Federal Register / Vol. 77, No. 31 / Wednesday, February 15, 2012 / Rules and Regulations 8725 

1The HRSA Guidelines can be found at: http:// 

www.hrsa.gov/womensguidelines. 

TABLE I—Continued 

Year 

Limit 

Auto. proj. cost 

limit (Col. 1) 

Prior notice proj. 

cost limit (Col. 2) 

2003 .. 7,600,000 21,200,000 

2004 .. 7,800,000 21,600,000 

2005 .. 8,000,000 22,000,000 

2006 .. 9,600,000 27,400,000 

2007 .. 9,900,000 28,200,000 

2008 .. 10,200,000 29,000,000 

2009 .. 10,400,000 29,600,000 

2010 .. 10,500,000 29,900,000 

2011 .. 10,600,000 30,200,000 

2012 .. 10,800,000 30,800,000 

* * * * * 

■ 3. Table II in § 157.215(a)(5) is revised 

to read as follows: 

§ 157.215 Underground storage testing 

and development. 

(a) * * * 

(5) * * * 

TABLE II 

Year Limit 

1982 .................................. $2,700,000 

1983 .................................. 2,900,000 

1984 .................................. 3,000,000 

1985 .................................. 3,100,000 

1986 .................................. 3,200,000 

1987 .................................. 3,300,000 

1988 .................................. 3,400,000 

1989 .................................. 3,500,000 

1990 .................................. 3,600,000 

1991 .................................. 3,800,000 

1992 .................................. 3,900,000 

1993 .................................. 4,000,000 

1994 .................................. 4,100,000 

1995 .................................. 4,200,000 

1996 .................................. 4,300,000 

1997 .................................. 4,400,000 

1998 .................................. 4,500,000 

1999 .................................. 4,550,000 

2000 .................................. 4,650,000 

2001 .................................. 4,750,000 

2002 .................................. 4,850,000 

2003 .................................. 4,900,000 

2004 .................................. 5,000,000 

2005 .................................. 5,100,000 

2006 .................................. 5,250,000 

2007 .................................. 5,400,000 

2008 .................................. 5,550,000 

2009 .................................. 5,600,000 

2010 .................................. 5,700,000 

2011 .................................. 5,750,000 

2012 .................................. 5,850,000 

* * * * * 

[FR Doc. 2012–3488 Filed 2–14–12; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 54 

[TD 9578] 

RIN 1545–BJ60 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2590 

RIN 1210–AB44 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Part 147 

[CMS–9992–F] 

RIN 0938–AQ74 

Group Health Plans and Health 

Insurance Issuers Relating to 

Coverage of Preventive Services Under 

the Patient Protection and Affordable 

Care Act 

AGENCIES: Internal Revenue Service, 

Department of the Treasury; Employee 

Benefits Security Administration, 

Department of Labor; Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services. 

ACTION: Final rules. 

SUMMARY: These regulations finalize, 

without change, interim final 

regulations authorizing the exemption 

of group health plans and group health 

insurance coverage sponsored by certain 

religious employers from having to 

cover certain preventive health services 

under provisions of the Patient 

Protection and Affordable Care Act. 

DATES: Effective date. These final 

regulations are effective on April 16, 

2012. 

Applicability dates. These final 

regulations generally apply to group 

health plans and group health insurance 

issuers on April 16, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Amy Turner or Beth Baum, Employee 

Benefits Security Administration 

(EBSA), Department of Labor, at (202) 

693–8335; Karen Levin, Internal 

Revenue Service, Department of the 

Treasury, at (202) 622–6080; Robert 

Imes, Centers for Medicare & Medicaid 

Services (CMS), Department of Health 

and Human Services (HHS), at (410) 

786–1565. 

Customer Service Information: 

Individuals interested in obtaining 

information from the Department of 

Labor concerning employment-based 

health coverage laws may call the EBSA 

Toll-Free Hotline at 1–866–444–EBSA 

(3272) or visit the Department of Labor’s 

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

addition, information from HHS on 

private health insurance for consumers 

can be found on the CMS Web site 

(http://cciio.cms.gov), and on health 

reform can be found at http:// 

www.HealthCare.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Patient Protection and Affordable 

Care Act, Public Law 111–148, was 

enacted on March 23, 2010; the Health 

Care and Education Reconciliation Act 

of 2010, Public Law 111–152, was 

enacted on March 30, 2010 (collectively, 

the Affordable Care Act). The Affordable 

Care Act reorganizes, amends, and adds 

to the provisions of part A of title XXVII 

of the Public Health Service Act (PHS 

Act) relating to group health plans and 

health insurance issuers in the group 

and individual markets. The Affordable 

Care Act adds section 715(a)(1) to the 

Employee Retirement Income Security 

Act (ERISA) and section 9815(a)(1) to 

the Internal Revenue Code (Code) to 

incorporate the provisions of part A of 

title XXVII of the PHS Act into ERISA 

and the Code, and make them 

applicable to group health plans. 

