18310 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Parts 155, 156, and 157 

[CMS–9989–F] 

RIN 0938–AQ67 

Patient Protection and Affordable Care 

Act; Establishment of Exchanges and 

Qualified Health Plans; Exchange 

Standards for Employers 

AGENCY: Department of Health and 

Human Services. 

ACTION: Final rule, Interim final rule. 

SUMMARY: This final rule will implement 

the new 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. 

The Exchanges will provide competitive 

marketplaces for individuals and small 

employers to directly compare available 

private health insurance options on the 

basis of price, quality, and other factors. 

The Exchanges, which will become 

operational by January 1, 2014, will 

help enhance competition in the health 

insurance market, improve choice of 

affordable health insurance, and give 

small businesses the same purchasing 

clout as large businesses. 

DATES: Effective Date: These regulations 

are effective on May 29, 2012. 

Comment Date: Certain provisions of 

this final rule are being issued as 

interim final. We will consider 

comments from the public on the 

following provisions: §§ 155.220(a)(3); 

155.300(b); 155.302; 155.305(g); 

155.310(e); 155.315(g); 155.340(d); 

155.345(a); and, 155.345(g). To be 

assured consideration, comments must 

be received at one of the addresses 

provided below, no later than 5 p.m. 

Eastern Standard Time (EST) on May 

11, 2012. 

ADDRESSES: In commenting, please refer 

to file code CMS–9989–F. 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–9989–F, 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–9989–F, Mail 

Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 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, 

please call telephone number (410) 786– 

9994 in advance to schedule your 

arrival with one of our staff members. 

FOR FURTHER INFORMATION CONTACT: 

Alissa DeBoy at (301) 492–4428 for 

general information and matters related 

to part 155. 

Michelle Strollo at (301) 492–4429 for 

matters related to part 155 subparts D 

and E. 

Pete Nakahata at (202) 680–9049 for 

matters related to part 156. 

Rex Cowdry at (301) 492–4387 for 

matters related to part 155 subpart H 

and part 157. 

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://regulations.gov. 

Follow the search instructions on that 

Web site to view public comments. 

Comments received timely will be 

also 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. 

This final rule incorporates provisions 

originally published as two proposed 

rules, the July 15, 2011 rule titled 

Establishment of Exchanges and 

Qualified Health Plans (‘‘Exchange 

establishment proposed rule’’), and the 

August 17, 2011 rule titled Exchange 

Functions in the Individual Market: 

Eligibility Determinations and Exchange 

Standards for Employers (‘‘Exchange 

eligibility proposed rule’’). These 

proposed rules are referred to 

collectively as the Exchange 

establishment and eligibility proposed 

rules. While originally published as 

separate rulemaking, the provisions 

contained in these proposed rules are 

integrally linked, and together 

encompass the key functions of 

Exchanges related to eligibility, 

enrollment, and plan participation and 

management. In addition, several 

sections in this final rule are being 

issued as interim final rules and we are 

soliciting comment on those sections. 

Given the highly connected nature of 

these provisions, we are combining both 

proposed rules and the interim final 

rule into a single final rule for reader 

ease and consistency with the note that, 

even though the final rule is shorter 

than the sum of the two proposed rules, 

it is longer than each individually. 

An updated Regulatory Impact 

Analysis associated with this final rule 

is available at http://cciio.cms.gov under 

‘‘Regulations and Guidance.’’ A 

summary of the aforementioned analysis 

is included as part of this final rule. 

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 

CAHPS Consumer Assessment of 

Healthcare Providers and Systems 

CHIP Children’s Health Insurance Program 

CMS Centers for Medicare & Medicaid 

Services 

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Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 18311 

DOL U.S. Department of Labor 

ERISA Employee Retirement Income 

Security Act (29 U.S.C. section 1001, et 

seq.) 

FEHBP Federal Employees Health Benefits 

Program (5 U.S.C. 8901, et seq.) 

HEDIS Healthcare Effectiveness Data and 

Information Set 

HHS U.S. Department of Health and Human 

Services 

HIPAA Health Insurance Portability and 

Accountability Act of 1996 (Pub. L. 104– 

191) 

HMO Health Maintenance Organization 

IHS Indian Health Service 

IRS Internal Revenue Service 

LEP Limited English Proficient 

MAGI Modified Adjusted Gross Income 

MEWA Multiple Employer Welfare 

Arrangement 

NAIC National Association of Insurance 

Commissioners 

OMB Office of Management and Budget 

OPM U.S. Office of Personnel Management 

PBM Pharmacy Benefit Manager 

PHS Act Public Health Service Act 

PRA Paperwork Reduction Act of 1985 

QHP Qualified Health Plan 

SHOP Small Business Health Options 

Program 

SSA Social Security Administration 

SSN Social Security Number 

The Act Social Security Act 

The Code Internal Revenue Code of 1986 

TIN Taxpayer Identification Number 

Table of Contents 

I. Background 

A. Legislative Overview 

1. Legislative Requirements for 

Establishing Exchanges 

2. Legislative Requirements for Related 

Provisions 

B. Structure of the Final Rule 

II. Provisions of the Proposed Regulation and 

Analysis of and Responses to Public 

Comments 

A. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. Subpart A—General Provisions 

2. Subpart B—General Standards Related to 

the Establishment of an Exchange by a 

State 

3. Subpart C—General Functions of an 

Exchange 

4. Subpart D—Exchange Functions in the 

Individual Market: Eligibility 

Determinations for Exchange 

Participation and Insurance Affordability 

Programs 

5. Subpart E—Exchange Functions in the 

Individual Market: Enrollment in 

Qualified Health Plans 

6. Subpart H—Exchange Functions: Small 

Business Health Options Program 

(SHOP) 

7. Subpart K—Exchange Functions: 

Certification of Qualified Health Plans 

B. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

1. Subpart A—General Provisions 

2. Subpart C—Qualified Health Plan 

Minimum Certification Standards 

C. Part 157—Employer Interactions With 

Exchange and SHOP Participation 

1. Subpart A—General Provisions 

2. Subpart C—Standards for Qualified 

Employers 

III. Provisions of the Final Regulations 

IV. Waiver of Proposed Rulemaking 

V. Collection of Information Requirements 

VI. Summary of Regulatory Impact Analysis 

VII. Regulatory Flexibility Act 

VIII. Unfunded Mandates 

IX. Federalism 

X. Regulations Text 

Executive Summary: Beginning in 

2014, individuals and small businesses 

will be able to purchase private health 

insurance through competitive 

marketplaces called Affordable 

Insurance Exchanges, or ‘‘Exchanges.’’ 

Exchanges will offer Americans 

competition, choice, and clout. 

Insurance companies will compete for 

business on a level playing field, driving 

down costs. Consumers will have a 

choice of health plans to fit their needs, 

and Exchanges will give individuals and 

small businesses the same purchasing 

clout as big businesses. 

This final rule: (1) Sets forth the 

minimum Federal standards that States 

must meet if they elect to establish and 

operate an Exchange, including the 

standards related to individual and 

employer eligibility for and enrollment 

in the Exchange and insurance 

affordability programs; (2) outlines 

minimum standards that health 

insurance issuers must meet to 

participate in an Exchange and offer 

qualified health plans (QHPs); and (3) 

provides basic standards that employers 

must meet to participate in the Small 

Business Health Options Program 

(SHOP). The intent of this final rule is 

to afford States substantial discretion in 

the design and operation of an 

Exchange, with greater standardization 

provided where directed by the statute 

or where there are compelling practical, 

efficiency or consumer protection 

reasons. Consistent with the scope of 

the Exchange establishment and 

eligibility proposed rules, this final rule 

does not address all of the Exchange 

provisions in the Affordable Care Act; 

rather, more details will be provided in 

forthcoming guidance and future 

rulemaking, where appropriate. 

A portion of this rule is issued on an 

interim final basis. As such, we will 

consider comments from the public on 

the following provisions: 

• § 155.220(a)(3)—Related to the 

ability of a State to permit agents and 

brokers to assist qualified individuals in 

applying for advance payments of the 

premium tax credit and cost-sharing 

reductions for QHPs. 

• § 155.300(b)—Related to Medicaid 

and CHIP regulations; 

• § 155.302—Related to options for 

conducting eligibility determinations; 

• § 155.305(g)—Related to eligibility 

standards for cost-sharing reductions; 

• § 155.310(e)—Related to timeliness 

standards for Exchange eligibility 

determinations; 

• § 155.315(g)—Related to 

verification for applicants with special 

circumstances; 

• § 155.340(d)—Related to timeliness 

standards for the transmission of 

information for the administration of 

advance payments of the premium tax 

credit and cost-sharing reductions; and 

• § 155.345(a) and § 155.345(g)— 

Related to agreements between agencies 

administering insurance affordability 

programs. 

I. Background 

A. Legislative Overview 

1. Legislative Requirements for 

Establishing Exchanges 

Section 1311(b) and section 1321(b) of 

the Affordable Care Act provide that 

each State has the opportunity to 

establish an Exchange(s) that: (1) 

Facilitates the purchase of insurance 

coverage by qualified individuals 

through qualified health plans (QHPs); 

(2) assists qualified employers in the 

enrollment of their employees in QHPs; 

and (3) meets other standards specified 

in the Affordable Care Act. 

Section 1321 of the Affordable Care 

Act discusses State flexibility in the 

operation and enforcement of Exchanges 

and related policies. Section 1311(k) 

specifies that Exchanges may not 

establish rules that conflict with or 

prevent the application of regulations 

promulgated by the Secretary. Section 

1311(d) describes the minimum 

functions of an Exchange, including the 

certification of QHPs. 

Section 1321(c)(1) directs the 

Secretary to establish and operate such 

Exchange within States that either: (1) 

Do not elect to establish an Exchange, or 

(2) as determined by the Secretary on or 

before January 1, 2013, will not have an 

Exchange operable by January 1, 2014. 

Section 1321(a) also provides broad 

authority for the Secretary to establish 

standards and regulations to implement 

the statutory standards related to 

Exchanges, QHPs, and other 

components of title I of the Affordable 

Care Act. 

Section 1401 of the Affordable Care 

Act creates new section 36B of the 

Internal Revenue Code (the Code), 

which provides for a premium tax credit 

for eligible individuals who enroll in a 

QHP through an Exchange. Section 1402 

establishes provisions to reduce the 

cost-sharing obligation of certain 

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18312 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

1State Exchange Implementation Questions and 

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

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

exchange_q_and_a.pdf.pdf. 

eligible individuals enrolled in a QHP 

offered through an Exchange, including 

standards for determining Indians 

eligible for certain categories of costsharing reductions. 

Under section 1411 of the Affordable 

Care Act, the Secretary is directed to 

establish a program for determining 

whether an individual meets the 

eligibility standards for Exchange 

participation, advance payments of the 

premium tax credit, cost-sharing 

reductions, and exemptions from the 

individual responsibility provision. 

Sections 1412 and 1413 of the 

Affordable Care Act and section 1943 of 

the Social Security Act (the Act), as 

added by section 2201 of the Affordable 

Care Act, contain additional provisions 

regarding eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions, as well as 

provisions regarding simplification and 

coordination of eligibility 

determinations and enrollment with 

other health programs. 

Unless otherwise specified, the 

provisions in this final rule related to 

the establishment of minimum 

functions of an Exchange are based on 

the general authority of the Secretary 

under section 1321(a)(1) of the 

Affordable Care Act. 

2. Legislative Requirements for Related 

Provisions 

Subtitle K of title II of the Affordable 

Care Act, Protections for American 

Indians and Alaska Natives, section 

2901, extends special benefits and 

protections to Indians including limits 

on cost sharing and payer of last resort 

requirements for health programs 

operated by the Indian Health Service 

(IHS), Indian tribes, tribal organizations, 

and urban Indian organizations. We are 

finalizing special Exchange enrollment 

periods and the reductions in cost 

sharing for Indians authorized, 

respectively, by sections 1311(c)(6) and 

1402(d) of the Affordable Care Act 

under this authority in subparts D and 

E of part 155, and we expect to address 

others in future rulemaking. 

Section 6005 of the Affordable Care 

Act creates new section 1150A of the 

Act, which directs QHP issuers, and 

sponsors of certain plans offered under 

part D of title XVIII of the Act to provide 

data on the cost and distribution of 

prescription drugs covered by the plan. 

We are codifying these standards under 

this authority in subpart C of part 156. 

B. Structure of the Final Rule 

The regulations outlined in this final 

rule are codified in the new 45 CFR 

parts 155, 156, and 157. Part 155 

outlines the standards relative to the 

establishment, operation, and minimum 

functionality of Exchanges, including 

eligibility standards for insurance 

affordability programs. Part 156 outlines 

the standards for health insurance 

issuers with respect to participation in 

an Exchange, including the minimum 

certification standards for QHPs. Many 

provisions in part 155 have parallel 

provisions under part 156 because the 

Affordable Care Act creates 

complementary responsibilities for 

Exchanges and QHP issuers. Where 

possible, there are cross-references 

between parts 155 and 156 to avoid 

redundancy. Part 157 establishes the 

participation standards for employers in 

the Small Business Health Options 

Program (SHOP). 

Subjects included in the Affordable 

Care Act to be addressed in separate 

rulemaking include but are not limited 

to: (1) Standards outlining the Exchange 

process for issuing certificates of 

exemption from the individual 

responsibility policy and payment 

under section 1411(a)(4); (2) defining 

essential health benefits, actuarial value 

and other benefit design standards; and 

(3) standards for Exchanges and QHP 

issuers related to quality. 

We note that the health plan 

standards set forth under this final rule 

are, for the most part, strictly related to 

QHPs certified to be offered through the 

Exchange and not the entire individual 

and small group market. Such policies 

for the entire individual and small and 

large group markets have been, and will 

continue to be, addressed in separate 

rulemaking issued by HHS, and the 

Departments of Labor and the Treasury. 

C. Alignment With Related Rules and 

Published Information 

The Exchange eligibility proposed 

rule was published in conjunction with 

‘‘Medicaid Program; Eligibility Changes 

under the Affordable Care Act of 2010— 

CMS–2349–P,’’ which will be referred to 

throughout this final rule as the 

‘‘Medicaid proposed rule’’ and the 

proposed rule published by the 

Department of the Treasury, ‘‘Health 

Insurance Premium Tax Credits—REG 

131491–10,’’ which will be referred to 

throughout this final rule as the 

‘‘Treasury proposed rule’’. This 

regulation includes numerous crossreferences to the Medicaid final rule, 

which is expected to be finalized shortly 

after this final rule. The Treasury final 

rule is expected to be published soon 

after this Exchanges final rule. 

HHS published a document titled 

‘‘State Exchange Implementation 

Question and Answers’’ on November 

29, 2011. 1 We reference this document 

throughout the preamble where the 

information complements policies in 

this final rule. 

II. Provisions of the Proposed 

Regulation and Analysis and Responses 

to Public Comments 

The Exchange establishment and 

eligibility proposed rules were 

published in the Federal Register on 

July 15, 2011 and August 17, 2011, 

respectively, with comment periods 

ending October 31, 2011. In total, we 

received approximately 24,781 

comments on both proposed rules. Of 

the comments received, about 23,000 

were a collection of letter campaigns 

related to women’s services, or general 

public comments on the Affordable Care 

Act and the government’s role in 

healthcare, but not specific to the 

proposed rules. We also received a 

number of comments on essential health 

benefits and preventive services. We 

have not addressed such comments, and 

others that are not directly related to the 

proposed rule, because they are outside 

the scope of this final rule. 

Before the proposed rules, HHS also 

published a Request for Comment (the 

RFC) on August 3, 2010 (75 FR 45584) 

inviting the public to provide input 

regarding the rules that will govern the 

Exchanges. In this final rule, we have 

responded to comments submitted in 

response to the Exchange establishment 

and eligibility proposed rules and the 

RFC, where relevant. These comments 

are not separately identified, but instead 

are incorporated into each substantive 

section of the final rule as appropriate. 

For the most part, we address issues 

according to the numerical order of the 

regulation sections. 

Comments represented a wide variety 

of stakeholders, including but not 

limited to States, tribes, tribal 

organizations, health plans, consumer 

groups, healthcare providers, industry 

experts, and members of the public. In 

addition, we held consultation sessions 

on August 22, 2011, September 7, 2011, 

and September 15, 2011 to provide an 

overview of the proposed rule where 

Tribal governments were afforded an 

opportunity to ask questions and make 

comments. The public was reminded to 

submit written comments before the 

close of the public comment period that 

was announced in the proposed rule 

and we extended the comment period 

by 30 days to ensure ample opportunity 

for comments. 

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Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 18313 

Many commenters addressed the 

balance between flexibility for States 

and Exchanges and standardization and 

predictability for consumers 

nationwide. Commenters also expressed 

concerns about differences between 

Exchange and Medicaid policies and 

about various aspects of the eligibility 

verification and redetermination 

process. 

While we recognize that consumers 

may benefit from national standards, we 

continue to believe that States are best 

equipped to adapt the minimum 

Exchange functions to their local 

markets and the unique needs of their 

residents. Further, States already have 

significant experience performing many 

key functions, including oversight and 

enforcement of health plans, and 

determining eligibility for health benefit 

programs. Therefore, where possible we 

finalized provisions of the proposed 

rule that provided significant discretion 

for States to go beyond the minimum 

standards in implementing and 

designing an Exchange. We believe this 

approach leverages local expertise and 

experience to provide a positive 

experience for consumers. Since 

functions within an Exchange will be 

handled consistently, consumers 

comparing plans within an Exchange 

will benefit from standardization. In 

addition, based on comments received, 

we provide States with additional 

options for determining eligibility under 

a State-based and Federally-facilitated 

Exchange in this final rule. 

A. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. Subpart A—General Provisions 

a. Basis and Scope (§ 155.10) 

Proposed § 155.10 of subpart A 

specified the general statutory authority 

for and scope of standards proposed in 

part 155, which establish minimum 

standards for the State option to 

establish an Exchange; minimum 

Exchange functions; eligibility and 

enrollment of qualified individuals, 

including for advance payments of the 

premium tax credit and cost-sharing 

reductions; enrollment periods; 

minimum SHOP functions; eligibility 

and enrollment of qualified employers 

and employees in a SHOP; and 

certification of QHPs. We did not 

receive specific comments on this 

section and are finalizing the provision 

as proposed. 

b. Definitions (§ 155.20) 

Under § 155.20, we set forth 

definitions for terms that are used 

throughout part 155. For the most part, 

the definitions presented in § 155.20 

were taken directly from the Affordable 

Care Act or from existing regulations, 

though some new definitions were 

created when necessary. 

We proposed definitions or 

interpretations for ‘‘Exchange,’’ 

‘‘advance payments of the premium tax 

credit,’’ ‘‘annual open enrollment 

period,’’ ‘‘applicant,’’ ‘‘cost-sharing 

reductions,’’ ‘‘initial enrollment 

period,’’ and ‘‘special enrollment 

period.’’ In addition, in the Exchange 

Eligibility proposed rule, we included a 

definition for ‘‘application filer.’’ 

Comment: A few commenters 

suggested that the term ‘‘applicant’’ only 

apply to individuals seeking coverage 

for themselves. Another commenter 

sought clarification as to whether the 

term applies only to modified adjusted 

gross income (MAGI)–based Medicaid 

applicants or to all Medicaid applicants. 

Response: We have revised the 

definition of the term ‘‘applicant’’ to 

apply only to individuals who are 

seeking eligibility for coverage for 

themselves or their family. The 

proposed definition included an 

individual who is seeking eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions who 

might not be seeking coverage for 

himself or herself (for example, in a 

situation in which a parent is seeking 

coverage only for his or her children); 

we have removed these programs from 

the definition of applicant as part of this 

clarification. Revising this definition is 

important to clarify that certain 

provisions of subpart D (for example, 

verification of citizenship and lawful 

presence) only apply to individuals who 

are seeking coverage. 

We also note that this term applies 

regardless of the results of an 

individual’s eligibility determination. 

Consequently, if an individual is 

seeking coverage and he or she is 

ultimately determined eligible for 

Medicaid in a non-MAGI category, he or 

she was still an ‘‘applicant.’’ We further 

clarify that the term ‘‘applicant’’ applies 

regardless of whether an application 

was submitted directly to the Exchange, 

or if an application was submitted to an 

agency administering an insurance 

affordability program (for example, the 

State Medicaid or CHIP agency) and 

then transmitted to the Exchange. 

Comment: We received comments 

suggesting that the definition of 

‘‘application filer,’’ described in 

§ 155.300(a), incorporate language 

included in Medicaid proposed 

regulations at 42 CFR 435.907, allowing 

that applications be completed by ‘‘the 

applicant, an authorized representative, 

or someone acting responsibly for the 

applicant.’’ 

Response: In the final rule, we amend 

the definition of ‘‘application filer’’ in 

proposed § 155.300 to align with the 

description of individuals who may 

submit an application according to 

§ 155.405(c) of this final rule as well as 

the Medicaid final rule, and to include: 

applicants; 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; 

authorized representatives; or, if the 

applicant is a minor or incapacitated, 

someone acting responsibly on behalf of 

the applicant. 

Comment: A few commenters 

suggested that defining ‘‘benefit year’’ as 

a calendar year may be confusing to 

some industries where such term is not 

used in the same way. Others asked how 

this definition impacts the calculation 

of deductibles and out-of-pocket limits. 

Response: The term ‘‘benefit year’’ is 

defined only for the purposes of this 

regulation and does not change the 

industry’s use of the term. In this final 

rule, as in the proposed rule, we use 

‘‘benefit year’’ to refer to the calendar 

year of coverage provided through the 

Exchange. The calculation of 

deductibles and cost-sharing limits 

described in section 1302(c) of the 

Affordable Care Act will be addressed in 

future regulations. 

Comment: One commenter 

recommended we should define 

‘‘consumer’’ to include enrollees, 

qualified employers, qualified 

individuals and qualified employers. 

One commenter requested that ‘‘person’’ 

be more clearly defined to be limited to 

individuals acting as brokers or agents, 

because in some States the word 

‘‘person’’ is defined to include entities 

such as a company, insurer, association, 

or an organization. 

Response: In response to the 

comments, we have tried to limit the 

use of the terms ‘‘consumer’’ and 

‘‘person’’ to reduce ambiguity and any 

confusion. When possible, we say 

‘‘individual’’ when the terms 

‘‘applicant, qualified individual, or 

enrollee’’ are not suitable. The 

definition of agent or broker is inclusive 

of individuals, companies, insurers, 

associations, organizations, and any 

other entity that holds a license as an 

agent, broker, or insurance producer. 

This final rule does not define ‘‘person.’’ 

Comment: Some commenters 

suggested that we codify the definition 

of ‘‘educated health care consumer in 

section 1304(e) of the Affordable Care 

Act. 

Response: We have added this 

definition to § 155.20. 

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18314 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

Comment: Two commenters sought 

clarification on whether the term 

‘‘Exchange’’ includes both the 

individual market and SHOP 

components of an Exchange. 

Response: The definition of 

‘‘Exchange’’ includes the phrase ‘‘makes 

QHPs available to qualified individuals 

and qualified employers’’ and thus 

incorporates the Exchange functions 

that serve both the individual and small 

group markets. Governance of an 

independent SHOP is addressed in 

§ 155.110(e) and unique standards for 

the SHOP are outlined in subpart H of 

this final rule. 

Comment: One commenter suggested 

that we define what it means for an 

Exchange to ‘‘make available’’ QHPs. 

Response: We believe that this 

regulation in its entirety defines what it 

means to ‘‘make available’’ QHPs in 

terms of certifying QHPs, displaying 

comparative QHP information, 

determining eligibility for enrollment, 

facilitating enrollment, and providing 

consumer assistance. 

Comment: One commenter requested 

that we define the term ‘‘entities eligible 

to carry out Exchange functions.’’ 

Response: We define what entities are 

eligible to carry out Exchange functions 

in § 155.110(a) of this final rule, and 

believe that a definition in § 155.20 

would be duplicative. 

Comment: Several commenters 

recommended that the final rule include 

a definition of ‘‘family’’ and that it be 

based on definitions used by Office of 

Personnel Management or the 

Department of Labor, or as defined 

under the Family and Medical Leave 

Act. Commenters urged the definition to 

capture the diversity and variety of 

family structures. Several commenters 

noted that a definition will promote 

clarity and consistency in the 

implementation of proposed § 156.255. 

Response: For purposes of the 

administration of advance payments of 

the premium tax credit and cost-sharing 

reductions, this final rule crossreferences and incorporates from section 

36B of the Code the definition of 

‘‘household income.’’ That definition 

relies on an identification of members of 

the ‘‘family’’ that is based on section 

36B of the Code, which will be finalized 

as part of the Treasury rule. We intend 

this final rule to align with the Code as 

implemented by the Secretary of the 

Treasury’s final rules. This final rule, at 

§ 155.320(c)(2)(i), provides that an 

application filer must provide an 

attestation to the Exchange regarding the 

individuals that comprise his or her 

household for purposes of Medicaid and 

CHIP eligibility (within the meaning of 

42 CFR 435.603(f)). Please refer to part 

155 subpart D for a more detailed 

discussion of this topic. We note that we 

are not finalizing the provisions of 

§ 156.255(c). 

Comment: Several commenters stated 

that the definition of ‘‘qualified 

employer’’ should include a multiemployer plan as defined in ERISA 

Section 3(37), and that ‘‘qualified 

employee’’ should include individuals 

who are participants in a multiemployer plan, not just individuals who 

are employed by a qualified employer. 

Response: We do not think that the 

law supports accepting the commenters’ 

suggested changes in the definitions of 

‘‘qualified employer’’ and ‘‘qualified 

employee.’’ Accordingly, we have not 

changed the definitions in the final rule. 

We intend to address commenters’ 

concerns surround multi-employer and 

church plans in future guidance. 

Comment: We received numerous 

comments regarding the types of plans 

that should be considered health plans 

eligible for certification as QHPs. A few 

commenters suggested that multiple 

employer welfare arrangements 

(MEWAs) be allowed to offer plans 

through the Exchange, be allowed to 

offer plans only in the SHOP and not 

the individual market, and be allowed 

to restrict enrollment to specific 

industry members or associations. A 

small number of commenters also 

suggested that Taft-Hartley plans and 

church plans be available through the 

Exchange. Other commenters urged 

HHS to ensure that all QHPs offered 

through the Exchange meet the same 

standards to ensure a level playing field 

and questioned the ability of selfinsured employer groups to comply. 

Response: We finalize the definition 

of a health plan as codified from section 

1301(b)(1) of the Affordable Care Act, 

and the standards set forth for 

participation in an Exchange are equally 

applicable to any health insurance 

issuer seeking certification of health 

plans as QHPs. We intend to address 

issues related to multi-employer and 

church plans in future guidance. 

Comment: Many commenters 

recommended HHS adopt an expansive 

definition of ‘‘lawfully present’’ that 

includes all prospective qualified 

individuals. A few commenters 

suggested that our definition be based 

on the current definition in section 214 

of the Children’s Health Insurance 

Program Reauthorization Act (CHIPRA, 

Pub. L. 111–3) or definitions proposed 

by the National Immigration Law Center 

and Asian and Pacific Islander 

American Health Foundation. Several 

commenters recommended that States 

have flexibility to continue using 

existing standards for lawfully present, 

as long as the rules are no more 

restrictive than Federal law. Many 

commenters recommended that we 

clarify that any list of ‘‘lawfully 

present’’ immigration categories is not 

exhaustive, as statuses and documents 

are constantly evolving. 

Many commenters also suggested a 

range of additional categories to be 

included in the lawfully present 

definitions, including individuals 

whose immigration status makes them 

eligible to apply for an Employment 

Authorization Document regardless of 

whether they have secured a work 

permit under 8 CFR 274a.12; certain 

victims of trafficking who have been 

granted ‘‘continued presence’’; 

individuals granted a stay of removal/ 

deportation by administrative or court 

order, statute, or regulations; 

individuals who are lawfully present in 

the Commonwealth of the Mariana 

Islands and American Samoa; 

individuals Permanently Residing in the 

U.S. under Color of Law; and asylum 

applicants (including pending 

applicants for asylum under section 

208(a) of the Immigration and 

Nationality Act (INA), or for 

withholding of removal under section 

241(b)(3) of the INA or Convention 

Against Torture). 

Response: We maintain the definition 

of ‘‘lawfully present’’ as used in the PreExisting Condition Insurance Plan, 

which is consistent with the definition 

of ‘‘lawfully present’’ used in section 

214 of CHIPRA, and included in the 

proposed rule. HHS will consider 

commenters’ recommendations in 

developing future rulemaking on this 

definition as it relates to Medicaid, 

CHIP, and the Exchanges. 

Comment: Several commenters 

recommended we adopt the broad, U.S. 

Census data definition for ‘‘limited 

English proficient’’ which is ‘‘an 

individual whose primary language is 

not English and who speaks English less 

than very well.’’ 

Response: In the final rule, we do not 

adopt a definition for the phrase 

‘‘limited English proficient.’’ We 

anticipate issuing future guidance that 

will interpret this term and will provide 

best practices and advice related to 

meaningful access standards for limited 

English proficient individuals. 

Comment: One commenter 

recommended that the definition for 

‘‘minimum essential coverage’’ include 

both defined contribution and defined 

benefit plans, allowing individuals to 

use any health care funds to maximize 

their purchasing power. Another 

commenter suggested that the Federal 

definition of ‘‘eligible employer 

sponsored plan’’ be such that in 

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circumstances that an employer is not 

able to provide a threshold of quality 

coverage, a defined contribution 

combined with premium tax credits 

should be provided in the individual 

market Exchange. 

Response: The definitions of 

‘‘minimum essential coverage’’ and 

‘‘eligible employer sponsored plan’’ are 

provided in section 5000A(f) of the 

Code and will be interpreted in 

Treasury guidance. The provisions of 

the Affordable Care Act that we 

implement through this final rule rely 

on those definitions from the Code. 

Comment: One commenter believes 

that Navigators should not be an 

individual person, but rather a regulated 

entity/institution, noting that awarding 

Navigator grants to individuals will 

increase the potential for fraud and 

consumer protection violations. 

Response: We maintain the definition 

for ‘‘Navigator’’ from the proposed rule. 

However, we have added Navigator 

standards in § 155.210(b) that are 

intended to reduce the potential for 

fraud and increase consumer protection. 

Comment: Regarding the definition of 

‘‘plain language,’’ one commenter 

recommended that all communications 

be provided in the individual’s primary 

language. Several commenters 

recommended that we align with the 

National Institutes of Health’s definition 

of ‘‘plain language,’’ including 

standards that communications be 

written between a fourth and sixth grade 

reading level, include non-written 

visuals, and reflect the likelihood that a 

proportion of individuals accessing the 

Exchange will not be familiar with 

utilizing online technologies. 

Response: We maintain the definition 

of ‘‘plain language’’ as codified from 

section 1311(e)(3)(B) of the Affordable 

Care Act, which directs HHS and the 

Department of Labor to jointly develop 

and issue guidance on best practices of 

plain language writing. 

Comment: One comment voiced 

concern that the definition of ‘‘qualified 

health plan’’ might potentially 

undermine a State that wanted to 

implement a standard that QHP issuers 

offer their QHPs outside of an Exchange. 

Response: We note that, consistent 

with the Affordable Care Act provisions 

that address how issuers of QHPs may 

offer their products, nothing in this final 

rule precludes a QHP issuer from 

offering a QHP outside of an Exchange, 

which we believe leaves flexibility for 

States to establish the offering of QHPs 

outside of the Exchange as a condition 

of certification. 

Comment: We received comments 

throughout to add the phrase ‘‘and 

stand-alone dental plans providing the 

pediatric dental essential health 

benefit’’ when referring to QHPs. One 

commenter requested that we define 

‘‘stand-alone dental plan.’’ 

Response: In general, with some 

exceptions as noted in new 

§ 155.1065(a)(3) of this final rule, we 

consider stand-alone dental plans to be 

a type of ‘‘qualified health plan,’’ and 

therefore believe that the addition of the 

suggested text is unnecessary. We 

believe that § 155.1065 sufficiently 

defines ‘‘stand-alone dental plan’’ for 

the purposes of participation in an 

Exchange, and a definition in § 155.20 

would be duplicative. 

Comment: We received several 

comments about the applicability of 

Medicare Secondary Payer (MSP) rules 

regarding coverage of End Stage Renal 

Disease (ESRD) and their applicability 

to QHPs as group health plans. These 

comments were received within the 

context of several sections, including: 

§ 155.20, which defines the terms 

‘‘health plan’’ and ‘‘qualified health 

plan’’; § 155.705 (Functions of a SHOP); 

§ 155.1000 (Certification Standards for 

QHPs); and § 156.200 (QHP 

Participation Standards). Commenters 

recommended that MSP rules regarding 

coverage of ESRD apply to QHPs as 

group health plans. 

Response: We clarify that QHPs 

offered in the small group market fall 

under the definition of a group health 

plan subject to MSP provisions codified 

in section 1862(b)(1) of the Social 

Security Act. This would result in parity 

between the SHOP and non-Exchange 

small group market regarding the 

applicability of MSP rules that pertain 

to ESRD coverage. 

Comment: A few commenters 

suggested that the definition of ‘‘State’’ 

include the Territories. 

Response: The definition of State is 

based on section 1304 of the Affordable 

Care Act, which does not include 

Territories. Section 1323 of the 

Affordable Care Act addresses 

Territories in the context of Exchanges 

and is not within the scope of this 

regulation. 

Summary of Regulatory Changes 

We are finalizing the definitions 

proposed in § 155.20, with the addition 

of the term ‘‘educated healthcare 

consumer,’’ which references the 

statutory definition for such term. As 

discussed in later sections, we also add 

a definition for ‘‘application filer’’ and 

‘‘Exchange Blueprint’’ to provide more 

detail for the purposes of eligibility and 

enrollment and approval of State-based 

Exchanges. We also clarified the 

definition of ‘‘applicant.’’ Finally, we 

have replaced the text of definitions 

copied from the Affordable Care Act 

with a direct reference instead, 

including: ‘‘eligible-employer sponsored 

plan,’’ ‘‘grandfathered health plan,’’ 

‘‘health plan,’’ ‘‘individual market,’’ 

‘‘plain language,’’ and ‘‘small group 

market.’’ 

2. Subpart B—General Standards 

Related to the Establishment of an 

Exchange 

The Affordable Care Act sets forth 

general standards related to the 

establishment of an Exchange and 

identifies a number of areas where 

States that choose to operate an 

Exchange may exercise operational 

discretion. This subpart sets forth 

approval standards for State-based 

Exchanges, as well as the process by 

which HHS will determine whether a 

State-based Exchange meets those 

standards. 

a. Establishment of a State Exchange 

(§ 155.100) 

We proposed to codify the option for 

States to elect to establish an Exchange 

to serve qualified individuals and 

qualified employers, provided that the 

Exchange is a governmental agency or 

non-profit entity established by the 

State and that the governance structure 

of the Exchange is consistent with 

§ 155.110. Furthermore, we introduced 

the concept of a State Partnership model 

that would allow States to leverage work 

done by other States and the Federal 

Government. 

Comment: Many commenters 

supported the general approach of State 

flexibility in the Exchange 

establishment proposed rule, while 

some urged additional flexibility and 

others requested more uniformity to 

decrease administrative complexity. 

Some topics where more uniformity was 

suggested include: minimum numbers 

of board meetings, conflict of interest 

standards, stakeholder consultation, call 

centers outside of normal hours, types 

of consumer outreach, notices, and 

access for limited English proficient 

individuals. Several commenters urged 

HHS to establish a menu of systems, 

functions, standard operating 

procedures, educational materials, 

reporting formats, and other tools that 

States could adopt for their Exchanges. 

One commenter suggested that States 

that use the HHS templates should 

receive an accelerated review process. 

Response: Decreasing administrative 

complexity will assist States in 

Exchange establishment. States are 

encouraged to make use of materials 

available to them from other States and 

on HHS’s Collaborative Application 

Lifecycle Tool (CALT). HHS is also 

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developing a Web portal that will allow 

continued sharing of information, 

business process flows, and templates to 

aid States in the establishment of their 

Exchange. 

Comment: One commenter requested 

clarification on proposed § 155.100(a) 

regarding whether a State could only 

establish a SHOP, and not an Exchange 

to serve the individual market. Other 

commenters urged HHS not to allow 

administrative separation of the small 

group and individual markets between a 

State-based and Federally-facilitated 

Exchange. 

Response: HHS will approve a Statebased Exchange upon determining that 

all minimum functions of an Exchange 

are met, which includes providing 

access to QHPs to qualified individuals 

and to qualified employers through a 

SHOP. 

Comment: In relation to proposed 

§ 155.100(b), several commenters voiced 

support of the option for Exchanges to 

be operated through a non-profit or 

governmental entity. One commenter 

requested clarification on what is 

encompassed in ‘‘governmental.’’ Some 

commenters were concerned about 

accountability of non-profit entities and 

encouraged States to establish 

governmental or quasi-governmental 

entities. Several commenters requested 

clarification that stakeholders would 

still need to be consulted regardless of 

the governance entity. 

Response: The discretion afforded 

States outlined in section 1311(d)(1) of 

the Affordable Care Act is critical. We 

do not provide additional clarification 

regarding what would be considered 

‘‘governmental’’ in deference to existing 

State classifications. We note that 

§ 155.130 of this final rule applies to all 

Exchanges. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.100 of the proposed 

rule without modification. 

b. Approval of a State Exchange 

(§ 155.105) 

In § 155.105, we proposed that the 

Secretary must determine by January 1, 

2013 whether a State’s Exchange will be 

fully operational by January 1, 2014 and 

outlined the proposed standards based 

upon which HHS will approve a State 

Exchange. Please refer to the preamble 

of the Exchange establishment proposed 

rule, at 76 FR 41870–41871, for a 

detailed discussion of these standards. 

Specifically, we outlined the process 

through which HHS will approve a 

State-based Exchange. We proposed that 

to initiate the State Exchange approval 

process, a State must submit an 

Exchange Plan to HHS. We noted that 

we planned to issue a template 

outlining the components of the 

Exchange Plan, subject to the notice and 

comment process under the Paperwork 

Reduction Act. We proposed that each 

State receive written approval or 

conditional approval of its Exchange 

Plan in order to operate and to 

constitute an agreement between HHS 

and the Exchange to adhere to the 

contents of the Exchange Plan. We also 

proposed that a State must notify HHS 

and receive written approval from HHS 

before significant changes are made to 

the Exchange Plan. We sought comment 

on whether the State Plan Amendment 

process offered an appropriate model for 

change submission and approval. 

Finally, we proposed to codify the 

provision in the Affordable Care Act 

that if a State elects not to establish an 

Exchange—or if the State’s Exchange is 

not approved—HHS must establish an 

Exchange in that State, and we proposed 

standards of the proposed rule that 

would apply to a Federally-facilitated 

Exchange. 

Comment: Many commenters were 

concerned that the approval date of 

January 1, 2013 for State-based 

Exchanges, as described in proposed 

§ 155.100(a), will be difficult for many 

States to meet and suggested that HHS 

allow more flexibility or issue waivers 

for States that cannot meet the 

timeframes. One commenter suggested 

that HHS approve an Exchange if a State 

has passed enabling legislation, or has 

the necessary regulatory process for 

Exchange creation underway by January 

1, 2013, and can provide HHS with a 

detailed plan and timeline for Exchange 

development. In contrast, several 

commenters supported the January 1, 

2013 approval deadline and requested 

that HHS closely monitor and enforce 

the implementation timeline. 

Several commenters also supported 

conditional approval and noted that it 

could help States meet the timelines for 

Exchange development. One commenter 

requested additional information on 

conditional approval, including the 

latest date when HHS could revoke 

conditional approval and interim 

deadlines and benchmarks. Another 

commenter did not support conditional 

approval and felt it diluted Federal 

scrutiny, while others expressed 

concern that conditional approval 

would result in States beginning open 

enrollment late, in a diminished 

capacity, or in a way that impairs HHS’s 

ability to implement a Federallyfacilitated Exchange. 

Response: We believe that in order to 

meet the October 1, 2013 open 

enrollment date, a State-based Exchange 

must be approved or conditionally 

approved by January 1, 2013, as called 

for in section 1321(c)(1)(B) of the 

Affordable Care Act. HHS may 

conditionally approve a State-based 

Exchange upon demonstration that it is 

likely to be fully operationally ready by 

October 1, 2013, which provides States 

with flexibility in meeting Exchange 

development timelines. HHS will 

provide additional details in future 

guidance. 

Comment: One commenter suggested 

that proposed § 155.105(b) include 

additional confidentiality standards, 

including that an Exchange comply with 

section 1411(g) of the Affordable Care 

Act and the Privacy Act (5 U.S.C. 552a). 

Response: HHS is committed to 

ensuring that security and privacy 

standards are in place in an Exchange. 

Security and privacy standards are 

addressed in § 155.260 and § 155.270 of 

this final rule. We believe it is 

duplicative to include these standards 

in § 155.105(b). 

Comment: Several commenters 

requested that the rule regarding the 

geographic area described in proposed 

§ 155.105(b)(4) be modified to clearly 

indicate that where there are multiple 

Exchanges, with each Exchange serving 

a distinct geographic area, that 

consumers could only use one 

Exchange. Several commenters 

suggested that HHS establish that the 

distinct geographic areas be consistent 

with premium rating areas in the State 

as determined under section 2701(a)(2) 

of the PHS Act. 

Response: In the preamble to the 

Exchange establishment proposed rule 

for § 155.105, we clarified that only one 

Exchange may operate in each 

geographically distinct area and that a 

subsidiary Exchange must be at least as 

large as a rating area. We maintain this 

position in the final rule, which we 

believe provides States with discretion 

to ensure that subsidiary Exchange 

service areas are consistent with rating 

areas. 

Comment: Several commenters 

requested that the proposed Exchange 

Plan described in proposed 

§ 155.105(c)(1) be subject to a public 

comment period before HHS approval. 

One commenter asked that HHS post 

documents related to the proposed 

Exchange Plan and operational 

readiness on the HHS Web site. 

Response: We believe that 

accelerating timeframes to accommodate 

a period for public comment on what 

we now refer to as ‘‘Exchange 

Blueprints’’ would put unreasonable 

pressure on what is already perceived as 

a tight timeline. Therefore, in order to 

maintain flexibility and because of 

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timeframe concerns, the final rule does 

not call for a State’s Exchange Blueprint 

to be made public and open to comment 

prior to approval by HHS. 

Comment: One commenter supported 

the proposal that the operational 

readiness assessment conducted by 

HHS, as described in proposed 

§ 155.105(c)(2), be coordinated with the 

monitoring process of the State 

Establishment Grants provided under 

section 1311 of the Affordable Care Act. 

Response: We believe that the 

operational readiness assessment should 

be coordinated with the grants 

monitoring process and are currently 

developing guidance for the evaluation 

process. 

Comment: In relation to proposed 

§ 155.105(d) and (e), several 

commenters supported using a process 

modeled from the Medicaid and CHIP 

State Plan review process for the 

approval of the initial Exchange and 

subsequent changes, including the 90- 

day review timeframe and posting of 

changes on the Internet, and because 

they believe that the process ensures 

sufficient Federal oversight and 

transparency. In contrast, many other 

commenters urged HHS to use a review 

plan other than the Medicaid and CHIP 

model, contending that the State Plan 

review process would delay State 

implementation while waiting for an 

HHS review that could potentially take 

up to 180 days. The commenters 

suggested that the proposed approach 

would be unwieldy, especially where 

HHS requests for additional information 

from States would restart the 90-day 

period, and would inhibit States from 

being able to effectively establish an 

Exchange and respond to changing 

circumstances over time. 

Response: We believe that initial 

approval of an Exchange and approval 

of subsequent changes should not cause 

unnecessary delay in Exchange 

implementation or future operations. 

Therefore, HHS will not model the 

review of the initial proposed Exchange 

Plan or future changes after the 

Medicaid and CHIP State Plan process. 

Additionally, we have changed 

reference of the ‘‘Exchange Plan’’ to 

‘‘Exchange Blueprint’’ to avoid 

confusion with the Medicaid and CHIP 

review process. Finally, we amended 

§ 155.105(e) to provide that when a 

State makes a written request for 

approval of a significant change to 

Exchange Blueprint, the change may be 

effective on the earlier of 60 days after 

HHS receipt of a completed request, or 

upon approval by HHS. For good cause, 

HHS may extend the review period an 

additional 30 days to a total of 90 days. 

We note that during the review period, 

HHS may deny the significant change to 

the Exchange Blueprint. 

Comment: Several commenters sought 

more information and provided 

suggestions on the establishment and 

operation of the Federally-facilitated 

Exchange described in proposed 

§ 155.100(f), including: the overall 

structure, governance, oversight, and 

standards; how it would differ from 

State to State; the approach to 

certification of QHPs (‘‘active 

purchaser’’ versus ‘‘any willing plan’’); 

and, what the relationship would be 

between a Federally-facilitated 

Exchange and Partnership model. One 

commenter expressed concern about 

consumer advocates’ ability to engage in 

the governance and oversight of a 

Federally-facilitated Exchange, while 

other commenters requested that the 

Federally-facilitated Exchange’s 

planning documents and updates 

should be subject to public notice and 

comment. 

Response: Information regarding the 

Federally-facilitated Exchange will be 

provided in future guidance. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.105 of the proposed 

rule, with the following modifications: 

in paragraph (a), we added clarifying 

language regarding the timeframe for 

Exchange approval, and clarified that 

HHS may consult with other relevant 

Federal agencies to approve a Statebased Exchange. Throughout § 155.105, 

we changed ‘‘Exchange Plan’’ to 

‘‘Exchange Blueprint.’’ We included 

subpart D in the list of Exchange 

functions in paragraph (b)(2) because we 

are finalizing the Exchange 

establishment and eligibility rules 

together, and removed the policy that 

States agree to perform responsibilities 

related to the reinsurance program 

because we are not finalizing the 

operation of the reinsurance program in 

connection with Exchange 

establishment. We amended paragraph 

(e) to provide timeframes for the 

approval of significant changes to the 

Exchange Blueprint. 

c. Election To Operate an Exchange 

After 2014 (§ 155.106) 

We proposed to give States the 

opportunity to seek approval to operate 

an Exchange after the statutory date of 

January 1, 2013. Specifically, we 

proposed that a State electing to operate 

an Exchange after 2014 must have in 

effect an approved or conditionally 

approved Exchange Plan at least 12 

months prior to the first effective date 

of coverage, or January 1 of the prior 

year. Further, a State must work with 

HHS to develop a plan to transition 

from a Federally-facilitated Exchange 

(including a Partnership) to a Statebased Exchange. 

We also proposed a process to allow 

a State-based Exchange to cease its 

operations after January 1, 2014 and to 

elect to have the Federal government 

establish and operate an Exchange 

within the State, provided that the State 

notifies HHS of this determination 12 

months prior to ceasing its operations 

and collaborates with HHS on the 

development and execution of a 

transition plan. 

Comment: One commenter stated that 

the deadlines set by the Affordable Care 

Act for setting up a State-based 

Exchange are not realistic and that HHS 

should extend them. 

Response: We understand the 

concerns regarding the deadlines for 

setting up a State-based Exchange. 

While we do not believe authority exists 

in section 1321(c) of the Affordable Care 

Act to alter the January 1, 2014 

Exchange implementation date, we 

proposed § 155.106 to alleviate some of 

the timing pressure. We maintain that 

approach in this final rule. 

Comment: Numerous commenters 

supported the flexibility for a State to 

elect to operate an Exchange after 2014, 

and several requested more detail on the 

transition plans in proposed 

§ 155.106(a)(3). Suggestions for the 

transition plan included: demonstration 

of consumer input and tribal 

consultation; process for educating 

consumers about potential changes; 

process for ensuring QHP issuers have 

sufficient time to comply with new 

standards (such as a one-year grace 

period); and, a plan to protect enrollees 

from lapses of coverage. A number of 

commenters recommended a Statebased Exchange starting after 2014 must 

have similar or better levels of insured 

rates, affordability, covered benefits, 

and administrative simplicity or quality 

of services. 

Response: We believe that it is 

important to develop a seamless 

transition plan for consumers and 

issuers alike, and will provide future 

guidance on transition plans. 

Comment: Several commenters 

requested clarification on the process 

for transitioning to a Federallyfacilitated Exchange in proposed 

§ 155.106(b) when a State terminates 

Exchange operations with less than 

twelve months notice to HHS. One 

commenter urged HHS to establish an 

alternative process for providing interim 

coverage to consumers if a State does 

not provide sufficient notice. 

Response: We understand concerns 

regarding the transition timeframes. 

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HHS will develop an approach to 

transitioning Exchanges in various 

circumstances when it becomes clearer 

what such circumstances would entail. 

Comment: One commenter requested 

information as to the availability of 

funding options for States electing to 

operate an Exchange after 2014. 

Response: As described in the State 

Exchange Implementation Questions 

and Answers released by HHS on 

November 29, 2011, establishment 

grants may be awarded through the end 

of 2014 for approved and permissible 

establishment activities. The process of 

‘‘establishing’’ an Exchange may extend 

beyond the first date of operation and 

may include improvements and 

enhancements to key functions over a 

limited period of time. Generally, grants 

can be used to establish Exchange 

functions and operating systems and to 

test and improve systems and processes. 

We have determined that a State that 

does not have a fully approved State 

Exchange on January 1, 2013 may 

continue to qualify for and receive a 

grant award, subject to the Funding 

Opportunity Announcement (FOA) 

eligibility criteria. 

Summary of Regulatory Changes 

We are finalizing the provisions in 

§ 155.106 of the proposed rule, with a 

conforming, technical change that 

replaced ‘‘Exchange Plan’’ with 

‘‘Exchange Blueprint’’ in paragraph 

(a)(2) and removed the word initial from 

paragraph (a) to make the provision 

more broad. 

d. Entities eligible to carry out Exchange 

functions (§ 155.110) 

In § 155.110, we proposed to codify 

an Exchange’s authority to contract with 

eligible entities, and requested comment 

on conflict of interest standards. We 

noted that the Exchange remains 

responsible for meeting all Federal rules 

related to contracted functions. 

If the Exchange is an independent 

State agency or not-for-profit entity 

established by the State, we proposed 

that its governing board meet the 

standards outlined in § 155.110(c)(1) 

through § 155.110(c)(4) of the proposed 

rule, which included: the Exchange 

accountability structure must be 

administered under a formal, publiclyadopted operating charter or by-laws; 

the Exchange board must hold regular 

public meetings; representatives of 

health insurance issuers, agents, 

brokers, or other individuals licensed to 

sell health insurance may not constitute 

a majority of the governing board; and, 

all members of the governing board 

must meet conflict of interest and 

qualifications standards. We invited 

comment on several topics related to 

conflict of interest and Exchange 

governance. 

We also proposed that the Exchange 

governing body ensure that a majority of 

members have relevant experience in a 

number of areas and invited comment 

on the types of representatives that 

could best ensure successful Exchange 

operations. We solicited comment on 

ethics and disclosure standards. 

Additionally, we proposed to allow a 

State to operate its individual market 

Exchange and SHOP under separate 

governance or administrative structures, 

provided that the State coordinates and 

shares relevant information between the 

two Exchange bodies and that it ensures 

adequate resources to assist both 

individuals and small employers. 

Finally, we proposed that HHS retain 

the option to review the accountability 

structure and governance principles of 

an Exchange and requested comment on 

the appropriate frequency for these 

reviews. 

Comment: A number of commenters 

requested clarification on whether State 

departments of insurance would be 

considered eligible contracting entities 

under proposed § 155.110(a), citing the 

importance of such expertise in the 

operation of an Exchange. 

Response: We clarify in 

§ 155.110(a)(2) of this final rule that, in 

addition to State Medicaid agencies, 

other State agencies that meet the 

qualifications in (a)(1) would be 

considered eligible contracting entities. 

For purposes of this final rule and 

Exchange operations, we interpret the 

term ‘‘incorporated’’ in (a)(1)(i) to 

include State agencies, such as 

departments of insurance, that have 

been established under and are subject 

to State law. 

Comment: Several commenters urged 

HHS to apply conflict of interest 

standards to eligible contracting entities. 

Response: We generally defer to States 

to establish conflict of interest standards 

for eligible contracting entities beyond 

the prohibition of health insurance 

issuers being eligible contracting 

entities, as established in section 

1311(f)(3) of the Affordable Care Act 

and codified in § 155.110(a)(1)(iii). We 

believe that many States have existing 

conflict of interest laws, have 

appropriate expertise in this area, and 

can support Exchanges in the 

development of conflict of interest 

standards for such entities. 

Comment: Several commenters agreed 

with the governance provisions in 

proposed § 155.110(c) and requested 

further guidance on governance, while 

others recommended that HHS defer to 

States on governance citing concerns of 

burden. Another commenter suggested 

that all Exchanges, including an 

Exchange that is a State agency, needed 

a governing board. One commenter 

requested that all Exchanges post their 

policies and procedures on the Internet. 

Response: We have afforded States 

substantial discretion regarding 

governance and do not believe that the 

governance standards are burdensome 

from an operational or systems 

standpoint. Additionally, to lessen the 

burden on States, an Exchange may use 

the State’s conflict of interest standards, 

regulations, or laws for governance of 

the Exchange. An existing State agency 

would already have an accountability 

structure, unlike an independent agency 

or nonprofit entity. Therefore, we 

believe that a governing board is not 

necessary for an existing State agency, 

although we note that a State may 

choose to establish one anyway. Section 

155.110(d) of this final rule directs 

Exchanges to make publicly available a 

set of guiding governance principles, 

which it may do through the Internet. 

We also create minimum standards for 

consumer representation on Exchange 

Boards to protect consumers and the 

interests of the Exchange without 

adding burden on States or Exchanges. 

Comment: With respect to proposed 

§ 155.110(c)(3), a few commenters 

requested HHS define ‘‘represents 

consumer interests’’ and ‘‘conflict of 

interest.’’ Many commenters 

recommended that all Exchange boards 

must have at least one consumer 

representative or advocate and a formal 

consumer advisory committee. A few 

commenters recommended increasing 

the threshold for voting members that 

do not have a conflict of interest to 

something higher than a simple 

majority. 

Response: We accept the suggestion 

that at least one voting member be a 

consumer advocate, and have amended 

in § 155.110(c)(3)(i) of this final rule 

accordingly. We do not believe this 

change will conflict with any current 

Exchange boards. We have also 

maintained the minimum standard that 

a simple majority of board members not 

have a conflict of interest, but a State 

can choose to establish an Exchange 

with a higher threshold of nonconflicted board members. 

Comment: Commenters suggested 

broadening the list of groups identified 

as having a conflict of interest in 

proposed § 155.110(c)(3)(ii) to include: 

health care providers; anyone with a 

financial interest; anyone with a spouse 

or immediate family with a conflict of 

interest; major vendors, subcontractors, 

or other financial partners of conflicted 

parties; members of health trade 

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associations and providers; and, health 

information technology companies. 

Commenters recommended that such 

groups be limited or prohibited from 

participation in an Exchange. Other 

commenters recommended that 

individuals with ties to the insurance 

industry participate through technical 

panel or advisory group instead of 

through board membership. 

Response: As proposed, 

§ 155.110(c)(3)(ii) ensures as a minimum 

standard that the groups with the most 

direct conflict of interest cannot form a 

majority of voting members on a 

governing board. We believe that further 

definition of conflict of interest may 

create inconsistencies with State law 

and other existing State standards, but 

note that Exchanges may expand the list 

or further define conflict of interest. For 

example, a State may elect to prohibit 

any conflicted members from serving on 

the board. 

Comment: Several commenters 

suggested areas in addition to those 

listed in proposed § 155.110(c)(4) in 

which governing board members should 

have experience, including: minority 

health; mental health; pediatric health; 

consumer education or outreach; public 

coverage programs; health disparities; or 

represent or be American Indian and 

Alaska Natives. A few commenters 

suggested that the Exchange board 

include members that reflected the 

cultural, ethnic and geographical 

diversity of the State. 

Response: Each of the suggested 

groups could add value to an Exchange 

governance board. However, we believe 

that a State can determine the expertise 

it believes would be most beneficial for 

the needs of its community. We note 

that the list in § 155.110(c)(4) is a 

minimum; thus, States may establish 

governing boards standards that include 

expertise in other areas, or may set up 

advisory committees to achieve another 

mechanism for specialized input. 

Comment: Regarding proposed 

§ 155.110(f), some commenters 

suggested that HHS limit review of an 

Exchange’s governance to every three or 

four years, while several commenters 

voiced concerns about the 

administrative burden of an annual 

review. One commenter recommended 

an annual review but only for the first 

few years of Exchange operation. 

Response: We have maintained 

language in the final rule but clarify that 

any changes to the accountability 

structure and governing principles of 

the Exchange will likely be reviewed 

under § 155.105(e) of this final rule or 

at the discretion of HHS through a 

process that may not occur annually 

under § 155.110(f). 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.110, with the 

following modifications: in paragraph 

(a)(1)(iii)(2), we clarified that any State 

entity that meets the qualifications of 

paragraph (a)(1) is an eligible 

contracting entity to include State 

departments of insurance. We 

established in new paragraph (c)(3)(i) 

that at least one member of the 

Exchange’s board must include one 

voting member who is a consumer 

representative, and renumbered 

proposed paragraph (c)(3)(i) as (c)(3)(ii). 

e. Non-interference with Federal Law 

and Non-Discrimination Standards 

(§ 155.120) 

In § 155.120, we proposed that an 

Exchange may not establish rules that 

conflict with or prevent the application 

of Exchange regulations promulgated by 

HHS. We also proposed to codify that 

nothing in title I may be construed to 

preempt any State law that does not 

prevent the application of the 

provisions set forth under title I of the 

Affordable Care Act. In addition, we 

proposed that a State must comply with 

any applicable non-discrimination 

statutes, specifically that a State must 

not operate an Exchange in such a way 

as to discriminate on the basis of race, 

color, national origin, disability, age, 

sex, gender identity, or sexual 

orientation. 

Comment: One commenter suggested 

that HHS ensure that contractors 

comply with the non-discrimination 

provisions of proposed § 155.120. One 

commenter recommended HHS amend 

§ 155.120(c) to explicitly name specific 

activities of the Exchange, including 

marketing, outreach, and enrollment in 

the Exchange. 

Response: We clarify that § 155.120 

applies to Exchange contractors and 

believe this notion is conveyed in 

§ 155.110(b) for contractors. We believe 

that § 155.120 already applies to all 

activities of the Exchange, and thus do 

not explicitly list marketing, outreach, 

and enrollment. 

Comment: Several commenters 

recommended that HHS specify that 

proposed § 155.120(b) functions as a 

floor for protection against 

discrimination. The commenters stated 

that in the event a State law provides 

additional consumer protections in an 

Exchange, the final rule should make 

clear that such a State law will prevail 

over the minimum protections codified 

in Federal law. 

Response: We believe the proposed 

approach of codifying section 1321(d) of 

the Affordable Care Act does not 

preclude the application of stronger 

protections in the Exchange provided by 

State law. Therefore, we do not make 

any further changes in the regulations to 

make this clarification. 

Comment: A number of commenters 

requested that HHS provide clarification 

on proposed § 155.120(c)(1) and specify 

which statutes would be considered 

‘‘applicable non-discrimination 

statutes,’’ with suggestions including 

the Americans with Disabilities Act, 

section 504 of the Rehabilitation Act, 

section 1557 of the Affordable Care Act, 

provider non-discrimination in 

accordance with section 2706 of the 

PHS Act. One commenter recommended 

that HHS ensure that States and 

Exchanges comply with existing State 

provider non-discrimination laws and 

another recommended that we amend 

the § 155.120(c)(1) to include consumer 

protection laws. 

Response: We clarify that by 

‘‘applicable non-discrimination 

statutes,’’ we mean any statute that 

would apply to Exchange activities by 

its clear language or as consistent with 

any rulemaking that has been 

established in accordance with such 

statutes. We acknowledge that the some 

non-discrimination statutes apply to 

specific activities and situations, and an 

Exchange must comply with such 

statutes to the extent its activities or 

circumstances would be subject to these 

standards. 

Comment: We received a comment on 

the preamble to the proposed 

§ 155.120(c)(2). The commenter 

recommended that HHS delete the 

phrase ‘‘operating in such a way as to 

discriminate’’ or revise the 

nondiscrimination standard to prohibit 

discrimination based ‘‘solely’’ on the 

listed grounds. 

Response: To clarify, we believe that 

Exchanges should not discriminate in 

any way on the basis of groups listed in 

§ 155.120(c)(2). We believe that the 

regulatory text conveys that intent. 

Comment: A number of commenters 

recommended HHS amend proposed 

§ 155.120(c)(2) to add categories to the 

proposed list, including Indians or 

individuals in the Lesbian, Gay, 

Bisexual, and Transgender (LGBT) 

community, individuals with limited 

English proficiency, and people with 

disabilities. 

Response: We recognize the 

commenters’ concerns but we are 

maintaining the categories specified in 

§ 155.120(c) because we believe that 

categories not listed in § 155.120(c)(2) 

are already protected by existing laws 

that apply to Exchanges. 

Comment: A number of commenters 

requested that HHS provide clarification 

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on the oversight and enforcement of the 

non-discrimination standards, including 

recommendations for strong oversight, 

the establishment of a clear complaints 

process, and mandatory public 

dissemination of an acknowledgement 

by QHP issuers that they comply with 

the non-discrimination standards in 

section 1557 of the Affordable Care Act. 

Response: We acknowledge the 

commenters’ concerns regarding the 

monitoring and enforcement of the nondiscrimination policies. We plan to 

issue future guidance on the oversight 

and enforcement of the nondiscrimination standards. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.120 of the proposed 

rule, with a technical change to include 

part 157 in paragraph (b). 

f. Stakeholder Consultation (§ 155.130) 

Consistent with the Affordable Care 

Act, we proposed that Exchanges 

consult with certain groups of 

stakeholders on an ongoing basis. The 

list of stakeholders identified were the 

following: educated health care 

consumers who are enrollees in QHP; 

individuals and entities with experience 

in facilitating enrollment in health care 

coverage; advocates for enrolling hard to 

reach populations; small businesses and 

self employed individuals; State 

Medicaid and CHIP agencies; Federallyrecognized Tribes; public health 

experts; health care providers, large 

employers; health insurance issuers; 

and agents and brokers. For a more 

complete list of stakeholders and for a 

discussion of how Exchanges may 

interact with tribes, please refer to page 

41873 of the Exchange establishment 

proposed rule. 

Comment: Some commenters 

requested clarification on what it means 

to ‘‘regularly consult on an ongoing 

basis,’’ as described in proposed 

§ 155.130, and suggested that we clarify 

that an Exchange must consult with 

stakeholders beyond establishment of 

the Exchange, outlining specific 

processes for consultation (including 

public meetings and input sessions), 

and specifying that Exchange activities 

must be topics of consultation 

(including the call center, Web site, 

consumer assistance functions and 

Navigators). 

Response: We recognize that it is 

important to utilize various methods of 

consultation to ensure the Exchange 

meets the diverse needs of the State’s 

population and seeks input on a broad 

set of issues. However, we believe that 

States are in the best position to 

determine what will be the most 

efficient and effective methods of 

stakeholder consultation for meeting the 

State’s unique needs and, therefore, we 

do not establish additional standards in 

the final rule. 

Comment: Many commenters 

recommended that HHS add additional 

categories of stakeholder groups to 

proposed § 155.130, including: a 

nonprofit community organization; 

unions; representatives of individuals 

with disabilities; minorities; advocates 

for individuals with limited English 

proficiency; essential community 

providers; employees of small 

businesses; stand-alone dental plans; 

health care consumer advocates; experts 

in low income tax policy; experts in 

privacy policy; and professional 

organizations representing specific 

health care providers. Several 

commenters requested clarification on 

what types of health insurance issuers 

and providers fall under the categories 

for consultation. A few commenters 

suggested that we narrow the list of 

stakeholders. 

Response: We recognize that 

Exchange consultation with the above 

groups would help the Exchange ensure 

it can meet the needs of the population 

it serves. However, we believe that the 

categories proposed in § 155.130 are 

broad enough to encapsulate a wide 

variety of stakeholders, and encourage 

Exchanges to consult with any other 

stakeholders that will add perspective to 

the development of an Exchange. 

Similarly, we did not accept suggestions 

to make the stakeholder categories 

narrower and believe the minimum list 

proposed will stimulate stakeholder 

participation. Exchanges have the 

flexibility to determine what types of 

stakeholders would fall under each of 

the categories. 

Comment: Regarding proposed 

§ 155.130(a), one commenter was 

concerned that including ‘‘educated 

health care consumer’’ as a stakeholder 

unfairly excludes people of a certain 

education level. Another commenter 

recommended that HHS delete the word 

‘‘educated’’ from ‘‘educated health care 

consumer’’ to avoid multiple 

interpretations. Numerous commenters 

recommended that HHS replace 

‘‘educated health care consumer’’ with 

‘‘health care consumer experienced with 

the system.’’ One commenter suggested 

that the definition of ‘‘educated health 

care consumers’’ take into account the 

diversity in the age, background, and 

health status of consumer stakeholders. 

A few commenters suggested that HHS 

expand the stakeholder group to include 

consumers who are eligible or likely to 

enroll in a QHP in addition to those 

consumers enrolled in QHPs. 

Response: We note that the term 

‘‘educated health care consumer’’ is 

defined in section 1304(e) of the 

Affordable Care Act to mean an 

individual who is knowledgeable about 

the health care system, and has 

background or experience in making 

informed decisions regarding health, 

medical, and scientific matters; we have 

codified this definition in § 155.20 of 

this final rule. An Exchange can 

interpret and apply the term in the way 

that is most appropriate for its 

environment consistent with this 

definition. 

Comment: Regarding proposed 

§ 155.130(f), commenters recommended 

that the final rule prohibit States from 

delegating consultation with FederallyRecognized Tribes to the governing 

bodies operating the Exchange. 

Commenters noted that establishing 

Exchanges as independent public 

entities would make stakeholder 

consultation difficult to monitor 

consultation with Tribes. Several 

commenters suggested that a tribal 

consultation policy be developed and 

approved by the State, the Exchange, 

and tribal governments prior to the 

submission of approval of an Exchange 

Blueprint. Some commenters also 

recommended that States must utilize a 

process for seeking advice from the 

Indian Health Service, tribal 

organizations, and urban Indian 

organizations as outlined in section 

5006(e) of the American Recovery and 

Reinvestment Act. Also, one commenter 

requested HHS to expand the tribal 

consultation standard to include any 

tribal organization or inter-tribal 

consortium as defined in the Indian 

Self-Determination and Education 

Assistance Act and the Indian Health 

Care Improvement Act. 

Response: Section 1311(d)(6) of the 

Affordable Care Act directs the 

Exchange to carry out consultation with 

stakeholders, and § 155.130(f) codifies 

this provision with respect to Federallyrecognized Tribes. We note that 

Exchange tribal consultation reflects a 

government-to-government relationship, 

as Exchanges would conduct 

consultation on behalf of States. Future 

guidance will be provided to States 

regarding key milestones, including 

tribal consultation, for approval of a 

State-based Exchange. Because of the 

government-to-government nature of 

tribal consultation, we did not include 

a provision similar to section 5006(e) of 

the American Recovery and 

Reinvestment Act in the proposed rule 

or in this final rule, and did not expand 

the tribal consultation standard to 

include tribal organizations, programs, 

or commissions. In the final rule, 

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Exchanges must consult with Federallyrecognized Tribes; however, this does 

not preclude Exchanges from engaging 

in discussions or consulting with tribal 

and Urban Indian organizations. It 

should be noted that when a tribal or 

Urban Indian organization is a 

stakeholder as defined in § 155.130—for 

example, the tribal or Urban Indian 

organization is a health care provider— 

then consultation may be necessary. We 

therefore encourage States to consult 

with tribal and Urban Indian 

organizations. 

Comment: Some commenters 

recommend that as a component to the 

ongoing tribal consultation standard in 

proposed § 155.130(f), the Exchange 

should establish an ‘‘Indian desk’’ with 

the lead person identified and contact 

information provided, and extend the 

authority of CMS Native American 

Contacts to include facilitating and 

interacting with the State Exchange 

governing bodies. 

Response: We did not accept the 

suggestion that all Exchanges must 

establish an ‘‘Indian Desk.’’ States have 

discretion to determine appropriate 

approaches and mechanisms for 

interacting with the Tribes, providing 

information to Indian Country and for 

meeting the needs of American Indians/ 

Alaska Natives, which can be 

determined during the tribal 

consultation process. We also did not 

accept the suggestion related to the CMS 

Native American Contacts. While we 

recognize that the Native American 

Contacts have a critical role in working 

with States and Tribes, structuring the 

responsibilities of CMS staff positions is 

not within the scope of this final rule. 

Comment: A few commenters 

suggested that the final rule enforce 

tribal consultation by Exchanges in the 

planning, implementation and operation 

of State-based Exchanges, and ensure 

adequate funding for the technical 

assistance provided by tribal entities to 

States and Exchanges. One commenter 

expressed a concern that Exchanges may 

not be able to process eligibility and 

enrollment information regarding 

American Indians/Alaska Natives unless 

they are included in policy and 

regulation development. Some 

commenters strongly urge CMS to work 

with Tribes to undertake a thorough 

education of State insurance 

commissioners on issues related to 

Indian law, the structure of the Indian 

health care delivery system, and 

protocols for consulting with Tribes, 

since many Tribes do not have 

experience working with insurance 

commissioners. 

Response: We did not accept the 

suggestion for Exchanges to obligate 

State grant funding for technical 

assistance provided by tribal entities to 

States and Exchanges. We believe that 

the concern regarding Exchange 

inclusion of American Indians and 

Alaska Natives in policy development is 

addressed in the final rule and the 

Exchange Establishment Grant, which 

directs Exchanges to consult with 

Federally-recognized Tribes. We note 

that education of State health insurance 

commissioners on Indian law will be 

addressed at the operational level of 

CMS. 

Comment: We received a number of 

comments stating that HHS should limit 

the number of consultations with health 

insurance issuers, agents, and brokers 

described in proposed § 155.130(j) and 

(k) to minimize any potential conflicts 

of interest. One commenter 

recommended that consultation with a 

health insurance issuer be made fully 

transparent, while several other 

commenters recommended that the 

consultation only include agents and 

brokers that enroll qualified individuals, 

employers, or employees. 

Response: We understand the 

concerns of commenters, but also 

acknowledge that health insurance 

issuers and agents and brokers are likely 

to play a significant role in the 

Exchange. We encourage Exchanges to 

be transparent in the consultation 

process. Furthermore, in States where 

the Exchange is not housed in the 

department of insurance, we expect 

there to be regular consultation between 

the Exchange and the department of 

insurance, given the need for 

coordination between the two entities. 

Comment: One commenter 

recommended that stakeholder input 

should contribute to both State-based 

Exchanges and Federally-facilitated 

Exchanges. 

Response: As indicated in 

§ 155.105(f), the stakeholder standards 

of § 155.130 apply to both Federallyfacilitated Exchanges and State-based 

Exchanges. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.130 of the proposed 

rule without modification. 

g. Establishment of a Regional Exchange 

or Subsidiary Exchange (§ 155.140) 

In § 155.140, we outlined several 

proposed features of regional 

Exchanges, including that a regional 

Exchange would encompass two or 

more States and could submit a single 

Exchange Blueprint, and the criteria that 

the Secretary will use to approve such 

an Exchange. 

Specifically, we proposed that a State 

may establish one or more subsidiary 

Exchanges if each such Exchange serves 

a geographically distinct area that is at 

least as large as a rating area described 

in section 2701(a) of the PHS Act. We 

invited comment on operational or 

policy concerns related to subsidiary 

Exchanges that cross State lines. We 

also requested comment on the extent to 

which we should allow more flexibility 

in the structure of a subsidiary 

Exchange. 

Finally, we proposed basic standards 

for a regional or subsidiary Exchange. 

For a complete discussion of the 

proposed standards, please see pages 

41873–41874 and 41914 of the 

Exchange establishment proposed rule. 

Comment: Regarding proposed 

§ 155.140(a), several commenters 

supported the flexibility to establish 

regional Exchanges so that States could 

share Exchange infrastructure and 

systems. However, other commenters 

had concerns regarding the applicability 

of State standards across a regional 

Exchange. Some were concerned about 

coordinating the regulation of QHP 

issuers in a regional Exchange to ensure 

each State’s insurance standards were 

met, especially regarding licensure and 

solvency, and others raised concerns 

about coordination between the 

Medicaid agencies of multiple States 

regarding consistency of eligibility 

determinations and provider payments. 

Other commenters were concerned that 

consumer protections, including State 

non-discrimination laws, minimum 

benefit standards, network adequacy, 

complaints processes, and tribal 

consultation, would be potentially 

undermined by a regional Exchange 

(particularly one that crosses noncontiguous States). Some commenters 

suggested that States must provide a 

compelling reason to establish a 

regional Exchange to help preserve 

consumer protections. 

Response: We acknowledge the 

commenters’ concerns regarding 

coordination across States. We note that 

in § 155.140(c)(1), we establish that a 

regional or subsidiary Exchange must 

meet all Exchange standards, which 

would include, for example, the 

standard in § 156.200(b)(4) that a QHP 

issuer be licensed and in good standing 

in each State in which it offers coverage. 

We believe that this and other 

provisions in the final rule provide 

some clarity on coordination. We 

recognize the concerns regarding 

consumer protection, and HHS will take 

those into account on a case-by-case 

basis during review of a regional 

Exchange Blueprint. 

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Comment: With regard to proposed 

§ 155.140(a), one commenter requested 

clarification on whether a regional 

Exchange would need to cover the 

entirety of each State, and another 

requested clarification on whether two 

States could share administrative 

resources without sharing governance. 

Response: We note that in 

§ 155.140(c)(1), a regional Exchange 

would have to comply with all 

Exchange standards, including 

§ 155.105(b)(3), which directs a State to 

ensure that the entire geographic area of 

a State is covered by an Exchange. A 

State has flexibility in the way it meets 

this standard. We believe that States are 

able to share administrative and 

operational resources to the extent 

practicable, and would not be 

considered a regional Exchange unless 

they also shared governance, consumer 

assistance, enrollment and eligibility 

processes, QHP certification authority, 

and the SHOP. 

Comment: Regarding proposed 

§ 155.140(b), a number of commenters 

did not support the proposed rules 

regarding subsidiary Exchanges out of 

concern for consumer protections, 

consumer confusion, administrative 

complexity, the effect of smaller risk 

pools, and the ability for subsidiary 

Exchanges to exacerbate adverse 

selection. Commenters suggested that a 

State must demonstrate a compelling 

justification as to how a subsidiary 

Exchange would be in the best interest 

of consumers. Some commenters 

suggested that subsidiary Exchanges 

should remain under centralized State 

governance and policy decisions to 

provide some consistency across the 

State. A number of commenters 

supported the provision in proposed 

§ 155.140(b)(2) that ensures a subsidiary 

Exchange is as large as a rating area 

because they believe it would prevent 

risk selection. Several commenters 

urged HHS not to allow subsidiary 

Exchanges to cross State lines while 

others supported the concept. 

Response: We recognize the concerns 

of commenters related to the consumer 

experience under subsidiary Exchanges, 

but we believe that such Exchanges may 

be valuable and appropriate in some 

marketplaces. In reviewing a State’s 

Exchange Blueprint, HHS will consider 

how best to protect the consumer 

experience. 

Comment: A few commenters 

requested clarification on whether an 

Exchange can be statewide for the 

individual market with several SHOPs 

operated through subsidiary Exchanges. 

Several commenters supported the 

alignment of SHOP and individual 

market Exchange service areas to ensure 

consistency for consumers and insurers, 

and for a more robust insurance market. 

Response: In this final rule, we 

maintain the standard in 

§ 155.140(c)(2)(ii) that the service areas 

of a SHOP and individual market 

Exchange must match. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.140 of the proposed 

rule without modification. 

h. Transition Process for Existing State 

Health Insurance Exchanges (§ 155.150) 

In § 155.150, we proposed that, unless 

determined to be non-compliant, a State 

operating a pre-Affordable Care Act 

exchange is presumed to be in 

compliance with the standards set forth 

in this part if: (1) The exchange was 

operating before January 1, 2010; and (2) 

the State has insured a percentage of its 

population not less than the percentage 

of the population projected to be 

covered nationally after the 

implementation of the Affordable Care 

Act. We invited comment on which 

proposed threshold should be used and 

on alternative data sources. We also 

proposed that any State that is currently 

operating a health insurance exchange 

that meets these criteria must work with 

HHS to identify areas of noncompliance with the standards of this 

part. 

Comment: A small number of 

commenters had suggestions for 

proposed § 155.150(a). A few 

commenters suggested that we use the 

Congressional Budget Office estimates 

for projected coverage in 2016 and 

others recommended the Census 

Bureau’s American Community Survey 

or the Current Population Survey 

estimates of State coverage on January 1, 

2010. A number of commenters 

suggested using a source that included 

Urban Indian-specific data, while 

another commenter suggested the 

coverage numbers be based on nonelderly State residents only. One 

commenter raised concerns that 

coverage numbers are calculated 

inaccurately at the State level. 

Response: We have amended 

proposed § 155.150(a)(2) to reference the 

Congressional Budget Office projected 

coverage numbers published on March 

30, 2011. HHS will work with any State 

that believes it would fall into this 

category to determine if its State 

coverage numbers were equal to or 

above that threshold in January of 2010. 

Comment: Several commenters 

suggested that proposed § 155.150(b) 

should provide additional information, 

provide for an expedited review 

process, make corrective action plans 

publicly available, establish that 

determining compliance will occur by 

fall 2012, and otherwise remain 

consistent with the January 1, 2013 

timeframe for Exchange approval. 

Response: We believe that any State 

that qualifies under § 155.150(a) would 

continue to generally meet all standards 

for Exchange approval as established 

elsewhere in the final rule, including 

the process for review and timeframes, 

so we do not believe it necessary to 

outline standards in this section. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.150 of the proposed 

rule, with the exception of specifying 

the database for the projected coverage 

numbers upon implementation. 

i. Financial support for continued 

operations (§ 155.160) 

In § 155.160, we proposed to codify 

the statutory provision that a State 

ensure its Exchange has sufficient 

funding to support ongoing operations 

beginning January 1, 2015 and develop 

a plan for ensuring funds will be 

available. Specifically, we proposed to 

allow a State Exchange to fund its 

ongoing operations by charging user fees 

or assessments on participating issuers 

or by generating other forms of funding, 

provided that any such assessments are 

announced in advance of the plan year. 

We invited comment on whether the 

final regulation should otherwise limit 

how and when user fees may be 

charged, and whether such fees should 

be assessed on an annual basis. 

Comment: In response to proposed 

§ 155.160, several commenters stated 

that an Exchange must not be approved 

by HHS unless a clear plan to achieve 

financial sustainability has been 

articulated. Further, commenters 

recommended that an Exchange also 

address the implications of its selected 

fee structure with respect to adverse 

selection and identify strategies to 

mitigate this risk. 

Response: A clearly defined plan for 

financial sustainability is essential to 

Exchange success and in § 155.160(b), 

we codify section 1311(d)(5)(A) of the 

Affordable Care Act, which establishes 

that a State ensure that its Exchange has 

sufficient funding to support its 

operations beginning January 1, 2015. 

As noted in the preamble to the 

proposed rule, a funding plan is 

necessary for Exchange approval. States 

should conduct an analysis of various 

user fee structures as well as other 

financial support options before making 

a decision. This analysis could include, 

among other factors, the potential 

impact on risk selection, issuer 

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participation, consumer experience, and 

provider contracting. We maintain the 

codification in this final rule. 

Comment: With respect to proposed 

§ 155.160(b), many commenters offered 

specific recommendations on how 

Exchanges should generate revenue, 

including methods for calculating 

assessments, such as percent of 

premium with or without a cap; perpolicy fees; or establishing fees at a 

specified amount. Commenters also 

recommended uniform notice standards, 

such as 10 or 12 months in advance of 

the relevant plan or benefit year, or in 

March of each year. A few commenters 

recommended specific frequencies of 

collection, such as monthly. 

Response: The Affordable Care Act 

directs Exchanges to be self-sustaining 

and provides flexibility for Exchanges to 

generate support for continued 

operation in a variety of ways, such as 

through user fees. Accordingly, we do 

not limit Exchanges’ options in the final 

rule by prescribing or prohibiting 

certain approaches. We believe that user 

fees parameters, as well as the need for 

other revenue-generating strategies, may 

vary by State depending upon several 

factors such as the number of potential 

enrollees and the Exchange’s 

operational costs. Consistent with this 

flexibility, we have not finalized the 

proposal that the Exchange announce 

user fees in advance of the applicable 

plan year, and instead look to 

Exchanges that opt to charge user fees 

to establish a deadline and vehicle for 

such announcement, as well as the 

frequency with which the Exchange will 

collect such fees. 

Comment: Some commenters 

expressed support for the flexibility 

provided with respect to funding for 

ongoing operations as specified in 

proposed § 155.160(b). Others 

recommended a centralized approach to 

assessments or raised concerns about 

specific approaches for generating 

revenue, such as a provider or general 

tax. A few commenters requested that 

HHS provide technical assistance to 

States in developing assessment 

structures. 

Response: Exchange flexibility in 

funding ongoing operations is critical, 

as we believe that the ability to pursue 

specific funding strategies may vary by 

State. We encourage Exchanges to 

consider the implications of various fee 

structures on all stakeholders before 

making a selection, but note that the 

Exchange has discretion to set 

parameters related to assessments. As 

we have noted previously, HHS is 

committed to working with States on a 

variety of Exchange features, including 

but not limited to financial 

sustainability. 

Comment: In response to the reference 

to the definition of ‘‘participating 

issuer’’ in proposed § 156.50, many 

commenters made recommendations 

regarding the types of issuers that 

should be subject to any assessments 

established by the Exchange. The 

majority of commenters advocated for a 

broad-based approach in which all 

issuers would be subject to the 

assessment. Fewer commenters 

recommended a narrower approach or 

that certain plans, such as excepted 

benefit plans, be excluded. Finally, 

several commenters requested that the 

final rule clarify that Exchanges will 

identify the issuers subject to any 

assessment. 

Response: The Exchange should 

identify the issuers that are subject to 

any user fees or other assessments, if 

applicable. This could include all 

participating issuers, as defined in 

§ 156.50 of this final rule, or a subset of 

issuers identified by the Exchange. 

Similarly, an Exchange could exempt 

certain issuers from assessments. We 

believe that Exchange discretion is 

important with respect to issuer 

participation so that Exchanges can 

consider a broad range of user fee and 

assessment alternatives. We anticipate 

that Exchanges will consider a variety of 

factors, such as the projected operating 

costs of the Exchange, and the number 

of issuers and consumers who are 

expected to participate, if and when 

establishing a fee structure. 

Comment: A few commenters 

expressed concern that user fees or 

assessments charged in accordance with 

proposed § 155.160 will be shifted to 

consumers and providers. These 

commenters variously recommended 

that any user fees passed on to the 

consumer be treated as rate increases, 

that user fees be reported separately on 

consumer bills, and that the final rule 

prohibit direct assessments on 

consumers. Conversely, several 

commenters recommended that the 

Exchange must report on user fees and 

other assessments; specifically, the 

amount collected and how the fees were 

used. 

Response: Any user fees or other 

assessments collected by the Exchange 

would be reflected in issuers’ 

premiums, consistent with current 

industry practice, and would thus be 

considered as part of any rate review 

conducted by the State. We believe that 

having issuers report separately any 

user fees is unnecessary, as we expect 

that the Exchange will announce user 

fees in advance of each plan year. With 

respect to having Exchanges report on 

user fees, we recognize that 

transparency is important, but defer to 

State flexibility to establish a process to 

notify issuers and report on the 

assessment of user fees, if this is the 

approach taken to supporting continued 

operations. We encourage States to be 

transparent in this process. 

Comment: A handful of commenters 

on proposed § 155.160 recommended 

that Exchanges establish uniform user 

fees for issuers in the individual 

Exchange and SHOP. 

Response: We believe that the 

decision about whether to charge 

uniform user fees for issuers in the 

individual and small group markets is 

best made by the Exchange, within the 

context of the local market and the 

Exchange operational structure. 

Therefore, we are not limiting Exchange 

flexibility in this area. 

Comment: A few commenters on 

proposed § 155.160(b) requested that 

HHS clarify the statement in the 

proposed rule that no Federal funds will 

be available to Exchanges after 2014. A 

few other commenters suggested that 

Exchanges secure funding from State 

Medicaid and CHIP agencies to support 

functions performed on behalf of 

individuals eligible for Medicaid and 

CHIP (for example, eligibility screenings 

and referrals). 

Response: The Affordable Care Act 

specifies that the State ensure that its 

Exchange is self-sustaining by January 1, 

2015. Further, as noted in the 

Department’s State Exchange 

Implementation Questions and Answers 

released on November 29, 2011, section 

1311 grant funding to establish an 

Exchange will only be awarded through 

2014. This funding is available to States 

pursuing State-based Exchanges, or 

preparing to partner with HHS on 

specific functions, and can be used to 

fund State activities to establish 

Exchange functions and operating 

systems and to test and improve systems 

and processes over time. In addition, we 

note that nothing in this final rule 

prohibits an Exchange from executing 

agreements with other State agencies to 

provide funding for certain functions 

that also assist or support those other 

State agencies. As noted in the 

November 29, 2011 Q&A document, 

HHS has provided additional help to 

States to build and maintain a shared 

eligibility service that allows for the 

Exchange, the Medicaid agency, and the 

CHIP agency to share common 

components, technologies, and 

processes to evaluate applications for 

insurance affordability programs. This 

includes enhanced funding under 

Medicaid and opportunities for other 

State programs to reuse the information 

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technology infrastructure without 

having to contribute funding for 

development costs related to shared 

services. 

Comment: Several commenters on 

proposed § 155.160 made 

recommendations with respect to how 

user fees or other assessments collected 

by the Exchange should be incorporated 

into issuers’ medical loss ratios. Some 

commenters suggested that user fees 

should be treated as administrative 

costs, while others recommended that 

user fees be excluded from the 

calculation. 

Response: We clarify that all 

calculations and reporting of user fees 

must be consistent with HHS’s medical 

loss ratio rule, published at 45 CFR 158. 

Summary of Regulatory Changes 

We are finalizing the provisions in 

proposed § 155.160, with limited 

exceptions: first, in revised paragraph 

(b)(1), we consolidated the description 

of how Exchange revenue may be 

generated to simplify the regulatory 

language. We deleted proposed 

paragraph (b)(3) and instead clarified in 

revised paragraph (b)(2) that no Federal 

grant funding to establish an Exchange 

will be awarded after January 1, 2015. 

Finally, we removed the proposal that 

an Exchange announce user fees in 

advance of the plan year and instead 

defer to State notification processes for 

assessing user fees, if applicable. 

3. Subpart C—General Functions of an 

Exchange 

Subpart C outlines the minimum 

functions of an Exchange, with crossreferences in some cases to more 

detailed standards that are described in 

subsequent subparts (specifically, 

subparts D, E, H and K). The minimum 

functions are designed to provide State 

flexibility. Uniform standards are 

established where specified by the 

statute or where there were compelling 

practical, efficiency or consumer 

protection reasons. This subpart also 

outlines standards for consumer tools 

and assistance, including the Internet 

Web site to facilitate consumer 

comparison of QHPs, the Navigator 

program, notices, the involvement of 

agents and brokers, premium payment, 

and privacy and security. 

a. Functions of an Exchange (§ 155.200) 

We proposed that an Exchange must 

perform the minimum functions 

outlined in subparts E, H, and K related 

to enrollment, SHOP, and QHP 

certification, respectively. We also 

proposed that the Exchange grant 

certifications of exemptions from the 

individual responsibility requirement. 

The proposed rule established that each 

Exchange would perform eligibility 

determinations; establish a process for 

appeals of eligibility determinations; 

perform functions related to oversight 

and financial integrity; evaluate quality 

improvement strategies; and oversee 

implementation of enrollee satisfaction 

surveys, assessment and ratings of 

health care quality and outcomes, 

information disclosures, and data 

reporting. We invited comments 

regarding these and other functions that 

should be performed by an Exchange. 

Comment: Several commenters 

suggested that HHS establish objective 

and public performance measures to 

determine how well an Exchange is 

executing the minimum functions. 

Examples provided by commenters 

include monitoring the percent of 

consumers enrolled in a QHP in a 

timely fashion, or monitoring the 

change in premiums over time in 

relation to health plans offered outside 

of an Exchange. Other commenters 

suggested that performance should be 

measured against benchmarks that 

change over time. The commenters 

further suggested that HHS employ 

remedies to address any State-based 

Exchange that is not performing the 

minimum functions adequately, 

particularly the processing of 

applications for advance payments of 

the premium tax credit and cost-sharing 

reductions. 

Response: Ongoing compliance with 

regulatory standards is critical to the 

effective operation of Exchanges and 

HHS is currently exploring mechanisms 

for performance measures and oversight 

tools available under section 1313 of the 

Affordable Care Act. We also note that 

the Government Accountability Office is 

also directed by section 1313(b) of the 

Affordable Care Act to conduct a study 

of Exchanges, including a comparison of 

premiums inside and outside of an 

Exchange. 

Comment: Several commenters urged 

HHS to clarify that the minimum 

functions in proposed § 155.200 are a 

floor and not a ceiling. Similarly, some 

commenters suggested other minimum 

functions, including but not limited to: 

coordinating with public programs and 

entities; monitoring and addressing 

adverse selection; creating an 

ombudsman office to handle complaints 

and appeals related to Exchange 

functions; and minimizing wrongful 

denials of eligibility. 

Response: The minimum functions 

presented in § 155.200 represent a floor 

that can be exceeded by an Exchange, 

but we do not believe we need to revise 

our proposed regulation text for that 

clarification. In response to the specific 

functions suggested by commenters, we 

believe that many of the suggested 

additional minimum functions are 

already encompassed in the final rule. 

For example, subpart D addresses 

coordination with other public 

programs and entities as well as the 

accuracy of eligibility determinations. 

We also note that subpart K of this part 

equips the Exchange with the ability to 

establish certification standards that 

mitigate adverse selection, while other 

sections of this subpart outlines various 

forms of consumer support. 

Comment: A number of commenters 

suggested that the final rule include the 

standard to fulfill the United States’ 

Trust Responsibility to provide health 

care for American Indian/Alaska Native 

individuals regardless of where they 

reside. 

Response: We believe Congress has 

acknowledged the Federal government’s 

historical and unique legal relationship 

with Indian tribes by providing 

additional benefits for American Indians 

and Alaska Natives to increase access to 

health care coverage in rural and urban 

areas. Those benefits include the waiver 

of cost-sharing amounts and the special 

enrollment period. We believe that the 

provisions in this final rule 

implementing these benefits will 

supplement the services and benefits 

that are provided by the Indian Health 

Service. 

Comment: Numerous commenters 

recommended standards related to the 

certificates of exemption described in 

§ 155.200(b) of the proposed rule. 

Response: As noted in the preamble to 

the proposed rule, we intend to address 

certificates of exemption and implement 

section 1311(d)(4)(H) and 1411 of the 

Affordable Care Act through future 

rulemaking. 

Comment: Many commenters urged 

HHS to provide more details on the 

eligibility appeals minimum function in 

§ 155.200(d) of the proposed rule, and 

several specifically commented on the 

need for appeals processes to 

accommodate limited English proficient 

individuals. 

Response: As noted in the preamble to 

the proposed rule, we intend to address 

the content and manner of appeals of 

individual eligibility determinations in 

future rulemaking. We have removed 

this from the list of minimum functions 

at this time. We note, however, that 

§ 155.355 provides that Exchange 

eligibility notices include notice of the 

right to an appeal. In addition, Exchange 

notices must meet certain minimum 

standards in § 155.230. Both of these 

provisions are discussed in more detail 

in response to comments on those 

specific sections. 

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Comment: Many commenters urged 

HHS to provide more details on the 

standards for oversight and financial 

integrity of an Exchange in § 155.200(e) 

of the proposed rule. 

Response: Section 1313 of the 

Affordable Care Act describes the steps 

the Secretary may take to oversee 

Exchanges and ensure their financial 

integrity, including conducting 

investigations and annual audits and 

partially rescinding Federal financial 

support from a State in which the 

Exchange has engaged in serious 

misconduct. We may publish 

regulations or other guidance in the 

future describing specific parameters of 

this oversight. 

Comment: Several commenters 

submitted comments in response to our 

proposals in § 155.200(f) supporting the 

use of national quality standards, State 

flexibility in implementation, reporting 

quality information to consumers and 

the evaluation of Exchanges as well as 

QHPs. 

Response: As noted in the preamble to 

the proposed rule, we intend to address 

the content and manner of quality 

reporting under this section in future 

rulemaking. In addition, the State 

Exchange Implementation Questions 

and Answers published by HHS on 

November 29, 2011 discusses the 

implementation of the quality rating 

system for QHPs at question 11. 

Comment: Some commenters 

requested clarification on whether an 

Exchange is considered a business 

associate under HIPAA. 

Response: In response to commenters’ 

requests for clarification regarding 

Exchanges and HIPAA, we have added 

language to section § 155.200 clarifying 

the relationship between Exchanges and 

QHP issuers, which are HIPAA covered 

entities, to help States determine the 

applicability of HIPAA to their 

Exchange. The final rule provides States 

with a breadth of options for designing 

and implementing Exchange functions 

and operations. Therefore, it is not 

possible to state the applicability of the 

HIPAA Privacy and Security Rules to all 

Exchanges. We have added § 155.200(e) 

to clarify that an Exchange is not acting 

on behalf of a QHP when the Exchange 

engages in the minimum functions 

outlined in this final rule. 

Because the Exchange, in performing 

functions under § 155.200, is not 

operating on behalf of a particular QHP 

issuer, but rather is acting on its own 

behalf in performing statutorily-required 

responsibilities to determine an 

individual’s eligibility for enrollment in 

a QHP through the Exchange, it is not 

a HIPAA business associate of the QHP 

issuer in regard to its performance of 

these functions. However, an Exchange 

that chooses to perform functions other 

than or in addition to those in § 155.200 

may be a HIPAA covered entity or 

business associate. For instance, a State 

may need to consider whether the 

Exchange performs eligibility 

assessments for Medicaid and CHIP, 

based on MAGI, or conducts eligibility 

determinations for Medicaid and CHIP 

as described in § 155.302(b). 

As stated in the Exchange 

establishment proposed rule, each 

Exchange should engage in an analysis 

of its functions and operations to 

determine whether the Exchange is a 

covered entity or business associate, 

based on the definitions in 45 CFR 

160.103. However, we believe that 

clarifying our conceptualization of the 

relationship between an Exchange and 

QHP issuers will assist Exchanges in 

their independent evaluation of the 

applicability of HIPAA. Please see 

further discussion of privacy and 

security in § 155.260. 

Summary of Regulatory Changes 

In the final rule, we made the 

following changes to § 155.200: we have 

removed the proposed paragraph (c), 

and instead included eligibility 

determinations as a minimum function 

through reference to subpart D in 

paragraph (a). We have also removed the 

proposed paragraph (d) related to 

appeals of eligibility determinations. In 

the final rule, paragraphs (c) and (d) 

now reflect the minimum functions 

related to oversight/financial integrity 

and quality activities, respectively. We 

have added a new paragraph (e) to 

clarify our intent that in carrying out its 

responsibilities under subpart C, an 

Exchange would not be considered to be 

operating on behalf of a QHP. 

b. Partnership 

In the Exchange establishment 

proposed rule, HHS introduced the 

concept of a Partnership model in 

which HHS and States work together on 

the operation of an Exchange. At a State 

grantee meeting on September 19, 2011, 

HHS provided additional information 

regarding the Partnership model. 

