7348 Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Parts 155 and 156 

[CMS–9958–P] 

RIN 0938–AR68 

Patient Protection and Affordable Care 

Act; Exchange Functions: Eligibility for 

Exemptions; Miscellaneous Minimum 

Essential Coverage Provisions 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule would 

implement certain functions of the 

Affordable Insurance Exchanges 

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

the Patient Protection and Affordable 

Care Act of 2010, as amended by the 

Health Care and Education 

Reconciliation Act of 2010, referred to 

collectively as the Affordable Care Act. 

These specific statutory functions 

include determining eligibility for and 

granting certificates of exemption from 

the shared responsibility payment for 

not maintaining minimum essential 

coverage as described in section 5000A 

of the Internal Revenue Code. 

Additionally, this proposed rule 

implements the responsibility of the 

Secretary of Health and Human 

Services, in coordination with the 

Secretary of the Treasury, to designate 

other health benefits coverage as 

minimum essential coverage by 

providing that certain coverage be 

designated as minimum essential 

coverage. It also outlines substantive 

and procedural requirements that other 

types of individual coverage must fulfill 

in order to be certified as minimum 

essential coverage under the Internal 

Revenue Code. 

DATES: To be assured consideration, 

comments must be received at one of 

the addresses provided below, no later 

than 5 p.m. on March 18, 2013. 

ADDRESSES: In commenting, please refer 

to file code CMS–9958–P. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

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

the ‘‘Submit a comment’’ instructions. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–9958–P, P.O. Box 8010, Baltimore, 

MD 21244–8010. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address only: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–9958–P, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. Alternatively, 

you may deliver (by hand or courier) 

your written comments only to the 

following addresses prior to the close of 

the comment period: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue SW., 

Washington, DC 20201 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, call 

telephone number (410) 786–7195 in 

advance to schedule your arrival with 

one of our staff members. 

Comments erroneously mailed to the 

addresses indicated as appropriate for 

hand or courier delivery may be delayed 

and received after the comment period. 

For information on viewing public 

comments, see the beginning of the 

SUPPLEMENTARY INFORMATION section. 

FOR FURTHER INFORMATION CONTACT: 

Lauren Block, (301) 492–4425, for 

provisions related to exemptions from 

the shared responsibility payment. 

Amanda Ledford, (410) 786–1565, for 

provisions related to minimum essential 

coverage. 

SUPPLEMENTARY INFORMATION: 

Inspection of Public Comments: All 

comments received before the close of 

the comment period are available for 

viewing by the public, including any 

personally identifiable or confidential 

business information that is included in 

a comment. We post all comments 

received before the close of the 

comment period on the following Web 

site as soon as possible after they have 

been received: http:// 

www.regulations.gov. Follow the search 

instructions on that Web site to view 

public comments. 

Comments received timely will also 

be available for public inspection as 

they are received, generally beginning 

approximately 3 weeks after publication 

of a document, at the headquarters of 

the Centers for Medicare & Medicaid 

Services, 7500 Security Boulevard, 

Baltimore, Maryland 21244, Monday 

through Friday of each week from 8:30 

a.m. to 4 p.m. To schedule an 

appointment to view public comments, 

phone 1–800–743–3951. 

Executive Summary 

To ensure effective and efficient 

implementation of the insurance market 

reforms, the Affordable Care Act 

requires a nonexempt individual to 

maintain minimum essential coverage 

or make a shared responsibility 

payment. The Affordable Care Act 

specifies the categories of individuals 

who are eligible to receive exemptions 

from the shared responsibility payment 

under section 5000A of the Code, which 

provides nonexempt individuals with a 

choice: Maintain minimum essential 

coverage for themselves and any 

nonexempt family members or include 

an additional payment with their federal 

income tax return. Many individuals are 

exempt from the shared responsibility 

payment, including some whose 

religious beliefs conflict with 

acceptance of the benefits of private or 

public insurance and those who do not 

have an affordable health insurance 

coverage option available. Section 

1311(d)(4)(H) of the Affordable Care Act 

(42 U.S.C. 18031(d)(4)(H)) directs the 

new health insurance marketplaces, 

called Affordable Insurance Exchanges 

(Exchanges), to issue certifications of 

exemption from the shared 

responsibility payment under section 

5000A of the Code to eligible 

individuals. Section 1411 of the 

Affordable Care Act (42 U.S.C. 18081) 

generally provides procedures for 

determining an individual’s eligibility 

for various benefits relating to health 

coverage, including exemptions from 

the application of section 5000A of the 

Code. 

This proposed rule sets forth 

standards and processes under which 

the Exchange will conduct eligibility 

determinations for and grant certificates 

of exemption from the shared 

responsibility payment. Furthermore, it 

supports and complements rulemaking 

conducted by the Secretary of the 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 7349 

Treasury with respect to section 5000A 

of the Internal Revenue Code (the Code), 

as added by section 1501(b) of the 

Affordable Care Act, published 

elsewhere in this issue of the Federal 

Register. The intent of this rule is to 

implement the relevant provisions 

while continuing to afford states 

substantial discretion in the design and 

operation of an Exchange, with greater 

standardizations provided where 

directed by the statute or where there 

are compelling practical, efficiency, or 

consumer protection reasons. 

Under section 5000A(f)(1)(E), the 

Secretary of Health and Human 

Services, in coordination with the 

Secretary of the Treasury, may designate 

other health benefits coverage as 

minimum essential coverage. This 

proposed rule provides standards for 

determining whether certain other types 

of health insurance coverage constitute 

minimum essential coverage and 

procedures for sponsors to follow for a 

plan to be identified as minimum 

essential coverage under section 5000A. 

This rule proposes to designate certain 

types of existing health coverage as 

minimum essential coverage. Other 

types of coverage, not statutorily 

specified and not designated as 

minimum essential coverage in this 

regulation, may be recognized as 

minimum essential coverage if certain 

substantive and procedural 

requirements are met as proposed in 

this rule. These additional categories of 

minimum essential coverage, both those 

designated per se and those that may 

apply for recognition are neither group 

health insurance coverage nor 

individual health insurance. Consumers 

with types of coverage that are 

recognized as minimum essential 

coverage in accordance with this rule 

would be determined to have minimum 

essential coverage for purposes of the 

minimum essential coverage 

requirement if the coverage is certified 

to be substantially compliant with the 

requirements of Title I of the Affordable 

Care Act that apply to nongrandfathered plans in the individual 

market. 

Table of Contents 

Executive Summary 

I. Background 

A. Legislative Overview 

B. Stakeholder Consultation and Input 

C. Structure of the Proposed Rule 

D. Alignment With Related Rules and 

Published Information 

II. Provisions of the Proposed Regulation 

A. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. Subpart A—General Provisions 

a. Definitions (§ 155.20) 

2. Subpart C—General Functions of an 

Exchange 

a. Functions of an Exchange (§ 155.200) 

3. Subpart G—Exchange Functions in the 

Individual Market: Eligibility 

Determinations for Exemptions 

a. Definitions and General Requirements 

(§ 155.600) 

b. Eligibility Standards for Exemptions 

(§ 155.605) 

c. Eligibility Process for Exemptions 

(§ 155.610) 

d. Verification Process Related to 

Eligibility for Exemptions (§ 155.615) 

e. Eligibility Redeterminations for 

Exemptions During a Calendar Year 

(§ 155.620) 

f. Options for Conducting Eligibility 

Determinations for Exemptions 

(§ 155.625) 

g. Reporting (§ 155.630) 

h. Right to Appeal (§ 155.635) 

B. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

a. Definition of Minimum Essential 

Coverage (§ 156.600) 

b. Other Types of Coverage That Qualify as 

Minimum Essential Coverage (§ 156.602) 

c. Requirements for Recognition as 

Minimum Essential Coverage for 

Coverage Not Otherwise Designated 

Minimum Essential Coverage in the 

Statute or This Regulation (§ 156.604) 

d. HHS Audit Authority (§ 156.606) 

e. Eligibility for Minimum Essential 

Coverage 

III. Collection of Information Requirements 

IV. Response to Comments 

V. Summary of Regulatory Impact Statement 

VI. Regulatory Flexibility Act 

VII. Unfunded Mandates 

VIII. Federalism 

IX. Congressional Review Act 

X. Regulation Text 

Abbreviations 

Affordable Care Act—the Affordable Care 

Act of 2010 (which is the collective term for 

the Patient Protection and Affordable Care 

Act (Pub. L. 111–148) and the Health Care 

and Education Reconciliation Act (Pub. L. 

111–152)) 

BHP Basic Health Program 

CHIP Children’s Health Insurance Program 

CMS Centers for Medicare & Medicaid 

Services 

FPL Federal Poverty Level 

HHS Department of Health and Human 

Services 

IRS Internal Revenue Service 

NAIC National Association of Insurance 

Commissioners 

QHP Qualified Health Plan 

SSA Social Security Administration 

SSN Social Security Number 

The Code Internal Revenue Code of 1986, as 

amended 

I. Background 

A. Legislative Overview 

Section 1501(b) of the Affordable Care 

Act added section 5000A of the Internal 

Revenue Code (the Code) to a new 

chapter 48 of subtitle D (Miscellaneous 

Excise Taxes) of the Code effective for 

months beginning after December 31, 

2013. Section 5000A of the Code, which 

was subsequently amended by the 

TRICARE Affirmation Act of 2010, 

Public Law 111–159 (124 Stat. 1123) 

and Public Law 111–173 (124 Stat. 

1215), requires that nonexempt 

individuals either maintain minimum 

essential coverage or make a shared 

responsibility payment, includes 

standards for the calculation of the 

shared responsibility payment, 

describes categories of individuals who 

may qualify for an exemption from the 

shared responsibility payment, and 

provides the definition of ‘‘minimum 

essential coverage.’’ 

Section 1311(d)(4)(H) of the 

Affordable Care Act specifies that the 

Exchange will, subject to section 1411 of 

the Affordable Care Act, grant 

certifications of exemption from the 

shared responsibility payment specified 

in section 5000A of the Code. Section 

1311(d)(4)(I)(i) of the Affordable Care 

Act specifies that the Exchange will 

transfer to the Secretary of the Treasury 

a list of the individuals to whom the 

Exchange provided such a certification. 

Section 1411(a)(4) of the Affordable 

Care Act provides that the Secretary of 

Health and Human Services (the 

Secretary) will establish a program for 

determining whether a certification of 

exemption from the shared 

responsibility requirement and penalty 

will be issued by an Exchange under 

section 1311(d)(4)(H) of the Affordable 

Care Act. We propose to interpret this 

provision as authorizing the Secretary to 

determine ‘‘whether,’’ with respect to 

the nine exemptions provided for under 

section 5000A of the Code, Exchanges 

would perform the role of issuing 

certifications of exemption under 

section 1311(d)(4)(H) of the Affordable 

Care Act, whether eligibility for the 

exemption would be determined solely 

through tax filing, or whether both 

processes would be available. Under 

this interpretation, the responsibility 

under section 1311(d)(4)(H) of the 

Affordable Care Act to issue 

certifications of exemption would be 

‘‘subject to’’ these determinations by the 

Secretary under section 1411(a)(4) of the 

Affordable Care Act, and Exchanges 

would thus only be required to issue 

certifications of exemption with respect 

to exemptions not exclusively assigned 

to IRS. 

Section 1321 of the Affordable Care 

Act discusses state flexibility in the 

operation and enforcement of Exchanges 

and related requirements. Section 

1321(a) of the Affordable Care Act 

provides broad authority for the 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

7350 Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 

Secretary to establish standards and 

regulations to implement the statutory 

requirements related to Exchanges and 

other components of title I of the 

Affordable Care Act as amended by the 

Health Care and Education 

Reconciliation Act of 2010. Section 

1311(k) of the Affordable Care Act 

specifies that Exchanges may not 

establish rules that conflict with or 

prevent the application of regulations 

promulgated by the Secretary under 

Subtitle D of Title I of the Affordable 

Care Act. 

In accordance with our interpretation 

of these sections of the Affordable Care 

Act, and the authority provided by, inter 

alia, section 1321(a) of the Affordable 

Care Act, we propose that under the 

program established under section 

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

the Exchange would determine 

eligibility for and grant certificates of 

exemption as described below. We also 

note that consistent with prior guidance, 

a state-based Exchange can be approved 

to operate by HHS if it uses a federallymanaged service to make eligibility 

determinations for exemptions. 

On March 27, 2012 the Department of 

Health and Human Services (HHS) 

published the final rule entitled 

‘‘Patient Protection and Affordable Care 

Act; Establishment of Exchanges and 

Qualified Health Plans; Exchange 

Standards for Employers’’ (77 FR 

18309). The provisions of the final rule, 

herein referred to as the Exchange final 

rule, encompass the key functions of 

Exchanges related to eligibility, 

enrollment, and plan participation and 

management. In the Exchange final rule, 

45 CFR 155.200(b) provided that a 

minimum function of an Exchange is to 

grant certificates of exemption 

consistent with sections 1311(d)(4)(H) 

and 1411 of the Affordable Care Act. 

This proposed rule cross-references 

several provisions in the Exchange final 

rule, notably the limited situations 

where eligibility and verification 

processes used in determining eligibility 

for enrollment in a qualified health plan 

(QHP) through the Exchange and for 

insurance affordability programs can 

also be used by Exchanges for the 

purpose of determining whether an 

individual is eligible for an exemption 

from the shared responsibility payment. 

Section 5000A(f) of the Code 

designates certain types of coverage as 

minimum essential coverage. The term 

‘‘minimum essential coverage’’ includes 

all of the following: Government 

sponsored programs (the Medicare 

program under part A of title XVII of the 

Social Security Act (the Act); the 

Medicaid program under title XIX of the 

Social Security Act; the CHIP program 

under title XXI of the Act; medical 

coverage under chapter 55 of title 10, 

United States Code, including the 

TRICARE program; a health care 

program under chapter 17 or 18 of title 

38, United States Code, as determined 

by the Secretary of Veterans Affairs, in 

coordination with the Secretaries of 

Health and Human Services and 

Treasury; a health plan under section 

2504(e) of title 22, United States Code 

(relating to Peace Corps volunteers); or 

the Nonappropriated Fund Health 

Benefits Program of the Department of 

Defense, established under section 349 

of the National Defense Authorization 

Act for Fiscal Year 1995); coverage 

under an eligible employer-sponsored 

plan; coverage under a health plan 

offered in the individual market within 

a State; and coverage under a 

grandfathered health plan. In addition, 

section 5000A(f)(1)(E) of the Code 

directs the Secretary of Health and 

Human Services, in coordination with 

the Secretary of Treasury, to designate 

other health benefits coverage, such as 

a state health benefits risk pool, as 

minimum essential coverage for 

purposes of their enrollees satisfying the 

minimum coverage requirement. This 

proposed regulation would designate 

certain additional types of coverage 

qualify as minimum essential coverage 

and also proposes a process by which 

other types of coverage could be 

recognized as minimum essential 

coverage. 

B. Stakeholder Consultation and Input 

On August 3, 2010, HHS published a 

request for comment (the RFC) inviting 

the public to provide input regarding 

the rules that will govern the Exchanges. 

In particular, HHS asked states, tribal 

representatives, consumer advocates, 

employers, insurers, and other 

interested stakeholders to comment on 

the standards Exchanges should meet. 

The comment period closed on October 

4, 2010. 

The public response to the RFC 

yielded comment submissions from 

consumer advocacy organizations, 

medical and health care professional 

trade associations and societies, medical 

and health care professional entities, 

health insurers, insurance trade 

associations, members of the general 

public, and employer organizations. The 

majority of the comments were related 

to the general functions and standards 

for Exchanges, qualified health plans 

(QHPs), eligibility and enrollment, and 

coordination with Medicaid. While this 

proposed rule does not directly respond 

to comments from the RFC, the 

comments received are described, where 

applicable, in discussing specific 

regulatory proposals. We intend to 

respond to relevant comments from the 

RFC, along with comments received on 

this proposed rule, as part of the final 

rule. 

In addition to the RFC, HHS has 

consulted with stakeholders through 

regular meetings with the National 

Association of Insurance Commissioners 

(NAIC), regular contact with states 

through the Exchange grant process, and 

meetings with tribal representatives, 

health insurance issuers, trade groups, 

consumer advocates, employers, and 

other interested parties. For example, 

we received feedback from health care 

sharing ministries about the process for 

how individual members can obtain 

certificates of exemption based on their 

membership in a health care sharing 

ministry, and an expression of interest 

in a process for allowing health care 

sharing ministries to obtain recognition 

that they meet the standards under 

section 5000A(d)(2)(B) of the Code. We 

also received information from various 

stakeholder groups regarding types of 

‘‘other coverage’’ as described in section 

5000A(f)(1)(E) of the Code. Similar 

consultation will continue throughout 

the development of further Exchange 

guidance on exemptions and ‘‘other 

coverage.’’ 

C. Structure of the Proposed Rule 

The provisions of this proposed rule 

include the addition of subpart G to 45 

CFR part 155, which includes standards 

for Exchanges related to conducting 

eligibility determinations for and 

granting certificates of exemption from 

the shared responsibility payment. We 

also propose to amend § 155.200(a) to 

add a reference to indicate that, 

consistent with existing language in 

§ 155.200(b), granting certificates of 

exemption is a minimum function of the 

Exchange. Furthermore, we add subpart 

G to 45 CFR part 156 which includes 

standards related to minimum essential 

coverage. 

D. Alignment With Related Rules and 

Published Information 

As noted above, this proposed rule is 

published in coordination with the 

Department of Treasury’s proposed rule, 

‘‘Shared Responsibility Payment for Not 

Maintaining Minimum Essential 

Coverage’’ (Treasury proposed rule). 

This regulation includes numerous 

cross-references to the Treasury 

proposed rule, published elsewhere in 

this issue of the Federal Register. 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 7351 

II. Provisions of the Proposed 

Regulation 

A. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. Subpart A—General Provisions 

a. Definitions (§ 155.20) 

We propose to make a technical 

correction to the definition of 

‘‘applicant’’ to note that it does not 

apply to an applicant seeking an 

exemption pursuant to proposed 

subpart G. We propose a separate 

definition for ‘‘applicant’’ that is 

specific to exemptions in § 155.600. 

We propose to make a technical 

correction to the definition of 

‘‘application filer’’ to note that it does 

not apply to an application filer seeking 

an exemption pursuant to proposed 

subpart G. We propose a separate 

definition for ‘‘application filer’’ that is 

specific to exemptions in § 155.600. 

