```

[Federal Register Volume 78, Number 127 (Tuesday, July 2, 2013)]
[Rules and Regulations]
[Pages 39869-39899]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-15866]

[[Page 39869]]

Vol. 78

Tuesday,

No. 127

July 2, 2013

Part III

Department of the Treasury

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Internal Revenue Service

26 CFR Part 54

Department of Labor

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Employee Benefits Security Administration

29 CFR Parts 2510 and 2590

Department of Health and Human Services

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45 CFR Parts 147 and 156

Coverage of Certain Preventive Services Under the Affordable Care Act; 
Final Rules

Federal Register / Vol. 78 , No. 127 / Tuesday, July 2, 2013 / Rules 
and Regulations

[[Page 39870]]

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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[TD-9624]
RIN 1545-BJ60

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Parts 2510 and 2590

RIN 1210-AB44

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 147 and 156

[CMS-9968-F]
RIN 0938-AR42

Coverage of Certain Preventive Services Under the Affordable Care 
Act

AGENCIES: 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: Final rules.

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SUMMARY: This document contains final regulations regarding coverage of 
certain preventive services under section 2713 of the Public Health 
Service Act (PHS Act), added by the Patient Protection and Affordable 
Care Act, as amended, and incorporated into the Employee Retirement 
Income Security Act of 1974 and the Internal Revenue Code. Section 2713 
of the PHS Act requires coverage without cost sharing of certain 
preventive health services by non-grandfathered group health plans and 
health insurance coverage. Among these services are women's preventive 
health services, as specified in guidelines supported by the Health 
Resources and Services Administration (HRSA). As authorized by the 
current regulations, and consistent with the HRSA guidelines, group 
health plans established or maintained by certain religious employers 
(and group health insurance coverage provided in connection with such 
plans) are exempt from the otherwise applicable requirement to cover 
certain contraceptive services. These final regulations simplify and 
clarify the religious employer exemption. These final regulations also 
establish accommodations with respect to the contraceptive coverage 
requirement for group health plans established or maintained by 
eligible organizations (and group health insurance coverage provided in 
connection with such plans), as well as student health insurance 
coverage arranged by eligible organizations that are institutions of 
higher education. These regulations also finalize related amendments to 
regulations concerning Affordable Insurance Exchanges.

DATES: Effective date: These final regulations are effective on August 
1, 2013. Applicability date: With the exception of the amendments to 
the religious employer exemption, which apply to group health plans and 
health insurance issuers for plan years beginning on or after August 1, 
2013, these final regulations apply to group health plans and health 
insurance issuers for plan years beginning on or after January 1, 2014.

FOR FURTHER INFORMATION CONTACT: For inquiries related to the religious 
employer exemption and eligible organization accommodations: Jacob 
Ackerman, Centers for Medicare & Medicaid Services (CMS), Department of 
Health and Human Services (HHS), at (410) 786-1565; Amy Turner or Beth 
Baum, Employee Benefits Security Administration (EBSA), Department of 
Labor, at (202) 693-8335; Karen Levin, Internal Revenue Service (IRS), 
Department of the Treasury, at (202) 927-9639.
    For matters related to the Federally-facilitated Exchange user fee 
adjustment: Ariel Novick, CMS, HHS, at (301) 492-4309.
    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). Information from HHS on private health insurance coverage can be 
found on CMS's Web site (www.cms.gov/cciio), and information on health 
care reform can be found at www.HealthCare.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    The Patient Protection and Affordable Care Act (Pub. L. 111-148) 
was enacted on March 23, 2010. The Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152) was enacted on March 30, 
2010. These statutes 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 Affordable Care Act adds section 
715(a)(1) to the Employee Retirement Income Security Act of 1974 
(ERISA) and section 9815(a)(1) to the Internal Revenue Code (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 sections of the PHS Act 
incorporated into ERISA and the Code are sections 2701 through 2728.
    Section 2713(a)(4) of the PHS Act, as added by the Affordable Care 
Act and incorporated into ERISA and the Code, requires that non-
grandfathered group health plans and health insurance issuers offering 
non-grandfathered group or individual health insurance coverage provide 
benefits for certain women's preventive health services without cost 
sharing, as provided for in comprehensive guidelines supported by the 
Health Resources and Services Administration (HRSA). On August 1, 2011, 
HRSA adopted and released guidelines for women's preventive health 
services (HRSA Guidelines) based on recommendations of the independent 
Institute of Medicine. As relevant here, the HRSA Guidelines include 
all Food and Drug Administration (FDA)-approved contraceptive methods, 
sterilization procedures, and patient education and counseling for 
women with reproductive capacity, as prescribed by a health care 
provider (collectively, contraceptive services).\1\ Except as discussed 
later in this section, non-grandfathered group health plans and health 
insurance coverage are required to provide coverage consistent with the 
HRSA Guidelines without cost sharing for plan years (in the individual 
market, policy years) beginning on or after August 1, 2012.\2\
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    \1\ The HRSA Guidelines exclude services relating to a man's 
reproductive capacity, such as vasectomies and condoms.
    \2\ Interim final regulations published by the Departments on 
July 19, 2010, generally provide that plans and issuers must cover a 
newly recommended preventive service starting with the first plan 
year (in the individual market, policy year) that begins on or after 
the date that is one year after the date on which the new 
recommendation is issued. 26 CFR 54.9815-2713T(b)(1); 29 CFR 
2590.715-2713(b)(1); 45 CFR 147.130(b)(1).
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    Interim final regulations implementing section 2713 of the PHS Act 
were published on July 19, 2010 (75 FR 41726) (2010 interim final

[[Page 39871]]

regulations). On August 1, 2011, the Departments of Health and Human 
Services (HHS), Labor, and the Treasury (collectively, the Departments) 
amended the 2010 interim final regulations to provide HRSA with 
authority that would effectively exempt group health plans established 
or maintained by certain religious employers (and group health 
insurance coverage provided in connection with such plans) from the 
requirement to cover contraceptive services consistent with the HRSA 
Guidelines (76 FR 46621) (2011 amended interim final regulations), and, 
on the same date, HRSA exercised this authority in the HRSA Guidelines 
such that group health plans established or maintained by these 
religious employers (and group health insurance coverage provided in 
connection with such plans) are exempt from the requirement to cover 
contraceptive services.\3\ The 2011 amended interim final regulations 
specified that, for purposes of this exemption, a religious employer is 
one that: (1) Has the inculcation of religious values as its purpose; 
(2) primarily employs persons who share its religious tenets; (3) 
primarily serves persons who share its religious tenets; and (4) is a 
nonprofit organization described in section 6033(a)(1) and (a)(3)(A)(i) 
or (iii) of the Code. Section 6033(a)(3)(A)(i) and (iii) of the Code 
refers to churches, their integrated auxiliaries, and conventions or 
associations of churches, as well as to the exclusively religious 
activities of any religious order. Final regulations issued on February 
10, 2012, adopted the definition of religious employer in the 2011 
amended interim final regulations without modification (2012 final 
regulations).\4\
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    \3\ The 2011 amended interim final regulations were issued and 
effective on August 1, 2011, and published on August 3, 2011(76 FR 
46621).
    \4\ The 2012 final regulations were published on February 15, 
2012 (77 FR 8725).
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    Contemporaneous with the issuance of the 2012 final regulations, 
HHS, with the agreement of the Departments of Labor and the Treasury, 
issued guidance establishing a temporary safe harbor from enforcement 
of the contraceptive coverage requirement by the Departments for group 
health plans established or maintained by certain nonprofit 
organizations with religious objections to contraceptive coverage (and 
group health insurance coverage provided in connection with such 
plans).\5\ The guidance provided that the temporary enforcement safe 
harbor would remain in effect until the first plan year beginning on or 
after August 1, 2013. The Departments committed to rulemaking during 
the 1-year safe harbor period to ensure more women broad access to 
recommended preventive services, including contraceptive services, 
without cost sharing, while simultaneously protecting certain 
additional nonprofit religious organizations with religious objections 
to contraceptive coverage from having to contract, arrange, pay, or 
refer for such coverage.
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    \5\ Guidance on the Temporary Enforcement Safe Harbor for 
Certain Employers, Group Health Plans, and Group Health Insurance 
Issuers with Respect to the Requirement to Cover Contraceptive 
Services Without Cost Sharing Under Section 2713 of the Public 
Health Service Act, Section 715(a)(1) of the Employee Retirement 
Income Security Act, and Section 9815(a)(1) of the Internal Revenue 
Code, issued on February 10, 2012, and reissued on August 15, 2012. 
Available at: http://www.cms.gov/CCIIO/Resources/Files/Downloads/prev-services-guidance-08152012.pdf. The guidance, as reissued on 
August 15, 2012, clarifies, among other things, that plans that took 
some action before February 10, 2012, to try, without success, to 
exclude or limit contraceptive coverage are not precluded from 
eligibility for the safe harbor. The temporary enforcement safe 
harbor is also available to insured student health insurance 
coverage arranged by nonprofit institutions of higher education with 
religious objections to contraceptive coverage that meet the 
conditions set forth in the guidance. See final rule entitled 
``Student Health Insurance Coverage'' published March 21, 2012 (77 
FR 16457).
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    On March 21, 2012, the Departments published an advance notice of 
proposed rulemaking (ANPRM) that described and solicited comments on 
possible approaches to achieve these goals (77 FR 16501).
    On February 6, 2013, following review of the comments on the ANPRM, 
the Departments published proposed regulations at 78 FR 8456 (proposed 
regulations). The regulations proposed to simplify and clarify the 
definition of religious employer for purposes of the religious employer 
exemption. The regulations also proposed accommodations for health 
coverage established or maintained or arranged by certain nonprofit 
religious organizations with religious objections to contraceptive 
coverage. These organizations were referred to as eligible 
organizations.
    The regulations proposed that, in the case of an insured group 
health plan established or maintained by an eligible organization, the 
health insurance issuer providing group health insurance coverage in 
connection with the plan would be required to assume sole 
responsibility, independent of the eligible organization and its plan, 
for providing contraceptive coverage to plan participants and 
beneficiaries without cost sharing, premium, fee, or other charge to 
plan participants or beneficiaries or to the eligible organization or 
its plan. The Departments proposed a comparable accommodation with 
respect to insured student health insurance coverage arranged by 
eligible organizations that are institutions of higher education.
    In the case of a self-insured group health plan established or 
maintained by an eligible organization, the proposed regulations 
presented potential approaches under which the third party 
administrator of the plan would arrange for a health insurance issuer 
to provide contraceptive coverage to plan participants and 
beneficiaries without cost sharing, premium, fee, or other charge to 
plan participants or beneficiaries or to the eligible organization or 
its plan. An issuer (or its affiliate) would be able to offset the 
costs incurred by the third party administrator and the issuer in the 
course of arranging and providing such coverage by claiming an 
adjustment in the Federally-facilitated Exchange (FFE) user fee.
    The Departments received over 400,000 comments (many of them 
standardized form letters) in response to the proposed regulations. 
After consideration of the comments, the Departments are publishing 
these final regulations. With the exception of the amendments to the 
religious employer exemption, which apply to group health plans and 
group health insurance issuers for plan years beginning on or after 
August 1, 2013, these final regulations apply to group health plans and 
health insurance issuers for plan years beginning on or after January 
1, 2014, which is when the majority of plan years begin.6 7 
Contemporaneously issued amendments to the HRSA Guidelines implementing 
the simplified and clarified religious employer exemption authorized by 
45 CFR 147.131(a) of these final regulations will be effective on 
August 1, 2013.
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    \6\ Section 2713(b) of the PHS Act and the companion provisions 
of ERISA and the Code provide that the Secretary shall establish an 
interval of not less than one year between when new recommendations 
or guidelines under PHS Act section 2713(a) are issued and the first 
plan year (in the individual market, policy year) for which coverage 
of services addressed in such recommendations or guidelines must be 
in effect. Under the 2010 interim final regulations, the requirement 
on a non-exempt, non-grandfathered group health plan or group or 
individual health insurance policy to cover a newly recommended 
preventive service without cost sharing takes effect starting with 
the first plan year (in the individual market, policy year) that 
begins on or after the date that is one year after the new 
recommendation is issued. 26 CFR 54.9815-2713T(b)(1); 29 CFR 
2590.715-2713(b)(1); 45 CFR 147.130(b)(1). In the case of 
contraceptive services, this 1-year period ended on August 1, 2012, 
because the HRSA Guidelines including such services were issued on 
August 1, 2011. These final regulations do not alter this effective 
date.
    \7\ This estimate is based on the Department of Labor's analysis 
of Form 5500 data.

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[[Page 39872]]

    Two additional guidance documents are being issued 
contemporaneously with these final regulations. First, HHS is issuing 
guidance extending the temporary safe harbor from enforcement of the 
contraceptive coverage requirement by the Departments to encompass plan 
years beginning on or after August 1, 2013, and before January 1, 2014. 
This guidance continues to include a form to be used by an organization 
during this temporary period to self-certify that its plan qualifies 
for the temporary enforcement safe harbor. Second, as described in more 
detail later in this preamble, HHS and DOL are also issuing a self-
certification form to be executed by an organization seeking to be 
treated as an eligible organization for purposes of an accommodation 
under these final regulations. This self-certification form is 
applicable in conjunction with the accommodations under these final 
regulations (that is, for plan years beginning on or after January 1, 
2014), after the expiration of the temporary enforcement safe harbor.

II. Overview of the Final Regulations

    These final regulations promote two important policy goals. First, 
the regulations provide women with access to contraceptive coverage 
without cost sharing, thereby advancing the compelling government 
interests in safeguarding public health and ensuring that women have 
equal access to health care. Second, the regulations advance these 
interests in a narrowly tailored fashion that protects certain 
nonprofit religious organizations with religious objections to 
providing contraceptive coverage from having to contract, arrange, pay, 
or refer for such coverage. The regulations finalize the general 
approach described in the proposed regulations, with modifications in 
response to comments that are intended primarily to simplify 
administration of the policy.
    Section 2713 of the PHS Act reflects a determination by Congress 
that coverage of recommended preventive services without cost sharing 
by non-grandfathered group health plans and health insurance coverage 
is necessary to achieve access to basic health care for more Americans. 
Individuals are more likely to use preventive services if they do not 
have to satisfy cost-sharing requirements (such as a copayment, 
coinsurance, or a deductible). Use of preventive services results in a 
healthier population and reduces health care costs by helping 
individuals avoid preventable conditions and receive treatment 
earlier.\8\ Further, Congress, by amending the Affordable Care Act 
during Senate consideration of the bill to ensure that recommended 
preventive services for women would be covered adequately by non-
grandfathered group health plans and health insurance coverage, 
recognized that women have unique health care needs.\9\ Such needs 
include contraceptive services.\10\
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    \8\ Institute of Medicine, Clinical Preventive Services for 
Women: Closing the Gaps, Washington, DC: National Academy Press, 
2011, at p. 16.
    \9\ S.Amdt. 2791 to S.Amdt. 2786 to H.R. 3590 (Service Members 
Home Ownership Tax Act of 2009), December 3, 2009.
    \10\ Institute of Medicine, Clinical Preventive Services for 
Women: Closing the Gaps, Washington. DC: National Academy. Press, 
2011, at p. 9; see also Sonfield, A., The Case for Insurance 
Coverage of Contraceptive Services and Supplies Without Cost 
Sharing, 14 Guttmacher Policy Review. 10 (2011), available at 
www.guttmacher.org/pubs/gpr/14/1/gpr140107.html. See also 
Congressional Record, S12025 (Dec. 1, 2009), S12114, S12271, S12277 
(December 3, 2009) (statements of Senators B. Boxer, D. Feinstein, 
A. Franken, and B. Nelson, respectively).
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    Some commenters asserted that contraceptive services should not be 
considered preventive health services, arguing that they do not prevent 
disease and have been shown by some studies to be harmful to women's 
health. The HRSA Guidelines are based on recommendations of the 
independent Institute of Medicine (IOM), which undertook a review of 
the scientific and medical evidence on women's preventive services. As 
documented in the IOM report, ``Clinical Preventive Services for Women: 
Closing the Gaps,'' women experiencing an unintended pregnancy may not 
immediately be aware that they are pregnant, and thus delay prenatal 
care. They also may be less motivated to cease behaviors during 
pregnancy, such as smoking and consumption of alcohol, that pose 
pregnancy-related risks. Studies show a greater risk of preterm birth 
and low birth weight among unintended pregnancies.\11\ In addition, 
contraceptive use helps women improve birth spacing and therefore avoid 
the increased risk of adverse pregnancy outcomes that comes with 
pregnancies that are too closely spaced. Short interpregnancy intervals 
in particular have been associated with low birth weight, prematurity, 
and small-for-gestational age births.\12\ Contraceptives also have 
medical benefits for women who are contraindicated for pregnancy, and 
there are demonstrated preventive health benefits from contraceptives 
relating to conditions other than pregnancy (for example, prevention of 
certain cancers, menstrual disorders, and acne).\13\ In addition, by 
reducing the number of unintended pregnancies, contraceptives reduce 
the number of women seeking abortions.\14\ It is for a woman and her 
health care provider in each particular case to weigh any risks against 
the benefits in deciding whether to use contraceptive services in 
general or any particular contraceptive service.
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    \11\ Gipson, J.D., et al., The Effects of Unintended Pregnancy 
on Infant, Child and Parental Health: A Review of the Literature, 
Studies on Family Planning, 2008, 39(1):18-38.
    \12\ Conde-Aguledo, A., et al., Birth Spacing and Risk of 
Adverse Perinatal Outcomes--A Meta-Analysis, Journal of the American 
Medical Association, 295(15):1809-1823 (2006); see also Zhu, B., 
Effect of Interpregnancy Interval on Birth Outcomes: Findings from 
Recent U.S. Studies, International Journal of Gynecology & 
Obstetrics, 89:S25-S33 (2005); Fuentes-Afflick, E., & Hessol, N., 
Interpregnancy Interval and the Risk of Premature Infants, 
Obstetrics & Gynecology, 95(3):383-390 (2000).
    \13\ Institute of Medicine, Clinical Preventive Services for 
Women: Closing the Gaps, Washington, DC: National Academy Press, 
2011, at p. 107.
    \14\ Institute of Medicine, Clinical Preventive Services for 
Women: Closing the Gaps, Washington, DC: National Academy Press, 
2011, at p. 105. See also, Peipert, J., et al., Preventing 
Unintended Pregnancies by Providing No-Cost Contraception, 
Obstetrics & Gynecology, 120(6): 1291-1297 (2012); see also 
Bongaarts, J., & Westoff, C., The Potential Role of Contraception in 
Reducing Abortion, Studies in Family Planning, 31(3): 193-202 
(2000).
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    Covering contraceptives also yields significant cost savings. A 
2000 study estimated that it would cost 15 to 17 percent more not to 
provide contraceptive coverage in employee health plans than to provide 
such coverage, after accounting for both the direct medical costs of 
pregnancy and the indirect costs, such as employee absence.\15\ 
Consistent with this finding, when contraceptive coverage was added to 
the Federal Employees Health Benefits Program, premiums did not 
increase because there was no resulting net health care cost 
increase.\16\ Specific to public financing of contraceptive services, a 
2010 analysis projected that expanding access to family planning 
services under Medicaid saves $4.26 for every $1 spent.\17\ Additional 
research

[[Page 39873]]

arrived at a similar conclusion and found that, in total, services 
provided at publicly funded family planning centers saved $5.1 billion 
in 2008.\18\
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    \15\ Testimony of Guttmacher Inst., submitted to the Comm. on 
Preventive Servs. for Women, Institute of Medicine, January 12, 
2012, p. 11, citing Bonoan, R. & Gonen, J.S., Promoting Healthy 
Pregnancies: Counseling and Contraception as the First Step, 
Washington Business Group on Health, Family Health in Brief, Issue 
No. 3. August 2000; see also Sonfield, A., The Case for Insurance 
Coverage of Contraceptive Services and Supplies Without Cost 
Sharing, 14 Guttmacher Pol'y Rev. 10 (2011); Mavranezouli, I., 
Health Economics of Contraception, 23 Best Practice & Res. Clinical 
Obstetrics & Gynecology 187-198 (2009); Trussell, J., et al., Cost 
Effectiveness of Contraceptives in the United States, 79 
Contraception 5-14 (2009); Trussell, J., The Cost of Unintended 
Pregnancy in the United States, 75 Contraception 168-170 (2007).
    \16\ Dailard, C., Special Analysis: The Cost of Contraceptive 
Insurance Coverage, Guttmacher Rep. on Public Policy (March 2003).
    \17\ Sawhill, R., et al., An Ounce of Prevention: Policy 
Prescriptions to Reduce the Prevalence of Fragile Families, Future 
of Children, 20(2):133-155.
    \18\ Frost, J., et al., Contraceptive Needs and Services, 
National and State Data, 2008 Update, New York: Guttmacher Institute 
(2010).
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    Further, the importance of covering contraceptive services has been 
recognized by many states, issuers, and employers. Twenty-eight states 
now have laws requiring health insurance issuers to cover 
contraceptives.\19\ A 2002 study found that more than 89 percent of 
insured plans covered contraceptives.\20\ And a 2010 survey of 
employers revealed that 85 percent of large employers and 62 percent of 
small employers offered coverage of FDA-approved contraceptives, with 
another 32 percent of small employers reporting that they did not know 
whether they did so.\21\
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    \19\ Sonfield, A., et al., U.S. Insurance Coverage of 
Contraceptives and the Impact of Contraceptive Coverage Mandates, 
Perspectives on Sexual and Reproductive Health 36(2):72-79, 2002.
    \20\ Sonfield, A., et al., U.S. Insurance Coverage of 
Contraceptives and the Impact of Contraceptive Coverage Mandates, 
Perspectives on Sexual and Reproductive Health 36(2):72-79, 2002.