A Partnership Exchange would be a 

variation of a Federally-facilitated 

Exchange. Section 1321(c) of the 

Affordable Care Act establishes that if a 

State does not have an approved 

Exchange, then HHS must establish an 

Exchange in that State; the statute does 

not authorize divided authority or 

responsibility. This means that HHS 

would have ultimate responsibility for 

and authority over the Partnership 

Exchange. In a Partnership Exchange, 

we intend to provide opportunities for 

a State to help operate the plan 

management function, some consumer 

assistance functions, or both. For 

successful operation of the Exchange in 

this model, we expect that States would 

agree under the terms of section 1311 

grants to ensure cooperation from the 

State’s insurance, Medicaid, and CHIP 

agencies to coordinate business 

processes, systems, data/information, 

and enforcement. Under such an 

arrangement, States could use section 

1311 Exchange grant funding to pay for 

activities related to establishment of 

these Exchange functions, thereby 

maintaining existing relationships and 

allowing for easier transitions to Statebased Exchanges in future years if a 

State elects to pursue Exchange 

approval. 

Comment: Many commenters 

supported the goal of a Partnership, but 

voiced concerns about the potentially 

negative implications for a seamless 

consumer experience. Commenters 

urged HHS to ensure that consumers 

would not be able to differentiate an 

Exchange operated by a single entity 

from a Partnership Exchange. Other 

commenters recommended a highly 

transparent process so consumers would 

know where to file appeals and voice 

complaints and health insurance issuers 

would know which standards are 

enforced by which entity. Some 

commenters raised concerns about 

separating Exchange functionality at all, 

and urged HHS not to sacrifice a 

seamless consumer experience for State 

flexibility. 

Response: A seamless consumer 

experience is a cornerstone to an 

effective Exchange, and we plan to 

structure any Partnership in such a way 

that will not undermine a smooth 

process for individuals and employers. 

Comment: Several commenters 

suggested other functions for State 

involvement in a Partnership instead of 

the plan management and consumer 

assistance, in particular suggesting that 

States perform Medicaid eligibility 

determinations. Some commenters 

recommended allowing a State to retain 

responsibility for making Medicaid 

eligibility determinations in order to 

avoid duplicating existing State systems 

or curtailing traditional State 

responsibilities. A few commenters 

suggested that there be a specific 

process to handle disputes between 

HHS and Medicaid regarding Medicaid 

eligibility if States retained that function 

in a Federally-facilitated Exchange, and 

one suggested that consumers be held 

harmless and enrolled in coverage 

during eligibility disputes. Meanwhile, 

other commenters urged HHS not to 

bifurcate eligibility determinations 

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between Federal and State entities out 

of concerns about the negative 

implications for the consumer 

experience and the complications such 

bifurcation would create. A small 

number also suggested that a State with 

a Federally-facilitated Exchange must 

accept Federal eligibility 

determinations. 

Other proposed functions for 

Partnership included: the certificates of 

exemption described in § 155.200(b), 

quality rating system, enrollee 

satisfaction tools, determination of 

affordability and minimum value of 

employer-sponsored coverage, or 

eligibility determinations for advance 

payments of the premium tax credit. 

Other commenters suggested areas that 

should specifically be retained by a 

State in any circumstance, including 

State responsibility for overseeing 

licensure, solvency, market conduct, 

form approval and other operations of 

QHPs, overseeing licensed agents, and 

responding to consumer complaints. 

Response: In this final rule, we 

address leveraging existing State 

resources and expertise regarding 

Medicaid in subpart D. Exchange 

responsibilities related to the quality 

rating system and enrollee satisfaction 

survey will be outlined in future 

rulemaking. In addition, HHS continues 

to explore how to leverage existing State 

insurance activities in several areas, 

including licensure, solvency, and 

network adequacy. The State Exchange 

Implementation Questions and Answers 

published on November 29, 2011 

provides additional discussion in this 

area. 

Comment: Some commenters 

suggested that we allow States to have 

a variety of options under a Partnership 

Exchange, while other commenters 

recommended that a standardized set of 

limited options would be the most 

effective way to ensure that a 

Partnership does not create significant 

administrative burden. 

Response: We recognize that an 

unlimited number of options for 

organization of a Federally-facilitated 

Exchange would be extremely 

complicated to implement and operate, 

and believe that the options and 

flexibilities HHS has laid out will 

balance flexibility with administrative 

feasibility. 

Comment: Many commenters, citing 

concerns about accountability, 

supported the approach of the 

Partnership being a form of a Federallyfacilitated Exchange, while others 

preferred that States retain ultimate 

authority in a Partnership. Some of the 

commenters urged HHS to oppose any 

Partnership that would confuse or blur 

lines of authority and responsibility. A 

few commenters suggested that HHS 

have readiness assessments or 

performance metrics to measure how a 

State will perform, or is performing, a 

function under Partnership. One 

commenter suggested that HHS have no 

role in plan management if a State 

decides to operate this function, while 

another voiced concerns about how 

HHS would enforce certain decisions if 

a State is operating one or more 

Exchange functions. 

Response: Section 1321(c) of the 

Affordable Care Act does not 

contemplate divided authority over an 

Exchange. In all organizations of a 

Federally-facilitated Exchange, the 

Secretary will retain ultimate 

responsibility and authority over 

operations and all inherently 

governmental functions. A State 

wishing to enter into a Partnership must 

agree to perform the function(s) within 

certain parameters, as agreed upon by 

the State and HHS. 

Comment: Some commenters urged 

HHS not to allow a State to operate only 

an individual market or SHOP 

component of an Exchange through a 

Partnership. 

Response: We believe that splitting 

the SHOP through a Partnership is not 

a reasonable or feasible option at this 

time and have not established that as an 

option. 

Comment: Many commenters urged 

HHS to consult with stakeholders 

during the development of a Partnership 

with a given State. 

Response: Section 155.105(f) clarifies 

that the Federally-facilitated Exchange 

must follow the stakeholder 

consultation standards in § 155.130. The 

Federally-facilitated Exchange will 

consult with a variety of stakeholders to 

ensure that the needs of the States in 

which it operates are met. 

Comment: A few commenters 

requested that Tribal governments be 

eligible to participate in a Partnership. 

Response: Currently, only States 

would be eligible to enter into a 

Partnership with HHS, as States are the 

entities designated in the Affordable 

Care Act as responsible for setting up an 

Exchange (see discussion of the 

Exchange establishment proposed rule 

for more detail (76 FR 41870). However, 

HHS will continue ongoing tribal 

consultation to ensure that Exchanges 

address the needs of tribal populations. 

Summary of Regulatory Changes 

We did not propose regulations on 

Partnership and have not added any in 

this final rule. Rather, further 

information will be provided in the 

context of future guidance on the 

Federally-facilitated Exchange. 

c. Consumer Assistance Tools and 

Programs of an Exchange (§ 155.205) 

In proposed § 155.205, we established 

that the Exchange must provide for the 

operation of a consumer assistance call 

center that is accessible via a toll-free 

telephone number, and outlined 

capabilities and suggested infrastructure 

as well as types of information we think 

will be most critical to consumer 

experience and informed decisionmaking. The proposed rule sought 

comment on ways to streamline and 

prevent duplication of effort by the 

Exchange call center and QHP issuers’ 

customer call centers while ensuring 

that consumers have a variety of ways 

to learn about their coverage options 

and receive assistance. 

We further proposed that an Exchange 

must maintain an Internet Web site that 

contains the following information on 

each available QHP: the premium and 

cost sharing information; the summary 

of benefits under section 2715 of the 

PHS Act; the identification of the QHP 

coverage (‘‘metal’’) level; the results of 

the enrollee satisfaction survey; the 

assigned quality ratings; the medical 

loss ratio; the transparency of coverage 

measures reported to the Exchange, and 

the provider directory. 

We noted that we were evaluating the 

extent to which the Exchange Web site 

may satisfy the need to provide plan 

comparison functionality using 

HealthCare.gov, and invited comment 

on this issue. We also requested 

comment on a Web site standard that 

would allow applicants, enrollees, and 

individuals assisting them to store and 

access their personal account 

information and make changes. 

We also proposed that the Exchange 

Web site be accessible to persons with 

disabilities and provide meaningful 

access to persons with limited English 

proficiency. In addition, we proposed 

that the Exchange post certain QHP 

financial information, and that an 

Exchange establish an electronic 

calculator to assist individuals in 

comparing the costs of coverage in 

available QHPs after the application of 

any advance payments of the premium 

tax credit and cost-sharing reductions. 

We invited comment on the extent to 

which States would benefit from a 

model calculator and suggestions on its 

design. 

Finally, we proposed that the 

Exchange have a consumer assistance 

function, and that the Exchange conduct 

outreach and education activities to 

educate consumers about the Exchange 

and encourage participation separate 

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from the implementation of a Navigator 

program described in § 155.210. 

Comment: Several commenters 

supported the significant flexibility in 

structuring a call center provided in 

proposed § 155.205(a). Other 

commenters suggested that HHS 

establish more detailed standards such 

as establishing key areas of competency 

for a call center service, including being 

able to provide information about QHPs, 

the categories of available assistance, 

and the application process. Some 

commenters recommended that an 

Exchange call center address additional 

topics, ranging from the ability to make 

appropriate referrals to other sources of 

information, to the capacity to provide 

enrollment assistance to hospitals and 

other providers encountering the 

uninsured. One commenter said that the 

call center should be able to respond to 

online chat. 

Response: We accept the 

recommendation of commenters that 

Exchange discretion in establishing a 

call center should be maintained, and 

therefore have not established 

additional standards in § 155.205(a) of 

the final rule. The final rule does not 

preclude an Exchange from adopting 

additional standards or implementing 

the specific suggestions from 

commenters to provide more robust 

consumer assistance. 

Comment: HHS received many 

comments regarding an Exchange’s 

ability to make appropriate referrals 

through the call center in proposed 

§ 155.205(a). Commenters specifically 

recommended that Exchanges have the 

capacity to refer consumers to Medicaid, 

Indian Health Service/Tribal/Urban (I/ 

T/U) providers, Navigators and assisters, 

oral translation services, and family 

planning services. A commenter also 

suggested that the call center be able to 

appropriately address the special issues 

facing families with mixed immigration 

status. Several commenters asked that 

the call center refer consumers who 

were ineligible for coverage through the 

Exchange to safety net health providers 

and other low-cost, non-Exchange 

options. Some commenters suggested 

that the call center be able to 

appropriately refer discrimination 

complaints. 

Response: We believe § 155.205(a) 

addresses this issue with the phrase 

‘‘address the needs of consumers 

requesting assistance.’’ In the preamble 

to the proposed rule, we noted that the 

Exchange call center should be a 

conduit to services like Navigators and 

State consumer programs (76 FR 41875). 

We maintain this expectation under this 

final rule and note that Exchanges have 

discretion to establish more specific 

standards. 

Comment: Many commenters 

recommended that the call center be 

able to provide oral communication to 

people with limited English proficiency 

(LEP), and several suggested standards 

that assure service to those with hearing 

disabilities. 

Response: We have amended the final 

rule to apply the meaningful access 

standards specified in the redesignated 

§ 155.205(c)(1), (c)(2)(i), and (c)(3) to an 

Exchange call center. HHS will also 

issue further guidance on language 

access and such guidance will 

coordinate our accessibility standards 

with insurance affordability programs, 

and across HHS programs, as 

appropriate, providing more detail 

regarding literacy levels, language 

services and access standards. 

Comment: HHS received comments 

about ways a call center can assure 

quality service, including training on 

important topics, establishing 

performance standards on topics like 

call wait times, abandonment rates, and 

call return time; or modeling call center 

performance standards on existing call 

centers, with 1–800 Medicare and the 

Michigan Health Insurance Consumer 

Assistance Program mentioned as 

positive examples. Commenters also 

suggested testing the call center with 

consumer focus groups, developing 

analytics on call center service issues, 

and updating an Exchange customer’s 

account with a record of any services 

provided by call center personnel. 

Response: We believe that 

§ 155.205(a) as proposed outlines 

general standards to address the needs 

of consumers and we retain this 

language in the final rule. We did not 

propose and are not adding specific 

performance standards for Exchange call 

centers in this final rule, but we note 

that in connection with the operation of 

Federally-facilitated Exchanges, we will 

take these specific performance 

recommendations into consideration. 

Comment: HHS received many 

comments on the need to coordinate call 

center services with other entities. 

Several commenters recommended that 

service issues handled by an Exchange 

call center versus those handled by a 

QHP issuer call center should be clearly 

delineated to avoid consumer confusion 

and unnecessary duplication, a topic for 

which we requested comment in the 

proposed rule. One commenter 

recommended limiting the Exchange 

call center services to pre-enrollment, 

leaving QHP issuers to provide 

customer service for QHP enrollees. 

Another commenter recommended a 

‘‘no wrong number’’ approach to 

customer service, advising that State 

flexibility would best foster a solution. 

One commenter spoke of the need to 

integrate the call center with the 

Exchange Web site in order to provide 

personal service without having callers 

repeat information already entered via 

an online account. Another commenter 

asked that HHS clarify the different 

roles of eligibility workers and the call 

center. 

Response: An Exchange must balance 

the need to prevent duplication against 

ensuring that consumers have a variety 

of ways to learn about their coverage 

options, an imperative supported by the 

flexibility in paragraph § 155.200(a). In 

regard to the differing roles between 

eligibility workers and the call center, 

we believe this is an operational issue 

that each Exchange must address. Thus, 

we are finalizing this provision as 

proposed. 

Comment: Related to proposed 

§ 155.200(b), many commenters 

remarked that the Web site 

www.Healthcare.gov’s ‘‘Find Insurance 

Options’’ would work as a model for 

health plan comparison for the 

Exchange, though often with the caveat 

that this feature should be fully 

integrated into the Exchange Web site. 

A commenter also noted that 

Healthcare.gov provides a foundation 

but would need changes to be used for 

an Exchange. Some commenters 

opposed Healthcare.gov as a model 

because it does not have transactional 

functionality or a precise premium 

calculator. Another commenter urged 

HHS to also consider 

eHealthInsurance.com and 

Medicare.gov as models. 

Response: HHS considered comments 

on the appropriateness of 

Healthcare.gov as a model for presenting 

comparative plan information, as well 

as comments suggesting consulting 

other models such as 

eHealthInsurance.com and 

Medicare.gov. We will take these 

recommendations into account in 

development of the model Internet Web 

site template and in future guidance. 

Comment: With respect to the 

preamble discussion related to proposed 

§ 155.205(b), commenters were 

generally supportive of the concept that 

Exchange Web sites allow applicants 

and enrollees to store and access their 

personal information in an online 

account or allow eligibility and 

enrollment application assisters to 

maintain records of an individual’s 

application process. Some commenters 

raised privacy and security concerns, 

and one commenter suggested applying 

a privacy and security standard like that 

used by the Financial Industry 

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Regulatory Authority (FINRA) in its selfregulation of the securities industry, 

ensuring that actions by authorized 

representatives are recorded for 

consumer protection purposes. 

Response: We believe that applicants, 

enrollees, and authorized third party 

assisters should have access to an online 

personal account with strong privacy 

and security protections and will 

consider these comments when 

developing the model Internet Web site 

template and guidance. We encourage 

Exchanges to consider the benefit of 

accounts, but are not establishing 

account functionality as a minimum 

Exchange Web site standard in this final 

rule. 

Comment: Many commenters 

supported the proposal in 

§ 155.205(b)(1)(ii) that the Exchange 

display the summary of benefits and 

coverage established in section 2715 of 

the PHS Act. Several noted that the 

summary of benefits should be 

searchable, not necessitate additional 

software to view, and include drug 

formulary information. 

Response: Enrollees, consumers, and 

other stakeholders need access to a 

variety of cost and benefit information 

via the Exchange Web site to make an 

informed plan selection. Accordingly, 

we are finalizing the provisions in 

paragraphs § 155.205(b)(1)(i) and (ii), 

which direct an Exchange Web site to 

display premium and cost-sharing 

information and a summary of benefits 

and coverage for each QHP. We clarify 

that paragraphs (b)(1)(i) and (b)(1)(ii) are 

separate standards because the premium 

and cost-sharing information needs for 

an Exchange surpass those included in 

the summary of benefits and coverage 

document. We note that paragraph 

(b)(1)(ii) allows an Exchange the option 

of collecting the summary of benefits 

from issuers in a manner supporting a 

searchable format. The content of the 

summary of benefits and coverage is 

outside of the scope of this final rule 

and refer readers to the Summary of 

Benefits and Coverage and Uniform 

Glossary final rule, codified at § 147.200 

of this title, published at 77 FR 8668 

(Feb. 14, 2012). 

Comment: With respect to the 

provider directory standard in proposed 

§ 155.205(b)(1)(viii), a number of 

commenters recommended that an 

Exchange provide an up-to-date 

consolidated provider directory to 

enable consumers to see which QHPs a 

given provider participates in from the 

Exchange Web site. A few other 

commenters advised HHS to ensure that 

the Exchange link to a QHP’s Web site 

provider directory for timely and 

accurate information. Another 

commenter asked that the final rule 

clarify that an online directory meets 

the standard in paragraph (b)(1)(viii), 

and that Exchanges do not need to 

provide paper provider directories. 

Response: HHS considered the 

comments received on the Internet Web 

site’s display of provider directory 

information. To maintain maximum 

flexibility for an Exchange, the final rule 

does not specify whether an Exchange 

should collect a consolidated provider 

directory or link to a QHP’s Web site in 

order to meet the standards in paragraph 

(b)(1)(viii). Additional comments on the 

provider directories are addressed in 

§ 156.230. 

Comment: One commenter indicated 

that our proposed standard in 

§ 155.205(b)(1)(vi) to display medical 

loss ratio on the Exchange Web site was 

inappropriate, comparing it to a 

manufacturer’s cost to produce. Another 

commenter suggested dropping the 

proposed MLR display for the 

individual market Exchange, stating that 

it was too technical a concept to be 

useful for consumers. 

Response: Issuers already report this 

data under the Affordable Care Act in 

accordance with section 2718 of the 

PHS Act, and displaying the medical 

loss ratio on the Exchange Web site 

makes this information accessible to 

consumers. 

Comment: Several commenters noted 

that an Exchange should track which 

Web site features were most used, or 

caused consumers difficulty, in order to 

continually improve the Web site. Some 

of these commenters asked that usage 

information be publicly disclosed. 

Response: Statistics on Web site usage 

may be helpful for Exchange quality 

assurance, and we will consider these 

comments when developing best 

practice guidelines for Exchanges. We 

make no modifications in the final rule 

to specifically regulate collection or 

dissemination of statistics on Web site 

usage. 

Comment: Many commenters 

supported the proposed § 155.205(b)(2) 

standards regarding meaningful access 

to people with disabilities and persons 

with limited English proficiency, with 

some suggesting that HHS further clarify 

that the Web site must be fully 

accessible, with Web site materials and 

notices available in alternative formats. 

One commenter noted that the Exchange 

calculator and other online tools should 

be accessible and independently usable 

as much as possible for people with 

disabilities. Commenters suggested that 

all Web site language be at a sixth grade 

proficiency level. A number of 

commenters suggested that the Web site 

be available in Spanish and one or more 

languages prevalent in the Exchange 

service area. Many suggested that the 

Web site clearly display taglines in up 

to 15 different languages explaining 

how to access oral translation in those 

languages. In contrast, one commenter 

requested that HHS defer to a State on 

meaningful access standards because a 

State is best situated to determine local 

needs. Finally, several commenters 

suggested that meaningful access 

standards apply to information 

presented on the Web site on premiums, 

premium tax credits, individual 

responsibility exemptions, and the 

appeals process. 

Response: We have made several 

changes in this final rule. We added 

paragraph § 155.205(c) to establish that 

communications be in plain language to 

help applicants and enrollees 

understand the information presented; 

the definition of ‘‘plain language’’ is 

discussed in § 155.20 of this final rule. 

We added § 155.205(c)(1) to specify that 

auxiliary aids and services be provided 

at no cost to the individual. Provisions 

on access for those with limited English 

proficiency are modified in new 

paragraph § 155.205(c)(2) to include oral 

translation, written translation, and 

taglines in non-English languages 

indicating the availability of language 

services. Finally, we added paragraph 

(c)(3) to establish that the Exchange 

must inform applicants and enrollees of 

the services in paragraph (1) and (2). We 

note that in this final rule, at 

§ 155.230(b) and § 156.250, we apply the 

meaningful access standards to 

Exchange notices and QHP issuer 

notices, respectively. We note that the 

standards in this section do not preempt 

current guidance issued by the Office of 

Civil Rights. 

We are not adding specific 

accessibility standards in this final rule, 

but intend to issue such standards in 

future guidance, seeking input first from 

States and other stakeholders about 

appropriate standards. Such guidance 

will coordinate our accessibility 

standards with insurance affordability 

programs, and across HHS programs, as 

appropriate, providing more detail 

regarding literacy levels, language 

services and access standards. 

We retained the standard that Web 

sites must be accessible to people with 

disabilities and encourage States to 

review WCAG 2.0 level AA Web site 

standards, which have been considered 

for adoption as Section 508 standards in 

the recent proposed rule issued by the 

Architectural and Transportation 

Barriers Compliance Board (Access 

Board)76 FR 76640, December 8, 2011). 

See also Section 5.1.3 of the Guidance 

for Exchange and Medicaid Information 

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2 Guidance for Exchange and Medicaid 

Information Technology (IT) Systems 1.0 published 

in November 2010: http://cciio.cms.gov/resources/ 

files/joint_cms_ociio_guidance.pdf. 

Technology (IT) Systems 1.0 published 

in November 2010.2 We intend to 

publish future guidance on these 

standards. 

Comment: With respect to the 

financial information described in 

proposed § 155.205(b)(3)(i), one 

commenter sought clarification on what 

HHS means by licensing costs. Another 

commenter recommended dropping the 

proposal in § 155.205(b)(3)(v) that 

Exchanges display losses due to waste, 

fraud and abuse, arguing that it would 

be speculative and inflammatory. 

Alternatively, several other commenters 

asked for more detail on Exchange 

reporting, and asked that HHS direct an 

Exchange to include all costs, including 

costs incurred in making a Medicaid 

eligibility determination, in the 

administrative cost of the Exchange. 

Response: We did not accept the 

recommendations to establish 

additional standards and have 

maintained the proposed policy in the 

final rule, which is redesignated as 

subparagraph (b)(6). Section 1311(d)(7) 

of the Affordable Care Act directs the 

Exchange Web site to display losses due 

to waste, fraud and abuse. HHS will 

consider the request for greater clarity 

on licensing costs as we develop 

guidance to interpret and implement 

this standard. 

Comment: Many commenters 

supported our proposal that the 

Exchange Web site provide information 

about Navigators and other assisters in 

§ 155.205(b)(4). Several commenters 

suggested that HHS explicitly include 

the display of contact information for 

other assisters, especially the Exchange 

call center. Another commenter asked 

that brokers and agents only be listed if 

they are also Navigators. One tribal 

entity remarked that consumer 

assistance should include services 

provided by Indian Health Service/ 

Tribal/Urban (I/T/U) organizations. 

Response: We maintain the standard 

in redesignated § 155.205(b)(3) of this 

final rule. Exchanges have the flexibility 

to establish additional standards 

regarding posting information relating to 

Navigators and other assisters. 

Comment: Many commenters were 

supportive of an Exchange Web site that 

facilitates a ‘‘one-stop’’ eligibility 

determination as described in 

§ 155.205(b)(5) of the proposed rule. 

Commenters were supportive of the 

Web site allowing for enrollment in 

coverage. Another commenter stated 

that the Exchange should not be the 

only access point for coverage, and that 

HHS should address the need for 

consumer assistance for Web site-related 

purchasing mistakes. 

Response: Exchange Web sites will 

not be the only access point for an 

individual to apply for coverage through 

the Exchange. Standards for enrollment 

initiated by an applicant through a nonExchange Web site are described in an 

amended § 155.220 and § 156.265, 

which provide additional details about 

eligibility determinations and 

protections against an applicant’s 

personal data from being 

inappropriately shared with other 

parties. Applications are also described 

in § 155.405(c) of the final rule. We have 

also modified the Web site’s function in 

enrollment in the proposed 

§ 155.205(b)(1), by clarifying in 

redesignated § 155.205(b)(5) that an 

Exchange Web site facilitates the 

selection of a QHP by a qualified 

individual since enrollment is 

effectuated by the QHP issuer in a 

process described in § 156.265(b). 

Comment: Many commenters 

expressed support for a Web site 

calculator proposed in § 155.205(c) that 

displays the estimated cost of coverage 

after the application of any expected 

advance payments of the premium tax 

credit and cost-sharing reductions. In 

general, these commenters urged 

simplicity and requested no additional 

calculation from the consumer. Several 

commenters recommended that HHS 

provide a national model calculator for 

efficiency and consistency across 

Exchanges. One commenter in 

particular asked that the calculator 

make cost-sharing reductions available 

to American Indians/Alaska Natives 

readily apparent. Another commenter 

suggested that the Web site provide a 

standard way for a consumer to take less 

than the available advance payment of 

the premium tax credit. A few other 

commenters suggested that the Web site 

have decision support to help a 

consumer see how a change in income 

would affect advance payments of the 

premium tax credit and make a plan 

selection accordingly. Several 

commenters suggested that the 

Exchange specify that an ‘‘out-ofpocket’’ estimate be part of the 

Exchange calculator in order to help 

consumers avoid evaluating cost by 

premium alone. Finally, one commenter 

suggested that the calculator account for 

the variation in cost sharing for ‘‘innetwork’’ versus ‘‘out-of-network’’ 

services. 

Response: We will consider these 

recommendations as we develop 

guidance, best practices, and the model 

Web site template, but we are not 

finalizing more specific standards for 

the electronic calculator in this final 

rule as we are codifying the statutory 

provision related to the calculator. 

Comment: Commenters were 

generally supportive of Exchanges 

providing consumer assistance as 

described in § 155.205(d) of the 

proposed rule. Many asked that an 

Exchange complete a consumer needs 

assessment before designing its 

consumer assistance program. HHS 

received many comments on the need to 

conduct outreach and education for 

hard to reach populations described in 

proposed § 155.205(e). Many 

commenters remarked that assistance 

should be able to serve those with 

disabilities or limited English 

proficiency, suggesting standards for 

consumer assistance such as oral 

translation for all limited English 

proficient individuals, or simply that 

such services be culturally and 

linguistically appropriate. Some 

commented that consumer assistance 

workers should be knowledgeable of the 

Indian Health System. One commenter 

remarked that consumer assistance 

should be accessible across multiple 

channels, including Web site, 

telephone, and in-person. Several 

commenters remarked on the need for 

in-person assistance, with one 

commenter suggesting the Internal 

Revenue Service’s Volunteer Income 

Tax Assistance Program as a model, 

another commenter recommending 

agents and brokers for consumer 

assistance, and a third suggesting that 

assistance be provided as much as 

possible by nonprofit organizations. 

Others suggested that an outreach 

program be coordinated with public 

programs because of the likely overlap 

in eligibility, or with providers like 

Federally Qualified Health Centers and 

essential community providers. Other 

commenters pointed to existing 

enrollment campaigns for lessons 

learned, such as the need to build in 

time to ‘‘ramp up’’ an enrollment 

campaign. 

Response: We will consider 

comments we received on consumer 

assistance in § 155.205(d) in the 

development of guidance. In this final 

rule, we maintain this provision as 

proposed and believe that it provides 

sufficient discretion to further develop 

the consumer assistance function. We 

have modified § 155.205(e) in this final 

rule to direct Exchanges to provide 

education regarding insurance 

affordability programs to ensure 

coordination with public programs. 

HHS received many helpful comments 

on how to ensure effective consumer 

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assistance and outreach and will 

consider these as we develop guidance. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.205 of the proposed 

rule, with the following modifications: 

we renumbered proposed paragraphs 

(b)(3) through (b)(6) as (b)(2) to (b)(5) in 

the final rule. We clarified in paragraph 

(b)(5) of this final rule that a qualified 

individual may select a QHP on the 

Exchange Web site to initiate the 

enrollment process, rather than 

completing the entirety of the 

enrollment process on the Web site. We 

moved the standard regarding the 

calculator to paragraph (b)(6) of this 

final rule. We redesignated paragraph 

(c)(1) and clarified standards for persons 

with disabilities, including the 

provision of auxiliary aids and services 

at no cost to the individual and that 

Exchange Web sites must be accessible. 

We added paragraph (c)(2) to outline 

standards for limited English proficient 

persons, including that oral translation 

be available, written translation be 

available, and that the availability of 

language services be displayed with 

taglines written in each respective 

language, and in paragraph (c)(3) that 

individuals must be made aware of the 

availability of these services. Finally, we 

made several minor technical and nonsubstantive changes. 

d. Navigator Program Standards 

(§ 155.210) 

In § 155.210, we proposed Navigator 

program standards for both the 

individual market Exchange and SHOP. 

We first proposed that Exchanges must 

award grant funds to public or private 

entities or individuals to serve as 

Navigators, and described the eligibility 

standards for and the types of entities to 

which the Exchange may award 

Navigator grants. We also identified the 

minimum duties of Navigators, 

including standards for the information 

and services provided by Navigators. 

We sought comment on how best to 

ensure that the information provided by 

Navigators is accurate and complete and 

whether HHS should identify additional 

standards for Navigators in future 

guidance. 

We further proposed that a Navigator 

must meet any licensing, certification or 

other standards prescribed by the State 

or Exchange, as appropriate, and may 

not have a conflict of interest during the 

term as Navigator. We sought comment 

on whether we should propose 

additional standards on Exchanges to 

make determinations regarding conflicts 

of interest. 

In addition, we proposed that the 

Exchange include at least two types of 

Navigators from the list of eligible 

entities included in the Affordable Care 

Act. We sought comment as to whether 

we should ensure that at least one 

community and consumer-focused nonprofit organization be designated as a 

Navigator by an Exchange, or whether 

we should provide that Navigator 

grantees reflect a cross-section of 

stakeholders. 

We also proposed to codify the 

statutory prohibitions on Navigator 

conduct in the Exchange, specifically 

that health insurance issuers are 

prohibited from serving as Navigators 

and that Navigators must not receive 

any compensation from any health 

insurance issuer in connection with the 

enrollment of any qualified individuals 

or qualified employees in a QHP. We 

sought comment on this issue and 

whether there are ways to manage any 

potential conflicts of interest that might 

arise. 

Finally, we proposed to codify the 

statutory restriction that the Exchange 

cannot support the Navigator program 

with Federal funds received by the State 

for the establishment of Exchanges. For 

a more detailed discussion of how this 

statutory prohibition applies in States 

where Navigators address Medicaid and 

CHIP administrative functions, please 

refer to the preamble of the Exchange 

establishment proposed rule (76 FR 

41878). We also noted that we were 

considering a standard that the 

Navigator program be operational with 

services available to consumers no later 

than the first day of the initial open 

enrollment period. 

General Standards 

Comment: Regarding proposed 

§ 155.210(a), several commenters had 

specific recommendations regarding the 

types of and content of contractual 

agreements that should exist between 

Navigators and Exchanges. 

Response: The final rule does not 

specify the type of or contents of the 

contractual agreements between 

Exchanges and Navigators, other than 

codifying the statutory provision that 

Navigators receive grants. Exchanges 

can design the grant agreements as they 

deem appropriate so long as they ensure 

that Navigators are completing, at least, 

the minimum duties outlined in 

§ 155.210(e) of the final rule. 

Comment: Several commenters 

recommended additional standards for 

Navigator programs established under 

proposed § 155.210(a), including a 

needs assessment of the population in 

the geographic areas in which 

Navigators will serve consumers and an 

ongoing evaluation system to gauge 

Navigator performance. 

Response: While a needs assessment 

is likely to yield useful information in 

developing the Navigator program, we 

do not accept the commenters’ 

suggestion that Navigator programs 

conduct such assessments. We note that 

many States have already begun 

research on the needs of the populations 

an Exchange could serve. To the extent 

that needs assessments undertaken as 

part of Exchange establishment and 

planning do not inform which types of 

Navigators to select and how Navigators 

can best serve potential Exchange 

enrollees, we encourage States to 

conduct them. But the final rule does 

not direct States to conduct additional 

research. Additionally, we strongly 

encourage Exchanges to implement 

regular reviews and assessments of their 

Navigators. 

Comment: A significant number of 

commenters expressed the importance 

of mitigating Navigator conflict of 

interest and of ensuring Navigator 

accountability. Many commenters asked 

that HHS issue specific conflict of 

interest standards that would apply to 

all entities interested in serving as 

Navigators, and some made specific 

recommendations regarding what 

should be included in such standards. 

Several commenters, including 

consumer and patient advocacy groups 

and State agencies, also requested that 

we define ‘‘conflict of interest’’ as used 

in § 155.210(b)(1)(iv) of the proposed 

rule, while another commenter 

suggested that States should have the 

flexibility to determine if a conflict of 

interest exists for Navigators. 

Response: The final rule contains 

restrictions on Navigator conduct that 

are intended to eliminate possible 

sources of conflicts of interest. However, 

the baseline standards that we have 

specified will likely not be sufficient to 

comprise a robust set of conflict of 

interest standards in all Exchanges. As 

such, § 155.210(b)(1) of the final rule 

establishes that Exchanges develop and 

disseminate a set of conflict of interest 

standards to ensure appropriate 

integrity of Navigators. Exchanges will 

be best-equipped to determine what 

additional conflict of interest standards 

are appropriate for their markets, and 

we strongly urge Exchanges to develop 

standards that are sufficient to help 

ensure that consumers receive accurate 

and unbiased information at all times 

from all Navigators. We also clarify here 

that ‘‘conflict of interest,’’ as used in 

§ 155.210(c)(1)(iv) of the final rule, 

means that a Navigator has a private or 

personal interest sufficient to influence, 

or appear to influence, the objective 

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exercise of his or her official duties; for 

purposes of this rule, it includes the 

conflict of interest standards developed 

by each Exchange. 

We urge Exchanges to develop 

conflict of interest standards that 

include, but are not limited to, areas 

such as financial considerations; nonfinancial considerations; the impact of a 

family member’s employment or 

activities with other potentially 

conflicted entities; Navigator 

disclosures regarding existing financial 

and non-financial relationships with 

other entities; Exchange monitoring of 

Navigator-based enrollment patterns; 

legal and financial recourses for 

consumers that have been adversely 

affected by a Navigator with a conflict 

of interest; and applicable civil and 

criminal penalties for Navigators that 

act in a manner inconsistent with the 

conflict of interest standards set forth by 

the Exchange. Additionally, we will be 

releasing model conflict of interest 

standards in forthcoming guidance. 

Comment: We requested comment on 

standards related to training in the 

proposed rule and received a large 

number of responses on this issue. 

Several commenters suggested that HHS 

establish minimum standards for 

Navigator training, including templates 

for the format and content of Navigator 

training materials. Some commenters 

suggested that Navigators be trained to 

specifically serve the needs of varying 

groups, including but not limited to: 

low-income individuals; limited English 

proficient individuals; tribal 

organizations; individuals with 

disabilities; and individuals with 

mental health or substance abuse needs. 

Other commenters urged HHS to defer 

to States in relation to Navigator 

training and standards beyond those 

established in the proposed rule. 

Response: Due in part to the 

sensitivity of information that will be 

available to Navigators, newly added 

§ 155.210(b)(2) of the final rule directs 

Exchanges to establish training 

standards that apply to all persons 

performing Navigator duties under the 

terms of a Navigator grant, including 

both paid and unpaid staff of entities 

serving as Navigators. We plan to issue 

training model standards in forthcoming 

guidance to supplement, not replace, 

the need for Navigator applicants to 

demonstrate that they can carry out the 

minimum duties of a Navigator as listed 

in § 155.210(e) of the final rule. We 

encourage Exchanges to conduct 

ongoing and recurring training for 

Navigators. 

Comment: One comment from a 

consumer advocacy organization 

requested that HHS specifically indicate 

that the Gramm-Leach-Bliley Act (Pub. 

L. 106–102) does not apply to the 

Navigator program as Navigators will 

not be selling insurance. 

Response: The Gramm-Leach-Bliley 

Act (GLBA) is intended to enhance 

competition in the financial services 

industry by providing a prudential 

framework for the affiliation of banks, 

securities firms, insurance companies, 

and other financial service providers, 

and for other purposes. To the extent a 

Navigator is not licensed to sell 

insurance, we believe the GLBA would 

not apply. The GLBA will apply to 

agents and brokers as it currently does, 

including agents and brokers that 

choose to serve as Navigators. However, 

other Navigator grantees will not be 

affected. Navigators must meet other 

training, conflict of interest, and privacy 

and security standards established by 

the Exchange. 

Comment: We received many 

comments expressing support for a 

standard that Navigator programs be 

operational with services available to 

consumers no later than the first day of 

the initial open enrollment period. 

Some commenters noted that while they 

support the proposed start date, they 

prefer an earlier operational start date. 

Response: We have not directed 

Navigator programs to be operational by 

the first day of the initial open 

enrollment period. However, we 

encourage Navigator programs to be 

operational with services available to 

consumers by October 1, 2013, for Statebased Exchanges that are approved or 

conditionally approved by January 1, 

2013, or the start of any annual open 

enrollment period in subsequent years 

for State-based Exchanges certified after 

January 1, 2013. 

Entities Eligible to be a Navigator 

Comment: Many commenters 

proposed that States, Exchanges, or HHS 

should set appropriate certification or 

licensing standards for Navigators. A 

few commenters proposed that HHS set 

a broad range of certification or 

licensing standards that States or 

Exchanges could tailor to meet their 

own needs, while others suggested 

specific programs upon which 

Exchanges could model Navigator 

certification standards, such as the 

Medicare State Health Insurance 

Assistance Programs, ombudsman 

programs, area agencies on aging, and 

Promotoras, a community health worker 

model that has been adopted into many 

Latino communities in the United 

States. 

Response: We understand and 

appreciate the concerns of commenters 

that recommended certification or 

licensure standards for Navigators; we 

have finalized in this rule a primary role 

for Exchanges and States in the creation, 

development and enforcement of such 

standards. We encourage Exchanges to 

set certification or licensing standards 

for Navigators in accordance with the 

guidelines set forth in this final rule and 

any State law(s) that may apply. 

However, without some minimum 

standards, significant variability may 

develop that could put consumers at a 

disadvantage. Therefore, HHS has added 

§ 155.210(b)(2) of the final rule to 

indicate that Exchanges must develop a 

set of training standards to ensure 

Navigator competency in the needs of 

underserved and vulnerable 

populations, eligibility and enrollment 

procedures, and the range of public 

programs and QHP options available 

through the Exchange. Additionally, 

given the policy set forth in 

§ 155.210(c)(1)(v) that Navigators 

comply with the privacy and security 

standards adopted by the Exchanges 

under § 155.260, the training standards 

must also ensure that Navigators are 

trained in the proper handling of tax 

data and other personal information. 

HHS also plans to issue additional 

guidance on the model standards for 

Navigator training and best practices for 

certification or licensure standards. 

Comment: A majority of commenters 

proposed that Navigators should not 

have to hold an agent or broker license 

or errors and omissions liability 

coverage in order to be certified or 

licensed as a Navigator. Conversely, a 

small number of commenters suggested 

that Navigators hold an agent or broker 

license as well as errors and omissions 

coverage and that Navigators should be 

subject to the same licensing and 

education standards established for 

agents and brokers. 

Response: We accept the commenters’ 

suggestion that States and Exchanges 

should not be able to stipulate that 

Navigators hold an agent or broker 

license, and we clarify that States or 

Exchanges are prohibited from adopting 

such a standard, including errors and 

omissions coverage. ‘‘Agent or broker’’ 

is defined in § 155.20 as ‘‘a person or 

entity licensed by the State as an agent, 

broker, or insurance producer.’’ Thus, 

establishing licensure standards for 

Navigators would mean that all 

Navigators would be agents and brokers, 

and would violate the standard set forth 

§ 155.210(c)(2) of the final rule that at 

least two types of entities must serve as 

Navigators. Additionally, we do not 

think that holding an agent or broker 

license is necessary or sufficient to 

perform the duties of a Navigator as 

these licenses generally do not address 

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training, among other things, about 

public coverage options. 

Comment: Several commenters 

addressed the need for Navigators to 

have expertise in serving American 

Indian/Alaska Native communities and 

on the ability of Navigators to 

adequately address the needs of 

American Indians/Alaska Natives. In 

addition, a few commenters suggested 

we modify the language proposed in 

§ 155.210(b)(1)(iii) such that Navigators 

serving tribal communities should be 

exempt from any State licensing or 

certification standards, as well as from 

conflict of interest standards. 

Response: Exchanges that include one 

or more Federally-recognized tribes 

within their geographic area must 

engage in regular and meaningful 

consultation and collaboration with 

tribes in accordance with § 155.130(f) of 

this final rule. In section 155.210(c)(2), 

we have identified Tribes, Tribal 

organizations, and urban Indian 

organizations as eligible entities to serve 

as Navigators. Development of the 

Navigator program should be an 

important element of Exchanges’ 

consultation with Tribal governments. 

The Navigator program will help ensure 

that American Indians/Alaska Natives 

participate in Exchanges. 

Comment: Commenters recommended 

that when the geographic area of an 

Exchange includes an Indian Tribe, 

tribal organization, or Urban Indian 

organization, that at least one of these 

organizations must be included as a 

Navigator within this Exchange. 

Another commenter recommended that 

HHS include directives to Navigator 

programs and contractors to provide 

resources directly to Tribes so they can 

conduct Navigator tasks within their 

own communities. 

Response: Although Indian Tribes, 

tribal organizations, or Urban Indian 

organizations are listed in 

§ 155.205(c)(2)(viii) as potential 

Navigators, we believe that the 

Exchange should have flexibility 

regarding the granting of Navigator 

awards. However, as noted previously, 

development of the Navigator program 

should be a critical element of an 

Exchange’s consultation with tribal 

governments, and tribal governments 

should have the opportunity to provide 

early input on the development of the 

Navigator program. 

Comment: Several commenters 

articulated the need for Navigators to be 

non-discriminatory in performing their 

duties. Commenters recommended that 

Navigators should comply with the nondiscrimination standards that apply to 

the Exchange as a whole. 

Response: We clarify that because 

Navigators are third parties under 

agreement (that is, the grant agreement) 

with the Exchange, the nondiscrimination standards that apply to 

Exchanges in § 155.120(c) will also 

apply to entities seeking to become 

Navigators. 

Comment: Regarding § 155.205(b)(2), 

a majority of commenters supported the 

provision suggested in the proposed 

rule to establish that at least one of the 

two types of entities eligible to serve as 

Navigators must be a community or 

consumer-focused non-profit entity (76 

FR 41877). Several commenters 

recommended expanding the list of 

categories to include additional entities. 

A small number of commenters thought 

States should have sole discretion over 

the determination of which entities may 

serve as Navigators. One commenter 

favored allowing States to determine the 

need for a Navigator program; another 

recommended using licensed insurance 

professionals to facilitate enrollment; 

and a small number stated that the 

standard that two types of entities must 

be Navigators was unnecessary and 

counterproductive. 

Response: We accept the commenters’ 

suggestion that at least one entity that 

serves as a Navigator should be a 

community or consumer-focused nonprofit, and have amended 

§ 155.210(c)(2) to convey this policy. 

The categories listed in the final rule in 

§ 155.210(c)(2) represent a broad 

spectrum of organizations, but are not 

meant to be an exhaustive list of 

potential Navigators. As stated in 

§ 155.210(c)(2)(viii), other public or 

private entities that meet the standards 

of the Navigator program may be eligible 

to receive a Navigator grant. When 

establishing a Navigator program, 

Exchanges should plan to have a 

sufficient number of Navigators 

available to assist qualified individuals 

and employers from various geographic 

areas and with varying needs who wish 

to enroll in QHPs within their State. 

Comment: One comment stated that a 

Navigator should never be an individual 

person, but instead a verifiable and 

appropriately regulated entity or 

institution. 

Response: We believe that the 

standard to meet licensure and 

certification standards in § 155.210(c), 

and the prohibition against health 

insurance issuers, and those who 

receive any consideration directly or 

indirectly from any health insurance 

issuer in connection with the 

enrollment in the Exchange, from 

receiving Navigator grants in 

§ 155.210(d) will serve as sufficient 

regulation against fraud by individuals 

or organizations who qualify to be 

Navigators. 

Prohibitions on Navigator Conduct 

Comment: Many commenters 

discussed the impact that Navigator 

compensation, or ‘‘consideration’’ as 

used in § 155.210(c)(2) of proposed rule, 

would have on a Navigator’s obligation 

to provide impartial assistance and 

avoid conflicts of interest. The majority 

of these commenters recommended that 

Navigators be prohibited from receiving 

compensation from health insurance 

issuers for enrolling individuals in 

plans outside of the Exchange, while 

some commenters expressed support for 

the compensation restrictions as 

proposed. Several commenters 

requested that a prohibition on 

enrollment-based compensation from a 

health issuer not prohibit Navigator 

programs from utilizing Medicaid or 

CHIP funds for appropriate Navigator 

activities. Some commenters also 

recommended that such a prohibition 

not preclude Navigators from receiving 

grants from health insurance issuers for 

activities unrelated to enrolling 

individuals in plans inside of the 

Exchange. Many commenters requested 

clarification of the term 

‘‘consideration.’’ 

Response: Prohibiting Navigators from 

receiving compensation from health 

insurance issuers for enrolling 

individuals in health insurance plans is 

an important way to mitigate potential 

conflict of interest, and we have 

amended the final rule in 

§ 155.210(d)(4) to establish this 

prohibition. Permitting Navigators to 

receive such compensation would 

introduce a financial conflict of interest 

which would run counter to the focus 

of the Navigator program as a consumercentered assistance resource. We clarify 

that this prohibition applies to 

Navigators broadly, including staff of an 

entity serving as a Navigator or entities 

that serve as Navigators for one 

Exchange while simultaneously serving 

in another capacity for another 

Exchange. Additionally, we clarify that 

this prohibition does not preclude 

Navigators from receiving grants from 

the Exchange that are funded through 

the collection of user fees. 

We note that the final rule does not 

inherently prohibit Navigators from 

receiving grants and other consideration 

from health insurance issuers for 

activities unrelated to enrollment into 

health plans, although we remain 

concerned that such relationships— 

financial and otherwise—may present a 

significant conflict of interest for 

Navigators. We urge Exchanges to 

consider the ramifications of such 

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relationships when developing conflict 

of interest standards for their Navigator 

programs. 

We also clarify that ‘‘consideration,’’ 

as used in § 155.210(d)(4) of the final 

rule, should be interpreted to both mean 

financial compensation—including 

monetary or in-kind of any type, 

including grants—as well as any other 

type of influence a health insurance 

issuer could use, including but not 

limited to things such as gifts and free 

travel, which may result in steering 

individuals to particular QHPs offered 

in the Exchange or plans outside of the 

Exchange. 

Duties of a Navigator 

Comment: Many commenters 

supported the Navigator duties 

proposed in § 155.210(d), and some 

suggested that the duty to ‘‘maintain 

expertise in eligibility, enrollment, and 

program specifications’’ should include 

knowledge about Exchanges, Medicaid, 

CHIP, other private and public health 

insurance programs, appeals, and rules 

related to cost-sharing. Other 

commenters recommended other 

specific minimum duties for Navigators, 

including providing information about 

total plan costs, assisting consumers 

with applying for advance payments of 

premium tax credit and other costsharing reductions, and making 

consumers aware of the tax implications 

of their enrollment decisions. 

Response: The final rule maintains 

most of the duties set forth in the 

proposed rule, except as re-assigned as 

§ 155.210(e) and reflecting edited 

language in § 155.210(e)(3). The change 

in § 155.210(e)(3) is a technical 

correction to ensure consistency with 

our clarification in § 155.205(b)(7). 

Similarly, a Navigator facilitating a QHP 

selection for a consumer initiates the 

enrollment process, which is then 

conducted by the Exchange. Section 

155.400(a)(2) of this final rule describes 

the subsequent step in the enrollment 

process, and directs Exchanges to 

transmit the QHP selection to the 

appropriate QHP issuer. 

We believe that Navigators should 

make consumers aware of the tax 

implications of their enrollment 

decisions, and consider this to be 

included in § 155.210(e)(1) of the final 

rule. Navigators should also provide 

information about the costs of coverage 

and assist consumers with applying for 

advanced payments of the premium tax 

credit and cost-sharing reductions, and 

we clarify that § 155.210(e)(2) and 

§ 155.210(e)(3) of the final rule are 

intended to include such activities. We 

also clarify that such assistance could 

result in an individual receiving an 

eligibility determination for other 

insurance affordability programs. 

Additionally, we note that Exchanges 

can establish additional minimum 

Navigator duties and encourage 

Exchanges to determine whether 

additional Navigator duties may be 

appropriate. 

Comment: A significant number of 

commenters recommended that 

Navigators be accessible to all 

consumers, including those with 

disabilities, and that all information 

provided under § 155.210(d)(5) of the 

proposed rule by Navigators be 

provided orally as well as in writing. 

Response: Navigators need to be 

accessible to individuals with 

disabilities, and redesignated 

§ 155.210(e)(5) of the final rule 

establishes that Navigators must ensure 

accessibility and usability for 

individuals with disabilities, which we 

believe includes accessibility by 

individuals with hearing or visual 

impairments and using enrollment 

tools, written in plain language, that are 

easily accessible by consumers. We 

believe this provision will help ensure 

that Navigators minimize obstacles to 

access for all potential enrollees and 

remain accessible to consumers. 

Exchanges have the flexibility to 

develop materials or to assign the 

responsibility to Navigators. 

Comment: Many commenters 

expressed the need for Navigators to be 

linguistically and culturally competent, 

as described in § 155.210(d)(5) of the 

proposed rule, and a significant number 

recommended training in this area. 

Commenters had numerous specific 

recommendations regarding how 

Navigators would be able to best 

accomplish this duty, and other 

commenters wanted additional clarity 

regarding this standard. Some 

commenters recommended that 

Navigator programs select diverse 

Navigators as a method of reinforcing 

linguistic and cultural competence. One 

commenter suggested that having a 

consumer’s family members or friends 

serve as interpreters should not be 

permitted to fulfill the obligation to 

provide culturally and linguistic 

appropriate services. 

Response: Redesignated 

§ 155.210(e)(5) establishes that 

Navigators must provide information in 

a way that is culturally and 

linguistically accessible to ensure that 

as many consumers as possible can 

benefit from Navigator programs. The 

linguistic and cultural accessibility 

standard applies broadly across the 

duties of a Navigator, including public 

education and outreach activities. We 

encourage Exchanges to undertake 

cultural and linguistic analysis of the 

needs of the populations they intend to 

serve and to develop training programs 

that ensure Navigators can meet the 

needs of such populations. We note that 

we do not believe that this standard can 

be met by simply having consumers’ 

family members or friends serve as 

interpreters. As previously stated, future 

guidance will set forth model standards 

related to linguistic and cultural 

competency. 

Comment: Regarding the duties of a 

Navigator outlined in § 155.210(d) of the 

proposed rule, several commenters 

expressed the importance of data and 

the use of information technology for 

Navigator programs, including 

Navigator collection of data and 

narratives regarding consumer 

experiences. Some consumers also 

stated that Navigators should 

collaborate with other programs and 

entities, including other consumer 

assistance programs and State 

governments, so that all groups could 

mutually share information. 

Response: The final rule does not 

establish that Navigators or the 

Navigator program must collect data or 

to ensure compatibility with existing 

information systems. However, 

Exchanges have the flexibility to use 

such tools to ensure that Navigators and 

Exchanges are best serving consumers. 

Funding for Navigators 

Comment: One commenter 

recommended that Navigator 

compensation by an Exchange described 

in § 155.210(e) of the proposed rule be 

only in the form of block grants, while 

another commenter recommended that 

Navigator grants include distribution on 

a per capita basis for enrolling 

individuals in QHPs offered through the 

Exchange. 

Response: We do not outline a 

specific compensation structure for 

Navigators, and we maintain the 

proposed approach to funding in 

§ 155.210(f) of the final rule. This 

approach does not alter section 

1311(i)(6) of the Affordable Care Act 

that establishes that all funds for 

Navigator grants come from the 

operational funds of the Exchange. We 

note, however, that operational funds of 

the Exchange may be revenue received 

by the Exchange through user fees or 

other revenue sources, so long as the 

Exchange is self-sustaining. We 

anticipate that there may be public or 

private grants available to support 

certain Exchange functions, such as 

education and outreach; once received 

for the purposes of funding Exchange 

operations, these funds would be 

operational funds. 

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Comment: We received numerous 

comments suggesting that we monitor 

Navigator programs to ensure that they 

have sufficient funding under proposed 

§ 155.210(e) to meet the needs of all 

potential enrollees, and several 

commenters recommended that we 

issue guidance on minimum funding 

levels needed to operate sustainable 

Navigator programs. 

Response: While States and 

Exchanges should ensure that Navigator 

programs have sufficient funds to 

ensure that all potential enrollees are 

capable of being assisted and guided in 

eligibility and decision-making for 

coverage in the Exchanges, we believe 

that minimum funding level for 

Navigator program needs will vary by 

State and by populations and therefore 

do not establish a minimum in 

§ 155.210(f) of the final rule. 

Comment: We received several 

comments regarding the use of Medicaid 

or CHIP funds when Navigators perform 

administrative functions for those 

programs. The majority of commenters, 

primarily consumer and patient 

advocacy groups, were supportive of 

using Federal Medicaid and CHIP funds 

for this purpose, while a small minority 

was opposed to such an approach. One 

commenter recommended that 

Navigators not perform Medicaid or 

CHIP administrative functions, stating 

that these activities are the purview of 

the State Medicaid program. 

Response: We continue to support the 

position that if a State chooses to permit 

Navigators to perform or assist with 

Medicaid and CHIP administrative 

functions, Medicaid or CHIP agencies 

may claim Federal funding for a share 

of expenditures incurred for such 

activities. A more detailed discussion of 

this position is in the proposed rule (76 

FR 41878). 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.210 of the proposed 

rule, with the following modifications. 

In new paragraph (b), we provide that 

an Exchange must develop and publicly 

disseminate conflict of interest and 

training standards for all entities that 

serve as Navigators. In paragraph 

(c)(1)(v), we apply the privacy and 

security standards adopted by the 

Exchange, as established in § 155.260, to 

Navigators. In paragraph (c)(2), we 

provided that at least one entity serving 

as a Navigator must be a community and 

consumer-focused non-profit. We 

clarified in paragraphs (d)(2) and (d)(3) 

that subsidiaries of health insurance 

issuers and associations that include 

members of or lobby on behalf of the 

insurance industry are prohibited from 

serving as Navigators. In paragraph 

(d)(4) we clarified that Navigators may 

not receive compensation from a health 

insurance issuer in connection with the 

enrollment of individuals or employees 

in any health plan, including both QHPs 

and non-QHPs. Finally, in paragraph 

(e)(3) we clarified that Navigators must 

assist consumers in selecting a QHP, 

thereby initiating the enrollment 

process. 

e. Ability of States to Permit Agents and 

Brokers to Assist Qualified Individuals, 

Qualified Employers, or Qualified 

Employees Enrolling in QHPs 

(§ 155.220) 

Based on comments and feedback to 

the proposed rule, we are revising the 

rule to include paragraph (a)(3) of this 

section as an interim final provision, 

and we are seeking comments on it. 

In § 155.220, we proposed to codify 

section 1312(e) of the Affordable Care 

Act that gives States the option to 

permit agents or brokers to enroll 

individuals and employers in QHPs. To 

ensure that individuals and small 

groups have access to information about 

agents and brokers should they wish to 

use one, we proposed to permit an 

Exchange to display information about 

agents and brokers on its Web site or in 

other publicly available materials. 

Additionally, recognizing that an 

Exchange may wish to work with webbased entities and other entities with 

experience in health plan enrollment, 

we sought comment on the functions 

that such entities could perform, the 

potential scope of how these entities 

would interact with the Exchange, and 

the standards that should apply to an 

entity performing functions in place of, 

or on behalf of, an Exchange while 

acknowledging and meeting the 

statutory limitation that premium tax 

credits and cost-sharing reductions be 

limited to enrollment through the 

Exchange. We also sought comment on 

the practical implications, costs, and 

benefits to an Exchange that coordinates 

with such entities, as well as any 

implications for security or privacy of 

such an arrangement. 

Comment: A number of commenters 

sought clarification on whether and how 

the involvement of agents and brokers 

described in proposed § 155.220 may 

serve as Navigators under § 155.210. 

Many commenters sought further 

clarification as to the distinction 

between the role of agents or brokers 

and the role of Navigators in the 

Exchange. 

Response: In general, the 

responsibilities of a Navigator differ 

from the activities that an agent or 

broker. For example, the duties of a 

Navigator described under § 155.210(e) 

of the final rule include providing 

information regarding various health 

programs, beyond private health 

insurance plans, and providing 

information in a manner that is 

culturally and linguistically appropriate 

to the needs of the population being 

served by the Exchange. Moreover, any 

individual or entity serving as a 

Navigator may not be compensated for 

enrolling individuals in QHPs or health 

plans outside of the Exchange; as such, 

an agent or broker serving as a Navigator 

would not be permitted to receive 

compensation from a health insurance 

issuer for enrolling individuals in 

particular health plans. That said, 

nothing precludes an Exchange’s 

Navigator program from including 

agents and brokers, subject to the 

conditions of § 155.210. 

Comment: Several commenters 

expressed support for the proposed 

§ 155.220(a) and the level of flexibility 

it affords State Exchanges to determine 

the role of agents and brokers and webbased entities in the Exchange 

marketplace. Several commenters 

specifically expressed support for the 

manner in which the accompanying 

preamble to the proposed rule described 

the Exchange as accountable for the 

actions of web-based entities. 

Response: We accept the 

recommendation that Exchanges have 

the flexibility to determine the role of 

agents and brokers, including web-based 

entities, in their marketplaces. We have 

retained the language in § 155.220(a), 

which codifies the statutory flexibility 

that States may determine whether 

agents and brokers may enroll 

individuals, employers and employees 

in QHPs and provide assistance to 

qualified individuals applying for 

financial assistance. 

Comment: HHS received several 

comments urging us to prohibit agents 

and brokers, including web-based 

brokers, from performing eligibility 

determinations. 

Response: The Exchange must 

perform eligibility determinations, 

subject to the standards and flexibility 

outlined in subpart D of this final rule. 

We note that an individual cannot 

enroll in a QHP through the Exchange, 

nor can a QHP issuer enroll a qualified 

individual in a QHP through the 

Exchange, unless such individual 

completes the single streamlined 

application to determine eligibility as 

described in § 155.405 and is 

determined eligible. We have clarified 

in § 156.265(b)(1) that that enrollment 

by QHP issuer may be considered 

‘‘enrollment through the Exchange’’ 

only after the Exchange notifies the QHP 

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issuer that the individual has received 

an eligibility determination, the 

individual is qualified to enroll in a 

QHP through the Exchange, and the 

Exchange transmits enrollment 

information to the QHP issuer 

consistent with § 155.400(a). In 

§ 155.220(c)(1), we also specify that an 

individual can be enrolled in a QHP 

through the Exchange with the 

assistance of an agent or broker only if 

the agent or broker ensures that the 

individual completes the application 

and eligibility verification process 

through the Exchange Web site. We 

acknowledge and clarify that nothing in 

this final rule prohibits a QHP issuer 

from selling QHP coverage directly or 

through an agent or broker, so long as 

the standards of § 156.255(b) are met; 

however, such sales and enrollment are 

not ‘‘enrollment through the Exchange’’ 

and such enrollees are not eligible for 

the benefits that are tied to enrollment 

through the Exchange. 

Comment: With respect to proposed 

§ 155.220(a), several commenters sought 

clarification of the role agents and 

brokers in enrolling individuals in 

QHPs. Several commenters urged us to 

strengthen the role of agents and brokers 

in the Exchange by further clarifying 

their ability to participate in the 

Exchange marketplace. With respect to 

the preamble discussion of web-based 

entities, several commenters urged HHS 

to permit web-based entities in 

particular to enroll individuals eligible 

for advance payments of the premium 

tax credit and cost-sharing reductions in 

QHPs so that such individuals may have 

access to the same avenues for QHP 

enrollment as those individuals who do 

not receive financial assistance. 

Response: We accept the 

recommendation that we provide 

Exchanges with discretion to leverage 

the market presence of agents and 

brokers, including web-based entities 

that are licensed by the State (webbrokers), to draw consumers to the 

Exchange and to QHPs. We have 

amended § 155.220 to include minimum 

standards for the process by which an 

agent or broker may help enroll an 

individual in a QHP in a manner that 

constitutes enrollment through the 

Exchange. This is intended to include 

traditional agents and brokers, as well as 

web-brokers. This process must include 

the completion by the individual of a 

single streamlined application to 

determine eligibility through the 

Exchange’s Web site, as described in 

§ 155.405; the transmission of 

enrollment information by the Exchange 

to the QHP issuer to allow the issuer to 

effectuate enrollment of qualified 

individuals in the QHP; and any 

standards set forth in an agreement 

between the agent or broker and the 

Exchange. We note that there may be 

various means a State may choose to 

integrate agents, brokers and webbrokers consistent with the standards 

described in this section for enrollment 

through the Exchange. Agents and 

brokers may assist individuals enrolling 

directly through the Exchange Web site 

and may serve as Navigators consistent 

with standards described in § 155.210. 

We also afford Exchanges discretion to 

allow agents and brokers to use their 

own Web sites to assist individuals in 

completing the QHP selection process, 

as long as such a Web site conforms to 

the standards identified in 

§ 155.220(c)(3). While Exchanges that 

pursue this option would be able to 

leverage the market presence of webbrokers in drawing consumers to the 

Exchange and QHPs, we note that the 

Exchanges will also have to share data 

and coordinate closely with such 

entities. 

Comment: With respect to proposed 

§ 155.220(a), many commenters urged 

us to set standards around the use of 

agents and brokers in order to ensure 

certain consumer protections. These 

suggestions included having Exchanges 

to monitor and oversee all agents and 

brokers enrolling individuals and small 

groups in QHPs; establishing provisions 

to mitigate agents’ and brokers’ 

incentives to steer consumers to enroll 

in certain QHPs or to non-QHPs; setting 

uniform commissions for agents and 

brokers or establishing that issuers must 

compensate agents and brokers the same 

amount for Exchange and non-Exchange 

plans; prohibiting commissions for 

agents and brokers in the Exchange 

altogether; establishing certain 

disclosures by agents and brokers, 

including disclosure of their 

commission and whether or not the 

agent or broker has been the subject of 

any sanctions; applying privacy and 

confidentiality standards to agents and 

brokers; prohibiting Exchanges from 

directing individuals or small groups to 

enroll only through an agent or broker; 

prohibiting advertising by agents or 

brokers; or prohibiting agents and 

brokers from the Exchange altogether. 

A number of commenters also 

expressed concern regarding the role of 

third-party web-based entities enrolling 

individuals in QHPs. Several 

commenters emphasized that such 

external entities should be held to the 

same standards as the Exchange; should 

not be permitted to perform eligibility 

determinations; or should be held to 

certain consumer protection standards 

to prevent steering. 

Response: We recognize the 

importance of consumer protections 

with respect to agents and broker 

interactions. We also recognize the 

States’ role in licensing and overseeing 

agents and brokers and have allowed 

States to determine which standards 

would apply to agents and brokers 

acting in the Exchange, if the State 

chooses to permit agents and brokers to 

enroll individuals and small groups in 

QHPs through the Exchange. In order to 

address commenters’ concerns while 

maintaining the State’s primary role in 

overseeing agents and brokers, we have 

added paragraph (d) to ensure that 

agents and brokers must comply with an 

agreement with the Exchange under 

which the agent or broker would 

comply with the Exchange’s privacy and 

security standards that are adopted 

consistent with § 155.260 and § 155.270. 

We have also added paragraph (e) to 

ensure that agents and brokers comply 

with applicable State law. 

We also recognize that the role of 

web-brokers may evolve upon 

implementation of Exchanges, and that 

Exchanges may seek to involve webbrokers in the enrollment process using 

a variety of technologies. We have set 

forth standards in this rule to ensure 

that consumers enjoy a seamless 

experience with appropriate consumer 

protections if an Exchange chooses to 

allow web-brokers to participate in 

Exchange enrollment activities. In order 

to address commenters’ particular 

concerns around the role of web-based 

entities, we note that eligibility 

determinations must be conducted by 

the Exchange and enrollment 

information must be transmitted to the 

QHP issuer by the Exchange. We have 

added paragraph (c)(3) to § 155.220 to 

ensure that Web sites used by agents or 

brokers to enroll individuals in a 

manner that constitutes enrollment 

through the Exchange provide 

consumers with access to the same 

information as they would if they used 

the Exchange Web site instead. Based on 

several commenters’ suggestion that we 

address agents’ and brokers’ ability to 

steer or incentivize consumers to enroll 

in certain QHPs, and commenters’ 

general concern about the fact that the 

existence of such Web sites may confuse 

consumers, we have inserted standards 

under paragraph (c)(3) of this section to 

prevent such web-brokers from 

providing financial incentives and to 

establish that such Web sites must allow 

consumers to withdraw from the webbroker’s process and use the Exchange 

Web site instead at any time. 

Furthermore, the web-brokers would 

also be subject to the standards inserted 

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18336 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

under paragraph (d) and (e) regarding 

compliance with an agreement with the 

Exchange and State law, respectively. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.220 of the proposed 

rule, with several modifications. In the 

new paragraph (a)(2), we clarify that 

agents and brokers may enroll qualified 

individuals in a QHP in a manner that 

constitutes enrollment through the 

Exchange. In new paragraph (a)(3), we 

clarify that agents and brokers may 

assist individuals in applying for 

advance payments of the premium tax 

credit and cost-sharing reductions for 

QHPs. As noted elsewhere in this rule, 

paragraph (a)(3) is being published as 

interim. We outline the parameters of 

what is considered enrollment through 

the Exchange in the newly added 

paragraph (c), including that an agent or 

broker must ensure that an individual 

completes the eligibility verification 

process through the Exchange and that 

the Exchange transmits enrollment 

information to the QHP issuer 

consistent with § 155.400(a). In 

paragraphs (d) and (e), respectively, we 

establish that agents or brokers must 

comply with the terms of an agreement 

with the Exchange as well as applicable 

State laws. New paragraph (c)(3) 

establishes standards that would apply 

for an agent or broker’s Internet Web site 

were to be used to assist individuals in 

selecting a QHP within the framework 

of enrollment through the Exchange. 

f. General Standards for Exchange 

Notices (§ 155.230) 

In § 155.230, we proposed standards 

for any notice sent by an Exchange in 

accordance with part 155. We 

additionally proposed that all 

applications, forms, and notices be 

provided in plain language, and be 

written in a manner that provides 

meaningful access to individuals with 

limited English proficiency and ensures 

effective communication for people 

with disabilities. We sought comment 

on whether we should codify specific 

examples of meaningful access in the 

final rule. We also proposed that the 

Exchange annually re-evaluate the 

appropriateness and usability of all 

applications, forms, and notices and 

consult with HHS when changes are 

made. 

Comment: Several commenters 

expressed support for proposed 

§ 155.230(a) that provides that any 

notice sent by the Exchange in 

accordance with part 155 must be in 

writing and include the information 

described in paragraphs (a)(1) through 

(a)(3). Many commenters further 

specified that the Exchange should send 

a second notice, or multiple notices, 

when the action taken in a notice (of 

eligibility determination) will result in a 

termination of coverage or another 

adverse action. Some commenters 

provided other specific 

recommendations about the content, 

timing, and formatting of notices, 

particularly for the purpose of clarity 

and applicability of relevant 

information on the part of the consumer. 

For example, some commenters 

specified that notices should include 

the relevant and appropriate range of 

customer service resource contact 

information based on the specific 

individual’s location or circumstances. 

Some commenters suggested that HHS 

issue model notices or best practices for 

crafting notices for States, and 

commenters suggested that HHS 

develop templates or minimum 

standards of forms and notices. 

Response: We believe that notices 

should be in writing, electronically 

whenever possible, and we are taking 

specific content, timing, and formatrelated recommendations we received 

from commenters into consideration as 

we move forward with development of 

model Exchange-issued notices. While 

§ 155.230(a)(1) through (a)(3) outline 

some specific content standards for 

notices, we plan to issue model notices. 

In addition to the content specific 

standards described under § 155.230(a), 

we expect that notices will also include 

the date on which the notice is sent. In 

§ 155.230(a)(3) we add that a notice 

must include the reason for the 

intended action. 

Comment: Several commenters 

recommended that applicants and 

enrollees should be able to specify their 

preferred method of communication for 

notices, including the option to receive 

duplicative notices, and that electronic 

notices should fulfill the Exchanges’ 

obligation to provide notices in writing 

in accordance with § 155.230(a). A few 

commenters requested clarification 

concerning whether Medicaid/CHIP will 

provide future guidance on the use of 

electronic communications. 

Response: In the final rule, we do not 

make changes to address the use of 

electronic notices. In coordination with 

Medicaid and CHIP, we will address 

standards related to electronic notices 

and coordination of notices between the 

Exchange, Medicaid, and CHIP in future 

rulemaking. We note that our goal is to 

allow for electronic notices wherever 

practical. Future rulemaking in 

coordination with Medicaid and CHIP 

will also increase our ability to align 

standards across programs. 

Comment: One commenter 

recommended that HHS consider 

whether it is necessary to set a specific 

timeline or clarify how quickly 

applications and notices must be 

processed by the Exchange. Another 

commenter suggested that the language 

for § 155.230 be expanded to refer to 

‘‘applications, forms, notices and any 

other documents sent by an Exchange.’’ 

Response: We have not included 

general timeliness standards in 

§ 155.230 of this final rule, as we did 

not propose them. However, subpart D 

contains timeliness standards related to 

eligibility determinations as interim 

final rules. In addition, as we develop 

model notices and future guidance, we 

will consider both notice timeliness 

standards and the applicability of 

§ 155.230 to other documents issued by 

the Exchange. 

Comment: A few commenters 

recommended that HHS remove ‘‘if 

applicable’’ from proposed 

§ 155.230(a)(2) that reads: ‘‘An 

explanation of appeal rights, if 

applicable.’’ 

Response: Section 155.230 applies to 

all notices in accordance with part 155. 

However, in some cases, a notice of 

appeal rights is not relevant. For 

example, the notice of the annual open 

enrollment period in accordance with 

§ 155.410(d) does not provide 

information specific to an individual 

and is not appealable. In contrast, the 

Exchange must include the notice of the 

right to appeal and instructions 

regarding how to file an appeal in any 

determination notice issued to the 

applicant in accordance with 

§ 155.310(g), § 155.330(e), or 

§ 155.335(h) of subpart D. We intend to 

address appeal rights and procedures in 

future rulemaking. 

Comment: A majority of commenters 

supported the approach described in 

§ 155.230(b) of the proposed rule, while 

others suggested that HHS add more 

detail to accessibility standards. Many 

commenters recommended that we 

provide specific standards and 

thresholds for translation of written 

information, and be understandable to 

limited English proficient populations. 

One common suggested threshold was 

to provide written translations where 5 

percent or 500 limited English 

proficient individuals reside in the State 

or Exchange service area, whichever is 

less. Many commenters also 

recommended we add specific 

standards with respect to oral 

interpretation, including at no cost to 

the individual, and informing 

individuals how to access these services 

through use of ‘‘taglines’’ in at least 15 

languages. A few commenters asked for 

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flexibility for States in developing 

language services standards as States’ 

populations and needs differ, and one 

commenter expressed concern that a 

specific, uniform standard could pose 

an unreasonable burden. 

Response: In response to these 

comments, we have modified our 

proposed regulation at § 155.230(b) to 

cross-reference the accessibility, 

readability, and translation and oral 

interpretation standards outlined in 

§ 155.205(c). We plan to put forth 

guidelines relating to these standards in 

upcoming guidance. 

Comment: Many commenters noted 

the importance of health literacy and 

the need to provide information that is 

readable and understandable. A few 

commenters suggested that the reading 

level of informational materials should 

be not greater than the 6th grade reading 

level. 

Response: We recognize the 

importance of health literacy and 

significance of providing readable and 

understandable information. We will 

take these comments into consideration 

as we develop guidance that sets more 

specific standards and thresholds for 

readability, and as we develop joint 

guidance with the Department of Labor 

related to ‘‘plain language.’’ However, 

we have decided not to add specific 

reading level standards in the final rule. 

Comment: While some commenters 

expressed support for the proposed 

§ 155.230(c) that the Exchange review 

notices on an annual basis, other 

commenters were concerned about the 

burdensome and costly nature of an 

annual review. Some commenters 

instead suggested that such a review 

occur every three years or 

‘‘periodically.’’ Several commenters 

recommended that Exchanges have 

flexibility in how they implement 

provision of notices and provided 

specific examples (that is, flexibility in 

content), while one commenter advised 

that Federal standards should provide a 

floor for notices but not diminish 

stronger standards that the State may 

have for notices. Commenters who 

supported an annual review also 

suggested that Exchanges seek consumer 

and stakeholder input as notices are 

developed and changes to notices are 

made. Some commenters also expressed 

support for or sought clarification 

related to how a State must consult with 

HHS when changes are made to notices, 

particularly regarding the scope of such 

a consultation. A few commenters 

suggested that notices should be 

reviewed annually as a part of the 

recertification process. 

Response: In § 155.230(c) of the final 

rule, we revise the language from the 

proposed rule to provide that the 

Exchange must re-evaluate the 

appropriateness and usability of 

applications, forms, and notices without 

specifying the interval at which such 

review must occur. Due to commenters’ 

concerns about the feasibility and 

burden of an annual review and the 

request for flexibility regarding notices 

implementation, we removed the 

standard that this review must occur on 

an annual basis. We anticipate that the 

model notices developed by HHS will 

help to ensure that Exchanges include 

the appropriate content for their notices 

and reduce administrative burden and 

cost to Exchanges. We will consider the 

feasibility of reviewing notices, and 

notably any proposed changes made to 

notices, and will consider stakeholder 

input, particularly Exchanges and State 

Medicaid programs, as the model 

notices are developed. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.230 of the proposed 

rule, with several modifications: we 

clarify in paragraph (b) that 

applications, forms and notices must 

comply with the readability and 

accessibility standards established in 

§ 155.205(c) for the Exchange Internet 

Web site. In paragraph (c), we removed 

the proposed provision that the 

Exchange must re-evaluate applications, 

forms, and notices on an annual basis 

and also removed that the Exchange 

must consult with HHS when changes 

are made. In § 155.230(a)(3), we add that 

a notice must include the reason for the 

intended action. 

g. Payment of Premiums (§ 155.240) 

In § 155.240, we proposed that 

Exchanges must always allow an 

individual, at his or her option, to pay 

the premium directly to the QHP issuer. 

In addition, we proposed that an 

Exchange may permit Indian tribes, 

tribal organizations and urban Indian 

organizations to pay the QHP premiums 

on behalf of qualified individuals, 

subject to the terms and conditions 

determined by the Exchange. We 

solicited comment on how such an 

approach might work in an Exchange. 

We also invited comment on how to 

distinguish between individuals eligible 

for assistance under the Affordable Care 

Act and those who are not in light of the 

different definitions of ‘‘Indian’’ that 

apply for other Exchange provisions. 

With respect to the operation of a SHOP, 

we proposed that an Exchange must 

accept payment of an aggregate 

premium by a qualified employer. 

Finally, we proposed that an 

Exchange may facilitate electronic 

collection and payment of premiums. 

We sought comment concerning 

Exchange flexibility in establishing the 

premium payment process and what 

Federal regulatory standards would be 

appropriate to ensure fiduciary 

accountability when an Exchange 

collects premiums. 

Comment: One commenter suggested 

that QHP issuers report to an Exchange 

if an individual pays the issuer directly 

under the option described in 

§ 155.240(a). 

Response: We believe that this 

information will be transmitted from a 

QHP issuer and an Exchange through 

the process of effectuating enrollment 

through the Exchange and through the 

process to initiate advance payments of 

the premium tax credit and cost-sharing 

reductions. We outline reporting 

standards related to enrollment and 

notification if an individual stops 

payment in § 155.400, § 155.430, and 

§ 156.270. 

Comment: One commenter suggested 

that issuers should be responsible for 

collecting premiums directly from 

individuals, as described in proposed 

§ 155.240(a), but that the Exchange 

should be permitted to garnish wages or 

undertake other legal means to collect 

unpaid premiums owed to QHP issuers. 

Response: We clarify that nothing in 

the final rule imposes a responsibility 

on Exchanges to pursue unpaid 

premiums on behalf of a QHP issuer. We 

do not believe the Exchange should take 

on debt collection responsibilities for 

issuers. 

Comment: With regard to proposed 

§ 155.240(a), one commenter suggested 

that a possible interpretation of section 

1312(b) of the Affordable Care Act is 

that payment facilitation by an 

Exchange could be considered direct 

payment by the individual to the QHP 

issuer. 

Response: We interpret section 

1312(b) of the Affordable Care Act to 

mean that individuals always have the 

option to pay a QHP issuer directly, and 

therefore, we maintain this policy as 

proposed. 

Comment: In response to § 155.240(b) 

of the proposed rule, several 

commenters recommended that 

Exchanges must allow Indian tribes, 

tribal organizations, and urban Indian 

organizations to pay the unsubsidized 

portion of QHP premiums on behalf of 

enrollees. Some commenters noted that 

Indian tribes have a right to use Federal 

funds to pay insurance premiums on 

behalf of their members and a sovereign 

right to use their own funds for that 

purpose. Other commenters 

recommended that the Exchange accepts 

aggregated payments from employers so 

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it should also accept aggregated 

payments from tribes, tribal 

organizations, and urban Indian 

organizations. A few commenters 

recommended that HHS eliminate the 

qualifier, ‘‘subject to the terms and 

conditions determined by the 

Exchange,’’ in the final rule. 

Response: We did not accept the 

recommendation that Exchanges must 

permit Indian tribes, tribal organizations 

and urban Indian organizations to pay 

premiums on behalf of enrollees. 

Premium aggregation is a unique 

function of the SHOP Exchange, and is 

not identified as a function of the 

individual market Exchange. However, 

we recognize that some Exchanges may 

wish to work with tribal governments to 

facilitate payment on behalf of 

enrollees, including aggregated 

payment. We encourage Exchanges to 

include this option as part of its 

consultation with tribal governments. 

This rule does not prohibit a QHP issuer 

from accepting third-party payments of 

premiums from tribal governments, 

tribal organizations, or urban Indian 

organizations for enrollees through the 

Exchange. 

Comment: Many commenters 

supported the option for an Exchange to 

act as a premium facilitator or 

aggregator for the individual market, as 

permitted under § 155.240(d). Several 

commenters suggested strengthening the 

standard by establishing that Exchanges 

must have the capacity to facilitate 

payments in the individual market 

citing benefits such as ease for 

consumer, consistent source of 

payments for QHP issuers, program 

integrity, and provision of real-time 

enrollment and payment data for 

Exchange monitoring. Others suggested 

a standard that Exchanges set a default 

payment, and suggested that Exchanges 

provide multiple avenues for payment 

including premium facilitation, direct to 

issuer, in person, online, by phone, by 

mail, and through cash, debit, credit, 

check, or automatic electronic transfers. 

One commenter suggested that the 

Exchange Blueprint address how 

complexity added by multiple payment 

options would be mitigated and another 

commenter recommended that an 

individual select the payment 

methodology at the time of enrollment 

for that benefit year. 

Response: Premium aggregation has 

potential benefits for individuals, but 

we also do not think that there are 

sufficient disadvantages in having 

individuals pay QHP issuers directly to 

warrant establishing premium 

aggregation as a minimum standard. We 

believe that the final rule balances the 

potential benefits of premium collection 

in the individual market with State 

flexibility. We encourage all Exchanges 

to provide consumers with multiple 

payment options that facilitate 

enrollment and avoid creating payment 

processes that create barriers. We note 

that Exchanges have the flexibility to 

create a default payment mechanism 

through the Exchange, and to direct 

individuals to select a payment option 

for a year at the time of enrollment. 

Comment: Several commenters 

oppose proposed § 155.240(d) that 

allows for an Exchange to facilitate the 

collection and payment of premiums for 

the individual market. Commenters 

were concerned with several areas 

including cost, the timeliness of 

payments getting from consumers to the 

issue, and the additional complexity in 

the case of errors. 

Response: We believe that premium 

aggregation may add value to an 

Exchange for consumers through ease of 

payment and to QHP issuers through 

having a single source of payment. 

Without premium aggregation in the 

small group market, a single entity 

would have to pay a variety of QHP 

issuers to administer its group health 

plan. However, the burden for paying 

premiums directly to QHP issuers is 

much less for individuals and families 

who are likely to be enrolled in a single 

QHP. Thus, premium aggregation is a 

minimum function of a SHOP, while it 

is optional for the individual market. 

We note that because an Exchange will 

need to establish premium aggregation 

functionality for a SHOP, it may be able 

to offer this option to individuals 

without additional up-front costs. 

Comment: One commenter suggested 

that proposed § 155.240(d) ban 

paperwork for financial transactions 

and, instead, call for the use of 

electronic methods exclusively to lower 

administrative costs and allow quick 

feedback between Exchanges, qualified 

individuals, qualified employers, and 

QHP issuers. 

Response: We believe that electronic 

payment methods have many benefits, 

and encourage Exchanges to use them 

where possible, but also acknowledge 

that electronic payment methods may 

not always be optimal for all consumers 

and may not be possible for all 

Exchanges. Therefore, it is not a 

minimum standard in this final rule. 

Comment: Most commenters 

supported the proposed § 155.240(e) to 

adopt electronic means of collecting 

premium payments by individuals and 

employers, and the accompanying 

application of the privacy and standards 

outlined in § 155.260 and § 155.270. 

One commenter recommended deleting 

the cross reference to § 155.260, because 

this section related to privacy and 

security, not electronic transaction 

standards. 

Response: We have maintained the 

cross-reference to § 155.260 in this final 

rule. Section 155.240(e) is meant to 

establish compliance with both 

electronic transactions standards in 

§ 155.270 and privacy and security 

provisions of § 155.260. Because 

personally identifiable information may 

be exchanged in the process of premium 

payment, we believe the protections for 

collection, use and disclosure of 

information contained in standard 

transactions for premium payments are 

as vital as the format of these 

transactions. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.240 with the 

exception of the removal of proposed 

paragraph (c), as we believe that 

payment of premiums by qualified 

employers is sufficiently addressed in 

§ 155.705. The other paragraphs have 

been re-numbered accordingly in the 

final rule. 

h. Privacy and Security of Information 

(§ 155.260) 

In proposed § 155.260, we addressed 

the privacy and security standards 

Exchanges must establish and follow. 

Specifically, we proposed that the 

Exchange apply appropriate security 

and privacy protections when 

collecting, using, disclosing or 

disposing of any personally identifiable 

information. In addition, we proposed 

that an Exchange apply these standards 

on contractors or sub-contractors 

through contracts or agreements with 

the Exchange. 

We defined personally identifiable 

information (PII) and proposed 

prohibiting the collection, use, or 

disclosure of PII by the Exchanges 

unless: (1) required or permitted by 

§ 155.260 of this subpart or other 

applicable law, and (2) the collection, 

use, or disclosure is made in accordance 

with subpart E of this part, § 155.200(c) 

of this subpart and section 1942 of the 

Act. We invited comment as to whether 

and how we should restrict the method 

of disposal in this section. 

We also proposed that the security 

standards of the Exchange be consistent 

with HIPAA security rules described at 

45 CFR 164.306, 164.308, 164.310, 

164.312, and 164.314. We solicited 

comment on the aptness of adopting the 

HIPAA Privacy Rule’s standards for 

Exchanges. Alternatively, we proposed 

to provide States with the flexibility to 

create a more appropriate and tailored 

standard, given the varied types of 

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3Nationwide Privacy and Security Framework for 

Electronic Exchange of Individually Identifiable 

Health Information: http://healthit.hhs.gov/portal/ 

server.pt/community/ 

healthit_hhs_gov_privacy_security_framework/ 

1173. 

information to which the Exchange 

would have access. We noted that we 

were considering directing each 

Exchange to adopt privacy policies that 

conform to the Fair Information Practice 

Principles (FIPPs), and sought comment 

on the appropriateness of FIPPs in this 

context and the best means to integrate 

FIPPs into the privacy policies and 

operating procedures of individual 

Exchanges. We listed examples of 

FIPPs-based principles derived from the 

Nationwide Privacy and Security 

Framework for the Electronic Exchange 

of Individually Identifiable Health 

Information, which is a model 

developed by the Office of the National 

Coordinator for Health IT. These are not 

purely FIPPs principles, but examples of 

how they may be used to develop robust 

privacy and security standards. 

We also proposed that security 

policies and procedures must be in 

writing and available to the Secretary of 

HHS, and must identify any applicable 

laws that the Exchange will need to 

follow. In addition, we proposed that 

any data matching arrangements 

between the Exchange and agencies that 

administer Medicaid and CHIP for the 

exchange of eligibility information be 

consistent with all applicable laws. We 

also proposed that return information is 

kept confidential under section 6103 of 

the Code. 

Finally, we proposed that any person 

that knowingly and willfully uses or 

discloses personally identifiable 

information inappropriately would be 

subject to a civil money penalty of not 

more than $25,000 per disclosure and 

any other applicable penalties that may 

be prescribed by law. 

Comment: Many commenters 

recommended that HHS set a national 

minimum standard for use and 

disclosure of personally identifiable 

information (PII) under proposed 

§ 155.260(b) rather than allow each 

Exchange flexibility to develop and 

implement standards customized to its 

operations. One commenter stated that 

HHS should harmonize State and 

Federal laws for the development and 

operation of information technology 

systems across all States. Commenters 

suggested adopting different existing 

privacy and/or security standards alone 

or in various combinations, including 

the Fair Information Practice Principles 

(FIPPs) model adopted by the Office of 

the National Coordinator for Health 

Information Technology, HIPAA 

Privacy, HIPAA Security, the Privacy 

Act, Medicaid standards at section 

1902(a)(7) of the Act, the confidentiality 

and disclosure provisions of the 

Department of Homeland Security’s 

Systematic Alien Verification for 

Entitlements (SAVE) program (42 U.S.C. 

1320b-7), the HITECH Act, and the 

Gramm-Leach-Bliley Act (GLBA). 

Response: We recognize that there 

should be robust minimum privacy and 

security standards to ensure the 

confidentiality and integrity of PII 

created, collected, used, or disclosed by 

an Exchange. We also accept the 

comment that each Exchange will need 

to consider any State and Federal laws 

governing individuals’ privacy and 

security rights for the geographic area(s) 

in which it operates in order to ensure 

PII is protected against any reasonably 

anticipated uses or disclosures that are 

not permitted or required by law. We 

acknowledge the current variance 

among States’ laws governing privacy 

and security, but believe that 

eliminating this variance would, in 

many cases, apply Federal standards to 

existing State privacy and security 

frameworks. This would be 

prohibitively expensive for many States, 

and could be detrimental to the goal of 

maintaining the confidentiality of PII. In 

addition, multiple security frameworks 

increase the complexity of the 

technological environment—if a State 

must follow two different frameworks, 

there is an increased risk of applying the 

wrong security controls to the Exchange. 

Finally, but equally important, we 

recognize the need for flexibility in the 

implementation of these standards in 

order to minimize implementation 

costs. The imposition of uniform 

standards would increase costs related 

to re-training staff, engaging contractors, 

investing in additional physical and 

technological infrastructure, and other 

tasks related to implementation of the 

new standards. We believe it would 

increase the complexity of State 

operations, with associated risks and 

costs, without providing meaningful 

improvements to the protection of PII. 

In the final rule, we do not establish 

a single, baseline standard. We direct an 

Exchange to put in place safeguards that 

ensure a set of critical security 

outcomes, and we present a framework 

within which an Exchange must create 

its privacy and security policies and 

protocols. We specify that an Exchange 

establish and implement privacy and 

security standards that are consistent 

with the FIPPs-based principles 

identified in the ‘‘Nationwide Privacy 

and Security Framework for Electronic 

Exchange of Individually Identifiable 

Health Information,’’ the model adopted 

by the Office of the National 

Coordinator for Health Information 

Technology.3 In addition to these FIPPsbased principles, § 155.260(a)(4) of this 

final rule directs Exchanges to establish 

and implement operational, technical, 

administrative, and physical safeguards 

that will ensure a set of defined privacy 

and security outcomes. We believe the 

standards in this final rule will 

minimize burden by allowing HHS and 

the States to leverage existing security 

infrastructure and allow Exchanges to 

tailor their privacy and security 

approaches to the types of information 

Exchanges will create, collect, use, and 

disclose, while providing a baseline set 

of standards and critical outcomes upon 

which all States must base their privacy 

and security policies and protocols. 

We plan to release guidance to assist 

States in developing and implementing 

privacy and security policies and 

protocols that fulfill the standards of 

this section. In addition, HHS will assist 

States in the development of policies 

and protocols as part of the reviews and 

technical assistance provided to 

grantees under the section 1311(a) of the 

Affordable Care Act. 

Comment: A large group of 

commenters requested that HHS codify 

sections 1411(g), 1413(c)(2), and 1414(a) 

of the Affordable Care Act. Several 

commenters recommended amending 

the language in proposed 

§ 155.260(b)(1)(i) to explicitly establish 

that, based on section 1411(g) of the 

Affordable Care Act, information may 

not be created, collected, used, or 

disclosed unless ‘‘strictly necessary.’’ 

One commenter recommended that we 

remove the reference to ‘‘other 

applicable law’’ and replace it with 

specific references to sections 1411(g) 

and 1557 of the Affordable Care Act, 

sections 1942 and 1137 of the Act, and 

the Privacy Act of 1974. 

Response: We believe that privacy 

and security of PII is of utmost 

importance. Accordingly, in the final 

rule, we have made major changes to the 

Exchange privacy and security 

standards, both to give more specific 

guidance to States as they implement 

the Exchange program, and to ensure 

confidentiality for individuals who may 

interact with Exchanges. As stated in 

the preamble to the proposed rule, we 

looked to sections 1411(g), 1413(c)(2), 

and 1414(a) of the Affordable Care Act 

as the basis for many of the provisions 

in the proposed regulatory text. First, 

we removed proposed paragraph (a), 

which defined personally identifiable 

information in the context of the 

Exchange program. This is a broadly 

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18340 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

used term across Federal agencies, and 

has been defined in the Office of 

Management and Budget Memorandum 

M–07–16. In order to reduce duplicative 

guidance or potentially conflicting 

regulatory language, we have removed 

this portion of the proposed rule, and 

point to the aforementioned 

memorandum as the source of this 

definition. 

Paragraph (a)(1) of the final rule 

specifically addresses PII that is created 

or collected for the purposes of 

determining eligibility for enrollment in 

a QHP, determining eligibility for other 

insurance affordability programs, or 

determining eligibility for exemptions 

from the individual responsibility 

provisions in section 5000A of the Code. 

This paragraph limits the purposes for 

which the Exchange can use this 

information to those outlined in 

§ 155.200 of this subpart. 

Paragraph (a)(2) is broader in scope 

than paragraph (a)(1), and includes all 

information collected for the purposes 

of carrying out Exchange minimum 

functions described in § 155.200. This 

paragraph prohibits the creation, 

collection, use or disclosure of PII 

unless the manner in which the 

Exchange does so is consistent with the 

privacy and security standards outlined 

in § 155.260(a). 

Paragraphs (a)(3) through (a)(4) 

outline the privacy and security 

principles and critical outcomes, and set 

expectations for development of privacy 

and security protocols by Exchanges, 

and new paragraph (a)(5) specifies that 

the Exchange must monitor, 

periodically assess, and update the 

security controls and related system 

risks to ensure the continued 

effectiveness of those controls. We also 

inserted the provision from section 

1413(c)(1) of the Affordable Care Act 

that an Exchange must develop and 

utilize secure electronic interfaces when 

sharing PII in § 155.260(a)(6). 

We are not amending the final rule to 

codify section 1414(a) of the Affordable 

Care Act, because it falls under the 

jurisdiction of the Department of the 

Treasury. We are not codifying section 

1557 of the Affordable Care Act because 

it is outside the scope of this rule. We 

are not codifying section 1137 of the 

Act, which includes standards for 

States’ income and eligibility 

verification systems, in this final rule 

because it does not impose any 

additional privacy or security standards. 

In addition, section 1413(c)(3) of the 

Affordable Care Act simply directs that 

an Exchange can only determine 

eligibility on the basis of reliable, third 

party data, which is outside the scope 

of this section. We note that while the 

final rule does not propose to codify 

these listed provisions, Exchanges will 

need to comply with applicable laws 

that are outside the scope of this 

rulemaking. 

Comment: A number of commenters 

requested clarification regarding HIPAA 

and Exchanges. One commenter 

requested that HHS declare that HIPAA 

applies to all Exchanges, but many 

commenters discouraged the use of this 

standard. A few commenters 

specifically requested that HHS not use 

HIPAA as the privacy standard. One 

commenter stated that applying HIPAA 

Privacy to non-HIPAA entities might 

permit broader collection, use, and 

disclosure of data than was intended by 

Congress in statutory limits set forth in 

section 1411(g) of the Affordable Care 

Act. Another commenter added that 

HIPAA lacks controls associated with 

new technologies. 

Response: We believe HIPAA is not 

broad enough to adequately protect the 

various types of PII that will be created, 

collected, used, and disclosed by 

Exchanges and individuals or entities 

who have access to information created, 

collected, used, and disclosed by 

Exchanges. We recognize that there will 

be aspects of Exchanges, as health 

insurance marketplaces, that will not be 

reached by the HIPAA regulations 

governing health plans, certain 

providers, and clearinghouses (that is, 

‘‘HIPAA covered entities’’). In clarifying 

these points, however, it is important to 

recognize that the privacy and security 

standards that are adopted in this rule 

do not obviate the need for HIPAA 

covered entities to meet the HIPAA 

Privacy and Security Rules’ standards. 

The Exchange sections of the Affordable 

Care Act did not alter the applicability 

of HIPAA to HIPAA covered entities. 

To avoid any further confusion on 

this point, we believe that it is advisable 

to remove any specific regulatory 

references to HIPAA in proposed 

§ 155.260(b), which we have 

redesignated as § 155.260(a) of this final 

rule. We replaced such references with 

the standards outlined in the first 

response in this section. We believe that 

the privacy and security standards in 

the final rule are analogs of the HIPAA 

policies in the proposed rule, with 

similar standards and restrictions. As 

stated in the preamble discussion to 

§ 155.260 in the proposed rule, each 

State will need to conduct an analysis 

of its operations and functions to 

determine its HIPAA status based on the 

definitions in 45 CFR 160.103, and, 

when applicable, meet any and all 

obligations under those regulations in 

addition to any Exchange standards. For 

instance, a State may need to consider 

whether the Exchange performs 

eligibility assessments for Medicaid and 

CHIP, based on MAGI, or conducts 

eligibility determinations for Medicaid 

and CHIP as described in § 155.302(b). 

