Medicaid, and 

CHIP. 

eligibility, effective January 1, 2014. 

While the use of this standard is 

referenced throughout this subpart, the 

use of a MAGI-based standard for 

Medicaid and CHIP is proposed in the 

Medicaid proposed rule, pursuant to 

section 2002 of the Affordable Care Act, 

and the definition of MAGI will be 

proposed by the Department of the 

Treasury in the Health Insurance 

Premium Tax Credit rule, scheduled for 

publication in this issue of the Federal 

Register.1

In this subpart, we have organized the 

standards we propose for the Exchange 

in determining eligibility as follows: 

Eligibility standards, eligibility 

determination process, and applicant 

information verification process. 

a. Definitions and General Standards for 

Eligibility Determinations (§ 155.300) 

In this section, we propose definitions 

for this subpart. We note that virtually 

all of the definitions in this section are 

from other proposed regulations, 

including many proposed in the 

Establishment of Exchanges and 

Qualified Health Plans rule, published 

at 76 FR 41866 (July 15, 2011), 

(Exchange proposed rule). 

In paragraph (a), we propose the 

definition for ‘‘adoption taxpayer 

identification number’’ to have the same 

meaning as it does in 26 CFR 301.6109– 

3(a). 

We propose the definition for 

‘‘applicable Medicaid modified adjusted 

gross income (MAGI)-based income 

standard’’ to have the same meaning as 

‘‘applicable Medicaid modified adjusted 

gross income standard’’ as defined in 42 

CFR 435.911(b), applied under the State 

Medicaid plan or waiver of such plan, 

and as certified by the State Medicaid 

agency pursuant to 42 CFR 

435.1200(c)(2), for determining 

Medicaid eligibility. Both 42 CFR 

435.911(b) and 435.1200(c)(2) are 

proposed in the Medicaid proposed 

rule. 

In support of our proposal that the 

Exchange determine an applicant’s 

eligibility for CHIP, we propose to 

define ‘‘applicable CHIP modified 

adjusted gross income (MAGI)-based 

income standard’’ as the income 

standard applied under the State plan 

under Title XXI of the Act, or waiver of 

such plan, as defined at 42 CFR 

457.305(a), and as certified by the State 

CHIP Agency pursuant to 42 CFR 

457.348(d), for determining eligibility 

for child health assistance and 

enrollment in a separate child health 

program. The applicable CHIP MAGIbased standard will also vary from State 

to State depending on the threshold 

established by the State CHIP agency. 

Both 42 CFR 457.305 and 457.348(d) are 

proposed in the Medicaid proposed 

rule. 

We propose to define ‘‘application 

filer’’ to mean an individual who 

submits an application for health 

insurance coverage to the Exchange and 

responds to inquiries about the 

application. An application filer may be 

an applicant or a non-applicant, and 

may or may not be a primary taxpayer. 

We propose to define ‘‘Federal 

Poverty Level’’ (FPL) to mean the most 

recently published FPL, updated 

periodically in the Federal Register by 

the Secretary of Health and Human 

Services under the authority of 42 

U.S.C. 9902(2), as of the first day of the 

annual open enrollment period for 

coverage in a qualified health plan 

through the Exchange; the open 

enrollment period is specified in 45 CFR 

155.410. This definition is used for 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions, and matches the definition 

in the Treasury proposed rule. We note 

that the Medicaid proposed rule does 

not specify that FPL is based on the data 

published as of the first day of the 

Exchange open enrollment period, 

which means that the FPL table used in 

eligibility determinations for Medicaid 

and CHIP may be different from that 

used for advance payments of the 

premium tax credit and cost-sharing 

reductions, depending on the date of the 

eligibility determination. However, we 

note that for the annual open enrollment 

period for coverage, the FPL tables for 

Medicaid, CHIP, and advance payments 

of the premium tax credit and costsharing reductions should be the same. 

For purposes of determining 

eligibility for cost-sharing provisions, 

we propose to codify the definition of 

‘‘Indian’’ to mean any individual 

defined in section 4(d) of the Indian 

Self-Determination and Education 

Assistance Act (ISDEAA) (Pub. L. 93– 

638, 88 Stat. 2203), in accordance with 

section 1402(d)(1) of the Affordable Care 

Act. This definition means an 

individual who is a member of a 

Federally-recognized tribe. Applicants 

meeting this definition are eligible for 

cost-sharing reductions or special costsharing rules on the basis of Indian 

status, which are described in § 155.350 

of this subpart. 

We propose to define ‘‘insurance 

affordability programs’’ as described 

earlier in this section. 

We propose that the definition of the 

term ‘‘minimum value’’ has the meaning 

given to the term in section 36B(c)(2)(C) 

of the Code. 

We propose to define ‘‘non-citizen’’ to 

mean any individual who is not a 

citizen or national of the United States, 

which is the same meaning as the term 

alien as defined in section 101(a)(3) of 

the Immigration and Nationality Act. 

We propose to define ‘‘primary 

taxpayer’’ to mean an individual who 

(1) attests that he or she will file a tax 

return for the benefit year, in 

accordance with 26 CFR 1.6011–8; (2) if 

married (within the meaning of 26 CFR 

1.7703–1), attests that he or she expects 

to file a joint tax return for the benefit 

year; (3) attests that he or she expects 

that no other taxpayer will be able to 

claim him or her as a tax dependent for 

the benefit year; and (4) attests that he 

or she expects to claim a personal 

exemption deduction on his or her tax 

return for the family members listed on 

his or her application, including the 

primary taxpayer and his or her spouse. 

We use this term in § 155.305 and 

§ 155.320(c) of this subpart to describe 

the individual who would receive 

advance payments of the premium tax 

credit and would file a tax return to 

reconcile such advance payments. 

We propose to define ‘‘State CHIP 

Agency’’ to mean the agency that 

administers a separate child health 

program established by the State under 

Title XXI of the Act in accordance with 

implementing regulations at 42 CFR part 

457. 

We propose to define ‘‘State Medicaid 

Agency’’ to mean the agency that 

administers a Medicaid program 

established by the State under Title XIX 

of the Act in accordance with 

implementing regulations at 42 CFR 

430. 

We propose to define ‘‘tax 

dependent’’ to mean a dependent in 

accordance with section 152 of the 

Code. 

In paragraph (b), we propose to clarify 

that, in general, references to Medicaid 

and CHIP regulations in this subpart 

refer to Medicaid and CHIP State plan 

provisions implementing those 

regulations. To the extent that the 

regulations outlined in this section refer 

to Medicaid and CHIP regulations, the 

Exchange would adhere to the rules of 

the Medicaid and CHIP agencies 

operating within the service area of the 

Exchange. 

Lastly, in paragraph (c)(1), we propose 

that except as specified in paragraph 

(c)(2), for purposes of this subpart, an 

attestation may be made by the 

applicant (self-attestation), an 

application filer, or in cases in which an 


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individual cannot attest, the attestation 

of a parent, caretaker, or someone acting 

responsibly on behalf of such an 

individual. In paragraph (c)(2), we 

propose that the attestations specified in 

§ 155.310(d)(2)(ii) and 

§ 155.315(e)(4)(ii), which result in the 

authorization of advance payments of 

the premium tax credit, must be made 

by the primary taxpayer. This is because 

these attestations are designed to ensure 

that the primary taxpayer appreciates 

and accepts the tax consequences that 

follow from receipt of advance 

payments. 

b. Eligibility Standards (§ 155.305) 

In § 155.305, we propose to codify the 

eligibility standards for enrollment in a 

QHP and for insurance affordability 

programs. 

In paragraph (a), we propose that the 

Exchange determine an applicant 

eligible for enrollment in a QHP if he or 

she meets the basic standards for 

enrollment in a QHP, which are taken 

from section 1312(f) of the Affordable 

Care Act. First, in paragraph (a)(1), we 

propose to codify section 1312(f)(3) that 

in order to be eligible for enrollment in 

a QHP, an individual must be a citizen, 

national, or a non-citizen lawfully 

present, and be reasonably expected to 

remain so for the entire period for 

which enrollment is sought. In proposed 

§ 155.20, the term ‘‘lawfully present’’ is 

adopted as defined in 45 CFR 152.2. 

Since the Exchange will also be 

determining eligibility for Medicaid and 

CHIP, we intend to align the 

requirements for lawful presence with 

that of the State option for Medicaid and 

CHIP under section 1903(v)(4) of the 

Act, as added by section 214 of the 

Children’s Health Insurance Program 

Reauthorization Act (Pub. L. 111–3, 123 

Stat. 8); to the extent that the Secretary 

amends the definition for Medicaid and 

CHIP in future rulemaking, we intend to 

adjust the Exchange rules accordingly. 

We solicit comments regarding the 

codified language in paragraph (a)(1) 

that an individual be ‘‘reasonably 

expected,’’ for the entire period for 

which enrollment is sought, to be a 

citizen, national, or non-citizen lawfully 

present, which comes directly from 

section 1312(f)(3) of the Affordable Care 

Act. We clarify that the period for which 

enrollment is sought does not have to be 

an entire benefit year. In particular, we 

seek comment on how this policy can be 

implemented in a way that is 

straightforward for individuals to 

understand and for the Exchange to 

implement. 

In paragraph (a)(2), we propose to 

codify section 1312(f)(1)(B) that in order 

to be eligible for enrollment in a QHP, 

an individual must not be incarcerated, 

with the exception of incarceration 

pending the disposition of charges. 

In paragraph (a)(3), we propose the 

standard regarding residency. Section 

1312(f) of the Affordable Care Act 

provides that in order to enroll in a 

QHP, an individual must reside in the 

State that established the Exchange. 

When discussing the residency standard 

for the Exchange, we use the term 

‘‘service area of the Exchange’’ to 

account for regional or subsidiary 

Exchanges that serve broader or 

narrower geographic areas than a single 

State, as well as for situations in which 

a Federally-facilitated Exchange is 

operating in a State. We clarify that this 

residency standard is designed to apply 

to all Exchanges, including regional and 

subsidiary Exchanges. In order to codify 

the residency standard of section 1312(f) 

to take account of the options under 

sections 1311(f)(1) and 1311(f)(2), in 

paragraph (a)(3)(i), we propose that an 

individual aged 21 or older who is not 

institutionalized, is capable of 

indicating intent, and is not receiving a 

State supplementary payment (Statefunded cash assistance for certain 

individuals receiving SSI) meets the 

residency standard for enrollment in a 

QHP if the applicant intends to reside 

in the State within the service area of 

the Exchange through which the 

individual is requesting coverage. 

In general, we propose to align the 

Exchange residency standard with the 

residency standards proposed for 

Medicaid, which are proposed in 42 

CFR 435.403 of the Medicaid proposed 

rule. Such Medicaid residency 

standards include an ‘‘intent to reside’’ 

standard. This ‘‘intent to reside’’ 

standard applies to individuals 21 and 

over who are seeking coverage through 

the Exchange and who intend to reside 

within the service area of the Exchange 

provided that an individual does not fall 

into special residency categories 

described in paragraph (a)(3)(iii). This 

phrase precludes visitors to the service 

area of an Exchange from meeting the 

residency standard, but accommodates 

those individuals who may transition 

between service areas of different 

Exchanges, such as seasonal workers 

and individuals seeking employment in 

the State or service area of the 

Exchange. This also allows individuals 

who are absent temporarily from the 

service area of an Exchange to remain 

within the same Exchange during the 

temporary absence. Furthermore, while 

we do not include the words ‘‘live’’ or 

‘‘living’’ in the proposed residency 

requirements, we will interpret these 

proposed regulations such that an 

adult’s residency will be based on 

where he or she is living, and expect 

that he or she must also maintain the 

present intent to reside in the State 

within the service area of the Exchange 

that is being claimed. Along these lines 

and in accordance with the language in 

section 1312(f)(3) of the Affordable Care 

Act, which we interpret to allow an 

applicant to request coverage for less 

than a full calendar year, we clarify that 

this residency standard does not require 

an individual to intend to reside for the 

entire benefit year. In paragraph 

(a)(3)(ii), we propose that an individual 

under age 21 who is not 

institutionalized, is not receiving 

payments under Title IV–E of the Act 

(such as foster care assistance and 

adoption assistance), is not 

emancipated, and is not receiving a 

State supplementary payment, meets the 

residency standard for enrollment in a 

QHP if he or she resides within the 

service area of the Exchange through 

which he or she is requesting coverage, 

to account for situations in which an 

individual under age 21 is unable to 

express intent. 

We note that Medicaid has adopted a 

number of additional rules regarding 

residency for special populations, 

including institutionalized individuals, 

individuals receiving Title IV–E 

payments, individuals receiving State 

supplementary payments, individuals 

incapable of expressing intent, and 

emancipated minors. In paragraph 

(a)(3)(iii) of this section, we propose that 

the Exchange follow these Medicaid 

residency standards (which are 

proposed in the Medicaid proposed rule 

at 42 CFR 435.403) and the policy of the 

State Medicaid or CHIP agency to the 

extent that an individual is specifically 

described in that section and not in 

paragraphs (a)(3)(i) or (ii). We continue 

to work across HHS to ensure that the 

Exchange, Medicaid, and CHIP can 

reach a definition or set of definitions of 

residency that will enable a uniform 

eligibility determination process for the 

vast majority of individuals to reduce 

complexity and confusion for all 

involved parties; we solicit comments 

on this topic. 

We also recognize that there are a 

number of situations in which a tax 

household may include members 

residing in different service areas served 

by different Exchanges. In paragraph 

(a)(3)(iv) of this section, we propose that 

for a spouse or a tax dependent who 

resides outside the service area of the 

primary taxpayer’s Exchange, such as 

when a non-custodial parent claims a 

child as a tax dependent, the spouse or 

tax dependent will be permitted to 

either: (1) Enroll in a QHP through the 

Exchange that services the area in which 


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Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 51207 

2Network adequacy is addressed in the Exchange 

proposed rule at 76 FR 41866, 41893–94. 

he or she resides or intends to reside; or 

(2) enroll in a QHP through the 

Exchange that services the area in which 

his or her primary taxpayer intends to 

reside or resides, as applicable. In either 

case, if the spouse or tax dependent is 

covered, he or she will still count as 

part of the tax household and the 

advance payment calculation will take 

account of the policy or policies needed 

to cover the tax household consistent 

with the rules proposed in the Treasury 

proposed rule. We believe that this will 

provide flexibility to an individual who 

does not live in the service area of the 

Exchange in which his or her primary 

taxpayer lives but want to remain in the 

same Exchange as the primary taxpayer, 

including but not limited to students 

attending out-of-State schools or tax 

dependents who do not live with their 

primary taxpayer. 

We note that section 1334 of the 

Affordable Care Act directs the Office of 

Personnel Management to contract with 

health insurance issuers to offer at least 

two private multi-State plans in each 

Exchange, which we believe may create 

opportunities for households with 

members in multiple States to remain 

covered by the same QHP. We also 

solicit comment as to whether there are 

any standards regarding in-network 

adequacy for out-of-State dependents 

we should consider.2 We also note that 

the preamble to 42 CFR 435.403, 

proposed in the Medicaid proposed 

rule, clarifies that HHS intends to allow 

State Medicaid agencies to continue to 

have State-specific rules with respect to 

residency for students under the 

Medicaid program, which is not 

consistent with our approach for the 

Exchange. We recognize that under the 

Medicaid proposed rule, State Medicaid 

agencies will continue to have 

flexibility with regard to residency for 

students and we solicit comments on 

whether different rules should be 

maintained or whether a unified 

approach should be adopted. 

In paragraph (b), we propose that the 

Exchange determine an applicant 

eligible for an enrollment period if he or 

she meets the criteria for an enrollment 

period, as specified in § 155.410 and 

§ 155.420 of this part. The purpose of 

this provision is to clarify that in 

addition to determining whether an 

applicant meets the eligibility standards 

for enrollment in a QHP specified in 

paragraph (a) of this section, the 

Exchange will determine whether or not 

the applicant is permitted to enroll in a 

QHP at the time the applicant actually 

seeks coverage. 

Based on sections 1311(d)(4)(F) and 

1413 of the Affordable Care Act and 

section 1943(b)(1)(B) of the Act, we 

propose that the Exchange determine 

applicants’ eligibility for Medicaid and 

CHIP, and enroll eligible applicants into 

these programs. In paragraph (c), we 

propose the criteria under which the 

Exchange will determine eligibility for 

Medicaid for an applicant seeking an 

eligibility determination for insurance 

affordability programs as described in 

§ 155.310(b). We propose that the 

Exchange determine an applicant’s 

eligibility for Medicaid for eligibility 

categories that use the applicable 

Medicaid MAGI-based income standard 

defined in § 155.300. 

Specifically, we propose that the 

Exchange determine an applicant 

eligible for Medicaid if he or she: (1) 

Meets the citizenship and immigration 

requirements described in 42 CFR 

435.406 and 1903(v)(4) of the Social 

Security Act, as certified by the State 

Medicaid agency under 435.1200(c)(3); 

(2) meets the proposed requirements 

described in 42 CFR 435.403 regarding 

residency; (3) has a household income, 

as defined in proposed 42 CFR 

435.911(b), that is at or below the 

applicable Medicaid MAGI-based 

income standard; and (4) falls into one 

of the categories described in the 

definition of ‘‘applicable Medicaid 

MAGI-based income standard’’ in 

§ 155.300(a). We note that 42 CFR 

435.406(a), 435.403, and 435.911(b) are 

proposed in the Medicaid proposed rule 

and we intend to fully align the 

standards to which the Exchange will 

adhere for purposes of Medicaid 

eligibility with those standards as 

implemented in the State Medicaid 

plan. 

In paragraph (d), we propose that the 

Exchange determine an applicant 

eligible for CHIP if he or she meets the 

requirements of 42 CFR 457.310 through 

457.320 and has a household income 

within the applicable CHIP MAGI-based 

income standard. 

Section 1331 of the Affordable Care 

Act provides a State with the option to 

create a Basic Health Program to provide 

coverage to some qualified individuals 

in lieu of Exchange coverage. In 

paragraph (e), we propose to codify that 

if a Basic Health Program is operating in 

the service area of the Exchange, the 

Exchange will determine an individual’s 

eligibility for the Basic Health Program. 

We intend to address policies for the 

Basic Health Program in future 

rulemaking. 

Sections 1401, which creates a new 

section 36B of the Code, and 1402 of the 

Affordable Care Act establish a 

premium tax credit and cost-sharing 

reductions that are available to certain 

individuals, and section 1412 of the 

Affordable Care Act provides that 

advance payments of the premium tax 

credit may be made to QHP issuers on 

behalf of eligible individuals. In 

paragraph (f), we propose the eligibility 

standards for advance payments of the 

premium tax credit. These provisions 

are drawn from the standards in section 

36B of the Code and implementing 

regulations at 26 CFR 1.36B–1 through 

1.36B–5, in the Treasury proposed rule. 

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

the eligibility standards for a primary 

taxpayer, as defined in § 155.300(a), to 

receive advance payments of the 

premium tax credit on behalf of him or 

herself, for his or her spouse, or for one 

or more of his or her tax dependents. 

We clarify that while these standards 

are described in terms of a primary 

taxpayer, because the primary taxpayer 

actually receives the premium tax credit 

on his or her tax return for the benefit 

year, an individual who is not a primary 

taxpayer may apply for coverage 

without the presence of a primary 

taxpayer throughout the application 

process. The primary taxpayer’s 

involvement is necessary only at the 

point at which the Exchange will 

authorize an advance payment, which is 

discussed in § 155.310(d)(2)(ii). 

We propose that the Exchange 

determine a primary taxpayer eligible to 

receive advance payments if the 

Exchange determines that he or she is 

expected to have a household income, 

as defined in proposed 26 CFR 1.36B– 

1(e), of at least 100 percent but not more 

than 400 percent of the FPL, as specified 

in proposed 26 CFR 1.36B–2(b)(1), for 

the benefit year for which coverage is 

requested, and one or more applicants 

for whom the primary taxpayer expects 

to claim a personal exemption 

deduction on his or her tax return for 

the benefit year, including the primary 

taxpayer and his or her spouse (1) meets 

the standards for eligibility for 

enrollment in a QHP through the 

Exchange; and (2) is not eligible for 

minimum essential coverage, in 

accordance with proposed 26 CFR 

1.36B–2(a)(2) (which excludes coverage 

purchased through the individual 

market, as well as employer-sponsored 

minimum essential coverage for which 

the employee’s contribution exceeds 9.5 

percent (in 2014, and indexed in future 

years) of household income or for which 

the plan’s share of the total allowed 

costs of benefits provided under the 

plan is less than 60 percent of such 

costs, unless an individual is enrolled in 

such employer-sponsored minimum 

essential coverage). We clarify that the 

definition of household income in 26 


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51208 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

CFR 1.36B–1(e) of the Treasury 

proposed rule does not include the 

income of an individual in a primary 

taxpayer’s family who is not required to 

file. 

In addition, in paragraph (f)(2), we 

propose that the Exchange determine a 

primary taxpayer eligible for advance 

payments of the premium tax credit if 

the Exchange determines that (1) he or 

she meets the standards specified in 

paragraph (f)(1) (regarding eligibility for 

advance payments of the premium tax 

credit) except for paragraph (f)(1)(i) 

(household income of at least 100 

percent but not more than 400 percent 

of the FPL); (2) he or she is expected to 

have a household income of less than 

100 percent of the FPL; and (3) one or 

more applicants, including the primary 

taxpayer and his or her spouse, for 

whom the primary taxpayer expects to 

claim a personal exemption deduction 

on his or her tax return for the benefit 

year, including the primary taxpayer 

and his or her spouse, is a non-citizen 

who is lawfully present and ineligible 

for Medicaid by reason of immigration 

status. 

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

the Exchange may provide advance 

payments of the premium tax credit 

only for an applicant who is enrolled in 

a QHP through the Exchange. The intent 

of this provision is to clarify that an 

applicant does not need to be enrolled 

in a QHP to be determined eligible for 

advance payments of the premium tax 

credit; however, an applicant must be 

enrolled prior to advance payments 

being made to a QHP issuer. 

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

the Exchange determine a primary 

taxpayer ineligible to receive advance 

payments of the premium tax credit if 

HHS notifies the Exchange that the 

primary taxpayer or his or her spouse 

received advance payments for a prior 

year for which tax data would be 

utilized for income verification and did 

not comply with the requirement to file 

a tax return for such year, as proposed 

in 26 CFR 1.6011–8. For example, this 

requirement means that for open 

enrollment for coverage in calendar year 

2016, which will take place in the fall 

of 2015, a primary taxpayer on whose 

behalf advance payments were made for 

calendar year 2014 must have filed a tax 

return for 2014. This proposal is 

intended to prevent a primary taxpayer 

or spouse who has failed to comply with 

tax filing rules from accumulating 

additional Federal tax liabilities due to 

advance payments of the premium tax 

credit. An individual may remove this 

restriction by filing a tax return for the 

year in question. 

In paragraph (f)(5), we propose that in 

the event the Exchange determines that 

a primary taxpayer is eligible to receive 

advance payments of the premium tax 

credit, the Exchange will calculate 

advance payments of the premium tax 

credit in accordance with 26 CFR 

1.36B–3 of the Treasury proposed rule. 

Our proposal to adopt the IRS premium 

tax credit rules for advance payments 

ensures that, to the extent the 

information used to calculate a primary 

taxpayer’s advance payments is 

consistent with the information 

reporting on the primary taxpayer’s 

income tax return at the end of the 

taxable year, the advance payment 

calculation will be consistent with the 

ultimate premium tax credit calculation, 

reducing the potential for differences at 

the time of reconciliation. We also note 

that in § 155.310(d)(2), we propose the 

Exchange permit a primary taxpayer to 

accept less than the full amount of 

advance payments of the premium tax 

credit for which he or she is determined 

eligible. 

Lastly, in paragraph (f)(6), we propose 

that the Exchange must require an 

application filer to provide the Social 

Security number (SSN) of the primary 

taxpayer if an application filer attests 

that the primary taxpayer has a SSN and 

filed a tax return for the year for which 

tax data would be utilized for 

verification of household income and 

family size. Sections 1412(b)(1) and 

1411(b)(3) of the Affordable Care Act 

together provide that eligibility 

determinations for advance payments of 

the premium tax credit are to be made 

based on tax return data, to the extent 

that reasonably recent and 

representative tax return data is 

available; the Secretary of the Treasury 

is only able to provide tax data for 

primary taxpayers for whom the 

Exchange provides a SSN or an 

adoption taxpayer identification number 

(ATIN). We clarify that taxpayers who 

have SSNs and who have tax data 

available that would be used for 

verification of household income and 

family size must provide them to the 

Exchange for purposes of eligibility for 

advance payments of the premium tax 

credit. We note that, because the 

eligibility standards for cost-sharing 

reductions proposed at § 155.305(g) 

incorporate the eligibility standards for 

advance payments of the premium tax 

credit, this standard also applies for the 

purposes of eligibility for cost-sharing 

reductions. Like all other data 

collections, the use and disclosure of 

SSNs is subject to the privacy and 

security safeguards proposed in 

§ 155.260 and § 155.270. 

We highlight two key differences 

between Medicaid and CHIP and 

advance payments of the premium tax 

credit. First, while eligibility for 

Medicaid and CHIP is based on current 

income, eligibility for advance 

payments of the premium tax credit is 

based on annual income. Second, unlike 

Medicaid and CHIP, the premium tax 

credit is paid on an advance basis and 

then reconciled based on information 

reported on an individual’s tax return 

for the entire year. That is, to the extent 

that an individual receives advance 

payments of the premium tax credit 

based on an initial eligibility 

determination at 150 percent of the FPL 

and his or her actual annual household 

income as reported on his or her tax 

return is 300 percent of the FPL, he or 

she will be liable to repay advance 

payments of the premium tax credit to 

reduce the credit to the 300 percent 

level, subject to the statutory caps on 

repayment proposed in 26 CFR 1.36B– 

4 of the Treasury proposed rule. 