    \21\ Claxton, G., et al., Employer Health Benefits: 2010 Annual 
Survey, Menlo Park, Cal.: Kaiser Family Found. & Chicago, Illinois: 
Health Research & Education Trust, 2010. While many employers 
included contraceptive coverage in their group health plans prior to 
the Affordable Care Act, the Departments note that the contraceptive 
coverage requirement promotes the government's interests with 
respect to even these plans' participants and beneficiaries by 
ensuring that these plans cover contraceptive services without cost 
sharing, a significant financial barrier to such services that was 
prevalent before the contraceptive coverage requirement. Institute 
of Medicine, Clinical Preventive Services for Women: Closing the 
Gaps, Washington, DC: National Academy Press, 2011, at p. 107. See 
also Postlethwaite, D., et al., A Comparison of Contraceptive 
Procurement Pre- and Post-Benefit Change, 76 Contraception 360 
(2007).
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    Furthermore, in directing non-grandfathered group health plans and 
health insurance coverage to cover preventive services and screenings 
for women described in HRSA Guidelines without cost sharing, the 
statute acknowledges that both existing health coverage and existing 
preventive services recommendations often did not adequately serve the 
unique health needs of women. This disparity placed women in the 
workforce at a disadvantage compared to their male coworkers. Research 
shows that access to contraception improves the social and economic 
status of women.\22\ Research also shows that cost sharing can be a 
significant barrier to access to contraception.\23\ As IOM noted, women 
use preventive services more than men, generating significant out-of-
pocket expenses for women.\24\ Thus, eliminating cost sharing is 
particularly critical to addressing the gender disparity of concern 
here.
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    \22\ Testimony of Guttmacher Institute, submitted to the Comm. 
on Preventive Services for Women, Institute of Medicine, January 12, 
2012, p. 6, citing Goldin, C. & Katz, L., Career and Marriage in the 
Age of the Pill, American Economic Review, 2000, 90(2):461-465; 
Goldin, C. & Katz, L.F., The Power of the Pill: Oral Contraceptives 
and Women's Career and Marriage Decisions, Journal of Political 
Economy, 2002, 110(4):730-770; Bailey, M.J., More Power to the Pill: 
The Impact of Contraceptive Freedom on Women's Life Cycle Labor 
Supply, Quarterly Journal of Economics, 2006, 121(1):289-320.
    \23\ Postlethwaite, D., et al., A Comparison of Contraceptive 
Procurement Pre- and Post-Benefit Change, 76 Contraception 360 
(2007).
    \24\ Institute of Medicine, Clinical Preventive Services for 
Women: Closing the Gaps, Washington, DC: National Academy Press, 
2011, p. 19.
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    The Departments aim to advance these compelling public health and 
gender equity interests by providing more women broad access to 
recommended preventive services, including contraceptive services, 
without cost sharing, while simultaneously protecting certain nonprofit 
religious organizations with religious objections to contraceptive 
coverage from having to contract, arrange, pay, or refer for such 
coverage, as described in these final regulations. Moreover, through 
these final regulations, the Departments seek to achieve these goals in 
ways that take into account the responsibilities imposed on health 
insurance issuers and third party administrators.

A. Amendments to Coverage of Recommended Preventive Health Services--26 
CFR 54.9815-2713, 29 CFR 2590.715-2713, 45 CFR 147.130

    These sections of the final regulations finalize technical 
amendments to the existing preventive services coverage regulations as 
proposed. The final regulations amend paragraph (a) of the existing 
regulations so that the general requirement to provide coverage for 
recommended preventive services without cost sharing is subject to the 
religious employer exemption and eligible organization accommodations 
discussed later in this section.
    The regulations also finalize proposed amendments to paragraph 
(a)(1)(iv) of the existing regulations. As amended, the authorization 
for HRSA to exempt religious employers from the contraceptive coverage 
requirement and the definition of religious employer are now located in 
new 45 CFR 147.131(a) of the HHS regulation and incorporated by 
reference in the regulations of the Departments of Labor and the 
Treasury.
    There are no other changes to the provisions of the 2010 interim 
final regulations related to providing coverage for recommended 
preventive services without cost sharing. Accordingly, consistent with 
the general rules for the provision of coverage for recommended 
preventive services without cost sharing set forth in the 2010 interim 
final regulations, nothing prevents a plan or issuer from using 
reasonable medical management techniques to determine the frequency, 
method, treatment, or setting for an item or service to the extent not 
specified in a recommendation or guideline and nothing requires a plan 
or issuer that has a network of health care providers to provide 
benefits or eliminate cost sharing for items or services that are 
delivered out-of-network.\25\
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    \25\ See 26 CFR 54.9815-2713T(a)(3) and (4); 29 CFR 2590.715-
2713(a)(3) and (4); 45 CFR 147.130(a)(3) and (4). Note, however, if 
a plan or issuer does not have in its network a provider who can 
provide the particular service, then the plan or issuer must cover 
the item or service when performed by an out-of-network provider and 
not impose cost sharing with respect to the item or service. See 
FAQs About Affordable Care Act Implementation (Part XII), Q3 
(February 20, 2013), available at: http://www.dol.gov/ebsa/faqs/faq-aca12.html.
---------------------------------------------------------------------------

B. Religious Employer Exemption and Accommodations for Health Coverage 
Established or Maintained or Arranged by Eligible Organizations--26 CFR 
54.9815-2713A, 29 CFR 2590.715-2713A, 45 CFR 147.131

    These sections of the final regulations simplify and clarify the 
criteria for the religious employer exemption from the contraceptive 
coverage requirement. These sections also establish accommodations with 
respect to the contraceptive coverage requirement for group health 
plans established or maintained by eligible organizations (and group 
health insurance coverage provided in connection with such plans), as 
well as student health insurance coverage arranged by eligible 
organizations that are institutions of higher education.
1. Religious Employer Exemption
    Under the 2012 final regulations, HRSA has the authority to issue 
guidelines in a manner that exempts group health plans established or 
maintained by religious employers (and group health insurance coverage 
provided in connection with such plans) from any requirement to cover 
contraceptive services consistent with the HRSA Guidelines that would 
otherwise apply. A religious employer was defined for this purpose as 
one that: (1) Has the inculcation of religious values as its purpose; 
(2) primarily employs persons who share its religious tenets; (3) 
primarily serves persons who

[[Page 39874]]

share its religious tenets; and (4) is a nonprofit organization 
described in section 6033(a)(1) and 6033(a)(3)(A)(i) or (iii) of the 
Code. Section 6033(a)(3)(A)(i) and (iii) of the Code refers to 
churches, their integrated auxiliaries, and conventions or associations 
of churches, as well as to the exclusively religious activities of any 
religious order.
    The Departments proposed to simplify and clarify the definition of 
religious employer by eliminating the first three prongs and clarifying 
the fourth prong of the definition. Under this proposal, an employer 
that is organized and operates as a nonprofit entity and is referred to 
in section 6033(a)(3)(A)(i) or (iii) of the Code would be considered a 
religious employer for purposes of the religious employer exemption. 
These proposed amendments were intended to eliminate any question as to 
whether group health plans of houses of worship that provide 
educational, charitable, or social services to their communities 
qualify for the exemption. Specifically, they were intended to ensure 
that an otherwise exempt plan is not disqualified because the 
employer's purposes extend beyond the inculcation of religious values 
or because the employer hires or serves people of different religious 
faiths. The Departments also proposed to clarify that, for purposes of 
the religious employer exemption, an employer that is organized and 
operates as a nonprofit entity is not limited to any particular form of 
entity under state law. The Departments reiterate that, under this 
standard, it is not necessary to determine the federal tax-exempt 
status of the nonprofit entity in determining whether the religious 
employer exemption applies.\26\
---------------------------------------------------------------------------

    \26\ Similarly, whether a nonprofit entity is a religious 
employer is determined under this definition without regard to 
whether the entity files Form 990 with the IRS.
---------------------------------------------------------------------------

    The Departments received numerous comments addressing the 
definition of religious employer. Some commenters stated that the 
proposed definition of religious employer was too narrow and should be 
broadened to include all employers, both nonprofit and for-profit, that 
have a religious objection to providing contraceptive coverage in their 
group health plan. Some commenters requested that the definition of 
religious employer be expanded to exempt not only churches and other 
houses of worship, but also religiously affiliated hospitals and other 
health care organizations and other religiously affiliated ministries 
using the concepts of Code section 414(e). Other commenters recommended 
that the requirement to cover contraceptive services be rescinded 
altogether.
    Some commenters stated that the exemption for religious employers 
should be eliminated and that religious employers should instead be 
subject to the accommodations for eligible organizations so that their 
employees may also receive alternative contraceptive coverage without 
cost sharing. Other commenters opposed eliminating the first three 
prongs of the definition of religious employer, stating that only 
churches and other houses of worship that meet the criteria of all of 
the prongs should be subject to the exemption. Many commenters agreed 
with the Departments that the proposed definition of religious employer 
would not materially expand the universe of religious employers, but 
others felt that the proposed definition would unduly broaden it.
    Based on their review of these comments, the Departments are 
finalizing without change the definition of religious employer in the 
proposed regulations. As indicated in the preamble to the proposed 
regulations (78 FR 8461), the simplified and clarified definition of 
religious employer does not expand the universe of religious employers 
that qualify for the exemption beyond that which was intended in the 
2012 final regulations, but only eliminates any perceived potential 
disincentive for religious employers to provide educational, 
charitable, and social services to their communities. The Departments 
believe that the simplified and clarified definition of religious 
employer continues to respect the religious interests of houses of 
worship and their integrated auxiliaries in a way that does not 
undermine the governmental interests furthered by the contraceptive 
coverage requirement. Houses of worship and their integrated 
auxiliaries that object to contraceptive coverage on religious grounds 
are more likely than other employers to employ people of the same faith 
who share the same objection, and who would therefore be less likely 
than other people to use contraceptive services even if such services 
were covered under their plan.
    Contemporaneous with the issuance of these final regulations, HRSA 
is issuing amended guidelines implementing the simplified and clarified 
religious employer exemption authorized by 45 CFR 147.131(a) of these 
final regulations (and incorporated by reference in 26 CFR 54.9815-
2713(a)(1)(iv) and 29 CFR 2590.715-2713(a)(1)(iv)). The amendments to 
the guidelines will become effective beginning August 1, 2013.
2. Accommodations for Health Coverage Established or Maintained or 
Arranged by Eligible Organizations
    In addition to simplifying and clarifying the definition of 
religious employer, these final regulations establish accommodations 
with respect to the contraceptive coverage requirement for health 
coverage established or maintained or arranged by eligible 
organizations, as defined in these final regulations. After meeting a 
self-certification standard, as described in more detail in this 
preamble, nonprofit religious organizations that qualify for these 
accommodations are not required to contract, arrange, pay, or refer for 
contraceptive coverage; however, plan participants and beneficiaries 
(or student enrollees and their covered dependents) will still benefit 
from separate payments for contraceptive services without cost sharing 
or other charge in accordance with section 2713 of the PHS Act and the 
companion provisions of ERISA and the Code. As discussed later in this 
section, the accommodations established under these final regulations 
do not require the issuance of a separate excepted benefits individual 
health insurance policy covering contraceptive services, as set forth 
in the proposed regulations, but instead require a simpler method of 
providing direct payments for contraceptive services.
a. Definition of Eligible Organization
    The final regulations retain the definition of eligible 
organization set forth in the proposed regulations. Accordingly, under 
these final regulations, an eligible organization is an organization 
that: (1) Opposes providing coverage for some or all of the 
contraceptive services required to be covered under section 2713 of the 
PHS Act and the companion provisions of ERISA and the Code on account 
of religious objections; (2) is organized and operates as a nonprofit 
entity; (3) holds itself out as a religious organization; and (4) self-
certifies that it satisfies the first three criteria (as discussed in 
more detail later in this section).
    Some commenters requested that the definition of eligible 
organization be broadened to include nonprofit secular employers and 
for-profit employers with religious objections to contraceptive 
coverage. Other commenters urged that the definition not be extended to 
for-profit employers, arguing that for-profit employers should not be 
accommodated because their purposes are commercial, not religious. 
Additionally, several

[[Page 39875]]

commenters recommended clarifying how an eligible organization would 
show that it holds itself out as a religious organization. 
Specifically, commenters suggested clarifying that only organizations 
that prominently and consistently hold themselves out to the public as 
religious organizations may qualify for an accommodation.
    The Departments decline to adopt these suggestions. The definition 
of eligible organization in these final regulations is the same as that 
in the proposed regulations, and is intended to allow health coverage 
established or maintained or arranged by various types of nonprofit 
religious organizations with religious objections to contraceptive 
coverage to qualify for an accommodation. Consistent with religious 
accommodations in related areas of federal law, such as the exemption 
for religious organizations under Title VII of the Civil Rights Act of 
1964, the definition of eligible organization in these final 
regulations does not extend to for-profit organizations. The 
Departments are unaware of any court granting a religious exemption to 
a for-profit organization, and decline to expand the definition of 
eligible organization to include for-profit organizations.
    b. Self-Certification
    Each organization seeking to be treated as an eligible organization 
under the final regulations, to avoid contracting, arranging, paying, 
or referring for contraceptive coverage, is required to self-certify, 
prior to the beginning of the first plan year to which an accommodation 
is to apply, that it meets the definition of an eligible 
organization.\27\ The self-certification (as described in these final 
regulations) needs to be executed once. A copy of the self-
certification needs to be provided to a new health insurance issuer or 
a new third party administrator if the eligible organization changes 
issuers or third party administrators. Comments addressing this topic 
generally approved of the approach proposed by the Departments, but 
some commenters suggested that stronger protections were needed to 
promote oversight, enforcement, and transparency and to prevent abuse. 
For example, some commenters recommended requiring eligible 
organizations to file their self-certifications with the Departments 
and making such records available to the public. Other commenters 
argued that the act of self-certification would infringe on the First 
Amendment right of free speech.
---------------------------------------------------------------------------

    \27\ Although not required to do so by these final regulations, 
nothing in these final regulations prevents a religious employer 
from drafting and executing a self-certification regarding its 
status as a religious employer and sharing the self-certification 
with issuers, plan service providers, plan participants or 
beneficiaries, or others.
---------------------------------------------------------------------------

    The final regulations do not require the self-certification to be 
submitted to any of the Departments. An eligible organization must 
simply maintain the self-certification (executed by an authorized 
representative of the organization) in its records, in a manner 
consistent with the record retention requirements under section 107 of 
ERISA, and make the self-certification available for examination upon 
request. The Departments believe that the requirement to make the self-
certification available for examination upon request appropriately 
balances regulators', issuers', third party administrators', and plan 
participants and beneficiaries' (and student enrollees and their 
covered dependents') interest in verifying compliance and eligible 
organizations' interest in avoiding undue inquiry into their character, 
mission, or practices. Further, the Departments do not believe that the 
self-certification standard infringes on freedom of speech.
    The proposed regulations provided that the self-certification would 
specify the contraceptive services for which the organization will not 
establish, maintain, administer, or fund coverage. The final 
regulations eliminate this requirement, pursuant to the standard 
exclusion policy discussed later in this section. Further, the final 
regulations provide that, if an organization seeks to be treated as an 
eligible organization under the final regulations, an issuer or third 
party administrator may not require any documentation from the 
organization beyond its self-certification as to its status as an 
eligible organization. The form to be used for the self-certification 
is being finalized contemporaneous with the issuance of these final 
regulations through the process provided for under the Paperwork 
Reduction Act of 1995.
    As discussed previously, the self-certification form is applicable 
in conjunction with the accommodations under these final regulations 
(that is, for plan years beginning on or after January 1, 2014), after 
the expiration of the temporary enforcement safe harbor. The self-
certification standard referenced in these final regulations (and the 
form to be executed by an eligible organization to make such self-
certification, which is being issued contemporaneously with these final 
regulations) are different from the standard (and the form) associated 
with the guidance regarding the extension of the temporary enforcement 
safe harbor, which is also being issued contemporaneously with these 
final regulations.
c. Separate Payments for Contraceptive Services for Participants and 
Beneficiaries in Insured Group Health Plans
    The proposed regulations provided, in the case of an insured group 
health plan established or maintained by an eligible organization, that 
the health insurance issuer providing group coverage in connection with 
the plan be required to assume sole responsibility, independent of the 
eligible organization and its plan, for providing separate individual 
health insurance policies covering contraceptive services for plan 
participants and beneficiaries without cost sharing, premium, fee, or 
other charge to plan participants or beneficiaries or to the eligible 
organization or its plan. Under this proposal, an organization seeking 
to be treated as an eligible organization would need only to meet the 
self-certification standard. The issuer, in turn, would automatically 
enroll plan participants and beneficiaries in separate individual 
health insurance policies that cover contraceptive services (and notify 
them of such enrollment) without the imposition of any cost-sharing 
requirement (such as a copayment, coinsurance, or a deductible), 
premium, fee, or other charge on plan participants or beneficiaries or 
on the eligible organization or its plan.
    Some commenters stated that the Departments should not provide a 
tailored accommodation for an eligible organization that objects to 
only some types of contraceptive services. These commenters said that 
customizing individual contraceptive policies for participants and 
beneficiaries (or students enrollees and their covered dependents) in 
plans of eligible organizations based on the differing religious 
objections to contraceptive coverage of each eligible organization 
would create an administrative burden for issuers and confuse plan 
participants and beneficiaries (or student enrollees and their covered 
dependents). Some commenters also noted that requiring coordination of 
benefits might not be feasible, because many states prohibit 
coordination between individual and group health insurance coverage.
    In response to these comments, the final regulations provide that 
an issuer providing payments for contraceptive services in accordance 
with these final regulations may use a standard exclusion from a group 
health insurance policy that encompasses all recommended contraceptive 
services

[[Page 39876]]

and not violate PHS Act section 2713 and the companion provisions of 
ERISA and the Code with respect to the requirement to cover 
contraceptive services. While issuers may, at their option, choose to 
offer customized exclusions from group health insurance policies based 
on the differing religious objections to contraceptive coverage of each 
eligible organization (or offer several different but standardized 
exclusions from group health insurance policies from which eligible 
organizations may choose), they are not required to do so under these 
final regulations. Regardless of whether an issuer uses a standard or 
customized exclusion from a group health insurance policy, plan 
participants and beneficiaries (and student enrollees and their covered 
dependents) are assured that the issuer will make payments for any 
recommended contraceptive services excluded from the group health 
insurance policy (or student health insurance coverage).
    Some commenters noted that the proposed individual health insurance 
policies covering contraceptive services might not be viewed as 
enforceable contracts under state contract law because there would be 
no premium associated with the coverage and no ability for an 
individual to decline coverage. Commenters suggested that states would 
need to develop new regulatory processes for reviewing forms and rates 
for such policies, and noted that the inability to charge a premium for 
such policies could raise actuarial soundness and financial reserve 
concerns. Commenters also noted that state laws would prevent issuers 
licensed to issue group health insurance policies in one state from 
issuing individual health insurance policies to employees of an 
eligible organization residing in other states, and expressed concern 
about the cost and administrative complexity of issuing and 
administering individual contraceptive coverage policies.
    These final regulations achieve the same end by requiring that a 
health insurance issuer providing group health insurance coverage in 
connection with a group health plan established or maintained by an 
eligible organization assume sole responsibility for providing separate 
payments for contraceptive services directly for plan participants and 
beneficiaries, without cost sharing, premium, fee, or other charge to 
plan participants or beneficiaries or to the eligible organization or 
its plan. The requirement that, for plan participants and 
beneficiaries, issuers provide payments for contraceptive services, in 
lieu of individual health insurance policies that cover contraceptive 
services, represents a simpler approach and responds to concerns raised 
by commenters, while still ensuring that eligible organizations and 
their plans do not contract, arrange, pay, or refer for such coverage, 
and that contraceptive coverage is expressly excluded from the group 
health insurance coverage.
    Under these final regulations, as under the proposed regulations, 
the eligible organization need only meet the self-certification 
standard and provide to the issuer a copy of its self-certification. 
The issuer that receives the copy of the self-certification from the 
eligible organization must expressly exclude contraceptive coverage--
either all contraceptive coverage or coverage of specific contraceptive 
services if the issuer chooses to customize the exclusion--from the 
group health insurance coverage of the eligible organization. The 
issuer must also notify plan participants and beneficiaries, 
contemporaneous with (to the extent possible) but separate from any 
application materials distributed in connection with enrollment (or re-
enrollment) in group health coverage that is effective beginning on the 
first day of each applicable plan year, that the issuer provides 
payments for contraceptive services at no cost separate from the group 
health plan for so long as the participant or beneficiary remains 
enrolled in the plan, as discussed later in this section. Unlike under 
the proposed regulations, the issuer is not required to issue to plan 
participants and beneficiaries individual health insurance policies 
covering contraceptive services, and, thus, there is no need to 
consider such coverage excepted benefits, as proposed. Instead, under 
these final regulations, the issuer must, as a federal regulatory 
requirement, provide payments for contraceptive services for plan 
participants and beneficiaries, separate from the group health plan, 
without the imposition of cost sharing, premium, fee, or other charge 
on plan participants or beneficiaries or on the eligible organization 
or its plan. Under this simplified approach, issuers will not incur the 
associated administrative costs of issuing individual contraceptive 
coverage policies.
    This simpler approach to the accommodation for insured coverage 
does not trigger certain aspects of state insurance law. As the 
payments at issue derive solely from a federal regulatory requirement, 
not a health insurance policy, they do not implicate issues such as 
issuer licensing and product approval requirements under state law, and 
they minimize cost and administrative complexity for issuers. At the 
same time, because the payments for contraceptive services are not a 
group health plan benefit under this approach, this policy ensures that 
eligible organizations and their plans do not contract, arrange, pay, 
or refer for contraceptive coverage, and that such coverage is 
expressly excluded from their group health insurance policies. This 
approach also minimizes barriers in access to care because plan 
participants and beneficiaries (and their health care providers) do not 
have to have two separate health insurance policies (that is, the group 
health insurance policy and the individual contraceptive coverage 
policy). Furthermore, Small Business Health Insurance Options Programs 
(SHOPs) (the small group market Exchanges) do not need to make 
operational changes as a result of the accommodation. Small employers 
that are eligible organizations purchasing coverage through a SHOP can 
simply provide a copy of their self-certification to the issuer (rather 
than provide it to the SHOP) to ensure that their small group market 
policy is provided in a manner consistent with these final regulations.
