Vol. 79 Monday, 

No. 36 February 24, 2014 

Part IV 

Department of the Treasury 

Internal Revenue Service 

26 CFR Part 54 

Department of Labor 

Employee Benefits Security Administration 

29 CFR Part 2590 

Department of Health and Human Services 

45 CFR Part 147 

Ninety-Day Waiting Period Limitation; Proposed Rule 


emcdonald on DSK67QTVN1PROD with PROPOSALS2
10320 Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Proposed Rules 

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

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

100 of the Code, and is distinct from the term 

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

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

does not include self-insured group health plans. 

2Note, however, that in the Economic Analysis 

and Paperwork Burden section of this preamble, in 

sections under headings listing only two of the 

three Departments, the term ‘‘Departments’’ 

generally refers only to the two Departments listed 

in the heading. 

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

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

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 54 

[REG–122706–12] 

RIN 1545–BL97 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2590 

RIN 1210–AB61 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Part 147 

[CMS–9952–P2] 

RIN 0938–AR77 

Ninety-Day Waiting Period Limitation 

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. 

SUMMARY: These proposed regulations 

would clarify the maximum allowed 

length of any reasonable and bona fide 

employment-based orientation period, 

consistent with the 90-day waiting 

period limitation set forth in 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. 

DATES: Written comments on this notice 

of proposed rulemaking are invited and 

must be received by April 25, 2014. 

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 ‘‘Ninety-day 

waiting period limitation,’’ 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: Ninety-day waiting period 

limitation. 

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, Internal 

Revenue Service, Department of the 

Treasury, at (202) 317–6846; 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 (HHS), and 

the Treasury (the Departments 2) 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.3 PHS Act section 2708 does 

not require an employer to offer 

coverage to any particular individual or 

class of individuals, including part-time 

employees. PHS Act section 2708 

merely prevents an otherwise eligible 

individual from being required to wait 

more than 90 days before coverage 

becomes effective. PHS Act section 2708 

applies to both grandfathered and nongrandfathered group health plans and 

group health insurance coverage for 


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Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Proposed Rules 10321 

4 Department of Labor Technical Release 2012– 

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

February 9, 2012. 

5 Department of Labor Technical Release 2012– 

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

August 31, 2012. 

6The final regulations also note that a plan or 

issuer that imposes a 90-day waiting period may, 

for administrative convenience, choose to permit 

coverage to become effective earlier than the 91st 

day if the 91st day is a weekend of holiday. 

plan years beginning on or after January 

1, 2014. 

On February 9, 2012, the Departments 

issued guidance 4 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) and requested public 

comment. On August 31, 2012, 

following their review of the comments 

on the February 2012 guidance, the 

Departments provided temporary 

guidance,5 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 future rulemaking (August 

2012 guidance). After consideration of 

all of the comments received in 

response to the February 2012 guidance 

and August 2012 guidance, the 

Departments issued proposed 

regulations on March 21, 2013 (78 FR 

17313). 

Under the proposed regulations, 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 regulations proposed to define 

‘‘waiting period’’ 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. 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). After consideration of comments 

on the proposed regulations, the 

Departments are publishing final 

regulations elsewhere in this issue of 

the Federal Register. These proposed 

regulations address orientation periods 

under the 90-day waiting period 

limitation of PHS Act section 2708 and 

solicit comment before promulgation of 

final regulations on this discrete issue. 

II. Overview of the Proposed 

Regulations 

A. Orientation Periods 

Final regulations published elsewhere 

in this edition of the Federal Register 

set forth rules governing the 

relationship between a plan’s eligibility 

criteria and the 90-day waiting period 

limitation. Specifically, the final 

regulations provide that being otherwise 

eligible to enroll in a plan means having 

met the plan’s substantive eligibility 

conditions (such as, for example, being 

in an eligible job classification, 

achieving job-related licensure 

requirements specified in the plan’s 

terms, or satisfying a reasonable and 

bona fide employment-based orientation 

period). Under the final regulations, 

after an individual is determined to be 

otherwise eligible for coverage under 

the terms of the plan, any waiting 

period may not extend beyond 90 days, 

and all calendar days are counted 

beginning on the enrollment date, 

including weekends and holidays.6

The final regulations do not specify 

the facts and circumstances under 

which an employment-based orientation 

period would not be considered 

‘‘reasonable and bona fide.’’ These 

proposed regulations would provide 

that one month is the maximum allowed 

length of any reasonable and bona fide 

employment-based orientation period. 