Commenters to the RFC raised 

concerns regarding the potential for the 

statutory reconciliation process, in 

combination with the annual basis of 

household income for advance 

payments of the premium tax credit, to 

render coverage unaffordable for 

individuals who have substantial 

decreases in income during the benefit 

year. A related concern is that the fear 

of large repayments due to 

reconciliation after an increase in 

income could deter enrollment. Both 

effects could result in a lower 

participation and a negative impact on 

the Exchange risk pool. To address these 

concerns, the Exchange can decrease the 

difference between the amount of 

advance payments and the premium tax 

credit amount based on actual income at 

the end of the year through a strong 

initial eligibility process that maximizes 

accuracy and a strong process by which 

individuals can report changes that 

occur during the year. We solicit 

comments on ways of achieving this 

outcome. 

In paragraph (g), we propose that the 

Exchange determine an applicant 

eligible for cost-sharing reductions if he 

or she meets eligibility standards that 

we propose to codify from section 1402 

of the Affordable Care Act. In 

accordance with sections 1402(b) and 

(c) of the Affordable Care Act, in 

paragraph (g)(1) of this section, we 

propose that the Exchange must 

determine an applicant eligible for costsharing reductions if he or she is (i) 

eligible for enrollment in a QHP in 

accordance with paragraph (a) of this 

section; (ii) is eligible for advance 

payments of the premium tax credit in 


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accordance with paragraph (f) of this 

section; and (iii) has household income 

for the taxable year that does not exceed 

250 percent of the FPL. We note that 

there are also special eligibility 

standards for cost-sharing reductions 

based on Indian status, which are 

described in § 155.350 of this subpart. 

Section 1402(b) of the Affordable Care 

Act explicitly provides that an 

individual is eligible for reduced costsharing if his or her household income 

exceeds 100 percent of the FPL, but 

does not exceed 400 percent of the FPL. 

However, section 1402(c)(1)(B)(i)(IV) 

specifies that cost-sharing reductions for 

an individual with household income 

that exceeds 250 percent of the FPL but 

does not exceed 400 percent of the FPL 

may not result in the QHP’s share of 

costs exceeding 70 percent, which is the 

actuarial value standard for a silverlevel QHP pursuant to section 

1302(d)(1)(B) of the Affordable Care Act, 

regardless of cost-sharing reductions. 

Since an individual has to enroll in a 

silver-level QHP in order to receive costsharing reductions, and the actuarial 

value of a silver-level QHP without costsharing reductions is 70 percent, an 

individual with household income that 

exceeds 250 percent of the FPL who is 

not an Indian is not eligible for costsharing reductions, which is reflected in 

paragraph (g)(1)(iii). 

Lastly, in paragraph (g)(2), we propose 

to codify section 1402(b)(1) of the 

Affordable Care Act, which specifies 

that an applicant must be enrolled in a 

QHP in the silver level of coverage in 

order to receive cost-sharing reductions. 

In paragraph (h), we propose three 

eligibility categories for cost-sharing 

reductions in accordance with 

paragraph (g) and section 1402 of the 

Affordable Care Act. In § 155.340, we 

propose that the Exchange transmit 

information about an enrollee’s category 

to his or her QHP issuer in order to 

enable the QHP issuer to provide the 

correct level of reductions. The 

proposed categories are as follows: In 

paragraph (h)(1), an individual who has 

household income greater than 100 

percent of the FPL and less than or 

equal to 150 percent of the FPL; in 

paragraph (h)(2), an individual who has 

household income greater than 150 

percent of the FPL and less than or 

equal to 200 percent of the FPL; and in 

paragraph (h)(3), an individual who has 

household income greater than 200 

percent of the FPL and less than or 

equal to 250 percent of the FPL. 

Additional information regarding the 

implementation of cost-sharing 

reductions will be provided in the 

future. Eligibility standards for costsharing provisions that are based in 

whole and in part on whether an 

individual is an Indian are described in 

§ 155.350 of this subpart. 

c. Eligibility Determination Process 

(§ 155.310) 

In § 155.310, consistent with sections 

1411–1413 of the Affordable Care Act, 

we propose the process by which the 

Exchange will determine an individual’s 

eligibility for enrollment in a QHP and 

for insurance affordability programs. 

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

the Exchange accept applications from 

individuals in the form and manner 

described in proposed 45 CFR 

§ 155.405, published in the Exchange 

proposed rule at 76 FR 41866. 

Furthermore, in paragraph (a)(2), we 

propose to prohibit the Exchange from 

requiring an individual who is not 

seeking coverage for himself or herself 

(a ‘non-applicant’), including an 

individual who is applying for coverage 

on behalf of another party, to provide 

information regarding the nonapplicant’s citizenship, status as a 

national, or immigration status on any 

application or supplemental form. We 

also propose that the Exchange may not 

require such an individual to provide a 

SSN, except as specified in 

§ 155.305(f)(6), which addresses, for the 

purposes of eligibility for advance 

payments of the premium tax credit, 

primary taxpayers who have SSNs and 

have tax data on file with the IRS that 

would be used in the verification of 

household income and family size. This 

exception is based on sections 

1412(b)(1) and 1411(b)(3) of the 

Affordable Care Act and is discussed 

further above. 

In paragraph (b), we propose that the 

Exchange permit an individual to 

decline an eligibility determination for 

insurance affordability programs. This 

proposal is designed to ensure that an 

individual can bypass the additional 

steps required for such screening and 

proceed directly to selecting and 

enrolling in a QHP. We clarify that this 

proposal does not allow an applicant to 

choose to seek a determination only for 

advance payments of the premium tax 

credit and cost-sharing reductions (and 

not for Medicaid and CHIP) or vice 

versa. Section 36B(c)(2)(B) of the Code 

states that an applicant is ineligible for 

advance payments of the premium tax 

credit to the extent that he or she is 

eligible for other minimum essential 

coverage, which includes Medicaid and 

CHIP. This provision means that the 

Exchange will consider an applicant’s 

eligibility for Medicaid and CHIP as part 

of an eligibility determination for 

advance payments of the premium tax 

credit. 

In paragraph (c), we propose that the 

Exchange accept an application and 

make an eligibility determination for an 

applicant seeking an eligibility 

determination at any point in time 

during a benefit year. An eligibility 

determination is a necessary precursor 

to enrollment; after an applicant is 

determined eligible for enrollment in a 

QHP, he or she may select a QHP and 

will then be able to receive covered 

health care services. We clarify that this 

does not supersede the limited 

enrollment periods in 45 CFR subpart E. 

In addition, subpart E does not limit an 

applicant’s ability to request and receive 

an eligibility determination, including 

an eligibility determination for advance 

payments of the premium tax credit or 

cost-sharing reductions, if he or she has 

previously declined such a 

determination. We also note that 

§ 155.330 directs the Exchange to accept 

and process changes reported by 

enrollees during the benefit year as well. 

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

after the Exchange has collected and 

verified all necessary data, the Exchange 

conduct an eligibility determination in 

accordance with the standards 

described in § 155.305 of this part. 

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

the Exchange allow an applicant who is 

determined eligible for advance 

payments of the premium tax credit to 

accept less than the expected annual 

amount of advance payments 

authorized. This proposal is designed to 

reduce the enrollee’s risk of repayment 

at the point of reconciliation. 

In paragraph (d)(2)(ii), we propose to 

clarify that the Exchange may provide 

advance payments on behalf of a 

primary taxpayer only if the primary 

taxpayer first attests that he or she will 

meet the tax-related provisions 

discussed in the definition of primary 

taxpayer, including that he or she will 

claim a personal exemption deduction 

on his or her tax return for the 

applicants identified as members of his 

or her tax family. In a scenario in which 

more than one tax household is covered 

through a single policy, 26 CFR 1.36B– 

3 of the Treasury proposed rule 

proposes that advance payments will be 

split between the two primary 

taxpayers; that is, a primary taxpayer 

may not receive advance payments for 

which another primary taxpayer is 

eligible. This proposal also clarifies that 

while an application filer who is not the 

primary taxpayer may complete the 

application process on the primary 

taxpayer’s behalf, the primary taxpayer 

must actively attest that he or she will 

comply with the standards for advance 

payments that are related to tax filing 

prior to advance payments being made 


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51210 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

for his or her family. This is designed 

to ensure that the primary taxpayer 

appreciates and accepts the tax 

consequences that follow from receipt of 

advance payments. 

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

the Exchange determines an applicant is 

eligible for Medicaid or CHIP, the 

Exchange will notify the State Medicaid 

or CHIP agency and transmit relevant 

information, including information from 

the application and the results of 

verifications, to such agency promptly 

and without undue delay in order to 

enable the applicant to receive benefits. 

In paragraph (e), we clarify that upon 

making eligibility determinations for 

enrollment in a QHP, advance payments 

of the premium tax credit, and costsharing reductions, the Exchange will 

implement the eligibility determinations 

in accordance with the coverage 

effective dates specified in subpart E, 

which are found at 45 CFR 155.410(c) 

and (f), and 45 CFR 155.420(b). This is 

designed to ensure that an applicant’s 

entire eligibility determination and any 

financial assistance to support the 

purchase of coverage are effective 

simultaneously. 

After the Exchange determines 

eligibility, in paragraph (f) we propose 

that the Exchange provide an applicant 

with a timely, written notice of his or 

her eligibility determination. For an 

applicant who requests an eligibility 

determination for insurance 

affordability programs, the Exchange 

will provide information in the notice 

regarding the applicant’s eligibility for 

all such programs. While we expect that 

the Exchange will provide an applicant 

who is applying online with 

information regarding his or her 

eligibility determination as the process 

progresses, we clarify that the Exchange 

must provide a single written notice to 

each applicant when the eligibility 

determination is final. The written 

notice of eligibility is intended to 

provide an individual with a record of 

the steps taken and remaining actions 

needed to complete the eligibility and 

enrollment process, as well as 

information regarding his or her right to 

appeal. We note that written notice is 

not necessary at every step of the 

eligibility process; rather, the Exchange 

will provide a single notice at the 

conclusion of the determination, as well 

as notices when additional information 

is required. We note that in § 155.230, 

we proposed general rules regarding 

notices under this part, which include 

provisions regarding ensuring that 

notices be written in plain language and 

in a manner that meets the needs of 

diverse populations by providing 

meaningful access to limited English 

proficient individuals and ensure 

effective communication for people 

with disabilities. We anticipate 

proposing additional information to be 

included in notices in future 

rulemaking. 

In paragraph (g), we propose to codify 

the reporting rules in section 

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

Act, which support the employer 

responsibility provisions of the 

Affordable Care Act. We propose that 

when the Exchange determines an 

applicant is eligible to receive advance 

payments of the premium tax credit or 

cost-sharing reductions based in part on 

a finding that his or her employer does 

not provide minimum essential 

coverage, or provides coverage that is 

not affordable, as specified in section 

36B(c)(2)(C)(i) of the Code, or does not 

meet the minimum value standard as 

specified in section 36B(c)(2)(C)(ii) of 

the Code, the Exchange will notify the 

employer and identify the employee. 

We anticipate providing additional 

information on the content of this notice 

in future rulemaking. 

In paragraph (h), we propose rules 

regarding the duration of an eligibility 

determination for an applicant who is 

determined eligible for enrollment in a 

QHP but does not select a QHP within 

his or her enrollment period in 

accordance with subpart E of this part. 

The purpose of these proposed rules is 

to ensure that the information used to 

support an eligibility determination 

remains accurate, while limiting burden 

and creating consistency with the rules 

for the population that selects a QHP. 

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

that to the extent that such an 

individual seeks a new enrollment 

period prior to the date on which he or 

she would have been subject to an 

annual redetermination in accordance 

with § 155.335, the Exchange must 

receive an attestation from him or her as 

to whether information affecting his or 

her eligibility has changed prior to 

accepting such selection. Second, in 

paragraph (h)(2), we propose that to the 

extent than an applicant who is 

determined eligible for enrollment in a 

QHP does not select a QHP within his 

or her enrollment period, and seeks a 

new enrollment period on or after the 

date on which he or she would have 

been subject to an annual 

redetermination, the Exchange will 

conduct an annual redetermination in 

accordance with § 155.335 prior to 

determining the applicant’s eligibility 

for an enrollment period. 

We considered requiring a new 

determination after a specific period of 

time, but opted for the proposed 

language in order to create consistency 

with the process for an individual who 

has been determined eligible for 

enrollment in a QHP and who actually 

enrolls during an authorized enrollment 

period, and to minimize burden on 

applicants and the Exchange. We solicit 

comments on this approach, and 

whether the application process should 

begin anew in some or all of these 

situations. 

d. Verification Process Related to 

Eligibility for Enrollment in a QHP 

(§ 155.315) 

Sections 1411(c) and (d) of the 

Affordable Care Act require the 

verification of applicant information 

prior to using such information to 

determine eligibility. The statute is 

specific with regard to the verification 

process for some, but not all, 

information needed to determine 

eligibility. Section 1411(d) of the 

Affordable Care Act provides authority 

for the Secretary to establish verification 

procedures for certain categories of 

information described in section 1411 

without a specific process established 

by the statute. In addition, section 

1411(c)(4)(B) of the Affordable Care Act 

provides authority to the Secretary to 

modify the statutory verification 

methods in certain cases. 

We propose to split the verification 

process of the Exchange into two main 

sections within this subpart: § 155.315, 

which contains the verification process 

related to eligibility for enrollment in a 

QHP, and § 155.320, which contains the 

verification process related to insurance 

affordability programs. We also note 

that § 155.350 contains a process for 

verification of whether an applicant is 

an Indian. 

In general, the verification processes 

proposed in this subpart would have the 

Exchange first rely on sources of 

electronic data and, to the extent that 

the Exchange is unable to verify 

information through such sources, 

follow specific procedures that include 

requesting documentation from 

applicants. Data sources described in 

this section may include the records of 

the Social Security Administration 

(SSA), the Department of Homeland 

Security (DHS), and the Internal 

Revenue Service (IRS), as well as data 

sources maintained by other entities. 

We also note that we propose to 

include authority for the Exchange to 

request documentation from an 

applicant when information provided 

by the applicant is not reasonably 

compatible with other information 

provided for an applicant or in the 

records of the Exchange for the 

applicant; this proposal is designed to 

enhance program integrity while 


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limiting additional requests to only 

those situations in which there is good 

cause for such requests. The preamble 

discussion associated with proposed 

42 CFR 435.952(b) of the Medicaid 

proposed rule addresses the ‘‘reasonably 

compatible’’ standard, which is used 

throughout the Medicaid proposed rule 

as well. We intend to interpret this 

standard the same way here (in the 

context of the Exchange) as it is 

interpreted and applied in the context of 

Medicaid and CHIP. 

In paragraph (a), we propose that the 

Exchange verify or obtain information to 

determine that an applicant is eligible 

for enrollment in a QHP as provided in 

this section, unless an Exchange’s 

request for modification of the methods 

used for collection and verification of 

information is granted pursuant to 

paragraph (e). Under paragraph (e), 

described later, we propose the 

flexibility to develop alternative 

verification processes that achieve the 

same goals as those proposed for general 

use. 

In paragraph (b), we propose the 

process that the Exchange follows to 

ensure that an individual is a citizen, 

national, or otherwise lawfully present 

individual in accordance with sections 

1312(f)(3) and 1411(c) of the Affordable 

Care Act, respectively. This is the first 

of several proposals regarding 

verification with the records of Federal 

officials. For such verifications, we 

propose to codify the role of the 

Secretary (through HHS) as an 

intermediary between the Exchange and 

other Federal officials, as described in 

section 1411(c). This proposal is 

designed to simplify the process for the 

Exchange as well as for involved 

Federal agencies. 

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

for an applicant who attests to 

citizenship and has a Social Security 

number, the Exchange will transmit the 

applicant’s Social Security number and 

other identifying information needed by 

the Social Security Administration 

(SSA) to SSA via HHS to verify whether 

the information matches SSA’s records. 

We anticipate that SSA may revise its 

information requirements and that a 

level of flexibility will be necessary to 

efficiently use this process. If the 

information needed to perform this 

verification with SSA changes, HHS 

will issue guidance to Exchanges. We 

anticipate that the single, streamlined 

application proposed in 45 CFR 

§ 155.405 will contain the necessary 

information. If SSA can match the 

individual’s basic identifying 

information to an SSA record, HHS will 

notify the Exchange as to whether SSA 

can substantiate the applicant’s 

citizenship. If SSA is unable to match 

the individual’s basic identifying 

information to an SSA record, HHS will 

notify the Exchange regarding the 

inconsistency. 

In paragraph (b)(2), and consistent 

with section 1411(c)(2)(B) of the 

Affordable Care Act, we propose that for 

an applicant who has documentation 

that can be verified through the 

Department of Homeland Security 

(DHS) and who attests to lawful 

presence, or who attests to citizenship 

and for whom the Exchange cannot 

substantiate citizenship through SSA, 

including an applicant who does not 

attest to citizenship or does not have a 

Social Security number, the Exchange 

will transmit information from the 

applicant’s documentation and basic 

identifying information to HHS, which 

will submit a request to DHS and return 

the response to the Exchange. Several 

commenters to the RFC recommended 

that we utilize the DHS Systematic 

Alien Verification for Entitlements 

(SAVE) system to satisfy this standard. 

The proposed language supports the use 

of SAVE, and we are working closely 

with DHS to identify the best 

technological option available to 

maximize accuracy and minimize delay. 

Section 1411(e)(3) of the Affordable 

Care Act specifies that in a situation in 

which the Exchange is unable to verify 

an applicant’s claim of citizenship, 

status as a national, or lawful presence 

through either SSA or DHS, the 

applicant’s eligibility must be 

determined in the same manner as an 

applicant’s eligibility under the 

Medicaid program under section 

1902(ee) of the Act. Section 1902(ee) of 

the Act includes a number of provisions 

related to the verification of citizenship, 

including a process by which a 

Medicaid agency can request that SSA 

verify whether an applicant’s attestation 

of citizenship matches SSA’s records. If 

such substantiation is unsuccessful, 

section 1902(ee) of the Act directs the 

Medicaid agency to: (1) Make a 

reasonable effort to identify and address 

the causes of the inconsistency; (2) 

notify the applicant of the inconsistency 

if the inconsistency cannot be resolved 

through this step, provide the applicant 

with a period of 90 days from receipt of 

the notice to present satisfactory 

documentation of citizenship or resolve 

the inconsistency with SSA, and 

provide Medicaid coverage during this 

period; and (3) if the inconsistency is 

not resolved after the close of the 

period, disenroll the individual. Section 

1902(ee) of the Act also includes details 

of the relationship between a State 

Medicaid agency and SSA, as well as 

the calculation of a payment to the 

Secretary related to how often eligibility 

is provided to applicants who are 

ultimately determined ineligible, when 

a State is not using the option to 

communicate with SSA on a real-time 

basis. We intend for the process 

proposed under this section to be near 

real-time, and therefore, we believe that 

this calculation does not apply to the 

Exchange. Further, unlike the choice 

provided to a State Medicaid agency 

pursuant to section 1902 of the Act, the 

Exchange will not automatically have 

the ability to implement a different 

verification process; therefore, the use of 

a penalty provision appears 

inappropriate here. 

This inconsistency process is 

substantially similar to the 

inconsistency process for information 

not related to citizenship, status as a 

national, or lawful presence, which is 

described in section 1411(e)(4) of the 

Affordable Care Act, codified in 

paragraph (e) of this section, and 

discussed below. As such, in paragraph 

(b)(3), we specify that in the case of an 

inconsistency related to citizenship, 

status as a national, or lawful presence, 

the Exchange will follow the procedures 

specified in paragraph (e), except that 

the time period for the resolution of 

inconsistencies related to citizenship, 

status as a national, or lawful presence 

is 90 days from the date on which the 

notice of inconsistency is received, 

rather that the date on which it is sent, 

as required by the law. We clarify that 

the date on which the notice is received 

means 5 days after the date on the 

notice, unless the applicant shows that 

he or she did not receive the notice 

within the 5-day period. This 5-day 

period is the standard period used by 

SSA for the Supplemental Security 

Income (Title XVI) and Old Age and 

Disability (Title II) programs to account 

for mailing a notice and receipt by the 

individual, and we believe this 

reasonable standard to adopt for the 

inconsistency process. We note that this 

process covers situations in which an 

applicant has neither a Social Security 

number nor documentation that can be 

verified with DHS. Future rulemaking 

will address the standards that the 

Exchange will use to adjudicate 

documentary evidence of citizenship 

provided by an applicant within this 

inconsistency process. 

In paragraph (c), we propose the 

verification process to be used by the 

Exchange to ensure that an individual 

meets the residency standard specified 

in § 155.305(a)(3) of this part. This 

process is parallel to that proposed for 

Medicaid. 

In paragraph (c)(1), to verify 

residency, we propose that the 


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Exchange accept an applicant’s 

attestation as to residency without 

further verification unless, as described 

in paragraph (c)(2), the State Medicaid 

or CHIP agency operating in the State in 

which the Exchange operates chooses 

not to allow verification of residency 

based solely on attestation, in which 

case the Exchange will verify residency 

in accordance with 42 CFR 435.956(c) 

and 42 CFR 457.380(c), which are 

proposed in the Medicaid proposed 

rule. 

Furthermore, in paragraph (c)(3), we 

propose that the Exchange may examine 

data sources regarding residency to the 

extent that information provided for an 

applicant regarding residency is not 

reasonably compatible with other 

information provided for the applicant 

or in the records of the Exchange. 

Examples of such data sources include 

State tax returns, Supplemental 

Nutrition Assistance Program or 

Temporary Assistance for Needy 

Families eligibility information, motor 

vehicles administration information, or 

other local, State or Federal sources of 

information. 

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

the extent information in the data 

sources examined by the Exchange in 

accordance with paragraph (c)(3) of this 

section is not reasonably compatible 

with information provided for the 

applicant, the Exchange will request 

additional documentation in accordance 

with § 155.315(e) of this section. We 

also propose that a document that 

provides evidence of immigration status 

may not be used alone to determine 

State residency. As discussed in the 

preamble to proposed 42 CFR 435.956(c) 

of the Medicaid proposed rule, this 

provision is intended to ensure that 

while documents which provide 

information regarding immigration 

status should be used as a source of 

evidence to verify satisfactory 

immigration status, they may not, by 

themselves, be used to demonstrate a 

lack of residency. 

In paragraph (d), we propose that the 

Exchange verify an applicant’s 

attestation that he or she is not 

incarcerated, with the exception of 

incarceration pending the disposition of 

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

that the Exchange implement this policy 

by first relying on any electronic data 

sources that are available to the 

Exchange and which have been 

authorized by HHS for verification of 

incarceration. HHS will approve 

electronic data sources based on 

evidence showing that such data 

sources are sufficiently accurate and 

offer less administrative complexity 

than paper verification; we note that 

this allows for the possibility that no 

electronic data source will be 

authorized. In paragraph (d)(2), we 

propose that to the extent that approved 

electronic data sources are unavailable, 

the Exchange accept the applicant’s 

attestation without further verification, 

except as provided in paragraph (d)(3). 

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

the event that an applicant’s attestation 

is not reasonably compatible with 

information from the data sources 

specified in paragraph (d)(1) or with 

other information provided by the 

applicant or in the records of the 

Exchange, the Exchange follow the 

inconsistency procedures described in 

§ 155.315(e) of this section, in 

accordance with section 

1411(e)(4)(A)(ii)(II) of the Affordable 

Care Act. 

We solicit comment as to what 

electronic data sources are available and 

should be authorized by HHS for 

Exchange purposes, including whether 

access to such data sources should be 

provided as a Federally-managed 

service like citizenship and immigration 

status information from SSA and DHS. 

We also note that the proposal regarding 

documentation is designed only to 

account for situations in which an 

attestation is not reasonably compatible 

with information contained in approved 

electronic data sources. 

In paragraph (e), we propose to codify 

sections 1411(e)(3) and 1411(e)(4) of the 

Affordable Care Act to address 

situations in which an applicant attests 

to information needed to determine 

eligibility, and such attestation is 

inconsistent with other information in 

the records of the Exchange, including 

information maintained in the records 

of applicable Federal officials. As such, 

we cross-reference this paragraph for a 

number of verifications within § 155.315 

and § 155.320 of this subpart. Such 

sections may also have specific 

standards for the adjudication of 

relevant documentation by the 

Exchange that are tailored to specific 

inconsistencies. We also note that given 

that the process in this paragraph is 

applied to more than one piece of 

information, it is possible for an 

applicant to have multiple 

inconsistencies simultaneously. In such 

a situation, the Exchange will continue 

to use an applicant’s attestations for any 

information that is subject to the 

inconsistency process in accordance 

with paragraph (e)(4)(ii) of this section. 

Section 1411(e)(3) of the Affordable 

Care Act, which covers inconsistencies 

related to citizenship, status as a 

national, and lawful presence, is 

substantially similar to section 

1411(e)(4) of the Affordable Care Act, 

which covers other inconsistencies. The 

process described in this paragraph is 

the process under section 1411(e)(4) of 

the Affordable Care Act; as noted above, 

paragraph (b)(3) of this section details 

the modifications required to the 

procedures described in this section to 

accommodate the process for 

inconsistencies related to citizenship, 

status as a national, and lawful 

presence. 

First, under paragraph (e)(1), the 

Exchange will make a reasonable effort 

to identify and resolve the issues. 

Second, in paragraph (e)(2)(i), if the 

Exchange is unable to resolve the 

inconsistencies, the Exchange will 

notify the applicant of the 

inconsistency. After providing this 

notice, in paragraph (e)(2)(ii), the 

Exchange will provide 90 days from the 

date on which the notice is sent for the 

applicant to resolve the issues, either 

with the Exchange or with the agency or 

office that maintains the data source 

that is inconsistent with the attestation. 

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

the period during which an applicant 

may resolve the inconsistency may be 

extended by the Exchange if the 

applicant can provide evidence that a 

good faith effort has been made to 

obtain additional documentation. We 

are adopting this provision in order to 

align with current Medicaid policy 

which offers States the flexibility to 

allow for a good faith extension for 

individuals to provide documentary 

evidence of citizenship or immigration 

status. 

In paragraph (e)(4), we propose to 

codify the provision of sections 

1411(e)(3) and 1411(e)(4) of the 

Affordable Care Act that the Exchange 

must allow an individual who is 

otherwise eligible for enrollment in a 

QHP, advance payments of the premium 

tax credit or cost-sharing reductions to 

receive such coverage and financial 

assistance during the resolution period. 

However, in paragraph (e)(4)(ii), we 

clarify that the Exchange will ensure 

that the primary taxpayer attests to the 

Exchange that he or she understands 

that any advance payments of the 

premium tax credit received during the 

resolution period are subject to 

reconciliation in order to receive such 

advance payments of the premium tax 

credit. 