    Although these payments for contraceptive services are not benefits 
under a health insurance policy, to fulfill an issuer's 
responsibilities under section 2713 of the PHS Act and the companion 
provisions of ERISA and the Code and consistent with the proposed 
regulations, an issuer must make them available in a way that meets 
minimum standards for consumer protection, which would ordinarily 
accompany coverage of recommended preventive health services without 
cost sharing under section 2713 of the PHS Act and the companion 
provisions of ERISA and the Code. Thus, issuers, in order to satisfy 
their regulatory obligations under these final regulations, must make 
these payments for contraceptive services in a manner consistent with 
the requirements under the following provisions of the PHS Act and the 
companion provisions of ERISA and the Code (and their implementing 
regulations): PHS Act sections 2706 (non-discrimination in health 
care), 2709 (coverage for individuals participating in approved 
clinical trials), 2711 (no lifetime or annual limits), 2713 (coverage 
of preventive health services), 2719 (appeals process), and 2719A 
(patient protections), as incorporated by reference into ERISA section 
715 and Code section 9815.\28\ Consistent with

[[Page 39877]]

these standards and as described in the 2010 interim final regulations, 
an issuer may apply reasonable medical management techniques and may 
require that contraceptive services be obtained in-network (if an 
issuer has a network of providers) in order for plan participants and 
beneficiaries to obtain such services without cost sharing.\29\
---------------------------------------------------------------------------

    \28\ With respect to the accommodation for self-insured coverage 
of eligible organizations under these final regulations, a 
comparable requirement to provide separate payments for 
contraceptive services consistent with these consumer protections is 
not explicitly placed on the third party administrator. This is 
because, as the plan administrator for contraceptive coverage, the 
third party administrator is already required to comply with these 
consumer protections, as well as all other provisions of ERISA that 
are applicable to group health plans, including ERISA sections 104 
and 503, and the requirements of Part 7 of ERISA.
    \29\ See 26 CFR 54.9815-2713T(a)(3) and (4); 29 CFR 2590.715-
2713(a)(3) and (4); 45 CFR 147.130(a)(3) and (4).
---------------------------------------------------------------------------

    Issuers are prohibited from charging any premium, fee, or other 
charge to eligible organizations or their plans, or to plan 
participants or beneficiaries, for making payments for contraceptive 
services, and must segregate the premium revenue collected from 
eligible organizations from the monies they use to make such payments. 
In making such payments, the issuer must ensure that it does not use 
any premiums collected from eligible organizations. Issuers have 
flexibility in how to structure these payments, provided that the 
payments in no way involve the eligible organization, and provided that 
issuers are able to account for this segregation of funds in accordance 
with applicable, generally accepted accounting and auditing standards.
    The Departments stated in the preamble of the proposed regulations 
that issuers would find that providing contraceptive coverage is at 
least cost neutral because they would be insuring the same set of 
individuals under both the group health insurance policies and the 
separate individual contraceptive coverage policies and, as a result, 
would experience lower costs from improvements in women's health, 
healthier timing and spacing of pregnancies, and fewer unplanned 
pregnancies. The Departments continue to believe, and have evidence to 
support, that, with respect to the accommodation for insured coverage 
established under these final regulations, providing payments for 
contraceptive services is cost neutral for issuers. Several studies 
have estimated that the costs of providing contraceptive coverage are 
balanced by cost savings from lower pregnancy-related costs and from 
improvements in women's health.30 31 The Departments are 
unaware of any studies to the contrary.\32\
---------------------------------------------------------------------------

    \30\ Bertko, J., Glied, S., et al. The Cost of Covering 
Contraceptives Through Health Insurance (February 9, 2012), http://aspe.hhs.gov/health/reports/2012/contraceptives/ib.shtml; Washington 
Business Group on Health, Promoting Healthy Pregnancies: Counseling 
and Contraception as the First Step, Report of a Consultation with 
Business and Health Leader (September 20, 2000), http://www.businessgrouphealth.org/pdfs/healthypregnancy.pdf; Campbell, 
K.P., Investing in Maternal and Child Health: An Employer's Toolkit, 
National Business Group on Health http://www.businessgrouphealth.org/healthtopics/maternalchild/investing/docs/mch_toolkit.pdf; Trussell, J., et al. The Economic Value of 
Contraception: A Comparison of 15 Methods, American Journal Public 
Health, 1995; 85(4):494-503, Revenues of H.R. 3162, the Children's 
Health and Medicare Protection Act, for the Rules Committee (August 
1, 2007) http://www.cbo.gov/ftpdocs/85xx/doc8519/HR3162.pdf.
    \31\ The Departments believe that these same cost savings found 
by issuers of group health insurance would also be found by issuers 
of student health insurance coverage.
    \32\ One commenter cited two studies disputing the cost 
effectiveness of preventive health services, but these studies are 
not specific to contraceptive services. Further, these studies find 
that preventive care is not cost effective when a large population 
receives the preventive service but only a small fraction of that 
population would have developed the condition being prevented, a 
circumstance not presented here. See Cohen, J., et al., New England 
Journal of Medicine. 2008, 358:661-663 (February 14, 2008) http://www.nejm.org/toc/nejm/358/7; CBO Letter to Congressman Nathan Deal, 
(August 7, 2009). http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/104xx/doc10492/08-07-prevention.pdf.
---------------------------------------------------------------------------

    Some commenters raised specific premium rating and accounting 
issues related to the proposed regulations' approach to the cost 
neutrality of issuers providing contraceptive coverage. These 
commenters generally asserted that the cost savings due to lower 
pregnancy-related costs and improvements in women's health would flow 
to employers through reduced premiums, thereby leaving issuers 
uncompensated for the cost of providing contraceptive coverage. 
Further, commenters stated that, in the case of a group health 
insurance policy in the small group market, the small employer's 
reduced claims experience attributable to contraceptive coverage (not 
including the issuer's direct costs of contraceptive coverage) would be 
spread across the issuer's single risk pool for the entire small group 
market in a state and result in a lower index rate for pricing all of 
the issuer's small group market products. Thus, according to these 
commenters, in both the large and small group markets, issuers would 
not reap the cost savings attributable to contraceptive coverage, and 
would need to fund the costs of a free-standing contraceptive coverage 
policy from some other source.
    One commenter suggested that it would be possible to view the 
provision of contraceptive coverage as cost neutral if an issuer were 
to set the premium otherwise charged to an eligible organization as 
though plan participants and beneficiaries did not have separate 
contraceptive coverage. Other commenters argued that the rationale for 
providing Federally-facilitated Exchange (FFE) user fee adjustments in 
connection with the accommodation for self-insured group health plans 
of eligible organizations was equally applicable in the context of 
insured group health plans of eligible organizations and recommended 
that issuers be permitted to charge a premium or otherwise be 
compensated for providing contraceptive coverage.
    In response to these comments, the Departments continue to believe 
that issuers have various options for achieving cost neutrality, 
notwithstanding that they must make payments for contraceptive services 
without cost sharing, premium, fee, or other charge to the eligible 
organization, the group health plan, or plan participants or 
beneficiaries.
    Issuers of large group insured products have an option by which 
they can ensure that they accrue the cost savings from reduced 
pregnancy-related expenses and other health care costs. For large group 
market products, issuers base premiums on an employer's prior year 
claims cost (that is, experience rating) and other factors.\33\ Some 
commenters asserted that this rating practice means that any cost 
savings from fewer pregnancies and childbirths and improvements in 
women's health will be passed to the employer in the large group 
insured market. Given that there appears to be no legal requirement 
that issuers use this particular rating practice, and that this 
practice often entails adding costs to premiums that are not based 
solely on the experience of the employer's group,\34\ issuers 
reasonably could set the premium for an eligible organization's large 
group policy as if no payments for contraceptive services had been 
provided to plan participants and beneficiaries--reflecting the actual 
terms of the group policy, which expressly excludes contraceptive 
coverage. This approach would be consistent with pricing methodologies 
currently used in the health insurance industry.
---------------------------------------------------------------------------

    \33\ http://www.nahu.org/consumer/GroupInsurance.cfm.
    \34\ http://www.actuary.org/files/Draft_Large_Group_Medical_Business_Practice_Note_Jan_2013.pdf.

---------------------------------------------------------------------------

[[Page 39878]]

    Another option is to treat the cost of payments for contraceptive 
services for women enrolled in insured group health plans established 
or maintained by eligible organizations as an administrative cost that 
is spread across the issuer's entire risk pool, excluding plans 
established or maintained by eligible organizations given that issuers 
are prohibited from charging any premium, fee, or other charge to 
eligible organizations or their plans for providing payments for 
contraceptive services. In the small group market, issuers are required 
beginning in 2014 to treat all of their non-grandfathered business 
within a state as a single risk pool, and administrative costs may be 
spread evenly across all plans in the single risk pool (although 
issuers are permitted to apply them on a plan basis). In the large 
group market, while there is no single risk pool requirement, issuers 
generally spread administrative costs across their entire book of 
business.\35\ In 2011, health insurance issuers earned approximately 
$290 billion in premiums in the insured small and large group 
markets.\36\ If the cost of providing payments for contraceptive 
services for participants and beneficiaries in insured group health 
plans established or maintained by eligible organizations were treated 
as an administrative cost spread across an issuer's entire book of 
business (excluding plans established or maintained by eligible 
organizations), the cost of providing such payments would result in an 
imperceptible increase in administrative load.\37\ These changes in 
premiums would be negligible and effectively cost neutral to issuers, 
even before considering any reductions in claims costs that accrue to 
the issuer.
---------------------------------------------------------------------------

    \35\ Bluhm, W., ed., Group Insurance, 5th Ed. 2007), 459-460.
    \36\ 2011 MLR-A data, submitted to CMS in July 2012.
    \37\ Office of Assistant Secretary for Planning and Evaluation, 
U.S. Department of Health and Human Services, ``Cost-Neutrality of 
Contraceptive Coverage.''
---------------------------------------------------------------------------

    Under either option, after meeting the self-certification standard, 
the eligible organization would not contract, arrange, pay, or refer 
for contraceptive coverage.
    HHS intends to clarify in guidance that an issuer of group health 
insurance coverage that makes payments for contraceptive services under 
these final regulations may treat those payments as an adjustment to 
claims costs for purposes of medical loss ratio and risk corridor 
program calculations.\38\ This adjustment compensates for any increase 
in incurred claims associated with making payments for contraceptive 
services.
---------------------------------------------------------------------------

    \38\ See 45 CFR Part 158 for standards related to the medical 
loss ratio and 45 CFR Part 153 Subpart F for standards related to 
the risk corridor program.
---------------------------------------------------------------------------

    Several commenters expressed concern that participants and 
beneficiaries in plans of eligible organizations would be automatically 
enrolled in individual contraceptive coverage policies and recommended 
providing an opt-out for plan participants and beneficiaries who object 
to contraceptive coverage on religious grounds. Other commenters stated 
that allowing participants and beneficiaries to opt out of such 
contraceptive coverage would create an administrative burden on issuers 
and privacy concerns for individuals because the issuers would know 
which individuals opted in or opted out of such coverage. The 
simplified approach described in these final regulations eliminates 
this issue altogether, because issuers are not required to issue 
individual contraceptive coverage policies at all.\39\ Rather, they are 
required only to provide payments for contraceptive services for those 
plan participants and beneficiaries who opt to use such services. 
Nothing in these final regulations compels any plan participant or 
beneficiary to use such services, and nothing causes participants or 
beneficiaries to be automatically enrolled in contraceptive coverage; 
therefore, these concerns are addressed without the need for an opt-out 
mechanism. Moreover, nothing in these final regulations precludes 
employers or others from expressing any opposition to the use of 
contraceptives or requires health care providers to prescribe or 
provide contraceptives, if doing so is against their religious beliefs.
---------------------------------------------------------------------------

    \39\ The same is true with respect to the accommodation for 
self-insured coverage of eligible organizations under these final 
regulations, given that third party administrators similarly are not 
required to arrange for individual contraceptive coverage policies 
at all.
---------------------------------------------------------------------------

    The Departments explained in the preamble of the proposed 
regulations that a health insurance issuer providing group health 
insurance coverage in connection with a group health plan established 
or maintained by an eligible organization would be held harmless if the 
issuer relied in good faith on a representation by the organization as 
to its eligibility for the accommodation and such representation was 
later determined to be incorrect. The Departments also explained that 
an eligible organization and its plan would be held harmless if the 
issuer were to fail to comply with the requirement to provide separate 
payments for contraceptive services for plan participants and 
beneficiaries at no cost. Some commenters requested that the 
Departments codify this policy in regulation text. Accordingly, this 
policy is now codified in paragraph (e) of 26 CFR 54.9815-2713A, 29 CFR 
2590.715-2713A, and 45 CFR 147.131 of these final regulations.
    To summarize, the following are the key elements of the 
accommodation that is being made for eligible organizations with 
insured group health plans:
     An organization seeking to be treated as an eligible 
organization needs only to self-certify that it is an eligible 
organization, provide the issuer with a copy of the self-certification, 
and satisfy the recordkeeping and inspection requirements of the self-
certification standard.
     The issuer that receives a self-certification must then 
expressly exclude contraceptive coverage from the eligible 
organization's group health insurance coverage.
     The issuer must, contemporaneous with (to the extent 
possible), but separate from, any application materials distributed in 
connection with enrollment (or re-enrollment) in group health coverage 
that is effective beginning on the first day of each applicable plan 
year, notify plan participants and beneficiaries that the issuer 
provides separate payments for contraceptive services at no cost for so 
long as the participant or beneficiary remains enrolled in the plan.
     The issuer must segregate premium revenue collected from 
the eligible organization from the monies used to make payments for 
contraceptive services. When it makes payments for contraceptive 
services used by plan participants and beneficiaries, the issuer must 
do so without imposing any premium, fee, or other charge, or any 
portion thereof, directly or indirectly, on the eligible organization, 
its group health plan, or its plan participants or beneficiaries. In 
making such payments, the issuer must ensure that it does not use any 
premiums collected from eligible organizations. Issuers have 
flexibility in how to structure these payments, but must be able to 
account for this segregation of funds, subject to applicable, generally 
accepted accounting and auditing standards. Thus, an eligible 
organization need not contract, arrange, pay or refer for contraceptive 
coverage.

[[Page 39879]]

     Plan participants and beneficiaries may refuse to use 
contraceptive services.
     An eligible organization and its group health plan are 
considered to comply with the contraceptive coverage requirement even 
if the issuer fails to comply with the requirement to provide separate 
payments for contraceptive services for plan participants and 
beneficiaries at no cost.
d. Separate Payments for Contraceptive Services for Participants and 
Beneficiaries in Self-Insured Group Health Plans
    Comments varied as to which of the three proposed approaches to 
providing separate contraceptive coverage without cost sharing for 
participants and beneficiaries in self-insured plans of eligible 
organizations should be finalized. Some commenters suggested that none 
of the proposed approaches would enable objecting employers to separate 
themselves completely from the administration of contraceptive 
coverage. These commenters requested an unqualified exemption from the 
contraceptive coverage requirement for such employers. Other commenters 
stated that none of the proposed approaches would sufficiently ensure 
that participants and beneficiaries in self-insured plans of eligible 
organizations would receive separate contraceptive coverage without 
cost sharing. These commenters requested that the final regulations 
require that objecting employers retain legal responsibility for any 
failure on the part of issuers or third party administrators to provide 
such coverage.
    A number of commenters expressed concern about the responsibilities 
that one or more of the proposed approaches would impose on third party 
administrators. Some of these commenters suggested that the proposed 
requirement that third party administrators arrange for separate 
contraceptive-only coverage through an issuer would convert third party 
administrators into health insurance brokers. Others suggested that 
third party administrators would not be willing to assume the 
responsibility of arranging for separate contraceptive-only coverage. 
These commenters also suggested that, even if a third party 
administrator were willing to assume such responsibility, it would pass 
along the resultant increase in its administrative costs to the 
employer.
    Other commenters expressed concern about an approach that would 
require third party administrators to become plan administrators and 
fiduciaries under section 3(16) of ERISA for the sole purpose of 
arranging contraceptive coverage. These commenters suggested that 
requiring third party administrators to serve as fiduciaries would 
increase their exposure to legal liability and also create conflicts of 
interest with their plan sponsor clients given that many agreements 
between third party administrators and plan sponsors prohibit third 
party administrators from serving as fiduciaries.
    A number of commenters questioned the Department of Labor's legal 
authority to designate a third party administrator as the plan 
administrator for contraceptive coverage by virtue of the eligible 
organization providing a copy of its self-certification to the third 
party administrator. These commenters suggested that the self-
certification of the eligibility of the organization for the 
accommodation would be insufficient to act as a designation under ERISA 
section 3(16)(A)(i), and questioned whether the self-certification 
could be defined as an instrument under which the plan is operated.
    After reviewing the comments on the three proposed approaches, the 
Departments are finalizing the third approach under which the third 
party administrator becomes an ERISA section 3(16) plan administrator 
and claims administrator solely for the purpose of providing payments 
for contraceptive services for participants and beneficiaries in a 
self-insured plan of an eligible organization at no cost to plan 
participants or beneficiaries or to the eligible organization. The 
Departments have determined that the ERISA section 3(16) approach most 
effectively enables eligible organizations to avoid contracting, 
arranging, paying, or referring for contraceptive coverage after 
meeting the self-certification standard, while also creating the fewest 
barriers to or delays in plan participants and beneficiaries obtaining 
contraceptive services without cost sharing.
    Under this approach, as set forth in these final regulations, with 
respect to the contraceptive coverage requirement, an eligible 
organization is considered to comply with section 2713 of the PHS Act 
and the companion provisions in ERISA and the Code if it provides to 
all third party administrators with which it or its plan has contracted 
a copy of its self-certification, consistent with the requirements of 
these final regulations.\40\ The self-certification must: (1) State 
that the eligible organization will not act as the plan administrator 
or claims administrator with respect to contraceptive services or 
contribute to the funding of contraceptive services; and (2) cite 29 
CFR 2510.3-16 and 26 CFR 54.9815-2713A and 29 CFR 2590.715-2713A, which 
explain the obligations of the third party administrator. Upon receipt 
of the copy of the self-certification, the third party administrator 
may decide not to enter into, or remain in, a contractual relationship 
with the eligible organization to provide administrative services for 
the plan.
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    \40\ Third party administrators are hired by plan sponsors to 
process claims and administer other administrative aspects of 
employee benefit plans. In some cases, a plan hires different third 
party administrator to administer claims for different 
classifications of benefits. (For example, one plan may contract 
with a pharmacy benefit manager (PBM) to handle claims 
administration for prescription drugs and another third party 
administrator to handle claims for inpatient and outpatient medical/
surgical benefits.) To the extent the plan hires more than one third 
party administrator, each third party administrator would become the 
section 3(16) plan administrator with respect to the types of claims 
it normally processes (that is, the PBM would continue to handle 
claims for prescription drugs and the other third party 
administrator would continue to handle claims for inpatient and 
outpatient medical/surgical benefits); each would do so in 
accordance with section 2713 of the PHS Act and the companion 
provisions of ERISA and the Code (even if plan terms might otherwise 
provide differently) as plan administration that may be funded in 
accordance with 45 CFR 156.50(d).
---------------------------------------------------------------------------

    As relevant here, a plan administrator is defined in ERISA section 
3(16)(A)(i) as ``the person specifically so designated by the terms of 
the instrument under which the plan is operated.'' As a document 
notifying the third party administrator(s) that the eligible 
organization will not provide, fund, or administer payments for 
contraceptive services, the self-certification is one of the 
instruments under which the employer's plan is operated under ERISA 
section 3(16)(A)(i). The self-certification will afford the third party 
administrator notice of obligations set forth in these final 
regulations, and will be treated as a designation of the third party 
administrator(s) as plan administrator and claims administrator for 
contraceptive benefits pursuant to section 3(16) of ERISA. Additional 
conditions the eligible organization must meet in order to be 
considered to comply with PHS Act section 2713 and the companion 
provisions in ERISA and the Code include prohibitions on: (1) Directly 
or indirectly interfering with a third party administrator's efforts to 
provide or arrange separate payments for contraceptive services for 
participants or beneficiaries in the plan and (2) directly or 
indirectly seeking to influence a third party administrator's

[[Page 39880]]

decision to provide or arrange such payments.\41\
---------------------------------------------------------------------------

    \41\ Nothing in these final regulations prohibits an eligible 
organization from expressing its opposition to the use of 
contraceptives.
---------------------------------------------------------------------------

    A third party administrator that receives a copy of the self-
certification and that agrees to enter into or remain in a contractual 
relationship with the eligible organization to provide administrative 
services for the plan must provide or arrange separate payments for 
contraceptive services for participants and beneficiaries in the plan 
without cost sharing, premium, fee, or other charge to plan 
participants or beneficiaries, or to the eligible organization or its 
plan. The third party administrator can provide such payments on its 
own, or it can arrange for an issuer or other entity to provide such 
payments. In either case, like the payments for contraceptive services 
under the accommodation for insured plans of eligible organizations 
discussed previously, the payments are not health insurance policies. 
Moreover, in either case, the third party administrator can make 
arrangements with an issuer offering coverage through an FFE to obtain 
reimbursement for its costs (including an allowance for administrative 
costs and margin). As discussed later in this section, the issuer 
offering coverage through the FFE can receive an adjustment to the FFE 
user fee, and the issuer is required to pass on a portion of that 
adjustment to the third party administrator to account for the costs of 
providing or arranging payments for contraceptive services. A third 
party administrator that provides or arranges the payments is entitled 
to retain reimbursement for its costs for the period during which it 
reasonably and in good faith relied on a representation by the eligible 
organization that it was eligible for the accommodation. This is so 
even if the organization's representation was later determined to be 
incorrect.