Section 2713 of the PHS Act, as added 

by the Affordable Care Act and 

incorporated into ERISA and the Code, 

requires that non-grandfathered group 

health plans and health insurance 

issuers offering group or individual 

health insurance coverage provide 

benefits for certain preventive health 

services without the imposition of cost 

sharing. These preventive health 

services include, with respect to 

women, preventive care and screening 

provided for in the comprehensive 

guidelines supported by the Health 

Resources and Services Administration 

(HRSA) that were issued on August 1, 

2011 (HRSA Guidelines).1 As relevant 

here, the HRSA Guidelines require 

coverage, without cost sharing, for ‘‘[a]ll 

Food and Drug Administration [(FDA)] 

approved contraceptive methods, 

sterilization procedures, and patient 

education and counseling for all women 

with reproductive capacity,’’ as 

prescribed by a provider. Except as 

discussed below, non-grandfathered 

group health plans and health insurance 

issuers are required to provide coverage 

consistent with the HRSA Guidelines, 

without cost sharing, in plan years (or, 


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8726 Federal Register / Vol. 77, No. 31 / Wednesday, February 15, 2012 / Rules and Regulations 

2The interim final regulations published by the 

Departments on July 19, 2010, generally provide 

that plans and issuers must cover a newly 

recommended preventive service starting with the 

first plan year (or, in the individual market, policy 

year) that begins on or after the date that is one year 

after the date on which the new recommendation 

or guideline is issued. 26 CFR 54.9815–2713T(b)(1); 

29 CFR 2590.715–2713(b)(1); 45 CFR 147.130(b)(1). 

3The amendment to the interim final regulations 

was published on August 3, 2011, at 76 FR 46621. 

in the individual market, policy years) 

beginning on or after August 1, 2012.2

These guidelines were based on 

recommendations of the independent 

Institute of Medicine, which undertook 

a review of the evidence on women’s 

preventive services. 

The Departments of Health and 

Human Services, Labor, and the 

Treasury (the Departments) published 

interim final regulations implementing 

PHS Act section 2713 on July 19, 2010 

(75 FR 41726). In the preamble to the 

interim final regulations, the 

Departments explained that HRSA was 

developing guidelines related to 

preventive care and screening for 

women that would be covered without 

cost sharing pursuant to PHS Act 

section 2713(a)(4), and that these 

guidelines were expected to be issued 

no later than August 1, 2011. Although 

comments on the anticipated guidelines 

were not requested in the interim final 

regulations, the Departments received 

considerable feedback regarding which 

preventive services for women should 

be covered without cost sharing. Some 

commenters, including some 

religiously-affiliated employers, 

recommended that these guidelines 

include contraceptive services among 

the recommended women’s preventive 

services and that the attendant coverage 

requirement apply to all group health 

plans and health insurance issuers. 

Other commenters, however, 

recommended that group health plans 

sponsored by religiously-affiliated 

employers be allowed to exclude 

contraceptive services from coverage 

under their plans if the employers deem 

such services contrary to their religious 

tenets, noting that some group health 

plans sponsored by organizations with a 

religious objection to contraceptives 

currently contain such exclusions for 

that reason. 

In response to these comments, the 

Departments amended the interim final 

regulations to provide HRSA with 

discretion to establish an exemption for 

group health plans established or 

maintained by certain religious 

employers (and any group health 

insurance coverage provided in 

connection with such plans) with 

respect to any requirement to cover 

contraceptive services that they would 

otherwise be required to cover without 

cost sharing consistent with the HRSA 

Guidelines. The amended interim final 

regulations were issued and effective on 

August 1, 2011.3 The amended interim 

final regulations specified that, for 

purposes of this exemption, a religious 

employer is one that: (1) Has the 

inculcation of religious values as its 

purpose; (2) primarily employs persons 

who share its religious tenets; (3) 

primarily serves persons who share its 

religious tenets; and (4) is a non-profit 

organization described in section 

6033(a)(1) and section 6033(a)(3)(A)(i) 

or (iii) of the Code. Section 

6033(a)(3)(A)(i) and (iii) of the Code 

refers to churches, their integrated 

auxiliaries, and conventions or 

associations of churches, as well as to 

the exclusively religious activities of 

any religious order. In the HRSA 

Guidelines, HRSA exercised its 

discretion under the amended interim 

final regulations such that group health 

plans established and maintained by 

these religious employers (and any 

group health insurance coverage 

provided in connection with such 

plans) are not required to cover 

contraceptive services. 

In the preamble to the amended 

interim final regulations, the 

Departments explained that it was 

appropriate that HRSA take into account 

the religious beliefs of certain religious 

employers where coverage of 

contraceptive services is concerned. The 

Departments noted that a religious 

exemption is consistent with the 

policies in some States that currently 

both require contraceptive services 

coverage under State law and provide 

for some type of religious exemption 

from their contraceptive services 

coverage requirement. Comments were 

requested on the amended interim final 

regulations, specifically with respect to 

the definition of religious employer, as 

well as alternative definitions. 