Lastly, in paragraph (e)(5), we propose 

that if after the conclusion of the 

resolution period, the Exchange is 

unable to verify the applicant’s 

attestation, the Exchange will determine 

the applicant’s eligibility based on the 

information available from the data 

sources specified in this subpart, and 

notify the applicant of such 


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determination in accordance with the 

notice standards in § 155.310(f) of this 

subpart, including notice that the 

Exchange is unable to resolve the 

inconsistency. We further propose that 

the Exchange then implement this 

eligibility determination no earlier than 

10 days after and no later than 30 days 

after the date on which such notice is 

sent. We note that we intend to address 

in the future the timing of notices, 

including standards related to the time 

between a notice of an adverse action 

and the effective date of such action, 

and we intend to coordinate such 

requirements with Medicaid. We note 

that like all other eligibility 

determinations, an eligibility 

determination in accordance with 

paragraph (e)(5)(i) of this section is 

subject to appeal. 

In addition to the authority proposed 

for the Exchange in paragraph (e)(3), 

section 1411(b)(4)(A)(ii)(II) of the 

Affordable Care Act also provides HHS 

with the authority to extend the 

resolution period for inconsistencies not 

involving citizenship, status as a 

national, or lawful presence for coverage 

in 2014. We are considering whether 

and how to implement this authority, 

such as whether to create a uniform 

standard or a rule to be applied on a 

case-by-case basis; we solicit comments 

on these alternatives to inform our final 

adoption of these rules. 

Lastly, we note that this paragraph 

does not apply in the event that an 

application filer attests to household 

income for an applicant that is at or 

below the applicable Medicaid or CHIP 

MAGI-based income standards. Rather, 

the Exchange will follow the process 

described in paragraph (c)(2)(ii)(C) for 

such individuals. 

In paragraph (f), we propose to codify 

section 1411(c)(4)(B) of the Affordable 

Care Act regarding flexibility in 

verification methods. We propose that 

HHS may approve an Exchange plan or 

a significant change to an Exchange plan 

to modify the methods for the collection 

and verification of information as 

described in this subpart, as well as the 

specific information to be collected, 

based on a finding by HHS that the 

requested modification would reduce 

the administrative costs and burdens on 

individuals while maintaining accuracy 

and minimizing delay, that it would not 

undermine coordination with Medicaid 

and CHIP, and that any applicable 

requirements under this subpart and 

section 6103 of the Code with respect to 

the confidentiality, disclosure, 

maintenance, or use of information will 

be met. We also note that all 

information exchanges specified in this 

section must comply with § 155.260 and 

§ 155.270. We solicit comment regarding 

likely proposals from Exchanges that 

would meet these criteria. 

Section 1411(g)(1) and 1413(b)(2) of 

the Affordable Care Act direct the 

Secretary to ensure that an applicant be 

asked only to provide the minimum 

amount of information and paperwork 

needed for purposes of making an 

eligibility determination. In paragraph 

(g), we propose to codify section 

1411(g)(1) of the Affordable Care Act by 

specifying that the Exchange must not 

require an applicant to provide 

information beyond what is necessary to 

support the eligibility and enrollment 

processes of the Exchange, Medicaid, 

and CHIP, including the process for 

resolving inconsistencies described in 

§ 155.315(e). 

e. Verification Process Related to 

Eligibility for Insurance Affordability 

Programs (§ 155.320) 

In § 155.320, we outline the 

verification process that supports 

eligibility determinations for insurance 

affordability programs. To implement 

section 1411 of the Affordable Care Act, 

we propose a general policy in 

paragraph (a)(1), that the Exchange 

verify information in accordance with 

this section only for an applicant who 

is requesting an eligibility 

determination for insurance 

affordability programs. In this section, 

we propose standards related to the 

verification of eligibility for minimum 

essential coverage other than through an 

eligible employer-sponsored plan; 

household income and household size; 

enrollment in or eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan; and Medicaid 

and CHIP immigration status 

requirements. These verification 

processes apply to eligibility 

determinations for insurance 

affordability programs. These 

verification processes do not apply to 

eligibility determinations solely for the 

purpose of enrollment or to eligibility 

determinations for benefits provided to 

Indians based on status as an Indian, 

which are addressed elsewhere. 

Section 36B(c)(2)(B) of the Code 

specifies that an individual who is 

eligible for minimum essential coverage 

through sources other than the 

Exchange and the individual market is 

ineligible for advance payments of the 

premium tax credit. Therefore, in order 

to accurately determine eligibility for 

advance payments of the premium tax 

credit, the Exchange needs to rule out 

eligibility for other minimum essential 

coverage. We propose paragraphs (b), 

(d), and (e) of this section to meet this 

standard. First, in paragraph (b)(1), we 

propose that the Exchange verify 

whether an individual is eligible for 

minimum essential coverage other than 

through an eligible employer-sponsored 

plan or Medicaid, CHIP, or the Basic 

Health Program within the State in 

which the Exchange operates using 

information obtained from HHS, which 

will obtain relevant information from 

selected Federal offices. We are 

currently working with other Federal 

agencies to determine where relevant 

records are maintained, and we solicit 

comments about specific data sources 

that HHS should integrate in to this 

process, as well as data sources that 

should be utilized directly by the 

Exchange, keeping in mind the direction 

from section 1413(c) of the Affordable 

Care Act regarding the use of data 

currently authorized for use in Medicaid 

and CHIP determinations. 

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

the Exchange verify whether an 

applicant has already been determined 

eligible for coverage through Medicaid, 

CHIP, or a Basic Health Program, if 

applicable, within the State in which 

the Exchange operates. We believe that 

this will result in limited, if any 

additional burden on the Exchange 

given the high degree of coordination 

between the Exchange, Medicaid, and 

CHIP. We also solicit comments as to 

options for supporting verification 

across States with the goal of crafting a 

solution that maximizes accuracy while 

minimizing administrative burden for 

applicants and Exchanges. 

In paragraph (c), we propose the 

verification process related to income 

and family/household size. As 

discussed earlier, while the statute 

specifies that income for advance 

payments of the premium tax credit and 

cost-sharing reductions is calculated on 

an annual basis, section 1902(e)(14)(H) 

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

of the Affordable Care Act, provides that 

income for Medicaid is calculated on a 

current basis. Consequently, in this 

section, we propose to require the 

Exchange to verify both annual 

household income information and 

current household income information. 

We also note that the Medicaid 

proposed rule proposes certain 

variations from the methodology used 

for advance payments of the premium 

tax credit and cost-sharing reductions 

for both income and household size, 

which are discussed further in the 

preamble to 42 CFR 435.603. These 

differences include the treatment of 

qualifying relatives claimed as tax 

dependents by another taxpayer; 

children claimed as tax dependents by 

non-custodial parents; pregnant women; 

lump sum payments; scholarships or 


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fellowship grants that are used for 

educational purposes; and certain 

American Indian/Alaska Native income. 

We solicit comments regarding how best 

to ensure a streamlined eligibility 

process given these underlying 

differences. 

In this section we use the term, 

application filer, as defined in 

§ 155.300(a). We note that the 

application filer does not necessarily 

have to be the primary taxpayer. We 

believe that the proposed process will 

support applications received through 

all channels, including electronically 

and on paper, although we discuss 

certain modifications that may be 

needed to accommodate paper 

applications later in this section. 

First, in paragraph (c)(1)(i)(A), we 

propose that for all individuals whose 

income is counted in calculating a 

primary taxpayer’s household income, 

in accordance with 26 CFR 1.36B–1(e) 

of the Treasury proposed rule, or an 

applicant’s household income, in 

accordance with 42 CFR 435.603(d) of 

the Medicaid proposed rule, and for 

whom the Exchange has a Social 

Security number or an adoption 

taxpayer identification number, the 

Exchange will request tax return data 

from the Secretary of the Treasury by 

submitting identifying information to 

HHS, which will in turn submit it to the 

Secretary of the Treasury. This 

identifying information will include 

name, Social Security number, and 

relationship to the primary taxpayer 

(filer, spouse, dependent), and like all 

other information submissions, will 

only include the minimum information 

needed to complete the verification. In 

paragraph (c)(1)(i)(B), we propose that 

in the event that the identifying 

information for one or more individuals 

does not match a tax record on file with 

the Secretary of the Treasury that may 

be disclosed pursuant to the Code, HHS 

will notify the Exchange, and the 

Exchange must make a reasonable effort 

to confirm that the lack of a match is not 

due to an error in individual identifying 

information. This proposal is consistent 

with our proposal in § 155.315(e)(1) and 

is designed to ensure that the Exchange 

can maximize the use of available 

electronic data sources in order to 

facilitate a streamlined eligibility 

process. 

We solicit comments regarding how 

the Exchange can best use available data 

to assist an application filer in 

navigating the components of the 

eligibility process related to household 

income and family/household size. We 

are particularly interested in comments 

regarding how to help an application 

filer determine whether available tax 

information is representative of a 

primary taxpayer’s likely situation for 

the year for which coverage is 

requested. 

We note that this proposal represents 

a modification of the statutory 

verification process, based on the 

authority granted to the Secretary in 

section 1411(c)(4)(B) to modify the 

methods for obtaining data, including 

allowing an applicant to request that the 

Secretary of the Treasury provide return 

information directly to the Exchange 

through the Secretary of HHS. We 

believe that this approach will be far 

more efficient for applicants, the 

Exchange, and the Federal government 

than the basic procedure described in 

the statute, which would require an 

application filer to state MAGI and then 

have the Exchange check with the 

Secretary of the Treasury through HHS 

to see if this was consistent with the 

records of the Secretary of the Treasury. 

We believe that requiring an application 

filer to state MAGI would deter 

applications by essentially requiring an 

application filer to possess a copy of the 

relevant tax return at the point of 

application, and would also reduce 

sharply the ability of the Exchange to 

assist application filers in completing 

the eligibility process. Further, without 

the proposed modification, we believe 

that a large number of applicants would 

be subject to the inconsistency process 

for income and household size, which 

would then drive a rise in the amount 

of paper documentation required, 

slowing down the overall eligibility 

process. 

In accordance with the statute, we 

propose this modification after 

determining that any applicable 

requirements under section 1411 of the 

Affordable Care Act and section 6103 of 

the Code with respect to the 

confidentiality, disclosure, 

maintenance, and use of information 

can and will be met. To this end, we are 

already working with the Secretary of 

the Treasury and States to ensure that 

Treasury-required safeguards for tax 

information will be met across the 

Exchange information technology 

architecture, as specified in 45 CFR 

155.260(d). 

In order to incorporate Medicaid and 

CHIP into the streamlined eligibility 

process, it is necessary to have readily 

available current income data to fill a 

similar role to that proposed for 

Treasury data in paragraph (c)(1)(i) of 

this section. Medicaid regulations at 42 

CFR 435.948(a), proposed in the 

Medicaid NPRM, specify that a State 

Medicaid agency must request State 

quarterly wage information, as well as 

other sources of current income, for use 

in verifying an individual’s MAGI-based 

income information, to the extent that 

such information is useful in 

conducting this verification. In this rule, 

we propose that the Exchange utilize 

this data for purposes of Exchange 

determinations of eligibility for 

Medicaid and CHIP in a similar manner 

to how we propose the Exchange use tax 

data for purposes of Exchange 

determinations of eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions. That is, 

consistent with Medicaid regulations, 

we propose that the Exchange treat the 

list of current data sources described in 

42 CFR 435.948(a), proposed in the 

Medicaid NPRM, as primary sources of 

MAGI-based income data for purposes 

of verification. 

In paragraph (c)(1)(ii), we propose 

that the Exchange obtain the most recent 

income information for all individuals 

whose income is counted in calculating 

a primary taxpayer’s household income, 

in accordance with 26 CFR 1.36B–1(e), 

or an applicant’s household income, in 

accordance with 42 CFR 435.603(d), 

from the data sources described in 42 

CFR 435.948(a) of the Medicaid 

proposed rule, which lists the data 

sources for Medicaid eligibility 

determinations. We believe that this 

step is necessary to implement our 

interpretation of the Affordable Care Act 

regarding the Exchange’s role in 

determining Medicaid eligibility, and 

does not create significant additional 

burden as it is an existing procedure in 

Medicaid programs. We recognize that 

42 CFR 435.948(a) includes multiple 

data sources, and we intend to provide 

subregulatory guidance regarding how 

such information can be utilized in a 

manner that is straightforward and 

helpful to application filers. We also 

solicit comment on this topic. 

In paragraphs (c)(2) and (c)(3) of this 

section, we propose the verification 

process for Medicaid and CHIP and for 

advance payments of the premium tax 

credit and cost-sharing reductions, 

respectively. We note that while we 

have drafted these sections separately, 

we expect the Exchange to implement 

them in an integrated, streamlined 

process that will avoid redundancy and 

minimize confusion for applicants. 

We also note that the proposed 

process in these paragraphs are 

designed to minimize burden on 

application filers by only requiring an 

applicant to provide an attestation 

regarding income if he or she attests that 

available data sources are not 

representative of an applicant or 

primary taxpayer’s current or projected 

financial situation, as applicable. For an 

electronic application, we believe that 


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the attestations required can be part of 

a real-time process, in which an 

application filer would be shown 

information computed by the Exchange 

regarding MAGI-based income and 

annual household income and then 

offered the opportunity to affirm it or 

provide different information. For a 

paper application, this approach will 

not be possible, and so the Exchange 

will instead check the information 

provided by an application filer on a 

paper application against data regarding 

MAGI-based income and annual 

household income or provide the 

information computed based on data 

from sources to the application filer on 

paper and request confirmation. We 

solicit comments as to how this process 

can work most smoothly for both 

electronic and paper applications. 

First, in paragraph (c)(2)(i), we 

propose the Exchange direct an 

application filer to attest to the specific 

individuals who comprise an 

applicant’s household for Medicaid and 

CHIP, within the meaning proposed in 

42 CFR 435.603(f) of the Medicaid 

NPRM. This provision is designed to 

define the relevant Medicaid and CHIP 

household, which is necessary to 

determine income. We also propose that 

Exchange accept an application filer’s 

attestation regarding the members of his 

or her household without further 

verification, unless the Exchange finds 

that the attestation is not reasonably 

compatible with other information 

provided by the application filer for the 

applicant or in the records of the 

Exchange, in which case the Exchange 

may utilize data obtained through 

electronic data sources to verify the 

attestation. If such data sources are 

unavailable or information in such data 

sources is not reasonably compatible 

with the application filer’s attestation, 

the Exchange may request additional 

documentation to support the 

attestation within the procedures 

specified in 45 CFR 435.952. 

Second, in paragraph (c)(2)(ii), we 

propose that the Exchange verify MAGIbased income for purposes of 

determining eligibility for Medicaid and 

CHIP by following the procedures 

described in 42 CFR 435.948 and 42 

CFR 435.952. We solicit comments as to 

how the Exchange process and the 

Medicaid and CHIP processes can be 

streamlined to ensure consistency and 

maximize the portion of eligibility 

determinations that can be completed in 

a single session. 

In paragraph (c)(3), we propose the 

verification process for advance 

payments of the premium tax credit and 

cost-sharing reductions, First, in 

paragraph (c)(3)(i), we propose the 

Exchange direct an application filer to 

attest to the specific individuals who 

comprise an applicant’s family for 

advance payments of the premium tax 

credit and cost-sharing reductions, 

within the meaning proposed in 26 CFR 

1.36B–1(d) of the Treasury proposed 

rule. This provision is designed to 

define the relevant primary taxpayer’s 

family, which is necessary to determine 

income. We also propose the Exchange 

accept an application filer’s attestation 

of family size without further 

verification, except as provided in cases 

in which information is not reasonably 

compatible with other data. We 

anticipate that the Exchange will 

provide education and assistance to an 

application filer such that attestations 

will be as close as possible to the 

ultimate tax filing family. We believe 

that requiring further verification of this 

is extremely difficult and may not be 

possible and that any verification would 

be of limited use while adding 

significant burden and delay to the 

process. We also propose that to the 

extent the Exchange finds that an 

application filer’s attestation of family 

size is not reasonably compatible with 

other information provided by the 

application filer for the family, the 

Exchange may utilize data obtained 

through electronic data sources to verify 

the attestation. We also propose that if 

such data sources are unavailable or not 

reasonably compatible with the 

attestation, the Exchange will follow the 

procedures specified in § 155.315(e) of 

this subpart. 

In paragraphs (c)(3)(ii)–(vi), we 

propose the verification process for 

income for purposes of advance 

payments of the premium tax credit and 

cost-sharing reductions. In paragraph 

(c)(3)(ii)(A), we propose the Exchange 

compute annual household income for 

the family defined by the application 

filer, based on the electronic data 

acquired pursuant to paragraph (c)(1)(i) 

of this section, and that the application 

filer validate this information by 

attesting whether it represents an 

accurate projection of the family’s 

household income for the benefit year 

for which coverage is requested. 

In paragraph (c)(3)(ii)(B), we propose 

that if tax data are unavailable, or if an 

application filer attests that the 

Exchange’s computation does not 

represent an accurate projection of the 

family’s household income for the 

benefit year for which coverage is 

requested, the Exchange will direct the 

application filer to attest to the family’s 

projected household income for the 

benefit year for which coverage is 

requested. Lastly, in paragraph 

(c)(3)(ii)(C), we propose that if the 

Exchange finds that an application 

filer’s attestation to a family’s projected 

annual household income is not 

reasonably compatible with the 

information regarding projected annual 

household income computed by the 

Exchange, including as a result of tax 

return data being unavailable, the 

Exchange will proceed in accordance 

with paragraphs (c)(3)(iii), (c)(3)(iv), and 

(c)(3)(vi), as applicable, which describe 

alternate verification processes. Section 

1412(b)(2) of the Affordable Care Act 

provides that the Secretary provide 

procedures for making advance 

determinations for advance payments of 

the premium tax credit and cost-sharing 

reductions on the basis of information 

other than a primary taxpayer’s most 

recent tax return, ‘‘in cases where 

information included with an 

application form demonstrates 

substantial changes in income, changes 

in family size or other household 

circumstances, change in filing status, 

the filing of an application for 

unemployment benefits, or other 

significant changes affecting eligibility.’’ 

The statute specifies that these alternate 

procedures should apply to a primary 

taxpayer whose income has decreased 

by at least 20 percent, is filing an 

application for unemployment benefits, 

or is not required to file a tax return, as 

well as to other primary taxpayers 

specified by the Secretary. 

In paragraphs (c)(3)(iii) and (c)(3)(iv), 

we propose to codify this provision of 

the statute by directing that the 

Exchange use an alternate process for 

determining income for purposes of 

advance payments of the premium tax 

credit and cost-sharing reductions for 

primary taxpayers in certain situations. 

In both (c)(3)(iii) and (c)(3)(iv), as 

section 1412(b)(2) specifies that the 

alternate process is limited to eligibility 

determinations for advance payments of 

the premium tax credit and cost-sharing 

reductions, we propose that the 

alternate processes are only available to 

a primary taxpayer for whom an 

application filer (who can be the 

primary taxpayer) has not established 

MAGI-based household income that is 

at or below the applicable Medicaid or 

CHIP MAGI-based income standard. 

That is, if an individual is or may be 

eligible for Medicaid or CHIP, this step 

in the verification process is not 

applicable because the applicant will 

not be eligible for advance payments of 

the premium tax credit or cost-sharing 

reductions. 

First, in paragraph (c)(3)(iii), we 

propose procedures for situations in 

which an application filer attests that a 

primary taxpayer’s annual household 

income has increased or is reasonably 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS3
51216 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

expected to increase from the 

information obtained from his or her tax 

return. In such a situation, we propose 

the Exchange accept the application 

filer’s attestation without further 

verification, except as provided in 

paragraph (c)(3)(iii)(B). This approach to 

verification is proposed because such 

attestation would result in the Federal 

government providing a lower advance 

payment than would otherwise be 

provided based on the primary 

taxpayer’s most recent available tax 

return. 

However, in order to ensure that such 

an attestation does not understate 

income, in paragraph (c)(3)(iii)(B), we 

propose that if the Exchange finds that 

the application filer’s attestation is not 

reasonably compatible with other 

information provided by the application 

filer or the MAGI-based income 

information acquired by the Exchange 

pursuant to paragraph (c)(1)(ii), the 

Exchange may utilize data obtained 

through electronic data sources to verify 

the attestation. If this approach is 

unsuccessful, the Exchange may request 

additional information in accordance 

with the procedures specified in 

§ 155.315(e) of this subpart. 

In paragraph (c)(3)(iv), we propose to 

codify the minimum requirements of 

section 1412(b)(2) of the Affordable Care 

Act, described above, regarding the 

circumstances under which an 

application filer who is attesting to a 

decrease in income for a primary 

taxpayer, or is attesting to income 

because tax return data is unavailable, 

may utilize an alternate income 

verification process. We clarify that this 

provision does not supersede 

§ 155.305(f)(4), which prohibits the 

Exchange from determining a primary 

taxpayer eligible for advance payments 

of the premium tax credit if advance 

payments were made on behalf of the 

primary taxpayer or his or her spouse 

for a year for which tax data would be 

utilized for verification of household 

income and family size and the primary 

taxpayer or his or her spouse did not 

comply with the requirement to file a 

tax return for that year as required by 26 

CFR 1.6011–8 (proposed in the Treasury 

proposed rule). 

We anticipate that this alternate 

process may also accommodate a 

situation in which an applicant does not 

have a Social Security number or a nonapplicant who is listed on an 

application as a family member does not 

have or does not provide a Social 

Security number. We solicit comment 

on what other situations should justify 

use of the alternate process. One 

potential approach is to allow a primary 

taxpayer with a decrease in income that 

does not meet the 20 percent threshold 

offered in the statute, but meets some 

other threshold, to use the alternate 

process. This would create a greater 

possibility that a primary taxpayer with 

a fairly significant decrease in income 

would be able to purchase coverage. 

In paragraph (c)(3)(v), we propose the 

alternative process for verifying income 

for primary taxpayers for whom an 

application filer attested to a decrease in 

household income or for whom tax 

return data is unavailable, as described 

in paragraph (c)(3)(iv) of this section. 

Under these proposed procedures, the 

Exchange will first attempt to verify the 

application filer’s attestation of 

projected annual household income for 

the primary taxpayer by using an 

annualized version of the MAGI-based 

income data obtained in accordance 

with paragraph (c)(1)(ii). In the event 

that this is unsuccessful, we propose 

that the Exchange attempt to verify the 

application filer’s attestation using any 

other electronic data sources that have 

been approved by HHS. HHS will 

approve other electronic data sources 

based on evidence showing that such 

data sources are sufficiently accurate 

and offer less administrative complexity 

than paper verification. In paragraph 

(c)(3)(v)(C), if such steps are 

unsuccessful, we propose the Exchange 

follow the procedures specified in 

§ 155.315(e) of this subpart. 

In paragraph (c)(3)(v)(D), we propose 

to clarify that if at the conclusion of the 

90-day period, an application filer has 

not responded to a request for 

additional information from the 

Exchange in accordance with this 

section and the data sources specified in 

paragraph (c)(1) indicate that an 

applicant in the primary taxpayer’s 

family is eligible for Medicaid or CHIP, 

the Exchange will not provide the 

applicant with eligibility for advance 

payments of the premium tax credit or 

cost-sharing reductions based on the 

application, in order to ensure that 

applicants who are eligible for Medicaid 

or CHIP are not determined eligible for 

advance payments or cost-sharing 

reductions as a result of noncompliance. In paragraph (c)(3)(v)(E), 

we propose that in other situations in 

which the Exchange remains unable to 

verify an application filer’s attestation, 

it will determine an applicant’s 

eligibility based on the information 

described in paragraph (c)(3)(ii)(A). In 

paragraph (c)(3)(vi), we propose to 

codify section 1412(b)(1)(B) of the 

Affordable Care Act regarding primary 

taxpayers who do not meet the criteria 

specified in paragraph (c)(3)(iii) or 

(c)(3)(iv) for use of an alternate income 

verification process. We propose the 

Exchange determine eligibility for these 

primary taxpayers for advance payments 

of the premium tax credit and costsharing reductions based on the income 

from the primary taxpayer’s tax data. At 

a minimum, the tax return data used for 

this purpose should be from the taxable 

year ending with or within the second 

calendar year preceding the calendar 

year in which the benefit year begins. 

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

Exchange provide education and 

assistance to an application filer 

regarding the verification process for 

income and family/household size. We 

solicit comments as to strategies that the 

Exchange can employ to ensure that 

application filers understand the 

validation process and provide wellinformed validations and attestations, 

including, but not limited to, 

developing ways to best display the data 

acquired from data sources and 

potentially accessing other data sources 

that might be informative. We intend to 

provide subregulatory guidance on this 

topic. 

In paragraph (d), we propose that the 

Exchange verify whether an applicant is 

enrolled in an eligible employersponsored plan by accepting his or her 

attestation without further verification, 

except as provided in paragraph (d)(2) 

in cases in which information is not 

reasonably compatible with other data. 

Although section 36B(c)(2)(C) of the 

Code provides that an individual is 

eligible for the premium tax credit 

provided that his or her coverage 

through an eligible employer-sponsored 

plan is not affordable or does not 

provide minimum value, clause (iii) of 

that subparagraph prohibits eligibility 

for the premium tax credit if the 

individual is enrolled in an eligible 

employer-sponsored plan, regardless of 

the cost or value of that plan. We 

propose that the Exchange accept an 

applicant’s attestation without further 

verification, with provisions in cases in 

which the attestation is not reasonably 

compatible with other data, because we 

believe that an applicant generally 

understands whether or not he or she is 

enrolled in an eligible employersponsored plan. We solicit comments as 

to whether this is a reasonable 

assumption. Similar to the provisions 

regarding residency and income 

verification, we propose to allow the 

Exchange to request additional 

information regarding whether an 

applicant is enrolled in an eligible 

employer-sponsored plan if an 

applicant’s attestation is not reasonably 

compatible with other information 

provided by the applicant or in the 

records of the Exchange. We solicit 


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Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 51217 

comments regarding the best data 

sources for this element of the process. 

In paragraph (e)(1), we propose that 

the Exchange require an applicant to 

attest to his or her eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan for the 

purposes of eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions. 