We have inserted language in 

§ 155.200 of the final rule that will 

clarify the relationship between an 

Exchange and a QHP—as noted therein, 

nothing in this final rule should be 

construed to create a relationship 

between an Exchange and a QHP 

whereby an Exchange performs 

functions on behalf of a QHP. Further, 

we intend to release guidance that will 

assist States in determining the 

applicability of HIPAA and other 

Federal laws to Exchanges. 

Comment: Several commenters 

suggested that HHS encourage States to 

apply privacy and security standards 

that are stricter than the minimum 

standard set forth by HHS regulations. 

Others asked that HHS make clear in the 

final rule that, even if an Exchange is 

covered by a single standard, it will 

continue to be subject to additional 

rules set by HHS and the States. 

Commenters asserted that State law 

regarding privacy and security should 

remain applicable. One commenter 

stated that HHS should provide States 

with the flexibility to enact more 

stringent standards based on those 

States’ determination of the most 

appropriate standard. 

Response: We accept commenters’ 

suggestion that States retain the 

discretion to apply more stringent 

standards than the minimum privacy 

and security standards imposed by this 

section. Nothing in this final rule 

prevents or otherwise impairs the 

applicability of more stringent State 

law. Equally, we note that nothing in 

this final rule obviates the need to meet 

any other applicable Federal privacy 

and security laws. 

Comment: One commenter asserted 

that HHS does not have the authority to 

require Exchanges to provide access to 

its data protection policies and 

procedures to HHS. The commenter 

requested that HHS provide an 

explanation of why it wants or needs 

access to an Exchange’s data protection 

policies and procedures and what it 

plans to do with that information. The 

commenter also stated that HHS has no 

enforcement authority over State-based 

Exchanges and therefore may not take 

‘‘action’’ against an Exchange with data 

protection policies and procedures the 

Secretary deems ‘‘inadequate.’’ In 

contrast, several commenters supported 

the provision in the proposed rule that 

Exchanges develop policies and 

procedures regarding the use, 

disclosure, and disposal of PII. Many 

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commenters asked that these policies 

and procedures be available to the 

public, and that HHS ensure that 

Exchanges engage stakeholders, 

including consumers, in the 

development of these policies and allow 

for public comment prior to submission 

to the Secretary. A few commenters 

asserted that these policies and 

procedures be part of the written 

Exchange Blueprint, in accordance with 

§ 155.105 of the proposed rule, or 

another similar document that is 

available to the public. 

Response: The Secretary has broad 

authority under section 1321(a) of the 

Affordable Care Act to issue appropriate 

regulations and standards with respect 

to the operation of Exchanges. Due to 

the private nature of the information 

provided to Exchanges, we believe that 

a process that allows the Secretary to 

ensure continued compliance with the 

privacy and security standards of 

§ 155.260 is not only appropriate, but 

necessary. According to section 1321(c) 

of the Affordable Care Act, the Secretary 

has the authority to determine whether 

a State Exchange meets the requisite 

standards to operate. If the Exchange 

fails to meet these standards, the 

Secretary may establish and operate a 

Federally-facilitated Exchange in that 

State. 

In addition, the Affordable Care Act 

also gives HHS an audit enforcement 

mechanism under section 1313. We 

believe the Secretary has broad 

authority to ensure the submission of 

these policies in accordance with 

1313(a)(3) of the Affordable Care Act. 

This information is necessary to ensure 

the integrity of the Exchange and its 

related activities and to protect 

confidential consumer information. 

However, Exchanges do not have to 

release these policies and protocols to 

the public because this disclosure might 

reveal information that could damage 

the State’s ability to maintain the 

integrity and security of its systems. 

Finally, while we have not included the 

privacy and security policies and 

protocols in the Exchange Blueprint, we 

believe we have the authority to do so 

if deemed appropriate by the Secretary. 

Comment: Many commenters 

recommended that the privacy and 

security standards in proposed 

§ 155.260 apply to application assisters, 

Navigators, contractors, other 

individuals who have access to PII 

gathered from individuals or available 

through an Exchange. One commenter 

asserted that the final rule should 

clearly affirm the obligation of these 

parties to abide by all Federal 

confidentiality and privacy laws. 

Response: Individuals who have 

agreements with an Exchange that can 

collect, use, or disclose PII as part of 

their Exchange-related activities should 

comply with the final rule’s privacy and 

security standards. However, we do not 

believe the Affordable Care Act grants 

the Secretary the authority to regulate 

all individuals and entities directly. 

Such authority is limited to the 

Exchange, who can impose these 

standards on individuals and entities 

that enter into agreements with the 

Exchange, such as contractors, agents, 

and brokers, and HHS grantees, such as 

Navigators. We have added § 155.260(b) 

of the final rule, which ensures that 

Exchanges impose privacy and security 

standards that are the same or more 

stringent than the privacy and security 

standards in § 155.260(a) as a condition 

of the agreement with other individuals 

or entities that will receive information 

through the Exchange. 

Comment: Several commenters asked 

that HHS provide notice to individuals 

who share PII with an Exchange. 

Commenters also asked that HHS direct 

Exchanges to notify individuals of their 

privacy rights and note why the 

information is being collected prior to 

asking individuals to submit PII. One 

commenter said HHS should not share 

protected health information (PHI) 

without written consent before each 

disclosure. 

Response: We believe the FIPPs-based 

principles in the final rule ensure that 

an Exchange will make individuals 

aware of the purpose of any information 

collection as well as the privacy policies 

that affect individuals and their PII. We 

have added language to new section 

§ 155.260(a)(3)(iv) that an Exchange 

must develop privacy and security 

policies and protocols that are 

consistent with the FIPPs-based 

principle of ‘‘Individual Choice,’’ which 

states that individuals should be 

provided a reasonable opportunity and 

capability to make informed decisions 

about the collection, use, and disclosure 

of their personally identifiable 

information. In addition, in new 

§ 155.260(a)(3)(iii), we establish that an 

Exchange’s policies and protocols must 

be consistent with the principle of 

‘‘Openness and Transparency,’’ which 

states that there should be openness and 

transparency about policies, procedures, 

and technologies that directly affect 

individuals and/or their personally 

identifiable health information. In 

addition, if a State determines that its 

Exchange is a HIPAA covered entity or 

business associate, as defined in 45 CFR 

160.103, that Exchange must adhere to 

any applicable HIPAA privacy and 

security standards, including those 

regarding the protection of protected 

health information (PHI). The final rule 

addresses only personally identifiable 

information, as defined in § 155.260(a) 

and does not modify HIPAA. 

Comment: A handful of commenters 

stated that Exchanges should obtain 

specific authorization from individuals 

prior to using any PII for marketing 

purposes. Some commenters requested 

that HHS prohibit Exchanges from 

sharing any information for marketing 

or fundraising purposes altogether. One 

commenter stated that HHS should 

specifically prohibit Exchanges from 

selling data, or allowing access to PII 

collected for Exchange purposes for data 

mining. Another commenter stated that 

HHS should specifically prohibit any 

secondary uses of PII that are not 

specifically authorized. 

Response: Section 155.260(a) does not 

permit the use or disclosure of PII for 

marketing or fundraising purposes. The 

final rule clarifies that PII collected for 

those purposes of determining eligibility 

for enrollment in a QHP, determining 

eligibility for other insurance 

affordability programs, or determining 

eligibility for exemptions from the 

individual responsibility provisions in 

section 5000A of the Code, can only be 

used to the extent such information is 

necessary to carry out minimum 

functions in § 155.200 of this subpart. 

Comment: Two commenters stated 

that HHS should be able to collect 

demographic information on a voluntary 

basis through the Exchange. 

Commenters believe that collection of 

demographic information would help to 

provide essential health information on 

vulnerable or underserved populations, 

facilitate tailored outreach and aid in 

enrollment activities, and provide input 

in the development of prevention and 

health care programming that address 

disparities. 

Response: Section 1411(g) of the 

Affordable Care Act does not prohibit 

the collection of demographic data. We 

respond to this issue in greater depth in 

the preamble to § 155.405, which 

addresses the single, streamlined 

application. 

Comment: Several commenters 

requested that HHS specify in the final 

rule that Social Security numbers 

should be collected for limited 

purposes. These commenters stated that 

Social Security numbers should be 

shared only for the purposes of 

determining eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions. Two 

commenters stated that Social Security 

numbers should be shared only for the 

purpose of identification of an 

individual. 

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Response: Sections 1411(b) and (c) of 

the Affordable Care Act give the 

Secretary the authority to ensure that 

applicants for enrollment in a QHP 

offered through an Exchange provide a 

Social Security number so that an 

Exchange can perform the requisite 

eligibility determination. While we 

believe that an individual’s Social 

Security number should be collected 

and used for limited purposes, the use 

of an individual’s Social Security 

number is essential to complete 

functions beyond identification—for 

example, the verifications described in 

sections 1411(c), (d), and (e) of the 

Affordable Care Act. 

Comment: One commenter stated that 

HHS should establish criteria for the 

collection and retention of information 

when a consumer is a survivor or victim 

of domestic violence based on policies 

of child support collection programs. 

Response: We do not believe that the 

final rule should contain the specific 

data collection for vulnerable 

populations for purposes other than 

those defined in the statute. 

Comment: Two commenters asked 

that HHS ensure that Exchanges 

promptly notify potentially affected 

enrollees in the event of a data breach 

or unauthorized access to PII. One 

commenter suggested that HHS ensure 

that an Exchange conducts an 

investigation and hold the breaching 

party accountable, both legally and 

financially, for notification and 

investigation following the breach or 

unauthorized access. 

Response: We do not plan to include 

the specific notification procedures in 

the final rule. Consistent with this 

approach, we do not include specific 

policies for investigation of data 

breaches in this final rule. We do, 

however, plan to release guidance that 

addresses breach procedures. 

Comment: One commenter requested 

that the final rule include privacy and 

security standards for storage, retention, 

and response to legal and civil matters. 

Another commenter stated that HHS 

should not retain PII longer than is 

necessary to carry out an authorized 

Exchange function. 

Response: While the rule does not 

specifically mention storage, retention, 

or response to legal and civil matters, 

we believe that the final rule adequately 

addresses privacy and security 

standards for all potential uses of data, 

including storage and retention. We 

therefore do not include these elements 

in the final rule. We expect privacy and 

security standards developed by the 

Exchange will address the storage of 

information when it is not in use. Also, 

the Exchange policies and protocols 

must apply to all requests for 

information from outside sources, 

including governmental bodies, the 

courts, or law enforcement officials. We 

also believe that Exchanges should not 

retain PII longer than necessary. 

Retention times for Federally-facilitated 

Exchanges will be approved by the 

National Archives and Records 

Administration. As these retention 

times have not yet been issued for these 

Exchanges, and as we believe that a 

single standard for retention should 

apply to all Exchanges, we plan to 

release guidance on this topic at a later 

date. 

Comment: One commenter asserted 

that HHS should not create one central 

location for personal information. The 

commenter challenged the government’s 

ability to protect personal information. 

Response: This comment regarding 

the storage of personal information is 

operational in nature and outside the 

scope of this rule. We plan to release 

guidance describing the approach for 

collection and storage of PII. We believe 

that the privacy and security standards 

in the final rule are sufficiently robust 

to protect the types of PII that will be 

created, collected, used, and disclosed 

by Exchanges. 

Comment: A few commenters 

suggested that HHS should define the 

operational solutions for Exchange 

policies and protocols for privacy and 

security. One commenter said that 

Exchanges should create usage logs that 

are subject to audit to ensure the data 

are being accessed appropriately and 

only for business purposes. Another 

commenter stated that HHS should 

implement procedures related to 

identity theft to address cases where an 

applicant or enrollee reports that 

someone has fraudulently submitted 

information in his or her name. One 

commenter recommended that HHS 

collect data in a manner that allows for 

de-identification so that data can be 

made available for other purposes, such 

as research and analysis. 

Response: We believe that having 

policies and protocols to protect against 

identify theft and fraudulent enrollment 

is critical. However, setting operational 

solutions for complying with regulatory 

standards in this section is outside the 

scope of the rule. HHS will release 

guidance identifying potential 

operational solutions for storing and 

tracking data, identifying and 

preventing fraudulent submissions to 

the Exchange, and de-identifying data. 

Comment: A number of commenters 

recommended that HHS address the 

issue of authentication of individuals 

who access PII through the Exchange. 

One commenter asserted that HHS 

should ensure that Exchanges 

authenticate all entities and individuals 

interacting with the Exchanges. 

Commenters also cautioned HHS to 

develop authentication procedures that 

are minimally burdensome and do not 

discourage or prevent lawful consumer 

access to the Exchange. One commenter 

stated that authentication procedures 

should be proportionate to the risks 

associated with the corresponding 

activities. This commenter also stated 

that authentication procedures should 

leverage commercially available 

database sources, a method currently in 

use by States to authenticate identity. 

Response: Exchanges will need robust 

authentication procedures that are 

effective, efficient, and minimally 

burdensome for both States and 

individuals. We have added language to 

the final rule that Exchanges must 

implement safeguards to ensure that 

personally identifiable information is 

disclosed only to those authorized to 

receive or view it. In addition, we 

expanded the scope of the privacy and 

security standards by stating explicitly 

that these standards must apply, as a 

condition of contract or agreement with 

an Exchange, to individuals or entities, 

including but not limited to Navigators, 

agents, and brokers, that: (1) gain access 

to personally identifiable information 

submitted to an Exchange; or (2) create, 

collect, use or disclose personally 

identifiable information gathered 

directly from applicants, qualified 

individuals, or enrollees while that 

individual or entity is performing the 

functions outlined in the agreement 

with the Exchange. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.260 of the proposed 

rule regarding privacy standards, with 

the following modifications: in an effort 

to prevent confusion and duplication in 

terminology, we removed paragraph (a), 

which defined personally identifiable 

information (PII) in the context of the 

Exchange program. This is a term used 

broadly by all Federal agencies, and the 

term is defined in a 2007 OMB 

Memorandum, which we point to in the 

preceding preamble discussion. 

We redesignated proposed paragraph 

(b) as new paragraph (a). In paragraph 

(a)(1) of the final rule, we added that, 

where the Exchange creates or collects 

personally identifiable information for 

the purposes of determining eligibility 

for enrollment in a QHP, determining 

eligibility for other insurance 

affordability programs, as defined in 

§ 155.20; determining eligibility for 

enrollment in a qualified health plan; 

determining eligibility for other 

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4http://healthit.hhs.gov/portal/ 

server.pt?open=512&mode=2&objID=3161. 

insurance affordability programs, as 

defined in 155.20; or determining 

eligibility for the exemptions from 

individual responsibility provisions 

described in section 5000A of the Code, 

the Exchange may only use or disclose 

such personally identifiable information 

only to the extent such information is 

necessary to carry out the functions 

described in § 155.200 of this subpart. 

This paragraph limits the purposes for 

which the Exchange can use this 

information to those outlined in 

§ 155.200 of this subpart. Paragraph 

(a)(2) is broader in scope than the type 

of PII described in (a)(1), and includes 

all personally identifiable information 

collected for the purposes of carrying 

out Exchange minimum functions 

described in § 155.200. This paragraph 

prohibits the creation, collection, use or 

disclosure of PII unless the manner in 

which the Exchange does so is 

consistent with the privacy and security 

standards outlined in § 155.260. In the 

final rule, we removed the provision 

from proposed paragraph (b)(2) for 

Exchanges to establish and follow 

operational, administrative, physical 

and technical security standards that, if 

carried out by a HIPAA covered entity 

would meet the standards at 45 CFR 

164.306, 164.308, 164.310, 164.312 and 

164.314. In its place we clarify that the 

Exchange must not create, collect, use or 

disclose PII unless the manner in which 

they do so is consistent with the 

standards of § 155.260. In new sections 

(a)(3)(i) through (viii), we outlined the 

principles that an Exchange must use in 

the development of its privacy and 

security standards. These include 

individual access; correction; openness 

and transparency; individual choice; 

collection, use, and disclosure 

limitations; data quality and integrity; 

safeguards; and accountability. 

As described in new text added to 

(a)(4)(i) through (vi), an Exchange must 

establish and implement a set of 

operational, technical, administrative 

and physical safeguards that ensure the 

confidentiality, integrity, and 

availability of PII created, collected, 

used, and disclosed by the Exchange; 

that personally identifiable information 

is only used by or disclosed to those 

authorized to receive or view it; return 

information, as such term is defined by 

section 6103(b)(2) of the Code, is kept 

confidential under section 6103 of the 

Code; personally identifiable 

information is protected against any 

reasonably anticipated threats or 

hazards to the confidentiality, integrity, 

and availability of such information; 

and personally identifiable information 

is protected against any reasonably 

anticipated uses or disclosures of such 

information that are not permitted or 

established by law. 

New paragraph (a)(5) directs the 

Exchange to monitor, periodically 

assess, and update the security controls 

and related system risks to ensure the 

continued effectiveness of the controls. 

In new paragraph (a)(6), we added a 

standard that the Exchange develop and 

utilize secure electronic interfaces when 

sharing personally identifiable 

information electronically. 

In new paragraph (b), we added that, 

except for tax return information, when 

creation, collection, use, or disclosure is 

not otherwise required by law, an 

Exchange must establish the same or 

more stringent privacy and security 

standards (as those in § 155.260(a)) as a 

condition of contract or agreement with 

individuals or entities, such as 

Navigators, agents, and brokers, that 

gain access to personally identifiable 

information submitted to an Exchange; 

or create, collect, use or disclose 

personally identifiable information 

gathered directly from applicants, 

qualified individuals, or enrollees while 

that individual or entity is performing 

the functions outlined in the agreement 

with the Exchange. 

New paragraph (c) directs the 

Exchange to ensure its workforce 

complies with the policies and 

procedures developed and implemented 

by the Exchange to comply with this 

section. 

In new paragraph (e), we added 

language to clarify that the standards for 

data matching and sharing between the 

Exchanges and Medicaid, CHIP, and 

BHP, where applicable, are triggered 

when these entities share PII. In 

addition, we added paragraph (e)(1) 

through (e)(4), which state that data 

matching or sharing agreements must: 

meet any applicable requirements 

described in this section; meet any 

applicable requirements described in 

sections 1413(c)(1) and (c)(2) of the 

Affordable Care Act; be equal to or more 

stringent that the requirements for 

Medicaid programs under section 1942 

of the Act; and, for those matching 

agreements that meet the definition of 

‘‘matching program’’ under 5 U.S.C. 

552a(a)(8), comply with 5 U.S.C. 

552a(o). 

In paragraph (g), we added that the 

civil penalty applies to each instance of 

knowing and willful improper use or 

disclosure of information. We 

redesignated proposed paragraph (b)(4) 

as new paragraph (d), and redesignated 

proposed paragraph (d) as new 

paragraph (f). 

i. Use of standards and protocols for 

electronic transactions (§ 155.270) 

In § 155.270 of the proposed rule, we 

proposed that the Exchange apply the 

HIPAA administrative simplification 

standards adopted by the Secretary in 

accordance with 45 CFR parts 160 and 

162 when the Exchange performs 

electronic transactions with a covered 

entity. In addition, we proposed to 

codify the Health Information 

Technology (HIT) enrollment standards 

and protocols that were developed in 

accordance with section 3021 of the 

PHS Act, which was added by section 

1561 of the Affordable Care Act, and 

that were adopted by the Secretary.4

Specifically, we proposed that these 

aforementioned standards and protocols 

be incorporated within Exchange 

information technology systems. 

Comment: HHS received several 

comments supporting our proposal to 

apply HIPAA administrative 

simplification standards, including the 

use of national standards and protocols 

for electronic transactions in § 155.270. 

However, one commenter expressed 

concern about the potential for gaps in 

the 005010 standard adopted by the 

Secretary in accordance with HIPAA. 

Another commenter, who supported the 

application of the administration 

simplification standards, added that 

HHS should apply any new transaction 

standards or protocols developed to 

supplement the HIPAA transactions 

consistently across all State-based 

Exchanges to promote administrative 

simplification among QHP issuers and 

eligibility services integrated with 

Exchanges. 

Response: HIPAA administrative 

simplification standards are the 

appropriate standards for transactions 

that occur between the Exchange and 

covered entities, such as issuers, to 

continue the promotion of uniformity in 

administration and information 

interoperability of the Exchange 

activities as part of the larger health 

insurance industry. If Exchanges choose 

to implement standards in addition to 

those established in 45 CFR parts 160 

and 162, they will continue to be in 

compliance with the final rule. As we 

work with Exchanges in connection 

with the information reporting 

standards for enrollment purposes to 

QHP issuers and/or Medicaid and CHIP 

agencies, we will be mindful of the 

potential for gaps in the 005010 

standard adopted by the Secretary in 

accordance with HIPAA and will fully 

adhere to privacy and security standards 

in § 155.260 and § 155.270. 

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Comment: One commenter 

recommended that ‘‘operating rules’’ be 

included in the phrase ‘‘the Exchange 

must use standards, implementation 

specifications, and code sets adopted by 

DHHS’’ in § 155.270(a), noting that 

proposed § 155.240(e) contains language 

that an Exchange must use ‘‘the 

standards and operating rules 

referenced in § 155.260 and § 155.270’’ 

when conducting electronic transactions 

with QHPs involving premium 

payments or electronic fund transfers. 

Response: We accept the commenter’s 

recommendation to add the phrase 

‘‘operating rules’’ to the proposed 

regulation text. In the final rule, we 

amended § 155.270(a) to include the 

term ‘‘operating rules’’ to address 

communications involving Exchanges 

that are subject to HIPAA administrative 

simplification. 

Comment: Several commenters 

supported § 155.270(b) of the proposed 

rule, which directs an Exchange to 

incorporate standards developed by the 

Secretary in accordance with section 

1561 of the Affordable Care Act, which 

amends the PHS Act and directs HHS to 

develop interoperable and secure 

standards and protocols for electronic 

enrollment transactions in consultation 

with the HIT Policy and HIT Standards 

committees. However, some 

commenters expressed concern about 

the ongoing usefulness of the 

committees’ recommendations. Two 

commenters stated that the 

recommendations of those committees 

are now outdated. Another stated that a 

weakness in the cited HIT enrollment 

standards and protocols is the fact that 

these standards are not applicable to 

web services. Commenters noted that 

these standards and protocols facilitate 

the transfer of consumer eligibility, 

enrollment, and disenrollment 

information, but do not fill the need for 

standards that would apply to web 

services versions of HIPAA transactions. 

One commenter said it is critical that 

Exchanges design electronic data 

formatting and transmission standards 

that are uniform, easily implemented by 

QHP issuers, and leverage electronic 

data formatting and transmission 

standards that are already in use by 

health insurance carriers. Commenters 

also suggested that HHS recommend 

that Exchanges use specific data 

exchange formats and transmission 

standards such as those already 

established under the Health Insurance 

Portability and Accountability Act of 

1996 and by CMS (for example, the 834 

Enrollment, Online Enrollment Center 

(OEC) file format, and Health Plan 

Management System (HPMS) reporting). 

Response: It will be important to 

leverage electronic data formatting and 

transmission standards that are already 

in use. However, we also believe that 

adhering to the broad standards and 

protocols developed by the Secretary, in 

collaboration with the HIT Policy and 

Standards committees, in accordance 

with section 3021 of the PHS Act, will 

provide standardization while allowing 

for the flexibility to leverage existing 

standards. We plan to issue guidance to 

help States determine appropriate 

transmission standards and data 

exchange formats for their Exchanges. 

We will also be consulting with the HIT 

Policy and HIT Standards committees at 

regular intervals to update the cited HIT 

enrollment standards and protocols to 

be more applicable to web services and 

to incorporate updates from Exchange 

electronic data formatting and 

transmission standards to broader 

standardization efforts. We also note 

that § 155.270 controls only how the 

Exchange sends information 

electronically to HIPAA covered 

entities. Section § 155.260 addresses 

privacy and security standards. 

Comment: A few commenters 

expressed concern about the privacy 

and security of information being shared 

via electronic transactions in 

accordance with proposed § 155.270. 

Some commenters requested that this 

section reference the limitations on use 

and disclosure in § 155.260 of this 

subpart, which sets privacy and security 

standards for Exchanges. These 

commenters also recommended 

codifying section 1413(c)(1) of the 

Affordable Care Act, which directs 

States to develop secure interfaces for 

electronic data sharing. Another group 

of commenters expressed concern that 

co-mingling of data used for different 

purposes would create threats to the 

privacy of PII. These commenters 

requested that HHS ensure that 

Exchanges maintain a division between 

information that is stored and 

information that is used for eligibility 

determinations and redeterminations, 

with strict standards for disclosure or 

release of stored data. 

Response: We believe the 

commenter’s suggestion to include a 

regulatory citation to § 155.260 would 

be redundant because the privacy and 

security standards and protections in 

§ 155.260 will apply to all transactions 

in which data are created, used, 

collected, stored, or disposed of by 

Exchanges. We also note that section 

1413(c) of the Affordable Care Act is 

codified in section § 155.260(b)(3) and 

§ 155.260(c). In addition, we note that 

the privacy and security standards cited 

in § 155.260 apply to both stored 

information and information used for 

eligibility determinations and 

redeterminations. Finally, while we 

acknowledge that stored data and data 

in active use warrant different privacy 

and security protocols, we believe that 

the privacy and security standards in 

§ 155.260 direct Exchanges to have 

safeguards in place to prevent improper 

use, collection, or disclosure of 

information, whether the data are at rest 

or in transit. We therefore do not think 

it is necessary to address this distinction 

in our final regulation. 

Comment: One commenter 

recommended that HHS adopt an 

operating rule that would apply to web 

services versions of the HIPAA 

transactions. This commenter 

encouraged HHS to consider the CORE 

Phase II rules, which have significant 

industry support, and to develop new 

standards that are not addressed in the 

CORE Phase II rules. 

Response: It is important for HHS to 

adopt a standard for web-based 

transactions; however, detailed 

discussion on the adoption of such 

standards is outside the scope of this 

final rule. In this final regulation, we 

maintain the policy that Exchanges 

must apply and follow HIPAA standard 

transactions when engaging in 

electronic exchanges of information 

with Covered Entities. 

Comment: One commenter requested 

clarification about whether it was in the 

intention of HHS to ensure that all 

electronic transactions with covered 

entities be consistent with the standards 

of 45 CFR parts 160 and 162. The 

commenter stated that this would direct 

all Medicaid agencies and issuers to use 

only standard transactions when 

conducting electronic transactions with 

Exchanges. Further, if it is the intent of 

HHS to permit, rather than require, 

these entities to conduct standard 

transactions with Exchanges, the 

commenter expressed that proposed 

§ 155.270(a) should be rewritten to state 

this clearly. In addition, this commenter 

requested that HHS clarify whether 

Exchanges must conduct standard 

transactions with non-covered entities, 

such as employers and banks or their 

respective agents that request to do so. 

This clarification would ensure that 

employers and others that are now 

conducting (or may in the future 

conduct) such standard transactions as 

eligibility for a health plan, enrollment 

or disenrollment in a health plan, or 

health plan premium payments may be 

assured they can do so as standard 

transactions with exchanges. 

Response: It is the intention of HHS 

to require, rather than to permit, 

adherence to the standards, 

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implementation specifications, and code 

sets adopted by the Secretary in 45 CFR 

parts 160 and 162, but only to the extent 

that the Exchange is performing 

electronic transactions with a covered 

entity. It is not the intention of HHS to 

establish standardized HIPAA 

transactions when Exchanges perform 

electronic transactions with noncovered entities, such as employers or 

banks. However, the Exchange has the 

flexibility to choose to use those 

standards, even if they are not minimum 

standards. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.270 of the proposed 

rule, with the following modification: in 

paragraph (a), we added a provision for 

Exchanges to use the operating rules 

adopted by the Secretary in 45 CFR 

parts 160 and 162. 

4. Subpart D—Exchange Functions in 

the Individual Market: Eligibility 

Determinations for Exchange 

Participation and Insurance 

Affordability Programs 

In this subpart, we proposed 

standards that the Exchange will use to 

determine eligibility for Exchange 

participation and insurance affordability 

programs. In the proposed rule and in 

this final rule, we organized the 

standards as follows: eligibility 

standards, eligibility determination 

process, and applicant information 

verification process. 

a. Definitions and General Standards for 

Eligibility Determinations (§ 155.300) 

In § 155.300, we proposed definitions 

for this subpart. Virtually all of the 

definitions proposed in this section 

were taken from other proposed 

regulations, including the Exchange 

establishment proposed rule which was 

published prior to the Exchange 

eligibility proposed rule. Specifically, in 

this section, we proposed definitions or 

interpretations for ‘‘adoption taxpayer 

identification number,’’ ‘‘applicable 

Medicaid modified adjusted gross 

income (MAGI)-based income 

standard,’’ ‘‘applicable CHIP modified 

adjusted gross income (MAGI)-based 

income standard,’’ ‘‘application filer,’’ 

‘‘Federal Poverty Level,’’ ‘‘Indian,’’ 

‘‘insurance affordability programs,’’ 

‘‘minimum value,’’ ‘‘non-citizen,’’ 

‘‘primary taxpayer,’’ ‘‘State CHIP 

Agency,’’ ‘‘State Medicaid Agency,’’ and 

‘‘tax dependent.’’ We also proposed 

rules related to the applicability of 

Medicaid and CHIP rules and the 

acceptance of attestations. 

Comment: A few commenters 

discussed the use of the term ‘‘MAGI’’ 

in the proposed rule. A commenter 

recommended referencing the term 

‘‘MAGI-based standard for Medicaid 

and CHIP,’’ as defined in the Medicaid 

proposed rule, and the term ‘‘MAGI,’’ as 

defined in the Treasury proposed rule. 

One commenter also asked that the 

differences in the use of MAGI for 

Medicaid eligibility, such as income 

exemptions described in the Medicaid 

proposed rule, be specified in § 155.300. 

Response: We recognize the need to 

reference the definitions of ‘‘MAGI’’ and 

‘‘MAGI-based income’’ in § 155.300(a), 

and in this final rule include a reference 

to MAGI, as defined in 36B(d)(2)(B) of 

the Code, and MAGI-based income, as 

defined in 42 CFR 435.603(e). To clarify, 

we use ‘‘MAGI’’ with respect to 

household income for advance 

payments of the premium tax credit and 

cost-sharing reductions, and ‘‘MAGIbased income’’ with respect to 

household income for Medicaid and 

CHIP. We note that to further clarify 

this, we have added cross-references 

whenever ‘‘household income’’ is used 

throughout this subpart to specify 

whether it is in reference to household 

income for purposes of advance 

payments of the premium tax credit and 

cost-sharing reductions, as defined in 

section 36B(d)(2) of the Code, or 

household income for purposes of 

Medicaid and CHIP, as defined in 42 

CFR 435.603(d). 

Comment: We received a number of 

comments regarding the definition of 

Federal Poverty Level (FPL), as 

proposed in § 155.300(a). The 

definition, as proposed, specified that 

the FPL table used for eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions for a 

coverage year must be the table 

published as of the first day of Exchange 

open enrollment for the coverage year; 

commenters recommended that this 

definition be aligned with the definition 

of FPL used for Medicaid and CHIP 

eligibility, which uses the FPL table 

available at the time of an eligibility 

determination. 

Response: We acknowledge the 

commenters’ concerns. However, 

section 36B(d)(3) of the Code, as added 

by section 1401(a) of the Affordable 

Care Act, clearly defines the FPL table 

that must be used for eligibility 

determinations for advance payments of 

the premium tax credit and cost-sharing 

reductions in such a way that it is 

distinct from the FPL table that is used 

for Medicaid and CHIP eligibility during 

much of the year. Therefore, HHS will 

maintain the proposed definition of FPL 

in the final rule. To the definition of 

‘‘Federal poverty level’’, we also 

included ‘‘or FPL’’; throughout the final 

rule we also remove references to 

Treasury regulations when using the 

term FPL since the term is defined in 

this section using the same definition as 

in section 36B of the Code. 

Comment: We received many 

comments asking HHS to define 

‘‘incarcerated, other than pending the 

disposition of charges’’ in proposed 

§ 155.300. Several commenters also 

recommended that such a definition be 

similar to the definition of ‘‘inmate of a 

public institution,’’ as used by the 

Medicaid program (42 CFR 435.1010). 

Response: We acknowledge 

commenters’ suggestion that we further 

define the term ‘‘incarcerated, other 

than pending the disposition of 

charges,’’ as used in § 155.305(a)(2), and 

we intend to clarify this term in future 

guidance. We note that 42 CFR 435.1010 

defines the term ‘‘inmate of a public 

institution’’, which is broader than the 

term ‘‘incarcerated’’ as used in this part; 

therefore, we do not have the authority 

or reason to adopt the broader 

definition, as the term ‘‘incarcerated’’ is 

used in the statute. 

Comment: Commenters asked that we 

amend our definitions of ‘‘State 

Medicaid Agency’’ and ‘‘State CHIP 

Agency’’ to explicitly include those 

offices that administer them in the U.S. 

Territories. 

Response: We acknowledge the 

suggestion, but are maintaining the 

proposed definitions in the final rule. 

These definitions reference Medicaid 

and CHIP regulations, which address 

Territories separately. Furthermore, the 

definition of ‘‘State’’ as included in 

section 1304(d) of the Affordable Care 

Act does not include Territories, and 

since this final rule implements only 

certain provisions of Title I of the 

Affordable Care Act that relate to States 

and Exchanges, we do not include 

Territories in these definitions. 

Comment: We received several 

comments providing alternative 

interpretations of the definition of 

‘‘Indian’’ than that which was included 

in the Exchange establishment and 

eligibility proposed rules. Some 

commenters suggested our definition is 

too narrow and inconsistent with 

Federal law. One commenter 

recommended that Indian be defined as 

a person who is a member of an Indian 

tribe or any person who is a member of 

an Indian tribe as defined in subsection 

(d) of the Indian Health Care 

Improvement Act (IHCIA), not limited 

to only Federally-recognized tribes. 

Other commenters stated that they 

believed that HHS’s interpretation is not 

supported by the plain language of 

section 4 of IHCIA or section 4(d) of the 

Indian Self-Determination and 

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Education Assistance Act (ISDEAA) and 

believe that it is contrary to general 

principles of Indian law. Several 

commenters recommend that at a 

minimum HHS recognize that the 

definitions under the ISDEAA and 

IHCIA are operationally the same. 

Several commenters recommend that 

this rule align its definition with the 

Medicaid/CHIP definition found in 42 

CFR 447.50. 

Response: Since the Affordable Care 

Act statutory provisions identifying the 

specific benefits available to Indians 

incorporate section 4 of the IHCIA (for 

purposes of the special enrollment 

period described in § 155.420(d)(8)) and 

section 4(d) of the ISDEAA (for 

purposes of the cost-sharing provisions 

described in § 155.300(a) and (b)) for the 

definition of Indian, we are unable to 

adopt the Medicaid/CHIP definition 

under 42 CFR 447.50. Therefore, we 

maintain our proposed definition in this 

final rule. However, since both the 

ISDEAA and IHCIA operationally mean 

the same thing, there is uniformity 

among the definition of Indian for 

purposes of the Exchange-related 

benefits described in this final rule. We 

accept that the definitions of ‘‘Indian’’ 

as provided under section 4(d) of 

ISDEAA (codified at 25 U.S.C. 450 et 

seq.) and section 4 of IHCIA (codified at 

25 U.S.C. 1603) operationally mean the 

same thing: an individual who is a 

member of an Indian tribe. In their 

definitions of an ‘‘Indian tribe,’’ both of 

these acts have nearly identical 

language that refers to a number of 

Indian entities (tribes, bands, nations, or 

other organized groups or communities) 

that are included in this definition on 

the basis that they are ‘‘recognized as 

eligible for the special programs and 

services provided by the United States 

to Indians because of their status as 

Indians.’’ 

Comment: One commenter asked that 

we clarify that the use of ‘‘attestation’’ 

does not prohibit the Exchange from 

obtaining electronic data and then 

asking an applicant to validate it, with 

the goal of increasing the efficiency and 

accuracy of the eligibility process. 

Response: A key principle in our 

approach to the eligibility process is to 

streamline this verification process and 

maximize the use of electronic data. In 

many cases, we anticipate that the 

dynamic, electronic application process 

will take the approach that is 

recommended by the commenter. In 

other cases, it will be necessary to 

obtain information prior to verifying it. 

In general, the language of the final rule 

does not mandate a specific sequencing 

of activities, and is designed to allow 

flexibility within standards to ensure 

that the eligibility process can evolve to 

align with changes in technology and 

the availability of authoritative data. We 

also note that we will be providing a 

model application, which will include 

sequencing for the various steps needed 

in the eligibility process. Consequently, 

we are maintaining the language from 

the proposed rule. We look forward to 

working closely with States to achieve 

our shared goal of a streamlined 

eligibility process, including through 

the many areas in which we are 

providing flexibility to allow for 

continuous quality improvement in 

access to affordable health insurance. 

We note that we have removed the 

language that specified that additional 

individuals, including a parent, 

caretaker or someone acting responsibly 

on behalf of such an individual, could 

provide attestations. The definition of 

application filer, which is now located 

in § 155.20, includes references to all 

individuals who may provide 

attestations; applicants, authorized 

representatives, and if the applicant is a 

minor or incapacitated, someone acting 

responsibly on behalf of the applicant. 

We have also replaced all references in 

this subpart regarding application filers 

providing attestations with references to 

applicants providing attestations, since 

the language in § 155.300(c) provides 

overarching clarification that 

attestations for applicants can be 

provided by application filers. 

Comment: We received comment 

regarding our definition of primary 

taxpayer. A commenter expressed 

concern that an individual may not 

know his future filing status. 

Response: While this final rule revises 

the term ‘‘primary taxpayer’’ to ‘‘tax 

filer,’’ to incorporate both spouses in a 

situation in which a married couple is 

filing jointly, we keep the proposed 

definition with minor revisions. Section 

36B of the Code governs eligibility for 

the premium tax credit and advance 

payments of the premium tax credit, 

and specifies that it is based on the 

annual household income for a tax 

family for the year for which coverage 

is requested, which necessitates an 

understanding of an applicant’s 

expected tax household for such year. 

We acknowledge challenges in 

communicating with individuals during 

the application process, including 

regarding tax filing status, and intend to 

work closely with stakeholders to 

develop effective communication 

strategies and tools. 

Summary of Regulatory Changes 

We are finalizing the definitions 

proposed in § 155.300 of the proposed 

rule, with the following modifications: 

We removed the definition of 

‘‘application filer,’’ and moved the 

definition to § 155.20, as a definition 

applicable for all of part 155; we address 

this change in comment response for 

§ 155.20. In the definition of ‘‘applicable 

CHIP MAGI-based income standard,’’ 

we changed the reference from 42 CFR 

457.05(a) to 42 CFR 457.310(b)(1) to 

align with the Medicaid final rule. For 

the definition of ‘‘minimum value’’, we 

clarified that the definition is used to 

describe coverage in an eligible 

employer-sponsored plan, and that 

minimum value means that an eligible 

employer-sponsored plan meets the 

standards with respect to coverage of 

the total allowed costs of benefits set 

forth in section 36B(c)(2)(C)(ii) of the 

Code. We added language to the 

definition of ‘‘State Medicaid agency’’ to 

clarify that the State Medicaid agency 

may be established or designated by the 

State in accordance with Medicaid 

regulations. For the definition of 

‘‘insurance affordability program’’ we 

cross-referenced 42 CFR 435.4, but 

clarify that those programs included in 

this definition are the State Medicaid 

program under Title XIX of the Act, 

CHIP under Title XXI of the Act, the 

BHP under section 1331 of the 

Affordable Care Act, advance payments 

of the premium tax credit under section 

36B of the Code, and cost-sharing 

reductions under section 1402 of the 

Affordable Care Act. 

As further explained in response to 

comments later in § 155.305, we also 

changed the definition of ‘‘primary 

taxpayer’’ to ‘‘tax filer,’’ which reflects 

that the role includes either spouse in 

a joint-filing situation, and changed the 

term throughout the subpart. Within the 

definition, we also added ‘‘or a married 

couple,’’ to clarify that a tax filer may 

be an individual or a married couple, 

and deleted subparagraph (1)(iv), which 

included language clarifying that a 

primary taxpayer could be either spouse 

in a married couple, as this language is 

now redundant. In paragraph (a), we 

added a definition for ‘‘modified 

adjusted gross income’’ and a definition 

of ‘‘MAGI-based income.’’ We also 

change the rule described in paragraph 

(b) to clarify that the Medicaid and CHIP 

regulations referred to in this subpart 

will be implemented in accordance with 

the policies and procedures as applied 

by the State Medicaid or State CHIP 

agency or as approved by the agency in 

the agreement described in 155.435(a). 

In response to comments, we also added 

new paragraph (d), which describes a 

rule for the Exchange when determining 

whether information is ‘‘reasonably 

compatible’’; this clarification is 

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discussed in more detail in § 155.315 

comment response. 

We also made technical changes to 

this section. In paragraph (c), we 

changed the reference to 

§ 155.310(e)(2)(ii) to § 155.310(d)(2)(ii). 

For the definition of ‘‘applicable 

Medicaid MAGI-based income 

standard,’’ we changed the reference to 

42 CFR 435.1200(c)(3) to 42 CFR 

435.1200(b)(2). 

Lastly, throughout this subpart, we 

have removed cross-references to the 

Treasury proposed rule and replaced 

them with cross-references to the 

applicable language in section 36B of 

the Code, as added by section 1401(a) of 

the Affordable Care Act, as the Treasury 

proposed rule will not be finalized as of 

the publication of this rule. Upon 

publication of the Treasury final rule, 

we intend to replace the statutory 

references with the appropriate 

regulatory references. 

b. Options for conducting eligibility 

determinations (§ 155.302) 

Based on comments and feedback to 

the proposed rule, we are revising the 

rule to include this section as an interim 

final provision, and we are seeking 

comments on it. 

Comment: We received a number of 

comments expressing support for a 

policy in which eligibility processes 

were integrated across the Exchange, 

Medicaid, and CHIP in order to ensure 

a seamless experience for consumers. 

Commenters further stressed the 

importance of a single entity conducting 

all eligibility determinations. We also 

received comments asking that States be 

permitted to rely on the Federal 

government for certain eligibility 

functions, and that State Medicaid and 

CHIP agencies be permitted to exercise 

final control over eligibility 

determinations for Medicaid and CHIP 

based on applications submitted to the 

Exchange, particularly when the State 

does not operate an Exchange. In 

particular, commenters asked that the 

Federal government offer to perform 

eligibility determinations for advance 

payments of the premium tax credit and 

cost-sharing reductions, based on an 

argument that this is not a current part 

of State processes, should be uniform 

across States, and is connected to the 

advance payment of premium tax 

credits with Federal funds. Another 

commenter suggested that rather than 

have the Federal government assume 

responsibility for an entire eligibility 

function, we should isolate certain 

components of the eligibility function. 

Response: While a fully-integrated 

eligibility process will best achieve a 

seamless experience for applicants, we 

adopt the suggestion of the commenters 

who requested more flexibility for States 

regarding Medicaid and CHIP eligibility 

determinations. With appropriate 

standards, this approach could both 

maintain the seamless consumer 

experience while allowing States to 

design the eligibility process to best 

match their current systems and 

capacity. Accordingly, while the 

majority of subpart D continues to refer 

to all functions being carried out by the 

Exchange, in new § 155.302 of this final 

rule, we specify that the Exchange may 

fulfill these provisions through different 

options or combinations of options, 

subject to standards described in 

§ 155.302(d). The standards in 

§ 155.302(d) are intended to ensure that 

this approach to eligibility 

determinations still affords applicants a 

seamless path to enrollment in coverage 

and that it does not increase 

administrative burden and costs; we use 

certain performance standards 

identified in paragraphs (b), (c) and (d) 

and the agreements among the relevant 

agencies to achieve this. We clarify that 

these options are separate and distinct 

from the ‘‘State Partnership’’ model 

described in the preamble of § 155.200 

of this final rule. We intend to provide 

further guidance on the implementation 

of these options, including the roles and 

responsibilities of the various parties, in 

the future. 

First, in § 155.302(a), we clarify that 

the Exchange may fulfill its minimum 

functions under this subpart by either 

executing all eligibility functions, 

directly or through contracting 

arrangements described in § 155.110(a), 

or through one or both of the 

approaches identified in paragraphs (b) 

and (c) when other entities determine 

the eligibility of applicants for 

insurance affordability programs. 

Second, in § 155.302(b), we identify 

that the Exchange may conduct an 

assessment of eligibility for Medicaid 

and CHIP rather than an eligibility 

determination for Medicaid and CHIP. 

Such an arrangement is permissible 

provided that the Exchange makes such 

an assessment based on the applicable 

Medicaid and CHIP MAGI-based income 

standards and citizenship and 

immigration status, using verification 

rules and procedures consistent with 

Medicaid and CHIP regulations, without 

regard to how such standards are 

implemented by the State Medicaid and 

CHIP agencies. That is, the assessment 

must follow verification rules and 

procedures that could be adopted by a 

State Medicaid or CHIP agency, 

although the use of this option is not 

contingent on the State Medicaid or 

CHIP agency doing so. 

In paragraph (b)(2), we provide that 

notices and other activities that must be 

conducted in connection with an 

eligibility determination for Medicaid or 

CHIP are conducted by the Exchange 

consistent with the standards identified 

in this subpart or by the applicable State 

Medicaid or State CHIP agency 

consistent with applicable law. 

In paragraph (b)(3), we outline the 

procedures the Exchange must follow 

when, based on the assessment 

conducted consistent with the standards 

in paragraph (b)(1), the Exchange finds 

an applicant potentially eligible for 

Medicaid or CHIP. We note that 

‘‘potentially eligible’’ does not mean 

that the individual’s income, as 

determined by the Exchange, 

necessarily is at or below the applicable 

Medicaid or CHIP MAGI-based income 

standard. We would expect in the 

interagency agreements between the 

State Medicaid and CHIP agencies and 

the Exchange, the Exchange’s 

determination of which applications 

will be transferred for further action by 

the Medicaid and CHIP agencies will 

depend in part on the extent to which 

their verification procedures are 

consistent with those followed by the 

State Medicaid and CHIP agencies. The 

Exchange would transmit such an 

individual’s information to the State 

Medicaid or CHIP agency in accordance 

with paragraph (b)(3) for additional 

processing, although the Exchange 

would consider him or her as ineligible 

for Medicaid or CHIP for purposes of 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions until the State Medicaid or 

CHIP agency notified the Exchange that 

the individual was eligible for Medicaid 

or CHIP. We will work with Exchanges 

to establish a reasonable application of 

the term ‘‘potentially eligible’’ taking 

into account an Exchange’s assessment 

procedures. 

In paragraph (b)(4), we describe the 

procedures that the Exchange must 

follow when, based on an assessment 

conducted in accordance with 

paragraph (b)(1), the Exchange finds that 

an applicant is not potentially eligible 

for Medicaid or CHIP based on the 

applicable Medicaid and CHIP MAGIbased income standards. The Exchange 

must consider such an applicant as 

ineligible for Medicaid or CHIP for 

purposes of determining eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions, and 

notify the applicant and provide him or 

her with the opportunity to withdraw 

his or her application for Medicaid and 

CHIP. To the extent that an applicant 

withdraws his or her application for 

Medicaid and CHIP (for example, if he 

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or she is approved for advance 

payments based in part on an 

assessment that he or she is not 

potentially eligible for Medicaid and 

CHIP), the applicant would not receive 

a formal approval or denial of Medicaid 

and CHIP; the alternative is for the 

applicant to request that the Exchange 

transmit the application to the State 

Medicaid and CHIP agency for 

additional processing. 

As noted above, in addition to 

providing the applicant with the 

opportunity to withdraw his or her 

application for Medicaid and CHIP, in 

paragraph (b)(4)(i)(B), the Exchange 

must notify and provide the applicant 

with the opportunity to request a full 

determination of eligibility for Medicaid 

and CHIP by the applicable State 

Medicaid and CHIP agencies. For an 

applicant who requests a full Medicaid 

and CHIP determination, the Exchange 

must transmit all information as 

provided as part of the application, 

update, or renewal that initiated the 

assessment and any information 

obtained or verified by the Exchange to 

the State Medicaid and CHIP agency. 

The Exchange must also consider such 

an applicant as ineligible for Medicaid 

or CHIP for purposes of determining 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions until the State Medicaid or 

CHIP agency notifies the Exchange that 

the applicant has been determined 

eligible for Medicaid or CHIP. 

The arrangement under paragraph (b) 

would also provide that the Exchange 

must adhere to the eligibility 

determination made by the Medicaid or 

CHIP agency, and that the Exchange and 

the applicable State Medicaid and CHIP 

agencies enter into an agreement 

specifying their respective 

responsibilities in connection with 

eligibility determinations for Medicaid 

and CHIP. We expect that these 

agreements will establish the 

responsibilities across the parties, and 

we will work with States to help 

develop such agreements. We note that 

we include rules related to assessments 

of eligibility for Medicaid and CHIP in 

paragraph (b)(1), to reinforce this 

concept. The standards and 

responsibilities of the Exchange, which 

we include for this agreement, 

complement the standards in 42 CFR 

435.1200(d) of the Medicaid final rule. 

In accordance with these standards, we 

expect that when an assessment is 

conducted by the Exchange and 

transmitted to the State Medicaid or 

CHIP agency, and the Exchange is 

providing advance payments pending 

an eligibility determination for 

Medicaid and CHIP, the Exchange will 

receive a notification of the final 

determination of eligibility for Medicaid 

and CHIP made by the receiving agency. 

Together, these standards aim to avoid 

the duplication of requests for 

information from applicants and 

verification of information, and ensure 

timely eligibility determinations despite 

the ‘hand-offs’ to different agencies or 

entities. Furthermore, we believe the 

inclusion of the functions and the 

standards for the agreements described 

in § 155.302 are consistent with our goal 

of ensuring a seamless eligibility 

process. We also note that while 

defining what constitutes eligibility for 

minimum essential coverage for 

purposes of eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions is outside the 

scope of this regulation, we clarify that 

our understanding is that if the 

Exchange conducts an assessment in 

accordance with paragraph (b) of this 

section and does not find that an 

applicant is eligible for Medicaid and 

CHIP, such finding is sufficient to meet 

the eligibility criteria specified in 

§ 155.305(f)(1)(ii)(B) with respect to 

Medicaid and CHIP. 

Third, in § 155.302(c) of the final rule, 

we describe that the Exchange must 

implement a determination of eligibility 

for advance payments of the premium 

tax credit and cost-sharing reductions 

made by HHS. We also describe that 

such an arrangement must provide that 

all verifications, notices, and other 

activities conducted in connection with 

determining eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions are conducted 

by either the Exchange in accordance 

with all of the applicable standards 

described in this subpart or by HHS in 

accordance with the agreement between 

HHS and the Exchange. We also direct 

that the Exchange transmit all applicant 

information and other information 

obtained or verified by the Exchange to 

HHS. The Exchange would then adhere 

to HHS’s determination for advance 

payments of the premium tax credit and 

cost-sharing reductions. The Exchange 

and HHS would also need to enter into 

an agreement specifying their respective 

responsibilities in connection with 

eligibility determinations for advance 

payments of the premium tax credit and 

cost-sharing reductions. As with the 

option described in § 155.302(b), we 

include particular standards and 

responsibilities which are designed to 

eliminate duplicative requests for 

information from applicants and ensure 

timely eligibility determinations. 

In § 155.302(d) we outline the 

standards to which the Exchange must 

adhere when assessments of eligibility 

for Medicaid and CHIP based on MAGI 

and eligibility determinations for 

advance payments of the premium tax 

credit and cost-sharing reductions are 

made in accordance with paragraphs (b) 

and (c); such standards include that all 

eligibility processes are streamlined and 

coordinated across applicable agencies, 

that such arrangement does not increase 

administrative costs and burden on 

applicants, enrollees, beneficiaries, or 

application filers, or increase delay, and 

that applicable requirements under part 

155 and section 6103 of the Code are 

met. 

Lastly, we note that all of the above 

configuration options will necessitate 

coordination between the Exchange, 

HHS, and the State Medicaid and CHIP 

agency. We will work closely with 

States to develop operational solutions 

that will result in a high-quality 

eligibility process, which in turn will 

result in achievement of our shared 

coverage goals and a sustainable 

Exchange. 

Summary of Regulatory Changes 

We are finalizing the following 

provisions at § 155.302 and requesting 

comment. In paragraph (a), we provided 

that the Exchange may choose to satisfy 

the standards of subpart D directly or 

through contracting arrangements, or 

through one or a combination of options 

described in paragraphs (b) and (c), 

subject to additional standards outlined 

in paragraph (d). 

If the Medicaid or CHIP agency 

retains final control of eligibility 

determinations for Medicaid and CHIP, 

in paragraph (b), we described that 

notwithstanding the standards of this 

subpart the Exchange may conduct 

assessments of eligibility for Medicaid 

and CHIP based on MAGI rather than 

the eligibility determinations for 

Medicaid and CHIP provided that: the 

Exchange makes such an assessment 

based on the applicable Medicaid and 

CHIP MAGI-based income standards 

and citizenship and immigration status, 

using verification rules and procedures 

consistent with 42 CFR parts 435 and 

457, without regard to how such 

standards are implemented by the State 

Medicaid and CHIP agencies; notices 

and other activities conducted in 

connection with an eligibility 

determination for Medicaid or CHIP are 

performed by the Exchange consistent 

with the standards identified in this 

subpart or the State Medicaid or CHIP 

agency consistent with applicable law; 

when the Exchange assesses an 

individual as potentially eligible for 

Medicaid or CHIP, the Exchange 

transmits all information provided as a 

part of the application, update, or 

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renewal that initiated the assessment, 

and any information obtained or 

verified by the Exchange to the State 

Medicaid or CHIP agency via secure 

electronic interface; when the Exchange 

finds an individual not potentially 

eligible for Medicaid and CHIP, the 

Exchange considers the applicant as 

ineligible for Medicaid and CHIP for 

purposes of determining eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions and 

must notify such applicant, and provide 

him or her with the opportunity to 

either withdraw his or her application 

for Medicaid and CHIP or request a full 

determination of eligibility for Medicaid 

or CHIP by the State Medicaid and CHIP 

agencies. When an applicant requests a 

full determination of eligibility for 

Medicaid and CHIP, the Exchange must 

transmit all information obtained or 

verified by the Exchange to the State 

Medicaid and CHIP agencies promptly 

and without undue delay and consider 

such an applicant as ineligible for 

Medicaid and CHIP for purposes of 

determining eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions until the State 

Medicaid or CHIP agency notifies the 

Exchange that the applicant is eligible 

for Medicaid or CHIP. Furthermore, 

under the arrangement described in 

paragraph (b), the Exchange must 

adhere to the eligibility determination 

for Medicaid or CHIP made by the State 

Medicaid or CHIP agency, and the 

Exchange and the State Medicaid and 

CHIP agencies must enter into an 

agreement specifying their respective 

responsibilities in connection with 

eligibility determinations for Medicaid 

and CHIP. We note that in such an 

arrangement if the Exchange the State 

Medicaid and CHIP agencies are using 

the same information technology 

infrastructure formal transmissions may 

not be needed. 

In paragraph (c), we establish that 

notwithstanding the standards of this 

subpart the Exchange may implement a 

determination of eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions made by HHS. 

Under such option we provide: that 

verifications, notices, and other 

activities necessary in connection with 

an eligibility determination for advance 

payments of the premium tax credit and 

cost-sharing reductions are performed 

by the Exchange in accordance with the 

standards identified in this subpart or 

by HHS, in accordance with the 

agreement between the Exchange and 

HHS; the Exchange transmits all 

information provided as a part of the 

application, update, or renewal that 

initiated the eligibility determination, 

and any information obtained or 

verified by the Exchange, to HHS via 

secure electronic interface, promptly 

and without undue delay; the Exchange 

adheres to the eligibility determination 

for advance payments of the premium 

tax credit and cost-sharing reductions 

made by HHS; and the Exchange and 

HHS enter into an agreement specifying 

their respective responsibilities in 

connection with eligibility 

determinations for advance payments of 

the premium tax credit and cost-sharing 

reductions. 

In paragraph (d), we outline the 

standards to which assessments and 

eligibility determinations described in 

paragraph (b) and (c) must adhere, 

including that eligibility processes are 

streamlined and coordinated across 

insurance affordability programs; such 

arrangement does not increase 

administrative costs and burdens on 

individuals or increase delay; and any 

applicable standards under § 155.260 or 

§ 155.270, § 155.315(i), and section 6103 

of the Code with respect to the 

confidentiality, disclosure, 

maintenance, or use of information will 

be met. All such changes adopted for 

this section of the final rule are 

described in responses to comments for 

§ 155.302. 

c. Eligibility Standards (§ 155.305) 

Based on comments and feedback to 

the proposed rule, we are revising the 

rule to include paragraph (g) of this 

section as an interim final provision, 

and we are seeking comments on it. 

In § 155.305, we proposed to codify 

the eligibility standards for enrollment 

in a QHP and for insurance affordability 

programs. Specifically, we proposed 

that the Exchange determine an 

applicant eligible for enrollment in a 

QHP if he or she meets the basic 

standards for enrollment in a QHP 

outlined in the Affordable Care Act, 

including that the individual must be a 

citizen, national, or a non-citizen who is 

lawfully present, not incarcerated, and 

be reasonably expected to remain so for 

the entire period for which enrollment 

is sought. We solicited comments 

regarding the language that an 

individual be ‘‘reasonably expected,’’ 

for the entire period for which 

enrollment is sought, to be a citizen, 

national, or non-citizen lawfully 

present, and on how this policy can be 

implemented in a way that is 

straightforward for individuals to 

understand and for the Exchange to 

implement. 

We also proposed that in order to be 

eligible to enroll in a QHP, an 

individual must intend to reside in the 

State in the service area of the 

Exchange. We clarified that this 

residency standard is designed to apply 

to all Exchanges, including regional and 

subsidiary Exchanges. In general, we 

proposed to align the Exchange 

residency standard with the Medicaid 

residency standards proposed in 42 CFR 

435.403 of the Medicaid proposed rule 

(76 FR 51148). We clarified that this 

residency standard does not require an 

individual to intend to reside for the 

entire benefit year. We also proposed 

that the Exchange follow additional 

Medicaid residency standards (which 

were proposed in the August 17, 2011 

Medicaid rule at 42 CFR 435.403) and 

the policy of the State Medicaid or CHIP 

agency to the extent that an individual 

is specifically described in that section 

and not under paragraphs (a)(3)(i) or (ii). 

We proposed that for a spouse or a tax 

dependent who resides outside the 

service area of the tax filer’s Exchange, 

the spouse or tax dependent will be 

permitted to either: (1) enroll in a QHP 

through the Exchange that services the 

area in which he or she resides or 

intends to reside; or (2) enroll in a QHP 

through the Exchange that services the 

area in which his or her tax filer intends 

to reside or resides, as applicable. We 

also solicited comment on any 

standards regarding in-network 

adequacy for out-of-State dependents 

that we should consider in a different 

section of the proposed rule. We also 

noted that HHS intends to allow State 

Medicaid agencies to continue to have 

State-specific rules with respect to 

residency for students under the 

Medicaid program, and solicited 

comments on whether different 

residency rules should be maintained 

for enrollment in a QHP or whether a 

unified approach should be adopted. 

We proposed that the Exchange 

determine an applicant eligible for an 

enrollment period if he or she meets the 

criteria for an enrollment period, as 

specified in § 155.410 and § 155.420. We 

also proposed that the Exchange 

determine applicants’ eligibility for 

Medicaid and CHIP. Specifically, we 

proposed that the Exchange determine 

eligibility for Medicaid based on 

categories utilizing the applicable 

Medicaid MAGI-based income standard, 

and that the Exchange determine 

eligibility for CHIP if an applicant meets 

the standards of 42 CFR 457.310 

through 457.320 and has a household 

income within the applicable CHIP 

MAGI-based income standard. 

Additionally, we proposed to codify 

that if a BHP is operating in the service 

area of the Exchange, the Exchange will 

determine an applicant’s eligibility for 

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the BHP, using the statutory criteria for 

eligibility. 

We also proposed that the Exchange 

determine eligibility for advance 

payments of the premium tax credit 

based on eligibility standards proposed 

in paragraph (f)(1) and (f)(2), and that 

the Exchange may provide advance 

payments of the premium tax credit 

only for an applicant who is enrolled in 

a QHP through the Exchange. 

Additionally, we clarified that the 

Exchange must determine a tax filer 

ineligible to receive advance payments 

of the premium tax credit if HHS 

notifies the Exchange that the tax filer 

or his or her spouse received advance 

payments for a prior year for which tax 

data would be utilized for income 

verification and did not comply with 

the requirement to file a tax return and 

reconcile the advance payments of the 

premium tax credit for such year. In the 

event the Exchange determines that a 

tax filer is eligible to receive advance 

payments of the premium tax credit, we 

proposed that the Exchange calculate 

advance payments of the premium tax 

credit in accordance with 26 CFR 

1.36B–3 of the Treasury proposed rule 

(76 FR 50931). 

We also proposed that the Exchange 

require an application filer to provide 

the social security number (SSN) of the 

tax filer if an application filer attests 

that the tax filer has a SSN and filed a 

tax return for the year for which tax data 

would be utilized for verification of 

household income and family size. We 

solicited comments on how the 

Exchange can maximize the accuracy of 

the initial eligibility determination and 

establish a robust process for 

individuals to report changes in income 

to alleviate stakeholder concerns about 

income fluctuations during the year that 

may result in large reconciliation 

payments. 

Finally, we proposed that the 

Exchange must determine applicants 

eligible for cost-sharing reductions 

based on eligibility standards described 

in paragraph (g), and we note that 

special eligibility standards for costsharing reductions based on Indian 

status are described in § 155.350 of this 

subpart. Specifically, we clarified in the 

proposed rule that an individual with 

household income that exceeds 250 

percent of the FPL who is not an Indian 

is not eligible for cost-sharing 

reductions. We codified the statute such 

that an applicant must be enrolled in a 

QHP in the silver level of coverage in 

order to receive cost-sharing reductions. 

Lastly, we proposed three eligibility 

categories for cost-sharing reductions, 

and proposed that the Exchange 

transmit information about an enrollee’s 

category to his or her QHP issuer in 

order to enable the QHP issuer to 

provide the correct level of reductions. 

Comments: We received comments 

regarding the provision in proposed 

§ 155.305(a)(1) which states that an 

individual must be ‘‘reasonably 

expected’’ to be a citizen, national, or a 

non-citizen who is lawfully present for 

the entire period for which enrollment 

is sought. One commenter 

recommended that the final rule remove 

the ‘‘reasonably expected’’ standard as it 

would limit non-citizens’ eligibility to 

enroll in a QHP. 

Response: The final rule maintains 

the ‘‘reasonably expected’’ standard in 

accordance with section 1312(f)(3) of 

the Affordable Care Act. We do not 

interpret this provision to mean that an 

applicant must be lawfully present for 

an entire coverage year; rather, we 

anticipate that the verification process 

will address whether an applicant’s 

lawful presence is time-limited, and if 

so, the Exchange will determine his or 

her eligibility for the period of time for 

which his or her lawful presence has 

been verified. We anticipate providing 

future guidance on this topic, with a 

focus on minimizing administrative 

complexity and burden. 

Comment: We received a number of 

comments related to and in support of 

the eligibility standard in proposed 

§ 155.305(a)(2) that in order to be 

eligible for enrollment in a QHP, an 

individual must not be incarcerated, 

with the exception of incarceration 

pending the disposition of charges. 

Several commenters expressed concerns 

and provided recommendations about 

how to coordinate and promote 

continuity of care for individuals who 

will be transitioning from incarceration, 

and some commenters expressed this 

concern in regard to specific 

populations of incarcerated individuals. 

One commenter recommended that 

prisoners should be able to apply for 

coverage through the Exchange in 

advance of their release so that coverage 

can be effective on their release date, 

while another commenter noted that we 

should provide that Exchanges must 

accept applications in the event they are 

submitted on behalf of an inmate of a 

correctional facility. Also, one 

commenter suggested that prisoners 

should not be held responsible for 

reporting changes if they become 

incarcerated, and prisoners should not 

be held liable for repayment of advance 

payments of the premium tax credit for 

which they would be liable if they are 

receiving them and then become 

incarcerated. 

Response: In § 155.305(a)(2) of the 

proposed rule, we codified section 

1312(f)(1)(B) of the Affordable Care Act, 

which specifies that in order to be 

eligible for enrollment in a QHP, an 

individual must not be incarcerated, 

other than incarceration pending the 

disposition of charges. HHS will 

consider commenters’ recommendations 

related to promoting continuity of care 

for individuals leaving incarceration in 

future guidance. Since the Exchange 

will accept applications and make 

eligibility determinations throughout 

the year, an inmate would not be 

precluded from applying for coverage 

through the Exchange in an effort to 

coordinate an effective date of coverage 

with his or her release date. We also 

note that § 155.420(d)(7) provides a 

special enrollment period (‘‘A qualified 

individual or enrollee who gains access 

to new QHPs as a result of a permanent 

move’’) which covers individuals who 

are released from incarceration. 

The final rule maintains the provision 

specifying that an enrollee must report 

any change with respect to the 

eligibility standards in § 155.305, which 

includes when an enrollee becomes 

incarcerated, other than incarceration 

pending the disposition of charges, as it 

is important for the Exchange to be able 

to discontinue the enrollment and 

recompute any advance payments or 

cost-sharing reductions to account for 

the change in eligibility. As with other 

changes that affect eligibility for 

enrollment in a QHP, not reporting such 

a change so that advance payments of 

the premium tax credit can be adjusted 

accordingly exposes a tax filer to the 

risk of repayment of advance payments 

of premium tax credits at tax filing. 

In addition, we note that we clarify in 

§ 155.330(b)(4) of the final rule that an 

application filer may report a change on 

behalf of an enrollee, which, for 

example, allows a member of an 

enrollee’s household to report the 

enrollee’s incarceration. Also, in 

§ 155.330(d)(2) of this final rule, we 

allow for flexibility for Exchanges to 

periodically check trusted data sources, 

provided that the data matching 

program meets certain standards; this 

provision could allow an Exchange to 

engage in data matching on 

incarceration to provide an additional 

avenue to capture changes. 

Comment: We received a number of 

comments related to the residency 

standards for enrollment in a QHP, 

described in proposed § 155.320(a)(3). 

Several commenters recommended that 

the residency standards across the 

Exchange, Medicaid and CHIP be 

aligned and uniform so as to limit 

States’ discretion in precluding certain 

transient populations from having 

continuous coverage throughout the 

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year. Several commenters recommended 

that we align with the Medicaid ‘‘intent 

to reside’’ standard, and include the two 

provisions from the residency standard 

as proposed in the Medicaid proposed 

rule at 42 CFR 435.403(h)(1)(ii). One 

commenter suggested that we add the 

following alternative as a means of 

satisfying the residency standard: ‘‘Has 

entered the State with a job commitment 

(whether or not he or she is currently 

employed).’’ A few commenters 

recommended that we should adopt a 

more stringent residency standard than 

included in the Medicaid proposed rule. 

Response: We intend to align the 

residency standards with those of the 

Medicaid regulations; therefore, we are 

revising § 155.305(a)(3) in this final rule 

in response to commenters’ 

recommendations that we align 

residency standards with Medicaid and 

CHIP and in consideration of changes 

made from the Medicaid proposed rule 

to the Medicaid final rule. For example, 

in § 155.305(a)(3)(i)(B), this final rule 

provides that an applicant age 21 and 

over also meets the residency standard 

if he or she has entered the service area 

of the Exchange with a job commitment 

or seeking employment (whether or not 

the applicant is currently employed). 

This provision was included in the 

Medicaid proposed rule and is included 

in the Medicaid final rule; we include 

it here to provide consistency between 

these rules. We add language 

throughout § 155.305(a)(3) to clarify that 

individuals must be ‘‘living’’ in the 

service area of the Exchange in addition 

to the prior standards, to clarify that an 

individual must be physically present in 

the service area of the Exchange in order 

to be eligible for enrollment in a QHP 

through that Exchange. We note, 

however, that this does not preclude an 

individual from submitting an 

application and receiving an eligibility 

determination in advance of relocating 

to a new State; in such a situation, his 

or her eligibility will not be effective 

until he or she is ‘‘living’’ in the new 

State. We have also restructured 

paragraph (a)(3)(i) and (ii) for clarity, 

and have added specific references to 

the Medicaid final rule. 

Comment: We received a number of 

comments related to the proposal in 

§ 155.305(a)(3)(iv) related to residency 

standards for family members who meet 

the applicable residency standard for a 

different Exchange service area than of 

one or both of the tax filers. While 

several commenters supported the 

provision in the proposed rule that 

dependents and spouses may enroll in 

a QHP offered through the Exchange in 

the service area where they reside or 

through the Exchange serving the area 

where a tax filer meets the applicable 

residency standard (or in the case of a 

spouse who is married filing jointly, 

another tax filer meets the applicable 

residency standard), several 

commenters opposed this provision. If 

this policy is maintained, one 

commenter recommended that HHS 

develop a system for Exchanges to easily 

apportion premium tax credits among 

family members. Several commenters 

expressed concern that a person who 

purchases coverage from a QHP offered 

through the Exchange where he or she 

does not live would likely encounter 

difficulties in finding care as well as 

significant additional costs from the use 

of out-of-network providers. In addition, 

the QHP issuer would be limited in its 

ability to facilitate use of the highest 

quality and most efficient providers and 

coordinate care across providers and 

settings. Commenters encouraged HHS 

to consider limiting this option. Several 

commenters recommended that HHS 

establish an electronic mechanism for 

Exchanges to communicate with each 

other, as well as sought clarification 

about how the Exchanges will 

coordinate tax credits for members of 

the same tax household purchasing 

coverage in QHPs through different 

Exchanges and other specific 

operational details around verification 

and the eligibility process. One 

commenter noted that this would be a 

simpler process if a tax filer could 

purchase coverage for a dependent or 

spouse in the other State’s Exchange 

through the tax filer’s Exchange via a 

link or web portal. 

Response: We maintain the residency 

standard in § 155.305(a)(3)(iv) of the 

final rule with limited modifications. 

All of the modifications result from a 

change in our terminology from 

‘‘primary taxpayer’’ to ‘‘tax filer’’ in an 

effort to reduce confusion that could be 

associated with the term ‘‘primary 

taxpayer,’’ notably since primary 

taxpayer generally refers to the first 

name on the tax return of two 

individuals who are married, but both 

individuals are tax filers and there is no 

significance to which is the primary 

taxpayer for purposes of the premium 

tax credit (this change has been made 

throughout the final rule). The 

remaining changes are to clarify that any 

member of a tax household that has 

members in multiple Exchange service 

areas may enroll in a QHP through any 

of the Exchanges for which one of the 

household’s tax filers meets the 

applicable residency standard; the 

exception to this standard is that when 

both tax filers enroll in a QHP through 

the same Exchange, the tax filers’ 

dependents may choose either the 

Exchange through which the tax filers 

are enrolled or an Exchange for which 

the dependents meet the applicable 

residency standard in paragraphs 

(a)(3)(i)–(iii). Taken together, we expect 

that these residency standards will 

ensure that enrollees in QHPs through 

the Exchange have appropriate access to 

services. 

Regarding comments suggesting that 

Exchanges should be able to apportion 

premium tax credits among family 

members, we will provide additional 

information in the future in 

coordination with the IRS. We note that 

the apportionment of advance payments 

will need to occur when a single tax 

household is covered by more than one 

QHP. Regarding comments we received 

related to network adequacy, a more 

detailed response is provided in 

§ 156.230 of this final rule. We also note 

that multi-State plans certified by and 

under contract with the Director of the 

Office of Personnel Management may 

provide another option in such 

scenarios. In response to comments 

recommending that we create an 

electronic mechanism by which 

Exchanges can communicate with each 

other and other operational details of 

the eligibility process, HHS is 

considering commenters’ 

recommendations regarding how best to 

coordinate cross-Exchange activities. 

Comment: A few commenters strongly 

supported limiting enrollment to a 

single open enrollment period per year. 

Response: The language in 

§ 155.305(b) of the proposed rule 

specified that the Exchange determine 

an applicant eligible for an enrollment 

period in accordance with the 

provisions regarding enrollment periods 

in § 155.410 and § 155.420. 

Comment: A number of commenters 

expressed overall support for the 

Exchange conducting Medicaid and 

CHIP eligibility determinations, and 

some suggested that the regulation be 

amended to include a standard that an 

Exchange determine eligibility for 

Medicaid on any basis of eligibility 

offered in that State (such as optional 

eligibility categories and categories that 

do not use the MAGI standard). Some 

commenters expressed support for 

uniformity and standardization around 

eligibility and enrollment in general. 

Several commenters recommended that 

HHS provide that the Exchange must 

collect information related to non-MAGI 

eligibility to ensure that applicants can 

truly avail themselves of a ‘‘no wrong 

door’’ application process for Medicaid. 

A few commenters supported the 

clarification that eligibility for 

emergency Medicaid services does not 

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count as Medicaid eligibility for 

purposes of eligibility for premium tax 

credit and cost-sharing reductions 

through the Exchange. Another 

recommended that there should be an 

emphasis on child-only plans through 

the Exchange for those children who are 

not eligible for Medicaid. 

Response: Sections 155.345(b) and (d) 

of the final rule specify that the 

Exchange must assess information 

provided by an applicant who is not 

eligible for Medicaid based on standards 

specified in § 155.305(c) to determine 

whether he or she is potentially eligible 

for Medicaid in a category that does not 

use the MAGI standard, and refer any 

potentially eligible individuals to the 

Medicaid agency for an eligibility 

determination. In addition, § 155.345(c) 

of the final rule specifies that the 

Exchange must provide an opportunity 

for an applicant to request a full 

Medicaid eligibility determination 

based on factors not considered in 

§ 155.305(c). We believe that this 

proposal creates a streamlined eligibility 

process for the vast majority of 

applicants, while also allowing 

applicants who may be eligible for a 

category that does not use the MAGI 

standard to access a more streamlined 

process than is available today, without 

requiring the Exchange to accommodate 

all of the complexity associated with the 

categories of Medicaid that were not 

modified by the Affordable Care Act. 

In order to maintain a single, 

streamlined application, and in 

accordance with section 1413(b)(2) of 

the Affordable Care Act, applicants will 

not be asked for more information than 

is needed for the Exchange to make an 

eligibility determination for insurance 

affordability programs based on MAGI, 

apart from collecting basic information 

to assess individuals for potential 

Medicaid eligibility on a non-MAGI 

basis, for example a single triggering 

question. Applicants will always have 

the opportunity to request a full 

determination of eligibility for 

Medicaid. We also note that we know 

that several States are considering 

leveraging a single Exchange/Medicaid/ 

CHIP technology platform in future 

years to also accommodate non-MAGI 

Medicaid applicants, which is permitted 

under the statute and final rule. In 

response to commenters requesting 

clarification about whether eligibility 

for Medicaid coverage that is limited to 

emergency services counts as minimum 

essential coverage for purposes of 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions, this determination is subject 

to other rulemaking. We note, however, 

that individuals who are not lawfully 

present, are not eligible for enrollment 

in a QHP, let alone for enrollment in a 

QHP that is supported by advance 

payments and cost-sharing reductions. 

We also note that immigration status is 

not a factor for emergency Medicaid 

eligibility. In this final rule, we also 

revise § 155.305(c) to streamline 

references to Medicaid citizenship and 

immigration status and residency 

eligibility standards, and align with the 

Medicaid MAGI-based assessment 

described under 42 CFR 435.911(c)(1). 

Lastly, regarding child-only plans, we 

note that the Exchange will inform an 

applicant of all of the QHPs for which 

he or she is eligible, including any 

child-only plans. 

Comment: We received a range of 

comments related to performance 

measurement and oversight tools related 

to eligibility and enrollment. One 

commenter recommended a 

modification of Federal audit tools to 

ensure that States are evaluated based 

on the number of eligible people they 

correctly enroll for coverage. Some 

commenters recommended that QHP 

issuers should not be held responsible 

for any errors that the Exchange may 

make in the eligibility determination 

process, while some commenters sought 

clarification of an Exchange’s liability 

for inaccurate eligibility determinations. 

Other commenters requested State 

flexibility when operational challenges 

impede a seamless eligibility and 

enrollment process (including, for 

example, transitioning enrollees from 

one insurance affordability program to 

another). 

Response: We plan to regulate in the 

future on oversight tools and 

performance measurements in future 

rulemaking and guidance. We will 

consider commenters’ recommendations 

regarding oversight tools and 

performance measurement as we 

develop future guidance on this topic. 

Comment: Several commenters 

strongly supported the Exchange 

sharing common eligibility standards 

with Medicaid, CHIP, and the BHP, and 

determining eligibility for the BHP. 

Several commenters suggested that the 

Exchange should conduct eligibility 

determinations for other programs that 

are not related to health insurance 

coverage, such as the Supplemental 

Nutrition Assistance Program and the 

National School Lunch Program. Other 

commenters stated that individuals who 

are served by those programs should 

also be enrolled in the appropriate 

health care program if they are not 

already enrolled. At least one 

commenter recommended that those 

applying for unemployment insurance 

also be directed towards health benefits 

for which they might be eligible. 

Response: In the final rule, we do not 

require the level of integration between 

the Exchange and other human services 

programs that some commenters 

recommended. This would not preclude 

a State from leveraging the technology 

platform and supporting infrastructure 

for insurance affordability programs for 

other health and human services 

programs in the future, provided that 

privacy and security standards (and 

applicable cost allocation rules) are met, 

particularly regarding the use and 

disclosure of information provided to 

the Exchange by applicants and Federal 

agencies. To this end, on August 10, 

2011 and January 23, 2012, CMS, the 

Administration for Children and 

Families (ACF), and the Food and 

Nutrition Service (FNS) issued joint 

letters providing guidance on the 

limited exception to cost allocation 

guidelines which allows Federallyfunded human services programs to 

benefit from Medicaid, CHIP, and 

Exchange technology investments. 

Comment: We received a number of 

comments related to eligibility 

standards for advance payments of the 

premium tax credit, in particular 

regarding compliance with the filing 

requirement described in proposed 

§ 155.305(f)(4). Some commenters 

recommended that the final rule clarify 

that if a tax filer is determined eligible 

for advance payments of the premium 

tax credit but opts not to take advance 

payments, his or her ability to file for 

the credit at the end of the tax year is 

not affected; commenters also asked 

whether such a scenario would 

adversely affect his or her eligibility for 

cost-sharing reductions. One commenter 

requested clarification regarding the 

length of time for which a taxpayer 

would be deemed ineligible for advance 

payment of premium tax credit 

following a failure to file a tax return. 

Some commenters suggested States 

should have the flexibility to 

discontinue eligibility for advance 

payments of the premium tax credit and 

Medicaid if Federal tax filings are not 

current. 

Response: We clarify that when a tax 

filer is determined eligible for advance 

payments of the premium tax credit but 

opts to not have advance payments 

made on his or her behalf, the tax filer 

may still claim the premium tax credit 

on his or her tax return; further, such 

action does not adversely affect his or 

her eligibility for cost-sharing 

reductions. Regarding § 155.305(f)(4), 

we note that the language of the 

proposed rule, which we maintain in 

the final rule, specifies that the 

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Exchange may not determine a tax filer 

eligible for advance payments if 

advance payments of the premium tax 

credit were made on behalf of the tax 

filer, or either spouse if the tax filer is 

a married couple, for a year for which 

tax data would be utilized for 

verification of household income and 

family size, and the tax filer or his or 

her spouse did not comply with the 

requirement to file an income tax return 

for that year as required by 26 U.S.C. 

6011, 6012, and implementing 

regulations and reconcile the advance 

payments of the premium tax credit for 

that period. 

We also note that a tax filer faced with 

this bar to eligibility may be able to 

regain eligibility by filing a tax return 

and reconciling the advance payments 

of the premium tax credit. Lastly, we do 

not have authority to discontinue 

Medicaid eligibility based on a failure to 

file a tax return. In the final rule, we 

also make a correction to the eligibility 

criteria for advance payments of the 

premium tax credit at § 155.305(f)(1)(ii) 

to align with the statutory requirement 

in section 36B(c)(1)(A) of the Code; the 

Exchange must generally determine that 

the tax filer is expected to have a 

household income of greater than or 

equal to 100 percent of the FPL. 

Comment: We received several 

comments requesting clarification as to 

how eligibility will be determined for 

specific household composition 

scenarios. One comment, for example, 

asked for clarification regarding 

situations in States that recognize samesex marriages or civil unions. 

Response: In § 155.305(f) in this final 

rule, we use a number of crossreferences to section 36B of the Code 

which governs the premium tax credit; 

these rules are the same rules that are 

used to determine eligibility for advance 

payments of the premium tax credit. 

Consequently, we refer commenters to 

those rules for details regarding family 

and family size. Similarly, in 

§ 155.305(c) and (d), we use a number 

of cross-references to 42 CFR parts 435 

and 457, which contain the Medicaid 

and CHIP rules for household 

composition; we refer commenters to 

those rules for details regarding these 

provisions. 

Comment: We received a comment 

asking that we address the issue of 

deeming a sponsor’s income to noncitizen applicants for Federal means 

tested public benefits; specifically, the 

commenter asked whether that policy is 

applicable to calculation of annual 

household income for purposes of 

determining eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions. The same 

commenter suggested that for applicants 

who are determined ineligible for 

Medicaid as a result of accounting for 

sponsor income and whose annual 

household income is below 100 percent 

FPL, we should apply the special rule 

described in § 155.305(f)(2) that would 

allow such applicants to be determined 

eligible for advance payments of the 

premium tax credits. 

Response: We intend to work closely 

with Treasury to address the 

applicability of sponsor deeming in the 

calculation of annual household income 

for purposes of determining eligibility 

for advance payments of the premium 

tax credit and cost-sharing reductions 

through future rulemaking or guidance. 

Such rulemaking or guidance will also 

address the relationship between 

sponsor deeming and the special rule 

described in § 155.305(f)(2). 

Comment: Several commenters 

expressed concern about the 

affordability of coverage for low-income 

individuals, notably lawfully present 

immigrants who are eligible for advance 

payments of the premium tax credit but 

ineligible for Medicaid. Some 

commenters requested clarification that 

lawfully present non-citizens with 

incomes below 100 percent FPL could 

be determined eligible for cost-sharing 

reductions in the 100 to 150 percent 

FPL eligibility category. 

Response: In response to comments 

received regarding lawfully present noncitizens with incomes below 100 

percent FPL and eligibility for costsharing reductions, we are clarifying in 

§ 155.305(g)(2)(i) of the final rule that an 

individual who is eligible for advance 

payments of the premium tax credit 

under § 155.305(f)(2) (non-citizens who 

are lawfully present and are ineligible 

for Medicaid) fall within the 100 to 150 

percent FPL eligibility category for 

purposes of determining eligibility for 

cost-sharing reductions. We also correct 

§ 155.305(f)(1)(i) to provide that an 

applicant who expects to have a 

household income of greater than or 

equal to 100 percent FPL may be 

determined eligible for advance 

payments of the premium tax credit; 

this is a technical correction to comply 

with section 36B(c)(1)(A) of the Code. 

Comment: Several commenters 

suggested we clarify the relationship 

between advance payments of the 

premium tax credit and other forms of 

coverage, such as CHIP or Medicare, for 

determining eligibility as well as for the 

calculation of the premium tax credit. 

Response: We note that comments of 

this nature are outside the scope of this 

rule and are within the jurisdiction of 

the Secretary of the Treasury. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.305 of the proposed 

rule, with several modifications: we 

added language throughout 

§ 155.305(a)(3) of the final rule to clarify 

that individuals must be ‘‘living’’ in the 

service area of the Exchange in addition 

to the prior standards. In addition, in 

§ 155.305(a)(3)(i)(B), we include in the 

final rule that an applicant age 21 and 

over also meets the residency standard 

if he or she has entered the service area 

of the Exchange with a job commitment 

or seeking employment (whether or not 

currently employed). We have also 

restructured paragraph (a)(3)(i) and (ii) 

for clarity, and have added specific 

references to the Medicaid final rule. In 

paragraph (c)(1), we also added a 

standard that the Exchange must 

determine an applicant eligible for 

Medicaid if he or she meets the nonfinancial eligibility criteria for Medicaid 

for populations whose eligibility is 

based on MAGI (that is, citizenship or 

immigration status, residency, etc.), as 

certified by the Medicaid agency at 

435.1200(b)(2), and added a crossreference to 42 CFR 435.603(d) for 

household income, in addition to the 

other criteria described under this 

paragraph. In paragraph (d), we added a 

cross-reference to 42 CFR 435.603(d) for 

household income. 

In paragraph (f)(1)(i), we have 

changed ‘‘at least 100 percent’’ to 

‘‘greater than or equal to 100 percent’’ 

to align with statutory language. In 

paragraph (f)(1)(ii)(B), we codified the 

exception for coverage in the individual 

market. In paragraph (f)(4), we have 

added, ‘‘or either spouse if the tax filer 

is a married couple,’’ and clarified that 

applicable Treasury provisions requires 

a tax filer on whose behalf advance 

payments are made to both file an 

income tax return, and as a part of that 

return, to reconcile the advance 

payments made. 

We have combined and restructured 

paragraphs (g) and (h) of the proposed 

rule into paragraphs (g)(1) and (g)(2) of 

the final rule. In paragraph (g)(2)(i) we 

have added a provision to implement 

section 1402(b) of the Affordable Care 

Act, which provides a special rule for 

non-citizens who are lawfully present; 

this revision clarifies that individuals 

who are expected to have a household 

income of less than 100 percent of the 

FPL for the benefit year for which 

coverage is requested and who are also 

eligible for advance payments of the 

premium tax credit under paragraph 

(f)(2) are eligible for cost-sharing 

reductions. 

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In paragraph (g)(3), we have added 

language implementing section 1402 of 

the Affordable Care Act, which provides 

cost-sharing reductions at a policy level, 

in situations where multiple tax 

households are covered by a single 

policy. In this paragraph, we specify a 

hierarchy of available cost-sharing 

provisions, and explain that when 

multiple tax households are covered on 

a single policy, the Exchange will apply 

only the first category of cost-sharing 

reductions listed in this paragraph. The 

categories are listed such that the lowest 

level of cost-sharing reductions will be 

provided to the combined households. 

We note that the tax households are 

always free to purchase separate 

policies, and in doing so, receive the 

benefit of all cost-sharing provisions for 

which they are eligible. 

Lastly, in paragraph (g)(4) we added 

language to clarify that household 

income for the purposes of eligibility for 

cost-sharing reductions is defined in 

accordance with section 36B(d)(2) of the 

Code, which is the same definition used 

for advance payments of the premium 

tax credit. We also clarified that the 

time period for measuring income for 

cost-sharing reductions is the same as 

for advance payments of the premium 

tax credit. 

We also made technical changes to 

the final rule. In § 155.305(c), we 

changed the reference to 42 CFR 

435.1200(c)(1) to 42 CFR 435.1200(b)(2), 

and throughout the section, as in the 

rest of the subpart, we replaced 

language regarding application filers 

providing attestations with references to 

applicants providing attestations, since 

the language in § 155.300(c) provides 

overarching clarification that 

attestations for applicants can be 

provided by application filers. 

d. Eligibility Determination Process 

(§ 155.310) 

Based on comments and feedback to 

the proposed rule, we are revising the 

rule to include paragraph (e) of this 

section as an interim final provision, 

and we are seeking comments on it. 

In § 155.310, we proposed the process 

by which the Exchange will determine 

an individual’s eligibility for enrollment 

in a QHP through the Exchange and for 

insurance affordability programs. 

Specifically, we proposed that the 

Exchange must accept applications from 

individuals in the form and manner 

described in § 155.405, and included 

standards around the collection of 

information from non-applicants. We 

also proposed that the Exchange permit 

an individual to decline an eligibility 

determination for insurance 

affordability programs. In addition, we 

proposed that the Exchange accept an 

application and make an eligibility 

determination for an applicant seeking 

an eligibility determination at any point 

in time during a benefit year. After the 

Exchange has collected and verified all 

necessary data, we proposed that the 

Exchange conduct an eligibility 

determination in accordance with the 

standards described in § 155.305 of this 

part. 

We also proposed that the Exchange 

allow an applicant who is determined 

eligible for advance payments of the 

premium tax credit to accept less than 

the expected annual amount of advance 

payments authorized. We clarified that 

the Exchange may provide advance 

payments on behalf of a tax filer only if 

the tax filer first attests that he or she 

will meet the tax-related provisions 

discussed in the definition of tax filer, 

including that he or she will claim a 

personal exemption deduction on his or 

her tax return for the applicants 

identified as members of his or her tax 

family. 

We also proposed that if the Exchange 

determines an applicant is eligible for 

Medicaid or CHIP, the Exchange will 

notify the State Medicaid or CHIP 

agency and transmit relevant 

information, including information from 

the application and the results of 

verifications, to the relevant agency 

promptly and without undue delay. We 

also proposed that effective dates for 

enrollment in a QHP through the 

Exchange, advance payments of the 

premium tax credit and cost-sharing 

reductions be implemented in 

accordance with the dates specified in 

§ 155.410(c) and (f) and § 155.420(b). 

We proposed that the Exchange 

provide an applicant with a timely, 

written notice of his or her eligibility 

determination, including the applicant’s 

eligibility for insurance affordability 

programs, as appropriate. We also 

proposed that when the Exchange 

determines an applicant is eligible to 

receive advance payments of the 

premium tax credit or cost-sharing 

reductions based, in part, on a finding 

that the applicant’s employer does not 

provide minimum essential coverage, 

provides coverage that is not affordable, 

or provides coverage that does not meet 

the minimum value standard, the 

Exchange must notify the employer and 

identify the employee. 

Finally, we proposed rules regarding 

the duration of an eligibility 

determination for an applicant who is 

determined eligible for enrollment in a 

QHP but does not select a QHP within 

his or her enrollment period in 

accordance with subpart E of this part. 

We solicited comments on whether a 

new determination should be conducted 

after a specific period of time has passed 

and whether the application process 

should begin anew in some or all 

situations. 

Comment: We received a few 

comments recommending the adoption 

of a timeliness standard within which 

the Exchange would need to complete 

an eligibility determination. Most of 

these commenters recommended 

requiring that the Exchange adhere to 

the Medicaid timeliness standard as 

outlined in 42 CFR 435.911(a)(2), which 

provides that the Medicaid agency must 

establish a standard for determining an 

individual’s eligibility and informing 

the individual of his or her eligibility 

determination that does not exceed 45 

days. 

Response: We recognize that there is 

a need for a timeliness standard for 

Exchange eligibility determinations. We 

add paragraph (e) which states that the 

Exchange must conduct an eligibility 

determination promptly and without 

undue delay. We also include that the 

Exchange must assess the timeliness of 

eligibility determinations based on the 

period from the date of application or 

transfer from an agency administering 

an insurance affordability program to 

the date the Exchange notifies the 

applicant of its decision or the date the 

Exchange transfers the application to 

another agency administering an 

insurance affordability program, when 

applicable. We intend to further 

interpret this timeliness standard in 

future guidance in coordination with 

standards established for the Medicaid 

and CHIP programs. 

We note that we think it is reasonable 

that the majority of eligibility 

determinations will be completed in a 

very short period of time and encourage 

the Exchange to continuously monitor 

and identify ways to shorten the time it 

takes to process an application and 

notify an applicant of his or her 

eligibility determination. We plan to 

work closely with States to establish a 

more detailed understanding of the 

timing needed for an eligibility 

determination as well as how the length 

of time needed can be reduced, and will 

provide future guidance on timeliness 

standards. 

Comment: We received a substantial 

number of comments in support of our 

proposed policy, as described in 

§ 155.310(a)(2), that the Exchange may 

not require an individual who is not 

seeking coverage for himself or herself 

to provide a SSN except as provided in 

proposed § 155.305(f)(6) (when he or 

she is the tax filer and the application 

filer attests that the tax filer has a SSN 

and has filed a tax return for the year 

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for which the tax data would be utilized 

for verification of household and family 

size). While the majority of commenters 

supported the policy on the collection 

of SSNs, as proposed in § 155.310(a)(2) 

and § 155.305(f)(6), a few commenters 

suggested adding language to reinforce 

the applicability of guidance on the 

collection of SSNs issued on September 

21, 2000 by CMS (then HCFA), the 

Administration of Children and 

Families, and the Food and Nutrition 

Service (the ‘Tri-Agency guidance’); 

others asked that we cross-reference the 

companion provision in the Medicaid 

proposed regulation (42 CFR 

435.907(e)(1)). 

Response: First, in new 

§ 155.310(a)(3)(i), we have clarified that 

the Exchange must collect a SSN from 

an applicant who has a SSN. We have 

also moved the proposed provision in 

§ 155.310(a)(2) to § 155.310(a)(3)(ii). We 

clarify that this provision only provides 

that the Exchange must collect SSNs 

from a non-applicant if he or she is the 

tax filer, has a SSN, and has filed a tax 

return for the year for which tax data 

would be utilized. We believe this 

provision is necessary given the 

standards for determining eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions, as 

described in sections 1402(f)(3), 

1411(b)(3) and 1412(b) of the Affordable 

Care Act, which provide that the most 

recent tax data available be the basis for 

determining eligibility for these benefits 

to the extent such tax data is available. 

In addition, we note that section 

36B(d)(2)(A)(ii)(II) of the Code specifies 

that household income for purposes of 

premium tax credits includes the MAGI 

of any individuals who have a filing 

requirement. As previously noted, a 

SSN must be used to obtain tax data 

from the IRS, and the IRS will not 

provide the tax data of a dependent who 

had a filing requirement without the 

dependent’s SSN. As noted above, while 

the Exchange will require an individual 

who is seeking coverage for himself or 

herself who has a SSN to provide it, the 

Exchange will only require an 

individual who is not seeking coverage 

for himself or herself to provide a SSN 

if he or she is a tax filer who meets the 

standard described in paragraph (f)(6). 

That is, in the limited number of cases 

in which a dependent is not seeking 

coverage for himself or herself, the 

Exchange will not require such a 

dependent to provide his or her SSN, 

although the dependent may provide it 

on a voluntary basis. However, we 

believe that § 155.305(f)(6), as proposed, 

is permissible under section 1412, given 

that a) whether a dependent has a filing 

requirement may change frequently, 

resulting in a change in circumstances 

that allows the Exchange to use an 

alternate verification process; and b) we 

believe that it will be challenging for an 

applicant to determine whether a 

dependent was or will be required to 

file (versus a voluntary filing). Further, 

we do not believe that it is appropriate 

to add a provision to require the 

Exchange to collect the SSN for every 

dependent who is not seeking coverage 

for himself or herself, regardless of 

whether he or she had a filing 

requirement, because this would go 

beyond what is needed to obtain tax 

data for those who had a requirement to 

file. As such, we maintain this provision 

in the final rule. To the extent that a 

dependent who is not seeking coverage 

for himself or herself has income that 

needs to be considered for purposes of 

determining eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions, the Exchange 

will verify it through an alternate 

verification process. 

We believe that these provisions also 

comply with the statutory standards 

contained in section 1411(g)(1) of the 

Affordable Care Act, which specifies 

that the Exchange must not require an 

applicant to provide information 

beyond what is necessary to support the 

eligibility and enrollment process. 

Given the statutory standards, we 

believe these are the appropriate 

application of the Tri-Agency guidance. 

We intend to continue to review these 

issues in the context of all insurance 

affordability programs and to develop a 

single, streamlined application that 

accommodates these policy and 

eligibility differences. 