    The third party administrator must provide plan participants and 
beneficiaries with notice of the availability of the separate payments 
for contraceptive services contemporaneous with (to the extent 
possible), but separate from, any application materials distributed in 
connection with enrollment (or re-enrollment) in coverage that is 
effective beginning on the first day of each applicable plan year (as 
discussed in more detail later in this section). Third party 
administrators must also take on the statutory responsibilities of a 
plan administrator under ERISA, including setting up and operating a 
claims procedure under ERISA section 503, providing plan participants 
and beneficiaries with disclosures required under ERISA section 104, 
and complying with the requirements of Part 7 of ERISA. The Departments 
note that there is no obligation for a third party administrator to 
enter into or remain in a contract with the eligible organization if it 
objects to any of these responsibilities.
    The Departments believe that this approach most successfully 
addresses both the desire of some commenters for plan participants and 
beneficiaries to receive contraceptive coverage without cost sharing 
without delays or other barriers, and the desire of other commenters 
for objecting employers to be separated from contracting, arranging, 
paying, or referring for contraceptive coverage. The third party 
administrator serving as the plan administrator for contraceptive 
benefits ensures that there is a party with legal authority to arrange 
for payments for contraceptive services and administer claims in 
accordance with ERISA's protections for plan participants and 
beneficiaries. At the same time, the approach enables objecting 
employers, after providing third party administrators with a copy of 
the self-certification (as described previously), to separate 
themselves from contracting, arranging, paying, or referring for 
contraceptive coverage. Additionally, by substituting payments for 
contraceptive services for health insurance policies, this approach 
avoids the complications that would be presented by requiring the 
creation of a contraceptive-only health insurance product, and allows 
third party administrators to avoid potentially becoming health 
insurance brokers. Accordingly, while the Departments appreciate 
commenters' concerns about the responsibilities that third party 
administrators must assume under this accommodation, they believe that 
this approach best ensures that plan participants and beneficiaries 
receive contraceptive coverage without cost sharing, and without the 
objecting employers paying for or administering such coverage.
    Moreover, none of the comments changed the Department of Labor's 
view that it has legal authority to require the third party 
administrator to become the plan administrator under ERISA section 
3(16) for the sole purpose of providing payments for contraceptive 
services if the third party administrator agrees to enter into or 
remain in a contractual relationship with the eligible organization to 
provide administrative services for the plan. The Department of Labor 
has broad rulemaking authority under Title I of ERISA, which includes 
the ability to interpret the definition of plan administrator under 
ERISA section 3(16)(A)(i). The Department of Labor's interpretation of 
the self-certification described herein as one of the ``instruments 
under which the plan is operated'' is consistent with the plain meaning 
of the term because it identifies the limited set of plan benefits 
(that is, contraceptive coverage) that the employer refuses to provide 
and that the third party administrator must therefore provide or 
arrange for an issuer or another entity to provide.
e. Self-Insured Group Health Plans Without Third Party Administrators
    Although some commenters addressed the solicitation for comments on 
whether and how to provide an accommodation for self-insured group 
health plans established or maintained by eligible organizations that 
do not use the services of a third party administrator, no comments 
indicated that such plans actually exist. Accordingly, the Departments 
continue to believe that there are no self-insured group health plans 
in this circumstance. However, to allow for the possibility that such a 
self-insured group health plan does exist, the Departments will provide 
any such plan with a safe harbor from enforcement of the contraceptive 
coverage requirement, contingent on: (1) the plan submitting to HHS 
information (as described later in this section) showing that it does 
not use the services of a third party administrator; and (2) if HHS 
agrees that the plan does not use the services of a third party 
administrator, the plan providing notice to plan participants and 
beneficiaries in any application materials distributed in connection 
with enrollment (or re-enrollment) in coverage that is effective 
beginning on the first day of each applicable plan year, indicating 
that it does not provide benefits for contraceptive services.
    Such plans must submit to HHS at least 60 days prior to the first 
day of the first applicable plan year all of the following information:
     Identifying information for the plan, the eligible 
organization that acts as the plan sponsor, and an authorized 
representative of the organization, along with the authorized 
representative's telephone number and email address.
     A listing of the five most highly compensated non-clinical 
plan service providers (other than employees of the plan or plan 
sponsor), including contact information for each plan service provider, 
a concise description of the nature of the services provided by each 
service provider to the plan, and the annual amount of compensation 
paid to

[[Page 39881]]

each plan service provider (examples of plan services include claims 
processing and adjudication, appeals management, provider network 
development, and pharmacy benefit management).
     An attestation (executed by an authorized representative 
of the organization) that the plan is established or maintained by an 
eligible organization, and is operated in compliance with all 
applicable requirements of part A of title XXVII of the PHS Act, as 
incorporated into ERISA and the Code.
    Such information must be submitted electronically to 
marketreform@cms.hhs.gov.
    If any such submission demonstrates that a self-insured group 
health plan established or maintained by an eligible organization does 
not use the services of a third party administrator, the Departments 
will provide a safe harbor from enforcement of the contraceptive 
coverage requirement while an additional accommodation is considered. 
If the Departments discover through any such submission that a self-
insured group health plan established or maintained by an eligible 
organization does in fact use the services of a third party 
administrator, the eligible organization must either follow the 
procedures described in these final regulations to obtain an 
accommodation or otherwise comply with the contraceptive coverage 
requirement.
f. Notice of Availability of Separate Payments for Contraceptive 
Services
    Consistent with the proposed regulations, the final regulations 
direct that, for any plan year to which an accommodation is to apply, a 
health insurance issuer providing separate payments for contraceptive 
services pursuant to the accommodation, or a third party administrator 
arranging or providing such payments (or its agent), must provide 
timely written notice about this fact to plan participants and 
beneficiaries in insured or self-insured group health plans (or student 
enrollees and their covered dependents in student health insurance 
coverage) of eligible organizations.
    Under the proposed regulations, this notice would be provided by 
the issuer contemporaneous with (to the extent possible) but separate 
from any application materials distributed in connection with 
enrollment (or re-enrollment) in health coverage established or 
maintained or arranged by the eligible organization. Commenters noted 
that employers, not issuers, typically distribute plan enrollment (or 
re-enrollment) materials to employees and that providing this notice 
contemporaneous with plan enrollment (or re-enrollment) materials would 
not be possible because issuers typically do not receive enrollee 
information prior to enrollment.
    Consistent with the simplified approach described previously, these 
final regulations provide that this notice must be provided by either 
the issuer providing separate payments for contraceptive services under 
the accommodation, or a third party administrator arranging or 
providing such payments (or its agent). The notice must be provided 
contemporaneous with (to the extent possible), but separate from, any 
application materials distributed in connection with enrollment (or re-
enrollment) in coverage that is effective beginning on the first day of 
each plan year to which the accommodation applies, and it must indicate 
that the eligible organization does not fund or administer 
contraceptive benefits, but that the issuer or third party 
administrator will provide separate payments for contraceptive services 
at no cost. The Departments believe that the direction that the notice 
be provided contemporaneous with application materials ``to the extent 
possible'' provides sufficient flexibility to address the concerns 
raised by commenters about the timing of the notice.
    The final regulations continue to provide model language that may 
be used to satisfy this notice requirement. Substantially similar 
language may also be used to satisfy the notice requirement. Some 
commenters suggested additions or modifications to the model language. 
Other commenters stated that the Departments should not allow the use 
of substantially similar language. Additionally, some commenters 
recommended the Departments set standards to ensure that the notice is 
accessible to persons with limited English proficiency and person with 
disabilities. The Departments believe that the model language in the 
final regulations, along with existing guidance concerning civil rights 
obligations, provide sufficient notice. The Departments also believe 
that the flexibility afforded by the final regulations to use 
substantially similar language is generally consistent with other 
federal notice requirements.
    The notice must include contact information for the issuer or third 
party administrator in the event plan participants and beneficiaries 
(or student enrollees and their covered dependents) have questions or 
complaints. The Departments note that issuers and third party 
administrators may find it useful to provide additional written 
information concerning how to obtain reimbursement for contraceptive 
services, appeals procedures, provider and pharmacy networks, 
prescription drug formularies, medical management procedures, and 
similar issues.\42\
---------------------------------------------------------------------------

    \42\ Furthermore, as discussed previously, with respect to self-
insured coverage, third party administrators that are plan 
administrators must operate in accordance with Part 1 of ERISA, 
including ERISA section 104, which generally requires certain 
disclosures regarding plan benefits and limitations.
---------------------------------------------------------------------------

g. Student Health Insurance Coverage
    Consistent with the HHS proposed regulation, paragraph (f) of the 
HHS final regulation provides that an accommodation applies to student 
health insurance coverage arranged by an eligible organization that is 
an institution of higher education in a manner comparable to that in 
which it applies to group health insurance coverage provided in 
connection with a group health plan established or maintained by an 
eligible organization that is an employer. For this purpose, any 
reference to plan participants and beneficiaries is a reference to 
student enrollees and their covered dependents.
    Several commenters supported treating student health insurance like 
employer-sponsored group health insurance for purposes of these final 
regulations. Other commenters suggested that an accommodation should 
not extend to institutions of higher education that arrange student 
health insurance coverage, because student health insurance coverage is 
considered a type of individual rather than group health insurance 
coverage under federal law.\43\ One commenter recommended that issuers 
offering coverage through the Exchanges be required to provide separate 
contraceptive coverage at no cost to students enrolled in nonprofit 
religious institutions of higher education with religious objections to 
contraceptive coverage (and their dependents).
---------------------------------------------------------------------------

    \43\ 45 CFR 147.147 (77 FR 16453).
---------------------------------------------------------------------------

    Student health insurance coverage is administered differently than 
other individual health insurance coverage. Whereas most individual 
health insurance coverage is issued under a contract between an 
individual policyholder and a health insurance issuer, student health 
insurance coverage is available to student enrollees and their covered 
dependents pursuant to a written agreement between an institution of 
higher education and a health insurance issuer. Some religiously 
affiliated colleges and universities object to signing a written 
agreement or providing financial

[[Page 39882]]

assistance for student health insurance coverage that provides benefits 
for contraceptive services. For these reasons, HHS believes that it is 
appropriate to take into account religious objections to contraceptive 
coverage of eligible organizations that are institutions of higher 
education and is finalizing the provision applicable to student health 
insurance coverage as proposed. HHS notes that it does not have the 
authority to require issuers offering coverage through the Exchanges to 
provide separate contraceptive coverage at no cost to students (and 
their dependents).
    The Departments note that any accommodation specific to a nonprofit 
religious institution of higher education is intended to accommodate 
the nonprofit religious institution of higher education only with 
respect to its arrangement of student health insurance coverage for its 
students and their covered dependents. With respect to the 
establishment or maintenance of a group health plan by a nonprofit 
religious institution of higher education for its employees and their 
dependents, the nonprofit religious institution of higher education is 
intended to be accommodated in the same manner as that in which any 
other eligible organization that has established or maintained a group 
health plan for its employees and their dependents is to be 
accommodated.

C. Adjustments of Federally-Facilitated Exchange User Fees--45 CFR 
156.50(d) and 156.80(d)

    These sections of the final HHS regulation set forth processes and 
standards to fund the payments for the contraceptive services that are 
provided for participants and beneficiaries in self-insured plans of 
eligible organizations under the accommodation described previously, at 
no cost to plan participants or beneficiaries, eligible organizations, 
third party administrators, or issuers, through an adjustment in the 
FFE user fee payable by an issuer participating in an FFE.\44\
---------------------------------------------------------------------------

    \44\ The FFE user fee was established in the March 11, 2013 
final rule entitled ``Patient Protection and Affordable Care Act; 
HHS Notice of Benefit and Payment Parameters for 2014'' (78 FR 
15410) (2014 Payment Notice).
---------------------------------------------------------------------------

    In response to the proposed regulations, some commenters questioned 
HHS's authority to establish the FFE user fee adjustment. Commenters 
also recommended that HHS ensure that the adjustments to user fee 
collections not undermine FFE operations. Commenters stated that the 
FFE user fee should not be increased to offset the user fee adjustment. 
Commenters further stated that the FFE user fee adjustment must be 
adequate to provide financial incentives to ensure that women in self-
insured plans of eligible organizations receive contraceptive coverage 
at no cost. Commenters suggested that the FFE user fee adjustment may 
not be an adequate long-term funding source as more states establish 
Exchanges over time, reducing the number of FFEs and therefore 
available FFE user fee revenue.
    Office of Management and Budget (OMB) Circular No. A-25R 
establishes federal policy regarding these types of user fees. 
Consistent with that Circular, the revised FFE user fee calculation 
(which will result in an adjustment of the FFE user fee) will 
facilitate the accommodation of self-insured plans established or 
maintained by eligible organizations by ensuring that plan participants 
and beneficiaries are provided contraceptive coverage at no cost so 
that eligible organizations are not required to administer or fund such 
coverage. By financing the accommodation for self-insured plans of 
eligible organizations through the FFE user fee adjustment, 
participants and beneficiaries in such plans can retain their existing 
coverage, while gaining access to separate payments for contraceptive 
services at no cost. HHS does not believe that the adjustment to FFE 
user fee collections, as contemplated under this final regulation, will 
materially undermine FFE operations.
    HHS notes that it is not raising the FFE user fee finalized in the 
2014 Payment Notice to offset the FFE user fee adjustments, and 
estimates that payments for contraceptive services will represent only 
a small portion of total FFE user fees.
    The FFE user fee adjustments support many of the goals of the 
Affordable Care Act, including improving the health of the population, 
reducing health care costs, providing access to health coverage, 
encouraging eligible organizations to continue to offer health 
coverage, and ensuring access to affordable qualified health plans 
(QHPs) via efficiently operated Exchanges. Moreover, as described 
earlier in these final regulations, there are significant benefits 
associated with contraceptive coverage without cost sharing. Such 
coverage significantly furthers the governmental interests in promoting 
public health and gender equality, and promotes the underlying goals of 
the Exchanges and the Affordable Care Act more generally.
    In Sec.  156.50(d) of the proposed regulations, HHS specified that, 
if an issuer were to provide contraceptive coverage to participants and 
beneficiaries in self-insured plans of eligible organizations at no 
cost, and the issuer offers coverage through an FFE, the issuer would 
be able to seek an adjustment to the FFE user fee for the estimated 
cost of the contraceptive coverage. Moreover, HHS proposed that, if the 
issuer providing the contraceptive coverage did not offer coverage 
through an FFE--either because it was not a QHP issuer, or because it 
was a QHP issuer but operated in a state without an FFE--an issuer in 
the same issuer group that offered coverage through an FFE would have 
been able to seek an adjustment to the FFE user fee on behalf of the 
issuer providing the contraceptive coverage. HHS proposed to use the 
definition of issuer group in 45 CFR 156.20, that is, all entities 
treated under subsection (a) or (b) of section 52 of the Code as a 
member of the same controlled group of corporations as (or under common 
control with) a health insurance issuer, or issuers affiliated by the 
common use of a nationally licensed service mark. Several commenters 
expressed concern that not every issuer seeking to provide 
contraceptive coverage to participants and beneficiaries in self-
insured plans of eligible organizations would be in the same issuer 
group as an issuer that offers coverage through an FFE. Commenters 
further noted that, even if the issuer providing the contraceptive 
coverage and the issuer offering coverage through an FFE were in the 
same issuer group, the issuers might incur significant administrative 
costs in establishing the necessary arrangements.
    In response to these comments, and to account for the payments for 
contraceptive services for participants and beneficiaries in self-
insured group health plans of eligible organizations under the 
accommodation described previously, HHS is finalizing a modification of 
the proposed policy. In Sec.  156.50(d)(1), a participating issuer 
(defined at 45 CFR 156.50(a) \45\) offering a plan through an FFE may 
qualify for an adjustment to the FFE user fee to the extent that the 
participating issuer either: (i) made payments for contraceptive 
services on behalf of a third party administrator pursuant to 26 CFR 
54.9815-2713A(b)(2)(ii) or 29 CFR 2590.715-2713A(b)(2)(ii); or (ii) 
seeks an adjustment to the FFE user fee with respect to a third party 
administrator

[[Page 39883]]

that, following receipt of a copy of the self-certification referenced 
in 26 CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4), made or 
arranged for payments for contraceptive services pursuant to 26 CFR 
54.9815-2713A(b)(2)(i) or (ii) or 29 CFR 2590.715-2713A(b)(2)(i) or 
(ii). Under the final regulation, neither the third party 
administrator, nor the participating issuer, nor any entity providing 
payments for contraceptive services (if neither the third party 
administrator nor the participating issuer is providing such payments) 
is required to be part of the same issuer group or otherwise 
affiliated. This modification allows greater flexibility in the 
arrangements among third party administrators, issuers, and other 
entities, while still ensuring that eligible organizations are not 
required to contract, arrange, pay, or refer for contraceptive 
coverage. Consistent with the proposed regulations, an allowance for 
administrative costs and margin in the FFE user fee adjustment accounts 
for the costs of arrangements among the third party administrator, the 
participating issuer, and any other entity providing payments for 
contraceptive services (if neither the third party administrator nor 
the participating issuer is providing such payments).
---------------------------------------------------------------------------

    \45\ Under 45 CFR 156.50(a), a participating issuer includes QHP 
issuers, issuers of multi-state plans, and issuers of stand-alone 
dental plans. We note that an issuer of a Consumer Operated and 
Oriented Plan (CO-OP) offered on an FFE is also considered to be a 
participating issuer for the purpose of the FFE user fee adjustment.
---------------------------------------------------------------------------

    In Sec.  156.50(d)(1) through (4) of the proposed regulations, HHS 
set forth a process through which an issuer seeking an FFE user fee 
adjustment would submit information to HHS to demonstrate the provision 
of contraceptive coverage and estimate the cost of such coverage. HHS 
further proposed that it would review this information and provide an 
adjustment to the issuer's monthly obligation to pay the FFE user fee 
in an amount equal to the approved estimated cost of the contraceptive 
coverage. HHS suggested that the cost of the contraceptive coverage, 
including administrative costs and margin, could be estimated on a per 
capita basis by either the issuer or HHS using either actuarial 
principles and methodologies or, for 2016 and beyond, previous 
experience. The per capita rate would then be multiplied by the monthly 
enrollment in the contraceptive coverage in order to calculate the 
total FFE user fee adjustment.
    HHS sought comments on this proposed process for collecting 
information, calculating the cost of the contraceptive coverage, and 
applying the FFE user fee adjustment. HHS received several comments 
suggesting that issuers should be required to submit information only 
on an annual basis, rather than a monthly basis, to reduce the 
administrative burden. Commenters also noted that it would likely be 
difficult to estimate the cost of the contraceptive coverage 
accurately, particularly in the initial years, given that the 
prohibition on cost sharing could affect utilization. In addition, 
commenters noted that costs would likely vary considerably based on 
differences in utilization patterns and administrative processes.
    In response to these comments, HHS is making certain modifications 
to the process described previously. Rather than using a monthly 
process, the final regulation at Sec.  156.50(d)(2) requires a 
participating issuer seeking an FFE user fee adjustment to submit to 
HHS, in the year following the calendar year in which the contraceptive 
services for which payments were made under the accommodation described 
previously were provided, for each self-insured plan, the total dollar 
amount of the payments for contraceptive services that were provided 
during the applicable calendar year. The issuer will then receive an 
adjustment to its obligation to pay the FFE user fee equal to the cost 
of the contraceptive services that were provided during the previous 
year, plus an allowance, as specified by HHS, for administrative costs 
and margin. For example, HHS expects that issuers seeking an FFE user 
fee adjustment for payments for contraceptive services that were 
provided in calendar year 2014 will be required to submit to HHS by 
July 15, 2015, the total dollar amount of the payments. This timing 
will allow adequate time for claims run-out and data collection. The 
FFE user fee adjustment will be applied starting in October 2015. 
Although this approach delays the application of the FFE user fee 
adjustment, it significantly reduces the administrative burden on 
issuers, third party administrators, and HHS. HHS believes that tying 
the FFE user fee adjustment to the actual costs of payments for 
contraceptive services, plus an allowance for administrative costs and 
margin, will provide reasonable assurance that the adjustment is 
adequate to cover the full costs of the payments for contraceptive 
services, furthering the goal of providing contraceptive coverage 
without cost sharing, as required by PHS Act section 2713 and the 
companion provisions in ERISA and the Code.
    As discussed later in this section, HHS is also directing third 
party administrators to submit to HHS a notification that the third 
party administrator intends for a participating issuer to seek an FFE 
user fee adjustment. This notification must be provided by the later of 
January 1, 2014, or the 60th calendar day following the date on which 
the third party administrator receives a copy of a self-certification 
from an eligible organization. The notification must be provided 
whether it is intended that the participating issuer will provide 
payments for contraceptive services on behalf of the third party 
administrator, or whether it is intended that the participating issuer 
will seek an adjustment to the FFE user fee with respect to such 
payments made or arranged for by the third party administrator. HHS 
will provide guidance on the manner of submission of the notification, 
as well as guidance on the application for the FFE user fee adjustment, 
through the process provided for under the Paperwork Reduction Act of 
1995.
    HHS is also modifying the standards proposed at Sec.  156.50(d) to 
align with the final regulations regarding the accommodation for self-
insured group health plans of eligible organizations. As discussed 
previously, under these final regulations, the third party 
administrator may make the payments for contraceptive services itself, 
or it may arrange for an issuer (including an issuer that does not 
offer coverage through an FFE) or another entity to make the payments 
on its behalf. Under either scenario, a third party administrator that 
seeks to offset the costs of such payments through an FFE user fee 
adjustment must enter into an arrangement with a participating issuer 
offering coverage through an FFE. The participating issuer and the 
third party administrator must each submit information to HHS, as 
described in Sec.  156.50(d)(2) of the final regulation, to verify that 
the payments for contraceptive services were provided in accordance 
with these final regulations.