2. Subpart C—General Functions of an 

Exchange 

a. Functions of an Exchange (§ 155.200) 

The Exchange final rule specifies that 

the Exchange will perform the 

minimum functions described in 

subparts D, E, H, and K of part 155. In 

accordance with section 1311(d)(4)(H) 

of the Affordable Care Act and existing 

45 CFR 155.200(b), in paragraph (a), we 

propose to add that the Exchange would 

also perform the functions described in 

subpart G of this part related to 

eligibility determinations for 

exemptions. 

3. Subpart G—Exchange Functions in 

the Individual Market: Eligibility 

Determinations for Exemptions 

a. Definitions and General Requirements 

(§ 155.600) 

In paragraph (a) of § 155.600, we 

propose definitions for terms that apply 

throughout subpart G. First, we propose 

to define ‘‘applicant’’ as an individual 

who is seeking an exemption from the 

shared responsibility payment for him 

or herself through an application 

submitted to the Exchange. We provide 

this definition to distinguish the use of 

applicant in this subpart from the 

definition in § 155.20 of this chapter, 

which is specific to an individual who 

is submitting an application for an 

eligibility determination for enrollment 

in a QHP. 

We propose to define ‘‘application 

filer’’ as an applicant, an individual 

who expects to be liable for the shared 

responsibility payment, in accordance 

with 26 CFR 1.5000A–1(c) of the 

Treasury proposed rule, published 

elsewhere in this issue of the Federal 

Register, for an applicant, an authorized 

representative, or if the applicant is a 

minor or incapacitated, someone acting 

responsibly for an applicant. This is 

consistent with the definition that is 

used for the eligibility process for 

enrollment in a QHP and for insurance 

affordability programs, with one 

exception. In this proposed rule, we use 

the liability structure established in 26 

CFR 1.5000A–1(c) of the Treasury 

proposed rule, published elsewhere in 

this issue of the Federal Register to 

assist in defining the range of potential 

application filers, while the definition 

of application filer in § 155.20 uses the 

tax household or Medicaid household, 

as they are the relevant units for 

eligibility for enrollment in a QHP and 

for insurance affordability programs. We 

note that we expect to modify the 

proposed language in § 155.227 (78 FR 

4711) to incorporate the minor changes 

necessary to clarify that authorized 

representatives can assist individuals 

seeking exemptions. Similarly, we 

intend to modify the proposed language 

in § 155.225 (78 FR 4710) to clarify that 

certified application counselors can 

assist individuals seeking exemptions. 

We seek comment on how authorized 

representatives and certified application 

counselors can best support individuals 

seeking certificates of exemption from 

the Exchange. 

We propose to define ‘‘exemption’’ as 

an exemption from the shared 

responsibility payment. While sections 

5000A(d)(2) through (4) of the Code 

describe individuals who are not 

‘‘applicable individuals’’ for purposes of 

the requirement to maintain minimum 

essential coverage in section 5000A of 

the Code, and sections 5000A(e)(1) 

through (5) of the Code describe 

individuals who are exempt from 

liability for the shared responsibility 

payment imposed under section 

5000A(b) of the Code, the consequence 

for individuals described in either 

category is the same: Individuals in both 

categories are not subject to the shared 

responsibility payment for not 

maintaining minimum essential 

coverage. 

We propose to define ‘‘health care 

sharing ministry’’ in the same manner as 

provided in 26 CFR 1.5000A–3(b) of the 

Treasury proposed rule, published 

elsewhere in this issue of the Federal 

Register. 

We propose to define ‘‘required 

contribution’’ in the same manner as 

provided in 26 CFR 1.5000A–3(e) of the 

Treasury proposed rule, published 

elsewhere in this issue of the Federal 

Register. 

We propose to define ‘‘Indian tribe’’ 

in the same manner as in 26 CFR 

1.5000A–3(g) of the Treasury proposed 

rule, published elsewhere in this issue 

of the Federal Register, which in turn 

references the definition in section 

45A(c)(6) of the Code. We note that 

section 45A(c)(6) of the Code describes 

certain federally-recognized Indian 

tribes (including any qualified Alaska 

Native village or regional or village 

corporation). 

We welcome comment on these 

definitions. 

Consistent with 45 CFR 155.300(c), in 

paragraph (b), we propose that for 

purposes of this subpart, any attestation 

that an applicant is to provide under 

this subpart may also be provided by an 

application filer on behalf of the 

applicant. 

In paragraph (c) of § 155.600, we 

propose that for the purposes of this 

subpart, the Exchange must consider 

information through electronic data 

sources, other information as provided 

by the applicant, or other information as 

available in the records of the Exchange 

to be reasonably compatible with an 

applicant’s attestation if the difference 

or discrepancy does not impact the 

eligibility for the relevant exemption 

that the applicant requested. This is the 

same standard that is used in 45 CFR 

155.300(d) for eligibility for enrollment 

in a QHP and for insurance affordability 

programs. This proposal minimizes the 

administrative burden on applicants by 

limiting additional requests for 

information to only those situations in 

which there is good cause for such 

requests. We note that as provided in 

subpart D, this threshold does not 

preclude flexibility for Exchanges in 

further defining reasonable 

compatibility, particularly with regard 

to specific categories of exemptions, as 

long as the Exchange adheres to this 

general standard as well. 

We also propose to add paragraphs (d) 

and (e) in order to specify that the 

accessibility and notice requirements in 

§ 155.205(c) and § 155.230, respectively, 

apply to exemptions as well, given that 

the definition of applicant in this 

subpart is otherwise specific to 

exemptions. We note that 45 CFR 

155.230(d), as proposed (78 FR 4594), 

specifies that notices will be provided 

either through standard mail, or, if an 

individual elects, electronically, 

provided that standards for use of 

electronic notices are met as set forth in 

42 CFR 435.918, as proposed in the 

same issue of the Federal Register. 

Further discussion of this approach is at 

78 FR 4601–4602 and 4635. 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

7352 Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 

b. Eligibility standards for Exemptions 

(§ 155.605) 

Section 5000A of the Code provides 

nine categories of exemptions. Of these 

nine categories, section 5000A expressly 

provides that certifications of 

exemptions in two categories (religious 

conscience and hardship) be provided 

by the Exchange under section 

1311(d)(4)(H) of the Affordable Care 

Act. Under the program established 

under section 1411(a)(4) of the 

Affordable Care Act for determining 

whether certifications of exemptions are 

to be issued by Exchanges under section 

1311(d)(4)(H) of the Affordable Care 

Act, we are proposing that Exchanges 

would issue certificates of exemption in 

these two categories. With respect to the 

other seven exemptions, for reasons set 

forth below, we propose that under the 

program provided for in section 

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

Exchanges would issue certifications of 

exemption with respect to three 

additional categories of exemption (with 

exemptions also available through the 

tax filing process). In the four remaining 

exemption categories, however, we 

propose that under the program 

established under section 1411(a)(4) of 

the Affordable Care Act, certifications 

would not be issued by Exchanges 

under section 1311(d)(4)(H) of the 

Affordable Care Act, and the 

determination of whether an individual 

is eligible for an exemption under 

section 5000A of the Code in these 

categories would be made exclusively 

by IRS through the tax filing process. 

In this section, we propose standards 

related to the five categories of 

exemptions that we are proposing that 

the program under section 1411(a)(4) of 

the Affordable Care Act assign to 

Exchanges, and discuss our reasons for 

assigning the remaining four categories 

of exemptions exclusively to the IRS at 

the end of this section. 

In paragraph (a) of § 155.605, we 

propose that except as specified in 

paragraph (g), the Exchange would 

determine an applicant eligible for and 

grant a certificate of exemption for a 

month if the Exchange determines that 

he or she meets the requirements for one 

of the categories of exemptions 

described in this section for at least one 

day in the month, consistent with 26 

CFR 1.5000A–3 of the Treasury 

proposed rule, published elsewhere in 

this issue of the Federal Register. We 

note that an individual will not need to 

submit a separate application for each 

month in which he or she is applying 

for an exemption. We also note that the 

proposed standards for hardship 

exemptions specify that depending on 

the circumstances for each specific 

hardship exemption category, the 

certificate may be provided for an entire 

calendar year or instead for a specific 

month or period of months, including 

periods of time that stretch across more 

than one calendar year (for example, in 

the case of a hardship that occurs for the 

first time in December); this is discussed 

further in the preamble associated with 

paragraph (g) of this section. 

We note that an individual may be 

eligible for multiple exemptions 

simultaneously; while there is no 

practical reason to have multiple 

exemptions in effect at any given time, 

we believe that an applicant should be 

able to apply for multiple exemptions in 

case some are denied, and also receive 

any exemptions for which he or she is 

eligible. We considered specifying that 

the Exchange could only accept an 

application for one category of 

exemption at a time from an applicant, 

but did not propose this approach 

because we believe that it increases the 

length of time required to conclude the 

overall eligibility process in cases where 

the initial application is denied. 

Further, we considered specifying that 

once the Exchange granted a certificate 

of exemption based on one category, it 

would not provide additional 

exemptions for the same time period. 

However, we believe that the statute 

does not provide the flexibility for the 

Exchange to deny an exemption to an 

applicant who is otherwise eligible, and 

think that the number of applicants who 

will continue to pursue exemptions 

after receiving one for a coverage month 

is too small to increase administrative 

burden in any significant way. We 

solicit comments regarding this 

approach. 

In paragraph (b), we propose that 

except as specified, an applicant is 

required to submit a new application for 

each year for which an applicant would 

like to be considered for an exemption 

through the Exchange, and that an 

exemption will only be provided for a 

calendar year that the applicant 

submitted an application. This proposal 

is based on the recognition that for 

many categories of exemptions, an 

applicant’s exemption status may 

change from year to year. There are 

exceptions for exemptions provided 

based on membership in an Indian tribe 

and for religious conscience, in 

recognition that an individual’s 

qualification for these exemptions is 

expected to remain the same from year 

to year. There are also exceptions for 

hardship, since some categories of 

hardship will be provided for one or 

more months and may be provided for 

periods of time that stretch across more 

than one calendar year (for example, in 

the case of a hardship that occurs for the 

first time in December), and some 

categories of hardship can only be 

provided after the close of a calendar 

year. We welcome comments on this 

approach and how the Exchange can 

expedite and streamline the process. 

We considered whether to specify that 

the Exchange send a notice to each 

individual who had an exemption 

certificate from the Exchange for a 

calendar year, in order to remind him or 

her regarding the opportunity to apply 

to for an exemption for the following 

calendar year, and whether this could 

also be an individual option. We solicit 

comments regarding the use of such a 

reminder and on a renewal process 

more generally. 

In paragraphs (c) through (g) of this 

section, we propose standards for 

eligibility for an exemption through the 

Exchange. First, in paragraph (c), we 

propose to codify the statutory 

eligibility standards for the exemption 

based on religious conscience. In 

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

Exchange will determine an applicant 

eligible for an exemption for a month if 

he or she is a member of a recognized 

religious sect or division described in 

section 1402(g)(1) of the Code, and an 

adherent of established tenets or 

teachings of such sect or division for 

such month, in accordance with 26 CFR 

1.5000A–3(a) of the Treasury proposed 

rule, published elsewhere in this issue 

of the Federal Register. We note that the 

statute prescribes the religious sects and 

divisions that are covered by this 

exemption, and that as such, HHS does 

not have discretion to expand it to cover 

other groups. 

In paragraph (c)(2), we propose 

eligibility standards regarding the 

duration of the exemption for religious 

conscience. In paragraph (c)(2)(i), we 

propose that the Exchange grant the 

exemption for religious conscience to an 

applicant that meets the standards of 

paragraph (c)(1) of this section for a 

month on a continuing basis, until such 

time that the applicant either reaches 

the age of 18, or reports that he or she 

no longer meets the standards provided 

in (c)(1) of this section. This proposal is 

based on our understanding that 

membership in the religious sects or 

divisions described in section 1402(g)(1) 

of the Code will not typically change 

from year to year, along with the 

provision in § 155.620(b), which 

provides that an applicant who receives 

a certificate of exemption from the 

Exchange must report changes with 

respect to the eligibility standards for 

exemptions established in this section. 

Further, the provision in § 155.620(a) 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 7353 

also provides that if an individual 

reports to the Exchange that they no 

longer meet the standards established in 

paragraph (c)(1) of this section, such as 

if the individual chooses to terminate 

his or her membership in a religious 

sect or division, the Exchange will 

redetermine his or her eligibility, which 

will result in the Exchange 

discontinuing the individual’s 

exemption. We solicit comment on this 

approach. 

We propose to add paragraph (c)(2)(ii) 

to specify how the Exchange should 

handle a situation in which an 

individual who has a certificate of 

exemption based on religious 

conscience that was granted prior to the 

individual reaching the age of 18 turns 

18. We believe that a special process is 

necessary in this situation so that any 

future exemption is based on the 

individual’s own attestation and not an 

attestation provided by a parent or legal 

guardian. Accordingly, we propose that 

the Exchange send such an individual a 

notice when he or she reaches the age 

of 18 that informs the individual that he 

or she needs to submit a new exemption 

application if he or she would like to 

maintain the certificate of exemption. If 

the applicant submits a new application 

that reflects uninterrupted membership, 

and it is approved, the Exchange will 

provide a new certificate of exemption 

that is retroactive and leaves no gap. 

We propose to add paragraph (c)(3) to 

specify that the Exchange will grant an 

exemption in this category 

prospectively or retrospectively, 

including after the close of the calendar 

year, which provides flexibility for 

applicants and ensures that this 

exemption will be available as needed 

during the tax filing process, as it can 

only be provided by the Exchange. 

In paragraph (d), we propose that the 

Exchange will determine an applicant 

eligible for an exemption for a month if 

the applicant is a member of a health 

care sharing ministry for such month in 

accordance with 26 CFR 1.5000A–3(b) 

of the Treasury proposed rule, 

published elsewhere in this issue of the 

Federal Register. This exemption is 

discussed further in the preamble 

associated with 26 CFR 1.5000A–3(b) of 

the Treasury proposed rule, published 

elsewhere in this issue of the Federal 

Register. We note that unlike the 

exemption for religious conscience, our 

understanding is that membership in a 

health care sharing ministry can 

fluctuate over time, particularly as we 

understand that membership is 

contingent on a financial contribution. 

Consequently, we propose that an 

applicant must re-apply for this 

exemption each calendar year. Further, 

for the same reason, we note that the 

language of this proposal specifies that 

the Exchange will only determine an 

individual eligible for an exemption in 

this category if he or she is a member 

of a health care sharing ministry at the 

time the application for an exemption is 

submitted; that is, the Exchange would 

not provide this exemption based on 

likely or probable future membership, 

including likely or probable 

membership beyond the calendar year. 

Lastly, consistent with these proposals, 

we propose to add paragraph (d)(2) to 

specify that the Exchange may only 

provide an exemption in this category 

retrospectively. We note that an 

individual may also receive this 

exemption retrospectively through the 

tax filing process. Furthermore, as 

proposed below in § 155.610(h), after 

December 31 of a given calendar year, 

the Exchange will not accept an 

application for an exemption in this 

category for months for such calendar 

year. We solicit comments on this 

approach. 

In paragraph (e), we propose the 

eligibility standards for the exemption 

based on incarceration. We specify that 

the Exchange must determine an 

individual eligible for an exemption for 

a month that he or she meets the 

definition specified in 26 CFR 1.5000A– 

3(d) of the Treasury proposed rule, 

published elsewhere in this issue of the 

Federal Register, which covers anyone 

who is confined after the disposition of 

charges in a jail, prison, or similar penal 

institution or correctional facility, 

which we believe can be implemented 

identically to the standard used for 

eligibility for enrollment in a QHP. We 

note that this proposed language does 

not provide for this exemption to be 

granted in cases where future 

incarceration is in doubt; rather, we 

propose that the Exchange will only 

provide this exemption for months in 

which an individual was incarcerated. 

We also considered specifying that this 

exemption could be provided based on 

an expectation of continued 

incarceration, but ultimately decided 

not to provide an exemption in this case 

since individuals are frequently released 

from incarceration ahead of the initiallyexpected release date, at which point 

they would need to obtain minimum 

essential coverage unless they apply for 

and are determined eligible for a 

separate exemption. Further, unlike 

some other categories of exemptions, it 

seems unlikely that an applicant who is 

seeking an exemption based on 

incarceration is doing so to obtain 

guidance regarding a purchasing 

decision, which is the primary purpose 

of providing prospective exemptions. 

We solicit comments on this approach. 

We propose to add paragraph (e)(2) to 

specify that the Exchange may only 

provide an exemption in this category 

retrospectively. We note that an 

individual may also receive this 

exemption retrospectively through the 

tax filing process. Furthermore, as 

proposed below in § 155.610(h), after 

December 31 of a given calendar year, 

the Exchange will not accept an 

application for an exemption in this 

category for months for such calendar 

year. 

In paragraph (f), we propose eligibility 

standards for the exemption based on 

membership in an Indian tribe. In 

paragraph (f)(1), we propose to codify 

that the Exchange must determine an 

applicant eligible for an exemption for 

a month if he or she is a member of an 

Indian tribe for such month, in 

accordance with 26 CFR 1.5000A–3(g) 

of the Treasury proposed rule, 

published elsewhere in this issue of the 

Federal Register. We note that the 

definition of Indian used in the statute 

for this exemption is the same as is used 

for the cost-sharing and special 

enrollment provisions in subparts D and 

E, respectively. 

In paragraph (f)(2), we propose 

eligibility standards regarding the 

duration of the exemption for 

membership in an Indian tribe, such 

that the Exchange must grant the 

exemption for membership in an Indian 

tribe to an applicant who meets the 

standards of paragraph (f)(1) of this 

section for a month on a continuing 

basis, until such time that the 

individual reports that he or she no 

longer meets the standards provided in 

(f)(1) of this section. This proposal is 

based on our understanding that an 

individual’s membership in an Indian 

tribe, as defined in section 45A(c)(6) of 

the Code, will not typically change from 

year to year. As such, we seek to reduce 

the administrative burden on the 

Exchange and individuals who are 

members of Indian tribes. We note that 

the provision in § 155.620(a) also 

provides that if an individual reports to 

the Exchange that they no longer meet 

the standards established in paragraph 

(f)(1) of this section, such as if the 

individual chooses to terminate his or 

her membership in an Indian tribe, as 

defined in section 45A(c)(6) of the Code, 

the Exchange will redetermine his or 

her eligibility, which will result in the 

Exchange discontinuing the individual’s 

exemption. We solicit comment on this 

approach. 

We propose to add paragraph (f)(3) to 

specify that the Exchange will grant an 

exemption in this category during the 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

7354 Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 

year prospectively or retrospectively. 

