Federal Register / Vol. 78, No. 55 / Thursday, March 21, 2013 / Proposed Rules 17313 

• OAR 340–200 General Air 

Pollution Procedures and Definitions 

• OAR 340–204 Designation of Air 

Quality Areas 

• OAR 340–216 Air Contaminant 

Discharge Permits 

EPA analysis: The regulations cited by 

the State were previously approved on 

December 27, 2011 (76 FR 80747), and 

provide for consultation and 

participation in SIP development by 

local political subdivisions affected by 

the SIP. Therefore the EPA proposes to 

find that the State’s SIP meets the 

requirements of CAA section 

110(a)(2)(M) for the 1997 PM2.5, 2006 

PM2.5, and 2008 ozone NAAQS. 

VI. Scope of Proposed Action 

Oregon has not demonstrated 

authority to implement and enforce the 

Oregon Administrative rules within 

‘‘Indian Country’’ as defined in 18 

U.S.C. 1151. ‘‘Indian country’’ is 

defined under 18 U.S.C. 1151 as: (1) All 

land within the limits of any Indian 

reservation under the jurisdiction of the 

United States Government, 

notwithstanding the issuance of any 

patent, and including rights-of-way 

running through the reservation, (2) all 

dependent Indian communities within 

the borders of the United States, 

whether within the original or 

subsequently acquired territory thereof, 

and whether within or without the 

limits of a State, and (3) all Indian 

allotments, the Indian titles to which 

have not been extinguished, including 

rights-of-way running through the same. 

Under this definition, the EPA treats as 

reservations trust lands validly set aside 

for the use of a Tribe even if the trust 

lands have not been formally designated 

as a reservation. Therefore, this SIP 

approval does not extend to ‘‘Indian 

Country’’ in Oregon. See CAA sections 

110(a)(2)(A) (SIP shall include 

enforceable emission limits), 

110(a)(2)(E)(i) (State must have adequate 

authority under State law to carry out 

SIP), and 172(c)(6) (nonattainment SIPs 

shall include enforceable emission 

limits). 

VII. Proposed Action 

The EPA is proposing to find that the 

Federally-approved provisions currently 

in the Oregon SIP meet the following 

CAA section 110(a)(2) infrastructure 

elements for the 1997 PM2.5, 2006 PM2.5, 

and the 2008 ozone NAAQS: (A), (B), 

(C), (D)(ii), (E), (F), (G), (H), (J), (K), (L), 

and (M). The EPA is also proposing to 

find that the Federally-approved 

provisions currently in the Oregon SIP 

meet the requirements of CAA section 

110(a)(2)(D)(i)(II) as it applies to 

prevention of significant deterioration 

for the 2008 ozone NAAQS, and CAA 

section 110(a)(2)(D)(i)(II) as it applies to 

visibility for the 2006 PM2.5 and 2008 

ozone NAAQS. This action does not 

propose to approve any additional 

provisions into the Oregon SIP but is a 

proposed finding that the current 

provisions of the Oregon SIP are 

adequate to satisfy the above-mentioned 

infrastructure elements required by the 

CAA. This action is being taken under 

section 110 of the CAA. 

VIII. Statutory and Executive Order 

Reviews 

Under the CAA, the Administrator is 

required to approve a SIP submission 

that complies with the provisions of the 

Act and applicable Federal regulations. 

42 U.S.C. 7410(k); 40 CFR 52.02(a). 

Thus, in reviewing SIP submissions, the 

EPA’s role is to approve state choices, 

provided that they meet the criteria of 

the CAA. Accordingly, this proposed 

action merely approves the state’s law 

as meeting Federal requirements and 

does not impose additional 

requirements beyond those imposed by 

the state’s law. For that reason, this 

proposed action: 

• Is not a ‘‘significant regulatory 

action’’ subject to review by the Office 

of Management and Budget under 

Executive Order 12866 (58 FR 51735, 

October 4, 1993); 

• does not impose an information 

collection burden under the provisions 

of the Paperwork Reduction Act (44 

U.S.C. 3501 et seq.); 

• is certified as not having a 

significant economic impact on a 

substantial number of small entities 

under the Regulatory Flexibility Act (5 

U.S.C. 601 et seq.); 

• does not contain any unfunded 

mandate or significantly or uniquely 

affect small governments, as described 

in the Unfunded Mandates Reform Act 

of 1995 (Pub. L. 104–4); 

• does not have Federalism 

implications as specified in Executive 

Order 13132 (64 FR 43255, August 10, 

1999); 

• is not an economically significant 

regulatory action based on health or 

safety risks subject to Executive Order 

13045 (62 FR 19885, April 23, 1997); 

• is not a significant regulatory action 

subject to Executive Order 13211 (66 FR 

28355, May 22, 2001); 

• is not subject to requirements of 

Section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (15 U.S.C. 272 note) because 

application of those requirements would 

be inconsistent with the CAA; and 

• does not provide the EPA with the 

discretionary authority to address, as 

appropriate, disproportionate human 

health or environmental effects, using 

practicable and legally permissible 

methods, under Executive Order 12898 

(59 FR 7629, February 16, 1994). 

In addition, this rule does not have 

tribal implications as specified by 

Executive Order 13175 (65 FR 67249, 

November 9, 2000), because the SIP is 

not approved to apply in Indian country 

located in Oregon, and the EPA notes 

that it will not impose substantial direct 

costs on tribal governments or preempt 

tribal law. 

List of Subjects in 40 CFR Part 52 

Environmental protection, Air 

pollution control, Incorporation by 

reference, Intergovernmental relations, 

Ozone, Particulate Matter, and 

Reporting and recordkeeping 

requirements. 

Authority: 42 U.S.C. 7401 et seq. 

Dated: March 6, 2013. 

Dennis J. McLerran, 

Regional Administrator, Region 10. 

[FR Doc. 2013–06309 Filed 3–20–13; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 54 

[REG–122706–12] 

RIN 1545–BL50 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2590 

RIN 1210–AB56 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Parts 144, 146, and 147 

[CMS–9952–P] 

RIN 0938–AR77 

Ninety-Day Waiting Period Limitation 

and Technical Amendments to Certain 

Health Coverage Requirements Under 

the Affordable Care Act 

AGENCY: Internal Revenue Service, 

Department of the Treasury; Employee 

Benefits Security Administration, 

Department of Labor; Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services. 

ACTION: Proposed rules. 


wreier-aviles on DSK5TPTVN1PROD with PROPOSALS
17314 Federal Register / Vol. 78, No. 55 / Thursday, March 21, 2013 / Proposed Rules 

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

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

100 of the Code, and is distinct from the term 

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

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

does not include self-insured group health plans. 

2 26 CFR 54.9801–3(a)(3)(iii), 29 CFR 2590.701– 

3(a)(3)(iii), and 45 CFR 146.111(a)(3)(iii). 

3 Department of Labor Technical Release 2012– 

01, IRS Notice 2012–17, and HHS FAQs issued 

February 9, 2012. 

SUMMARY: These proposed rules 

implement the 90-day waiting period 

limitation under section 2708 of the 

Public Health Service Act, as added by 

the Patient Protection and Affordable 

Care Act (Affordable Care Act), as 

amended, and incorporated into the 

Employee Retirement Income Security 

Act of 1974 and the Internal Revenue 

Code. They also propose amendments to 

regulations to conform to Affordable 

Care Act provisions already in effect as 

well as those that will become effective 

beginning 2014. The proposed 

conforming amendments make changes 

to existing requirements such as 

preexisting condition limitations and 

other portability provisions added by 

the Health Insurance Portability and 

Accountability Act of 1996 (HIPAA) and 

implementing regulations because they 

have become moot or need amendment 

due to new market reform protections 

under the Affordable Care Act. 

DATES: Comments are due on or before 

May 20, 2013. 

ADDRESSES: Written comments may be 

submitted to the Department of Labor as 

specified below. Any comment that is 

submitted will be shared with the other 

Departments and will also be made 

available to the public. Warning: Do not 

include any personally identifiable 

information (such as name, address, or 

other contact information) or 

confidential business information that 

you do not want publicly disclosed. All 

comments may be posted on the Internet 

and can be retrieved by most Internet 

search engines. No deletions, 

modifications, or redactions will be 

made to the comments received, as they 

are public records. Comments may be 

submitted anonymously. 

Comments, identified by ‘‘Waiting 

Periods’’, may be submitted by one of 

the following methods: 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Mail or Hand Delivery: Office of 

Health Plan Standards and Compliance 

Assistance, Employee Benefits Security 

Administration, Room N–5653, U.S. 

Department of Labor, 200 Constitution 

Avenue NW., Washington, DC 20210, 

Attention: Waiting Periods. 

Comments received will be posted 

without change to www.regulations.gov 

and available for public inspection at 

the Public Disclosure Room, N–1513, 

Employee Benefits Security 

Administration, 200 Constitution 

Avenue NW., Washington, DC 20210, 

including any personal information 

provided. 

FOR FURTHER INFORMATION CONTACT: 

Amy Turner or Elizabeth Schumacher, 

Employee Benefits Security 

Administration, Department of Labor, at 

(202) 693–8335; Karen Levin or Kathryn 

Johnson, Internal Revenue Service, 

Department of the Treasury, at (202) 

927–9639; or Cam Moultrie Clemmons, 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, at (410) 786–1565. 

Customer service information: 

Individuals interested in obtaining 

information from the Department of 

Labor concerning employment-based 

health coverage laws may call the EBSA 

Toll-Free Hotline at 1–866–444–EBSA 

(3272) or visit the Department of Labor’s 

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

addition, information from HHS on 

private health insurance for consumers 

can be found on the Centers for 

Medicare & Medicaid Services (CMS) 

Web site (www.cciio.cms.gov/) and 

information on health reform can be 

found at www.HealthCare.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Patient Protection and Affordable 

Care Act, Public Law 111–148, was 

enacted on March 23, 2010, and the 

Health Care and Education 

Reconciliation Act, Public Law 111– 

152, was enacted on March 30, 2010. 

(They are collectively known as the 

‘‘Affordable Care Act’’.) The Affordable 

Care Act reorganizes, amends, and adds 

to the provisions of part A of title XXVII 

of the Public Health Service Act (PHS 

Act) relating to group health plans and 

health insurance issuers in the group 

and individual markets. The term 

‘‘group health plan’’ includes both 

insured and self-insured group health 

plans.1 The Affordable Care Act adds 

section 715(a)(1) to the Employee 

Retirement Income Security Act (ERISA) 

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

Revenue Code (the Code) to incorporate 

the provisions of part A of title XXVII 

of the PHS Act into ERISA and the 

Code, and to make them applicable to 

group health plans and health insurance 

issuers providing health insurance 

coverage in connection with group 

health plans. The PHS Act sections 

incorporated by these references are 

sections 2701 through 2728. 

PHS Act section 2708, as added by the 

Affordable Care Act and incorporated 

into ERISA and the Code, provides that 

a group health plan or health insurance 

issuer offering group health insurance 

coverage shall not apply any waiting 

period (as defined in PHS Act section 

2704(b)(4)) that exceeds 90 days. PHS 

Act section 2704(b)(4), ERISA section 

701(b)(4), and Code section 9801(b)(4) 

define a waiting period to be the period 

that must pass with respect to an 

individual before the individual is 

eligible to be covered for benefits under 

the terms of the plan. In 2004 

regulations implementing the Health 

Insurance Portability and 

Accountability Act of 1996 (HIPAA) 

portability provisions (2004 HIPAA 

regulations), the Departments of Labor, 

Health and Human Services, and the 

Treasury (the Departments) defined a 

waiting period to mean the period that 

must pass before coverage for an 

employee or dependent who is 

otherwise eligible to enroll under the 

terms of a group health plan can become 

effective.2 PHS Act section 2708 applies 

to both grandfathered and nongrandfathered group health plans and 

group health insurance coverage for 

plan years beginning on or after January 

1, 2014. 

PHS Act section 2708 does not require 

an employer to offer coverage to any 

particular employee or class of 

employees, including part-time 

employees. PHS Act section 2708 

merely prevents an otherwise eligible 

employee (or dependent) from being 

required to wait more than 90 days 

before coverage becomes effective. 

Furthermore, nothing in the Affordable 

Care Act penalizes small employers for 

choosing not to offer coverage, or 

applicable large employers, as defined 

in the employer shared responsibility 

provisions under Code section 4980H, 

for choosing to limit their offer of 

coverage to full-time employees (and 

their dependents), as defined in the 

employer shared responsibility 

provisions under Code section 4980H. 

On February 9, 2012, the Departments 

issued guidance 3 outlining various 

approaches under consideration with 

respect to both the 90-day waiting 

period limitation and the employer 

shared responsibility provisions under 

Code section 4980H (February 2012 

guidance). Public comments were 

invited generally, as well as specifically, 

regarding how rules relating to the 

potential look-back/stability period safe 

harbor method for determining the 

number of full-time employees under 

Code section 4980H should be 

coordinated with the 90-day waiting 

period limitation. 


wreier-aviles on DSK5TPTVN1PROD with PROPOSALS
Federal Register / Vol. 78, No. 55 / Thursday, March 21, 2013 / Proposed Rules 17315 

4 Department of Labor Technical Release 2012– 

02, IRS Notice 2012–59, and HHS FAQs issued 

August 31, 2012. 

5The August 2012 guidance provides that an 

employer may use a measurement period that is 

consistent with Code section 4980H, whether or not 

it is an applicable large employer subject to Code 

section 4980H. 

6 26 CFR 54.9801–6, 29 CFR 2590.701–6, and 45 

CFR 146.117. 

7While a substantive eligibility condition that 

denies coverage for employees may be permissible 

under PHS Act section 2708, an applicable large 

employer’s denial of coverage to a full-time 

employee may, nonetheless, give rise to an 

assessable payment under section 4980H of the 

Code and its implementing regulations. 

On August 31, 2012, following their 

review of the comments on the February 

2012 guidance, the Departments 

provided temporary guidance,4 to 

remain in effect at least through the end 

of 2014, regarding the 90-day waiting 

period limitation, and described the 

approach they intended to propose in 

rulemaking in the future (August 2012 

guidance). The August 2012 guidance 

provides that employers, plans, and 

issuers may rely on the compliance 

guidance at least through the end of 

2014 and that, for purposes of 

enforcement by the Departments, 

compliance with the approach set forth 

in the August 2012 guidance will be 

considered compliance with the 

provisions of PHS Act section 2708 at 

least through the end of 2014. 

In general, the August 2012 guidance 

provides, among other things, that 

eligibility conditions based solely on the 

lapse of a time period are permissible 

for no more than 90 days. Other 

conditions for eligibility under the 

terms of a group health plan are 

generally permissible under PHS Act 

section 2708, unless the condition is 

designed to avoid compliance with the 

90-day waiting period limitation. The 

August 2012 guidance further clarifies 

that if, under the terms of a plan, an 

employee may elect coverage that would 

begin on a date that does not exceed the 

90-day waiting period limitation, the 90- 

day waiting period limitation is 

considered satisfied and, accordingly, a 

plan or issuer will not be considered to 

have violated PHS Act section 2708 

solely because employees may take 

additional time to elect coverage. 

The August 2012 guidance also 

addresses the application of PHS Act 

section 2708 to variable-hour employees 

in cases in which a specified number of 

hours of service per period is a plan 

eligibility condition. Specifically, the 

guidance provides that if a group health 

plan conditions eligibility on an 

employee regularly working a specified 

number of hours per period (or working 

full-time), and it cannot be determined 

that a newly-hired employee is 

reasonably expected to regularly work 

that number of hours per period (or 

work full-time), the plan may take a 

reasonable period of time to determine 

whether the employee meets the plan’s 

eligibility condition, which may include 

a measurement period that is consistent 

with the timeframe permitted for such 

determinations under Code section 

4980H.5 Except in cases in which a 

waiting period that exceeds 90 days is 

imposed in addition to a measurement 

period, the time period for determining 

whether such an employee meets the 

plan’s eligibility condition will not be 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if coverage is made 

effective no later than 13 months from 

the employee’s start date, plus if the 

employee’s start date is not the first day 

of a calendar month, the time remaining 

until the first day of the next calendar 

month. 

The August 2012 guidance also 

addresses application of the rules to 

plans with cumulative hours-of-service 

requirements. The August 2012 

guidance includes an example stating 

that, if a plan’s cumulative hours-ofservice requirement is more than 1,200 

hours, the Departments would consider 

the requirement to be designed to avoid 

compliance with the 90-day waiting 

period limitation. 

After consideration of all of the 

comments received in response to the 

February 2012 guidance and in response 

to the August 2012 guidance, the 

Departments are proposing these 

regulations. Public comments on these 

proposed regulations are invited. 

II. Overview of the Proposed 

Regulations 

A. Prohibition on Waiting Periods That 

Exceed 90 Days 

These regulations propose that a 

group health plan, and a health 

insurance issuer offering group health 

insurance coverage, not apply any 

waiting period that exceeds 90 days. 

(Neither a plan nor an issuer offering 

coverage is required to have any waiting 

period.) If, under the terms of the plan, 

an employee can elect coverage that 

becomes effective on a date that does 

not exceed the 90-day waiting period 

limitation, the coverage complies with 

the waiting period rules, and the plan or 

issuer will not be considered to violate 

the waiting period rules merely because 

individuals choose to elect coverage 

beyond the end of the 90-day waiting 

period. 

In these proposed regulations, the 

definition of waiting period is the same 

as that used in the 2004 HIPAA 

regulations. (However, the definition is 

proposed to be moved from the section 

on preexisting condition exclusions to 

this section. See below for an 

explanation of other technical and 

conforming changes proposed to be 

made to the 2004 HIPAA regulations.) 

Accordingly, under these proposed 

regulations, waiting period would 

continue to be defined as the period that 

must pass before coverage for an 

employee or dependent who is 

otherwise eligible to enroll under the 

terms of a group health plan can become 

effective. These proposed regulations 

would also continue to include the 

clarification that, if an employee or 

dependent enrolls as a late enrollee or 

special enrollee, any period before such 

late or special enrollment is not a 

waiting period. The effective date of 

coverage for special enrollees continues 

to be that set forth in the Departments’ 

2004 HIPAA regulations governing 

special enrollment.6

Paragraph (c) of the proposed 

regulations sets forth rules governing 

the relationship between a plan’s 

eligibility criteria and the 90-day 

waiting period limitation. Specifically, 

this paragraph provides that being 

otherwise eligible to enroll in a plan 

means having met the plan’s substantive 

eligibility conditions (such as being in 

an eligible job classification or 

achieving job-related licensure 

requirements specified in the plan’s 

terms). However, the 90-day waiting 

period limitation generally does not 

require the plan sponsor to offer 

coverage to any particular employee or 

class of employees (including, for 

example, part-time employees). Instead, 

these proposed regulations would 

prohibit requiring otherwise eligible 

participants and beneficiaries to wait 

more than 90 days before coverage is 

effective.7

Under these proposed regulations, 

eligibility conditions that are based 

solely on the lapse of a time period 

would be permissible for no more than 

90 days. Other conditions for eligibility 

under the terms of a group health plan 

(i.e., those that are not based solely on 

the lapse of a time period) are generally 

permissible under PHS Act section 2708 

and these proposed regulations unless 

the condition is designed to avoid 

compliance with the 90-day waiting 

period limitation. 

These regulations propose an 

approach when applying waiting 

periods to variable-hour employees in 


wreier-aviles on DSK5TPTVN1PROD with PROPOSALS
17316 Federal Register / Vol. 78, No. 55 / Thursday, March 21, 2013 / Proposed Rules 

8While a cumulative hours-of-service eligibility 

condition up to 1,200 hours may be permissible 

under PHS Act section 2708, an applicable large 

employer’s denial of coverage to a full-time 

employee may, nonetheless, give rise to an 

assessable payment under section 4980H of the 

Code and its implementing regulations. 

cases in which a specified number of 

hours of service per period (such as 30 

hours per week or 250 hours per 

quarter) is a plan eligibility condition. 