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

the Exchange verify this information. 

We solicit comments regarding how the 

Exchange may handle a situation in 

which it is unable to gain access to 

authoritative information regarding an 

applicant’s eligibility for qualifying 

coverage in an eligible employersponsored plan. 

Exchanges will interact with 

employees and their employers in order 

to make a determination of eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions. 

Specifically sections 1401 and 1402 of 

the Affordable Care Act establish that an 

applicant is eligible for advance 

payments of the premium tax credit or 

cost-sharing reductions only if he or she 

is not eligible for qualifying coverage in 

an eligible employer-sponsored plan 

that meets a minimum value standard 

and is affordable under section 

36B(c)(2)(C) of the Code, as added by 

the Affordable Care Act. Section 1411(b) 

of the Affordable Care Act directs an 

applicant seeking advance payments of 

the premium tax credit and cost-sharing 

reductions through the Exchange to 

provide to the Exchange specific 

information for purposes of determining 

eligibility, including (1) The name, 

address and Employer Identification 

Number (if available) of the employer; 

(2) whether the applicant is a full-time 

employee and whether the employer 

provides minimum essential coverage; 

and (3) if the employer provides 

minimum essential coverage, the lowest 

cost option for the applicant’s 

enrollment status and the applicant’s 

contribution under the employersponsored plan. Additionally, we 

recognize that Exchanges may need 

additional information about employersponsored health plans to complete 

eligibility determinations such as 

information about whether such plans 

are available to spouses and dependents 

and whether they meet the minimum 

value standard. 

Under several statutory reporting 

provisions, employers already will 

provide much, if not all, of the 

information the Exchanges will need to 

determine eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions. Under these 

provisions, employers will provide 

information either directly to their 

employees, to the IRS and/or to the 

Department of Labor. These provisions 

include, but are not limited to, section 

6056 of the Code, as added by section 

1514 of the Affordable Care Act 

(requiring employers to report to the IRS 

specific information related to 

employer-sponsored health coverage 

provided to employees); section 2715 of 

the PHS Act, as amended by section 

1001 of the Affordable Care Act 

(requiring group health plans and health 

insurance issuers to disclose to eligible 

individuals information about the 

employer-sponsored health plan(s) or 

coverage option(s) available to them); 

and section 18B of the Fair Labor 

Standards Act, as added by section 1512 

of the Affordable Care Act (requiring 

employers to disclose to employees 

information regarding Exchange 

coverage options). 

In developing the standards for 

Exchange verification of eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan, HHS and the 

Departments of the Treasury and Labor 

are working together to coordinate how 

needed information could be reported in 

order to make it efficient and easy for 

employees to access it and to minimize 

burden on employers. For example, 

consideration is being given to whether 

Exchanges could provide a template that 

both employers and employees could 

use to capture information already 

reported under the provisions cited 

above. A template might help 

employees to have ready-access to the 

plan-level information they need for the 

Exchange application process, and for 

employers, it might support a uniform 

verification process that would simplify 

employers’ interactions with the 

Exchanges. 

We are also considering the feasibility 

of a central database that employers 

voluntarily could populate as a 

potential resource for the verification 

process. A consolidated database could 

be drawn upon for the purposes of 

verifying the information provided by 

applicants seeking eligibility for 

advance payments of the premium tax 

credit and cost-sharing reduction. Such 

database would include the appropriate 

privacy and security safeguards 

necessary to protect the information 

provided. We recognize that employers 

will need to accumulate both plan-level 

and employee-level information for 

purposes of reporting under section 

6056 of the Code (as added by section 

1514 of the Affordable Care Act). We are 

considering whether and how the same 

plan-level information could be 

incorporated into such a database. 

We invite comment on the timing and 

reporting of information needed to 

verify whether an employed applicant is 

eligible for an advance payment of the 

premium tax credit and cost-sharing 

reductions and how best for Exchanges 

to interact and communicate with 

employers to verify information 

regarding employer-sponsored coverage. 

Specifically, we invite comment on (1) 

whether a template would be helpful 

and, if so, how it could be designed to 

capture plan-level information that is 

already reported to employees, the IRS 

and/or the Department of Labor, and (2) 

whether the development of a central 

database is an attractive option for 

employers to provide information about 

the coverage offered under eligible 

employer-sponsored plans. We note that 

the Treasury Department and the IRS 

also intend to request comments on the 

employer information reporting 

required under section 6056 of the 

Code. 

In paragraph (f), we propose a process 

regarding the verification of specific 

immigration status standards for 

Medicaid and CHIP. The immigration 

status standards for eligibility for 

enrollment in a QHP differ from those 

for Medicaid and CHIP, with the 

exception of the standard for pregnant 

women and children in certain States 

that have adopted the State option 

under section 1903(v)(4) of the Act, as 

added by section 214 of the Children’s 

Health Insurance Program 

Reauthorization Act (Pub. L. 111–3, 123 

Stat. 8), further, the ‘reasonably 

expected’ element discussed in 

§ 155.305(a)(1) does not apply to any 

population in Medicaid or CHIP. In 

paragraph (f), we propose that the 

Exchange verify whether an applicant 

requesting an eligibility determination 

for insurance affordability programs 

under § 155.310(b) who is not a citizen 

or national meets the immigration status 

and five-year waiting period for 

Medicaid and CHIP as specified under 

42 CFR 435.406, 42 CFR 457.320, 

1903(v)(4) of the Act, section 

2107(e)(1)(J) of the Act, and section 403 

of the Personal Responsibility and Work 

Opportunity Reconciliation Act 

(PRWORA) of 1996 (Pub. L. 104–493, 

110 Stat. 2105), as applicable. We clarify 

that we do not consider eligibility for 

Medicaid coverage that is restricted to 

emergency services to qualify an 

individual as eligible for Medicaid. We 

anticipate that the Exchange will 

determine whether an individual meets 

this standard while verifying the 

individual’s citizenship, status as a 

national, or lawful presence as required 

in § 155.315(b). 


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3This provision is proposed in the Exchange 

NPRM at 76 FR 41866 (July 15, 2011). 

As section 36B(c)(1)(B) of the Code, 

which is also referenced in section 1402 

of the Affordable Care Act in defining 

eligibility for cost-sharing reduction, 

provides that an applicant who is 

lawfully present in the United States, 

has household income below 100 

percent of the FPL, and is not eligible 

for Medicaid based on immigration 

status is eligible for the premium tax 

credit, we believe that 42 CFR 

435.406(a)(2) and section 403 of 

PRWORA do not apply to advance 

payments of the premium tax credit and 

cost-sharing reductions. Therefore, we 

propose a definition of ‘‘lawfully 

present’’ that is not limited to ‘‘qualified 

alien’’ as defined in PRWORA. 

f. Eligibility Redetermination During a 

Benefit Year (§ 155.330) 

Section 1411(f)(1)(B) of the Affordable 

Care Act specifies that the Secretary 

shall establish procedures by which the 

Secretary or another Federal official 

redetermines an individual’s eligibility 

on a periodic basis. Consistent with our 

proposal that the Exchange conduct 

initial eligibility determinations, in 

§ 155.330, we outline procedures for 

redeterminations during a benefit year 

consistent with section 1411(f)(1)(B) of 

the Affordable Care Act. We note that 

the goal of the eligibility 

redetermination process is to ensure 

that an individual’s eligibility reflects 

his or her circumstances with respect to 

the eligibility standards specified in 

§ 155.305, while minimizing 

administrative complexity for enrollees 

and the Exchange. 

The redetermination process that we 

propose in this section relies primarily 

on the individual to provide the 

Exchange with updated information 

during the benefit year, as opposed to 

having the Exchange examine electronic 

data sources and/or contact the 

individual in order to determine 

whether a change has occurred during 

the year. This primary reliance on 

individuals would eliminate much of 

the administrative burden associated 

with periodic electronic data matching 

and any follow-up with individuals. 

That said, we have included a provision 

for State flexibility in this area, and we 

solicit comments as to whether there 

should be an ongoing role for Exchangeinitiated data matching beyond what is 

proposed in this rule and the allowance 

for flexibility. We also solicit comments 

as to whether the Exchange should offer 

an enrollee an option to be periodically 

reminded to report any changes that 

have occurred. 

In paragraph (a), we propose that the 

Exchange redetermine the eligibility of 

an enrollee in a QHP during the benefit 

year in two situations: first, if an 

enrollee reports updated information 

and the Exchange verifies it; and 

second, if the Exchange identifies 

updated information through the 

limited data matching to identify 

individuals who have died or gained 

eligibility for a public health insurance 

program, as described in paragraph (c) 

of this section. 

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

an individual who enrolls in a QHP 

with or without advance payments of 

the premium tax credit or cost-sharing 

reductions must report any changes to 

the Exchange with respect to the 

eligibility standards specified in 

§ 155.305 within 30 days of such 

change. In paragraph (b)(2), we propose 

that the Exchange use the verification 

procedures at the point of initial 

application for any changes reported by 

an individual prior to using the selfreported data in an eligibility 

determination. These changes could 

include, but are not limited to, changes 

in incarceration status, residency, 

immigration status, household income 

or household size, or in the availability 

of qualifying coverage in an eligible 

employer-sponsored plan, which could 

be driven by changes in employment. 

We solicit comments regarding 

whether we should require or allow the 

Exchange to limit the requirement on an 

individual to report changes in income 

to changes of a certain magnitude. For 

example, one alternative would be for 

the Exchange to require an individual to 

report all changes to non-income 

information that affect his or her 

eligibility within 30 days of a change, 

but only require an individual to report 

changes of greater than five, ten, or 15 

percent of income. This could limit the 

number of changes reported, but also 

could add to enrollee confusion 

regarding when a change is required to 

be reported. We also note that this 

provision would have no effect on 

whether an individual was liable for 

repayment of excess advance payments 

of the premium tax credit. 

In paragraph (c), we propose that the 

Exchange periodically examine certain 

data sources used to support the initial 

eligibility process, specifically those 

data sources described in § 155.315(b)(1) 

and § 155.320(b) of this part, to identify 

death and eligibility determinations for 

Medicare, Medicaid, or CHIP. We 

propose to limit proactive examination 

to these pieces of information as they 

come from these data sources and 

provide clear-cut indications of 

eligibility for enrollment in a QHP and 

advance payments of the premium tax 

credit and cost-sharing reductions. 

Consequently, in paragraph (d), we do 

not propose to require the Exchange to 

seek or receive an affirmation from an 

enrollee that such information is 

accurate prior to using it in an eligibility 

determination. We note, however, that 

like all eligibility determinations, such 

a determination would result in a notice 

to an enrollee and would be subject to 

appeal. 

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

allow the Exchange to make additional 

efforts to identify and act on changes 

that may affect an enrollee’s eligibility 

to the extent that HHS approves an 

Exchange Plan in accordance with 

§ 155.105(d) or a significant change to 

the Exchange Plan in accordance with 

§ 155.105(e) to modify the process.3 We 

propose that such approval would be 

granted if HHS finds that such a 

modification would reduce the 

administrative costs and burdens on 

individuals while maintaining accuracy 

and minimizing delay, that such 

changes would not undermine 

coordination with Medicaid and CHIP, 

and that any applicable provisions 

under § 155.260, § 155.270, § 155.310(f), 

and section 6103 of the Code with 

respect to the confidentiality, 

disclosure, maintenance, or use of 

information will be met. This provision 

is consistent with our proposal in 

§ 155.315(e). 

As an alternative, we also considered 

directing the Exchange to use electronic 

data sources to determine whether other 

pieces of information regarding an 

enrollee’s eligibility have changed from 

the prior eligibility determination in any 

way that would affect his or her 

eligibility, or to allow this without the 

process described in paragraph (c)(2). 

Under such a scenario, the Exchange 

could either take action without seeking 

the enrollee’s confirmation or notify the 

enrollee of the change and provide him 

or her with an opportunity to affirm the 

information. We solicit comments 

regarding whether and how we should 

approach additional data matching, 

whether the Exchange should modify an 

enrollee’s eligibility based on electronic 

data in the event that he or she did not 

respond to a notice regarding the 

updated information, and whether there 

are other procedures that could support 

the goals of the redetermination process 

for changes during the benefit year. 

In paragraph (d), we propose that to 

the extent that the Exchange verifies 

updated information reported by an 

enrollee or identifies updated 

information through data matching in 

accordance with paragraph (c), the 

Exchange determine the enrollee’s 


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eligibility and provide an eligibility 

notice in accordance with the process 

described in § 155.305 and § 155.310(f), 

respectively. We also note that in 

accordance with § 155.340(a), the 

Exchange will notify an enrollee’s QHP 

if it determines that his or her eligibility 

has changed. 

In paragraph (e)(1), we propose that 

changes resulting from a 

redetermination during the benefit year 

be effective for the first day of the 

month following the notice of eligibility 

determination described in paragraph 

(d)(2). In paragraph (e)(2), we allow an 

exception, subject to the authorization 

of HHS, in which the Exchange could 

establish a ‘‘cut-off date’’ for changes 

resulting from a redetermination during 

the coverage year to be considered 

effective for the first day of the month 

following the month in which changes 

would otherwise be effective, if not for 

the existence of the cut-off date. For 

example, under this proposal, the 

Exchange could determine that in order 

to be effective on October 1, a 

redetermination would have to be 

completed by September 15th. We 

solicit comment as to whether this 

should or should not necessitate an 

authorization from HHS, and if there 

should be a uniform timeframe across 

all Exchanges. In addition, we solicit 

comment as to whether this is the 

appropriate policy for the effective date 

for changes. 

In paragraph (e)(3), we propose that if 

the eligibility determination results in 

an individual being ineligible to 

continue his or her enrollment in a 

QHP, the Exchange will maintain his or 

her eligibility for enrollment in a QHP 

for a full month after the month in 

which the determination notice 

described in paragraph (d) is sent by the 

Exchange, although it will discontinue 

advance payments of the premium tax 

credit and cost-sharing reductions in 

accordance with the effective dates 

specified in paragraphs (e)(1) and (e)(2). 

We believe that allowing for this 

continuity of coverage allows for 

adequate time for an enrollee to conduct 

necessary follow-up with the Exchange 

without providing financial assistance 

that would later have to be recouped at 

the point of reconciliation. We note that 

this does not preclude an enrollee from 

terminating coverage prior to the 

termination of his or her eligibility, 

provided that the termination is 

permissible under § 155.430. Alternative 

options could include a shorter or 

longer time period, or different time 

periods for specific types of changes. 

We solicit comment on this topic, as 

well as on approaches to ensuring that 

transitions between insurance 

affordability programs do not create 

coverage gaps for individuals. 

g. Annual Eligibility Redetermination 

(§ 155.335) 

In § 155.335, we outline procedures 

for annual redeterminations, consistent 

with section 1411(f)(1)(B) of the 

Affordable Care Act. Similar to our 

rationale for redeterminations during 

the coverage year, we believe that 

conducting annual redeterminations at 

the Exchange level would ensure that 

the eligibility process for the Exchange, 

Medicaid, and CHIP is streamlined and 

seamless. 

In paragraph (a), we propose that the 

Exchange redetermine the eligibility of 

an enrollee in a QHP on an annual basis, 

which would ensure that eligibility 

determinations remain current and 

follow the process proposed for the 

Medicaid program in 42 CFR 435.916. 

We clarify that this redetermination will 

consider eligibility for enrollment in a 

QHP, and to the extent that an enrollee 

has a request for an eligibility 

determination for insurance 

affordability programs on file with the 

Exchange, as described in § 155.310(b), 

consider his or her eligibility for such 

programs. We solicit comments on 

whether the procedures proposed in 

§ 155.330 should satisfy the annual 

redetermination as well, and if so, 

whether this should be a Federal 

standard or an Exchange option. 

Permitting or requiring a 

redetermination that occurs during the 

coverage year to take the place of the 

annual redetermination could spread 

some of the eligibility workload for the 

Exchange across the year and reduce the 

number of times when an individual has 

to review and potentially affirm or 

update eligibility information but might 

take away from the simplicity offered by 

a process that occurs at a consistent 

point in the year for all individuals. 

Furthermore, determinations of 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions are based on the most recent 

tax data available, so these 

determinations need to be made on an 

annual basis as more recent information 

becomes available. We solicit comment 

on how this interaction can be 

streamlined, and at what point annual 

redeterminations should occur. 

In paragraph (b), we propose that in 

the case of an annual redetermination 

for an enrollee who has a request for an 

eligibility determination for insurance 

affordability programs on file with the 

Exchange, the Exchange conduct 

electronic data matching to obtain 

updated tax return information and 

current household income information 

from the Secretary of Treasury and other 

data sources as described in 

§ 155.320(c)(1), and provide such 

updated information to the enrollee in 

the notice described in § 155.335(c). We 

solicit comment regarding whether and 

how we should approach additional 

data matching, and whether there are 

alternatives that could support the goals 

of the redetermination process. 

In paragraph (c), we propose that the 

Exchange provide an enrollee with an 

annual redetermination notice. Such 

notice will include: any updated tax 

return data and current household 

income data obtained by the Exchange, 

if the enrollee requested an eligibility 

determination for insurance 

affordability programs; the data used in 

the enrollee’s most recent eligibility 

determination; and the enrollee’s 

‘‘projected eligibility determination’’ 

incorporating any updated income 

information obtained under paragraph 

(b), and including, if applicable, the 

amount of the advance payments of the 

premium tax credit or level of any costsharing reductions for which he or she 

would be eligible. We solicit comment 

regarding the contents of the notice and 

whether additional information should 

be provided. 

In paragraph (d), we propose that the 

Exchange direct an individual to report 

any changes relative to the information 

listed on the redetermination notice 

within 30 days of the date of the notice. 

Our goal is to ensure that the timeframe 

is long enough for individuals to reply, 

but short enough to serve the purpose of 

timely redeterminations; we solicit 

comments as to whether this is an 

appropriate timeframe. In paragraph (e), 

we propose that the Exchange verify any 

changes reported by the individual 

under paragraph (d) using the same 

verification procedures used at the point 

of initial application, including the 

provisions regarding inconsistencies, 

with the procedures modified for the 

specific type of information subject to 

the inconsistency process. 

In paragraph (f)(1), we propose that 

the Exchange require an enrollee to sign 

and return the notice specified in 

paragraph (c). However, in paragraph 

(f)(2), we propose that if an enrollee 

does not sign and return the notice, the 

Exchange will proceed in accordance 

with the procedures specified in 

paragraph (g)(1) of this section, meaning 

that it will redetermine his or her 

eligibility based on the information 

provided in the notice. This proposal is 

designed to minimize the risk of 

individuals losing coverage when they 

remain eligible. It is one strategy that 

has been proven to increase retention 

rates, and would reduce the 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS3
51220 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

4 ‘‘MaxEnroll Minute: Cutting Red Tape to Keep 

Eligible Families Enrolled in Massachusetts’’. 

Maximizing Enrollment for Kids. http:// 

www.maxenroll.org/resource/maxenroll-minutecutting-red-tape-keep-eligible-families-enrolledmassachusetts. Also see, ‘‘Stability and Churning in 

Medi-Cal and Healthy Families’’. Fairbrother and 

Schucter, Child Policy Research Center, Cincinnati 

Children’s Hospital Medical Center. http:// 

www.cincinnatichildrens.org/assets/0/78/1067/ 

1395/1833/1835/9811/9813/9819/48b3047a-79ac4e52–9ed8-b7824db1cec3.pdf; ‘‘Instability of Public 

Health Insurance Coverage for Children and Their 

Families: Causes, Consequences, and Remedies’’. 

Summer, Laura, and Mann, Cindy. The 

Commonwealth Fund. http:// 

www.commonwealthfund.org/Content/ 

Publications/Fund-Reports/2006/Jun/Instability-ofPublic-Health-Insurance-Coverage-for-Childrenand-Their-Families—Causes—Consequence.aspx), 

and (‘‘Enrollment and Disenrollment in MassHealth 

and Commonwealth Care’’. Seifert, Robert, Kirk, 

Garrett, and Oakes, Margaret. Massachusetts 

Medicaid Policy Institute. http:// 

www.massmedicaid.org/∼/media/MMPI/Files/ 

2010_4_21_disenrollment_mh_cc.pdf. 

administrative burden and associated 

costs for the Exchange, as is outlined in 

several studies that found a majority of 

individuals were disenrolled based on a 

failure to return requests for information 

rather than for no longer meeting the 

substantive eligibility standards.4

We recognize that advance payments 

of the premium tax credit are subject to 

reconciliation by the Treasury. If 

advance payments are made where an 

enrollee does not respond to a notice to 

tell the Exchange that he or she will no 

longer be eligible for advance payments 

for the coming year (such as where the 

enrollee has new employment that will 

provide minimum essential coverage), 

the enrollee may have to repay some or 

all of the advance payments as 

additional tax. Thus, an enrollee has an 

interest in actively reviewing his or her 

annual redetermination notice and 

managing his or her eligibility 

information to ensure that his or her 

eligibility for advance payments of the 

premium tax credit is updated as 

quickly as possible after a change 

occurs. We solicit comment on policy 

and operational strategies to improve 

the accuracy of determinations and 

policy options that could allow an 

individual the choice to opt out of 

having his or her eligibility 

redetermined based on the information 

contained in the annual redetermination 

notice. We also solicit comment as to 

what steps the Exchange could take to 

ensure that redetermination minimizes 

burden on individuals, QHPs, and the 

Exchange without increasing 

inaccuracies. 

In paragraph (g)(1), we propose that 

after the 30-day period specified in 

paragraph (c) of § 155.335 concludes, 

the Exchange (i) determine an enrollee’s 

eligibility based on the information 

provided to the enrollee in the 

redetermination notice, along with any 

information that an enrollee has 

provided in response to such notice that 

the Exchange has verified; (ii) notify the 

enrollee in accordance with the 

procedures in § 155.310(f); and (iii) if 

applicable, notify the enrollee’s 

employer, in accordance with the 

procedures in § 155.310(g). In paragraph 

(g)(2), we propose that to the extent that 

the Exchange is unable to verify a 

change reported by an enrollee as of the 

close of the 30-day period, the Exchange 

redetermine the enrollee’s eligibility 

after completing verification. We expect 

that this redetermination would occur 

as soon as the verification process is 

completed. 

In paragraph (h), we propose that 

changes resulting from an enrollee’s 

annual eligibility redetermination 

follow the same rules regarding effective 

dates as those proposed in § 155.330. 

We solicit comment as to whether the 

effective dates for changes made as a 

result of an annual redetermination 

should be different from the effective 

dates for changes made as a result of a 

redetermination that occurs during the 

coverage year. 

In paragraph (i), we propose that if an 

enrollee remains eligible for coverage in 

a QHP upon annual redetermination, 

the enrollee will remain in the QHP 

selected the previous year unless the 

enrollee takes action to select a new 

QHP within an enrollment period or 

terminate coverage in accordance with 

45 CFR 155.430, as proposed at 76 FR 

41866. 

h. Administration of Advance Payments 

of the Premium Tax Credit and CostSharing Reductions (§ 155.340) 

Sections 1412(a) and (c) of the 

Affordable Care Act direct the Secretary 

to notify the Secretary of the Treasury 

of advance determinations for advance 

payments of the premium tax credit and 

cost-sharing reductions so that the 

Secretary of the Treasury may make 

advance payments of such credit or 

reductions to the issuer of the QHP 

selected by an individual. Sections 

1311(d)(4)(I)–(J) of the Affordable Care 

Act also direct that the Exchange report 

certain information to the Secretary of 

the Treasury and to employers to 

facilitate the employer responsibility 

provisions in the Affordable Care Act. In 

§ 155.340, we propose to codify these 

reporting provisions for the Exchange, 

consistent with our proposal that the 

Exchange conduct eligibility 

determinations. We also propose that 

the Exchange simultaneously provide 

relevant information to the issuer of the 

QHP selected by an applicant in order 

to ensure that the issuer can effectuate 

any required changes within the 

effective dates specified in § 155.330 

and § 155.335. 

In paragraph (a)(1), we propose that in 

the event of a determination of an 

individual’s eligibility or ineligibility 

for advance payments of the premium 

tax credit or cost-sharing reductions, 

including a change in the level of 

advance payments of the premium tax 

credit or cost-sharing reductions for 

which he or she is eligible, the 

Exchange provide information to the 

issuer of the QHP selected by the 

individual or in which the individual is 

enrolled. 

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

the Exchange provide eligibility and 

enrollment information to HHS to 

enable HHS to begin, end, or adjust 

advance payments of the premium tax 

credit and cost-sharing reductions. We 

solicit comment on whether the 

information could be used by HHS to 

support any reporting necessary for 

monitoring, evaluation, and program 

integrity. We solicit comment as to how 

this interaction can work as smoothly as 

possible and the scope of information 

that should be transmitted among the 

relevant agencies. 

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

the notification specified in paragraph 

(a) include the information necessary to 

enable the issuer of the QHP to 

implement or discontinue the 

implementation of an individual’s 

advance payments of the premium tax 

credit or cost-sharing reductions, or 

modify the level of an individual’s 

advance payments of the premium tax 

credit or cost-sharing reductions. By 

implementing, we mean that the issuer 

of the QHP will adjust an enrollee’s net 

premium to reflect the advance 

payments of the premium tax credit, as 

well as make any changes needed to 

ensure that cost-sharing reflects the 

appropriate level of reductions. 

In paragraph (b), we propose to codify 

the reporting rules in sections 

1311(d)(4)(I)(ii)–(iii) and 1311(d)(4)(J), 

which support the employer 

responsibility provisions of the 

Affordable Care Act. Each of the 

proposed standards in paragraph (b) 

relates to information about enrollees 

who are receiving advance payments of 

the premium tax credit and cost-sharing 

reductions. 

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

when the Exchange determines that an 

applicant is eligible to receive advance 

payments of the premium tax credit 

based in part on a finding that his or her 

employer does not provide minimum 

essential coverage, or provides 

minimum essential coverage that is 

unaffordable, as described in 26 CFR 


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Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 51221 

1.36B–2(c)(3)(v) of the Treasury 

proposed rule, or does not meet the 

minimum value standard, as described 

in 26 CFR 1.36B–2(c)(3)(vi) of the 

Treasury proposed rule, the Exchange 

will provide this information to the 

Secretary of the Treasury. In paragraph 

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

transmit such applicant’s name and 

Social Security number to HHS, which 

will transmit it to the Secretary of the 

Treasury. This proposed pathway is 

consistent with our proposals 

throughout this part that HHS serve as 

an intermediary between the Exchange 

and the various Federal agencies with 

which the Exchange communicates. We 

note that § 155.310(g) specifies that the 

Exchange notify the employer of certain 

information regarding an employee’s 

eligibility for advance payments of the 

premium tax credit. 