    Specifically, in Sec.  156.50(d)(2)(i), HHS finalizes submission 
standards for a participating issuer to receive the FFE user fee 
adjustment. The participating issuer must submit to HHS, in the manner 
and timeframe specified by HHS, in the year following the calendar year 
in which the contraceptive services were provided: (A) Identifying 
information for the participating issuer and each third party 
administrator that received a copy of the self-certification with 
respect to which the participating issuer seeks an adjustment in the 
FFE user fee (whether or not the participating issuer was the entity 
that made the payments for contraceptive services); (B) identifying 
information for each self-insured group health plan with respect to 
which a copy of the self-certification was received by a third party 
administrator and with respect to

[[Page 39884]]

which the participating issuer seeks an adjustment in the FFE user fee; 
and (C) for each such self-insured group health plan, the total dollar 
amount of the payments for contraceptive services that were provided 
during the applicable calendar year under the accommodation described 
previously. If such payments were made by the participating issuer 
directly, the total dollar amount should reflect the amount of the 
payments made by the participating issuer; if the third party 
administrator made or arranged for such payments, the total dollar 
amount should reflect the amount reported to the participating issuer 
by the third party administrator. Similarly, in Sec.  156.50(d)(2)(ii) 
and (iii), HHS finalizes submission standards for the third party 
administrator with respect to which the participating issuer seeks an 
adjustment in the FFE user fee. In paragraph (d)(2)(ii), HHS finalizes 
a standard under which the third party administrator must notify HHS, 
by the later of January 1, 2014, or the 60th calendar day following the 
date on which it receives the applicable copy of the self-
certification, that it intends to arrange for a participating issuer to 
seek an FFE user fee adjustment. HHS will provide guidance on the 
manner of this submission through the process provided for under the 
Paperwork Reduction Act of 1995. This notification is necessary to 
allow HHS to coordinate the development of the systems for 
administering the FFE user fee adjustment. In paragraphs (d)(2)(iii)(A) 
through (E), HHS specifies several other standards under which the 
third party administrator must submit to HHS, in the year following the 
calendar year in which the contraceptive services for which payments 
were made under the accommodation described previously were provided, 
the following information: (A) Identifying information for the third 
party administrator and the participating issuer; (B) identifying 
information for each self-insured group health plan with respect to 
which the participating issuer seeks an adjustment in the FFE user fee; 
(C) the total number of participants and beneficiaries in each self-
insured group health plan during the applicable calendar year; \46\ (D) 
for each self-insured group health plan with respect to which the third 
party administrator made payments for contraceptive services, the total 
dollar amount of such payments that were provided during the applicable 
calendar year under the accommodation described previously (if such 
payments were made by the participating issuer directly, the total 
dollar amount should reflect the amount reported to the third party 
administrator by the participating issuer; if the third party 
administrator made or arranged for such payments, the total dollar 
amount should reflect the amount of the payments made by or on behalf 
of the third party administrator); and (E) an attestation that the 
payments for contraceptive services were made in compliance with 26 CFR 
54.9815-2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2). If the third party 
administrator does not meet these standards, the participating issuer 
may not receive an FFE user fee adjustment to offset the costs of the 
payments for contraceptive services incurred by or on behalf of the 
third party administrator. HHS believes that it is necessary to collect 
this information directly from the third party administrator that has 
the duty to ensure that the payments for contraceptive services are 
made to ensure the accuracy of the data provided, without requiring the 
participating issuer to attest to information to which it may not have 
access or over which it has little control.
---------------------------------------------------------------------------

    \46\ No personally identifiable information will be collected 
from participating issuers or third party administrators pursuant to 
Sec.  156.50(d)(2).
---------------------------------------------------------------------------

    In Sec.  156.50(d)(3), HHS establishes the process by which a 
participating issuer will be provided a reduction in its obligation to 
pay the FFE user fee. As long as an authorizing exception under OMB 
Circular No. A-25R is in effect, the reduction will be calculated as 
the sum of the total dollar amount of the payments for contraceptive 
services submitted by the applicable third party administrators, as 
described in paragraph (d)(2)(iii)(D), and an allowance, specified by 
HHS, for administrative costs and margin. In the proposed regulations, 
HHS requested comments on the appropriate method for determining the 
administrative costs associated with providing the contraceptive 
coverage, as well as a margin to ensure that issuers receive 
appropriate compensation for providing the contraceptive coverage. 
Commenters agreed with the proposal to reimburse for administrative 
costs and to provide a margin. Commenters noted that administrative 
costs would be incurred because of the complexities inherent in 
arrangements between entities seeking the FFE user fee adjustment and 
entities providing the contraceptive coverage, particularly when the 
entities operate in different states. In addition, commenters stated 
that administrative costs incurred by the third party administrators 
could vary because of variations in billing processes.
    As finalized in this regulation, for the initial years of this 
policy, HHS will specify an allowance for administrative costs and 
margin, which will be incorporated into the FFE user fee adjustment, 
rather than request the third party administrator or the participating 
issuer to submit to HHS an estimate of the third party administrator 
and the participating issuer's administrative costs. This approach is 
consistent with the general approach in these final regulations to 
simplify administration of the accommodations for eligible 
organizations, while still ensuring that no eligible organization is 
required to contract, arrange, pay, or refer for contraceptive 
coverage. HHS notes that it intends to review the methodology for 
determining reimbursement for administrative costs and margin in future 
years to ensure that HHS is accurately capturing these costs. HHS will 
establish the allowance as a percentage of the cost of the payments for 
contraceptive services because HHS believes that the majority of 
administrative costs will be related to processing of payments to 
providers for contraceptive services, and because HHS believes that it 
is reasonable to measure margin on this business as a percentage of the 
cost of the contraceptive services. HHS will establish the allowance at 
no less than ten percent of such cost, and will specify the allowance 
for a particular calendar year in the annual HHS notice of benefit and 
payment parameters. The specific allowance for the 2014 calendar year 
will be proposed for public comment in the HHS Notice of Payment and 
Benefit Parameters for 2015 (which is scheduled to be published in the 
fall of 2013). This approach will allow HHS to provide for a reasonable 
allowance for administrative expenses for the third party 
administrator, the participating issuer, and any other entity providing 
the payments for contraceptive services on behalf of the third party 
administrator, as well as a margin for each entity. HHS welcomes 
feedback from third party administrators, participating issuers, and 
other relevant stakeholders on the allowance for administrative costs 
and margin, including the appropriate percentage and alternative 
methods for future determination of the allowance for administrative 
costs and margin.
    Section 156.50(d)(4) is similar to the corresponding proposed 
provision, and specifies that, as long as an exception under OMB 
Circular No. A-25R is in effect, if the amount of the reduction under 
paragraph (d)(3) is greater than the amount of the obligation to pay 
the FFE user fee in a particular month, the participating issuer will 
be provided a credit in succeeding months in the

[[Page 39885]]

amount of the excess. HHS notes that the likelihood of this occurring 
will depend on the relative magnitudes of the cost of payments for 
contraceptive services and the FFE user fee, the number of participants 
and beneficiaries in self-insured plans with respect to which the 
participating issuer seeks an adjustment in the FFE user fee, and the 
number of individuals enrolled in coverage offered by the issuer 
through the FFE. HHS also notes that it intends to provide a monthly 
report, for the initial month in which the FFE user fee adjustment for 
a particular calendar year is applied, and for succeeding months until 
the credit is fully applied, to issuers that receive an FFE user fee 
adjustment. HHS contemplates that this monthly report will include 
information on the issuer's user fee obligation for the month, its 
total adjustment for the applicable calendar year, the user fee 
adjustment applied to date, and the value of the adjustment to be 
credited to future months (so long as the exception under OMB Circular 
No. A-25R is in effect). Additionally, HHS intends to provide a monthly 
report to each applicable third party administrator detailing any FFE 
user fee adjustment that will be provided to a participating issuer 
with respect to the costs for contraceptive services incurred by or on 
behalf of the third party administrator, as well as the portion of the 
user fee adjustment applied to date.
    Section 156.50(d)(5) specifies that, within 60 calendar days of 
receipt of any adjustment in the FFE user fee, a participating issuer 
must pay each third party administrator with respect to which it 
received any portion of such adjustment an amount no less than the 
portion of the adjustment attributable to the total dollar amount of 
the payments for contraceptive services submitted by the third party 
administrator, as described in paragraph (d)(2)(iii)(D). HHS expects 
that the participating issuer will also agree to pay each third party 
administrator a portion of such allowance (and that the apportionment 
will be negotiated between the entities); HHS does not specify such 
payment in this final regulation, as HHS expects the entities to work 
out an arrangement that best fits their situation. Finally, HHS notes 
that this provision does not apply if the participating issuer made the 
payments for contraceptive services on behalf of the third party 
administrator, as described in paragraph (d)(1)(i), or is in the same 
issuer group (as defined in 45 CFR 156.20) as the third party 
administrator.
    In Sec.  156.50(d)(6) and (7), HHS establishes standards relating 
to documentation and program integrity, similar to those proposed in 
Sec.  156.50(d)(5), but modified slightly to align with the other 
changes in this final regulation. In paragraph (d)(6), HHS specifies 
that a participating issuer receiving an adjustment in the FFE user fee 
under this section for a particular calendar year must maintain for 10 
years following that year, and make available upon request to HHS, the 
HHS Office of the Inspector General, the Comptroller General, and their 
designees, documentation demonstrating that it timely paid each third 
party administrator, with respect to which it received such adjustment, 
any amount required under paragraph (d)(5). In paragraph (d)(7), HHS 
specifies documentation standards for third party administrators with 
respect to which an FFE user fee adjustment is received under this 
section for a particular calendar year. Third party administrators must 
maintain for 10 years following the applicable calendar year, and make 
available upon request to HHS, the HHS Office of the Inspector General, 
the Comptroller General, and their designees, all of the following: (i) 
A copy of the self-certification provided by the eligible organization 
for each self-insured plan with respect to which an adjustment is 
received; (ii) documentation demonstrating that the payments for 
contraceptive services were made in compliance with 26 CFR 54.9815-
2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2); and (iii) documentation 
supporting the total dollar amount of the payments for contraceptive 
services submitted by the third party administrator, as described in 
paragraph (d)(2)(iii)(D). Although a commenter argued that the 
documentation retention standards should be shortened from 10 years to 
6 years, to align with ERISA standards, we believe that the finalized 
standard is appropriate as it aligns with timeframes under the False 
Claims Act, 31 U.S.C. 3729-3733, and standards used for other Exchange 
programs. HHS notes that a participating issuer or a third party 
administrator may satisfy these standards by archiving these records 
and ensuring that they are accessible if needed in the event of an 
investigation, audit, or other review.
    To summarize, costs of payments made for contraceptive services for 
participants and beneficiaries in self-insured group health plans of 
eligible organizations under the accommodation described previously 
will be reimbursed through an adjustment in FFE user fees as follows:
     The adjustment will be made to the FFE user fees of a 
participating issuer, if that participating issuer made the payments 
for the contraceptive services under the accommodation on behalf of the 
third party administrator, or if it seeks the adjustment with respect 
to such payments made or arranged for by the third party administrator.
     A third party administrator must notify HHS that it 
intends for a participating issuer to seek the adjustment by the later 
of January 1, 2014, or the 60th calendar day following the date on 
which it received the copy of the applicable self-certification.
     For the participating issuer to receive the adjustment, 
the third party administrator and the participating issuer must notify 
HHS of the total amount of the payments made for the contraceptive 
services under the accommodation, and provide certain other information 
and documentation, including an attestation by the third party 
administrator that the payments for the contraceptive services were 
provided in compliance with 26 CFR 54.9815-2713A(b)(2) or 29 CFR 
2590.715-2713A(b)(2), by July 15 of the year following the calendar 
year in which the contraceptive services were provided.
     If the necessary conditions are met, and if an exception 
under OMB Circular No. A-25R is in effect, the participating issuer 
will receive an adjustment to its FFE user fee obligation equal to the 
total amount of the payments for the contraceptive services provided 
under the accommodation, plus an allowance for administrative costs and 
margin. If the adjustment exceeds the FFE user fees owed in the month 
of the initial adjustment, any excess adjustment will be carried over 
to later months, for so long as the exception under OMB Circular No. A-
25R is in effect.
     The allowance, which will be at least ten percent of the 
costs of the payments for the contraceptive services under the 
accommodation, will be specified by HHS in the annual HHS notice of 
benefit and payment parameters.
     Within 60 days of receipt of any adjustment, the 
participating issuer must pay the third party administrator the portion 
of the adjustment attributable to payments for contraceptive services 
made by the third party administrator. No payment is required with 
respect to the allowance for administrative costs and margin, although 
it is expected that the participating issuer will agree to pay each 
third party administrator a portion of such allowance. In addition, no 
payment is required if the participating issuer made the payments for 
the contraceptive services under the accommodation on behalf of the 
third

[[Page 39886]]

party administrator, or if the participating issuer and third party 
administrator are in the same issuer group.
    Lastly, in response to comments received, HHS is finalizing a 
provision clarifying that participating issuers may add any amounts 
paid out to a third party administrator or incurred by or for the 
participating issuer in contraceptive claims costs under the 
accommodation for self-insured group health plans of eligible 
organizations provided in these final regulations, plus the allowance 
for administrative costs and margin provided under 45 CFR 
156.50(d)(3)(ii), to their net FFE user fee paid to HHS, in 
calculations relating to the index rate for the single risk pool under 
45 CFR 156.80(d), the medical loss ratio under 45 CFR part 158, and the 
risk corridors program under 45 CFR 153 subpart F. Several commenters 
noted that improperly incorporating the FFE user fee adjustment 
provided for under the final regulation into these calculations could 
lead to unintended consequences. For example, if a participating issuer 
were required to incorporate the FFE user fee adjustment into the 
calculation of the medical loss ratio, but not allowed to incorporate 
the cost of the accommodation for self-insured group health plans of 
eligible organizations, the adjustment would reduce the amount reported 
as licensing and regulatory fees (as described in 45 CFR 158.161(a)). 
This would result in a lower medical loss ratio. HHS agrees that such a 
result would not accurately reflect the ratio of claims to premiums, as 
estimated by the medical loss ratio, for the participating issuer's 
insurance business, because the FFE user fee adjustment occurs due to 
activity not directly related to the participating issuer's insurance 
business. Indeed, under Sec.  156.50(d)(5), the participating issuer is 
required in many circumstances to pay out the greater share of the FFE 
user fee adjustments to third party administrators responsible for 
making (or arranging for another entity to make) the payments for 
contraceptive services. Therefore, HHS clarifies that, for purposes of 
the medical loss ratio and the risk corridors program, participating 
issuers should report the sum of: (1) The net FFE user fee paid to HHS; 
(2) any amounts paid out to a third party administrator or incurred by 
or for the participating issuer in contraceptive claims costs under the 
accommodation for self-insured group health plans of eligible 
organizations provided in these final regulations; and (3) the 
allowance for administrative costs and margin provided under 45 CFR 
156.50(d)(3)(ii), as licensing and regulatory fees referenced in 45 CFR 
158.161(a), or taxes and regulatory fees in the case of the risk 
corridors program. For similar reasons, HHS is modifying the provision 
at 45 CFR 156.80(d) to clarify that, for the purpose of establishing a 
single risk pool index rate for a state market, any market-wide 
adjustments to the index rate for expected Exchange user fees should 
include: (1) The expected net FFE user fee to be paid to HHS; (2) any 
amounts paid out to a third party administrator or incurred by or for 
the participating issuer in contraceptive claims costs under the 
accommodation for self-insured group health plans of eligible 
organizations expected to be credited against user fees payable for 
that state market; and (3) the allowance for administrative costs and 
margin provided under 45 CFR 156.50(d)(3)(ii) expected to be credited 
against user fees payable for that state market.
    HHS clarifies that, if an issuer provides payments for 
contraceptive services on behalf of a third party administrator, such 
payments are not directly linked to any of the health insurance 
coverage provided by the issuer, and the issuer should not incorporate 
the cost of such payments into their calculations for the numerator 
with respect to the medical loss ratio or the risk corridors program.

D. Treatment of Multiple Employer Group Health Plans

    In the case of several employers offering coverage through a single 
group health plan, the Departments proposed that each employer be 
required to independently meet the definition of religious employer or 
eligible organization in order to avail itself of the exemption or an 
accommodation with respect to its employees and their covered 
dependents. Several commenters supported the proposed approach of 
applying the exemption and the accommodation on an employer-by-employer 
basis. Other commenters favored a plan-based approach, allowing any 
employer offering coverage through the same group health plan as a 
religious employer or eligible organization to qualify for the 
exemption or the accommodation, citing administrative challenges to an 
employer-by-employer approach. A few commenters recommended criteria 
for determining whether an employer is affiliated with a religious 
employer or eligible organization with which it offers coverage through 
a single group health plan, such as the control standards in Code 
section 52(a) and (b), and therefore qualified for the exemption or an 
accommodation.\47\
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    \47\ Code section 52(a) generally provides that all employees of 
all corporations that are members of the same controlled group of 
corporations, including corporations that are at least 50 percent 
controlled by a common parent corporation, are treated as employed 
by a single employer. Code section 52(b) generally provides that all 
employees of trades or businesses (whether or not incorporated) that 
are under common control are treated as employed by a single 
employer.
---------------------------------------------------------------------------

    The final regulations continue to provide that the availability of 
the exemption or an accommodation be determined on an employer-by-
employer basis, which the Departments continue to believe best balances 
the interests of religious employers and eligible organizations and 
those of employees and their dependents. The Departments are clarifying 
that, for purposes of these final regulations, any nonprofit 
organization with religious objections to contraceptive coverage that 
is part of the same controlled group of corporations or part of the 
same group of trades or businesses under common control (each within 
the meaning of section 52(a) or (b) of the Code) with a religious 
employer and/or an eligible organization, and that offers coverage 
through the same group health plan as such religious employer and/or 
eligible organization, is considered to hold itself out as a religious 
organization and therefore qualifies for an accommodation under these 
final regulations. Each such organization must independently satisfy 
the self-certification standard.

E. Religious Freedom Restoration Act and Other Federal Law

    Some commenters expressed concerns about the proposed 
accommodations for eligible organizations under the Religious Freedom 
Restoration Act (RFRA) (Pub. L. 103-141) 107 Stat. 1488 (1993) 
(codified at 42 U.S.C. 2000bb-1).\48\ All such concerns were 
considered. But the accommodations for group health plans established 
or maintained by eligible organizations (and group health insurance 
coverage provided in connection with such plans), or student health 
insurance coverage arranged by eligible organizations that are 
institutions of higher education, are not required under RFRA. In 
addition, the accommodations for eligible organizations under these 
final regulations do not violate RFRA because

[[Page 39887]]

they do not substantially burden religious exercise, and they serve 
compelling government interests and moreover are the least restrictive 
means to achieve those interests.
---------------------------------------------------------------------------

    \48\ RFRA provides that the federal government generally may not 
``substantially burden a person's exercise of religion, even if the 
burden results from a rule of general applicability,'' unless the 
burden: ``(1) Is in furtherance of a compelling governmental 
interest; and (2) is the least restrictive means of furthering that 
compelling governmental interest,'' 42 U.S.C. 2000bb-1.
---------------------------------------------------------------------------

    First, some commenters asserted that the proposed accommodations 
would substantially burden their exercise of religion by requiring 
their involvement in providing coverage of medical services to which 
they object on religious grounds. These final regulations do not 
require eligible organizations that provide self-certifications to 
their issuers or third party administrators to provide health coverage 
that includes benefits for contraceptive services, or to contract, 
arrange, pay, or refer for such coverage or services. Issuers and third 
party administrators cannot pass along the costs because these final 
regulations specifically prohibit an issuer or third party 
administrator from charging any premium or otherwise passing on any 
cost relating to payments for contraceptive services to an eligible 
organization. Thus, there is no burden on any religious exercise of the 
eligible organization. And even if the accommodations were found to 
impose some minimal burden on eligible organizations, any such burden 
would not be substantial for the purposes of RFRA because a third party 
pays for the contraceptive services and there are multiple degrees of 
separation between the eligible organization and any individual's 
choice to use contraceptive services.
    One commenter contended that the mere act of self-certification 
would facilitate access to contraception, resulting in violation of its 
religious beliefs. But the self-certification under these final 
regulations simply confirms that an eligible organization is a 
nonprofit religious organization with religious objections to 
contraceptive coverage and so informs the issuer or third party 
administrator. Even prior to the proposed regulations, because 
contraceptive benefits are typically in standard product designs, many 
eligible organizations directed their issuers and third party 
administrators not to make payments for claims for medical services to 
which they object on religious grounds. In any event, in order for a 
burden on religious exercise to be ``substantial'' under RFRA, its 
effects on the objecting person cannot be as indirect and attenuated as 
they are here. Under these final regulations, third parties, not 
eligible organizations, provide the payments for contraceptive 
services, at no cost to eligible organizations. And whether such 
services will be utilized is the result of independent choices by 
employees or students and their dependents, who have distinct interests 
and may have their own religious views that differ from those of the 
eligible organization.
    Second, some commenters claimed that the proposed accommodations 
would force them to fund or subsidize contraceptive coverage because 
issuers or third party administrators would pass on the costs of such 
coverage to eligible organizations. Again, however, these final 
regulations specifically prohibit an issuer or third party 
administrator from charging any premium, or otherwise passing on any 
cost, to an eligible organization with respect to the payments for 
contraceptive services.