During an orientation period, the 

Departments envision that an employer 

and employee could evaluate whether 

the employment situation was 

satisfactory for each party, and standard 

orientation and training processes 

would begin. Under these proposed 

regulations, one month would be 

determined by adding one calendar 

month and subtracting one calendar 

day, measured from an employee’s start 

date in a position that is otherwise 

eligible for coverage. For example, if an 

employee’s start date in an otherwise 

eligible position is May 3, the last 

permitted day of the orientation period 

is June 2. Similarly, if an employee’s 

start date in an otherwise eligible 

position is October 1, the last permitted 

day of the orientation period is October 

31. If there is not a corresponding date 

in the next calendar month upon adding 

a calendar month, the last permitted day 

of the orientation period is the last day 

of the next calendar month. For 

example, if the employee’s start date is 

January 30, the last permitted day of the 

orientation period is February 28 (or 

February 29 in a leap year). Similarly, 

if the employee’s start date is August 31, 

the last permitted day of the orientation 

period is September 30. If a group 

health plan conditions eligibility on an 

employee’s having completed a 

reasonable and bona fide employmentbased orientation period, the eligibility 

condition would not be considered to be 

designed to avoid compliance with the 

90-day waiting period limitation if the 

orientation period did not exceed one 

month and the maximum 90-day 

waiting period would begin on the first 

day after the orientation period. 

B. Comment Invitation and Reliance 

The Departments invite comments on 

these proposed regulations. The 

Departments will consider compliance 

with these proposed regulations to 

constitute compliance with PHS Act 

section 2708 at least through the end of 

2014. To the extent final regulations or 

other guidance with respect to the 

application of the 90-day waiting period 

limitation to orientation periods is more 

restrictive on plans and issuers, the final 

regulations or other guidance will not be 

effective prior to January 1, 2015, and 

will provide plans and issuers a 

reasonable time period to comply. 

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 


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10322 Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Proposed Rules 

7 In section III of this preamble, some subsections 

have a heading listing one or two of the three 

Departments. In those subsections, the term 

‘‘Departments’’ generally refers only to the 

Departments listed in the heading. 

8 78 FR 17313 (March 21, 2013). 

9This estimate is based upon internal Department 

of Labor calculations derived from the 2009 

Medical Expenditure Panel Survey. 

10See e.g., Kaiser Family Foundation and Health 

Research and Education Trust, Employer Health 

Benefits 2013 Annual Survey (2013) available at 

http://ehbs.kff.org/pdf/2013/8345.pdf. 

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 7 have provided the 

following assessment of their impact. 

1. Summary 

As stated earlier in this preamble, 

these proposed regulations address 

reasonable and bona fide employmentbased orientation periods under the 90- 

day waiting period limitation of PHS 

Act section 2708. The Departments have 

crafted these proposed regulations to 

secure the protections intended by 

Congress in an economically efficient 

manner. The Departments lack 

sufficient data to quantify the 

regulations’ economic cost or benefits. 

The proposed regulations implementing 

PHS Act section 2708 8 provided a 

qualitative discussion of economic 

impacts of proposed limits on waiting 

periods and requested detailed 

comments and data that would allow for 

quantification of the costs, benefits, and 

transfers. Comments were received 

expressing concern about the cost to 

employers that currently have waiting 

periods longer than 90 days, and 

explaining that they would have to 

change their practices and often have to 

provide coverage sooner than the 90-day 

waiting period limitation. No comments 

provided additional data that would 

help in estimating the economic impacts 

of the proposed regulations. The 

Departments request comments that 

would allow them to quantify the 

impacts of these proposed regulations 

on the discrete issue of orientation 

periods. 

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.9 The 2013 

Kaiser Family Foundation and Health 

Research and Education Trust Employer 

Health Benefits Annual Survey (the 

‘‘2013 Kaiser Survey’’) finds that 30 

percent of covered workers were subject 

to waiting periods of three months or 

more.10 The Departments do not have 

any data, and therefore invite public 

comment, on the number of employees 

subject to orientation periods, as 

described earlier in this preamble. 