Under these proposed regulations, if a 

group health plan conditions eligibility 

on an employee regularly having a 

specified number of hours of service per 

period (or working full-time), and it 

cannot be determined that a newlyhired employee is reasonably expected 

to regularly work that number of hours 

per period (or work full-time), the plan 

may take a reasonable period of time to 

determine whether the employee meets 

the plan’s eligibility condition, which 

may include a measurement period of 

no more than 12 months that begins on 

any date between the employee’s start 

date and the first day of the first 

calendar month following the 

employee’s start date. (This is consistent 

with the timeframe permitted for such 

determinations under Code section 

4980H and its implementing 

regulations.) Except for cases in which 

a waiting period that exceeds 90 days is 

imposed in addition to a measurement 

period, the time period for determining 

whether a variable-hour employee meets 

the plan’s hours of service per period 

eligibility condition will not be 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if coverage is made 

effective no later than 13 months from 

the employee’s start date, plus if the 

employee’s start date is not the first day 

of a calendar month, the time remaining 

until the first day of the next calendar 

month. 

Some commenters requested 

clarification regarding employees with 

specific or unique work schedules, and 

whether they would be treated as 

variable-hour employees. In this regard, 

unlike the rules under Code section 

4980H, whether an employee has been 

appropriately classified as part-time, 

full-time, or variable-hour is of limited 

application under PHS Act section 

2708. That is, conditions for eligibility 

under the terms of a group health plan 

are generally permissible under PHS Act 

section 2708, unless based solely on the 

lapse of time or designed to avoid 

compliance with the 90-day waiting 

period limitation. Accordingly, plan 

provisions that base eligibility on 

whether an employee is, for example, 

meeting certain sales goals or earning a 

certain level of commission, are 

generally substantive eligibility 

provisions that do not trigger the 90-day 

waiting period limitation. Some plan 

eligibility provisions, such as whether 

an employee has a specified number of 

hours of service per period (such as 30 

hours per week or 250 hours per 

quarter) necessarily require the passage 

of time in order to determine whether 

the plan’s substantive eligibility 

provision has been met. These proposed 

regulations set forth an approach under 

which such plan provisions will not be 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation. However, whether a 

particular employee is classified 

appropriately as part-time, full-time, or 

variable-hour is generally not an issue 

under PHS Act section 2708, although 

other provisions of law (such as Code 

section 4980H, the HIPAA 

nondiscrimination provisions, and other 

provisions of ERISA) may be applicable. 

Another type of plan eligibility 

provision addressed in the August 2012 

guidance was cumulative hours-ofservice requirements, which use more 

than solely the passage of a time period 

in determining whether employees are 

eligible for coverage. Specifically, the 

August 2012 guidance included an 

example stating that if a plan’s 

cumulative hours-of-service 

requirement were more than 1,200 

hours, the Departments would consider 

the requirement to be designed to avoid 

compliance with the 90-day waiting 

period limitation. Under these proposed 

regulations, if a group health plan or 

health insurance issuer conditions 

eligibility on any employee’s (part-time 

or full-time) having completed a number 

of cumulative hours of service, the 

eligibility condition is not considered to 

be designed to avoid compliance with 

the 90-day waiting period limitation if 

the cumulative hours-of-service 

requirement does not exceed 1,200 

hours.8 Under the proposed rules, the 

plan’s waiting period must begin once 

the new employee satisfies the plan’s 

cumulative hours-of-service 

requirement and may not exceed 90 

days. Furthermore, this provision is 

designed to be a one-time eligibility 

requirement only; these proposed 

regulations do not permit, for example, 

re-application of such a requirement to 

the same individual each year. 

In response to the August 2012 

guidance, some commenters requested 

clarification regarding application of the 

rule to plan provisions that require 

employees to work sufficient number of 

hours per measurement period but 

permit employees, if they do not have 

a sufficient number of hours, to make a 

self-payment (or buy-in) equal to the 

amount which would allow them to 

have a sufficient number of hours 

within the measurement period. PHS 

Act section 2708 and these proposed 

regulations do not prohibit plan 

procedures permitting self-payment (or 

buy-in) to satisfy any otherwise 

permissible hours-of-service 

requirement. 

Some commenters raised concerns 

about communication between a plan 

and issuer regarding the 90-day 

limitation on waiting periods. 

Commenters stated that many issuers 

rely on the plan sponsor for information 

about an individual’s eligibility for 

coverage and that issuers may not have 

knowledge of certain plan terms, such 

as eligibility conditions and waiting 

periods. These commenters expressed 

concern that health insurance issuers 

are required to comply with the 

requirements of PHS Act section 2708, 

but must rely on the information plan 

sponsors and employers report to them 

regarding eligibility information such as 

an employee’s start date. At the same 

time, small employers purchasing 

insurance coverage often rely on their 

issuers for compliance assistance. 

Therefore, while the requirements of 

PHS Act section 2708 and these 

proposed regulations would be 

applicable to both the plan and issuer, 

to the extent coverage under a group 

health plan is insured by a health 

insurance issuer, paragraph (f) of the 

proposed regulations would provide 

that the issuer can rely on the eligibility 

information reported to it by an 

employer (or other plan sponsor) and 

will not be considered to violate the 

requirements of these proposed 

regulations in administering the 90-day 

waiting period limitation if the issuer 

requires the plan sponsor to make a 

representation regarding the terms of 

any eligibility conditions or waiting 

periods imposed by the plan sponsor 

before an individual is eligible to 

become covered under the terms of the 

employer’s plan (and requires the plan 

sponsor to update this representation 

with any changes), and the issuer has no 

specific knowledge of the imposition of 

a waiting period that would exceed the 

permitted 90-day period. 

Paragraph (d) of the proposed 

regulations clarifies the method for 

counting days when applying a 90-day 

waiting period. Some commenters 

stated that it is common practice to have 

a 90-day waiting period with coverage 

effective the first day of the month after 

the 90-day waiting period and requested 

flexibility for administrative ease. 

Others requested the Departments to 

create a de minimis exception for the 


wreier-aviles on DSK5TPTVN1PROD with PROPOSALS
Federal Register / Vol. 78, No. 55 / Thursday, March 21, 2013 / Proposed Rules 17317 

9See 26 CFR 54.9801–3(a)(3)(i); 29 CFR 

2590.701–3(a)(3)(i); and 45 CFR 146(a)(3)(i), which 

would be moved under these proposed rules to 26 

CFR 54.9801–2; 29 CFR 2590.701–2; and 45 CFR 

144.103. 

10Affordable Care Act section 1201 also moved 

those provisions from PHS Act section 2701 to PHS 

Act section 2704. 

11 75 FR 37188 (June 28, 2010). 

12 75 FR 37188 (June 28, 2010). 

13 75 FR 27122 (May 13, 2010). 

difference between 90 days and 3 

months. Under these proposed 

regulations, due to the clear text of the 

statute, the waiting period may not 

extend beyond 90 days and all calendar 

days are counted beginning on the 

enrollment date, including weekends 

and holidays. For a plan with a waiting 

period, ‘‘enrollment date’’ is defined as 

the first day of the waiting period.9 If, 

with respect to a plan or issuer 

imposing a 90-day waiting period, the 

91st day is a weekend or holiday, the 

plan or issuer may choose to permit 

coverage to be effective earlier than the 

91st day, for administrative 

convenience. However, a plan or issuer 

may not make the effective date of 

coverage later than the 91st day. 

The Departments recognize that 

multiemployer plans maintained 

pursuant to collective bargaining 

agreements have unique operating 

structures and may include different 

eligibility conditions based on the 

participating employer’s industry or the 

employee’s occupation. For example, 

some comments received on the August 

2012 guidance gave examples of plan 

eligibility provisions based on complex 

formulas for earnings and residuals. As 

discussed earlier, the Departments view 

eligibility provisions that are based on 

compensation as substantive eligibility 

provisions that are not designed to 

avoid compliance with the 90-day 

waiting period limitation. In addition, 

hours banks, which are common 

multiemployer plan provisions that 

allow workers to bank excess hours 

from one measurement period and then 

draw down on them to compensate for 

any shortage in a succeeding 

measurement period and prevent lapses 

in coverage, function as buy-in 

provisions, which were discussed 

earlier as permissible. It is the 

Departments’ view that the proposed 

rules provide flexibility to both 

multiemployer and single-employer 

health plans to meet their needs in 

defining eligibility criteria, while also 

ensuring that employees are protected 

from excessive waiting periods. 

Comments are invited on these 

proposed rules and on whether any 

additional examples or provisions are 

needed to address multiemployer plans. 

These proposed regulations generally 

would apply for plan years beginning on 

or after January 1, 2014, consistent with 

the statutory effective date of PHS Act 

section 2708. The rules would apply to 

both grandfathered and nongrandfathered group health plans and 

health insurance issuers offering group 

health insurance coverage. As with the 

applicability of the 2004 HIPAA 

regulations, with respect to individuals 

who are in a waiting period for coverage 

before the applicability date, beginning 

on the first day these rules apply to the 

plan, any waiting period can no longer 

apply in a manner that exceeds 90 days. 

However, as discussed below, the 

proposed amendment to eliminate the 

requirement to issue a certificate of 

creditable coverage is proposed to apply 

December 31, 2014, so that individuals 

needing to offset a preexisting condition 

exclusion under a plan that operates 

with a plan year beginning later than 

January 1 would still have access to the 

certificate for proof of coverage. 

Comments are invited on these 

proposed applicability dates. 

The August 2012 guidance provided 

that group health plans and health 

insurance issuers may rely on the 

compliance guidance through at least 

the end of 2014. In the Departments’ 

view, these proposed regulations are 

consistent with, and no more restrictive 

on employers than, the August 2012 

guidance. Therefore, the Departments 

will consider compliance with these 

proposed regulations as compliance 

with PHS Act section 2708 at least 

through the end of 2014. (However, for 

changes outside of PHS Act section 

2708 made to existing HIPAA 

regulations, such as the elimination of 

the requirement to provide a certificate 

of creditable coverage, the existing 

HIPAA regulations continue to apply 

until amended in new final regulations.) 

To the extent final regulations or other 

guidance with respect to the 90-day 

waiting period limitation is more 

restrictive on plans and issuers than 

these proposed regulations, the final 

regulations or other guidance will not be 

effective prior to January 1, 2015. 

B. Conforming Changes to Existing 

Regulations 

Sections 9801 of the Code and 701 of 

ERISA, and section 2701 of the PHS Act 

as originally added by HIPAA included 

requirements pertaining to the 

application of preexisting condition 

exclusions and waiting periods, as well 

as methods of crediting coverage. Final 

regulations implementing Code section 

9801, ERISA section 701, and PHS Act 

section 2701 (as originally added by 

HIPAA) were adopted in 2004. The 2004 

HIPAA regulations permit limited 

exclusions of coverage based on a 

preexisting condition under certain 

circumstances. PHS Act section 2704, 

added by the Affordable Care Act and 

incorporated into ERISA and the Code, 

amends the HIPAA requirements 

relating to preexisting conditions to 

provide that a group health plan and a 

health insurance issuer offering group or 

individual health insurance coverage 

may not impose any preexisting 

condition exclusion.10 PHS Act section 

2704 and the interim final regulations 

implementing that section are generally 

effective with respect to plan years (in 

the individual market, policy years) 

beginning on or after January 1, 2014, 

but for enrollees who are under 19 years 

of age, this prohibition became effective 

for plan years (in the individual market, 

policy years) beginning on or after 

September 23, 2010.11 Therefore, these 

proposed regulations would amend the 

2004 HIPAA regulations implementing 

Code sections 9801, ERISA section 701, 

and PHS Act section 2701 (as originally 

added by HIPAA), to remove provisions 

superseded by the prohibition on 

preexisting conditions under PHS Act 

section 2704 and the implementing 

regulations. Additionally, these 

regulations propose to amend examples 

in 26 CFR Part 54, 29 CFR Part 2590, 

and 45 CFR Parts 144 and 146 to 

conform to other changes made by the 

Affordable Care Act, such as the 

elimination of lifetime and annual 

limits under PHS Act section 2711 and 

its implementing regulations,12 as well 

as the provisions governing dependent 

coverage of children to age 26 under 

PHS Act section 2714 and its 

implementing regulations.13

C. Technical Amendment Relating to 

OPM Multi-State Plan Program and 

External Review 

Section 1334 of the Affordable Care 

Act creates the Multi-State Plan Program 

(MSPP) to foster competition in the 

Affordable Insurance Exchanges 

(Exchanges) and directs the U.S. Office 

of Personnel Management (OPM) to 

contract with private health insurance 

issuers to offer at least two multi-state 

plans (MSPs) on each of the Exchanges 

in the 50 states and the District of 

Columbia. Under Affordable Care Act 

section 1334(a)(4), OPM is to administer 

this program ‘‘in a manner similar to the 

manner in which’’ it implements the 

contracting provisions of the Federal 

Employee Health Benefits Program 

(FEHBP). OPM has interpreted 

Affordable Care Act section 1334(a)(4) 

to require implementation of a uniform, 

nationally applicable external review 


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14OPM published a final rule on establishment of 

the MSPP on March 11, 2013 at 78 FR 15559. 

15The interim final regulations relating to 

internal claims and appeals and external review 

processes are codified at 26 CFR 54.9815–2719T, 29 

CFR 2590.715–2719, and 45 CFR 147.136. These 

requirements do not apply to grandfathered health 

plans. The interim final regulations relating to 

status as a grandfathered health plan are codified 

at 26 CFR 54.9815–1251T, 29 CFR 2590.715–1251, 

and 45 CFR 147.140. 

16The amendments in these proposed regulations 

only seek to address the differences that exist 

between the proposed MSPP external review 

process and the external review requirements for 

group health plans and health insurance issuers. 

While MSPP is also required to comply with the 

requirements related to internal claims and appeals, 

OPM’s proposed process does not differ from the 

internal claims and appeals requirements for group 

health plans and health insurance issuers. 

17More information on the regulatory 

requirements for State external review processes, 

including the regulations, Uniform Health Carrier 

External Review Model Act promulgated by the 

National Association of Insurance Commissioners, 

technical releases, and other guidance, is available 

at http://www.dol.gov/ebsa and http:// 

cciio.cms.gov. 

18More information on the regulatory 

requirements for the Federal external review 

process, including the regulations, technical 

releases, and other guidance, is available at http:// 

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

19We note that this interpretation of section 

2719(b)(2) as applicable to MSPs is supported by 

the fact that Congress directed that the MSPP be 

implemented by OPM, and OPM is not a state. 

20See 45 CFR 800.115(k) and 45 CFR part 800. 

21 45 CFR 800.504(a). See also 78 FR 15559, 

15582–15584 (March 11, 2013), the Preamble to the 

Patient Protection and Affordable Care Act; 

Establishment of the Multi-State Plan Program for 

the Affordable Insurance Exchanges; Final Rule. 

process consistent with the 

requirements of PHS Act section 2719 

for MSPs similar to that administered by 

OPM under FEHBP,14 to ensure that the 

MSPP contract is administered 

consistently throughout all 51 

jurisdictions that would be served by an 

MSP (as FEHBP currently does). 

The ‘‘level playing field’’ requirement 

in section 1324 of the Affordable Care 

Act provides that ‘‘[n]otwithstanding 

any other provision of law,’’ 

requirements under State or Federal law 

in 13 categories (including appeals) 

‘‘shall not’’ apply to ‘‘health insurance 

offered by a private health insurance 

issuer’’ if the requirement does not 

apply to MSPs established under the 

Affordable Care Act. Non-grandfathered 

health insurance coverage is generally 

required to comply with PHS Act 

section 2719 and its implementing 

regulations regarding internal claims 

and appeals and external review 

processes.15 As a result, MSPP plans 

must also so comply, or other nongrandfathered insurance coverage would 

have to be similarly exempted.16

PHS Act section 2719 and its 

implementing regulations provide that 

group health plans and health insurance 

issuers must comply with either a State 

external review process or the Federal 

external review process. Generally, if a 

State has an external review process that 

meets, at a minimum, the consumer 

protections set forth in the interim final 

regulations, then the issuer (or a plan) 

subject to the State process must comply 

with the State process.17 For plans and 

issuers not subject to an existing State 

external review process (including selfinsured plans), a Federal external 

review process applies.18 The statute 

requires the Departments to establish 

standards, ‘‘through guidance,’’ 

governing a Federal external review 

process. Among such guidance that has 

been issued by the Departments, HHS 

has established a Federal external 

review process for self-insured 

nonfederal governmental health plans, 

as well as for plans and issuers in States 

that do not meet the minimum 

consumer protections in the regulations. 

In this rule, the Departments propose 

to clarify that MSPs will be subject to 

the Federal external review process 

under PHS section 2719(b)(2) and 

paragraph (d) of the internal claims and 

appeals and external review regulations. 

In doing so, the Departments interpret 

section 2719(b)(2) to apply to all plans 

not subject to a State’s external review 

process (emphasis added).19 OPM’s 

final rule on the establishment of the 

multi-State plan program 20 requires the 

MSPP external review process to meet 

the requirements of PHS Act section 

2719 and its implementing regulations. 

Additionally, the Departments 

propose to clarify that the scope of the 

Federal external review process, as 

described in paragraph (d)(1)(ii) of the 

regulations, is the minimum required 

scope of claims eligible for external 

review for plans using a Federal 

external review process, and that 

Federal external review processes 

developed in accordance with 

paragraph (d) may have a scope that 

exceeds the minimum requirements. For 

example, OPM stated that the scope of 

the MSP external review process would 

allow for appeals of all disputed 

claims.21 This clarification would 

reiterate that the proposed external 

review process would meet the 

minimum requirement for the scope of 

a Federal external review process under 

the regulations. 

III. Economic Impact and Paperwork 

Burden 

A. Executive Order 12866 and 13563— 

Department of Labor and Department of 

Health and Human Services 

Executive Order 13563 emphasizes 

the importance of quantifying both costs 

and benefits, of reducing costs, of 

harmonizing and streamlining rules, 

and of promoting flexibility. It also 

requires federal agencies to develop a 

plan under which the agencies will 

periodically review their existing 

significant regulations to make the 

agencies’ regulatory programs more 

effective or less burdensome in 

achieving their regulatory objectives. 

Under Executive Order 12866, a 

regulatory action deemed ‘‘significant’’ 

is subject to the requirements of the 

Executive Order and review by the 

Office of Management and Budget 

(OMB). Section 3(f) of the Executive 

Order defines a ‘‘significant regulatory 

action’’ as an action that is likely to 

result in a rule (1) having an annual 

effect on the economy of $100 million 

or more, or adversely and materially 

affecting a sector of the economy, 

productivity, competition, jobs, the 

environment, public health or safety, or 

State, local or tribal governments or 

communities (also referred to as 

‘‘economically significant’’); (2) creating 

serious inconsistency or otherwise 

interfering with an action taken or 

planned by another agency; (3) 

materially altering the budgetary 

impacts of entitlement grants, user fees, 

or loan programs or the rights and 

obligations of recipients thereof; or (4) 

raising novel legal or policy issues 

arising out of legal mandates, the 

President’s priorities, or the principles 

set forth in the Executive Order. 

These proposed regulations are not 

economically significant within the 

meaning of section 3(f)(1) of the 

Executive Order. However, OMB has 

determined that the actions are 

significant within the meaning of 

section 3(f)(4) of the Executive Order. 

Therefore, OMB has reviewed these 

proposed regulations, and the 

Departments have provided the 

following assessment of their impact. 

1. Summary 

As stated earlier in this preamble, 

these proposed regulations would 

implement PHS Act section 2708, which 

provides that a group health plan, and 

a health insurance issuer offering group 

health insurance coverage, may not 

apply any waiting period that exceeds 

90 days. The proposed regulations 

define ‘‘waiting period’’ as the period 

that must pass before coverage for an 


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22As stated earlier, the Departments’ August 2012 

guidance provided that group health plans and 

health insurance issuers may rely on the 

compliance guidance through at least the end of 

2014. In the Departments’ view, these proposed 

regulations are consistent with, and no more 

restrictive on employers than, the August 2012 

guidance. Therefore, the Departments will consider 

compliance with these proposed regulations as 

compliance with PHS Act section 2708 at least 

through the end of 2014. 23This estimate is based upon internal 

Department of Labor calculations derived from the 

2009 Medical Expenditure Panel Survey. 

24See e.g., Kaiser Family Foundation and Health 

Research and Education Trust, Employer Health 

Benefits 2012 Annual Survey (2012) available at 

http://ehbs.kff.org/pdf/2012/8345.pdf. 