II. Overview of the Public Comments on 

the Amended Interim Final Regulations 

The Departments received over 

200,000 responses to the request for 

comments on the amended interim final 

regulations. Commenters included 

concerned citizens, civil rights 

organizations, consumer groups, health 

care providers, health insurance issuers, 

sponsors of group health plans, 

religiously-affiliated charities, 

religiously-affiliated educational 

institutions, religiously-affiliated health 

care organizations, other religiouslyaffiliated organizations, secular 

organizations, sponsors of group health 

plans, women’s religious orders, and 

women’s rights organizations. 

Some commenters recommended that 

the exemption for the group health 

plans of a limited group of religious 

organizations as formulated in the 

amended interim final regulations be 

maintained. Other commenters urged 

that the definition of religious employer 

be broadened so that more sponsors of 

group health plans would qualify for the 

exemption. Others urged that the 

exemption be rescinded in its entirety. 

The Departments summarize below the 

major issues raised in the comments 

that were received. 

Some commenters supported the 

inclusion of contraceptive services in 

the HRSA Guidelines and urged that the 

religious employer exemption be 

rescinded in its entirety due to the 

importance of extending these benefits 

to as many women as possible. For 

example, one provider association 

commented that all group health plans 

and group health insurance issuers 

should offer the same benefits to plan 

participants, without a religious 

exemption for some plans, and that 

religious beliefs are more appropriately 

taken into account by individuals when 

making personal health care decisions. 

Others urged that the exemption be 

eliminated because making 

contraceptive services available to all 

women would satisfy a basic health care 

need and would significantly reduce 

long-term health care costs associated 

with unplanned pregnancies. 

Some of the commenters supporting 

the elimination of the exemption argued 

that section 2713 of the PHS Act does 

not provide any explicit basis for 

exempting a subset of group health 

plans. One commenter asserted that 

Congress’s incorporation of section 2713 

of the PHS Act into ERISA and the Code 

indicates its intent to require coverage 

of recommended preventive services 

under section 2713 of the PHS Act in 

the broadest spectrum of group health 

plans possible. 

Many commenters that opposed the 

exemption asked that, at a minimum, 

the Departments not expand the 

definition of religious employer. 

Alternatively, they asked that, if the 

Departments decided to base the 

relevant portion of the definition of 

religious employer on a Code section 

other than section 6033, the other 

portions of the definition of religious 

employer be retained to limit the 

exemption largely to houses of worship. 

Some commenters urged the 

Departments not to modify the 

definition of religious employer. For 

example, some commenters asserted 

that the exemption is appropriately 


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Federal Register / Vol. 77, No. 31 / Wednesday, February 15, 2012 / Rules and Regulations 8727 

4 Inst. of Med., Clinical Preventive Services for 

Women: Closing the Gaps, Wash., DC: Nat’l Acad. 

Press, 2011, at p. 16. 

5 Inst. of Med., Clinical Preventive Services for 

Women: Closing the Gaps, Wash. DC: Nat’l Acad. 

Press, 2011, at p. 9; see also Sonfield, A., The Case 

for Insurance Coverage of Contraceptive Services 

and Supplies Without Cost Sharing, 14 Guttmacher 

Pol’y Rev. 10 (2011), available at http:// 

www.guttmacher.org/pubs/gpr/14/1/ 

gpr140107.html. 

6 Gipson, J.D., et al., The Effects of Unintended 

Pregnancy on Infant, Child and Parental Health: A 

Review of the Literature, Studies on Family 

Planning, 2008, 39(1):18–38. 

7 Inst. of Med., Clinical Preventive Services for 

Women: Closing the Gaps, Wash., DC: Nat’l Acad. 

Press, 2011, at p. 107. 

8Testimony of Guttmacher Inst., submitted to the 

Comm. on Preventive Servs. for Women, Inst. of 

Med., Jan. 12, 2012, p. 11 citing Bonoan, R + Gonen, 

JS, ‘‘Promoting Healthy Pregnancies: Counseling 

and Contraception as the First Step’’, Washington 

Business Group on Health, Family Health in Brief, 

Issue No. 3. August 2000; see also Sonfield, A., The 

Case for Insurance Coverage of Contraceptive 

Services and Supplies without Cost Sharing, 14 

Guttmacher Pol’y Rev. 10 (2011); Mavranezouli, I., 

Health Economics of Contraception, 23 Best 

Practice & Res. Clinical Obstetrics & Gynaecology 

187–198 (2009); Trussell, J., et al., Cost 

Effectiveness of Contraceptives in the United States, 

79 Contraception 5–14 (2009); Trussell, J., The Cost 

of Unintended Pregnancy in the United States, 75 

Contraception 168–170 (2007). 

targeted at houses of worship, rather 

than a larger set of religiously-affiliated 

organizations. Others argued that, while 

the exemption addresses legitimate 

religious concerns, its scope is already 

broader than necessary and should not 

be expanded. 