    Third, some commenters asserted that the contraceptive coverage 
requirement fails to serve any compelling government interest. As noted 
previously, however, the contraceptive coverage requirement serves two 
compelling governmental interests. The contraceptive coverage 
requirement furthers the government's compelling interest in 
safeguarding public health by expanding access to and utilization of 
recommended preventive services for women. HHS tasked IOM with 
conducting an independent, science-based review of the available 
literature to determine what preventive services are necessary for 
women's health and well-being. IOM included in its recommendations for 
comprehensive guidelines for women's preventive services all FDA-
approved contraceptive methods, sterilization procedures, and patient 
education and counseling for women with reproductive capacity. IOM 
determined that lack of access to contraceptive services has proven in 
many cases to have serious negative health consequences for women and 
newborn children.
    The government also has a compelling interest in assuring that 
women have equal access to health care services. Women would be denied 
the full benefits of preventive care if their unique health care needs 
were not considered and addressed. For example, prior to the 
implementation of the preventive services coverage provision, women of 
childbearing age spent 68 percent more on out-of-pocket health care 
costs than men, and these costs resulted in women often forgoing 
preventive care. The IOM found that this disproportionate burden on 
women imposed financial barriers that prevented women from achieving 
health outcomes on an equal basis with men. The contraceptive coverage 
requirement helps remedy this problem by helping to equalize the 
provision of preventive health care services to women and, as a result, 
helping women contribute to society to the same degree as men.
    Fourth, some commenters suggested that certain provisions of the 
Affordable Care Act that, in their view, leave some women without 
contraceptive coverage with no cost sharing demonstrate that the 
government interests in providing such coverage cannot be truly 
compelling. But these commenters misunderstand the effect of these 
provisions.\49\
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    \49\ For example, the Affordable Care Act's grandfathering 
provision is only transitional in effect, and it is expected that a 
majority of plans will lose their grandfathered status by the end of 
2013. (75 FR 34552; June 17, 2010); see also Kaiser Family Found. & 
Health Res. & Ed. Trust, Employer Health Benefits 2012 Annual Survey 
at 7-8, 190, available at http://ehbs.kff.org/pdf/2012/8345.pdf. 
Moreover, small employers that elect to offer non-grandfathered 
health coverage to their employees are not exempt from the 
requirement under the preventive health services coverage 
regulations to provide coverage for recommended preventive health 
services, including contraceptive services, without cost sharing 
(subject to the religious employer exemption and eligible 
organization accommodations in these final regulations). While the 
Affordable Care Act excludes small employers from the possibility of 
tax liability under the employer shared responsibility provision at 
Code section 4980H, it encourages such employers to offer health 
coverage to their employees by establishing new group health 
insurance options through the SHOPs, as well as new tax incentives 
to exercise such options. With respect to employees of small 
employers that do not offer health coverage to their employees, the 
Affordable Care Act establishes new individual health insurance 
options through the Exchanges, as well as new tax credits to assist 
the purchase of such insurance; such insurance will cover 
recommended preventive services, including contraceptive services, 
without cost sharing.
---------------------------------------------------------------------------

    Nor do the exemption for religious employers and the accommodations 
for eligible organizations undermine the government's compelling 
interests. With respect to the religious employer exemption, houses of 
worship and their integrated auxiliaries that object to contraceptive 
coverage on religious grounds are more likely than other employers to 
employ people who are of the same faith and/or adhere to the same 
objection, and who would therefore be less likely than other people to 
use contraceptive services even if such services were covered under 
their plan. Under the eligible organization accommodations, individuals 
in plans of eligible organizations, who are less likely than 
individuals in plans of religious employers to share their employer's 
(or institution of higher education's) faith and objection to 
contraceptive coverage on religious grounds, will still benefit from 
payments for contraceptive services, even though such payments will not 
be provided, funded, or subsidized by their employer (or institution of 
higher education).

[[Page 39888]]

    Fifth, some commenters asserted that the contraceptive coverage 
requirement is not the least restrictive means of advancing these 
compelling interests, and proposed various alternatives to these 
regulations. All of these proposals were considered, and it was 
determined that they were not feasible and/or would not advance the 
government's compelling interests as effectively as the mechanisms 
established in these final regulations and the preventive services 
coverage regulations more generally. For example, some commenters 
suggested that the government could provide contraceptive services to 
all women free of charge (through Medicaid or another program), 
establish a government-funded health benefits program for contraceptive 
services, or force drug and device manufacturers to provide 
contraceptive drugs and devices to women for free. The Departments lack 
the statutory authority and funding to implement these proposals. 
Moreover, the Affordable Care Act contemplates providing coverage of 
recommended preventive services through the existing employer-based 
system of health coverage so that women face minimal logistical and 
administrative obstacles. Imposing additional barriers to women 
receiving the intended coverage (and its attendant benefits), by 
requiring them to take steps to learn about, and to sign up for, a new 
health benefit, would make that coverage accessible to fewer women. The 
same concern undermines the effectiveness of other commenters' 
suggestion that the government require the multi-state plans on the 
Exchanges to offer a stand-alone, contraceptive-only benefit to all 
women without charge.
    For another example, some commenters suggested that the government 
should establish tax incentives for women to use contraceptive 
services. Again, the Departments lack the statutory authority to 
implement such proposal. Reliance only on tax incentives would also 
depart from the existing employer-based system of health coverage, 
would require women to pay out of pocket for their care in the first 
instance, and would not benefit women who do not have sufficient income 
to be required to file a tax return. Such barriers would make a tax 
incentive structure less effective than the employer-based system of 
health coverage in advancing the government's compelling interests.
    Finally, some commenters expressed concern that the final 
regulations violate the Religion Clauses of the First Amendment or 
certain federal restrictions relating to abortion. The regulations do 
not violate the Free Exercise Clause because they are neutral and 
generally applicable. The regulations do not target religiously 
motivated conduct, but rather, are intended to improve women's access 
to preventive health care and lessen the disparity between men's and 
women's health care costs. And the regulations are generally applicable 
because they do not pursue their purpose only against conduct motivated 
by religious belief. The exemption and accommodations set forth in the 
regulations serve to accommodate religion, not to disfavor it.
    The final regulations also do not violate the Establishment Clause. 
The exemption and accommodations set forth in the regulations are not 
restricted to organizations of a particular denomination or 
denominations. Instead, they are available on an equal basis to 
religious organizations affiliated with any and all religions.
    Finally, the regulations do not violate federal restrictions 
relating to abortion because FDA-approved contraceptive methods, 
including Plan B, Ella, and IUDs, are not abortifacients within the 
meaning of federal law. (62 FR 8611; February 25, 1997) (``Emergency 
contraceptive pills are not effective if the woman is pregnant[.]''); 
45 CFR 46.202(f) (``Pregnancy encompasses the period of time from 
implantation until delivery.''). Further, these regulations do not 
require nonprofit religious organizations that object to such 
contraceptive methods to contract, arrange, pay, or refer for such 
services.

F. No Effect on Other Law

    The religious employer exemption and eligible organization 
accommodations under these final regulations are intended to have 
meaning solely with respect to the contraceptive coverage requirement 
under section 2713 of the PHS Act and the companion provisions of ERISA 
and the Code. Whether an employer or organization (including an 
institution of higher education) is designated as religious for this 
purpose is not intended as a judgment about the mission, sincerity, or 
commitment of the employer or organization (including an institution of 
higher education), or intended to differentiate among the religious 
merits, mission, sincerity, commitment, or public or private standing 
of religious entities. The use of such designation is limited solely to 
defining the class of employers or organizations (including 
institutions of higher education) that qualify for the religious 
employer exemption and eligible organization accommodations under these 
final regulations. The definition of religious employer or eligible 
organization in these final regulations should not be construed to 
apply with respect to, or relied upon for the interpretation of, any 
other provision of the PHS Act, ERISA, the Code, or any other provision 
of federal law, nor is it intended to set a precedent for any other 
purpose. For example, nothing in these final regulations should be 
construed as affecting the interpretation of federal or state civil 
rights statutes, such as Title VII of the Civil Rights Act of 1964 or 
Title IX of the Education Amendments of 1972.
    Furthermore, nothing in these final regulations precludes employers 
or others from expressing any opposition to the use of contraceptives; 
requires anyone to use contraceptives; or requires health care 
providers to prescribe or provide contraceptives if doing so is against 
their religious beliefs.
    The Departments received several comments requesting clarification 
about whether the religious employer exemption and eligible 
organization accommodations in these final regulations supersede state 
laws that require health insurance issuers to provide contraceptive 
coverage. The preemption provisions of section 731 of ERISA and section 
2724 of the PHS Act (implemented at 29 CFR 2590.731(a) and 45 CFR 
146.143(a)) apply such that the requirements of part 7 of ERISA and 
title XXVII of the PHS 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 or individual health insurance 
coverage except to the extent that such standard or requirement 
prevents the application of a requirement'' of federal law. With 
respect to issuers subject to state law, insurance laws that provide 
greater access to contraceptive coverage than federal standards are 
unlikely to ``prevent the application of'' the preventive services 
coverage provision, and therefore are unlikely to be preempted by these 
final regulations. On the other hand, in states with broader religious 
exemptions and accommodations with respect to health insurance issuers 
than those in the final regulations, the exemptions and accommodations 
will be narrowed to align with those in the final regulations. This is 
consistent with the application of other federal health insurance 
standards.

[[Page 39889]]

G. Applicability Dates and Transitional Enforcement Safe Harbor

    These final regulations generally apply to group health plans and 
health insurance issuers for plan years beginning on or after January 
1, 2014, except the amendments to the religious employer exemption 
apply to group health plans and health insurance issuers for plan years 
beginning on or after August 1, 2013.
    The Departments are extending the current safe harbor from 
enforcement of the contraceptive coverage requirement by the 
Departments to encompass plan years beginning on or after August 1, 
2013, and before January 1, 2014. This transitional enforcement safe 
harbor is intended to maintain the status quo with respect to 
organizations that qualify for the current safe harbor during the 
period that exists between the expiration of the current safe harbor 
\50\ and the applicability date of the accommodations under these final 
regulations. This period is designed to provide issuers and third party 
administrators with sufficient time to prepare to implement the 
accommodations under these final regulations. Organizations that 
qualify under the current safe harbor are not required to execute 
another self-certification if one has already been executed, but are 
required to provide another notice to plan participants and 
beneficiaries in connection with plan years beginning on or after 
August 1, 2013, and before January 1, 2014. The guidance extending the 
current safe harbor can be found at: www.cms.gov/cciio and www.dol.gov/healthreform.
---------------------------------------------------------------------------

    \50\ See Guidance on the Temporary Enforcement Safe Harbor for 
Certain Employers, Group Health Plans, and Group Health Insurance 
Issuers with Respect to the Requirement to Cover Contraceptive 
Services Without Cost Sharing Under Section 2713 of the Public 
Health Service Act, Section 715(a)(1) of the Employee Retirement 
Income Security Act, and Section 9815(a)(1) of the Internal Revenue 
Code, issued on February 10, 2012, and reissued on August 15, 2012.
---------------------------------------------------------------------------

IV. Economic Impact and Paperwork Burden

A. Executive Orders 12866 and 13563--Department of Health and Human 
Services and Department of Labor

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, and public 
health and safety effects; distributive impacts; and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility.
    Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a 
regulation: (1) Having an annual effect on the economy of $100 million 
or more in any one year, 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 a 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.
    A regulatory impact analysis must be prepared for major rules with 
economically significant effects ($100 million or more in any one 
year), and an ``economically significant'' regulatory action is subject 
to review by the Office of Management and Budget (OMB). The Departments 
have concluded that these final regulations are not likely to have 
economic impacts of $100 million or more in any one year, and therefore 
do not meet the definition of ``economically significant'' under 
Executive Order 12866.
1. Need for Regulatory Action
    As stated earlier in this preamble, the Departments previously 
issued amended interim final regulations authorizing an exemption for 
group health plans established or maintained by religious employers 
(and group health insurance coverage provided in connection with such 
plans) from certain coverage requirements under section 2713 of the PHS 
Act (76 FR 46621, August 3, 2011). The amended interim final 
regulations were finalized on February 15, 2012 (77 FR 8725). In these 
final regulations, the Departments are amending the definition of 
religious employer in the HHS regulation at 45 CFR 147.131(a) 
(incorporated by reference in the regulations of the Departments of 
Labor and the Treasury) by eliminating the first three prongs of the 
definition of religious employer that was established in the 2012 final 
regulations and clarifying the fourth prong. Accordingly, an employer 
that is organized and operates as a nonprofit entity and is referred to 
in section 6033(a)(3)(A)(i) or (iii) of the Code is a religious 
employer, and its group health plan qualifies for the exemption from 
the requirement to cover contraceptive services. In addition, the final 
regulations establish accommodations that provide women with access to 
such services, without cost sharing, while simultaneously protecting 
certain nonprofit religious organizations with religious objections to 
contraceptive coverage from having to contract, arrange, pay, or refer 
for such coverage (as detailed herein).
2. Anticipated Effects
    The Departments expect that these final regulations will not result 
in any additional significant burden on or costs to the affected 
entities.

B. Special Analyses--Department of the Treasury

    For purposes of the Department of the Treasury, it has been 
determined that this Treasury decision is not a significant regulatory 
action as defined in Executive Order 12866, as amended 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 this final 
regulation. It is hereby certified that the collections of information 
contained in this final regulation do not have a significant impact on 
a substantial number of small entities. Accordingly, a regulatory 
flexibility analysis under the Regulatory Flexibility Act (5 U.S.C. 
chapter 6) is not required.
    These final regulations require each organization seeking to be 
treated as an eligible organization under the final regulations to 
self-certify that it meets the definition of eligible organization in 
the final regulations. The self-certification must be executed by an 
authorized representative of the organization. The organization must 
maintain the self-certification in its records in a manner consistent 
with ERISA section 107 and make it available for examination upon 
request. The final regulations also direct each eligible organization 
to provide a copy of its self-certification to the group health 
insurance issuer or third party administrator (as applicable) to avail 
itself of an accommodation. The Departments are unable to estimate the 
number of organizations that will seek to be treated as eligible 
organizations. Of the eligible organizations, some will likely be small 
entities. It is estimated that each eligible organization will need 
only approximately 50 minutes of labor to prepare and provide the 
information

[[Page 39890]]

in the self-certification. This will not be a significant economic 
impact. For these reasons, this information collection requirement will 
not have a significant impact on a substantial number of small 
entities.
    These final regulations also require health insurance issuers 
providing payments for contraceptive services, or third party 
administrators arranging or providing such payments (or their agents), 
to provide written notice to plan participants and beneficiaries 
regarding the availability of such payments. The notice will be 
provided contemporaneous with (to the extent possible) but separate 
from any application materials distributed in connection with 
enrollment (or re-enrollment) in health coverage established, 
maintained, or arranged by the eligible organization in any plan year 
to which the accommodation is to apply. The final regulations contain 
model language for issuers and third party administrators to use to 
satisfy the notice requirement. It is unknown how many issuers provide 
health insurance coverage in connection with insured plans of eligible 
organizations or how many third party administrators provide plan 
services to self-insured plans of eligible organizations. However, the 
cost of preparation and distribution of the notices will not be 
significant. It is estimated that each issuer or third party 
administrator will need approximately 1 hour of clerical labor (at 
$31.64 per hour) and 15 minutes of management review (at $55.22 per 
hour) to prepare the notices for a total cost of approximately $44. It 
is estimated that each notice will require $0.46 in postage and $0.05 
in materials cost (paper and ink) and the total postage and materials 
cost for each notice sent via mail will be $0.51. For these reasons, 
these information collection requirements will not have a significant 
impact on a substantial number of small entities.
    Pursuant to section 7805(f) of the Code, the notice of proposed 
rulemaking preceding this final regulation was submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on its impact on small businesses.

C. Paperwork Reduction Act--Department of Health and Human Services

    These final regulations contain information collection requirements 
(ICRs) that are subject to review by the Office of Management and 
Budget (OMB). A description of these provisions is given in the 
following paragraphs with an estimate of the annual burden. Average 
labor costs (including fringe benefits) used to estimate the costs are 
calculated using data available from the Bureau of Labor Statistics.
    HHS sought comments in the proposed regulations, but did not 
receive any information that would allow for an estimate of the number 
of organizations that would seek to be treated as eligible 
organizations, or an estimate of the number of health insurance issuers 
that would provide separate payments for contraceptive services. HHS 
is, nevertheless, seeking OMB approval for the following ICRs 
consistent with the Paperwork Reduction Act of 1995. The burden 
estimates will be updated in the future when more information is 
available.
1. Self-Certification (Sec. Sec.  147.131(b)(4) and 147.131(c)(1))
    Each organization seeking to be treated as an eligible organization 
under the final regulations must self-certify that it meets the 
definition of an eligible organization. The self-certification must be 
executed by an authorized representative of the organization. The self-
certification will not be submitted to any of the Departments. The form 
that will be used by organizations for their self-certification was 
made available during the comment period for the proposed regulations 
at http://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html. HHS is finalizing this 
form with updated instructions and notes, and eliminating the proposed 
field for listing the contraceptive services for which the organization 
will not establish, maintain, administer, or fund coverage. The 
organization must maintain the self-certification in its records in a 
manner consistent with ERISA section 107 and make it available for 
examination upon request. The eligible organization must provide a copy 
of its self-certification to a health insurance issuer for insured 
group health plans or student health insurance coverage.
    HHS is unable to estimate the number of organizations that will 
seek to be treated as eligible organizations under the final 
regulations. Therefore, the burden for only one eligible organization, 
as opposed to all eligible organizations in total, is estimated. It is 
assumed that, for each eligible organization, clerical staff will 
gather and enter the necessary information, send the self-certification 
electronically to the issuer, and retain a copy for record-keeping; a 
manager and legal counsel will review it; and a senior executive will 
execute it. HHS estimates that an organization will need approximately 
50 minutes (30 minutes of clerical labor at a cost of $30.64 per hour, 
10 minutes for a manager at a cost of $55.22 per hour, 5 minutes for 
legal counsel at a cost of $83.10 per hour, and 5 minutes for a senior 
executive at a cost of $112.43 per hour) to execute the self-
certification. The certification may be electronically transmitted to 
the issuer at minimal cost. Therefore, the total annual burden for 
preparing and providing the information in the self-certification is 
estimated to be approximately $41 for each eligible organization.
2. Notice of Availability of Separate Payments for Contraceptive 
Services (Sec.  147.131(d))
    The proposed regulations sought comment on a notice of availability 
of contraceptive coverage. The final regulations instead direct a 
health insurance issuer providing payments for contraceptive services 
for participants and beneficiaries in insured plans (or student 
enrollees and covered dependents in student health insurance coverage) 
of eligible organizations to provide a written notice to such plan 
participants and beneficiaries (or such student enrollees and covered 
dependents) informing them of the availability of such payments. The 
notice must be provided contemporaneous with (to the extent possible) 
but separate from any application materials distributed in connection 
with enrollment (or re-enrollment) in group health coverage that is 
effective on the first day of each applicable plan year, and must 
specify that contraceptive coverage will not be funded or administered 
by the eligible organization but that the issuer provides separate 
payments for contraceptive services. The notice must also provide 
contact information for the issuer for questions and complaints. To 
satisfy the notice requirement, issuers may use the model language set 
forth in the final regulations or substantially similar language.
    It is unknown how many issuers provide health insurance coverage in 
connection with insured plans of eligible organizations. In the 
proposed regulations, HHS estimated that each issuer would need 
approximately 1 hour of clerical labor (at $31.64 per hour) and 15 
minutes of management review (at $55.22 per hour) to prepare the 
notices for a total cost of approximately $44. It was estimated that 
each notice would require $0.46 in postage and $0.05 in materials cost 
(paper and ink) and the total postage and materials cost for each 
notice sent via mail would be $0.51.

[[Page 39891]]

One commenter stated that the cost of preparing and sending these 
notices may be greater than estimated, but did not provide an estimate. 
HHS believes that using the model language provided in the final 
regulations will help minimize costs and declines to revise the 
estimate.
3. Collections for FFE User Fee Adjustment (Sec.  156.50(d))
    The final HHS regulation describes information collections with 
respect to the FFE user fee adjustment under Sec.  156.50(d). The 
information collection instruments are under development, and HHS will 
seek public comments and OMB approval on the instruments at a later 
date, consistent with the Paperwork Reduction Act of 1995.
4. Collections for Self-Insured Group Health Plans Without Third Party 
Administrators
    The final regulations provide that a self-insured group health plan 
established or maintained by an eligible organization that does not use 
the services of a third party administrator will be provided a safe 
harbor from enforcement of the contraceptive coverage requirement by 
the Departments contingent on, among other things: (1) the plan 
providing certain information to HHS; and (2) the plan providing 
participants and beneficiaries with notice that it does not provide 
benefits for contraceptive services. As noted earlier in these final 
regulations, the Departments believe that there are no self-insured 
group health plans in this circumstance. Therefore, because the number 
of respondents is likely to be fewer than 10, HHS is not seeking OMB 
approval for this collection.

D. Paperwork Reduction Act--Department of Labor and Department of the 
Treasury

    As noted previously, as under the proposed regulations, each 
organization seeking to be treated as an eligible organization under 
the final regulations must self-certify that it meets the definition of 
an eligible organization. This requirement is set out at 26 CFR 
54.9815-2713A(a)(4) and 29 CFR 2590.715-2713A(a)(4) of the final 
regulations of the Departments of Labor and the Treasury.
    In addition, the final regulations include a notice of availability 
of separate payments for contraceptive services. This notice 
requirement is identical to that set forth in 45 CFR 147.131(d), but it 
applies to third party administrators in connection with disclosures to 
participants and beneficiaries in self-insured group health plans of 
eligible organizations, instead of applying to health insurance issuers 
in connection with disclosures to participants and beneficiaries in 
insured group health plans of eligible organizations. Therefore, we are 
seeking OMB approval for this notice, relying on the same estimates 
noted previously.

V. 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 final regulations do 
not include any federal mandate that may result in expenditures by 
state, local, or tribal governments, nor do they include any federal 
mandates that may impose an annual burden of $100 million, adjusted for 
inflation, or more on the private sector.\51\
---------------------------------------------------------------------------

    \51\ In 2013, that threshold level is approximately $141 
million.