25Approximately 331,000 private sector 

employees and 77,000 state and local public sector 

employees. 

26 1,200 hours/40 hours per week = 30 weeks; 30 

weeks *7 days/week = 210 days; 210 days eligibility 

requirement + 90 day wait period = 300 days. 

employee or dependent who is 

otherwise eligible to enroll under the 

terms of a group health plan can become 

effective, which is the same definition 

used in the 2004 HIPAA regulations. 

The proposed regulations would 

generally apply to plan years beginning 

on or after January 1, 2014, consistent 

with the statutory effective date of PHS 

Act section 2708.22

The Departments have crafted these 

proposed regulations to secure the 

protections intended by Congress in an 

economically efficient manner. The 

Departments do not have sufficient data 

to quantify the regulations’ economic 

cost or benefits; therefore, they have 

provided a qualitative discussion of 

their economic impacts and request 

detailed comment and data that would 

allow for quantification of the costs, 

benefits, and transfers that would be 

brought about by the proposed rule. 

2. Estimated Number of Affected 

Entities 

The Departments estimate that 4.1 

million new employees receive group 

health insurance coverage through 

private sector employers and 1.0 million 

new employees receive group health 

insurance coverage through public 

sector employers annually.23 The 2012 

Kaiser Family Foundation and Health 

Research and Education Trust Employer 

Health Benefits Annual Survey (the 

‘‘2012 Kaiser Survey’’) finds that only 

eight percent of covered workers were 

subject to waiting periods of four 

months or more.24 If eight percent of 

new employees receiving health care 

from their employers are subject to a 

waiting period of four months or more, 

then 408,000 new employees (5.1 

million × 0.08) would be affected by this 

rule.25 However, the Departments 

would note that it is unlikely that the 

survey defines the term ‘‘waiting 

period’’ in the same manner as these 

proposed regulations. For example, 

waiting period may have been defined 

by reference to an employee’s start date, 

and it seems unlikely that the 2012 

Kaiser Survey would have included the 

clarifications included in these 

proposed regulations regarding the 

measurement period for variable-hour 

employees or the clarification regarding 

cumulative hours-of-service 

requirements. 

3. Benefits 

Before Congress enacted PHS Act 

section 2708, federal law did not 

prescribe any limits on waiting periods 

for group health insurance coverage. 

If employees delay health care 

treatment until the expiration of a 

prolonged waiting period, detrimental 

health effects can result, especially for 

employees and their dependents 

requiring higher levels of health care, 

such as older Americans, pregnant 

women, young children, and those with 

chronic conditions. This could lead to 

lower work productivity and missed 

school days. Low-wage workers also are 

vulnerable, because they have less 

income to spend out-of-pocket to cover 

medical expenses. The Departments 

anticipate that these proposed 

regulations can help reduce these 

effects, although the overall benefit may 

be limited because—as discussed in 

greater detail below—a small fraction of 

employers are expected to offer earlier 

health insurance coverage as a result of 

these proposed regulations. 

As discussed earlier in this preamble, 

these proposed regulations would 

amend the 2004 HIPAA regulations 

implementing Code sections 9801, 

ERISA section 701, and PHS Act section 

2701 (as originally added by HIPAA) to 

remove provisions superseded by the 

prohibition on preexisting conditions 

under PHS Act section 2704 and the 

implementing regulations. These 

amendments would provide a benefit to 

plans by reducing the burden associated 

with complying with the several 

Paperwork Reduction Act information 

collections that are associated with the 

superseded regulations. For a discussion 

of the affected information collections 

and the estimated cost and burden hour 

reduction, please see the Paperwork 

Reduction Act section, below. 

4. Transfers Associated with the Rule 

The possible transfers associated with 

this proposed rule would arise if 

employers begin to pay their portion of 

health insurance premiums or 

contributions sooner than they did 

before the enactment of PHS Act section 

2708 and issuance of these proposed 

regulations. Recipients of the transfers 

would be covered employees and their 

dependents who would, if these 

proposed regulations are finalized, not 

be subject to excessive waiting periods 

during which they must forgo health 

coverage, purchase COBRA 

continuation coverage, or obtain an 

individual health insurance policy—all 

of which are options that could lead to 

higher out-of-pocket costs for employees 

to cover their healthcare expenditures. 

As discussed above, federal law did not 

limit the duration of waiting periods in 

the group health plans market before the 

enactment of PHS Act section 2708. 

The Departments do not believe that 

this rule, on its own, will cause more 

than a marginal number of employers to 

offer coverage earlier to their employees 

because this provision on its own does 

not require employers to offer coverage 

and there is significant flexibility 

afforded to employers in these proposed 

regulations to maintain or revise their 

current group health plan eligibility 

conditions. For example, paragraph 

(c)(3)(ii) of the proposed regulations 

provides that if a group health plan or 

health insurance issuer conditions 

eligibility on any employee’s (part-time 

or full-time) having completed a number 

of cumulative hours of service, the 

eligibility condition is not considered to 

be designed to avoid compliance with 

the 90-day waiting period limitation if 

the cumulative hours-of-service 

requirement does not exceed 1,200 

hours. This is intended to provide plan 

sponsors with flexibility to continue the 

common practice of utilizing a 

probationary or trial period to determine 

whether a new employee will be able to 

handle the duties and challenges of the 

job, while providing protections against 

excessive waiting periods for such 

employees. Under these proposed 

regulations, the plan’s waiting period 

must begin once the new employee 

satisfies the plan’s cumulative hours-ofservice requirement and may not exceed 

90 days. 

Therefore, an employee who must 

meet a cumulative hours-of-service 

requirement of 1,200 hours could be 

employed for ten months 26 before their 

health coverage becomes effective and 

only employers that had a waiting 

period longer than ten months before 

the enactment of PHS Act section 2708 

and these proposed regulations would 

necessarily incur a transfer for 

additional coverage. Because the 2012 

Kaiser Survey reports that just eight 

percent of covered workers are in plans 

with waiting periods of four months or 

more and the overall average waiting 

period is just 2.3 months, the 


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27Under ERISA section 104(a)(2), the Secretary 

may also provide exemptions or simplified 

reporting and disclosure requirements for pension 

plans. Pursuant to the authority of ERISA section 

104(a)(3), the Department of Labor has previously 

issued at 29 CFR 2520.104–20, 2520.104–21, 

2520.104–41, 2520.104–46, and 2520.104b–10 

certain simplified reporting provisions and limited 

exemptions from reporting and disclosure 

requirements for small plans, including unfunded 

or insured welfare plans, that cover fewer than 100 

participants and satisfy certain other requirements. 

Departments are confident that such 

long waiting periods are rare. 

B. Paperwork Reduction Act 

1. Department of Labor and Department 

of the Treasury 

As stated above, Sections 9801 of the 

Code and 701 of ERISA, and 2701 of the 

PHS Act as originally added by Health 

Insurance Portability and 

Accountability Act of 1996, included 

requirements pertaining to the 

application of preexisting conditions 

exclusions and waiting periods as well 

as methods of crediting coverage. The 

2004 HIPAA regulations (in effect prior 

to the effective date of these 

amendments) permit limited exclusions 

of coverage based on a preexisting 

condition under certain circumstances. 

PHS Act section 2704, added by the 

Affordable Care Act and incorporated 

into ERISA and the Code, amends the 

2004 HIPAA regulations relating to 

preexisting conditions to provide that a 

group health plan and a health 

insurance issuer offering group or 

individual health insurance coverage 

may not impose any preexisting 

condition exclusion. PHS Act section 

2704 and the interim final regulations 

implementing that section are generally 

effective with respect to plan years (in 

the individual market, policy years) 

beginning on or after January 1, 2014, 

but for enrollees who are under 19 years 

of age, this prohibition became effective 

for plan years (in the individual market, 

policy years) beginning on or after 

September 23, 2010. Therefore, these 

regulations propose to amend the 2004 

HIPAA regulations implementing Code 

sections 9801, ERISA section 701, and 

PHS Act section 2701 (as originally 

added by HIPAA), to remove provisions 

superseded by the prohibition on 

preexisting conditions under PHS Act 

section 2704 and the implementing 

regulations. 

The Departments are proposing to 

discontinue the following Information 

Collection Requests (ICRs) that are 

associated with the superseded 

regulation: The Notice of Preexisting 

Condition Exclusion under Group 

Health Plans, which is approved under 

OMB Control Number 1210–0102 

through January 31, 2016, and 

Establishing Creditable Coverage under 

Group Health Plans, which is approved 

under OMB Control Number 1210–0103 

through January 31, 2016. 

Additionally, the Departments are 

proposing to revise Final Regulations for 

Health Coverage Portability for Group 

Health Plans and Group Health 

Insurance Issuers under HIPAA Titles I 

& IV, which is approved under OMB 

Control Number 1545–1537 through 

January 31, 2014, to remove the Health 

Plans Imposing Pre-existing Condition 

Notification Requirements, Certification 

Requirements, and Exclusion Period 

Notification Information Collections 

within this ICR because they are 

associated with the superseded 

regulation. 

Discontinuing and revising these ICRs 

would result in a total burden reduction 

of approximately 341,000 hours (5,000 

hours attributable to OMB Control 

Number 1210–0102, 74,000 hours 

attributable to OMB Control Number 

1210–0103, and 262,000 hours 

attributable to OMB Control Number 

1545–1537) and a total cost burden 

reduction of approximately $32.7 

million ($1.1 million attributable to 

OMB Control Number 1210–0102, $12.4 

million attributable to OMB Control 

Number 1210–0103, and $19.2 million 

attributable to OMB Control Number 

1545–1537). 

C. Regulatory Flexibility Act— 

Department of Labor and Department of 

Health and Human Services 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) applies to most 

Federal rules that are subject to the 

notice and comment requirements of 

section 553(b) of the Administrative 

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

Unless an agency certifies that such a 

rule will not have a significant 

economic impact on a substantial 

number of small entities, section 603 of 

the RFA requires the agency to present 

an initial regulatory flexibility analysis 

at the time of the publication of the 

notice of proposed rulemaking 

describing the impact of the rule on 

small entities. Small entities include 

small businesses, organizations and 

governmental jurisdictions. 

For purposes of analysis under the 

RFA, the Departments propose to 

continue to consider a small entity to be 

an employee benefit plan with fewer 

than 100 participants. The basis of this 

definition is found in section 104(a)(3) 

of ERISA, which permits the Secretary 

of Labor to prescribe simplified annual 

reports for welfare benefit plans that 

cover fewer than 100 participants.27

Further, while some large employers 

may have small plans, in general, small 

employers maintain most small plans. 

Thus, the Departments believe that 

assessing the impact of these proposed 

regulations on small plans is an 

appropriate substitute for evaluating the 

effect on small entities. 

The definition of small entity 

considered appropriate for this purpose 

differs, however, from a definition of 

small business that is based on size 

standards promulgated by the Small 

Business Administration (SBA) (13 CFR 

121.201) pursuant to the Small Business 

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

Departments therefore request 

comments on the appropriateness of the 

size standard used in evaluating the 

impact of these proposed regulations on 

small entities. 

The Departments carefully considered 

the likely impact of the rule on small 

entities in connection with their 

assessment under Executive Order 

12866. The Departments lack data to 

focus only on the impacts on small 

business. However, the Departments 

believe that the proposed rule includes 

flexibility that would allow small 

employers to minimize the transfers in 

health insurance premiums that they 

would have to pay to employees. 

The Departments hereby certify that 

these proposed regulations will not have 

a significant economic impact on a 

substantial number of small entities. 

Consistent with the policy of the RFA, 

the Departments encourage the public to 

submit comments that would allow the 

Departments to assess the impacts 

specifically on small plans or suggest 

alternative rules that accomplish the 

stated purpose of PHS Act section 2708 

and minimize the impact on small 

entities. 

D. Special Analyses—Department of the 

Treasury 

For purposes of the Department of the 

Treasury, it has been determined that 

this notice of proposed rulemaking is 

not a significant regulatory action as 

defined in Executive Order 12866, as 

supplemented by Executive Order 

13563. Therefore, a regulatory 

assessment is not required. It has also 

been determined that section 553(b) of 

the Administrative Procedure Act (5 

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

proposed regulations, and, because 

these proposed regulations do not 

impose a collection of information 

requirement on small entities, a 

regulatory flexibility analysis under the 

Regulatory Flexibility Act (5 U.S.C. 

chapter 6) is not required. Pursuant to 

Code section 7805(f), this notice of 

proposed rulemaking has been 


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submitted to the Small Business 

Administration for comment on its 

impact on small business. 

E. Congressional Review Act 

These proposed regulations are 

subject to the Congressional Review Act 

provisions of the Small Business 

Regulatory Enforcement Fairness Act of 

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

finalized, will be transmitted to the 

Congress and the Comptroller General 

for review. 

F. Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), as well as Executive Order 

12875, these proposed rules do not 

include any proposed federal mandate 

that may result in expenditures by state, 

local, or tribal governments, or by the 

private sector, of $100 million or more 

adjusted for inflation ($141 million in 

2013). 

G. Federalism Statement—Department 

of Labor and Department of Health and 

Human Services 

Executive Order 13132 outlines 

fundamental principles of federalism, 

and requires the adherence to specific 

criteria by Federal agencies in the 

process of their formulation and 

implementation of policies that have 

‘‘substantial direct effects’’ on the 

States, the relationship between the 

national government and States, or on 

the distribution of power and 

responsibilities among the various 

levels of government. Federal agencies 

promulgating regulations that have 

these federalism implications must 

consult with State and local officials, 

and describe the extent of their 

consultation and the nature of the 

concerns of State and local officials in 

the preamble to the regulation. 

In the Departments’ view, these 

proposed regulations have federalism 

implications, because they have direct 

effects on the States, the relationship 

between the national government and 

States, or on the distribution of power 

and responsibilities among various 

levels of government. In general, 

through section 514, ERISA supersedes 

State laws to the extent that they relate 

to any covered employee benefit plan, 

and preserves State laws that regulate 

insurance, banking, or securities. While 

ERISA prohibits States from regulating a 

plan as an insurance or investment 

company or bank, the preemption 

provisions of ERISA section 731 and 

PHS Act section 2724 (implemented in 

29 CFR 2590.731(a) and 45 CFR 

146.143(a)) apply so that the HIPAA 

requirements (including those of the 

Affordable Care Act) are not to be 

‘‘construed to supersede any provision 

of State law which establishes, 

implements, or continues in effect any 

standard or requirement solely relating 

to health insurance issuers in 

connection with group health insurance 

coverage except to the extent that such 

standard or requirement prevents the 

application of a requirement’’ of a 

federal standard. The conference report 

accompanying HIPAA indicates that 

this is intended to be the ‘‘narrowest’’ 

preemption of State laws. (See House 

Conf. Rep. No. 104–736, at 205, 

reprinted in 1996 U.S. Code Cong. & 

Admin. News 2018.) 

States may continue to apply State 

law requirements except to the extent 

that such requirements prevent the 

application of the Affordable Care Act 

requirements that are the subject of this 

rulemaking. State insurance laws that 

are more stringent than the Federal 

requirements are unlikely to ‘‘prevent 

the application of’’ the Affordable Care 

Act, and be preempted. Accordingly, 

States have significant latitude to 

impose requirements on health 

insurance issuers that are more 

restrictive than the Federal law. 

Guidance conveying this 

interpretation was published in the 

Federal Register on April 8, 1997 (62 FR 

16904), and December 30, 2004 (69 FR 

78720), and these proposed rules would 

clarify and implement the statute’s 

minimum standards and would not 

significantly reduce the discretion given 

the states by the statute. 

In compliance with the requirement 

of Executive Order 13132 that agencies 

examine closely any policies that may 

have federalism implications or limit 

the policy making discretion of the 

States, the Departments have engaged in 

efforts to consult with and work 

cooperatively with affected State and 

local officials, including attending 

conferences of the National Association 

of Insurance Commissioners and 

consulting with State insurance officials 

on an individual basis. 

Throughout the process of developing 

these proposed regulations, to the extent 

feasible within the specific preemption 

provisions of HIPAA as it applies to the 

Affordable Care Act, the Departments 

have attempted to balance the States’ 

interests in regulating health insurance 

issuers, and Congress’ intent to provide 

uniform minimum protections to 

consumers in every State. By doing so, 

it is the Departments’ view that they 

have complied with the requirements of 

Executive Order 13132. 

IV. Statutory Authority 

The Department of the Treasury 

regulations are proposed to be adopted 

pursuant to the authority contained in 

sections 7805 and 9833 of the Code. 

The Department of Labor regulations 

are proposed to be adopted pursuant to 

the authority contained in 29 U.S.C. 

1027, 1059, 1135, 1161–1168, 1169, 

1181–1183, 1181 note, 1185, 1185a, 

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

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

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

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

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

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

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

119, as amended by Public Law 111– 

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

Order 3–2010, 75 FR 55354 (September 

10, 2010). 

The Department of Health and Human 

Services regulations are proposed to be 

adopted, with respect to 45 CFR Part 

146, pursuant to the authority contained 

in sections 2702 through 2705, 2711 

through 2723, 2791, and 2792 of the 

PHS Act (42 U.S.C. 300gg–1 through 

300gg–5, 300gg–11 through 300gg–23, 

300gg–91, and 300gg–92), and, with 

respect to 45 CFR Part 147, pursuant to 

the authority contained in sections 2701 

through 2763, 2791, and 2792 of the 

PHS Act (42 U.S.C. 300gg through 

300gg–63, 300gg–91, and 300gg–92), as 

amended. 

List of Subjects 

26 CFR Part 54 

Excise taxes, Health care, Health 

insurance, Pensions, Reporting and 

recordkeeping requirements. 

29 CFR Part 2590 

Continuation coverage, Disclosure, 

Employee benefit plans, Group health 

plans, Health care, Health insurance, 

Medical child support, Reporting and 

recordkeeping requirements. 

45 CFR Part 144 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements. 

45 CFR Parts 146 and 147 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, and State regulation of 

health insurance. 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement, Internal Revenue Service. 

Signed this 14th day of March, 2013. 


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17322 Federal Register / Vol. 78, No. 55 / Thursday, March 21, 2013 / Proposed Rules 

Phyllis C. Borzi, 

Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. 

Dated: March 13, 2013. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Dated: March 14, 2013. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

Accordingly, 26 CFR part 54 is 

proposed to be amended as follows: 

PART 54—PENSION EXCISE TAXES 

■ Paragraph 1. The authority citation 

for Part 54 is amended by adding an 

entry for § 54.9815–2708 in numerical 

order to read in part as follows: 

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

Section 54.9815–2708 is also issued under 

26 U.S.C. 9833. 

■ Par. 2. Section 54.9801–1 is amended 

by revising paragraph (b) to read as 

follows: 

§ 54.9801–1 Basis and scope. 

* * * * * 

(b) Scope. A group health plan or 

health insurance issuer offering group 

health insurance coverage may provide 

greater rights to participants and 

beneficiaries than those set forth in the 

portability and market reform sections 

of this part 54. This part 54 sets forth 

minimum requirements for group health 

plans and group health insurance 

issuers offering group health insurance 

coverage concerning certain consumer 

protections of the Health Insurance 

Portability and Accountability Act 

(HIPAA), including special enrollment 

periods and the prohibition against 

discrimination based on a health factor, 

as amended by the Patient Protection 

and Affordable Care Act (Affordable 

Care Act). Other consumer protection 

provisions, including other protections 

provided by the Affordable Care Act and 

the Mental Health Parity and Addiction 

Equity Act are set forth in this part 54. 

* * * * * 

■ Par. 3. Section 54.9801–2 is amended 

by revising the definitions of 

‘‘enrollment date’’, ‘‘late enrollment’’, 

and ‘‘waiting period’’, and by adding 

definitions of ‘‘first day of coverage’’ 

and ‘‘late enrollee’’ in alphabetical 

order, to read as follows: 

§ 54.9801–2 Definitions. 

* * * * * 

Enrollment date means the first day of 

coverage or, if there is a waiting period, 

the first day of the waiting period. If an 

individual receiving benefits under a 

group health plan changes benefit 

packages, or if the plan changes group 

health insurance issuers, the 

individual’s enrollment date does not 

change. 