Commenters opposing any exemption 

stated that, if the exemption were to be 

retained, clear notice should be 

provided to the affected plan 

participants that their group health 

plans do not include benefits for 

contraceptive services. In addition, they 

urged the Departments to monitor plans 

to ensure that the exemption is not 

claimed more broadly than permitted. 

On the other hand, a number of 

comments asserted that the religious 

employer exemption is too narrow. 

These commenters included some 

religiously-affiliated educational 

institutions, health care organizations, 

and charities. Some of these 

commenters expressed concern that the 

exemption for religious employers will 

not allow them to continue their current 

exclusion of contraceptive services from 

coverage under their group health plans. 

Others expressed concerns about paying 

for such services and stated that doing 

so would be contrary to their religious 

beliefs. 

Commenters also claimed that Federal 

laws, including the Affordable Care Act, 

have provided for conscience clauses 

and religious exemptions broader than 

that provided for in the amended 

interim final regulations. Some 

commenters asserted that the narrower 

scope of the exemption raises concerns 

under the First Amendment and the 

Religious Freedom Restoration Act. 

Other commenters, however, disputed 

claims that the contraceptive coverage 

requirement infringes on rights 

protected by the First Amendment or 

the Religious Freedom Restoration Act. 

These commenters noted that the 

requirement is neutral and generally 

applicable. They also explained that the 

requirement does not substantially 

burden religious exercise and, in any 

event, serves compelling governmental 

interests and is the least restrictive 

means to achieve those interests. 

Some religiously-affiliated employers 

warned that, if the definition of 

religious employer is not broadened, 

they could cease to offer health coverage 

to their employees in order to avoid 

having to offer coverage to which they 

object on religious grounds. 

Commenters supporting a broadening 

of the definition of religious employer 

proposed a number of options, generally 

intended to expand the scope of the 

exemption to include religiouslyaffiliated educational institutions, 

health care organizations, and charities. 

In some instances, in place of the 

definition that was adopted in the 

amended interim final regulations, 

commenters suggested other State 

insurance law definitions of religious 

employer. In other instances, 

commenters referenced alternative 

standards, such as tying the exemption 

to the definition of ‘‘church plan’’ under 

section 414(e) of the Code or to status 

as a nonprofit organization under 

section 501(c)(3) of the Code. 

III. Overview of the Final Regulations 

In response to these comments, the 

Departments carefully considered 

whether to eliminate the religious 

employer exemption or to adopt an 

alternative definition of religious 

employer, including whether the 

exemption should be extended to a 

broader set of religiously-affiliated 

sponsors of group health plans and 

group health insurance coverage. For 

the reasons discussed below, the 

Departments are adopting the definition 

in the amended interim final regulations 

for purposes of these final regulations 

while also creating a temporary 

enforcement safe harbor, discussed 

below. During the temporary 

enforcement safe harbor, the 

Departments plan to develop and 

propose changes to these final 

regulations that would meet two goals— 

providing contraceptive coverage 

without cost-sharing to individuals who 

want it and accommodating nonexempted, non-profit organizations’ 

religious objections to covering 

contraceptive services as also discussed 

below. 

PHS Act section 2713 reflects a 

determination by Congress that coverage 

of recommended preventive services by 

non-grandfathered group health plans 

and health insurance issuers without 

cost sharing is necessary to achieve 

basic health care coverage for more 

Americans. Individuals are more likely 

to use preventive services if they do not 

have to satisfy cost sharing requirements 

(such as a copayment, coinsurance, or a 

deductible). Use of preventive services 

results in a healthier population and 

reduces health care costs by helping 

individuals avoid preventable 

conditions and receive treatment 

earlier.4 Further, Congress, by amending 

the Affordable Care Act during the 

Senate debate to ensure that 

recommended preventive services for 

women are covered adequately by nongrandfathered group health plans and 

group health insurance coverage, 

recognized that women have unique 

health care needs and burdens. Such 

needs include contraceptive services.5

As documented in a report of the 

Institute of Medicine, ‘‘Clinical 

Preventive Services for Women, Closing 

the Gaps,’’ women experiencing an 

unintended pregnancy may not 

immediately be aware that they are 

pregnant, and thus delay prenatal care. 