2. Benefits 

The final regulations provide that 

being otherwise eligible to enroll in a 

plan means having met the plan’s 

substantive eligibility conditions (such 

as, for example, being in an eligible job 

classification, achieving job-related 

licensure requirements specified in the 

plan’s terms, or satisfying a reasonable 

and bona fide employment-based 

orientation period). These proposed 

regulations would provide that one 

month is the maximum allowed length 

of any reasonable and bona fide 

employment-based orientation period. 

During an orientation period, the 

Departments envision that an employer 

and employee could evaluate whether 

the employment situation was 

satisfactory for each party, and standard 

orientation and training processes 

would begin. If a group health plan 

conditions eligibility on an employee’s 

having completed a reasonable and bona 

fide employment-based orientation 

period, the eligibility condition would 

not be considered to be designed to 

avoid compliance with the 90-day 

waiting period limitation if the 

orientation period did not exceed one 

month and the maximum 90-day 

waiting period would begin on the first 

day after the orientation period. 

3. Costs 

These proposed regulations could 

extend the time between an employee 

beginning work and obtaining health 

care coverage relative to the time before 

the issuance of the final regulations and 

these proposed regulations. If 

employees delay health care treatment 

until the expiration of the orientation 

period and 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 could lead to these effects, 

although the overall cost may be limited 

because few employees are likely to be 

affected and it is anticipated that 

conditioning eligibility on an 

employee’s having completed an 

orientation period will not result in 

most employees facing a full additional 

month between being hired and 

obtaining coverage. 

4. Transfers 

The possible transfers associated with 

these proposed regulations would arise 

from employers beginning to pay their 

portion of premiums or contributions 

later than they did before the issuance 

of the final regulations and these 

proposed regulations. Recipients of the 

transfer would be employers who 

implement an orientation period in 

addition to the 90-day waiting period, 

thus delaying having to pay premiums. 

The source of the transfers would be 

covered employees who, after these 

proposed regulations become 

applicable, will have to wait longer 

between being employed and obtaining 

health coverage, 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. 

The Departments believe that under 

these proposed regulations only a small 

number of employers would further 

delay offering coverage to their 

employees because a relatively small 

fraction of workers have an orientation 

period in addition to a waiting periods 

that runs for 90 days. 

B. 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 


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Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Proposed Rules 10323 

11Under 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. 

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.11

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 regulations 

include flexibility that would minimize 

the transfers in health insurance 

premiums that would occur due to the 

orientation period. 

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. 

C. Special Analyses—Department of the 

Treasury 

For purposes of the Department of the 

Treasury, it has been determined that 

this proposed rule is not a significant 

regulatory action as defined in 

Executive Order 12866, as 

supplemented by Executive Order 

13563. Therefore, a regulatory 

assessment is not required. It 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 proposed rule 

has been submitted to the Small 

Business Administration for comment 

on its impact on small business. 

D. 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. 

E. Unfunded Mandates Reform Act 

For purposes of the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), as well as Executive Order 

12875, these proposed regulations do 

not include any Federal mandate that 

may result in expenditures by State, 

local, or tribal governments, or by the 

private sector, of $100 million or more 

adjusted for inflation. 

F. 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 consumer protective than the 

Federal requirements are unlikely to 

‘‘prevent the application of’’ the 

Affordable Care Act, and therefore are 

unlikely to 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 regulations 

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 


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10324 Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Proposed Rules 

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 pursuant to the authority 

contained in sections 2701 through 

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

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

91, and 300gg–92), as amended. 

List of Subjects 

26 CFR Part 54 

Excise taxes, Health care, Health 

insurance, Pensions, Reporting and 

recordkeeping requirements. 

29 CFR Part 2590 

Continuation coverage, Disclosure, 

Employee benefit plans, Group health 

plans, Health care, Health insurance, 

Medical child support, Reporting and 

recordkeeping requirements. 

45 CFR Part 147 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, and State regulation of 

health insurance. 

John Dalrymple, 

Deputy Commissioner for Services and 

Enforcement, Internal Revenue Service. 

Signed this 12th day of February, 2014. 

Phyllis C. Borzi, 

Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. 