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

the event that an enrollee for whom 

advance payments of the premium tax 

credit are made or who is receiving costsharing reductions notifies the Exchange 

that he or she has changed employers, 

the Exchange transmit the enrollee’s 

name and Social Security number to 

HHS, which will transmit it to Treasury. 

We note that such a change may also 

trigger a redetermination of eligibility 

during the benefit year for advance 

payments of the premium tax credit and 

cost-sharing reductions pursuant to 

§ 155.330. 

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

the event an enrollee for whom advance 

payments of the premium tax credit are 

made or who is receiving cost-sharing 

reductions terminates coverage in a 

QHP during a benefit year, the Exchange 

transmit his or her name and Social 

Security number and the effective date 

of the termination of coverage to HHS, 

which will transmit it to Treasury, and 

transmit his or her name and the 

effective date of the termination of 

coverage to his or her employer. 

Section 36B(f) of the Code directs the 

Secretary of the Treasury reconcile the 

amount of advance payments of the 

premium tax credit received by an 

individual with the amount allowed 

based on his or her tax return for the tax 

year that includes the benefit year. In 

order to support this reconciliation, 

section 1412(c)(1) of the Affordable Care 

Act directs the Secretary to provide 

information to the Secretary of the 

Treasury regarding advance 

determinations. In addition, section 

36B(f)(3) of the Code requires the 

Exchange to provide information to the 

Treasury Secretary, including an 

identification of coverage provided, 

QHP premiums, aggregate amounts of 

the premium tax credit provided during 

the tax year, identifying information, 

information supporting eligibility 

determinations, and any information 

necessary to determine whether excess 

advance payments of the premium tax 

credit have been made. The Treasury 

Secretary is proposing to implement this 

provision in 26 CFR 1.36B–5 of the 

Treasury proposed rule; to reinforce this 

provision and clarify it as a standard for 

approval of an Exchange, in paragraph 

(c), we propose that the Exchange 

comply with the Treasury regulation. 

i. Coordination With Medicaid, CHIP, 

the Basic Health Program, and the PreExisting Conditions Insurance Program 

(§ 155.345) 

In § 155.345, we propose standards for 

coordination across the Exchange, 

Medicaid, and CHIP in order to 

implement a streamlined, simplified 

system for eligibility determinations and 

enrollment. In this section, we also 

propose standards for coordination 

between the Exchange and the PreExisting Conditions Insurance Program 

(PCIP), established pursuant to section 

1101 of the Affordable Care Act. 

In paragraph (a) of this section, we 

propose that the Exchange enter into 

agreements with the Medicaid or CHIP 

agencies as necessary to fulfill this 

subpart. Such agreements could support 

ensuring that Exchange determinations 

of eligibility for Medicaid and CHIP are 

consistent with the methods, standards 

and procedures set forth in the 

approved State plan and the interpretive 

policies and procedures of the State 

agency or agencies administering the 

Medicaid or CHIP programs. We 

anticipate that Medicaid and CHIP 

eligibility determination activities 

conducted by the Exchange will be 

conducted in cooperation and 

coordination with the agency or 

agencies administering those programs, 

and will utilize the single eligibility 

system or shared eligibility service 

discussed later in this section. 

In paragraph (d)(1) of § 155.310 of this 

subpart, we propose that as part of the 

eligibility determination process, the 

Exchange determine an applicant 

eligibility for Medicaid and CHIP, in 

accordance with standards described in 

§ 155.305 of this subpart, and as 

described in (d)(3), notify the State 

agency administering Medicaid or CHIP 

and transmit relevant information. Upon 

making a determination of eligibility for 

Medicaid or CHIP, the Exchange will 

also notify the applicant of the 

determination, as described in 

§ 155.310(f). The agency administering 

Medicaid or CHIP would then provide 

the individual with his or her choices of 

available delivery systems (such as a 

managed care organization, a primary 

care case management program, or other 

option) and notify the chosen health 

plan or delivery system of the 

individual’s selection. 

The Exchange may also facilitate 

delivery system and health plan 

selection, including transmitting 

enrollment transactions to health plans, 

if applicable, for individuals determined 

eligible for Medicaid or CHIP, if the 

agencies administering Medicaid or 

CHIP enter into an agreement 

authorizing the Exchange to perform 

this function. A greater level of 

integration in this area could offer an 

opportunity to reduce administrative 

costs associated with a two-step process 

for applicants who are determined 

eligible for Medicaid or CHIP, 

particularly because the Exchange will 

already have the capacity to allow 

delivery system selection for 

individuals determined eligible to enroll 

in a QHP. We solicit comments 

regarding whether and how this 

integration could best work for the 

Exchange, Medicaid, and CHIP. 

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

the Exchange perform a ‘‘screen and 

refer’’ function for those applicants who 

may be eligible for Medicaid in a MAGIexempt category, as described in section 

1902(e)(14)(D) of the Act or an applicant 

that is potentially eligible for Medicaid 

based on factors not otherwise 

considered in this subpart. We propose 

that the Exchange transmit eligibility 

information related to such applications 

to the applicable State agency(ies) 

promptly and without undue delay to 

complete the remainder of the eligibility 

determination process. 

We also note that a State may choose 

to establish an eligibility system that 

conducts all eligibility determinations 

for the Exchange, Medicaid, and CHIP, 

including those Medicaid 

determinations that are based on factors 

beyond the MAGI-based income 

standard. 

We note that section 36B(c)(2)(B)(i) of 

the Code provides that an applicant is 

not eligible for advance payments of the 

premium tax credit or cost-sharing 

reductions to the extent that he or she 

is eligible for other minimum essential 

coverage, including coverage under 

Medicaid. We do not believe this 

provision is intended to exclude an 

applicant who is otherwise eligible for 

advance payments of the premium tax 

credit or cost-sharing reductions from 

receiving such advance payments or 

reductions during the time needed for 

Medicaid or CHIP to complete and 

effectuate an eligibility determination, 

particularly an eligibility determination 

that may involve the review of clinical 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS3
51222 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

information. As such, in paragraph 

(b)(2), we propose that the Exchange 

provide advance payments of the 

premium tax credit and cost-sharing 

reductions to an individual who is 

found to be otherwise eligible for 

advance payments of the premium tax 

credit and cost-sharing reductions while 

the agency administering Medicaid 

completes a more detailed 

determination. We note that 26 CFR 

1.36B–2(c)(2) of the Treasury proposed 

rule, specifies that if an individual 

receiving advance payments is approved 

for government-sponsored minimum 

essential coverage (including Medicaid), 

the individual is treated as eligible for 

minimum essential coverage no earlier 

than the first day of the first calendar 

month after approval; that is, an 

applicant who is referred to the 

Medicaid agency for additional 

screening and provided with advance 

payments in the interim while he or she 

is enrolled in a QHP would be eligible 

for the premium tax credit for such 

months and therefore, would not be 

liable to repay advance payments upon 

retroactive eligibility for Medicaid for 

the period of retroactive eligibility. 

In paragraph (c) we propose the 

Exchange provide an opportunity for an 

applicant who is not automatically 

referred to the State Medicaid agency for 

an eligibility determination under 

paragraph (b) of this section to request 

a full screening of eligibility for 

Medicaid by such agency. Because 

Medicaid may provide different benefits 

or greater protections for certain 

individuals, those applicants who 

believe they may be eligible for such 

programs should have the opportunity 

to receive a conclusive determination of 

eligibility based on all available 

eligibility criteria. In paragraph (c)(2), 

we propose that to the extent that an 

applicant requests such a determination, 

the Exchange transmit the applicant’s 

information to the State Medicaid 

agency promptly and without undue 

delay. We note that 26 CFR 1.36B– 

2(c)(2) of the Treasury proposed rule, 

discussed above, applies to applicants 

who are determined eligible for 

retroactive Medicaid coverage. 

In order to implement section 1413 of 

the Affordable Care Act, in paragraph 

(d), we propose that the Exchange work 

with the agencies administering 

Medicaid and CHIP, to establish 

procedures through which an 

application that is submitted directly to 

an agency administering Medicaid or 

CHIP initiates an eligibility 

determination for enrollment in a QHP, 

advance payments of the premium tax 

credit, and cost-sharing reductions. This 

is designed to ensure that an application 

that is submitted to an agency 

administering Medicaid or CHIP follows 

the same processes for a complete 

MAGI-based determination of eligibility 

for enrollment in a QHP, advance 

payments of the premium tax credit, 

and cost-sharing reductions, in a 

manner identical to that of an 

application submitted directly to the 

Exchange. 

We encourage States to develop 

integrated IT systems across the 

Exchange, Medicaid, and CHIP, which 

could allow States to leverage 

administrative functions and resources 

across coverage programs and ensure a 

consistent, seamless experience for 

consumers. We also expect that States 

will utilize a common or shared 

eligibility system or service across the 

Exchange and Medicaid. 

Section 1413(c) of the Affordable Care 

Act provides for secure interfaces and 

standards for data matching 

arrangements between the Exchange and 

the agencies administering Medicaid, 

and CHIP. In paragraph (e)(1), we 

propose to codify that the Exchange 

must utilize a secure, electronic 

interface for the exchange of data for the 

purpose of determining eligibility, 

including verifying whether an 

applicant requesting an eligibility 

determination for advance payments of 

the premium tax credit and cost-sharing 

reductions has been determined eligible 

for Medicaid or CHIP, and other 

functions specified under this subpart. 

We also note that the standards 

specified in § 155.260 and § 155.270 

regarding privacy and security apply to 

any data sharing agreements under this 

section. Lastly, in paragraph (e)(2), we 

propose that the Exchange utilize any 

model agreements established by HHS 

for the purpose of sharing data as 

described in this section. We solicit 

comment as to the content of these 

model agreements. 

We propose in paragraph (f), 

standards for coordination between the 

Exchange and the Pre-Existing 

Conditions Insurance Program (PCIP), 

established pursuant to section 1101 of 

the Affordable Care Act, which will end 

coverage for its enrolled population 

effective January 1, 2014. In accordance 

with 45 CFR 152.45, we propose to 

develop procedures for the transition of 

PCIP enrollees to coverage in QHPs 

offered through the Exchanges to ensure 

that PCIP enrollees do not experience a 

lapse in coverage. We solicit comment 

on additional responsibilities that 

should be assigned to Exchanges as part 

of this process, such as providing 

dedicated customer service staff for 

PCIP enrollees or actions that may 

accelerate or further streamline 

eligibility determinations for PCIP 

enrollees. 

j. Special Eligibility Standards and 

Process for Indians (§ 155.350) 

Section 1402(d) of the Affordable Care 

Act includes special rules regarding 

cost-sharing for Indians. First, section 

1402(d)(1) of the Affordable Care Act 

specifies that a QHP issuer may not 

impose any cost-sharing on an Indian 

who has household income at or below 

300 percent of the FPL and is enrolled 

in a QHP at any level of coverage. We 

note that this is different from the costsharing rules for non-Indians, which 

specifies that an individual be enrolled 

in a silver-level plan in order to receive 

cost-sharing reductions. Second, section 

1402(d)(2) of the Affordable Care Act 

specifies that a QHP may not impose 

any cost-sharing on an Indian for 

services furnished directly by the Indian 

Health Service, an Indian tribe, tribal 

Organization, or Urban Indian 

Organization, or through referral under 

contract health services. This provision 

applies regardless of an Indian’s income 

or plan level. We note that as defined 

in § 155.300(a), for the purposes of this 

section, ‘‘Indian’’ means any individual 

defined in section 4(d) of the Indian 

Self-Determination and Education 

Assistance Act (ISDEAA) (Pub. L. 93– 

638, 88 Stat. 2203), in accordance with 

section 1402(d)(1) of the Affordable Care 

Act. 

In paragraph (a), we propose to codify 

section 1402(d)(1) of the Affordable Care 

Act by requiring the Exchange to 

determine an applicant who is an Indian 

eligible for cost-sharing reductions if he 

or she (i) meets the standards of 

§ 155.305 (related to eligibility for 

enrollment in a QHP) and (ii) has 

household income that does not exceed 

300 percent of the FPL. We also propose 

in paragraph (a)(2) to clarify that the 

Exchange may only provide cost-sharing 

reductions to an individual who is an 

Indian if he or she is enrolled in a QHP. 

In paragraph (b), we propose to codify 

section 1402(d)(2) of the Affordable Care 

Act by requiring the Exchange to 

determine an applicant eligible for the 

special cost-sharing rule described in 

that section if he or she is an Indian, 

without requiring the applicant to 

request an eligibility determination that 

requires collection or verification of 

income. This special cost-sharing 

reduction rule is not tied to income. 

In paragraph (c), we propose that the 

Exchange verify an individual’s 

attestation that he or she is an Indian for 

purposes of determining whether he or 

she qualifies for the cost-sharing rules 

described in paragraphs (a) and (b) of 

this section. We propose that this 


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process consist of two phases. First, in 

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

Exchange use any relevant 

documentation verified to support an 

attestation of citizenship or lawful 

presence in accordance with 

§ 155.315(e) of this subpart. This is 

designed to ensure that the Exchange 

and an application filer will not 

duplicate the effort related to collecting 

and processing documentation if an 

application filer submitted 

documentation to support an applicant’s 

attestation to citizenship or lawful 

presence that also satisfies the 

requirement of this paragraph. 

Second, in paragraph (c)(2), we 

propose that the Exchange rely on any 

electronic data sources that are available 

and have been authorized by HHS. HHS 

will approve electronic data sources 

based on evidence showing that such 

data sources are sufficiently accurate 

and offer less administrative complexity 

than paper verification. 

If an applicant has not submitted 

satisfactory documentation in 

accordance with paragraph (c)(1) and 

the verification process described in 

paragraph (c)(2) is not applicable (such 

as because the data are unavailable, do 

not contain an applicant’s information, 

or are not reasonably compatible with 

an applicant’s attestation), we propose 

that the Exchange follow the standard 

inconsistency procedures proposed in 

§ 155.315(e) of this subpart. Within 

these procedures, we propose that the 

Exchange follow the standards for 

acceptable documentation provided in 

section 1903(x)(3)(B)(v) of the Act. We 

note that to the extent that the Exchange 

is unable to verify an applicant’s 

attestation that he or she is an Indian, 

and the applicant is otherwise eligible 

for enrollment in a QHP or insurance 

affordability programs, the Exchange 

determine the applicant eligible 

accordingly. 

We solicit comment on the 

availability and usability of electronic 

data sources, as well as best practices 

for accepting and verifying 

documentation related to Indian status. 

We note that this provision is also 

intended to facilitate data sharing 

between tribes and the Exchange for the 

purposes of this section, to the extent 

that tribes are willing and able to engage 

in such data sharing. 

k. Right to Appeal (§ 155.355) 

Section 1411(f) of the Affordable Care 

Act directs the Secretary to establish a 

process for a Federal official to hear and 

make decisions on appeals of eligibility 

determinations. Section 1411(e)(4)(C) of 

the Affordable Care Act also provides 

that the Exchange notify applicants and 

employers of appeal processes when 

notifying the applicant or employer of 

an eligibility determination. As 

described in § 155.200(d) of the 

Exchange NPRM, published at 76 FR 

41866, the Exchange will establish a 

process to hear individual appeals of 

eligibility determinations. We propose 

that an individual may appeal any 

eligibility determination or 

redetermination made by the Exchange 

under subpart D, including 

determinations of eligibility for 

enrollment in a QHP, advance payments 

of the premium tax credit, and costsharing reductions. We intend to 

propose the details of the individual 

eligibility appeals processes, including 

standards for the Federal appeals 

process, in future rulemaking. 

Pursuant to 1411(f)(2) of the 

Affordable Care Act, we intend to 

propose through future rulemaking 

standards for a process through which 

an employer would be able to appeal a 

determination that an employee of the 

employer is eligible for advance 

payments of the premium tax credit or 

cost-sharing reductions based in part on 

a finding that the employer did not offer 

qualifying coverage to the employee. 

C. Part 157—Employer Interactions With 

Exchange and SHOP Participation 

1. Subpart A—General Provisions 

The Affordable Care Act contains a 

number of provisions related to 

employers with respect to employee 

health coverage. While a number of 

them are incorporated into the Code, at 

sections 4980H and 6056, several are to 

be implemented by the Secretary. In 

part 157, we propose standards that 

address qualified employer 

participation in SHOP. Also, in the 

preamble, we briefly discuss employer 

interactions with Exchanges related to 

the verification of employees’ eligibility 

for qualifying coverage in an eligible 

employer-sponsored plan. Subpart A 

outlines the basis and scope for part 157 

and defines terms used throughout part 

157. 

a. Basis and Scope (§ 157.10) 

Section 157.10 of subpart A specifies 

the general statutory authority for the 

proposed regulations and indicates that 

the scope of part 157 is to establish the 

standards for employers in connection 

with Exchanges. 

b. Definitions (§ 157.20) 

Under § 157.20, we propose 

definitions for terms used in part 157 

that require clarification. The 

definitions presented in § 157.20 are 

taken directly from the statute or based 

on definitions we propose in other parts 

of this proposed rule. The terms 

‘‘qualified employer,’’ ‘‘qualified 

employee’’ and ‘‘small employer’’ have 

the meaning given to the terms in 

§ 155.20. 

We recognize that employers may 

need to interact with Exchanges for the 

express purpose of verifying employees’ 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan for 

those employees who seek eligibility 

determinations for advance payments of 

the premium tax credit and cost-sharing 

reductions, as described in § 155.320(e). 

We solicit comment earlier in the 

preamble on the timing of the 

interactions between employers and 

Exchanges and how these interactions 

might be structured. 

2. Subpart B—Reserved 

3. Subpart C—Standards for Qualified 

Employers 

Section 1311(b)(1)(B) of the 

Affordable Care Act directs each State 

that operates an Exchange to provide for 

the establishment of a Small Business 

Health Options Program (SHOP), which 

we describe in subpart H of part 155. 

Subpart C of this part outlines the 

general provisions for employer 

participation in SHOPs. To a significant 

extent, the proposal for this subpart 

mirrors and complements subpart H of 

part 155, proposed in the Exchange 

NPRM, published at 76 FR 41866. 

a. Eligibility of Qualified Employers to 

Participate in SHOP (§ 157.200) 

In § 157.200, we propose the 

standards for an employer that seeks to 

offer health coverage to its employees 

through a SHOP. In paragraph (a), we 

propose that only qualified employers 

may participate in a SHOP. SHOP 

eligibility standards for qualified 

employers are proposed in 45 CFR 

155.710. 

In paragraph (b), as proposed in 45 

CFR 155.710, a qualified employer 

participating in the SHOP may continue 

to participate if it ceases to be a small 

employer solely because of an increase 

in the number of employees. In such 

instances, the employer will continue to 

be treated as a qualified employer and 

may continue its participation until the 

employer either fails to meet the other 

eligibility criteria or elects to no longer 

participate in the SHOP. 

We note that some small employers 

may have employees in multiple States 

or SHOP service areas. In 45 CFR 

155.710, we proposed to allow multiState employers flexibility in offering 

coverage to their employees. While large 

employers are more likely than small 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS3
51224 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

employers to have employees in 

multiple States or SHOP jurisdictions, it 

is important that the health insurance 

options available to small employers 

participating in the SHOP are not 

limited by the SHOP’s geographic 

location. We note that this does not 

exempt an employer from the size 

standard of the SHOP. If an employer 

has more than 100 employees divided 

among multiple SHOP service areas, 

such an employer is still a large 

employer. 

Unlike the individual market, in the 

SHOP there are no statutory residency 

standards for either the qualified 

employer or qualified employee. 

However, in 45 CFR 155.710, we 

proposed that small employers either 

offer employees coverage through the 

SHOP serving the employer’s principle 

business address or offer coverage to an 

employee through the SHOP serving the 

employee’s primary worksite. We 

propose parallel standards here to 

coordinate with that proposal. 

b. Employer Participation Process in the 

SHOP (§ 157.205) 

We propose the process for employer 

participation in the SHOP in § 157.205. 

Paragraph (a), directs an employer to 

adhere to the standards, process, and 

deadlines set by this part and by the 

SHOP to maintain eligibility as a 

qualified employer and have employees 

enroll in QHPs. As proposed in 45 CFR 

155.720, the SHOP will set a uniform 

process and timeline for each employer 

seeking to become a qualified employer 

through the SHOP. 

In paragraph (b), we propose that a 

qualified employer make available 

QHPs to employees in accordance with 

the process developed by the SHOP 

pursuant to 45 CFR 155.705. 

In paragraph (c), we propose that a 

qualified employer participating in 

SHOP disseminate information to its 

employees about the methods for 

selecting and enrolling in a QHP. To 

address the needs of qualified 

employees seeking assistance, the 

information disseminated by qualified 

employers should include at least the 

timeframes for enrollment, instructions 

for how to access the SHOP Web site 

and other tools to compare QHPs, and 

the SHOP toll-free hotline. We propose 

to establish this as a responsibility of 

the qualified employer because the 

SHOP will not have employee contact 

information until employees apply for 

coverage. However, the SHOP may 

assist qualified employers, for example 

by providing an easy to use toolkit to 

qualified employers explaining the key 

pieces of information to disseminate to 

its employees. 

In paragraph (d), we propose that a 

qualified employer submit premium 

payments according to the process 

proposed in 45 CFR 155.705. In 

paragraph (e), we propose that qualified 

employers provide an employee hired 

outside of the initial enrollment or 

annual open enrollment period with 

information described in paragraph (c). 

As proposed in 45 CFR 155.725(g), the 

SHOP will establish a window of time 

in which a newly hired employee may 

select coverage through a QHP. 

In paragraph (f), we propose that 

qualified employers provide the SHOP 

with information about individuals or 

employees whose eligibility to purchase 

coverage through the employer has 

changed. This notice would apply both 

to newly eligible employees and 

dependents as well as those no longer 

eligible for coverage. This includes a 

COBRA qualifying event, as described 

in 29 U.S.C. 1163. The SHOP may in 

turn notify the QHP to process the 

change in enrollment. The employer 

retains all notice responsibilities under 

Federal and State law. We suggest that 

SHOPs direct employers to provide such 

notices within thirty (30) days of the 

change in eligibility. 

In paragraph (g), we propose that a 

qualified employer adhere to the annual 

employer election period to change 

program participation for the next plan 

year. As proposed in 45 CFR 155.725, an 

employer may begin participating in the 

SHOP at any time. However, once an 

employer begins participating, it will 

adhere to an annual employer election 

period during which it may change 

employee offerings. 

In paragraph (h), we propose that if an 

employer remains eligible for coverage 

and does not take action during the 

annual employer election period, such 

employer would continue to offer the 

same plan, coverage level or plans 

selected the previous year for the next 

plan year unless the QHP or QHPs are 

no longer available. We invite 

comments regarding the feasibility of 

the processes established in this section 

and the implications for small 

employers and their employees. 

III. Collection of Information 

Requirements 

We recognize that this proposed rule 

contains items that are subject to the 

Paperwork Reduction Act of 1995. We 

intend to estimate the burden of 

complying with the provisions of this 

rule as part of future rulemaking, per the 

Paperwork Reduction Act. 

IV. Summary of Preliminary Regulatory 

Impact Analysis 

The summary analysis of benefits and 

costs included in this proposed rule is 

drawn from the detailed Preliminary 

Regulatory Impact Analysis (PRIA) that 

evaluates the impacts of the Exchange 

proposed rule and the related Patient 

Protection and Affordable Care Act; 

Standards Related to Reinsurance, Risk 

Corridors and Risk Adjustment 

(Premium Stabilization) proposed rule, 

available at http://cciio.cms.gov under 

‘‘Regulations and Guidance.’’ This 

proposed rule proposes the specific 

standards for the Exchange eligibility 

process in order to implement the 

sections related to eligibility in the 

Affordable Care Act. As performing 

eligibility determinations is a minimum 

function of the Exchange, the costs and 

benefits of these eligibility provisions 

are inherently tied to the costs and 

benefits of the Patient Protection and 

Affordable Care Act; Establishment of 

Exchanges and Qualified Health Plans 

(Exchange) proposed rule. 

A. Introduction 

HHS has examined the impact of the 

proposed rule under Executive Orders 

12866 and 13563, the Regulatory 

Flexibility Act (5 U.S.C. 601–612), and 

the Unfunded Mandates Reform Act of 

1995 (Pub. L. 104–4). Executive Orders 

13563 and 12866 direct agencies to 

assess all costs and benefits (both 

quantitative and qualitative) 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 an ‘‘economically’’ 

significant rule, under section 3(f)(1) of 

Executive Order 12866. Accordingly, 

the rule has been reviewed by the Office 

of Management and Budget. 

The Regulatory Flexibility Act 

requires agencies to analyze regulatory 

options that would minimize any 

significant impact of a rule on small 

entities. Using the Small Business 

Administration (SBA) definitions of 

small entities for agents and brokers, 

providers, QHPs, and employers—HHS 

tentatively concludes that a significant 

number of firms affected by this 

proposed rule are not small businesses. 

Section 202(a) of the Unfunded 

Mandates Reform Act of 1995 requires 

that agencies prepare a written 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS3
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 51225 

5http://research.stlouisfed.org/fred2/data/ 

GDPDEF.txt. Accessed on 7/26/2011. 

6Foster, Richard ‘‘Estimated Financial Effects of 

the Patient Protection and Affordable Care Act as 

Amended ‘‘April 2011. CMS’’. 

7Congressional Budget Office. (2007) ‘‘CBO’s 

Health Insurance Simulation Model: A Technical 

Description.’’ October. 

8Finkelstein, A. et al., (2011). The Oregon Health 

Insurance Experiment: Evidence from the First 

Year,’’ National Bureau of Economic Research 

Working Paper Series, 17190. 

statement, which includes an 

assessment of anticipated costs and 

benefits, before proposing ‘‘any rule that 

includes any Federal mandate that may 

result in the expenditure by State, local, 

and tribal governments, in the aggregate, 

or by the private sector, of $100,000,000 

or more (adjusted annually for inflation) 

in any one year.’’ The current threshold 

after adjustment for inflation is 

approximately $136 million, using the 

most current (2011) Implicit Price 

Deflator for the Gross Domestic 

Product.5 HHS does not expect this 

proposed rule to result in one-year 

expenditures that would meet or exceed 

this amount. 