We note that an individual may also 

receive this exemption retrospectively 

through the tax filing process. This 

permits flexibility depending on when 

an application is submitted. 

In paragraph (g), we propose 

eligibility standards for the exemption 

based on hardship, which is defined in 

section 5000A(e)(5) of the Code as 

applying to, ‘‘any applicable individual 

who for any month is determined by the 

Secretary under section 1311(d)(4)(H) of 

the Affordable Care Act to have suffered 

a hardship with respect to the capability 

to obtain coverage under a qualified 

health plan.’’ In developing some of 

these standards, we considered the 

standards established by the 

Commonwealth of Massachusetts. We 

note that we propose specific time 

standards for each category of hardship, 

and we solicit comments regarding 

whether these are appropriate, or if we 

should adopt a more uniform approach 

across the category. 

First, in paragraph (g)(1) of § 155.605, 

we propose that the Exchange provide 

an exemption for hardship for a month 

or months in which an applicant 

experienced financial or domestic 

circumstances, including unexpected 

natural or human-caused events, such 

that he or she has a significant, 

unexpected increase in essential 

expenses; the expense of purchasing 

health insurance would have caused 

him or her to experience serious 

deprivation of food, shelter, clothing or 

other necessities; or he or she has 

experienced other factors similar to 

those described in paragraphs (g)(1)(i) 

and (ii) of this section that prevented 

him or her from obtaining minimum 

essential coverage. We propose broad 

language to include a range of personal 

scenarios that could negatively impact 

an applicant such that he or she would 

be eligible for this exemption, and we 

expect to clarify these criteria in future 

guidance. This proposal provides 

necessary flexibility for the Exchange to 

tailor an exemption for hardship to 

particular circumstances that impact an 

individual, but cannot adequately be 

predicted in advance. We expect that 

these circumstances will include, but 

not be limited to, situations in which an 

applicant is homeless, receives a shutoff notice from a utility company, faces 

a natural disaster, or experiences other 

unexpected natural or human-caused 

event causing significant damage to the 

applicant or his or her home. We 

request comment on these criteria, 

including on whether additional 

standards should be established in 

regulation or guidance. We note that we 

strive to set clearly defined standards as 

much as possible without preventing an 

applicant in need from being 

determined eligible for an exemption for 

hardship. We also solicit comments 

regarding whether the proposed time 

standard can be effectively 

implemented, or whether we should 

instead specify that a hardship under 

this paragraph that occurs at any point 

during a year should result in a 

hardship exemption for that entire year, 

as well as potentially for the entire next 

year, depending on when the hardship 

occurred. 

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

propose that the Exchange provide an 

exemption for hardship for a calendar 

year if an applicant, or another 

individual for whom the applicant 

attests will be included in the 

applicant’s family (as defined in 26 CFR 

1.5000A–1(d)(6)), is unable to afford 

coverage for such calendar year in 

accordance with 26 CFR 1.5000A–3(e) 

of the Treasury proposed rule, 

published elsewhere in this issue of the 

Federal Register, calculated using 

projected annual household income. We 

propose identical standards to those 

defined for the lack of affordable 

coverage exemption in 26 CFR 1.5000A– 

3(e), except that the Exchange would 

use projected household income to 

determine whether coverage is 

affordable under this exemption, instead 

of actual household income from the tax 

return for the year for which the 

exemption is requested. We note that 

the preamble associated with 26 CFR 

1.5000A–3(e) of the Treasury proposed 

rule, published elsewhere in this issue 

of the Federal Register recognizes that 

the information necessary to determine 

the portion of the required contribution 

made through a salary reduction 

arrangement and excluded from gross 

income may not be available to the 

applicant or the IRS. Accordingly, 

Treasury has solicited comments about 

practicable ways to administer this 

requirement. We also solicit comments 

regarding whether the approach in 

paragraph (g)(5) of this section should 

also be applied to this hardship 

category. 

We propose these standards as a 

component of hardship, rather than as a 

separate category of exemption, in order 

to ensure that an applicant can 

prospectively receive this exemption 

during a calendar year, and in doing so, 

obtain the information needed to make 

a purchasing decision and also qualify 

to purchase a catastrophic plan. We also 

clarify that we propose that this 

exemption is not available for a calendar 

year for an application that is submitted 

after the last date on which an applicant 

could enroll in a QHP through the 

Exchange for the calendar year for 

which the exemption is requested. This 

is because this exemption is designed to 

ensure that an applicant can obtain the 

information needed to make a 

purchasing decision, including for a 

catastrophic plan, which is not 

applicable after the last date on which 

enrollment would be possible. After this 

point, an individual will be able to seek 

an exemption on his or her tax return 

for the year. 

We specify in paragraph (g)(3) of 

§ 155.605 that the Exchange provide an 

exemption for hardship for a calendar 

year if an individual taxpayer who was 

not required to file an income tax return 

for such calendar year because his or 

her gross income was below the filing 

threshold, but who nevertheless filed to 

receive a tax benefit, claimed a 

dependent who was required to file a 

tax return, and the combined household 

income exceeded the applicable return 

filing threshold outlined in 26 CFR 

1.5000A–3(f)(2) of the Treasury 

proposed rule, published elsewhere in 

this issue of the Federal Register. 

We propose to add paragraph (g)(4) to 

specify that the Exchange provide an 

exemption for hardship for a calendar 

year for an individual who has been 

determined ineligible for Medicaid for 

one or more months during the benefit 

year solely as a result of a State not 

implementing section 2001(a) of the 

Affordable Care Act. We provide an 

exemption for hardship in this 

circumstance to address situations in 

which a state’s decision regarding the 

Medicaid expansion included in the 

Affordable Care Act results in an 

individual being ineligible for Medicaid. 

We believe that this determination is an 

appropriate use of the hardship 

exemption given that the Affordable 

Care Act anticipates that Medicaid will 

be available to such individuals. With 

this situation noted, we believe that 

many such individuals could also 

receive exemptions based on the 

standards specified in paragraph (g)(2) 

of this section (the inability to afford 

coverage), or section 5000A(e)(2) of the 

Code (income below filing threshold), 

and so propose this paragraph to ensure 

that any such individuals remaining are 

not liable for a shared responsibility 

payment regardless of a state’s decision 

with respect to the Medicaid expansion 

under the Affordable Care Act. We seek 

comment on whether this exemption 

should be limited to such individuals 

who are also not eligible for advance 

payments of the premium tax credit 

(that is, with projected annual 

household income below the poverty 

threshold). 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 7355 

We propose to add paragraph (g)(5) of 

§ 155.605 to specify that the Exchange 

provide an exemption for hardship for 

a calendar year if an applicant and one 

or more employed members of his or her 

family, as defined in 26 CFR 1.5000A– 

1(d)(6) of the Treasury proposed rule, 

published elsewhere in this issue of the 

Federal Register, are each determined 

eligible for self-only coverage in 

separate eligible employer-sponsored 

plans that are affordable, pursuant to 26 

CFR 1.5000A–3(e) for one or more 

months during the calendar year, but for 

whom the aggregate cost of employersponsored coverage for all the employed 

members of the family exceeds 8 

percent of the household income for 

that month or those months, in 

accordance with 26 CFR 1.5000A–3(e). 

This proposal aligns with 26 CFR 

1.5000A–3(e)(3)(i) and (ii), which 

specify that for an employed individual, 

the affordability of coverage under an 

eligible employer-sponsored plan 

offered through such individual’s 

employer is determined based on the 

cost of self-only coverage, regardless of 

whether the employed individual is 

eligible for family coverage under 

another eligible employer-sponsored 

plan because of the individual’s 

relationship to another employed 

individual in the family. Thus, this 

hardship category is designed to provide 

relief for employed members of a family 

who have affordable self-only coverage 

options available and as a result do not 

qualify for the lack of affordable 

coverage exemption under 26 CFR 

1.5000A–3(e) even though the family’s 

aggregate cost of covering all of the 

employed members may exceed 8 

percent of household income. We note 

that this category only covers those 

individuals who are actually offered 

self-only coverage in an eligible 

employer-sponsored plan, as the lack of 

affordable coverage exemption in 

paragraph 26 CFR 1.5000A–3(e) already 

provides an exemption based on 

affordability computed using the cost of 

family coverage for children and others 

who are not offered self-only coverage 

in an eligible employer-sponsored plan. 

Lastly, as noted above, section 5000A 

of the Code provides for four additional 

categories of exemptions that we 

propose, under our authority in section 

1411(d)(4) of the Affordable Care Act to 

determine whether certificates of 

exemptions are issued by Exchanges 

under section 1311(d)(4)(H) of the 

Affordable Care Act, to make available 

solely through the tax filing process and 

not to be subject to certification by 

Exchanges. Specifically, we propose 

that the Exchange would not issue 

certifications of exemption with respect 

to household income below the filing 

threshold (other than the limited 

hardship exemption proposed in 

§ 155.605(g)(3) and described above); 

not being lawfully present; short 

coverage gaps; and inability to afford 

coverage (other than the limited 

hardship exemption proposed in 

§ 155.605(g)(2) and described above). 

The exemptions for inability to afford 

coverage under section 5000A(e)(1) of 

the Code and income below the filing 

threshold under section 5000A(e)(2) of 

the Code necessitate an assessment of 

actual household income, which will be 

unavailable until after the close of the 

tax year and which would be provided 

to the individual through the tax filing 

process, making a process of seeking a 

duplicative certification from an 

Exchange an unnecessary administrative 

burden. Under the authority in section 

5000A(e)(1)(A) and (e)(2) of the Code to 

determine the year for which income 

will be evaluated for purposes of these 

exemptions, the Secretary (in 

consultation with the Secretary of 

Treasury) has determined that the 

relevant year is the taxable year that 

includes a month for which an 

individual seeks one of these 

exemptions. Verification of an 

individual’s household income once the 

year is over is a matter of tax 

administration and tax compliance. 

Accordingly, we are proposing under 

our authority in section 1411(d)(4) that 

certifications by Exchanges not be 

issued with respect to these two 

exemptions (other than the hardship 

exemption proposed in § 155.605(g)(2) 

and § 155.605(g)(3)). 

With respect to the exemption based 

on an individual not being lawfully 

present under section 5000A(d)(3) of the 

Code, we do not believe it is appropriate 

to provide for a process under which an 

individual would be required to present 

himself or herself to an Exchange as not 

lawfully present. Consequently, we are 

proposing that this exemption also be 

implemented exclusively through the 

tax filing process. 

Lastly, with respect to the exemption 

for short coverage gaps under section 

5000A(e)(4) of the Code, as short 

coverage gaps can only be confirmed 

after the year has concluded, and as IRS 

will have authoritative information 

about whether an individual has 

coverage based on information reported 

by health insurance issuers under 

section 6055 of the Code, we propose 

that this exemption also be 

implemented exclusively through the 

tax filing process, as proposed at 26 CFR 

1.5000A–5 of the Treasury proposed 

rule, published elsewhere in this issue 

of the Federal Register, in order to 

reduce administrative burden on 

individuals and the Exchange. We 

solicit comment on this approach and if 

there are alternative approaches that 

HHS should consider. 

c. Eligibility Process for Exemptions 

(§ 155.610) 

In § 155.610, we propose the process 

by which the Exchange will determine 

an applicant’s eligibility for exemptions. 

In paragraph (a), we propose to 

specify that the Exchange will use an 

application established by HHS in order 

to collect the information necessary to 

determine eligibility and grant a 

certificate of exemption for an 

applicant, unless the Exchange receives 

approval to use an alternative 

application in accordance with 

paragraph (b). We also clarify that in 

cases in which relevant information has 

already been collected through the 

eligibility process for enrollment in a 

QHP and for insurance affordability 

programs, the Exchange will use this 

information for the purpose of eligibility 

for an exemption to the maximum 

extent possible. This proposal promotes 

an efficient process that minimizes the 

burden on the applicant, and is parallel 

to the approach used for eligibility for 

enrollment in a QHP and for insurance 

affordability programs, as specified in 

45 CFR 155.405. We intend to provide 

the HHS-developed application in the 

near future, and expect it will share data 

elements with the application defined 

in 45 CFR 155.405 for information that 

is common to the two applications. 

In paragraph (b) of § 155.610, we 

propose that the Exchange may seek 

approval from HHS for an alternative 

application. We further specify that 

such alternative application must only 

request the minimum information 

necessary for the purposes identified in 

paragraph (a) of this section. Our intent 

is to simplify the application process by 

reducing the collection of unnecessary 

information. As such, we seek to 

preserve flexibility for Exchanges to 

utilize an alternative application if it 

efficiently assists individuals in 

applying for exemptions while also 

minimizing potential administrative 

burdens. 

We also note that there are 

exemptions that share common data and 

verifications with the eligibility process 

for enrollment in a QHP and for 

insurance affordability programs. There 

are also situations in which an 

individual may submit the application 

described in 45 CFR 155.405, and 

ultimately need an exemption, 

including when he or she is determined 

ineligible for enrollment in a QHP based 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

7356 Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 

on being incarcerated (other than 

incarceration pending the disposition of 

charges); when available coverage is 

unaffordable in accordance with 

proposed § 155.605(g)(2); and when he 

or she is ineligible for Medicaid based 

solely on a state’s decision with respect 

to the Medicaid expansion under the 

Affordable Care Act. As such, in 

paragraph (c) of § 155.610, we propose 

that if an individual submits the 

application in 45 CFR 155.405 and then 

requests an exemption, the Exchange 

must use the information collected on 

the application for coverage and not 

duplicate any verification processes that 

share the standards specified in this 

subpart. We solicit comments on how 

best to coordinate these processes to 

ensure maximum administrative 

simplicity for all involved parties. 

In paragraph (d) of § 155.610, we 

propose the Exchange must accept the 

application for an exemption from an 

application filer, and provide tools for 

the submission of an application. 

Section 1413(b)(1)(A)(ii) of the 

Affordable Care Act, 45 CFR 155.405(a) 

specifies that the single, streamlined 

application for enrollment in a QHP 

through the Exchange and insurance 

affordability programs via an Internet 

Web site, by telephone, by mail, and in 

person. However, the Affordable Care 

Act does not contain similarly specific 

language for the application for an 

exemption; consequently, we have 

opted to not specify particular channels 

here. With that said, we believe that this 

language would allow the Exchange to 

deploy any or all of the methods 

described in 45 CFR 155.405. We solicit 

comments regarding whether we should 

specify some or all of the channels 

specified in 45 CFR 155.405. 

In paragraph (e) of § 155.610, we 

propose that the Exchange will specify 

that an applicant who has a social 

security number (SSN) will provide 

such number to the Exchange. This 

provision is particularly important in 

the exemption process because the 

Secretary of the Treasury uses the SSN 

to coordinate information in the tax 

filing process. Further, the SSN 

provides the Exchange with additional 

abilities to ensure program integrity. 

However, we clarify in paragraphs (e)(2) 

and (e)(3) that the Exchange may not 

require an individual who is not seeking 

an exemption for him or herself to 

provide a SSN, except that the Exchange 

will require an application filer to 

provide the SSN for a non-applicant tax 

filer only if the applicant attests that the 

tax filer has a SSN and filed a tax return 

for the year for which tax data would be 

utilized to verify household income and 

family size for a hardship exemption as 

discussed in § 155.605(g) that involves 

such verification. This proposal follows 

the approach used for eligibility for 

insurance affordability programs, as 

specified in 45 CFR 155.305(e)(6), and 

ensures that information collected by 

the Exchange is only that information 

which is necessary to support the 

eligibility process. We solicit comments 

on the applicability of this provision in 

the context of the exemption eligibility 

process. 

In paragraph (f) of § 155.610, we 

propose that the Exchange will grant a 

certificate of exemption to any applicant 

determined eligible in accordance with 

the standards for exemptions provided 

in § 155.605. As specified in section 

1311(d)(4)(H) of the Affordable Care 

Act, the responsibility of the Exchange 

is to ‘‘grant a certification’’, which is 

what will be provided to the IRS to 

support the tax filing process. 

Depending on the exemption for which 

an applicant receives a certificate, the 

certificate may cover a month, multiple 

months, a calendar year, or multiple 

calendar years, and may represent 

multiple exemption categories, to the 

extent that an individual receives 

multiple exemptions for a single tax 

year. 

In paragraph (g)(1) of § 155.610, we 

propose that the Exchange will 

determine eligibility for exemptions 

promptly and without undue delay. 

This proposal uses the same timing 

threshold used throughout subpart D, 

including in 45 CFR 155.310(e)(1), with 

respect to eligibility determinations for 

enrollment in a QHP and for insurance 

affordability programs. We note in 

paragraph (g)(2) in § 155.610 that the 

assessment of timeliness of eligibility 

determinations by the Exchange is based 

on the period from the date of the 

application until the date on which the 

Exchange notifies the applicant of its 

decision. We expect that the Exchange 

will monitor the timeliness of eligibility 

determinations and strive to improve 

performance over time. We solicit 

comments regarding specific 

performance standards for the eligibility 

process described in this subpart, and 

whether we should define an outer 

bound in which an eligibility 

determination will be made (e.g., 45 

days). 

In paragraph (h), we propose to clarify 

that except for the exemption for 

religious conscience under § 155.605(c) 

and for hardship described in 

§ 155.605(g), after December 31 of a 

given calendar year, the Exchange will 

not accept an application for an 

exemption for months for such calendar 

year. As described above, the other 

seven categories of exemptions will be 

available through the tax filing process, 

which we believe is a more appropriate 

and efficient avenue through which to 

receive exemptions after the coverage 

year is over. With the exception of the 

two exemptions that can only be granted 

by the Exchange, we consider the 

availability of exemptions from the 

Exchange necessary only until an 

individual can file an income tax return 

claiming an exemption for a given 

coverage year. We solicit comments 

regarding this approach, and whether 

there should be additional categories of 

exemptions for which the Exchange will 

grant exemptions after the close of a 

calendar year. 

In paragraph (i) of § 155.610, we 

propose that the Exchange will provide 

timely written notice to an applicant of 

any eligibility determination for an 

exemption made in accordance with 

this subpart. We note that as proposed 

in § 155.600(e), written notice can be 

provided through electronic means, 

consistent with § 155.230(d). We further 

note that, for purposes of tax 

administration, if the Exchange 

determines an applicant eligible for a 

certificate of exemption, the notification 

provided will include an exemption 

certificate number, which we will 

further define in systems guidance. An 

individual will use this certificate 

number as part of the tax filing process. 