They also may not be as motivated to 

discontinue behaviors that pose 

pregnancy-related risks (e.g., smoking, 

consumption of alcohol). Studies show 

a greater risk of preterm birth and low 

birth weight among unintended 

pregnancies compared with pregnancies 

that were planned.6 Contraceptives also 

have medical benefits for women who 

are contraindicated for pregnancy, and 

there are demonstrated preventive 

health benefits from contraceptives 

relating to conditions other than 

pregnancy (e.g., treatment of menstrual 

disorders, acne, and pelvic pain).7

In addition, there are significant cost 

savings to employers from the coverage 

of contraceptives. A 2000 study 

estimated that it would cost employers 

15 to17 percent more not to provide 

contraceptive coverage in employee 

health plans than to provide such 

coverage, after accounting for both the 

direct medical costs of pregnancy and 

the indirect costs such as employee 

absence and reduced productivity.8 In 

fact, when contraceptive coverage was 

added to the Federal Employees Health 

Benefits Program, premiums did not 

increase because there was no resulting 


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8728 Federal Register / Vol. 77, No. 31 / Wednesday, February 15, 2012 / Rules and Regulations 

9 Dailard, C., Special Analysis: The Cost of 

Contraceptive Insurance Coverage, Guttmacher Rep. 

on Public Pol’y (March 2003). 

10Sonfield, A., et al., U.S. Insurance Coverage of 

Contraceptives and the Impact of Contraceptive 

Coverage Mandates, Perspectives on Sexual and 

Reproductive Health 36(2):72–79, 2002. 

11Claxton, G., et al., Employer Health Benefits: 

2010 Annual Survey, Menlo Park, Cal.: Kaiser 

Family Found. and Chi., Ill.: Health Research & 

Educ. Trust, 2010. 

12Testimony of Guttmacher Inst., submitted to 

the Comm. on Preventive Servs. for Women, Inst. 

of Med., Jan. 12, 2012, p.6, citing Goldin C and Katz 

L, Career and marriage in the age of the pill, 

American Economic Review, 2000, 90(2):461–465; 

Goldin C and Katz LF, The power of the pill: oral 

contraceptives and women’s career and marriage 

decisions, Journal of Political Economy, 2002, 

110(4):730–770; and Bailey MJ, More power to the 

pill: the impact of contraceptive freedom on 

women’s life cycle labor supply, Quarterly Journal 

of Economics, 2006, 121(1):289–320. 

13Postlethwaite, D., et al., A Comparison of 

Contraceptive Procurement Pre- and Post-Benefit 

Change, 76 Contraception 360 (2007). 

14 Inst. of Med., Clinical Preventive Services for 

Women: Closing the Gaps, Wash., DC: Nat’l Acad. 

Press, 2011, p.19. 

15See section 1251 of the Affordable Care Act and 

its implementing regulations at 26 CFR 54.9815– 

1251T; 29 CFR 2590.715–1251; 45 CFR 147.140. 

16Bertko, John, F.S.A., M.A.A.A., Director of 

Special Initiatives and Pricing in the Center for 

Consumer Information and Insurance Oversight at 

the Centers for Medicare and Medicaid Services, 

Glied, Sherry, Ph.D., Assistant Secretary for 

Planning and Evaluation, U.S. Department of Health 

& Human Services (ASPE/HHS), Miller, Erin, MPH, 

(ASPE/HHS), Wilson, Lee, (ASPE/HHS), Simmons, 

Adelle, (ASPE/HHS), ‘‘The Cost of Covering 

Contraceptives through Health Insurance,’’ (9 

February 2012), available at: http://aspe.hhs.gov/ 

health/reports/2012/contraceptives/ib.shtml. 

health care cost increase.9 Further, the 

cost savings of covering contraceptive 

services have already been recognized 

by States and also within the health 

insurance industry. Twenty-eight States 

now have laws requiring health 

insurance issuers to cover 

contraceptives. A 2002 study found that 

more than 89 percent of insured plans 

cover contraceptives.10 A 2010 survey of 

employers revealed that 85 percent of 

large employers and 62 percent of small 

employers offered coverage of FDAapproved contraceptives.11

Furthermore, in directing nongrandfathered group health plans and 

health insurance issuers to cover 

preventive services and screenings for 

women described in HRSA-supported 

guidelines without cost sharing, 

Congress determined that both existing 

health coverage and existing preventive 

services recommendations often did not 

adequately serve the unique health 

needs of women. This disparity places 

women in the workforce at a 

disadvantage compared to their male coworkers. Researchers have shown that 

access to contraception improves the 

social and economic status of women.12

Contraceptive coverage, by reducing the 

number of unintended and potentially 

unhealthy pregnancies, furthers the goal 

of eliminating this disparity by allowing 

women to achieve equal status as 

healthy and productive members of the 

job force. Research also shows that cost 

sharing can be a significant barrier to 

effective contraception.13 As the 

Institute of Medicine noted, owing to 

reproductive and sex-specific 

conditions, women use preventive 

services more than men, generating 

significant out-of-pocket expenses for 

women.14 The Departments aim to 

reduce these disparities by providing 

women broad access to preventive 

services, including contraceptive 

services. 

The religious employer exemption in 

the final regulations does not 

undermine the overall benefits 

described above. A group health plan 

(and health insurance coverage 

provided in connection with such a 

plan) qualifies for the exemption if, 

among other qualifications, the plan is 

established and maintained by an 

employer that primarily employs 

persons who share the religious tenets 

of the organization. As such, the 

employees of employers availing 

themselves of the exemption would be 

less likely to use contraceptives even if 

contraceptives were covered under their 

health plans. 

