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AUG 2 6 20m 

LEGAL PROCESSING DIVISION 

PUBLICATION" REGULATIONS As of: August 26, 2010 BRANCH Received: August 25, 2010 PUBLIC Status: Posted

Posted: August 26, 2010 

Tracking No. 80b3ad7f SUBMISSION Comments Due: August 27, 2010 

Submission Type: Web 

Docket: IRS-2010-0015 

Requirements for Group Health Plans and Health Insurance Issuers under the Patient Proted:ion 

and Affordable Care Act 

Comment On: IRS-2010-0015-0002 

Patient Protection and Affordable Care Act: Preexisting Condition Exclusions, Lifetime and Annual 

Limits, Rescissions, and PatientProtections 

Document: IRS-2010-0015-0014 

Comment on FR Doc # 2010-15278 

Submitter Information 

Name: G. Austin Robison 

Address: 

Dimondale, MI, 

General Comment 

See attached file(s) 

Attachments 

IRS-2010-0015-0014.1: Comment on FR Doc # 2010-15278 

https:llfdms.erulemaking.netlfdms-web-agency/componentlsubmitterlnfoCoverPage?Call=... 8/26/2010 
August 25,2010 

Office of Health Plan Standards and Compliance Assistance 

Employee Benefits Security Administration 

Room N-5653 

U.S. Department of Labor 

200 Constitution A venue, NW 

Washington, DC 20210 

Attention: RIN 1210-AB43 

Submitted via eRulemaking Portal at http://www.regulations.gov 

Dear Sir/Madam: 

Thank you for the opportunity to comment. 

"Patient Protection and Affordable Care Act; Requirements for Group Health Plans and Health 

Insurance Issuers Under Patient Protection and Affordable Care Act Relating to Preexisting 

Condition Exclusions, Lifetime and Annual Limits, Rescissions, and Patient Protections; Final 

Rule and Proposed Rule" were published in the Federal Register on June 28, 2010. Of specific 

concern today are the provisions under "Section 54.9815-2712T Rules Regarding Rescissions 

(Temporary)", as well as Section 2590.715-2712 and Section 147.128 published on behalf of the 

IRS and DHHS, respectively, and contain the same provisions. 

While the preamble makes it clear the coverage rescission regulations are directed at eliminating 

certain insurance industry practices, the regulations are written so broadly that they create 

unmanageable situations for a significant number of employers, and as pointed out by a colleague 

of mine, are inconsistent with COBRA regulations 

The provisions of Section 54. 9815-2712T (a)(2) define coverage rescission "as a cancellation or 

discontinuance of coverage that has retroactive effect." As written, the regulations provide no 

exceptions and do not distinguish between insurance company practices that are the stated target 

of these rules and employer practices which are the unintended victim of these rules. 

To illustrate, if an employer's plan stops coverage at the end of the day on which an employee 

separates from employment, and a covered employee tenders a resignation effective immediately 

(i.e. "quits"), under 54.9815-2712T(a)(2) the employer must discontinue the coverage 

immediately. Waiting until the next day to cancel the coverage as of the end of the prior day 

renders the coverage cancellation a "rescission" under the rules, as written. 

There are a number of reasons that the coverage cancellation will not likely happen on the date of 

separation in this example. First, the employer's staff needs time to communicate the coverage 

cancellation to the area responsible for managing coverage enrollment. The separation was 

probably given to the employee's supervisor or manager, not someone in benefits administration. 

Therefore, the employer needs time to communicate the employee's status change to those 

handling the benefits enrollment, and for the benefits administration staff to process the coverage 

termination. Second, the cancellation must be communicated from the employer to the insurance: 
August 25, 2010 

Comments on DOL, EBSA RIN 1210-AB43 

Page 2 of3 

carrierlTPA. In some cases this is a paper communication, sometimes it is a fax, and sometimes 

it is an e-mail communication. In still other situations, it is a secure electronic file transfer that hi 

automated and run periodically. Here again, time needs to be allowed for the employer processt:s 

to be completed. Third the carriers/TPA's need time to complete their processing. It is not 

uncommon for a carrier/TPA system to have a 24 hour cycle time for updates and changes to be 

made effective. Fourth, not all employer or carrier/TPA systems permit pre-dating of coverage 

change events. Some systems require changes be entered on or after the date of change. 