Dated: February 11, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Dated: February 14, 2014. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

Department of the Treasury 

Internal Revenue Service 

Accordingly, 26 CFR Part 54, as 

amended by the final rule titled, NinetyDay Waiting Period Limitation and 

Technical Amendments to Certain 

Health Coverage Requirements Under 

the Affordable Care Act, published 

elsewhere in this issue of the Federal 

Register, is proposed to be further 

amended as follows: 

PART 54—PENSION EXCISE TAXES 

■ Paragraph 1. The authority citation 

for Part 54 continues to read in part as 

follows: 

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

Section 54.9815–2708 is also issued under 

26 U.S.C. 9833. 

* * * * * 

■ Par. 2. Section 54.9815–2708 is 

amended by adding paragraph (c)(3)(iii) 

and a new Example 11 in paragraph (f) 

to read as follows: 

§ 54.9815–2708 Prohibition on waiting 

periods that exceed 90 days. 

* * * * * 

(c) * * * 

(3) * * * 

(iii) Limitation on orientation periods. 

To ensure that an orientation period is 

not used as a subterfuge for the passage 

of time, or designed to avoid 

compliance with the 90-day waiting 

period limitation, an orientation period 

is permitted only if it does not exceed 

one month. For this purpose, one month 

is determined by adding one calendar 

month and subtracting one calendar 

day, measured from an employee’s start 

date in a position that is otherwise 

eligible for coverage. For example, if an 

employee’s start date in an otherwise 

eligible position is May 3, the last 

permitted day of the orientation period 

is June 2. Similarly, if an employee’s 

start date in an otherwise eligible 

position is October 1, the last permitted 

day of the orientation period is October 

31. If there is not a corresponding date 

in the next calendar month upon adding 

a calendar month, the last permitted day 

of the orientation period is the last day 

of the next calendar month. For 

example, if the employee’s start date is 

January 30, the last permitted day of the 

orientation period is February 28 (or 

February 29 in a leap year). Similarly, 

if the employee’s start date is August 31, 

the last permitted day of the orientation 

period is September 30. 

* * * * * 

(f) * * * 

Example 11. (i) Facts. Employee H begins 

working full time for Employer Z on October 

16. Z sponsors a group health plan, under 

which full time employees are eligible for 

coverage after they have successfully 

completed a one-month orientation period. H 

completes the orientation period on 

November 15. 

(ii) Conclusion. In this Example 11, the 

orientation period is not considered a 

subterfuge for the passage of time and is not 

considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. Accordingly, plan coverage for H 

must begin no later than February 14, which 

is the 91st day after H completes the 

orientation period. (If the orientation period 

was more than one month, it would be 

considered to be considered a subterfuge for 

the passage of time and designed to avoid 

compliance with the 90-day waiting period 

limitation. Accordingly it would violate the 

rules of this section.) 

* * * * * 

Department of Labor 

Employee Benefits Security 

Administration 

29 CFR Chapter XXV 

For the reasons stated in the 

preamble, the Department of Labor 

proposes to further amend 29 CFR part 

2590, as amended by the final rule 

titled, Ninety-Day Waiting Period 

Limitation and Technical Amendments 

to Certain Health Coverage 

Requirements Under the Affordable 

Care Act, published elsewhere in this 

issue of the Federal Register, as follows: 

PART 2590—RULES AND 

REGULATIONS FOR GROUP HEALTH 

PLANS 

■ 3. 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. 


emcdonald on DSK67QTVN1PROD with PROPOSALS2
Federal Register / Vol. 79, No. 36 / Monday, February 24, 2014 / Proposed Rules 10325 

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

Labor’s Order 3–2010, 75 FR 55354 

(September 10, 2010). 

■ 4. Section 2590.715–2708 is amended 

by adding paragraph (c)(3)(iii) and a 

new Example 11 in paragraph (f) to read 

as follows: 

§ 2590.715–2708 Prohibition on waiting 

periods that exceed 90 days. 

* * * * * 

(c) * * * 

(3) * * * 

(iii) Limitation on orientation periods. 