B. Need for This Regulation 

A central aim of Title I of the 

Affordable Care Act is to expand access 

to health insurance coverage through 

the establishment of Exchanges. The 

number of uninsured Americans is 

rising due to lack affordable insurance, 

barriers to insurance for people with 

pre-existing conditions, and high prices 

due to limited competition and market 

failures. Millions of people without 

health insurance use health care 

services for which they do not pay, 

shifting the uncompensated cost of their 

care to health care providers. Providers 

pass much of this cost to insurance 

companies, resulting in higher 

premiums that make insurance 

unaffordable to even more people. The 

Affordable Care Act includes a number 

of policies to address these problems, 

including the creating of Affordable 

Insurance Exchanges. 

Starting in 2014, individuals and 

small businesses will be able to 

purchase private health insurance 

through State-based competitive 

marketplaces called Affordable 

Insurance Exchanges, or ‘‘Exchanges.’’ 

Exchanges will offer Americans 

competition, choice, and clout. 

Insurance companies will compete for 

business on a level playing field, driving 

down costs. Consumers will have a 

choice of health plans to fit their needs. 

And Exchanges will give individuals 

and small businesses the same 

purchasing clout as big businesses. 

This proposed rule provides 

standards for the Exchange eligibility 

process, in order to implement sections 

1311, 1411, 1412, and 1413 of the 

Affordable Care Act. Further, it supports 

and complements rulemaking 

conducted by the Secretary of the 

Treasury with respect to section 36B of 

the Code, as added by section 1401(a) of 

the Affordable Care Act, and by the 

Secretary of HHS with respect to several 

sections of the Affordable Care Act that 

create new law and amend existing law 

regarding Medicaid and CHIP. This 

proposed rule also contains standards 

for employers with respect to 

participation in the Small Business 

Health Options Program. 

C. Summary of Costs and Benefits 

This proposed regulation is being 

published to provide the specific 

standards for the Exchange eligibility 

process in order to implement the 

sections related to eligibility in the 

Affordable Care Act. As performing 

eligibility determinations is a minimum 

function of the Exchange, the costs and 

benefits of these eligibility provisions 

are inherently tied to the costs and 

benefits of the Establishment of 

Exchanges and Qualified Health Plans 

(Exchange) proposed rule. A detailed 

PRIA, available at http://cciio.cms.gov 

under ‘‘Regulations and Guidance,’’ 

evaluates the impacts of the Exchange 

proposed rule and the related Premium 

Stabilization proposed rule. This section 

summarizes benefits and costs of this 

proposed rule. 

Methods of Analysis 

The detailed PRIA references the 

estimates of the CMS Office of the 

Actuary (OACT) (CMS, April 22, 2010),6

but primarily uses the underlying 

assumptions and analysis done by the 

Congressional Budget Office (CBO) and 

the staff of the Joint Committee on 

Taxation. Their modeling effort 

accounts for all of the interactions 

among the interlocking pieces of the 

Affordable Care Act including its tax 

policies, and estimates premium effects 

that are important to assessing the 

benefits of the proposed rule. A 

description of CBO’s methods used to 

estimate budget and enrollment impacts 

is available.7 The CBO estimates of 

enrollment in Exchanges are not 

significantly different than the 

comparable estimate produced by 

OACT. Based on our review, we expect 

that the provisions of these proposed 

rules will not substantially alter CBO’s 

estimates of the budget impact of 

Exchanges or enrollment. The proposed 

provisions are well within the 

parameters used in the CBO modeling of 

the Affordable Care Act and do not 

diverge from assumptions embedded in 

the CBO model. Our review and 

analysis of the proposed provisions 

indicate that the impacts are within the 

model’s margin of error. 

Benefits in Response to the Proposed 

Regulation 

This summary focuses on the effects 

of implementing the provisions of the 

Affordable Care Act related to 

eligibility. In this section, we provide 

evidence on the benefits of increased 

health insurance coverage and reduced 

transaction costs. Simple eligibility 

processes will increase take-up of health 

insurance leading to improved health. 

In a recent study, compared to the 

uninsured group, the insured received 

more hospital care, more outpatient 

care, had lower medical debt, better selfreported health, and other health related 

benefits.8 The evaluation concluded that 

for low-income uninsured adults, 

coverage has the following benefits: 

• Significantly higher utilization of 

preventive care (mammograms, 

cholesterol monitoring, etc.), 

• A significant increase in the 

probability of having a regular office or 

clinic for primary care, and 

• Significantly better self-reported 

health. 

In addition, the use of electronic 

records among State and Federal 

agencies with information to verify 

eligibility will minimize the transaction 

costs of purchasing health insurance 

improving market efficiency and 

minimizing time cost for enrollees on 

enrollment. 

Costs in Response to the Proposed 

Regulation 

To support this new eligibility 

structure, States are expected to build 

new or modify existing information 

technology systems. How each State 

constructs and assembles the 

components necessary to support its 

Exchange and Medicaid infrastructure 

will vary and depend on the level of 

maturity of current systems, current 

governance and business models, size, 

and other factors. Administrative costs 

to support the vision for a streamlined 

and coordinated eligibility and 

enrollment process will also vary for 

each State depending on the specific 

approaches taken regarding the 

integration between programs and its 

decision to build a new system or use 

existing systems; while the Affordable 

Care Act requires a high level of 

integration, States have the option to go 

beyond the requirements of the Act. We 

also believe that overall administrative 

costs may increase in the short term as 


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51226 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

9Federal Funding for Medicaid Eligibility 

Determination and Enrollment Activities; Final 

Rule, April 19, 2011 [42 CFR part 433 page 21950]. 

10OACT estimates that the initial start-up costs 

for Exchanges will be $4.4 billion for 2011–2013 

(Sisko, A.M., et al., ‘‘National Health Spending 

Projections: The Estimated Impact of Reform 

through 2019,’’ Health Affairs, 29, no. 10 (2010): 

1933–1941. 

States build information technology 

systems; however, in the long-term 

States will see savings through the use 

of more efficient systems. 

As noted in the preamble, we believe 

the approach we are taking to 

supporting the verification of applicant 

information with SSA, IRS, and DHS 

reduces administrative complexity and 

associated costs. Administrative costs 

incurred in the development of 

information technology infrastructure to 

support the Exchange are funded wholly 

through State Exchange Planning and 

Establishment Grants. Costs for 

information technology infrastructure 

that will also support Medicaid must be 

allocated to Medicaid, but are eligible 

for a 90 percent Federal matching rate 

to assist in development.9

Summary of Costs and Benefits 

CBO estimated program payments and 

receipts for outlays related to grants for 

Exchange startup. States’ initial costs to 

the creation of Exchanges will be 

funded by these grants. Eligibility 

determination is a minimum function of 

the Exchange, therefore the Exchange 

costs related to develop the 

infrastructure for this function these 

eligibility provisions are covered by 

these grant outlays. 

TABLE 1—ESTIMATED OUTLAYS FOR THE AFFORDABLE INSURANCE EXCHANGES FY 2012–FY 2016, IN BILLIONS OF

DOLLARS

Year 2012 2013 2014 2015 2016 

Grant Authority for Exchange Start up 10 ................................................ 0.6 0.8 0.4 0.2 0.0 

Source: Congressional Budget Office. (2011). Cost Estimate of H.R. 1213 A bill to repeal mandatory funding provided to states in the Patient 

Protection and Affordable Care Act to establish American Health Benefit Exchanges. April 27, 2011. http://www.cbo.gov/ftpdocs/121xx/doc12158/ 

hr1213.pdf. 

Regulatory Options Considered 

In addition to a baseline, HHS has 

identified two regulatory options for 

this propose rule as required by 

Executive Order 12866. 

(1) Require Exchanges To Conduct 

Eligibility Determinations for the MAGIExempt Population 

Under the proposed rule, the 

Exchange will determine eligibility for 

Medicaid and CHIP for eligibility 

categories that use a MAGI-based 

income standard. In this NPRM, we 

propose the Exchange perform a ‘‘screen 

and refer’’ function for those applicants 

who may be eligible for Medicaid in a 

category that does not use a MAGI-based 

income standard. For these applicants, 

we propose that the Exchange transmit 

eligibility information to the State 

Medicaid agency to complete the 

remainder of the eligibility 

determination process. 

This alternative would require the 

Exchange to determine eligibility for 

applicants that may fall into Medicaid 

eligibility categories that do not use a 

MAGI-based income standard. It would 

require Exchanges to conduct lengthier 

investigations of these applications than 

what is required for eligibility 

determinations for applicants eligible 

based on MAGI. It would also require 

Exchanges develop the capability to 

evaluate this information and other 

income information not required for 

MAGI-based eligibility determinations. 

This would require additional resources 

and increase costs to Exchanges and 

Federal agencies. 

(2) Require a Paper-Driven Process for 

Conducting Eligibility Determinations 

In the proposed rule, to verify 

applicant information used to support 

an eligibility determination, we 

generally propose the Exchange first use 

electronic data, where available, prior to 

requesting paper documentation. Under 

this proposal, individuals will be asked 

to provide only the minimum amount of 

information necessary to complete an 

eligibility determination, and will only 

be required to submit paper if electronic 

data cannot be used to complete the 

verification process. 

We believe using technology to 

minimize burden on individuals and 

States will help increase access to 

coverage by streamlining the eligibility 

process, and will reduce administrative 

burden on Exchanges, while increasing 

accuracy by relying on trusted data for 

eligibility. 

Under this alternative, the Exchange 

would require individuals to submit 

paper documentation to verify 

information necessary for an eligibility 

determination. This would not only 

increase the amount of burden placed 

on individuals to identify and collect 

this information, which may not be 

readily available to the applicant, but 

would also necessitate additional time 

and resources for Exchanges to accept 

and verify the paper documentation 

needed for an eligibility determination. 

Summary of Costs for Each Option 

While it would extend a more 

streamlined eligibility process to 

individuals ineligible for a MAGI-based 

eligibility determination, option 1 

would require the Exchange to generate 

additional resources and funds to be 

able to determine eligibility for 

applicants that may fall into an 

eligibility category that does not use a 

MAGI-based income standard, including 

one that involves the consideration of 

clinical or other income information. 

The paper-driven process outlined 

under option 2 would ultimately 

increase the amount of time it would 

take for an individual to receive health 

coverage, would reduce the number of 

States likely to operate an Exchange due 

to increased administrative costs, and 

would dissuade individuals from 

seeking coverage through the Exchange. 

D. Accounting Statement 

For full documentation and 

discussion of these estimated costs and 

benefits, see the detailed Exchange 

PRIA, available at http://cciio.cms.gov 

under ‘‘Regulations and Guidance.’’ 

Since eligibility determination is a 

minimum function of the Exchange, the 

costs and benefits of these eligibility 

provisions are included in the costs and 

benefits of Exchange establishment. 

Therefore, this accounting statement is 

identical to the one published in the 

Establishment of Exchanges and 

Qualified Health Plans (Exchange) 

proposed rule. 


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Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 51227 

11 ‘‘Table of Size Standards Matched To North 

American Industry Classification System Codes,’’ 

effective November 5, 2010, U.S. Small Business 

Administration, available at http://www.sba.gov. 

Category Primary 

estimate Year dollar Units discount rate 

Period 

covered 

Benefits: 

Annualized Monetized ($millions/year) ............................................................ Not estimated 2011 7% 2012–2016 

Not estimated 2011 3% 2012–2016 

Qualitative ........................................................................................................ The Exchanges, combined with other actions being taken to 

implement the Affordable Care Act, will improve access to health 

insurance, with numerous positive effects, including earlier 

treatment and improved morbidity, fewer bankruptcies and 

decreased use of uncompensated care. The Exchange will also 

serve as a distribution channel for insurance reducing 

administrative costs as a part of premiums and providing 

comparable information on health plans to allow for a more 

efficient shopping experience. 

Costs: 

Annualized Monetized ($millions/year) ............................................................ 424 2011 7% 2012–2016 

410 2011 3% 2012–2016 

Qualitative ........................................................................................................ These costs include grant outlays to States to establish 

Exchanges. 

V. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

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

agencies to prepare an initial regulatory 

flexibility analysis to describe the 

impact of the proposed rule on small 

entities, unless the head of the agency 

can certify that the rule will not have a 

significant economic impact on a 

substantial number of small entities. 

The Act generally defines a ‘‘small 

entity’’ as (1) a proprietary firm meeting 

the size standards of the Small Business 

Administration (SBA); (2) a not-forprofit organization that is not dominant 

in its field; or (3) a small government 

jurisdiction with a population of less 

than 50,000. States and individuals are 

not included in the definition of ‘‘small 

entity.’’ HHS uses as its measure of 

significant economic impact on a 

substantial number of small entities a 

change in revenues of more than 3 to 5 

percent. 

As discussed above, this proposed 

rule is necessary to implement certain 

standards related to the establishment 

and operation of Exchanges as 

authorized by the Affordable Care Act. 

Specifically, this rule proposes 

standards for Exchanges related to 

eligibility determinations for enrollment 

in a QHP, advance payments of the 

premium tax credit, cost-sharing 

reductions, Medicaid, and CHIP; and 

qualified employer participation in 

SHOP. 

For the purposes of the regulatory 

flexibility analysis, we expect the 

following types of entities to be affected 

by this proposed rule—(1) QHP issuers; 

and (2) employers. We believe that 

health insurers would be classified 

under the North American Industry 

Classification System (NAICS) Code 

524114 (Direct Health and CMS–9989– 

P 166 Medical Insurance Carriers). 

According to SBA size standards, 

entities with average annual receipts of 

$7 million or less would be considered 

small entities this NAICS code. Health 

issuers could possibly be classified in 

621491 (HMO Medical Centers) and, if 

this is the case, the SBA size standard 

would be $10 million or less. 

QHP Issuers 

This rule proposes standards on 

Exchanges that address eligibility 

determinations for enrollment in a QHP, 

advance payments of the premium tax 

credit, cost-sharing reductions, 

Medicaid, and CHIP. Although these 

standards are for Exchanges, they also 

affect health plan issuers that choose to 

participate in an Exchange. QHP issuers 

receive information from an Exchange 

about an enrollee’s category in order to 

enable the QHP issuer to provide the 

correct level of cost-sharing reductions. 

The issuer of the QHP will adjust an 

enrollee’s net premium to reflect the 

advance payments of the premium tax 

credit, as well as make any changes 

required to ensure that cost-sharing 

reflects the appropriate level of 

reductions. Issuers benefit significantly 

from advance payments of the premium 

tax credit and cost-sharing reductions, 

but may face some administrative costs 

relating to receiving enrollee 

information from an Exchange. 

As discussed in the Web Portal 

interim final rule (75 FR 24481), HHS 

examined the health insurance industry 

in depth in the Regulatory Impact 

Analysis we prepared for the proposed 

rule on establishment of the Medicare 

Advantage program (69 FR 46866, 

August 3, 2004). In that analysis we 

determined that there were few, if any, 

insurance firms underwriting 

comprehensive health insurance 

policies (in contrast, for example, to 

travel insurance policies or dental 

discount policies) that fell below the 

size thresholds for ‘‘small’’ business 

established by the SBA (currently $7 

million in annual receipts for health 

insurers, based on North American 

Industry Classification System Code 

524114).11

Additionally, as discussed in the 

Medical Loss Ratio interim final rule (75 

FR 74918), the Department used a data 

set created from 2009 National 

Association of Insurance Commissioners 

(NAIC) Health and Life Blank annual 

financial statement data to develop an 

updated estimate of the number of small 

entities that offer comprehensive major 

medical coverage in the individual and 

group markets. For purposes of that 

analysis, the Department used total 

Accident and Health (A&H) earned 

premiums as a proxy for annual 

receipts. The Department estimated that 

there were 28 small entities with less 

than $7 million in accident and health 

earned premiums offering individual or 

group comprehensive major medical 

coverage; however, this estimate may 


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overstate the actual number of small 

health insurance issuers offering such 

coverage, because it does not include 

receipts from these companies’ other 

lines of business. 

Employers 

The establishment of SHOP in 

conjunction with tax incentives for 

some employers will provide new 

opportunities for employers to offer 

affordable health insurance to their 

employees. A detailed discussion of the 

impact on employers related to the 

establishment of the SHOP is found in 

the PRIA, available at http:// 

cciio.cms.gov under ‘‘Regulations and 

Guidance.’’ 

Subpart D of part 157 proposes 

standards that address qualified 

employer participation in SHOP. This 

rule proposes standards for employers 

that choose to participate in a SHOP. 

The SHOP is limited by statute to 

employers with at least one but not 

more than 100 employees. For this 

reason, we expect that many employers 

would meet the SBA Standard for small 

entities. Since participation in the 

SHOP is voluntary, this proposed rule 

does not place any requirements on 

small employers. 

We request comment on whether the 

small entities affected by this rule have 

been fully identified. We also request 

comment and information on potential 

costs for these entities and on any 

alternatives that we should consider. 

VI. Unfunded Mandates 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires that agencies assess anticipated 

costs and benefits and take certain other 

actions before issuing proposed rule 

(and subsequent final rule) that includes 

any Federal mandate that may result in 

expenditures in any one year by State, 

local, or tribal governments, in the 

aggregate, or by the private sector, of 

$100 million in 1995 dollars, updated 

annually for inflation. In 2011, that 

threshold is approximately $136 

million. Because States are not required 

to set up an Exchange, and because 

grants are available for funding of the 

establishment of an Exchange by a State, 

we anticipate that this proposed rule 

would not impose costs above that $136 

million UMRA threshold on State, local, 

or tribal governments. 

VII. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule (and subsequent final 

rule) that imposes substantial direct 

costs on State and local governments, 

pre-empts State law, or otherwise has 

Federalism implications. Because States 

have flexibility in designing their 

Exchange, State decisions will 

ultimately influence both administrative 

expenses and overall premiums. 

However, because States are not 

required to create an Exchange, these 

costs are not mandatory. For States 

electing to create an Exchange, the 

initial costs of the creation of the 

Exchange will be funded by Exchange 

Planning and Establishment Grants. 

After this time, Exchanges will be 

financially self-sustaining with revenue 

sources left to the discretion of the 

State. In the Department’s view, while 

this proposed rule does not impose 

substantial direct on State and local 

governments, it has Federalism 

implications due to direct effects on the 

distribution of power and 

responsibilities among the State and 

Federal governments relating to 

determining standards relating to health 

insurance coverage (that is, for QHPs) 

that is offered in the individual and 

small group markets. Each State electing 

to establish a State-based Exchange 

must adopt the Federal standards 

contained in the Affordable Care Act 

and in this proposed rule, or have in 

effect a State law or regulation that 

implements these Federal standards. 

However, the Department anticipates 

that the Federalism implications (if any) 

are substantially mitigated because 

States have choices regarding the 

structure and governance of their 

Exchanges. Additionally, the Affordable 

Care Act does not require States to 

establish an Exchange; but if a State 

elects not to establish an Exchange or 

the State’s Exchange is not approved, 

HHS must establish and facilitate an 

Exchange in that State. Additionally, 

States will have the opportunity to 

participate in State Partnership 

Exchanges. 

In compliance with the requirement 

of Executive Order 13132 that agencies 

examine closely any policies that may 

have Federalism implications or limit 

the policymaking discretion of the 

States, the Department has engaged in 

efforts to consult with and work 

cooperatively with affected States, 

including participating in conference 

calls with and attending conferences of 

the National Association of Insurance 

Commissioners, and consulting with 

State insurance officials on an 

individual basis. 

Pursuant to the requirements set forth 

in section 8(a) of Executive Order 

13132, and by the signatures affixed to 

this regulation, the Department certifies 

that CMS has complied with the 

requirements of Executive Order 13132 

for the attached proposed regulation in 

a meaningful and timely manner. 

List of Subjects 

45 CFR Part 155 

Administrative practice and 

procedure, Advertising, Brokers, 

Conflict of interest, Consumer 

protection, Grant programs—health, 

Grants administration, Health care, 

Health insurance, Health maintenance 

organization (HMO), Health records, 

Hospitals, Indians, Individuals with 

disabilities, Loan programs-health, 

Organization and functions 

(Government agencies), Medicaid, 

Public assistance programs, Reporting 

and recordkeeping requirements, Safety, 

State and local governments, Technical 

assistance, Women, and Youth. 

45 CFR Part 157 

Employee benefit plans, Health 

insurance, Health maintenance 

organization (HMO), Health records, 

Hospitals, Indians, Individuals with 

disabilities, Organization and functions 

(Government agencies), Medicaid, 

Public assistance programs, Reporting 

and recordkeeping requirements, Safety, 

State and local governments, Sunshine 

Act, Technical Assistance, Women, and 

Youth. 

For the reasons set forth in the 

preamble, the Department of Health and 

Human Services proposes to amend 45 

CFR subtitle A, subchapter B, as set 

forth below: 

SUBTITLE A—DEPARTMENT OF 

HEALTH AND HUMAN SERVICES 

SUBCHAPTER B—REQUIREMENTS 

RELATING TO HEALTH CARE ACCESS 

PART 155—EXCHANGE 

ESTABLISHMENT STANDARDS AND 

OTHER RELATED STANDARDS 

UNDER THE AFFORDABLE CARE ACT 

1. Part 155, as proposed to be added 

at 76 FR 13564, March 14, 2011 is 

amended by adding subpart D to read as 

follows: 

Subpart D—Exchange Functions in the 

Individual Market: Eligibility Determinations 

for Exchange Participation and Insurance 

Affordability Programs 

Sec. 

155.300 Definitions and general standards 

for eligibility determinations. 

155.305 Eligibility standards. 

155.310 Eligibility determination process. 

155.315 Verification process related to 

eligibility to enroll in a QHP through the 

Exchange. 

155.320 Verification process related to 

eligibility for insurance affordability 

programs. 

155.330 Eligibility redetermination during a 

benefit year. 


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155.335 Annual eligibility redetermination. 

155.340 Administration of advance 

payments of the premium tax credit and 

cost-sharing reductions. 

155.345 Coordination with Medicaid, CHIP, 

the Basic Health Program, and the Preexisting Condition Insurance Program. 

155.350 Special eligibility standards and 

process for Indians. 

155.355 Right to appeal. 

Subpart D—Exchange Functions in the 

Individual Market: Eligibility 

Determinations for Exchange 

Participation and Insurance 

Affordability Programs 

§ 155.300 Definitions and General 

Standards for Eligibility Determinations 

(a) Definitions. In addition to those 

definitions proposed in 45 CFR 155.20, 

for purposes of this subpart, the 

following terms have the following 

meaning: 

Adoption taxpayer identification 

number has the same meaning as it does 

in 26 CFR 301.6109–3(a). 

Applicable Children’s Health 

Insurance Program (CHIP) MAGI-based 

income standard means the applicable 

income standard applied under the 

State plan under title XXI of the Act, or 

waiver of such plan, as defined at 42 

CFR 457.305(a), and as certified by the 

State CHIP Agency pursuant to 42 CFR 

457.348(d), for determining eligibility 

for child health assistance and 

enrollment in a separate child health 

program. 

Applicable Medicaid modified 

adjusted gross income (MAGI)-based 

income standard has the same meaning 

as ‘‘applicable modified adjusted gross 

income standard,’’ as defined at 42 CFR 

435.911(b), applied under the State 

Medicaid plan or waiver of such plan, 

and as certified by the State Medicaid 

agency pursuant to 42 CFR 

435.1200(c)(3) for determining 

eligibility for Medicaid. 

Application filer means an individual 

who submits an application for health 

insurance coverage to the Exchange and 

responds to inquiries about the 

application, regardless of whether he or 

she is seeking health insurance coverage 

for him or herself. 

Federal poverty level means the most 

recently published federal poverty level, 

updated periodically in the Federal 

Register by the Secretary of Health and 

Human Services under the authority of 

42 U.S.C. 9902(2), as of the first day of 

the annual open enrollment period for 

coverage in a qualified health plan 

through the Exchange, as specified in 45 

CFR 155.410. 

Indian means any individual as 

defined in section 4(d) of the Indian 

Self-Determination and Education 

Assistance Act (Pub. L. 93–638, 88 Stat. 

2203). 

Insurance affordability programs 

means advance payments of the 

premium tax credit, cost-sharing 

reductions, Medicaid, CHIP, and the 

Basic Health Program, as applicable, in 

accordance with 42 CFR 435.4. 

Minimum value, in connection with 

an eligible employer-sponsored plan, 

has the meaning given to the term in 

section 36B(c)(2)(C) of the Code. 

Non-citizen means an individual who 

is not a citizen or national of the United 

States, in accordance with section 

101(a)(3) of the Immigration and 

Nationality Act. 

Primary taxpayer. (1) Primary 

taxpayer means an individual who 

indicates that he or she expects— 

(i) To file a tax return for the benefit 

year, in accordance with 26 CFR 

1.6011–8; 

(ii) If married (within the meaning of 

26 CFR 1.7703–1), to file a joint tax 

return for the benefit year; 

(iii) That no other taxpayer will be 

able to claim him or her as a tax 

dependent for the benefit year; and 

(iv) That he or she expects to claim a 

personal exemption deduction under 

section 151 of the Code on his or her tax 

return for one or more applicants, 

including himself or herself and his or 

her spouse. 

(2) This term can mean either spouse 

within a married couple. 

Qualifying coverage in an eligible 

employer-sponsored plan means 

coverage in an eligible employersponsored plan that meets the 

affordability and minimum value 

standards specified in 26 CFR 1.36B– 

2(c)(3). 

State CHIP Agency means the agency 

that administers a separate child health 

program established by the State under 

title XXI of the Act in accordance with 

implementing regulations at 42 CFR 

457. 

State Medicaid Agency means the 

agency established by the State under 

title XIX of the Act that administers the 

Medicaid program in accordance with 

implementing regulations at 42 CFR 

parts 430 through 456. 

Tax dependent has the same meaning 

as the term dependent under section 

152 of the Code. 

(b) Medicaid and CHIP. In general, 

references to Medicaid and CHIP 

regulations in this subpart refer to those 

regulations as implemented by the State 

Medicaid or CHIP agency. 