In paragraph (j) of § 155.610, we 

propose that an individual who has 

been certified by an Exchange as 

qualifying for an exemption will retain 

the records that demonstrate not only 

receipt of the certificate of exemption 

but also qualification for the underlying 

exemption. For tax purposes, the Code 

provides that every taxpayer must keep 

records sufficient to establish all 

information required to be shown on 

any return the taxpayer must file. These 

records include any records and 

information substantiating any claim for 

exemption on the taxpayer’s federal 

income tax return. We note that to the 

extent that the Exchange provides a 

certificate of exemption for which the 

underlying verification is based in part 

on the special circumstances exception 

proposed in § 155.615(h), an individual 

will retain records that demonstrate 

receipt of the certificate of exemption, 

as well as the circumstances that 

warranted the use of the special 

circumstances exception. 

d. Verification Process Related to 

Eligibility for Exemptions (§ 155.615) 

Section 1411(b)(5) of the Affordable 

Care Act provides that an applicant who 

is seeking an exemption will provide 

information as a part of the eligibility 

process, and section 1411(c)(1) of the 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 7357 

Affordable Care Act specifies that the 

Exchange will verify this information. 

Section 1411(d) of the Affordable Care 

Act provides flexibility to the Secretary 

to define verification processes for those 

data elements for which a process is not 

otherwise defined in section 1411 of the 

Affordable Care Act. In this section, we 

propose language regarding the 

verification process related to eligibility 

for exemptions. Similar to the 

verification process outlined in 

§ 155.315 governing the verification 

process related to eligibility for 

enrollment in a qualified health plan 

through the Exchange, the Exchange 

will undertake a series of steps designed 

to assemble the information needed to 

determine an applicant’s eligibility for 

the exemption for which he or she 

applied. These processes are designed 

not only to minimize the burden on 

applicants, but also to serve a valuable 

program integrity function in order to 

assure that applicants are only deemed 

eligible for exemptions if they meet the 

standards specified in § 155.605. 

First, in paragraph (a) of § 155.615, we 

propose that unless HHS grants a 

request for modification under 

paragraph (i) of this section, the 

Exchange will verify or obtain 

information as provided in this section 

in order to determine that the applicant 

is eligible for an exemption. 

In paragraph (b), we propose the 

verification process concerning the 

exemption for religious conscience. We 

specify that for any applicant requesting 

this exemption, the Exchange will verify 

that he or she meets the standards as 

outlined in § 155.605(c). First, in 

paragraph (b)(1) of § 155.615, we 

propose that except as specified in 

paragraph (b)(2) of this section, the 

Exchange will accept a form that reflects 

that an applicant has been approved 

under section 1402(g)(1) of the Code by 

the Internal Revenue Service (IRS). This 

is to accommodate those situations in 

which an applicant has already received 

approval from IRS for an exemption 

from Social Security and Medicare 

taxes, which use an identical standard 

to that used for the purposes of the 

religious conscience exemption. 

Second, in paragraph (b)(2), we propose 

that except as specified in paragraphs 

(b)(3) and (4) of this section, the 

Exchange will accept an applicant’s 

attestation that he or she is a member of 

a recognized religious sect or division 

described in section 1402(g)(1) of the 

Code, and an adherent of established 

tenets or teachings of such sect or 

division. Next, the Exchange will verify 

that the religious sect or division to 

which the applicant attests membership 

is recognized by the Social Security 

Administration (SSA) as a religious sect 

or division under section 1402(g)(1) of 

the Code. We expect that this 

verification will involve comparing the 

religious sect or division to which an 

applicant attests membership to a list 

maintained by SSA that is available for 

this purpose. 

Third, in paragraph (b)(3) of 

§ 155.615, we propose that if the 

information provided by an applicant 

regarding his or her membership in a 

recognized religious sect or division is 

not reasonably compatible with other 

information provided by the individual 

or the records of the Exchange, the 

Exchange will follow the procedures 

specified in paragraph (g) of this section 

concerning situations in which the 

Exchange is unable to verify 

information. These procedures are used 

throughout this section and described in 

the preamble associated with paragraph 

(g) of this section. 

Fourth, in paragraph (b)(4), we 

propose that if an applicant attests to 

membership in a religious sect or 

division that is not recognized by SSA 

as a religious sect or division under 

section 1402(g)(1) of the Code, the 

Exchange will determine an applicant 

ineligible for this exemption. Because 

SSA has an established process for 

religious sects and divisions to follow in 

order to become recognized, sects or 

divisions that are not currently 

recognized but are interested in 

pursuing such status will follow the 

existing SSA process. With that said, we 

note that our understanding is that there 

are few, if any, religious sects or 

divisions that could be approved under 

section 1402(g)(1) of the Code that have 

yet to be approved, as this provision of 

the Code requires that a sect or division 

to have been in existence at all times 

since December 31, 1950. 

In paragraph (c) of § 155.615, we 

propose the verification process 

concerning the exemption for 

membership in a health care sharing 

ministry. We specify that for any 

applicant requesting this exemption, the 

Exchange will verify whether he or she 

meets the standards in § 155.605(d). 

First, in paragraph (c)(1) of § 155.615, 

we propose that except as specified in 

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

the Exchange will first accept an 

attestation from an applicant that he or 

she is a member of a health care sharing 

ministry. Next, the Exchange will verify 

that the health care sharing ministry to 

which the applicant attests membership 

is known to the Exchange as a health 

care sharing ministry. We expect that 

this verification will involve comparing 

the health care sharing ministry to 

which an applicant attests membership 

with a list of health care sharing 

ministries that will be developed by 

HHS based on outreach to heath care 

sharing ministries, which HHS will then 

make available to Exchanges. 

In paragraph (c)(2), we propose that if 

the information provided by an 

applicant regarding his or her 

membership in a health care sharing 

ministry is not reasonably compatible 

with other information provided by the 

individual or the records of the 

Exchange, the Exchange will follow the 

procedures specified in paragraph (g) of 

this section concerning situations in 

which the Exchange is unable to verify 

information. These procedures are used 

throughout this section and described in 

the preamble associated with paragraph 

(g) of this section. 

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

an applicant attests to membership in a 

health care sharing ministry that is 

unknown to the Exchange as a health 

care sharing ministry according to the 

standards in § 155.605(d), the Exchange 

will then notify HHS and not determine 

an applicant eligible or ineligible for 

this exemption until HHS informs the 

Exchange regarding the attested health 

care sharing ministry’s status with 

respect to the standards specified in 26 

CFR 1.5000A–3(b) of the Treasury 

proposed rule, published elsewhere in 

this issue of the Federal Register. This 

process allows an applicant who is a 

member of a health care sharing 

ministry that meets the standards 

specified in § 155.605(d), but is 

previously unknown to the Exchange, to 

have the opportunity to receive this 

exemption. We have conducted 

preliminary outreach regarding health 

care sharing ministries that meet the 

requirements specified in the statute, 

and note that this provision of the Code 

normally requires a health care sharing 

ministry to have been in existence at all 

times since December 31, 1999, 

although a new organization can meet 

the criteria based on the history of its 

predecessor, and some existing health 

care sharing ministries may not 

currently meet all the statutory 

requirements, but can later perfect their 

status by, for example, obtaining 

501(c)(3) status. 

In paragraph (d), we propose the 

verification process concerning the 

exemption for incarceration. We specify 

that for any applicant requesting this 

exemption, the Exchange will verify, 

through the process described in 45 CFR 

155.315(e), that he or she was 

incarcerated, which means that there is 

no additional burden associated with 

developing a process to support this 

verification for purposes of the 

incarceration exemption. 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

7358 Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 

As with other verifications, we also 

specify in paragraph (d)(2) of § 155.615 

that if the Exchange is unable to verify 

an applicant’s incarceration status 

through the verification process 

outlined, the Exchange will follow the 

procedures in paragraph (g) of this 

section concerning situations in which 

the Exchange is unable to verify 

information. 

In paragraph (e), we propose the 

verification process concerning the 

exemption for members of Indian tribes. 

We specify in paragraph (e)(1) that for 

any applicant requesting this 

exemption, the Exchange will verify his 

or her membership in an Indian tribe 

through the process outlined in 45 CFR 

155.350(c), which means that there is no 

additional burden associated with 

developing a process to support this 

verification for purposes of this 

exemption. In paragraph (e)(2) of 

§ 155.615, we also propose that the 

Exchange follow the procedures 

specified in paragraph (g) of this section 

if it is unable to verify an applicant’s 

tribal membership. 

In paragraph (f), we propose the 

verification process concerning 

exemptions for hardship. In paragraph 

(f)(2), we propose that for an applicant 

applying for a hardship exemption 

prospectively based on an inability to 

afford coverage, as described in 

§ 155.605(g)(2), the Exchange use 

procedures established under subpart D 

of this part to verify the availability of 

affordable coverage through the 

Exchange based on projected income, 

and the procedures described in 

§ 155.320(e) to verify eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan. As noted in 

the preamble to § 155.605(g)(2), we 

propose that this exemption is not 

available for a calendar year for an 

application that is submitted after the 

last date on which an applicant could 

enroll in a QHP through the Exchange 

for the calendar year for which the 

exemption is requested. We anticipate 

providing additional guidance regarding 

procedures for the Exchange to verify 

whether an applicant has experienced 

other categories of hardship; we expect 

that these will likely include some 

amount of paper documentation, but 

solicit comments regarding appropriate 

verification procedures that will ensure 

a high degree of program integrity while 

minimizing administrative burden. 

Paragraph (g) provides procedures for 

the Exchange to follow in the event the 

Exchange is unable to verify information 

necessary to make an eligibility 

determination for an exemption, 

including situations in which an 

applicant’s attestation is not reasonably 

compatible with information in 

electronic data sources or other 

information in the records of the 

Exchange, or when electronic data is 

required but unavailable. These 

procedures mirror those provided in 

§ 155.315(f), with modifications to 

preclude eligibility pending the 

outcome of the verification process, 

made in accordance with the Secretary’s 

authority under section 1411 of the 

Affordable Care Act. These 

modifications are based on the fact that 

individuals need to account for 

exemptions when they file income tax 

returns after the coverage year is over, 

which means that delaying the granting 

of a certificate until information can be 

verified does not create significant 

issues for an applicant. We also note 

that given that the process in this 

paragraph may be applied to more than 

one piece of information and applicants 

can apply for more than one exemption 

at a time, it is possible for the process 

in paragraph (g) to run simultaneously 

for multiple pieces of information that 

are relevant to eligibility for a single 

exemption, or across multiple 

exemptions. 

First, under paragraph (g)(1) of 

§ 155.615, the Exchange will make a 

reasonable effort to identify and address 

the causes of the issue, including 

through typographical or other clerical 

errors, by contacting the application 

filer to confirm the accuracy of the 

information submitted by the 

application filer. We anticipate that 

when an applicant applies via an 

internet Web site or the telephone, this 

process will occur during the 

application session. Second, in 

paragraph (g)(2)(i), we propose that if 

the Exchange is unable to resolve the 

issue, the Exchange will notify the 

applicant of the issue. After providing 

this notice, in paragraph (g)(2)(ii), the 

Exchange will provide 30 days from the 

date on which the notice is sent for the 

applicant to present satisfactory 

documentary evidence via the channels 

available for the submission of an 

application, except by telephone, or 

otherwise resolve the issues. We note 

that, following the same approach in the 

Exchange final rule, all listed timelines 

refer to calendar days. In paragraph 

(g)(3), we propose that the Exchange 

may extend the period for an applicant 

to resolve the issue if the applicant can 

provide evidence that a good faith effort 

has been made to obtain the necessary 

documentation. And in paragraph (g)(4), 

we propose that the Exchange will not 

grant a certificate of exemption during 

this period based on the information 

that is the subject of the request under 

this paragraph. This is distinct from the 

approach taken for the eligibility 

process for enrollment in a QHP and for 

advance payments of the premium tax 

credit and cost-sharing reductions, 

since, while there is a strong benefit 

associated with providing access to 

health insurance pending the outcome 

of a verification process, there is no 

apparent health benefit to an applicant 

in receiving an exemption pending the 

outcome of such a process. 

In paragraph (g)(5), we propose that, 

if after the conclusion of the period 

described in paragraph (g)(2)(ii) of this 

section, the Exchange is unable to verify 

the applicant’s attestation, the Exchange 

will determine the applicant’s eligibility 

based on the information available from 

the data sources specified in this 

subpart, as applicable, unless such 

applicant qualifies for the exception 

provided under paragraph (h), and 

notify the applicant in accordance with 

the procedures described under 

§ 155.610(i), including the inability to 

verify the applicant’s attestation. 

In paragraph (h) of § 155.615, we 

propose a provision under which the 

Exchange would provide a case-by-case 

exception for applicants for whom 

documentation does not exist or is not 

reasonably available. We proposed this 

language to account for situations in 

which documentation cannot be 

obtained. This standard is consistent 

with the standard in subpart D at 45 

CFR 155.315(g); examples of individuals 

for whom this provision may apply 

include homeless individuals, and 

victims of domestic violence or natural 

disasters. 

Section 1411(c)(4)(B) of the 

Affordable Care Act provides that the 

Secretary may modify the methods used 

under the Secretary’s program under 

section 1411 for the verification of 

information. In paragraph (i) of 

§ 155.615, we propose to codify this 

flexibility, as we did in 45 CFR 

155.315(h). Specifically, we propose 

that HHS may approve an Exchange 

Blueprint or a significant change to an 

Exchange Blueprint to modify the 

methods for the collection and 

verification of information as described 

in this subpart, as well as the specific 

information to be collected, based on a 

finding by HHS that the requested 

modification would reduce the 

administrative costs and burdens on 

individuals while maintaining accuracy 

and minimizing delay, and that any 

applicable requirements under 45 CFR 

155.260, 45 CFR 155.270, paragraph (j) 

of this section, and section 6103 of the 

Code with respect to the confidentiality, 

disclosure, maintenance, or use of 

information will be met. We also note 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 7359 

1State Exchange Implementation Questions and 

Answers, published November 29, 2011: http:// 

cciio.cms.gov/resources/files/Files2/11282011/

exchange_q_and_a.pdf.pdf. 

2Frequently Asked Questions on Exchanges, 

Market Reforms, and Medicaid, published 

December 10, 2012: http://cciio.cms.gov/resources/ 

files/exchanges-faqs-12-10-2012.pdf. 

that all information exchanges specified 

in this section will comply with 45 CFR 

155.260 and 155.270. 

In paragraph (j) of § 155.615, we 

propose that the Exchange will not 

require an applicant to provide 

information beyond what is necessary to 

support the process of the Exchange for 

eligibility determinations for 

exemptions, including the process for 

resolving inconsistencies described in 

§ 155.615(g). 

e. Eligibility Redeterminations for 

Exemptions During a Calendar Year 

(§ 155.620) 

Section 1411(f)(1) of the Affordable 

Care Act provides that the Secretary 

shall establish procedures for periodic 

redeterminations of eligibility. In 

§ 155.620, we propose to codify this by 

providing that the Exchange will 

redetermine an individual’s eligibility 

for an exemption if the Exchange 

receives and verifies new information as 

reported by an individual. Similar to the 

standards in 45 CFR 155.330, in 

paragraph (b) of § 155.620, we propose 

that the Exchange will require an 

individual with a certificate of 

exemption to report any changes related 

to the eligibility standards described in 

§ 155.605. 

In 45 CFR 155.330(b)(3), which relates 

to the redetermination process for 

eligibility for enrollment in a QHP and 

for insurance affordability programs, we 

provide that the Exchange may establish 

a reasonable threshold for changes in 

income, such that an individual who 

experiences a change in income that is 

below the threshold is not required to 

report such change. We also note, 

however, that the Exchange will always 

allow an individual to report a change 

of any size. The intent of this provision 

was to limit the burden associated with 

reporting very small changes in income, 

with the understanding that the 

reconciliation process for advance 

payments of the premium tax credit 

would ultimately resolve these 

differences. We considered proposing 

similar flexibility for the purpose of 

eligibility for exemptions, but chose not 

to due to the absence of a reconciliation 

process. We solicit comment as to 

whether we should establish such 

flexibility in this section. 

Also, in paragraph (b)(2) of § 155.620, 

we propose that the Exchange would 

allow an individual to report changes by 

the channels acceptable for the 

submission of an exemption 

application. 

In paragraph (c), we propose that the 

Exchange use the verification processes 

used at the point of initial application, 

as described in § 155.615, in order to 

verify any changes reported by an 

individual prior to using the selfreported information in an eligibility 

determination for an exemption. In 

paragraph (c)(2), we propose that the 

Exchange notify an individual in 

accordance with § 155.610(i) after redetermining his or her eligibility based 

on a reported change. Lastly, in 

paragraph (c)(3), similar to standards 

established in 45 CFR 155.330(c), we 

propose that the Exchange will provide 

periodic electronic notifications 

regarding the requirements for reporting 

changes and an individual’s opportunity 

to report any changes, to an individual 

who has a certificate of exemption and 

who has elected to receive electronic 

notifications, unless he or she has 

declined to receive such notifications. 

We also note that unlike 45 CFR 

155.330, we do not propose that the 

Exchange conduct periodic data 

matching regarding an individual’s 

eligibility for an exemption. The data 

matches that are established in 45 CFR 

155.330(d), which were established 

based on a combination of relevance to 

eligibility for insurance affordability 

programs and the availability of 

electronic data sources, relate to data 

that is not significant in determining 

eligibility for exemptions: Death, and 

whether an individual has been 

determined eligible for Medicare, 

Medicaid, CHIP, or the Basic Health 

Program (BHP), where applicable. 

Further, with the exception of income, 

we are unaware of electronic data 

sources with which it would be useful 

to conduct data matching for purposes 

of eligibility for exemptions, 

particularly given the fact that generally, 

exemptions that are provided by the 

Exchange will be provided for prior 

months based on actual information. 

And while income data are available, 

we do not believe that the 

administrative complexity associated 

with implementing these matches, 

which are not required under 45 CFR 

155.330, produces sufficient benefit. We 

solicit comments as to whether we 

should establish similar data matching 

provisions, and if so, whether we 

should specify that the Exchange should 

handle changes identified through the 

matching process in a similar manner as 

to that specified in 45 CFR 155.330, or 

take a different approach. 

Lastly, also unlike the eligibility 

process for enrollment in a QHP and for 

insurance affordability programs, we do 

not propose an annual Exchange 

redetermination process for exemptions. 