* * * * * 

First day of coverage means, in the 

case of an individual covered for 

benefits under a group health plan, the 

first day of coverage under the plan and, 

in the case of an individual covered by 

health insurance coverage in the 

individual market, the first day of 

coverage under the policy or contract. 

* * * * * 

Late enrollee means an individual 

whose enrollment in a plan is a late 

enrollment. 

Late enrollment means enrollment of 

an individual under a group health plan 

other than the earliest date on which 

coverage can become effective for the 

individual under the terms of the plan, 

or through special enrollment. (For rules 

relating to special enrollment, see 

§ 54.9801–6.) If an individual ceases to 

be eligible for coverage under a plan, 

and then subsequently becomes eligible 

for coverage under the plan, only the 

individual’s most recent period of 

eligibility is taken into account in 

determining whether the individual is a 

late enrollee under the plan with respect 

to the most recent period of coverage. 

Similar rules apply if an individual 

again becomes eligible for coverage 

following a suspension of coverage that 

applied generally under the plan. 

* * * * * 

Waiting period means waiting period 

within the meaning of § 54.9815– 

2708(b). 

* * * * * 

■ Par. 4. Section 54.9801–3 is amended 

by: 

■ A. Removing paragraphs (a)(2), (a)(3), 

(c), (d), (e) and (f). 

■ B. Revising the heading to paragraph 

(a). 

■ C. Removing paragraph (a)(1) 

introductory text, and redesignating 

paragraphs (a)(1)(i) and (a)(1)(ii) as 

paragraphs (a)(1) and (a)(2). 

■ D. Amending paragraph (a)(2) by 

revising paragraph (ii) of Examples 1 

and 2, by revising Example 3 and 

Example 4, and by revising paragraph 

(ii) of Examples 5, 6, 7 and 8. 

■ E. Revising paragraph (b). 

The revisions read as follows: 

§ 54.9801–3 Limitations on preexisting 

condition exclusion period. 

(a) Preexisting condition exclusion 

defined— 

* * * * * 

(2) * * * 

Example 1. * * * 

(ii) Conclusion. In this Example 1, the 

exclusion of benefits for any prosthesis if the 

body part was lost before the effective date 

of coverage is a preexisting condition 

exclusion because it operates to exclude 

benefits for a condition based on the fact that 

the condition was present before the effective 

date of coverage under the policy. The 

exclusion of benefits, therefore, is prohibited. 

Example 2. * * * 

(ii) Conclusion. In this Example 2, the plan 

provision excluding cosmetic surgery 

benefits for individuals injured before 

enrolling in the plan is a preexisting 

condition exclusion because it operates to 

exclude benefits relating to a condition based 

on the fact that the condition was present 

before the effective date of coverage. The 

plan provision, therefore, is prohibited. 

Example 3. (i) Facts. A group health plan 

provides coverage for the treatment of 

diabetes, generally not subject to any 

requirement to obtain an approval for a 

treatment plan. However, if an individual 

was diagnosed with diabetes before the 

effective date of coverage under the plan, 

diabetes coverage is subject to a requirement 

to obtain approval of a treatment plan in 

advance. 

(ii) Conclusion. In this Example 3, the 

requirement to obtain advance approval of a 

treatment plan is a preexisting condition 

exclusion because it limits benefits for a 

condition based on the fact that the condition 

was present before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

Example 4. (i) Facts. A group health plan 

provides coverage for three infertility 

treatments. The plan counts against the threetreatment limit benefits provided under prior 

health coverage. 

(ii) Conclusion. In this Example 4, 

counting benefits for a specific condition 

provided under prior health coverage against 

a treatment limit for that condition is a 

preexisting condition exclusion because it 

operates to limit benefits for a condition 

based on the fact that the condition was 

present before the effective date of coverage. 

The plan provision, therefore, is prohibited. 

Example 5. * * * 

(ii) Conclusion. In this Example 5, the 

requirement to be covered under the plan for 

12 months to be eligible for pregnancy 

benefits is a subterfuge for a preexisting 

condition exclusion because it is designed to 

exclude benefits for a condition (pregnancy) 

that arose before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

Example 6. * * * 

(ii) Conclusion. In this Example 6, the 

exclusion of coverage for treatment of 

congenital heart conditions is a preexisting 


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condition exclusion because it operates to 

exclude benefits relating to a condition based 

on the fact that the condition was present 

before the effective date of coverage. The 

plan provision, therefore, is prohibited. 

Example 7. * * * 

(ii) Conclusion. In this Example 7, the 

exclusion of coverage for treatment of cleft 

palate is not a preexisting condition 

exclusion because the exclusion applies 

regardless of when the condition arose 

relative to the effective date of coverage. The 

plan provision, therefore, is not prohibited. 

(But see 45 CFR 147.150, which may require 

coverage of cleft palate as an essential health 

benefit for health insurance coverage in the 

individual or small group market). 

Example 8. * * * 

(ii) Conclusion. In this Example 8, the 

exclusion of coverage for treatment of cleft 

palate for individuals who have not been 

covered under the plan from the date of birth 

operates to exclude benefits in relation to a 

condition based on the fact that the condition 

was present before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

* * * * * 

(b) General rules. See § 54.9815– 

2704T for rules prohibiting the 

imposition of a preexisting condition 

exclusion. 

■ Par. 5. Section 54.9801–4 is amended 

by removing paragraphs (a)(3) and (c), 

and revising paragraph (b) to read as 

follows: 

§ 54.9801–4 Rules relating to creditable 

coverage. 

* * * * * 

(b) Counting creditable coverage rules 

superseded by prohibition on 

preexisting condition exclusion. See 

§ 54.9815–2704T for rules prohibiting 

the imposition of a preexisting 

condition exclusion. 

■ Par. 6. Section 54.9801–5 is revised to 

read as follows: 

§ 54.9801–5 Evidence of creditable 

coverage. 

(a) In general. The rules for providing 

certificates of creditable coverage and 

demonstrating creditable coverage have 

been superseded by the prohibition on 

preexisting condition exclusions. See 

§ 54.9815–2704T for rules prohibiting 

the imposition of a preexisting 

condition exclusion. 

(b) Applicability. The amendments 

made under this section apply 

beginning December 31, 2014. 

■ Par. 7. Section 54.9801–6 is amended 

by removing paragraph (a)(3)(i)(E) and 

revising paragraphs (a)(3)(i)(C), 

(a)(3)(i)(D), (a)(4)(i) and (d)(2) to read as 

follows: 

§ 54.9801–6 Special enrollment periods. 

* * * * * 

(a) * * * 

(3) * * * 

(i) * * * 

(C) In the case of coverage offered 

through an HMO, or other arrangement, 

in the group market that does not 

provide benefits to individuals who no 

longer reside, live, or work in a service 

area, loss of coverage because an 

individual no longer resides, lives, or 

works in the service area (whether or 

not within the choice of the individual), 

and no other benefit package is available 

to the individual; and 

(D) A situation in which a plan no 

longer offers any benefits to the class of 

similarly situated individuals (as 

described in § 54.9802–1(d)) that 

includes the individual. 

* * * * * 

(4) * * * 

(i) A plan or issuer must allow an 

employee a period of at least 30 days 

after an event described in paragraph 

(a)(3) of this section to request 

enrollment (for the employee or the 

employee’s dependent). 

* * * * * 

(d) * * * 

(2) Special enrollees must be offered 

all the benefit packages available to 

similarly situated individuals who 

enroll when first eligible. For this 

purpose, any difference in benefits or 

cost-sharing requirements for different 

individuals constitutes a different 

benefit package. In addition, a special 

enrollee cannot be required to pay more 

for coverage than a similarly situated 

individual who enrolls in the same 

coverage when first eligible. 

* * * * * 

■ Par. 8. Section 54.9802–1 is amended 

by: 

■ A. Removing paragraph (b)(3) and 

revising paragraphs (b)(1)(i) and 

(b)(2)(i)(B). 

■ B. Revising Example 1, paragraph (i) 

of Example 2, paragraph (ii) of Example 

4, paragraph (ii) of Example 5, and 

removing Example 8 in paragraph 

(b)(2)(i)(D). 

■ C. Revising Example 2, and paragraph 

(i) of Example 5, in paragraph (d)(4). 

■ D. Revising paragraph (ii) of Example 

2 in paragraph (e)(2)(i)(B). 

■ E. Revising Example 1 in paragraph 

(g)(1)(ii). 

The revisions read as follows: 

§ 54.9802–1 Prohibiting discrimination 

against participants and beneficiaries 

based on a health factor. 

* * * * * 

(b) * * * 

(1) * * * 

(i) A group health plan may not 

establish any rule for eligibility 

(including continued eligibility) of any 

individual to enroll for benefits under 

the terms of the plan that discriminates 

based on any health factor that relates 

to that individual or a dependent of that 

individual. This rule is subject to the 

provisions of paragraph (b)(2) of this 

section (explaining how this rule 

applies to benefits), paragraph (d) of this 

section (containing rules for establishing 

groups of similarly situated 

individuals), paragraph (e) of this 

section (relating to nonconfinement, 

actively-at-work, and other service 

requirements), paragraph (f) of this 

section (relating to wellness programs), 

and paragraph (g) of this section 

(permitting favorable treatment of 

individuals with adverse health factors). 

* * * * * 

(2) * * * 

(i) * * * 

(B) However, benefits provided under 

a plan must be uniformly available to all 

similarly situated individuals (as 

described in paragraph (d) of this 

section). Likewise, any restriction on a 

benefit or benefits must apply uniformly 

to all similarly situated individuals and 

must not be directed at individual 

participants or beneficiaries based on 

any health factor of the participants or 

beneficiaries (determined based on all 

the relevant facts and circumstances). 

Thus, for example, a plan may limit or 

exclude benefits in relation to a specific 

disease or condition, limit or exclude 

benefits for certain types of treatments 

or drugs, or limit or exclude benefits 

based on a determination of whether the 

benefits are experimental or not 

medically necessary, but only if the 

benefit limitation or exclusion applies 

uniformly to all similarly situated 

individuals and is not directed at 

individual participants or beneficiaries 

based on any health factor of the 

participants or beneficiaries. In 

addition, a plan may require the 

satisfaction of a deductible, copayment, 

coinsurance, or other cost-sharing 

requirement in order to obtain a benefit 

if the limit or cost-sharing requirement 

applies uniformly to all similarly 

situated individuals and is not directed 

at individual participants or 

beneficiaries based on any health factor 

of the participants or beneficiaries. In 

the case of a cost-sharing requirement, 

see also paragraph (b)(2)(ii) of this 

section, which permits variances in the 

application of a cost-sharing mechanism 

made available under a wellness 

program. (Whether any plan provision 

or practice with respect to benefits 

complies with this paragraph (b)(2)(i) 

does not affect whether the provision or 

practice is permitted under ERISA, the 

Affordable Care Act (including the 

requirements related to essential health 


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benefits), the Americans with 

Disabilities Act, or any other law, 

whether State or Federal.) 

* * * * * 

(D) * * * 

Example 1. (i) Facts. A group health plan 

applies a $10,000 annual limit on a specific 

covered benefit that is not an essential health 

benefit to each participant or beneficiary 

covered under the plan. The limit is not 

directed at individual participants or 

beneficiaries. 

(ii) Conclusion. In this Example 1, the limit 

does not violate this paragraph (b)(2)(i) 

because coverage of the specific, nonessential health benefit up to $10,000 is 

available uniformly to each participant and 

beneficiary under the plan and because the 

limit is applied uniformly to all participants 

and beneficiaries and is not directed at 

individual participants or beneficiaries. 

Example 2. (i) Facts. A group health plan 

has a $500 deductible on all benefits for 

participants covered under the plan. 

Participant B files a claim for the treatment 

of AIDS. At the next corporate board meeting 

of the plan sponsor, the claim is discussed. 

Shortly thereafter, the plan is modified to 

impose a $2,000 deductible on benefits for 

the treatment of AIDS, effective before the 

beginning of the next plan year. 

* * * * * 

Example 4. * * * 

(ii) Conclusion. In this Example 4, the limit 

does not violate this paragraph (b)(2)(i) 

because $2,000 of benefits for the treatment 

of TMJ are available uniformly to all 

similarly situated individuals and a plan may 

limit benefits covered in relation to a specific 

disease or condition if the limit applies 

uniformly to all similarly situated 

individuals and is not directed at individual 

participants or beneficiaries. (However, 

applying a lifetime limit on TMJ may violate 

§ 54.9815–2711, if TMJ coverage is an 

essential health benefit. This example does 

not address whether the plan provision is 

permissible under any other applicable law, 

including PHS Act section 2711 or the 

Americans with Disabilities Act.) 

Example 5. * * * 

(ii) Conclusion. In this Example 5, the 

lower lifetime limit for participants and 

beneficiaries with a congenital heart defect 

violates this paragraph (b)(2)(i) because 

benefits under the plan are not uniformly 

available to all similarly situated individuals 

and the plan’s lifetime limit on benefits does 

not apply uniformly to all similarly situated 

individuals. Additionally, this plan provision 

is prohibited under § 54.9815–2711 because 

it imposes a lifetime limit on essential health 

benefits. 

* * * * * 

(d) * * * 

(4) * * * 

Example 2. (i) Facts. Under a group health 

plan, coverage is made available to 

employees, their spouses, and their children. 

However, coverage is made available to a 

child only if the child is under age 26 (or 

under age 29 if the child is continuously 

enrolled full-time in an institution of higher 

learning (full-time students)). There is no 

evidence to suggest that these classifications 

are directed at individual participants or 

beneficiaries. 

(ii) Conclusion. In this Example 2, treating 

spouses and children differently by imposing 

an age limitation on children, but not on 

spouses, is permitted under this paragraph 

(d). Specifically, the distinction between 

spouses and children is permitted under 

paragraph (d)(2) of this section and is not 

prohibited under paragraph (d)(3) of this 

section because it is not directed at 

individual participants or beneficiaries. It is 

also permissible to treat children who are 

under age 26 (or full-time students under age 

29) as a group of similarly situated 

individuals separate from those who are age 

26 or older (or age 29 or older if they are not 

full-time students) because the classification 

is permitted under paragraph (d)(2) of this 

section and is not directed at individual 

participants or beneficiaries. 

* * * * * 

Example 5. (i) Facts. An employer sponsors 

a group health plan that provides the same 

benefit package to all seven employees of the 

employer. Six of the seven employees have 

the same job title and responsibilities, but 

Employee G has a different job title and 

different responsibilities. After G files an 

expensive claim for benefits under the plan, 

coverage under the plan is modified so that 

employees with G’s job title receive a 

different benefit package that includes a 

higher deductible than in the benefit package 

made available to the other six employees. 

* * * * * 

(e) * * * 

(2) * * * 

(i) * * * 

(B) * * * 

Example 2. * * * 

(ii) Conclusion. In this Example 2, the plan 

violates this paragraph (e)(2) (and thus also 

paragraph (b) of this section) because the 90- 

day continuous service requirement is a rule 

for eligibility based on whether an individual 

is actively at work. However, the plan would 

not violate this paragraph (e)(2) or paragraph 

(b) of this section if, under the plan, an 

absence due to any health factor is not 

considered an absence for purposes of 

measuring 90 days of continuous service. (In 

addition, any eligibility provision that is 

time-based must comply with the 

requirements of PHS Act section 2708 and its 

implementing regulations.) 

* * * * * 

(g) * * * 

(1) * * * 

(ii) * * * 

Example 1. (i) Facts. An employer 

sponsors a group health plan that generally 

is available to employees, spouses of 

employees, and dependent children until age 

26. However, dependent children who are 

disabled are eligible for coverage beyond age 

26. 

(ii) Conclusion. In this Example 1, the plan 

provision allowing coverage for disabled 

dependent children beyond age 26 satisfies 

this paragraph (g)(1) (and thus does not 

violate this section). 

* * * * * 

■ Par. 9. Section 54.9815–2708 is added 

to read as follows: 

§ 54.9815–2708 Prohibition on waiting 

periods that exceed 90 days. 

(a) General rule. A group health plan, 

and a health insurance issuer offering 

group health insurance coverage, must 

not apply any waiting period that 

exceeds 90 days, in accordance with the 

rules of this section. If, under the terms 

of a plan, an employee can elect 

coverage that would begin on a date that 

is not later than the end of the 90-day 

waiting period, this paragraph (a) is 

considered satisfied. Accordingly, a 

plan or issuer in that case will not be 

considered to have violated this 

paragraph (a) solely because employees 

(or other classes of participants) may 

take additional time (beyond the end of 

the 90-day waiting period) to elect 

coverage. 

(b) Waiting period defined. For 

purposes of this part, a waiting period 

is the period that must pass before 

coverage for an employee or dependent 

who is otherwise eligible to enroll under 

the terms of a group health plan can 

become effective. If an employee or 

dependent enrolls as a late enrollee (as 

defined under § 54.9801–2) or special 

enrollee (as described in § 54.9801–6), 

any period before such late or special 

enrollment is not a waiting period. 

(c) Relation to a plan’s eligibility 

criteria—(1) Except as provided in 

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

section, being otherwise eligible to 

enroll under the terms of a group health 

plan means having met the plan’s 

substantive eligibility conditions (such 

as, for example, being in an eligible job 

classification or achieving job-related 

licensure requirements specified in the 

plan’s terms). Moreover, except as 

provided in paragraphs (c)(2) and (c)(3) 

of this section, nothing in this section 

requires a plan sponsor to offer coverage 

to any particular employee or class of 

employees (including, for example, parttime employees). Instead, this section 

prohibits requiring otherwise eligible 

participants and beneficiaries to wait 

more than 90 days before coverage is 

effective. (While a substantive eligibility 

condition that denies coverage to 

employees may be permissible under 

this section, a failure by an applicable 

large employer (as defined in section 

4980H) to offer coverage to a full-time 

employee might, for example, 

nonetheless give rise to an assessable 

payment under section 4980H and its 

implementing regulations.) 

(2) Eligibility conditions based solely 

on the lapse of time. Eligibility 

conditions that are based solely on the 


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lapse of a time period are permissible 

for no more than 90 days. 

(3) Other conditions for eligibility. 

Other conditions for eligibility under 

the terms of a group health plan are 

generally permissible under PHS Act 

section 2708, unless the condition is 

designed to avoid compliance with the 

90-day waiting period limitation, 

determined in accordance with the rules 

of this paragraph (c)(3). 

(i) Application to variable-hour 

employees in cases in which a specified 

number of hours of service per period is 

a plan eligibility condition. If a group 

health plan conditions eligibility on an 

employee regularly having a specified 

number of hours of service per period 

(or working full-time), and it cannot be 

determined that a newly-hired 

employee is reasonably expected to 

regularly work that number of hours per 

period (or work full-time), the plan may 

take a reasonable period of time, not to 

exceed 12 months and beginning on any 

date between the employee’s start day 

and the first day of the first calendar 

month following the employee’s start 

date, to determine whether the 

employee meets the plan’s eligibility 

condition. Except in cases in which a 

waiting period that exceeds 90 days is 

imposed in addition to a measurement 

period, the time period for determining 

whether such an employee meets the 

plan’s eligibility condition will not be 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if coverage is made 

effective no later than 13 months from 

the employee’s start date, plus if the 

employee’s start date is not the first day 

of a calendar month, the time remaining 

until the first day of the next calendar 

month. 

(ii) Cumulative service requirements. 

If a group health plan or health 

insurance issuer conditions eligibility 

on an employee’s having completed a 

number of cumulative hours of service, 

the eligibility condition is not 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if the cumulative 

hours-of-service requirement does not 

exceed 1,200 hours. 

(d) Counting days. Under this section, 

all calendar days are counted beginning 

on the enrollment date (as defined in 

§ 54.9801–2), including weekends and 

holidays. If, in the case of a plan or 

issuer imposing a 90-day waiting 

period, the 91st day is a weekend or 

holiday, the plan or issuer may choose 

to permit coverage to become effective 

earlier than the 91st day, for 

administrative convenience. Similarly, 

plans and issuers that do not want to 

start coverage in the middle of a month 

(or pay period) may choose to permit 

coverage to become effective earlier than 

the 91st day, for administrative 

convenience. For example, a plan may 

impose a waiting period of 60 days plus 

a fraction of a month (or pay period) 

until the first day of the next month (or 

pay period). However, a plan or issuer 

that extends the effective date of 

coverage beyond the 91st day fails to 

comply with the 90-day waiting period 

limitation. 