In addition, we have added 

§ 155.315(b), which clarifies that in 

accordance with section 1411 of the 

Affordable Care Act, the Exchange will 

transmit SSNs to HHS for validation 

with SSA. This is separate from the 

provision regarding citizenship 

verification, and only serves to ensure 

that SSNs provided to the Exchange can 

be used for subsequent transactions, 

including for verification of family size 

and household income with IRS. We 

clarify that in accordance with section 

1411(e)(3) of the Affordable Care Act, 

which governs inconsistencies regarding 

SSNs, to the extent that the Exchange is 

unable to validate a SSN, the Exchange 

will follow the inconsistency 

procedures specified in § 155.315(f). 

Comment: We received a number of 

comments in support of our proposed 

policy to allow applicants to opt out of 

an eligibility determination for 

insurance affordability programs but to 

not allow applicants to choose among a 

subset of insurance affordability 

programs in proposed § 155.310(b). 

Only one commenter did not support 

the provision to allow individuals to opt 

out of screening for insurance 

affordability programs, citing that it is 

more important to provide a uniform 

eligibility determination for all 

applicants to increase the likelihood 

that individuals have access to 

affordable coverage options. One 

commenter also suggested that the final 

rule provide certain exceptions to the 

provision barring individuals from 

selecting among insurance affordability 

programs. 

Response: We believe it is important 

to preserve the option for an applicant 

to bypass the examination of his or her 

household income and other 

information that may result in a 

lengthier eligibility process, and allow 

him or her to enroll directly in a QHP 

without financial assistance if he or she 

so chooses. Therefore, in the final rule, 

we are maintaining the provision in 

§ 155.310(b) with some clarification; the 

Exchange must permit an applicant to 

request only an eligibility determination 

for enrollment in a QHP through the 

Exchange, but that the Exchange may 

not permit an applicant to request an 

eligibility determination for less than all 

insurance affordability programs. We 

expect that an Exchange could 

implement this provision by allowing 

an applicant to opt-out of an eligibility 

determination for all insurance 

affordability programs. 

We also maintain that an applicant 

may not choose between insurance 

affordability programs since section 

36B(c)(2)(B) of the Code specifies that a 

tax filer is ineligible for advance 

payments of the premium tax credit for 

any applicant who is eligible for other 

minimum essential coverage. 

Comment: A number of commenters, 

particularly consumer groups, noted 

support for the provision in proposed 

§ 155.310(d)(2), which would allow an 

enrollee to accept less than the full 

amount of advance payments of the 

premium tax credit for which he or she 

is determined eligible; however, the 

majority of these commenters 

recommended that HHS complement 

this provision with a standard that the 

Exchange must provide detailed 

consumer education and tools regarding 

the premium tax credit and 

reconciliation. We also received a 

number of comments which raised 

concerns that individuals may not fully 

understand the responsibilities 

associated with receiving advance 

payments of the premium tax credit; 

such commenters recommended that 

HHS provide more detail concerning 

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what information will be provided to 

consumers about reconciliation. 

Response: We amended the final rule 

in § 155.310(d)(2)(ii) to state that the 

Exchange may authorize advance 

payments of the premium tax credit on 

behalf of a tax filer only if the Exchange 

obtains certain attestations regarding 

advance payments of the premium tax 

credit from a tax filer. We intend to 

provide further guidance regarding the 

additional attestations that may be 

asked of individuals, which may 

include an attestation from a tax filer 

acknowledging that he or she 

understands the potential impact of 

reconciliation. 

Comment: We received a number of 

comments regarding the standards for 

Exchanges to notify the State Medicaid 

or CHIP agency upon determining an 

applicant eligible for Medicaid or CHIP 

and transmit relevant information 

promptly and without undue delay 

described in proposed § 155.310(d)(3). 

Commenters recommended that HHS 

provide a timeliness standard that is 

more specific than ‘‘promptly and 

without undue delay,’’ and suggested 

adding language to provide the 

Exchange must transmit the relevant 

information ‘‘within no more than 24 

hours.’’ 

A few commenters also recommended 

aligning with Medicaid language to 

clarify that ‘‘relevant information’’ 

transmitted to Medicaid or CHIP 

agencies include ‘‘the electronic account 

containing the finding of Medicaid or 

CHIP eligibility, all information 

provided on the application, and any 

information obtained or verified by the 

Exchange in making such a finding.’’ 

Response: We considered the 

recommendation to adopt a specific 

time standard for the transmittal of 

information between the Exchange and 

State Medicaid or CHIP agencies; 

however, we believe that the timeliness 

standard in the regulation text at 

paragraph (e) provides the necessary 

flexibility to accommodate 

technological advances. We anticipate 

that we will interpret and clarify this 

standard in guidance. Furthermore, this 

standard is aligned with the Medicaid 

standard described in 42 CFR 

435.911(c)(1); CMS also plans to issue 

guidance to clarify this standard. 

We also considered comments asking 

HHS to specify the meaning of ‘‘relevant 

information.’’ We recognize that 

clarification is necessary, and in the 

final rule, replace the phrase ‘‘relevant 

information’’ in § 155.310(d)(3), with 

‘‘all information necessary to effectuate 

coverage in Medicaid or CHIP.’’ 

Although this is not the identical 

language used in Medicaid regulations, 

we believe it is the appropriate standard 

to adequately address the concern raised 

by the commenter. 

Comment: We received a variety of 

comments related to the notification of 

eligibility determination, described in 

proposed § 155.310(g). Several 

commenters asked that we amend the 

language in this provision to provide 

that such a notice must be ‘‘written,’’ as 

we specified in the proposed rule 

governing general notice standards in 

§ 155.230(a). One commenter suggested 

adding language to allow applicants or 

enrollees to choose to have notices sent 

to other parties, such as application 

assisters or authorized representatives; 

another recommended adding a notice 

to individuals when an application is 

incomplete. 

Response: Because paragraph 

§ 155.230(a) of the proposed rule 

specifies that notices issued by the 

Exchange must be ‘‘written,’’ this 

general notice standard would apply to 

the notification of eligibility 

determination, which we clarify in 

§ 155.310(g) in this final rule. We will 

further address notices and the roles of 

application assisters and authorized 

representatives in future rulemaking 

and guidance. 

Comment: We received a large 

number of comments on proposed 

§ 155.310(g) regarding the content and 

scope of employer notices of an 

employee’s eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions. These 

commenters suggested that HHS limit 

employer notices to a subset of 

employers to provide greater privacy 

protections for consumers. Most 

commenters stated that the employer 

should be notified of an employee’s 

receipt of advanced payment of the 

premium tax credit or cost-sharing 

reductions only if this determination 

might trigger an employer responsibility 

payment. Some commenters asserted 

that the appropriate trigger for an 

employer to receive notification is if the 

employer has 50 or more full time 

equivalent employees and the employer 

has full-time employees that receive 

advanced payment of the premium tax 

credit or cost-sharing reductions 

through the Exchange. One commenter 

said that only employers that offer 

unaffordable coverage should receive a 

notification and employers that offer no 

coverage should not receive any 

employee information. 

Response: While we recognize that 

the employer responsibility provisions 

of section 4980H of the Code apply only 

to employers with 50 or more full-time 

equivalent employees, section 

1411(e)(4)(B)(iii) of the Affordable Care 

Act imposes the obligation to provide 

the notice regardless of the size of the 

employer. Therefore, we are not limiting 

the scope of the notice standard in this 

final rule to a subset of employers. We 

anticipate that HHS may provide 

additional guidance regarding how the 

content of the notice can be structured 

so as to minimize potential employer 

confusion associated with whether a 

determination will have implications 

under section 4980H of the Code. 

Further, we are aware that employer 

contact information may not always be 

available, because a person fails to 

provide it, or provides incorrect 

information, or that person changed 

employers, or a host of other reasons. 

We will work with Exchanges and 

employers on this to develop a solution 

for situations in which the Exchange 

does not have a seamless way to reach 

the correct employer for the purposes of 

delivering the notice. 

Comment: Other commenters raised 

additional privacy concerns regarding 

the content of notices sent to employers 

under proposed § 155.310(g). Several 

commenters suggested that the 

Exchange provide the employer with the 

minimum amount information 

necessary to evaluate liability for the 

employer responsibility payment. One 

commenter suggested that the Exchange 

should only transmit information 

necessary under law—the employee 

name and taxpayer identification 

number. This commenter stressed that 

the regulation should specify that the 

taxpayer identification number (TIN) 

should be used, and not the SSN, in 

accordance with section 1311(d)(4)(I)) of 

the Affordable Care Act. One 

commenter suggested that even the 

employee name should not be disclosed. 

Finally, a few commenters noted that 

HHS should be sensitive to the fact that 

some employees do not want their 

employers to know their household 

income. 

Response: For the purposes of the 

employer notice under section 

1411(e)(4)(B)(iii) of the Affordable Care 

Act, we believe that only the minimum 

necessary personally identifiable 

information should be released to an 

employer. The Affordable Care Act 

provides that the Exchange must notify 

an employer that his or her employee 

has been determined eligible for 

advance payments of the premium tax 

credit and that the employer may appeal 

such eligibility determination. The 

proposed rule provided only that the 

notice identify the employee. However, 

based on sections 1411(e)(4)(B)(iii), 

1411(e)(4)(C), and 1411(f)(2)(B) of the 

Affordable Care Act, our final regulation 

provides that if an enrollee is eligible for 

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a premium tax credit or cost-sharing 

reductions because that enrollee’s 

employer does not provide minimum 

essential coverage through an eligible 

employer-sponsored plan, or that the 

employer provides coverage but it is not 

affordable or does not meet minimum 

value, the Exchange must notify the 

employer, identifying the employee, 

relating the opportunity to appeal, 

indicating that the employee has been 

determined eligible for advance 

payments of the premium tax credit, 

and indicating that the employer may be 

liable for a shared responsibility 

payment under section 4980H of the 

Code if the employer has 50 or more 

full-time workers. We note that we do 

not expect the Exchange to relay to the 

employer the exact reason for which the 

applicant was determined eligible, or to 

provide any tax return information to 

the employer. Rather, the notice should 

indicate the list (above) of potential 

reasons for the determination. We have 

amended the final rule, redesignating 

proposed section (g) as section (h) and 

adding sections (h)(2) and (h)(3) to 

§ 155.310 to clarify these standards. 

The notice will not disclose an 

enrollee’s household income or any 

other taxpayer information, except the 

enrollee’s name or other personal 

identifier. We anticipate that additional 

guidance regarding the content of the 

notification will be released in the 

future. 

Comment: One commenter expressed 

concern about potential HIPAA 

violations that may occur if an applicant 

provides the wrong employer contact 

information, and an incorrect employer 

receives the notification, with respect to 

the notices sent in accordance with 

proposed § 155.310(g). 

Response: To the extent the Exchange 

is not a HIPAA covered entity or 

business associate, the Exchange would 

be subject only to the privacy and 

security standards of 155.260. If a State 

has determined that its Exchange is a 

HIPAA covered entity or business 

associate, to the extent the Exchange 

was merely acting on incorrect 

information provided to the Exchange 

by an applicant, there would be no 

HIPAA violation. In addition, we do not 

expect that the notice will result in a 

violation of applicable privacy and 

security standards in this section. We 

acknowledge that the notices outlined 

under this section will contain 

personally identifiable information, 

such as the name of enrollees. However, 

we think any inadvertent disclosure 

would be mitigated by the fact that only 

minimal information about the 

individual will be included in the 

employer notice; thus, we do not believe 

that this standard poses a substantial 

threat to individual privacy. In addition, 

we plan to disseminate guidance to 

Exchanges on practices designed to 

minimize the instances of individuals or 

entities other than the enrollee’s actual 

employer receiving the notice. 

Comment: A number of commenters 

asked that Exchanges inform employers 

that retaliation based on the notices sent 

in accordance with § 155.310(g) is 

prohibited and that evidence of 

retaliation could subject the employer to 

a penalty. 

Response: We note that section 1558 

of the Affordable Care Act, which 

amends the Fair Labor Standards Act 

and is within the jurisdiction of the 

Department of Labor, includes a 

prohibition on an employer discharging 

or discriminating against an employee 

because the employee has received a 

premium tax credit or cost-sharing 

reductions. Because of this statutory 

provision, we do not believe additional 

standards are necessary in this final 

rule. 

Comment: One commenter suggested 

that IRS, and not HHS, effectuate the 

notice described in § 155.310(h) because 

(1) IRS has information about employers 

subject to free rider assessments, and (2) 

IRS maintains a database of employer 

contacts for the transmission of 

sensitive personal information. Another 

commenter suggested that reporting to 

employers should be consolidated and 

centralized into a Federal process, with 

information provided on a monthly or 

quarterly basis. 

Response: Section 1411(e)(4)(B)(iii) 

provides that this notice must be 

provided to employers by Exchanges in 

connection with certain eligibility 

determinations. It is not within the 

discretion of the Secretary to shift 

responsibility for provision of this 

notice to the IRS. We do support 

reducing reporting burden by 

consolidating and streamlining 

reporting, if feasible. In addition, we 

plan to issue guidance to help 

Exchanges develop an operational 

strategy for reporting. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.310 of the proposed 

rule, with a few modifications. In 

paragraph (b), we clarified that the 

choice of an applicant is whether to 

allow the Exchange to determine his or 

her eligibility for insurance affordability 

programs. In paragraph (d)(2)(ii), we 

added language specifying that 

attestations from the tax filer will be 

attestations regarding advance payments 

of the premium tax credits. In paragraph 

(d)(3), we removed the reference to 

‘‘relevant’’ information and further 

clarified that the Exchange must 

transmit all information from the 

records of the Exchange promptly and 

without undue delay to such agency 

that is necessary for the State Medicaid 

or CHIP agency to provide the applicant 

with coverage. In paragraph (e), we 

adopted a provision which provides that 

the Exchange must conduct eligibility 

determinations promptly and without 

undue delay. 

In paragraph (f), we clarified in the 

header that the effective dates outlined 

are effective dates for eligibility, and not 

for coverage. Consistent with changes 

we discuss in § 155.420, we also added 

language in paragraphs (f)(1) and (f)(2) 

to differentiate between effective dates 

for initial eligibility determinations, 

which will be implemented in 

accordance with § 155.410(c) and (f) and 

§ 155.420(b), as applicable, and effective 

dates for redeterminations, which will 

be implemented in accordance with the 

dates specified in § 155.330(f) and 

155.335(i), as applicable. In paragraph 

(g), we added language to specify that 

the notice of eligibility determination 

must be written, consistent with other 

notice standards. We redesignated 

proposed paragraph (g) as new 

paragraph (h). In new paragraph (h), we 

added three additional standards, in 

accordance with section 1411(e)(4) of 

the Affordable Care Act, for the content 

of the notice to employers. In addition 

to identifying the employee, the notice 

must indicate that the employee has 

been determined eligible for advance 

payments of the premium tax credit; 

that, if the employer has 50 or more fulltime employees, the employer may be 

liable for the payment assessed under 

section 4980H of the Code; and that the 

employer has the right to appeal the 

determination. 

Also included in this final rule are 

several technical corrections from the 

proposed text. In paragraph (a)(1), we 

removed the reference to 45 CFR and 

changed the phrase to ‘‘specified in 

§ 155.405 of this chapter.’’ In paragraph 

(b), we added the words ‘‘insurance 

affordability’’ before ‘‘programs’’ as a 

clarification. 

e. Verification Process Related to 

Eligibility for Enrollment in a QHP 

(§ 155.315) 

Based on comments and feedback to 

the proposed rule, we are revising the 

rule to include paragraph (g) of this 

section as an interim final provision, 

and we are seeking comments on it. 

In § 155.315, we proposed the general 

standard that the Exchange must verify 

or obtain information to determine that 

an applicant is eligible for enrollment in 

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a QHP, unless a request for modification 

is granted in accordance with proposed 

paragraph (f) of this section. 

To verify whether an applicant for 

coverage through the Exchange is a 

citizen, national, or otherwise lawfully 

present individual in accordance with 

section 1312(f)(3) of the Affordable Care 

Act, we proposed to codify the role of 

the Secretary (through HHS) as an 

intermediary between the Exchange and 

other Federal officials, specifically the 

Social Security Administration and the 

Department of Homeland Security. In 

the case of an inconsistency related to 

citizenship, status as a national, or 

lawful presence, we proposed that the 

time period for the resolution is 90 days 

from the date on which the notice of 

inconsistency is received. We also 

clarified that the date on which the 

notice is received means 5 days after the 

date on the notice, unless the applicant 

shows that he or she did not receive the 

notice within the 5 day period. 

We also proposed that the Exchange 

verify an applicant’s residency by 

accepting an applicant’s attestation 

without further verification or following 

the procedures of the State Medicaid or 

CHIP agency, if such agency examines 

electronic data sources for all 

applicants. We also proposed that the 

Exchange may examine data sources 

regarding residency to the extent that 

information provided by an applicant 

regarding residency is not reasonably 

compatible with other information 

provided by the applicant or in the 

records of the Exchange. In addition, we 

proposed that a document that provides 

evidence of immigration status may not 

be used alone to determine State 

residency. We also proposed that the 

Exchange verify an applicant’s 

attestation that he or she is not 

incarcerated. We solicited comment as 

to what electronic data sources are 

available and should be authorized by 

HHS for Exchange purposes, including 

whether access to such data sources 

should be provided as a Federallymanaged service like citizenship and 

immigration status information from 

SSA and DHS. 

Further, we proposed that when an 

individual attests to information and 

such attestation is inconsistent with 

other data in the records of the 

Exchange, the Exchange must make a 

reasonable effort to identify and resolve 

the issues. If the Exchange is unable to 

resolve the inconsistencies, we 

proposed that the Exchange notify the 

applicant of the inconsistency. After 

providing this notice, we proposed that 

the Exchange provide 90 days from the 

date on which the notice is sent for the 

applicant to resolve the issues, either 

with the Exchange or with the agency or 

office that maintains the data source 

that is inconsistent with the attestation. 

We also proposed that the period during 

which an applicant may resolve the 

inconsistency may be extended by the 

Exchange if the applicant can provide 

evidence that a good faith effort has 

been made to obtain additional 

documentation. 

We further proposed that the 

Exchange allow an individual who is 

otherwise eligible for enrollment in a 

QHP, advance payments of the premium 

tax credit or cost-sharing reductions to 

receive such coverage and financial 

assistance during the resolution period, 

provided that the tax filer attests to the 

Exchange that he or she understands 

that any advance payments of the 

premium tax credit received during the 

resolution period are subject to 

reconciliation. We also proposed that if 

after the conclusion of the resolution 

period, the Exchange is unable to verify 

the applicant’s attestation, the Exchange 

must determine the applicant’s 

eligibility based on the information 

available from the data sources specified 

in this subpart and notify the applicant 

of such determination. We clarified that 

the Exchange must make effective this 

eligibility determination no earlier than 

10 days after and no later than 30 days 

after the date on which such notice is 

sent. 

Finally, we also proposed that HHS 

may approve an Exchange Blueprint to 

change the methods used to collect and 

verify information, within certain 

standards. We also proposed that the 

Exchange must not require an applicant 

to provide information beyond the 

minimum necessary to support 

eligibility and enrollment processes. 

Comment: We received a few 

comments asking that we establish 

standards for the collection, use and 

safeguarding of data used to verify 

applicant information, as described 

throughout proposed § 155.315. We 

received a few comments suggesting 

that we incorporate specific safeguards 

and protections for information used in 

the verification of citizenship and 

immigration status, proposed in 

§ 155.315(b). Commenters suggested 

including language stating that 

information related to the verification of 

citizenship and immigration status be 

used only for purpose of verifying 

eligibility for enrollment in a QHP and 

that pending such verification, coverage 

should not be delayed, denied, reduced 

or terminated. 

Response: We address the privacy and 

security of information and the specific 

standards and protocols for the 

transmission of data in § 155.260 and 

§ 155.270 of this final rule and note that 

these provisions apply to the 

transactions described throughout 

subpart D, including § 155.315. 

Language in § 155.260 provides that 

information must provided to or 

obtained by the Exchange for the 

purposes of determining eligibility for 

enrollment in a QHP, advance payments 

of the premium tax credit, and costsharing reductions, under sections 

1411(b) through (e) of the Affordable 

Care Act, or exemptions from the 

individual responsibility provisions in 

section 5000A of the Code, may only be 

used to carry out those minimum 

functions of the Exchange described in 

§ 155.200; we believe this language 

addresses these concerns and 

establishes appropriate safeguards. 

Regarding comments asking that 

coverage not be delayed, denied, 

reduced or terminated, pending 

verification of citizenship and 

immigration status, we addressed these 

concerns in § 155.315(f), which allows 

an applicant to enroll in coverage with 

financial assistance pending such 

verification. We also amend § 155.315(c) 

in order to be consistent throughout this 

subpart and clarify that an applicant 

and not an application filer receives the 

notice of inconsistency. 

Comment: A number of comments 

addressed the process for resolving 

inconsistencies between applicant 

information and data obtained by the 

Exchange, as proposed in § 155.315(e). 

Commenters requested that we provide 

details on the types of documentation 

that the Exchange may use to verify 

applicant information; specifically, 

commenters asked for details on 

documents that the Exchange will be 

permitted to use in verifying citizenship 

and immigration status. Other 

commenters asked that we clarify the 

ways in which individuals will be able 

to submit documentation to the 

Exchange when attempting to resolve 

such inconsistencies. Furthermore, in 

response to the Medicaid eligibility 

proposed rule, HHS received a number 

of comments requesting adoption of an 

exception for agencies administering 

insurance affordability programs to 

accept attestations alone from certain 

applicants, who are part of at-risk 

populations and who may not have 

access to necessary documentation to 

resolve inconsistencies. 

Response: While we acknowledge 

commenters’ requests for details 

regarding documentation used during 

the inconsistency process, we believe 

that this level of specificity is most 

appropriate for guidance. Therefore, we 

maintain that the applicant may 

‘‘present satisfactory evidence’’ in 

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§ 155.315(f)(2)(ii) of the final rule. We 

intend to issue future guidance with 

details on documents which may be 

used to support verification, in 

coordination with Medicaid and CHIP 

and in accordance with the statutory 

standard for the Exchange to follow the 

procedures specified in section 1902(ee) 

of the Act. 

We accept commenters’ suggestions 

that we specify the ways in which an 

applicant will be able to submit 

documentation to the Exchange; 

accordingly, we adopt language in the 

final rule at § 155.315(f)(2)(ii) that the 

Exchange must provide the applicant 

with the opportunity to present 

satisfactory documentary evidence via 

the channels available for the 

submission of an application, as 

described in § 155.405, except for by 

telephone. 

We also proposed a provision in 

§ 155.315(g) to 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 which 

documentation cannot be obtained, and 

to achieve consistency with the 

Medicaid program; examples of 

individuals for whom this provision 

may apply include homeless 

individuals, victims of domestic 

violence or natural disasters, and 

sporadic earners. We believe that adding 

this provision is permissible within the 

Secretary’s statutory authority to change 

verification methods as provided under 

sections 1411(c)(4) and 1321(a)(1) of the 

Affordable Care Act. We note also that 

if at the conclusion of the 90 day period, 

the Exchange is unable to verify the 

applicant’s attestation and the data from 

the data sources specified in § 155.315 

are unavailable, the Exchange must 

notify that applicant that the Exchange 

finds the applicant ineligible for the 

eligibility standard in question. In 

§ 155.320(c)(3)(vi)(F), we also describe 

the procedures for the Exchange to 

discontinue advance payments and costsharing reductions in the event that the 

applicant’s attestation is not verified by 

the conclusion of the 90 day period. 

We also make several changes 

throughout verification provisions of the 

final rule at § 155.315 and § 155.320 

where information is found by the 

Exchange to be not reasonably 

compatible with an applicant’s 

attestation and where the inconsistency 

process is triggered; we change the 

language in a number of places to state 

that the Exchange ‘‘must,’’ rather than 

‘‘may,’’ examine electronic data sources 

or supporting documentation, when 

applicable. The proposed rule did not 

consistently require that the Exchange 

examine other data sources or 

documentary evidence for all 

verification processes. 

Comment: We received several 

comments regarding our use throughout 

§ 155.315 of the term ‘‘reasonably 

compatible.’’ Many commenters asked 

that we define the term and provided a 

number of suggested definitions; one 

common approach to clarifying the term 

was to provide the Exchange must only 

consider material differences between 

an attestation and available electronic 

data as not reasonably compatible. 

Response: We believe that the 

common approach suggested by 

commenters is a sensible one, and in 

§ 155.300(d) of this final rule, provide 

that the Exchange must consider 

information to be reasonably compatible 

with an applicant’s attestation if the 

difference or discrepancy does not have 

an impact on the eligibility of the 

applicant, including the amount of 

advance payments of the premium tax 

credit or category of cost-sharing 

reductions. This provision would 

provide, for example, that if an 

individual attested to one address 

within an Exchange service area, but 

Exchange-obtained data demonstrated a 

different address within the same 

Exchange service area, he or she must be 

considered to meet the residency 

eligibility standard. We note that while 

we provide this clarification in the final 

rule, Exchanges may still exercise 

flexibility in defining what is 

considered reasonably compatible. We 

expect that definitions will vary 

depending on the types of information 

subject to verification, and that States 

will use this flexibility to enhance the 

eligibility process. We intend to provide 

future guidance on this issue. We also 

clarify that to the extent that income 

information provided by an application 

filer and income information obtained 

through electronic data sources both 

indicate that the applicant is eligible for 

Medicaid or CHIP, such information 

must be considered reasonably 

compatible; this provision aligns with 

the provision of the Medicaid eligibility 

final rule at 42 CFR 435.952(c)(1). We 

also clarify that this rule does not mean 

that an applicant’s attestation regarding 

annual household income must be 

identical to that of the tax return 

information in order to be considered 

reasonably compatible. The standard for 

household income is discussed in more 

detail in § 155.320. 

Comment: We received a few 

comments which asked that we 

explicitly state that an applicant has the 

ability to access and amend the data 

used to determine his or her eligibility. 

Response: Section 155.330 of the 

proposed rule allowed an enrollee to 

report changes affecting his or her 

eligibility to the Exchange, which must 

then be verified by the Exchange. We 

maintain this provision in this final 

rule. We anticipate that the Exchange 

will make the information used in an 

eligibility determination available to the 

applicant and enrollee, including 

through a web-based self-service tool 

with appropriate safeguards. In 

addition, we direct the commenter to 

the final rule at § 155.260(b)(3)(i), which 

provides the Exchange must incorporate 

a principle of individual access to 

personally identifiable information as 

part of the Exchange’s privacy and 

security policies and procedures. 

Comment: We received comments 

asking that we specify the content of the 

eligibility determination notice 

provided to applicants, which is 

described in proposed § 155.315(e)(2)(i). 

Commenters also suggested certain 

content standards for such a notice, 

including clear procedures for the 

inconsistency process. 

Response: As noted in the notice of 

proposed rulemaking, we intend to 

provide content and timing standards 

for notices in future rulemaking and 

guidance. We have made a minor edit to 

the final rule at § 155.315(f)(2)(i) to 

clarify that this notice is sent to the 

applicant by the Exchange. 

Comment: We received a number of 

comments regarding the process to 

resolve inconsistencies, as described in 

proposed § 155.315(b)(3) and (e). A few 

comments asked that the inconsistency 

periods described in proposed 

§ 155.315(b)(3) and (e) begin when the 

application is submitted, not when the 

notice of inconsistency is sent or 

received by the applicant. Other 

commenters asked that we align 

inconsistency periods for the Exchange 

with the inconsistency period described 

in section 1902(ee) of the Act. 

Response: Section 1411(e)(3) of the 

Affordable Care Act states that for 

inconsistencies related to citizenship 

and immigration status, the Exchange 

must follow procedures described in 

section 1902(ee) of the Act. Section 

1902(ee) provides that the applicant 

must be given a period of 90 days from 

the date of the receipt of the notice to 

present satisfactory documentation. 

Because such a receipt date is difficult 

to pinpoint, we have adopted language 

specifying that the date on which the 

notice is received is 5 days from the 

date the notice is sent, unless the 

applicant demonstrates that he or she 

did not receive the notice within the 5 

day period. This standard is also 

utilized by the SSA. Alternatively, for 

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inconsistencies not related to 

citizenship and immigration status, 

section 1411(e)(4)(A)(ii)(II) of the 

Affordable Care Act provides that the 90 

day period must begin on the date on 

which the notice is sent to the 

applicant. Due to these statutory 

standards, we are unable to change the 

point at which the inconsistency period 

is triggered, and unable to further align 

the provision in proposed § 155.315(e) 

with the process described in section 

1902(ee) of the Act. Therefore, we 

maintain the provisions in 

§ 155.315(c)(3) and (f) in the final rule. 

We neglected to include the statutory 

language found in section 

1411(e)(4)(A)(i) of the Affordable Care 

Act which provides that the Exchange 

must address ‘‘typographical or clerical 

errors’’ in order to address causes of 

inconsistencies, prior to accepting 

documentation or other evidence from 

the applicant; we adopt this language in 

the final rule at § 155.315(f)(1). 

Comment: We received a number of 

comments which expressed concern 

over the potential for increased liability 

for QHP issuers as applicants are 

provided coverage during the 

inconsistency period described in 

proposed § 155.315(e). We also received 

comments suggesting that issuers 

should not be required to enroll, nor 

continue enrollment of, individuals for 

whom the Exchange is still verifying 

eligibility during the resolution period. 

Response: The standard to determine 

eligibility based on the information on 

the application (that is, an individual’s 

attestation) during the inconsistency 

period is specified in section 1411(e)(3) 

and (e)(4) of the Affordable Care Act. 

We note that this final rule does not 

prohibit QHPs from requiring premium 

payment prior to providing coverage. 

We also expect that the Exchange and 

an applicant’s selected QHP issuer will 

provide notice to an applicant to ensure 

that the enrollee is aware of liability for 

premium payment. 

Comment: One commenter suggested 

that the Exchange be given more 

flexibility to decrease the length of the 

inconsistency period. 

Response: The period of time during 

which an applicant is permitted to 

provide documentation in order to 

resolve an inconsistency is specified in 

sections 1411(e)(3) and 

1411(e)(4)(A)(ii)(II) of the Affordable 

Care Act; therefore, we maintain 

provisions § 155.315(c)(3) and (f)(2)(ii) 

the final rule. 

Comment: A few commenters asked 

that we explicitly allow certain 

application assisters, Navigators, and 

application filers to help applicants 

navigate the inconsistency process, 

described in proposed § 155.315(e). 

Response: As described in § 155.210, 

part of the duties of a Navigator will be 

to educate the consumer, facilitate 

enrollment, and assist with any part of 

the application process. We also 

anticipate that agents and brokers will 

provide such assistance. In addition, we 

expect that application assisters who are 

not Navigators, agents, or brokers will 

provide support for consumers during 

the application process, and we 

anticipate providing additional 

guidance regarding this role, including 

on appropriate privacy and security 

protections. 

Comment: We received a number of 

comments on proposed § 155.315(e)(3), 

in which we proposed that the 

Exchange may extend the inconsistency 

period if the applicant demonstrates a 

good faith effort to obtain the 

documentation. Commenters asked that 

the Exchange must provide such an 

extension. 

Response: We adopted the provision 

regarding the extension of the 

inconsistency period in order to align 

with Medicaid guidance, which 

provides States the flexibility to allow a 

good faith extension. Therefore, we are 

maintaining the proposed text in the 

final rule. 

Comment: We received a comment 

asking that we include timeliness 

standards for processing 

inconsistencies. 

Response: We adopt a timeliness 

standard of ‘‘promptly and without 

undue delay’’ for eligibility 

determinations made by the Exchange 

in the final rule at § 155.310(e), but 

intend to provide future guidance about 

best practices for an Exchange to make 

the best use of the 90 day inconsistency 

period. 

Comment: We received a number of 

comments on proposed § 155.315(g), in 

which we proposed that the Exchange 

may not require the applicant to provide 

information beyond the minimum 

necessary to support the eligibility and 

enrollment process. Commenters asked 

us to define ‘‘minimum necessary’’; 

others suggested that we include 

language describing how HHS will 

conduct oversight to ensure compliance 

with this provision. 

Response: We acknowledge the 

importance of oversight to ensure 

compliance with the provision 

described in § 155.315(g) of the 

proposed rule, which is finalized in 

§ 155.315(i), and intend to provide 

additional detail regarding oversight in 

future rulemaking and guidance. HHS 

will also consider this in the context of 

evaluating alternate applications 

developed by States, as described in 

§ 155.405(b), and will continue to work 

with States on the issue of information 

collection. 

Comment: We received a number of 

comments related to the proposed 

process for verification of citizenship 

and immigration status, described in 

proposed § 155.315(b). A few 

commenters found the process unclear, 

and asked for more information 

regarding the verification process for 

other individuals listed on the 

application, such as spouses and tax 

dependents. 

We also received a number of 

comments related to the services that 

will be provided by a Federally– 

managed data services hub to support 

verification of citizenship and 

immigration status. Several comments 

recommended that we utilize the DHS 

Systematic Alien Verification for 

Entitlements (SAVE) system to verify 

immigration status. Comments on the 

proposed rule asked for information on 

the impact of services available through 

the Federally-managed data services 

hub on existing State agency 

connections with Federal data sources 

used for verification of citizenship and 

immigration status. Commenters 

recommended that Exchanges not use 

‘‘E-verify’’ to verify immigration status 

and others asked that we provide details 

on the format of data provided to the 

State agency or Exchange. We also 

received comments asking whether it 

would be legally permissible for the 

Exchange to transmit information to 

DHS, via HHS, when an individual has 

attested to being a citizen. Another 

commenter asked how the Exchange 

will know whether an individual has 

documentation at the point of 

application that can be verified through 

DHS, as described in the provision 

proposed at § 155.315(b)(2). 

Response: Section 1312(f)(3) of the 

Affordable Care Act, as codified in 

§ 155.305(a)(1) in this final rule, states 

that an individual may only enroll in a 

QHP through the Exchange if he or she 

is a citizen, national, or a non-citizen 

who is lawfully present, and is 

reasonably expected to be so for the 

entire period for which enrollment is 

sought. Because citizenship, status as a 

national, or lawful presence is an 

eligibility standard for any applicant 

seeking coverage through the Exchange 

for him or herself, the verification 

process described in § 155.315(c) 

applies to each applicant, regardless of 

whether he or she is a tax filer or 

dependent. 

While we do not specify a level of 

operational detail in the final rule that 

includes the specific services or data 

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formats which will be used in 

supporting verification, we are working 

closely with our Federal partners to 

develop and provide details on the 

verification services provided by the 

Federally-managed data services hub; 

we expect to provide such details in 

guidance. However, we believe that the 

final rule supports the use of SAVE. We 

also note that we do not intend to use 

the E-verify service, as it is designed for 

employers to check the work 

authorization of employees, rather than 

to verify eligibility for benefits. 

Regarding existing State connections 

used in verification, we anticipate that 

Medicaid agencies, CHIP agencies, and 

Exchanges will leverage the Federallymanaged data services hub for 

connections to SSA and DHS to support 

verification of citizenship and 

immigration status. 

With regard to the Exchange 

transmitting information to DHS via 

HHS, when an individual has attested to 

being a citizen, section 1411(c)(2) of the 

Affordable Care Act specifies that in 

such cases when an individual who 

attests that he or she is a citizen but for 

whom citizenship cannot be verified 

through SSA, the Secretary of HHS shall 

submit to DHS the applicant’s 

information and other identifying 

information for verification of 

immigration status. Based on this 

statutory standard, we maintain 

§ 155.315(b)(2) in the final rule as 

§ 155.315(c)(2). 

Lastly, we intend to work with DHS 

to provide Exchanges with the 

information needed to identify whether 

an applicant can likely be matched 

through DHS. DHS has existing 

verification relationships with many 

State Medicaid and CHIP agencies, as 

well as other Federal, State, and Local 

government entities, which means that 

many States will already be familiar 

with this information. 

Comment: We received several 

comments recommending the inclusion 

of language in proposed § 155.315(b) 

describing the verification process as to 

whether an applicant is ‘‘reasonably 

expected’’ to be lawfully present for the 

entire period for which enrollment is 

sought. The ‘‘reasonably expected’’ 

standard is part of the standard for 

determining whether an applicant is a 

citizen, national or non-citizen who is 

lawfully present, which is described in 

§ 155.305(a)(1). Commenters’ specific 

recommendations for such a verification 

process varied. One requested that as 

long as an applicant’s residency is 

verified, that he or she be considered 

reasonably expected to be lawfully 

present for the entire period for which 

enrollment is sought. Others suggested 

that self-attestation alone be used in 

verification. 

Response: In the final rule, we 

address our interpretation of the term 

‘‘reasonably expected’’ in § 155.305. We 

intend to provide additional 

interpretation of this standard, 

including how it applies in specific 

scenarios, in future guidance. 

Comment: We received a few 

comments asking that we specify in 

regulation that an applicant is permitted 

to provide his or her A-number for 

verification of immigration status 

through the records of DHS. 

Response: In § 155.315(b), we 

proposed that for purposes of verifying 

citizenship and immigration status 

through the records of DHS, the 

Exchange must transmit information 

from the applicant’s documentation and 

other identifying information to HHS. 

We intend the phrase ‘‘information from 

the applicant’s documentation and other 

identifying information’’ to encompass 

information such as A-numbers; 

therefore, we maintain the provision in 

the final rule. This approach 

incorporates other types of identifying 

information (for example, I–94 numbers) 

that are used by DHS, as well as 

preserves the intent and applicable of 

this regulation if DHS changes its 

process in the future. 

Comment: We received a number of 

comments regarding the connections 

between the Exchange and Federal data 

sources needed to support verification 

of applicant information. Comments 

expressed concern that each Exchange 

would need to develop separate data 

sharing arrangements and interfaces 

with Federal agencies maintaining 

information for use in verification. 

Comments responding to the proposed 

rule, which identified HHS as a conduit 

for information transmitted between the 

Exchange and Federal agencies, asked 

that we specifically refer to the 

Federally-managed data services hub, or 

electronic service, throughout § 155.315, 

rather than refer to HHS as the entity 

through which data will be transmitted. 

Response: Acknowledging comments 

to the RFC and specific direction from 

section 1411(c) of the Affordable Care 

Act, we proposed that HHS would be 

the entity through which information 

would be transmitted to and from 

Exchanges and Federal data sources to 

support the verification process. In the 

final rule, we maintain HHS’ role in 

supporting verification. However, in 

order to remain flexible to the 

technology used to transmit such data, 

we do not specifically mention in the 

final rule the ‘‘electronic service’’ or 

‘‘data services hub’’. Instead, the final 

rule focuses on HHS’ role as the entity 

which will facilitate the transfer of 

information, rather than how such 

information will be transferred. We 

anticipate that as technological 

advances are made, there may be 

changes in the procedures used by HHS 

to receive information from the 

Exchange and to communicate with 

other Federal agencies involved in the 

verification process. 

Comment: We received a number of 

comments on the process for 

verification of residency, proposed in 

§ 155.315(c). A significant number of 

commenters asked that self-attestation 

of residency be accepted without further 

verification. A smaller number of 

commenters recommended always 

allowing the Exchange to verify 

residency through electronic data 

sources, not only when the State 

Medicaid or CHIP agency operating in 

the State of the Exchange opts to 

examine such data sources. 

Response: We are redesignating 

proposed § 155.315(c) as § 155.315(d), 

and amending it to state that an 

Exchange may accept an attestation of 

residency from an applicant or examine 

electronic data sources which have been 

approved by HHS. This flexibility 

would allow an Exchange, should it 

choose, to align with the verification 

procedures of the State Medicaid or 

CHIP agency. Such alignment may 

facilitate integration across insurance 

affordability programs and result in a 

more streamlined process. We amend 

§ 155.315(d)(3), as well as equivalent 

provisions throughout this subpart, to 

specify that if the Exchange finds that 

information provided by an applicant is 

not reasonably compatible, it must 

examine any information available 

through other electronic data sources. 

The proposed rule was inconsistent, and 

used, ‘‘may,’’ instead of, ‘‘must,’’ in this 

paragraph and in several other areas. 

This change was made to create 

consistency throughout the subpart, and 

because the rationale for the reasonably 

compatible concept, as described in the 

proposed rule, is that it is a threshold 

for when additional verification (for 

example, examining other electronic 

data sources) is necessary to complete 

the verification process. For example, in 

the event the Exchange accepts selfattestation without further verification, 

in accordance with paragraph (d)(1), 

and such attestation is found to be not 

reasonably compatible with other 

information provided by the individual 

or in the records of the Exchange, the 

Exchange would continue the 

verification process by examining 

available electronic data sources in 

order to verify the attestation. If the 

Exchange is still unable to complete the 

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verification after examining information 

in electronic data sources, the Exchange 

would then follow procedures to resolve 

the inconsistency, in accordance with 

§ 155.315(f). As discussed in the 

proposed rule, examining data sources, 

when available, prior to moving through 

the inconsistency process will help 

minimize the need to request paper 

documentation from applicants, and the 

burden for Exchanges to process such 

documentation. 

Comment: We received a few 

comments regarding the provision in 

proposed § 155.315(c)(4) in which we 

propose that a document that provides 

evidence of immigration status may not 

be used alone to determine State 

residency. A commenter requested that 

we remove the word ‘‘alone’’ from this 

phrase. Another asked that we allow the 

Exchange to use documentation of 

immigration status to positively verify 

residency. 

Response: We are removing the word 

‘‘alone’’ from § 155.315(d)(4) in the final 

rule because we do not intend for 

documents that provide evidence of 

immigration status to be used to 

determine State residency either alone 

or together with other documentation. 

We have also amended the phrase to 

allow the Exchange to positively verify 

residency using immigration 

documentation, which aligns with 

Medicaid regulations. 

Comment: We received a number of 

comments regarding the verification of 

incarceration status, as proposed in 

§ 155.315(d). Several commenters 

recommended that self-attestation of 

incarceration be accepted without 

further verification. Others believed that 

information or an attestation regarding 

incarceration should never be requested 

of an applicant, since such a request 

may be a deterrent to consumers 

applying for coverage through the 

Exchange. A smaller number of 

commenters questioned the availability 

of recent, accurate data with which 

Exchanges may verify incarceration 

status. One commenter stated that by 

not defining ‘‘release date,’’ 

incarceration status will be difficult to 

verify. 

Response: We acknowledge that there 

are challenges regarding the availability 

of electronic data on incarceration. 

However, we believe it is important for 

the Exchange to utilize any such data 

sources that are available and have been 

approved by HHS for this purpose, and, 

at the very least, accept self-attestations 

of incarceration status since such status 

is a statutory standard for eligibility to 

enroll in a QHP. In addition, we believe 

that this attestation can be collected 

with minimal burden on an applicant, 

and we expect that it will be paired with 

a clear explanation as to why the 

information is being requested. We 

believe that allowing for verification of 

incarceration status through paper 

documentation would increase 

administrative burden on the Exchange 

and applicants, and for these reasons, 

allow for the examination of paper 

documentation only in the event that 

the applicant’s self-attestation is not 

reasonably compatible with other 

information provided by the individual 

or information in the records of the 

Exchange. For greater detail about the 

definition of incarceration, please see 

comment response for § 155.300. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.315 of the proposed 

rule, with the following modifications. 

We added paragraph (b), which clarifies 

that the Exchange will validate SSNs 

that are provided by individuals. In 

paragraph (c)(3), we changed the word 

‘‘shows’’ to ‘‘demonstrates’’ in referring 

to what the applicant must do if the if 

he or she did not receive the notice 

within the 5 day period; this change was 

made to more accurately describe the 

obligation of the applicant. In paragraph 

(d)(1) and (2), we allowed the Exchange 

may choose whether it accepts an 

attestation from applicants regarding 

residency without further verification or 

examines electronic data sources for all 

applicants, and we clarify that the 

standard for approval of electronic data 

sources for verification of residency will 

be based on whether such sources are 

sufficiently current and accurate, and 

minimize administrative costs and 

burdens. 

In paragraph (d)(3), we clarify that by 

referring to data sources, we mean those 

data sources that are available to the 

Exchange and that have been approved 

by HHS for this purpose. In paragraph 

(d)(3), we remove the reference to ‘‘a 

document that provides’’ before 

‘‘evidence’’ so as not to limit the 

acceptable types of such evidence. We 

also remove the word ‘‘alone’’ in order 

to clarify that the Exchange may not use 

evidence of immigration status alone or 

together with other evidence to 

determine State residency. In paragraph 

(d)(3), we also change the term ‘‘may’’ 

to ‘‘must’’ to specify that if the 

applicant’s attestation is not reasonably 

compatible with information in the 

records of the Exchange, the Exchange 

must examine available, approved data 

sources in order to verify the attestation. 

We also change the phrase in paragraph 

(d)(4) to state that evidence of 

immigration status may not be used to 

determine that an applicant is not 

resident of the Exchange service area. 

We clarified in paragraph (f) that an 

inconsistency may result when 

electronic data is necessary for 

verification but is not available. We also 

included in paragraph (f)(1), ‘‘including 

through typographical or other clerical 

errors’’ to describe the causes of 

inconsistency. In paragraph (f)(2)(i), we 

changed ‘‘notify’’ to ‘‘provide notice to 

the applicant regarding’’ in order to 

clarify the Exchange’s notice standard. 

Also, we added language to paragraph 

(f)(2)(ii) to specify that all channels 

described in § 155.405(c) of this part are 

acceptable for the submission of 

documentation to resolve 

inconsistencies, except for by telephone. 

In paragraph (f)(5)(i), we specify that the 

Exchange must determine the 

applicant’s eligibility based on the 

information available unless such 

applicant qualifies for the exception 

provided under paragraph (g). We also 

add, on an interim final basis, paragraph 

(g), which provides a case-by-case 

approach to resolving inconsistencies 

for applicants for whom documentation 

does not exist or is not reasonably 

available. 

We also made technical corrections. 

We redesignated paragraphs (b) through 

(g) as paragraphs (c) through (i). In 

paragraph (a), we changed the reference 

to paragraph (e) to paragraph (g). In 

paragraph (d), we changed ‘‘by’’ to ‘‘as 

follows,’’ and changed verb tenses in 

(d)(1) and (d)(2). In paragraph (f)(3), we 

corrected the reference to paragraph 

(f)(3) and changed it to (f)(2)(ii). In 

paragraph (f)(5)(ii), we changed the 

word ‘‘implement’’ to ‘‘effectuate.’’ We 

also add, on an interim final basis, 

paragraph (g) to provide a case-by-case 

exception for applicants for whom 

documentation does not exist or is not 

reasonably available. 

In paragraph (h), we changed the 

word ‘‘plan’’ to ‘‘Blueprint.’’ 

Throughout the section, as in the rest of 

the subpart, we replaced language 

regarding application filers providing 

attestations with references to 

applicants providing attestations, since 

the language in § 155.300(c) provides 

overarching clarification that 

attestations for applicants can be 

provided by application filers. 

f. Verification process related to 

eligibility for insurance affordability 

programs (§ 155.320) 

In § 155.320, we proposed that the 

Exchange verify information in 

accordance with this section only for an 

applicant who is requesting an 

eligibility determination for insurance 

affordability programs. 

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We proposed standards related to the 

verification of eligibility for minimum 

essential coverage other than through an 

eligible employer-sponsored plan. 

We also proposed standards for the 

verification of household income and 

family and family/household size and 

solicited comments regarding how best 

to ensure a streamlined eligibility 

process given underlying differences 

between the Treasury proposed rule and 

the Medicaid proposed rule. We 

proposed standards for the Exchange to 

obtain tax return data for individuals 

whose income is counted in calculating 

a tax filer’s household income, and to 

obtain MAGI-based income for all 

individuals whose income is counted in 

calculating a tax filer’s household 

income, in accordance with 26 CFR 

1.36B–1(e), or an applicant’s household 

income, in accordance with 42 CFR 

435.603(d). 

We proposed the verification process 

for income and household size for 

Medicaid and CHIP and solicited 

comments as to how this process could 

work most smoothly for both electronic 

and paper applications. We proposed 

that the Exchange must verify 

household size by obtaining an 

attestation from the application filer and 

accepting the attestation without further 

verification unless the attestation is not 

reasonably compatible with other 

information in the records of the 

Exchange. We also proposed the process 

for the Exchange to verify MAGI-based 

household income by referring to the 

procedures described in Medicaid 

proposed regulations at 42 CFR 435.948 

and 42 CFR 435.952 and CHIP 

regulations at 42 CFR 457.380. We 

solicited comments as to how the 

Exchange process and the Medicaid and 

CHIP processes can be streamlined to 

ensure consistency and maximize the 

portion of eligibility determinations that 

can be completed in a single session. 

Similar to Medicaid and CHIP, we 

proposed that for advance payments of 

the premium tax credit and cost-sharing 

reductions, the Exchange direct an 

application filer to attest to the specific 

individuals who comprise an 

applicant’s family for advance payments 

of the premium tax credit and costsharing reductions, and that the 

Exchange accept an application filer’s 

attestation of family size without further 

verification, unless the attestation and 

any other information in the records of 

the Exchange are not reasonably 

compatible. We further proposed the 

basic verification process for annual 

household income. We proposed that 

the Exchange compute, in accordance 

with specific rules for Medicaid and 

CHIP and specific rules for eligibility for 

advance payments of premium tax 

credits and cost-sharing reductions, 

annual household income for the family 

defined by the application filer and that 

the application filer validate this 

information by attesting whether it 

represents an accurate projection of the 

family’s household income for the 

benefit year for which coverage is 

requested. We proposed that if tax data 

are unavailable, or if an application filer 

attests that the Exchange’s computation 

based on available tax data does not 

represent an accurate projection of the 

family’s household income for the 

benefit year for which coverage is 

requested, the Exchange direct the 

application filer to attest to the family’s 

projected household income. We 

proposed that if such an attestation is 

not reasonably compatible with the data 

obtained by the Exchange or if the data 

is unavailable, the Exchange must 

follow procedures for the alternate 

verification process. We also proposed 

that the Exchange use an alternate 

process for determining income for 

purposes of advance payments of the 

premium tax credit and cost-sharing 

reductions for tax filers in certain 

situations. We proposed that in 

situations in which an application filer 

attests that a tax filer’s annual 

household income has increased or is 

reasonably expected to increase from 

the information obtained from his or her 

tax return, the Exchange accept the 

application filer’s attestation without 

further verification, with limited 

exceptions. We also proposed to codify 

the minimum standards for 

circumstances under which an 

application filer who is attesting to a 

decrease in income for a tax filer, or is 

attesting to income because tax return 

data is unavailable, may utilize an 

alternate income verification process 

that includes annualized data from 

MAGI-based income sources and other 

electronic data sources approved by 

HHS. We solicited comment on what 

situations should justify use of the 

alternate process. 

We also proposed the verification 

process the Exchange must follow for a 

tax filer whose annual household 

income decreases by a certain amount. 

We proposed that if the Exchange 

requests additional documentation to 

resolve an inconsistency and the 

application filer has not responded to a 

request for additional information from 

the Exchange within a 90 day period 

and data sources indicate that an 

applicant in the tax filer’s family is 

eligible for Medicaid or CHIP, the 

Exchange may not provide the applicant 

with eligibility for advance payments of 

the premium tax credit or cost-sharing 

reductions. We proposed that if at the 

end of the 90 day period the Exchange 

is unable to verify the application filer’s 

attestation, the Exchange must 

determine the applicant’s eligibility 

based on available data, in accordance 

with the process proposed in 

§ 155.310(g) and § 155.330(f). In 

addition to the above standards, we 

proposed that the Exchange provide 

education and assistance to an 

application filer regarding the 

verification process for income and 

family/household size and solicited 

comments on strategies that the 

Exchange can employ to ensure that 

application filers understand the 

validation process and provide wellinformed validations and attestations. 

For other situations in which the 

Exchange remains unable to verify an 

application filer’s attestation, we 

proposed that the Exchange determine 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions for tax filers who do not 

meet the criteria for the alternate 

income verification process based on 

the tax filer’s tax data. We also proposed 

that if an application filer does not 

respond to a request for additional 

information from the Exchange and data 

sources described in paragraph (c)(1) 

indicate that an applicant in the primary 

tax filer’s family is eligible for Medicaid 

or CHIP, the Exchange will not provide 

the applicant with eligibility for 

advance payments of the premium tax 

credit or cost-sharing reductions based 

on the application. 

We proposed that the Exchange verify 

whether an applicant who requested an 

eligibility determination for advance 

payments of the premium tax credit or 

cost-sharing reductions is enrolled in an 

eligible employer-sponsored plan by 

accepting his or her attestation without 

further verification, except in cases in 

which information is not reasonably 

compatible with other data provided by 

the applicant or in the records of the 

Exchange. We solicited comments as to 

whether the Exchange could assume 

that an applicant would understand 

whether or not he or she is enrolled in 

an eligible employer-sponsored plan, 

and therefore rely upon applicant 

attestation in this area. We proposed 

that the Exchange may request 

additional information regarding 

whether an applicant is enrolled in an 

eligible employer-sponsored plan if an 

applicant’s attestation is where an 

applicant’s information is not 

reasonably compatible with other 

information provided by the applicant 

or in the records of the Exchange. We 

solicited comments regarding the best 

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18364 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

5http://www.healthcare.gov/law/resources/ 

reports/premiums01282011a.pdf. 

data sources for this element of the 

process. 

In addition, we proposed that the 

Exchange must request from an 

applicant who requests an eligibility 

determination for advance payments of 

the premium tax credit or cost-sharing 

reductions to attest to his or her 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan. We 

further proposed that the Exchange 

verify this information. We solicited 

comments regarding how the Exchange 

may handle a situation in which it is 

unable to gain access to authoritative 

information regarding an applicant’s 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan. We 

invited comment on the timing and 

reporting of information needed to 

verify whether an employed applicant is 

eligible for qualifying coverage in an 

eligible employer-sponsored plan, and 

the best methods for facilitating 

interaction among Exchanges for this 

purpose. Specifically, we solicited 

comment regarding two specific 

methods for the submission and 

collection of information regarding 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan—the 

employee template and the employer 

central database. 

Comment: Many commenters 

questioned the criteria for using the 

alternative verification process to verify 

household income; in particular, 

commenters argued against the standard 

proposed § 155.320(c)(3)(iv) that limits 

the ability of the Exchange to follow the 

alternative verification process to 

situations in which tax data is not 

available, family size or filing status has 

changed or is reasonably expected to 

change, an applicant has filed for 

unemployment benefits, or when an 

application filer attests that the tax 

filer’s annual household income has 

decreased or is reasonably expected to 

decrease from tax data obtained by the 

Exchange by 20 percent or more. 

Comments focused on the 20 percent 

threshold, which commenters believed 

was too high, particularly given the 

relatively low incomes of the population 

likely to request an eligibility 

determination for financial assistance, 

and would thus result in a substantial 

group of tax filers being unable to obtain 

advance payments of the premium tax 

credit commensurate with their 

household income, regardless of 

whether they were able to substantiate 

a lower income. Commenters supported 

a percentage threshold lower than 20 

percent or a different measure 

altogether. 

Response: We recognize that utilizing 

the 20 percent minimum would result 

in a substantial number of tax filers who 

are unable to afford coverage due to 

significant changes in income and that 

we should modify our proposed rule so 

that an eligibility determination 

matches, as closely as possible, a tax 

filer’s true circumstances. We note that 

section 1412(b)(2) of the Affordable Care 

Act describes that the Secretary must 

provide procedures for making 

eligibility determinations for advance 

payments of the premium tax credit, ‘‘in 

cases where information included with 

an application demonstrates substantial 

changes in income * * * or other 

significant changes affecting eligibility’’. 

The statute outlines a minimum set of 

circumstances that meet this standard; 

we interpret the statutory 20 percent or 

more decrease as congressional 

direction that any decrease of that 

magnitude must trigger an alternate 

verification process, but not to limit the 

Secretary’s discretion to identify other 

significant changes in income that 

trigger an alternate verification process. 

We codified this provision in the 

proposed rule at § 155.320(c)(3)(iv), 

along with the other minimum 

standards, and solicited comments as to 

whether this was an appropriate 

standard, or whether we should 

establish a different threshold. 

Based on an analysis performed by 

the Secretary,5 a family of four with 

household income of 200 percent of the 

FPL ($47,018 using projected 2014 

figures) is projected to have a total 

premium, after advance payments, of 

$247 per month. A five percent decrease 

in income from $47,018 is $44,667 (190 

percent of the FPL), would correspond 

to a total premium, after advance 

payments, of $217 per month, for a total 

difference in premium of around $360 

per year. In addition, while advance 

payments are sensitive to every dollar of 

income, cost-sharing reductions are not; 

consequently, even very small changes 

that move a person across a threshold 

(150 percent FPL, 200 percent FPL, or 

250 percent FPL) can be very 

significant. For example, based on the 

same figures cited above, the difference 

in cost-sharing between a family at 190 

percent FPL and a family at 200 percent 

FPL is $1,000 per year, due to the 

change in eligibility for cost-sharing 

reductions at 200 percent FPL. The 

difference is $2,000 around 250 percent 

FPL, which is the upper limit for costsharing reductions based solely on 

household income. We believe that 

these are significant changes, which will 

be critical to recognize in order to 

ensure that eligible individuals can 

afford coverage. 

Therefore, in this final rule, we 

specify that the Exchange must use 

information other than tax data to verify 

income in cases in which an applicant 

attests that a change has occurred or is 

reasonably expected to occur, and as 

such, a tax filer’s annual household 

income has decreased or is reasonably 

expected to decrease from his or her tax 

data. As noted above, we believe that 

any change in household income 

constitutes a change in circumstances 

that meets the ‘‘significant changes 

affecting eligibility’’ standard identified 

in section 1412(b)(2) of the Affordable 

Care Act, given the sensitivity of the 

advance payment formula and the 

potential for large variations in costsharing reductions with small shifts in 

income. This approach to implementing 

section 1412(b)(2) is further reinforced 

by the fact that requiring the Exchange 

to conduct an individualized analysis as 

to whether each tax filer’s 

circumstances constitute a ‘‘significant 

change’’ in accordance with the statute 

would place a substantial administrative 

burden on the Exchange; to conduct 

such case-by-case analyses, the 

Exchange would need to apply different 

procedures to subgroups of tax filers, 

specifically around cost-sharing 

reduction thresholds. Overall, we 

believe that using this standard will 

increase the accuracy of income 

verification, the accuracy of eligibility 

determinations, and the equity of the 

process for tax filers without 

significantly increasing the 

administrative burden on the Exchange. 

We also make a change to another 

criterion for the alternate verification 

process described in 

§ 155.320(c)(3)(iv)(B); we include that 

when an applicant attests that members 

of the tax filer’s family have changed or 

are reasonably expected to change, he or 

she qualifies for an alternate verification 

process. We add this provision in order 

to account for a situation in which the 

family members are different but the 

number of family members remains the 

same. 

In § 155.320(c)(3)(v), we describe the 

alternate verification process for 

decreases in household income or 

situations in which tax data are 

unavailable. We move the language from 

§ 155.320(c)(3)(ii)(C) of the proposed 

rule, which specified that the Exchange 

accept an applicant’s attestation of 

projected annual household income, 

unless it was not reasonably compatible 

with tax data, to this section, and 

replace ‘‘reasonably compatible’’ with a 

standard of a decrease of ten percent or 

less from the tax data. We redesignate 

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Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 18365 

§ 155.320(c)(3)(v) of the proposed rule 

as § 155.320(c)(3)(vi), which specifies 

the verification process for larger 

decreases and situations in which tax 

data are unavailable. Taken together, 

these revisions address commenters’ 

concerns regarding inequities in the 

proposed verification process by 

ensuring that there are procedures 

under which a tax filer can obtain 

advance payments of the premium tax 

credit commensurate with their 

household income when changes have 

occurred or are reasonably expected to 

occur, regardless of the size of any such 

changes. 

Comment: We received many 

comments recommending that HHS 

further define the term ‘‘reasonably 

compatible’’, as used throughout 

proposed § 155.320(c) as the standard 

for assessing whether verification can be 

considered complete, or if additional 

information is necessary. Commenters 

suggested various approaches to 

establishing a more detailed standard, 

including, in the case of income, the use 

of an acceptable percentage of deviation 

between the amount reflected by the 

data and an application filer’s 

attestation. Others recommended that 

the Exchange should consider an 

application filer’s attestation to income 

reasonably compatible with electronic 

data even if there is a difference in the 

data and an application filer’s 

attestation, as long as the difference 

does not significantly impact eligibility. 

Some commenters recommended that 

Exchanges maximize the use of selfattestation without further verification, 

which would speak to setting the 

‘‘reasonably compatible’’ threshold at a 

higher level. Other commenters 

requested that HHS establish a standard 

that allows for flexibility in 

implementation, and a few commenters 

recommended removing the ‘‘reasonably 

compatible’’ standard altogether. A few 

commenters recommended providing 

that the Exchange must always request 

additional evidence with the goal of 

achieving a more accurate projection of 

income or family size. 

Response: When assessing comments 

recommending that HHS define the 

‘‘reasonably compatible’’ standard 

proposed in § 155.320(c), we weighed 

our desire for Exchange flexibility with 

the goal of providing greater consistency 

in income verification for applicants 

across Exchanges and a more 

streamlined process, in order to reduce 

burden for applicants and Exchanges. 

However, based on the comments 

received, we recognize that there is a 

need to define a specific threshold 

within which the Exchange would 

accept an applicant’s attestation 

regarding projected annual household 

income, as opposed to engaging in a 

more burdensome process. Accordingly, 

as discussed in the previous response, 

the final rule specifies that the Exchange 

will accept an applicant’s attestation to 

projected annual household income 

without further verification if it is no 

more than ten percent below his or her 

tax data. We believe that using this 

threshold will result in eligibility 

determinations that are accurate while 

limiting the administrative burden 

associated with completing additional 

verification processes for smaller 

decreases in income. We believe that 

this is particularly important given the 

age of available tax return information at 

the point of open enrollment, as well as 

the volatility in income among 

households that are likely to request an 

eligibility determination for insurance 

affordability programs. In particular, we 

believe that it is critical to focus the 

limited resources of Exchanges on 

ensuring that larger changes are 

subjected to additional scrutiny. 

In addition, we clarify that the 

process proposed in § 155.320(c)(3)(i) 

for verification of family size for 

purposes of eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions follows the 

process specified in section 1411 of the 

Affordable Care Act, which specifies 

that the Secretary verify family size with 

the Secretary of the Treasury, and then 

implement alternative procedures to the 

extent that a change has occurred or tax 

data are unavailable. 

First, in paragraph (c)(1)(i)(A), the 

Exchange will request tax return data 

including data regarding family size. In 

paragraph (c)(3)(i)(A), we specify that an 

applicant will attest to the individuals 

that comprise an applicant’s family for 

advance payments of the premium tax 

credit and cost-sharing reductions. We 

add paragraph (c)(3)(i)(B) to clarify that 

if an applicant attests that tax data 

represents an accurate projection of a 

tax filer’s family size for the benefit year 

for which coverage is requested (that is, 

that no change has occurred or is 

reasonably expected to occur), the 

Exchange must use the family size 

information from the tax data to 

determine the tax filer’s eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions. And 

in paragraph (c)(3)(i)(C), we specify that 

if tax data are unavailable, or an 

applicant attests that a change has 

occurred or is reasonably expected to 

occur, and as such, it does not represent 

an accurate projection of a tax filer’s 

family size for the benefit year for which 

coverage is requested, the Exchange 

must accept his or her attestation to 

family size without further verification, 

unless it is not reasonably compatible 

with other information provided by the 

applicant or in the records of the 

Exchange. 

In paragraph (c)(3)(i)(C), we clarify 

that the assessment of reasonable 

compatibility is not with respect to the 

tax data, as paragraph (c)(3)(i)(C) is 

designed to address situations in which 

it is already clear that tax data are 

unavailable or not representative. We 

then maintain the provisions from the 

proposed rule specifying that if 

information regarding family size is not 

reasonably compatible, the Exchange 

must first utilize data obtained through 

other electronic data sources, and if that 

is unsuccessful, follow the 

inconsistency process in § 155.315(f). 

Comment: We received comments 

suggesting that HHS clarify aspects of 

the income verification process in 

proposed § 155.320; in particular, 

commenters asked that the final rule 

specify the sequencing of the process, so 

that a clear order for the execution of 

steps for Medicaid, CHIP, and advance 

payments of the premium tax credit and 

cost-sharing reductions is established. 

Commenters also asked that HHS allow 

Exchanges greater flexibility around the 

use of electronic data to verify 

household income. For example, one 

commenter recommended that in the 

event an applicant’s current income 

data places them well below the income 

level for eligibility for advance 

payments of the premium tax credit or 

cost-sharing reductions, the Exchange 

not be required to also obtain the 

applicant’s tax return data. Others 

questioned the overall usefulness of 

available tax return data given its age, 

and asked that Exchanges be permitted 

to look only at available current income 

data sources to verify household income 

for all insurance affordability programs. 

Response: We acknowledge 

commenters’ desire to further streamline 

and simplify the eligibility and 

enrollment process by avoiding 

unnecessary steps to verify applicant 

information. Sections 1402(f)(3), 

1411(b)(3) and 1412(b)(1) of the 

Affordable Care Act provide that data 

from the most recent tax return 

information available must be the basis 

for determining eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions to the extent 

such tax data is available. HHS is 

working closely with Treasury and IRS 

to ensure that such data is readily 

accessible by the Exchange, to assist in 

facilitating the completion of an 

eligibility determination in a single, 

online session. We believe that the 

regulation is not the place to lay out 

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detailed, sequenced steps for verifying 

household income. As such, in 

§ 155.320(c)(3)(ii), we have made 

changes to allow the Exchange 

flexibility when sequencing the 

verification of annual household 

income; we altered the text such that the 

Exchange may present the applicant 

with his or her projected annual 

household income computed from the 

tax return information prior to requiring 

an attestation from the applicant or, in 

the alternative, to allow the Exchange to 

take an attestation from the applicant 

regarding a tax filer’s projected annual 

household income and then verify 

whether the attestation is supported by 

the tax return information described in 

§ 155.320(c)(3)(i). Overall, we intend for 

the regulation to be neutral with regard 

to the sequencing of operations, and 

will provide such operational details 

through guidance. 

Comment: Commenters asked HHS to 

clarify whether, when verifying annual 

household income as described in 

proposed § 155.320, the Exchange must 

rely on a tax filer’s attestation to make 

a final determination of household 

income when the attestation and tax 

data are reasonably compatible, or 

whether the Exchange must rely on tax 

data. 

Response: We acknowledge 

commenters’ concerns that the proposed 

regulation text at § 155.320(c)(3)(ii) does 

not clearly describe the process the 

Exchange must follow in the event that 

the applicant attests that the income in 

the tax data represents an accurate 

projection of the household’s projected 

annual household income. In this final 

rule, we include a provision in 

§ 155.320(c)(3)(ii)(B) which describes 

that, in this situation, the Exchange 

must determine the tax filer’s eligibility 

for advance payments of the premium 

tax credit and cost-sharing reductions 

based on the income data from his or 

her tax return. 

Comment: A few commenters asked 

for clarification as to when it is 

appropriate to accept self-attestation of 

income. We also received comments 

asking for clarification on our use of 

self-attestations throughout the 

verification processes described in 

§ 155.315 and § 155.320. 

Response: The Exchange may accept 

an applicant’s attestation of her or her 

projected annual household income in a 

number of instances during the income 

verification process; however, it is 

important to note, that for purposes of 

verification of income for determining 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions, the Exchange will never 

accept such an attestation without 

attempting to acquire tax data.Those 

instances in which the Exchange may 

accept an attestation without further 

verification when an application attests 

that as a result of a change or an 

expected change, a tax filer’s income 

has increased, by any amount, above the 

projected annual household income 

calculated by the Exchange based on tax 

data, as described in § 155.320(c)(3)(iii); 

and when an applicant attests that as a 

result of a change or an expected 

change, a tax filer’s projected annual 

household income has decreased or is 

reasonably expected to decrease from 

the projected annual household income 

calculated based on tax data by ten 

percent or less, as described in 

§ 155.320(c)(3)(v). 

In response to comments regarding 

the use of self-attestation in the 

verification process, the processes 

described are designed to confirm 

information to the extent necessary to 

provide eligibility. In situations in 

which the Exchange uses self-attestation 

without further verification as the basis 

of eligibility, we have determined that 

this approach yields valid data and does 

not pose unacceptable levels of risk. We 

believe that this approach is particularly 

important in order to promote a 

seamless, real-time experience for as 

many applicants as possible. It is also 

important to note that strong program 

integrity protections will be in place 

and that all attestations will be provided 

under penalty of perjury. 

Comment: We received comments 

asking which procedures the Exchange 

must follow when an individual’s 

unverified income meets the Medicaid 

or CHIP income threshold. 

Response: As indicated in 

§ 155.320(c)(2)(ii) of the proposed rule, 

if an individual’s unverified current 

income meets the Medicaid or CHIP 

income threshold, the Exchange would 

verify his or her household income in 

accordance with Medicaid or CHIP rules 

specified in 42 CFR 435.948 and 42 CFR 

435.952. Similarly, if an individual 

attests to income in the Medicaid or 

CHIP eligibility range, the Exchange 

would need to follow the procedures 

outlined in 42 CFR 435.948 and 42 CFR 

435.952, since such individual would 

not be eligible for the alternative 

verification process, as indicated in 

§ 155.320(c)(3)(iv). We maintain these 

provisions in this final rule. 

Comment: We received several 

comments requesting greater integration 

and alignment in standards and 

processes for verifying family/ 

household size and household income 

across insurance affordability programs. 

Some asked for States to be given 

flexibility to align standards across 

insurance affordability programs. 

Commenters also recommended specific 

changes facilitating a closer alignment 

of the rules for determining family/ 

household size and household income 

between Medicaid, CHIP and advance 

payments of the premium tax credit and 

cost-sharing reductions. Some 

recommended full integration, utilizing 

identical standards across insurance 

affordability programs. 

Response: Throughout § 155.320(c), 

the standards for verification of family 

size and income for determining 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions closely follow the rules set 

forth in sections 1411 and 1412 of the 

Affordable Care Act and section 36B of 

the Code. We sought to align as closely 

as possible with the standards 

established for Medicaid and CHIP, but 

given statutory standards, we were 

limited in the degree of alignment we 

could achieve. 

With respect to family/household 

income and household size, we note 

that Medicaid/CHIP and advance 

payments both start with the family size 

and income counting rules in section 

36B of the Code. From there, there are 

three key differences in how income 

must be measured in Medicaid/CHIP 

and for advance payments and costsharing reductions. First, as noted in the 

proposed rule, section 1902(e)(14)(H) of 

the Social Security Act, as added by 

section 2002 of the Affordable Care Act, 

specifies that Medicaid eligibility will 

continue to be based on ‘‘point-in-time’’, 

or current monthly income, while 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions is based on annual income. 

This is reflected in 42 CFR 

435.603(h)(1). Second, 42 CFR 

435.603(b) and (f) specifies that in 

certain situations, Medicaid and CHIP 

follow different household composition 

rules from those in section 36B of the 

Code, which then lead to counting 

income for a different group than would 

be counted for advance payments of the 

premium tax credit and cost-sharing 

reductions. These situations are 

discussed in detail in the preamble 

associated with 42 CFR 435.603. 

Third, 42 CFR 435.603(e) specifies 

that there are some exceptions to the use 

of the income counting rules of section 

36B of the Code for purposes of 

eligibility for Medicaid and CHIP. These 

include special treatment for lump sum 

payments, scholarships, awards, or 

fellowship grants used for educational 

purposes and not for living expenses, 

and certain types of American Indian 

and Alaska Native income. 

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11282011/exchange_q_and_a.pdf.pdf. 

Aside from the different time 

standard, in the majority of cases, the 

rules for counting household income 

and household/family size are the same 

across insurance affordability programs. 

In addition, we note that 42 CFR 

435.603(i) specifies that in a situation in 

which an applicant is over the income 

threshold for Medicaid, but is under the 

income threshold for advance payments 

of the premium tax credit, the Medicaid 

agency will determine Medicaid 

eligibility using section 36B rules, 

which would likely result in Medicaid 

eligibility in most situations. We have 

also added an additional provision in 

§ 155.345(e), which is discussed in the 

comment and response associated with 

that section. 

Lastly, we note that throughout 

subpart D, we use ‘‘household size’’ for 

purposes of Medicaid and CHIP, in 

order to align with Medicaid and CHIP 

regulations, and ‘‘family size’’ for 

purposes of advance payments of the 

premium tax credit and cost-sharing 

reductions, in order to align with 

Treasury regulations. To clarify this, we 

added § 155.320(c)(3)(viii), which 

specifies that for purposes of advance 

payments of the premium tax credit and 

cost-sharing reductions, ‘‘family size’’ 

means family size as defined in section 

36B(d)(1) of the Code. 

Comment: We received a number of 

comments related to current income 

sources to be used by the Exchange in 

verifying household income. 

Commenters asked us to define those 

current income sources that the 

Exchange will use in the process 

proposed in § 155.320(c)(1)(ii). Others 

asked whether current income 

information would be available via the 

Federally-managed data services hub. 

Response: Under § 155.320(c)(1)(ii) of 

the proposed and this final rule, the 

Exchange must obtain the most current 

income data from those data sources 

described in existing Medicaid 

regulations at 42 CFR 435.948(a). In 

order to access this current income data, 

we anticipate that the Exchange will 

leverage State Medicaid and CHIP 

agencies’ existing relationships with 

current income sources, but we are also 

exploring the potential for supporting 

connections to sources of current 

income data through the data services 

hub. 

Comment: Several commenters had 

specific questions related to services 

available to support the income 

verification process through the data 

services hub. Specifically, commenters 

asked which data elements from the tax 

return would be available from the IRS 

via the data services hub, and 

recommended that individual data 

elements (for example, wages, profit and 

loss from business, deductions) would 

be more useful in verifying household 

income than a single MAGI data 

element. 

Response: We are working to identify 

those services which will be available to 

Exchanges to support the income 

verification process and will provide 

further detail in future guidance. We 

note that the section 6103(l)(21) of the 

Code identifies general categories of tax 

data that will be available for purposes 

of determining eligibility in insurance 

affordability programs. In addition, 

these categories are discussed in the 

response to question 8 in HHS’ 

November 29, 2011 document titled 

‘‘State Exchange Implementation 

Questions and Answers’’.6

Comment: We received comments 

related to the treatment of American 

Indian and Alaska Native income. Some 

asked whether current State 

arrangements around the treatment of 

such income will be allowed to stand 

under the Exchange; others asked that 

the exemption for American Indian and 

Alaska Native income be referenced in 

the Exchange final rule and that 

materials be available to consumers so 

they can understand the availability of 

such exemptions. 

Response: In § 155.320(c)(1)(ii) of the 

proposed rule, we reference 42 CFR 

435.603(d) for purposes of income 

eligibility for Medicaid, which 

incorporates the applicable income 

exemptions for American Indians and 

Alaska Natives described under 42 CFR 

435.603(e)(3). This regulatory reference 

addresses the treatment of these 

exemptions and the future of existing 

arrangements with regard to American 

Indian and Alaska Native income with 

respect to Medicaid. We note that these 

income exemptions do not apply when 

verifying annual household income for 

advance payments of the premium tax 

credit and cost-sharing reductions, 

because the Affordable Care Act 

establishes specific definitions of 

‘‘household income’’ and ‘‘MAGI’’ to 

use for determining eligibility for these 

benefits. Because of the statutory limits 

on the definition of household income 

for advance payment of premium tax 

credits and cost-sharing reductions, this 

final rule maintains the proposal to 

follow the rules described in section 

36B of the Code. 

Comment: We received a comment 

recommending that HHS clarify that, for 

purposes of obtaining data regarding 

MAGI-based income for purposes of 

Medicaid and CHIP eligibility, the 

Exchange will initially request data 

from data sources described in 42 CFR 

435.948(a), not from the applicant. 

Response: The specific sequencing of 

the process for collecting and verifying 

relevant information is subject to future 

operational analysis, and that we 

anticipate providing future guidance on 

this topic, including through the model 

electronic application. 

Comment: We received a number of 

comments related to proposed 

§ 155.320(c)(4), which provides that the 

Exchange must provide education and 

assistance to an application filer 

regarding the family/household size and 

household income verification process. 

Several commenters suggested specific 

standards for the format and content of 

consumer education and assistance 

materials. Some commenters asked that 

a Federal standard for such materials be 

developed for Exchanges, and others 

advised that HHS encourage Exchanges 

to provide information specific to the 

alternative income verification process 

to ensure a smooth verification process. 

Response: There are several 

provisions throughout this final rule 

which provides that the Exchange must 

provide consumer tools and education 

related to the eligibility and enrollment 

process, in addition to the standard 

described in § 155.320(c)(4), including a 

calculator and other tools, described in 

§ 155.205, and information regarding 

advance payments of the premium tax 

credit, described in § 155.310(d)(2)(iii). 

We expect to issue future guidance on 

this topic. 

Comment: We received comments 

asking if the Exchange would have 

access to all child support data; and if 

so, suggesting that the Exchange must 

abide by specific data safeguards. 

Response: The Exchange would not be 

required to have access to child support 

data for purposes of verifying annual 

household income. Regardless, for data 

collected by the Exchange, privacy and 

security protections, described in 

§ 155.260 of this final rule, and 

standards for electronic transactions, 

described in § 155.270 of this final rule, 

would also apply. 

Comment: Several commenters 

supported the proposal in § 155.320(d) 

for the Exchange to utilize selfattestation by the employee to verify 

enrollment in an eligible employersponsored plan. One commenter stated 

that HHS should give States the 

flexibility to use self-attestation or to 

use other methods of verification. 

Response: We accept these comments 

and maintain this provision in the final 

rule. Section 1411(d) gives authority to 

the Secretary to determine the 

appropriate means to verify certain 

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information that the applicant must 

submit in accordance with section 

1411(b)(4). We note that § 155.315(h) of 

this subpart allows State flexibility, 

subject to approval by HHS, based on a 

finding that the alternative approach 

meets certain standards described in 

that section. 

Comment: Several commenters 

asserted that individuals enrolled in 

continuation coverage under the 

Consolidated Omnibus Budget 

Reconciliation Act (COBRA) or in an 

eligible employer-sponsored plan 

should have the opportunity to be 

conditionally determined eligible for 

advance payments of the premium tax 

credit and cost-sharing reductions, 

subject to termination prior to 

enrollment in a QHP. These commenters 

reasoned that individuals should not be 

forced into uninsured status in order to 

obtain a determination of eligibility for 

tax credits and risk remaining 

uninsured if they are found ineligible 

and the enrollment period for electing 

COBRA or coverage in an eligible 

employer-sponsored plan passes. 

Response: Section 36B(c)(2)(C)(iii) of 

the Code states that an individual who 

is enrolled in an eligible employersponsored plan is not eligible for 

advance payments of the premium tax 

credit; because of the statutory 

prohibition on providing cost-sharing 

reductions for any month that is not a 

month for which the enrollee is eligible 

for premium tax credits, this bar also 

applies to eligibility for cost-sharing 

reductions. However, while an 

individual must terminate coverage in 

his or her employer-sponsored plan 

prior to the period for which he or she 

actually receives advance payments of 

the premium tax credit and/or costsharing reductions, we clarify that the 

individual need not terminate coverage 

to receive an eligibility determination 

that he or she is eligible to receive these 

payments and reductions. Accordingly, 

we have amended the language in 

§ 155.320(d)(1) of this final rule to 

clarify that an attestation regarding 

enrollment in qualifying coverage in an 

eligible employer-sponsored plan 

should be based on the applicant’s 

reasonable expectation of enrollment in 

the benefit year for which coverage is 

requested. 

Comment: One commenter noted that 

the language in proposed § 155.320(d) 

seems to indicate that the decision 

whether or not the Exchange must verify 

beyond an applicant’s attestation 

regarding enrollment in an eligible 

employer-sponsored plan is within the 

discretion of an Exchange, and 

requested clarification regarding 

whether this was an intentional 

wording. 

Response: We have amended the 

regulatory text to reflect the standard 

that an Exchange must verify an 

applicant’s attestation using electronic 

data sources to the extent that an 

applicant’s attestation is not reasonably 

compatible with other information 

provided by the applicant or in the 

records of the Exchange. 

This change is consistent with 

equivalent amendments made in this 

subpart, and provides that, if the 

Exchange finds that information 

provided by an applicant is not 

reasonably compatible, it must examine 

any information available through 

electronic data sources. As discussed in 

the proposed rule, examining data 

sources, when available, will help 

minimize the need to request paper 

documentation from applicants, and the 

burden for Exchanges to process such 

documentation. A more detailed 

explanation of the change from ‘‘may’’ 

to ‘‘must’’ can be found in the comment 

and response to § 155.315. We also plan 

to release guidance for States regarding 

electronic data sources to support this 

verification. 

Comment: Commenters suggested a 

variety of operational solutions for 

carrying out the verification of an 

applicant’s eligibility for and/or 

enrollment in an eligible employersponsored plan. These comments were 

largely in response to the accompanying 

preamble discussion regarding the two 

potential data sources an Exchange may 

use to support this verification—the 

employer/employee template and the 

central database. Several commenters 

expressed support for or against the 

template and central database options. 

A large group consisting of consumer 

advocacy groups, a labor union and a 

think tank expressed support for the 

standard template option. Each of these 

commenters added that employees 

should not be required to provide 

information regarding minimum value 

because this information is not readily 

accessible to employees. One 

commenter requested that HHS provide 

that employers must submit information 

regarding eligibility for and enrollment 

in employer-sponsored plans to 

Exchanges on an annual basis. One 

commenter said HHS should provide 

States with the option to develop 

algorithms to determine who can be 

expected to have access to qualifying 

coverage in an eligible employersponsored plan using the size of the 

applicant’s employer and industry type 

instead of creating a new database. 

Commenters also supported the goal of 

leveraging existing data sources for the 

purposes of verifying eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan. One 

commenter said that HHS should give 

States the flexibility to verify eligibility 

for qualifying coverage in an eligible 

employer-sponsored plan using alreadyexisting data. One commenter stated 

that HHS should have employee W–2 

forms available as a verification source. 

Response: We continue to consult 

with the Departments of Labor and 

Treasury regarding the optimal solution 

for gathering information for the 

purposes of verification of eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan and will issue 

guidance on this topic. Both the 

template and database options we 

described in the proposed rule are being 

considered as operational solutions. We 

are also considering ways in which an 

individual could gather information 

from his or her employer for the 

purposes of this verification. A 

combination of these methods could 

provide the most accurate and reliable 

results, while gathering information 

from both of the relevant information 

sources—employees and employers. We 

are also considering additional options 

in which employees seeking coverage 

could provide other sources of 

documentation from his or her employer 

that could verify eligibility. We plan to 

issue guidance outlining one or more 

possible methods for comment that will 

help guide the collection of information 

necessary to verify eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan. However, it 

should be noted that any database 

option may rely on voluntary 

submission of information regarding 

employee eligibility for qualifying 

employer-sponsored coverage by 

employers. Further, HHS acknowledges 

that building the functionality required 

to collect and retain information 

regarding employer-sponsored 

insurance coverage will be time and 

resource-intensive, and is therefore is 

considering options for an interim 

approach for verification of eligibility 

for qualifying coverage in an eligible 

employer-sponsored plan. We plan to 

describe these interim options in 

forthcoming guidance. We also note that 

it is anticipated that initial guidance 

under 6103(l)(21) of the Code will not 

provide for sharing the contents of an 

applicant’s Form W–2 with the 

Exchange. 

Comment: Some commenters said the 

Federal government should perform 

verification of eligibility for qualifying 

coverage in an eligible employersponsored plan as a service to States. 

These commenters cited limitations on 

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7Frequently Asked Questions from Employers 

Regarding Automatic Enrollment, Employer Shared 

Responsibility, and Waiting Periods. February 9, 

2012: http://www.dol.gov/ebsa/newsroom/tr12– 

01.html. 

the ability of States to perform this 

verification. One commenter said that 

States with no individual income tax, 

specifically, would have difficulty 

making affordability determinations. 

Response: In the State Exchange 

Implementation Questions and Answers 

released on November 29, 2011, we 

indicated that we are exploring how the 

Federal government could manage 

services for verification of employersponsored minimum essential coverage. 

We note, though, that we do not believe 

that the absence of an individual State 

income tax return poses an obstacle to 

computing affordability, since the 

income verification process in 

§ 155.320(c)(3) of this final rule does not 

require the use of State income tax 

information. 

Comment: One commenter stated that, 

in the case of an inconsistency between 

an applicant’s attestation and internal 

Exchange records, the burden to 

produce further documentation should 

be on the employee, not the employer. 

Response: We believe our proposed 

regulation followed the commenter’s 

recommendation because the employee 

is the applicant. Section 155.315(f)(2)(ii) 

of this final rule describes that an 

applicant must provide further 

documentation if the applicant’s 

attestation is inconsistent with other 

information sources. 

Comment: One commenter requested 

that HHS must establish two distinct 

processes for the determination of 

eligibility for advance payments of the 

premium tax credit by Exchanges under 

proposed § 155.320 and for the 

assessment of employer penalties by the 

Treasury. 

Response: The statute makes clear 

that the two processes are distinct. 

Under sections 1411 and 1412 of the 

Affordable Care Act, the Exchange will 

make eligibility determinations for 

advance payments of the premium tax 

credit and cost-sharing reductions, 

notify employers that a payment may be 

assessed and that the employer has a 

right to appeal to the Exchange, and 

provide information to the Treasury. 

The assessment of shared responsibility 

payments under section 4980H of the 

Code is within the jurisdiction of the 

Treasury. 

Comment: One commenter concurred 

with the language of § 155.320 of the 

Exchange Eligibility proposed rule, 

which provides that the Exchange must 

verify information for only those 

applicants seeking eligibility 

determinations for insurance 

affordability programs in order to 

minimize multiple employer 

interactions with the Exchange. 

Response: Verification of eligibility 

for qualifying coverage in an eligible 

employer-sponsored plan is necessary 

only when indicated as necessary in 

accordance with the statute. An 

Exchange is not required to verify 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan for an 

applicant who did not request an 

eligibility determination for all 

insurance affordability programs. 

Comment: One commenter asserted 

that HHS should declare that all 

employer-sponsored insurance offered 

to American Indians and Alaska Natives 

fails the affordability and minimum 

value standards. The commenter 

reasoned that information regarding 

affordability and minimum value will 

be difficult for this type of applicant to 

provide. In addition, the commenter 

stated that if an individual is eligible to 

receive services through the Indian 

Health Service (IHS), including 

eligibility for services from an IHS 

facility, or for services from a tribe or 

tribal organization, or Urban Indian 

Organization, the Exchange should not 

attempt to verify an attestation regarding 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan 

because this population is exempt from 

the standard to maintain minimum 

essential coverage. 

Response: While we recognize that 

certain data elements requested from 

applicants for the purposes of this 

verification may be challenging to 

obtain, we believe that a wholesale 

exception for American Indians and 

Alaska Natives is not warranted or 

permissible under the statute, and are 

not providing for such an exception in 

this final rule. 

Comment: One commenter requested 

clarification on the issue of full-time 

employment and its relationship to 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan. 

Specifically, the commenter asked 

whether full-time status will be 

requested during the verification 

process, whether the Exchange will 

consider it when making eligibility 

determinations for advance payments of 

the premium tax credit, and whether the 

affordability test depends on whether 

the applicant is a full-time employee. In 

addition, the commenter requested 

clarification regarding notification and 

how an Exchange should manage 

eligibility determinations for applicants 

with multiple employers. 

Response: Section 1411(b)(4)(B) of the 

Affordable Care Act specifies that an 

applicant must provide information 

including, ‘‘whether the enrollee or 

individual is a full-time employee.’’ 

With that said, the affordability test and 

the determination of whether an 

applicant is eligible to receive advance 

payments of the premium tax credit 

and/or cost-sharing reductions is not 

dependent on the full-time status of the 

employee. Rather, this information is 

relevant for Treasury’s determination as 

to whether a shared responsibility 

payment under section 4980H of the 

Code applies to an employer. Also, we 

note that in the case of an applicant who 

has more than one employer, the 

Exchange will evaluate information 

from existing data sources regarding all 

of the applicant’s employers to 

determine eligibility for qualifying 

coverage in an eligible employersponsored plan. 

Comment: One commenter requested 

clarification regarding whether the 

Exchange will use tax data to ensure 

affordability of coverage for employees 

under proposed § 155.320. The 

commenters asked whether the 

employer may use wage data, instead of 

household income data, in its 

affordability determination. 

Response: The Exchange will use the 

projected annual household income 

verified through the process described 

in § 155.320(c)(3) of this final rule to 

compute the affordability of available 

coverage through an eligible employersponsored plan. The question of 

whether an employer may use wage data 

in determining whether its offered 

coverage meets affordability criteria is 

beyond the scope of this rule, and is 

within the authority of the Department 

of the Treasury. In September 2011, the 

Department of the Treasury released IRS 

Notice 2011–73 (2011–40 I.R.B. 474) 

requesting comments on a potential safe 

harbor permitting employers to use an 

employee’s W–2 wages in determining 

the affordability of employer-sponsored 

minimum essential coverage for purpose 

of the employer shared responsibility 

provisions under Code section 4980H. 

In February 2012, the Department of the 

Treasury released Notice 2012–17 

(issued jointly with HHS and the 

Department of Labor) confirming that it 

intends to issue proposed regulations or 

other guidance providing for this safe 

harbor.7

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.320 of the proposed 

rule, with the following modifications. 

In paragraph (c)(2)(i)(A), we adopted 

new language to describe the 

verification of household size for 

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Medicaid and CHIP, in order to align 

with the Medicaid Eligibility final rule. 

We redesignated paragraph (c)(3)(i)(B) 

as paragraph (c)(3)(i)(C), and added 

paragraph (c)(3)(i)(B), which clarifies 

that if an applicant attests that tax data 

represents an accurate projection of a 

tax filer’s family size for the benefit year 

for which coverage is requested, the 

Exchange must use the family size 

information from the tax data to 

determine the tax filer’s eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions. We 

also added paragraphs (c)(3)(i)(C) and 

(D), which clarifies that this paragraph 

applies when tax data are unavailable or 

when a change has occurred or is 

reasonably expected to occur such that 

the data does not represent an accurate 

projection of family size; and clarifies 

that the assessment of reasonable 

compatibility is with respect to data 

other than that from the tax return. 

We also make a technical change to 

§ 155.320(c)(2)(i)(B) to state that the 

Exchange ‘‘must,’’ rather than ‘‘may,’’ 

examine electronic data sources if 

information is found to be not 

reasonably compatible. This change was 

made in order to align with verification 

of other applicant information, and so 

that in the event the Exchange accepts 

an applicant’s attestation without 

further verification but such attestation 

is not reasonably compatible with other 

information provided by the application 

filer or contained in the records of the 

Exchange, the Exchange must examine 

available data sources to verify the 

attestation. If the information in the data 

sources cannot be used to verify the 

attestation, the Exchange must request 

additional documentation in accordance 

with Medicaid regulations at 42 CFR 

435.952. This change was also made in 

order to align with changes made to the 

Medicaid regulations regarding 

verification of household size. 

We redesignated paragraph 

(c)(3)(ii)(B) as paragraph (c)(3)(ii)(C), 

and removed the phrase ‘‘is requested 

and accept the application filer’s 

attestation without further verification, 

except as provided in paragraph 

(c)(3)(ii)(C) of this section’’ in order to 

clarify that the Exchange must proceed 

in accordance with the procedures in 

paragraph (c)(3)(ii)(C) after receiving 

such an attestation. 

We also added paragraph (c)(3)(ii)(B), 

which provides that the Exchange must 

request the applicant to attest regarding 

his or her projected annual household 

income. We have also added paragraph 

(c)(3)(ii)(C) which clarifies that if an 

applicant’s attestation indicates that the 

tax data represents an accurate 

projection of a family’s household 

income for the benefit year for which 

coverage is requested, the Exchange 

must use the household income 

information from the tax data to 

determine his or her eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions. In 

paragraph (c)(3)(iii)(B), we changed the 

term ‘‘may’’ to ‘‘must’’ to specify that if 

the Exchange finds that information 

provided by an applicant is not 

reasonably compatible, it must examine 

any information available through other 

electronic data sources. In paragraph 

(c)(3)(iv)(A), we replaced the phrase 

‘‘this is as a result of an individual not 

being required to file’’ with ‘‘an 

individual was not required to file.’’ In 

paragraph (c)(3)(iv)(B), we added that 

the alternate verification process is also 

available for a tax filer whose family 

composition has changed or is 

reasonably expected to change; we also 

added the phrase ‘‘or members of the tax 

filer’s family have changed or are 

reasonably expected to change.’’ In 

paragraph (c)(3)(iv)(C), we removed, ‘‘by 

more than 20 percent,’’ and clarified 

that this criterion is based on an 

applicant’s attestation that a change has 

occurred or is reasonably expected to 

occur. We added a paragraph 

(c)(3)(iv)(D) to allow a tax filer to qualify 

for the alternative verification process if 

the applicant attests that the tax filer’s 

filing status has changed or is 

reasonably expected to change for the 

benefit year for which the applicants in 

his or her family are requesting 

coverage. Omitting this provision from 

the proposed rule was an oversight; this 

basis for use of an alternate income 

determination process is authorized in 

section 1412(b)(2) of the Affordable Care 

Act. 

We removed proposed paragraph 

(c)(3)(vi); given changes made to this 

section of the regulation, this paragraph 

was no longer necessary. We 

redesignated proposed paragraph 

(c)(3)(v) as paragraph (c)(3)(vi), and 

added a new paragraph (c)(3)(v). In 

paragraph (c)(3)(v) of the final rule, we 

specified that if a tax filer qualifies for 

an alternate verification process and the 

applicant’s attestation to projected 

annual household income is no more 

than ten percent below the annual 

household income computed from tax 

data, the Exchange must accept his or 

her attestation without further 

verification. In revised paragraph 

(c)(3)(vi), we specified that the process 

in proposed paragraph (c)(3)(vi) applies 

if a tax filer qualifies for an alternate 

verification process and the applicant’s 

attestation to projected annual 

household income is greater than ten 

percent below the annual household 

income computed from tax data, or if 

tax data are unavailable. 

In paragraph (c)(3)(vi)(C), we clarified 

a reference to § 155.315(f) to include 

paragraphs (f)(1)–(4), which includes 

the 90 day period during which an 

individual may either present 

satisfactory documentary evidence or 

otherwise resolve the inconsistency. We 

also added paragraph (c)(3)(vi)(F), to 

describe that if, at the end of the 90 day 

period the Exchange is unable to verify 

the applicant’s attestation and the tax 

data described in (c)(3)(ii)(A) is 

unavailable, the Exchange must notify 

that applicant and discontinue the 

advance payments and cost-sharing 

reductions. We added this paragraph in 

order to explicitly describe the 

procedures the Exchange must follow 

when there is no data on which to rely 

at the conclusion of the 90 day period. 

We also added paragraphs (c)(3)(vii) 

and (c)(3)(viii), which clarify that the 

terms ‘‘household income’’ and ‘‘family 

size’’ in paragraph (c)(3) mean 

household income as specified in 

section 36B(d)(2) of the Code, and 

family size as specified in section 

36B(d)(1) of the Code, respectively. To 

clarify the process for verifying 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan tracks, 

we amended paragraph (d)(1) to state 

that the Exchange must also verify 

whether an applicant reasonably 

expects to be enrolled in an eligible 

employer-sponsored plan for the benefit 

year for which coverage is requested. 