According to Section 54.9815-2712T (a)(2), termination of coverage in this manner is a 

retroactive termination and not permitted. 

The problem exists in similar form for plans that terminate coverage at the end of the month in 

which a separation occurs. While more it is expected that more information about employment 

separations would be available prior to a month end, there are still situations when the 

employment separation occurs too close to the coverage end date to permit employers to process 

the coverage termination through normal processes and still meet the standard established by 

Section 54.9815-2712T (a)(2). 

And, because nothing in the example rises the level offraud or misrepresentation, many 

employers will find compliance with Section 54.9815-2712T (a)(2) to be problematic in such 

situations since they have no ability to process coverage terminations in advance. This is an 

unintended consequence ofthe regulations, and should be rectified by adding language that 

allows employers to complete coverage terminations in their normal course of business but not 

more than 30 days after coverage should have been terminated under the provisions ofthe 

employers' medical plans. 

A second problems with Section 54.9815-2717T(a)(2) involves COBRA. Under COBRA 

regulations Section 2590.606-3(c), employees are permitted 60 days following the event to report 

divorces and losses of dependent status to employers. Thus, employees have the ability to delay 

reporting of events which would result in the loss of coverage, and employers are prohibited from 

cancelling the coverage retrospectively. Clearly if COBRA regulations allow 60 days to report 

such events, it is inconceivable that reporting a divorce or loss of dependent status any time up to 

day 61 would constitute fraud or misrepresentation of a material fact under Section 54-9815­

2717T(a)( I). As written, Section 54.981 5-27 I 7T(a)(2) would only permit an employer's 

retroactive cancellation of the ex-spouse's coverage IF the employee reported the divorce more 

than 60 days after the event. Not only is this problematic for employers, but it provides an 

incentive to report such changes later rather than sooner. Again, this is not consistent with the 

intent described in the preamble to the regulations, and Section 54.98 15-27 l7T(a)(2) should be 

modified to make it consistent with the 60 day COBRA reporting time frame. 

A third problem exists with respect to the content of Sections 54.981 5-271 2T(a)(1) and (2) and 

the 2 examples appearing in54.98 15-27 I 7T(a)(3). I believe the examples are completely 

insufficient to address employer issues arising from the paragraphs they are intended to clarify. 

Section 54.98I5-27l2T (a) (1) requires "an act, practice or omission" to rise to the level of 

"fraud" or "intentional misrepresentation of material fact" in order for a rescission to be 

permitted. There are no examples given of any such situations from an employer perspective. 

The only example given, Example I, involves a commercial application where 2 psychology 

visits from 6 years prior were not reported, and in the conclusion, that omission is described as 
August 25, 2010 

Comments on DOL, EBSA RIN 1210-AB43 

Page 3 of3 

"inadvertent". The example is rarely, if ever, applicable to employers providing coverage to 

employees. 

Next, it is extremely unfortunate that Example 1 justifies the conclusion that the coverage cannot 

be rescinded because the omission was "inadvertent", rather than reaching the conclusion because 

ofthe immateriality of 6 year old psychology visits to a current cancer case. Instead of focusing 

on the thresholds established in paragraph (a)(l), the example creates a third standard, 

"inadvertency". Employees intent on escaping the consequences oftheir own actions will flock 

to this "inadvertency" standard since it requires only feigning a lack of attentiveness rather than 

showing they had no knowledge or could not reasonably have had knowledge, or there no intent 

to defraud or misrepresent. Not only are there no examples to guide employers with respect to 

Section 54.9815-2712T (a), ifthe rationale for the conclusion in Example J is not changed, the 

standard for compliance will become the employee's claimed level ofinattentiveness. Such a 

standard places an undue burden on employers who already put a great deal of effort into 

communicating benefit packages, eligibility, and so forth. Please add examples that deal with 

real life employer situations to clarify Sections 54.9815-2712T (a) (I) and (2), and please write 

the examples so that the conclusions are based on the standards appearing in Sections 54.9815­

2712T (a)(l) and (2) rather than using examples to add standards. 

Thank you for considering these comments. I look forward to seeing revisions to Section 

54.98J5-2712T. 

Sincerely, 

O. Austin Robison, III 

Dimondale, MI