(e) Examples. The rules of this section 

are illustrated by the following 

examples: 

Example 1. (i) Facts. A group health plan 

provides that full-time employees are eligible 

for coverage under the plan. Employee A 

begins employment as a full-time employee 

on January 19. 

(ii) Conclusion. In this Example 1, any 

waiting period for A would begin on January 

19 and may not exceed 90 days. Coverage 

under the plan must become effective no 

later than April 19 (assuming February lasts 

28 days). 

Example 2. (i) Facts. A group health plan 

provides that only employees with job title 

M are eligible for coverage under the plan. 

Employee B begins employment in job title 

L on January 30. 

(ii) Conclusion. In this Example 2, B is not 

eligible for coverage under the plan, and the 

period while B is working in job title L and 

therefore not in an eligible class of employees 

is not part of a waiting period under this 

section. 

Example 3. (i) Facts. Same facts as 

Example 2, except that B transfers to a new 

position with job title M on April 11. 

(ii) Conclusion. In this Example 3, B 

becomes eligible for coverage on April 11, 

but for the waiting period. Any waiting 

period for B begins on April 11 and may not 

exceed 90 days. Coverage under the plan 

must become effective no later than July 10. 

Example 4. (i) Facts. A group health plan 

provides that only employees who have 

completed specified training and achieved 

specified certifications are eligible for 

coverage under the plan. Employee C is hired 

on May 3 and meets the plan’s eligibility 

criteria on September 22. 

(ii) Conclusion. In this Example 4, C 

becomes eligible for coverage on September 

22, but for the waiting period. Any waiting 

period for C would begin on September 22 

and may not exceed 90 days. Coverage under 

the plan must become effective no later than 

December 21. 

Example 5. (i) Facts. A group health plan 

provides that employees are eligible for 

coverage after one year of service. 

(ii) Conclusion. In this Example 5, the 

plan’s eligibility condition is based solely on 

the lapse of time and, therefore, is 

impermissible under paragraph (c)(2) of this 

section because it exceeds 90 days. 

Example 6. (i) Facts. Employer W’s group 

health plan provides for coverage to begin on 

the first day of the first payroll period on or 

after the date an employee is hired and 

completes the applicable enrollment forms. 

Enrollment forms are distributed on an 

employee’s start date and may be completed 

within 90 days. Employee D is hired and 

starts on October 31, which is the first day 

of a pay period. D completes the enrollment 

forms and submits them on the 90th day after 

D’s start date. Coverage is made effective 7 

days later, which is the first day of the next 

pay period. 

(ii) Conclusion. In this Example 6, under 

the terms of W’s plan, coverage may become 

effective as early as October 31, depending 

on when D completes the applicable 

enrollment forms. Under the terms of the 

plan, when coverage becomes effective is 

dependent solely on the length of time taken 

by D to complete the enrollment materials. 

Therefore, under the terms of the plan, D may 

elect coverage that would begin on a date that 

does not exceed the 90-day waiting period 

limitation, and the plan complies with this 

section. 

Example 7. (i) Facts. Under Employer Y’s 

group health plan, only employees who are 

full-time (defined under the plan as regularly 

averaging 30 hours of service per week) are 

eligible for coverage. Employee E begins 

employment for Employer Y on November 26 

of Year 1. E’s hours are reasonably expected 

to vary, with an opportunity to work between 

20 and 45 hours per week, depending on 

shift availability and E’s availability. 

Therefore, it cannot be determined at E’s start 

date that E is reasonably expected to work 

full-time. Under the terms of the plan, 

variable-hour employees, such as E, are 

eligible to enroll in the plan if they are 

determined to be a full-time employee after 

a measurement period of 12 months that 

begins on the employee’s start date. Coverage 

is made effective no later than the first day 

of the first calendar month after the 

applicable enrollment forms are received. E’s 

12-month measurement period ends 

November 25 of Year 2. E is determined to 

be a full-time employee and is notified of E’s 

plan eligibility. If E then elects coverage, E’s 

first day of coverage will be January 1 of Year 

3. 

(ii) Conclusion. In this Example 7, the 

measurement period is permissible because it 

is not considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. The plan may use a reasonable 

period of time to determine whether a 

variable-hour employee is a full-time 

employee, provided the period of time is no 

longer than 12 months and begins on a date 

between the employee’s start date and the 

first day of the next calendar month, 

provided coverage is made effective no later 

than 13 months from E’s start date (plus if 

the employee’s start date is not the first day 

of a calendar month, the time remaining until 

the first day of the next calendar month) and 

provided that, in addition to the 

measurement period, no more than 90 days 

elapse prior to the employee’s eligibility for 

coverage. 

Example 8. (i) Facts. Employee F begins 

working 25 hours per week for Employer Z 

on January 6 and is considered a part-time 

employee for purposes of Z’s group health 

plan. Z sponsors a group health plan that 

provides coverage to part-time employees 

after they have completed a cumulative 1,200 

hours of service. F satisfies the plan’s 


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cumulative hours of service condition on 

December 15. 

(ii) Conclusion. In this Example 8, the 

cumulative hours of service condition with 

respect to part-time employees is not 

considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. Accordingly, coverage for F under 

the plan must begin no later than the 91st 

day after F completes 1,200 hours. (If the 

plan’s cumulative hours-of-service 

requirement was more than 1,200 hours, the 

requirement would be considered to be 

designed to avoid compliance with the 90- 

day waiting period limitation.) 

(f) Special rule for health insurance 

issuers. To the extent coverage under a 

group health plan is insured by a health 

insurance issuer, the issuer is permitted 

to rely on the eligibility information 

reported to it by the employer (or other 

plan sponsor) and will not be 

considered to violate the requirements 

of this section with respect to its 

administration of any waiting period, if 

both of the following conditions are 

satisfied: 

(1) The issuer requires the plan 

sponsor to make a representation 

regarding the terms of any eligibility 

conditions or waiting periods imposed 

by the plan sponsor before an individual 

is eligible to become covered under the 

terms of the employer’s plan (and 

requires the plan sponsor to update this 

representation with any changes); and 

(2) The issuer has no specific 

knowledge of the imposition of a 

waiting period that would exceed the 

permitted 90-day period. 

(g) No effect on other laws. 

Compliance with this section is not 

determinative of compliance with any 

other provision of State or Federal law 

(including ERISA, the Code, or other 

provisions of the Patient Protection and 

Affordable Care Act). See e.g., 

§ 54.9802–1, which prohibits 

discrimination in eligibility for coverage 

based on a health factor, and section 

4980H, which generally requires 

applicable large employers to offer 

coverage to full-time employees and 

their dependents or make an assessable 

payment. 

(h) Applicability date—(1) In general. 

The provisions of this section apply for 

plan years beginning on or after January 

1, 2014. See § 54.9815–1251T providing 

that the prohibition on waiting periods 

exceeding 90 days applies to all group 

health plans and health insurance 

issuers, including grandfathered health 

plans. 

(2) Application to individuals in a 

waiting period prior to the applicability 

date—(i) With respect to individuals 

who are in a waiting period for coverage 

before the applicability date of this 

section, beginning on the first day the 

section applies, the waiting period can 

no longer apply to the individual if it 

would exceed 90 days with respect to 

the individual. 

(ii) This paragraph (h)(2) is illustrated 

by the following example: 

Example. (i) Facts. A group health plan is 

a calendar year plan. Prior to January 1, 2014, 

the plan provides that full-time employees 

are eligible for coverage after a 6-month 

waiting period. Employee A begins work as 

a full-time employee on October 1, 2013. 

(ii) Conclusion. In this Example 1, the first 

day of A’s waiting period is October 1, 2013 

because that is the first day A is otherwise 

eligible to enroll under the plan’s substantive 

eligibility provisions, but for the waiting 

period. Beginning January 1, 2014, the plan 

may not apply a waiting period that exceeds 

90 days. Accordingly, A must be given the 

opportunity to elect coverage that begins no 

later than January 1, 2014 (which is 93 days 

after A’s start date) because otherwise, on 

January 1, 2014, the plan would be applying 

a waiting period that exceeds 90 days. The 

plan is not required to make coverage 

effective before January 1, 2014 under the 

rules of this section. 

Par. 10. Section 54.9815–2719T is 

amended by adding a sentence to the 

end of the introductory text of 

paragraph (d) and revising paragraph 

(d)(1)(i) to read as follows: 

§ 54.9815–2719T Internal claims and 

appeals and external review processes. 

* * * * * 

(d) * * * A Multi State Plan or MSP, 

as defined by 45 CFR 800.20, must 

provide an effective Federal external 

review process in accordance with this 

paragraph (d). 

(1) * * * 

(i) In general. Subject to the 

suspension provision in paragraph 

(d)(1)(ii) of this section and except to 

the extent provided otherwise by the 

Secretary in guidance, the Federal 

external review process established 

pursuant to this paragraph (d) applies, 

at a minimum, to any adverse benefit 

determination or final adverse benefit 

determination (as defined in paragraphs 

(a)(2)(i) and (a)(2)(v) of this section), 

except that a denial, reduction, 

termination, or a failure to provide 

payment for a benefit based on a 

determination that a participant or 

beneficiary fails to meet the 

requirements for eligibility under the 

terms of a group health plan is not 

eligible for the Federal external review 

process under this paragraph (d). 

* * * * * 

Par. 11. Section 54.9831–1 is 

amended by removing paragraph 

(b)(2)(i), and redesignating paragraphs 

(b)(2)(ii) through (b)(2)(viii) as (b)(2)(i) 

through (b)(2)(vii). 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Chapter XXV 

For the reasons stated in the 

preamble, the Department of Labor 

proposes to amend 29 CFR part 2590 as 

follows: 

PART 2590—RULES AND 

REGULATIONS FOR GROUP HEALTH 

PLANS 

■ 12. The authority citation for Part 

2590 continues to read as follows: 

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

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

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

1191a, 1191b, and 1191c; sec. 101(g), Pub. 

L.104–191, 110 Stat. 1936; sec. 401(b), Pub. 

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

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

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

111–148, 124 Stat. 119, as amended by Pub. 

L. 111–152, 124 Stat. 1029; Secretary of 

Labor’s Order 3–2010, 75 FR 55354 

(September 10, 2010). 

■ 13. Section 2590.701–1 is amended by 

revising paragraph (b) to read as follows: 

§ 2590.701–1 Basis and scope. 

* * * * * 

■ (b) Scope. A group health plan or 

health insurance issuer offering group 

health insurance coverage may provide 

greater rights to participants and 

beneficiaries than those set forth in this 

Subpart B. This Subpart B sets forth 

minimum requirements for group health 

plans and group health insurance 

issuers offering group health insurance 

coverage concerning certain consumer 

protections of the Health Insurance 

Portability and Accountability Act 

(HIPAA), including special enrollment 

periods and the prohibition against 

discrimination based on a health factor, 

as amended by the Patient Protection 

and Affordable Care Act (Affordable 

Care Act). Other consumer protection 

provisions, including other protections 

provided by the Affordable Care Act and 

the Mental Health Parity and Addiction 

Equity Act are set forth in Subpart C of 

this part. 

■ 14. Section 2590.701–2 is amended by 

revising the definitions of ‘‘enrollment 

date’’, ‘‘late enrollment’’, and ‘‘waiting 

period’’, and by adding definitions of 

‘‘first day of coverage’’ and ‘‘late 

enrollee’’ in alphabetical order, to read 

as follows: 

§ 2590.701–2 Definitions. 

* * * * * 

Enrollment date means the first day of 

coverage or, if there is a waiting period, 

the first day of the waiting period. If an 

individual receiving benefits under a 


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group health plan changes benefit 

packages, or if the plan changes group 

health insurance issuers, the 

individual’s enrollment date does not 

change. 

* * * * * 

First day of coverage means, in the 

case of an individual covered for 

benefits under a group health plan, the 

first day of coverage under the plan and, 

in the case of an individual covered by 

health insurance coverage in the 

individual market, the first day of 

coverage under the policy or contract. 

* * * * * 

Late enrollee means an individual 

whose enrollment in a plan is a late 

enrollment. 

Late enrollment means enrollment of 

an individual under a group health plan 

other than on the earliest date on which 

coverage can become effective for the 

individual under the terms of the plan; 

or through special enrollment. (For rules 

relating to special enrollment, see 

§ 2590.701–6.) If an individual ceases to 

be eligible for coverage under a plan, 

and then subsequently becomes eligible 

for coverage under the plan, only the 

individual’s most recent period of 

eligibility is taken into account in 

determining whether the individual is a 

late enrollee under the plan with respect 

to the most recent period of coverage. 

Similar rules apply if an individual 

again becomes eligible for coverage 

following a suspension of coverage that 

applied generally under the plan. 

* * * * * 

Waiting period means waiting period 

within the meaning of § 2590.715– 

2708(b). 

■ 15. Section 2590.701–3 is amended 

by: 

■ A. Removing paragraphs (a)(2), (a)(3), 

(c), (d), (e), and (f). 

■ B. Revising the heading to paragraph 

(a). 

■ C. Removing paragraph (a)(1) 

introductory text, and redesignating 

paragraphs (a)(1)(i) and (a)(1)(ii) as 

paragraphs (a)(1) and (a)(2). 

■ D. Amending paragraph (a)(2) by 

revising paragraph (ii) of Examples 1 

and 2, by revising Example 3 and 

Example 4, by revising paragraph (ii) of 

Examples 5, 6, 7 and 8. 

■ E. Revising paragraph (b). 

The revisions read as follows: 

§ 2590.701–3 Limitations on preexisting 

condition exclusion period. 

(a) Preexisting condition exclusion 

defined— 

* * * * * 

(2) * * * 

Example 1. * * * 

(ii) Conclusion. In this Example 1, the 

exclusion of benefits for any prosthesis if the 

body part was lost before the effective date 

of coverage is a preexisting condition 

exclusion because it operates to exclude 

benefits for a condition based on the fact that 

the condition was present before the effective 

date of coverage under the policy. The 

exclusion of benefits, therefore, is prohibited. 

Example 2. * * * 

(ii) Conclusion. In this Example 2, the plan 

provision excluding cosmetic surgery 

benefits for individuals injured before 

enrolling in the plan is a preexisting 

condition exclusion because it operates to 

exclude benefits relating to a condition based 

on the fact that the condition was present 

before the effective date of coverage. The 

plan provision, therefore, is prohibited. 

Example 3. (i) Facts. A group health plan 

provides coverage for the treatment of 

diabetes, generally not subject to any 

requirement to obtain an approval for a 

treatment plan. However, if an individual 

was diagnosed with diabetes before the 

effective date of coverage under the plan, 

diabetes coverage is subject to a requirement 

to obtain approval of a treatment plan in 

advance. 

(ii) Conclusion. In this Example 3, the 

requirement to obtain advance approval of a 

treatment plan is a preexisting condition 

exclusion because it limits benefits for a 

condition based on the fact that the condition 

was present before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

Example 4. (i) Facts. A group health plan 

provides coverage for three infertility 

treatments. The plan counts against the threetreatment limit benefits provided under prior 

health coverage. 

(ii) Conclusion. In this Example 4, 

counting benefits for a specific condition 

provided under prior health coverage against 

a treatment limit for that condition is a 

preexisting condition exclusion because it 

operates to limit benefits for a condition 

based on the fact that the condition was 

present before the effective date of coverage. 

The plan provision, therefore, is prohibited. 

Example 5. * * * 

(ii) Conclusion. In this Example 5, the 

requirement to be covered under the plan for 

12 months to be eligible for pregnancy 

benefits is a subterfuge for a preexisting 

condition exclusion because it is designed to 

exclude benefits for a condition (pregnancy) 

that arose before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

Example 6. * * * 

(ii) Conclusion. In this Example 6, the 

exclusion of coverage for treatment of 

congenital heart conditions is a preexisting 

condition exclusion because it operates to 

exclude benefits relating to a condition based 

on the fact that the condition was present 

before the effective date of coverage. The 

plan provision, therefore, is prohibited. 

Example 7. * * * 

(ii) Conclusion. In this Example 7, the 

exclusion of coverage for treatment of cleft 

palate is not a preexisting condition 

exclusion because the exclusion applies 

regardless of when the condition arose 

relative to the effective date of coverage. The 

plan provision, therefore, is not prohibited. 

(But see 45 CFR 147.150, which may require 

coverage of cleft palate as an essential health 

benefit for health insurance coverage in the 

individual or small group market). 

Example 8. * * * 

(ii) Conclusion. In this Example 8, the 

exclusion of coverage for treatment of cleft 

palate for individuals who have not been 

covered under the plan from the date of birth 

operates to exclude benefits in relation to a 

condition based on the fact that the condition 

was present before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

* * * * * 

(b) General rules. See § 2590.715– 

2704 for rules prohibiting the 

imposition of a preexisting condition 

exclusion. 

■ 16. Section 2590.701–4 is amended by 

removing paragraphs (a)(3) and (c), and 

revising paragraph (b) to read as follows: 

§ 2590.701–4 Rules relating to creditable 

coverage. 

* * * * * 

(b) Counting creditable coverage rules 

superseded by prohibition on 

preexisting condition exclusion. See 

§ 2590.715–2704 for rules prohibiting 

the imposition of a preexisting 

condition exclusion. 

■ 17. Section 2590.701–5 is revised to 

read as follows: 

§ 2590.701–5 Evidence of creditable 

coverage. 

(a) In general. The rules for providing 

certificates of creditable coverage and 

demonstrating creditable coverage have 

been superseded by the prohibition on 

preexisting condition exclusions. See 

§ 2590.715–2704 for rules prohibiting 

the imposition of a preexisting 

condition exclusion. 

(b) Applicability. The amendments 

made under this section apply 

beginning December 31, 2014. 

■ 18. Section 2590.701–6 is amended by 

removing paragraph (a)(3)(i)(E) and 

revising paragraphs (a)(3)(i)(C), 

(a)(3)(i)(D), (a)(4)(i), and (d)(2) to read as 

follows: 

§ 2590.701–6 Special enrollment periods. 

* * * * * 

(a) * * * 

(3) * * * 

(i) * * * 

(C) In the case of coverage offered 

through an HMO, or other arrangement, 

in the group market that does not 

provide benefits to individuals who no 

longer reside, live, or work in a service 

area, loss of coverage because an 

individual no longer resides, lives, or 

works in the service area (whether or 

not within the choice of the individual), 

and no other benefit package is available 

to the individual; and 


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(D) A situation in which a plan no 

longer offers any benefits to the class of 

similarly situated individuals (as 

described in § 2590.702(d)) that 

includes the individual. 

* * * * * 

(4) * * * 

(i) A plan or issuer must allow an 

employee a period of at least 30 days 

after an event described in paragraph 

(a)(3) of this section to request 

enrollment (for the employee or the 

employee’s dependent). 

* * * * * 

(d) * * * 

(2) Special enrollees must be offered 

all the benefit packages available to 

similarly situated individuals who 

enroll when first eligible. For this 

purpose, any difference in benefits or 

cost-sharing requirements for different 

individuals constitutes a different 

benefit package. In addition, a special 

enrollee cannot be required to pay more 

for coverage than a similarly situated 

individual who enrolls in the same 

coverage when first eligible. 

* * * * * 

■ 19. Section 2590.701–7 is revised to 

read as follows: 

§ 2590.701–7 HMO affiliation period as an 

alternative to a preexisting condition 

exclusion. 

The rules for HMO affiliation periods 

have been superseded by the 

prohibition on preexisting condition 

exclusions. See § 2590.715–2704 for 

rules prohibiting the imposition of a 

preexisting condition exclusion. 

■ 20. Section 2590.702 is amended by: 

■ A. Removing paragraph (b)(3) and 

revising paragraphs (b)(1)(i) and 

(b)(2)(i)(B). 

■ B. Revising Example 1, paragraph (i) 

of Example 2, paragraph (ii) of Example 

4, paragraph (ii) of Example 5, and 

removing Example 8, in paragraph 

(b)(2)(i)(D). 

■ C. Revising Example 2, and paragraph 

(i) of Example 5, in paragraph (d)(4). 