A broader exemption, as urged by 

some commenters, would lead to more 

employees having to pay out of pocket 

for contraceptive services, thus making 

it less likely that they would use 

contraceptives, which would undermine 

the benefits described above. Employers 

that do not primarily employ employees 

who share the religious tenets of the 

organization are more likely to employ 

individuals who have no religious 

objection to the use of contraceptive 

services and therefore are more likely to 

use contraceptives. Including these 

employers within the scope of the 

exemption would subject their 

employees to the religious views of the 

employer, limiting access to 

contraceptives, and thereby inhibiting 

the use of contraceptive services and the 

benefits of preventive care. 

The Departments note that this 

religious exemption is intended solely 

for purposes of the contraceptive 

services coverage requirement pursuant 

to PHS Act section 2713 and the 

companion provisions of ERISA and the 

Code. 

The Departments also note that some 

group health plans sponsored by 

employers that do not satisfy the 

definition of religious employer in these 

final regulations may be grandfathered 

health plans 15 and thus are not subject 

to any of the preventive services 

coverage requirements of section 2713 

of the PHS Act, including the 

contraceptive coverage requirement. 

With respect to certain non-exempted, 

non-profit organizations with religious 

objections to covering contraceptive 

services whose group health plans are 

not grandfathered health plans, 

guidance is being issued 

contemporaneous with these final 

regulations that provides a one-year safe 

harbor from enforcement by the 

Departments. 

Before the end of the temporary 

enforcement safe harbor, the 

Departments will work with 

stakeholders to develop alternative ways 

of providing contraceptive coverage 

without cost sharing with respect to 

non-exempted, non-profit religious 

organizations with religious objections 

to such coverage. Specifically, the 

Departments plan to initiate a 

rulemaking to require issuers to offer 

insurance without contraception 

coverage to such an employer (or plan 

sponsor) and simultaneously to offer 

contraceptive coverage directly to the 

employer’s plan participants (and their 

beneficiaries) who desire it, with no 

cost-sharing. Under this approach, the 

Departments will also require that, in 

this circumstance, there be no charge for 

the contraceptive coverage. Actuaries 

and experts have found that coverage of 

contraceptives is at least cost neutral 

when taking into account all costs and 

benefits in the health plan.16 The 

Departments intend to develop policies 

to achieve the same goals for selfinsured group health plans sponsored 

by non-exempted, non-profit religious 

organizations with religious objections 

to contraceptive coverage. 

A future rulemaking would be 

informed by the existing practices of 

some issuers and religious organizations 

in the 28 States where contraception 

coverage requirements already exist, 

including Hawaii. There, State health 

insurance law requires issuers to offer 

plan participants in group health plans 

sponsored by religious employers that 

are exempt from the State contraception 

coverage requirement the option to 

purchase this coverage in a way that 

religious employers are not obligated to 

fund it. It is our understanding that, in 

practice, rather than charging employees 

a separate fee, some issuers in Hawaii 

offer this coverage to plan participants 

at no charge. The Departments will 

work with stakeholders to propose and 


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Federal Register / Vol. 77, No. 31 / Wednesday, February 15, 2012 / Rules and Regulations 8729 

finalize this policy before the end of the 

temporary enforcement safe harbor. 

Nothing in these final regulations 

precludes employers or others from 

expressing their opposition, if any, to 

the use of contraceptives, requires 

anyone to use contraceptives, or 

requires health care providers to 

prescribe contraceptives if doing so is 

against their religious beliefs. These 

final regulations do not undermine the 

important protections that exist under 

conscience clauses and other religious 

exemptions in other areas of Federal 

law. Conscience protections will 

continue to be respected and strongly 

enforced. 

This approach is consistent with the 

First Amendment and Religious 

Freedom Restoration Act. The Supreme 

Court has held that the First 

Amendment right to free exercise of 

religion is not violated by a law that is 

not specifically targeted at religiously 

motivated conduct and that applies 

equally to conduct without regard to 

whether it is religiously motivated—a 

so-called neutral law of general 

applicability. The contraceptive 

coverage requirement is generally 

applicable and designed to serve the 

compelling public health and gender 

equity goals described above, and is in 

no way specially targeted at religion or 

religious practices. Likewise, this 

approach complies with the Religious 

Freedom Restoration Act, which 

generally requires a federal law to not 

substantially burden religious exercise, 

or, if it does substantially burden 

religious exercise, to be the least 

restrictive means to further a compelling 

government interest. 

III. Economic Impact and Paperwork 

Burden 

A. Executive Orders 13563 and 12866— 

Department of Labor and Department of 

Health and Human Services 

Executive Orders 13563 and 12866, 

among other things, 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). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. Executive 

Order 13563 also states that where 

‘‘appropriate and permitted by law, each 

agency may consider (and discuss 

qualitatively) values that are difficult or 

impossible to quantify, including 

equity, human dignity, fairness, and 

distributive impacts.’’ These final 

regulations have been designated a 

‘‘significant regulatory action,’’ although 

not economically significant, under 

section 3(f) of Executive Order 12866. 