We amended paragraph (d)(2) by 

changing ‘‘may’’ to ‘‘must’’, which 

provides that an Exchange must obtain 

data from electronic data sources to 

verify an applicant’s attestation that he 

or she is not enrolled in an eligible 

employer-sponsored plan when an 

applicant’s attestation is not reasonably 

compatible with other information 

provided by the applicant or in the 

records of the Exchange. We also added 

the word ‘‘electronic’’ in paragraph 

(d)(2) to create consistency with 

equivalent provisions in the subpart. 

We made several technical 

corrections. In paragraph (a)(2), we also 

changed the reference in § 155.315 from 

paragraph (e) to (h). In paragraphs 

(c)(3)(i)(C) and (c)(3)(ii)(C), we clarified 

that when an applicant attests that tax 

return data is not representative of 

family size or household income for the 

benefit year for which coverage is 

requested, it is as a result of a change 

in circumstances, which aligns with 

section 1412 of the Affordable Care Act. 

In paragraph (c)(3)(iii)(A), we added ‘‘in 

accordance with paragraph (c)(3)(ii)(B). 

Proposed paragraph (c)(3)(iv)(D) was 

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8This provision is proposed in the Exchange 

proposed rule at 76 FR 41866 (July 15, 2011) and 

is addressed in this final rule at § 155.330(d)(2). 

redesignated as paragraph (c)(3)(iv)(E). 

In paragraph (c)(3)(vi)(E), we 

renumbered the reference to § 155.310(f) 

to § 155.310(g), and the reference to 

§ 155.330(e)(1) through (e)(2) to 

§ 155.330(f). Throughout paragraph 

(c)(3), we changed references to ensure 

that the paragraph consistently referred 

to the tax filer for verification of 

household income for purposes of 

advance payments of the premium tax 

credit and cost-sharing reductions, in 

order to align with the eligibility 

standards. We made several changes to 

paragraph (f) to align with the Medicaid 

final rule. In paragraph (c)(2)(i)(A), we 

changed references to the Medicaid 

Eligibility final rule to account for 

renumbering. We also added the 

reference to 42 CFR 435.945 to 

paragraph (c)(2)(ii). Throughout the 

section, as in the rest of the subpart, we 

replaced language regarding application 

filers providing attestations with 

references to applicants providing 

attestations, since the language in 

§ 155.300(c) provides overarching 

clarification that attestations for 

applicants can be provided by 

application filers. 

g. Eligibility Redetermination During a 

Benefit Year (§ 155.330) 

In § 155.330, we outlined procedures 

for redeterminations during a benefit 

year. We proposed to rely primarily on 

the enrollee to provide the Exchange 

with updated information during the 

benefit year, and solicited comments as 

to whether there should be an ongoing 

role for Exchange-initiated data 

matching beyond what was proposed in 

the proposed rule. We also solicited 

comments on whether the Exchange 

should offer an enrollee an option to be 

periodically reminded to report any 

changes that have occurred. 

We proposed that the Exchange 

redetermine the eligibility of an enrollee 

in a QHP during the benefit year in two 

situations: first, if an enrollee reports 

updated information and the Exchange 

verifies it; and second, if the Exchange 

identifies updated information through 

limited data matching to identify 

individuals who have died or gained 

eligibility for a public health insurance 

program. 

We also proposed that an individual 

who enrolls in a QHP with or without 

advance payments of the premium tax 

credit or cost-sharing reductions must 

report any changes to the Exchange with 

respect to the eligibility standards 

specified in § 155.305 within 30 days of 

such change. Additionally, we proposed 

that the Exchange use the verification 

procedures at the point of initial 

application for any changes reported by 

an individual prior to using the selfreported data in an eligibility 

determination. We solicited comments 

on whether to allow the Exchange to 

limit those changes on which an 

individual must report, to changes in 

income of a certain magnitude. We 

noted that this provision would have no 

effect on whether an individual was 

liable for repayment of excess advance 

payments of the premium tax credit at 

reconciliation. 

We also proposed that the Exchange 

periodically examine certain data 

sources that are used to support the 

initial eligibility process to identify 

death and eligibility determinations for 

Medicare, Medicaid, CHIP, or the BHP, 

if applicable. We proposed to generally 

limit proactive examination to these 

pieces of information because of the 

reliability of these data sources and 

because the identified information 

provides clear-cut indications of 

ineligibility for enrollment in a QHP 

and advance payments of the premium 

tax credit and cost-sharing reductions. 

We further proposed to allow the 

Exchange to make additional efforts to 

identify and act on changes that may 

affect an enrollee’s eligibility to enroll 

in a QHP to the extent that HHS 

approves a plan to modify the process.8

We indicated that such approval would 

be granted if HHS finds that a 

modification would reduce the 

administrative costs and burdens on 

individuals while maintaining accuracy 

and minimizing delay, that such 

changes would not undermine 

coordination with Medicaid and CHIP, 

and that any applicable provisions 

related to the confidentiality, disclosure, 

maintenance, or use of information will 

be met. 

We solicited comments regarding 

whether and how we should approach 

additional data matching, whether the 

Exchange should modify an enrollee’s 

eligibility based on electronic data in 

the event that he or she did not respond 

to a notice regarding the updated 

information, and whether there are 

other procedures that could support the 

goals of the redetermination process for 

changes during the benefit year. 

To the extent that the Exchange 

verifies updated information reported 

by an enrollee or identifies updated 

information through data matching, we 

proposed that the Exchange determine 

the enrollee’s eligibility and provide an 

eligibility notice in accordance with the 

process described in § 155.305 and 

§ 155.310, respectively. Additionally, 

we proposed that changes resulting from 

a redetermination during the benefit 

year be effective for the first day of the 

month following the notice of eligibility 

determination, and proposed to allow 

for an exception, subject to the 

authorization of HHS, in which the 

Exchange could establish a ‘‘cut-off 

date’’ for changes resulting from a 

redetermination during the coverage 

year. We solicited comment as to 

whether this should or should not 

necessitate an authorization from HHS, 

and if there should be a uniform 

timeframe across all Exchanges. In 

addition, we solicited comment as to 

whether this is the appropriate policy 

for the effective date for changes. 

Finally, we proposed that if the 

eligibility determination results in an 

individual being ineligible to continue 

his or her enrollment in a QHP through 

the Exchange, the Exchange maintain 

his or her eligibility for enrollment in a 

QHP through the Exchange for a full 

month after the month in which the 

determination notice is sent. However, 

as soon as eligibility for insurance 

affordability materially changes, we 

proposed that the Exchange discontinue 

advance payments of the premium tax 

credit and cost-sharing reductions in 

accordance with the effective dates 

specified in paragraphs (e)(1) and (e)(2). 

We solicited comment on this topic, as 

well as on approaches to ensuring that 

transitions between insurance 

affordability programs do not create 

coverage gaps for individuals. 

Comment: We received a number of 

comments regarding redeterminations 

conducted during the benefit year, as 

proposed in § 155.330. While several 

commenters were supportive of the 

opportunity for an enrollee to have his 

or her eligibility redetermined prior to 

the annual redetermination, other 

commenters suggested that we limit or 

eliminate eligibility redeterminations 

during the benefit year in order to limit 

movement for enrollees between 

different insurance affordability 

programs and QHPs. 

Response: We feel it is important for 

the Exchange to accept and identify 

changes to help ensure that an enrollee’s 

eligibility reflects his or her true 

circumstances, which will help 

minimize repayment of excess advance 

payments at reconciliation when 

income increases, increase the 

affordability of coverage when income 

decreases, and improve program 

integrity. Therefore, we maintain in the 

final rule the opportunity for eligibility 

redeterminations during the benefit 

year. 

Comment: Of those entities that 

commented on the process for handling 

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18372 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

changes during the benefit year 

described in proposed § 155.330, a 

number suggested limiting the scope of 

changes on which enrollees must report; 

these commenters stated that requiring 

reporting of any and all changes 

potentially impacting eligibility would 

substantially increase the administrative 

burden on both the Exchange and on 

enrollees. Many commenters 

recommended clarifying that an enrollee 

in a QHP who is not receiving advance 

payments of the premium tax credit or 

cost-sharing reductions would not be 

required to report changes in their 

household income or access to 

minimum essential coverage, as these 

are not considered when financial 

assistance is not present. Other 

commenters suggested limiting the 

reporting of changes in income; some 

recommended that enrollees be allowed 

and encouraged, but never required, to 

report changes in income, while others 

were in favor of a establishing a 

threshold for the reporting of income 

changes. Generally, those commenters 

who suggested limiting the changes that 

individuals must report also suggested 

that enrollees should be encouraged but 

not required to report all other changes 

impacting eligibility, such as changes in 

income and family size. 

Response: In response to commenters’ 

suggestions, we have altered § 155.330 

in this final rule regarding the policy of 

reporting of changes during the benefit 

year. First, we clarify that the Exchange 

may not require an enrollee who did not 

request an eligibility determination for 

insurance affordability programs to 

report changes related to eligibility for 

insurance affordability programs, 

including changes in income or access 

to minimum essential coverage. We 

clarify that we mean an enrollee who, as 

of his or her most recent interaction 

with the Exchange, has not requested an 

eligibility determination for insurance 

affordability programs. In response to 

comments regarding which changes an 

enrollee must report, we amended the 

regulation text in the final rule to reflect 

different standards for changes related 

to income. As a result, we maintain that 

an individual must report a change 

related to eligibility for enrollment in a 

QHP through the Exchange (that is a 

change in residence, incarceration or 

citizenship and lawful presence) within 

30 days of such change; however, we 

allow the Exchange to establish a 

reasonable threshold below which an 

individual is not required to report a 

change in income. We believe that 

allowing the Exchange to limit the 

changes the enrollee must report will 

reduce confusion for enrollees and 

administrative burden on the Exchange, 

while still ensuring that significant 

changes are captured. With that said, we 

clarify that this provision does not allow 

the Exchange to not process changes in 

income that are reported by enrollees, 

regardless of whether they meet the 

threshold. 

Comment: In response to our request 

for comment in this area, we received 

comments asking that Exchanges 

periodically remind individuals to 

report changes impacting their 

eligibility. We also received comments 

recommending that the Exchange 

provide education regarding what 

changes must be reported and how the 

reporting of changes may impact 

reconciliation. 

Response: We have added a provision 

at paragraph § 155.330(c)(2) of this final 

rule specifying that the Exchange must 

provide periodic electronic notifications 

regarding the standards for reporting 

changes to an enrollee who has elected 

to receive electronic notifications, 

unless he or she has declined to receive 

such periodic electronic notifications. 

We believe this will complement the 

provision allowing Exchanges to limit 

those changes in income an enrollee 

must report, by helping ensure that 

consumers are informed of the impact 

and importance of reporting any change 

to the Exchange during the benefit year. 

In addition, we believe that electronic 

communications will be minimally 

burdensome for the Exchange and for 

enrollees. Exchanges can determine the 

timing and frequency of such notices. 

Comment: A large number of 

commenters supported our policy 

proposed at § 155.330(c) directing 

Exchanges to periodically initiate 

limited data matches to identify changes 

in enrollees’ eligibility. A few 

commenters asked that we preserve 

Exchange flexibility to expand the scope 

of data matches and others asked that 

we provide that Exchanges must expand 

data matches to include income and 

other data; these commenters noted that 

such an expansion would help decrease 

the burden on enrollees to report 

changes and to decrease inaccuracy 

when enrollees fail to report. However, 

some commenters were against any 

Exchange-initiated data matches, 

including the proposal to allow 

Exchanges flexibility to expand the 

scope of data matches with HHS 

approval. These commenters stated that 

such data matches would increase 

movement between programs for 

enrollees; they also believe that 

enrollees are in the best position to 

report changes impacting their 

eligibility. 

Response: While we acknowledge 

commenters’ calls for Exchange 

flexibility to expand data matching, we 

believe that allowing for unlimited data 

matching without the application of 

specific standards would be 

undesirable. Therefore, in the final rule, 

we maintain the flexibility provision we 

proposed in the paragraph redesignated 

in this final rule as § 155.330(d)(2), with 

one change: we do not require HHS 

approval to expand data matching, but 

provide that the Exchange must adhere 

to specific standards. We also adopt 

new procedures in this final rule around 

the verification of data obtained through 

such expanded data matches, which is 

explained in more detail in comment 

response below. Together, these changes 

will reduce burden for the Exchange 

and allow the Exchange to take steps to 

increase the accuracy of eligibility 

determinations as technology and data 

sources evolve; furthermore, the 

Exchange must ensure that such data 

matches would reduce administrative 

costs and burdens on individuals, 

maintain accuracy, minimize delay and 

would not undermine coordination with 

Medicaid and CHIP. 

Comment: We received a number of 

comments on the provision proposed in 

§ 155.330(d), related to the verification 

process and enrollee notification 

following the Exchange identifying a 

change that affects eligibility. As noted 

previously, some commenters objected 

to any Exchange-initiated data 

matching; these concerns were based in 

part on discomfort with the Exchange 

making changes to an enrollee’s 

eligibility in cases in which the enrollee 

did not respond to a notice regarding 

the change. Some suggested that the 

Exchange verify changes reported or 

identified through data matching in 

accordance with the standards proposed 

in § 155.315 and § 155.320. Several 

commenters suggested that enrollees be 

given advance notice of changes 

identified through data matching and 

that they be able to affirm all changes 

prior to the Exchange using the new 

information. A number of commenters 

recommended that the notice proposed 

in § 155.330(d) contain a right to appeal. 

Response: For changes in eligibility 

identified by the Exchange through data 

matching, the procedures for notifying 

the enrollee should be more clearly 

outlined in the final rule. Therefore, in 

§ 155.330(e)(2) of this final rule we 

provide that for changes identified 

through data-matching that do not 

impact household income, family size, 

or family composition, the Exchange 

must notify the enrollee of the new data 

and his or her projected eligibility 

determination, and allow the enrollee 

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30 days to notify the Exchange if the 

information is inaccurate. If the enrollee 

responds that the information is 

inaccurate, the Exchange must proceed 

with the inconsistency process 

described in § 155.315(f); if the enrollee 

responds that the information is 

accurate or does not respond, the 

Exchange must redetermine the 

enrollee’s eligibility based on the 

verified data obtained through the data 

matching process. 

For changes to household income, 

family size and family composition 

identified through data matching, we 

provide in § 155.330(e)(3) of this final 

rule that the Exchange must notify the 

enrollee of the new data and his or her 

projected eligibility determination 

(including the amount of advance 

payments of the premium tax credit and 

the level of cost-sharing reductions), 

and allow the enrollee 30 days to 

respond to the notice. If the enrollee 

does respond confirming the 

information obtained by the Exchange 

or responds by providing more up to 

date information, the Exchange must 

redetermine the enrollee’s eligibility 

based on the data obtained through the 

data matching process or by verifying 

the updated information provided by 

the enrollee. However, if the enrollee 

does not respond, the Exchange must 

maintain the enrollee’s eligibility 

without considering the new 

information. Because data related to 

income, family size and family 

composition has the potential to impact 

both the amount of financial assistance 

received by the enrollee and his or her 

tax liability at reconciliation, we believe 

the procedures for acting on such 

information should be different from the 

procedures for acting on data that do not 

have an impact on income and family 

size, and that enrollees must actively 

confirm such changes. We also note that 

the Exchange must notify the enrollee of 

the determination made as a result of a 

redetermination conducted during the 

benefit year, as indicated in (e)(1)(ii), 

and that such notice will include the 

right to appeal, in accordance with 

§ 155.355(a). 

Comment: Several commenters 

suggested clarification of our policies 

related to effective dates, as proposed in 

§ 155.330(d). A number of commenters 

suggested that we align effective dates 

across part 155; among those 

suggestions was one to align the 

effective dates for redeterminations with 

effective dates for coverage under 

special enrollment periods, as described 

in § 155.420. Further, we received 

comments which suggested that we 

establish a uniform cut-off date. 

Response: We recognize the need for 

greater alignment between the effective 

dates for redeterminations of eligibility 

with effective dates for coverage, as 

described in § 155.420 of this final rule. 

As such, in the final rule, we provide in 

§ 155.330(f) of this final rule that 

changes resulting from redeterminations 

during the benefit year must be 

implemented for the first day of the 

month following the date of the 

redetermination notice; however, we 

allow the Exchange to establish a cut-off 

date after which redeterminations 

would be implemented in the following 

month, as long as the cut-off date is no 

earlier than the date established under 

§ 155.420(b)(1), (which is the 15th of the 

month) in order to effectuate coverage 

on the first of the following month. We 

believe that allowing the Exchange to 

establish such a cut-off date aligning 

with the cut-off date for coverage 

effective dates will facilitate 

administrative efficiency for the 

Exchange, if it chooses to align. 

Regarding comments requesting a 

uniform cut-off date, we wish to 

maintain Exchange flexibility to 

establish such a cut-off date, which is 

the same approach taken in subpart E, 

and so do not change the policy 

reflected in § 155.330(f)(2) in this final 

rule. In the paragraph newly designated 

as § 155.310(f) in this final rule, we also 

include the effective dates of eligibility 

for redeterminations, since these were 

inadvertently not included in the 

proposed rule. We also clarify that when 

we state that the effective date is the 

date on which the Exchange must 

implement an eligibility determination, 

we mean the date on which the 

applicant’s eligibility, for example his or 

her advance payments of the premium 

tax credit or cost-sharing reduction, is or 

can be applied to the cost of his or her 

coverage. 

Comment: We received a number of 

comments regarding the policy 

proposed in § 155.330(e)(3), which 

provides that the Exchange must extend 

an enrollee’s eligibility for enrollment in 

a QHP for a full month, without advance 

payments of the premium tax credit or 

cost-sharing reductions, following a 

notice of redetermination terminating 

his or her eligibility for enrollment. 

Several commenters expressed concern 

regarding this provision citing a 

potential for liability to issuers when 

enrollees neglected to or were unable to 

pay premiums without financial 

assistance. Some commenters suggested 

that individuals must pay premiums in 

order to receive such coverage, or that 

the redetermination notice clearly 

indicate when coverage will be 

terminated and that the enrollee will be 

liable for premiums not paid. Others 

asked that we make clear that an 

enrollee may always choose to terminate 

his or her enrollment in a QHP sooner 

than the termination date included in 

paragraph (e)(3). 

Response: We acknowledge 

commenters concerns regarding the 

potential for QHP liability during the 

available extension of coverage 

described in proposed § 155.330(e)(3), 

redesignated as § 155.330(f)(3). We will 

take into consideration such comments 

when developing the notice of eligibility 

determination sent to an enrollee when 

he or she loses advance payments of the 

premium tax credit after 

redetermination and ensure that an 

enrollee is aware of their responsibility 

to pay for his or her premium. 

Furthermore, the provision 

§ 155.430(d)(3) of this final rule, which 

allows the enrollee to maintain 

eligibility for enrollment in a QHP 

without advance payments or costsharing reductions until the last day of 

the month following the notice of 

termination of coverage is sent, also 

makes clear that an enrollee may 

terminate his or her enrollment sooner 

than such date. We also clarify that the 

final rule does not provide that an 

enrollee must pay a premium if he or 

she does terminate coverage sooner than 

the date described in § 155.430(d)(3), 

but we acknowledge that this provision 

would not prevent an issuer from 

seeking out premiums owed. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.330 of the proposed 

rule, with several modifications: we 

specified in paragraph (b)(1), that an 

enrollee must report any change with 

respect to the eligibility standard 

specified in § 155.305 within 30 days of 

such change; however, we added in 

paragraph (b)(1) exceptions to this 

standard as described in new 

paragraphs (b)(2) and (b)(3). In new 

paragraph (b)(2), we provide that 

individuals who did request an 

eligibility determination for all 

insurance affordability programs must 

not be required to report changes related 

to eligibility for insurance affordability 

programs. In new paragraph (b)(3), we 

specified that for changes in income, the 

Exchange may establish a reasonable 

threshold for such changes below which 

enrollees are not required to report. 

Also, in new paragraph (b)(4), we added 

that the Exchange must allow an 

enrollee, or an application filer on 

behalf of the enrollee, to report a change 

via all channels available for the 

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submission of an application, which are 

described in § 155.405(c). 

We also created new paragraph (c), 

which describes the standards for the 

Exchange to verify changes reported by 

enrollees. We moved proposed 

paragraph (b)(2) and redesignated it as 

paragraph (c)(1) and added paragraph 

(c)(2), which describes that the 

Exchange must provide enrollees with 

periodic notifications regarding 

standards for reporting changes and the 

opportunity to report any change, to the 

extent the enrollee has elected to receive 

electronic notifications and has not 

opted out of periodic notifications 

regarding change reporting. 

In new paragraph (d)(2), we added the 

opportunity for the Exchange to make 

additional efforts to identify and act on 

changes related to eligibility for 

insurance affordability programs, in 

addition to eligibility for enrollment in 

a QHP as previously proposed. We also 

removed the language that provided the 

Exchange with flexibility to conduct 

data matching during the benefit year, 

contingent upon HHS approval of a 

change to the Exchange Blueprint and 

instead included that this flexibility is 

subject to compliance with specific 

standards, including that such efforts 

would reduce the administrative costs 

and burdens on individuals while 

maintaining accuracy and minimizing 

delay, that it would not undermine 

coordination with Medicaid and CHIP, 

and that applicable standards under 

§ 155.260, § 155.270, § 155.315(i) of this 

section, and section 6103 of the Code 

with respect to the confidentiality, 

disclosure, maintenance, or use of such 

information will be met. We also add 

that such efforts must comply with the 

newly designated paragraphs (e)(2) and 

(3). 

In newly designated paragraph (e), we 

added paragraphs (e)(2) and (e)(3) to 

describe the procedures for 

redeterminations that Exchanges must 

follow upon identifying new 

information through data matching. In 

newly designated paragraph (e)(2), we 

specified that for all changes identified 

by the Exchange that are not related to 

income, family size and family 

composition, the Exchange must notify 

the enrollee of his or her projected 

eligibility determination and allow the 

enrollee 30 days from the date of the 

notice to inform the Exchange that such 

information is inaccurate. If the 

information is inaccurate, the Exchange 

must follow procedures related to 

resolving inconsistencies described in 

§ 155.315(f). If the enrollee does not 

respond within the 30 day period, the 

Exchange must redetermine his or her 

eligibility using the new information. In 

newly designated paragraph (e)(3), we 

specify that for changes identified by 

the Exchange that are related to income, 

family size and family composition, the 

Exchange must notify the enrollee of his 

or her projected eligibility 

determination and allow the enrollee 30 

days from the date of the notice to 

respond to the notice. If the enrollee 

responds within the 30 day period, the 

Exchange must redetermine his or her 

eligibility in accordance with the 

procedures for redetermining enrolleereported data. If the enrollee does not 

respond within the 30 day period, we 

specified that the Exchange must 

maintain the enrollee’s eligibility 

determination without the updated 

information. 

In newly designated paragraph (f), we 

amended the provisions related to 

effective dates for redeterminations 

made in accordance with this section. In 

newly designated paragraph (f)(1), we 

clarified the exceptions to the provision 

regarding effective dates for 

implementing changes resulting from a 

redetermination. In newly designated 

paragraph (f)(2), we added that while an 

Exchange may determine a reasonable 

point in a month after which a change 

captured through a redetermination will 

not be effective until the first day of the 

month after the month specified in 

newly designated paragraph (f)(1). We 

clarify that such reasonable point must 

be no earlier than the cut-off date 

described in § 155.420(b)(1) of this part. 

In newly designated paragraph (f)(3), we 

also added a new reference to the 

effective dates described in subpart E to 

accommodate for renumbering. 

We renumbered several paragraphs in 

this section to accommodate changes to 

the final rule. Also, in paragraph (d), 

which was previously designated as 

paragraph (c), we changed the title to 

‘‘periodic examination of data sources.’’ 

h. Annual Eligibility Redetermination 

(§ 155.335) 

In § 155.330, we proposed that the 

Exchange redetermine the eligibility of 

an enrollee in a QHP during a benefit 

year if it receives and verifies new 

information reported by an enrollee or 

identifies updated information through 

data matching. We solicited comments 

on whether the redetermination based 

on changes reported or identified during 

the year should satisfy the annual 

redetermination as well, and if so, 

whether this should be a Federal 

standard or an Exchange option. We 

also solicited comment on how the 

interaction between Exchange eligibility 

and updated tax data can be 

streamlined, and at what point annual 

redeterminations should occur. Finally, 

we solicited comment regarding 

whether and how we should approach 

data matching related to 

redeterminations, and whether there 

were alternatives that could support the 

goals of this process. 

We also proposed that the Exchange 

provide an enrollee with an annual 

redetermination notice and identified 

specific data elements that should be 

contained in the notice and solicited 

comment regarding the contents of the 

notice. In addition, we proposed that 

the Exchange direct an individual to 

report any changes relative to the 

information listed on the 

redetermination notice within 30 days 

of the date of the notice, and specified 

that the Exchange must verify any 

changes reported by the individual in 

response to the notice using the same 

verification procedures used at the point 

of initial application, including the 

provisions regarding inconsistencies. 

We also proposed that an enrollee 

must sign and return the 

redetermination notice. We solicited 

comment on policy and operational 

strategies to improve the accuracy of 

redeterminations. We also solicited 

comment as to what steps the Exchange 

could take to ensure that 

redetermination minimizes burden on 

individuals, QHPs, and the Exchange 

without increasing inaccuracies. 

After the conclusion of the 30 day 

notice period, we proposed that the 

Exchange determine an enrollee’s 

eligibility based on the information 

provided to the enrollee in the 

redetermination notice, along with any 

information that an enrollee has 

provided in response to such notice that 

the Exchange has verified; notify the 

enrollee; and, if applicable, notify the 

enrollee’s employer. If an enrollee does 

not sign and return the notice, we 

proposed that the Exchange redetermine 

an enrollee’s eligibility based on the 

information provided in the notice. In 

addition, we proposed that to the extent 

that the Exchange is unable to verify a 

change reported by an enrollee as of the 

close of the 30 day period, the Exchange 

redetermine the enrollee’s eligibility as 

soon as possible after completing 

verification. 

We solicited comment as to whether 

the effective dates for changes made as 

a result of an annual redetermination 

should be different from the effective 

dates for changes made as a result of a 

redetermination that occurs during the 

coverage year. 

Finally, we proposed that if an 

enrollee remains eligible for coverage in 

a QHP upon annual redetermination, 

the enrollee will remain in the QHP 

selected the previous year unless the 

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enrollee takes action to select a new 

QHP or terminate coverage. 

Comment: A number of commenters 

supported the provision in proposed 

§ 155.335(a) to conduct eligibility 

redeterminations on an annual basis. 

Many commenters highlighted that this 

would avoid administrative burden, 

costs, and loss of eligibility. Several 

commenters suggested that HHS not 

provide for more frequent 

redeterminations. 

Response: In the final rule, we 

maintain the standard in § 155.335(a) to 

redetermine eligibility on an annual 

basis. We address redeterminations 

during the coverage year in our 

responses to § 155.330. 

Comment: The majority of 

commenters recommended that the 

timing of annual redetermination as 

described in proposed § 155.335 align 

with the annual open enrollment period 

as specified in § 155.410. Some 

commenters suggested combining the 

annual open enrollment notice with the 

annual redetermination notice. Many 

commenters recommended that the 

annual redetermination notice be 

distributed prior to the start of the 

annual open enrollment period. One 

commenter suggested sending the 

annual redetermination notice no later 

than 45 days prior to annual open 

enrollment. Another commenter 

recommended that HHS provide that 

Exchanges must send annual 

redetermination notices to enrollees no 

later than June 15th of each year. 

Commenters also suggested giving 

Exchanges flexibility to determine the 

best way to conduct redeterminations. 

Response: In response to the large 

number of comments we received on 

this topic, we have set a timing standard 

in § 155.335(d) of this final rule for 

annual redetermination to align with 

annual open enrollment. In 

§ 155.335(d)(1), we provide that the 

Exchange must provide the annual 

redetermination notice and the notice of 

annual open enrollment in a single, 

coordinated notice for the 2015 and 

2016 benefit year. We believe this will 

reduce confusion among consumers and 

reduce administrative burden. In 

§ 155.410(d), we specify that the notice 

of annual open enrollment will be 

provided no earlier than September 1 

and no later than September 30. We 

expect that as the program matures, 

States may have a better understanding 

of the best time to release the annual 

redetermination notice, and therefore in 

§ 155.335(d)(2) of this final rule, starting 

with annual redeterminations for 

coverage effective on January 1, 2017, 

we provide flexibility for Exchanges to 

adjust the timing and coordination of 

the redetermination notice in future 

years. The Exchange may exercise this 

flexibility to provide separate notices, 

provided that the timing of the 

redetermination notice is no earlier than 

the date of the notice of annual open 

enrollment specified in 155.410(d) and 

allows a reasonable amount of time for 

the enrollee to review the notice, 

provide a timely response, and for the 

Exchange to implement any changes in 

coverage elected during the annual open 

enrollment period; this is to ensure that 

the enrollee has adequate time to review 

available plans and change plans, if 

applicable. 

Comment: We solicited comment 

regarding whether a redetermination 

during the benefit year should satisfy 

the annual redetermination standard. 

Several commenters opposed this 

concept. One commenter recommended 

that allowing a redetermination of 

eligibility during the coverage year to 

serve as a household’s annual 

redetermination should be a State 

option. Several commenters 

recommended that HHS should not give 

Exchanges the flexibility to conduct 

redeterminations on a rolling basis. 

Commenters suggested that annual 

redetermination should occur at a 

consistent point in the year for all 

individuals when new tax data becomes 

available, regardless if eligibility was 

redetermined during the coverage year. 

Response: We decided not to allow 

redeterminations during the benefit year 

to satisfy the annual redetermination for 

an enrollee. Due to the fixed coverage 

period and a set annual open enrollment 

period, we believe allowing for a rolling 

annual redetermination would create a 

situation where the Exchange may 

redetermine an enrollee’s eligibility but 

the enrollee would not be able to switch 

plans because they would not qualify 

for an enrollment period. Additionally, 

we believe that because the annual 

redetermination relies on tax data which 

is updated at a specific time each year, 

rolling annual redetermination would 

add unnecessary complexity to the 

streamlined redetermination process. 

Finally, we also believe that this 

approach will increase the predictability 

of Exchange staffing and other resource 

needs. 

Comment: Some commenters 

suggested HHS clarify that enrollees do 

not have to submit a new application to 

complete the annual redetermination 

process. Several commenters 

recommended that an individual’s 

information from initial enrollment 

should be retained and used during the 

redetermination process. Accordingly, 

commenters suggested that an enrollee 

should never have to re-enter any 

information during the annual 

redetermination process that has not 

changed. A few commenters specified 

that States should use an ‘‘ex parte’’ 

redetermination process, in which the 

Exchange attempts to redetermine the 

enrollee’s eligibility using information 

from external data sources; under such 

a process, the Exchange only contacts 

the enrollee if additional information is 

needed. Commenters also suggested that 

Exchanges and States should use a 

‘‘passive’’ redetermination process, 

through which an enrollee notifies the 

Exchange that he or she agrees with the 

information included in a 

redetermination notice by not 

responding. Several commenters 

suggested that pre-populated forms or 

applications be used for annual 

redeterminations. Many commenters 

expressed support for the proactive role 

of the Exchange in obtaining data from 

external data sources to assist in annual 

redetermination. 

Response: We have maintained the 

provisions in § 155.335(c) of this final 

rule that outline information to be 

presented on the annual 

redetermination notice. We believe this 

will increase retention rates by helping 

to minimize the risk of individuals 

losing coverage when they remain 

eligible. We also believe this process 

will reduce administrative burden on 

the Exchange by reducing the steps 

necessary to redetermine eligibility. 

Furthermore, we add language to 

paragraph (c)(3) providing that the 

notice of annual redetermination must 

include eligibility for Medicaid, CHIP or 

BHP, if applicable, since the updated 

tax return information and data 

regarding MAGI-based income may 

indicate eligibility for Medicaid, CHIP 

or BHP, in addition to eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions. 

Comment: Several commenters 

recommended specific information for 

the content of the annual 

redetermination notice as specified in 

proposed § 155.335(c). Items suggested 

include the date the redetermination 

will become effective, procedures to 

correct errors in data obtained or used 

in the enrollee’s most recent eligibility 

determination, including the 30 day 

requirement to report changes specified 

in § 155.335(e), or where individuals 

may obtain additional information or 

assistance, including the Exchange Web 

site, call center, Navigators and other 

consumer assistance tools. One 

commenter felt that notices regarding 

annual redeterminations may be 

confusing to many consumers. Some 

commenters recommended that notices 

comply with standards in § 155.230 to 

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ensure meaningful access for limited 

English proficient enrollees. Others 

recommended that annual 

redetermination notices include 

information about rights to appeal. 

Response: We provide general 

standards for all notices from the 

Exchange in § 155.230, which include 

accessibility and readability standards 

outlined in § 155.205(b)(2) and (b)(3). 

We intend to provide further 

interpretation regarding issuance of the 

annual redetermination notice in future 

guidance which may include a model of 

the annual redetermination notice and 

detail on content. 

In response to comments, we would 

also like to clarify the differences 

between the notices outlined in 

§ 155.335(c) and § 155.310(g) of this 

final rule. The redetermination notice in 

§ 155.335(c) is the pre-populated form 

which includes the enrollee’s updated 

information, including—in the case of 

an enrollee who allowed the Exchange 

to determine his or her eligibility for 

insurance affordability programs— 

updated tax return information and 

updated current income information. In 

accordance with § 155.335(e), this 

notice will be signed and returned by 

each enrollee to confirm information is 

up-to-date. After information on this 

notice has been verified and a final 

eligibility determination has been made, 

the Exchange will send a second notice 

described in § 155.310(g), as finalized in 

this rule, to notify the enrollee of the 

final eligibility determination for the 

upcoming benefit year. 

Comment: Many commenters 

recommended that the final rule should 

specify that enrollees can report changes 

through the same channels available for 

the submission of an application 

(online, by phone, by mail, in person), 

as specified in proposed § 155.405. 

Response: In 155.335(e)(2) of this final 

rule, we clarify that an enrollee or an 

application filer, on behalf of the 

enrollee, may report a change online, by 

phone, by mail, or in person. We 

identify these channels for an enrollee 

to provide additional information based 

on section 1413(b) of the Affordable 

Care Act and § 155.405, which identify 

how an applicant may submit an 

application. As the annual 

redetermination will be functionally the 

same as a new application for the next 

benefit year, the use of the same 

procedures is appropriate. We have also 

added this provision to § 155.330(b)(4), 

to allow an enrollee, or application filer 

on the enrollee’s behalf, to report 

changes via the channels described in 

§ 155.405. 

Comment: Some commenters 

supported the standard set forth in the 

proposed rule that the verification 

processes related to changes reported as 

a part of the annual redetermination 

process specified in proposed 

§ 155.335(e) be consistent with the 

processes specified in proposed 

§ 155.315 and § 155.320. Many 

commenters suggested HHS specify 

timeframes by which the Exchange must 

verify changes reported by the enrollee 

in response to the annual 

redetermination notice. One commenter 

suggested a time period of 10 days by 

which to conduct the verification. 

Another commenter believed States 

should have the flexibility to be able to 

determine any time constraints or 

verification processes related to changes 

reported in response to the annual 

redeterminations. 

Response: We support the standard to 

use the same verification processes for 

initial applications and for annual 

redeterminations. We believe that the 

timeliness standards for verification 

should be consistent with the standards 

§ 155.310(e); we intend to provide more 

guidance on the interpretation of the 

timeliness standard. 

Additionally, we would like to clarify 

that in order to conduct a 

redetermination as outlined in 

§ 155.335, the Exchange must obtain an 

authorization from an enrollee to 

request his or her tax data. We 

anticipate that this authorization will be 

obtained during the initial application 

process, and that such authorization 

could be accomplished, for example, by 

allowing enrollees a chance to opt out 

of authorizing the use of tax data. An 

enrollee must provide an authorization 

for the Exchange to obtain tax data for 

annual redeterminations only if he or 

she chooses to allow the Exchange to 

determine his or her eligibility for 

insurance affordability programs. We 

also clarify that without such 

authorization, the Exchange will be 

unable to access tax return information 

and, subsequently, conduct an 

eligibility redetermination for insurance 

affordability programs. 

The Secretary of Treasury will allow 

an individual to authorize the release of 

his or her tax data for use by the 

Exchange in verification of household 

income for a period of up to five years. 

In 155.335(k), we specify that the 

Exchange must have authorization from 

an enrollee in order to obtain his or her 

updated tax return information for 

purposes of conducting an annual 

redetermination. We specify that the 

Exchange may obtain this tax return 

information for a period of no more than 

five years, based on a single 

authorization. The Exchange must allow 

the individual to decline a five-year 

authorization or to authorize the 

Exchange to obtain tax return data for 

annual redetermination for a period of 

less than five years. We also specify that 

the Exchange must allow an individual 

to discontinue, change, or renew the 

authorization at any time. We expect 

that an enrollee will have an 

opportunity to reauthorize the Exchange 

to obtain tax return data whenever he or 

she reports changes, at annual 

redetermination, and in the course of 

other interactions with the Exchange. 

We believe this process will be 

minimally burdensome on the 

individual and on the Exchange. 

In 155.335(l), we clarify that to the 

extent that an enrollee has requested an 

eligibility determination for all 

insurance affordability programs and 

has not authorized the request of tax 

data, the Exchange will redetermine the 

enrollee’s eligibility for enrollment in a 

QHP, but must notify the enrollee that 

the Exchange will not proceed with the 

redetermination process until such 

authorization has been obtained or the 

enrollee discontinues his or her request 

for an eligibility determination for 

insurance affordability programs. 

We also clarify that for purposes of 

providing updated data described in 

§ 155.335(b), we expect that the 

Exchange will obtain the updated 

information for enrollees who, as of 

their most recent interaction with the 

Exchange, has requested an eligibility 

determination for all insurance 

affordability programs; as such, for an 

enrollee who requested an eligibility 

determination for insurance 

affordability programs but who was 

determined ineligible for advance 

payments of the premium tax credits or 

cost-sharing reductions, the Exchange 

would obtain updated information at 

annual redetermination, to the extent 

that the applicable authorization was in 

place. 

Comment: We received a large 

number of comments expressing 

concern over the requirement for 

enrollees to sign and return the annual 

redetermination notice when no 

changes have occurred, as specified in 

proposed § 155.335(f)(1). Commenters 

suggested the sign and return 

requirement was an unnecessary burden 

on consumers and Exchanges, since the 

Exchange is instructed to redetermine 

eligibility using the information on the 

notice even if the notice is not returned. 

A few commenters highlighted the 

current practice in Medicaid where 

annual redeterminations are completed 

without a signature required from the 

enrollee. 

Response: While signing and 

returning the redetermination notice 

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will add an additional step in the 

redetermination process, due to the 

financial responsibility imposed on an 

individual accepting an advance 

payment of the premium tax credit as 

part of the reconciliation process, we 

believe it is important to collect a 

signature from an enrollee as a means of 

ensuring that he or she accepts this 

responsibility. 

Comment: Several commenters 

supported proposed § 155.335(e), which 

provided that an enrollee correct any 

erroneous information on the 

redetermination notice and report 

changes to the information on the 

annual redetermination notice within 30 

days. A few commenters urged HHS to 

consider extending the period enrollees 

are given to return the notice with 

reported changes consistent with the 

language in the Medicaid proposed rule, 

which provides States with the 

authority to increase this time period to 

more than 30 days. 

Response: In the final rule, we 

maintain the standard of 30 days for an 

individual to report changes and believe 

this standard provides a reasonable 

amount of time for individuals to review 

the annual redetermination notice and 

submit changes as appropriate. 

Comment: Commenters recommended 

adopting the effective dates outlined for 

the annual open enrollment periods in 

proposed § 155.410(f) as the effective 

dates for annual redeterminations, 

except for enrollees who become 

eligible for Medicaid as a result of an 

annual redetermination. In those cases, 

commenter recommended that Medicaid 

eligibility and coverage be effective on 

the first day of the month in which the 

eligibility determination is made. 

Response: In § 155.335(i) of the final 

rule, we have modified the language in 

the regulation text to clarify that the 

effective date for the annual 

redetermination will be the first day of 

the coverage year following the year in 

which the Exchange provided the 

annual redetermination notice in 

§ 155.335(c) or on the first day of the 

month following the eligibility notice to 

the enrollee in accordance with 

§ 155.330(f), whichever is later. The 

latter part of this clarification addresses 

situations in which the eligibility 

determination is made by the Exchange 

in the benefit year for which the 

applicant is seeking coverage. The 

effective dates for annual 

redetermination should not be confused 

with the dates by which the Exchange 

must make a QHP selection effective 

during the annual open enrollment 

period as specified in § 155.410(f). 

Regarding commenters suggestions for 

the effective dates for individual 

determined eligible for Medicaid at 

annual redetermination, we clarify that 

coverage effective dates for Medicaid 

eligibility are governed by those 

standards found in Medicaid regulations 

at 42 CFR 435.915. In accordance with 

§ 155.310(d)(3), the Exchange must 

transmit enrollee information promptly 

and without undue delay to the State 

Medicaid or CHIP agency so that he or 

she may be enrolled in Medicaid or 

CHIP. We note that in accordance with 

section 36B(c)(2) of the Code, eligibility 

for premium tax credits (including the 

advance payments) and cost-sharing 

reductions will terminate when an 

individual is eligible for minimum 

essential coverage, including Medicaid 

and CHIP coverage. 

Comment: Several commenters 

supported the provision specified in 

proposed § 155.335(i) to allow an 

enrollee who remains eligible for 

enrollment in a QHP upon annual 

redetermination to remain in his or her 

QHP without the need to re-select it. 

One commenter suggested the provision 

aligns with the goal of a simple and 

consumer-friendly Exchange. Another 

commenter emphasized that no enrollee 

should be removed from coverage until 

the enrollee has been given notice of an 

eligibility determination and the right to 

appeal. 

Response: We are finalizing without 

change the provision to allow an 

enrollee who remains eligible for 

enrollment in a QHP upon annual 

redetermination to remain in his or her 

QHP without the need to re-select it. We 

believe this provision will minimize 

disruptions in coverage for eligible 

enrollees and administrative burden for 

the Exchange, QHP issuers, and 

enrollees. We also clarify that references 

to termination in this provision only 

relate to termination initiated by the 

enrollee, which we believe addresses 

the commenter’s concern about notices 

and appeals. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.335 of the proposed 

rule, with the following modifications: 

in paragraph (a), we noted that annual 

redeterminations are limited based on 

the new language in paragraph (l) of this 

section. In paragraph (b), we clarified 

that in the case of an enrollee who has 

requested an eligibility determination 

for all insurance affordability programs 

in accordance with § 155.310(b) of this 

subpart, the Exchange must request 

updated tax return information, if the 

enrollee has authorized the request of 

such tax return information. In 

paragraph (c), we added that the notice 

must also include an enrollee’s 

projected eligibility determination, 

including eligibility for insurance 

affordability programs. In paragraph (d), 

we clarified the timing of the annual 

redetermination. For coverage effective 

January 1, 2015 and January 1, 2016, the 

Exchange must satisfy the notice 

provisions of paragraph (c) of this 

section and § 155.410(d) of this part 

through a single, coordinated notice. In 

paragraph (d)(2), we provided that for 

coverage effective January 1, 2017, the 

Exchange may send the annual 

redetermination notice separately from 

the notice of annual open enrollment, 

provided that certain restrictions on the 

timing of such notices are met. 

In paragraph (e) of this section we 

clarified that the Exchange must allow 

an enrollee or an application filer, on 

the enrollee’s behalf, to report changes 

via the channels available for the 

submission of an application, as 

described in § 155.405(c) of this part. 

We also added to paragraph (g)(1), that 

an application filer may sign and return 

the annual redetermination notice on an 

enrollee’s behalf. In paragraph (i), we 

modified the standard for effective dates 

of annual redetermination to clarify that 

the Exchange must ensure that the 

annual redetermination is effective on 

the first day of the coverage year 

following the year in which the 

Exchange provided the notice in 

paragraph (c) of this section or in 

accordance with the rules specified in 

§ 155.330(f), regarding effective dates, 

whichever is later. In new paragraph (k), 

we added language to specify that the 

Exchange must have authorization from 

an enrollee in order to obtain updated 

tax return information for purposes of 

conducting an annual redetermination. 

We also describe that any single 

authorization will extend for a period of 

no more than five years, and that an 

individual may authorize the Exchange 

to obtain tax data for a period of less 

than five years, or not at all. We also 

provide that the enrollee must be able 

to discontinue, change or renew an 

authorization at any time. In new 

paragraph (l), we added language to 

specify that to the extent that an 

enrollee who has requested an eligibility 

determination for insurance 

affordability programs in accordance 

with § 155.310(b) has not authorized the 

request of data described in paragraph 

(b), the Exchange must notify the 

enrollee in accordance with the timing 

described in paragraph (d), and not 

proceed with the redetermination 

process described in paragraphs (c) and 

(e) through (j) until such authorization 

has been obtained or the enrollee 

discontinues his or her request for an 

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eligibility determination for insurance 

affordability programs in accordance 

with § 155.310(b). 

We also made a few technical 

corrections to this section including 

renumbering paragraphs (d) through (k) 

to account for additional regulation text 

and updated cross-references based on 

similar renumbering in other parts of 

this final rule. In paragraph (e)(1) we 

clarified that the reference to a notice is 

referring to the notice in paragraph (c) 

of this section. We also clarified that 

changes reported at annual 

redetermination must be verified 

according to the processes specified in 

§ 155.315 and § 155.320. Finally, we 

clarified that the verification referred to 

in paragraph (h)(2) of this section is the 

same verification specified in paragraph 

(f) of this section. 

i. Administration of Advance Payments 

of the Premium Tax Credit and CostSharing Reductions (§ 155.340) 

In § 155.340, we proposed reporting 

provisions for the Exchange related to 

advance payments of the premium tax 

credit and cost-sharing reductions. We 

proposed that in the event of a 

determination of an individual’s 

eligibility or ineligibility for advance 

payments of the premium tax credit or 

cost-sharing reductions, including a 

change in the level of advance payments 

of the premium tax credit or costsharing reductions for which he or she 

is eligible, the Exchange provide 

information to the issuer of the QHP 

selected by the individual or in which 

the individual is enrolled. 

We also proposed that the Exchange 

provide eligibility and enrollment 

information to HHS to enable HHS to 

begin, end, or adjust advance payments 

of the premium tax credit and costsharing reductions. We solicited 

comment on whether the information 

could be used by HHS to support any 

reporting necessary for monitoring, 

evaluation, and program integrity. We 

solicited comment as to how this 

interaction can work as smoothly as 

possible and the scope of information 

that should be transmitted among the 

relevant agencies. 

We further proposed that the 

information transmitted to issuers 

include the information necessary to 

enable the issuer of the QHP to 

implement or discontinue the 

implementation, or modify the level of 

an individual’s advance payment of the 

premium tax credit or cost-sharing 

reductions. 

We proposed to codify the reporting 

rules in sections 1311(d)(4)(I)(ii) 

through (iii) and 1311 (d)(4)(J), which 

support the employer responsibility 

provisions of the Affordable Care Act. 

We proposed that when the Exchange 

determines that an applicant is eligible 

to receive advance payments of the 

premium tax credit based in part on a 

finding that his or her employer does 

not provide minimum essential 

coverage, or provides minimum 

essential coverage that is unaffordable 

as described in 26 CFR 1.36B–2(c)(3)(v) 

of the Treasury proposed rule, or does 

not meet the minimum value standard, 

as described in 26 CFR 1.36B–2(c)(3)(vi) 

of the Treasury proposed rule, the 

Exchange will provide this information 

to the Secretary of the Treasury. We 

proposed that the Exchange transmit 

such applicant’s name and SSN to HHS, 

which will transmit it to the Secretary 

of the Treasury. 

In the event that an enrollee for whom 

advance payments of the premium tax 

credit are made or who is receiving costsharing reductions notifies the Exchange 

that he or she has changed employers, 

we proposed that the Exchange transmit 

the enrollee’s name and SSN to HHS, 

which will transmit it to the Treasury. 

We also proposed that in the event an 

enrollee for whom advance payments of 

the premium tax credit are made or who 

is receiving cost-sharing reductions 

terminates coverage in a QHP through 

the Exchange during a benefit year, the 

Exchange transmit his or her name and 

SSN and the effective date of the 

termination of coverage to HHS, which 

will transmit it to the Treasury. We 

proposed that the Exchange will also 

transmit his or her name and the 

effective date of the termination of 

coverage to his or her employer. Finally, 

we proposed that the Exchange must 

comply with the standards related to 

reconciliation of the advance payments 

of the premium tax credit specified in 

section 36B(f)(3) of the Code and 26 CFR 

1.36B–5 regarding reporting to the IRS 

and to taxpayers. 

Comment: We received a number of 

comments asking that we clarify how 

advance payments of the premium tax 

credit will be administered. Many 

comments suggested the use of 

electronic funds transfers, as well as 

electronic communications that are 

compatible with existing issuer 

infrastructure. Several commenters 

noted the importance of transparency 

and flexibility in establishing the 

standards regarding administration of 

the advance payment of the premium 

tax credit and cost-sharing reductions. 

Commenters suggested the need for 

further guidance on this topic. 

Response: In § 155.340 of this final 

rule, we provide general standards for 

the exchange of information necessary 

for administration of advance payments 

of the premium tax credit and costsharing reductions, as well as to support 

the employer responsibility and 

reconciliation provisions of the 

Affordable Care Act. We anticipate 

providing more operational and 

procedural detail about these processes 

in future guidance. 

Comment: Several commenters 

recommended that the proposed 

§ 155.340(a) include a specific 

timeliness standard for the Exchange to 

transmit information to facilitate the 

administration of advance payments of 

the premium tax credit and cost-sharing 

reductions to the applicable QHP and 

HHS. Commenters recommended that 

the timeliness standard reflect the ‘‘realtime’’ expectation, but to provide for 

exceptions in instances when systems 

are not functioning properly. Some 

commenters suggested that the 

regulation specify that all transactions 

be completed within one business day 

from the initiating event (for example, 

the completion of an eligibility 

determination). 

Response: In paragraph (d), we adopt, 

on an interim final basis, a timeliness 

standard that the Exchange must 

perform actions outlined in § 155.340(a) 

to enable advance payment of premium 

tax credits and cost-sharing reductions 

‘‘promptly and without undue delay.’’ 

We also adopt this standard for 

transmission of information described 

in § 155.340(b). We intend to interpret 

this standard in future guidance. 

Comment: Several commenters raised 

various privacy concerns in response to 

proposed § 155.340(b)(2) and 

§ 155.340(b)(3)(i) prescribing that the 

Exchange transmit information to HHS 

when an enrollee changes employers 

and in the event that an individual for 

whom advance payments of the 

premium tax credit are made or who is 

receiving cost-sharing reductions 

terminates coverage from a QHP through 

the Exchange during a benefit year. 

Some commenters raised concerns over 

the amount of burden placed on 

Exchanges to provide this information 

to HHS and the Secretary of Treasury. 

A large number of commenters 

suggested that the information provided 

be limited to a minimum amount of 

information, only name and taxpayer ID 

number. Many commenters 

recommended striking, ‘‘Social Security 

number,’’ and replacing it with, 

‘‘taxpayer identification number.’’ 

Response: We codified the 

transactions specified in § 155.340(b)(2) 

and § 155.340(b)(3)(i) from section 

1311(d)(4)(I) of the Affordable Care Act, 

which specifies that they include name 

and taxpayer identification number. 

Accordingly, we have replaced, ‘‘Social 

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Security number,’’ with ‘‘taxpayer 

identification number.’’ We note that we 

have limited the information to be sent 

to HHS and to the Secretary of Treasury 

to be the information that is explicitly 

mentioned in section 1311(d)(4)(I). In 

addition, like all other activities related 

to personally identifiable information, 

the transactions specified in this section 

are subject to the privacy and security 

protections specified in § 155.260 of this 

final rule. Regarding concerns of burden 

on the Exchange, in addition to this 

being a statutory standard, we believe 

that this will largely be an automated 

process and that the submission of 

information to HHS and the Secretary of 

Treasury will not be overly burdensome. 

Comment: A number of commenters 

sought more guidance on how costsharing reductions will be implemented 

and monitored. Commenters suggested 

HHS provide flexibility and 

transparency in establishing standards 

related to cost-sharing reductions. 

Response: In § 155.340 of this final 

rule, we specify that the Exchange will 

transmit information about an enrollee’s 

eligibility to his or her QHP issuer in 

order to enable the QHP issuer to 

provide the correct level of cost-sharing 

reductions. We intend to provide future 

guidance on this issue and identify what 

we interpret to be the minimally 

necessary information for this purpose. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.340 of the proposed 

rule, with the following modifications: 

in § 155.340(a) we replaced the terms 

applicant and enrollee with tax filer in 

connection with advance payments of 

premium tax credits because the tax 

filer is the eligible person for that 

benefit; we have retained the use of the 

terms applicant and enrollee in 

connection with cost-sharing reductions 

because that statute does not limit 

eligibility for that benefit to tax filers or 

tax payers. In § 155.340(a)(2), we 

clarified that the Exchange must notify 

and transmit information necessary to 

enable the issuer of the QHP to 

implement, discontinue the 

implementation, or modify the level of 

an individual’s advance payments of the 

premium tax credit or cost-sharing 

reductions, as applicable. In 

§ 155.340(b)(2) and (b)(3)(i) of this 

section, we removed the standard that 

the Exchange transmit the enrollee’s 

SSN and replaced it with taxpayer 

identification number. We also replaced 

the term ‘‘disenrolls’’ with ‘‘terminates 

coverage’’ to align with language used in 

§ 155.430 of this part. We note that 

coverage terminations by the Exchange 

are limited to enrollment through the 

Exchange. For a more detailed 

discussion, please see the comment and 

response for § 155.430. We also add in 

paragraph (d) a timeliness standard for 

the transmissions of information 

described in paragraphs (a) and (b). 

j. Coordination with Medicaid, CHIP, 

the Basic Health Program, and the PreExisting Condition Insurance Plan 

(§ 155.345) 

Based on comments and feedback to 

the proposed rule, we are revising the 

proposed rule to include paragraphs (a) 

and (g) of this section, and we are 

seeking comments on these provisions. 

In § 155.345, we proposed standards 

for coordination across insurance 

affordability programs in order to 

implement a streamlined, simplified 

system for eligibility determinations and 

enrollment as part of the 

implementation of section 1413 of the 

Affordable Care Act. In this section, we 

also proposed standards for 

coordination between the Exchange and 

the Pre-Existing Condition Insurance 

Plan (PCIP), established in accordance 

with section 1101 of the Affordable Care 

Act. 

Specifically, we proposed that the 

Exchange enter into agreements with the 

State Medicaid or CHIP agencies as 

necessary to fulfill the Exchange 

responsibilities identified in this 

subpart. We proposed that as part of the 

eligibility determination process, the 

Exchange determine an applicant’s 

eligibility for Medicaid and CHIP, in 

accordance with standards described in 

§ 155.305 of this subpart, notify the 

State agency administering Medicaid or 

CHIP of that determination, and 

transmit relevant information necessary 

for the timely enrollment of the eligible 

individual into coverage. Upon making 

a determination of eligibility for 

Medicaid or CHIP, we indicated that the 

Exchange must also notify the applicant 

of the determination. We suggested that 

the Exchange may also facilitate 

delivery system and health plan 

selection for Medicaid and CHIP and 

solicited comments regarding whether 

and how this integration of delivery 

system selection could best work for the 

Exchange, Medicaid, and CHIP. 

We also proposed that the Exchange 

perform a ‘‘screen and refer’’ function 

for those applicants who may be eligible 

for Medicaid in a MAGI-exempt 

category or an applicant that is 

potentially eligible for Medicaid based 

on factors not otherwise considered in 

this subpart. We proposed that the 

Exchange transmit eligibility 

information related to such application 

to the applicable State agencies 

promptly and without undue delay. In 

addition, we proposed that the 

Exchange provide advance payments of 

the premium tax credit and cost-sharing 

reductions to an individual who is 

found to be otherwise eligible while the 

agency administering Medicaid 

completes a more detailed 

determination. 

We also noted, based on our 

interpretation of proposed Treasury 

§ 1.36B–2(c)(2) published on the same 

day in the Federal Register, that an 

applicant who is referred to the 

Medicaid agency for additional 

screening and is enrolled in a QHP 

receiving advance payments of the 

premium tax credit in the interim would 

not be liable to repay advance payments 

if he or she is ultimately determined 

eligible for Medicaid and for any period 

of retroactive eligibility. 

We proposed that the Exchange 

provide an opportunity for an applicant 

who is not automatically referred to the 

State Medicaid agency for an eligibility 

determination to request a full screening 

of eligibility for Medicaid by such 

agency. We proposed that to the extent 

that an applicant requests such a 

determination, the Exchange will 

transmit the applicant’s information to 

the State Medicaid agency promptly and 

without undue delay. 

We also proposed that the Exchange 

work with the agencies administering 

Medicaid and CHIP to establish 

procedures through which an 

application that is submitted directly to 

an agency administering Medicaid or 

CHIP initiates an eligibility 

determination for enrollment in a QHP, 

advance payments of the premium tax 

credit, and cost-sharing reductions. In 

addition, we proposed that the 

Exchange utilize a secure, electronic 

interface for the exchange of data for the 

purpose of determining eligibility, 

including verifying whether an 

applicant requesting an eligibility 

determination for advance payments of 

the premium tax credit and cost-sharing 

reductions has been determined eligible 

for Medicaid or CHIP, and other 

functions specified under this subpart. 

We also proposed that the Exchange 

utilize any model agreements 

established by HHS for the purpose of 

sharing data as described in this section. 

We solicited comment as to the content 

of these model agreements. 

Finally, we proposed to develop 

procedures for the transition of PCIP 

enrollees to coverage in QHPs offered 

through the Exchanges to ensure that 

PCIP enrollees do not experience a lapse 

in coverage. We solicited comment on 

additional responsibilities that should 

be assigned to an Exchange as part of 

this process, such as providing 

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dedicated customer service staff for 

PCIP enrollees or actions that may 

accelerate or further streamline 

eligibility determinations for PCIP 

enrollees. 

Comment: A large number of 

commenters supported a streamlined 

and coordinated eligibility 

determination process for all insurance 

affordability programs. A number of 

commenters also supported close 

alignment of policies between the 

Exchange and other insurance 

affordability programs to facilitate this 

streamlining and coordination. 

Commenters supported the standard 

specified in proposed § 155.345(a) that 

the Exchange enter into agreements with 

Medicaid and CHIP agencies. A few 

commenters suggested that language be 

added to regulation text to ensure that 

the Exchange eligibility determinations 

for Medicaid and CHIP comply with 

State plans and interpretive policies and 

procedures of the State agency or 

agencies administering the Medicaid or 

CHIP programs. 

Response: We believe that agreements 

between the Exchange and other 

insurance affordability programs are 

important for ensuring such alignment 

and coordination across programs. We 

also note that in § 155.300(b) of this 

final rule, we specify that, in general, 

references to Medicaid and CHIP 

regulations in this subpart refer to those 

regulations as implemented in 

accordance with policies and 

procedures as applied by the State 

Medicaid or State CHIP agency or as 

approved by the State Medicaid or State 

CHIP agency. With that said, we have 

also added new § 155.302 in this final 

rule that describes in greater detail the 

options available for configuring 

responsibilities related to eligibility 

determinations, which clarifies that 

there is an option under which the 

Exchange does not make Medicaid or 

CHIP eligibility determinations but is 

considered to be compliant with this 

final rule; in such situations, the State 

Medicaid and CHIP agencies exercise 

final control over eligibility 

determinations for Medicaid and CHIP 

for applications submitted to the 

Exchange. 

Additionally, we further clarify 

standards for coordination in 

§ 155.345(a) of this final rule to align 

with those outlined in the Medicaid 

final rule. Such standards are set to 

provide a clear delineation of 

responsibilities of each program to 

minimize burden on individuals, ensure 

prompt determinations of eligibility, 

enroll eligible individuals into the 

program promptly and without undue 

delay, and ensure compliance with the 

standards set forth in subpart D. We 

encourage States to work closely across 

the Exchange, Medicaid, and CHIP to 

simplify and streamline eligibility 

processes to maximize efficiency and 

minimize administrative costs. In 

addition, in response to comments 

regarding coordinating policies across 

insurance affordability programs to 

avoid negative outcomes for consumers, 

we have added new 155.345(f), which 

provides a special rule for the limited 

number of situations in which a tax 

filer’s household income, as defined in 

section 36B(d)(2) of the Code, is less 

than 100 percent of the FPL for the 

benefit year for which coverage is 

requested, the Exchange determines that 

the tax filer is not eligible for advance 

payments of the premium tax credit 

based on § 155.305(f)(2), and one or 

more applicants in the tax filer’s 

household has been determined 

ineligible for Medicaid and CHIP based 

on income. This provision describes 

that the Exchange must provide 

information and explanation to the 

applicant and tax filer in such 

situations; we clarify that this language 

is new text, but that it is a means to 

address gaps in eligibility rules and 

procedures. This provision will only 

have an impact after the Medicaid rule 

in 42 CFR 435.603(i) is applied, which 

specifies that the Medicaid agency will 

determine Medicaid eligibility using 

section 36B rules, which should result 

in Medicaid eligibility in most cases. As 

such, we believe that the provision in 

paragraph (f) will be used in a very 

limited set of cases, but will ensure 

individuals are not affected by gaps in 

eligibility rules. 

Comment: Several commenters 

highlighted the importance of 

coordinating eligibility and enrollment 

for individuals who are determined 

eligible for Medicaid based on factors 

other than MAGI, for example those 

qualifying based on disability status. 

Many commenters to the proposed rule 

expressed concern that the Exchange 

standards in proposed § 155.345(b) 

through (d), which relate to those 

individuals potentially eligible for 

Medicaid based on factors not otherwise 

mentioned in this subpart were overly 

vague. Commenters requested that HHS 

provide further details and guidance on 

the ‘‘basic screening’’ standard specified 

in proposed paragraph § 155.345(b)(1). 

Several commenters urged HHS to 

strengthen the standard and others 

suggested the Exchange should ask a 

question or a set of questions to assess 

whether a person is eligible for 

Medicaid on a non-MAGI basis. Some 

commenters suggested striking a balance 

between gathering relevant information 

and not overburdening applicants with 

unnecessary questions. A few 

commenters suggested that States 

implement oversight mechanisms and 

protections to ensure that each 

applicant is directed to the most 

comprehensive benefits package to 

which he or she is entitled. 

Response: We clarified that the 

Exchange must assess the information 

provided by the applicant on his or her 

application to determine whether he or 

she is potentially eligible for Medicaid 

based on factors not otherwise 

considered in this subpart. We believe 

the term ‘‘screening’’ may have been 

misleading as the intention of the 

provision was to simply check the 

application for an indication that an 

applicant may be potentially eligible for 

Medicaid based on factors not otherwise 

considered, such as disability or age. We 

appreciate commenters’ concerns that 

the Exchange only gather relevant 

information and not overburden 

applicants, and we believe that this 

approach will meet these standards. 

Comment: Many commenters raised 

concerns that individuals may be 

unaware of coverage that may be 

available to them and suggested that 

HHS clarify how an individual who is 

not found eligible for Medicaid based on 

MAGI will be notified of the 

opportunity to request a full eligibility 

determination for Medicaid. One 

commenter suggested that we provide 

example scenarios in the final rule to 

show when an applicant may be 

determined ineligible in a screening but 

eligible after a full screening. Another 

commenter suggested the basic 

screening on factors other than MAGI 

could be confused as an eligibility 

determination. Some commenters 

suggested amending language in 

proposed § 155.345(c) such that the 

Exchange must notify applicants of the 

Medicaid programs that may be 

available to them so the applicant can 

request an appropriate determination of 

Medicaid eligibility from the State 

agency. 

Response: To address this concern, in 

§ 155.345(b) of this final rule, we specify 

that the Exchange will assess the 

information provided by the applicant 

on his or her application to determine 

whether he or she is potentially eligible 

for Medicaid based on factors other than 

MAGI. While not every individual who 

is potentially eligible for Medicaid 

based on non-MAGI factors will be 

identified through the assessment in 

§ 155.345(b), we believe that this 

provision will help identify a 

substantial portion of those individuals. 

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We also clarify in § 155.345(c) of this 

final rule that the Exchange will notify 

an applicant of his or her opportunity to 

request a full determination of eligibility 

for Medicaid and provide the applicant 

such opportunity. We anticipate that 

Exchanges will work with State 

Medicaid agencies to craft notice text 

that reflects the options available in 

specific States for Medicaid eligibility 

based on factors other than MAGI. We 

have added to paragraph § 155.345(d) 

that the Exchange must notify the 

applicant during the application process 

that his or her application has been 

transmitted to the State Medicaid 

agency. We anticipate that such notices 

will be the subject of future guidance. 

Comment: Many commenters 

highlighted the importance of seamless 

transmissions between coverage 

programs. Some commenters suggested 

clarifying, ‘‘promptly and without 

undue delay,’’ and adding language 

providing that the Exchange must 

transmit the relevant information within 

24 hours. A few commenters suggested 

that HHS establish standards for the 

State Medicaid agency to follow up on 

referrals it receives from the Exchange. 

Response: We believe it would be 

more appropriate to interpret such a 

standard in guidance, which will allow 

it to evolve with technology and 

supporting business processes. 

Comment: A few commenters also 

recommended aligning with Medicaid 

language to clarify that relevant 

information transmitted to Medicaid or 

CHIP agencies includes the electronic 

account containing the finding of 

Medicaid or CHIP eligibility, all 

information provided on the 

application, and any information 

obtained or verified by the Exchange in 

making such a finding. 

Response: We adopt the following 

standard to implement such a standard: 

the Exchange must transmit all 

information provided on the application 

and any information obtained or 

verified by, the Exchange to the State 

Medicaid agency. As discussed in more 

detail above, this Exchange final rule 

does not use the term ‘‘electronic 

account’’ but we believe that the scope 

of our standard appropriately aligns 

with the language in the Medicaid final 

rule on this point. 

Comment: The majority of 

commenters supported the standard to 

provide advance payments of the 

premium tax credit to individuals 

seeking a determination of Medicaid 

eligibility on a basis other than MAGI 

until the State Medicaid agency notifies 

the Exchange that the applicant is 

eligible for Medicaid. Commenters 

highlighted that this standard 

encourages applicants to obtain the 

most comprehensive coverage for which 

they are eligible. Commenters also noted 

this standard is vital to ensuring that 

consumers have access to continuous 

health coverage while they navigate the 

eligibility and enrollment process in 

their State. One commenter 

recommended that applicants be able to 

waive enrollment in a QHP while 

awaiting a Medicaid/CHIP 

determination. 

Response: We maintain this provision 

in the final rule. We clarify that this 

provision applies both when an 

applicant has not been determined 

eligible for Medicaid based on MAGI 

and either is referred by the Exchange 

to the State Medicaid agency based on 

screening, or requests a full Medicaid 

eligibility determination. We also clarify 

that an applicant is never required to 

enroll in a QHP while a full Medicaid 

determination is underway; the 

Exchange must provide eligibility, but it 

is the choice of the applicant whether to 

actually select a QHP. We also clarify 

that this provision would apply only to 

the extent that the responsibility to 

conduct a determination for Medicaid 

eligibility on bases other than MAGI has 

not been delegated to the Exchange, 

through an agreement between the 

Exchange and the State Medicaid 

agency. 

Comment: A few commenters said 

that the proposed process in 

§ 155.345(d) for applications submitted 

directly to Medicaid, CHIP, or BHP was 

vague and should be clarified to specify 

that such agencies will screen 

applicants to determine whether they 

are eligible for enrollment in a QHP 

with or without advance payments of 

the premium tax credit and cost-sharing 

reductions, and then ‘‘enroll’’ eligible 

applicants. Many commenters 

supported the provisions in proposed 

§ 155.345(d) that specified that an 

Exchange may not be required to 

duplicate any eligibility or verification 

findings that have already been made by 

agencies administering Medicaid, CHIP, 

or the BHP, where applicable. A few 

commenters suggested that language be 

added to clarify that Exchanges are not 

permitted, not simply ‘‘not required,’’ to 

duplicate eligibility and verification 

findings made by the Medicaid or CHIP 

agency. 

Response: In § 155.345(g) of this final 

rule, we clarify our intention to 

maintain a streamlined eligibility 

determination process for consumers. 

Consistent with the Medicaid final rule, 

we add standards for how agencies 

administering Medicaid, CHIP, and BHP 

will transmit an application to the 

Exchange and how the Exchange will 

take the necessary steps to process such 

applications. We note that the Medicaid 

final rule provides additional 

information regarding the 

responsibilities of the Medicaid agency 

with regards to applications submitted 

directly to Medicaid. In § 155.345(g)(2), 

we clarify that the Exchange must not 

duplicate any eligibility and verification 

findings already made by the 

transmitting agency, to the extent such 

findings are made in accordance with 

this subpart and in § 155.345(g)(3). We 

also clarify that the Exchange must not 

request information or documentation 

from the individual already provided to 

Medicaid, CHIP, or BHP that was 

included in the transmission to the 

Exchange. Additionally, in 

§ 155.345(g)(6) of this final rule, we 

specify that the Exchange must provide 

for following a streamlined process for 

eligibility determinations regardless of 

the agency that initially received an 

application. This provision is intended 

to ensure that an application that is 

submitted to a State Medicaid or CHIP 

agency follows the same processes for a 

complete MAGI-based determination of 

eligibility to enroll in a QHP, advance 

payments of the premium tax credit, 

and cost-sharing reductions. 

Comment: Commenters supported the 

provisions in proposed § 155.345(e) to 

use of a secure electronic interface to 

transmit data among the various 

agencies responsible for determining 

eligibility for the insurance affordability 

programs. 

Response: We maintain these 

provisions in the final rule. In addition 

to these standards, we have also further 

specified standards for data sharing in 

§ 155.260 in this final rule. More 

information can be found in the 

responses to comments found in that 

section. 

Comment: Several commenters 

requested guidance or standards in 

proposed § 155.345(i) regarding the 

transition of Pre-existing Condition 

Insurance Plan (PCIP) enrollees into the 

Exchange, and many commenters 

provided specific suggestions as to what 

this guidance should consider. Some 

specific recommendations provided 

include that the Exchange should 

develop an agreement with PCIP; the 

Exchange and PCIP should coordinate to 

develop a letter informing PCIP 

enrollees of what they need to do to 

transition to the Exchange; customer 

service resources should be dedicated 

and trained to assist these enrollees to 

transition smoothly; and others 

provided recommendations regarding 

outreach, education, and information 

that should be provided to PCIP 

enrollees, frequently citing provider 

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directories as an example of information 

that needs to be clearly provided to 

PCIP enrollees. Some commenters 

recommended that information be 

transferred between the PCIP and 

Exchange programs to reduce the need 

for the Exchange to request duplicative 

information from PCIP enrollees and to 

ease their transition into the Exchange. 

Several commenters emphasized that 

flexibility be given to States to 

accommodate the transition of PCIP 

enrollees due to concerns related to the 

influx of large numbers of high-risk 

people. Some of these commenters 

recommended that HHS consider 

allowing the Exchange to transition 

PCIP enrollees into 2014 and years 

beyond. One commenter recommended 

that the Federal government should not 

assign specific responsibilities to Stateoperated Exchanges relating to 

transitioning PCIP enrollees into 

Exchanges, while another commenter 

suggested that HHS evaluate 

mechanisms to ensure that a 

distribution of enrollees is balanced 

among QHPs in the Exchange. 

Response: We will consider these 

comments as we develop future 

guidance to support a smooth transition 

of PCIP enrollees into the Exchange that 

minimizes disruption in the insurance 

marketplace to the greatest extent 

possible, while also ensuring that this 

population has access to affordable, 

high-quality health insurance. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.345 of the proposed 

rule, with several modifications: in 

§ 155.345(a), we clarified that the 

Exchange must provide HHS with 

copies of any agreements made with 

other agencies administering insurance 

affordability programs upon request. We 

clarified that agreements must include a 

clear delineation of the responsibilities 

of each program to minimize burden on 

individuals, ensure prompt 

determinations of eligibility and 

enrollment, including redeterminations, 

and ensure compliance with paragraphs 

(c), (d), (e), and (g) of this section. We 

also modified language in § 155.345(b) 

to specify that for an applicant who is 

not eligible for Medicaid based on the 

standards specified in § 155.305 of this 

subpart, the Exchange must assess the 

information provided on the application 

to determine whether he or she is 

potentially eligible for Medicaid based 

on factors included in the streamlined 

application, but not otherwise 

considered in this subpart. 

In § 155.345(c) of this final rule, we 

added that the Exchange must provide, 

and notify an applicant of, the 

opportunity to request a full 

determination of eligibility for 

Medicaid. We also add that the 

Exchange must provide notification and 

opportunity for a full determination of 

eligibility for Medicaid when making a 

determination in accordance with 

§ 155.330 and § 155. 335. We modified 

language in § 155.345(d) to specify that 

if the Exchange identifies an applicant 

as potentially eligible for Medicaid or an 

applicant requests a full determination 

for Medicaid, the Exchange must 

transmit all information provided on the 

application and any information 

obtained or verified by the Exchange to 

the State Medicaid agency promptly and 

without undue delay. 

In addition, we clarified language in 

§ 155.345(e) to provide that if an 

applicant potentially eligible for 

Medicaid is otherwise eligible for 

advance payments of the premium tax 

credit and cost-sharing reductions, the 

Exchange must provide the applicant 

with such advance payments of the 

premium tax credit or cost-sharing 

reductions until Medicaid notifies the 

Exchange that the applicant is eligible 

for Medicaid. We amended § 155.345(f) 

to add a special rule to address 

situations in which a tax filer’s 

household income is below 100 percent 

of the FPL for the benefit year for which 

coverage is requested, the tax filer is not 

eligible for advance payments of the 

premium tax credit based on 

§ 155.305(f)(2), and one or more 

applicants in the tax filer’s household is 

ineligible for Medicaid and CHIP based 

on income, in which case the Exchange 

must provide the income information 

used in the Medicaid and CHIP 

determination to the applicant, and then 

repeat the verification process. We 

modified § 155.345(g)(1) to include the 

standards set forth in the Medicaid final 

rule and outline that the Exchange 

must—(1) Accept, via secure electronic 

interface, all information provided on 

the application and any information 

obtained or verified by, the agency 

administering Medicaid, CHIP, or the 

BHP, if a BHP is operating in the service 

area of the Exchange, for the individual, 

and not require submission of another 

application; (2) not duplicate any 

eligibility and verification findings 

already made by the transmitting 

agency, to the extent such findings are 

made in accordance with this subpart; 

(3) not request information or 

documentation from the individual 

already provided to another insurance 

affordability program; (4) promptly and 

without undue delay determine 

eligibility of the individual for 

enrollment in a QHP, advance payments 

of the premium tax credit and costsharing reductions, in accordance with 

this subpart; and (5) provide for 

following a streamlined process for 

eligibility determinations regardless of 

the agency that initially received an 

application. Additionally, we 

renumbered paragraphs (c) through (i) to 

account for the changes described 

above. 

We also made two technical 

corrections. First, we amended the 

phrase ‘‘providing advance payments of 

the premium tax credit’’ to ‘‘providing 

eligibility for advance payments of the 

premium tax credit’’. Second, we 

changed, ‘‘Pre-Existing Condition 

Insurance Program’’ to ‘‘Pre-Existing 

Condition Insurance Plan’’ to match the 

actual name of the plan. 

k. Special Eligibility Standards and 

Process for Indians (§ 155.350) 

In accordance with section 1402(d)(1) 

of the Affordable Care Act, in 

§ 155.350(a), we proposed that the 

Exchange determine eligibility for costsharing reductions for an applicant who 

is an Indian if he or she meets the 

standards related to eligibility for 

enrollment in a QHP and has household 

income that does not exceed 300 

percent of the FPL. We also proposed to 

clarify that the Exchange may only 

provide cost-sharing reductions to an 

individual who is an Indian if he or she 

is enrolled in a QHP. In addition, in 

§ 155.350(b) we provided that the 

Exchange must determine an applicant 

eligible for the special Indian costsharing rule in accordance with section 

1402(d)(2) of the Affordable Care Act if 

he or she is an Indian, without requiring 

the applicant to request an eligibility 

determination that provides for 

collection or verification of income. 

We further proposed a two-phase 

process by which the Exchange must 

verify an individual’s attestation that he 

or she is an Indian for purposes of 

determining whether he or she qualifies 

for these cost-sharing rules. In 

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

Exchange must verify an applicant’s 

attestation that he or she is an Indian if 

an applicant submits satisfactory 

documentation to support their 

attestation of citizenship or lawful 

presence in accordance with 

§ 155.315(e). In paragraph (c)(2), we 

proposed that the Exchange must rely 

on any available electronic data sources 

that have been authorized by HHS. 

Lastly, if the process under (c)(1) does 

not occur or data sources are 

unavailable, the individual is not 

represented in the source, or the source 

is not reasonably compatible with the 

applicant’s attestation, we proposed that 

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the Exchange follow the standard 

inconsistency procedures under 

§ 155.315(e). We solicited comment on 

the availability and usability of 

electronic data sources, as well as best 

practices for accepting and verifying 

documentation related to Indian status. 

Comment: One commenter sought 

clarification about proposed 

§ 155.350(b), which codifies section 

1402(d)(2) of the Affordable Care Act. 

The commenter noted that this section 

appears to apply only to those services 

received at the IHS, and the commenter 

asked if it also applies to referrals to 

outside specialists, etc. The commenter 

further suggested that the proposed 

regulations appear to go beyond what 

the statute asks and recommends that 

the special cost-sharing provisions be 

limited to those services furnished 

through Indian Health Providers. 

Response: Our intent is to adhere to 

the statute. In accordance with section 

1402(d)(2) of the Affordable Care Act, 

the cost-sharing rule described in 

§ 155.350(b) of this final rule is limited 

to only an item or service furnished 

directly by the Indian Health Service, an 

Indian Tribe, Tribal Organization, or 

Urban Indian Organization or through 

referral under contract health services. 

Comment: Several commenters 

generally requested that all applicants 

and potential applicants be given notice 

that there may be benefits and 

protections that apply if the applicant is 

an Indian. One commenter 

recommended that determining Indian 

status should be a one-time occurrence, 

and the commenter further requested 

that any data matching system used to 

identify eligible American Indians or 

Alaska Natives should only provide 

information essential to establish 

whether an individual is an Indian in 

order to protect the privacy of the 

individual from unwarranted intrusions. 

The commenter acknowledged that 

there will be cases in which further 

verification is necessary or where there 

is a gap in information available through 

data matching, and that there should be 

other vehicles by which an individual 

can establish qualifications for benefits 

and protections as an American Indian 

or Alaska Native. Another commenter 

suggested that any reasonable 

documentation be accepted, and lists a 

number of potential documents that 

would satisfy this policy. One 

commenter recommended that Indians 

with tribal enrollment cards should be 

able to submit their tribal enrollment 

number on their application. 

Response: We anticipate that 

verification of Indian status for purposes 

of determining eligibility for Exchangerelated benefits will only be a one-time 

occurrence for applicants. Additionally, 

the utilization of any electronic data 

sources for purposes of verification of 

Indian status will be subject to the 

privacy and security standards outlined 

in § 155.260 and § 155.270 of this final 

rule, as is the case for all data acquired 

and used by the Exchange in the 

eligibility determination process. Lastly, 

under § 155.350(c)(3) of this final rule, 

we reference section 1903(x)(3)(B)(v) of 

the Act for standards for acceptable 

documentation, which includes 

documents issued by Federallyrecognized tribes. These standards for 

acceptable documentation provide 

uniformity in process for applicants 

claiming Indian status. 

Comment: A few commenters 

recommended that the Exchange accept 

self-attestation for verification of Indian 

status, stating that self-attestation 

should be sufficient if the application 

questions are framed in a way that can 

be used to determine eligibility. One 

commenter suggested that verification of 

Indian status only be conducted when 

there are inconsistencies that cannot be 

resolved through simple explanation 

and attestation by the individual, or if 

there is some indication of fraud on the 

part of the individual, and further 

recommended that if electronic data 

sources are utilized to verify Indian 

status, that the only appropriate data 

source is the registration database used 

by Indian Tribe, Tribal Organization, or 

Urban Indian Organization programs. 

Response: We are maintaining the 

verification process described under 

§ 155.350 in this final rule. This 

verification is tied to a full exemption 

from cost-sharing, which could involve 

a substantial expenditure for the Federal 

government; consequently, we are 

specifying a more stringent process for 

verification though we note that 

§ 155.315(h) allows the Exchange 

flexibility to modify this and other 

verification processes with HHS 

approval. In addition, we note that the 

documentation process described under 

§ 155.350(c)(3) is similar to the 

documentation process utilized by the 

IHS when determining eligibility for 

American Indians/Alaska Natives who 

seek services at IHS facilities. The 

standard for Exchanges is slightly 

different from the standard for such 

services, however, which means that the 

registration database for Indian Tribe, 

Tribal Organization, or Urban Indian 

Organization programs may not be a 

one-to-one match. With that in mind, 

we are working closely with the IHS and 

intend to work with States and tribes to 

determine whether and how electronic 

data can support this process. 

Comment: Several commenters 

recommended that American Indians be 

determined eligible for advance 

payments of the premium tax credit and 

cost-sharing reductions through the 

Exchange even if they have access to 

qualifying coverage in an eligible 

employer-sponsored plan, notably 

because cost-sharing may be more costly 

for the employer-sponsored plan in 

comparison to that for a QHP through 

the Exchange given the special costsharing benefits provided for Indians 

under section 1402(d) of the Affordable 

Care Act. Other commenters 

recommended that American Indians 

under 300 percent of the FPL should be 

exempt from both cost-sharing and 

premiums for QHPs through the 

Exchange. 

Response: The comment regarding 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions based on eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan is addressed 

in responses associated with 

§ 155.320(e). Additionally, in 

accordance with section 1302(c)(3) of 

the Affordable Care Act, the definition 

of ‘‘cost-sharing’’ as provided does not 

include premiums; therefore, HHS does 

not interpret this statutory provision to 

say that the special cost-sharing benefits 

provided to Indians under section 1402 

of the Affordable Care Act includes an 

exemption from premiums for a QHP 

through the Exchange. Nothing in this 

final rule impacts an Indian’s ability to 

access IHS facilities at no cost-sharing. 

Summary of Regulatory Changes 

For the reasons described in the 

proposed rule and considering the 

comments received, we are finalizing 

the provisions proposed in § 155.350 of 

the proposed rule, with the following 

modifications: In paragraph (a)(1)(i), we 

clarify that in accordance with section 

1402(f)(2) of the Affordable Care Act, an 

applicant must be eligible for advance 

payments of the premium tax credit in 

order to receive cost-sharing reductions 

based in part on household income. In 

paragraph (a)(1)(ii), we add a citation to 

clarify that for purposes of cost-sharing 

reductions under paragraph (a)(1), 

household income is defined in section 

36B(d)(2) of the Code and FPL is 

defined in section 36B(d)(3) of the Code. 

l. Right to Appeal (§ 155.355) 

In § 155.355, we proposed that an 

individual may appeal any eligibility 

determination or redetermination made 

by the Exchange, including 

determinations of eligibility for 

enrollment in a QHP, advance payments 

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sharing reductions. We noted that we 

intend to propose the details of the 

individual eligibility appeals processes, 

including standards for the Federal 

appeals process, in future rulemaking. 

Comment: We received a number of 

comments in support of our proposal 

that the Exchange must provide a notice 

of the right to appeal and instructions 

on how to file an appeal of any aspect 

of an eligibility determination in 

accordance with proposed § 155.310(g), 

§ 155.330(d), or § 155.335(g). However, 

several commenters recommended that 

we provide greater detail around the 

appeals process in the final rule, 

including specific standards for the 

notice, coordination or integration with 

the Medicaid and CHIP appeals 

processes, and alignment of standards 

with Medicaid. 

Response: We acknowledge the 

importance of providing greater detail 

regarding the appeals process, and will 

do so in future rulemaking. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.355 of the proposed 

rule, with the following technical 

modifications: In paragraph (a), we 

added ‘‘eligibility’’ to describe the 

determination notice. We also edited the 

references to other sections of subpart D 

to account for renumbering. 

5. Subpart E—Exchange Functions in 

the Individual Market: Enrollment in 

Qualified Health Plans 

In subpart E, we outline the initial, 

annual, and special enrollment periods 

as well as the enrollment process and 

the termination of coverage process. 

a. Enrollment of Qualified Individuals 

into QHPs (§ 155.400) 

In § 155.400, we proposed that the 

Exchange must: (1) Accept a QHP 

selection from an applicant who is 

determined eligible for enrollment in a 

QHP; (2) notify the issuer of the 

applicant’s selected QHP; and (3) 

transmit information necessary to 

enable the QHP issuer to enroll the 

applicant. We also proposed that the 

Exchange send QHP issuers enrollment 

information on a timely basis, and 

sought comment as to whether we 

should establish a specific frequency for 

enrollment transactions, such as in real 

time or daily, in our final rule. Finally, 

to ensure that the Exchange and QHP 

issuers have identical plan enrollment 

records, we proposed that the Exchange 

maintain records of enrollment, submit 

enrollment information to HHS, and 

reconcile the enrollment files with the 

QHP issuers no less than monthly. 

Comment: With respect to proposed 

§ 155.400(a), several commenters 

recommended adding the limitation that 

the Exchange transmit ‘‘only’’ 

information necessary to effectuate 

enrollment. Commenters further 

recommended HHS identify the 

information that Exchanges should 

transmit to QHP issuers. 

Response: We outline the limitations 

for information the Exchange may 

collect, use or receive in § 155.260 of 

this final rule, which addresses privacy 

and security of information. Across all 

functions, the Exchange will only 

acquire, maintain, and disclose 

information that is necessary for 

Exchange operations. Specific data 

elements for transmission to QHP 

issuers will be identified at a later date. 

Comment: One commenter 

recommended allowing Exchanges to 

contract with safety net providers to 

conduct enrollment activities, similar to 

the activities they perform for Medicaid. 

Response: In general, the Exchange 

has discretion to contract with an 

eligible contracting entity to perform 

Exchange functions on its behalf, as 

outlined in § 155.110 of this final rule. 

Furthermore, § 155.210(c)(2)(viii) of this 

final rule allows for ‘‘other public or 

private entities that meet the standards 

of this section,’’ to serve as Navigators, 

including ‘‘State or local human service 

agencies.’’ 

Comment: One commenter 

encouraged the Exchanges to initiate 

what it referred to as a preliminary 

‘‘pipeline’’ reporting under proposed 

§ 155.400(a), so that QHP issuers would 

have a sense of the enrollment volume 

they might expect over the next month, 

particularly during, and leading up to 

open enrollment periods. 

Response: Exchanges have the 

flexibility to notify QHP issuers of the 

number of individuals who have 

received eligibility determinations for 

coverage through the Exchange, as well 

as to work with QHP issuers to define 

other operational communications that 

would streamline administration. We do 

not believe it is necessary or within 

statutory authority for Exchanges to 

share any personally identifiable 

information with QHPs about 

individuals who have not selected the 

QHP issuer’s offering. 

Comment: Several commenters noted 

that the success of health reform hinges 

on individuals’ ability to easily enroll 

in, and retain coverage. They generally 

recommended instituting enrollment 

processes that do not overburden 

individuals with paperwork and 

documentation. 

Response: We believe the streamlined 

application discussed in § 155.405 and 

the Internet Web site discussed in 

§ 155.205 of this final rule will help to 

achieve a streamlined process for all 

applicants. In addition, in § 155.315(g) 

of this final rule, we codify a provision 

of the Affordable Care Act that specifies 

that an applicant does not have to 

provide information beyond the 

minimum necessary to support the 

eligibility and enrollment process. 

Comment: One commenter 

recommended that QHP issuers be 

responsible for the enrollment of 

participants in the Exchange in 

accordance with proposed § 155.400(a), 

since they currently facilitate the 

enrollment process, and will continue to 

do so for products outside of the 

Exchange. 

Response: Prior to enrollment by the 

QHP issuer, the Exchange will need to 

transmit enrollment information to the 

QHP issuer because the individual must 

have an eligibility determination for 

coverage, and, if interested, for advance 

payments of the premium tax credit and 

cost-sharing reductions. Furthermore, 

the Exchange must report enrollment 

information to HHS in order to initiate 

advance payments of the premium tax 

credit and cost-sharing reductions. Once 

enrollment information has been 

provided by the Exchange, the QHP 

issuer is ultimately responsible for 

effectuating enrollment. 

Comment: One commenter noted that 

the proposed provision in 

§ 155.400(a)(2) for the Exchange to 

transmit information necessary to 

enable the QHP issuer to enroll the 

applicant, appears to be inconsistent 

with the proposed § 155.205(b)(6), now 

redesignated in this final rule as 

§ 155.205(b)(5), which established that 

the Exchange Web site must have the 

capacity to allow enrollment. The 

commenter asked HHS to clarify 

whether these are intended as 

alternatives. 

Response: We have clarified language 

in this final rule at § 155.205(b)(5) to 

ensure that the Exchange Web site 

allows consumers to make a QHP 

selection, thereby initiating the 

enrollment process. Section 

155.400(a)(2) of this final rule describes 

the subsequent step in the enrollment 

process, and establishes that Exchanges 

must transmit the QHP selection to the 

appropriate QHP issuer. 

Comments: Many commenters 

requested clarification on the definition 

of a ‘‘timely’’ transmittal of enrollment 

information from the Exchange to QHP 

issuers, as discussed in proposed 

§ 155.400(b)(1). Some suggested 

specifying ‘‘daily,’’ ‘‘real-time,’’ or 

leaving the definition to State flexibility. 

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Response: In this final rule, we have 

modified the regulatory text in 

§ 155.400(b)(1) to be consistent with 

§ 155.340(d), which states that 

Exchanges must send eligibility 

information to both QHP issuers and to 

HHS promptly and without undue 

delay. We expect Exchanges will send 

each QHP issuer an automated file of 

applicable eligibility and enrollment 

transactions, and simply include HHS 

on the transmission. HHS will issue 

future guidance outlining standards and 

timing for these transmissions. We 

further expect Exchanges to use the 

monthly reconciliation standards 

outlined in § 155.400(c) and 

§ 155.400(d) to ensure consistency in 

enrollment records. 

Comment: A few health insurance 

issuers cautioned that the QHP issuer’s 

acknowledgement of the receipt of an 

enrollment transaction under proposed 

§ 155.400(b)(2) is not a confirmation that 

the information is complete. The 

commenters stated that it should be the 

responsibility of the Exchange to ensure 

that the eligibility and enrollment 

information being sent to the QHP 

issuer is complete and accurate. One 

commenter recommended a strong file 

validation protocol, so that any 

incomplete or conflicting records were 

identified prior to submission. 

Response: The intent of the 

acknowledgement standard in 

§ 155.400(b)(2) is to ensure that QHP 

issuers accept responsibility for 

completing an individual’s enrollment. 

We expect Exchanges will establish a 

process by which the QHP issuer 

signifies that it has received complete 

and accurate enrollment information, 

and if it does not, promptly notifies the 

Exchange that the information is 

insufficient to complete enrollment. 

Comment: One commenter 

recommended that QHP issuers 

acknowledge the receipt of eligibility 

and enrollment information, as 

described in proposed § 155.400(b)(2), 

to both the Exchange and the applicant, 

while one health insurance issuer 

recommended that State laws govern 

communication between QHP issuers 

and enrollees. 

Response: We clarify in part 156 the 

information that QHP issuers must 

provide to enrollees. As finalized in 

§ 156.260(b), the QHP issuer must 

provide notice of the effective date of 

coverage and must provide new 

enrollees an enrollment information 

package as an acknowledgement of 

enrollment as described in § 156.265(e). 

However, we note that Exchanges may 

apply additional rules to ensure an 

optimal consumer experience, such as 

notifying the applicant that the 

Exchange has transmitted enrollment 

information to the QHP issuer. 

Comments: Several commenters 

requested clarification on reporting 

standards under proposed § 155.400(c), 

including timing, format, and content. 

Some commenters requested that the 

HHS reporting standard be omitted. One 

State agency recommended that State 

regulators have unfettered access to all 

data sets used for and by Exchanges. 

Response: As noted above, HHS plans 

to provide guidance on timing, format, 

and content of the enrollment 

information transmissions required 

under § 155.400 of this final rule. We 

have removed the standard in proposed 

§ 155.400(c) for Exchanges to submit 

enrollment information to HHS on a 

monthly basis, because § 155.400(b)(2) 

of this final rule directs Exchanges to 

send eligibility and enrollment 

information to HHS ‘‘promptly and 

without undue delay.’’ With respect to 

the comment on the ability of State 

regulators to have access to all data 

collected and used by Exchanges, we 

note that data sets that contain 

personally identifiable information, and 

that are used by an Exchange while the 

Exchange is fulfilling its responsibilities 

in accordance with § 155.200(c), may 

only be disclosed if such disclosure is 

consistent with § 155.260. Disclosures 

for other purposes must be consistent 

with applicable Federal and State laws. 

Comment: For the reporting and 

reconciliation standards outlined in 

proposed § 155.400(c) and § 155.400(d), 

one commenter requested clarification 

to ensure that Exchanges may collect 

monthly enrollment and termination 

data directly from insurers. The 

commenter sought to eliminate the need 

for the Exchange to collect this 

information on a case by case basis, 

compile it, and then reconcile it with 

issuers; all activities that the commenter 

stated are not feasible under a free 

market model where the Exchange Web 

site may not be tracking an individual’s 

coverage choices. 

Response: Per subpart D of both the 

proposed and final rules, the Exchange 

must make a determination of an 

individual’s eligibility in order for a 

person to enroll in a QHP through the 

Exchange. In addition, per § 155.340(a), 

the Exchange must know which QHP a 

qualified individual has selected in 

order to make any advance payments of 

the premium tax credit. We do not 

believe that collection of enrollment 

data from issuers on a monthly basis 

would be sufficient to meet these 

standards, and therefore maintain the 

policy in § 155.400 of this final rule. 

Comment: Most commenters 

supported a minimum monthly 

reconciliation under § 155.400(d), as 

long as Exchanges retained flexibility to 

reconcile more frequently. One health 

insurance issuer recommended 

reconciling only the cases with changes 

on a more frequent basis, while 

reconciling the full case load on a 

quarterly basis. 

Response: In this final rule, we 

maintain the requirement in 

§ 155.400(d) for monthly reconciliation, 

and require Exchanges to reconcile 

enrollment information with HHS in 

addition to QHP issuers. Exchanges 

have flexibility to reconcile some or all 

cases more frequently. We expect that 

Exchanges will work to minimize 

enrollment discrepancies, to automate 

reconciliation where possible, and to 

streamline any manual reconciliation 

activities that remain necessary. 