---------------------------------------------------------------------------

VI. Federalism--Department of Health and Human Services and Department 
of Labor

    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 states, the 
relationship between the federal government and states, or 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 final regulations have federalism 
implications, but the federal implications are substantially mitigated 
because, with respect to health insurance issuers, 15 states have 
enacted specific laws, regulations, or bulletins that meet or exceed 
the federal standards requiring coverage of specified preventive 
services without cost sharing. The remaining states, which provide 
oversight for these federal law requirements, do so using their general 
authority to enforce these federal standards. Therefore, the final 
regulations are not likely to require substantial additional oversight 
of states by HHS.
    In general, section 514 of ERISA provides that state laws are 
superseded to the extent that they relate to any covered employee 
benefit plan, and preserves state laws that regulate insurance, 
banking, or securities. ERISA also prohibits states from regulating a 
covered plan as an insurance or investment company or bank. The Health 
Insurance Portability and Accountability Act of 1996 (HIPAA) added a 
new preemption provision to ERISA (as well as to the PHS Act) narrowly 
preempting state requirements on group health insurance coverage. 
States may continue to apply state law requirements but not to the 
extent that such requirements prevent the application of the federal 
requirement that group health insurance coverage provided in connection 
with group health plans provide coverage for specified preventive 
services without cost sharing. HIPAA's Conference Report states that 
the conferees intended the narrowest preemption of state laws with 
regard to health insurance issuers (H.R. Conf. Rep. No. 104-736, 104th 
Cong. 2d Session 205, 1996). State insurance laws that are more 
stringent than the federal requirement are unlikely to ``prevent the 
application of'' the preventive services coverage provision, and 
therefore are unlikely to be preempted. Accordingly, states have 
significant latitude to impose requirements on health insurance issuers 
that are more restrictive than those in 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 final regulations implement the preventive services 
coverage provision's minimum standards and do not significantly reduce 
the discretion given to states under the statutory scheme.
    The PHS Act provides that states may enforce the provisions of 
title XXVII of the PHS Act as they pertain to issuers, but that the 
Secretary of HHS will enforce any provisions that a state does not have 
authority to enforce or that a state has failed to substantially 
enforce. When exercising its responsibility to enforce provisions of 
the PHS Act, HHS works cooperatively with the state to address the 
state's concerns and avoid conflicts with the state's exercise of its 
authority.\52\ HHS has developed procedures to implement its

[[Page 39892]]

enforcement responsibilities, and to afford states the maximum 
opportunity to enforce the PHS Act's requirements in the first 
instance. In compliance with Executive Order 13132's requirement that 
agencies examine closely any policies that may have federalism 
implications or limit the policymaking discretion of states, the 
Departments have engaged in numerous efforts to consult and work 
cooperatively with affected state and local officials.
---------------------------------------------------------------------------

    \52\ This authority applies to insurance issued with respect to 
group health plans generally, including plans covering employees of 
church organizations. Thus, this discussion of federalism applies to 
all group health insurance coverage that is subject to the PHS Act, 
including those church plans that provide coverage through a health 
insurance issuer (but not to church plans that do not provide 
coverage through a health insurance issuer).
---------------------------------------------------------------------------

    In conclusion, throughout the process of developing these final 
regulations, to the extent feasible within the specific preemption 
provisions of ERISA and the PHS Act, the Departments have attempted to 
balance states' interests in regulating health coverage and health 
insurance issuers, and the rights of those individuals whom Congress 
intended to protect in the PHS Act, ERISA, and the Code.

VII. Statutory Authority

    The Department of the Treasury regulations are adopted pursuant to 
the authority contained in sections 7805 and 9833 of the Code.
    The Department of Labor regulations are adopted pursuant to the 
authority contained in 29 U.S.C. 1002(16), 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 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; and Title I of the Affordable Care Act, 
sections 1301-1304, 1311-1312, 1321-1322, 1324, 1334, 1342-1343, 1401-
1402, and 1412, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-18024, 
18031-18032, 18041-18042, 18044, 18054, 18061, 18063, 18071, 18082, 26 
U.S.C. 36B, and 31 U.S.C. 9701).

List of Subjects

26 CFR Part 54

    Excise taxes, Health care, Health insurance, Pensions, Reporting 
and recordkeeping requirements.

29 CFR Part 2510

    Employee benefit plans, Pensions.

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.

45 CFR Part 156

    Administrative practice and procedure, Advertising, Advisory 
committees, Brokers, Conflict of interest, Consumer protection, Grant 
programs--health, Grants administration, Health care, Health insurance, 
Health maintenance organization (HMO), Health records, Hospitals, 
American Indian/Alaska Natives, Individuals with disabilities, Loan 
programs--health, Organization and functions (Government agencies), 
Medicaid, Public assistance programs, Reporting and recordkeeping 
requirements, State and local governments, Sunshine Act, Technical 
assistance, Women, and Youth.

DEPARTMENT OF THE TREASURY

Internal Revenue Service

    Accordingly, 26 CFR part 54 is amended as follows:

PART 54--PENSION EXCISE TAXES

0
Paragraph 1. The authority citation for part 54 continues to read, in 
part, as follows:

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

0
Par. 2. Section 54.9815-2713 is amended by revising paragraphs (a)(1) 
introductory text and (a)(1)(iv) to read as follows:

Sec.  54.9815-2713  Coverage of preventive health services.

    (a) * * *
    (1) In general. Beginning at the time described in paragraph (b) of 
this section and subject to Sec.  54.9815-2713A, a group health plan, 
or a health insurance issuer offering group health insurance coverage, 
must provide coverage for all of the following items and services, and 
may not impose any cost-sharing requirements (such as a copayment, 
coinsurance, or a deductible) with respect to those items and services:
* * * * *
    (iv) With respect to women, to the extent not described in 
paragraph (a)(1)(i) of this section, evidence-informed preventive care 
and screenings provided for in binding comprehensive health plan 
coverage guidelines supported by the Health Resources and Services 
Administration, in accordance with 45 CFR 147.131(a).
* * * * *

0
Par. 3. Section 54.9815-2713A is added to read as follows:

Sec.  54.9815-2713A  Accommodations in connection with coverage of 
preventive health services.

    (a) Eligible organizations. An eligible organization is an 
organization that satisfies all of the following requirements:
    (1) The organization opposes providing coverage for some or all of 
any contraceptive services required to be covered under Sec.  54.9815-
2713(a)(1)(iv) on account of religious objections.
    (2) The organization is organized and operates as a nonprofit 
entity.
    (3) The organization holds itself out as a religious organization.
    (4) The organization self-certifies, in a form and manner specified 
by the Secretaries of Health and Human Services and Labor, that it 
satisfies the criteria in paragraphs (a)(1) through (3) of this 
section, and makes such self-certification available for examination 
upon request by the first day of the first plan year to which the 
accommodation in paragraph (b) or (c) of this section applies. The 
self-certification must be executed by a person authorized to make the 
certification on behalf of the organization, and must be maintained in 
a manner consistent with the record retention requirements under 
section 107 of ERISA.
    (b) Contraceptive coverage--self-insured group health plans--(1) A 
group health plan established or maintained by an eligible organization 
that provides benefits on a self-insured basis complies for one or more 
plan years with any requirement under Sec.  54.9815-2713(a)(1)(iv) to 
provide contraceptive coverage if all of the requirements of this 
paragraph (b)(1) of this section are satisfied:
    (i) The eligible organization or its plan contracts with one or 
more third party administrators.
    (ii) The eligible organization provides each third party 
administrator that will process claims for any contraceptive services 
required to be covered under Sec.  54.9815-2713(a)(1)(iv) with a copy 
of the self-certification described in paragraph (a)(4) of this 
section, which shall include notice that--
    (A) The eligible organization will not act as the plan 
administrator or claims administrator with respect to claims for 
contraceptive services, or contribute to

[[Page 39893]]

the funding of contraceptive services; and
    (B) Obligations of the third party administrator are set forth in 
29 CFR 2510.3-16 and 26 CFR 54.9815-2713A.
    (iii) The eligible organization must not, directly or indirectly, 
seek to interfere with a third party administrator's arrangements to 
provide or arrange separate payments for contraceptive services for 
participants or beneficiaries, and must not, directly or indirectly, 
seek to influence the third party administrator's decision to make any 
such arrangements.
    (2) If a third party administrator receives a copy of the self-
certification described in paragraph (a)(4) of this section, and agrees 
to enter into or remain in a contractual relationship with the eligible 
organization or its plan to provide administrative services for the 
plan, the third party administrator shall provide or arrange payments 
for contraceptive services using one of the following methods--
    (i) Provide payments for contraceptive services for plan 
participants and beneficiaries without imposing any cost-sharing 
requirements (such as a copayment, coinsurance, or a deductible), or 
imposing a premium, fee, or other charge, or any portion thereof, 
directly or indirectly, on the eligible organization, the group health 
plan, or plan participants or beneficiaries; or
    (ii) Arrange for an issuer or other entity to provide payments for 
contraceptive services for plan participants and beneficiaries without 
imposing any cost-sharing requirements (such as a copayment, 
coinsurance, or a deductible), or imposing a premium, fee, or other 
charge, or any portion thereof, directly or indirectly, on the eligible 
organization, the group health plan, or plan participants or 
beneficiaries.
    (3) If a third party administrator provides or arranges payments 
for contraceptive services in accordance with either paragraph 
(b)(2)(i) or (ii) of this section, the costs of providing or arranging 
such payments may be reimbursed through an adjustment to the Federally-
facilitated Exchange user fee for a participating issuer pursuant to 45 
CFR 156.50(d).
    (4) A third party administrator may not require any documentation 
other than the copy of the self-certification from the eligible 
organization regarding its status as such.
    (c) Contraceptive coverage--insured group health plans--(1) General 
rule. A group health plan established or maintained by an eligible 
organization that provides benefits through one or more group health 
insurance issuers complies for one or more plan years with any 
requirement under Sec.  54.9815-2713(a)(1)(iv) to provide contraceptive 
coverage if the eligible organization or group health plan furnishes a 
copy of the self-certification described in paragraph (a)(4) of this 
section to each issuer that would otherwise provide such coverage in 
connection with the group health plan. An issuer may not require any 
documentation other than the copy of the self-certification from the 
eligible organization regarding its status as such.
    (2) Payments for contraceptive services--(i) A group health 
insurance issuer that receives a copy of the self-certification 
described in paragraph (a)(4) of this section with respect to a group 
health plan established or maintained by an eligible organization in 
connection with which the issuer would otherwise provide contraceptive 
coverage under Sec.  54.9815-2713(a)(1)(iv) must--
    (A) Expressly exclude contraceptive coverage from the group health 
insurance coverage provided in connection with the group health plan; 
and
    (B) Provide separate payments for any contraceptive services 
required to be covered under Sec.  54.9815-2713(a)(1)(iv) for plan 
participants and beneficiaries for so long as they remain enrolled in 
the plan.
    (ii) With respect to payments for contraceptive services, the 
issuer may not impose any cost-sharing requirements (such as a 
copayment, coinsurance, or a deductible), or impose any premium, fee, 
or other charge, or any portion thereof, directly or indirectly, on the 
eligible organization, the group health plan, or plan participants or 
beneficiaries. The issuer must segregate premium revenue collected from 
the eligible organization from the monies used to provide payments for 
contraceptive services. The issuer must provide payments for 
contraceptive services in a manner that is consistent with the 
requirements under sections 2706, 2709, 2711, 2713, 2719, and 2719A of 
the PHS Act, as incorporated into section 9815. If the group health 
plan of the eligible organization provides coverage for some but not 
all of any contraceptive services required to be covered under Sec.  
54.9815-2713(a)(1)(iv), the issuer is required to provide payments only 
for those contraceptive services for which the group health plan does 
not provide coverage. However, the issuer may provide payments for all 
contraceptive services, at the issuer's option.
    (d) Notice of availability of separate payments for contraceptive 
services--self-insured and insured group health plans. For each plan 
year to which the accommodation in paragraph (b) or (c) of this section 
is to apply, a third party administrator required to provide or arrange 
payments for contraceptive services pursuant to paragraph (b) of this 
section, and an issuer required to provide payments for contraceptive 
services pursuant to paragraph (c) of this section, must provide to 
plan participants and beneficiaries written notice of the availability 
of separate payments for contraceptive services contemporaneous with 
(to the extent possible), but separate from, any application materials 
distributed in connection with enrollment (or re-enrollment) in group 
health coverage that is effective beginning on the first day of each 
applicable plan year. The notice must specify that the eligible 
organization does not administer or fund contraceptive benefits, but 
that the third party administrator or issuer, as applicable, provides 
separate payments for contraceptive services, and must provide contact 
information for questions and complaints. The following model language, 
or substantially similar language, may be used to satisfy the notice 
requirement of this paragraph (d): ``Your employer has certified that 
your group health plan qualifies for an accommodation with respect to 
the federal requirement to cover all Food and Drug Administration-
approved contraceptive services for women, as prescribed by a health 
care provider, without cost sharing. This means that your employer will 
not contract, arrange, pay, or refer for contraceptive coverage. 
Instead, [name of third party administrator/health insurance issuer] 
will provide or arrange separate payments for contraceptive services 
that you use, without cost sharing and at no other cost, for so long as 
you are enrolled in your group health plan. Your employer will not 
administer or fund these payments. If you have any questions about this 
notice, contact [contact information for third party administrator/
health insurance issuer].''
    (e) Reliance--insured group health plans--(1) If an issuer relies 
reasonably and in good faith on a representation by the eligible 
organization as to its eligibility for the accommodation in paragraph 
(c) of this section, and the representation is later determined to be 
incorrect, the issuer is considered to comply with any requirement 
under Sec.  54.9815-2713(a)(1)(iv) to provide contraceptive coverage if 
the issuer

[[Page 39894]]

complies with the obligations under this section applicable to such 
issuer.
    (2) A group health plan is considered to comply with any 
requirement under Sec.  54.9815-2713(a)(1)(iv) to provide contraceptive 
coverage if the plan complies with its obligations under paragraph (c) 
of this section, without regard to whether the issuer complies with the 
obligations under this section applicable to such issuer.

DEPARTMENT OF LABOR

Employee Benefits Security Administration

    For the reasons stated in the preamble, the Department of Labor 
amends 29 CFR parts 2510 and 2590 as follows:

PART 2510--DEFINITION OF TERMS USED IN SUBCHAPTERS C, D, E, F, G 
AND L OF THIS CHAPTER

0
1. The authority citation for part 2510 is revised to read as follows:

    Authority:  29 U.S.C. 1002(2), 1002(16), 1002(21),1002(37), 
1002(38), 1002(40), 1031, and 1135; Secretary of Labor's Order 1-
2003, 68 FR 5374; Sec. 2510.3-101 also issued under sec. 102 of 
Reorganization Plan No. 4 of 1978, 43 FR 47713, 3 CFR, 1978 Comp., 
p. 332 and E.O. 12108, 44 FR 1065, 3 CFR, 1978 Comp., p. 275, and 29 
U.S.C. 1135 note. Sec. 2510.3-102 also issued under sec. 102 of 
Reorganization Plan No. 4 of 1978, 43 FR 47713, 3 CFR, 1978 Comp., 
p. 332 and E.O. 12108, 44 FR 1065, 3 CFR, 1978 Comp., p. 275. Sec. 
2510.3-38 is also issued under sec. 1, Pub. L. 105-72, 111 Stat. 
1457.

0
2. Section 2510.3-16 is added to read as follows:

Sec.  2510.3-16  Definition of ``plan administrator.''

    (a) In general. The term ``plan administrator'' or 
``administrator'' means the person specifically so designated by the 
terms of the instrument under which the plan is operated. If an 
administrator is not so designated, the plan administrator is the plan 
sponsor, as defined in section 3(16)(B) of ERISA.
    (b) In the case of a self-insured group health plan established or 
maintained by an eligible organization, as defined in Sec.  2590.715-
2713A(a) of this chapter, the copy of the self-certification provided 
by the eligible organization to a third party administrator (including 
notice of the eligible organization's refusal to administer or fund 
contraceptive benefits) in accordance with Sec.  2590.715-
2713A(b)(1)(ii) of this chapter shall be an instrument under which the 
plan is operated, shall be treated as a designation of the third party 
administrator as the plan administrator under section 3(16) of ERISA 
for any contraceptive services required to be covered under Sec.  
2590.715-2713(a)(1)(iv) of this chapter to which the eligible 
organization objects on religious grounds, and shall supersede any 
earlier designation. A third party administrator that becomes a plan 
administrator pursuant to this section shall be responsible for--
    (1) The plan's compliance with section 2713 of the Public Health 
Service Act (42 U.S.C. 300gg-13) (as incorporated into section 715 of 
ERISA) and Sec.  2590.715-2713 of this chapter with respect to coverage 
of contraceptive services. To the extent that the plan contracts with 
different third party administrators for different classifications of 
benefits (such as prescription drug benefits versus inpatient and 
outpatient benefits), each third party administrator is responsible for 
providing contraceptive coverage that complies with section 2713 of the 
Public Health Service Act (as incorporated into section 715 of ERISA) 
and Sec.  2590.715-2713 of this chapter with respect to the 
classification or classifications of benefits subject to its contract.
    (2) Establishing and operating a procedure for determining such 
claims for contraceptive services in accordance with Sec.  2560.503-1 
of this chapter.
    (3) Complying with disclosure and other requirements applicable to 
group health plans under Title I of ERISA with respect to such 
benefits.

PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS

0
3. The authority citation for part 2590 is revised to read as follows:

    Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a, 1185b, 1185d, 1191, 1191a, 1191b, and 
1191c; sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b), 
Pub. L. 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 12(d), 
Pub. L. 110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. 
L. 111-148, 124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 
1029; Secretary of Labor's Order 1-2011, 77 FR 1088 (January 9, 
2012).

0
4. Section 2590.715-2713 is amended by revising paragraphs (a)(1) 
introductory text and (a)(1)(iv) to read as follows:

Sec.  2590.715-2713  Coverage of preventive health services.

    (a) * * *
    (1) In general. Beginning at the time described in paragraph (b) of 
this section and subject to Sec.  2590.715-2713A, a group health plan, 
or a health insurance issuer offering group health insurance coverage, 
must provide coverage for all of the following items and services, and 
may not impose any cost-sharing requirements (such as a copayment, 
coinsurance, or a deductible) with respect to those items and services:
* * * * *
    (iv) With respect to women, to the extent not described in 
paragraph (a)(1)(i) of this section, evidence-informed preventive care 
and screenings provided for in binding comprehensive health plan 
coverage guidelines supported by the Health Resources and Services 
Administration, in accordance with 45 CFR 147.131(a).
* * * * *

0
5. Section 2590.715-2713A is added to read as follows:

Sec.  2590.715-2713A  Accommodations in connection with coverage of 
preventive health services.

    (a) Eligible organizations. An eligible organization is an 
organization that satisfies all of the following requirements:
    (1) The organization opposes providing coverage for some or all of 
any contraceptive services required to be covered under Sec.  2590.715-
2713(a)(1)(iv) on account of religious objections.
    (2) The organization is organized and operates as a nonprofit 
entity.
    (3) The organization holds itself out as a religious organization.
    (4) The organization self-certifies, in a form and manner specified 
by the Secretary, that it satisfies the criteria in paragraphs (a)(1) 
through (3) of this section, and makes such self-certification 
available for examination upon request by the first day of the first 
plan year to which the accommodation in paragraph (b) or (c) of this 
section applies. The self-certification must be executed by a person 
authorized to make the certification on behalf of the organization, and 
must be maintained in a manner consistent with the record retention 
requirements under section 107 of ERISA.
    (b) Contraceptive coverage--self-insured group health plans--(1) A 
group health plan established or maintained by an eligible organization 
that provides benefits on a self-insured basis complies for one or more 
plan years with any requirement under Sec.  2590.715-2713(a)(1)(iv) to 
provide contraceptive coverage if all of the requirements of this 
paragraph (b)(1) are satisfied:
    (i) The eligible organization or its plan contracts with one or 
more third party administrators.
    (ii) The eligible organization provides each third party 
administrator that will

[[Page 39895]]

process claims for any contraceptive services required to be covered 
under Sec.  2590.715-2713(a)(1)(iv) with a copy of the self-
certification described in paragraph (a)(4) of this section, which 
shall include notice that--
    (A) The eligible organization will not act as the plan 
administrator or claims administrator with respect to claims for 
contraceptive services, or contribute to the funding of contraceptive 
services; and
    (B) Obligations of the third party administrator are set forth in 
Sec.  2510.3-16 of this chapter and Sec.  2590.715-2713A.
    (iii) The eligible organization must not, directly or indirectly, 
seek to interfere with a third party administrator's arrangements to 
provide or arrange separate payments for contraceptive services for 
participants or beneficiaries, and must not, directly or indirectly, 
seek to influence the third party administrator's decision to make any 
such arrangements.
    (2) If a third party administrator receives a copy of the self-
certification described in paragraph (a)(4) of this section, and agrees 
to enter into or remain in a contractual relationship with the eligible 
organization or its plan to provide administrative services for the 
plan, the third party administrator shall provide or arrange payments 
for contraceptive services using one of the following methods--
    (i) Provide payments for contraceptive services for plan 
participants and beneficiaries without imposing any cost-sharing 
requirements (such as a copayment, coinsurance, or a deductible), or 
imposing a premium, fee, or other charge, or any portion thereof, 
directly or indirectly, on the eligible organization, the group health 
plan, or plan participants or beneficiaries; or
    (ii) Arrange for an issuer or other entity to provide payments for 
contraceptive services for plan participants and beneficiaries without 
imposing any cost-sharing requirements (such as a copayment, 
coinsurance, or a deductible), or imposing a premium, fee, or other 
charge, or any portion thereof, directly or indirectly, on the eligible 
organization, the group health plan, or plan participants or 
beneficiaries.