Accordingly, these final regulations 

have been reviewed by the Office of 

Management and Budget. 

1. Need for Regulatory Action 

As stated earlier in this preamble, the 

Departments previously issued 

amended interim final regulations 

authorizing an exemption for group 

health plans and health insurance 

coverage sponsored by certain religious 

employers from certain coverage 

requirements under PHS Act section 

2713 (76 FR 46621, August 3, 2011). The 

Departments have determined that it is 

appropriate to finalize, without change, 

these amended interim final regulations 

authorizing the exemption of group 

health plans and health insurance 

coverage sponsored by certain religious 

employers from having to cover certain 

preventive health services under the 

Patient Protection and Affordable Care 

Act. 

2. Anticipated Effects 

The Departments expect that these 

final regulations will not result in any 

additional significant burden or costs to 

the affected entities. 

B. Special Analyses—Department of the 

Treasury 

For purposes of the Department of the 

Treasury, it has been determined that 

this Treasury decision is not a 

significant regulatory action for 

purposes of Executive Order 12866. 

Therefore, a regulatory assessment is not 

required. It has also been determined 

that section 553(b) of the APA (5 U.S.C. 

chapter 5) does not apply to these final 

regulations, and, because these 

regulations do not impose a collection 

of information on small entities, a 

Regulatory Flexibility Analysis under 

the Regulatory Flexibility Act (5 U.S.C. 

chapter 6) is not required. 

C. Paperwork Reduction Act 

These final regulations are not subject 

to the requirements of the Paperwork 

Reduction Act (44 U.S.C. 3501 et seq.) 

because they do not contain a 

‘‘collection of information’’ as defined 

in 44 U.S.C. 3502(11). 

IV. Statutory Authority 

The Department of the Treasury final 

regulations are adopted pursuant to the 

authority contained in sections 7805 

and 9833 of the Code. 

The Department of Labor final 

regulations are adopted pursuant to the 

authority contained in 29 U.S.C. 1027, 

1059, 1135, 1161–1168, 1169, 1181– 

1183, 1181 note, 1185, 1185a, 1185b, 

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

1191c; sec. 101(g), Public Law104–191, 

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

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

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

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

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

119, as amended by Public Law 111– 

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

Order 3–2010, 75 FR 55354 (September 

10, 2010). 

The Department of Health and Human 

Services final regulations are adopted 

pursuant to the authority contained in 

sections 2701 through 2763, 2791, and 

2792 of the PHS Act (42 USC 300gg 

through 300gg-63, 300gg-91, and 300gg92), as amended. 

List of Subjects 

26 CFR Part 54 

Excise taxes, Health care, Health 

insurance, Pensions, Reporting and 

recordkeeping requirements. 

29 CFR Part 2590 

Continuation coverage, Disclosure, 

Employee benefit plans, Group health 

plans, Health care, Health insurance, 

Medical child support, Reporting and 

recordkeeping requirements. 

45 CFR Part 147 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, and State regulation of 

health insurance. 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Chapter I 

Accordingly, 26 CFR part 54 is 

amended as follows: 

PART 54—PENSION EXCISE TAXES 

■ Paragraph 1. The authority citation 

for part 54 is amended by adding an 

entry for § 54.9815–2713 in numerical 

order to read in part as follows: 

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

Section 54.9815–2713 also issued under 26 

U.S.C. 9833. * * * 

■ Par. 2. Section 54.9815–2713T is 

amended in paragraph (a)(1)(iii) by 

removing ‘‘; and’’ and adding a period 

in its place, and by removing paragraph 

(a)(1)(iv). 

■ Par. 3. Section 54.9815–2713 is added 

to read as follows: 


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8730 Federal Register / Vol. 77, No. 31 / Wednesday, February 15, 2012 / Rules and Regulations 

1Appendix B to PBGC’s regulation on Allocation 

of Assets in Single-Employer Plans (29 CFR part 

4044) prescribes interest assumptions for valuing 

benefits under terminating covered single-employer 

plans for purposes of allocation of assets under 

ERISA section 4044. Those assumptions are 

updated quarterly. 

§ 54.9815–2713 Coverage of preventive 

health services. 

(a) Services—(1) In general. 

[Reserved] 

(i) [Reserved] 

(ii) [Reserved] 

(iii) [Reserved] 

(iv) With respect to women, to the 

extent not described in paragraph 

(a)(1)(i) of § 54.9815–2713T, preventive 

care and screenings provided for in 

binding comprehensive health plan 

coverage guidelines supported by the 

Health Resources and Services 

Administration and developed in 

accordance with 45 CFR 

147.130(a)(1)(iv). 

(2) Office visits. [Reserved] 

(3) Out-of-network providers. 