(c) Attestation. 

(1) Except as specified in paragraph 

(c)(2) of this section, for the purposes of 

this subpart, an attestation may be made 

by the applicant (self-attestation), an 

application filer, or in cases in which an 

individual cannot attest, the attestation 

of a parent, caretaker, or someone acting 

responsibly on behalf of such an 

individual. 

(2) The attestations specified in 

§ 155.310(d)(2)(ii) and § 155.315(e)(4)(ii) 

of this subpart must be provided by a 

primary taxpayer. 

§ 155.305 Eligibility standards. 

(a) Eligibility for enrollment in a QHP 

through the Exchange. The Exchange 

must determine an applicant eligible for 

enrollment in a QHP through the 

Exchange if he or she meets the 

following requirements: 

(1) Citizenship, status as a national, 

or lawful presence. Is a citizen or 

national of the United States or a noncitizen lawfully present in the United 

States, and is reasonably expected to be 

a citizen, national, or a non-citizen who 

is lawfully present for the entire period 

for which enrollment is sought; 

(2) Incarceration. Is not incarcerated, 

other than incarceration pending the 

disposition of charges; and 

(3) Residency. 

(i) In the case of an individual age 21 

and over who is not institutionalized, is 

capable of indicating intent, and is not 

receiving an optional State 

supplementary payment, intends to 

reside in the State within the service 

area of the Exchange, including without 

a fixed address, in which the applicant 

is requesting coverage. 

(ii) In the case of an individual under 

the age of 21, who is not 

institutionalized, is not receiving 

assistance pursuant to Title IV–E of the 

Social Security Act, is not emancipated, 

and is not receiving an optional State 

supplementary payment, resides in the 

State within the service area of the 

Exchange in which he or she is 

requesting coverage, including with a 

parent or caretaker or without a fixed 

address. 

(iii) Other special circumstances. In 

the case of an individual who is not 

described in paragraphs (a)(3)(i) or (ii) of 

this section, the Exchange must apply 

the residency requirements described in 

42 CFR 435.403 with respect to the 

service area of the Exchange. 

(iv) Special rule for family members 

living outside the service area of the 

Exchange of the primary taxpayer. A tax 

dependent or spouse who lives outside 

the service area of the Exchange of the 

primary taxpayer may request coverage 

through either the Exchange that 

services the area in which the spouse or 

tax dependent resides or intends to 

reside, as applicable pursuant to the 

standard identified in paragraphs 

(a)(3)(i), (ii), or (iii) of this section, or the 


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Exchange that services the area in which 

the primary taxpayer resides or intends 

to reside, as applicable pursuant to the 

standard identified in subparagraphs 

(a)(3)(i), (ii), or (iii). 

(b) Eligibility for QHP enrollment 

periods. The Exchange must determine 

an applicant eligible for an enrollment 

period if he or she meets the criteria for 

an enrollment period, as specified in 

§ 155.410 and § 155.420 of this part. 

(c) Eligibility for Medicaid. The 

Exchange must determine an applicant 

eligible for Medicaid if he or she meets 

the citizenship and satisfactory 

immigration status requirements of 42 

CFR 435.406, the residency 

requirements of 42 CFR 435.403, has a 

household income, as defined in 42 CFR 

435.911(b), that is at or below the 

applicable Medicaid MAGI-based 

income standard and— 

(1) Is pregnant, as defined in the 

Medicaid State Plan pursuant to 42 CFR 

435.4; 

(2) Is under age 19; 

(3) Is a parent or caretaker relative of 

a dependent child, as defined in the 

Medicaid State plan pursuant to 42 CFR 

435.4; or 

(4) Is not described in paragraph 

(b)(1), (b)(2), or (b)(3) of this section, is 

under age 65 and is not entitled to or 

enrolled for benefits under part A of 

title XVIII of the Social Security Act, or 

enrolled for benefits under part B of title 

XVIII of the Social Security Act. 

(d) Eligibility for CHIP. The Exchange 

must determine an applicant eligible for 

CHIP if he or she meets the 

requirements of 42 CFR 457.310 through 

457.320 and has a household income 

within the applicable CHIP MAGI-based 

income standard. 

(e) Eligibility for Basic Health 

Program. If a Basic Health Program is 

operating in the service area of the 

Exchange, the Exchange must determine 

an applicant eligible for the Basic 

Health Program if he or she meets the 

requirements specified in section 

1331(e) of the Affordable Care Act and 

regulations implementing that section. 

(f) Eligibility for advance payments of 

the premium tax credit. 

(1) In general. The Exchange must 

determine a primary taxpayer eligible 

for advance payments of the premium 

tax credit if the Exchange determines 

that— 

(i) He or she is expected to have a 

household income, as defined in 26 CFR 

1.36B–1(e), of at least 100 percent but 

not more than 400 percent of the FPL, 

as specified in 26 CFR 1.36B–2(b)(1), for 

the benefit year for which coverage is 

requested; and 

(ii) One or more applicants for whom 

the primary taxpayer expects to claim a 

personal exemption deduction on his or 

her tax return for the benefit year, 

including the primary taxpayer and his 

or her spouse— 

(A) Meets the requirements for 

eligibility for enrollment in a QHP 

through the Exchange, as specified in 

paragraph (a) of this section; and 

(B) Is not eligible for minimum 

essential coverage, in accordance with 

26 CFR 1.36B–2(a)(2). 

(2) Special rule for non-citizens 

lawfully present who are ineligible for 

Medicaid. The Exchange must 

determine a primary taxpayer eligible 

for advance payments of the premium 

tax credit if the Exchange determines 

that— 

(i) He or she meets the requirements 

specified in paragraph (f)(1) of this 

section, except for paragraph (f)(1)(i); 

(ii) He or she is expected to have a 

household income, as defined in 26 CFR 

1.36B–1(e), of less than 100 percent of 

the FPL, as specified in 26 CFR 1.36B– 

2(b)(5), for the benefit year for which 

coverage is requested; and 

(iii) One or more applicants for whom 

the primary taxpayer expects to claim a 

personal exemption deduction on his or 

her tax return for the benefit year, 

including the primary taxpayer and his 

or her spouse, is a non-citizen who is 

lawfully present and ineligible for 

Medicaid, as specified in 26 CFR 1.36B– 

2(b)(5)(i), by reason of immigration 

status. 

(3) Enrollment required. The 

Exchange may provide advance 

payments of the premium tax credit 

only on behalf of a primary taxpayer if 

one or more applicants for whom the 

primary taxpayer attests that he or she 

expects to claim a personal exemption 

deduction for the benefit year, including 

the primary taxpayer and his or her 

spouse, is enrolled in a QHP through the 

Exchange. 

(4) Compliance with filing 

requirement. The Exchange may not 

determine a primary taxpayer eligible 

for advance payments of the premium 

tax credit if HHS notifies the Exchange 

as part of the process described in 

§ 155.320(c)(4) of this subpart that 

advance payments of the premium tax 

credit were made on behalf of the 

primary taxpayer or his or her spouse 

for a year for which tax data would be 

utilized for verification of household 

income and family size and the primary 

taxpayer or his or her spouse did not 

comply with the requirement to file a 

tax return for that year as required by 26 

CFR 1.6011–8. 

(5) Calculation of advance payments 

of the premium tax credit. The 

Exchange must calculate advance 

payments of the premium tax credit in 

accordance with the rules specified in 

26 CFR 1.36B–3. 

(6) Collection of Social Security 

numbers. The Exchange must require an 

application filer to provide the Social 

Security number of the primary 

taxpayer if an application filer attests 

that the primary taxpayer has a Social 

Security number and filed a tax return 

for the year for which tax data would be 

utilized for verification of household 

income and family size. 

(g) Eligibility for cost-sharing 

reductions. 

(1) The Exchange must determine an 

applicant eligible for cost-sharing 

reductions if he or she— 

(i) Meets the requirements for 

eligibility for enrollment in a QHP 

through the Exchange, as specified in 

paragraph (a) of this section; 

(ii) Meets the requirements for 

advance payments of the premium tax 

credit, as specified in paragraph (f) of 

this section; and 

(iii) Has household income for the 

taxable year that does not exceed 250 

percent of the Federal Poverty Level 

(FPL). 

(2) The Exchange may only provide 

cost-sharing reductions to an enrollee 

who is not an Indian if he or she is 

enrolled in a silver-level QHP, as 

defined by section 1302(d)(1)(B) of the 

Affordable Care Act, purchased through 

the Exchange. 

(h) Eligibility categories for costsharing reductions. The Exchange must 

use the following eligibility categories 

for cost-sharing reductions when 

making eligibility determinations under 

this section— 

(1) An individual who has household 

income greater than 100 percent of the 

FPL and less than or equal to 150 

percent of the FPL; 

(2) An individual who has household 

income greater than 150 percent of the 

FPL and less than or equal to 200 

percent of the FPL; and 

(3) An individual who has household 

income greater than 200 percent of the 

FPL and less than or equal to 250 

percent of the FPL. 

§ 155.310 Eligibility determination 

process. 

(a) Application. 

(1) The Exchange must accept 

applications from individuals in the 

form and manner proposed in 45 CFR 

155.405. 

(2) Information collection from nonapplicants. The Exchange may not 

require an individual who is not seeking 

coverage for himself or herself to 

provide information regarding his or her 

citizenship, status as a national, or 

immigration status on any application 


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Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 51231 

or supplemental form. The Exchange 

may not require such an individual to 

provide a Social Security number, 

except as described in § 155.305(f)(6) of 

this subpart. 

(b) Choice to request determination of 

eligibility for insurance affordability 

programs. The Exchange must permit an 

applicant to decline an eligibility 

determination for the programs 

described in paragraphs (c) through (g) 

of § 155.305 of this subpart; however, 

the Exchange may not permit an 

applicant to decline an eligibility 

determination for a subset of the 

programs listed in those paragraphs. 

(c) Timing. The Exchange must accept 

an application and make an eligibility 

determination for an applicant seeking 

an eligibility determination at any point 

in time during the year. 

(d) Determination of eligibility. 

(1) The Exchange must determine an 

applicant’s eligibility in accordance 

with the standards specified in 

§ 155.305 of this subpart. 

(2) Special rules relating to advance 

payments of the premium tax credit. 

(i) The Exchange must permit an 

enrollee to accept less than the full 

amount of advance payments of the 

premium tax credit for which he or she 

is determined eligible. 

(ii) The Exchange may authorize 

advance payments of the premium tax 

credit on behalf of a primary taxpayer 

only if the primary taxpayer first attests 

that— 

(A) He or she will file a tax return for 

the benefit year, in accordance with 26 

CFR 1.6011–8; 

(B) If married (within the meaning of 

26 CFR 1.7703–1), he or she will file a 

joint tax return for the benefit year; 

(C) No other taxpayer will be able to 

claim him or her as a tax dependent for 

the benefit year; and 

(D) He or she will claim a personal 

exemption deduction on his or her tax 

return for the applicants identified as 

members of his or her family, including 

the primary taxpayer and his or her 

spouse, in accordance with 

§ 155.320(c)(3)(i). 

(3) Special rule relating to Medicaid 

and CHIP. To the extent that the 

Exchange determines an applicant 

eligible for Medicaid or CHIP, the 

Exchange must notify the State 

Medicaid or CHIP agency and transmit 

relevant information to such agency 

promptly and without undue delay. 

(e) Effective dates. Upon making an 

eligibility determination, the Exchange 

must implement the eligibility 

determination under this section for 

enrollment in a QHP through the 

Exchange, advance payments of the 

premium tax credit, and cost-sharing 

reductions in accordance with the dates 

specified in 45 CFR 155.410(c) and (f), 

and 45 CFR 155.420(b). 

(f) Notification of eligibility 

determination. The Exchange must 

provide timely notice to an applicant of 

any eligibility determination made in 

accordance with this subpart. 

(g) Notice of an employee’s eligibility 

for advance payments of the premium 

tax credit and cost-sharing reductions to 

an employer. The Exchange must notify 

an employer that an employee has been 

determined eligible for advance 

payments of the premium tax credit or 

cost-sharing reductions upon 

determination that an employee is 

eligible for advance payments of the 

premium tax credit or cost-sharing 

reductions. Such notice must identify 

the employee. 

(h) Duration of eligibility 

determinations without enrollment. To 

the extent that an applicant who is 

determined eligible for enrollment in a 

QHP does not select a QHP within his 

or her enrollment period in accordance 

with subpart E of this part, and seeks a 

new enrollment period— 

(1) Prior to the date on which he or 

she would have been redetermined in 

accordance with § 155.335 of this 

subpart had he or she enrolled in a 

QHP, the Exchange must require the 

applicant to attest as to whether 

information affecting his or her 

eligibility has changed since his or her 

most recent eligibility determination 

before determining his or her eligibility 

for an enrollment period, and must 

process any changes reported in 

accordance with the procedures 

specified in § 155.330 of this subpart. 

(2) On or after the date on which he 

or she would have been redetermined in 

accordance with § 155.335 of this 

subpart had he or she enrolled in a 

QHP, the Exchange must apply the 

procedures specified in § 155.335 of this 

subpart before determining his or her 

eligibility for an enrollment period. 

§ 155.315 Verification process related to 

eligibility for enrollment in a QHP through 

the Exchange. 

(a) General requirement. Unless a 

request for modification is granted 

pursuant to paragraph (e) of this section, 

the Exchange must verify or obtain 

information as provided in this section 

in order to determine that an applicant 

is eligible for enrollment in a QHP 

through the Exchange. 

(b) Verification of citizenship, status 

as a national, or lawful presence. 

(1) Verification with records from the 

Social Security Administration. For an 

applicant who attests to citizenship and 

has a Social Security number, the 

Exchange must transmit the applicant’s 

Social Security number and other 

identifying information to HHS, which 

will submit it to the Social Security 

Administration. 

(2) Verification with the records of the 

Department of Homeland Security. For 

an applicant who has documentation 

that can be verified through the 

Department of Homeland Security and 

who attests to lawful presence, or who 

attests to citizenship and for whom the 

Exchange cannot substantiate a claim of 

citizenship through the Social Security 

Administration, the Exchange must 

transmit information from the 

applicant’s documentation and other 

identifying information to HHS, which 

will submit necessary information to the 

Department of Homeland Security. 

(3) Inconsistencies and inability to 

verify information. For an applicant 

who attests to citizenship, status as a 

national, or lawful presence, and for 

whom the Exchange cannot verify such 

attestation through the Social Security 

Administration or the Department of 

Homeland Security, the Exchange must 

follow the procedures specified in 

paragraph (e) of this section, except that 

the Exchange must provide the 

applicant with a period of 90 days from 

the date on which the notice described 

in § 155.315(e)(2)(i) of this section is 

received for the application filer to 

provide satisfactory documentary 

evidence or resolve the inconsistency 

with the Social Security Administration 

or the Department of Homeland 

Security, as applicable. The date on 

which the notice is received means 5 

days after the date on the notice, unless 

the applicant shows that he or she did 

not receive the notice within the 5-day 

period. 

(c) Verification of residency. 

(1) Except as provided in paragraphs 

(c)(2) through (c)(4) of this section, the 

Exchange must verify an applicant’s 

residency in the service area of the 

Exchange by accepting his or her 

attestation without further verification. 

(2) If the State Medicaid or CHIP 

agency operating in the State in which 

the Exchange operates elects to examine 

electronic data sources for all applicants 

to verify residency, the Exchange must 

proceed in accordance with 42 CFR 

435.956(c) and 42 CFR 457.380(c), and 

the policy of the State Medicaid or CHIP 

agency. 

(3) If information provided by an 

applicant regarding residency is not 

reasonably compatible with other 

information provided by the individual 

or in the records of the Exchange the 

Exchange may examine information in 

data sources. 


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(4) If the information in such data 

sources is not reasonably compatible 

with the information provided by the 

applicant, the Exchange must follow the 

procedures specified in § 155.315(e) of 

this section. A document that provides 

evidence of immigration status may not 

be used alone to determine State 

residency. 

(d) Verification of incarceration 

status. The Exchange must verify an 

applicant’s attestation that he or she 

meets the requirements of 

§ 155.305(a)(2) of this subpart by— 

(1) Relying on any electronic data 

sources that are available to the 

Exchange and which have been 

approved by HHS for this purpose, 

based on evidence showing that such 

data sources are sufficiently current, 

accurate, and offer less administrative 

complexity than paper verification; or 

(2) Except as provided in paragraph 

(d)(3) of this section, if an approved data 

source is unavailable, accepting his or 

her attestation without further 

verification. 

(3) To the extent that an applicant’s 

attestation is not reasonably compatible 

with information from approved data 

sources described in paragraph (d)(1) of 

this section or other information 

provided by the applicant or in the 

records of the Exchange, the Exchange 

must follow the procedures specified in 

§ 155.315(e) of this subpart. 

(e) Inconsistencies. Except as 

otherwise specified in this subpart, for 

an applicant for whom the Exchange 

cannot verify information required to 

determine eligibility for enrollment in a 

QHP, advance payments of the premium 

tax credit, and cost-sharing reductions, 

the Exchange— 

(1) Must make a reasonable effort to 

identify and address the causes of such 

inconsistency, such as by contacting the 

application filer to confirm the accuracy 

of the information submitted by the 

application filer; 

(2) If the Exchange is unable to 

resolve the inconsistency through the 

process described in paragraph (e)(1) of 

this section, must— 

(i) Notify the applicant of the 

inconsistency; and 

(ii) Provide the applicant with a 

period of 90 days from the date on 

which the notice described in paragraph 

(e)(2)(i) of this section is sent to the 

applicant to either present satisfactory 

documentary evidence or otherwise 

resolve the inconsistency. 

(3) The Exchange may extend the 

period described in paragraph (e)(3) for 

an applicant if the applicant 

demonstrates that a good faith effort has 

been made to obtain the required 

documentation during the period. 

(4) During the period described in 

paragraph (e)(2)(ii) of this section, 

must— 

(i) Proceed with all other elements of 

eligibility determination using the 

application filer’s attestation for the 

applicant, and provide eligibility for 

enrollment in a QHP to the extent that 

an applicant is otherwise qualified; and 

(ii) Ensure that advance payments of 

the premium tax credit and cost-sharing 

reductions are provided on behalf of an 

applicant within this period who is 

otherwise qualified for such payments 

and reductions, as described in 

§ 155.305 of this subpart, if the primary 

taxpayer attests to the Exchange that he 

or she understands that any advance 

payments of the premium tax credit 

received are subject to reconciliation. 

(5) If, after the period described in 

paragraph (e)(2)(ii) of this section, the 

Exchange remains unable to verify the 

attestation, the Exchange must— 

(i) Determine the applicant’s 

eligibility based on the information 

available from the data sources specified 

in this subpart, and notify the applicant 

of such determination in accordance 

with the notice requirements specified 

in § 155.310(f) of this subpart, including 

notice that the Exchange is unable to 

verify the attestation; and 

(ii) Implement the determination 

specified in paragraph (e)(5)(i) of this 

section no earlier than 10 days after and 

no later than 30 days after the date on 

which the notice in paragraph (e)(5)(i) of 

this section is sent. 

(f) Flexibility in information collection 

and verification. HHS may approve an 

Exchange Plan in accordance with 

§ 155.105(d) or a significant change to 

the Exchange Plan in accordance with 

§ 155.105(e) of this part to modify the 

methods to be used for collection of 

information and verification of 

information as set forth in this subpart, 

as well as the specific information 

required to be collected, provided that 

HHS finds that such modification would 

reduce the administrative costs and 

burdens on individuals while 

maintaining accuracy and minimizing 

delay, that it would not undermine 

coordination with Medicaid and CHIP, 

and that any applicable requirements 

under § 155.260, § 155.270, paragraph 

(g) of this section, and section 6103 of 

the Code with respect to the 

confidentiality, disclosure, 

maintenance, or use of information will 

be met. 

(g) Applicant information. The 

Exchange must not require an applicant 

to provide information beyond the 

minimum necessary to support the 

eligibility and enrollment processes of 

the Exchange, Medicaid, CHIP, and the 

Basic Health Program, if a Basic Health 

Program is operating in the service area 

of the Exchange, described in this 

subpart. 

§ 155.320 Verification process related to 

eligibility for insurance affordability 

programs. 

(a) General requirements. 

(1) The Exchange must verify 

information in accordance with this 

section only for an applicant who is 

requesting an eligibility determination 

for insurance affordability programs in 

accordance with § 155.310(b) of this 

subpart. 

(2) Unless a request for modification 

is granted pursuant to § 155.315(e) of 

this subpart, the Exchange must verify 

or obtain information in accordance 

with this section before making an 

eligibility determination for insurance 

affordability programs, and must use 

such information in such determination. 

(b) Verification of eligibility for 

minimum essential coverage other than 

through an eligible employer-sponsored 

plan. 

(1) The Exchange must verify whether 

an applicant is eligible for minimum 

essential coverage other than through an 

eligible employer-sponsored plan, 

Medicaid, CHIP, or the Basic Health 

Program, using information obtained by 

transmitting identifying information 

specified by HHS to HHS. 

(2) The Exchange must verify whether 

an applicant has already been 

determined eligible for coverage through 

Medicaid, CHIP, or the Basic Health 

Program, if a Basic Health Program is 

operating in the service area of the 

Exchange, within the State or States in 

which the Exchange operates using 

information obtained from the agencies 

administering such programs. 

(c) Verification of household income 

and family/household size. 

(1) Data. 

(i) Tax return data. 

(A) For all individuals whose income 

is counted in calculating a primary 

taxpayer’s household income, in 

accordance with 26 CFR 1.36B–1(e), or 

an applicant’s household income, in 

accordance with 42 CFR 435.603(d), and 

for whom the Exchange has a Social 

Security number or an adoption 

taxpayer identification number, the 

Exchange must request tax return data 

regarding MAGI and family size from 

the Secretary of the Treasury by 

transmitting identifying information 

specified by HHS to HHS. 

(B) If the identifying information for 

one or more individuals does not match 

a tax record on file with the Secretary 

of the Treasury that may be disclosed 

pursuant to section 6103(l)(21) of the 


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Code and its accompanying regulations, 

the Exchange must proceed in 

accordance with § 155.315(e)(1) of this 

subpart. 

(ii) Data regarding MAGI-based 

income. For all individuals whose 

income is counted in calculating a 

primary taxpayer’s household income, 

in accordance with 26 CFR 1.36B–1(e), 

or an applicant’s household income, in 

accordance with 42 CFR 435.603(d), the 

Exchange must request data regarding 

MAGI-based income in accordance with 

42 CFR 435.948(a). 

(2) Verification process for Medicaid 

and CHIP. 

(i) Household size. 

(A) The Exchange must require an 

application filer to attest to the 

individuals that comprise an applicant’s 

household for Medicaid and CHIP, 

within the meaning of 42 CFR 

435.603(f). 

(B) The Exchange must verify the 

information in paragraph (c)(2)(i)(A) of 

this section by accepting an application 

filer’s attestation without further 

verification, unless the Exchange finds 

that an application filer’s attestation to 

the individuals that comprise an 

applicant’s household for Medicaid and 

CHIP is not reasonably compatible with 

other information provided by the 

application filer for the applicant or in 

the records of the Exchange, in which 

case the Exchange may utilize data 

obtained through electronic data sources 

to verify the attestation. If such data 

sources are unavailable or information 

in such data sources is not reasonably 

compatible with the application filer’s 

attestation, the Exchange may request 

additional documentation to support the 

attestation within the procedures 

specified in 45 CFR 435.952. 

(ii) Verification process for MAGIbased household income. The Exchange 

must verify MAGI-based income, within 

the meaning of 42 CFR 435.603(d), for 

the household described in paragraph 

(c)(2)(i)(A) of this section in accordance 

with the procedures specified in 42 CFR 

435.948 and 42 CFR 435.952. 

(3) Verification process for advance 

payments of the premium tax credit and 

cost-sharing reductions. 

(i) Family size. 

(A) The Exchange must require an 

application filer to attest to the 

individuals that comprise an applicant’s 

family for advance payments of the 

premium tax credit and cost-sharing 

reductions, within the meaning of 26 

CFR 1.36B–1(d). 

(B) The Exchange must verify an 

applicant’s family size for advance 

payments of the premium tax credit and 

cost-sharing reductions by accepting an 

application filer’s attestation without 

further verification, unless the Exchange 

finds that an application filer’s 

attestation of family size is not 

reasonably compatible with other 

information provided by the application 

filer for the family or in the records of 

the Exchange, in which case the 

Exchange may utilize data obtained 

through electronic data sources to verify 

the attestation. If such data sources are 

unavailable or information in such data 

sources is not reasonably compatible 

with the application filer’s attestation, 

the Exchange may request additional 

documentation to support the 

attestation within the procedures 

specified in § 155.315(e) of this subpart. 

(ii) Basic verification process for 

annual household income. 

(A) The Exchange must compute 

annual household income for the family 

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

this section based on the tax return data 

described in paragraph (c)(1)(i) of this 

section, and require the application filer 

to validate this information, by attesting 

whether it represents an accurate 

projection of the family’s household 

income for the benefit year for which 

coverage is requested. 

(B) To the extent that the data 

described in paragraph (c)(1)(i) of this 

section is unavailable, or an application 

filer attests that it does not represent an 

accurate projection of the family’s 

household income for the benefit year 

for which coverage is requested, the 

Exchange must require the application 

filer to attest to the family’s projected 

household income for the benefit year 

for which coverage is requested and 

accept the application filer’s attestation 

without further verification, except as 

provided in paragraph (c)(3)(ii)(C) of 

this section. 

(C) If the Exchange finds that an 

application filer’s attestation to the 

family’s projected household income for 

the benefit year for which coverage is 

requested is not reasonably compatible 

with the information described in 

paragraph (c)(3)(ii)(A) of this section, 

including as a result of data under 

paragraph (c)(1)(i) of this section being 

unavailable, the Exchange must proceed 

in accordance with paragraphs 

(c)(3)(iii), (c)(3)(iv), and (c)(3)(vi) of this 

section, as applicable. 

(iii) Verification process for increases 

in household income. 