We believe that an individual’s 

exemption status may change 

significantly from year to year, and have 

proposed in § 155.605 that certain 

exemptions for which information is 

unlikely to change (i.e., the exemptions 

for members of an Indian tribe, and for 

members of recognized religious sects) 

remain in effect unless an individual 

reports that his or her status has 

changed. For all other exemptions, we 

propose that an individual who has a 

certificate of exemption will submit an 

application for any subsequent calendar 

year for which he or she requests the 

same exemption. We do anticipate, 

however, that the Exchange can 

expedite and streamline this process 

significantly through the use of online 

accounts and other administrative tools, 

and welcome comment regarding how 

this can occur, including whether it 

should be reflected explicitly in 

regulation. 

f. Options for Conducting Eligibility 

Determinations for Exemptions 

(§ 155.625) 

As previously noted, section 1411 of 

the Affordable Care Act provides that 

the Secretary will establish a program 

for eligibility determinations for 

exemptions. As described above, in 

general, we propose that the Exchange 

conduct the eligibility process for 

exemptions. However, as noted in the 

State Exchange Implementation 

Questions and Answers released by 

HHS on November 29, 2011 1 and the 

Frequently Asked Questions on 

Exchanges, Market Reforms, and 

Medicaid released by HHS on December 

10, 2012,2 based on significant 

comments and feedback from states, a 

state-based Exchange can be approved if 

it uses a federally-managed service to 

make eligibility determinations for 

exemptions. As such, in § 155.625, we 

propose this option, and we solicit 

comment regarding the specific 

configuration of a service that would be 

useful for states and also feasible within 

the time remaining for implementation. 

First, in § 155.625(a), we propose that 

the Exchange may satisfy the 

requirements of this subpart by either 

executing all eligibility functions, 

directly or through contracting 

arrangements described in 45 CFR 

155.110(a), or through the use of a 

federally-managed service, which is 

described in paragraph (b) of § 155.625. 

Second, in § 155.625(b), we specify 

that the Exchange may implement an 

eligibility determination for an 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

7360 Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 

exemption made by HHS, provided that 

the Exchange accepts the application, as 

specified in § 155.610(d), and issues the 

eligibility notice, as specified in 

§ 155.610(i), and that verifications and 

other activities required in connection 

with eligibility determinations for 

exemptions are performed by the 

Exchange in accordance with the 

standards identified in this subpart or 

by HHS in accordance with the 

agreement described in paragraph (b)(4) 

of § 155.625. We also propose that under 

this option, the Exchange will transmit 

all applicant information and other 

information obtained by the Exchange to 

HHS, and adhere to HHS’s 

determination. Lastly, in paragraph 

(b)(4), we propose that the Exchange 

and HHS enter into an agreement 

specifying their respective 

responsibilities in connection with 

eligibility determinations for 

exemptions. 

We considered establishing a process 

under which HHS would accept the 

application for an exemption certificate 

and provide the notice under 

§ 155.610(i), but did not propose this for 

two reasons. First, we believe that it is 

more straightforward, and also not 

administratively burdensome, for the 

Exchange to provide and accept the 

application, since the exemption 

application process shares similar 

features with the coverage application 

process, and the Exchange will be 

identified to applicants through 

outreach campaigns and other means as 

a primary contact point for many 

activities regarding the Affordable Care 

Act in a particular state. Further, it 

facilitates the provision of exemptions 

that originate through applications for 

eligibility for enrollment in a QHP and 

for insurance affordability programs, 

which will be accepted by the 

Exchange. Second, we propose that the 

Exchange issue the notice, and the 

certificate, as section 1311(d)(4)(H) of 

the Affordable Care Act specifies that 

the Exchange must, ‘‘* * * grant a 

certification attesting that * * * an 

individual is exempt * * *’’ 

Consequently, we see issuing the notice 

and any certificate as a necessary 

activity of the Exchange. We also 

believe that this does not present a 

significant administrative burden to the 

Exchange, since the contents of the 

notice can be standardized and 

provided by HHS. We solicit comments 

regarding maintaining these 

responsibilities at the Exchange, 

whether there are other responsibilities 

that should be specifically attributed to 

the Exchange or to HHS, and how this 

service can be implemented most 

efficiently, including with a focus on 

the first year of operations. 

In § 155.625(c), we outline the 

standards to which the Exchange will 

adhere when eligibility determinations 

are made in accordance with paragraph 

(b). Such standards include that the 

arrangement does not increase 

administrative costs and burdens on 

individuals, or increase delay, and that 

applicable requirements under 45 CFR 

155.260, 155.270, and 155.315(i), and 

section 6103 of the Code are met with 

respect to the confidentiality, 

disclosure, maintenance or use of 

information. These are the same 

standards that are used in 45 CFR 

155.302(d) regarding advance payments 

of the premium tax credit and costsharing reductions. 

g. Reporting (§ 155.630) 

In § 155.630, we propose to codify the 

provisions specified in section 

1311(d)(4)(I)(i) of the Affordable Care 

Act regarding reporting by the Exchange 

to IRS regarding eligibility 

determinations for exemptions. If the 

Exchange grants an individual a 

certificate of exemption in accordance 

with § 155.610(i), we propose that the 

Exchange will transmit to IRS the 

individual’s name and SSN, exemption 

certificate number, and any additional 

information specified in additional 

guidance published by IRS in 

accordance with 26 CFR 601.601(d)(2). 

We solicit comment as to how this 

interaction can work as smoothly as 

possible. 

h. Right to Appeal (§ 155.635) 

In § 155.635, we propose that the 

Exchange will include notice of the 

right to appeal and instructions for how 

to appeal in any notification issued in 

accordance with § 155.610(i) and 

§ 155.625(b)(1). We propose that an 

individual may appeal any eligibility 

determination or redetermination made 

by the Exchange in relation to an 

exemption. Additional detail about the 

appeal process is described in subpart F 

of the proposed rule titled, ‘‘Medicaid, 

Children’s Health Insurance Programs, 

and Exchanges: Essential Health 

Benefits in Alternative Benefit Plans, 

Eligibility Notices, Fair Hearing and 

Appeal Processes for Medicaid and 

Exchange Eligibility Appeals and Other 

Provisions Related to Eligibility and 

Enrollment for Exchanges, Medicaid 

and CHIP, and Medicaid Premiums and 

Cost Sharing’’ (78 FR 4719). 

B. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

Some individuals are currently 

enrolled in health coverage that is not 

statutorily designated as minimum 

essential coverage. Under section 

5000A(f)(1)(E), the Secretary of Health 

and Human Services, in coordination 

with the Secretary of the Treasury, may 

designate other health benefits coverage 

as minimum essential coverage. This 

proposed rule would allow these 

individuals to keep their current 

coverage without incurring the shared 

responsibility payment for not 

maintaining minimum essential 

coverage, and would ensure that such 

coverage includes consumer 

protections. 

This proposed rule proposes to 

designate certain types of existing 

coverage, not specified under section 

5000A, as minimum essential coverage. 

Additionally, other types of coverage 

that are neither statutorily nor 

regulatory designated as minimum 

essential coverage in this regulation, 

may be recognized as minimum 

essential coverage if certain substantive 

and procedural requirements are met as 

proposed in this rule. These types of 

coverage, both those designated per se 

and those recognized by application are 

neither group health insurance coverage 

nor individual health insurance. 

Consumers with coverage recognized as 

minimum essential coverage in 

accordance with this regulation would 

be determined to have minimum 

essential coverage for purposes of the 

requirement to maintain minimum 

essential coverage. 

Under section 36B of the Code, 

individuals eligible to enroll in 

minimum essential coverage other than 

coverage in the individual market are 

generally not eligible for the premium 

tax credit. Recognizing that some of the 

categories of coverage designated by the 

Secretary may be widely available, the 

Treasury Department will consider 

providing appropriate rules in guidance 

under Code section 36B to address 

when individuals are treated as eligible 

to enroll in various types of coverage 

designated by the Secretary. 

a. Definition of Minimum Essential 

Coverage (§ 156.600) 

This proposed rule cross references 

the Treasury regulation under section 

5000A of the Code for the definition of 

minimum essential coverage. 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 7361 

b. Other Types of Coverage That Qualify 

as Minimum Essential Coverage 

(§ 156.602) 

Prior to the Affordable Care Act, many 

people did not have access to employersponsored health coverage and could 

not qualify for, or otherwise seek 

alternatives to, individual health 

insurance coverage. Some individuals 

turned to other types of health coverage, 

such as self-funded student health 

coverage or state high risk pools. 

We propose to specifically recognize 

certain types of coverage that have not 

been designated in the statute, as 

minimum essential coverage. HHS is 

familiar with the scope of coverage 

under these plans and they are 

comparable to other coverage that is 

designated as minimum essential 

coverage under the statute. The 

following types of coverage would be 

designated per se as minimum essential 

coverage for purposes of the minimum 

essential coverage requirement: 

1. Self-funded student health 

insurance plans. Some institutions of 

higher education (as defined in the 

Higher Education Act of 1965) offer 

student health coverage to students with 

their own funds, assuming the risk for 

payment of claims. These plans are 

neither group health insurance nor 

individual insurance in most states. 

2. Foreign health coverage. Many 

foreign nationals reside in this country 

and many of these individuals are 

covered by health coverage from their 

country of citizenship. 

3. Refugee medical assistance 

supported by the Administration for 

Children and Families (45 CFR 400.90 

through 400.107) This is a federallyfunded program that provides up to 

eight months of coverage to certain noncitizens who are considered refugees 

under the Immigration and 

Naturalization Act. 

4. Medicare advantage plans. The 

Medicare program under part C of title 

XVIII of the Social Security Act, which 

provides Medicare parts A and B 

benefits through a private insurer. While 

these plans provide the same coverage 

as that described in part A of Title XVIII 

of the Social Security Act, section 

5000A(f)(1)(a)(i) specifically designated 

only Medicare coverage under Part A of 

Title XVIII as minimum essential 

coverage. 

5. AmeriCorps coverage (45 CFR 

2522.250(b)). Coverage offered to 

AmeriCorps volunteers, which is the 

domestic counterpart to the Peace 

Corps. 

The types of coverage enumerated 

above have been in existence for a 

significant period of time. Although 

they vary in scope, they each provide a 

meaningful level of coverage that meets 

certain fundamental health needs for the 

people who are enrolled and protect 

against catastrophic losses. Three of the 

five are public programs, and even 

though student health plans are not 

individual or group market coverage, 

they are subject to certain consumer 

protections. Accordingly, individuals 

who wish to remain in these plans 

should not be subject to the shared 

responsibility payment under section 

5000A of the Code. We welcome 

comments on these and whether there 

are other existing categories of coverage 

that should be recognized as minimum 

essential coverage. We also solicit 

comments regarding whether selffunded student health coverage should 

be limited to institutions of higher 

education, as defined by the Higher 

Education Act of 1965, or if coverage 

offered by other institutions, such as 

primary or secondary educational 

institution, or unaccredited educational 

institutions, should be included. Lastly, 

we included coverage for AmeriCorps 

volunteers in the list of types of 

coverage designated as minimum 

essential coverage. Coverage for Peace 

Corps volunteers is statutorily 

designated as minimum essential 

coverage, and since AmeriCorps is a 

similar organization, coverage offered to 

volunteers under AmeriCorp should be 

provided the same status as minimum 

essential coverage. We welcome 

comments on the inclusion of 

AmeriCorps coverage in the designated 

list. 

State high risk pools are specifically 

noted in section 5000A(f)(1)(E) of the 

Code as coverage that could be 

designated by the Secretary as minimum 

essential coverage. This rule proposes 

that state high risk pools be designated 

as minimum essential coverage for a 

period of time to be determined by the 

Secretary. State high risk pools across 

the country vary in their coverage and 

benefits and some high risk pools may 

not substantially comply with the 

requirements of the Affordable Care Act, 

as specified in this proposed rule. 

Accordingly, while we are proposing 

that state high risk pools will initially be 

designated minimum essential coverage, 

we reserve the right to review and 

monitor the extent and quality of 

coverage, and in the future to reassess 

whether they should be designated 

minimum essential coverage or should 

be required to go through the process 

outlined in § 156.604 this proposed rule. 

We solicit comments on whether state 

high risk pools should automatically be 

designated as minimum essential 

coverage or whether they should be 

required to follow the process outlined 

in § 156.604 of this proposed rule. 

c. Requirements for Recognition as 

Minimum Essential Coverage for Types 

of Coverage not Otherwise Designated 

Minimum Essential Coverage in the 

Statute or This Regulation (§ 156.604) 

In addition to the types of coverage 

recognized above, there may be other 

types of individual coverage that 

provide important coverage to enrollees 

comparable to the statutorily designated 

types of minimum essential coverage. 

Accordingly, the proposed rule outlines 

a process in which other types of 

coverage could seek to be recognized as 

minimum essential coverage. Such 

recognition would apply only to the 

particular plan sponsored by the 

submitting organization seeking 

recognition. 

Employment-based coverage would 

not be recognized as minimum essential 

coverage through this proposed process. 

This is because employment-based 

group coverage is generally subject to 

the provisions of either ERISA, the Code 

and/or the PHS Act, and there is a 

separate statutory category of minimum 

essential coverage under the Department 

of Treasury’s authority that addresses 

eligible employer-sponsored plans. 

Coverage recognized as minimum 

essential coverage through this process 

would need to offer substantially the 

same consumer protections as those 

enumerated in the Title I of Affordable 

Care Act relating to non-grandfathered, 

individual coverage to ensure 

consumers are receiving the protections 

of the Affordable Care Act. Furthermore, 

setting standards for other coverage 

qualifying as minimum essential 

coverage creates a disincentive for the 

creation of coverage that is designed to 

circumvent the important consumer 

protections of the Affordable Care Act. 

We solicit comments on the proposed 

‘‘substantially comply’’ standard as it 

applies to other types of individual 

coverage. We also solicit comments on 

the process for recognizing other 

coverage as minimum essential 

coverage. 

We propose that sponsors of 

minimum essential coverage also meet 

other criteria specified by the Secretary. 

We anticipate that there may be 

organizational standards that could 

disqualify a type of coverage from being 

recognized as minimum essential 

coverage, such as if individuals are 

prohibited from membership in the 

organization based on a health factor. 

We seek comment on the types of 

criteria the Secretary should consider in 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

7362 Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 

this process as well as whether they 

should be added to the final rule. 

We propose that sponsors of a plan 

that seeks to have such coverage 

recognized as minimum essential 

coverage adhere to certain procedures. 

Sponsors would submit to HHS 

electronically the following information: 

(1) Name of the organization sponsoring 

the plan; (2) name and title of the 

individual who is authorized to make, 

and makes, this certification on behalf 

of the organization; (3) address of the 

individual named above; (4) phone 

number of the individual named above; 

(5) number of enrollees; (6) eligibility 

criteria; (7) cost sharing requirements, 

including deductible and out-of-pocket 

maximum; (8) essential health benefits 

covered (as defined in § 1302(b) of the 

Affordable Care Act and its 

implementing regulations); and (9) a 

certification that the plan substantially 

complies with the provisions of Title I 

of the Affordable Care Act as applicable 

to non-grandfathered individual health 

insurance coverage. Once HHS receives 

a submission from a sponsor, it will 

review the information. If HHS 

determines that the coverage meets the 

necessary criteria to be recognized by 

the Secretary as minimum essential 

coverage, HHS would then inform the 

sponsor of the minimum essential 

coverage status of its coverage. This 

coverage would then be placed in a 

public list the types of coverage that 

have submitted information and have 

been determined by the Secretary to 

meet the eligibility requirements to be 

recognized as minimum essential 

coverage. The proposed rule also 

provides the Secretary the authority to 

revoke the minimum essential coverage 

status of a type of coverage that had 

previously been recognized minimum 

essential coverage if it has been 

determined that the coverage no longer 

meets the requirements to be minimum 

essential coverage. We solicit comments 

on whether there should be an appeal 

process for sponsors of coverage that 

had the minimum essential coverage 

status revoked by the Secretary. Such an 

appeal process could be internal within 

HHS, where the initial decision to 

revoke would be reviewed by an HHS 

staff person other than the one who 

made the initial decision. Comments are 

also welcome on whether this appeal 

process should be available to sponsors 

whose initial request for recognition of 

minimal essential coverage status for 

their coverage was denied by HHS. 

d. HHS Audit Authority (§ 156.606) 

Under this proposed rule, HHS would 

have the ability to audit plans to ensure 

the accuracy of the certification either 

randomly or when triggered by certain 

information. For example, errors in the 

submission, complaints from enrollees, 

communications with state insurance 

regulators, media reports, etc., may 

result in an audit of a sponsoring 

organization. 

We believe this process strikes the 

appropriate balance between efficiency 

and ensuring compliance. Comments 

are solicited on the proposed 

procedures and if and when audits 

should be conducted. Comments are 

also welcome on whether sponsors of 

the types of coverage that have been 

designated as minimum essential 

coverage in the proposed rule should 

also submit the above information 

required to CMS. 

Once recognized as minimum 

essential coverage, a plan would have to 

provide notice to its enrollees, 

specifying that the plan has been 

recognized as minimum essential 

coverage for the purposes of the 

individual coverage requirement. This 

notice could be included in existing 

enrollment materials and in other plan 

documents. The sponsor of any plan 

recognized as minimum essential 

coverage would also be required to 

provide the annual information 

reporting to the IRS specified in section 

6055 of the Code and furnish statements 

to individuals enrolled in such coverage 

to assist them in establishing that they 

are not subject to the shared 

responsibility payment of section 5000A 

of the Code. We request comments on 

whether all plans and programs 

designated as minimum essential 

coverage under this regulation must 

provide notice to enrollees, or only 

plans recognized through the process in 

§ 156.604 of this regulation. 

III. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

of 1995, we are required to provide 60- 

day notice in the Federal Register and 

solicit public comment before a 

collection of information requirement is 

submitted to the Office of Management 

and Budget (OMB) for review and 

approval. In order to fairly evaluate 

whether an information collection 

should be approved by OMB, section 

3506(c)(2)(A) of the Paperwork 

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

The proposed rule entitled ‘‘Exchange 

Functions: Eligibility for Exemptions’’ 

proposes standards with regard to the 

minimum function of an Exchange to 

perform eligibility determinations and 

issue certificates of exemption from the 

shared responsibility payment. The rule 

proposes standards related to eligibility 

for exemptions, including the 

verification and eligibility 

determination process, eligibility 

redeterminations, options for 

conducting eligibility determinations, 

and reporting related to exemptions. 

The rule also proposes to designate 

certain types of coverage as minimum 

essential coverage and outlines 

substantive and procedural 

requirements that other types of 

coverage must fulfill in order to be 

recognized as minimum essential 

coverage under section 5000A(f)(5) of 

the Code, as added by the Affordable 

Care Act. 