■ D. Revising paragraph (ii) of Example 

2 in paragraph (e)(2)(i)(B). 

■ E. Revising Example 1 in paragraph 

(g)(1)(ii). 

The revisions read as follows: 

§ 2590.702 Prohibiting discrimination 

against participants and beneficiaries 

based on a health factor. 

* * * * * 

(b) * * * 

(1) * * * 

(i) A group health plan, and a health 

insurance issuer offering health 

insurance coverage in connection with a 

group health plan, may not establish 

any rule for eligibility (including 

continued eligibility) of any individual 

to enroll for benefits under the terms of 

the plan or group health insurance 

coverage that discriminates based on 

any health factor that relates to that 

individual or a dependent of that 

individual. This rule is subject to the 

provisions of paragraph (b)(2) of this 

section (explaining how this rule 

applies to benefits), paragraph (d) of this 

section (containing rules for establishing 

groups of similarly situated 

individuals), paragraph (e) of this 

section (relating to nonconfinement, 

actively-at-work, and other service 

requirements), paragraph (f) of this 

section (relating to wellness programs), 

and paragraph (g) of this section 

(permitting favorable treatment of 

individuals with adverse health factors). 

* * * * * 

(2) * * * 

(i) * * * 

(B) However, benefits provided under 

a plan must be uniformly available to all 

similarly situated individuals (as 

described in paragraph (d) of this 

section). Likewise, any restriction on a 

benefit or benefits must apply uniformly 

to all similarly situated individuals and 

must not be directed at individual 

participants or beneficiaries based on 

any health factor of the participants or 

beneficiaries (determined based on all 

the relevant facts and circumstances). 

Thus, for example, a plan may limit or 

exclude benefits in relation to a specific 

disease or condition, limit or exclude 

benefits for certain types of treatments 

or drugs, or limit or exclude benefits 

based on a determination of whether the 

benefits are experimental or not 

medically necessary, but only if the 

benefit limitation or exclusion applies 

uniformly to all similarly situated 

individuals and is not directed at 

individual participants or beneficiaries 

based on any health factor of the 

participants or beneficiaries. In 

addition, a plan or issuer may require 

the satisfaction of a deductible, 

copayment, coinsurance, or other costsharing requirement in order to obtain a 

benefit if the limit or cost-sharing 

requirement applies uniformly to all 

similarly situated individuals and is not 

directed at individual participants or 

beneficiaries based on any health factor 

of the participants or beneficiaries. In 

the case of a cost-sharing requirement, 

see also paragraph (b)(2)(ii) of this 

section, which permits variances in the 

application of a cost-sharing mechanism 

made available under a wellness 

program. (Whether any plan provision 

or practice with respect to benefits 

complies with this paragraph (b)(2)(i) 

does not affect whether the provision or 

practice is permitted under ERISA, the 

Affordable Care Act (including the 

requirements related to essential health 

benefits), the Americans with 

Disabilities Act, or any other law, 

whether State or Federal.) 

* * * * * 

(D) * * * 

Example 1. (i) Facts. A group health plan 

applies a $10,000 annual limit on a specific 

covered benefit that is not an essential health 

benefit to each participant or beneficiary 

covered under the plan. The limit is not 

directed at individual participants or 

beneficiaries. 

(ii) Conclusion. In this Example 1, the limit 

does not violate this paragraph (b)(2)(i) 

because coverage of the specific, nonessential health benefit up to $10,000 is 

available uniformly to each participant and 

beneficiary under the plan and because the 

limit is applied uniformly to all participants 

and beneficiaries and is not directed at 

individual participants or beneficiaries. 

Example 2. (i) Facts. A group health plan 

has a $500 deductible on all benefits for 

participants covered under the plan. 

Participant B files a claim for the treatment 

of AIDS. At the next corporate board meeting 

of the plan sponsor, the claim is discussed. 

Shortly thereafter, the plan is modified to 

impose a $2,000 deductible on benefits for 

the treatment of AIDS, effective before the 

beginning of the next plan year. 

* * * * * 

Example 4. * * * 

(ii) Conclusion. In this Example 4, the limit 

does not violate this paragraph (b)(2)(i) 

because $2,000 of benefits for the treatment 

of TMJ are available uniformly to all 

similarly situated individuals and a plan may 

limit benefits covered in relation to a specific 

disease or condition if the limit applies 

uniformly to all similarly situated 

individuals and is not directed at individual 

participants or beneficiaries. (However, 

applying a lifetime limit on TMJ may violate 

§ 2590.715–2711, if TMJ coverage is an 

essential health benefit. This example does 

not address whether the plan provision is 

permissible under any other applicable law, 

including PHS Act section 2711 or the 

Americans with Disabilities Act.) 

Example 5. * * * 

(ii) Conclusion. In this Example 5, the 

lower lifetime limit for participants and 

beneficiaries with a congenital heart defect 

violates this paragraph (b)(2)(i) because 

benefits under the plan are not uniformly 

available to all similarly situated individuals 

and the plan’s lifetime limit on benefits does 

not apply uniformly to all similarly situated 

individuals. Additionally, this plan provision 

is prohibited under § 2590.715–2711 because 

it imposes a lifetime limit on essential health 

benefits. 

* * * * * 

(d) * * * 

(4) * * * 

Example 2. (i) Facts. Under a group health 

plan, coverage is made available to 

employees, their spouses, and their children. 

However, coverage is made available to a 

child only if the child is under age 26 (or 

under age 29 if the child is continuously 


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enrolled full-time in an institution of higher 

learning (full-time students)). There is no 

evidence to suggest that these classifications 

are directed at individual participants or 

beneficiaries. 

(ii) Conclusion. In this Example 2, treating 

spouses and children differently by imposing 

an age limitation on children, but not on 

spouses, is permitted under this paragraph 

(d). Specifically, the distinction between 

spouses and children is permitted under 

paragraph (d)(2) of this section and is not 

prohibited under paragraph (d)(3) of this 

section because it is not directed at 

individual participants or beneficiaries. It is 

also permissible to treat children who are 

under age 26 (or full-time students under age 

29) as a group of similarly situated 

individuals separate from those who are age 

26 or older (or age 29 or older if they are not 

full-time students) because the classification 

is permitted under paragraph (d)(2) of this 

section and is not directed at individual 

participants or beneficiaries. 

* * * * * 

Example 5. (i) Facts. An employer 

sponsors a group health plan that provides 

the same benefit package to all seven 

employees of the employer. Six of the seven 

employees have the same job title and 

responsibilities, but Employee G has a 

different job title and different 

responsibilities. After G files an expensive 

claim for benefits under the plan, coverage 

under the plan is modified so that employees 

with G’s job title receive a different benefit 

package that includes a higher deductible 

than in the benefit package made available to 

the other six employees. 

* * * * * 

(e) * * * 

(2) * * * 

(i) * * * 

(B) * * * 

Example 2. * * * 

(ii) Conclusion. In this Example 2, the plan 

violates this paragraph (e)(2) (and thus also 

paragraph (b) of this section) because the 90- 

day continuous service requirement is a rule 

for eligibility based on whether an individual 

is actively at work. However, the plan would 

not violate this paragraph (e)(2) or paragraph 

(b) of this section if, under the plan, an 

absence due to any health factor is not 

considered an absence for purposes of 

measuring 90 days of continuous service. (In 

addition, any eligibility provision that is 

time-based must comply with the 

requirements of PHS Act section 2708 and its 

implementing regulations.) 

* * * * * 

(g) * * * 

(1) * * * 

(ii) * * * 

Example 1. (i) Facts. An employer 

sponsors a group health plan that generally 

is available to employees, spouses of 

employees, and dependent children until age 

26. However, dependent children who are 

disabled are eligible for coverage beyond age 

26. 

(ii) Conclusion. In this Example 1, the plan 

provision allowing coverage for disabled 

dependent children beyond age 26 satisfies 

this paragraph (g)(1) (and thus does not 

violate this section). 

* * * * * 

21. Section 2590.715–2708 is added to 

read as follows: 

§ 2590.715–2708 Prohibition on waiting 

periods that exceed 90 days. 

(a) General rule. A group health plan, 

and a health insurance issuer offering 

group health insurance coverage, must 

not apply any waiting period that 

exceeds 90 days, in accordance with the 

rules of this section. If, under the terms 

of a plan, an employee can elect 

coverage that would begin on a date that 

is not later than the end of the 90-day 

waiting period, this paragraph (a) is 

considered satisfied. Accordingly, a 

plan or issuer in that case will not be 

considered to have violated this 

paragraph (a) solely because employees 

(or other classes of participants) may 

take additional time (beyond the end of 

the 90-day waiting period) to elect 

coverage. 

(b) Waiting period defined. For 

purposes of this part, a waiting period 

is the period that must pass before 

coverage for an employee or dependent 

who is otherwise eligible to enroll under 

the terms of a group health plan can 

become effective. If an employee or 

dependent enrolls as a late enrollee (as 

defined under § 2590.701–2) or special 

enrollee (as described in § 2590.701–6), 

any period before such late or special 

enrollment is not a waiting period. 

(c) Relation to a plan’s eligibility 

criteria—(1) Except as provided in 

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

section, being otherwise eligible to 

enroll under the terms of a group health 

plan means having met the plan’s 

substantive eligibility conditions (such 

as, for example, being in an eligible job 

classification or achieving job-related 

licensure requirements specified in the 

plan’s terms). Moreover, except as 

provided in paragraphs (c)(2) and (c)(3) 

of this section, nothing in this section 

requires a plan sponsor to offer coverage 

to any particular employee or class of 

employees (including, for example, parttime employees). Instead, this section 

prohibits requiring otherwise eligible 

participants and beneficiaries to wait 

more than 90 days before coverage is 

effective. (While a substantive eligibility 

condition that denies coverage to 

employees may be permissible under 

this section, a failure by an applicable 

large employer (as defined in section 

4980H of the Code) to offer coverage to 

a full-time employee might, for 

example, nonetheless give rise to an 

assessable payment under Code section 

4980H and its implementing 

regulations.) 

(2) Eligibility conditions based solely 

on the lapse of time. Eligibility 

conditions that are based solely on the 

lapse of a time period are permissible 

for no more than 90 days. 

(3) Other conditions for eligibility. 

Other conditions for eligibility under 

the terms of a group health plan are 

generally permissible under PHS Act 

section 2708, unless the condition is 

designed to avoid compliance with the 

90-day waiting period limitation, 

determined in accordance with the rules 

of this paragraph (c)(3). 

(i) Application to variable-hour 

employees in cases in which a specified 

number of hours of service per period is 

a plan eligibility condition. If a group 

health plan conditions eligibility on an 

employee regularly having a specified 

number of hours of service per period 

(or working full-time), and it cannot be 

determined that a newly-hired 

employee is reasonably expected to 

regularly work that number of hours per 

period (or work full-time), the plan may 

take a reasonable period of time, not to 

exceed 12 months and beginning on any 

date between the employee’s start day 

and the first day of the first calendar 

month following the employee’s start 

date, to determine whether the 

employee meets the plan’s eligibility 

condition. Except in cases in which a 

waiting period that exceeds 90 days is 

imposed in addition to a measurement 

period, the time period for determining 

whether such an employee meets the 

plan’s eligibility condition will not be 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if coverage is made 

effective no later than 13 months from 

the employee’s start date, plus if the 

employee’s start date is not the first day 

of a calendar month, the time remaining 

until the first day of the next calendar 

month. 

(ii) Cumulative service requirements. 

If a group health plan or health 

insurance issuer conditions eligibility 

on an employee’s having completed a 

number of cumulative hours of service, 

the eligibility condition is not 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if the cumulative 

hours-of-service requirement does not 

exceed 1,200 hours. 

(d) Counting days. Under this section, 

all calendar days are counted beginning 

on the enrollment date (as defined in 

§ 2590.701–2), including weekends and 

holidays. If, in the case of a plan or 

issuer imposing a 90-day waiting 

period, the 91st day is a weekend or 

holiday, the plan or issuer may choose 

to permit coverage to become effective 

earlier than the 91st day, for 


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administrative convenience. Similarly, 

plans and issuers that do not want to 

start coverage in the middle of a month 

(or pay period) may choose to permit 

coverage to become effective earlier than 

the 91st day, for administrative 

convenience. For example, a plan may 

impose a waiting period of 60 days plus 

a fraction of a month (or pay period) 

until the first day of the next month (or 

pay period). However, a plan or issuer 

that extends the effective date of 

coverage beyond the 91st day fails to 

comply with the 90-day waiting period 

limitation. 

(e) Examples. The rules of this section 

are illustrated by the following 

examples: 

Example 1. (i) Facts. A group health plan 

provides that full-time employees are eligible 

for coverage under the plan. Employee A 

begins employment as a full-time employee 

on January 19. 

(ii) Conclusion. In this Example 1, any 

waiting period for A would begin on January 

19 and may not exceed 90 days. Coverage 

under the plan must become effective no 

later than April 19 (assuming February lasts 

28 days). 

Example 2. (i) Facts. A group health plan 

provides that only employees with job title 

M are eligible for coverage under the plan. 

Employee B begins employment in job title 

L on January 30. 

(ii) Conclusion. In this Example 2, B is not 

eligible for coverage under the plan, and the 

period while B is working in job title L and 

therefore not in an eligible class of employees 

is not part of a waiting period under this 

section. 

Example 3. (i) Facts. Same facts as 

Example 2, except that B transfers to a new 

position with job title M on April 11. 

(ii) Conclusion. In this Example 3, B 

becomes eligible for coverage on April 11, 

but for the waiting period. Any waiting 

period for B begins on April 11 and may not 

exceed 90 days. Coverage under the plan 

must become effective no later than July 10. 

Example 4. (i) Facts. A group health plan 

provides that only employees who have 

completed specified training and achieved 

specified certifications are eligible for 

coverage under the plan. Employee C is hired 

on May 3 and meets the plan’s eligibility 

criteria on September 22. 

(ii) Conclusion. In this Example 4, C 

becomes eligible for coverage on September 

22, but for the waiting period. Any waiting 

period for C would begin on September 22 

and may not exceed 90 days. Coverage under 

the plan must become effective no later than 

December 21. 

Example 5. (i) Facts. A group health plan 

provides that employees are eligible for 

coverage after one year of service. 

(ii) Conclusion. In this Example 5, the 

plan’s eligibility condition is based solely on 

the lapse of time and, therefore, is 

impermissible under paragraph (c)(2) of this 

section because it exceeds 90 days. 

Example 6. (i) Facts. Employer W’s group 

health plan provides for coverage to begin on 

the first day of the first payroll period on or 

after the date an employee is hired and 

completes the applicable enrollment forms. 

Enrollment forms are distributed on an 

employee’s start date and may be completed 

within 90 days. Employee D is hired and 

starts on October 31, which is the first day 

of a pay period. D completes the enrollment 

forms and submits them on the 90th day after 

D’s start date. Coverage is made effective 7 

days later, which is the first day of the next 

pay period. 

(ii) Conclusion. In this Example 6, under 

the terms of W’s plan, coverage may become 

effective as early as October 31, depending 

on when D completes the applicable 

enrollment forms. Under the terms of the 

plan, when coverage becomes effective is 

dependent solely on the length of time taken 

by D to complete the enrollment materials. 

Therefore, under the terms of the plan, D may 

elect coverage that would begin on a date that 

does not exceed the 90-day waiting period 

limitation, and the plan complies with this 

section. 

Example 7. (i) Facts. Under Employer Y’s 

group health plan, only employees who are 

full-time (defined under the plan as regularly 

averaging 30 hours of service per week) are 

eligible for coverage. Employee E begins 

employment for Employer Y on November 26 

of Year 1. E’s hours are reasonably expected 

to vary, with an opportunity to work between 

20 and 45 hours per week, depending on 

shift availability and E’s availability. 

Therefore, it cannot be determined at E’s start 

date that E is reasonably expected to work 

full-time. Under the terms of the plan, 

variable-hour employees, such as E, are 

eligible to enroll in the plan if they are 

determined to be a full-time employee after 

a measurement period of 12 months that 

begins on the employee’s start date. Coverage 

is made effective no later than the first day 

of the first calendar month after the 

applicable enrollment forms are received. E’s 

12-month measurement period ends 

November 25 of Year 2. E is determined to 

be a full-time employee and is notified of E’s 

plan eligibility. If E then elects coverage, E’s 

first day of coverage will be January 1 of Year 

3. 

(ii) Conclusion. In this Example 7, the 

measurement period is permissible because it 

is not considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. The plan may use a reasonable 

period of time to determine whether a 

variable-hour employee is a full-time 

employee, provided the period of time is no 

longer than 12 months and begins on a date 

between the employee’s start date and the 

first day of the next calendar month, 

provided coverage is made effective no later 

than 13 months from E’s start date (plus if 

the employee’s start date is not the first day 

of a calendar month, the time remaining until 

the first day of the next calendar month) and 

provided that, in addition to the 

measurement period, no more than 90 days 

elapse prior to the employee’s eligibility for 

coverage. 

Example 8. (i) Facts. Employee F begins 

working 25 hours per week for Employer Z 

on January 6 and is considered a part-time 

employee for purposes of Z’s group health 

plan. Z sponsors a group health plan that 

provides coverage to part-time employees 

after they have completed a cumulative 1,200 

hours of service. F satisfies the plan’s 

cumulative hours of service condition on 

December 15. 

(ii) Conclusion. In this Example 8, the 

cumulative hours of service condition with 

respect to part-time employees is not 

considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. Accordingly, coverage for F under 

the plan must begin no later than the 91st 

day after F completes 1,200 hours. (If the 

plan’s cumulative hours-of-service 

requirement was more than 1,200 hours, the 

requirement would be considered to be 

designed to avoid compliance with the 90- 

day waiting period limitation.) 

(f) Special rule for health insurance 

issuers. To the extent coverage under a 

group health plan is insured by a health 

insurance issuer, the issuer is permitted 

to rely on the eligibility information 

reported to it by the employer (or other 

plan sponsor) and will not be 

considered to violate the requirements 

of this section with respect to its 

administration of any waiting period, if 

both of the following conditions are 

satisfied: 

(1) The issuer requires the plan 

sponsor to make a representation 

regarding the terms of any eligibility 

conditions or waiting periods imposed 

by the plan sponsor before an individual 

is eligible to become covered under the 

terms of the employer’s plan (and 

requires the plan sponsor to update this 

representation with any changes), and 

(2) The issuer has no specific 

knowledge of the imposition of a 

waiting period that would exceed the 

permitted 90-day period. 

(g) No effect on other laws. 

Compliance with this section is not 

determinative of compliance with any 

other provision of State or Federal law 

(including ERISA, the Code, or other 

provisions of the Patient Protection and 

Affordable Care Act). See e.g., 

§ 2590.702, which prohibits 

discrimination in eligibility for coverage 

based on a health factor and Code 

section 4980H, which generally requires 

applicable large employers to offer 

coverage to full-time employees and 

their dependents or make an assessable 

payment. 

(h) Applicability date—(1) In general. 

The provisions of this section apply for 

plan years beginning on or after January 

1, 2014. See § 2590.715–1251 providing 

that the prohibition on waiting periods 

exceeding 90 days applies to all group 

health plans and health insurance 

issuers, including grandfathered health 

plans. 

(2) Application to individuals in a 

waiting period prior to the applicability 

date—(i) With respect to individuals 


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who are in a waiting period for coverage 

before the applicability date of this 

section, beginning on the first day the 

section applies, the waiting period can 

no longer apply to the individual if it 

would exceed 90 days with respect to 

the individual. 

(ii) This paragraph (h)(2) is illustrated 

by the following example: 

Example. (i) Facts. A group health plan is 

a calendar year plan. Prior to January 1, 2014, 

the plan provides that full-time employees 

are eligible for coverage after a 6-month 

waiting period. Employee A begins work as 

a full-time employee on October 1, 2013. 

(ii) Conclusion. In this Example 1, the first 

day of A’s waiting period is October 1, 2013 

because that is the first day A is otherwise 

eligible to enroll under the plan’s substantive 

eligibility provisions, but for the waiting 

period. Beginning January 1, 2014, the plan 

may not apply a waiting period that exceeds 

90 days. Accordingly, A must be given the 

opportunity to elect coverage that begins no 

later than January 1, 2014 (which is 93 days 

after A’s start date) because otherwise, on 

January 1, 2014, the plan would be applying 

a waiting period that exceeds 90 days. The 

plan is not required to make coverage 

effective before January 1, 2014 under the 

rules of this section. 