Summary of Regulatory Changes 

We are finalizing the standards 

proposed in § 155.400 of the proposed 

rule with the following modifications: 

In § 155.400(b) regarding the timing of 

data exchanges, we specify in the final 

rule that the Exchange must send 

enrollment information to both QHP 

issuers and HHS promptly and without 

undue delay. In § 155.400(c) we remove 

the standard that Exchanges submit 

enrollment information to HHS on a 

monthly basis. In § 155.400(d), we 

establish that Exchanges must reconcile 

enrollment information with both QHP 

issuers and HHS no less than on a 

monthly basis. We also made a few nonsubstantive edits to streamline the 

regulatory text. 

b. Single Streamlined Application 

(§ 155.405) 

In § 155.405, we proposed to codify 

that a QHP issuer must use the single 

streamlined application for qualified 

individuals and employers to enroll in 

QHPs through the Exchange. We also 

offered States the option to develop an 

alternative application, subject to 

approval by HHS. We sought comment 

regarding whether we should establish 

that applicants do not have to answer 

questions that are not pertinent to the 

eligibility and enrollment process. 

We further proposed that the 

Exchange must accept applications from 

multiple sources including the 

applicant, an authorized representative 

(as defined by State law), or someone 

acting responsibly for the applicant; and 

that an individual must be able to file 

an application online, by telephone, by 

mail, or in person. We solicited 

comment on whether an individual 

must be able to file an application in 

person. 

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Comment: A handful of commenters 

urged that the application described in 

proposed § 155.405(a) enable eligibility 

determinations for other human services 

programs such as the Supplemental 

Nutritional Assistance Program (SNAP) 

and Temporary Assistance for Needy 

Families (TANF) in addition to 

Medicaid, CHIP, and BHP. 

Response: In this final rule, we are 

only establishing that the application 

support eligibility for Exchange 

coverage and insurance affordability 

programs. With that said, States can 

decide to use HHS-approved alternative 

applications that include human 

services programs. 

Comment: Some commenters 

suggested that all States should use the 

HHS-created application and requested 

that we strike proposed § 155.405(b) 

from this section, which pertains to 

alternative applications. Issuers were 

concerned that they could be subjected 

to too much variation in Exchange 

applications. Other commenters 

supported our proposal to give States 

flexibility to create an alternative 

application should they desire. 

Response: Section 1413(b)(1)(B) of the 

Affordable Care Act directs HHS to 

allow a State to develop and use its 

application, subject to compliance with 

standards. We do not believe that 

variations in applications will place a 

burden on QHP issuers since the 

necessary enrollment information will 

be consistent across Exchanges. In 

addition, we reiterate our position in the 

proposed rule that the single 

streamlined application has been 

developed to meet the requirement for 

a uniform enrollment form, as set forth 

in section 1311(c)(1)(F) of the 

Affordable Care Act. We further clarify 

that the single streamlined application, 

or an HHS-approved Exchange 

alternative application, must be used for 

enrollment in a QHP through the 

Exchange only. Per § 156.265 of the final 

rule, a QHP can satisfy the standard 

regarding use of the single streamlined 

application by directing the individual 

to file the single streamlined application 

with the Exchange, or ensuring the 

applicant received an eligibility 

determination for coverage through the 

Exchange through the Exchange Internet 

Web site. 

Comment: Numerous commenters 

urged HHS to add language to proposed 

§ 155.405 stating that the standard 

single streamlined application should 

not include questions that are not 

pertinent to the eligibility and 

enrollment process. Other commenters 

wanted to ensure that the application 

will collect demographic information 

beyond what is established in the 

statute. 

Response: The Exchange eligibility 

proposed rule and this final rule at 

§ 155.315(g) prohibit Exchanges from 

requiring information beyond the 

minimum necessary to support 

eligibility determinations for the 

Exchange and insurance affordability 

programs. This provision limits the 

application to information that is 

pertinent to the eligibility and 

enrollment process. 

Comment: Numerous commenters 

expressed support for allowing an 

applicant to file an application in 

person, as described in the preamble to 

§ 155.405 in the proposed rule. A 

handful of commenters also urged HHS 

to go further and establish that 

Exchanges must allow individuals to 

submit, change, or renew coverage at 

numerous locations, including social 

service offices, welfare offices, 

community-based organizations, and 

any other pathway that accepts 

applications for government health 

benefit programs. Some commenters 

expressed concern that the proposed 

regulation did not ensure effective 

communication for individuals with 

disabilities because it did not provide 

for assistance when filing an application 

in person. Other commenters suggested 

that HHS establish that Exchanges must 

provide in-person assistance in a 

number of different locations 

throughout States. 

Response: We are maintaining the 

standard that applicants should be able 

to file an application for an eligibility 

determination through the Exchange 

and other insurance affordability 

programs in person. We have added to 

regulation text in § 155.405(c)(2)(iv) to 

establish that the facilities where 

someone files an application in person 

comply with the Americans with 

Disabilities Act. However, Exchanges 

have the flexibility to determine the 

venues at which applicants may file in 

person, which will allow Exchanges to 

configure staffing to meet the specific 

characteristics of each State. We 

encourage Exchanges to consider 

allowing enrollees to submit changes or 

complete the annual redetermination 

process at an in-person location. We are 

not, however, amending this in the final 

rule. 

Comment: A handful of commenters 

suggested that an Exchange could fulfill 

the standard to accept applications in 

person in accordance with proposed 

§ 155.405(c)(2) through its Navigator 

program. These commenters stated that 

in-person assistance may be 

burdensome for the States, but 

Navigators are a natural venue for such 

assistance. 

Response: An Exchange has flexibility 

in how it structures it Navigator 

program and may use such a program to 

meet the standard for in-person 

application filing and to provide 

assistance to individuals applying for 

coverage through the Exchange. 

Comment: Some commenters 

requested that the application provide 

meaningful access for individuals who 

are LEP, provide effective 

communication for individuals with 

disabilities, and also that the 

application be translated into a number 

of different languages. Some 

commenters recommended the 

application be translated into no fewer 

than 15 languages. 

Response: We address meaningful 

access issues and concerns in 

§ 155.205(c) as well as in § 155.230(b) of 

this final rule. Additional guidance 

issued at a later date will coordinate our 

accessibility standards with insurance 

affordability programs, and across HHS 

programs, as appropriate, providing 

more detail regarding literacy levels, 

language services, and access standards. 

Comment: A significant number of 

commenters asked for clarification on 

who can qualify as an authorized 

representative to file an application on 

behalf of an applicant under proposed 

§ 155.405(c)(1) and, in particular, on 

what HHS meant by ‘‘someone acting 

responsibly for the applicant’’ and how 

this role is different from an authorized 

representative. Other commenters asked 

for more details on the privacy 

standards that will be applied to 

authorized representatives and others 

assisting with the application process. 

Additionally, commenters thought that 

the final rule should specify that a 

Navigator cannot apply on behalf of the 

individual without the signed consent 

of an individual or an individual’s 

parent, guardian, court-designated 

representative, or legally-approved 

family member. 

Response: We expect to provide 

future guidance regarding who may 

serve as an authorized representative; 

we intend for this to track against who 

can serve as an authorized 

representative under Medicaid. We also 

note that a single application may have 

both an application filer and an 

authorized representative. In paragraph 

§ 155.405(c) of this final rule, we state 

that an ‘‘application filer’’ may file the 

application, and we have added a 

corresponding definition in § 155.20 in 

this final rule that notes that an 

application filer includes authorized 

representatives as well as someone 

acting responsibly for the applicant, if 

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the applicant is a minor or 

incapacitated. This change clarifies 

situations when someone acting 

responsibly for the applicant might file 

an application. In addition, the privacy 

and security standards addressed in 

§ 155.260 apply to any person or entity 

that views or receives personally 

identifiable information from or on 

behalf of an applicant through the 

Exchange. Therefore, we believe that 

these standards will ensure appropriate 

privacy standards for authorized 

representatives and others assisting 

applicants. Further, the application 

process will include an authentication 

process. HHS expects to issue future 

guidance on the authentication process 

to verify an individual’s identity. In 

addition, we expect that application 

assisters who are not Navigators, agents, 

or brokers will provide support for 

consumers during the application 

process, and we anticipate providing 

additional guidance regarding this role, 

including on appropriate privacy and 

security protections. 

Comment: Several commenters asked 

for clarification regarding whether 

mobile devices could be used to apply 

for coverage under proposed 

§ 155.405(c)(2). Many of these 

commenters recommended that the final 

rule establish that the single streamlined 

application must be available through 

mobile devices or mobile applications. 

Response: In this final rule, 

Exchanges must only provide an online 

application at this time (see 

§ 155.405(c)(2)(i)). Although it may be 

beneficial for applicants to be able to 

complete the application and the plan 

selection process using a mobile device, 

Exchanges do not have to provide this 

functionality given the short 

implementation timeframe. 

Summary of Regulatory Changes 

We are finalizing the definitions 

proposed in § 155.405 of the proposed 

rule, with a few small modifications: We 

changed the final rule in § 155.405(b) 

from ‘‘request’’ to ‘‘collect’’ for 

consistency with other parts of the final 

rule. We replaced (c)(1)(i) through 

(c)(1)(iii) of the proposed rule with (c)(1) 

‘‘application filer,’’ which incorporates 

the previous categories included in the 

proposed rule. In paragraph (c)(2), we 

have made minor clarifying edits. We 

codified the standard that an individual 

may file an application for coverage in 

person and clarified that reasonable 

accommodations must be made for 

individuals with disabilities. 

c. Initial and Annual Open Enrollment 

Periods (§ 155.410) 

In § 155.410, we proposed that the 

Exchange adhere to specified initial and 

annual open enrollment periods and 

indicated that qualified individuals and 

enrollees may begin or change coverage 

in a QHP at such times. We sought 

comment on the duration of the initial 

open enrollment period, which we 

proposed to be from October 1, 2013 to 

February 28, 2014. We also requested 

comment on the proposed annual open 

enrollment period (October 15 to 

December 7 of each year) and whether 

we should consider an alternative 

annual enrollment period from 

November 1 through December 15 of 

each year. 

We also proposed standards for 

effective dates based on the date when 

an individual’s QHP selection is 

received. To coordinate coverage in a 

QHP with the advance payments of the 

premium tax credit, we proposed that 

coverage in a QHP may only begin on 

the first of the month. We sought 

comment as to whether we should 

consider twice monthly or flexible 

effective dates of coverage for 

individuals who forgo advance payment 

of the premium tax credit for the first 

partial month or who are not eligible for 

advance payments of the premium tax 

credit. 

We also proposed that the Exchange 

must send written notification to 

enrollees about the annual open 

enrollment period and sought comment 

on whether we should codify specific 

elements that must be included in the 

notification and timing of the 

notification. We further proposed that 

the Exchange must ensure coverage is 

effective as of the first day of the 

following benefit year for a qualified 

individual who has made a QHP 

selection during the annual open 

enrollment period. 

Finally, we sought comment on 

whether Exchanges should 

automatically enroll individuals who 

received advance payments of the 

premium tax credit and then have 

coverage terminated from a QHP 

because the QHP is no longer offered, if 

such individual does not make a new 

QHP selection. We also sought comment 

on whether we should allow for 

automatic enrollment of individuals in 

specific circumstances, such as mergers 

between issuers or when one QHP 

offered through a specific issuer is no 

longer offered, but there are other 

options available to the individual 

through the same issuer. Lastly, we 

sought comment as to how far such 

automatic enrollment should extend if 

we were to allow it. 

Comment: Several commenters 

expressed concern about adverse 

selection with respect to the enrollment 

periods in proposed § 155.410 and 

§ 155.420. The commenters supported 

limited enrollment periods and opposed 

any flexibility for States to implement 

longer or more frequent enrollment 

periods. 

Response: In both the proposed and 

final rules, we have attempted to 

balance the risk of adverse selection 

with the need to ensure that consumers 

have adequate opportunity to enroll in 

QHPs through an Exchange. We believe 

that the enrollment periods described in 

§ 155.410 and § 155.420 of this final rule 

achieve that balance. As we describe 

later in this section, we believe that 

additional time is needed for the initial 

enrollment period, given that Exchanges 

are a new coverage option under the 

Affordable Care Act, and significant 

education and outreach will be needed 

to make individuals aware of this 

coverage opportunity. 

Comment: Several commenters 

requested more State flexibility with 

respect to the enrollment periods 

identified under proposed § 155.410 and 

§ 155.420. The commenters 

recommended States have flexibility to 

set their own enrollment periods and 

effective dates, especially those States 

already operating Exchanges. A few 

commenters requested State flexibility 

to extend enrollment periods, 

particularly for vulnerable populations. 

Response: Section 1311(c)(6) of the 

Affordable Care Act specifically directs 

the Secretary to provide for initial, 

annual and special enrollment periods. 

In both the proposed and final rule, we 

have tried to provide State flexibility 

while adhering to our responsibility 

under the statute to establish the 

enrollment periods identified under 

section 1311(c). Therefore, we have 

proposed and finalized in this rule the 

minimum uniform enrollment periods 

across all Exchanges, including a special 

enrollment period for individuals 

experiencing an exceptional 

circumstance. 

Comment: Almost all commenters 

supported the proposed start date of 

October 1, 2013 under proposed 

§ 155.410(b) for the initial open 

enrollment period. One State agency 

believed it was unrealistic to expect 

Exchanges to be operational prior to 

January 1, 2014, given the systems 

development challenges ahead. A few 

commenters requested flexibility to 

begin enrollment, or a ‘‘prequalification’’ period before October 1, 

2013. Commenters recommended an 

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initial open enrollment period lasting as 

few as two months and as long as three 

years. The majority of commenters 

recommended a six-month initial open 

enrollment period, ending on March 31, 

2014, one month later than in the 

proposed rule. Most commenters 

suggested that the longer initial open 

enrollment period would allow more 

time for individuals and families to 

learn about their coverage options, and 

more time for them to select a QHP. 

Finally, commenters recommended that 

individuals who enroll during the initial 

open enrollment period be permitted to 

change plans at least once without 

penalty during the Exchanges’ first year 

of operation. 

Response: In this final rule, we 

maintain the start date of October 1, 

2013 for the start of the initial open 

enrollment period. Although coverage 

will not be effective until January 1, 

2014, we believe that individuals and 

families need time to explore their 

coverage options and QHPs need time to 

process plan selections. We have 

extended the initial open enrollment 

period by one month—from February 

28, 2014 to March 31, 2014. HHS’s 

experience with the initial open 

enrollment period for Medicare’s 

Prescription Drug Benefit Program 

supports an extended period. We have 

not extended the initial open enrollment 

period past March 31 in order to limit 

the risk of adverse selection, as 

expressed by commenters. 

Comment: Several commenters 

recommended a robust outreach 

campaign prior to the initial open 

enrollment period. One group 

recommended that health insurance 

issuers notify all individual market 

subscribers about their potential 

eligibility for financial assistance 

through an Exchange under this section. 

Response: We encourage Exchanges to 

leverage existing resources in their 

marketing efforts, including working 

with issuers to determine how they can 

participate most effectively. Section 

155.205(e) of this final rule directs 

Exchanges to conduct outreach and 

education activities to educate 

consumers about the Exchange and to 

encourage participation. 

Comments: Several commenters 

representing State agencies and health 

insurance issuers expressed concern 

about effective dates proposed in 

§ 155.410(c). The commenters asserted 

that the specified minimum of eight 

days between plan selection and 

coverage effective date was too short, 

and that they needed as many as 30 

days to make coverage effective. 

Commenters recommended that we 

ensure there is sufficient lag time 

between QHP selection and effective 

dates. 

Response: Based on the commenters’ 

recommendation to allow more time 

between QHP selection and effective 

dates, we have modified the proposed 

QHP selection cutoff date in this final 

rule from the 22nd to the 15th of the 

month. As described in more detail 

below, we have also provided flexibility 

for Exchanges to work with QHP issuers 

to make coverage effective more quickly. 

Comment: Many commenters, namely 

consumer and patient advocates, were 

concerned that the proposed effective 

dates under § 155.410(c) and 

§ 155.410(f) would lead to coverage gaps 

for individuals losing coverage midmonth. The commenters offered 

alternative effective dates, including 

twice monthly, continuous, and 

retroactive. Many commenters 

responded positively to our solicitation 

for comments on whether to allow midmonth or flexible effective dates for 

qualified individuals willing to forgo 

advance payments of the premium tax 

credit until the 1st of the following 

month, or who are ineligible for such 

payments. Others requested that 

coverage be guaranteed for the 1st of the 

month for all qualified individuals, even 

when they select a QHP on the last day 

of the previous month. Finally, a few 

commenters recommended printable, 

temporary insurance cards that 

individuals could use until the 

enrollment process was completed. 

Response: We recognize the need to 

minimize coverage gaps, especially for 

vulnerable populations. However, the 

suggested alternatives could have 

negative consequences for Exchanges 

and QHP issuers, by increasing costs 

and administrative burden. Because the 

initial open enrollment period will be 

the Exchanges’ first experience with 

enrollment, and many newly-eligible 

individuals will be seeking to enroll at 

the same time, we believe it is important 

to maintain administrative processes 

consistent with health insurance 

issuers’ experience, while at the same 

time including flexibility for 

improvement as Exchanges and QHP 

issuers enhance their capabilities. 

In response to commenters’ concerns, 

we have added two new options for 

earlier initial open enrollment period 

effective dates in § 155.410(c)(2) of this 

final rule. We have also added the same 

options for special enrollment period 

effective dates in § 155.420(b)(3) of this 

final rule. An Exchange may adopt one 

or both options, provided that it 

demonstrate to HHS that all of the 

participating QHP issuers agree to 

effectuate coverage in a timeframe 

shorter than discussed in 

§ 155.410(c)(1)(ii) through 

§ 155.410(c)(1)(iii). We include this 

qualification because QHP issuers may 

need to implement administrative 

changes to accommodate the modified 

effective dates. We note that individuals 

seeking the earlier effective date 

described in § 155.410(c)(2)(i)(B) must 

waive the benefit of advance payments 

of the premium tax credit and costsharing reductions if coverage is 

effectuated mid-month. However, 

individuals do not have to accept this 

earlier effective date. As an example, if 

all QHP issuers in State X agree that 

they can effectuate coverage eight days 

after QHP selection, and individual A 

makes a QHP selection on January 17th, 

2014, the issuer may effectuate the 

coverage on January 25th, provided that 

the individual is willing to forgo 

advance payment of the premium tax 

credit for the seven days of coverage in 

January. 

Comment: In response to our request 

for comment in the preamble of 

proposed § 155.410(d) on whether we 

should set a standard for the timing of 

the annual open enrollment notice, most 

commenters supported a standard for 

the Exchange to send a notice of annual 

open enrollment 30 days prior to the 

start of enrollment, though one patient 

advocacy organization recommended 60 

days’ notice. 

Response: We have added a standard 

in this final rule in § 155.410(d) that the 

Exchange send the notice no earlier than 

September 1st, and no later than 

September 30th of each year, in 

preparation for an October 15th annual 

open enrollment. Because subpart D of 

this final rule directs the annual 

redetermination notice to be combined 

with the annual open enrollment notice, 

we have allowed a 30 day window for 

States to produce and mail the 

combined notice. We believe that 60 

days is too far in advance of annual 

open enrollment for enrollees to 

remember to take action. 

Comment: Many commenters 

representing patient and consumer 

advocacy groups recommended that 

proposed § 155.410(d) establish an 

additional notice to be sent 30 days 

before the end of the annual open 

enrollment period to enrollees who had 

not yet selected a QHP. Some 

commenters recommended the use of 

social media and mass media to increase 

awareness of annual open enrollment. 

Response: We note that Exchanges 

may send additional notices and 

conduct outreach to assist consumers 

with enrollment, but we do not establish 

such notices as a minimum standard. 

Comment: A few commenters 

recommended that HHS provide a 

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model annual open enrollment notice 

and a process for deviating from that 

notice. Suggestions for the notice’s 

content included: meaningful access 

standards, information about how to 

access brokers and application assisters, 

an explanation of the once-a-year nature 

of an annual enrollment period, the 

implications of going uninsured, and 

the criteria for qualifying for a special 

enrollment period. Several commenters 

recommended that the notice of annual 

eligibility redetermination described in 

proposed § 155.335(c) be combined with 

the notice of annual open enrollment 

described in § 155.410(d), into a single, 

streamlined notice. 

Response: HHS intends to provide 

Exchanges with a model notice in future 

guidance. The model will consider the 

content recommended above. In 

response to commenters’ 

recommendation to combine and 

streamline notices, we have added 

timing standards to the notice of annual 

redetermination notice in § 155.335(d) 

of this final rule. 

Comment: One commenter noted that 

health insurance issuers already send a 

notice of annual open enrollment. The 

commenter stated that if Exchanges did 

the same, as described in proposed 

§ 155.410(d), it would be duplicative 

and unnecessarily burdensome for 

Exchanges. 

Response: While it is possible that an 

Exchange or a State insurance regulator 

might direct health insurance issuers to 

send a notice of annual open 

enrollment, HHS is not imposing such 

a standard. We therefore do not believe 

§ 155.410(d) is duplicative, and we 

maintain it in the final rule. Issuers may 

continue to send such notices at their 

discretion. 

Comment: Several commenters, 

namely health insurance issuers, 

recommended a shorter annual open 

enrollment period under proposed 

§ 155.410(e), lasting between 30 and 45 

days, to discourage adverse selection. 

Conversely, several other commenters 

recommend extending the annual open 

enrollment period until at least 

December 15th (for a total of at least 60 

days), to give individuals and families 

more time to explore their coverage 

options. One commenter recommended 

quarterly instead of annual open 

enrollment periods, to increase 

opportunities for consumers to enroll. 

Commenters recommended annual open 

enrollment periods lasting between 30 

and 90 days, with several 

recommending continuous open 

enrollment. 

Response: As noted above, the rule 

seeks to balance flexibility for 

consumers with the need to limit 

adverse selection. The 53-day length of 

the annual open enrollment period 

balances these competing interests, and 

gives individuals and families ample 

time to explore coverage options. 

Therefore we maintain the annual open 

enrollment start and end dates in 

§ 155.410(e) of this final rule. 

Comment: One health insurance 

issuer suggested limiting an enrollee’s 

QHP selection during annual open 

enrollment in proposed § 155.410(e) to 

only one metal level higher. For 

example, the commenter believed that 

enrollees should not be permitted to 

move from a bronze level QHP to a gold 

or platinum level QHP. In response to 

a similar proposal in § 155.420(f) of the 

proposed rule to limit movement 

between QHPs during special 

enrollment periods, most commenters, 

with the exception of a few health 

insurance issuers, either objected to the 

provision outright, or recommended 

additional exceptions to allow 

movement between QHPs. One 

commenter noted that because the 

special enrollment periods were 

generally not tied to changes in an 

individual’s health status, they did not 

pose a risk of adverse selection. 

Response: We have removed 

§ 155.420(f) from the final rule. We do 

not believe it is appropriate to limit 

enrollee movement between QHPs 

during the annual open enrollment 

period in § 155.410(e), and we have not 

added the restriction requested by the 

commenter. 

Comment: With respect to the 

proposed annual open enrollment 

period under § 155.410(e), many 

commenters were concerned that its 

overlap with the open enrollment 

periods for SHOP, Medicare and other 

Federal programs would create an 

unmanageable administrative workload 

at the end of each year. Some 

commenters suggested moving the 

Exchange’s open enrollment until after 

the first of the year to better align it with 

tax filing season and with many 

employers’ annual open enrollment 

periods. Others recommended 

staggered, individual-specific open 

enrollment periods. For example, 

periods could be linked to birthdays, to 

spread out enrollment over the course of 

the year. Others recommended that the 

annual open enrollment period reflect 

the current enrollment practices in the 

individual and small-group market, and 

at the least, align inside and outside the 

Exchange. Some commenters 

representing senior citizens supported 

the alignment with Medicare. 

Response: We recognize that the 

annual open enrollment period overlaps 

with that of other Federal programs. 

However, we believe that the 

alternatives suggested by commenters 

would lead to undesirable outcomes. 

For instance, aligning the annual open 

enrollment period with the tax season 

would mean that the coverage year and 

the tax year no longer align, and in the 

first year consumers could have more 

than 12 months of coverage before 

receiving an opportunity to change 

QHPs. Further, the updated tax return 

information may not yet be available via 

the data services hub. We believe that a 

rolling open enrollment period, with 

individual-specific dates would add 

complexity for families and increase 

risk selection. It would also eliminate 

the ability to conduct a single 

enrollment campaign when consumers 

could take action. We therefore 

maintain the proposed open enrollment 

period in § 155.410(e) of this final rule. 

With respect to the comment on 

aligning the enrollment period inside 

and outside the Exchange, we clarify 

that this rule only sets standards for 

Exchanges. 

Comment: In response to our request 

for comment on the issue of autoenrollment, several State agencies 

supported the rule’s lack of autoenrollment standards, because they 

perceived it as permitting flexibility. A 

few commenters explicitly opposed 

auto-enrollment. The remainder of the 

commenters supported the option for 

Exchanges to auto-enroll individuals 

who become unintentionally uninsured, 

but they expressed concerns over 

limiting an individual’s right to choose 

his or her own QHP. Most commenters 

recommended that an Exchange send 

multiple notices to individuals facing 

potential auto-enrollment, and provide a 

30- to 90-day period for individuals to 

change QHPs after being auto-enrolled. 

Response: We have established 

flexibility for the Exchange to autoenroll qualified individuals when the 

Exchange demonstrates to HHS that it 

has good cause to do so under 

§ 155.410(g) of this final rule. We expect 

to issue guidance outlining generally the 

circumstances under which HHS will 

approve Exchange auto-enrollment. 

HHS will also monitor auto-enrollment 

practices across Exchanges for 

appropriateness and effectiveness. 

Comment: A few commenters stressed 

that any QHP into which qualified 

individuals are auto-enrolled must meet 

women’s reproductive needs, as well as 

the need for local providers. The 

commenters recommended that the QHP 

in which an individual is auto-enrolled 

resemble any previous QHP coverage 

the qualified individual had. 

Response: All QHPs must offer the 

essential health benefits established 

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under section 1302(b) of the Affordable 

Care Act, which includes coverage of 

maternity and newborn care. Also, all 

QHPs must comply with Exchange 

network adequacy standards that ensure 

a sufficient number and type of 

providers to assure that all services will 

be accessible without unreasonable 

delay, per § 156.230. HHS will consider 

other commenter suggestions in 

developing guidance for § 155.410(g) of 

this final rule. 

Summary of Regulatory Changes 

We are finalizing the definitions 

proposed in § 155.410 of the proposed 

rule, with the following modifications: 

in § 155.410(b), we extended the end 

date of the initial enrollment period 

from February 28, 2014 to March 31, 

2014. In § 155.410(c)(2), we modified 

the initial enrollment period effective 

date such that a QHP selection must be 

received by the Exchange by the 15th of 

the month to secure an effective date of 

the first day of the following month. We 

also provided Exchanges flexibility to 

effectuate coverage more quickly if all 

QHP issuers offering coverage through 

the Exchange agree with the earlier 

dates, but noted that advance payments 

of the premium tax credit and costsharing reductions cannot begin until 

the first of the month. We further 

specified in § 155.410(d) that the 

Exchange must send the notice of 

annual open enrollment no earlier than 

September 1st, and no later than 

September 30th of each year. Finally, in 

§ 155.410(g) we added an option for 

Exchanges to automatically enroll 

qualified individuals at such time and 

in such manner as HHS may specify, 

and subject to the Exchange 

demonstrating to HHS that it has good 

cause to perform such automatic 

enrollments. 

d. Special Enrollment Periods 

(§ 155.420) 

In § 155.420, we proposed that the 

Exchange must allow a qualified 

individual or enrollee to enroll in a QHP 

or change from one QHP to another 

outside of the annual open enrollment 

period if such individual qualifies for a 

special enrollment period. We proposed 

special enrollment period effective dates 

that generally followed the proposed 

initial enrollment period effective dates 

in § 155.410. 

For each special enrollment period we 

proposed a standard length of 60 days 

from the date of the triggering event, 

unless the regulation specified 

otherwise. We requested comment on 

whether special enrollment periods, 

particularly those described in 

paragraphs § 155.420(d)(4), 

§ 155.420(d)(6), and § 155.420(d)(7), 

should have an alternate trigger or start 

date. The special enrollment periods we 

proposed were triggered by the 

following events: 

• A qualified individual and any 

dependents losing other minimum 

essential coverage. We provided several 

examples of loss of coverage, and we 

sought comment on our proposal to 

limit this special enrollment period to 

the loss of minimum essential coverage, 

rather than loss of any coverage. 

• A qualified individual gaining or 

becoming a dependent through 

marriage, birth, adoption, or placement 

for adoption. We solicited comment on 

whether States might consider 

expanding the special enrollment period 

to include gaining dependents through 

other life events. 

• An individual, not previously 

lawfully present, gaining status as a 

citizen, national, or lawfully present 

individual in the U.S. 

• Consistent with the Medicare 

Prescription Drug Program, a qualified 

individual experiencing an error in 

enrollment. 

• An individual enrolled in a QHP 

adequately demonstrating to the 

Exchange that the QHP in which he or 

she is enrolled substantially violated a 

material provision of its contract. 

• An individual becoming newly 

eligible or newly ineligible for advance 

payments of the premium tax credit or 

experiencing a change in eligibility for 

cost-sharing reductions. 

• New QHPs offered through the 

Exchange becoming available to a 

qualified individual or enrollee as a 

result of a permanent move. 

• The individual is an Indian, as 

defined by the Indian Health Care 

Improvement Act. We solicited 

comment on the potential implications 

on the process for verifying Indian 

status for purposes of this special 

enrollment period. 

• A qualified individual or enrollee 

meeting other exceptional 

circumstances, as determined by the 

Exchange or HHS. Similar to section 

9801 of the Code, we proposed that loss 

of coverage does not include failure to 

pay premiums on a timely basis, 

including COBRA premiums prior to 

expiration of COBRA coverage. We also 

proposed that loss of coverage not 

include situations allowing for a 

rescission as specified in 45 CFR 

147.128. 

We proposed that the Exchange allow 

an existing enrollee who qualifies for a 

special enrollment period to only 

change plans within the same metal 

level of coverage, as defined by section 

1302(d) of the Affordable Care Act. We 

proposed a single exception for new 

eligibility for advance payments of the 

premium tax credit or change in 

eligibility for cost-sharing reductions. 

We requested comment as to whether 

we should provide an exception for 

catastrophic plan enrollees who become 

pregnant. 

Comment: Several commenters sought 

clarification on the types of documents 

needed to qualify for a special 

enrollment period, as described in 

proposed § 155.420(a). Some requested 

that the same verifications used for 

determining eligibility for coverage also 

be used to verify eligibility for a special 

enrollment period. Others, namely State 

agencies, requested State flexibility for 

determining special enrollment period 

eligibility. 

Response: Exchanges must verify 

information outlined in § 155.315 of the 

rule in order to make an eligibility 

determination, which includes a 

determination of eligibility for 

enrollment periods, per § 155.305(b). 

Exchanges will be able to determine 

eligibility for most special enrollment 

periods using the information available 

through verifications outlined in 

§ 155.315. However, given that the 

eligibility criteria for some of the special 

enrollment periods in § 155.420 do not 

directly align with the criteria to 

establish eligibility for coverage through 

the Exchange or insurance affordability 

programs in § 155.315, we expect 

Exchanges will use other verification 

standards and processes to determine 

eligibility for those particular special 

enrollment periods. 

Comment: Several commenters 

recommended adding standards for 

Exchanges, QHP issuers and employers 

to notify an individual about his or her 

potential eligibility for a special 

enrollment period under proposed 

§ 155.420(a). For example, commenters 

recommended that employers include a 

notice about employees’ potential 

eligibility for a special enrollment 

period with any health benefit change 

materials, or that QHP issuers notify 

enrollees who report a change in 

address. 

Response: HHS will issue guidance 

pertaining to notices that may include 

information on special enrollment 

periods. We expect that Exchanges will 

include information about all 

enrollment periods both on their Web 

site and other informational resources. 

Comment: Many commenters 

expressed general concerns about 

adverse selection. The commenters 

requested that individuals be limited to 

only one special enrollment period per 

month, and recommended limiting 

individuals’ movement between QHPs 

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during some or all special enrollment 

periods. 

Response: While we recognize the 

need to limit the risk of adverse 

selection, we do not believe it is 

necessary to limit special enrollment 

periods, given the nature of the types of 

special enrollment periods. We received 

similar comments on the issue of 

limiting enrollees’ movement between 

QHPs during open and special 

enrollment periods, and have responded 

to them in preamble for § 155.410(e) and 

§ 155.420(f), respectively. 

Comment: A few commenters 

suggested that the special enrollment 

periods described in this section be 

aligned more closely with HIPAA rules 

for consistency inside and outside the 

Exchange. A few other commenters 

instead recommended aligning the 

special enrollment periods more closely 

with Medicare’s special enrollment 

periods. 

Response: Section 1311(c)(6) of the 

Affordable Care Act establishes that 

Exchange special enrollment periods 

follow those specified in section 9801 of 

the Code (the HIPAA special enrollment 

periods) and reflect those available 

under part D of title XVIII of the Act. 

The final rule balances these two 

parameters by adopting relevant 

provisions from each. In response to 

comments requesting closer alignment 

with HIPAA rules, we have added 

regulatory text to § 155.420(b)(2) to 

ensure first-of-the-month effective dates 

for qualified individuals who gain or 

become dependents through marriage, 

and for qualified individuals who lose 

minimum essential coverage. We have 

also aligned more closely with HIPAA 

rules by clarifying what is included 

under loss of minimum essential 

coverage in § 155.420(e). 

Comment: Many commenters made 

suggestions for effective dates under 

§ 155.420(b) similar to those made for 

the proposed § 155.410(c) and 

§ 155.410(f) on effective dates during the 

initial and annual open enrollment 

periods. 

Response: With the exception of the 

cases noted above in § 155.420(b)(2), we 

have modified the special enrollment 

period effective dates in proposed 

§ 155.420(b) to align with initial 

enrollment period effective dates in 

§ 155.410(c) of this final rule. Our 

reasoning follows the same logic for 

both sections of the rule. 

Comment: Several commenters 

recommended 30-day special 

enrollment periods, under proposed 

§ 155.420(c), consistent with the HIPAA 

standard, while several others 

supported the proposed 60-day periods, 

consistent with several special 

enrollment periods under the Medicare 

Prescription Drug Benefit Program. 

Several commenters recommended 

extending the periods for as long as 120 

days, particularly for vulnerable 

populations. 

Response: Regarding the length of 

Exchange special enrollment periods 

outlined in § 155.420(c) of the final rule, 

our experience with the Medicare 

Prescription Drug Benefit Program 

informs our decision to adopt the 60- 

day window, which generally conforms 

with several special enrollment periods 

in the Medicare Prescription Drug 

Benefit Manual that extend for two 

months beyond the month of a 

triggering event. We believe that this 

approach will give consumers the time 

they need to explore their coverage 

options through the Exchange, following 

a change in life circumstances. We have 

not extended the length of the 

enrollment period due to concerns 

about adverse selection. Exchanges may 

grant special enrollment periods in 

advance of a triggering event, so long as 

the effective date of coverage does not 

occur before the triggering event, and so 

long as there is no overlap in coverage 

for which the individual receives 

advance payments of the premium tax 

credit or cost-sharing reductions while 

enrolled in other minimum essential 

coverage. 

Comment: Several commenters, 

namely health insurance issuers, asked 

HHS not to add any additional special 

enrollment periods to those listed in 

proposed § 155.420(d). Several other 

commenters recommended additions to 

the rule, including special enrollment 

periods for certain changes in plan 

provider networks, exhaustion of the 

COBRA disability extension, denial of 

services due to a provider’s moral or 

religious opposition, and pregnancy. 

Response: The Affordable Care Act 

establishes that Exchange special 

enrollment periods follow those 

specified in section 9801 of the Code 

and part D of title XVIII of the Act. The 

additional special enrollment periods 

suggested by commenters are not 

specified in the Code, nor are they 

similar enough to those available under 

the Act for HHS to include them in the 

final rule. Therefore the final rule 

implements the statute without 

additions. We note, however, that the 

special enrollment period for 

exceptional circumstances in 

§ 155.420(d)(9) of this final rule 

provides an additional opportunity for 

enrollment when unforeseen 

circumstances arise. 

Comment: Regarding proposed 

§ 155.420(d)(1), for individuals losing 

minimum essential coverage, many 

commenters sought clarification about 

what coverage it included. Several 

commenters questioned whether an 

individual would be eligible for this 

special enrollment period if offered 

COBRA, and how the policy related to 

proposed § 155.420(e) and the Treasury 

proposed rule. Many commenters also 

sought assurance that loss of coverage 

included loss of coverage through 

Medicaid, CHIP and the BHP. One 

health insurance issuer recommended 

that loss of Medicaid or CHIP only be 

included if it is the result of a reported 

change in household income to an 

Exchange that disqualifies the 

individual or family from Medicaid or 

CHIP. A few health insurance issuers 

supported the language in proposed 

§ 155.420(d)(1) specifying loss of 

‘‘minimum essential coverage,’’ as 

opposed to any coverage, because it 

limits adverse selection by prohibiting 

individuals from dropping their 

substandard coverage when they 

became sick or injured. A few other 

commenters recommended Exchange 

flexibility to offer special enrollment 

periods to individuals losing nonminimum essential coverage. 

Response: The Exchange 

establishment proposed rule preamble 

provides several examples of loss of 

coverage, including loss of Medicaid 

and CHIP, in accordance with section 

9801(f)(3) of the Code. The examples 

remain accurate for this final rule. We 

have further clarified § 155.420(e) in 

this final rule by specifying that loss of 

coverage includes those circumstances 

described in 26 CFR 54.9801–6(a)(3)(i) 

through (iii). This clarification aligns 

the special enrollment more closely 

with section 9801 of the Code. An 

individual could lose eligibility for 

Medicaid or CHIP as a result of a 

reported change in household income, 

or as a result of other circumstances. 

Qualified individuals are eligible for 

the loss of minimum essential coverage 

special enrollment period described in 

§ 155.420(d)(1), even if offered COBRA. 

The Treasury proposed rule defines 

COBRA coverage as minimum essential 

coverage only if the individual enrolls 

in such coverage. Therefore, if an 

individual elects and enrolls in COBRA, 

he or she cannot qualify for this special 

enrollment period until exhausting 

COBRA, as described in § 155.420(e), 

but if the individual does not elect 

COBRA, he or she may take advantage 

of the Exchange special enrollment 

period. Regarding the recommendation 

to allow Exchanges to offer this special 

enrollment period to individuals losing 

non-minimum essential coverage, we 

have not adopted this policy in 

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deference to the status the statute gives 

to minimum essential coverage. 

Comment: Regarding the special 

enrollment period for individuals 

gaining or becoming a dependent as 

described in proposed § 155.420(d)(2), 

many commenters made arguments for 

either limiting or for expanding the list 

of life events through which an 

individual becomes or gains a 

dependent. Several commenters 

recommended adding domestic 

partners, partners joined in civil unions, 

or dependents gained through 

guardianship. Several other commenters 

recommended that State law determine 

the types of dependents allowed. 

Response: For the same reasons as 

described above, we do not find legal 

grounds for expanding the definition of 

dependents for the purpose of the 

special enrollment period described in 

§ 155.420(d)(2). Therefore, we retain this 

provision in this final rule without 

modification. 

Comment: Regarding the special 

enrollment period for individuals 

becoming lawfully present, outlined in 

proposed § 155.420(d)(3), several 

commenters questioned whether an 

individual moving from one lawfully 

present category to another would be 

granted this special enrollment period if 

it affected his or her eligibility for 

certain types of coverage. 

Response: To qualify for coverage 

without advance payments of the 

premium tax credit or cost-sharing 

reductions through an Exchange under 

the special enrollment period described 

in both the proposed and final rule at 

§ 155.420(d)(3), the individual cannot 

have been previously lawfully present. 

Comment: Regarding the special 

enrollment periods for errors in 

enrollment, and for contract violations, 

outlined in proposed § 155.420(d)(4) 

and § 155.420(d)(5) respectively, several 

commenters sought clarification on the 

kinds of events that would trigger them, 

and how individuals would 

demonstrate such events. A few health 

insurance issuers recommended appeals 

processes, either in conjunction with, or 

instead of these special enrollment 

periods. They recommended various 

limitations on the special enrollment 

period for errors in enrollment, and one 

commenter recommended that it be 

removed from the rule all together. 

Several other commenters sought 

clarification as to which entities are 

considered ‘‘agents of the Exchange or 

HHS,’’ and recommended that at least 

QHPs be included as such agents. 

Response: The special enrollment 

periods in § 155.420(d)(4) and 

§ 155.420(d)(5) of this final rule are 

generally consistent with those offered 

under the Medicare Prescription Drug 

Program, as noted above. We expect 

Exchanges to develop guidance and 

standard operating procedures for 

considering requests for this special 

enrollment period. We encourage 

Exchanges to do so in consultation with 

health insurance issuers and other 

stakeholders. HHS may also provide 

future guidance to help Exchanges in 

operationalizing this special enrollment 

period. 

Comment: Regarding the special 

enrollment period for individuals newly 

eligible or ineligible for advance 

payments of the premium tax credit, 

outlined in proposed § 155.420(d)(6), a 

couple of commenters sought 

clarification as to whether an individual 

newly released from incarceration 

would qualify for the special enrollment 

period, even if he or she did not qualify 

for advance payments of the premium 

tax credit or did not experience a 

change in cost-sharing reductions. 

Response: Qualified individuals 

newly released from incarceration are 

eligible for the special enrollment 

period afforded to individuals who gain 

access to a new QHP as a result of a 

permanent move, as outlined in 

§ 155.420(d)(7) of this final rule and as 

described further below. 

Comment: A couple of commenters 

recommended that the special 

enrollment period for individuals newly 

eligible or ineligible for advance 

payments of the premium tax credit, 

outlined in proposed § 155.420(d)(6), 

clarify that individuals may not qualify 

for this special enrollment period if they 

become eligible for an increase or 

decrease in their existing advance 

payments of the premium tax credit. 

Conversely, one commenter responding 

to HHS’ request for comment 

recommended that this kind of special 

enrollment period be offered to all 

individuals who experience a change in 

income resulting in recalculation of 

their advance payments of the premium 

tax credit. 

Response: The final rule specifies that 

individuals may only qualify for this 

special enrollment period in 

§ 155.420(d)(6) if they are newly eligible 

or ineligible for advance payments of 

the premium tax credit, and we do not 

believe clarification is necessary, as 

requested by the commenter. That said, 

if an individual experiences a change in 

his or her existing payments of the 

premium tax credit in tandem with a 

change in level of cost-sharing 

reductions, the individual could qualify 

for this special enrollment period. 

Comment: One commenter 

recommended dividing the special 

enrollment period in proposed 

§ 155.420(d)(6) into two distinct 

periods—one for individuals gaining 

eligibility for advance payments of the 

premium tax credit or experiencing a 

change in cost-sharing reductions, and a 

second for individuals whose employersponsored coverage ceases to meet 

affordability or minimum value 

standards. 

Response: While we have not added 

a special enrollment period specifically 

for individuals whose employersponsored coverage ceases to meet 

affordability or minimum value 

standards, as recommended by the 

commenter, we clarify in § 155.420(e) 

that loss of minimum essential coverage 

includes those circumstances described 

in 26 CFR 54.9801–6(a)(3)(i) through 

(iii). We believe that between the special 

enrollment periods offered for loss of 

minimum essential coverage in 

§ 155.420(d)(1) and for employersponsored coverage becoming 

unaffordable in § 155.420(d)(6), 

individuals will have ample 

opportunities to enroll in coverage 

through the Exchange. 

Comment: Regarding the special 

enrollment period for permanent moves, 

outlined in proposed § 155.420(d)(7), 

one health insurance issuer 

recommended that the provision be 

revised so that it would only be a 

triggering event if an enrollee moves 

permanently outside the service area of 

his or her existing QHP. Several health 

insurance issuers also recommended 

that individuals who move across State 

lines receive an eligibility determination 

from the Exchange in their new State. 

Response: The special enrollment 

period in § 155.420(d)(7) is similar to 

the special enrollment period under part 

D of title XVIII of the Act, as directed 

by section 1311(c)(6) of the Affordable 

Care Act. Both are intended to afford 

individuals the full range of plan 

options when they relocate. Individuals 

moving to a new State should receive an 

eligibility determination from their new 

State’s Exchange. Qualified individuals 

are responsible for reporting a 

permanent move. 

Comment: Several commenters 

recommended that a special enrollment 

period be triggered by the date of a 

permanent move described in 

§ 155.420(d)(7), while others 

recommended it be triggered by the date 

the individual reports the move to the 

Exchange, with a time-limited time 

window in which to report it. In cases 

where an individual’s eligibility for 

employer-sponsored coverage 

terminates or changes, in response to 

proposed § 155.420(d)(1) and (d)(6) 

respectively, several commenters 

recommended that the period be 

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triggered by the date the employee 

learns of the termination or change. 

Other commenters recommended that it 

be triggered by the actual date of the 

termination of or change in coverage. In 

cases where an individual becomes 

newly eligible for advance payments of 

the premium tax credit or experiences a 

change in cost-sharing reductions, in 

response to proposed § 155.420(d)(6), 

several commenters recommended that 

the period be triggered by the date the 

individual experienced a change in 

circumstances, while others 

recommended it be triggered by the date 

of the Exchange’s official eligibility 

determination. Several other 

commenters recommended less 

structured approaches, such as leaving 

the trigger up to the consumer with the 

change in circumstances, or allowing 

the particular circumstances to dictate 

the trigger. Many commenters also 

recommended that individuals be 

permitted to seek special enrollment 

periods in advance of a known 

triggering event. 

Response: We expect to issue 

guidance to help Exchanges determine 

how to define the triggering events and 

consider the recommendations received. 

We believe it is critical to establish a 

balance between minimizing gaps in 

coverage and the need to avoid coverage 

overlaps when premium tax credits are 

involved. Exchanges may grant special 

enrollment periods in advance of a 

triggering event, so long as the effective 

date of coverage does not occur before 

the triggering event, and so long as there 

is no overlap in coverage for which the 

individual receives advance payments 

of the premium tax credit or costsharing reductions while enrolled in 

other minimum essential coverage. 

Comment: Regarding the special 

enrollment period for Indians, outlined 

in proposed § 155.420(d)(8), some 

commenters expressed support, while 

others either opposed it or 

recommended that States have 

flexibility to adopt their own special 

Indian provisions. Many commenters 

sought further clarification on how the 

Exchange would verify an individual’s 

status as an Indian. Some disagreed 

with the definition of Indian outlined by 

HHS in proposed § 155.420(d)(8), and 

some provided a detailed legal analysis 

to support their position. Others 

recommended allowing special 

enrollment periods more frequently 

than once per month in cases where any 

QHP network excludes Indian Health 

Service, tribal, or urban Indian 

providers or when a QHP drops such 

providers from its network. 

Response: Consistent with the 

proposed rule, HHS is codifying the 

special monthly enrollment period for 

Indians in accordance with section 

1311(c)(6)(D) of the Affordable Care Act. 

Sections 155.300 and 155.350(c) of this 

final rule address comments submitted 

regarding the definition of Indian and 

verification of an individual’s status as 

an Indian as it relates to eligibility for 

cost-sharing reductions. The same 

verification rules apply to eligibility for 

this special enrollment period. As stated 

above, we do not believe that there is 

legal flexibility to include additional 

special enrollment periods. 

Comment: Regarding the special 

enrollment period for individuals with 

exceptional circumstances, outlined in 

proposed § 155.420(d)(9), many 

commenters supported the broad 

language, while several others 

recommended more specificity. A few 

commenters recommended that States, 

not HHS, determine the exceptional 

circumstances. 

Response: We have modified the 

language in § 155.420(d)(9) to permit 

individuals to request a special 

enrollment period by demonstrating to 

their Exchange that they meet 

exceptional circumstances. The 

modified language establishes that 

individuals must demonstrate such 

circumstances in accordance with 

guidelines issued by HHS. Consistent 

with examples outlined in the proposed 

rule preamble, HHS’s guidance for this 

special enrollment period will outline 

circumstances when HHS may grant 

special enrollment periods directly, 

such as in cases of natural disasters. 

Comment: A few commenters 

supported the exclusion from special 

enrollment periods when individuals 

failed to pay their premiums on a timely 

basis, outlined in proposed § 155.420(e), 

while several other commenters 

explicitly opposed this provision. 

Several commenters only opposed the 

exclusion for individuals who failed to 

pay their COBRA premium on a timely 

basis, noting that many people are likely 

to elect COBRA without realizing that 

there are more affordable coverage 

options through the Exchange. 

Response: The limitation described in 

§ 155.420(e) reflects similar limitations 

in both section 9801 of the Code, and 

part D of title XVIII, as directed by 

section 1311(c)(6) of the Affordable Care 

Act. As stated in the response to 

comments on § 155.420(d)(1) (for 

individuals losing minimum essential 

coverage) individuals are free to decline 

COBRA and instead enroll in a QHP 

through the Exchange. We have also 

added clarification to § 155.420(e) to 

indicate which circumstances are 

included under loss of minimum 

essential coverage. 

Comment: While a few health 

insurance issuers supported the limits 

on special enrollment periods outlined 

in proposed § 155.420(f), most 

commenters either opposed the 

provision outright, or recommended 

additional exceptions, such as 

exceptions for pregnant women, or for 

the special enrollment periods 

described in proposed § 155.420(d)(2), 

§ 155.420(d)(4), § 155.420(d)(5), and 

§ 155.420(d)(8). One commenter noted 

that because the special enrollment 

periods were generally not tied to 

changes in an individual’s health status, 

they did not pose a risk of adverse 

selection. 

Response: We have removed 

§ 155.420(f) from the final rule because 

special enrollment periods are generally 

not tied to changes in an individual’s 

health status, and are unlikely to 

increase the potential for adverse 

selection. Just as qualified individuals 

are free to move between metal levels 

during the initial and annual open 

enrollment periods, they are also free to 

do so during special enrollment periods. 

Summary of Regulatory Changes 

We are finalizing the standards 

proposed in § 155.420 of the proposed 

rule, with several modifications: in 

§ 155.420(b) related to effective dates, 

we modified the special enrollment 

period effective dates such that a QHP 

selection must be received by the 

Exchange by the 15th of the month to 

secure an effective date of the first day 

of the following month. We provided 

Exchanges flexibility to effectuate 

coverage more quickly by demonstrating 

to HHS that all QHP issuers offering 

coverage through the Exchange agree 

with the earlier dates, but noted that 

advance payments of the premium tax 

credit and cost-sharing reductions 

cannot begin until the first of the month. 

This limitation on advance payments of 

the premium tax credit and cost-sharing 

reductions also applies to individuals 

enrolling mid-month as a result of birth, 

adoption or placement for adoption. As 

an exception to the effective dates 

above, we specified in § 155.420(b)(2)(ii) 

that in the case of marriage or in the 

case where a qualified individual loses 

minimum essential coverage, the 

Exchange must always ensure coverage 

is effective on the first day of the 

following month, consistent with 

HIPAA rules. We clarify that to qualify 

for the special enrollment period under 

§ 155.420(d)(9) individuals must 

demonstrate their exceptional 

circumstances to the Exchange, in 

accordance with guidelines issued by 

HHS. In § 155.420(e) we clarify that loss 

of coverage includes those 

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circumstances described in 26 CFR 

54.9801–6(a)(3)(i) through (iii). Finally, 

we remove the restrictions in 

§ 155.420(f) that had previously 

prohibited individuals from moving 

between metal levels during special 

enrollment periods. 

e. Termination of Coverage (§ 155.430) 

We proposed that the Exchange must 

permit an enrollee to terminate his or 

her coverage in a QHP with appropriate 

notice to the Exchange or the QHP. We 

proposed that the Exchange may initiate 

termination of an enrollee’s coverage in 

a QHP, and must permit a QHP issuer 

to terminate such coverage under a 

specific list of circumstances: the 

enrollee is no longer eligible for 

coverage; the enrollee obtains other 

minimum essential coverage; payment 

of premiums cease; the enrollee’s 

coverage is rescinded in accordance 

with § 147.128 of this title; the 

enrollee’s QHP is terminated or 

decertified; or the enrollee changes from 

one plan to another during the annual 

open enrollment or a special enrollment 

period in accordance with sections 

§ 155.410 and § 155.420. 

We also proposed that the Exchange 

establish maintenance of records 

procedures for termination of coverage, 

track the number of individuals for 

whom coverage has been terminated 

and submit that information to HHS 

promptly and without undue delay, 

establish terms for reasonable 

accommodations for individuals with 

mental or cognitive conditions, and 

retain records in order to facilitate audit 

functions. 

Additionally, we proposed that in the 

case of a termination requested by an 

enrollee, the last day of coverage for an 

enrollee is the termination date 

specified by the enrollee, provided that 

the Exchange and QHP receive 

reasonable notice. We proposed that if 

the Exchange or the QHP do not receive 

reasonable notice, the last day of 

coverage is the first day after a 

reasonable amount of time has passed. 

We proposed that in the case of a 

termination by the Exchange or a QHP 

as a result of an enrollee obtaining new 

minimum essential coverage, the last 

day of coverage is the day before the 

effective date of the new coverage. We 

solicited comments regarding how 

Exchanges can work with QHP issuers 

to implement this proposal. We also 

proposed standards for termination 

effective dates in the case of a 

termination by the Exchange or a QHP 

as a result of an enrollee changing 

QHPs. Finally, we proposed that for 

individuals not covered by the previous 

termination effective dates, the last day 

of coverage would be either the 

fourteenth or the last day of the month, 

depending on when termination of 

coverage was initiated. 

Comment: A handful of commenters 

asked us to clarify what length of time 

would qualify as ‘‘reasonable notice,’’ as 

referenced in the proposed rule in 

§ 155.430(b)(1). Some commenters 

suggested 24 hours while others 

suggested 30 days. The most common 

suggestion was 14 days. Other 

commenters requested that the final rule 

specify the methods consumers may use 

to notify their intent to terminate 

coverage. 

Response: In this final rule, we clarify 

in § 155.430(d)(1) that ‘‘reasonable 

notice’’ is defined as 14 days from the 

requested date of termination. We want 

to ensure that individuals who have 

access to other coverage sources do not 

need to maintain Exchange coverage 

longer than necessary. In 

§ 155.430(d)(2)(ii) of the final rule, we 

further state that the date of termination 

of coverage is 14 days from the request 

if the enrollee does not give reasonable 

notice to terminate coverage. We also 

note in § 155.430(d)(2)(iii) that coverage 

may be terminated in fewer than 14 

days, per the request of the individual, 

if his or her QHP issuer is able to 

effectuate terminations more quickly. 

We do not specify how an individual 

will notify the Exchange that they wish 

to terminate coverage; rather, we leave 

this up to States to define how such 

transmissions may be received. This is 

in part because a request for termination 

may be received through either the 

Exchange or the QHP, and also because 

we wish to allow maximum flexibility 

to Exchanges. 

Comment: Several commenters 

requested clarification regarding how 

the grace period for non-payment of 

premiums would work for individuals 

receiving advance payments of the 

premium tax credit and whether these 

policies differ for those who are not. 

Response: We clarify in 

§ 155.430(b)(2)(ii)(A) and (B) of this 

final rule that the grace periods for nonpayment of premiums are not the same 

for individuals receiving advance 

payments of the premium tax credit and 

other enrollees. The 90-day grace period 

for non-payment of premiums for 

individuals receiving advance payments 

of the premium tax credit is addressed 

in § 156.270(d). In § 155.430(d)(5) of the 

final rule, we clarify that the last day of 

coverage for individuals not receiving 

advance payments of the premium tax 

credit should be consistent with existing 

State laws regarding grace periods for 

non-payment. 

Comment: One commenter suggested 

that Exchanges be allowed to designate 

either the Exchange or the QHP to 

receive termination notifications in 

order to reduce duplication. A few 

commenters did not support the 

proposed standard in § 155.430(c) that 

QHP issuers report termination of 

coverage data to HHS because of privacy 

concerns. 

Response: We did not accept the 

commenter’s recommendation. 

Regardless of which entity the enrollee 

contacts to terminate coverage, the 

Exchange and QHP issuers will need to 

notify the other entity of the enrollee’s 

coverage status to keep updated 

enrollment records. In addition, HHS 

needs to know when coverage is 

terminated to stop advance payments of 

the premium tax credit. As such, we 

maintain the reporting standards in 

§ 155.430(c) in this final rule. 

Comment: A few commenters asked 

that language in proposed 

§ 155.430(c)(3), which directs QHP 

issuers to make reasonable 

accommodations when terminating 

coverage for individuals with mental or 

cognitive conditions, be broadened to 

include all individuals with disabilities, 

not just individuals with mental or 

cognitive disabilities. 

Response: We broaden the final rule 

in § 155.430(c)(3) to state that 

reasonable accommodations must be 

undertaken when terminating coverage 

for individuals with disabilities as 

defined by the Americans with 

Disabilities Act. 

Comment: A handful of commenters 

thought that provisions of section 2703 

of the PHS Act were in conflict with the 

termination provisions contained in the 

Exchange establishment proposed rule 

in § 155.430(d)(2) because the proposed 

rule outlined dates of termination when 

an enrollee gains other minimum 

essential coverage. Commenters 

interpreted this to mean that an 

individual must terminate his or her 

Exchange coverage and said that issuers 

cannot terminate an individual’s 

coverage because they gain access to 

other minimum essential coverage. 

Response: We removed language 

indicating that a QHP must terminate an 

enrollee’s coverage should they gain 

access to other minimum essential 

coverage in the final rule. Therefore, we 

do not believe there is a conflict with 

section 2703 of the PHS Act. We note, 

however, that the enrollee would no 

longer be eligible for advance payments 

of the premium tax credit or costsharing reductions if they have access to 

other minimum essential coverage. 

Comment: Several commenters 

requested that CMS put in place 

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‘‘safeguards’’ so as to minimize or 

eliminate coverage gaps for individuals 

who become newly eligible for 

Medicaid, CHIP, or the BHP. Other 

commenters requested that individuals 

not have their Exchange coverage 

terminated when they become eligible 

but do not enroll in Medicare. Many 

other commenters recommended that 

the final rule state that individuals 

cannot be automatically terminated 

from Exchange coverage should they be 

found eligible for Medicaid, CHIP, or 

the BHP. 

Response: In order to address these 

concerns, we have added 

§ 155.430(d)(2)(iv) to the final rule to 

specify that if an individual enrolls in 

Medicaid, CHIP, or the BHP and wishes 

to terminate his or her Exchange 

coverage, then the last day of Exchange 

coverage is the day before such other 

coverage begins. We note that neither 

the proposed nor the final rule state that 

individuals will automatically be 

terminated from Exchange coverage 

should they be found eligible for 

Medicare. We also note that we remove 

proposed § 155.430(d)(4) from this final 

rule because the provisions are no 

longer necessary given the termination 

dates outlined in § 155.430(d)(1–6) of 

the final rule. 

Comment: Some commenters 

requested that the Exchange establish a 

broad definition of ‘‘minimum essential 

coverage,’’ as well as flexibility in terms 

of when coverage is terminated because 

an enrollee gains access to other 

minimum essential coverage. 

Response: We do not define minimum 

essential coverage in this final rule as 

this definition is included in section 

5000A(f) of the Code. Individuals do not 

have to terminate coverage and QHP 

issuers must not terminate coverage 

when an individual becomes enrolled in 

other minimum essential coverage 

unless such individual requests a 

termination. In § 155.430(d)(2) of this 

final rule, we clarify that the last day of 

coverage when an enrollee gains access 

to other minimum essential coverage is 

the date requested by the enrollee, 

should they give reasonable notice 

unless the QHP issuer can effectuate the 

termination earlier, or, the day before 

new coverage begins if the enrollee 

becomes eligible for Medicaid, CHIP, or 

the Basic Health Program. Individuals 

and QHP issuers do not have to 

terminate coverage when an individual 

becomes enrolled in other minimum 

essential coverage. However, if an 

individual is eligible for or enrolled in 

other minimum essential coverage, such 

individual may no longer be included in 

the coverage family, as indicated in 

§ 155.305(f)(1)(B) and can no longer 

receive advance payments of the 

premium tax credit or cost-sharing 

reductions. 

Comment: A few commenters asked 

that HHS track reasons for termination 

of coverage. 

Response: Additional details 

regarding data that must be submitted to 

HHS will be addressed in future 

guidance. 

Comment: Several commenters noted 

that the proposed termination effective 

date in § 155.430(d)(3) was inaccurate as 

it was prospective, when rescission is 

by definition retrospective. 

Response: We removed 

§ 155.430(d)(3) in the final rule to 

eliminate a date of termination for a 

rescission in accordance with § 147.128. 

The termination of coverage date will 

vary based on the situation. 

Summary of Regulatory Changes 

We are finalizing the definitions 

proposed in § 155.430 of the proposed 

rule, with the following modifications: 

we clarified paragraph (b)(1) to specify 

that an enrollee must be permitted to 

terminate his or her coverage, including 

as a result of obtaining other minimum 

essential coverage. In new paragraph 

(b)(2)(A), we clarified that enrollees 

receiving advance payments of the 

premium tax credit will be terminated 

from coverage when the grace period 

described in § 156.270 is exhausted. In 

§ 155.430(c)(2) we clarified that the 

Exchange must transmit data on 

terminations to QHP issuers and HHS 

promptly and without undue delay. We 

also broadened the regulation text in 

§ 155.430(c)(3) regarding individuals 

with disabilities to state that QHP 

issuers must create standards to 

accommodate all individuals with 

disabilities when terminating such 

individuals’ coverage, and defined 

individuals with disabilities as those 

groups identified under the Americans 

with Disabilities Act. In addition, in 

paragraph § 155.430(d)(1) we defined 

‘‘reasonable notice’’ given by the 

enrollee to the Exchange or QHP issuer 

to terminate coverage as 14 days. 

In paragraph § 155.430(d)(2), we 

described the last day of coverage as the 

date specified by the enrollee; fourteen 

days after the termination date 

requested by the enrollee, if the enrollee 

does not provide reasonable notice; or 

fewer than 14 days if the individual’s 

QHP issuer is able to terminate coverage 

more quickly. Paragraph (d)(3) was 

added to clarify that for an enrollee who 

is no longer eligible for coverage 

through the Exchange, the last day of 

coverage is the last day of the month 

following the month in which notice 

described by § 155.330(e) is sent by the 

QHP. We noted in new paragraph (d)(4) 

that for an enrollee receiving advance 

payments of the premium tax credit, the 

last day of coverage will be the last day 

of the first month of the grace period. In 

paragraph (d)(5) we noted that the last 

day of coverage for non-payment of 

premiums for enrollees not receiving 

advance payment of the premium tax 

credit is in accordance with State law. 

6. Subpart H—Exchange Functions: 

Small Business Health Options Program 

(SHOP) 

The Affordable Care Act directs each 

State that chooses to operate an 

Exchange to establish insurance options 

for small businesses through a Small 

Business Health Options Program 

(SHOP). States that choose to operate an 

Exchange may also merge SHOP with 

the individual market Exchange. 

a. Standards for the Establishment of a 

SHOP (§ 155.700) 

In § 155.700, we proposed the general 

standard that an Exchange must provide 

for the establishment of a SHOP that 

meets the standards of this subpart. 

Comment: Some commenters 

requested that, in the case of a State that 

establishes either a SHOP or an 

Exchange serving the individual market, 

but not both, the Secretary certify this 

as an Exchange in accordance with the 

Affordable Care Act. 

Response: Section 1311(b) of the 

Affordable Care Act envisions an 

Exchange that both facilitates the 

purchase of QHPs and provides for the 

establishment of a SHOP. We interpret 

this to mean that a State that fails to 

fulfill both standards has not 

established an Exchange in accordance 

with the Affordable Care Act. 

Comment: Some commenters 

proposed that the SHOP may want to 

fulfill additional functions outside the 

scope of the proposed rule in order to 

offer employers a streamlined 

experience when managing their 

employee benefits. These commenters 

proposed that the SHOP sell other types 

of insurance, administer COBRA on 

behalf of participating employers, 

administer flexible spending accounts, 

assist small employers in setting up 

Section 125 plans, and oversee wellness 

programs. 

Response: Section 155.1000(b) directs 

the Exchanges to only offer health plans 

that have been certified as QHPs. We 

will take these comments into account 

as we consider future guidance on the 

offering of other products on the 

Exchange. 

Comment: One commenter requested 

that we clarify the meaning of 

‘‘coordination’’ and sharing of 

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information between the Exchange and 

the SHOP as described in the preamble 

to the proposed rule. 

Response: As discussed in the 

proposed rule, there are many 

economies of scale that may arise from 

integrated Exchange and SHOP 

establishment. We believe that there are 

natural opportunities for the Exchange 

and the SHOP to benefit from shared 

data sources and coordinated activities. 

Comment: One commenter discussed 

the possible use of health 

reimbursement arrangements from 

multiple employers as a means of 

purchasing coverage through the SHOP, 

aggregating premium contributions from 

multiple employers to support the 

employee’s purchase of a QHP. 

Response: The possible use of 

different forms of health reimbursement 

arrangement to purchase coverage 

through the Exchange or the SHOP is 

beyond the scope of this final rule, and 

will be addressed in future guidance. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.700 of the proposed 

rule, with one modification: in new 

paragraph (b), we added a definition of 

‘‘group participation rule.’’ 

b. Functions of a SHOP (§ 155.705) 

In § 155.705, we proposed the 

minimum functions of a SHOP. The 

SHOP must carry out all the functions 

of an Exchange described in this subpart 

and in subparts C, E, and K of this part, 

except for standards related to 

individual eligibility determinations, 

enrollment standards related to 

qualified individuals, standards related 

to the premium tax credit calculator, 

standards related to exemptions from 

the individual coverage requirement, 

and standards related to the payment of 

premiums by individuals, Indian tribes, 

tribal organizations, and urban tribal 

organizations. 

We also proposed that a SHOP must 

adhere to additional enrollment and 

eligibility standards described in 

§ 155.710, § 155.715, § 155.720, 

§ 155.725, and § 155.730. In addition, 

the SHOP must at a minimum facilitate 

the special enrollment periods 

described in § 156.285(b)(2). 

Specifically, we proposed that all of the 

special enrollment periods that apply to 

individual market coverage in the 

Exchange also apply in the SHOP, with 

the exception of special enrollment 

periods associated with a change in 

citizenship status or lawful presence or 

eligibility for advance payments of the 

premium tax credit or cost-sharing 

reductions. We noted that the proposed 

rule did not eliminate any special 

enrollment periods established by other 

laws (including, but not limited to, 

HIPAA (Pub. L. 104–191)). We also 

clarified that the two exceptions 

described above also apply to qualified 

employees in a SHOP. We invited 

comment on special enrollment periods 

for the SHOP and how they might differ 

from those that would apply to the 

Exchange for the individual market. 

We proposed that a qualified 

employer may choose a level of 

coverage under section 1302(b) of the 

Affordable Care Act, within which a 

qualified employee may choose an 

available plan at that level of coverage. 

We also provided flexibility for a SHOP 

to choose additional ways for qualified 

employers to offer one or more plans to 

their employees and listed several 

potential options. We sought comment 

on our proposed approach, which 

established a standard for employee 

choice within a level of cost sharing 

while providing SHOPs the option to 

offer broader employee choices among 

plans of different levels of cost sharing. 

We also invited comment on whether 

QHPs offered in the SHOP should waive 

application of minimum participation 

rules at the level of the QHP or issuer; 

whether a minimum participation rule 

applied at the SHOP level is desirable; 

and if so, how the rate should be 

calculated, what the rate should be, and 

whether the minimum participation rate 

should be established in Federal 

regulation. 

To simplify the administration of 

health benefits among small employers, 

we proposed that the SHOP allow 

qualified employers to receive a single 

monthly bill for all QHPs in which their 

employees are enrolled and to pay a 

single monthly amount to the SHOP. We 

further proposed that the SHOP collect 

from employers offering multiple 

coverage options a single cumulative 

premium payment. 

We proposed three unique criteria for 

certification for a SHOP: rate setting and 

premium payment standards; 

enrollment period standards; and 

enrollment process standards. 

Specifically, we proposed that the 

SHOP direct all QHP issuers to make 

any changes to rates at a uniform 

interval that is either monthly, 

quarterly, or annually. As described in 

§ 155.725, we proposed to permit rolling 

enrollment in a SHOP, which allows 

qualified employers to purchase 

coverage in QHPs at any point during 

the year. We invited comment on 

whether we should allow a more 

permissive or restrictive timeframe than 

monthly, quarterly, or annually. We also 

invited comment on what rates should 

be used to determine premiums during 

the plan year. 

We also proposed that if a State 

merges the individual and small group 

risk pools, the Exchange may only offer 

QHPs to employers and employees that 

meet the deductibles set forth in section 

1302(c)(2)(A) of the Affordable Care Act. 

If a State does not merge the individual 

and small group risk pools, we proposed 

that a SHOP may only make small group 

QHPs available to qualified employees. 

Finally, we proposed to codify the 

statutory option for States to allow 

insurers in the large group market to sell 

large group products to large groups 

through the SHOP beginning in 2017. 

Comment: We received several 

comments regarding the proposed 

exclusion of a premium calculator from 

the minimum functions for the SHOP in 

proposed § 155.705(a)(3). Some 

commenters requested that a premium 

calculator be included, arguing that it 

assists employers in estimating their 

total costs. Other commenters noted that 

instead of providing individuals with an 

estimation of their cost of coverage after 

any applicable tax credits or cost 

sharing reductions, a premium 

calculator in the SHOP may show 

employees their premiums after any 

applicable employer contributions. 

Response: We believe that a premium 

calculator will assist employees in 

determining their cost of coverage after 

any applicable employer contribution at 

little to no additional burden on SHOPs 

or employers. Therefore, we have added 

new § 155.705(b)(11) in this final rule to 

clarify that a SHOP must provide a 

premium calculator to qualified 

employers. To support States in 

developing a premium calculator for the 

SHOP, HHS will provide model 

computer code. 

Comment: In response to the 

proposed § 155.705(b)(1), which stated 

that a SHOP must facilitate the special 

enrollment periods described in 

§ 156.285(b)(2), many commenters 

expressed concern about the preamble 

discussion regarding a lack of a special 

enrollment period in SHOP based on 

change in immigration or citizenship 

status. These commenters recommended 

that, rather than clarifying that a SHOP 

would not need to offer a special 

enrollment period based on a change in 

immigration or citizenship status, HHS 

should clarify that special enrollment 

periods in SHOP should be based on 

whether an individual is newly hired by 

a ‘‘qualified’’ employer or whether an 

individual becomes a newly eligible 

‘‘qualified employee.’’ Further, 

commenters recommended that HHS 

clarify that new hires or newly eligible 

qualified employees should not need a 

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9Exhibit 4.2: Among Firms Offering Health 

Benefits, Percentage of Covered Workers in Firms 

Offering One, Two, or Three or More Plan Types, 

by Firm Size, 2011, Employer Health Benefits 2011 

Annual Survey. Kaiser Family Foundation. 

special enrollment period because the 

qualified employers should allow them 

to enroll at any time during the plan 

year. 

Response: We have modified the 

language in § 155.725(g) and 

§ 156.285(b) in this final rule to clarify 

the provision of an enrollment period 

for an employee who becomes a 

‘‘qualified employee’’ rather than just 

new hires. We believe this clarification 

more accurately reflects the intent that 

enrollment periods will be provided to 

those who become qualified employees 

outside of the initial or annual open 

enrollment period, such as employees 

who have, for example, completed an 

employer’s waiting period for benefits, 

changed from part time to full time 

status, or are newly hired. 

Comment: We received numerous 

comments in response to proposed 

§ 155.705(b)(2) and (3) on the employee 

and employer choice provisions. Many 

commenters supported additional 

employee choice options, such as 

offering plans across cost-sharing levels. 

Other commenters supported more 

limited employee choice options, often 

expressing concern that allowing 

employee choice across cost-sharing 

levels and even within a cost-sharing 

level would result in substantial risk 

selection. Some commenters supported 

broad employer choice to offer either a 

wider or narrower range of employee 

choices, including offering a single 

QHP. Several commenters suggested 

that the Affordable Care Act directs the 

SHOP to give employers the option to 

offer a single QHP. One commenter 

suggested initially implementing a pure 

employer choice model with no 

employee choice. A few commenters 

suggested adding a defined contribution 

model to the list of additional choice 

options from the preamble to the 

proposed rule. 

Response: We believe the proposed 

rule appropriately balances the 

employee choice standards of the 

Affordable Care Act with flexibility for 

SHOPs to allow employers greater 

choice in their plan offering options. 

Under this model, employees will likely 

have more plan choice than they 

currently have in the small group 

market, where traditionally an employer 

offers only one plan to its employees.9

However, nothing in the Affordable Care 

Act limits a SHOP’s ability to offer an 

employer additional options, including 

choice across cost-sharing levels. We 

believe that States and SHOPs are best 

positioned to strike the proper balance 

among competing priorities: flexibility, 

meaningful consumer choice, and 

protection of the market against risk 

selection. Thus, we have retained the 

proposed wording of § 155.705(b)(2) and 

(b)(3) in the final rule. 

We also note specifically that the 

SHOP may allow employers to offer 

only one plan to its employees. We 

believe this is supported by section 

1312 of the Affordable Care Act, which 

defines a ‘‘qualified employer’’ as a 

small employer that elects to make all 

full-time employees eligible for one or 

more QHPs offered in the small group 

market through the Exchange. However, 

we do not believe that this definition 

establishes that the SHOP must give 

employers the option to offer only a 

single plan. 

With regard to the comments on 

defined contribution, we note that the 

method through which an employer 

offers QHPs to its employees is 

independent of how the employer 

chooses to contribute toward the 

premium cost of coverage. 

Comment: One commenter expressed 

concern that allowing employers to 

enroll their qualified employees into a 

single QHP may trigger the application 

of ERISA, and that the Affordable Care 

Act was intended to supersede ERISA 

and provide stronger Federal and State 

protections to consumers. 

Response: Issues on the application of 

ERISA are within the purview of 

Department of Labor. In this rule, we 

clarify that a SHOP may permit 

employers to offer employees a single 

QHP. 

Comment: One commenter on 

proposed § 155.705 requested that HHS 

clarify whether the employer or the 

SHOP will be responsible for 

maintaining records on employee QHP 

selections, and further expressed 

concern that the employer would be 

unable to monitor its employees’ QHP 

selections. 

Response: As described in 

§ 155.705(b)(4)(i) of this final rule, the 

SHOP is responsible for providing each 

qualified employer with a bill listing the 

employees enrolled under that 

employer, the QHP each employee is 

enrolled in, and the cost of the QHP. 

Comment: We received several 

comments regarding the proposed 

§ 155.705(b)(4), which stated that a 

SHOP must provide a ‘‘single bill’’ to 

qualified employers and aggregate 

premium payments from employers. 

Many commenters supported this 

proposal, noting that it was essential to 

the effective operation of providing 

employees with a choice of QHP and 

should ease the burden on small 

employers of administering group 

health benefits. Some commenters 

recommended that the single bill list for 

each employee the portion of the 

premium the employee is responsible 

for and the portion of the premium for 

which the employer is responsible, 

while others suggested that the SHOP 

assist employers in calculating an 

average premium for its employees. In 

contrast, other commenters suggested 

that premium aggregation should not be 

a minimum function of the SHOP or 

should be optional for employers not 

providing their employees with a choice 

of QHP. Some commenters noted that 

health plans currently provide their 

own the billing services and that a 

standard on the SHOP to aggregate 

premiums may add to the 

administrative cost of selling QHPs 

through the SHOP. 

Response: We believe that premium 

aggregation dramatically decreases the 

burden on an employer of participating 

in the SHOP by permitting the employer 

to write a single check for the total 

premium amount due. We do not 

believe that SHOP premium aggregation 

will increase the administrative burden 

on issuers who already perform billing 

services, because such issuers will no 

longer have to submit, track, and 

support a large number of paper bills to 

individual employers. Further, we 

believe that the process of resolving 

discrepancies will be simplified, since 

the issuer only needs to reconcile with 

one entity—the SHOP. 

Additionally, we believe that bills 

provided by the SHOP should contain 

in addition to the total amount due by 

the employer, the portion of each 

employee’s premium for which the 

employer is responsible and the portion 

for which the employee is responsible, 

and have revised paragraph 

§ 155.705(b)(4)(i) of this final rule to 

reflect this clarification. We note that 

this information may be collected on the 

SHOP single employer application. The 

SHOP may also include an average 

premium on the billing statement to 

assist employers in smoothing premium 

costs between employees. 

Comment: Some commenters 

responding to proposed § 155.705 

requested clarification regarding 

procedures for dispute resolution for 

potential scenarios where the SHOP 

failed to remit payment to QHP issuers 

in a timely manner or failed to collect 

the correct amount from employers. One 

commenter recommended that proposed 

§ 155.720(d) allow a grace period for 

employees and employers for making 

premium payments based on evidence 

of a ‘‘good faith’’ effort. 

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Response: Because States vary 

dramatically in statutory and regulatory 

standards related to non-payment or late 

payment of premiums, we do not 

believe a Federal uniform standard and 

process could effectively prevent such 

errors. Instead, we encourage SHOPs to 

create standard operating procedures 

regarding the payment and remittance of 

premiums. We also recommend that 

SHOPs standardize grace periods across 

QHPs. Because proper oversight of the 

flow of funds is essential, we direct the 

SHOP to maintain records and evidence 

of standard accounting procedures in 

order to allow for effective auditing of 

the premium aggregation service. 

Comment: Commenters generally 

supported the option for a State to 

merge the individual and small group 

markets subject to the provisions of 

proposed § 155.705(b)(7).While 

commenters had a variety of views on 

the advisability of merging the markets, 

most commenters agreed that, if a State 

merges the markets, QHPs offered to 

small employers in the merged market 

must meet the maximum deductible 

provision in section 1302(c) of the 

Affordable Care Act. One commenter 

said that QHPs in a merged market 

should not be subject to a maximum 

deductible, and another commenter 

stated that there should be no 

restrictions on the deductible in the 

small group market. 

Response: We do not believe that the 

statute allows issuers who participate in 

a merged market to be exempted from 

offering small businesses the maximum 

deductible in the Affordable Care Act; 

therefore, we are finalizing 

§ 155.705(b)(7) as proposed. 

Comment: Commenters expressed 

concern that limiting employees to 

small group market QHPs rather than in 

any QHP that meets the maximum 

deductible provision in section 1302(c) 

of the Affordable Care Act may make it 

more difficult to achieve portability of 

coverage across employment situations, 

including periods of unemployment and 

self-employment, and may complicate 

the aggregation of employer 

contributions from different employers. 

The commenters asked that the standard 

be changed or removed in the final rule. 

Response: While we understand the 

concern about portability between small 

group and individual market products, 

section 1311(b)(1)(B) of the Affordable 

Care Act clearly states that the SHOP is 

‘‘designed to assist qualified employers 

in the State who are small employers in 

facilitating the enrollment of their 

employees in QHPs offered in the small 

group market in the State.’’ We have 

therefore retained the language in 

§ 155.705(b)(8) in this final rule. 

Comment: Several commenters 

expressed concerns about the possibility 

of adverse selection and other market 

disruptions that might result from a 

State’s choice to allow large group 

market issuers to offer QHPs in the large 

group market through the SHOP. Two 

commenters specifically expressed 

concern about an automatic SHOP 

expansion to the large group market. 

Several commenters recommended that 

States not expand the SHOP; one 

commenter suggested that HHS delay 

the expansion; and one commenter 

asked that HHS create safeguards to 

prevent adverse selection. Finally, one 

commenter asked that we interpret 

section 1312(f)(2)(b) of the Affordable 

Care Act to allow States the latitude to 

expand the SHOP earlier than 2017. 

Response: Section 2701(a)(5) of the 

PHS Act provides that if the State 

exercises the option of offering large 

group market QHPs in the SHOP, the 

rating rules in section 2701 that apply 

to the small group market will also 

apply to all coverage offered in that 

State’s large group market, except for 

self-insured group health plans. A State 

must specifically elect the expansion. 

We also do not believe that we have the 

authority to delay—or to allow earlier 

implementation of—the State’s ability to 

make this election. Accordingly, we are 

not modifying the final rule to provide 

for any such modifications. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.705 of the proposed 

rule, with the following modifications: 

in paragraph (b)(4)(i), we clarified the 

data elements that must be included in 

the monthly bill sent by the SHOP. In 

new paragraph (b)(4)(iii), we added a 

standard for the SHOP to maintain 

books, records, documents, and other 

evidence of accounting procedures and 

practices of the premium aggregation 

program for each benefit year for at least 

10 years, to conform to the standards for 

the individual Exchange. We also 

clarified in paragraph (b)(5) that the 

SHOP must ensure that each QHP meets 

the certification standards in § 156.285. 

In new paragraphs (b)(10) and (11), we 

noted that the SHOP may authorize 

minimum participation standards on 

certain conditions, and established that 

the SHOP must develop a premium 

calculator to assist qualified employers 

and employees. Finally, we made 

several technical clarifications and 

modifications. 

c. Eligibility Standards for SHOP 

(§ 155.710) 

In § 155.710, we proposed the 

eligibility standards for qualified 

employers and qualified employees 

seeking to purchase coverage through a 

SHOP, and proposed to codify the 

general standard that the SHOP make 

QHPs available to qualified employers. 

Specifically, we proposed that the 

SHOP ensure that an entity is a small 

employer, or an employer with no fewer 

than one employee and no more than 

100 employees, unless a State elects to 

limit enrollment in the small group 

market to employers with no more than 

50 employees until January 1, 2016. 

We also proposed to define 

‘‘employer,’’ ‘‘small employer,’’ and 

‘‘large employer’’ based on the PHS Act, 

and to adopt the PHS Act methodology 

for counting employees, where 

employees are counted equally 

regardless of their status as a part time 

employee or full time employee. Noting 

that States use a variety of methods to 

determine employer size for purposes of 

determining eligibility for the small 

group market, we solicited comment on 

this approach. 

We further proposed that the SHOP 

must ensure a qualified employer 

provides an offer of coverage through a 

SHOP to all of its full-time employees, 

and that the employer can elect to cover 

all employees through the SHOP serving 

the employer’s principal business 

address or by providing coverage to 

each eligible employee through the 

SHOP serving the employee’s primary 

worksite. In cases where the employer 

elects to cover all employees through 

the SHOPs serving their worksites, we 

proposed that a SHOP must accept the 

application of such an employer, subject 

to any minimum participation rules 

authorized by the SHOP. In addition, we 

proposed to allow an employer 

participating in the SHOP to continue 

its participation if the number of 

workers employed fluctuates after the 

employer’s initial eligibility 

determination. We also clarified that 

only an employee who receives an offer 

of coverage through the SHOP from a 

qualified employer may be a qualified 

employee. 

Comment: Many commenters 

addressed the question of whether 

businesses consisting entirely of sole 

proprietors, 2 percent S-corporation 

shareholders, and their family members, 

with no common law employees, should 

be eligible to purchase coverage through 

a SHOP. Several commenters were in 

favor of either including sole proprietors 

in the definition of eligible employer or 

allowing States to decide whether to 

expand their definition of a small group 

to encompass sole proprietors, stating 

that this would be analogous to the 

HIPAA interpretation that States could 

extend HIPAA protections to more 

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Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 18399 

10HCFA Insurance Standards Bulletin Series No. 

99–03 (September 1999), posted online at https:// 

www.cms.gov/HealthInsReformforConsume/ 

downloads/HIPAA–99–03.pdf. 

11Notice of Proposed Rulemaking for Health 

Coverage Portability: Tolling Certain Time Periods 

and Interaction with the Family and Medical Leave 

Act Under HIPAA Titles I and IV, 69 CFR 78000– 

78825. 

employers. Other commenters suggested 

deferring to State definitions of small 

group to avoid confusion and minimize 

possible differences between the SHOP 

and the outside market. 

Many commenters supported 

allowing sole proprietors to choose 

either Exchange individual market or 

SHOP coverage. Some commenters 

suggested deferring to State law to allow 

those States to continue offering small 

group coverage to sole proprietors. 

Many other commenters supported the 

proposed rule’s exclusion of sole 

proprietors from the small group 

market, noting that the current rationale 

for allowing sole proprietors to purchase 

in the small group market—to provide 

access to a guaranteed issue product 

with modified community rating—will 

not be relevant in 2014 because of 

individual market reforms. Several of 

these commenters suggested that the 

final rule make clear that sole 

proprietors are eligible for coverage in 

the Exchange. Two commenters 

suggested using the COBRA standard to 

determine the number of employees, 

which would also exclude sole 

proprietors. Other commenters who 

supported the rule as proposed 

suggested that allowing sole proprietors 

and S-corporation owners a choice 

between markets would create possible 

adverse risk selection. 

Response: The Affordable Care Act 

and the proposed rule base their 

definitions of ‘‘employer,’’ ‘‘employee,’’ 

‘‘small employer,’’ and ‘‘large 

employer’’ on the definitions in the 

Public Health Service Act (PHS Act). 

Section 2791 of the PHS Act 

incorporates by reference the definition 

of employee in section 3(6) of ERISA. 

Further, section 2791 provides that an 

employer is defined by reference to 

section 3(5) of ERISA. To be an 

employer eligible to purchase coverage 

through the SHOP, the employer must 

employ at least one common law 

employee. Under 29 CFR 2510.3–3, an 

employee would not include a sole 

proprietor or the sole proprietor’s 

spouse. 

We find no authority to interpret what 

constitutes a group health plan 

differently than set forth in the 

proposed rule. And, we note that even 

though both markets will have 

guaranteed issue and similar rating 

rules, enrollment of individuals is 

limited to the annual open enrollment 

period while enrollment of groups can 

occur throughout the year. We have 

therefore retained the definitions in 

proposed § 155.20, and our 

interpretation of what constitutes a 

group health plan. 

Comment: A number of commenters 

addressed the issue of how employees 

should be counted in determining 

employer size. Commenters noted that 

States use different methods to calculate 

employer group size when determining 

small group market eligibility. Several 

commenters noted that there are also 

different Federal methods for 

determining employer size for different 

purposes, and that these differing 

methods may be confusing to small 

employers. While some commenters 

supported the proposed approach, to 

count all full-time and part-time 

employees, other commenters suggested 

specific alternatives, including but not 

limited to a full-time equivalent method 

like that used in section 4980H of the 

Code, as added by section 1513 of the 

Affordable Care Act, to determine 

whether an employer is a large 

employer; the full-time equivalent 

method used to determine whether 

Federal COBRA continuation of 

coverage standards apply; or counting 

full-time employees only. Finally, a 

number of commenters suggested that 

each Exchange defer to the applicable 

State’s method of determining group 

size or transitioning from current State 

methods of counting employees to a 

Federal method. 

Response: CMS has previously issued 

guidance on determining employer size 

that includes part-time employees in the 

count.10 For example, the method 

described in the preamble to the 

proposed rule would count part-time 

employees as full employees. A second 

method proposed in a 2004 proposed 

rule issued by the Department of the 

Treasury, the Department of Labor, and 

HHS, in which the number of full-time 

equivalent employees is determined.11

Because of the range of comments 

received to the proposed rule and 

because the method of counting 

employees has implications that extend 

beyond the operation of the SHOP, we 

are not finalizing at this time a rule for 

determining employer size. We are 

considering future rulemaking to 

address the method of determining 

employer size for purposes of deciding 

whether an employer is a small 

employer or a large employer. 

Comment: Several commenters 

suggested that the proposed rule 

articulate the method of determining 

whether a small employer is subject to 

or exempt from the shared 

responsibility standards, since that 

determination is different from the 

determination of eligibility for 

participation in the SHOP. 

Response: Formal guidance about the 

method of determining whether a small 

employer is subject to the shared 

responsibility provisions is outside the 

scope of this final rule. 

Comment: Several commenters 

supported the flexibility of the employer 

and employee eligibility standards in 

proposed § 155.710, including allowing 

employers with worksites in the service 

areas of multiple SHOPs to offer 

coverage to their employees through the 

SHOP serving the employees’ worksites. 

Some commenters requested 

clarification regarding the coordination 

of information necessary for the 

effective implementation of such an 

eligibility standard. Other commenters 

requested clarification of how employer 

groups can calculate premiums in a way 

that mitigates the effects of age rating in 

instances where workers obtain 

coverage through more than one 

Exchange. Finally, one commenter 

recommended that employee eligibility 

be limited to the State in which the 

employer’s headquarters is located. 

Response: We recognize the benefits 

of allowing employers in multiple States 

flexibility regarding the SHOPs in 

which they may opt to enroll. We 

believe this eligibility standard does not 

establish a significant level of 

coordination between SHOPs, though 

nothing in this section would preclude 

a SHOP from establishing processes or 

standard operating procedures to 

coordinate across service areas. 

Employers electing to participate in 

multiple SHOPs must meet the 

eligibility standards of each SHOP in 

which they wish to participate and prior 

to 2017 may not employ more than 100 

employees in total in accordance with 

section 1312(f)(2) of the Affordable Care 

Act. We acknowledge, however, that 

standards related to the calculation of 

premiums in the small group market 

may vary from State to State in a 

manner that does not allow differences 

in cost due to age or location to be 

spread easily among all employees 

across State lines. 

Comment: One commenter objected to 

the proposed § 155.710(b)(2), which 

stated that the SHOP must ensure that 

a qualified employer provides an offer 

of coverage through the SHOP to all fulltime employees because it places an 

administrative burden on the SHOP and 

would be difficult to enforce. Other 

commenters suggested that a multiemployer plan should be able to offer 

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coverage to its participants through the 

SHOP only to the employees of a 

participating small employer covered 

under a collective bargaining agreement. 

Response: Our eligibility process 

allows the SHOP to accept an attestation 

by an employer that it will offer 

coverage to all of its full-time 

employees, minimizing the commenter’s 

concern about burden. Multiemployer 

plans that qualify as QHPs may offer 

coverage in SHOP but, like other QHPs, 

must follow rules applicable to QHPs. 

Additionally, we intend to address 

commenters’ concerns surrounding 

multi-employer plans in future 

guidance. 

Comment: One commenter suggested 

that additional guidance might be 

needed with regard to multi-employer 

plans purchasing coverage through the 

SHOP, particularly with regard to 

determining the work site, establishing 

eligibility and enrollment procedures, 

billing and premium collection, and 

other administrative procedures. 

Response: Multiemployer plans can 

play a role as an aggregator of premium 

contributions, and an arranger of 

coverage, and intend to address 

commenters’ concerns in future 

guidance. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.710 of the proposed 

rule without substantive modification. 

d. Eligibility Determination Process for 

SHOP (§ 155.715) 

In § 155.715, we proposed that a 

SHOP determine eligibility consistent 

with the standards described in 

§ 155.710. Specifically, we proposed 

that a SHOP must verify either through 

the attestation of the employer or 

through additional methods developed 

by the SHOP, that a qualified employer 

has fulfilled all of the standards 

specified in § 155.710, including that 

the employer is a small employer, it is 

offering coverage through the SHOP to 

all full-time employees, as well as 

verifying that at least one employee 

works in the SHOP’s service area. 

Consistent with the statutory directive 

for HHS to provide a single, streamlined 

application form, we also proposed that 

the SHOP use only two application 

forms: one for qualified employers and 

one for qualified employees. We further 

proposed that for the purpose of 

determining eligibility in the SHOP, the 

SHOP may use the information attested 

to by the employer or employee on the 

application but must, at a minimum, 

verify that an individual attempting to 

enter the SHOP as an employee is listed 

on the qualified employer’s roster of 

employees to whom coverage is offered. 

We also proposed that the SHOP have 

processes to resolve occasions when the 

SHOP has a reason to doubt the 

information provided through the 

employer and employee applications. In 

addition, similar to the individual 

market Exchange standards, we 

proposed that the SHOP notify an 

employer or employee seeking coverage 

of the SHOP’s eligibility determination 

and the employer or employee’s right to 

appeal. 

Finally, we proposed that if a 

qualified employer ceases to purchase 

any coverage through the SHOP, the 

SHOP must ensure that: (1) each QHP 

terminates the coverage of the 

employer’s qualified employees 

enrolled in QHPs through the SHOP; 

and (2) each of the employer’s qualified 

employees enrolled in a QHP through 

the SHOP is notified of the employer’s 

withdrawal and its termination of 

coverage prior to such withdrawal and 

termination. We solicited comments on 

whether this notification must inform 

the employee about his or her eligibility 

for a special enrollment period in the 

Exchange and about the process of being 

determined eligible for insurance 

affordability programs. 

Comment: We received several 

comments regarding the eligibility 

determination process for employees 

proposed in § 155.715. Some 

commenters opposed the processes for 

individual employee verification, 

stating that the process may increase the 

administrative burden on businesses. 

Others suggested that the SHOP should 

not verify employee eligibility and 

questioned the Secretary’s authority for 

such verifications. Commenters 

recommended that any SHOP eligibility 

process conform to the standards of 

sections 1411(g) and 1411(h) of the 

Affordable Care Act. Some additionally 

proposed an alternative process 

whereby employers applying for 

coverage in a SHOP present a list of 

qualified employees with reference to 

associated Employment Identification 

Numbers (EIN) in order to prevent 

employer and employees applicants 

from gaming the eligibility process. 

Commenters additionally recommended 

that the final rule prohibit the SHOP 

from collecting information for 

verification of citizenship status or 

eligibility for the advance payment of 

the premium tax credit, as described in 

sections 1411(b)(2) or 1411(c) of the 

Affordable Care Act. 

Response: We note that in accordance 

with § 155.705(a), SHOPs must comply 

with the standards of part 155 subpart 

C including the privacy and security 

standards of § 155.260 and § 155.270. 

These sections implement section 

1411(g) of the Affordable Care Act. 

The employee eligibility process as 

proposed would direct the SHOP to 

verify only that an employee applying 

for coverage through the SHOP is a 

qualified employee—an employee 

offered coverage by a qualified 

employer. We believe that such 

verification is necessary to ensure the 

effective operation of the SHOP and the 

prevention of abuse. An employee 

applying to the SHOP for coverage may 

easily be both verified and determined 

to be a qualified employee by the SHOP 

solely on the list of qualified employees 

provided to the SHOP by the employer. 

Because citizenship verification is the 

responsibility of the employer at the 

time of hiring, we have added language 

in this final rule to clarify that the SHOP 

will not perform re-verification of 

citizenship status. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.715 of the proposed 

rule, with the following modifications: 

in new paragraph (c)(3), we clarified 

that a SHOP may only collect the 

minimum information necessary to 

verify the information provided in an 

application. In new paragraph (c)(4) we 

reiterated that the SHOP may not 

perform individual eligibility 

determinations as described in sections 

1411(b)(2) or 1411(c) of the Affordable 

Care Act. In paragraph (d)(1)(iv)(A), we 

established that the SHOP must mention 

an employer’s right to appeal in any 

notice of denial of eligibility. In 

paragraph (g)(2), we specified that the 

SHOP must ensure that any employees 

affected by a qualified employer’s 

withdrawal from the SHOP are notified 

and receive information about other 

coverage options. Finally, we made 

several changes throughout this section 

to improve the precision of the language 

used. 

e. Enrollment of Employees Into QHPs 

Under SHOP (§ 155.720) 

In § 155.720, we proposed that the 

SHOP establish a uniform enrollment 

timeline and process, standardized to a 

plan year, for all employers and QHPs 

in the SHOP. In addition, we proposed 

that the SHOP must ensure that 

qualified employees who select a QHP 

are notified of the effective date of 

coverage, whether such notice is 

executed by the QHP or by the SHOP. 