    (3) If a third party administrator provides or arranges payments 
for contraceptive services in accordance with either paragraph 
(b)(2)(i) or (ii) of this section, the costs of providing or arranging 
such payments may be reimbursed through an adjustment to the Federally-
facilitated Exchange user fee for a participating issuer pursuant to 45 
CFR 156.50(d).
    (4) A third party administrator may not require any documentation 
other than the copy of the self-certification from the eligible 
organization regarding its status as such.
    (c) Contraceptive coverage--insured group health plans--(1) General 
rule. A group health plan established or maintained by an eligible 
organization that provides benefits through one or more group health 
insurance issuers complies for one or more plan years with any 
requirement under Sec.  2590.715-2713(a)(1)(iv) to provide 
contraceptive coverage if the eligible organization or group health 
plan furnishes a copy of the self-certification described in paragraph 
(a)(4) of this section to each issuer that would otherwise provide such 
coverage in connection with the group health plan. An issuer may not 
require any documentation other than the copy of the self-certification 
from the eligible organization regarding its status as such.
    (2) Payments for contraceptive services--(i) A group health 
insurance issuer that receives a copy of the self-certification 
described in paragraph (a)(4) of this section with respect to a group 
health plan established or maintained by an eligible organization in 
connection with which the issuer would otherwise provide contraceptive 
coverage under Sec.  2590.715-2713(a)(1)(iv) must--
    (A) Expressly exclude contraceptive coverage from the group health 
insurance coverage provided in connection with the group health plan; 
and
    (B) Provide separate payments for any contraceptive services 
required to be covered under Sec.  2590.715-2713(a)(1)(iv) for plan 
participants and beneficiaries for so long as they remain enrolled in 
the plan.
    (ii) With respect to payments for contraceptive services, the 
issuer may not impose any cost-sharing requirements (such as a 
copayment, coinsurance, or a deductible), or impose any premium, fee, 
or other charge, or any portion thereof, directly or indirectly, on the 
eligible organization, the group health plan, or plan participants or 
beneficiaries. The issuer must segregate premium revenue collected from 
the eligible organization from the monies used to provide payments for 
contraceptive services. The issuer must provide payments for 
contraceptive services in a manner that is consistent with the 
requirements under sections 2706, 2709, 2711, 2713, 2719, and 2719A of 
the PHS Act, as incorporated into section 715 of ERISA. If the group 
health plan of the eligible organization provides coverage for some but 
not all of any contraceptive services required to be covered under 
Sec.  2590.715-2713(a)(1)(iv), the issuer is required to provide 
payments only for those contraceptive services for which the group 
health plan does not provide coverage. However, the issuer may provide 
payments for all contraceptive services, at the issuer's option.
    (d) Notice of availability of separate payments for contraceptive 
services--self-insured and insured group health plans. For each plan 
year to which the accommodation in paragraph (b) or (c) of this section 
is to apply, a third party administrator required to provide or arrange 
payments for contraceptive services pursuant to paragraph (b) of this 
section, and an issuer required to provide payments for contraceptive 
services pursuant to paragraph (c) of this section, must provide to 
plan participants and beneficiaries written notice of the availability 
of separate payments for contraceptive services contemporaneous with 
(to the extent possible), but separate from, any application materials 
distributed in connection with enrollment (or re-enrollment) in group 
health coverage that is effective beginning on the first day of each 
applicable plan year. The notice must specify that the eligible 
organization does not administer or fund contraceptive benefits, but 
that the third party administrator or issuer, as applicable, provides 
separate payments for contraceptive services, and must provide contact 
information for questions and complaints. The following model language, 
or substantially similar language, may be used to satisfy the notice 
requirement of this paragraph (d): ``Your employer has certified that 
your group health plan qualifies for an accommodation with respect to 
the federal requirement to cover all Food and Drug Administration-
approved contraceptive services for women, as prescribed by a health 
care provider, without cost sharing. This means that your employer will 
not contract, arrange, pay, or refer for contraceptive coverage. 
Instead, [name of third party administrator/health insurance issuer] 
will provide or arrange separate payments for contraceptive services 
that you use, without cost sharing and at no other cost, for so long as 
you are enrolled in your group health plan. Your employer will not 
administer or fund these payments. If you have any questions about this 
notice, contact [contact information for third party administrator/
health insurance issuer].''

[[Page 39896]]

    (e) Reliance--insured group health plans--(1) If an issuer relies 
reasonably and in good faith on a representation by the eligible 
organization as to its eligibility for the accommodation in paragraph 
(c) of this section, and the representation is later determined to be 
incorrect, the issuer is considered to comply with any requirement 
under Sec.  2590.715-2713(a)(1)(iv) to provide contraceptive coverage 
if the issuer complies with the obligations under this section 
applicable to such issuer.
    (2) A group health plan is considered to comply with any 
requirement under Sec.  2590.715-2713(a)(1)(iv) to provide 
contraceptive coverage if the plan complies with its obligations under 
paragraph (c) of this section, without regard to whether the issuer 
complies with the obligations under this section applicable to such 
issuer.

DEPARTMENT OF HEALTH AND HUMAN SERVICES

    For the reasons stated in the preamble, the Department of Health 
and Human Services amends 45 CFR Subtitle A parts 147 and 156 as 
follows:

PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND 
INDIVIDUAL HEALTH INSURANCE MARKETS

0
1. 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.

0
2. Section 147.130 is amended by revising paragraphs (a)(1) 
introductory text and (a)(1)(iv) to read as follows:

Sec.  147.130  Coverage of preventive health services.

    (a) * * *
    (1) In general. Beginning at the time described in paragraph (b) of 
this section and subject to Sec.  147.131, a group health plan, or a 
health insurance issuer offering group or individual health insurance 
coverage, must provide coverage for all of the following items and 
services, and may not impose any cost-sharing requirements (such as a 
copayment, coinsurance, or a deductible) with respect to those items 
and services:
* * * * *
    (iv) With respect to women, to the extent not described in 
paragraph (a)(1)(i) of this section, evidence-informed preventive care 
and screenings provided for in binding comprehensive health plan 
coverage guidelines supported by the Health Resources and Services 
Administration.
* * * * *

0
3. Section 147.131 is added to read as follows:

Sec.  147.131  Exemption and accommodations in connection with coverage 
of preventive health services.

    (a) Religious employers. In issuing guidelines under Sec.  
147.130(a)(1)(iv), the Health Resources and Services Administration may 
establish an exemption from such guidelines with respect to a group 
health plan established or maintained by a religious employer (and 
health insurance coverage provided in connection with a group health 
plan established or maintained by a religious employer) with respect to 
any requirement to cover contraceptive services under such guidelines. 
For purposes of this paragraph (a), a ``religious employer'' is an 
organization that is organized and operates as a nonprofit entity and 
is referred to in section 6033(a)(3)(A)(i) or (iii) of the Internal 
Revenue Code of 1986, as amended.
    (b) Eligible organizations. An eligible organization is an 
organization that satisfies all of the following requirements:
    (1) The organization opposes providing coverage for some or all of 
any contraceptive services required to be covered under Sec.  
147.130(a)(1)(iv) on account of religious objections.
    (2) The organization is organized and operates as a nonprofit 
entity.
    (3) The organization holds itself out as a religious organization.
    (4) The organization self-certifies, in a form and manner specified 
by the Secretary, that it satisfies the criteria in paragraphs (b)(1) 
through (3) of this section, and makes such self-certification 
available for examination upon request by the first day of the first 
plan year to which the accommodation in paragraph (c) of this section 
applies. The self-certification must be executed by a person authorized 
to make the certification on behalf of the organization, and must be 
maintained in a manner consistent with the record retention 
requirements under section 107 of the Employee Retirement Income 
Security Act of 1974.
    (c) Contraceptive coverage--insured group health plans--(1) General 
rule. A group health plan established or maintained by an eligible 
organization that provides benefits through one or more group health 
insurance issuers complies for one or more plan years with any 
requirement under Sec.  147.130(a)(1)(iv) to provide contraceptive 
coverage if the eligible organization or group health plan furnishes a 
copy of the self-certification described in paragraph (b)(4) of this 
section to each issuer that would otherwise provide such coverage in 
connection with the group health plan. An issuer may not require any 
documentation other than the copy of the self-certification from the 
eligible organization regarding its status as such.
    (2) Payments for contraceptive services--(i) A group health 
insurance issuer that receives a copy of the self-certification 
described in paragraph (b)(4) of this section with respect to a group 
health plan established or maintained by an eligible organization in 
connection with which the issuer would otherwise provide contraceptive 
coverage under Sec.  147.130(a)(1)(iv) must--
    (A) Expressly exclude contraceptive coverage from the group health 
insurance coverage provided in connection with the group health plan; 
and
    (B) Provide separate payments for any contraceptive services 
required to be covered under Sec.  147.130(a)(1)(iv) for plan 
participants and beneficiaries for so long as they remain enrolled in 
the plan.
    (ii) With respect to payments for contraceptive services, the 
issuer may not impose any cost-sharing requirements (such as a 
copayment, coinsurance, or a deductible), or impose any premium, fee, 
or other charge, or any portion thereof, directly or indirectly, on the 
eligible organization, the group health plan, or plan participants or 
beneficiaries. The issuer must segregate premium revenue collected from 
the eligible organization from the monies used to provide payments for 
contraceptive services. The issuer must provide payments for 
contraceptive services in a manner that is consistent with the 
requirements under sections 2706, 2709, 2711, 2713, 2719, and 2719A of 
the PHS Act. If the group health plan of the eligible organization 
provides coverage for some but not all of any contraceptive services 
required to be covered under Sec.  147.130(a)(1)(iv), the issuer is 
required to provide payments only for those contraceptive services for 
which the group health plan does not provide coverage. However, the 
issuer may provide payments for all contraceptive services, at the 
issuer's option.
    (d) Notice of availability of separate payments for contraceptive 
services--insured group health plans and student health insurance 
coverage. For each plan year to which the accommodation in paragraph 
(c) of this section is to apply, an issuer required to provide

[[Page 39897]]

payments for contraceptive services pursuant to paragraph (c) of this 
section must provide to plan participants and beneficiaries written 
notice of the availability of separate payments for contraceptive 
services contemporaneous with (to the extent possible), but separate 
from, any application materials distributed in connection with 
enrollment (or re-enrollment) in group health coverage that is 
effective beginning on the first day of each applicable plan year. The 
notice must specify that the eligible organization does not administer 
or fund contraceptive benefits, but that the issuer provides separate 
payments for contraceptive services, and must provide contact 
information for questions and complaints. The following model language, 
or substantially similar language, may be used to satisfy the notice 
requirement of this paragraph (d): ``Your [employer/institution of 
higher education] has certified that your [group health plan/student 
health insurance coverage] qualifies for an accommodation with respect 
to the federal requirement to cover all Food and Drug Administration-
approved contraceptive services for women, as prescribed by a health 
care provider, without cost sharing. This means that your [employer/
institution of higher education] will not contract, arrange, pay, or 
refer for contraceptive coverage. Instead, [name of health insurance 
issuer] will provide separate payments for contraceptive services that 
you use, without cost sharing and at no other cost, for so long as you 
are enrolled in your [group health plan/student health insurance 
coverage]. Your [employer/institution of higher education] will not 
administer or fund these payments. If you have any questions about this 
notice, contact [contact information for health insurance issuer].''
    (e) Reliance--(1) If an issuer relies reasonably and in good faith 
on a representation by the eligible organization as to its eligibility 
for the accommodation in paragraph (c) of this section, and the 
representation is later determined to be incorrect, the issuer is 
considered to comply with any requirement under Sec.  147.130(a)(1)(iv) 
to provide contraceptive coverage if the issuer complies with the 
obligations under this section applicable to such issuer.
    (2) A group health plan is considered to comply with any 
requirement under Sec.  147.130(a)(1)(iv) to provide contraceptive 
coverage if the plan complies with its obligations under paragraph (c) 
of this section, without regard to whether the issuer complies with the 
obligations under this section applicable to such issuer.
    (f) Application to student health insurance coverage. The 
provisions of this section apply to student health insurance coverage 
arranged by an eligible organization that is an institution of higher 
education in a manner comparable to that in which they apply to group 
health insurance coverage provided in connection with a group health 
plan established or maintained by an eligible organization that is an 
employer. In applying this section in the case of student health 
insurance coverage, a reference to ``plan participants and 
beneficiaries'' is a reference to student enrollees and their covered 
dependents.

PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE 
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES

0
4. The authority citation for part 156 continues to read as follows:

    Authority: Title I of the Affordable Care Act, sections 1301-
1304, 1311-1312, 1321-1322, 1324, 1334, 1342-1343, 1401-1402, and 
1412, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-18024, 18031-
18032, 18041-18042, 18044, 18054, 18061, 18063, 18071, 18082, 26 
U.S.C. 36B, and 31 U.S.C. 9701).

0
5. Section 156.50 is amended by adding paragraph (d) to read as 
follows:

Sec.  156.50  Financial support.

* * * * *
    (d) Adjustment of Federally-facilitated Exchange user fee--(1) A 
participating issuer offering a plan through a Federally-facilitated 
Exchange may qualify for an adjustment in the Federally-facilitated 
Exchange user fee specified in paragraph (c) of this section to the 
extent that the participating issuer--
    (i) Made payments for contraceptive services on behalf of a third 
party administrator pursuant to 26 CFR 54.9815-2713A(b)(2)(ii) or 29 
CFR 2590.715-2713A(b)(2)(ii); or
    (ii) Seeks an adjustment in the Federally-facilitated Exchange user 
fee with respect to a third party administrator that, following receipt 
of a copy of the self-certification referenced in 26 CFR 54.9815-
2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4), made or arranged for 
payments for contraceptive services pursuant to 26 CFR 54.9815-
2713A(b)(2)(i) or (ii) or 29 CFR 2590.715-2713A(b)(2)(i) or (ii).
    (2) For a participating issuer described in paragraph (d)(1) of 
this section to receive the Federally-facilitated Exchange user fee 
adjustment--
    (i) The participating issuer must submit to HHS, in the manner and 
timeframe specified by HHS, in the year following the calendar year in 
which the contraceptive services for which payments were made pursuant 
to 26 CFR 54.9815-2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2) were 
provided --
    (A) Identifying information for the participating issuer and each 
third party administrator that received a copy of the self-
certification referenced in 26 CFR 54.9815-2713A(a)(4) or 29 CFR 
2590.715-2713A(a)(4) with respect to which the participating issuer 
seeks an adjustment in the Federally-facilitated Exchange user fee, 
whether or not the participating issuer was the entity that made the 
payments for contraceptive services;
    (B) Identifying information for each self-insured group health plan 
with respect to which a copy of the self-certification referenced in 26 
CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) was received by 
a third party administrator and with respect to which the participating 
issuer seeks an adjustment in the Federally-facilitated Exchange user 
fee; and
    (C) For each such self-insured group health plan, the total dollar 
amount of the payments that were made pursuant to 26 CFR 54.9815-
2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2) for contraceptive services 
that were provided during the applicable calendar year. If such 
payments were made by the participating issuer directly as described in 
paragraph (d)(1)(i) of this section, the total dollar amount should 
reflect the amount of the payments made by the participating issuer; if 
the third party administrator made or arranged for such payments, as 
described in paragraph (d)(1)(ii) of this section, the total dollar 
amount should reflect the amount reported to the participating issuer 
by the third party administrator.
    (ii) Each third party administrator that intends for a 
participating issuer to seek an adjustment in the Federally-facilitated 
Exchange user fee with respect to the third party administrator for 
payments for contraceptive services must submit to HHS a notification 
of such intent, in a manner specified by HHS, by the later of January 
1, 2014, or the 60th calendar day following the date on which the third 
party administrator receives the applicable copy of the self-
certification referenced in 26 CFR 54.9815-2713A(a)(4) or 29 CFR 
2590.715-2713A(a)(4).
    (iii) Each third party administrator identified in paragraph 
(d)(2)(i)(A) of

[[Page 39898]]

this section must submit to HHS, in the manner and timeframe specified 
by HHS, in the year following the calendar year in which the 
contraceptive services for which payments were made pursuant to 26 CFR 
54.9815-2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2) were provided--
    (A) Identifying information for the third party administrator and 
the participating issuer;
    (B) Identifying information for each self-insured group health plan 
with respect to which a copy of the self-certification referenced in 26 
CFR 54.9815-2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) was received by 
the third party administrator and with respect to which the 
participating issuer seeks an adjustment in the Federally-facilitated 
Exchange user fee;
    (C) The total number of participants and beneficiaries in each such 
self-insured group health plan during the applicable calendar year;
    (D) For each such self-insured group health plan with respect to 
which the third party administrator made payments pursuant to 26 CFR 
54.9815-2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2) for contraceptive 
services, the total dollar amount of such payments that were provided 
during the applicable calendar year. If such payments were made by the 
participating issuer directly as described in paragraph (d)(1)(i) of 
this section, the total dollar amount should reflect the amount 
reported to the third party administrator by the participating issuer; 
if the third party administrator made or arranged for such payments, as 
described in paragraph (d)(1)(ii) of this section, the total dollar 
amount should reflect the amount of the payments made by or on behalf 
of the third party administrator; and
    (E) An attestation that the payments for contraceptive services 
were made in compliance with 26 CFR 54.9815-2713A(b)(2) or 29 CFR 
2590.715-2713A(b)(2).
    (3) If the requirements set forth in paragraph (d)(2) of this 
section are met, and as long as an authorizing exception under OMB 
Circular No. A-25R is in effect, the participating issuer will be 
provided a reduction in its obligation to pay the Federally-facilitated 
Exchange user fee specified in paragraph (c) of this section equal in 
value to the sum of the following:
    (i) The total dollar amount of the payments for contraceptive 
services submitted by the applicable third party administrators, as 
described in paragraph (d)(2)(iii)(D) of this section.
    (ii) An allowance for administrative costs and margin. The 
allowance will be no less than 10 percent of the total dollar amount of 
the payments for contraceptive services specified in paragraph 
(d)(3)(i) of this section. HHS will specify the allowance for a 
particular calendar year in the annual HHS notice of benefit and 
payment parameters.
    (4) As long as an exception under OMB Circular No. A-25R is in 
effect, if the amount of the adjustment under paragraph (d)(3) of this 
section is greater than the amount of the participating issuer's 
obligation to pay the Federally-facilitated Exchange user fee in a 
particular month, the participating issuer will be provided a credit in 
succeeding months in the amount of the excess.
    (5) Within 60 days of receipt of any adjustment in the Federally-
facilitated Exchange user fee under this section, a participating 
issuer must pay each third party administrator with respect to which it 
received any portion of such adjustment an amount no less than the 
portion of the adjustment attributable to the total dollar amount of 
the payments for contraceptive services submitted by the third party 
administrator, as described in paragraph (d)(2)(iii)(D) of this 
section. No such payment is required with respect to the allowance for 
administrative costs and margin described in paragraph (d)(3)(ii) of 
this section. This paragraph does not apply if the participating issuer 
made the payments for contraceptive services on behalf of the third 
party administrator, as described in paragraph (d)(1)(i) of this 
section, or is in the same issuer group as the third party 
administrator.
    (6) A participating issuer receiving an adjustment in the 
Federally-facilitated Exchange user fee under this section for a 
particular calendar year must maintain for 10 years following that 
year, and make available upon request to HHS, the Office of the 
Inspector General, the Comptroller General, and their designees, 
documentation demonstrating that it timely paid each third party 
administrator with respect to which it received any such adjustment any 
amount required to be paid to the third party administrator under 
paragraph (d)(5) of this section.
    (7) A third party administrator with respect to which an adjustment 
in the Federally-facilitated Exchange user fee is received under this 
section for a particular calendar year must maintain for 10 years 
following that year, and make available upon request to HHS, the Office 
of the Inspector General, the Comptroller General, and their designees, 
all of the following documentation:
    (i) A copy of the self-certification referenced in 26 CFR 54.9815-
2713A(a)(4) or 29 CFR 2590.715-2713A(a)(4) for each self-insured plan 
with respect to which an adjustment is received.
    (ii) Documentation demonstrating that the payments for 
contraceptive services were made in compliance with 26 CFR 54.9815-
2713A(b)(2) or 29 CFR 2590.715-2713A(b)(2).
    (iii) Documentation supporting the total dollar amount of the 
payments for contraceptive services submitted by the third party 
administrator, as described in paragraph (d)(2)(iii)(D) of this 
section.

0
6. Section 156.80 is amended by revising paragraph (d)(1) to read as 
follows:

Sec.  156.80  Single risk pool.

* * * * *
    (d) * * *
    (1) In general. Each plan year or policy year, as applicable, a 
health insurance issuer must establish an index rate for a state market 
described in paragraphs (a) through (c) of this section based on the 
total combined claims costs for providing essential health benefits 
within the single risk pool of that state market. The index rate must 
be adjusted on a market-wide basis for the state based on the total 
expected market-wide payments and charges under the risk adjustment and 
reinsurance programs, and Exchange user fees (expected to be remitted 
under Sec.  156.50(b) or Sec.  156.50(c) and (d) of this subchapter as 
applicable plus the dollar amount under Sec.  156.50(d)(3)(i) and (ii) 
of this subchapter expected to be credited against user fees payable 
for that state market). The premium rate for all of the health 
insurance issuer's plans in the relevant state market must use the 
applicable market-wide adjusted index rate, subject only to the plan-
level adjustments permitted in paragraph (d)(2) of this section.
* * * * *

[[Page 39899]]

    Signed this 27th day of June 2013.
Beth Tucker,
Deputy Commissioner for Operations Support, Internal Revenue Service.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
    Signed this 26th day of June 2013.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
    Dated: June 20, 2013
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Approved: June 25, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2013-15866 Filed 6-28-13; 11:15 am]
BILLING CODE 4830-01-P; 4510-029-P; 4120-01-P; 6325-64-P
```