■ 22. Section 2590.715–2719 is 

amended by adding a sentence to the 

end of the introductory text of 

paragraph (d) and revising paragraph 

(d)(1)(i) to read as follows: 

§ 2590.715–2719 Internal claims and 

appeals and external review processes. 

* * * * * 

(d) * * * A Multi State Plan or MSP, 

as defined by 45 CFR 800.20, must 

provide an effective Federal external 

review process in accordance with this 

paragraph (d). 

(1) * * * 

(i) In general. Subject to the 

suspension provision in paragraph 

(d)(1)(ii) of this section and except to 

the extent provided otherwise by the 

Secretary in guidance, the Federal 

external review process established 

pursuant to this paragraph (d) applies, 

at a minimum, to any adverse benefit 

determination or final adverse benefit 

determination (as defined in paragraphs 

(a)(2)(i) and (a)(2)(v) of this section), 

except that a denial, reduction, 

termination, or a failure to provide 

payment for a benefit based on a 

determination that a participant or 

beneficiary fails to meet the 

requirements for eligibility under the 

terms of a group health plan is not 

eligible for the Federal external review 

process under this paragraph (d). 

* * * * * 

■ 23. Section 2590.731 is amended by 

revising paragraph (c)(2) to read as 

follows: 

§ 2590.731 Preemption; State flexibility; 

construction. 

* * * * * 

(c) * * * 

(2) Exceptions. Only in relation to 

health insurance coverage offered by a 

health insurance issuer, the provisions 

of this part do not supersede any 

provision of State law to the extent that 

such provision requires special 

enrollment periods in addition to those 

required under section 701(f) of the Act. 

* * * * * 

■ 24. Section 2590.732 is amended by 

removing paragraph (b)(2)(i), and 

redesignating paragraphs (b)(2)(ii) 

through (b)(2)(ix) as (b)(2)(i) through 

(b)(2)(viii). 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Subtitle A 

For the reasons set forth in the 

preamble, the Department of Health and 

Human Services proposes to amend 45 

CFR parts 144, 146, and 147 as set forth 

below: 

PART 144—REQUIREMENTS 

RELATING TO HEALTH INSURANCE 

COVERAGE 

■ 25. The authority citation for part 144 

continues to read as follows: 

Authority: Secs. 2701 through 2763, 2791, 

and 2792 of the Public Health Service Act (42 

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

and 300gg–92). 

■ 26. Section 144.103 is amended by 

revising the definitions of ‘‘enrollment 

date’’, ‘‘late enrollment’’, and ‘‘waiting 

period’’, and by adding definitions of 

‘‘first day of coverage’’ and ‘‘late 

enrollee’’ in alphabetical order, to read 

as follows: 

§ 144.103 Definitions. 

* * * * * 

Enrollment date means the first day of 

coverage or, if there is a waiting period, 

the first day of the waiting period. If an 

individual receiving benefits under a 

group health plan changes benefit 

packages, or if the plan changes group 

health insurance issuers, the 

individual’s enrollment date does not 

change. 

* * * * * 

First day of coverage means, in the 

case of an individual covered for 

benefits under a group health plan, the 

first day of coverage under the plan and, 

in the case of an individual covered by 

health insurance coverage in the 

individual market, the first day of 

coverage under the policy or contract. 

* * * * * 

Late enrollee means an individual 

whose enrollment in a plan is a late 

enrollment. 

Late enrollment means enrollment of 

an individual under a group health plan 

other than on the earliest date on which 

coverage can become effective for the 

individual under the terms of the plan; 

or other than through special or limited 

open enrollment. (For rules relating to 

special enrollment and limited open 

enrollment, see § 146.117 and 

§ 147.104.) If an individual ceases to be 

eligible for coverage under a plan, and 

then subsequently becomes eligible for 

coverage under the plan, only the 

individual’s most recent period of 

eligibility is taken into account in 

determining whether the individual is a 

late enrollee under the plan with respect 

to the most recent period of coverage. 

Similar rules apply if an individual 

again becomes eligible for coverage 

following a suspension of coverage that 

applied generally under the plan. 

* * * * * 

Waiting period has the meaning given 

the term in 45 CFR 147.116(b). 

PART 146—REQUIREMENTS FOR THE 

GROUP HEALTH INSURANCE 

MARKET 

■ 27. The authority citation for part 146 

continues to read as follows: 

Authority: Secs. 2702 through 2705, 2711 

through 2723, 2791, and 2792 of the PHS Act 

(42 U.S.C. 300gg–1 through 300gg–5, 300gg– 

11 through 300gg–23, 300gg–91, and 300gg– 

92). 

■ 28. Section 146.101 is amended by 

revising paragraph (b)(1) to read as 

follows: 

§ 146.101 Basis and scope. 

* * * * * 

(b) * * * 

(1) Subpart B. Subpart B of this part 

sets forth minimum requirements for 

group health plans and health insurance 

issuers offering group health insurance 

coverage under the Health Insurance 

Portability and Accountability Act 

(HIPAA), as amended by the Patient 

Protection and Affordable Care Act 

(Affordable Care Act), including special 

enrollment periods, prohibiting 

discrimination against participants and 

beneficiaries based on a health factor, 

and additional requirements prohibiting 

discrimination against participants and 

beneficiaries based on genetic 

information. 

* * * * * 

■ 29. Section 146.111 is amended by: 

■ A. Removing paragraphs (a)(2), (a)(3), 

(c), (d), (e), and (f). 

■ B. Revising the heading to paragraph 

(a). 


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■ C. Removing paragraph (a)(1) 

introductory text, and redesignating 

paragraphs (a)(1)(i) and (a)(1)(ii) as 

paragraphs (a)(1) and (a)(2). 

■ D. Amending paragraph (a)(2) by 

revising paragraph (ii) of Examples 1 

and 2, by revising Example 3 and 

Example 4, and by revising paragraph 

(ii) of Examples 5, 6, 7, and 8. 

■ E. Revising paragraph (b). 

The revisions read as follows: 

§ 146.111 Prohibition of preexisting 

condition exclusion period. 

(a) Preexisting condition exclusion 

defined— 

* * * * * 

(2) * * * 

Example 1. * * * 

(ii) Conclusion. In this Example 1, the 

exclusion of benefits for any prosthesis if the 

body part was lost before the effective date 

of coverage is a preexisting condition 

exclusion because it operates to exclude 

benefits for a condition based on the fact that 

the condition was present before the effective 

date of coverage under the policy. The 

exclusion of benefits, therefore, is prohibited. 

Example 2. * * * 

(ii) Conclusion. In this Example 2, the plan 

provision excluding cosmetic surgery 

benefits for individuals injured before 

enrolling in the plan is a preexisting 

condition exclusion because it operates to 

exclude benefits relating to a condition based 

on the fact that the condition was present 

before the effective date of coverage. The 

plan provision, therefore, is prohibited. 

Example 3. (i) Facts. A group health plan 

provides coverage for the treatment of 

diabetes, generally not subject to any 

requirement to obtain an approval for a 

treatment plan. However, if an individual 

was diagnosed with diabetes before the 

effective date of coverage under the plan, 

diabetes coverage is subject to a requirement 

to obtain approval of a treatment plan in 

advance. 

(ii) Conclusion. In this Example 3, the 

requirement to obtain advance approval of a 

treatment plan is a preexisting condition 

exclusion because it limits benefits for a 

condition based on the fact that the condition 

was present before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

Example 4. (i) Facts. A group health plan 

provides coverage for three infertility 

treatments. The plan counts against the threetreatment limit benefits provided under prior 

health coverage. 

(ii) Conclusion. In this Example 4, 

counting benefits for a specific condition 

provided under prior health coverage against 

a treatment limit for that condition is a 

preexisting condition exclusion because it 

operates to limit benefits for a condition 

based on the fact that the condition was 

present before the effective date of coverage. 

The plan provision, therefore, is prohibited. 

Example 5. * * * 

(ii) Conclusion. In this Example 5, the 

requirement to be covered under the plan for 

12 months to be eligible for pregnancy 

benefits is a subterfuge for a preexisting 

condition exclusion because it is designed to 

exclude benefits for a condition (pregnancy) 

that arose before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

Example 6. * * * 

(ii) Conclusion. In this Example 6, the 

exclusion of coverage for treatment of 

congenital heart conditions is a preexisting 

condition exclusion because it operates to 

exclude benefits relating to a condition based 

on the fact that the condition was present 

before the effective date of coverage. The 

plan provision, therefore, is prohibited. 

Example 7. * * * 

(ii) Conclusion. In this Example 7, the 

exclusion of coverage for treatment of cleft 

palate is not a preexisting condition 

exclusion because the exclusion applies 

regardless of when the condition arose 

relative to the effective date of coverage. The 

plan provision, therefore, is not prohibited. 

(But see 45 CFR 147.150, which may require 

coverage of cleft palate as an essential health 

benefit for health insurance coverage in the 

individual or small group market). 

Example 8. * * * 

(ii) Conclusion. In this Example 8, the 

exclusion of coverage for treatment of cleft 

palate for individuals who have not been 

covered under the plan from the date of birth 

operates to exclude benefits in relation to a 

condition based on the fact that the condition 

was present before the effective date of 

coverage. The plan provision, therefore, is 

prohibited. 

* * * * * 

(b) General rules. See § 147.108 for 

rules prohibiting the imposition of a 

preexisting condition exclusion. 

■ 30. Section 146.113 is amended by 

removing paragraphs (a)(3) and (c), and 

revising paragraph (b) to read as follows: 

§ 146.113 Rules relating to creditable 

coverage. 

* * * * * 

(b) Counting creditable coverage rules 

superseded by prohibition on 

preexisting condition exclusion. See 

§ 147.108 of this subchapter for rules 

prohibiting the imposition of a 

preexisting condition exclusion. 

■ 31. Section 146.115 is revised to read 

as follows: 

§ 146.115 Certification and disclosure of 

previous coverage. 

(a) In general. The rules for providing 

certificates of creditable coverage and 

demonstrating creditable coverage have 

been superseded by the prohibition on 

preexisting condition exclusions. See 

§ 147.108 of this subchapter for rules 

prohibiting the imposition of a 

preexisting condition exclusion. 

(b) Applicability. The amendments 

made under this section apply 

beginning December 31, 2014. 

■ 32. Section 146.117 is amended by 

removing paragraph (a)(3)(i)(E) and 

revising paragraph (a)(3)(i)(C), 

(a)(3)(i)(D), (a)(4)(i), and (d)(2) to read as 

follows: 

§ 146.117 Special enrollment periods. 

* * * * * 

(a) * * * 

(3) * * * 

(i) * * * 

(C) In the case of coverage offered 

through an HMO, or other arrangement, 

in the group market that does not 

provide benefits to individuals who no 

longer reside, live, or work in a service 

area, loss of coverage because an 

individual no longer resides, lives, or 

works in the service area (whether or 

not within the choice of the individual), 

and no other benefit package is available 

to the individual; and 

(D) A situation in which a plan no 

longer offers any benefits to the class of 

similarly situated individuals (as 

described in § 146.121(d)) that includes 

the individual. 

* * * * * 

(4) * * * 

(i) A plan or issuer must allow an 

employee a period of at least 30 days 

after an event described in paragraph 

(a)(3) of this section to request 

enrollment (for the employee or the 

employee’s dependent). 

* * * * * 

(d) * * * 

(2) Special enrollees must be offered 

all the benefit packages available to 

similarly situated individuals who 

enroll when first eligible. For this 

purpose, any difference in benefits or 

cost-sharing requirements for different 

individuals constitutes a different 

benefit package. In addition, a special 

enrollee cannot be required to pay more 

for coverage than a similarly situated 

individual who enrolls in the same 

coverage when first eligible. 

* * * * * 

■ 33. Section 146.119 is revised to read 

as follows: 

§ 146.119 HMO affiliation period as an 

alternative to a preexisting condition 

exclusion. 

The rules for HMO affiliation periods 

have been superseded by the 

prohibition on preexisting condition 

exclusions. See § 147.108 of this 

subchapter for rules prohibiting the 

imposition of a preexisting condition 

exclusion. 

■ 34. Section 146.121 is amended by: 

■ A. Removing paragraph (b)(3) and 

revising paragraphs (b)(1)(i) and 

(b)(2)(i)(B). 

■ B. Revising Example 1, paragraph (i) 

of Example 2, paragraph (ii) of Example 

4, and paragraph (ii) of Example 5, and 

removing Example 8 in paragraph 

(b)(2)(i)(D). 


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■ C. Revising Example 2, and paragraph 

(i) of Example 5, in paragraph (d)(4). 

■ D. Revising paragraph (ii) of Example 

2 in paragraph (e)(2)(i)(B). 

■ E. Revising Example 1 in paragraph 

(g)(1)(ii). 

The revisions read as follows: 

§ 146.121 Prohibiting discrimination 

against participants and beneficiaries 

based on a health factor. 

* * * * * 

(b) * * * 

(1) * * * 

(i) A group health plan, and a health 

insurance issuer offering health 

insurance coverage in connection with a 

group health plan, may not establish 

any rule for eligibility (including 

continued eligibility) of any individual 

to enroll for benefits under the terms of 

the plan or group health insurance 

coverage that discriminates based on 

any health factor that relates to that 

individual or a dependent of that 

individual. This rule is subject to the 

provisions of paragraph (b)(2) of this 

section (explaining how this rule 

applies to benefits), paragraph (d) of this 

section (containing rules for establishing 

groups of similarly situated 

individuals), paragraph (e) of this 

section (relating to nonconfinement, 

actively-at-work, and other service 

requirements), paragraph (f) of this 

section (relating to wellness programs), 

and paragraph (g) of this section 

(permitting favorable treatment of 

individuals with adverse health factors). 

* * * * * 

(2) * * * 

(i) * * * 

(B) However, benefits provided under 

a plan must be uniformly available to all 

similarly situated individuals (as 

described in paragraph (d) of this 

section). Likewise, any restriction on a 

benefit or benefits must apply uniformly 

to all similarly situated individuals and 

must not be directed at individual 

participants or beneficiaries based on 

any health factor of the participants or 

beneficiaries (determined based on all 

the relevant facts and circumstances). 

Thus, for example, a plan may limit or 

exclude benefits in relation to a specific 

disease or condition, limit or exclude 

benefits for certain types of treatments 

or drugs, or limit or exclude benefits 

based on a determination of whether the 

benefits are experimental or not 

medically necessary, but only if the 

benefit limitation or exclusion applies 

uniformly to all similarly situated 

individuals and is not directed at 

individual participants or beneficiaries 

based on any health factor of the 

participants or beneficiaries. In 

addition, a plan or issuer may require 

the satisfaction of a deductible, 

copayment, coinsurance, or other costsharing requirement in order to obtain a 

benefit if the limit or cost-sharing 

requirement applies uniformly to all 

similarly situated individuals and is not 

directed at individual participants or 

beneficiaries based on any health factor 

of the participants or beneficiaries. In 

the case of a cost-sharing requirement, 

see also paragraph (b)(2)(ii) of this 

section, which permits variances in the 

application of a cost-sharing mechanism 

made available under a wellness 

program. (Whether any plan provision 

or practice with respect to benefits 

complies with this paragraph (b)(2)(i) 

does not affect whether the provision or 

practice is permitted under ERISA, the 

Affordable Care Act (including the 

requirements related to essential health 

benefits), the Americans with 

Disabilities Act, or any other law, 

whether State or Federal.) 

* * * * * 

(D) * * * 

Example 1. (i) Facts. A group health plan 

applies a $10,000 annual limit on a specific 

covered benefit that is not an essential health 

benefit to each participant or beneficiary 

covered under the plan. The limit is not 

directed at individual participants or 

beneficiaries. 

(ii) Conclusion. In this Example 1, the limit 

does not violate this paragraph (b)(2)(i) 

because coverage of the specific, nonessential health benefit up to $10,000 is 

available uniformly to each participant and 

beneficiary under the plan and because the 

limit is applied uniformly to all participants 

and beneficiaries and is not directed at 

individual participants or beneficiaries. 

Example 2. (i) Facts. A group health plan 

has a $500 deductible on all benefits for 

participants covered under the plan. 

Participant B files a claim for the treatment 

of AIDS. At the next corporate board meeting 

of the plan sponsor, the claim is discussed. 

Shortly thereafter, the plan is modified to 

impose a $2,000 deductible on benefits for 

the treatment of AIDS, effective before the 

beginning of the next plan year. 

* * * * * 

Example 4. * * * 

(ii) Conclusion. In this Example 4, the limit 

does not violate this paragraph (b)(2)(i) 

because $2,000 of benefits for the treatment 

of TMJ are available uniformly to all 

similarly situated individuals and a plan may 

limit benefits covered in relation to a specific 

disease or condition if the limit applies 

uniformly to all similarly situated 

individuals and is not directed at individual 

participants or beneficiaries. (However, 

applying a lifetime limit on TMJ may violate 

§ 147.126, if TMJ coverage is an essential 

health benefit. This example does not 

address whether the plan provision is 

permissible under any other applicable law, 

including PHS Act section 2711 or the 

Americans with Disabilities Act.) 

Example 5. * * * 

(ii) Conclusion. In this Example 5, the 

lower lifetime limit for participants and 

beneficiaries with a congenital heart defect 

violates this paragraph (b)(2)(i) because 

benefits under the plan are not uniformly 

available to all similarly situated individuals 

and the plan’s lifetime limit on benefits does 

not apply uniformly to all similarly situated 

individuals. Additionally, this plan provision 

is prohibited under § 147.126 because it 

imposes a lifetime limit on essential health 

benefits. 

* * * * * 

(d) * * * 

(4) * * * 

Example 2. (i) Facts. Under a group health 

plan, coverage is made available to 

employees, their spouses, and their children. 

However, coverage is made available to a 

child only if the child is under age 26 (or 

under age 29 if the child is continuously 

enrolled full-time in an institution of higher 

learning (full-time students)). There is no 

evidence to suggest that these classifications 

are directed at individual participants or 

beneficiaries. 

(ii) Conclusion. In this Example 2, treating 

spouses and children differently by imposing 

an age limitation on children, but not on 

spouses, is permitted under this paragraph 

(d). Specifically, the distinction between 

spouses and children is permitted under 

paragraph (d)(2) of this section and is not 

prohibited under paragraph (d)(3) of this 

section because it is not directed at 

individual participants or beneficiaries. It is 

also permissible to treat children who are 

under age 26 (or full-time students under age 

29) as a group of similarly situated 

individuals separate from those who are age 

26 or older (or age 29 or older if they are not 

full-time students) because the classification 

is permitted under paragraph (d)(2) of this 

section and is not directed at individual 

participants or beneficiaries. 

* * * * * 

Example 5. (i) Facts. An employer sponsors 

a group health plan that provides the same 

benefit package to all seven employees of the 

employer. Six of the seven employees have 

the same job title and responsibilities, but 

Employee G has a different job title and 

different responsibilities. After G files an 

expensive claim for benefits under the plan, 

coverage under the plan is modified so that 

employees with G’s job title receive a 

different benefit package that includes a 

higher deductible than in the benefit package 

made available to the other six employees. 

* * * * * 

(e) * * * 

(2) * * * 

(i) * * * 

(B) * * * 

Example 2. * * * 

(ii) Conclusion. In this Example 2, the plan 

violates this paragraph (e)(2) (and thus also 

paragraph (b) of this section) because the 90- 

day continuous service requirement is a rule 

for eligibility based on whether an individual 

is actively at work. However, the plan would 

not violate this paragraph (e)(2) or paragraph 

(b) of this section if, under the plan, an 

absence due to any health factor is not 


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17334 Federal Register / Vol. 78, No. 55 / Thursday, March 21, 2013 / Proposed Rules 

considered an absence for purposes of 

measuring 90 days of continuous service. (In 

addition, any eligibility provision that is 

time-based must comply with the 

requirements of PHS Act section 2708 and its 

implementing regulations.) 