We also proposed that information 

maintained by the SHOP must include 

records of qualified employer 

participation and qualified employee 

enrollment, and that reconciliation of 

enrollment information with QHPs 

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occur at least monthly. We invited 

comments on whether we should 

establish target dates or guidelines so 

that multi-State qualified employers are 

subject to consistent rules. 

Finally, we proposed that if a 

qualified employee voluntarily 

terminates coverage from a QHP, the 

SHOP must notify the individual’s 

employer. 

Comment: Several commenters 

suggested that proposed § 155.720(a) 

clarify the duties of the SHOP and QHP 

issuers when facilitating employee 

enrollment into QHPs. 

Response: Section 155.705 directs a 

SHOP to carry out the minimum 

functions in other subparts of the part. 

Consistent with the proposed rule, 

§ 155.720(c)(2) of the final rule directs a 

SHOP to fulfill the standards of 

§ 155.400, which establishes standards 

related to enrollment of individuals into 

QHPs. 

Comment: One commenter requested 

clarification that QHP issuers do not 

have to participate in both the SHOP 

and individual Exchanges. 

Response: Nothing in this part 

establishes that an issuer must 

participate in both the SHOP and the 

individual Exchange. However, we note 

that Exchanges may wish to establish 

such participation in both markets as a 

condition of certification. 

Comment: One commenter to this 

section recommended automatic 

enrollment of employees into new QHPs 

when there are mergers between QHP 

issuers or when one QHP offered by a 

specific QHP issuer is no longer offered, 

but there are other options available to 

the individual through the same QHP 

issuer. 

Response: We believe that States may 

wish to take variable approaches to 

managing the enrollment; and therefore, 

we are not establishing a standard to 

offer automatic enrollment in this final 

rule. 

Comment: Several commenters to 

proposed § 155.720(b) recommended 

that the final rule afford States further 

flexibility with respect to enrollment 

timelines. A few commenters suggested 

that the SHOP base its timelines on 

eligibility rules for enrollment on the 

current market practices. A few 

commenters recommended that the final 

rule exclude any target dates and 

guidelines in § 155.720, while another 

commenter recommended that the rule 

establish basic guidelines and leave the 

selection of exact dates to the SHOP. Yet 

another commenter expressed concern 

that the proposed rule did not provide 

sufficient flexibility for industries that 

typically begin coverage on October 1 

and recommended that SHOPs be 

permitted to provide special group 

enrollment for those groups or amend 

the rule to afford States greater 

flexibility to address those 

circumstances. Conversely, another 

commenter proposed that § 155.720 

include target dates and guidelines so 

that multi-State employers are subject to 

consistent rules. One commenter 

supported similar enrollment processes 

and timelines across QHPs to allow 

qualified employees the greatest 

opportunity to select preferred plans 

and ease administrative burden for 

multi-State employers. 

Response: We believe that § 155.720 

provides adequate flexibility for a State 

to develop its process in a way that is 

most suitable to local situations. Thus, 

we have not included specific dates in 

the section and have allowed States 

flexibility to address specific needs or 

concerns, including current market 

environment and special industries. 

Comment: Two commenters 

responding to this section and § 155.725 

recommended that HHS develop a 

transaction standard with respect to 

collected enrollment information. 

Response: We plan to provide 

guidance on the timing, format, and 

content of the enrollment information 

transmissions to QHP issuers. 

Comment: Several commenters 

suggested proposed § 155.720(e) specify 

how SHOPs can ensure that QHPs 

provide notices to employees of 

effective coverage dates. One 

commenter supported the policy that 

SHOPs be held accountable for 

employees receiving notices of effective 

dates of coverage. One commenter 

recommended that QHPs transmit 

confirmation of enrollment to the SHOP, 

and another urged HHS not to add a 

standard that the SHOP must send a 

duplicate notification to the enrollee. 

Response: SHOPs must be able to 

enforce the notification standard; we 

believe that § 155.720 provides a State 

with the flexibility to establish its SHOP 

enrollment timeline, procedures, and 

enforcement mechanisms that work best 

for the particular State. The QHP should 

be responsible for sending notification; 

we have clarified in § 155.720(e) of this 

final rule that a QHP, and not the SHOP, 

must send the notification. 

Comment: In response to proposed 

§ 155.720(f) and (g), one commenter 

opposed the policy for the SHOP to 

reconcile information and keep records, 

noting that it is unclear under the 

Affordable Care Act why SHOP should 

maintain records. 

Response: The reconciliation of 

information and the retention of records 

of participants and participant 

information by the SHOP is a necessary 

standard for the smooth operation of the 

SHOP and effective oversight of the 

SHOP. 

Comment: Several commenters to 

proposed § 155.720(g) supported the 

idea of reconciliation of enrollment 

information but disagreed on the 

frequency and on who should determine 

the frequency. One recommended that 

this paragraph establish monthly 

reconciliation and that SHOPs allow 

QHPs to query a SHOP at any time for 

information on qualified employers and 

employees. A few commenters 

recommended flexibility for States to 

establish reporting and auditing 

standards. 

Response: We recognize the need for 

periodic reconciliation of enrollment 

information between the SHOP and the 

QHPs. However, States should have the 

flexibility to determine how often such 

reconciliation is necessary, provided 

that reconciliation is completed no less 

frequently than once per month. 

Therefore, we are not adding a more 

specific standard in the final rule. 

Comment: In response to the 

standards in proposed § 155.720(h) 

related to termination of a qualified 

employee, some commenters 

recommended allowing SHOPs to 

ensure that disenrollment requests from 

current employees to come through the 

employer because such a process would 

ensure the employer receives 

notification and is able to communicate 

to the employee the potential 

consequences of disenrollment. One 

commenter recommended that an 

employee who ends employment should 

consult with the employer regarding 

available coverage options after 

employment ends. Another commenter 

recommended the notification standard 

be placed on the QHP issuer and not on 

the SHOP. 

Response: We believe that 

§ 155.720(h) of this final rule ensures 

that an employer will receive 

appropriate notification while 

preserving an employee’s ability to 

terminate coverage without the added 

step of consulting with the employer or 

creating an additional administrative 

burden on the employer. We believe 

that the notification standard should 

remain with the SHOP and that the 

associated administrative burden will be 

minimal. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.720 of the proposed 

rule, with the following modification: in 

paragraph (f), we clarified that SHOPs 

must retain records for ten years, which 

is changed from the proposed seven 

years. We added new paragraph (i), 

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which directs the SHOP to report to the 

IRS employer participation and 

employee enrollment information for 

tax administration purposes. Finally, we 

made a few technical modifications to 

streamline the regulation text. 

f. Enrollment Periods Under SHOP 

(§ 155.725) 

In § 155.725, we proposed that the 

SHOP adhere to the start of the initial 

open enrollment period for the 

Exchange, which is October 1, 2013 for 

coverage effective January 1, 2014, and 

ensure that QHP issuers adhere to 

coverage effective dates in accordance 

with § 156.260. We noted that the initial 

open enrollment date represents the first 

date employers may begin participating 

in the SHOP. In addition, to align 

enrollment processes between the SHOP 

and the small group market, we 

proposed a rolling enrollment process in 

the SHOP whereby qualified employers 

may begin participating in the SHOP at 

any time during the year. 

We invited comment on two 

provisions related to SHOP enrollment: 

that qualified employers may enroll or 

change plans once per year or during an 

applicable special enrollment period; 

and that an employer’s plan may not 

align with the calendar year. 

We also proposed an annual employer 

election period in advance of the annual 

open enrollment period, during which 

time a qualified employer could modify 

the employer contribution towards the 

premium cost of coverage and the plans 

it intended to offer to employees during 

the next plan year. We noted that this 

annual election period may be specific 

to each qualified employer and therefore 

must occur at a fixed point in the plan 

year, not at a fixed point during the 

calendar year. In addition, we proposed 

that the SHOP must notify participating 

employers that their annual election 

period is approaching, and solicited 

comment on this standard and whether 

we should establish that the notice be 

sent at a specified interval (for example, 

30 days before the relevant election 

period). 

We solicited comment on our 

proposal that the SHOP establish an 

annual employee open enrollment 

period for qualified employees, to occur 

at a fixed point during the plan year, 

during which the employee would have 

the option to renew or change coverage. 

We proposed that a qualified employee 

who is hired outside of the initial or 

annual open enrollment period would 

have a specified window set by the 

SHOP to seek coverage in a QHP 

beginning on the first day of 

employment. We also proposed that the 

SHOP establish effective dates of 

coverage for qualified employees 

consistent with § 155.720. Finally, we 

proposed that if an enrollee remains 

eligible for coverage in a QHP through 

the SHOP, the individual will remain in 

the QHP selected during the previous 

plan year with limited exceptions, in 

which case the individual would be 

disenrolled at the end of the coverage 

year. We invited comments on our 

approach to differentiating individual 

and small group market enrollment and 

the proposed structure for initial, 

rolling, and annual open enrollment 

through the SHOP. 

Comment: In response to proposed 

§ 155.725(a), some commenters opposed 

aligning the enrollment periods in 

§ 155.725 with the individual Exchange 

and recommended that SHOP 

enrollment should be aligned with other 

group markets. 

Response: In § 155.725(a), we align 

the SHOP initial open enrollment 

period with an individual Exchange for 

the first opportunity when coverage may 

be purchased through the SHOP. Under 

§ 155.725(b), we establish rolling 

enrollment in the SHOP, which we 

believe is consistent with current 

practice in the small group market 

where plan years do not necessarily 

correspond to calendar years. We have 

retained these provisions in the final 

rule. 

Comment: In response to the 

standards in proposed § 155.725(a)(2), 

one commenter requested clarification 

that effective dates depend on the 

completion of eligibility and enrollment 

standards, and recommend that such 

standards must be met by December 7, 

2013 to secure a coverage effective date 

of January 1, 2014. 

Response: A SHOP must permit an 

individual to enroll in a QHP only after 

a qualified employee has been 

determined eligible and has completed 

any enrollment standards. We believe 

that the standards in § 155.410 of this 

final rule provide sufficient time for 

QHP issuers to effectuate enrollment. 

Comment: A few commenters on this 

section recommended adding a standard 

that SHOPs develop a plan to encourage 

maximum enrollment during the initial 

open enrollment period, noting 

concerns about adverse selection if 

certain employers wait to enroll until 

health care needs make it more 

advantageous. One commenter 

recommended allowing employers to 

pro-rate their initial year of 

participation and then begin their next 

plan year on January 1st of the following 

year to minimize public confusion and 

aid implementation. 

Response: We believe that States have 

the flexibility under the rule to best 

assess their local market environment 

and to develop plans to encourage 

enrollment and discourage adverse 

selection. 

Comment: Many commenters on 

proposed § 155.725(e) recommended 

that the annual employee open 

enrollment period last at least 30 days. 

Some commenters recommended that 

open enrollment should be standardized 

for all QHPs. Several supported a 

notification period for employees before 

the annual enrollment period. One 

commenter recommended the employer, 

and not the SHOP, decide the open 

enrollment period, and a few 

commenters recommended the Federal 

government defer to States to establish 

open enrollment periods. 

Response: We have added language to 

§ 155.725(e) of this final rule 

establishing a standardized open 

enrollment period of at least 30 days. 

We note that States will have the 

flexibility to establish open enrollment 

periods based on the specific market 

landscape of the State, and believe that 

§ 155.725 provides that flexibility. We 

further believe that employees should 

receive a notification in advance of the 

open enrollment period and have added 

a standard in new § 155.725(f) that the 

SHOP provide notification to qualified 

employees of the open enrollment 

period in advance of the period. 

Comment: Several commenters on 

proposed § 155.725(d) supported the 

policy that the SHOP must notify the 

employer in advance of the annual 

employer election period. A few 

supported a notification period of 30 

days or at least 30 days, one requested 

flexibility in determining when 

employers must be notified, and one 

recommended that the notification 

period align with the outside market to 

prevent additional administrative 

burden on QHPs. Conversely, one 

commenter opposed a notification 

standard for the SHOP, stating that this 

function is currently handled by health 

insurance issuers. 

Response: We believe that the SHOP 

should provide notification of the open 

enrollment period but do not believe 

that we should prescribe specific timing 

for the notification. We believe that 

§ 155.725 of the proposed rule provides 

the SHOP with the requested flexibility 

for notification timing. Finally, we note 

that the SHOP is the appropriate entity 

to notify employers because a single 

employer could have employees 

enrolled in QHPs across several issuers. 

Therefore, we are not changing this 

standard in the final rule. 

Comment: A few commenters on 

proposed § 155.725(c) recommended 

that the annual employer election 

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period last at least 30 days. One 

commenter recommended that an 

employer must submit an application to 

participate in SHOP at least 120 days 

prior to the start of the plan year. 

Response: We recognize the 

importance of an annual employer 

election period of at least 30 days and 

have added language to § 155.725(c) to 

that effect. However, we note that States 

have the flexibility to establish longer 

annual employer election periods if they 

so choose. 

Comment: In response to proposed 

§ 155.725(h), one commenter requested 

clarification on the auto-enrollment 

process where a QHP ceases to exist and 

an individual does not select another 

QHP. 

Response: Auto-enrollment in the 

SHOP is only applicable per 

redesignated § 155.725(i) of this final 

rule in situations in which a qualified 

employee enrolled in a QHP through the 

SHOP remains eligible for coverage. In 

such cases, the employee will remain in 

the QHP selected during the previous 

year unless the qualified employee 

terminates coverage, enrolls in another 

QHP, or the QHP is no longer available. 

We note that if a QHP ceases to exist, 

resulting in a loss of minimum essential 

coverage for the enrollee, the enrollee 

will be eligible for a special enrollment 

period per § 155.725(a)(3). We also note 

that under § 156.290(b), a QHP issuer 

that does not seek recertification with 

the Exchange for a QHP must provide 

written notice to each enrollee. 

However, in these cases where an 

enrollee’s former QHP is no longer 

available, there is no auto-enrollment 

standard in the SHOP should the 

individual not select another QHP 

during a special enrollment period or 

open enrollment period. 

Comment: Many commenters offered 

feedback on the proposed § 155.725(g), 

which stated that the SHOP must 

establish effective dates of coverage for 

enrollees in the SHOP. A few 

commenters requested that the final rule 

clarify the SHOP’s obligation to 

establish coverage effective dates. One 

commenter recommended that coverage 

take effect on the first day of the month 

following the date of enrollment for 

enrollment transactions completed by 

the 20th of the month. In cases where 

enrollment is completed after the 20th, 

the commenter recommended that 

coverage take effect on the first day of 

the month that follows the next month. 

In contrast, some commenters disagreed 

with the policy that SHOPs must 

establish effective dates of coverage, 

noting that employers and carriers 

currently perform this function. 

Response: Per redesignated 

§ 155.725(h) of this final rule, the SHOP 

must establish coverage effective dates 

consistent with § 155.720. We believe 

that a single policy of effective dates in 

the SHOP ensures consistency and note 

that we proposed using the same 

effective dates as the individual 

Exchange for the initial enrollment 

period in order to increase the 

administrative simplicity for Exchanges 

and issuers. We believe the § 155.410 

standards provide sufficient time for 

processing enrollment information 

before the effective date of coverage. 

Therefore, we are finalizing 

redesignated § 155.725(h), as proposed. 

We further note that a SHOP must not 

only establish effective dates but must 

also ensure notification of the effective 

dates in accordance with § 155.720. 

Comment: Some commenters to 

§ 155.725 recommended that employees 

receive advance notice if the QHP in 

which they are enrolled will no longer 

be offered through the SHOP for the 

upcoming plan year. Another 

commenter recommended that 

employees in this circumstance receive 

advance notice of other affordable 

options, including insurance 

affordability programs. 

Response: We note that 

§ 156.285(d)(1)(ii) of this final rule 

directs any QHP issuer that chooses not 

to renew its participation in the SHOP 

to notify affected enrollees and qualified 

employers. We believe that this 

notification standard, combined with 

the annual open enrollment period, 

provides sufficient opportunity for 

enrollees to review their coverage 

options and make a new plan selection. 

Therefore, we are not adding a 

notification standard in this section. 

Comment: Several commenters on 

proposed § 155.725(f) supported the 

policy that SHOPs provide coverage to 

any new employees hired outside of the 

initial or annual open enrollment period 

and that SHOPs be able to make that 

coverage available on the employee’s 

first day of employment. One 

commenter recommended a 

predetermined, regulated length of time 

for the enrollment period. One 

commenter expressed concern with the 

limited ability to amend an employee’s 

coverage and recommended that 

employees have an opportunity to state 

a case for needing to change coverage 

similar to special enrollment rules. One 

commenter suggested that there should 

be a special enrollment period if an 

employer reduces its contribution. 

Other commenters questioned how this 

standard relates to probationary periods, 

specifically the Affordable Care Act 

provision that permits group plans to 

impose waiting periods of no more than 

90 days for coverage of new employees. 

Response: In general, we recognize 

the importance of providing coverage to 

new employees hired outside of the 

initial or annual open enrollment. Thus, 

we have clarified in redesignated 

§ 155.725(g) of this final rule to assure 

that the SHOP provides an employee 

who becomes a qualified employee a 

period to seek coverage that would be 

effective on the first day of becoming a 

qualified employee rather than on the 

first day of employment. This revision 

refines the standard to encompass not 

only new employees, but also situations 

where an employee moves from part to 

full time status or completes a waiting 

period. In the case of a waiting period, 

an employee could become a qualified 

employee under § 155.710(e) when the 

qualified employer makes an offer of 

coverage after the waiting period is over. 

It still retains the ability for a new and 

qualified employee to seek coverage on 

the first day of employment. States will 

be able to set a time for this period 

under § 155.720. We believe that 

§ 155.725 does not preclude a State from 

creating special enrollment periods in 

addition to the ones established by the 

rule. 

Comment: One commenter on 

proposed § 155.725(h) recommended 

that because eligibility of a qualified 

employee to enroll in a QHP through the 

SHOP is available on the basis of 

employment by a qualified employer, 

the employer should be responsible for 

renewing its employees’ coverage at the 

end of a plan year. 

Response: We believe that 

§ 155.725(c) adequately addresses that 

concern by specifically establishing that 

a SHOP must provide qualified 

employers with an annual election 

period in which a qualified employer 

may change its participation in the 

SHOP for the next year, including the 

method it makes QHPs available to 

qualified employees, the level of 

employer contribution, the level of 

coverage offered, and the QHP or plans 

offered. Therefore, we are finalizing this 

provision as proposed. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.725 of the proposed 

rule, with the following modifications: 

in new paragraph (a)(3) we clarified that 

a SHOP must provide the special 

enrollment periods described in 

§ 155.420, with the exception of those 

described in paragraphs (d)(3) and (6) of 

that section. We provided in paragraph 

(c) that the SHOP must allow qualified 

employers a period of no less than 30 

days to alter plan selections prior to the 

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open enrollment period. We established 

in paragraph (e) that the annual 

employee open enrollment period must 

be standardized, and must be at least 30 

days. In new paragraph (f), we direct the 

SHOP to provide notification to a 

qualified employee of the annual open 

enrollment period. In redesignated 

paragraph (g) we clarified that the SHOP 

must offer an enrollment period to 

newly qualified employees. Finally, we 

redesignated proposed paragraphs (f), 

(g), and (h) as paragraphs (g), (h), and (i), 

respectively, and made several minor 

changes throughout this section to make 

the regulation text more precise and to 

add clarity. 

g. Application Standards for SHOP 

(§ 155.730) 

In 155.730, we outlined the proposed 

application-related standards for 

participation in the SHOP. Specifically, 

we proposed that the SHOP use a single 

employer application and the 

information the application should 

collect (that is, employer name and 

address, number of employees, 

employer identification number, list of 

qualified employees and SSNs). We 

sought comment on what, if any, other 

employer information SHOPs should 

collect via the employer application. 

Similarly, we proposed that the SHOP 

must use a single employee application 

for each employee to collect eligibility 

information and QHP selection. We 

noted that a SHOP may modify or 

reduce the individual Exchange 

application for SHOP applicants, if 

desired and subject to approval by the 

Secretary. We also proposed that a 

SHOP may also use a model single 

employer application and model single 

employee application created by HHS or 

an alternative application approved by 

HHS. Finally, we proposed that the 

SHOP must allow employers and 

employees to submit their eligibility and 

enrollment information consistent with 

§ 155.405(c). 

Comment: We received several 

comments regarding the preamble 

discussion in the proposed rule that the 

SHOP should not make eligibility 

determinations for Medicaid or CHIP. 

Many commenters recommended that 

the final rule outline a role for the SHOP 

in providing information about these 

programs. 

Response: There are a number of ways 

that employees can learn about 

insurance affordability programs. We do 

not think that the application for SHOP 

is the most effective venue for providing 

this information. 

Comment: We received several 

comments related to the limitations on 

the information that may be collected on 

SHOP applications in accordance with 

proposed § 155.730(a). Some 

commenters requested that the final rule 

not impose any limitations on the 

information that the SHOP may request 

of employees, noting that such 

restrictions could limit how well the 

SHOP can serve qualified employers 

and qualified employees. Other 

commenters supported the proposed 

rule’s focus on a simple application 

standard and limiting the information 

collected to information necessary to 

facilitate applications, eligibility 

determinations, and enrollment. 

Response: We believe that limiting the 

collection of information on the 

application to data relevant for 

eligibility determinations, enrollment, 

and reporting by the SHOP or by QHP 

issuers balances the need to minimize 

the burden placed on applicants with 

the information needs of the SHOP and 

QHP issuers. Therefore, we are 

finalizing the provisions of § 155.730(a) 

as proposed. 

Comment: One commenter suggested 

that the application collect the NAIC 

code of each employer applying to the 

SHOP under proposed § 155.730(a). 

Response: We do not believe that it is 

essential for the SHOP application to 

collect each employer’s NAIC code, 

since it is beyond what is minimally 

necessary for the purpose of the SHOP. 

Comment: Some commenters were 

strongly opposed to the standard that 

the SHOP collect the social security 

number (SSN) of employees on the 

employer application in accordance 

with proposed § 155.730(a)(4). These 

commenters stated that effective 

alternate methods of authenticating 

employees exist, recommended that this 

standard be removed from the final rule. 

Response: While employees may be 

effectively authenticated without the 

employer providing employee SSN on 

the employer application, employee 

taxpayer identification numbers (most 

commonly an employee’s SSN) are 

needed for QHP issuers to comply with 

the standards of section 1502 of the 

Affordable Care Act. Although we retain 

the employees’ names and taxpayer 

identification numbers as elements of 

the employer application, we have 

clarified in § 155.715(c)(4), that the 

SHOP may not re-verify the citizenship 

status of the employee or make a 

determination of eligibility for an 

advance payments of the premium tax 

credit. We note that employees already 

provide their Social Security number to 

employers for a variety of purposes and 

this information is disclosed by the 

employer to both State and Federal 

agencies of for such purposes as 

unemployment insurance and tax 

purposes. 

Comment: Some commenters 

requested that the SHOP be permitted to 

adopt an alternative employer or 

employee application without obtaining 

formal approval from HHS, as proposed 

in § 155.730(e), in order to prevent the 

delay in the adoption of such 

applications. Other commenters agreed 

with the proposed policy that HHS 

approve any alternative application to 

ensure it meets the standards of this 

section. 

Response: The HHS review of any 

proposed alternative application is 

intended to ensure that it conforms to 

the standards proposed in this section. 

Therefore, we are maintaining the 

standard under § 155.730(e), as 

proposed. 

Summary of Regulatory Changes 

We are finalizing the definitions 

proposed in § 155.730 of the proposed 

rule, with two modifications. In 

paragraph (e) we clarified that a SHOP 

may develop and submit for HHS 

approval an alternative application for 

employers and employees. Additionally, 

in new paragraph (g) we provide for 

additional safeguards to address 

commenters concern regarding the 

collection and use of dependent 

information for purposes other than 

processing enrollment in a QHP and 

made several minor changes throughout 

this section to make the regulation text 

more precise and to add clarity. 

7. Subpart K—Exchange Functions: 

Certification of Qualified Health Plans 

This subpart codifies section 

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

Act, which establishes that Exchanges, 

at a minimum, implement procedures 

for the certification, recertification, and 

decertification of health plans as QHPs, 

consistent with guidelines developed by 

HHS. This subpart also clarifies the 

Exchanges’ responsibility related to the 

inclusion in the Exchange of certain 

multi-State plans. We note that as States 

establish Exchanges, each State has 

choices related to certification of QHPs 

for the Exchange through the piece of 

legislation, executive order, or charter 

that creates the Exchange. Alternatively, 

the Exchange itself may be able to 

exercise discretion under existing State 

and Federal law. 

a. Certification Standards for QHPs 

(§ 155.1000) 

In § 155.1000, we proposed the 

overall responsibilities of an Exchange 

to certify QHPs. We proposed that QHPs 

must have in effect a certification issued 

or recognized by the Exchange as QHPs 

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and that an Exchange may only make 

available as a QHP a health plan that 

has in effect a certification issued or 

recognized by the Exchange as a QHP. 

We proposed to define a multi-State 

plan as a plan under contract with OPM 

to offer a multi-State plan that offers a 

benefits package that is uniform in each 

State and consists of the benefit design 

standards described in section 1302 of 

the Affordable Care Act; meets all 

standards for QHPs; and meets Federal 

rating standards in accordance with 

section 2701 of the PHS Act, or a State’s 

more restrictive rating standards, if 

applicable. 

We proposed that an Exchange may 

certify a QHP if the QHP meets 

minimum certification standards 

described in subpart C of part 156 and 

if the Exchange determines the QHP is 

in the interest of qualified individuals 

and qualified employers in the State. 

We noted than an Exchange could adopt 

an ‘‘any qualified plan’’ certification, 

engage in selective certification, or 

negotiate with plans on a case-by-case 

basis; the proposal also permitted an 

Exchange to establish additional 

certification criteria. 

Comment: A few commenters 

requested that HHS redefine a multiState plan in proposed § 155.1000(a) as 

a plan that is described under section 

1334 of the Affordable Care Act to 

ensure continuous alignment between 

this final rule and forthcoming 

regulations on multi-State plans 

promulgated by the U.S. Office of 

Personnel Management (OPM). 

Response: We believe the 

commenters’ approach would better 

align this final rule with forthcoming 

regulations on multi-State plans. 

Therefore, we are revising the regulation 

text in final § 155.1000 to reference 

section 1334 of the Affordable Care Act. 

The final rule in this subpart has been 

revised throughout to acknowledge the 

role of OPM in certifying multi-State 

plans. 

Comment: Several commenters 

requested additional information on 

how the Office of Personnel 

Management will administer multi-State 

plans. Commenters proposed specific 

recommendations, including that OPM 

deem existing health plans that operate 

in multiple States as multi-State plans, 

or that multi-State plans include 

protections for certain types of benefits 

(for example, benefits related to endstage renal disease). 

Response: The standards and 

processes related to multi-State plans 

will be addressed in forthcoming 

regulations implementing section 1334 

of the Affordable Care Act promulgated 

by OPM. These issues are outside the 

scope of this final rule, which only 

addresses multi-State plans in 

connection with Exchange obligations to 

recognize multi-State plans as certified 

by OPM. 

Comment: Several commenters 

requested that HHS clarify the language 

in proposed § 155.1000(c)(2) permitting 

an Exchange to certify a QHP if the 

Exchange determines that such QHP is 

in the interest of qualified individuals 

and qualified employers. 

Response: We interpret 

§ 155.1000(c)(2), as proposed and as 

finalized, as providing an Exchange 

with broad discretion to certify health 

plans that otherwise meet the QHP 

certification standards specified in part 

156 in a way that best meets the needs 

of local consumers and businesses. We 

refer commenters to pages 41891 and 

41892 of the Exchange establishment 

proposed rule for a more comprehensive 

discussion of the strategies an Exchange 

could use to apply the ‘‘interest’’ test, 

including consideration of the 

reasonableness of the expected costs 

supporting the QHP’s premium and 

cost-sharing structure, past performance 

of the QHP issuer, quality improvement 

activities, enhancements of provider 

networks, the QHP service area, or past 

rate increases. 

Comment: A few commenters 

requested that HHS clarify the meaning 

of the exclusions in proposed 

§ 155.1000(c)(2)(i) through (iii), which 

place certain limits on an Exchange’s 

ability to exercise the ‘‘interest’’ test 

described in proposed § 155.1000(c)(2). 

Response: As proposed and as 

finalized, § 155.1000(c)(2)(i)–(iii) 

codifies sections 1311(e)(1)(B)(i)–(iii) of 

the Affordable Care Act, which limits an 

Exchange’s ability to apply the 

‘‘interest’’ test in certifying qualified 

QHPs. Specifically, we clarify that an 

Exchange cannot exclude an otherwise 

eligible QHP on the sole basis that it is 

a fee-for-service plan, through the use of 

premium price controls, or because the 

QHP covers treatments or services 

necessary to prevent patient deaths that 

the Exchange determines are 

inappropriate or too costly. 

Comment: One commenter requested 

that the final rule clarify that any 

certification standards or processes 

developed in accordance with this 

section apply uniformly to any 

subsidiary Exchanges. Another 

commenter requested that a QHP issuer 

be permitted to operate statewide, even 

where subsidiary Exchanges cover 

smaller service areas. 

Response: There may be multiple 

compelling and appropriate reasons for 

a State to create additional standards, or 

to take a different approach to 

certification, in different market regions. 

For example, a State may wish to 

employ different contracting strategies 

in a highly competitive, urban service 

area versus a rural service area. Further, 

we believe that the definition of an 

Exchange in § 155.20 and the authority 

to have a regional or subsidiary 

Exchange provided in § 155.140 

establish that a subsidiary or regional 

Exchange not only must meet all 

Exchange responsibilities, but also have 

the same authority and discretion as an 

Exchange that serves an entire State. 

Therefore, we are not establishing 

uniform standards for subsidiary 

Exchanges within a State; we note, 

however, that HHS must review and 

approve subsidiary Exchanges. We 

expect that States will consider the 

implications of developing subsidiary 

Exchanges, including the potential 

effects on issuer participation in the 

State. 

Comment: One commenter generally 

expressed concern about aligning 

market rules and consumer protections 

inside and outside of the Exchange. 

Response: We note that nothing in the 

final rule limits a State’s ability to adjust 

market and other rules outside of the 

Exchange to better align with the rules 

and protections that exist within the 

Exchange. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.1000 of the proposed 

rule, with the following modification: 

we revised the definition of a multiState plan in paragraph (a) to mean a 

QHP that is offered in accordance with 

section 1334 of the Affordable Care Act, 

to ensure ongoing consistency with 

forthcoming regulations implementing 

this section. In paragraph (b), we 

amended the provision to clarify the 

language. 

b. Certification Process for QHPs 

(§ 155.1010) 

In § 155.1010, we proposed that the 

Exchange establish procedures for the 

certification of QHPs that are consistent 

with the certification criteria outlined in 

§ 155.1000(c). We also proposed that a 

multi-State plan offered through OPM 

be deemed certified by an Exchange and 

noted that multi-State plans will need to 

meet all the standards for a QHP, as 

determined by OPM. To ensure 

consumers have a robust selection of 

QHPs during the open enrollment 

period, we further proposed that the 

Exchange complete the certification of 

QHPs prior to the open enrollment 

periods established in § 155.410. 

Finally, we proposed that the Exchange 

monitor QHP issuers for demonstration 

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of ongoing compliance with certification 

standards. 

Comment: In response to proposed 

§ 155.1010(a) on QHP certification, a 

number of commenters expressed 

support for Exchange flexibility in 

designing the certification process. 

Conversely, several commenters 

recommended a uniform, national set of 

certification standards and processes 

and proposed specific features, such as 

that the certification process consider 

past premium increases, an issuer’s 

medical loss ratio, quality information, 

or provider payment standards. Several 

commenters requested that the final rule 

provide additional detail on the 

certification standards that Exchanges 

will use to evaluate QHPs. 

Response: We recognize the 

importance of ensuring a basic set of 

uniform consumer protections across all 

Exchange markets through the setting of 

minimum certification standards for 

QHP issuers. We believe that States are 

best positioned to adapt and expand on 

these standards to meet the needs of 

consumers served by the Exchange, 

given local market conditions. 

Therefore, while Exchanges have 

discretion to identify certification 

standards above and beyond those 

provided for in the final rule, including 

the features suggested by commenters, 

we are not specifying additional 

elements in this final rule. 

Comment: Many commenters 

expressed support for a specific 

contracting model the Exchange could 

adopt in accordance with proposed 

§ 155.1010(a); of these, approximately 

half endorsed an ‘‘any willing plan’’ 

approach, in which the Exchange would 

contract with all QHPs that meet the 

relevant certification criteria. The other 

half of the commenters favored more 

proactive forms of ‘‘active purchasing,’’ 

including selective contracting with 

QHPs. 

Response: As we noted in the 

preamble to the Exchange establishment 

proposed rule, we believe that an 

Exchange’s certification approach may 

vary based upon market conditions and 

the needs of consumers in the service 

area. Accordingly, in this final rule, we 

offer flexibility to Exchanges on several 

elements of the certification process, 

including the contracting model, so that 

Exchanges can appropriately adjust to 

local market conditions and consumer 

needs. An Exchange could adopt its 

contracting approach from a variety of 

contracting strategies, including an anyqualified plan approach, a selective 

contracting model based on 

predetermined criteria, or direct 

negotiation with all or a subset of QHPs. 

Therefore, we are not prescribing a 

specific contracting model in this final 

rule. 

Comment: Many commenters 

expressed support for the provisions in 

§ 155.1010(b) of the proposed rule 

related to the deemed certification of 

multi-State plans and emphasized the 

importance of creating a level playing 

field for all QHPs within an Exchange. 

Several commenters recommended that 

the final rule clarify that multi-State 

plans and CO–OPs will be treated 

identically to other plans; for example, 

multi-State plans and CO–OPs would 

comply with any additional certification 

criteria established by an Exchange, and 

could be excluded in States that 

selectively contract. 

Response: The final rule establishing 

the CO–OP program, ‘‘Patient Protection 

and Affordable Care Act; Establishment 

of Consumer Operated and Oriented 

Plan (CO–OP) Program,’’ published at 

76 FR 77392 (December 13, 2011) 

directs CO–OPs to comply with all 

standards generally applicable to QHP 

issuers. We anticipate that specific 

standards for multi-State plans will be 

described in future rulemaking by OPM 

in accordance with section 1334 of the 

Affordable Care Act. 

We note that the Affordable Care Act 

specifically provides a deeming process 

for multi-State plans and CO–OPs. 

Based on this fact, we do not believe 

these plans can be excluded from 

participation, including in Exchanges 

that adopt selective certification 

approaches. 

Comment: Several commenters 

supported flexibility for States to 

establish a certification timeline for 

QHPs, as provided in proposed 

§ 155.1010(c). In contrast, some 

commenters recommended that the final 

rule specify a certification timeline or 

suggested specific times by which 

health plans must be certified as QHPs, 

such as 10 months prior to the 

beginning of the relevant open 

enrollment period. 

Response: In developing the 

certification timeframe, an Exchange 

may need to consider market conditions 

in the State, including the potential for 

participation by new QHP issuers. As a 

result, we are not establishing a specific 

deadline by which an Exchange must 

complete certification, other than that 

certification must be completed prior to 

the open enrollment period for those 

QHPs that will be made available during 

open enrollment. We have revised the 

regulation text by replacing the proposal 

that all QHPs must be certified before 

the beginning of the relevant open 

enrollment period with a standard that 

all QHPs offered during an open 

enrollment period must be certified 

before the beginning of such period. We 

encourage Exchanges to certify QHPs 

before the open enrollment period to the 

extent possible, and to consider the 

needs of consumers, issuers, and other 

stakeholders when establishing 

certification timelines. 

Comment: Multiple commenters 

requested clarification as to how 

Exchanges will continually monitor 

compliance with certification standards 

as described in proposed § 155.1010(d). 

Several commenters offered specific 

recommendations related to ongoing 

monitoring, including that HHS 

establish a national complaint tracking 

database; that QHPs demonstrate 

compliance rather than placing the 

burden of proof on Exchanges; that HHS 

establish penalties for non-compliance; 

and that Exchanges consider network 

adequacy and provider payment 

practices. 

Response: The Exchange is generally 

responsible for monitoring ongoing QHP 

compliance with certification standards. 

There are existing and variable 

mechanisms for monitoring health plan 

performance; therefore, we believe 

Exchanges are best positioned to 

develop a process and infrastructure for 

monitoring QHP performance in the 

Exchange. This could include 

coordination with State departments of 

insurance, reviews of health plan 

performance, and other approaches. We 

note that the final rule gives Exchanges 

the express authority to decertify a QHP 

at any time for non-compliance with 

certification standards, including the 

discretion to establish sanctions for noncompliance. 

Comment: Several commenters 

requested that the final rule clarify 

whether a multi-State plan may cover 

non-excepted abortion services if its 

service area includes one or more States 

where coverage of such services is 

prohibited by State law. 

Response: Specific standards for 

multi-State plans will be described in 

future rulemaking published by OPM in 

accordance with section 1334 of the 

Affordable Care Act. 

Comment: A few commenters 

requested that Exchanges be permitted 

to contract with other State agencies, 

such as the State department of 

insurance, to certify, recertify, and 

decertify QHPs for participation in the 

Exchange. 

Response: Exchanges may enter into 

agreements with eligible entities in 

accordance with § 155.110, including 

other State agencies, to perform 

Exchange functions such as QHP 

certification. The Exchange is 

responsible for establishing processes 

for QHP certification, recertification, 

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and decertification. The Exchange may 

choose to carry out these functions by 

contracting with the State department of 

insurance or another appropriate entity, 

but must retain ultimate accountability 

for the certification and review of QHPs 

in accordance with § 155.110. 

Comment: A few commenters 

addressed the certification processes for 

the individual Exchange and SHOP 

under proposed § 155.1010(a). While 

some commenters recommended that 

the certification process be identical for 

both Exchanges, others supported two 

distinct processes in States where the 

individual Exchange and SHOP are 

separately administered. 

Response: The administrative 

structure of the individual Exchange 

and SHOP may vary by State. Further, 

the final rule offers significant flexibility 

to Exchanges in designing the 

certification process and does not 

prescribe a particular approach. 

Therefore, the final rule neither 

prescribes a single, uniform process nor 

two complementary processes for 

certification. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.1010 of the proposed 

rule, with the following modifications: 

we redesignated proposed paragraphs 

(c) and (d) as final paragraphs (a)(1) and 

(a)(2) to clarify that the certification 

timeline and the direction for Exchanges 

to monitor QHPs for ongoing 

compliance are considered part of the 

certification process. In paragraph (a)(1), 

we added language to increase 

flexibility for an Exchange to certify a 

QHP during the benefit year by 

replacing the proposal that all QHPs 

must be certified before the beginning of 

the relevant open enrollment period 

with a standard that all QHPs offered 

during an open enrollment period must 

be certified before the beginning of such 

period. We revised the language in 

paragraph (b) to clarify that both multiState plans and CO–OPs must be 

recognized by the Exchange as certified 

(we have previously finalized that 

Exchanges must recognize CO–OP QHPs 

in 45 CFR 156.520(e)(1), published at 76 

FR 77414). 

c. QHP Issuer Rate and Benefit 

Information (§ 155.1020) 

In § 155.1020, we proposed that 

Exchanges must receive a QHP issuer’s 

justification for a rate increase prior to 

the implementation of such an increase, 

and ensure that the QHP issuer posts the 

justification on its Web site. 

Specifically, we proposed to codify the 

statutory direction in section 1311(e)(2) 

of the Affordable Care Act that an 

Exchange consider the following factors 

related to health plan rates when 

determining whether to certify QHPs: 

(1) The justification of a rate increase 

prior to the implementation of the 

increase; (2) the recommendations 

provided to the Exchange by the State 

under section 2794(b)(1)(B) of the PHS 

Act; and (3) any excess rate growth 

outside the Exchange as compared to 

the rate of growth inside the Exchange, 

including information reported by the 

States. We also solicited comment on 

how to best align section 2794 of the 

PHS Act and section 1311(e)(2) of the 

Affordable Care Act with respect to 

review of rates. Finally, we proposed 

that the Exchange must, at least 

annually, receive from QHP issuers 

information on rates, covered benefits, 

and cost sharing for each QHP, in a form 

and manner specified by HHS. 

Comment: Many commenters 

expressed support for the standard in 

proposed § 155.1020(a) that an 

Exchange ensure that any rate increase 

justification is prominently posted on 

the QHP issuer’s Web site. Several 

commenters requested clarification of 

the meaning of ‘‘prominently’’ posted or 

made specific recommendations that, 

for example, the Exchange Web site link 

to the justification on the issuer’s Web 

site, that the Exchange Web site 

separately post the justification, or that 

the Exchange Web site include a pop-up 

‘‘warning’’ to enrollees who select a 

QHP for which there was a recent rate 

increase. 

Response: In the final rule, we have 

amended § 155.1020(a) to direct the 

Exchange to provide access to the rate 

increase justification posted on the 

issuer’s Web site. We believe that this 

additional standard would provide 

greater transparency, and make it easier 

for consumers to access information 

about rate increases when considering 

QHPs. We note that nothing in this final 

rule would preclude an Exchange from 

separately posting an issuer’s 

justification or otherwise informing 

consumers about rate increase 

justifications, as suggested by 

commenters. 

Comment: A few commenters 

recommended that the final rule specify 

that the Exchange must collect rate 

justifications in accordance with 

proposed § 155.1020(a) in a timely 

manner. 

Response: The Exchange must collect 

rate justifications in advance of the 

annual certification or recertification 

process, so that the Exchange can 

meaningfully consider the information 

when determining whether to make a 

QHP available through the Exchange. 

This is implicit in the operation of 

§ 155.1010 and § 155.1020. However, 

recognizing that Exchanges may 

establish different timelines for 

certification and recertification within 

the parameters described in § 155.1010, 

we do not establish a separate uniform 

date for the collection of such 

justifications in the final rule. 

Comment: One commenter requested 

that HHS clarify that any discussion of 

the State Insurance Commissioner or 

State department of insurance in the 

preamble to the proposed rule 

encompasses any relevant State 

regulator. 

Response: While the statute gives the 

Exchange this authority, we believe that 

that the intent of § 155.1020 is that the 

Exchange consider recommendations 

from the State agency or official 

responsible for complying with section 

2794(b) of the PHS Act. 

Comment: Many commenters 

suggested ways Exchanges could 

consider rate increase justifications 

under proposed § 155.1020(b). Some 

commenters favored a rigorous rate 

review process that would go beyond 

the functions currently performed by 

State regulators, such as by collecting 

additional information from QHP 

issuers implementing rate increases (for 

example, evidence of efforts to control 

costs through value-based benefit 

designs). 

In contrast, several other commenters 

recommended that the final rule 

reaffirm the traditional role of States in 

reviewing rates. Commenters further 

urged HHS to minimize the potential for 

duplication and inconsistency by 

encouraging the Exchange to leverage a 

State’s program under section 2794 of 

the PHS Act to review rates. One 

commenter requested that the final rule 

clarify that an Exchange’s ability to act 

in response to a rate increase would be 

limited to deciding whether to make a 

QHP available through the Exchange. 

Response: We encourage the 

Exchange to leverage existing State rate 

review processes to the extent 

appropriate. As we highlighted in the 

preamble to the proposed rule, such 

coordination could include posting or 

adopting the same format used for rate 

justifications submitted to the State. 

However, we note that in some cases an 

Exchange may engage in more in-depth 

consideration of QHP issuers’ 

justifications when determining 

whether to make a QHP available on the 

Exchange. As a result, we do not limit 

the ability of Exchanges to conduct 

additional reviews of rate increase 

justifications, although we recommend 

that Exchanges consider the 

administrative burden on issuers 

associated with any such reviews. We 

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note that an Exchange’s consideration of 

rate increases is limited to whether a 

QHP should be made available on the 

Exchange. 

Comment: In response to the 

provision in proposed § 155.1020(b) that 

an Exchange consider rate increases, 

many commenters requested that HHS 

clarify how the Exchange must 

incorporate such review into the QHP 

certification process. A few commenters 

recommended that excessive rate 

increases be considered cause for refusal 

of certification or decertification. 

Conversely, one commenter 

recommended that Exchanges initially 

not consider rate increases in the 

certification of QHPs, and that in later 

years the level or review would be 

proportional to the size of the rate 

increase. Finally, a few commenters 

requested that the final rule clarify how 

HHS will oversee Exchange review of 

rate increases. 

Response: An Exchange may choose 

from a variety of approaches with 

respect to QHP issuer rate increases. For 

example, an Exchange may exercise the 

discretion provided in § 155.1000(c)(2) 

by opting to not make available QHPs 

implementing rate increases that the 

Exchange determines are not 

sufficiently justified. Other Exchanges 

may choose to rely more heavily on the 

process and determinations made by the 

applicable State regulator. Therefore, we 

are not prescribing a specific process or 

standard that the Exchange must follow 

in its consideration of rate increase 

justifications in this final rule. 

Comment: One commenter requested 

that the final rule clarify the 

applicability of the provisions in this 

section to multi-State plans. 

Response: Standards and processes 

related to multi-State plans will be 

addressed in future rulemaking by OPM 

in accordance with section 1334 of the 

Affordable Care Act. Because OPM will 

administer contracts with multi-State 

plans, we anticipate that OPM may 

collect certain data, including rate and 

benefit data, from multi-State plans. To 

avoid duplicate reporting and minimize 

administrative burden, we have 

amended proposed § 155.1020(b) and (c) 

to clarify that OPM will provide a 

process for rate increase consideration 

of multi-State plans and a process for 

multi-State plans to submit rate and 

benefit information, respectively. 

Comment: Two commenters requested 

the meaning of the standard in proposed 

§ 155.1020(b)(1)(iii) that an Exchange 

consider any excess of rate growth 

outside versus inside the Exchange. One 

commenter requested clarification of 

whether HHS will establish a uniform, 

national limit on rate increases. Another 

commenter requested that HHS clarify 

the meaning of premium price controls. 

One commenter recommended that the 

final rule discourage or prohibit the 

Exchanges from holding down rates and 

creating ‘‘spillover’’ increases outside 

the Exchange or in other States, for 

multi-State plans. Finally, one 

commenter recommended that the rate 

review function inside and outside of 

the Exchange be combined. 

Response: As indicated in the 

preamble to the proposed rule, we 

encourage Exchanges to work closely 

with State departments of insurance 

when considering issuer rate increases. 

With respect to § 155.1020(b)(1)(iii), we 

note that an Exchange should consider 

the rate of growth in rates for similar 

products that are offered outside versus 

inside the Exchange, which may help 

the Exchange in its consideration of rate 

increase justifications. 

The term premium price controls is 

not defined in section 1311(e) of the 

Affordable Care Act, which this 

provision implements. We note that 

review of rate information in accordance 

with this section is the responsibility of 

the Exchange; therefore, we are not 

defining the term ‘‘premium price 

controls’’ or setting a national limit in 

this final rule. 

Comment: A few commenters 

requested that the final rule clarify the 

content and timing of reporting of the 

rate and benefit information described 

in proposed § 155.1020(c). One 

commenter recommended that the 

information be reported twice per year. 

Several commenters urged HHS to 

direct the Exchange also collect 

information on benefit exclusions. 

Response: We intend to clarify the 

format and content of data submission 

in accordance with this section in future 

guidance. Because the purpose of the 

collected information is to support the 

QHP certification process, the timing is 

implicit in the operation of this 

provision in conjunction with 

§ 155.1010(a). We note that we interpret 

§ 155.1020(c)(1) to direct Exchanges to 

collect rate information for pediatric 

dental benefits offered in accordance 

with section 1302(b)(1)(J) of the 

Affordable Care Act, and for any 

benefits in excess of the other benefits 

offered under section 1302(b) of the 

Affordable Care Act. Exchanges will 

need to be able to identify such 

information to support the 

administration of advance payments of 

the premium tax credit. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.1020 of the proposed 

rule, with a few exceptions. In 

paragraph (a), we added that the 

Exchange must provide access to rate 

justification information on its Internet 

Web site. We also clarified throughout 

this section that the U.S. Office of 

Personnel Management will determine 

the process by which OPM will consider 

rate increases and by which multi-State 

plans submit rate and benefit 

information to the Exchange. 

d. Transparency in Coverage 

(§ 155.1040) 

In § 155.1040, we proposed how 

section 1311(e)(3) would be 

implemented: that Exchanges direct 

health plans seeking certification as 

QHPs to submit transparency 

information outlined in § 156.220 to the 

Exchange, HHS, and other entities. We 

also proposed to direct the Exchange to 

monitor the use of plain language by 

QHP issuers when making available 

QHP transparency data, consistent with 

guidance developed jointly by the 

Secretary of HHS and the Secretary of 

Labor. In addition, we proposed that the 

Exchange direct QHP issuers to make 

cost-sharing information available to 

enrollees. 

Comment: With respect to proposed 

§ 155.1040(a), several commenters 

recommended that Exchanges serve as 

data aggregators for transparency 

information. One commenter requested 

that Exchanges be permitted to contract 

with other entities to collect and 

analyze transparency data. 

Response: While we believe some 

Exchanges may wish to aggregate 

transparency data across QHPs to 

facilitate the comparison of plans, other 

Exchanges may prefer not to take on this 

function, and others may contract with 

another entity to collect and analyze 

transparency data consistent with 

§ 155.110. Regardless, by law, we note 

that the Exchange must condition 

certification of a QHP on its submission 

of such transparency data in accordance 

with § 156.220. 

Comment: A few commenters 

recommended that HHS consult with 

consumers and other stakeholders in 

developing plain language guidance in 

accordance with proposed 

§ 155.1040(b). Other commenters 

suggested specific elements to include 

(for example, translation services). One 

commenter recommended that QHP 

issuers be permitted to attest to the use 

of plain language to reduce the 

administrative burden on the Exchange. 

Response: We note that ‘‘plain 

language’’ is defined in § 155.20. HHS 

and the Department of Labor will jointly 

develop and issue guidance on best 

practices of plain language writing, and 

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will inform the public about the process 

for developing such guidance. 

Comment: Several commenters 

recommended that the Exchange Web 

site inform consumers of their ability to 

request cost-sharing information from 

QHP issuers in accordance with 

proposed § 155.1040(c) of this section. 

Response: We will consider including 

sample language to this effect in the 

Exchange Web site template. 

Comment: Multiple commenters 

requested that HHS clarify the oversight 

and enforcement process for data 

reporting in accordance with proposed 

§ 155.1040(a), including by specifying 

any sanctions that the Exchange may 

impose on QHP issuers for failure to 

report the data. One commenter 

specifically recommended that QHP 

issuers be directed to prepare 

compliance reports addressing 

transparency data and consumer 

inquiries regarding cost sharing. 

Response: We expect that each 

Exchange will develop a compliance 

and enforcement approach that will 

apply to this and other certification 

standards. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.1040 of the proposed 

rule, with the following modification: in 

paragraph (a) we clarified that the U.S. 

Office of Personnel Management will 

determine the process through which 

multi-State plans submit transparency 

data. 

e. Accreditation Timeline (§ 155.1045) 

In § 155.1045, we proposed that the 

Exchange establish the time period 

within which any QHP issuer that is not 

already accredited must become 

accredited following certification of a 

QHP. This provision is consistent with 

§ 156.275, in which we proposed that all 

QHP issuers must be accredited with 

respect to their QHPs within the 

timeframe established by the Exchange. 

Comment: We received many 

comments in response to our proposed 

standard to allow Exchanges to 

determine a uniform period following 

certification by which QHP issuers must 

be accredited. A number of commenters 

agreed with our proposal that the States 

should be given flexibility to determine 

this timeline. Several other commenters 

disagreed with our proposal to allow 

Exchanges to set the timeline for 

accreditation for QHPs and requested 

that HHS establish a Federal timeline 

for accreditation that all Exchanges 

must follow. Several commenters 

suggested appropriate accreditation 

timelines for HHS to establish. Another 

commenter suggested that allowing QHP 

certification without accreditation runs 

counter to the intent of the law and 

State autonomy in determining the 

accreditation timeline fails to offer 

adequate consumer protection. 

Response: We maintain our regulation 

text as stated in the proposed rule. We 

believe that this proposal is consistent 

with our efforts to ensure that 

Exchanges have the discretion to 

implement QHP issuer standards that 

best meet the needs of their Exchange 

enrollees. To draw new issuers to the 

Exchange, we note that an Exchange 

may want to provide issuers with 

additional time beyond initial 

certification to become accredited. 

Section 1311(c)(1)(D)(ii) of the 

Affordable Care Act clearly provides for 

the Exchange to establish the timeframe. 

Comment: We received a single 

comment to our proposed provision in 

§ 155.1045 requesting that plans be 

allowed to select their own accrediting 

entity. We also received a comment 

suggesting criteria that the Secretary 

should use to recognize accrediting 

entities. 

Response: We expect to engage in 

future rulemaking to adopt a process 

and criteria for the recognition of 

accrediting entities. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.1045 of the proposed 

rule with the clarification that the Office 

of Personnel Management will establish 

the accreditation period for multi-State 

plans as part of the certification of those 

plans. 

f. Establishment of Exchange Network 

Adequacy Standards (§ 155.1050) 

To ensure that Exchange network 

adequacy standards are appropriate for 

QHP issuers and reflect local patterns of 

care, we proposed in § 155.1050 that 

each Exchange ensure that enrollees of 

QHPs have a sufficient choice of 

providers. We discussed, in preamble, 

different measures of network adequacy 

and solicited comment on whether the 

final rule should set Federal minimum 

network adequacy standards or direct 

the Exchanges to set specific types of 

standards, including additional 

qualitative or quantitative standards. We 

also requested comment on an 

additional standard that the Exchange 

ensure that QHPs’ provider networks 

provide sufficient access to care for all 

enrollees, including those in medically 

underserved areas. 

Comment: A few commenters 

requested that HHS clarify how the 

network adequacy standards will be 

monitored and enforced. Commenters 

recommended that the Exchange report 

on oversight of network adequacy, or 

use specific tactics to monitor network 

adequacy (for example, secret shopper 

events, monitoring of appointment wait 

times). 

Response: Many States direct health 

insurance issuers to evaluate the 

adequacy of their provider networks on 

an ongoing basis and monitor network 

adequacy in their traditional role of 

regulating health insurance. We 

encourage Exchanges to coordinate with 

State departments of insurance in 

monitoring QHP networks for sufficient 

access, and this final rule provides 

Exchanges with discretion to establish 

their own monitoring procedures to 

assure ongoing compliance. We 

anticipate that Exchanges will identify a 

variety of tools and strategies to monitor 

QHP compliance with all certification 

standards, including standards related 

to network adequacy. Accordingly, we 

are not prescribing specific oversight 

and enforcement strategies in this final 

rule. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.1050 of the proposed 

rule, except that we are revising the 

regulation text to clarify that an 

Exchange must ensure that each QHP 

complies with network adequacy 

standards established in accordance 

with § 156.230.We are reorganizing the 

regulation text for increased clarity and 

flow by moving the network adequacy 

standard to § 156.230. In addition, the 

regulation text is revised to clarify that 

the U.S. Office of Personnel 

Management will ensure compliance 

with network adequacy standards for 

multi-State plans as part of the 

certification of those plans. Finally, for 

reasons described in § 156.230, we 

clarified that a QHP issuer may not be 

prohibited from contracting with any 

essential community provider. For a 

complete discussion of the comments 

on network adequacy standards, please 

refer to § 156.230. 

g. Service Area of a QHP (§ 155.1055) 

In § 155.1055, we proposed that 

Exchanges have a process to establish or 

evaluate the service areas of QHPs to 

determine whether the following criteria 

are met: (1) the service area covers a 

minimum geographical area that meets 

certain conditions, and (2) has been 

established without regard to racial, 

ethnic, language, health status-related 

factors listed in section 2705(a) of the 

PHS Act, or other factors that exclude 

specific high utilizing, high cost, or 

medically-underserved populations. 

Comment: Many commenters 

supported the service area standard in 

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18410 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

proposed § 155.1055(a). However, 

several commenters recommended 

alternative standards, such as that all 

QHPs must serve the entire Exchange 

service area, the entire State, areas 

smaller than a county, or contiguous 

areas. Some commenters suggested that 

HHS refrain from requiring QHPs to 

offer coverage Statewide to ensure that 

local health plans may participate, 

while others encouraged Exchanges to 

align standards with market-wide 

standards. 

Response: Under the proposed and 

final rule policy, Exchanges have the 

ability to establish or evaluate QHP 

service areas in such a way that would 

allow for participation by local health 

plans, provided that such standard is 

established without regard to the factors 

listed in § 155.1055(b). We recommend 

that Exchanges consider aligning QHP 

service areas with rating areas 

established by the State in accordance 

with section 2701(a)(2) of the PHS Act. 

To the extent QHPs operate within such 

uniform service areas, this policy would 

facilitate consumers’ ability to compare 

premiums of QHPs, promoting 

competition within the Exchange 

market. Furthermore, aligning QHP 

service areas with rating areas may 

simplify consumer understanding and 

Exchange administration of eligibility 

determinations for premium tax credits, 

which may be complex if QHP service 

areas are highly individualized. 

Comment: Several commenters 

expressed concern that allowing 

Exchanges to set unique service area 

standards would conflict with existing 

State standards that are meant to 

prevent against discriminatory service 

areas. 

Response: We acknowledge that some 

States already have in place service area 

standards that protect against red-lining 

and other ‘‘cherry-picking’’ practices 

where the issuer only offers plans to 

geographic areas that are expected to 

have lower risk. We believe that 

§ 155.1055 of this final rule provides a 

sufficiently broad standard such that an 

Exchange operating in a State with 

equally or more protective service area 

standards that prevent discrimination 

could use those standards for QHP 

issuers as well. To the extent that the 

broad standard here is more protective 

than existing State law, however, the 

Exchange must apply this regulatory 

standard to QHPs. 

Comment: One commenter requested 

examples of the ‘‘necessary’’ or 

‘‘nondiscriminatory’’ standards in 

proposed § 155.1055(b). Another 

commenter suggested that the Medicare 

Advantage precedent would be useful in 

determining whether service of part of 

a county would fall under necessary or 

non-discriminatory standards. Two 

commenters suggested that HHS 

specifically incorporate the parameters 

relating to a small geographic service 

area contained in the Medicare manual. 

Response: We believe that the 

Medicare Advantage ‘‘county integrity 

rule’’ described in 42 CFR 422.2 

(defining service area) is a useful 

resource for evaluating service areas, 

and we noted in the preamble to the 

proposed rule that the service area 

standard in § 155.1055 mirrors the 

standard established by Medicare 

Advantage (76 FR 41866, at 41894 (July 

15, 2011)). While we believe that the 

standards set forth by Medicare 

Advantage guidance provide examples 

of how to apply this standard, we note 

that States have discretion to interpret 

‘‘necessary, non-discriminatory, and in 

the best interest of qualified individuals 

and qualified employers.’’ For example, 

if a State has an existing service area 

standard that ensures service areas are 

not discriminatory and are in the best of 

the consumer, then the Exchange could 

decide to establish its service areas to be 

the same as the existing State standard. 

However, this provision provides 

authority for an Exchange to set stricter 

QHP standards if it observes service 

areas that specifically exclude certain 

areas. 

Comment: A number of commenters 

requested clarification on the difference 

between a service area and a rating area. 

Response: A rating area, as described 

in § 156.255(a) and section 2701(a)(2) of 

the PHS Act, is a geographic area 

established by a State that provides 

boundaries by which issuers can adjust 

premiums in accordance with section 

2701(a)(1)(A)(ii) of the PHS Act. In 

contrast, a service area is the geographic 

area in which an individual must reside 

or be employed (in accordance with 

standards outlined in § 155.305 and 

§ 155.710) in order to enroll in a given 

QHP. As noted previously, we 

recommend that Exchanges consider 

aligning QHP service areas with rating 

areas to foster competition, promote 

consumer understanding, and reduce 

administrative complexity. 

Comment: One commenter 

recommended that HHS encourage 

States to establish service areas in 

accordance with proposed § 155.1055 as 

soon as possible using county or other 

existing area boundaries, noting that 

new regional boundaries will increase 

administrative and logistical complexity 

of assembling a provider network. 

Response: QHP issuers will need to 

understand QHP standards as early as 

practicable, and we encourage 

Exchanges to be transparent and clear 

about standards as far in advance of 

QHP certification as possible. As noted 

above, Exchanges do not need to 

establish new service area boundaries if 

existing service areas are not 

discriminatory. 

Comment: Several commenters voiced 

concern about the lack of an overarching 

standard that Exchanges ensure a 

sufficient number of health plans in all 

geographic areas of an Exchange. 

Response: In general, we clarify that 

the expectation of § 155.105(b)(3) is that, 

to the extent possible, an Exchange must 

ensure that QHPs are available 

throughout the entire State. We 

encourage Exchanges to establish or 

negotiate service areas with QHP issuers 

to ensure that residents living in the 

Exchange service area have access to 

QHPs. 

Comment: A few commenters 

suggested that the final rule specifically 

establish that service areas of QHPs 

cannot be drawn to avoid dividing 

Tribal communities and reservations, or 

former reservations, into different 

service areas. 

Response: We note that § 155.1055(b) 

establishes that QHP service areas be 

established in a non-discriminatory 

manner. We encourage the Exchange to 

consider the impact of QHP service 

areas on Tribal communities when 

evaluating or developing service areas 

and to initiate Tribal consultation in 

connection with these issues. 

Comment: A few commenters 

recommended the final rule add 

‘‘economic factors’’ to the list of factors 

by which a QHP issuer cannot establish 

service areas in proposed § 155.1055(b). 

Another set of commenters were 

concerned that the proposed rule only 

prevented discriminatory service areas 

within counties, but not between 

counties. 

Response: We believe that this 

provision adequately addresses the 

underlying causes of ‘‘red-lining,’’ 

which is to exclude populations that are 

high utilizing, high cost, or medicallyunderserved. In addition, while 

§ 155.1055(a) addresses discriminatory 

service area practices within a county, 

§ 155.1055(b) establishes that the 

general service area delineations must 

be established without regard to a 

variety of factors that could be used to 

‘‘cherry-pick’’ healthy from unhealthy 

risk by geography. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.1055 of the proposed 

rule with a modification to strengthen 

the language that directs Exchanges to 

ensure that the service area standards 

are met. 

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h. Stand-alone Dental Plans (§ 155.1065) 

In § 155.1065, we proposed that an 

Exchange allow limited scope standalone dental plans to be offered as 

stand-alone plans or in conjunction 

with a QHP, provided that the plans 

furnish at least the pediatric essential 

dental benefit described under section 

1302(b)(1)(j) of the Affordable Care Act. 

We also proposed that the stand-alone 

dental plan comply with section 

9832(c)(2)(A) of the Code and section 

2791(c)(2)(A) of the PHS Act. We also 

proposed to allow an Exchange to 

certify a health plan as a QHP if it does 

not offer the pediatric essential dental 

benefit, provided that a stand-alone 

dental plan is offered through the 

Exchange. 

We requested comment on whether 

some of the QHP certification standards 

and consumer protections, such as a 

network adequacy, should also apply to 

stand-alone dental plans as a Federal 

minimum and what limits Exchanges 

may face on placing certification 

standards on dental plans given that 

they are excepted benefits. We also 

invited comment on whether we should 

set specific operational minimum 

standards related to allocation of 

advance payments of the premium tax 

credit, calculating actuarial value, and 

ensuring the availability of pediatric 

dental coverage in the Exchange. Lastly, 

in response to comments to the RFC, we 

requested comment on whether we 

should establish that all dental benefits 

must be offered and priced separately 

from medical coverage, even when 

offered by the same QHP issuer. 

Comment: With respect to proposed 

§ 155.1065(b), one commenter 

interpreted section 1311(d)(2)(B)(ii) of 

the Affordable Care Act to mean that an 

Exchange must allow a stand-alone 

dental plan to offer coverage in an 

Exchange. The commenter requested 

clarification on whether the partnering 

of a QHP with stand-alone dental plans 

as their subcontractors for pediatric 

dental care would be consistent with 

this provision. 

Response: We interpret the phrase 

regarding the offering of stand-alone 

dental plans ‘‘either separately or in 

conjunction with a QHP’’ to mean that 

the Exchange must allow stand-alone 

dental plans to be offered either 

independently from a QHP or as a 

subcontractor of a QHP issuer, but 

cannot limit participation of stand-alone 

dental products in the Exchange to only 

one of these options. 

Comment: A number of commenters 

expressed concern regarding the 

applicability of cost-sharing limits and 

annual and lifetime limits to standalone dental plans. Commenters 

requested clarity on whether such limits 

applied, and cautioned that if standalone dental plans do not have to 

comply with the same out-of-pocket, 

annual, and lifetime limit standards that 

would apply QHPs, then there would be 

an unlevel playing field. 

Response: We accept the 

recommendation of commenters that 

cost-sharing limits and the restrictions 

on annual and lifetime limits should 

apply to stand-alone dental plans for 

coverage of the pediatric dental 

essential health benefit. The Affordable 

Care Act directs any issuer that must 

meet the coverage standards in section 

1302(a) to cover each of the ten 

categories; thus, any issuer covering 

pediatric dental services as part of the 

essential health benefits must do so 

without annual or lifetime limits as 

defined under the Affordable Care Act 

and its implementing guidance, even if 

such issuers are otherwise exempt from 

the provisions of Subparts I and II of 

Part A of Title XXVII of the PHS Act 

(including PHS Act section 2711) under 

PHS Act section 2722. We note that for 

any benefit offered by a stand-alone 

dental plan beyond those established 

under section 1302(b)(1)(J) of the 

Affordable Care Act, standards specific 

to the essential health benefits would 

not apply. We plan to provide more 

detail in the future regarding how a 

separately offered pediatric dental 

essential health benefit would be 

considered under standards that apply 

to a full set of essential health benefits. 

Comment: With respect to proposed 

§ 155.1065(b), several commenters 

specifically recommended that standalone dental plans be directed to offer 

a child-only pediatric dental plan. The 

commenters were concerned that an 

Exchange with only family dental 

coverage options and QHPs that do not 

have to cover the pediatric dental 

benefit would decrease the enrollment 

of children in dental coverage, as the 

advance payment of the premium tax 

credit would only be applicable to the 

pediatric dental essential health benefit. 

Others were concerned that the standalone dental plans would not have 

capacity to cover all potential enrollees 

which, combined with the exemption 

for QHPs to not offer the pediatric 

dental coverage when stand-alone 

dental plans are available, would create 

insufficient access to child-only options. 

Response: In this final rule, 

§ 155.1065(a)(3) would apply the 

standard of § 156.200(c)(2) to offer a 

child-only plan to stand-alone dental 

plans certified to be offered through the 

Exchange. In the new paragraph 

§ 155.1065(d), we direct an Exchange to 

consider the collective capacity of 

stand-alone dental plans during 

certification to ensure sufficient access 

to pediatric dental coverage. By 

‘‘sufficient access,’’ we mean to convey 

that Exchanges should ensure that, 

when combined, stand-alone dental 

plans have the capacity (in terms of 

solvency and provider network) to 

provide child-only coverage to all 

potential children enrolling in coverage 

through the Exchange. 

Comment: A set of commenters 

addressed the request for comment in 

the proposed rule on whether the final 

rule should establish that QHPs must 

separately offer and price coverage for 

the pediatric dental essential health 

benefit so that consumers have the 

potential to enroll in dental coverage 

that is different from the dental benefits 

offered by the QHP they selected. Some 

suggested a standard for QHPs to 

separately price and offer pediatric 

dental coverage so consumers could 

make direct comparisons based on 

premium, cost-sharing, and benefits. 

Other commenters stated that it would 

be easier for consumers if the benefits 

were bundled. A number of commenters 

also recommended that HHS direct 

QHPs to offer medical-only options 

without pediatric dental coverage. 

Response: If an Exchange determines 

that having QHPs separately offer and 

price pediatric dental coverage is in the 

interest of the consumer, as described in 

§ 155.1000(c), then the Exchange may 

establish such standard as a condition of 

QHP certification. Otherwise, QHPs are 

not uniformly directed to separately 

price and offer pediatric dental coverage 

under this final rule. 

Comment: A few commenters urged 

HHS to allow health plans outside of the 

Exchange to have the same exemption 

as QHPs inside the Exchange, in that 

health plans would not have to cover 

pediatric dental if a stand-alone plan 

existed in the market. 

Response: This request is outside the 

scope of this final rule, which addresses 

explicitly the standards for QHPs. 

Section 1302(b)(4)(F) of the Affordable 

Care Act specifically addresses the 

exemption in terms of QHPs offered 

through an Exchange. 

Comment: With respect to proposed 

§ 155.1065(b), a small number of 

commenters requested that Exchanges 

ensure that stand-alone dental plans are 

offered as both fee-for-service plans and 

managed care plans. 

Response: Section 1311(e)(1)(B)(i) 

prohibits the Exchange from excluding 

a plan from the Exchange because it is 

a fee-for-service plan. 

Comment: Several commenters 

suggested that a way to indicate to QHPs 

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that they will not have to cover 

pediatric dental coverage would be to 

issue a request for proposals to standalone dental plans in advance of the 

QHP certification process. 

Response: We have not set any 

operational standards in § 155.1065. 

Each Exchange has discretion in 

determining how to implement this 

provision. 

Comment: With respect to proposed 

§ 155.1065(c), many commenters voiced 

support for allowing an Exchange to 

direct issuers of stand-alone dental 

plans to comply with any QHP 

certification standards and consumer 

protections, with some specifying 

network adequacy and cost-sharing 

standards. Many commenters stated that 

certification standards are necessary to 

ensure a level playing field between 

pediatric dental coverage offered 

through QHPs or stand-alone products. 

A few commenters requested that HHS 

direct Exchanges to establish uniform 

certification and recertification 

standards for medical and stand-alone 

dental plans. A small number of 

commenters recommended that HHS 

not establish standards for stand-alone 

dental plans, or specified certain 

standards that should not apply, such as 

quality and accreditation. One 

commenter suggested that QHP issuers 

not have to comply with any standard 

that does not apply to stand-alone 

dental plans for the offering of pediatric 

dental coverage. 

Response: We are persuaded by 

comments suggesting that stand-alone 

dental plans comply with QHP 

certification standards, as such 

standards will help ensure a consistent 

level of consumer protections as QHPs. 

Accordingly, we have added a new 

provision to § 155.1065(a)(3) 

establishing that stand-alone dental 

plans must comply with QHP 

certification standards, except for those 

certification standards that cannot be 

met because the stand-alone dental 

plans covers only pediatric dental 

benefits. For example, to the extent that 

accreditation standards specific to 

stand-alone dental plans do not exist, 

such plans would not have to meet 

§ 155.1045. We also note that the 

Exchange may establish certification 

standards that are specific to the unique 

nature of stand-alone dental plans. For 

example, an Exchange can set a different 

network adequacy standard for standalone dental plans than for medical 

plans. For the purposes of this 

provision, any application of QHP 

standards to stand-alone dental plans by 

the Exchange would only apply to 

stand-alone dental plans offered through 

the Exchange. 

Comment: A small number of 

commenters sought clarification on 

whether stand-alone vision plans could 

be offered through the Exchanges. Other 

commenters also sought clarification 

about the offering of other types of 

insurance that are not health plans, such 

as disability insurance. 

Response: HHS is still evaluating this 

issue and plans to provide more details 

regarding the offering other coverage 

through an Exchange in future guidance. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.1065 of the proposed 

rule, with three modifications: in 

paragraph (a)(2), we clarify that section 

2711 of the PHS Act would apply to the 

pediatric dental essential health benefit 

covered by a stand-alone dental plan. In 

new paragraph (a)(3), we established 

that stand-alone dental plans must 

comply with all QHP certification 

standards subject to certain exceptions. 

In new paragraph (c) we directed 

Exchanges to consider whether standalone dental plans will provide 

sufficient access to the pediatric dental 

essential health benefit during 

certification of stand-alone dental plans. 

Finally, we redesignated proposed 

paragraph (c) as paragraph (d). 

i. Recertification of QHPs (§ 155.1075) 

In § 155.1075, we proposed that the 

Exchange implement procedures for the 

recertification of health plans as QHPs 

that include a review of the general 

certification criteria outlined in 

§ 155.1000(c). We also proposed to 

permit the Exchange to determine the 

frequency for recertifying QHPs. We 

invited comment on whether we should 

outline specific standards associated 

with the term length for recertification. 

In addition, we proposed that, after 

reviewing all relevant information and 

determining whether to recertify a QHP, 

the Exchange must notify a QHP issuer 

of its recertification status and take 

appropriate action. Finally, we solicited 

comments on the appropriateness of the 

proposed recertification deadline of 

September 15 of the applicable calendar 

year. 

Comment: With respect to the 

recertification process described in 

proposed § 155.1075(a), many 

commenters provided feedback on our 

proposal to permit Exchanges to 

establish the frequency of 

recertification. While some commenters 

supported the flexibility provided in the 

proposed rule, others recommended that 

HHS establish the frequency for 

recertification and offered specific 

recommendations about the 

recertification interval, such as every 

one year, three years, or as-needed 

based on certain ‘‘triggering’’ events. 

Response: We believe that Exchanges 

are best positioned to establish the 

frequency of or other parameters for 

recertification that reflect local market 

conditions or existing State regulatory 

processes. We believe varying intervals 

for recertification and approaches could 

be appropriate in some circumstances, 

and therefore are not establishing a 

uniform frequency for recertification in 

this final rule. 

Comment: Multiple commenters 

recommended that specific elements be 

considered during the recertification 

process described in proposed 

§ 155.1075(a), such as a QHP issuer’s 

complaint history, sanctions imposed by 

State regulators, or interaction with 

tribes and/or American Indian/Alaska 

Native populations. Commenters also 

suggested that the recertification process 

include a review of the QHP’s network 

and engagement with essential 

community providers. 

Response: An Exchange must 

establish a recertification process that 

includes a review of the minimum 

certification criteria outlined in 

§ 155.1000(c) of the final rule, and must 

monitor QHPs for ongoing compliance 

with certification criteria, as specified in 

§ 155.1010(d). At its discretion, an 

Exchange may establish additional 

recertification criteria or review 

processes, if the Exchange believes such 

criteria will improve the consumer 

experience. 

Comment: While some commenters 

supported the proposed recertification 

deadline of September 15th of the 

applicable calendar year as indicated in 

proposed § 155.1075(b), others 

recommended greater flexibility for 

States or an alternate deadline, such as 

August 15 of each year. 

Response: Recertification should be 

completed, and the appropriate parties 

notified, in advance of the open 

enrollment period so that consumers, 

issuers, and Exchanges have sufficient 

time to prepare for and make decisions 

about the upcoming plan year. In the 

proposed rule, we set forth the dates for 

the initial and annual open enrollment 

periods. In this final rule, we believe it 

is also appropriate to establish the 

annual deadline for recertification. We 

believe that the proposed deadline of 

September 15th provides sufficient time 

for Exchanges and issuers to participate 

in a robust recertification process, and 

also ensures that consumers will be 

fully informed of their plan choices at 

the start of each open enrollment 

period. Therefore, we are finalizing the 

proposed recertification deadline of 

September 15th in this rule. 

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Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.1075 of the proposed 

rule, except that in paragraph (a) we 

clarified that, consistent with the 

revisions to § 155.1010, multi-State 

plans and CO–OPs are not subject to the 

Exchange recertification process. 

j. Decertification of QHPs (§ 155.1080) 

In § 155.1080, we proposed that the 

Exchange implement procedures for the 

decertification of health plans as QHPs, 

which we defined as the termination by 

the Exchange of the certification status 

and offering of a QHP. We also proposed 

that the Exchange must establish an 

appeals process for health plans that 

have been decertified. We requested 

comments generally on the proposed 

decertification process and asked 

specifically whether there were other 

appropriate authorities that could assist 

Exchanges in the decertification 

process. Finally, we proposed that if a 

QHP is decertified, the Exchange must 

provide notice of the decertification to 

parties who may be affected, including 

the QHP issuer, enrollees of the 

decertified QHP, HHS, and the State 

department of insurance. 

Comment: With respect to the 

decertification process proposed in 

§ 155.1080(b), some commenters 

supported the flexibility given to 

Exchanges to design the decertification 

process in the proposed rule, while 

other commenters suggested specific 

approaches to decertification. A few 

commenters requested that the final rule 

identify ‘‘triggering events’’ for 

decertification, such as a determination 

that a QHP’s network is inadequate; 

others requested that HHS provide 

additional clarification on when 

decertification would be appropriate. 

Response: We continue to provide 

Exchanges discretion in designing the 

decertification process and making 

decertification decisions. The final rule 

establishes that an Exchange may 

decertify a QHP at any time for failure 

to comply with the minimum 

certification standards described in 

§ 155.1000(c), and any additional 

certification standards established by 

the Exchange. We believe that this 

flexibility is necessary to allow an 

Exchange to tailor its process for 

compliance and decertification to be 

appropriate for the market conditions in 

the State. The Exchange is responsible 

for establishing the decertification 

process, including the approach used to 

identify plans that are out of compliance 

with certification standards or the 

associated sanctions. 

Comment: One commenter requested 

additional information on whether 

multi-State plans may be decertified 

through the process described in 

proposed § 155.1080(b). 

Response: The Affordable Care Act 

establishes a deeming process for multiState plans; as a result, we clarify that 

multi-State plans are exempt from the 

Exchange’s recertification and 

decertification processes. 

Comment: Several commenters 

requested that HHS clarify the 

consequences of an Exchange’s failure 

to decertify plans that are out of 

compliance with certification standards 

as described in proposed § 155.1080(c), 

and recommended that Exchanges be 

directed to decertify non-compliant 

QHPs. 

Response: QHPs with persistent or 

significant compliance issues should be 

decertified and removed from the 

Exchange; however, we recognize that 

Exchanges may, for example, wish to 

pursue intermediate sanctions for minor 

violations of certification standards that 

do not adversely impact consumers, so 

long as such actions are consistent with 

applicable law. While it is our 

expectation that an Exchange would 

decertify a QHP that is not compliant 

with certification standards or where 

the health and safety of an enrollee may 

be at-risk, this final rule permits 

Exchanges to explore a variety of 

oversight and enforcement strategies, up 

to and including decertification. We 

intend to address oversight of 

Exchanges through future 

implementation and rulemaking under 

section 1313 of the Affordable Care Act. 

Comment: One commenter 

recommended that an Exchange be 

permitted to certify new plan(s) to 

replace decertified QHP(s) during the 

benefit or plan year in accordance with 

proposed § 155.1080(c). 

Response: We believe it is important 

for QHPs to be certified prior to the 

open enrollment period to ensure all 

consumers have the same plan options, 

and are aware of those options before 

they make their plan selections. 

However, we believe that an Exchange 

should have the option to replace a 

decertified QHP with another QHP in 

certain cases, for example if the 

decertification of a QHP resulted in no 

or few QHP choices in some regions of 

an Exchange’s service area. We have 

revised the regulation text in 

§ 155.1010(a)(1) to provide additional 

flexibility for an Exchange to certify 

QHPs during the benefit year by 

replacing the proposal that all QHPs 

must be certified before the beginning of 

the relevant open enrollment period 

with a standard that all QHPs offered 

during an open enrollment period must 

be certified before the beginning of such 

period. 

Comment: A few commenters 

requested that the final rule clarify that 

QHPs decertified in accordance with 

proposed § 155.1080(c) may retain nonExchange membership. 

Response: Decertification would not 

affect enrollees who purchased QHP 

coverage directly or not through the 

Exchange, because such members’ 

enrollment occurred outside the 

Exchange. However, such a plan could 

no longer be marketed as a QHP 

following decertification and the 

population enrolled in that plan through 

the Exchange would be provided a 

special enrollment period to transfer to 

a different QHP in accordance with 

§ 155.420(d) and § 155.430(b)(2)(iv). 

While the Exchange regulates 

enrollment through the Exchange, any 

sanctions or other actions related to a 

QHP’s non-Exchange membership 

would be at the discretion of the State 

insurance commissioner. 

Comment: A few commenters 

requested additional information on the 

appeals process described in proposed 

§ 155.1080(d) or suggested specific 

parameters, such as 30 days to file and 

30 days to hear an appeal. 

Response: Consistent with the 

authority to design the decertification 

process, the Exchange is responsible for 

outlining the parameters of the appeals 

process, including timing, what entity 

will hear appeals, and other factors. 

Comment: Several commenters 

endorsed a special enrollment period for 

individuals whose QHP has been 

decertified under proposed 

§ 155.1080(c), and advocated that 

enrollees be permitted to change levels 

of coverage during such special 

enrollment period. One commenter 

recommended that consumers receive a 

special enrollment period if the QHP in 

which they are enrolled appeals a 

decertification. One commenter 

recommended that enrollees be given 63 

days to enroll in other coverage, while 

another suggested that coverage by the 

decertified QHP continue until enrollees 

make new plan selections. 

Response: Enrollees would have an 

opportunity to select a new QHP once 

a QHP has been decertified. Allowing 

enrollees to switch plans in advance of 

a formal determination could create 

unnecessary disruption in the Exchange. 

Consistent with § 155.410, enrollees 

whose QHP is decertified would have 

access to a special enrollment period 

lasting 60 days from the date of the 

decertification. We believe that 60 days 

is a sufficient amount of time to select 

a new QHP. Finally, as described in the 

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comment and response to § 155.410, we 

are revising the regulation text to permit 

enrollees to change levels of coverage 

during a special enrollment period. 

Comment: One commenter requested 

clarification on why HHS needs to 

receive information on decertified 

QHPs, as in proposed § 155.1080(e)(3). 

Response: HHS needs access to 

information on decertification of QHPs 

for a number of policy and operational 

reasons. For example, HHS will need to 

administer a termination of advance 

payments of the premium tax credit and 

payment of cost-sharing reductions to 

issuers of decertified QHPs. 

Comment: Several commenters 

proposed standards for notices related 

to decertification and non-renewal 

identified in proposed § 155.1080(e), 

such as that the notices be available in 

multiple languages, identify appropriate 

consumer resources, or include 

information targeted to specific 

populations such as American Indians 

and Alaska Natives. Alternatively, a few 

commenters recommended that HHS 

publish model notices. Finally, one 

commenter recommended that the final 

rule direct Exchanges and QHP issuers 

to confirm receipt of notices related to 

decertification and non-renewal. 

Response: Under this final rule, all 

notices to consumers issued by the 

Exchange must conform to the 

minimum standards outlined in 

§ 155.230, while notices issued by a 

QHP issuer must conform to standards 

established by § 156.250. These include 

protections for individuals with limited 

English proficiency or disabilities, and 

establish that all notices be written in 

plain language. Further, to the extent 

that State law or Exchange policies 

provide for greater accessibility or 

additional content, an Exchange may 

provide notices that exceed the 

minimum standards in this final rule. 

We believe that establishing a 

standard that Exchanges and QHP 

issuers confirm that each notice of 

decertification or non-renewal has been 

received by the appropriate enrollee 

would place a significant burden on 

Exchanges and issuers and could 

demand resources that are better used 

for other customer service functions. 

Further, we believe it is consistent with 

the current practices of many other 

programs to rely upon the contact 

information provided by each enrollee 

without confirming that each mailing 

has been successfully received. 

Comment: One commenter requested 

that HHS clarify that in the case of a 

SHOP, each enrollee, and not each 

employer, must receive a notice of 

decertification or non-renewal described 

in proposed § 155.1080(e), as 

appropriate. 

Response: For purposes of SHOP, 

each enrollee must receive a notice of 

decertification or non-renewal. We note 

that § 156.285(d)(1)(ii) directs QHP 

issuers offering QHPs through a SHOP 

to provide notices to both enrollees and 

qualified employers. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.1080 of the proposed 

rule, except that in paragraph (b) we 

clarified that, consistent with the 

revisions to § 155.1010, multi-State 

plans and CO–OPs are not subject to the 

Exchange decertification process. 

B. Part 156—Health Insurance Issuer 

Standards under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

Part 156 contains the proposed 

standards for QHPs and QHP issuers 

that are intended to promote robust and 

meaningful consumer choice. 

1. Subpart A—General Provisions 

a. Basis and Scope (§ 156.10) 

Proposed § 156.10 of subpart A 

specified the general statutory authority 

for the ensuing regulation and noted 

that the scope of part 156 is to establish 

standards for health plans and health 

insurance issuers related to the benefit 

design standards and in regard to 

offering QHPs through an Exchange. We 

did not receive specific comments on 

this section and are finalizing the 

provisions as proposed. 

b. Definitions (§ 156.20) 

Most of the terms that we proposed to 

define in this section refer to terms 

proposed in § 155.20. Beyond these 

terms, we proposed that the term 

‘‘benefit design standards’’ mean the 

‘‘essential health benefits package’’ 

defined in section 1302(a) of the 

Affordable Care Act. We did not receive 

comments on this section that were not 

addressed elsewhere, and are finalizing 

the definitions as proposed. 

c. Financial Support (§ 156.50) 

In § 156.50, we proposed that 

participating issuers pay user fees to 

support ongoing operations of an 

Exchange, if a State chooses to impose 

such fees. We proposed to define the 

term ‘‘participating issuer’’ to mean an 

issuer offering plans that participate in 

the specific function that is funded by 

the user fee. We further proposed that 

participating issuers pay any fees 

assessed by a State-based Exchange, 

consistent with Exchange authority 

outlined in § 155.160. 

Comment: Several commenters on 

proposed § 156.50 recommended that 

HHS modify the definition of 

‘‘participating issuer’’ by simplifying 

and broadening the proposed definition. 

Specifically, two commenters requested 

that HHS clarify whether the proposed 

definition would mean that Exchanges 

would charge user fees in proportion to 

an issuer’s participation in specific 

Exchange functions. 

Response: The definition proposed in 

§ 156.50 is structured to accommodate 

the variety of functions that an 

Exchange could perform. We note that 

the proposed definition does not direct 

an Exchange to pro-rate or otherwise 

tailor user fees to the specific functions 

in which an issuer participates. Rather, 

an Exchange could, but is not directed 

to, charge uniform user fees to all 

participating issuers. We note that the 

Affordable Care Act suggests user fees 

charged to participating issuers as a 

means for States to ensure that an 

Exchange is self-sustaining. We track 

that statutory language in this final rule 

when using the term participating 

issuer. 

Comment: A few commenters 

recommended that § 156.50(b) of the 

final rule clarify that participating 

issuers must pay all assessments 

established by an Exchange, whether 

structured as user fees or otherwise. 

Response: We believe that 

participating issuers are responsible for 

paying any assessments established by 

an Exchange irrespective of how such 

assessments are structured. Therefore, 

we are revising the regulation text in 

§ 156.50 of this final rule to reflect this 

clarification. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.50 of the proposed 

rule, with the following modifications: 

in paragraph (b), we clarified that a 

participating issuer must remit user fees 

to a State-based or a Federallyfacilitated Exchange. We further 

clarified in paragraph (b) that a QHP 

issuer must remit any fees charged by 

the Exchange in accordance with 

§ 155.160, whether structured as user 

fees or otherwise. 

2. Subpart C—Qualified Health Plan 

Minimum Certification Standards 

Section 1311(c)(1) of the Affordable 

Care Act authorizes the Secretary, by 

regulation, to establish criteria for the 

certification of health plans as QHPs; we 

implement that authority in this 

subpart. The proposed rule clarified 

that, unless otherwise noted, the 

standards for QHPs proposed in this 

subpart do not supersede existing State 

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Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 18415 

laws or regulations applicable to the 

health insurance market generally, 

apply specifically to the certification of 

QHPs for participation in the Exchange, 

and do not exempt health insurance 

issuers from any generally applicable 

State laws or regulations. 

a. QHP Issuer Participation Standards 

(§ 156.200) 

In § 156.200, we outline the proposed 

standards on QHP issuers as a condition 

of participation in the Exchange. These 

include: (1) Complying with the 

standards in this subpart; (2) complying 

with the proposals established in 

accordance with subpart K of part 155, 

and in the small group market, 

§ 156.705; (3) ensuring that each QHP 

complies with the benefit design 

standards defined in § 156.20; (4) being 

licensed and in good standing to offer 

health insurance in the State; (5) 

implementing and reporting on quality 

improvement strategies consistent with 

section 1311(g) of the Affordable Care 

Act; (6) paying applicable user fees; and 

(7) complying with standards related to 

risk adjustment under part 153. We 

noted that States may choose to 

establish additional conditions for 

participation beyond the minimum 

standards established by the Secretary. 

We also proposed that to participate in 

an Exchange, a health insurance issuer 

must have in effect a certification issued 

or recognized by the Exchange to 

demonstrate that each health plan it 

offers in the Exchange is a QHP and that 

the issuer meets all applicable 

standards. 

We also outlined the set of proposed 

standards with which a QHP issuer 

must comply related to the offering of a 

QHP, and specified that the QHP issuer 

must comply with the standards set 

forth in this subpart on an ongoing 

basis. The offering standards included: 

(1) Offering at least one QHP in the 

silver and gold coverage level; (2) 

offering a child-only plan at the same 

level of coverage; and (3) offering the 

QHP at the same premium rate when the 

QHP is offered directly by the issuer or 

through an agent or broker 

(implemented through § 156.255(b)). 

Finally, we proposed that a QHP issuer 

not discriminate on the basis of race, 

color, national origin, disability, age, 

sex, gender identity or sexual 

orientation. 

Comment: Several commenters 

requested that HHS clarify the standard 

that a QHP issuer be in ‘‘good standing’’ 

to offer health insurance in proposed 

§ 156.200(b)(4). While many 

commenters supported the proposed 

provision as written, a few suggested 

that HHS strengthen the standard. 

Conversely, one commenter 

recommended that ‘‘in good standing’’ 

be defined to exclude minor violations. 

One commenter recommended that QHP 

issuers be held accountable for 

demonstrating good standing, such as by 

providing an attestation from the 

relevant State regulator. 

Response: As described in the 

preamble to the proposed rule, we 

interpret ‘‘good standing’’ to mean that 

an issuer faces no outstanding sanctions 

imposed by a State’s department of 

insurance. Therefore, the specific 

violations or infractions that would 

jeopardize standing may vary by State. 

With respect to determining licensure 

and standing, Exchanges may wish to 

use a number of means, such as 

attestation or verifying the information 

directly with State departments of 

insurance. Accordingly, we do not 

prescribe a specific process in this final 

rule, but instead allow Exchanges 

discretion in determining the best way 

to substantiate licensure and standing. 

Comment: Several commenters 

requested that HHS harmonize quality 

reporting standards in proposed 

§ 156.200(b)(5) with other public 

programs, suggested quality measures 

HHS could consider to evaluate QHPs, 

and made specific recommendations 

regarding both the quality improvement 

strategy and quality rating system. 

Commenters also requested that 

national quality standards be utilized 

and quality used as a factor in QHP 

certification decisions. Other 

commenters requested that quality 

information be publicly reported to 

consumers to inform QHP selection. 

Response: We will provide additional 

detail on the content and manner of 

quality reporting under this section in 

future guidance. 

Comment: In response to proposed 

§ 156.200(c)(1), one commenter 

recommended that plans be permitted to 

achieve the bronze level of coverage 

over time, while participating in an 

Exchange as a QHP. 

Response: Section 1301(a)(1)(B) of the 

Affordable Care Act directs a QHP to 

provide the essential health benefits 

package, which includes compliance 

with the level of coverage standards 

outlined in section 1302; therefore, a 

health plan that does not meet the 

bronze level of coverage cannot be 

certified as a QHP and made available 

through the Exchange. HHS will issue 

future rulemaking on section 1302, but 

the Affordable Care Act does not 

provide for a transitional process to 

achieving the coverage levels. 

Comment: Many commenters offered 

feedback on the standard for QHP 

issuers to offer a corresponding childonly plan for any QHP offered through 

the Exchange, described in proposed 

§ 156.200(c)(2). Several commenters 

recommended that HHS permit 

individuals up to age 26 to enroll in 

child-only coverage; two commenters 

recommended that instead of offering a 

separate child-only plan, QHP issuers be 

directed or permitted to accept enrollees 

of any age into a QHP offered to single 

qualified applicants. 

Response: Section 1302(f) of the 

Affordable Care Act directs a QHP 

issuer that offers a non-catastrophic 

plan on the Exchange to offer an 

identical child-only plan. We clarify 

that a QHP issuer could satisfy this 

standard by offering a single QHP to 

qualified applicants seeking child-only 

coverage, as long as the QHP includes 

rating for child-only coverage in 

accordance with applicable premium 

rating rules. Section 1302(f) further 

specifies that for purposes of this 

standard, a child-only plan is available 

to individuals under age 21 at the 

beginning of the benefit year. We lack 

the authority to alter the age limitation 

for enrollment into a child-only plan. 

Comment: In response to this section, 

a few commenters requested that HHS 

confirm whether a QHP may contract 

with providers that serve specific 

populations, such as tribal health care 

providers, without violating the antidiscrimination provisions in proposed 

§ 156.200(e). 

Response: The anti-discrimination 

provisions included in § 156.200(e) are 

intended to protect enrollees and 

potential enrollees from discriminatory 

practices on the basis of race, color, 

national origin, disability, age, sex, 

gender identity, or sexual orientation. A 

QHP issuer may contract with health 

care providers that are authorized or 

directed by law to serve specific 

populations, such as Indian health 

providers, without violating these 

provisions. We note that a QHP issuer 

must meet all standards related to 

network adequacy and essential 

community providers specified in 

§ 156.230 and § 156.235, respectively. 

Comment: With respect to proposed 

§ 156.200 in general, several 

commenters recommended that certain 

issuers, such as Medicaid managed care 

organizations, church plans and union 

plans, be permitted to offer certified 

QHPs on a limited-issue basis. 

Response: As established in section 

1301(a) of the Affordable Care Act, all 

QHPs must be offered by licensed health 

insurance issuers that are subject to the 

guaranteed issue provisions, effective 

January 1, 2014. Under section 2702 of 

the PHS Act, these issuers must issue 

coverage to any individual who applies 

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for coverage in a particular health plan. 

Though the statute allows issuers to 

stop accepting new enrollees to preserve 

financial solvency or due to provider 

network capacity under section 2702(c) 

and (d), respectively, the issuer must 

close off enrollment, or begin accepting 

new enrollees again, uniformly rather 

than selectively. We note that HHS will 

address the authority under 2702 under 

separate rulemaking. 

We recognize the potential for 

significant movement of individuals 

between the Exchanges and Medicaid, 

as well as the potential for members of 

a family to be covered separately under 

the Exchange, Medicaid, and CHIP. We 

recognize that QHPs offered by 

Medicaid managed care organizations 

(MMCOs) may be able to play an 

important role in keeping family 

members covered under a common 

issuer and in the same provider 

network, promoting continuity of 

coverage, and mitigating the potential 

negative effects of ‘‘churning’’ between 

Medicaid and the Exchanges. HHS may 

provide additional guidance on this 

topic in the future. Additionally, we 

intend to address commenters’ concerns 

surround multi-employer plans in 

future guidance. 

Comment: A few commenters 

recommended that each Exchange 

include at least one QHP that is also a 

Medicaid MCO to minimize enrollee 

churn. A handful of commenters 

recommended that the Exchange be 

directed to deem Medicaid MCOs and 

other safety net health plans as QHPs. 

Similarly, one commenter 

recommended that safety net health 

plans be permitted to achieve licensure 

gradually while participating in the 

Exchange. 