This section outlines the information 

collection requirements in the proposed 

regulation that will be addressed 

through this notice and comment 

process under the Paperwork Reduction 

Act (PRA). We are soliciting public 

comment on each of these issues for the 

following sections of the proposed rule 

that contain information collection 

requirements (ICRs). We used data from 

the Bureau of Labor Statistics to derive 

average costs for all estimates of salary 

in establishing the information 

collection requirements. Salary 

estimates include the cost of fringe 

benefits, calculated at 30.4 percent of 

salary, which is based on the June 2012 

Employer Costs for Employee 

Compensation report by the U.S. Bureau 

of Labor Statistics. Additionally, we 

used estimates from the Congressional 

Budget Office to derive estimates of the 

number of exemption applications we 

anticipate Exchanges to receive, and the 

number of exemption eligibility 

determination notifications we 

anticipate Exchanges to generate. 

1. Exemption Application (§ 155.610) 

Throughout this subpart, we propose 

that the Exchange collect attestations 

from applicants for a certificate of 

exemption. These attestations will be 

collected using the application 

described in § 155.610(a). In 

§ 155.610(a), we provide that the 

Exchange use an application created by 

HHS to collect the information 

necessary for determining eligibility for 

and granting certificates of exemption. 

The burden associated with this 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 7363 

3The estimates may be found in the information 

collection request entitled, ‘‘Data Collection to 

Support Eligibility Determinations for Insurance 

Affordability Programs and Enrollment through 

Affordable Insurance Exchanges, Medicaid and 

Children’s Health Insurance Program Agencies.’’ 4Congressional Budget Office, ‘‘Payments of 

Penalties for Being Uninsured Under the Affordable 

Care Act,’’ September 2012 http://cbo.gov/sites/

default/files/cbofiles/attachments/09-19-12-Indiv_

Mandate_Penalty.pdf. 

requirement is the time and effort 

estimated for an applicant to complete 

an application. The exemption 

application may be available in both 

paper and electronic formats. An 

electronic application process would 

vary depending on each applicant’s 

circumstances and which exemption an 

applicant is applying for, such that an 

applicant is only presented with 

questions relevant to the exemption for 

which he or she is applying. The goal 

is to solicit sufficient information so 

that in most cases no further inquiry 

will be needed. We estimate that on 

average, it will take .27 hours (16 

minutes) for an application filer to 

complete an application, which is based 

on the estimates created for the single, 

streamlined application for enrollment 

in a QHP 3, with a 90% electronic/10% 

paper mix (noting that no specific 

application channel is specified in this 

proposed rule). While the Congressional 

Budget Office 4 estimates that 24 million 

individuals would be exempt from the 

shared responsibility penalty in 2016, it 

is unclear how many individuals will 

seek these exemptions from an 

Exchange. Some of these individuals 

will apply for and receive an exemption 

through the tax filing process, while 

others will apply for and receive an 

exemption through the Exchange. 

Therefore, of the 24 million individuals, 

we conservatively anticipate that 

approximately half will apply for an 

exemption through the Exchange, and 

half will seek an exemption through the 

tax filing process and specifically seek 

comment on this assumption. 

Accordingly, we estimate that 

approximately 12 million applications 

for exemptions will be submitted to the 

Exchange for calendar year 2016, for a 

total of 3.2 million burden hours. We 

also note that some individuals will 

apply for an exemption but be 

determined ineligible for an exemption, 

but it is difficult for us to estimate this 

number, and that in an unknown 

number of cases, multiple individuals in 

a single household may submit a single 

application. 

We do not estimate any cost to the 

Exchanges of evaluating the exemption 

applications. For the purposes of this 

estimate, we expect all applications to 

be submitted electronically and 

processed through the system, which 

would result in no additional labor costs 

to evaluate and review the exemption 

applications. We request comment on 

this assumption. 

We estimate that the cost to develop 

the exemption application will be 

significantly less than the estimated cost 

of developing the coverage application 

because the coverage application takes 

into account additional factors 

necessary in order to perform eligibility 

determinations for insurance 

affordability programs. We also note 

that as with the coverage application, 

HHS will be releasing a model 

application for use by Exchanges, which 

will significantly decrease the burden 

associated with the implementation of 

the application. On average, we estimate 

that the implementation of the 

exemption application will take 

approximately 1,059 hours of software 

development at a labor cost of $98.50 

per hour, for a total cost of $104,312 per 

Exchange and a total cost of $5,319,887 

for 51 Exchanges. 

2. Notices (§§ 155.610, 155.615, 

155.620) 

Several provisions in subpart G 

outline specific notices that the 

Exchange will send to individuals 

during the exemption eligibility 

determination process, including the 

notice of eligibility determination 

described in § 155.610(i). The purpose 

of these notices is to alert an applicant 

of his or her eligibility determination for 

an exemption and related actions taken 

by the Exchange. To the extent that an 

applicant is determined eligible for an 

exemption, the notice of eligibility 

determination described in § 155.610(i) 

will serve as the certificate of 

exemption. Accordingly, we do not 

provide a separate burden estimate for 

the certificates of exemption described 

throughout this subpart. When possible, 

we anticipate that the Exchange will 

consolidate notices when multiple 

members of a household are applying 

together and receive an eligibility 

determination at the same time. 

Consistent with 45 CFR 155.230(d), the 

notice may be in paper or electronic 

format, based on the election of an 

individual, will be in writing, and will 

be sent after an eligibility determination 

has been made by the Exchange; these 

are the same standards that are used for 

eligibility notices for enrollment in a 

QHP through the Exchange and for 

insurance affordability programs, as 

described in 45 CFR 155.310(g). It is 

difficult to estimate the number of 

applicants that will opt for electronic 

versus paper notices, although we 

anticipate that a large volume of 

applicants will request electronic 

notification. We estimated the 

associated mailing costs for the time and 

effort needed to mail notices in bulk to 

applicants who request paper notices. 

We expect that the exemption 

eligibility determination notice will be 

dynamic and include information 

tailored to all possible outcomes of an 

application throughout the eligibility 

determination process. A health policy 

analyst, senior manager, and an attorney 

would review the notice. HHS is 

currently developing model notices, 

which will decrease the burden on 

Exchanges associated with providing 

such notices. If a state opts to use the 

model notices provided by HHS, we 

estimate that the Exchange effort related 

to the development and implementation 

of the exemption eligibility 

determination notice will necessitate 44 

hours from a health policy analyst at an 

hourly cost of $49.35 to learn 

exemptions rules and draft notice text; 

20 hours from an attorney at an hourly 

cost of $90.14, and four hours from a 

senior manager at an hourly cost of 

$79.08 to review the notice; and 32 

hours from a computer programmer at 

an hourly cost of $52.50 to conduct the 

necessary development. In total, we 

estimate that this will take a total of 100 

hours for each Exchange, at a cost of 

approximately $5,971 per Exchange and 

a total cost of $304,497 for 51 

Exchanges. For most notices outlined in 

subpart G of this proposed rule, we 

estimate that the notice development as 

outlined in the paragraph above, 

including the systems programming, 

would take each Exchange an estimated 

100 hours to complete in the first year. 

We expect that the burden on the 

Exchange to maintain this notice will be 

significantly lower than to develop it. 

We estimate that it will take each 

professional approximately a quarter of 

the time to maintain the notice as 

compared to developing the notice. 

Accordingly, we estimate the 

maintenance of the eligibility 

determination notice in subsequent 

years will necessitate 11 hours from a 

health policy analyst at an hourly cost 

of $49.35; 5 hours from an attorney at 

an hourly cost of $90.14; one hour from 

a senior manager at an hourly cost of 

$79.08 and eight hours from a computer 

programmer at an hourly cost of $52.50. 

In total, we estimate that this will take 

a total of 25 hours for each Exchange, 

at a cost of approximately $1,492 per 

Exchange and a total cost of $76,092 for 

51 Exchanges. 

Pursuant to section 5000A of the 

Code, the Secretary of Treasury must 

collect the necessary data from QHP 

issuers to determine the national 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

7364 Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 

average bronze monthly premiums in 

order to assist in the computation of the 

shared responsibility payment. As such, 

HHS must request the monthly 

premium for all bronze level QHP’s 

through all 51 Exchanges from QHP 

issuers. The burden associated on states 

and QHP issuers is already included in 

the information collection request 

entitled, ‘‘Initial Plan Data Collection to 

Support QHP Certification and other 

Financial Management and Exchange 

Operations,’’ and as such, we do not 

include a separate burden estimate here. 

As this information is already being 

collected for another purpose, there will 

be no additional burden on QHP issuers 

or states. 

3. Electronic Transmissions (§§ 155.615, 

155.630) 

Section 155.615 specifies that the 

Exchange will utilize applicable 

procedures established under subpart D 

of the Exchange final rule in order to 

obtain data through electronic data 

sources for purposes of determining 

eligibility for and granting certificates of 

exemption. This involves the electronic 

transmission of data through procedures 

established under subpart D in order to 

verify an applicant’s incarceration 

status, to verify eligibility for qualifying 

coverage in an eligible employersponsored plan, and to determine 

eligibility for advance payments of the 

premium tax credit. Section 155.615 

also includes additional electronic 

transmissions that are specific to the 

eligibility process for exemptions, 

including those related to health care 

sharing ministries and religious 

conscience. In section 155.630, we 

propose that the Exchange will provide 

relevant information to IRS regarding 

certificates of exemption for the 

purposes of tax administration, such as 

the name and other identifying 

information for the individual who 

received the exemption. As we expect 

that these transmissions of information 

will all be electronic, and through the 

same channels used for reporting to IRS 

established in § 155.340, we do not 

anticipate for there to be any additional 

burden other than that which is 

required to design the overall eligibility 

and enrollment system. We do not 

provide a burden estimate for the 

electronic transmissions, as the cost is 

incorporated into the development of 

the IT system for the Exchange 

eligibility and enrollment system. 

4. Verification and Change Reporting 

(§§ 155.615, 155.620) 

The Exchange will use the same 

verification processes for new 

applications and for changes that are 

reported during the year. This includes 

the process for situations in which the 

Exchange is unable to verify the 

information necessary to determine an 

applicant’s eligibility, which is 

described in section 155.615(g). It is not 

possible at this time to provide 

estimates for the number of applicants 

for whom additional information will be 

required to complete an eligibility 

determination, but we anticipate that 

this number will decrease as applicants 

become more familiar with the 

eligibility process for exemptions and as 

more data become available 

electronically. As such, for now, we 

estimate the burden associated with the 

processing of documentation for one 

submission from an applicant. We note 

that the burden associated with this 

provision is one hour for an individual 

to collect and submit documentation, 

and 12 minutes for eligibility support 

staff at an hourly cost of $28.66 to 

review the documentation, for a total 

cost of $6 per document submission. 

5. ICRs Regarding Agreements 

(§ 155.625) 

These provisions propose that an 

Exchange that decides to utilize the 

HHS service for making eligibility 

determinations for exemptions will 

enter into a written agreement with 

HHS. These agreements are necessary to 

ensure that the use of the service will 

minimize burden on individuals, ensure 

prompt determinations of eligibility 

without undue delay, and provide for 

secure, timely transfers of application 

information. 

The burden associated with these 

provisions is the time and effort 

necessary for the Exchange to establish 

an agreement with HHS. We estimate 

that the creation of the necessary 

agreement will necessitate 35 hours 

from a health policy analyst at an hourly 

cost of $49.35, and 35 hours from an 

operations analyst at an hourly cost of 

$54.45 to develop the agreement; and 30 

hours from an attorney at an hourly cost 

of $90.14 and five hours from a senior 

manager at an hourly cost of $79.14 to 

review the agreement. Accordingly, the 

total burden on the Exchange associated 

with the creation of the necessary 

agreement will be approximately 105 

hours and $6,733 per Exchange, for a 

total cost of $343,382 for 51 Exchanges. 

6. ICRs Regarding Minimum Essential 

Coverage (§§ 156.604(a)(3), 156.604(c)) 

Organizations that currently provide 

health coverage that are not statutorily 

specified and not designated as 

minimum essential coverage in this 

regulation may submit a request to CMS 

that their coverage be recognized as 

minimum essential coverage. As 

described in § 156.604(a)(3), sponsoring 

organizations would have to 

electronically submit to CMS 

information regarding their plans and 

certify that their plans meet 

substantially all of the requirements in 

the Title I of Affordable Care Act, as 

applicable to non-grandfathered, 

individual coverage. Because we do not 

know how many sponsoring 

organizations would submit a request, 

we have estimated the burden for one 

entity. We seek comments on how many 

organizations are likely to submit such 

requests. The burden associated with 

this certification includes the time 

needed to collect and input the 

necessary plan information, and 

maintain a copy for recordkeeping by 

clerical staff and for a manager and legal 

counsel to review it and for a senior 

executive to review and sign it. The 

certification would be submitted to CMS 

electronically at minimal cost. We 

estimate that it would take a combined 

total of 4.25 hours (3 hours for clerical 

staff at an hourly cost of 30.64, 0.5 hour 

for a manager at an hourly cost of 

$55.22, 0.5 hours for legal counsel at an 

hourly cost of $83.10 and 0.25 hours for 

a senior executive at an hourly cost of 

$112.43) to prepare and submit the 

information and certification to CMS 

and to retain a copy for recordkeeping 

purposes. The total cost for one 

organization is estimated to be 

approximately $190. 

Section 156.604(c) specifies that 

sponsoring organizations whose health 

coverage are recognized as minimum 

essential coverage would have to 

provide a notice to enrollees informing 

them that the plan has been recognized 

minimum essential coverage for the 

purposes of the individual coverage 

requirement. The notice requirement 

may be satisfied by inserting the model 

statement provided in this proposed 

rule into existing plan documents. Plan 

documents are usually reviewed and 

updated annually before a new plan 

year begins. Sponsoring organizations 

may insert the model language in their 

plan documents at that time at minimal 

cost. Once the notice is included in the 

plan documents the first year, no 

additional cost will be incurred in 

future years. Therefore this notice is not 

subject to the Paperwork Reduction Act 

of 1995. 

The sponsor of any type of coverage 

recognized as minimum essential 

coverage would also be required to 

provide the annual information 

reporting to the IRS specified in section 

6055 of the Code and furnish statements 

to individuals enrolled in such coverage 

to assist them in establishing that they 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 7365 

are not subject to the shared 

responsibility payment of section 5000A 

of the Code. The Department of 

Treasury plans to publish for public 

comment, in accordance with the 

Paperwork Reduction Act of 1995 (44 

U.S.C. Chapter 35), the required ICRs in 

the near future. 

TABLE 1—PROPOSED ANNUAL INFORMATION COLLECTION REQUIREMENTS

Regulation section(s) 

OMB 

control 

No. 

Number of 

respondents 

Number of 

responses 

Burden 

per response 

(hours) 

Total annual 

burden 

(hours) 

§ 155.610 .............................................................. 0938—New ................... 51 51 1,059 54,009 

§ 155.610 .............................................................. 0938—New ................... 12,000,000 12,000,000 0.27 3,200,000 

§§ 155.610, 155.615, 155.620 .............................. 0938—New ................... 51 51 125 6,275 

§ 155.615, 155.620 ............................................... 0938—New ................... 1 1 0.2 0.2 

§ 155.625 .............................................................. 0938—New ................... 51 51 105 5,355 

§§ 156.604(b) ........................................................ 0938—New ................... 1 1 4.25 4.25 

Total ............................................................... ....................................... ........................ ........................ ........................ 3,265,643 

C. Submission of PRA-Related 

Comments 

We have submitted a copy of this 

proposed rule to OMB for its review of 

the rule’s information collection and 

recordkeeping requirements. These 

requirements are not effective until they 

have been approved by OMB. 

To obtain copies of the supporting 

statement and any related forms for the 

proposed paperwork collections 

referenced above, access the CMS Web 

site at http://www.cms.hhs.gov/

Paperwork@cms.hhs.gov, or call the 

Reports Clearance Office at 410–786– 

1326. 

We invite public comments on these 

potential information collection 

requirements. If you comment on these 

information collection and 

recordkeeping requirements, please do 

either of the following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, Attention: CMS Desk Officer, 

(CMS—9958–P) Fax: (202) 395–5806; or 

Email: OIRA_submission@omb.eop.gov. 

IV. Response to Comments 

Because of the large number of public 

comments we normally receive on 

Federal Register documents, we are not 

able to acknowledge or respond to them 

individually. We will consider all 

comments we receive by the date and 

time specified in the DATES section of 

this preamble, and, when we proceed 

with a subsequent document, we will 

respond to the comments in the 

preamble to that document. 

V. Summary of Regulatory Impact 

Statement 

A. Overall Impact 

We have examined the impact of this 

rule as required by Executive Order 

12866 on Regulatory Planning and 

Review (September 30, 1993) and 

Executive Order 13563 on Improving 

Regulation and Regulatory Review 

(January 18, 2011). 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, public health and safety 

effects, distributive impacts, and 

equity). This rule has been designated a 

‘‘significant regulatory action’’ under 

Executive Order 12866. Accordingly, 

this rule has been reviewed by the 

Office of Management and Budget. 

The exemption provisions of this 

proposed rule set forth how and what 

exemptions can be received through the 

Exchange. Given the statute, these rules 

would generate exemption request 

activity; the proposed rules could also 

potentially affect the amount of shared 

responsibility payments made in a given 

year and the number of individuals who 

would enroll in health insurance plans 

to avoid shared responsibility payments. 

The impact of the proposed minimum 

essential coverage provisions would be 

similar; individuals whose coverage 

would be designated minimum essential 

coverage, under the authority of the 

Secretary of Health and Human Services 

to designate other health benefit 

coverage as minimum essential 

coverage, would, in the absence of the 

rule, pay shared responsibility 

payments or switch health insurance 

coverage so as not to incur those 

penalties. 

As noted in our discussion, above, of 

information collection requirements, 

while CBO estimates that 24 million 

individuals would be exempt from the 

penalty in 2016, it is unclear how many 

individuals will seek these exemptions 

from an Exchange. These submissions 

would be associated with a variety of 

effects, including: costs to Exchanges to 

review the exemption requests; costs to 

applicants to request exemptions and 

retain documents; potential effects on 

enrollment in health coverage and its 

benefits; and a transfer from the federal 

government to individuals receiving 

exemptions in cases in which there is a 

foregone shared responsibility payment. 

We note that the cost to an applicant 

of submitting a request and retaining 

documents is bounded above by the 

expected shared responsibility payment; 

otherwise, he or she would not 

necessarily apply for the exemption. 