* * * * * 

(g) * * * 

(1) * * * 

(ii) * * * 

Example 1. (i) Facts. An employer sponsors 

a group health plan that generally is available 

to employees, spouses of employees, and 

dependent children until age 26. However, 

dependent children who are disabled are 

eligible for coverage beyond age 26. 

(ii) Conclusion. In this Example 1, the plan 

provision allowing coverage for disabled 

dependent children beyond age 26 satisfies 

this paragraph (g)(1) (and thus does not 

violate this section). 

* * * * * 

■ 35. Section 146.143 is amended by 

revising paragraph (c)(2) to read as 

follows: 

§ 146.143 Preemption; State flexibility; 

construction. 

* * * * * 

(c) * * * 

(2) Exceptions. Only in relation to 

health insurance coverage offered by a 

health insurance issuer, the provisions 

of this part do not supersede any 

provision of State law to the extent that 

such provision requires special 

enrollment periods in addition to those 

required under section 2702 of the Act. 

* * * * * 

■ 36. Amend § 146.145 by revising 

paragraph (b) to read as follows: 

§ 146.145 Special rules relating to group 

health plans. 

* * * * * 

(b) General exception for certain small 

group health plans. The requirements of 

this part, other than § 146.130 and the 

provisions with respect to genetic 

nondiscrimination (found in 

§ 146.121(b), § 146.121(c), § 146.121(e), 

§ 146.122(b), § 146.122(c), § 146.122(d), 

and § 146.122(e)) do not apply to any 

group health plan (and group health 

insurance coverage) for any plan year, if 

on the first day of the plan year, the 

plan has fewer than two participants 

who are current employees. 

* * * * * 

PART 147—HEALTH INSURANCE 

REFORM REQUIREMENTS FOR THE 

GROUP AND INDIVIDUAL HEALTH 

INSURANCE MARKETS 

■ 37. The authority citation for part 147 

continues to read as follows: 

Authority: Secs. 2701 through 2763, 2791, 

and 2792 of the Public Health Service Act (42 

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

and 300gg–92), as amended. 

■ 38. Section 147.116 is added to read 

as follows: 

§ 147.116 Prohibition on waiting periods 

that exceed 90 days. 

(a) General rule. A group health plan, 

and a health insurance issuer offering 

group health insurance coverage, must 

not apply any waiting period that 

exceeds 90 days, in accordance with the 

rules of this section. If, under the terms 

of a plan, an employee can elect 

coverage that would begin on a date that 

is not later than the end of the 90-day 

waiting period, this paragraph (a) is 

considered satisfied. Accordingly, a 

plan or issuer in that case will not be 

considered to have violated this 

paragraph (a) solely because employees 

(or other classes of participants) may 

take additional time (beyond the end of 

the 90-day waiting period) to elect 

coverage. 

(b) Waiting period defined. For 

purposes of this part, a waiting period 

is the period that must pass before 

coverage for an employee or dependent 

who is otherwise eligible to enroll under 

the terms of a group health plan can 

become effective. If an employee or 

dependent enrolls as a late enrollee (as 

defined under § 144.103 of this 

subchapter) or special enrollee (as 

described in § 146.117 of this 

subchapter), any period before such late 

or special enrollment is not a waiting 

period. 

(c) Relation to a plan’s eligibility 

criteria—(1) Except as provided in 

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

section, being otherwise eligible to 

enroll under the terms of a group health 

plan means having met the plan’s 

substantive eligibility conditions (such 

as, for example, being in an eligible job 

classification or achieving job-related 

licensure requirements specified in the 

plan’s terms). Moreover, except as 

provided in paragraphs (c)(2) and (c)(3) 

of this section, nothing in this section 

requires a plan sponsor to offer coverage 

to any particular employee or class of 

employees (including, for example, parttime employees). Instead, this section 

prohibits requiring otherwise eligible 

participants and beneficiaries to wait 

more than 90 days before coverage is 

effective. (While a substantive eligibility 

condition that denies coverage to 

employees may be permissible under 

this section, a failure by an applicable 

large employer (as defined in section 

4980H of the Code) to offer coverage to 

a full-time employee might, for 

example, nonetheless give rise to an 

assessable payment under section 

4980H and its implementing 

regulations.) 

(2) Eligibility conditions based solely 

on the lapse of time. Eligibility 

conditions that are based solely on the 

lapse of a time period are permissible 

for no more than 90 days. 

(3) Other conditions for eligibility. 

Other conditions for eligibility under 

the terms of a group health plan are 

generally permissible under PHS Act 

section 2708, unless the condition is 

designed to avoid compliance with the 

90-day waiting period limitation, 

determined in accordance with the rules 

of this paragraph (c)(3). 

(i) Application to variable-hour 

employees in cases in which a specified 

number of hours of service per period is 

a plan eligibility condition. If a group 

health plan conditions eligibility on an 

employee regularly having a specified 

number of hours of service per period 

(or working full-time), and it cannot be 

determined that a newly-hired 

employee is reasonably expected to 

regularly work that number of hours per 

period (or work full-time), the plan may 

take a reasonable period of time, not to 

exceed 12 months and beginning on any 

date between the employee’s start day 

and the first day of the first calendar 

month following the employee’s start 

date, to determine whether the 

employee meets the plan’s eligibility 

condition. Except in cases in which a 

waiting period that exceeds 90 days is 

imposed in addition to a measurement 

period, the time period for determining 

whether such an employee meets the 

plan’s eligibility condition will not be 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if coverage is made 

effective no later than 13 months from 

the employee’s start date, plus if the 

employee’s start date is not the first day 

of a calendar month, the time remaining 

until the first day of the next calendar 

month. 

(ii) Cumulative service requirements. 

If a group health plan or health 

insurance issuer conditions eligibility 

on an employee’s having completed a 

number of cumulative hours of service, 

the eligibility condition is not 

considered to be designed to avoid 

compliance with the 90-day waiting 

period limitation if the cumulative 

hours-of-service requirement does not 

exceed 1,200 hours. 

(d) Counting days. Under this section, 

all calendar days are counted beginning 

on the enrollment date (as defined in 

§ 144.103 of this subchapter), including 

weekends and holidays. If, in the case 

of a plan or issuer imposing a 90-day 

waiting period, the 91st day is a 

weekend or holiday, the plan or issuer 

may choose to permit coverage to 

become effective earlier than the 91st 


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day, for administrative convenience. 

Similarly, plans and issuers that do not 

want to start coverage in the middle of 

a month (or pay period) may choose to 

permit coverage to become effective 

earlier than the 91st day, for 

administrative convenience. For 

example, a plan may impose a waiting 

period of 60 days plus a fraction of a 

month (or pay period) until the first day 

of the next month (or pay period). 

However, a plan or issuer that extends 

the effective date of coverage beyond the 

91st day fails to comply with the 90-day 

waiting period limitation. 

(e) Examples. The rules of this section 

are illustrated by the following 

examples: 

Example 1. (i) Facts. A group health plan 

provides that full-time employees are eligible 

for coverage under the plan. Employee A 

begins employment as a full-time employee 

on January 19. 

(ii) Conclusion. In this Example 1, any 

waiting period for A would begin on January 

19 and may not exceed 90 days. Coverage 

under the plan must become effective no 

later than April 19 (assuming February lasts 

28 days). 

Example 2. (i) Facts. A group health plan 

provides that only employees with job title 

M are eligible for coverage under the plan. 

Employee B begins employment in job title 

L on January 30. 

(ii) Conclusion. In this Example 2, B is not 

eligible for coverage under the plan, and the 

period while B is working in job title L and 

therefore not in an eligible class of employees 

is not part of a waiting period under this 

section. 

Example 3. (i) Facts. Same facts as 

Example 2, except that B transfers to a new 

position with job title M on April 11. 

(ii) Conclusion. In this Example 3, B 

becomes eligible for coverage on April 11, 

but for the waiting period. Any waiting 

period for B begins on April 11 and may not 

exceed 90 days. Coverage under the plan 

must become effective no later than July 10. 

Example 4. (i) Facts. A group health plan 

provides that only employees who have 

completed specified training and achieved 

specified certifications are eligible for 

coverage under the plan. Employee C is hired 

on May 3 and meets the plan’s eligibility 

criteria on September 22. 

(ii) Conclusion. In this Example 4, C 

becomes eligible for coverage on September 

22, but for the waiting period. Any waiting 

period for C would begin on September 22 

and may not exceed 90 days. Coverage under 

the plan must become effective no later than 

December 21. 

Example 5. (i) Facts. A group health plan 

provides that employees are eligible for 

coverage after one year of service. 

(ii) Conclusion. In this Example 5, the 

plan’s eligibility condition is based solely on 

the lapse of time and, therefore, is 

impermissible under paragraph (c)(2) of this 

section because it exceeds 90 days. 

Example 6. (i) Facts. Employer W’s group 

health plan provides for coverage to begin on 

the first day of the first payroll period on or 

after the date an employee is hired and 

completes the applicable enrollment forms. 

Enrollment forms are distributed on an 

employee’s start date and may be completed 

within 90 days. Employee D is hired and 

starts on October 31, which is the first day 

of a pay period. D completes the enrollment 

forms and submits them on the 90th day after 

D’s start date. Coverage is made effective 7 

days later, which is the first day of the next 

pay period. 

(ii) Conclusion. In this Example 6, under 

the terms of W’s plan, coverage may become 

effective as early as October 31, depending 

on when D completes the applicable 

enrollment forms. Under the terms of the 

plan, when coverage becomes effective is 

dependent solely on the length of time taken 

by D to complete the enrollment materials. 

Therefore, under the terms of the plan, D may 

elect coverage that would begin on a date that 

does not exceed the 90-day waiting period 

limitation, and the plan complies with this 

section. 

Example 7. (i) Facts. Under Employer Y’s 

group health plan, only employees who are 

full-time (defined under the plan as regularly 

averaging 30 hours of service per week) are 

eligible for coverage. Employee E begins 

employment for Employer Y on November 26 

of Year 1. E’s hours are reasonably expected 

to vary, with an opportunity to work between 

20 and 45 hours per week, depending on 

shift availability and E’s availability. 

Therefore, it cannot be determined at E’s start 

date that E is reasonably expected to work 

full-time. Under the terms of the plan, 

variable-hour employees, such as E, are 

eligible to enroll in the plan if they are 

determined to be a full-time employee after 

a measurement period of 12 months that 

begins on the employee’s start date. Coverage 

is made effective no later than the first day 

of the first calendar month after the 

applicable enrollment forms are received. E’s 

12-month measurement period ends 

November 25 of Year 2. E is determined to 

be a full-time employee and is notified of E’s 

plan eligibility. If E then elects coverage, E’s 

first day of coverage will be January 1 of Year 

3. 

(ii) Conclusion. In this Example 7, the 

measurement period is permissible because it 

is not considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. The plan may use a reasonable 

period of time to determine whether a 

variable-hour employee is a full-time 

employee, provided the period of time is no 

longer than 12 months and begins on a date 

between the employee’s start date and the 

first day of the next calendar month, 

provided coverage is made effective no later 

than 13 months from E’s start date (plus if 

the employee’s start date is not the first day 

of a calendar month, the time remaining until 

the first day of the next calendar month) and 

provided that, in addition to the 

measurement period, no more than 90 days 

elapse prior to the employee’s eligibility for 

coverage. 

Example 8. (i) Facts. Employee F begins 

working 25 hours per week for Employer Z 

on January 6 and is considered a part-time 

employee for purposes of Z’s group health 

plan. Z sponsors a group health plan that 

provides coverage to part-time employees 

after they have completed a cumulative 1,200 

hours of service. F satisfies the plan’s 

cumulative hours of service condition on 

December 15. 

(ii) Conclusion. In this Example 8, the 

cumulative hours of service condition with 

respect to part-time employees is not 

considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. Accordingly, coverage for F under 

the plan must begin no later than the 91st 

day after F completes 1,200 hours. (If the 

plan’s cumulative hours-of-service 

requirement was more than 1,200 hours, the 

requirement would be considered to be 

designed to avoid compliance with the 90- 

day waiting period limitation.) 

(f) Special rule for health insurance 

issuers. To the extent coverage under a 

group health plan is insured by a health 

insurance issuer, the issuer is permitted 

to rely on the eligibility information 

reported to it by the employer (or other 

plan sponsor) and will not be 

considered to violate the requirements 

of this section with respect to its 

administration of any waiting period, if 

both of the following conditions are 

satisfied: 

(1) The issuer requires the plan 

sponsor to make a representation 

regarding the terms of any eligibility 

conditions or waiting periods imposed 

by the plan sponsor before an individual 

is eligible to become covered under the 

terms of the employer’s plan (and 

requires the plan sponsor to update this 

representation with any changes), and 

(2) The issuer has no specific 

knowledge of the imposition of a 

waiting period that would exceed the 

permitted 90-day period. 

(g) No effect on other laws. 

Compliance with this section is not 

determinative of compliance with any 

other provision of State or Federal law 

(including ERISA, the Code, or other 

provisions of the Affordable Care Act). 

See e.g., § 146.121 of this subchapter, 

which prohibits discrimination in 

eligibility for coverage based on a health 

factor and Code section 4980H, which 

generally requires applicable large 

employers to offer coverage to full-time 

employees and their dependents or 

make an assessable payment. 

(h) Applicability date—(1) In general. 

The provisions of this section apply for 

plan years beginning on or after January 

1, 2014. See § 147.140 providing that the 

prohibition on waiting periods 

exceeding 90 days applies to all group 

health plans and health insurance 

issuers, including grandfathered health 

plans. 

(2) Application to individuals in a 

waiting period prior to the applicability 

date—(i) With respect to individuals 

who are in a waiting period for coverage 


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17336 Federal Register / Vol. 78, No. 55 / Thursday, March 21, 2013 / Proposed Rules 

before the applicability date of this 

section, beginning on the first day the 

section applies, the waiting period can 

no longer apply to the individual if it 

would exceed 90 days with respect to 

the individual. 

(ii) This paragraph (h)(2) is illustrated 

by the following example: 

Example. (i) Facts. A group health plan is 

a calendar year plan. Prior to January 1, 2014, 

the plan provides that full-time employees 

are eligible for coverage after a 6-month 

waiting period. Employee A begins work as 

a full-time employee on October 1, 2013. 

(ii) Conclusion. In this Example 1, the first 

day of A’s waiting period is October 1, 2013 

because that is the first day A is otherwise 

eligible to enroll under the plan’s substantive 

eligibility provisions, but for the waiting 

period. Beginning January 1, 2014, the plan 

may not apply a waiting period that exceeds 

90 days. Accordingly, A must be given the 

opportunity to elect coverage that begins no 

later than January 1, 2014 (which is 93 days 

after A’s start date) because otherwise, on 

January 1, 2014, the plan would be applying 

a waiting period that exceeds 90 days. The 

plan is not required to make coverage 

effective before January 1, 2014 under the 

rules of this section. 

■ 39. Section 147.136 is amended by 

adding a sentence to the end of the 

introductory text of paragraph (d) and 

revising paragraph (d)(1)(i) to read as 

follows: 

§ 147.136 Internal claims and appeals and 

external review processes. 

* * * * * 

(d) * * * A Multi State Plan or MSP, 

as defined by 45 CFR 800.20, must 

provide an effective Federal external 

review process in accordance with this 

paragraph (d). 

(1) * * * 

(i) In general. Subject to the 

suspension provision in paragraph 

(d)(1)(ii) of this section and except to 

the extent provided otherwise by the 

Secretary in guidance, the Federal 

external review process established 

pursuant to this paragraph (d) applies, 

at a minimum, to any adverse benefit 

determination or final adverse benefit 

determination (as defined in paragraphs 

(a)(2)(i) and (a)(2)(v) of this section), 

except that a denial, reduction, 

termination, or a failure to provide 

payment for a benefit based on a 

determination that a participant or 

beneficiary fails to meet the 

requirements for eligibility under the 

terms of a group health plan is not 

eligible for the Federal external review 

process under this paragraph (d). 

[FR Doc. 2013–06454 Filed 3–18–13; 4:15 pm] 

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

6325–64 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 622 

[Docket No. 120815345–3223–01] 

RIN 0648–BC41 

Snapper-Grouper Fishery off the 

Southern Atlantic States; SnapperGrouper Management Measures 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Proposed rule; request for 

comments. 

SUMMARY: NMFS proposes regulations to 

implement a regulatory amendment 

(Regulatory Amendment 13) to the 

Fishery Management Plan for the 

Snapper-Grouper Fishery of the South 

Atlantic Region (FMP), as prepared by 

the South Atlantic Fishery Management 

Council (Council). If implemented, this 

rule would revise the annual catch 

limits (ACLs) (including sector ACLs) 

for 37 species in the snapper-grouper 

fishery management unit (FMU). The 

intent of this rule is to ensure that the 

ACLs are based on the best scientific 

information available, and to prevent 

unnecessary negative socio-economic 

impacts to participants in the snappergrouper fishery and fishing community 

that could occur if the ACLs are not 

revised, in accordance with the 

provisions set forth in the MagnusonStevens Fishery Conservation and 

Management Act (Magnuson-Stevens 

Act). 

DATES: Written comments must be 

received on or before April 22, 2013. 

ADDRESSES: You may submit comments 

on this document, identified by 

‘‘NOAA–NMFS–2012–0245’’, by any of 

the following methods: 

• Electronic Submission: Submit all 

electronic public comments via the 

Federal e-Rulemaking Portal. Go to 

www.regulations.gov/ 

#!docketDetail;D=NOAA-NMFS-2012- 

0245, click the ‘‘Comment Now!’’ icon, 

complete the required fields, and enter 

or attach your comments. 

• Mail: Submit written comments to 

Nikhil Mehta, Southeast Regional 

Office, NMFS, 263 13th Avenue South, 

St. Petersburg, FL 33701. 

Instructions: Comments sent by any 

other method, to any other address or 

individual, or received after the end of 

the comment period, may not be 

considered by NMFS. All comments 

received are a part of the public record 

and will generally be posted for public 

viewing on www.regulations.gov 

without change. All personal identifying 

information (e.g., name, address, etc.), 

confidential business information, or 

otherwise sensitive information 

submitted voluntarily by the sender will 

be publicly accessible. NMFS will 

accept anonymous comments (enter ‘‘N/ 

A’’ in the required fields if you wish to 

remain anonymous). Attachments to 

electronic comments will be accepted in 

Microsoft Word, Excel, or Adobe PDF 

file formats only. 

Electronic copies of documents 

supporting this proposed rule including 

an environmental assessment, initial 

regulatory flexibility analysis (IRFA), 

regulatory impact review, and fishery 

impact statement may be obtained from 

the Southeast Regional Office Web site 

at http://sero.nmfs.noaa.gov/sf/ 

SASnapperGrouperHomepage.htm. 

FOR FURTHER INFORMATION CONTACT: 

Nikhil Mehta, telephone: 727–824– 

5305, or email: Nikhil.Mehta@noaa.gov. 

SUPPLEMENTARY INFORMATION: The 

snapper-grouper fishery of the South 

Atlantic is managed under the FMP and 

includes the 37 snapper-grouper species 

addressed in Regulatory Amendment 13 

and this proposed rule. These 37 

snapper-grouper species do not have 

stock assessments; their acceptable 

biological catch estimates (ABCs) are 

greater than zero; and their ABCs were 

specified using a formula established in 

the Comprehensive ACL Amendment. 

Species in the FMU with stock 

assessments and species with an ABC 

equal to zero are not addressed in 

Regulatory Amendment 13. However, 

they will be considered in future 

amendments. The FMP was prepared by 

the Council and implemented through 

regulations at 50 CFR parts 622 under 

the authority of the Magnuson-Stevens 

Act. 

Background 

The Magnuson-Stevens Act requires 

NMFS and regional fishery management 

councils to prevent overfishing of 

federally managed fish stocks, to the 

extent practicable. This mandate is 

intended to ensure that fishery 

resources are managed for the greatest 

overall benefit to the nation, particularly 

with respect to providing food 

production and recreational 

opportunities, and protecting marine 

ecosystems. National Standard 2 of the 

Magnuson-Stevens Act states that the 

conservation and management measures 

of fishery management plans and any 

regulations promulgated to implement 

any such plan shall be based upon the 

best scientific information available. 


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