To ensure that an orientation period is 

not used as a subterfuge for the passage 

of time, or designed to avoid 

compliance with the 90-day waiting 

period limitation, an orientation period 

is permitted only if it does not exceed 

one month. For this purpose, one month 

is determined by adding one calendar 

month and subtracting one calendar 

day, measured from an employee’s start 

date in a position that is otherwise 

eligible for coverage. For example, if an 

employee’s start date in an otherwise 

eligible position is May 3, the last 

permitted day of the orientation period 

is June 2. Similarly, if an employee’s 

start date in an otherwise eligible 

position is October 1, the last permitted 

day of the orientation period is October 

31. If there is not a corresponding date 

in the next calendar month upon adding 

a calendar month, the last permitted day 

of the orientation period is the last day 

of the next calendar month. For 

example, if the employee’s start date is 

January 30, the last permitted day of the 

orientation period is February 28 (or 

February 29 in a leap year). Similarly, 

if the employee’s start date is August 31, 

the last permitted day of the orientation 

period is September 30. 

* * * * * 

(f) * * * 

Example 11. (i) Facts. Employee H begins 

working full time for Employer Z on October 

16. Z sponsors a group health plan, under 

which full time employees are eligible for 

coverage after they have successfully 

completed a one-month orientation period. H 

completes the orientation period on 

November 15. 

(ii) Conclusion. In this Example 11, the 

orientation period is not considered a 

subterfuge for the passage of time and is not 

considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. Accordingly, plan coverage for H 

must begin no later than February 14, which 

is the 91st day after H completes the 

orientation period. (If the orientation period 

was more than one month, it would be 

considered to be considered a subterfuge for 

the passage of time and designed to avoid 

compliance with the 90-day waiting period 

limitation. Accordingly it would violate the 

rules of this section.) 

* * * * * 

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 further 

amend 45 CFR part 147, as amended by 

the final rule titled, Ninety-Day Waiting 

Period Limitation and Technical 

Amendments to Certain Health 

Coverage Requirements Under the 

Affordable Care Act, published 

elsewhere in this issue of the Federal 

Register, as set forth below: 

PART 147—HEALTH INSURANCE 

REFORM REQUIREMENTS FOR THE 

GROUP AND INDIVIDUAL HEALTH 

INSURANCE MARKETS 

■ 5. 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). 

■ 6. Section 147.116 is amended by— 

■ A. Adding paragraph (c)(3)(iii); and 

■ B. Adding Example 11 in paragraph 

(f). 

The additions read as follows: 

§ 147.116 Prohibition on waiting periods 

that exceed 90 days. 

* * * * * 

(c) * * * 

(3) * * * 

(iii) Limitation on orientation periods. 

To ensure that an orientation period is 

not used as a subterfuge for the passage 

of time, or designed to avoid 

compliance with the 90-day waiting 

period limitation, an orientation period 

is permitted only if it does not exceed 

one month. For this purpose, one month 

is determined by adding one calendar 

month and subtracting one calendar 

day, measured from an employee’s start 

date in a position that is otherwise 

eligible for coverage. For example, if an 

employee’s start date in an otherwise 

eligible position is May 3, the last 

permitted day of the orientation period 

is June 2. Similarly, if an employee’s 

start date in an otherwise eligible 

position is October 1, the last permitted 

day of the orientation period is October 

31. If there is not a corresponding date 

in the next calendar month upon adding 

a calendar month, the last permitted day 

of the orientation period is the last day 

of the next calendar month. For 

example, if the employee’s start date is 

January 30, the last permitted day of the 

orientation period is February 28 (or 

February 29 in a leap year). Similarly, 

if the employee’s start date is August 31, 

the last permitted day of the orientation 

period is September 30. 

* * * * * 

(f) * * * 

Example 11. (i) Facts. Employee H begins 

working full time for Employer Z on October 

16. Z sponsors a group health plan, under 

which full time employees are eligible for 

coverage after they have successfully 

completed a one-month orientation period. H 

completes the orientation period on 

November 15. 

(ii) Conclusion. In this Example 11, the 

orientation period is not considered a 

subterfuge for the passage of time and is not 

considered to be designed to avoid 

compliance with the 90-day waiting period 

limitation. Accordingly, plan coverage for H 

must begin no later than February 14, which 

is the 91st day after H completes the 

orientation period. (If the orientation period 

was more than one month, it would be 

considered to be considered a subterfuge for 

the passage of time and designed to avoid 

compliance with the 90-day waiting period 

limitation. Accordingly it would violate the 

rules of this section.) 

* * * * * 

[FR Doc. 2014–03811 Filed 2–20–14; 11:15 am] 

BILLING CODE 4830–01–P; 4510–29–P; 4120–01–P; 

6325–64–P 


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