Though we currently lack data to 

precisely characterize the effects of 

these proposed provisions, we note that 

the potential number of individuals 

seeking exemptions through the 

Exchange could place the overall impact 

of the proposed rule over the $100 

million threshold for economic 

significance, even at a low economic 

cost per individual. The minimum 

essential coverage provisions included 

in this proposed rule could lead to 

transfers from the federal government to 

affected individuals (in this case, 

individuals whose coverage is 

designated to be minimum essential 

coverage) and have effects on health 

coverage enrollment (e.g., decreased 

switching between plans). Decreased 

switching between plans would entail 

time savings for affected individuals 

and uncertain effects on premium 

payments and use of medical services 

and products. We currently lack data to 

estimate the number of individuals 

whose coverage would be designated 

minimum essential coverage by this 

proposed rule. In light of our 

incomplete data and quantification of 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

7366 Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 

impacts, we request data and comments 

on all likely economic effects of the 

provisions of this proposed rule. 

VI. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

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

agencies to prepare an initial regulatory 

flexibility analysis to describe the 

impact of the proposed rule on small 

entities, unless the head of the agency 

can certify that the rule will not have a 

significant economic impact on a 

substantial number of small entities. 

The Act generally defines a ‘‘small 

entity’’ as (1) a proprietary firm meeting 

the size standards of the Small Business 

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

in its field; or (3) a small government 

jurisdiction with a population of less 

than 50,000. States and individuals are 

not included in the definition of ‘‘small 

entity.’’ HHS uses as its measure of 

significant economic impact on a 

substantial number of small entities a 

change in revenues of more than 3 to 5 

percent. As the burden for this proposed 

regulation falls on either Exchanges or 

individuals, the proposed regulations 

will not have a significant economic 

impact on a substantial number of small 

entities, and therefore, a regulatory 

flexibility analysis is not required. 

VII. Unfunded Mandates 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation, 

by state, local, or tribal governments, in 

the aggregate, or by the private sector. In 

2012, that threshold is approximately 

$139 million. This final rule does not 

mandate expenditures by state 

governments, local governments, tribal 

governments, in the aggregate, or the 

private sector, of $136 million. The 

majority of state, local, and private 

sector costs related to implementation of 

the Affordable Care Act were described 

in the RIA accompanying the March 

2012 Medicaid eligibility rule. 

Furthermore, the proposed rule does not 

set any mandate on states to set up an 

Exchange. 

VIII. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a 

proposed rule that imposes substantial 

direct effects on states, preempts state 

law, or otherwise has federalism 

implications. We wish to note again that 

the impact of changes related to 

implementation of the Affordable Care 

Act were described in the RIA 

associated with the Exchange final rule. 

As discussed in the Exchange final rule 

RIA, we have consulted with states to 

receive input on how the various 

Affordable Care Act provisions codified 

in this proposed rule would affect 

states. 

Because states have flexibility in 

designing their Exchange, state 

decisions will ultimately influence both 

administrative expenses and overall 

premiums. However, because states are 

not required to create an Exchange, 

these costs are not mandatory. For states 

electing to create an Exchange, the 

initial costs of the creation of the 

Exchange will be funded by Exchange 

Planning and Establishment Grants. 

After this time, Exchanges will be 

financially self-sustaining with revenue 

sources left to the discretion of the state. 

In the Department’s view, while this 

proposed rule does not impose 

substantial direct costs on state and 

local governments, it has federalism 

implications due to direct effects on the 

distribution of power and 

responsibilities among the state and 

federal governments relating to 

determining standards relating to health 

insurance coverage (that is, for QHPs) 

that is offered in the individual and 

small group markets. Each state electing 

to establish a state-based Exchange must 

adopt the federal standards contained in 

the Affordable Care Act and in this 

proposed rule, or have in effect a state 

law or regulation that implements these 

federal standards. However, the 

Department anticipates that the 

federalism implications (if any) are 

substantially mitigated because states 

have choices regarding the structure and 

governance of their Exchanges. 

Additionally, the Affordable Care Act 

does not require states to establish an 

Exchange; but if a state elects not to 

establish an Exchange or the state’s 

Exchange is not approved, HHS, will 

establish and operate an Exchange in 

that state. Additionally, states will have 

the opportunity to participate in state 

Partnership Exchanges that would allow 

states to leverage work done by other 

states and the federal government, and 

will be able to leverage a federallymanaged service for eligibility 

determination for exemptions. 

In compliance with the requirement 

of Executive Order 13132 that agencies 

examine closely any policies that may 

have federalism implications or limit 

the policy making discretion of the 

states, the Department has engaged in 

efforts to consult with and work 

cooperatively with affected states, 

including participating in conference 

calls with and attending conferences of 

the National Association of Insurance 

Commissioners, and consulting with 

state officials on an individual basis. 

Pursuant to the requirements set forth 

in section 8(a) of Executive Order 

13132, and by the signatures affixed to 

this regulation, the Department certifies 

that CMS has complied with the 

requirements of Executive Order 13132 

for the attached proposed regulation in 

a meaningful and timely manner. 

IX. Congressional Review Act 

This proposed rule is subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (5 

U.S.C. 801 et seq.), which specifies that 

before a rule can take effect, the federal 

agency promulgating the rule shall 

submit to each House of the Congress 

and to the Comptroller General a report 

containing a copy of the rule along with 

other specified information, and has 

been transmitted to Congress and the 

Comptroller General for review. 

In accordance with the provisions of 

Executive Order 12866, this regulation 

was reviewed by the Office of 

Management and Budget. 

List of Subjects 

45 CFR Part 155 

Administrative practice and 

procedure, Advertising, Brokers, 

Conflict of interest, Consumer 

protection, Grant programs—health, 

Grants administration, Health care, 

Health insurance, Health maintenance 

organization (HMO), Health records, 

Hospitals, Indians, Individuals with 

disabilities, Loan programs—health, 

Organization and functions 

(Government agencies), Medicaid, 

Public assistance programs, Reporting 

and recordkeeping requirements, Safety, 

State and local governments, Technical 

assistance, Women, and Youth. 

45 CFR Part 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, Indians, Individuals with 

disabilities, Loan programs—health, 

Organization and functions 

(Government agencies), Medicaid, 

Public assistance programs, Reporting 

and recordkeeping requirements, Safety, 

State and local governments, Sunshine 

Act, Technical Assistance, Women, and 

Youth. 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 7367 

For the reasons set forth in the 

preamble, the Department of Health and 

Human Services proposes to amend 45 

CFR subtitle A, subchapter B, as set 

forth below: 

PART 155—EXCHANGE 

ESTABLISHMENT STANDARDS AND 

OTHER RELATED STANDARDS 

UNDER THE AFFORDABLE CARE ACT 

■ 1. The authority citation for part 155 

continues to read as follows: 

Authority: Title I of the Affordable Care 

Act, sections 1301, 1302, 1303, 1304, 1311, 

1312, 1313, 1321, 1322, 1331, 1334, 1402, 

1411, 1412, 1413. 

Subpart A—General Provisions 

■ 2. Amend § 155.20 by revising the 

introductory text to paragraph (1) for the 

definition of ‘‘Applicant’’ and revising 

the definition of ‘‘Application filer’’ to 

read as follows: 

§ 155.20 Definitions. 

* * * * * 

Applicant means: 

(1) An individual who is seeking 

eligibility for him or herself through an 

application submitted to the Exchange, 

excluding those individuals seeking 

eligibility for an exemption from the 

shared responsibility payment for not 

maintaining minimum essential 

coverage pursuant to subpart G, or 

transmitted to the Exchange by an 

agency administering an insurance 

affordability program for at least one of 

the following: 

* * * * * 

Application filer means an applicant, 

an adult who is in the applicant’s 

household, as defined in 42 CFR 

435.603(f), or family, as defined in 

section 36B(d)(1) of the Code, an 

authorized representative, or if the 

applicant is a minor or incapacitated, 

someone acting responsibly for an 

applicant, excluding those individuals 

seeking eligibility for an exemption 

pursuant to subpart G. 

* * * * * 

Subpart C—General Functions of an 

Exchange 

■ 3. In § 155.200, revise paragraph (a) to 

read as follows: 

§ 155.200 Functions of an Exchange. 

(a) General requirements. The 

Exchange must perform the minimum 

functions described in this subpart and 

in subparts D, E, G, H, and K of this part. 

* * * * * 

■ 4. Add subpart G to read as follows: 

Subpart G—Exchange Functions in the 

Individual Market: Eligibility Determinations 

for Exemptions 

Sec. 

155.600 Definitions and general 

requirements. 

155.605 Eligibility standards for 

exemptions. 

155.610 Eligibility process for exemptions. 

155.615 Verification process related to 

eligibility for exemptions. 

155.620 Eligibility redeterminations for 

exemptions during a calendar year. 

155.625 Options for conducting eligibility 

determinations for exemptions. 

155.630 Reporting. 

155.635 Right to appeal. 

Subpart G—Exchange Functions in the 

Individual Market: Eligibility 

Determinations for Exemptions 

§ 155.600 Definitions and general 

requirements. 

(a) Definitions. For purposes of this 

subpart, the following terms have the 

following meaning: 

Applicant means an individual who is 

seeking an exemption for him or herself 

through an application submitted to the 

Exchange. 

Application filer means an applicant, 

an individual who is liable for the 

shared responsibility payment in 

accordance with 26 CFR 1.5000A–1(c) 

for an applicant, an authorized 

representative, or if the applicant is a 

minor or incapacitated, someone acting 

responsibly for an applicant. 

Exemption means an exemption from 

the shared responsibility payment. 

Health care sharing ministry has the 

same meaning as it does in 26 CFR 

1.5000A–3(b). 

Required contribution has the same 

meaning as it does in 26 CFR 1.5000A– 

3(e). 

Shared responsibility payment has the 

same meaning as in 26 CFR 1.5000A–1 

et seq. 

Indian tribe has the same meaning as 

it does in section 45A(c)(6) of the Code. 

(b) Attestation. For the purposes of 

this subpart, any attestation that an 

applicant is to provide under this 

subpart may be made by the application 

filer on behalf of the applicant. 

(c) Reasonably compatible. For 

purposes of this subpart, the Exchange 

must consider information through 

electronic data sources, other 

information provided by the applicant, 

or other information in the records of 

the Exchange to be reasonably 

compatible with an applicant’s 

attestation if the difference or 

discrepancy does not impact the 

eligibility of the applicant for the 

exemption or exemptions for which he 

or she applied. 

(d) Accessibility. Information, 

including notices, forms, and 

applications, must be provided to 

applicants in accordance with the 

standards specified in 45 CFR 

155.205(c). 

(e) Notices. Any notice required to be 

sent by the Exchange to an individual in 

accordance with this subpart must be 

provided in accordance with the 

standards specified in 45 CFR 155.230. 

§ 155.605 Eligibility standards for 

exemptions. 

(a) Eligibility for an exemption 

through the Exchange. Except as 

specified in paragraph (g) of this 

section, the Exchange must determine 

an applicant eligible for and issue a 

certificate of exemption for any month 

if the Exchange determines that he or 

she meets the requirements for one or 

more of the categories of exemptions 

described in this section for at least one 

day of the month. 

(b) Duration of single exemption. 

Except as specified in paragraphs (c)(2), 

(f)(2), and (g) of this section, the 

Exchange may provide a certificate of 

exemption only for the calendar year in 

which an applicant submitted an 

application for such exemption. 

(c) Religious conscience. (1) The 

Exchange must determine an applicant 

eligible for an exemption for any month 

if the applicant is a member of a 

recognized religious sect or division 

described in section 1402(g)(1) of the 

Code, and an adherent of established 

tenets or teachings of such sect or 

division for such month, in accordance 

with section 5000A(d)(2)(A) of the Code. 

(2) Duration of exemption for religious 

conscience. (i) The Exchange must grant 

the certificate of exemption specified in 

this paragraph to an applicant who 

meets the standards provided in 

paragraph (c)(1) of this section for a 

month on a continuing basis, until the 

month after the month of the 

individual’s 18th birthday, or until such 

time that an individual reports that he 

or she no longer meets the standards 

provided in paragraph (c)(1). 

(ii) If the Exchange granted a 

certificate of exemption in this category 

to an applicant prior to him or her 

reaching the age of 18, the Exchange 

must send such an applicant a notice 

upon reaching the age of 18 informing 

the applicant that he or she must submit 

a new exemption application if seeking 

to maintain the certificate of exemption. 

(3) The Exchange must provide an 

exemption in this category 

prospectively or retrospectively. 

(d) Membership in a health care 

sharing ministry. (1) The Exchange must 

determine an applicant eligible for an 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

7368 Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 

exemption for a month if the applicant 

is a member of a health care sharing 

ministry for such month as defined in 

26 CFR 1.5000A–3(b). 

(2) The Exchange may only provide 

an exemption in this category 

retrospectively. 

(e) Incarceration. (1) The Exchange 

must determine an applicant eligible for 

an exemption for a month if he or she 

meets the standards as defined in 26 

CFR 1.5000A–3(d) for such month. 

(2) The Exchange may only provide 

an exemption in this category 

retrospectively. 

(f) Membership in an Indian tribe. (1) 

The Exchange must determine an 

applicant eligible for an exemption for 

any month if he or she is a member of 

an Indian tribe, as defined in section 

45A(c)(6) of the Code, for such month, 

as defined in 26 CFR 1.5000A–3(g). 

(2) Duration of exemption for 

membership in an Indian tribe. The 

Exchange must grant the exemption 

specified in this paragraph to an 

applicant who meets the standards 

specified in § 155.605(f)(1) for a month 

on a continuing basis, until such time 

that the applicant reports that he or she 

no longer meets the standards provided 

in § 155.605(f)(1). 

(3) The Exchange must provide an 

exemption in this category 

prospectively or retrospectively. 

(g) Hardship. The Exchange must 

determine an applicant eligible for an 

exemption— 

(1) For a month or months during 

which— 

(i) He or she experienced financial or 

domestic circumstances, including an 

unexpected natural or human-caused 

event, such that he or she has a 

significant, unexpected increase in 

essential expenses; 

(ii) The expense of purchasing 

minimum essential coverage would 

have caused him or her to experience 

serious deprivation of food, shelter, 

clothing or other necessities; or 

(iii) He or she has experienced other 

factors similar to those described in 

paragraphs (g)(1)(i) and (ii) of this 

section that prevented him or her from 

obtaining minimum essential coverage, 

as described in 26 CFR 1.5000A–2. 

(2) For a calendar year if he or she, or 

another individual the applicant attests 

will be included in the applicant’s 

family, as defined in 26 CFR 1.5000A– 

1(d)(6), is unable to afford coverage for 

such calendar year in accordance with 

the standards specified in 26 CFR 

1.5000A–3(e), calculated using 

projected annual household income, 

and provided that the applicant applies 

for this exemption prior to the last date 

on which he or she could enroll in a 

QHP through the Exchange for the 

calendar year for which the exemption 

is requested; 

(3) For a calendar year if he or she 

was not required to file an income tax 

return for such calendar year because 

his or her gross income was below the 

filing threshold, but who nevertheless 

filed to receive a tax benefit, claimed a 

dependent with a filing requirement, 

and as a result, had household income 

exceeding the applicable return filing 

threshold described in 26 CFR 1.5000A– 

3(f)(2); 

(4) For a calendar year if he or she has 

been determined ineligible for Medicaid 

for one or more months during the 

benefit year solely as a result of a State 

not implementing section 2001(a) of the 

Affordable Care Act; or 

(5) For a calendar year if he or she, as 

well as one or more employed members 

of his or her family, as defined in 26 

CFR 1.5000A–1(d)(6), has been 

determined eligible for affordable selfonly employer-sponsored coverage 

pursuant to 26 CFR 1.5000A–3(e) 

through their respective employers for 

one or more months during the calendar 

year, but the aggregate cost of employersponsored coverage for all the employed 

members of the family exceeds 8 

percent of household income for that 

month or those months. 

§ 155.610 Eligibility process for 

exemptions. 

(a) Application. Except as specified in 

paragraphs (b) and (c) of this section, 

the Exchange must use an application 

established by HHS to collect 

information necessary for determining 

eligibility for and granting certificates of 

exemption as described in § 155.605 of 

this subpart. 

(b) Alternative application. If the 

Exchange seeks to use an alternative 

application, such application, as 

approved by HHS, must request the 

minimum information necessary for the 

purposes identified in paragraph (a) of 

this section. 

(c) Exemptions through the eligibility 

process for coverage. If an individual 

submits the application described in 45 

CFR 155.405 of this chapter and then 

requests an exemption, the Exchange 

must use information collected for 

purposes of the eligibility determination 

for enrollment in a QHP and for 

insurance affordability programs in 

making the exemption eligibility 

determination and must not request 

duplicate information or conduct repeat 

verifications that adhere to the 

standards specified in this subpart. 

(d) Filing the exemption application. 

The Exchange must— 

(1) Accept the application from an 

application filer; and 

(2) Provide the tools to file an 

application. 

(e) Collection of Social Security 

Numbers. (1) The Exchange must 

require an applicant who has a Social 

Security number to provide such 

number to the Exchange. 

(2) The Exchange may not require an 

individual who is not seeking an 

exemption for himself or herself to 

provide a Social Security number, 

except as specified in paragraph (e)(3) of 

this section. 

(3) The Exchange must require an 

application filer to provide the Social 

Security number of a tax filer who is not 

an applicant only if an applicant attests 

that the tax filer has a Social Security 

number and filed a tax return for the 

year for which tax data would be 

utilized for verification of household 

income and family size for an 

exemption under § 155.605(g)(2) that 

requires such verification. 

(f) Determination of eligibility; 

granting of certificates. The Exchange 

must determine an applicant’s eligibility 

for an exemption in accordance with the 

standards specified in § 155.605, and 

grant a certificate of exemption to any 

applicant determined eligible. 

(g) Timeliness standards. (1) The 

Exchange must determine eligibility for 

exemption promptly and without undue 

delay. 

(2) The Exchange must assess the 

timeliness of eligibility determinations 

made under this subpart based on the 

period from the date of application to 

the date the Exchange notifies the 

applicant of its decision. 

(h) Exemptions for previous tax years. 

Except for the exemptions described in 

155.605(c) and (f) of this subpart, after 

December 31 of a given calendar year, 

the Exchange will not accept an 

application for an exemption for months 

for such calendar year, and must 

provide information to individuals 

regarding the process for claiming an 

exemption through the tax filing 

process. 

(i) Notification of eligibility 

determination for exemptions. The 

Exchange must provide timely written 

notice to an applicant of any eligibility 

determination made in accordance with 

this subpart. In the case of a 

determination that an applicant is 

eligible for an exemption, this 

notification must include the exemption 

certificate number for the purposes of 

tax administration. 