[Reserved] 

(4) Reasonable medical management. 

[Reserved] 

(5) Services not described. [Reserved] 

(b) Timing. [Reserved] 

(c) Recommendations not current. 

[Reserved] 

(d) Effective/applicability date. April 

16, 2012. 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Chapter XXV 

29 CFR part 2590 is amended as 

follows: 

PART 2590—RULES AND 

REGULATIONS FOR GROUP HEALTH 

PLANS 

■ 1. The authority citation for part 2590 

continues to read as follows: 

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

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

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

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

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

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

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

122 Stat. 3881; sec. 1001, 1201, and 1562(e), 

Public Law 111–148, 124 Stat. 119, as 

amended by Public Law 111–152, 124 Stat. 

1029; Secretary of Labor’s Order 3–2010, 75 

FR 55354 (September 10, 2010). 

■ 2. Accordingly, the amendment to the 

interim final rule with comment period 

amending 29 CFR 2590.715– 

2713(a)(1)(iv) which was published in 

the Federal Register at 76 FR 46621– 

46626 on August 3, 2011, is adopted as 

a final rule without change. 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Subtitle A 

PART 147—HEALTH INSURANCE 

REFORM REQUIREMENTS FOR THE 

GROUP AND INDIVIDUAL HEALTH 

INSURANCE MARKETS 

■ 1. The authority citation for part 147 

continues to read as follows: 

Authority: 2701 through 2763, 2791, and 

2792 of the Public Health Service Act (42 

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

and 300gg–92), as amended. 

■ 2. Accordingly, the amendment to the 

interim final rule with comment period 

amending 45 CFR 147.130(a)(1)(iv) 

which was published in the Federal 

Register at 76 FR 46621–46626 on 

August 3, 2011, is adopted as a final 

rule without change. 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement, Internal Revenue Service. 

Approved: February 10, 2012. 

Emily S. McMahon, 

Acting Assistant Secretary of the Treasury 

(Tax Policy). 

Signed this 10th day, of February 2012. 

Phyllis C. Borzi, 

Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. 

Dated: February 10, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Dated: February 10, 2012. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2012–3547 Filed 2–10–12; 3:45 pm] 

BILLING CODE 4120–01–P 

PENSION BENEFIT GUARANTY 

CORPORATION 

29 CFR Part 4022 

Benefits Payable in Terminated SingleEmployer Plans; Interest Assumptions 

for Paying Benefits 

AGENCY: Pension Benefit Guaranty 

Corporation. 

ACTION: Final rule. 

SUMMARY: This final rule amends the 

Pension Benefit Guaranty Corporation’s 

regulation on Benefits Payable in 

Terminated Single-Employer Plans to 

prescribe interest assumptions under 

the regulation for valuation dates in 

March 2012. The interest assumptions 

are used for paying benefits under 

terminating single-employer plans 

covered by the pension insurance 

system administered by PBGC. 

DATES: Effective March 1, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Catherine B. Klion 

(Klion.Catherine@pbgc.gov), Manager, 

Regulatory and Policy Division, 

Legislative and Regulatory Department, 

Pension Benefit Guaranty Corporation, 

1200 K Street NW., Washington, DC 

20005, 202–326–4024. (TTY/TDD users 

may call the Federal relay service tollfree at 1–800–877–8339 and ask to be 

connected to 202–326–4024.) 

SUPPLEMENTARY INFORMATION: PBGC’s 

regulation on Benefits Payable in 

Terminated Single-Employer Plans (29 

CFR part 4022) prescribes actuarial 

assumptions—including interest 

assumptions—for paying plan benefits 

under terminating single-employer 

plans covered by title IV of the 

Employee Retirement Income Security 

Act of 1974. The interest assumptions in 

the regulation are also published on 

PBGC’s Web site (http://www.pbgc.gov). 

PBGC uses the interest assumptions in 

Appendix B to Part 4022 to determine 

whether a benefit is payable as a lump 

sum and to determine the amount to 

pay. Appendix C to Part 4022 contains 

interest assumptions for private-sector 

pension practitioners to refer to if they 

wish to use lump-sum interest rates 

determined using PBGC’s historical 

methodology. Currently, the rates in 

Appendices B and C of the benefit 

payment regulation are the same. 

The interest assumptions are intended 

to reflect current conditions in the 

financial and annuity markets. 

Assumptions under the benefit 

payments regulation are updated 

monthly. This final rule updates the 

benefit payments interest assumptions 

for March 2012.1

The March 2012 interest assumptions 

under the benefit payments regulation 

will be 1.25 percent for the period 

during which a benefit is in pay status 

and 4.00 percent during any years 

preceding the benefit’s placement in pay 

status. In comparison with the interest 

assumptions in effect for February 2012, 

these interest assumptions are 

unchanged. 

PBGC has determined that notice and 

public comment on this amendment are 

impracticable and contrary to the public 

interest. This finding is based on the 


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