(A) If an application filer attests that 

a primary taxpayer’s annual household 

income has increased or is reasonably 

expected to increase from the data 

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

this section to the benefit year for which 

the applicant(s) in the primary 

taxpayer’s family are requesting 

coverage and have not established 

MAGI-based income through the 

process specified in paragraph (c)(2)(ii) 

of this section that is within the 

applicable Medicaid or CHIP MAGIbased income standard, the Exchange 

must accept the application filer’s 

attestation for the primary taxpayer’s 

family without further verification, 

except as provided in paragraph 

(c)(3)(iii)(B) of this section. 

(B) If the Exchange finds that an 

application filer’s attestation of annual 

household income is not reasonably 

compatible with other information 

provided by the application filer or 

available to the Exchange in accordance 

with paragraph (c)(1)(ii) of this section, 

the Exchange may utilize data obtained 

through electronic data sources to verify 

the attestation. If such data sources are 

unavailable or information in such data 

sources is not reasonably compatible 

with the application filer’s attestation, 

the Exchange must request additional 

documentation using the procedures 

specified in § 155.315(e) of this subpart. 

(iv) Eligibility for alternate verification 

process for decreases in annual 

household income and situations in 

which tax return data is unavailable. 

The Exchange must determine a primary 

taxpayer’s annual household income for 

advance payments of the premium tax 

credit and cost-sharing reductions based 

on the alternate verification procedures 

described in paragraph (c)(3)(v) of this 

section, if an application filer attests to 

projected annual household income in 

accordance with paragraph (c)(3)(ii)(B) 

of this section, the primary taxpayer 

does not meet the criteria specified in 

paragraph (c)(3)(iii) of this section, the 

applicants in the primary taxpayer’s 

family have not established MAGI-based 

income through the process specified in 

paragraph (c)(2)(ii) of this section that is 

within the applicable Medicaid or CHIP 

MAGI-based income standard, and 

(A) The Secretary of the Treasury does 

not have tax return data for the primary 

taxpayer that is at least as recent as the 

calendar year two years prior to the 

calendar year for which advance 

payments of the premium tax credit or 

cost-sharing reductions would be 

effective, including a situation in which 

this is as a result of an individual not 

being required to file; 

(B) The application filer attests that 

the primary taxpayer’s applicable family 

size has changed or is reasonably 

expected to change for the benefit year 

for which the applicants in his or her 

family are requesting coverage; 

(C) The application filer attests that 

the primary taxpayer’s annual 

household income has decreased or is 

reasonably expected to decrease from 

the data described in paragraph (c)(1)(i) 


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of this section by 20 percent or more to 

the benefit year for which the applicants 

in his or her family are requesting 

coverage; or 

(D) An applicant in the primary 

taxpayer’s family has filed an 

application for unemployment benefits. 

(v) Alternate verification process for 

decreases in annual household income 

and situations in which tax return data 

is unavailable. If a primary taxpayer 

qualifies for an alternate verification 

process based on the requirements 

specified in paragraph (c)(3)(iv) of this 

section, the Exchange must attempt to 

verify the application filer’s attestation 

of projected annual household income 

for the primary taxpayer by— 

(A) Using annualized data from the 

MAGI-based income sources specified 

in paragraph (c)(1)(ii) of this section; 

(B) Using other electronic data 

sources that have been approved by 

HHS, based on evidence showing that 

such data sources are sufficiently 

accurate and offer less administrative 

complexity than paper verification; or 

(C) If electronic data are unavailable 

or do not support an application filer’s 

attestation, the Exchange must follow 

the procedures specified in § 155.315(e) 

of this subpart. 

(D) If, following the 90-day period 

described in paragraph (c)(3)(v)(C) of 

this section, an application filer has not 

responded to a request for additional 

information from the Exchange and the 

data sources specified in paragraph 

(c)(1) of this section indicate that an 

applicant in the primary taxpayer’s 

family is eligible for Medicaid or CHIP, 

the Exchange must not provide the 

applicant with eligibility for advance 

payments of the premium tax credit, 

cost-sharing reductions, Medicaid, CHIP 

or the Basic Health Program, if a Basic 

Health Program is operating in the 

service area of the Exchange. 

(E) If, at the conclusion of the period 

specified in paragraph (c)(3)(v)(C) of this 

section, the Exchange remains unable to 

verify the application filer’s attestation, 

the Exchange must determine an 

applicant’s eligibility based on the 

information described in paragraph 

(c)(3)(ii)(A) of this section, notify the 

applicant of such determination in 

accordance with the notice 

requirements specified in § 155.310(f) of 

this subpart, and implement such 

determination in accordance with the 

effective dates specified in 

§ 155.330(e)(1)–(2) of this subpart. 

(vi) Primary taxpayers not meeting 

criteria for use of the alternate 

verification process. For a primary 

taxpayer who does not qualify for the 

alternate verification process based on 

the requirements specified in paragraph 

(c)(3)(iv) of this section, the Exchange 

must determine household income for 

purposes of advance payments of the 

premium tax credit and cost-sharing 

reductions based on the information 

specified in paragraph (c)(3)(ii)(A) of 

this section. 

(4) The Exchange must provide 

education and assistance to an 

application filer regarding the process 

specified in this paragraph. 

(d) Verification related to enrollment 

in an eligible employer-sponsored plan. 

(1) Except as provided in paragraph 

(d)(2) of this section, the Exchange must 

verify whether an applicant requesting 

an eligibility determination for advance 

payments of the premium tax credit or 

cost-sharing reductions is enrolled in an 

eligible employer-sponsored plan by 

accepting his or her attestation without 

further verification. 

(2) If the Exchange finds that an 

applicant’s attestation of enrollment in 

an eligible employer-sponsored plan is 

not reasonably compatible with other 

information provided by the applicant 

or in the records of the Exchange, the 

Exchange may utilize data obtained 

through data sources to verify the 

attestation. If such data sources are 

unavailable or information in such data 

sources is not reasonably compatible 

with the individual’s attestation, the 

Exchange may request additional 

documentation to support the 

attestation within the procedures 

specified in paragraph (g) of this 

subpart. 

(e) Verification related to eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan. 

(1) The Exchange must require an 

applicant to attest to his or her 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan for the 

purposes of eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions, and to provide 

information identified in section 

1411(b)(4) of the Affordable Care Act. 

(2) The Exchange must verify whether 

an applicant is eligible for qualifying 

coverage in an eligible employersponsored plan for the purposes of 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions. 

(f) Additional verification related to 

immigration status for Medicaid and 

CHIP. 

(1) For purposes of determining 

eligibility for Medicaid, the Exchange 

must verify whether an applicant who is 

not a citizen or a national meets the 

requirements of 42 CFR 435.406 and 

section 1903(v)(4) of the Social Security 

Act, in accordance with the Medicaid 

State Plan. 

(2) For purposes of determining 

eligibility for CHIP, the Exchange must 

verify whether an applicant who is not 

a citizen or a national meets the 

requirements of 42 CFR 457.320(d) and 

section 2107(e)(1)(J) of the Social 

Security Act, in accordance with the 

State Child Health Plan. 

§ 155.330 Eligibility redetermination during 

a benefit year. 

(a) General requirement. The 

Exchange must redetermine the 

eligibility of an enrollee in a QHP 

through the Exchange during the benefit 

year if it receives and verifies new 

information reported by an enrollee or 

identifies updated information through 

the data matching described in 

paragraph (c) of this section. 

(b) Requirement for individuals to 

report changes. The Exchange must— 

(1) Require an enrollee to report 

changes with respect to the eligibility 

standards specified in § 155.305 of this 

subpart within 30 days of such change; 

and 

(2) Verify any information reported by 

an enrollee in accordance with the 

processes specified in § 155.315 and 

§ 155.320 of this subpart prior to using 

such information in an eligibility 

redetermination. 

(c) Requirement for Exchange to 

periodically examine certain data 

sources. 

(1) The Exchange must periodically 

examine available data sources 

described in § 155.315(b)(1) and 

§ 155.320(b) of this subpart to identify 

the following changes: 

(i) Death; and 

(ii) Eligibility determinations for 

Medicare, Medicaid, CHIP, or the Basic 

Health Program, if a Basic Health 

Program is operating in the service area 

of the Exchange. 

(2) Flexibility. The Exchange may 

make additional efforts to identify and 

act on changes that may affect an 

enrollee’s eligibility for enrollment in a 

QHP through the Exchange if HHS 

approves an Exchange Plan in 

accordance with § 155.105(d) or a 

significant change to the Exchange Plan 

in accordance with § 155.105(e) of this 

part to modify the requirements, based 

on the criteria specified in § 155.315(e) 

of this subpart. 

(d) Redetermination and notification 

of eligibility. If the Exchange verifies 

updated information reported by an 

enrollee or identifies updated 

information through the data matching 

described in paragraph (c) of this 

section, the Exchange must: 

(1) Redetermine the enrollee’s 

eligibility in accordance with the 


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standards specified in § 155.305 of this 

subpart, and 

(2) Notify the enrollee regarding the 

determination in accordance with the 

requirements specified in § 155.310(f) of 

this subpart and notify the enrollee’s 

employer, as applicable, in accordance 

with the requirements specified in 

§ 155.310(g) of this subpart. 

(e) Effective dates. 

(1) In general, changes resulting from 

a redetermination under this section are 

effective on the first day of the month 

following the date of the notice 

described in paragraph (d)(2) of this 

section. 

(2) Subject to the authorization of 

HHS, the Exchange may determine a 

reasonable point in a month after which 

a change captured through a 

redetermination will not be effective 

until the first day of the month after the 

month specified in paragraph (e)(1) of 

this section. 

(3) In the case of a redetermination 

that results in an enrollee being 

ineligible to continue his or her 

enrollment in a QHP through the 

Exchange, the Exchange must maintain 

his or her eligibility for enrollment in a 

QHP without advance payments of the 

premium tax credit and cost-sharing 

reductions, for a full month following 

the month in which the notice described 

in paragraph (d)(2) of this section is 

sent. 

§ 155.335 Annual eligibility 

redetermination. 

(a) General requirement. The 

Exchange must redetermine the 

eligibility of an enrollee in a QHP 

through the Exchange on an annual 

basis. 

(b) Updated income and family size 

information. In the case of an enrollee 

who requests an eligibility 

determination for insurance 

affordability programs in accordance 

with § 155.310(b) of this subpart, the 

Exchange must request updated tax 

return information and data regarding 

MAGI-based income as described in 

paragraph (c)(1) of § 155.320 of this 

subpart for use in the enrollee’s 

eligibility redetermination. 

(c) Notice to enrollee. The Exchange 

must provide an enrollee with an 

annual redetermination notice including 

the following: 

(1) The data obtained under paragraph 

(b) of this section, if applicable; and 

(2) The data used in the enrollee’s 

most recent eligibility determination; 

and 

(3) The enrollee’s projected eligibility 

determination for the following year, 

after considering any updated 

information described in paragraph 

(c)(1) of this section, including, if 

applicable, the amount of any advance 

payments of the premium tax credit and 

level of cost-sharing reductions. 

(d) Changes reported by enrollees. 

The Exchange must require an enrollee 

to report any changes with respect to the 

information listed in the notice within 

30 days from the date of the notice. 

(e) Verification of reported changes. 

The Exchange must verify any 

information reported by an enrollee 

under paragraph (d) of this section in 

accordance with § 155.315 and 

§ 155.320 of this subpart, including the 

relevant provisions in those sections 

regarding inconsistencies, before using 

such information to determine 

eligibility. 

(f) Response to redetermination 

notice. 

(1) The Exchange must require an 

enrollee to sign and return the notice 

described in paragraph (c) of this 

section. 

(2) To the extent that an enrollee does 

not sign and return the notice described 

in paragraph (c) of this section within 

the 30-day period specified in paragraph 

(d) of this section, the Exchange must 

proceed in accordance with the 

procedures specified in paragraph (h)(1) 

of this section. 

(g) Redetermination and notification 

of eligibility. 

(1) After the 30-day period specified 

in paragraph (d) of this section has 

elapsed, the Exchange must— 

(i) Redetermine the enrollee’s 

eligibility in accordance with the 

standards specified in § 155.305 of this 

subpart using the information provided 

to the individual in the notice specified 

in paragraph (c) of this section, as 

supplemented with any information 

reported by the enrollee and verified by 

the Exchange pursuant to paragraphs (d) 

and (e) of this section; 

(ii) Notify the enrollee in accordance 

with the requirements specified in 

§ 155.310(f) of this subpart; and 

(iii) If applicable, notify the enrollee’s 

employer, in accordance with the 

requirements specified in § 155.310(g) of 

this subpart. 

(2) If an enrollee reports a change 

with respect to the information 

provided in the notice specified in 

paragraph (c) of this section that the 

Exchange has not verified as of the end 

of the 30-day period specified in 

paragraph (d) of this section, the 

Exchange must redetermine the 

enrollee’s eligibility after completing 

verification. 

(h) Effective dates. The rules specified 

in § 155.330(e) of this part regarding 

effective dates apply to changes 

resulting from a redetermination under 

this section. 

(i) Renewal of coverage. If an enrollee 

remains eligible for coverage in a QHP 

upon annual redetermination, such 

enrollee will remain in the QHP 

selected the previous year unless such 

enrollee terminates coverage from such 

plan, including termination of coverage 

in connection with enrollment in a 

different QHP, in accordance with 45 

CFR § 155.430. 

§ 155.340 Administration of advance 

payments of the premium tax credit and 

cost-sharing reductions. 

(a) Requirement to provide 

information to enable advance 

payments of the premium tax credit and 

cost-sharing reductions. In the event 

that the Exchange determines that an 

applicant is eligible for advance 

payments of the premium tax credit or 

cost-sharing reductions or that an 

enrollee’s eligibility has changed, the 

Exchange must, simultaneously and at 

such time and in such manner as HHS 

may specify— 

(1) Notify the issuer of the applicable 

QHP; 

(2) Transmit eligibility and 

enrollment information to HHS 

necessary to enable HHS to begin, end, 

or change the individual’s advance 

payments of the premium tax credit or 

cost-sharing reductions; 

(3) Transmit information necessary to 

enable the issuer of the QHP to 

implement, discontinue the 

implementation, or modify the level of 

an individual’s advance payments of the 

premium tax credit or cost-sharing 

reductions, as applicable, including: 

(i) The dollar amount of the 

individual’s advance payment; and 

(ii) The individual’s cost-sharing 

reductions eligibility category. 

(b) Requirement to provide 

information related to employer 

responsibility. 

(1) In the event that the Exchange 

determines that an individual is eligible 

for advance payments of the premium 

tax credit or cost-sharing reductions 

based in part on a finding that an 

individual’s employer does not provide 

minimum essential coverage, or 

provides minimum essential coverage 

that is unaffordable, as specified in 26 

CFR 1.36B–2(c)(3)(v), or does not meet 

the minimum value requirement 

specified in 26 CFR 1.36B–2(c)(3)(vi), 

the Exchange must transmit the 

individual’s name and taxpayer 

identification number to HHS. 

(2) If an enrollee for whom advance 

payments of the premium tax credit are 

made or who is receiving cost-sharing 

reductions notifies the Exchange that he 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS3
51236 Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 

or she has changed employers, the 

Exchange must transmit the enrollee’s 

name and Social Security number to 

HHS. 

(3) In the event that an individual for 

whom advance payments of the 

premium tax credit are made or who is 

receiving cost-sharing reductions 

disenrolls from a QHP through the 

Exchange during a benefit year, the 

Exchange must— 

(i) Transmit the individual’s name 

and Social Security number, and the 

effective date of coverage termination, to 

HHS, which will transmit it to the 

Secretary of the Treasury; and 

(ii) Transmit the individual’s name 

and the effective date of the termination 

of coverage to his or her employer. 

(c) Requirement to provide 

information related to reconciliation of 

advance payments of the premium tax 

credit. The Exchange must comply with 

the requirements specified in section 

36B(f)(3) of the Code and 26 CFR 1.36B– 

5 regarding reporting to the IRS and to 

taxpayers. 

§ 155.345 Coordination with Medicaid, 

CHIP, the Basic Health Program, and the 

Pre-existing Condition Insurance Program. 

(a) Agreements. The Exchange must 

enter into agreements with Medicaid or 

CHIP agencies as are necessary to fulfill 

the requirements of this subpart. 

(b) Responsibilities related to 

individuals potentially eligible for 

Medicaid based on other information or 

through other coverage groups. 

(1) The Exchange must conduct basic 

screening for an applicant requesting an 

eligibility determination for insurance 

affordability programs under 

§ 155.310(b) of this subpart to determine 

if an applicant is potentially eligible for 

Medicaid based on factors not otherwise 

considered in this subpart, including 

disability, and must transmit to the 

State Medicaid agency promptly and 

without undue delay the name of such 

applicant, other identifying information, 

and all other information provided on 

the application submitted by or on 

behalf of such applicant to, and 

obtained and verified by, the Exchange. 

(2) If the applicant is otherwise 

eligible for advance payments of the 

premium tax credit and cost-sharing 

reductions, the Exchange must provide 

the applicant with such advance 

payments of the premium tax credit or 

cost-sharing reductions until the other 

program notifies the Exchange that the 

applicant is eligible for such program. 

(c) Individuals requesting additional 

screening. The Exchange must— 

(1) Provide an opportunity for an 

applicant to request a full determination 

of eligibility for Medicaid based on 

eligibility criteria that are not described 

in § 155.305. 

(2) If an applicant requests such a 

determination, transmit promptly and 

without undue delay the applicant’s 

name, other identifying information, 

and all other information provided on 

the application submitted by or on 

behalf of such applicant to, and 

obtained and verified by, the Exchange 

to the State Medicaid agency. 

(d) Determination of eligibility for 

individuals submitting applications 

directly to an agency administering 

Medicaid, CHIP, or the Basic Health 

Program. The Exchange, in consultation 

with the agencies administering 

Medicaid, CHIP, and the Basic Health 

Program, if a Basic Health Program is 

operating in the service area of the 

Exchange, must establish procedures to 

ensure that an eligibility determination 

for enrollment in a QHP, advance 

payments of the premium tax credit and 

cost-sharing reductions is performed 

when an application is submitted 

directly to an agency administering 

Medicaid, CHIP, or the Basic Health 

Program, if a Basic Health Program is 

operating in the service area of the 

Exchange, and the applicant is 

determined ineligible for such programs 

based on the applicable MAGI. Such 

procedures must— 

(1) Not require the Exchange to 

duplicate any eligibility and verification 

findings already made by the agency 

administering Medicaid, CHIP, or the 

Basic Health Program, if a Basic Health 

Program is operating in the service area 

of the Exchange, for enrollment in a 

QHP through the Exchange, advance 

payments of the premium tax credit, or 

cost-sharing reductions; and 

(2) Provide for following the same 

eligibility determination processes for 

eligibility determinations regardless of 

the agency that initially receives an 

application. 

(e) Standards for sharing information 

between the Exchange and the agencies 

administering Medicaid, CHIP, and the 

Basic Health Program. 

(1) The Exchange must utilize a 

secure electronic interface to exchange 

data with the agencies administering 

Medicaid, CHIP, and the Basic Health 

Program, if a Basic Health Program is 

operating in the service area of the 

Exchange, for the purpose of 

determining eligibility, including 

verification as to whether an applicant 

for advance payments of the premium 

tax credit or cost-sharing reductions has 

been determined eligible for Medicaid, 

CHIP, or the Basic Health Program as 

specified in § 155.320(b)(2) of this 

subpart and other functions required 

under this subpart. 

(2) Model agreements. The Exchange 

may utilize any model agreements as 

established by HHS for the purpose of 

sharing data as described in this section. 

(f) Transition from the Pre-existing 

Condition Insurance Program (PCIP). 

The Exchange must follow procedures 

established in accordance with 45 CFR 

152.45 to transition PCIP enrollees to 

the Exchange to ensure that there are no 

lapses in health coverage. 

§ 155.350 Special eligibility standards and 

process for Indians. 

(a) Eligibility for cost-sharing 

reductions. 

(1) The Exchange must determine an 

applicant who is an Indian eligible for 

cost-sharing reductions if he or she— 

(i) Meets the requirements specified 

in § 155.305(a) of this subpart; and 

(ii) Has household income for the 

taxable year that does not exceed 300 

percent of the FPL. 

(2) The Exchange may only provide 

cost-sharing reductions to an individual 

who is an Indian if he or she is enrolled 

in a QHP through the Exchange. 

(b) Special cost-sharing rule for 

Indians regardless of income. The 

Exchange must determine an applicant 

eligible for the special cost-sharing rule 

described in section 1402(d)(2) of the 

Affordable Care Act if he or she is an 

Indian, without requiring the applicant 

to request an eligibility determination 

for cost-sharing reductions in 

accordance with § 155.310(b) of this 

subpart in order to qualify for this rule. 

(c) Verification related to Indian 

status. To the extent that an applicant 

attests that he or she is an Indian, the 

Exchange must verify such attestation 

by— 

(1) Utilizing any relevant 

documentation verified in accordance 

with § 155.315(e) of this subpart; 

(2) Relying on any electronic data 

sources that are available to the 

Exchange and which have been 

approved by HHS for this purpose, 

based on evidence showing that such 

data sources are sufficiently accurate 

and offer less administrative complexity 

than paper verification; or 

(3) To the extent that approved data 

sources are unavailable, an individual is 

not represented in available data 

sources, or data sources conflict with an 

applicant’s attestation, the Exchange 

must follow the procedures specified in 

§ 155.315(e) of this subpart and verify 

documentation provided by the 

applicant in accordance with the 

standards for acceptable documentation 

provided in section 1903(x)(3)(B)(v) of 

the Social Security Act. 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS3
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules 51237 

§ 155.355 Right to appeal. 

(a) Individual appeals. The Exchange 

must include the notice of the right to 

appeal and instructions regarding how 

to file an appeal in any determination 

notice issued to the applicant pursuant 

to § 155.310(f), § 155.330(d), or 

§ 155.335(h) of this subpart. 

(b) [Reserved] 

2. Part 157 is added as follows: 

PART 157—EMPLOYER 

INTERACTIONS WITH EXCHANGES 

AND SHOP PARTICIPATION 

Subpart A—General Provisions 

Sec. 

157.10 Basis and scope. 

157.20 Definitions. 

Subpart B—[Reserved] 

Subpart C—Standards for Qualified 

Employers 

157.200 Eligibility of qualified employers to 

participate in a SHOP. 

157.205 Qualified employer participation 

process in a SHOP. 

Authority: Title I of the Affordable Care 

Act, Sections 1311, 1312, 1321, 1411, 1412. 

Subpart A—General Provisions 

§ 157.10 Basis and scope. 

(a) Basis. This part is based on the 

following sections of title I of the 

Affordable Care Act: 

1311. Affordable choices of health 

benefits plans. 

1312. Consumer Choice. 

1321. State flexibility in operation 

and enforcement of Exchanges and 

related requirements. 

1411. Procedures for determining 

eligibility for Exchange participation, 

advance payments of the premium tax 

credit and cost-sharing reductions, and 

individual responsibility exemptions. 

1412. Advance determination and 

payment of the premium tax credit and 

cost-sharing reductions. 

(b) Scope. This part establishes the 

requirements for employers in 

connection with the operation of 

Exchanges. 

§ 157.20 Definitions. 

The following definitions apply to 

this part, unless otherwise indicated: 

Qualified employee has the meaning 

given to the term in § 155.20. 

Qualified employer has the meaning 

given to the term in § 156.20. 

Small employer has the meaning 

given to the term in § 155.20. 

Subpart B—[Reserved] 

Subpart C—Standards for Qualified 

Employers 

§ 157.200 Eligibility of qualified employers 

to participate in a SHOP. 

(a) General requirement. Only a 

qualified employer may participate in 

the SHOP in accordance with 45 CFR 

155.710. 

(b) Continuing participation for 

growing small employers. A qualified 

employer may continue to participate in 

the SHOP if it ceases to be a small 

employer pursuant to 45 CFR 155.710. 

(c) Participation in multiple SHOPs. A 

qualified employer may participate in 

multiple SHOPs pursuant to 45 CFR 

155.710. 

§ 157.205 Qualified employer participation 

process in a SHOP. 

(a) General requirements. When 

joining the SHOP, a qualified employer 

must comply with the requirements, 

processes, and timelines set forth by this 

part and must remain in compliance for 

the duration of the employer’s 

participation in the SHOP. 

(b) Selecting QHPs. During an election 

period, a qualified employer may make 

coverage in a QHP available through the 

SHOP in accordance with the processes 

developed by the SHOP pursuant to 45 

CFR 155.705. 

(c) Information dissemination to 

employees. A qualified employer 

participating in the SHOP must 

disseminate information to its qualified 

employees about the process to enroll in 

a QHP through the SHOP. 

(d) Payment. A qualified employer 

must submit any contribution towards 

the premiums of any qualified employee 

according to the standards and 

processes described in 45 CFR 155.705. 

(e) Employees hired outside of the 

initial or annual open enrollment 

period. Qualified employers must 

provide employees hired outside of the 

initial or annual open enrollment period 

with a specified period to seek coverage 

in a QHP beginning on the first day of 

employment and information about the 

enrollment process pursuant to 45 CFR 

155.725. 

(f) New employees and changes in 

employee eligibility. Qualified 

employers participating in the SHOP 

must provide the SHOP with 

information about individuals or 

employees whose eligibility status for 

coverage purchased through the 

employer in the SHOP has changed, 

including: 

(1) Newly eligible individuals and 

employees; and 

(2) Loss of qualified employee status. 

(g) Annual employer election period. 

Qualified employers must adhere to the 

annual employer election period to 

change the program participation for the 

next plan year described in 45 CFR 

155.725(c). 

(h) Employer participation renewal. If 

a qualified employer does not take 

action during the annual employer 

election period, and remains eligible to 

continue participating in the SHOP, 

such qualified employer will, for the 

next plan year, continue to offer the 

same plan, coverage level (as defined by 

section 1302(d)(1) of the Affordable Care 

Act), or combination of plans at the 

same contribution level as selected 

during the previous year, if such options 

remain available. 

(Catalog of Federal Domestic Assistance 

Program No. 93.773, Medicare—Hospital 

Insurance; and Program No. 93.774, 

Medicare—Supplementary Medical 

Insurance Program) 

Dated: August 4, 2011. 

Donald M. Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: August 9, 2011 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2011–20776 Filed 8–12–11; 8:45 am] 

BILLING CODE 4120–01–P 


Emcdonald on DSK2BSOYB1PROD with PROPOSALS3