(j) Retention of records for tax 

compliance. (1) Consistent with the 

requirements of section 6001of the 

Code, an individual must retain the 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 7369 

records that demonstrate not only 

receipt of the certificate of exemption 

but also qualification for the underlying 

exemption. 

(2) In the case of any factor of 

eligibility that is verified through use of 

the special circumstances exception 

described in § 155.615(h) of this 

subpart, the records that demonstrate 

qualification for the underlying 

exemption are the information 

submitted to the Exchange regarding the 

circumstances that warranted the use of 

the exception, as well as records of the 

Exchange decision to allow such 

exception. 

§ 155.615 Verification process related to 

eligibility for exemptions. 

(a) General rule. Unless a request for 

modification is granted under paragraph 

(i) of this section, the Exchange must 

verify or obtain information as provided 

in this section in order to determine that 

an applicant is eligible for an 

exemption. 

(b) Verification related to exemption 

for religious conscience. For any 

applicant who requests an exemption 

based on religious conscience, the 

Exchange must verify that he or she 

meets the standards specified in 

§ 155.605(c) of this subpart by— 

(1) Except as specified in paragraph 

(b)(2) of this section, accepting a form 

that reflects that he or she is approved 

by the Internal Revenue Service under 

section 1402(g)(1) of the Code; 

(2) Except as specified in paragraphs 

(b)(3) and (4) of this section, accepting 

his or her attestation, and verifying that 

the religious sect or division to which 

the applicant attests membership is 

recognized by the Social Security 

Administration as an approved religious 

sect or division under section 1402(g)(1) 

of the Code. 

(3) If information provided by an 

applicant regarding his or her 

membership in a religious sect or 

division is not reasonably compatible 

with other information provided by the 

individual or in the records of the 

Exchange, the Exchange must follow the 

procedures specified in paragraph (g) of 

this section. 

(4) If an applicant attests to 

membership in a religious sect or 

division that is not recognized by the 

Social Security Administration as an 

approved religious sect or division 

under section 1402(g)(1) of the Code, the 

Exchange must determine the applicant 

ineligible for this exemption. 

(c) Verification related to exemption 

for membership in a health care sharing 

ministry. For any applicant who 

requests an exemption based on 

membership in a health care sharing 

ministry, the Exchange must verify that 

the applicant meets the standards 

specified in § 155.605(d) of this subpart 

by— 

(1) Except as provided in paragraphs 

(c)(2) and (3) of this section, accepting 

his or her attestation; and verifying that 

the health care sharing ministry to 

which the applicant attests membership 

is known to the Exchange based on data 

provided by HHS as a health care 

sharing ministry. 

(2) If information provided by an 

applicant regarding his or her 

membership in a health care sharing 

ministry is not reasonably compatible 

with other information provided by the 

individual or in the records of the 

Exchange, the Exchange must follow the 

procedures specified in paragraph (g) of 

this section. 

(3) If an applicant attests to 

membership in a health care sharing 

ministry that is not known to the 

Exchange as a health care sharing 

ministry, the Exchange must notify HHS 

and not determine the applicant eligible 

or ineligible until such time as HHS 

notifies the Exchange regarding the 

attested health care sharing ministry’s 

status with respect to the standards 

specified in 26 CFR 1.5000A–3(b). 

(d) Verification related to exemption 

for incarceration. (1) For any applicant 

who provides information attesting that 

he or she was incarcerated for a given 

month in accordance with the standards 

specified in § 155.605(e) of this subpart, 

the Exchange must verify his or her 

attestation through the same process as 

described in 45 CFR 155.315(e) of this 

part. 

(2) To the extent that the Exchange is 

unable to verify an applicant’s 

attestation that he or she was 

incarcerated for a given month in 

accordance with the standards specified 

in § 155.605(e) through the process 

described in 45 CFR 155.315(e) of this 

part, the Exchange must follow the 

procedures specified in paragraph (g) of 

this section. 

(e) Verification related to exemption 

for members of Indian tribes. (1) For any 

applicant who provides information 

attesting that he or she is a member of 

an Indian tribe, the Exchange must use 

the process outlined in 45 CFR 

155.350(c) of this part to verify that the 

applicant is a member of an Indian tribe. 

(2) To the extent that the Exchange is 

unable to verify an applicant’s status as 

a member of an Indian tribe through the 

process described in 45 CFR 155.350(c) 

of this part, the Exchange must follow 

the procedures specified in paragraph 

(g) of this section. 

(f) Verification related to exemption 

for hardship—(1) In general. For any 

applicant who requests an exemption 

based on hardship, the Exchange must 

verify whether he or she has 

experienced the hardship to which he or 

she is attesting. 

(2) Cannot afford coverage. For any 

applicant who requests an exemption 

based on the hardship described in 

§ 155.605(g)(2) of this subpart, the 

Exchange must verify the unavailability 

of affordable coverage through the 

procedures used to determine eligibility 

for advance payments of the premium 

tax credit, as specified in subpart D of 

this part, and the procedures used to 

verify eligibility for qualifying coverage 

in an eligible employer-sponsored plan, 

as specified in 45 CFR 155.320(e) of this 

part. 

(3) To the extent that the Exchange is 

unable to verify any of the information 

needed to determine an applicant’s 

eligibility for an exemption based on 

hardship, the Exchange must follow the 

procedures specified in paragraph (g) of 

this section. 

(g) Inability to verify necessary 

information. Except as otherwise 

specified in this subpart, for an 

applicant for whom the Exchange 

cannot verify information required to 

determine eligibility for an exemption, 

including but not limited to when 

electronic data is required in accordance 

with this subpart but data for 

individuals relevant to the eligibility 

determination for an exemption are not 

included in such data sources or when 

electronic data is required but it is not 

reasonably expected that data sources 

will be available within 2 days of the 

initial request to the data source, the 

Exchange— 

(1) Must make a reasonable effort to 

identify and address the causes of such 

inconsistency, including typographical 

or other clerical errors, by contacting the 

application filer to confirm the accuracy 

of the information submitted by the 

application filer; 

(2) If unable to resolve the 

inconsistency through the process 

described in paragraph (g)(1) of this 

section, must— 

(i) Provide notice to the applicant 

regarding the inconsistency; and 

(ii) Provide the applicant with a 

period of 30 days from the date on 

which the notice described in paragraph 

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

applicant to either present satisfactory 

documentary evidence via the channels 

available for the submission of an 

application, as described in 45 CFR 

155.610(d) of this subpart, except for by 

telephone, or otherwise to resolve the 

inconsistency. 

(3) May extend the period described 

in paragraph (g)(2)(ii) of this section for 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

7370 Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 

an applicant if the applicant 

demonstrates that a good faith effort has 

been made to obtain the required 

documentation during the period. 

(4) During the period described in 

paragraph (g)(1) and (g)(2)(ii) of this 

section, must not grant a certificate of 

exemption based on the information 

subject to this paragraph. 

(5) If, after the period described in 

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

Exchange remains unable to verify the 

attestation, the Exchange must 

determine the applicant’s eligibility for 

an exemption based on any information 

available from the data sources used in 

accordance with this subpart, if 

applicable, unless such applicant 

qualifies for the exception provided 

under paragraph (h) of this section, and 

notify the applicant of such 

determination in accordance with the 

notice requirements specified in 

§ 155.610(i) of this subpart, including 

notice that the Exchange is unable to 

verify the attestation; and 

(h) Exception for special 

circumstances. For an applicant who 

does not have documentation with 

which to resolve the inconsistency 

through the process described in 

paragraph (g)(2) of this section because 

such documentation does not exist or is 

not reasonably available and for whom 

the Exchange is unable to otherwise 

resolve the inconsistency, the Exchange 

must provide an exception, on a caseby-case basis, to accept an applicant’s 

attestation as to the information which 

cannot otherwise be verified along with 

an explanation of circumstances as to 

why the applicant does not have 

documentation. 

(i) Flexibility in information collection 

and verification. HHS may approve an 

Exchange Blueprint in accordance with 

45 CFR 155.105(d) of this part or a 

significant change to the Exchange 

Blueprint in accordance with 45 CFR 

155.105(e) of this part modify the 

methods to be used for collection of 

information and verification as set forth 

in this subpart, as well as the specific 

information required to be collected, 

provided that HHS finds that such 

modification would reduce the 

administrative costs and burdens on 

individuals while maintaining accuracy 

and minimizing delay, and that 

applicable requirements under 45 CFR 

155.260, 155.270 of this part, and 

paragraph (j) of this section, and section 

6103 of the Code with respect to the 

confidentiality, disclosure, 

maintenance, or use of such information 

will be met. 

(j) Applicant information. The 

Exchange must not require an applicant 

to provide information beyond the 

minimum necessary to support the 

eligibility process for exemptions as 

described in this subpart. 

§ 155.620 Eligibility redeterminations for 

exemptions during a calendar year. 

(a) General requirement. The 

Exchange must redetermine the 

eligibility of an individual with an 

exemption if it receives and verifies new 

information reported by such an 

individual. 

(b) Requirement for individuals to 

report changes. (1) Except as specified 

in paragraph (b)(2) of this section, the 

Exchange must require an individual 

who has a certificate of exemption from 

the Exchange to report any change with 

respect to the eligibility standards for 

the exemption as specified in § 155.605 

of this subpart within 30 days of such 

change. 

(2) The Exchange must allow an 

individual with a certificate of 

exemption to report changes via the 

channels available for the submission of 

an application, as described in 

§ 155.610(d) of this subpart. 

(c) Verification of reported changes. 

The Exchange must— 

(1) Verify any information reported by 

an individual with a certificate of 

exemption in accordance with the 

processes specified in § 155.615 of this 

subpart prior to using such information 

in an eligibility redetermination. 

(2) Notify an individual in accordance 

with § 155.610(i) of this subpart after 

redetermining his or her eligibility 

based on a reported change. 

(3) Provide periodic electronic 

notifications regarding the requirements 

for reporting changes and an 

individual’s opportunity to report any 

changes, to an individual who has a 

certificate of exemption who has elected 

to receive electronic notifications, 

unless he or she has declined to receive 

such notifications. 

§ 155.625 Options for conducting eligibility 

determinations for exemptions. 

(a) Options for conducting eligibility 

determinations. The Exchange may 

satisfy the requirements of this 

subpart— 

(1) Directly or through contracting 

arrangements in accordance with 45 

CFR 155.110(a) of this part; or 

(2) Through the approach described in 

paragraph (b) of this section, subject to 

the standards in paragraph (c) of this 

section. 

(b) Use of HHS service. 

Notwithstanding the requirements of 

this subpart, the Exchange may adopt an 

exemption eligibility determination 

made by HHS, provided that— 

(1) The Exchange accepts the 

application, as specified in § 155.610(c) 

of this subpart, and issues the eligibility 

notice, as specified in § 155.610(i) of 

this subpart; 

(2) Verifications and other activities 

required in connection with eligibility 

determinations for exemptions are 

performed by the Exchange in 

accordance with the standards 

identified in this subpart or by HHS in 

accordance with the agreement 

described in paragraph (b)(5) of this 

section; 

(3) The Exchange transmits to HHS 

promptly and without undue delay and 

via secure electronic interface, all 

information provided as a part of the 

application or update that initiated the 

eligibility determination, and any 

information obtained or verified by the 

Exchange; 

(4) The Exchange adheres to the 

eligibility determination made by HHS; 

and 

(5) The Exchange and HHS enter into 

an agreement specifying their respective 

responsibilities in connection with 

eligibility determinations for 

exemptions. 

(c) Standards. To the extent that 

eligibility determinations for 

exemptions are made in accordance 

with paragraph (b) of this section, the 

Exchange must ensure that – 

(1) Such arrangement does not 

increase administrative costs and 

burdens on individuals, or increase 

delay; and 

(2) Applicable requirements under 45 

CFR 155.260, 155.270, and 155.315(i) of 

this part, and section 6103 of the Code 

with respect to the confidentiality, 

disclosure, maintenance or use of 

information are met. 

§ 155.630 Reporting. 

Requirement to provide information 

related to tax administration. If the 

Exchange grants an individual a 

certificate of exemption in accordance 

with § 155.610(i) of this subpart, the 

Exchange must transmit to the IRS at 

such time and in such manner as the 

IRS may specify – 

(a) The individual’s name, Social 

Security number, and exemption 

certificate number; 

(b) Any other information required in 

guidance published by the 

Commissioner of the IRS in accordance 

with 26 CFR 601.601(d)(2). 

§ 155.635 Right to appeal. 

Individual appeals. The Exchange 

must include the notice of the right to 

appeal and instructions regarding how 

to file an appeal in any notification 

issued in accordance with § 155.610(i) 

and § 155.625(b)(1) of this subpart. 

mstockstill on DSK4VPTVN1PROD with PROPOSALS

Federal Register / Vol. 78, No. 22 / Friday, February 1, 2013 / Proposed Rules 7371 

PART 156—PROCEDURAL AND 

SUBSTANTIVE REQUIREMENTS FOR 

MISCELLANEOUS COVERAGES 

WISHING TO BE DESIGNATED AS 

MINIMUM ESSENTIAL COVERAGE 

■ 5. The authority citation for subpart G 

is revised to read as follows: 

Authority: Title I of the Affordable Care 

Act, Sections 1301–1304, 1311–1312, 1321, 

1322, 1324, 1334, 1341–1343, and 1401– 

1402, 1501, Pub. L. 111–148, 124 Stat. 119 

(42 U.S.C. 18042). 

■ 6. Add subpart G to read as follows: 

Subpart G—Minimum Essential Coverage 

Sec. 

156.600 The definition of minimum 

essential coverage. 

156.602 Other coverage that qualifies as 

minimum essential coverage. 

156.604 Requirements for recognition as 

minimum essential coverage for types of 

coverage not otherwise designated 

minimum essential coverage in the 

statute or this subpart. 

156.606 HHS audit authority. 

Subpart G—Minimum Essential 

Coverage 

§ 156.600 The definition of minimum 

essential coverage. 

The term minimum essential coverage 

has the same meaning as provided in 26 

CFR 1.5000A–2 for purposes of this 

subpart. 

§ 156.602 Other coverage that qualifies as 

minimum essential coverage. 

The following types of coverage are 

designated by the Secretary as minimum 

essential coverage for purposes of 

section 5000A(f)(1)(E) of the Code: 

(a) Self-funded student health 

coverage. Coverage offered to students, 

by an institution of higher education (as 

defined in the Higher Education Act of 

1965), where the institution assumes the 

risk for payment of claims. 

(b) Foreign health coverage. Coverage 

for non-citizens residing in the United 

States, provided by their home country. 

(c) Refugee medical assistance 

supported by the Administration for 

Children and Families (45 CFR Subpart 

G). A federally-funded program that 

provides up to 8 months of coverage to 

certain noncitizens who are considered 

refugees under the Immigration and 

Naturalization Act. 

(d) Medicare advantage plans. 

Medicare program under Part C of title 

XVIII of the Social Security Act, which 

provides Medicare Parts A and B 

benefits through a private insurer. 

(e) State high risk pool coverage. State 

high risk pools are designated as 

minimum essential coverage subject to 

further review by the Secretary. 

(f) Coverage for AmeriCorp 

volunteers. Health coverage provided to 

volunteers of AmeriCorp. 

(g) Other coverage. Other coverage 

that qualifies pursuant to § 156.604 of 

this subpart. 

§ 156.604 Requirements for recognition as 

minimum essential coverage for types of 

coverage not otherwise designated 

minimum essential coverage in the statute 

or this subpart. 

The Secretary may recognize ‘‘other 

coverage’’ as minimum essential 

coverage provided HHS determines that 

the coverage meets the following 

substantive and procedural 

requirements: 

(a) Coverage requirements. A plan 

must meet substantially all the 

requirements pertaining to nongrandfathered, individual health 

insurance coverage, of title I of the 

Affordable Care Act. 

(b) Sponsoring organization 

requirements. In order for ‘‘other 

coverage’’ to be considered by the 

Secretary for recognition as minimum 

essential coverage, the sponsor, or in the 

case of a government-sponsored 

program, the government agency 

responsible for administering the 

program, must meet criteria at the 

discretion the Secretary. 

(c) Procedural requirements. 

Procedural requirements for recognition 

as miscellaneous minimum essential 

coverage. To be considered for 

recognition as minimum essential 

coverage, a sponsor must submit the 

following information to HHS: 

(1) Identity of the plan sponsor and 

appropriate contact persons; 

(2) Basic information about the plan, 

including: 

(i) Name of the organization 

sponsoring the plan; 

(ii) Name and title of the individual 

who is authorized to make, and makes, 

this certification on behalf of the 

organization; 

(iii) Address of the individual named 

above; 

(iv) Phone number of the individual 

named above; 

(v) Number of enrollees; 

(vi) Eligibility criteria; 

(vii) Cost sharing requirements, 

including deductible and out-of-pocket 

maximum limit; 

(viii) Essential health benefits 

covered; and 

(ix) A certification by the appropriate 

individual, named pursuant to 

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

the health coverage sponsored by the 

organization substantially complies 

with the requirements of title I of the 

Affordable Care Act and sponsor 

standards required by this rule. 

(d) CMS will maintain a public list of 

types of coverage that the Secretary has 

recognized as minimum essential 

coverage. 

(e) If at any time the Secretary 

determines that a type of coverage 

previously recognized as minimum 

essential coverage no longer meets the 

coverage requirements of paragraph (a) 

of this section or the sponsoring 

organization requirements of paragraph 

(b) of this section, the Secretary may 

revoke the recognition of such coverage. 

(f) Notice. Once recognized as 

minimum essential coverage, a plan 

must provide notice to all enrollees of 

its minimum essential coverage status. 

§ 156.606 HHS audit authority. 

The Secretary may audit a plan or 

program recognized as minimum 

essential coverage under § 156.604 of 

this subpart at any time to ensure 

compliance with the requirements of 

§ 156.604(a) of this subpart. 

Dated: January 25, 2013. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: January 28, 2013. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2013–02139 Filed 1–30–13; 11:15 am] 

BILLING CODE 4120–01–P 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

50 CFR Part 660 

[Docket No. 110708376–3052–01] 

RIN 0648–BB17 

Fisheries Off West Coast States; 

Pacific Coast Groundfish Fishery; 

Trawl Rationalization Program; Cost 

Recovery 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Proposed rule; request for 

comments. 

SUMMARY: This action would implement 

a cost recovery program for the Pacific 

coast groundfish trawl rationalization 

program, which is a catch share program 

and type of limited access privilege 

program (LAPP), as required by the 

Magnuson-Stevens Fishery 

Conservation and Management Act 

(MSA). This action includes regulations 

mstockstill on DSK4VPTVN1PROD with PROPOSALS