Response: Medicaid MCOs must meet 

the same standards as other plans to 

become QHPs. However, we note that 

Exchanges have discretion to develop 

specific certification criteria in a 

manner that might facilitate 

participation by Medicaid MCOs, 

including the establishment of the 

accreditation timeline as specified in 

§ 155.1045 and the setting of QHP 

service areas in § 155.1055. We also note 

that there may be opportunities to 

leverage the Exchange Web site in a 

manner that would allow the Exchange 

to identify issuers that participate in 

both the Exchange and Medicaid 

managed care. 

Comment: A few commenters 

requested that HHS clarify States’ ability 

to develop additional certification and 

participation standards for QHPs. 

Response: We clarify that nothing in 

this section precludes an Exchange from 

establishing additional certification 

criteria or issuer participation standards 

beyond those specified in the final rule 

if in the interest of qualified individuals 

and qualified employers served by the 

Exchange, per final § 155.1000(c) and 

the preamble discussion for that section 

in this final rule. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.200 with the 

following modification: we have 

removed proposed paragraph (c)(3) 

related to offering a QHP at the same 

premium rate inside and outside of the 

Exchange to avoid duplication of 

§ 156.255(b). 

b. QHP Rate and Benefit Information 

(§ 156.210) 

In § 156.210, we proposed that a 

QHP’s rates must be applicable for an 

entire benefit year or, for the SHOP, 

plan year. We also proposed that QHP 

issuers submit rate and benefit 

information to the Exchange and that a 

QHP issuer submit a justification for a 

rate increase prior to the 

implementation of such increase for 

purposes described more fully in 

§ 155.1020. Additionally, we proposed 

that QHP issuers post rate increase 

justifications on their Web sites so they 

can be viewed by consumers, enrollees, 

and prospective enrollees. 

Comment: Several commenters 

supported the provision in proposed 

§ 156.210(a) that QHP issuers set rates 

for an entire benefit or plan year. 

Conversely, some commenters 

recommended an exception for plans 

participating in the SHOP, or to 

accommodate Federal or State 

regulatory changes. 

Response: All QHPs, including those 

participating in the SHOP, must offer a 

set rate for an entire benefit or plan year. 

We note that while QHP issuers in 

SHOP may establish new rates quarterly 

or annually, issuers must charge the 

same contract rate for a plan year. We 

note that most Federal and State 

regulatory changes are proposed well in 

advance of becoming effective, so the 

number of regulatory changes that 

would take effect in the middle of a 

benefit or plan year will be limited. 

Therefore, no exceptions are provided 

in the final rule. 

Comment: One commenter 

recommended that QHP issuers notify 

enrollees in advance of any rate 

increase. 

Response: The final rule strengthens 

the transparency standards regarding 

rate increases. In § 155.1020, QHP 

issuers must submit to the Exchange a 

justification for a rate increase prior to 

the implementation of the rate increase. 

Potential and current enrollees will be 

able to compare QHPs and rates through 

the Exchange Web site. Accordingly, we 

are not adding an additional notice 

obligation to this section. 

Comment: Several commenters 

offered feedback on the scope of the 

standard to post rate increase 

justifications in proposed § 156.210(c). 

While some commenters recommended 

posting of all rate increases, others 

recommended that posting be limited to 

rate increases determined unreasonable 

by a State’s program for the review of 

rates under section 2794 of the PHS Act. 

Response: The Affordable Care Act, at 

section 1311(e), demands the posting of 

all rate increase justifications submitted 

by a QHP issuer. Therefore, § 156.210(c) 

establishes that all rate increase 

justifications must be posted, 

irrespective of whether the increase is 

subject to review by a State’s program 

under section 2794 of the PHS Act to 

determine if it is an unreasonable 

increase or the determination of such 

review. We continue to encourage 

Exchanges to leverage existing State 

processes, including a State’s program 

under section 2794 of the PHS Act, to 

minimize the potential burden on QHP 

issuers associated with this section. 

Comment: In response to the 

provision in proposed § 156.210(c) that 

QHP issuers submit and post rate 

increase justifications, a few 

commenters recommended that HHS 

clarify that such justifications must be 

written in plain language and must not 

be deceptive. 

Response: We encourage Exchanges to 

use the rate increase justifications 

submitted as part of the State’s program 

under section 2794 of the PHS Act, 

because the format for these 

justifications were developed with input 

from the National Association of 

Insurance Commissioners and 

incorporates consumer-friendly 

language. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.210 of the proposed 

rule without modification. 

c. Transparency in Coverage (§ 156.220) 

In § 156.220, we proposed a 

transparency standard as a condition for 

certification of QHPs in accordance with 

section 1311(e)(3) of the Affordable Care 

Act. The proposed rule listed specific 

data elements that issuers must provide, 

from the Affordable Care Act: (1) Claims 

payment policies and practices; (2) 

periodic financial disclosures; (3) data 

on enrollment; (4) data on 

disenrollment; (5) data on the number of 

claims that are denied; (6) data on rating 

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practices; (7) information on cost 

sharing and payments with respect to 

any out-of-network coverage; and (8) 

information on enrollment rights under 

title I of the Affordable Care Act. We 

sought comment on whether QHP 

issuers should be directed to submit this 

information to the Exchange and other 

entities, or to make such information 

available to the Exchange and other 

entities. We also proposed that QHP 

issuers provide the specified 

information in plain language. Finally, 

we proposed that QHP issuers make 

available to the enrollee information on 

cost-sharing responsibilities for a 

specific service by a participating 

provider under that enrollee’s particular 

plan. 

Comment: Many groups commented 

on the data elements included in 

§ 156.220(a) of the proposed rule. 

Several commenters supported the 

proposed rule as written, with one 

commenter recommending that HHS 

maintain the list as proposed without 

additional elements. However, other 

commenters, suggested specific 

enhancements or clarifications to the 

proposed approach or requested that 

HHS establish uniform standards and 

methodologies. A few commenters 

recommended that HHS include 

reporting of additional data elements, 

such as information about conditionbased exclusions. Some commenters 

requested that HHS provide sample 

forms, define key terms, or outline a 

specific reporting format (for example, a 

summary statement accompanied by 

data tables). 

Other commenters recommended 

elements or approaches to transparency 

reporting, such as segmenting data by 

enrollee demographics, collecting 

information at the issuer level, or 

reporting at the product level. A few 

commenters provided recommendations 

on where transparency information 

should be submitted and where the 

information should be made available. 

One commenter encouraged HHS to 

apply the same standards to all plan 

types, including catastrophic plans. 

Several commenters recommended that 

HHS collect transparency data annually. 

Finally, one commenter stated that these 

standards should be extended to 

Medicaid and CHIP populations. 

Response: We believe that QHP 

issuers should submit transparency 

information in a manner and timeframe 

that maximizes the utility of such 

information to the Exchange, HHS, and 

individuals. HHS intends that the 

reporting obligations established in this 

section and § 155.1040 will be aligned 

with the transparency reporting 

standards under section 2715A of the 

PHS Act. HHS, together with the 

Departments of Labor and the Treasury, 

will coordinate guidance on the 

transparency in coverage standards. As 

a result, we are not describing specific 

data formats, definitions, or frequency 

of reporting with respect to § 155.1040 

in this final rule. We note that data 

reporting for Medicaid and CHIP plans 

is outside the scope of this final rule. 

Comment: Several commenters agreed 

with the plain language provision in 

proposed § 156.220(c) as written. In 

addition, several commenters requested 

that HHS clarify how it will enforce 

plain language standards, with some 

expressing concern about the Exchange 

or HHS being able to check the accuracy 

of the plain language information 

submitted by QHP issuers. The 

commenters recommended that HHS 

direct QHP issuers to provide data with 

plain language information. 

Response: We note that each 

Exchange will be responsible for 

ensuring QHP issuer compliance with 

this standard. HHS and the Department 

of Labor will jointly develop and issue 

guidance on best practices of plain 

language writing, which will assist 

Exchanges in determining whether 

issuers are using plain language, as 

defined in § 155.20. 

Comment: We received a number of 

comments supporting the cost-sharing 

transparency in proposed § 156.220(d). 

Several commenters recommended that 

the provision be amended to allow the 

consumer to be able to request 

information by phone, fax, email, or 

online. One commenter requested that 

HHS clarify whether the obligation to 

provide enrollee cost-sharing 

information is prospective or 

retrospective in nature. Several 

commenters recommended that HHS 

establish that the cost-sharing 

information be provided free of charge 

by QHP issuers to the enrollees. 

Response: As noted previously, HHS 

will coordinate with the Departments of 

Labor and Treasury on guidance for the 

transparency in coverage standards. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.220 of the proposed 

rule without modification. 

d. Marketing and Benefit Design of 

QHPs (§ 156.225) 

To preserve a level playing field 

within and outside of the Exchange and 

to leverage existing State activities, we 

proposed in § 156.225 that QHP issuers 

must to comply with any applicable 

State laws and regulations regarding 

marketing by health insurance issuers as 

a certification standard, as established 

by section 1311(c)(1)(A) of the 

Affordable Care Act. We also proposed 

to prohibit QHP issuers from employing 

marketing practices that have the effect 

of discouraging enrollment of 

individuals with significant health 

needs and sought comment on the best 

means for an Exchange to monitor QHP 

issuers’ marketing practices to 

determine whether such activities are 

taking place. Additionally, we invited 

comment on a broad prohibition against 

unfair or deceptive marketing practices 

by all QHP issuers and their officials, 

agents, and representatives, and on 

whether HHS should establish a 

standard that QHP issuers not 

misrepresent the benefits, advantages, 

conditions, exclusions, limitations or 

terms of a QHP. 

Comment: Many commenters offered 

feedback on whether the final rule 

should include a broad prohibition 

against deceptive marketing practices. A 

number of commenters supported such 

a prohibition and suggested specific 

Federal standards that HHS could 

adopt, such as Medicare Advantage, 

Medicare Prescription Drug Program, or 

Medicaid standards. Conversely, many 

commenters supported State flexibility 

with respect to marketing rules and 

oversight. A few commenters expressed 

concern that a Federal standard could 

be overly restrictive. 

Response: States have significant 

experience with, and existing 

infrastructure to support, monitoring 

and oversight of health plan marketing 

activities. The National Association of 

Insurance Commissioners (NAIC) has 

provided guidance to the States in the 

form of the Model Unfair Trade 

Practices Act. The Model Act has been 

adopted by 45 States and the District of 

Columbia. The NAIC has also issued an 

Advertisements of Accident and 

Sickness Insurance Model Regulation, 

which has been adopted by 42 States. 

Both the Model Act and Model 

Regulation are extensive and position 

States to address misleading or 

deceptive practices. As a result, we are 

finalizing the marketing standards with 

the flexibility afforded in the proposed 

rule. 

Comment: Many commenters offered 

standards or clarifications for inclusion 

in proposed § 156.225(b), such as a list 

of discriminatory versus acceptable 

marketing practices; a prohibition on 

inducements and other tactics prone to 

abuse; secret shopper events; focus 

group testing of marketing materials; 

and standardized compensation for 

agents and brokers in the Exchange. 

Response: We note that the above 

tactics could be appropriately included 

in an Exchange’s monitoring and 

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oversight activities, as well as its 

marketing rules. While we are not 

establishing that an Exchange 

implement specific standards for the 

reasons described in the preceding 

response, we encourage Exchanges to 

consider a variety of standards, tools, 

and strategies to promote transparent 

and consumer-oriented conduct in the 

Exchange. 

Comment: Many commenters urged 

HHS to codify the statutory prohibition 

against benefit designs that have the 

effect of discouraging enrollment of 

higher-need consumers in § 156.225(b) 

of the final rule. 

Response: We note that section 

1311(c)(1)(A) specifically prohibits QHP 

issuers from utilizing benefit designs 

that have the effect of discouraging 

enrollment by higher-need individuals. 

We have modified § 156.225(b) in this 

final rule to codify the statutory 

prohibition. 

Comment: A few commenters 

recommended that the Exchange be 

permitted to decertify QHPs based on 

improper marketing practices. 

Response: Section 155.1080 of the 

final rule gives the Exchange the 

authority to decertify a QHP at any time 

for failure to comply with certification 

standards, including standards related 

to marketing practices. 

Comment: Several commenters 

recommended that HHS repeat the antidiscrimination standards established in 

§ 156.200(e) in this section. 

Response: We believe that the broad 

prohibition on discrimination in 

§ 156.200(e) clearly bars discrimination 

in marketing practices as well as other 

operations of the QHP issuer, and that 

repeating this language in § 156.225 is 

unnecessary. 

Comment: Several commenters 

encouraged HHS to establish a level 

playing field with respect to marketing 

inside and outside of the Exchange. 

Specifically, a few commenters 

recommended that the final rule clarify 

that QHP issuers must comply with all 

State laws and regulations that govern 

marketing other health insurance 

products, such as statutes prohibiting 

unfair or deceptive acts or practices. 

Response: We note that adopting the 

proposed rule’s approach would ensure 

QHPs conform to any standards, laws, 

or regulations that govern the marketing 

of non-QHP health insurance products 

in a State. 

Comment: Several commenters 

recommended that HHS direct 

Exchanges to report on oversight 

activities related to marketing. A few 

commenters additionally recommended 

that an Exchange Blueprint detail the 

Exchange’s proposed approach to 

marketing oversight. 

Response: Exchanges are responsible 

for ensuring compliance with the 

marketing standards of this section. 

States have significant experience in 

regulating marketing of health insurance 

issuers, and Exchanges may leverage the 

current monitoring practices of States 

with respect to marketing of health 

insurance. As a result, we are not 

imposing an additional reporting 

obligation for Exchanges in this area. 

Comment: In response to the concern 

expressed in the proposed rule 

preamble that certain groups (for 

example, Medicare beneficiaries) may 

be vulnerable to deceptive marketing 

tactics, one commenter suggested that 

the Exchange electronically verify 

whether QHP enrollees are also enrolled 

in other coverage. 

Response: We encourage Exchanges to 

develop a variety of strategies to identify 

improper marketing practices. We note 

that subpart D of this final rule provides 

for electronic verification of some types 

of other coverage in § 155.320(b). 

Comment: A handful of commenters 

recommended that HHS establish a 

mechanism to receive consumer 

complaints related to marketing 

practices. 

Response: Consumers who encounter 

marketing practices that they believe are 

deceptive or improper should be able to 

report such practices to the Exchange or 

State regulator, as appropriate. Because 

the Exchange is responsible for 

monitoring marketing of QHPs and 

taking any appropriate action, we 

believe that establishing a separate 

Federal complaint reporting mechanism 

is unnecessary. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.225 of the proposed 

rule, with the following modifications: 

in paragraph (b) we codified statutory 

language prohibiting QHP issuers from 

employing benefits designs that could 

discourage enrollment of individuals 

with significant health needs. 

Accordingly, we added ‘‘and Benefit 

Design’’ to the title of this section. 

e. Network Adequacy Standards 

(§ 156.230) 

In § 156.230, we proposed the 

minimum criteria for network adequacy 

in order for health plans to be certified 

as QHPs. We proposed that QHP issuers 

meet network adequacy standards 

established by the Exchange in 

accordance with § 155.1050 and 

consistent with the provisions of section 

2702(c) of the PHS Act as amended by 

the Affordable Care Act. In the proposed 

rule, the network adequacy standard, 

stated in proposed § 155.1050, 

established ‘‘sufficient choice of 

providers’’ as the touchstone of whether 

a provider network is adequate. The 

preamble discussion identified several 

different measures of network adequacy 

and sought comment on whether to 

include additional qualitative and 

quantitative standards to measure 

network adequacy. 

We proposed that a QHP issuer make 

its health plan provider directory 

available to the Exchange electronically 

and to potential enrollees and current 

enrollees in hard copy upon request, 

and that the directory identify providers 

who are no longer accepting new 

patients. We sought comment on 

standards we might set to ensure that 

QHP issuers maintain up-to-date 

provider directories. We refer 

commenters to the summary of 

proposed § 155.1050 in this final rule 

and to the preamble to the proposed 

rule for additional discussion of the 

proposed policy. 

Comment: Many commenters offered 

feedback on the network adequacy 

standard, initially included in proposed 

§ 155.1050. Some commenters 

supported the flexibility provided to 

States in the proposed rule, noting that 

such flexibility could facilitate the 

alignment of markets inside and outside 

of the Exchange. Conversely, many 

commenters recommended that HHS 

establish a national, uniform standard 

for network adequacy. These 

commenters offered numerous 

standards HHS could adopt, including 

the NAIC Managed Care plan Network 

Adequacy Model Act, or the current 

standards for Medicare Advantage 

plans, Medicaid managed care plans, or 

TRICARE plans. Finally, a few 

commenters generally requested that 

HHS clarify the meaning of ‘‘sufficient 

number’’ of providers. 

Response: A number of competing 

policy goals and considerations come 

into play with examinations of network 

adequacy: that QHPs must provide 

sufficient access to providers; that 

Exchanges should have discretion in 

how to ensure sufficient access; that a 

minimum standard in this regulation 

would provide consistent consumer 

protections nationwide; that network 

adequacy standards should reflect local 

geography, demographics, patterns of 

care, and market conditions; and that a 

standard in regulation could misalign 

standards inside and outside of the 

Exchange. In balancing these 

considerations, we have modified 

§ 156.230(a)(2) in this final rule to better 

align with the language used in the 

NAIC Model Act. Specifically, the final 

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rule establishes a minimum standard 

that a QHP’s provider network must 

maintain a network of a sufficient 

number and type of providers, including 

providers that specialize in mental 

health and substance abuse, to assure 

that all services will be available 

without unreasonable delay. We believe 

this modification provides additional 

protection for consumers by 

communicating our expectations with 

respect to the number and variety of 

providers that should be present in a 

QHP’s provider network. Further, the 

modified standard establishes a baseline 

(‘‘all services * * * without 

unreasonable delay’’) against which 

network adequacy can be measured. We 

note that nothing in the final rule limits 

an Exchange’s ability to establish more 

rigorous standards for network 

adequacy. We also believe that this 

minimum standard allows sufficient 

discretion to Exchanges to structure 

network adequacy standards that are 

consistent with standards applied to 

plans outside the Exchange and are 

relevant to local conditions. Finally, 

placing the responsibility for 

compliance on QHP issuers, rather than 

directing the Exchange to develop 

standards, is more consistent with 

current State practice. 

Comment: Several commenters urged 

HHS to codify the potential additional 

standards listed in the preamble to the 

proposed rule (access without 

unreasonable delay, reasonable 

proximity of providers to enrollees’ 

homes or workplaces, ongoing 

monitoring process, and out-of-network 

care at no additional cost when innetwork care is unavailable), with the 

largest number of commenters 

expressing support for the provision of 

out-of-network care at no additional cost 

when in-network care is unavailable. 

Other commenters recommended 

specific alternatives to these elements, 

such as a ‘‘60 minutes or 60 miles’’ or 

‘‘15–20 minutes’’ standard. 

Response: Based on comments, we 

have modified § 156.230(a)(2) in this 

final rule to codify the standard that 

services must be available without 

unreasonable delay. With respect to the 

other specific suggestions offered by 

commenters, we are concerned that the 

proposed standards may not be 

compatible with existing State 

regulation and oversight in this area. We 

believe that the modification to final 

§ 156.230(a)(2) strikes the appropriate 

balance between assuring access for 

consumers and recognizing the 

historical flexibility and responsibility 

given to States in this area. 

Comment: Several commenters 

recommended that the final rule 

strengthen access protections in 

medically underserved, rural, or 

professional shortage areas, and for 

vulnerable populations, such as limited 

English proficient individuals or 

individuals with disabilities. With 

respect to medically underserved areas, 

some commenters suggested approaches 

that HHS could take, such as supporting 

higher payment rates in these areas. 

Others advocated for State flexibility to 

develop local solutions. One commenter 

requested that the final rule clarify that 

a QHP’s network cannot be deemed 

inadequate in a professional shortage 

area. 

Response: We did not accept 

comments recommending specific, 

national standards given that network 

adequacy is typically—and diversely— 

regulated by States. As described above, 

we amended § 156.230(a)(2) in this final 

rule to clarify that the provider 

networks maintained by QHP issuers 

must offer access to all services without 

unreasonable delay. We believe that this 

modified standard enhances protections 

for all Exchange consumers, including 

vulnerable populations, while 

preserving flexibility for States to 

develop local solutions to ensure access. 

Furthermore, we believe that the 

standards for inclusion of essential 

community providers in QHP provider 

networks in proposed § 156.235 will 

also help to strengthen access in 

medically-underserved areas and for 

vulnerable populations. 

Comment: Many commenters 

recommended that the network 

adequacy provisions include specific 

provider types, such as pediatricians, 

tribal health care providers, mental 

health professionals, teaching hospitals, 

or women’s health care providers. 

Response: While QHP networks 

should provide access to a range of 

health care providers, we are concerned 

that mandating inclusion of a list of 

specified provider types would detract 

from the larger issue of broadly ensuring 

access to the full range of covered 

services (that is, essential health 

benefits). Accordingly, we have 

modified § 156.230(a)(2) of this final 

rule to require QHP issuers to maintain 

networks that include sufficient 

numbers and types of providers, 

including providers that specialize in 

mental health and substance abuse, to 

ensure access to all services. We 

specifically highlight mental health and 

substance abuse services because we 

recognize that the essential health 

benefits will create new demands for 

access to mental health and substance 

abuse services, and that such services 

have traditionally been difficult to 

access in low-income and medically 

underserved communities. By 

highlighting mental health and 

substance abuse providers in the 

network adequacy standard, we seek to 

encourage QHP issuers to provide 

sufficient access to a broad range of 

mental health and substance abuse 

services, particularly in low-income and 

underserved communities. In addition, 

we are clarifying in § 155.1050 of this 

final rule that, because inclusion of 

essential community providers is 

related to network adequacy, a QHP 

issuer may not be prohibited from 

contracting with any essential 

community provider described in final 

§ 156.235(c). We urge States to consider 

local demographics, among other 

elements, when developing network 

adequacy standards and note that 

nothing in the final rule would preclude 

an Exchange from identifying specific 

provider types that are particularly 

essential in a State. 

Comment: A few commenters 

recommended that the final rule direct 

QHP networks to maintain growth 

capacity, or the ability to accept 

additional enrollees or utilization. 

Response: We believe that the higher 

standard in § 156.230(a)(2) of this final 

rule helps address the commenters’ 

concerns. Further, we believe that the 

reference to section 2702(c)(2) of the 

PHS Act, included in section 1311(c)(1) 

of the Affordable Care Act, implies 

Congressional intent to protect current 

enrollees from unreasonable delays in 

access to care if QHPs expand 

enrollment too quickly. Therefore, we 

are not prescribing a uniform growth 

capacity standard for all Exchanges in 

the final rule, though we note that an 

individual Exchange would be able to 

set such a standard. 

Comment: A few commenters 

supported the language in the preamble 

to the proposed rule encouraging 

Exchanges and QHP issuers to consider 

broadly defining the providers that can 

furnish primary care services. However, 

other commenters raised concerns about 

this broader definition and noted that 

other programs, such as Medicare and 

Medicaid, identify a limited set of 

providers who may be considered 

primary care providers. 

Response: We continue to encourage 

Exchanges to consider a broader 

definition of the types of providers who 

may furnish primary care services, 

because this should improve access to 

such services for consumers, 

particularly those in medically 

underserved or rural areas. We also 

recognize that the definition of a 

‘‘primary care provider’’ should be 

consistent across health insurance 

programs to the extent possible, and we 

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encourage Exchanges to be mindful of 

existing definitions and approaches in 

other health insurance programs when 

outlining corresponding standards for 

QHP issuers participating in the 

Exchange. All provider contracts 

executed by QHP issuers participating 

in the Exchange must be fully compliant 

with State scope of practice laws. 

Comment: A few commenters 

requested that HHS provide technical 

assistance on the various network 

adequacy benchmarks that are available 

(for example, NAIC, Medicare 

Advantage, TRICARE, Medicaid 

managed care) as States develop 

Exchange standards. 

Response: We continue to work with 

States on a variety of issues related to 

Exchange establishment and operations, 

and will consider providing more 

specific technical assistance on existing 

network adequacy standards in the 

future. 

Comment: Several commenters 

recommended that additional items be 

included in QHP provider directories 

described under proposed § 156.230(b), 

such as each provider’s specialty, 

affiliation, licensure, or languages 

spoken. A few commenters requested 

that HHS establish that the provider 

directory must be easily searchable for 

Indian Health Service/Tribal/Urban (I/ 

T/U) providers. Finally, a few 

commenters recommended that 

provider directories include nonphysician providers. 

Response: Consistent with current 

industry practice, we expect QHP 

issuers’ provider directories to include 

information on each provider’s 

licensure or credentials, specialty, and 

contact information, which could 

include any institutional affiliation. The 

Exchange may establish additional data 

elements that QHP issuers must include, 

such as identifying Indian Health 

Service/Tribal/Urban (I/T/U) providers. 

We note that while a provider 

directory could include appropriate 

non-physician providers, we afford 

Exchanges discretion regarding their 

inclusion in the provider directory. A 

provider directory that includes 

providers whose scope of practice is 

limited should generally identify the 

services that the provider is contracted 

to perform, for example, by displaying 

such providers only when consumers 

search for certain services (for example, 

primary care). 

Comment: Multiple commenters 

recommended that the Exchange 

consolidate QHP provider directories as 

described in the preamble to the 

proposed rule. Conversely, some 

commenters recommended maximum 

flexibility for QHP issuers to submit 

provider information. 

Response: We encourage, but do not 

direct, Exchanges to consolidate QHP 

provider directories to make it easier for 

consumers to locate the QHPs in which 

their providers participate. Exchanges 

may also want to establish links to the 

provider directory on a QHP issuer’s 

Web site. 

Comment: Several commenters 

requested that HHS clarify how 

frequently QHP issuers must update 

provider directories under proposed 

§ 156.230(b). Recommendations offered 

by commenters ranged from in real time 

to annually. A few commenters raised 

concerns about the proposed standard 

that directories identify providers who 

are not accepting new patients, noting 

that this could result in continuous 

updates. 

Response: We afford each Exchange 

with discretion to provide guidance to 

QHP issuers with respect to the 

updating of provider directories, 

including how frequently issuers must 

identify providers who are no longer 

accepting new patients. We urge 

Exchanges to consider the appropriate 

balance between supporting consumer 

choice and the burden on QHP issuers 

associated with this standard (which 

should be lower for electronic 

directories than for hard copy 

directories). Further, in establishing 

such standards, we expect Exchanges to 

consider the information needs of 

current versus potential enrollees. 

Comment: A few commenters 

recommended that HHS establish that 

provider directories developed in 

accordance with proposed § 156.230(b) 

must offer meaningful access to 

individuals with limited English 

proficiency and/or disabilities, for 

example by making directories available 

by phone. 

Response: We note that, because they 

are made available to enrollees, provider 

directories must meet the standards for 

applications, forms, and notices 

established in § 155.230 of this final 

rule, which include accommodations for 

individuals with limited English 

proficiency and/or disabilities. 

Comment: A few commenters 

suggested that QHP issuers be directed 

to notify enrollees if their particular 

provider drops out of the network. 

Response: Although a provider’s 

contracting status has significant 

implications for patients—especially 

those who regularly see a particular 

provider for treatment of a chronic or 

complex condition—we do not set a 

uniform standard for notification of 

individual patients if their providers 

drop out of the QHP’s network. Such a 

uniform standard on QHPs might not be 

consistent with practices in the nonExchange market, and would raise QHP 

administrative costs. 

Comment: HHS received comments 

that section 408 of the Indian Health 

Care Improvement Act (IHCIA), should 

be interpreted to obligate QHPs to 

include health programs operated by the 

IHS, Tribes, Tribal organizations, and 

Urban Indian organizations as providers 

in their networks. Several commenters 

also recommended that HHS clarify the 

applicability of section 206 of the ICHIA 

to QHPs. 

Response: The primary purpose of 

section 408 of IHCIA is to deem Indian 

health providers as eligible to receive 

payment from Federal Health Care 

Programs for health care services 

provided to Indians if certain standards 

are met. Eligibility to receive payment 

under section 408 of IHCIA does not 

depend on in-network status with a 

QHP. Section 206 of IHCIA provides 

that all Indian providers have the right 

to recover from third party payers, 

including QHPs, up to the reasonable 

charges billed for providing health 

services, or, if higher, the highest 

amount an insurer would pay to other 

providers to the extent that the patient 

or another provider would be eligible 

for such recoveries. We believe that 

section 206 will foster network 

participation because it benefits QHPs 

to contract with Indian health providers 

to establish the payment terms to which 

the parties agree. Accordingly, we are 

not modifying the regulation text to 

reflect this comment. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.230 of the proposed 

rule with the following modification: in 

new paragraph (a)(2), we modified the 

standard previously proposed in 

§ 155.1050 to clarify that a QHP issuer 

must maintain a provider network that 

is sufficient in number and types of 

providers to assure that all services will 

be accessible without unreasonable 

delay. We also specifically include 

providers that specialize in mental 

health and substance abuse, because 

mental health and substance abuse 

services are essential health benefits and 

because mental health parity applies to 

QHPs. 

f. Essential Community Providers 

(§ 156.235) 

In § 156.235, we proposed that a 

health plan’s network must include a 

sufficient number of essential 

community providers who provide care 

to predominantly low-income and 

medically-underserved populations to 

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apply/assistance/NAP/forms/ 

9needforassistance.pdf. 

be certified as a QHP. We solicited 

comment on how to define a sufficient 

number of essential community 

providers. We also defined the types of 

providers included in the definition of 

essential community providers 

consistent with the Affordable Care Act, 

which specifically identifies all health 

care providers defined in section 

340B(a)(4) of the PHS Act and providers 

described in section 1927(c)(1)(D)(i)(IV) 

of the Act. We also solicited comment 

on the extent to which the definition 

should include other similar types of 

providers that serve predominantly lowincome, medically-underserved 

populations and furnish the same 

services as the providers referenced in 

section 340B(a)(4) of the PHS Act. 

In the preamble to this section, we 

acknowledged that two provisions of the 

Affordable Care Act regarding payment 

of essential community providers and 

payment of Federally Qualified Health 

Centers (FQHCs) may conflict and 

invited comment on this issue. We also 

invited comment on specific payment 

and contracting issues related to Indian 

health providers. Finally, we requested 

comment on other special 

accommodations that should be made 

when contracting with Indian health 

providers, such as the use of a 

standardized Indian health provider 

contract addendum. 

Comment: HHS received many 

comments seeking clarity on the 

proposed standard in § 156.235(a) that 

QHPs include in their provide networks 

a ‘‘sufficient’’ number of essential 

community providers. Many 

commenters recommended that QHP 

issuers include in their provider 

networks all essential community 

providers in the area; contract with any 

willing essential community provider; 

or contract with certain types of 

providers, such as family planning 

providers. Some commenters suggested 

HHS define sufficiency based on 

specific ratios of enrollees to providers, 

maximum travel times, or the Need for 

Assistance worksheet used by the 

Health Resources and Services 

Administration.12 One commenter 

suggested that HHS base the sufficiency 

standard in part on the Health 

Professions Shortage Areas, Medically 

Underserved Areas and Medically 

Underserved Populations designated by 

the Health Resources and Services 

Administration. 

In contrast, other commenters 

supported the proposed rule and urged 

HHS to maintain a broad definition of 

‘‘sufficient’’ that allows Exchanges to 

establish standards appropriate for their 

States. A number of commenters urged 

HHS to strike a balance between having 

QHP issuers provide enrollees with 

adequate access to care from essential 

community providers and allowing QHP 

issuers to employ innovative network 

designs that improve quality and 

contain costs. 

Response: Based on comments 

received, we believe that additional 

clarification of the ‘‘sufficiency’’ 

standard is necessary. Accordingly, we 

have modified final § 156.235(a) to 

direct that each QHP’s network have a 

sufficient number and geographic 

distribution of essential community 

providers, where available, to ensure 

reasonable and timely access to a broad 

range of such providers for low-income, 

medically underserved individuals in 

the QHP’s service area, in accordance 

with the Exchange’s network adequacy 

standards. We believe that this approach 

more clearly articulates our expectations 

with respect to sufficiency than the 

standard included in the proposed rule 

with respect to essential community 

providers while continuing to balance 

the accessibility of essential community 

providers with network flexibility for 

issuers. We emphasize that Exchanges 

have the discretion to set higher, more 

stringent standards with respect to 

essential community provider 

participation, including a standard that 

QHP issuers offer a contract to any 

willing essential community provider. 

HHS intends to monitor the 

effectiveness of this provision in 

ensuring access to essential community 

providers, and it may be subject to 

further modification. 

Comment: HHS received several 

comments suggesting that QHP issuers 

be exempt from the standard in 

proposed § 156.235(a) to include 

essential community providers in their 

provider networks if the Exchange’s 

service area does not include lowincome or medically-underserved 

populations. 

Response: Section 1311(c)(1)(C) of the 

Affordable care Act directs all QHP 

issuers to include essential community 

providers in their provider networks; 

therefore, we have not amended the 

regulation to provide the exemption 

suggested by the commenter. Further, 

we note that the statute and final rule 

acknowledge that essential community 

providers may not be available 

throughout a QHP’s service area. We 

believe that the inclusion of ‘‘where 

available’’ in both places creates 

flexibility for QHP issuers to contract 

with essential community providers in 

a manner that reflects the relative 

availability of these providers and the 

needs of local communities. 

Comment: A number of commenters 

urged us to address the services that a 

QHP issuer should cover when provided 

by an essential community provider in 

its provider network, as described in 

proposed § 156.235(a)(1). Some 

commenters suggested that QHP issuers 

be directed to cover all services 

furnished by the essential community 

provider. Some commenters expressed 

concern that QHP issuers might contract 

with essential community providers for 

a few services, thus fulfilling the 

essential community provider 

‘‘sufficiency’’ standard but prohibiting 

access to the full breadth of services 

through such providers. 

Response: While we believe the 

statutory directive to include essential 

community providers in QHP provider 

networks must translate to meaningful 

access to care for low-income and 

medically underserved populations, 

section 1311(c)(1)(C) of the Affordable 

Care Act provides that nothing in the 

standard to include essential 

community providers obligates a QHP to 

cover any specific medical procedure. 

We generally anticipate and expect QHP 

issuers will contract with essential 

community providers for all services 

furnished by the provider that are 

otherwise covered by the QHP. 

Comment: Several commenters 

supported an exemption from the 

standards in this section for staff-model 

health plans or integrated delivery 

system-based health plans, though one 

commenter urged HHS to make such an 

exemption contingent upon the 

organization demonstrating that its 

provider network still provides 

meaningful access to all forms of care to 

potential enrollees in the service area. 

One commenter suggested that HHS 

establish a provision similar to 

Medicaid’s ‘‘freedom of choice’’ 

provision in 42 U.S.C. 1396(a)(23) in 

order to allow enrollees in staff-model 

QHPs to receive covered services from 

other providers if needed at no 

additional cost to the enrollee; the 

commenter specifically cited concerns 

that a religiously-sponsored integrated 

delivery health plan may not offer a full 

range of reproductive health services. 

Conversely, several commenters 

opposed any exemption for staff-model 

or integrated delivery system plans. 

Response: Based on comments, we are 

persuaded that the obligation to contact 

with essential community providers 

should address the unique contracting 

structure of staff-model health plans and 

integrated delivery system-based health 

plans that provide a majority of services 

‘‘in-house.’’ We are concerned that 

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establishing a standard for such plans to 

contract with essential community 

providers would result in these plans 

having to alter their business models, 

which may obviate the benefits of 

integration. In the proposed rule, we 

noted that we were weighing whether to 

provide consideration for plans that 

solely provide services ‘‘in-house’’. In 

light of comments, however, we 

recognize that staff model and highly 

integrated delivery system plans do not 

provide services solely ‘‘in house’’; 

rather, as a practical matter, they must 

provide some level of out-of-network 

services (for example, emergency 

services) and often must contract with 

Centers of Excellence or certain 

specialists to provide patients with 

access to highly specialized services. As 

a result, we have added under final 

§ 156.235(b) a provision directing 

Exchanges to offer an alternate standard 

for plans with a majority of services 

furnished by ‘‘in-house’’ providers. 

Under the alternate standard, health 

insurance issuers that provide a 

majority of covered professional 

services through employed physicians 

or through a single contracted medical 

group may demonstrate their ability to 

provide an equivalent level of service 

accessibility for low-income and 

medically underserved individuals. We 

note that this alternate standard does 

not permit an Exchange to grant any 

QHP issuer a wholesale exception to 

standards related to essential 

community providers. 

Comment: In response to the 

discussion in the preamble to the 

proposed rule, many commenters urged 

HHS to clarify the term ‘‘generally 

applicable payment rates’’ and ensure 

that essential community providers are 

reimbursed at a reasonable level by 

establishing minimum reimbursement 

standards for all essential community 

providers. Suggestions for such a 

benchmark included the Medicaid 

prospective payment system (PPS) rate 

under 42 U.S.C. 1396a(bb), Medicare 

rates, or a reimbursement rate at least 

equal to the issuer’s negotiated rate with 

a similarly situated non-essential 

community provider. Commenters also 

recommended that QHPs offer 

‘‘generally applicable payment rates’’ by 

service line to ensure that plans do not 

mask low rates for particular services by 

providing higher rates for less-utilized 

service, or otherwise discriminate 

against essential community providers 

in contract negotiations. 

Response: QHP issuers should not 

discriminate against essential 

community providers through contract 

negotiations, or otherwise attempt to 

circumvent the obligation to include 

such providers in-network by offering 

unfavorable rates. In this final rule, we 

are not specifically establishing that a 

generally applicable payment rate be 

based on a particular benchmark or be 

calculated using a particular method 

(for example, by service line), but clarify 

that ‘‘generally applicable payment 

rate’’ means, at a minimum, the rate 

offered to similarly situated providers 

who are not essential community 

providers as defined in this section. 

Comment: In response to the 

discussion in the preamble to the 

proposed rule, many commenters 

offered feedback on the appropriate 

payment rates for Federally-qualified 

health centers, or FQHCs. Several 

commenters supported payment of 

Medicaid PPS rates to all FQHCs some 

commenters advocated that Exchange 

provide wrap-around payments to 

FQHCs, as is currently the practice in 

State Medicaid programs. Other 

commenters supported payment of the 

issuer’s generally applicable payment 

rates, while other commenters 

recommended allowing payment of 

mutually agreed upon rates. A few 

commenters offered unique suggestions 

not explicitly contemplated in the 

proposed rule, such as negotiating based 

on Medicare rates or permitting States to 

establish payment rates for essential 

community providers. 

Response: The Affordable Care Act, at 

section 1302(g), establishes payment of 

FQHCs at the applicable Medicaid PPS 

rate. However, the Affordable Care Act 

also supports, at section 1311(c)(2), 

payment of essential community 

providers, including FQHCs, at the QHP 

issuer’s generally applicable payment 

rate. We are amending the regulation 

text in final § 156.235(e) to codify both 

sections 1302(g) and 1311(c)(2) of the 

Affordable Care Act. We interpret these 

two provisions to mean that a QHP 

issuer must pay an FQHC the relevant 

Medicaid PPS rate, or may pay a 

mutually agreed upon rate to the FQHC, 

provided that such rate is at least equal 

to the QHP issuer’s generally applicable 

payment rate. 

Comment: Several commenters 

suggested that, rather than direct QHP 

issuers to contract with essential 

community providers under proposed 

§ 156.235(a), Exchanges should provide 

incentives for QHP issuers to contract 

with essential community providers. 

Response: Including essential 

community providers in QHP provider 

networks is a minimum certification 

standard specifically established by 

Section 1311(c)(1)(B) of the Affordable 

Care Act. This does not preclude 

Exchanges from offering incentives to 

QHP issuers (such as priority placement 

on the Exchange Internet Web site) to 

contract with more essential community 

providers than the Federal minimum 

standard. 

Comment: In response to the list of 

essential community providers in 

proposed § 156.235(b), many 

commenters recommended inclusion of 

specific provider types, including but 

not limited to rural health clinics, 

community mental health centers, 

family planning clinics, Ryan White 

Care Act providers, pediatricians and 

children’s hospitals, tribal health care 

providers, providers that serve limited 

English proficient populations, schoolbased clinics, or the entirety of a health 

system that includes a 340(B) or 

disproportionate share hospital. Some 

commenters also expressed concern 

about the potential for exclusion of or 

discrimination against specific types of 

essential community providers, such as 

those that are academic medical centers, 

by issuers, States or Exchanges. 

Conversely, a few commenters 

recommended that each State define 

essential community providers. 

Response: We acknowledge that a 

wide variety of health care providers 

and institutions serve low-income and 

medically underserved individuals, and 

we note that the definition of essential 

community providers contained in the 

proposed rule encompasses a broad 

range of providers that serve low 

income and underserved communities, 

including FQHCs, disproportionate 

share hospitals, Ryan White Care Act 

Title II and III grantees, and urban 

Indian organizations. We clarify that the 

list of essential community providers 

provided in paragraphs (c)(1) and (c)(2) 

are not an exhaustive list and are not 

meant to exclude QHP issuers from 

contracting with other providers that 

serve predominantly low-income, 

medically underserved individuals. 

In § 156.235(c) of the final rule, we are 

finalizing the proposed rule definition, 

with a slight modification. Based upon 

comments regarding the potential for 

exclusion of or discrimination against 

essential community providers and 

consistent with the intent explicit in 

section 1311(c)(1)(C) of the Affordable 

Care Act that access to essential 

community providers be maximized in 

QHPs, we clarify that any provider that 

meets the criteria for an essential 

community provider in § 156.235(c), or 

met the criteria on the publication date 

of this regulation unless the provider 

lost its status under § 156.235(c)(1) or 

(c)(2) thereafter as a result of violating 

Federal law, must be considered an 

essential community provider. We 

intend to monitor this policy and revisit 

as necessary. 

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13Available at: http://www.pcpcc.net/content/ 

joint-principles-patient-centered-medical-home. 

We note that the definition in the 

final rule, taken from the section 

1311(c)(1)(C) of the Affordable Care Act, 

provides a test to determine whether a 

provider is an essential community 

provider and a non-exhaustive list of 

examples. An Exchange may apply the 

test contained in the definition 

(providers that serve predominantly 

low-income, medically underserved 

individuals) to a particular service area 

to identify additional essential 

community providers. Finally, we note 

that each QHP provider network must 

be sufficient in number and types of 

providers to assure that all services, 

including mental health and substance 

abuse services, will be accessible 

without unreasonable delay. 

Comment: A few commenters 

recommended that HHS develop a 

standard Indian Addendum for 

contracting with tribal health care 

providers. 

Response: We recognize that 

furnishing QHP issuers with a standard 

Indian Addendum to a provider contract 

may make it easier for QHP issuers to 

contract with Indian providers. We note 

that QHP issuers may not be aware of 

the various Federal authorities that 

govern contracting with Indian health 

providers, and such an Addendum may 

lower the perceived barrier of 

contracting with Indian providers. We 

plan to develop a template for 

contracting between QHP issuers and 

tribal health care providers. While we 

do not uniformly mandate that QHP 

issuers use the template, we believe that 

QHP issuers will find it in their interest 

to adopt such a template when 

contracting with Indian providers. We 

also note that Exchanges may elect to 

direct QHP issuers to use the Indian 

Addendum when contracting with 

Indian providers. 

Comment: One commenter 

recommended that all entities 

designated as essential community 

providers qualify for special drug 

pricing under section 340B(a)(4) of the 

Public Health Service Act. Conversely, 

another commenter requested that the 

final rule clarify that QHP issuers are 

not obligated to contract with all 340(B) 

pharmacies. One commenter suggested 

that HHS work with States and 

Exchange governing boards to ensure 

that providers have a clear 

understanding of how key 340(B) 

principles apply in the Exchange 

context in order to avoid confusion and 

violation of 340(B) anti-diversion rules. 

Response: This rule concerns the 

establishment and operation of 

Exchanges and the certification 

standards for QHPs; nothing in this final 

rule changes or affects the operation of 

section 340(B) of the Public Health 

Service Act. As a result, requests to 

interpret section 340B of the Public 

Health Service Act are outside the scope 

of this final rule. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.235 of the proposed 

rule, with the following modifications: 

in paragraph (a)(1) we modified QHP 

issuer’s contracting responsibilities with 

respect to essential community 

providers to reflect a reasonable access 

standard and a broad range of providers 

standard. In new paragraph (a)(2) we 

added an alternate standard for QHP 

issuers that provide a majority of 

professional services with ‘‘in-house’’ 

providers. In paragraph (c), we clarified 

the definition of an essential community 

provider. We also added new 

paragraphs (d) and (e) to interpret and 

implement Affordable Care Act section 

1311(c)(2) (regarding payment rates to 

essential community providers) and 

section 1302(g) (regarding payment of 

FQHCs); in doing so we indicate that 

QHP issuers and FQHCs may negotiate 

rates and mutually agree on a payment 

rate other than the Medicaid PPS rate. 

g. Treatment of Direct Primary Care 

Medical Home (§ 156.245) 

In § 156.245, we proposed to permit 

QHP issuers to provide coverage 

through a direct primary care medical 

home (PCMH) that meets the standards 

established by HHS, provided that the 

QHP meets all standards otherwise 

applicable. We requested comment on 

what standards HHS should establish 

under this section. 

Comment: Multiple commenters 

recommended that direct PCMHs 

described in proposed § 156.245 be 

accredited, or comply with existing 

industry standards such as the Joint 

Principles of the Patient-Centered 

Medical Home 13 developed by the 

Patient Centered Primary Care 

Collaborative. Other commenters 

expressed general support for PCMHs or 

provided data on the effectiveness of the 

PCMH model. 

Response: We believe that Exchanges 

offer an opportunity to advance 

innovative models of delivery that can 

improve the care experience for patients 

and providers. Consistent with this 

overall goal, we have structured the 

direct PCMH provision to encourage, 

rather than limit, innovative care 

models. While we recognize the 

importance of accreditation and quality 

assurance, we are not establishing that 

direct PCMHs be accredited in order to 

participate in QHP networks. We 

encourage QHP issuers to consider the 

accreditation, licensure, or performance 

of all network providers. 

Comment: Several commenters 

suggested that the definition of direct 

PCMHs in proposed § 156.245 be 

expanded to include accountable care 

organizations or specialists who serve as 

a patient’s ‘‘health home.’’ 

Response: While non-primary care 

clinicians can play a significant role in 

care coordination, particularly for 

patients with multiple or complex 

conditions, the statute specifically 

provides for inclusion of primary care 

medical homes. We do not interpret that 

phrase as including providers of nonprimary care services, such as 

specialists. However, we note that 

nothing in this section prohibits or 

limits a QHP issuer’s ability to pursue 

other innovative care models or 

contracting structures, such as 

increasing payments to specialists who 

coordinate an individual’s care, or 

contracting with accountable care 

organizations. 

Comment: A few commenters 

requested that HHS clarify what 

coordination is contemplated between a 

QHP and a contracted direct PCMH 

under proposed § 156.245. 

Response: QHP issuers that choose to 

contact with direct PCMHs for primary 

care services will need to consider how 

to promote a seamless consumer 

experience. For example, the QHP 

issuer should ensure that enrollees 

understand how to use the direct PCMH 

model, identify which services will be 

provided by the direct PCMH and which 

will not, and have clear information on 

how to access specialists and other nonprimary care providers. 

Comment: Several commenters 

generally recommended that HHS 

encourage QHP issuers to contract with 

direct PCMHs, direct issuers to contact 

with a specific number of direct PCMHs, 

establish that a certain percentage of 

network providers must be affiliated 

with direct PCMHs, or direct QHP 

issuers to report on the number of innetwork direct PCMHs. 

Response: While we believe that an 

Exchange could create incentives for 

QHP issuers to contract with direct 

PCMHs, such incentives are more 

appropriately considered within the 

context of local provider market 

conditions, including the relative 

availability of direct PCMHs. As a 

result, we are not directing Exchanges to 

create incentives for contracting with 

direct PCMHs. We encourage Exchanges 

to promote, and QHP issuers to explore, 

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18424 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

innovative models of delivery along the 

care spectrum. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.245 of the proposed 

rule without modification. 

h. Health Plan Applications and Notices 

(§ 156.250) 

In § 156.250, we proposed basic 

standards for the format of applications 

and notices provided by the QHP issuer 

to the enrollee, specifically that QHP 

issuers must adhere to the standards 

established for notices in § 155.230. 

We received a number of comments 

on this section. Because § 156.250 crossreferences to § 155.230, we have 

responded to all comments on 

applications and notices in § 155.230. 

Accordingly, we are finalizing § 156.250 

as proposed. 

i. Rating Variation (§ 156.255) 

Consistent with the rating rules 

established in the Affordable Care Act, 

we proposed § 156.255 to codify the 

statutory provision that allows QHP 

issuers to vary premiums by the rating 

areas established under section 

2701(a)(2) of the PHS Act. We further 

proposed that each QHP issuer offer a 

QHP at the same premium rate without 

regard to whether the plan is offered 

through an Exchange or whether the 

plan is offered directly from the issuer 

or through an agent. We also proposed 

that a QHP issuer cover all the following 

groups using some combination of the 

following categories: (1) Individuals; (2) 

two-adult families; (3) one-adult 

families with a child or children; and (4) 

all other families. We sought comment 

on how we might structure family rating 

categories while adhering to section 

2701(a)(4) of the PHS Act, which 

establishes that any family rating using 

age or tobacco rating may only apply 

those rates to the portion of the 

premium that is attributable to each 

family member. 

Additionally, we requested comment 

on how to apply four family categories 

when performing risk adjustment. We 

also invited comment on alternatives to 

the four categories for defining family 

composition, and how to balance 

potential consumer confusion 

associated with more categories while 

maintaining plan offerings and rating 

structures that are similar to those that 

are currently available in the health 

insurance market. Finally, we noted that 

we were also considering whether to 

direct QHP issuers to cover an enrollee’s 

tax household, including for purposes of 

applying individual and family rates, 

and sought comment on the potential 

considerations of this approach. 

Comment: A few commenters asked 

why the proposed rule did not address 

section 1312(c) of the Affordable Care 

Act related to a single risk pool. 

Response: The proposed rule and this 

final rule only address standards that 

are unique to Exchanges, QHP issuers 

and QHPs. The single risk pool 

provision applies to health insurance 

issuers in the individual and small 

group market and to enrollees who do 

not enroll in health plans through the 

Exchange. Therefore, it is outside the 

scope of this final rule. We anticipate 

future rulemaking on other Affordable 

Care Act provisions that apply to 

insurance markets generally. 

Comment: One commenter suggested 

that the final rule establish a process 

whereby a State demonstrates that 

existing State laws related to rating 

outside of the Exchange will not 

undermine the Exchange. 

Response: We are continuing to 

evaluate the relationship and interaction 

of State rating laws, the market reform 

provisions in section 2701 of the PHSA, 

and the provisions to implement the 

Exchange standards. We may issue 

further guidance in the future. 

Comment: In response to the 

proposed § 156.255(a) on rating areas, 

one commenter suggested that we codify 

the standard that rating areas must be 

applied consistently inside and outside 

of the Exchange, which we discussed in 

preamble of the proposed rule (76 FR 

41901). A few commenters requested 

that HHS establish a standard set of 

criteria for rating area boundaries that 

reflect actual differences in health costs 

within a State. 

Response: Section 2701(a)(2) of the 

PHS Act directs States to establish 

rating areas, which will be reviewed by 

the Secretary of HHS. Section 1301(a)(4) 

of the Affordable Care Act directly 

references the rating areas outlined in 

section 2701(a)(2) of the PHS Act, which 

ensures that the rating areas are applied 

consistently both inside and outside the 

Exchange. The requested provision is 

outside the scope of this final rule; we 

anticipate future rulemaking on other 

Affordable Care Act provisions that 

apply to insurance markets generally. 

Comment: Several commenters 

requested that HHS more clearly define 

what ‘‘same plans’’ would need to be 

offered at the same premium rate for 

proposed § 156.255(b). The commenters 

raised concerns that issuers would offer 

two plans with very minor differences 

and then charge a different premium for 

what is essentially the same plan, which 

could result in adverse selection against 

the Exchange. 

Response: We believe that, generally, 

this provision means that health plans 

that are substantially the same as a QHP 

should charge the same premium and 

encourage States to use this standard 

when evaluating compliance with this 

provision. HHS may further clarify this 

standard in future rulemaking or 

guidance. 

Comment: Several commenters voiced 

support for proposed § 156.255(b), while 

others had questions regarding whether 

user fees charged for enrollment would 

undermine the same premium 

provision. Some commenters suggested 

that HHS direct Exchanges to apply user 

fees to QHPs offered outside of the 

Exchange in order to ensure pricing 

parity. 

Response: We clarify that States have 

substantial flexibility in establishing a 

funding mechanism for an Exchange to 

meet the self-sustaining provision of 

section 1311(d)(5) of the Affordable Care 

Act, implemented in this final rule at 

§ 155.160. As noted in the statute and 

the regulation text, user fees on QHPs 

are one mechanism to achieve this 

status. Such fees may be set based on a 

broad or narrow set of issuers, on 

enrollment volume, including 

enrollment that is not through the 

Exchange, or be set without regard to 

enrollment. 

Comment: Several commenters 

suggested that we direct QHP issuers to 

offer QHPs outside of the Exchange. 

Response: Nothing in Federal law 

prohibits a QHP issuer from offering the 

QHP for sale directly to an individual or 

through an agent/broker in addition to 

through the Exchange. We note that a 

State law may address this issue. 

Further, enrollees in such a plan would 

not qualify for advanced payments of 

premium tax credits, among other 

Exchange benefits. 

Comment: In response to proposed 

§ 156.255(c), several commenters raised 

issues regarding rating rules that were 

discussed in the proposed rule, 

including the incorporation of the 

tobacco rating factor described in 

section 2701(a)(1)(A)(iv) of the PHS Act 

(76 FR 41901). Other commenters made 

suggestions about the application of a 

rating structure to a tax household. 

Response: In the final rule, we have 

removed proposed § 156.255(c), which 

addresses rating categories. We 

anticipate that implementation of 

section 2701(a)(1)(A) of the PHS Act 

will establish standards that apply to 

health insurance issuers in the 

individual and small group market, 

including QHP issuers. 

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Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 18425 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.255 of the proposed 

rule, with the exception of removing 

paragraph (c). 

j. Enrollment Periods for Qualified 

Individuals (§ 156.260) 

In § 156.260, we proposed that QHP 

issuers must accept and enroll qualified 

individuals during the initial open 

enrollment period, during the annual 

open enrollment period thereafter, and 

during special enrollment periods, as 

applicable. We further proposed that 

QHP issuers adhere to the effective 

dates of coverage established in 

§ 155.410 for all enrollment periods in 

the Exchange, and provide enrollees 

with notice of effective dates of 

coverage. 

Comment: HHS received many 

comments about enrollment periods in 

accordance with § 155.410 and 

§ 155.420, which are summarized and 

addressed in those sections of the final 

rule. One commenter remarked 

specifically on proposed § 156.260 and 

requested that HHS clarify whether a 

QHP could refuse enrollment to an 

applicant previously proven to have 

committed fraud. 

Response: A QHP issuer may not 

refuse enrollment to a new applicant 

who has previously proven to have 

committed fraud. We note that section 

2703(b) of the PHS Act, with which 

QHP issuers must comply, includes an 

exception to the guaranteed 

renewability standard in certain 

instances of fraud, but includes no 

parallel exception for new coverage. We 

further note that § 156.270(a) permits 

QHP issuers to rescind coverage under 

certain circumstances. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.260 of the proposed 

rule, with a minor technical 

modification and no substantive 

changes. 

k. Enrollment Process for Qualified 

Individuals (§ 156.265) 

In § 156.265, we proposed that QHP 

issuers adhere to the Exchange’s process 

for enrollment in QHPs, which includes 

standards for the collection and 

transmission of enrollment information. 

Additionally, we proposed that QHP 

issuers use the application adopted in 

accordance with § 155.405 when 

accepting applications from individuals 

seeking to enroll in a QHP through the 

Exchange enrollment process. After 

collecting the uniform enrollment 

information from an applicant, we 

proposed that the QHP issuer send the 

information to the Exchange, in 

accordance with the standards 

established in § 155.260 and, as 

applicable, § 155.270. 

Consistent with the standards 

established in accordance with 

§ 155.260 and in § 155.270, we proposed 

that QHP issuers receive enrollment 

information electronically from the 

Exchange. We sought comment on the 

frequency with which plans should 

receive electronic enrollment 

information. We also proposed that QHP 

issuers abide by the premium payment 

process established by the Exchange and 

described in § 155.240. 

We further proposed that QHP issuers 

provide enrollees in the Exchange with 

an enrollment package, and the 

summary of benefits and coverage 

document. We solicited comment on 

what should be included in an 

enrollment package. Finally, we 

proposed that QHP issuers reconcile 

enrollment files with the Exchange no 

less than once a month, and that QHP 

issuers acknowledge the receipt of 

enrollment information in accordance 

with Exchange standards established in 

§ 155.400. 

Comment: Some commenters 

recommended that proposed 

§ 156.265(b) prohibit agents, brokers and 

Web-based entities from performing 

eligibility determinations. 

Response: An agent, broker, or Webbased entity cannot perform eligibility 

determinations as part of enrollment 

through the Exchange. We note that 

section (b)(2)(A) of 36B of the Internal 

Revenue Code as amended by the 

Affordable Care Act establishes that an 

individual must enroll ‘‘through the 

Exchange’’ in order to access advance 

payments of the premium tax credit and 

cost-sharing reductions. However, in 

§ 155.220(c)(1), we specify that an 

individual can be enrolled in a QHP 

through the Exchange with the 

assistance of an agent or broker only if 

the agent or broker ensures that the 

individual receives an eligibility 

determination through the Exchange 

Web site. 

Comment: In response to the 

provisions described in proposed 

§ 156.265(b), several commenters 

suggested that an individual have an 

eligibility determination before 

enrolling in a QHP. Other commenters 

expressed concern regarding the privacy 

of individuals’ information when a QHP 

issuer facilitates the enrollment of an 

individual through the Exchange as 

described in proposed § 156.265(b), 

particularly when the individual seeks 

an eligibility determination. One 

commenter suggested that the QHP 

issuer refer individuals to the Exchange 

to carry out activities related to 

eligibility and enrollment. 

Response: An individual must receive 

an eligibility determination from the 

Exchange before enrolling in a QHP 

through the Exchange. Accordingly, we 

have added new paragraph 

§ 156.265(b)(1) to clarify that the QHP 

issuer may only enroll a qualified 

individual after the Exchange has 

notified the QHP issuer that the 

individual has been determined eligible 

consistent with the standards identified 

in part 155 subpart D, and on the basis 

of enrollment information sent from the 

Exchange to the QHP issuer. In addition, 

in § 156.265(b)(2), we specify that QHP 

issuers must direct the individual to file 

an application with the Exchange or 

ensure the applicant receives an 

eligibility determination for coverage 

through the Exchange through the 

Exchange Internet Web site. These 

provisions ensure that the applicant’s 

information is collected only by the 

Exchange and thus firewalled from 

issuers and agents and brokers and 

accordingly protected. We do not 

provide regulatory standards for 

enrollment in a QHP that is not 

enrollment through the Exchange and 

defer to issuers as to their business 

practices for that. We reiterate that the 

assistance and protections described in 

part 155 apply to Exchange enrollment. 

Protecting the personal health and 

other information provided by potential 

enrollees during the eligibility and 

enrollment process is critical. Further, 

we note that when the QHP issuer 

conducts relevant enrollment functions 

on its own behalf, that appears to be an 

activity covered by the HIPAA privacy 

and security rules in part 164. 

Comment: HHS received a few 

comments in response to proposed 

§ 156.265(d), which obligates issuers to 

follow the premium payment process 

established in § 155.240. One issuer 

recommended that payment directly to 

the QHP serve as the last resort for 

enrollees, another commenter requested 

that enrollees retain this option in the 

final rule. One commenter suggested 

that the enrollee pay only one entity 

(that is, the Exchange or the QHP issuer) 

for the entire benefit year. Finally, one 

commenter suggested that the Exchange 

be directed to aggregate premiums to 

avoid unpredictable administrative 

costs for issuers. 

Response: As this option is statutorily 

established under section 1312(b) of the 

Affordable Care Act, consumers must 

have the option to remit premium 

payments directly to QHP issuers. 

Therefore, we are maintaining the 

language in § 155.240(a), which directs 

an Exchange to allow enrollees to pay 

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18426 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

premiums directly to QHP issuers. For 

a full discussion of issues related to 

premium payment, please refer to the 

responses to comment in § 155.240. 

Comment: Many commenters offered 

suggestions related to the enrollment 

package described under proposed 

§ 156.265(e). Many commenters 

recommended that HHS establish 

meaningful access standards; standards 

suggested by commenters included 

language written at the 6th grade level, 

in-language ‘‘taglines’’ in fifteen 

languages directing enrollees to oral 

translation services, or existing HHS 

Limited English Proficiency guidance. 

Other commenters recommended that 

the package include information about 

how to file a complaint. Some 

commenters suggested that HHS direct 

issuers to follow existing State and 

Federal law governing the contents of 

enrollment packages. 

Response: The enrollment 

information package is subject to the 

accessibility and readability standards 

established in § 156.250, which crossreferences the access standards set forth 

in section § 155.230(b); therefore, we 

have not amended the regulation text in 

this section because it would be 

duplicative. States have the flexibility to 

establish that the enrollment package 

include information on grievance and 

appeal rights, but we note that this 

information is already described in the 

summary of benefits and coverage as 

specified in guidance published by the 

Departments of HHS, Labor, and the 

Treasury under PHS Act section 2715, 

which an enrollee would receive at 

essentially the same time. We also note 

that issuers must continue to follow 

existing law regarding the content of the 

enrollment package. 

Comment: One commenter suggested 

that QHP issuers be able to attach the 

individual’s choice of QHP to the 

individual’s application to determine 

eligibility when that application 

originates with the QHP issuer. 

Response: HHS will consider 

comments recommending that an 

individual’s QHP selection be included 

in an application that is initiated with 

the QHP issuer as we develop guidance. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.265 of the proposed 

rule, with the following modifications: 

We have rewritten paragraph (b) to 

describe more clearly the process to 

enroll an applicant through the 

Exchange when the applicant 

approaches the QHP issuer directly. We 

modified paragraph (e) to state that the 

enrollment information package must 

comply with accessibility and 

readability standards in § 155.230(b). 

We eliminated paragraph (f) referencing 

the summary of benefits and coverage 

document. Because of the elimination of 

the paragraph on summary of benefits 

and coverage, the remaining provisions 

have redesignated numbers. 

l. Termination of Coverage for Qualified 

Individuals (§ 156.270) 

In § 156.270, we proposed standards 

for QHP issuers regarding the 

termination of coverage of individuals 

enrolled in QHPs through the Exchange, 

and proposed that a QHP issuer may 

terminate coverage for non-payment of 

premium, fraud and abuse, and 

relocation outside of the service area, 

among other situations permitted by the 

Exchange. Additionally, we proposed 

that QHP issuers provide a notice of 

termination of coverage to the enrollee 

and the Exchange, consistent with the 

standards for effective dates in 

§ 155.430. We solicited comment on the 

information that should be included in 

the termination notice. 

We also proposed standards for QHP 

issuers regarding the application of the 

grace period for non-payment of 

premiums by individuals receiving 

advance payments of the premium tax 

credit. Specifically, we proposed that a 

QHP issuer must provide a grace period 

of at least three consecutive months if 

an enrollee receiving advance payments 

of the premium tax credit has 

previously paid at least one month’s 

premium. During the grace period, we 

clarified that the QHP issuer must pay 

all appropriate claims, apply any 

payment received to the first billing 

cycle in which payment was delinquent, 

and continue to collect the advance 

payments of the premium tax credit on 

behalf of the enrollee from the 

department of the Treasury. 

We also proposed to direct QHP 

issuers to provide a notice to enrollees 

who are delinquent on premium 

payments and sought comment on the 

potential elements of such a notice. 

Additionally, we proposed that QHP 

issuers maintain records of terminations 

of coverage in accordance with 

Exchange standards as established in 

§ 155.430. Finally, we proposed that 

QHP issuers abide by the effective dates 

for termination of coverage as described 

in § 155.430. 

Comment: Many commenters were 

concerned that the notices described in 

proposed § 156.270(b) and (e) should 

meet meaningful access standards and 

are accessible for LEP individuals and 

for individuals with disabilities. 

Response: QHP notices must meet 

standards for LEP individuals and for 

individuals with disabilities. Section 

156.250 of the final rule states that all 

notices from a QHP issuer must meet 

the standards outlined in § 155.230(b). 

Comment: Some commenters were 

concerned that a QHP issuer could 

terminate coverage under this section 

without sufficient notice. Other 

comments urged HHS to track reasons 

for termination of coverage for oversight 

purposes. Finally, a few commenters 

asked us to clarify how QHP issuers and 

the Exchange would share information 

about termination of coverage. 

Response: In response to comments, 

we have added paragraph (b)(1) to the 

final rule to state that QHP issuers must 

notify enrollees at least 30 days prior to 

terminating coverage, and further that 

the notice must include a reason for 

termination. We also added 

156.270(b)(2) to the final rule to state 

that the QHP issuer must notify the 

Exchange of the termination effective 

date and reason for termination. 

Comment: A significant number of 

commenters voiced concerns that the 

proposed policy in § 156.270(d) that 

directed QHP issuers to pay all 

appropriate claims during the 3-month 

grace period would exacerbate adverse 

selection and increase premiums across 

enrollees. Several commenters 

representing the insurance industry 

specifically noted that under the 

proposed policy, rates would be built 

with an assumption that some portion of 

enrollees would pay 9 months of 

premium for 12 months of full coverage. 

Several alternatives were suggested, 

such as allowing QHP issuers to pend 

claims after the first 30 days of nonpayment, which would allow the issuer 

to put a hold on claims until the end of 

the grace period, at which point such 

claims would be paid if the premiums 

were paid, or denied if the premiums 

were not paid. Another commenter 

suggested allowing QHP issuers to deny 

coverage for certain categories of 

services, such as elective, nonemergency procedures, additions of new 

household members, or new 

prescription drugs. Other commenters 

suggested that each Exchange be 

allowed to determine the payment 

policy, and some recommended that 

Exchanges be responsible for helping to 

pay outstanding premiums or for 

seeking payment of outstanding 

premiums from an individual. 

Response: We did not accept the 

recommendation that each Exchange set 

its own standard. Advance payments of 

the premium tax credit are directly tied 

to the grace period. Thus the grace 

period’s parameters will have an impact 

on potential Federal tax liability of 

consumers and on Federal 

administration of the advance payments 

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Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 18427 

of the premium tax credit. As a result, 

it is critical that the Federal government 

establish a uniform grace period policy 

to balance the potential impacts on the 

consumer’s tax liability, coverage 

liability for issuers and providers, and 

appropriate administration of advance 

payments of the premium tax credit. 

However, we are persuaded that the 

proposed standards should be adjusted 

in this final rule to decrease the 

opportunities for risk manipulation, 

adverse selection, and premium 

increases. In § 156.270(d)(1) and (d)(2) 

of the final rule, we now direct QHP 

issuers to pay all appropriate claims for 

services provided during the first month 

of the grace period. We believe that the 

first month of non-payment is the 

month in which an enrollee is the most 

likely to resume timely payments, and 

thus is the time period in which it is 

most important to ensure seamless 

coverage. As such, issuers should 

adjudicate claims as they would for any 

enrollee that pays his or her premium in 

full. However, we acknowledge that as 

the amount owed by an enrollee 

increases during the 3-month grace 

period, the risk of non-payment 

increases as well. To decrease the 

financial risk to issuers, and to 

individuals as described below, the final 

rule now permits QHP issuers to pend 

claims in the second and third months. 

We note that QHP issuers may still 

decide to pay claims for services 

rendered during that time period in 

accordance with company policy or 

State laws, but the option to pend 

claims exists. If the individual settles all 

outstanding premium payments by the 

end of the grace period, then the pended 

claims would be paid as appropriate. If 

not, the claims for the second and third 

months could be denied. The grace 

period under this final rule represents 

an extended time for enrollees to catch 

up on premium payments before 

coverage is terminated. Several 

considerations informed this amended 

approach. 

First, the statutory 3-month grace 

period is substantially longer than many 

current grace periods and only applies 

to recipients of advance payments of the 

premium tax credit, assuming they have 

paid at least one monthly premium. In 

light of this fact, a grace period policy 

that is significantly different from the 

rest of the market could produce 

markedly different premiums between 

the Exchange and non-Exchange 

markets. The final rule approach helps 

mitigate these concerns by aligning the 

grace period claims payment standards 

more closely with current industry 

practices. 

Second, in accordance with section 

36B of the Code, individuals may incur 

a tax liability for any advance payments 

of the premium tax credit that are paid 

on their behalf for a month that such 

individual did not pay his or her 

portion of the premium. Under the 

policy in the proposed rule, an 

individual would potentially be liable 

for three months of advance payments 

of the premium tax credit, which could 

be substantial in some instances. Given 

the potential for a large tax liability on 

the part of enrollees receiving advance 

premium tax credits that fail to pay their 

residual premiums to QHP issuers, we 

believe that a retroactive termination 

date is appropriate to mitigate excessive 

individual financial exposure. Under 

the final rule policy, an individual’s 

financial exposure would be limited to 

the first month’s advance payment of 

the premium tax credit if the individual 

did not pay his or her portion of the 

premium for that month. We have 

provided several examples below to 

illustrate how the new grace period 

policy would work: 

Grace Period Examples: 

Assumptions for a monthly premium: 

—Premium: $500. 

—Advance premium tax credit share of 

premium: $450. 

—Enrollee share of premium: $50. 

—First month of grace period: March. 

—Individual pays enrollee share of 

premium for January and February 

coverage. 

Example #1: Individual misses $50 

payment that is due February 28 for March 

coverage. Individual realizes mistake and 

pays $100 on March 31st for March and April 

coverage, satisfying all obligations for 

premium payments through the end of 

March. 

Æ Issuer adjudicates claims for March 

consistent with normal practices (that is, for 

non-grace periods) 

Æ Individual will have full coverage for 

March and April 

Æ Individual has paid full premium for 

March and April as is eligible for premium 

tax credit for March and April. 

Example #2: Individual misses $50 

payment that is due February 28 for March 

coverage and misses $50 payment that is due 

March 31st for April coverage. Individual 

Pays $150 on April 30 for March, April and 

May coverage. 

Æ Issuer adjudicates claims for March 

Æ Coverage continues for April and May 

(2nd and 3rd months of the grace period), 

but: 

D Providers are notified of the potential for 

a denied claim. 

D Issuer pends claims for services 

performed in April and May until individual 

pays outstanding premiums. 

D Individual has paid full premium for 

March, April and May as is eligible for 

premium tax credit for March, April and 

May. 

Example #3: Same facts as Example #2 

except that individual does not pay enrollee’s 

share of premium for March, April or May. 

Æ Coverage terminated retroactively to 

March 31 

Æ Issuer can deny claims for services 

rendered during April and May. Providers 

could then seek payment directly from the 

individual for any services provided during 

that time. 

Æ Individual may have additional tax 

liability attributable to the $450 for the 

advance payment of the premium tax credit 

paid on his or her behalf for March’s 

coverage. The exact amount of additional tax 

liability would be determined in accordance 

with the rules for tax credit reconciliation 

under section 36B of the Code. 

Comment: Several commenters 

supported the proposed standards in 

§ 156.270(d) that QHP issuers pay all 

appropriate claims during the 3-month 

grace period for enrollees receiving 

advance payments of the premium tax 

credit. Commenters said this would 

protect providers that render services to 

such enrollees during the grace period. 

A few commenters were also concerned 

about the timing of claims, and 

suggested that QHP issuers be obligated 

to pay claims based on the date the 

service was rendered, and not the date 

the claim was submitted. 

Response: We understand that pended 

claims increase uncertainty for 

providers and increase the burden of 

uncompensated care. The obligation to 

pay all appropriate claims established in 

the proposed rule was intended to 

protect providers during an extended 

grace period. However, given the 

significant concerns regarding premium 

increases and the potential tax liability 

to consumers, we were concerned that 

this approach did not strike the right 

balance. Because we share providers’ 

concerns about incurring claims during 

the grace period that are not ultimately 

paid, we now establish in 

§ 156.270(d)(3) of the final rule that 

QHP issuers notify providers who 

submit claims for services rendered 

during the second and third months of 

the grace period that any such claims 

will be pended, and potentially not 

reimbursed by the QHP issuer if the 

individual does not settle outstanding 

premium payments. We believe that 

there are technology-based approaches 

to provide this notification. We also 

clarify in § 156.270(d)(1) that the 

application of the grace period to claims 

is based on the date the service was 

rendered, and not the date the claim 

was submitted. 

Comment: Some commenters 

suggested that the 3-month grace period 

proposed in § 156.270(d) should be 

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18428 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

shorter, and that HHS refrain from 

establishing additional rules. Other 

commenters suggested extending the 

grace period to 6 months, at least for the 

first few years. 

Response: As stated in the proposed 

rule, section 1412(c)(2)(B)(iv)(II) of the 

Affordable Care establishes that QHP 

issuers ‘‘receiving advance payments of 

the premium tax credit with respect to 

an individual enrolled in the plan shall 

* * * allow a 3-month grace period for 

non-payment of premiums before 

discontinuing coverage’’ (76 FR 41902). 

We do not believe that the statute 

provides the flexibility to alter the grace 

period timeframe. 

Comment: Several commenters 

requested clarification on whether the 

grace period described in proposed 

§ 156.270(d) would be triggered by a full 

non-payment of premium or a partial 

non-payment of premium. 

Response: The 3-month grace period 

applies whenever the QHP issuer has 

received payment of less than the full 

amount of the enrollee’s share of the 

premium for a given month. It is our 

understanding that issuers have varying 

practices related to the triggering of a 

grace period, with some issuers 

initiating a grace period for any 

payment that is not the full premium 

and others initiating a grace period only 

if the individual has not submitted an 

amount above some threshold. 

However, in order to be consistent with 

policy related to the advance payments 

of the premium tax credit, the enrollee 

must pay the full amount of his or her 

portion of the premium or the grace 

period would be triggered. 

Comment: Several commenters voiced 

concerns about the potential for gaming 

during the grace period described in 

proposed § 156.270(d). Commenters 

suggested that we take action to prevent 

people from habitually paying 9 months 

of premiums, stopping premium 

payment for 3 months, and then 

enrolling in a new QHP to start the 

process over again. Commenter 

suggestions included: requiring 

payment of all outstanding premiums 

before enrollees can change issuers, 

enroll in a different QHP, or re-enroll in 

a QHP; establishing a 60-day waiting 

period for individuals who have been 

terminated for coverage due to nonpayment of premiums but seeking reenrollment in another QHP; allowing 

issuers to seek reimbursement for claims 

paid during the grace period from 

enrollee after termination; issuing a late 

enrollment penalty or establish a preexisting condition exclusion period for 

individuals seeking re-enrollment after 

termination due to non-payment of 

premiums; prohibiting enrollment in a 

QHP until the following open 

enrollment period; prohibiting someone 

who has been terminated due to nonpayment of premiums from qualifying 

for a special enrollment period later in 

the year; imposing penalties for repeat 

offenders, increasing premiums; 

allowing QHP issuers to collect the first 

and last month’s premium at the time of 

application; and finally, limiting grace 

periods to one year. Other commenters 

recommended that States have the 

flexibility to establish their own 

protections against opportunistic 

consumer behavior. 

Response: We did not adopt the 

recommendations regarding nonissuance of coverage for individuals 

who have outstanding premium 

payments for a previous QHP because 

we believe that there are implications 

for rescissions, guaranteed issue, and 

pre-existing condition policies. HHS 

will continue to explore options for 

incentivizing appropriate use of the 

grace period, either through future 

rulemaking or in the context of general 

insurance market reforms. We will also 

consider the implications for automatic 

redeterminations and reenrollment in 

instances where individuals have had 

their coverage terminated for nonpayment of premiums. Gaming will not 

only affect issuers, but also represents 

potential for misuse of the advance 

payments of the premium tax credits. 

Given the compelling Federal financial 

stake in grace period, HHS will monitor 

this issue moving forward and will 

continue to work on the development of 

policies to prevent misuse of the grace 

period. 

Comment: Many commenters voiced 

support of the continued issuance of 

advance payments of the premium tax 

credit on behalf of enrollees during the 

3-month grace period, as proposed in 

§ 156.270(e). Some commenters 

suggested that if QHP issuers were 

allowed to terminate coverage 

retroactively, then QHP issuers should 

be directed to return the advance 

payments of the premium tax credits. 

Response: We have maintained the 

proposed rule policy that QHP issuers 

must continue to receive advance 

payments of the premium tax credit 

being paid on behalf of an enrollee in a 

grace period. In addition, we included 

in § 156.270(e)(2) an instruction for QHP 

issuers to return advance payments of 

the premium tax credit for the second 

and third months of the grace period for 

individuals who exhaust the grace 

period without paying outstanding 

premiums, because such individuals 

will have their coverage terminated 

retroactively to the end of the first 

month of the grace period. We note that, 

consistent with section 36B of the Code, 

individuals may owe a tax liability as a 

result of advance payments of the 

premium tax credit paid on their behalf 

during a month in which they did not 

pay their portion of the premium. Under 

the final rule, individuals will have a 

liability as a result of the advance 

payment of the premium tax credit for 

the first month of the grace period if 

they never pay their portion of the first 

month’s premium. If an individual 

exhausts the grace period without 

paying all outstanding premiums, QHP 

issuers can terminate coverage 

retroactive to the end of the first month 

of the grace period and deny claims that 

were pended. An issuer who terminated 

coverage in this fashion would be 

obligated to return the advance 

payments of the premium tax credit 

made on behalf of the individual for the 

second and third months of the grace 

period. 

Comment: Some commenters 

requested clarification of the proposed 

policy in § 156.270(g) regarding whether 

a partial payment could extend the 

grace period once it has already been 

triggered, or if only full payment of all 

outstanding premiums would allow an 

individual to resolve a grace period. 

Commenters supported the resetting of 

the grace period only when all 

outstanding payments are made. 

Response: The grace period may only 

be reset be if an individual has paid all 

outstanding premiums. We believe that 

a ‘‘rolling’’ grace period that moves the 

initial date of the grace period in 

correlation with any payment made by 

an individual would be not only 

confusing to consumers but 

administratively burdensome, 

particularly in light of the revised 

payment policy described in paragraph 

(d). Therefore, in this final rule, we have 

added language to clarify this policy in 

§ 156.270(g). Once a grace period has 

been initiated by a QHP issuer, the 

individual has three months to settle all 

outstanding premium payments, at 

which time the grace period is either 

resolved and pended claims are paid or 

the individual’s coverage is terminated. 

Comment: Commenters requested 

clarification on the proposed policy in 

§ 156.270(g) regarding whether a QHP 

issuer could terminate coverage 

retroactively to the last date of payment, 

or whether the termination was 

prospective from the end of the 3-month 

grace period. Commenters also 

requested clarification regarding how 

advance payments of the premium tax 

credit and payments to providers would 

be reconciled if the date of termination 

were retroactive. 

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Response: We clarify in final 

§ 156.270(g) that if an individual 

exhausts the grace period without 

settling all outstanding premium 

payments, then the QHP issuer can 

terminate coverage retroactively to the 

first day of the second month in the 

grace period. We understand that many 

States allow issuers to terminate to the 

last paid date of coverage. In addition, 

HHS issued rules concerning rescissions 

of health insurance coverage, under 

which issuers are permitted to cancel 

coverage retroactively due to a failure to 

timely pay premiums (PHS Act section 

2712; 45 CFR 147.128). However, the 

final Exchange standards for QHP 

issuers add more consumer protections 

than the generally applicable PHS Act’s 

standards. During the first month, full 

coverage will be provided and the QHP 

issuer will be able to keep the advance 

payment of the premium tax credit. As 

a result, we treat the last day of the first 

month of the grace period as the ‘‘last 

paid date.’’ We note that the enrollee 

may be obligated to repay the advance 

payment of the premium tax credit for 

the first month in the form of an 

additional tax liability if the individual 

does not pay the enrollee’s portion of 

the premium. For purposes of claims 

payment, the QHP issuer must treat the 

first month of the grace period as if the 

full premium has been paid. However, 

the QHP issuer may pursue collection of 

the individual’s portion of the premium; 

if the individual pays the unpaid 

enrollee portion of the premium, the 

individual would retain the potential to 

be eligible for the premium tax credit for 

that month. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.270 of the proposed 

rule, with the following modifications: 

We added paragraph (b)(1) to note that 

a QHP issuer must provide the enrollee 

with a notice of termination of coverage 

at least 30 days prior to effectuating 

termination. We added paragraph (b)(2) 

to clarify that the QHP issuer must give 

reason for termination in a notice. We 

have also amended the proposed policy 

regarding the statutory 3-month grace 

period for individuals receiving advance 

payments of the premium tax credit. As 

described in paragraphs (d) through (g), 

QHP issuers will now be directed to pay 

appropriate claims in the first month 

only of the grace period, and will be 

able to pend claims in the second and 

third months. QHP issuers must notify 

providers who submit claims that an 

enrollee is in the second or third month 

of the grace period and that a claim may 

be denied if the outstanding premiums 

are not paid in full. Finally, QHP issuers 

must retain advance payments of the 

premium tax credit made on behalf of 

an individual for the first month, and 

must return such payments for the 

second and third months to the 

Department of the Treasury. Finally, we 

redesignated proposed paragraphs (g) 

and (h) as (h) and (i), respectively, to 

accommodate other changes to this 

section. 

m. Accreditation of QHP Issuers 

(§ 156.275) 

In § 156.275, we proposed to codify 

the statutory provision that a QHP 

issuer be accredited on the basis of local 

performance in each of the nine 

categories listed in the Affordable Care 

Act, where ‘‘local performance’’ means 

performance of the QHP issuer in the 

State in which it is licensed. We further 

specified that a QHP issuer must be 

accredited by an entity recognized by 

HHS. We also proposed that a QHP 

issuer must obtain its accreditation 

within a time period established by the 

Exchange under § 155.1045. 

Comment: In general, commenters 

supported accreditation as a condition 

of QHP certification. One commenter 

voiced concern over the cost of private 

accreditation and the impact on 

participation of issuers in Exchanges. 

Commenters also suggested additional 

areas that HHS should include in 

standards for accreditation beyond those 

specified in the proposed rule, 

including specific clinical measure sets 

that should be included, among others. 

Another commenter asked that new 

accreditation models be reviewed that 

are specifically developed for the 

individual and small group market. One 

commenter asked for clarification if 

States would be able to establish more 

stringent accreditation standards 

beyond the Federal minimum. 

Response: While we understand that 

accreditation can be a costly and 

resource-intensive process for issuers, it 

is established in the Affordable Care Act 

for certification of QHPs. At this time 

we are also not adding any additional 

standards for accreditation beyond what 

is specified in the Affordable Care Act. 

The Affordable Care Act is clear as to 

which criteria should be included in 

accreditation standards and we are 

codifying the statute in this regard. We 

clarify that Exchanges may impose 

accreditation standards that are more 

stringent than those contained in the 

Affordable Care Act. 

Comment: Several commenters 

suggested specific entities that should 

be recognized by HHS and asked that 

more than one accrediting entity be 

recognized. Other commenters asked 

HHS to specify which accreditation 

entities would be selected and requested 

including both private and public 

entities. 

Response: We will be issuing future 

rulemaking to establish a process by 

which accrediting entities will be 

recognized. Comments that requested 

specific products be considered for 

accreditation are beyond the scope of 

this rule. 

Comment: A commenter did not 

support the proposal to direct issuers to 

authorize the release of their 

accreditation survey. 

Response: We codify the obligation 

that issuers authorize the release of their 

accreditation survey to the Exchange 

and HHS. We believe that this is 

necessary to monitor the accreditation 

of QHP issuers beyond what can be 

learned from a simple reporting of 

accreditation status. We are also 

exploring the extent to which data 

submitted on the accreditation survey 

may be used to fulfill quality reporting 

standards, which may help alleviate 

potential reporting burden on 

Exchanges and issuers. 

Comment: In general, commenters 

supported establishing a timeline for 

accreditation of QHP issuers under 

proposed § 156.275(b). However, several 

commenters disagreed with our 

proposal to allow Exchanges to set the 

timeline and requested that HHS 

establish a Federal timeline for 

accreditation that all Exchanges must 

follow. Commenters also provided 

recommendations on appropriate 

accreditation timelines for HHS to 

establish, ranging from one to several 

years. Other commenters suggested that 

there should be a transition period for 

new plans to become accredited. 

Response: The Affordable Care Act, at 

section 1311(c)(1)(D)(ii) clearly provides 

for the Exchange to establish the 

timeframe. Consistent with the statute, 

we believe that Exchanges are in the 

best position to determine the 

accreditation timeline for QHP issuers 

operating in their States. Exchanges are 

familiar with local market conditions 

and the needs of their constituents. 

Therefore, we are maintaining the 

regulation text as proposed. 

Summary of Regulatory Changes 

We are finalizing § 156.275 as 

proposed. 

n. Segregation of Funds for Abortion 

Services (§ 156.280) 

In § 156.280, we proposed to 

implement section 1303 of the 

Affordable Care Act by codifying the 

statutory provisions. This codification 

includes the non-discrimination clause 

for providers and facilities, a voluntary 

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14Available at: http://www.whitehouse.gov/sites/

default/files/omb/assets/financial_pdf/segregation_

2010-09-20.pdf. 

15Available at: http://www.whitehouse.gov/sites/

default/files/omb/assets/financial_pdf/segregation_

2010-09-20.pdf. 

choice clause for issuers with respect to 

abortion services, the standards for the 

segregation of funds for QHP issuers 

that elect to cover abortion services for 

which public funding is prohibited, and 

the associated communication standards 

related to such services. We solicited 

comment on the related model 

guidelines issued by HHS and the Office 

of Management and Budget on 

September 20, 2010,14 noting that we 

intended the model guidelines to serve 

as the basis for the final rule. 

Comment: A large number of 

commenters offered feedback on 

proposed § 156.280. Of these, many 

expressed general support for or 

opposition to abortion coverage in 

Exchanges. A number of commenters 

supported specific provisions of the 

proposed rule and recommended that 

they be finalized; for example, the 

voluntary choice provision for QHP 

issuers and the provision on the 

applicability of emergency services 

laws. Conversely, a few commenters 

recommended changes to the proposed 

provisions—such as that each Exchange 

be directed to include one QHP that 

covers non-excepted abortion services. 

A few commenters requested that HHS 

provide additional technical guidance 

on the provisions in section 1303 of the 

Affordable Care Act; for example, a few 

commenters suggested specific 

clarifications to the pre-regulatory 

model guidelines that describe highlevel principles for QHP issuers’ 

segregation plans, while other 

commenters recommended that 

Exchanges be directed to review the 

actuarial value of abortion coverage 

calculated by QHP issuers. Commenters 

also recommended that HHS clarify the 

provisions regarding separate payments 

for non-excepted abortion and all other 

services, specifically whether QHP 

issuers must collect separate payments 

from all enrollees or only from those 

receiving Federal financial assistance, 

whether QHP issuers may satisfy the 

separate payment provision by 

providing each enrollee with an 

itemized bill, and whether an enrollee’s 

coverage would be terminated for failure 

to comply with the separate payment 

provision. A few commenters requested 

that HHS strengthen anti-discrimination 

protections for providers or expand the 

conscience protection. Finally, a few 

commenters raised concerns regarding 

provisions that HHS believes are 

addressed elsewhere in the final rule, 

such as privacy of individuals’ QHP 

selections, and accessibility standards 

and other protections for QHP notices 

and plan information. 

Response: We considered the 

comments received on this section, and 

are finalizing the provisions of proposed 

§ 156.280 without modification, with 

the exception of finalizing the preregulatory model guidelines on issuer 

segregation plans released by HHS and 

the Office of Management and Budget.15

Where future guidance is issued on this 

section, these comments will be taken 

into account. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.280 of the proposed 

rule, with the following modifications: 

we redesignated paragraph (e)(5)(ii) as 

(e)(5)(iv). In new paragraphs (e)(5)(ii) 

and (e)(5)(iii), we codified the preregulatory model guidelines on 

segregation of funds published by the 

Office of Management and Budget and 

the Assistant Secretary for Financial 

Resources as proposed. 

o. Additional Standards Specific to the 

SHOP (§ 156.285) 

In § 156.285, we proposed rating and 

premium payment standards for QHP 

issuers participating in the SHOP, 

including a proposal that the QHP 

issuer accept aggregated premiums, 

abide by the rate setting timeline 

established by the SHOP, and charge the 

same contract rate for a plan year. We 

also proposed that QHP issuers must 

accept and enroll applicants during the 

annual open enrollment period 

described in § 155.725 and the special 

enrollment periods described in 

§ 155.420 (excluding paragraphs (d)(3) 

and (d)(6)), and they must ensure 

effective dates of coverage in accordance 

with § 155.410(c). We solicited 

comment on whether to direct QHPs in 

the SHOP to allow employers to offer 

dependent coverage. 

We also proposed that QHP issuers 

abide by the SHOP enrollment timeline 

process standards, including the 

standards that QHP issuers must 

frequently accept electronic 

transmission of enrollment information 

from the SHOP, provide all new 

enrollees with the enrollment 

information package, and provide 

qualified employers and employees 

with the summary of cost and coverage 

document. We further proposed that 

QHP issuers reconcile enrollment files 

with the SHOP at least monthly. 

Additionally, we proposed that QHP 

issuers abide by the SHOP standards for 

acknowledgement of the receipt of 

enrollment information and issue 

qualified employees a policy that aligns 

with the qualified employer’s plan year 

and contract. 

We also proposed general standards 

related to termination of coverage in the 

SHOP that are largely similar to the 

standards for the Exchange with respect 

to their enrollees from the individual 

market. We noted that the QHP issuer 

would be directed to provide the 

qualified employers and employees 

with a notice of termination of coverage 

of enrollees and QHP non-renewal to 

ensure that the qualified employer is 

aware of the changes in coverage for its 

employees and the availability of 

coverage in the SHOP. We indicated 

that a QHP issuer must terminate all 

enrolled qualified employees of the 

withdrawing employer if the employer 

chooses to stop participating in the 

SHOP. 

Comment: In response to proposed 

§ 156.285(b), one commenter 

recommended that the employer, and 

not the SHOP, establish the specific 

standards and dates for open enrollment 

and special enrollment periods. 

Response: We believe that States 

should have the flexibility in 

establishing their enrollment periods 

based on the specific market and 

employer circumstances in the State, as 

it often does today for the small group 

market. 

Comment: One commenter 

recommended that proposed 

§ 156.285(b)(2) specify that employees 

who enroll during a special enrollment 

period should be allowed to purchase 

coverage at the same rates as those 

employees who enrolled during the 

annual open enrollment period for that 

plan year. 

Response: We note that § 156.210 

directs an issuer to set rates for an 

employer that will remain in effect for 

the employer’s entire plan year. 

Comment: One commenter suggested 

that the preamble text, which states that 

the rule would direct issuers to provide 

all new enrollees with an enrollment 

information package as described in 

§ 156.265(e), is inconsistent with the 

proposed regulation text in 

§ 156.285(c)(3), which states that the 

enrollment information package is 

described in § 156.265(f). 

Response: We have modified the final 

rule to correctly reference § 156.265(e). 

Comment: One commenter requested 

clarification of the definition of a QHP 

for the SHOP. 

Response: We note that all of the 

standards in part 156, including 

definitions, pertaining to QHPs also 

apply to the QHPs offered through the 

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SHOP in the small group market unless 

the regulation text explicitly indicates 

that a specific standard pertains only to 

QHPs offered to qualified individuals, 

or are otherwise exempted. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.285 of the proposed 

rule, with the following modifications 

in conformance with changes to part 

155 subpart H: in new paragraph (b)(3) 

we clarified that a SHOP must offer an 

enrollment period to a newly qualified 

employee who becomes qualified 

outside of the initial or annual open 

enrollment period. In new paragraph 

(b)(4) we established that a SHOP must 

conform to the effective dates of 

coverage described in § 156.260 and 

§ 155.720. In new paragraph (e) we 

clarified that QHP issuers participating 

in the SHOP may not impose minimum 

participation rules with respect to a 

QHP unless the SHOP authorizes the 

minimum participation rule in 

accordance with 155.705(b)(10). Finally, 

we made a limited number of technical 

changes to clarify the language in this 

section. 

p. Non-renewal and Decertification of 

QHPs (§ 156.290) 

In § 156.290, we proposed standards 

for QHP issuers that voluntarily do not 

renew participation of a QHP in the 

Exchange, including notification, 

benefit coverage standards, and 

reporting standards. Specifically, we 

proposed to direct QHP issuers that do 

not renew QHP participation to provide 

written notice to each enrollee. We 

solicited comment on the potential 

content of the non-renewal notice and 

any other information that we should 

consider including. We also proposed 

that if an Exchange decertifies a QHP, 

the QHP issuer must terminate coverage 

for enrollees only after the Exchange has 

notified the QHP’s enrollees as 

described in § 155.1080 and enrollees 

have had the opportunity to enroll in 

other coverage. We requested comment 

on the extent to which enrollees should 

continue to receive coverage from a 

decertified plan. 

Comment: One commenter 

recommended that HHS or Exchanges 

attach penalties to the decision not to 

seek recertification described in 

proposed § 156.290(a), such as barring 

the QHP from participating in the 

Exchange for one year following the 

non-renewal. Conversely, a few 

commenters requested that HHS 

prohibit Exchanges from imposing 

penalties or sanctions on plans that 

voluntarily non-renew. 

Response: HHS lacks authority under 

the Affordable Care Act to impose any 

penalties for non-renewal of a QHP in 

an Exchange. Exchanges may take 

varied approaches to voluntary nonrenewal; for example, some Exchanges 

may establish criteria for re-entry, while 

other Exchanges may utilize the 

standard certification process. 

Comment: One commenter 

recommended that the final rule direct 

QHPs that choose not pursue 

recertification to complete data 

reporting 6 to 12 months after exiting 

the market. 

Response: Obtaining data from nonrenewing QHPs will be important for 

Exchanges. We note that § 156.290(a)(3) 

expressly obligates a non-renewing QHP 

to complete its reporting through the 

end of the plan or benefit year. 

Comment: A few commenters 

suggested that HHS establish more 

advanced notice for non-renewal than 

the proposed deadline of September 

15th. 

Response: We believe that a deadline 

of September 15th is sufficiently far in 

advance of the annual open enrollment 

period to provide adequate notice for 

Exchanges and enrollees. Accordingly, 

we are finalizing that deadline as 

proposed. 

Comment: Several commenters 

suggested that HHS direct QHPs to 

notify participating providers of a 

decision not to renew. These 

commenters further suggested that the 

QHP pay all incurred claims until 

participating providers have been 

notified. 

Response: Section 156.290 of the final 

rule establishes that QHPs that choose 

not to pursue recertification must cover 

benefits for enrollees for the duration of 

the plan or benefit year. Similarly, QHPs 

must pay all claims incurred while 

certified and participating in the 

Exchange, subject to the terms and 

conditions of the QHP’s contracts with 

providers. While participating providers 

have a significant interest in a QHP’s 

decision not to seek recertification with 

the Exchange, we believe that 

establishing a standard for QHP issuers 

to notify participating providers would 

impose a significant burden on QHPs. 

Therefore, we are not adding such a 

standard in the final rule. 

Summary of Regulatory Changes 

We are finalizing § 156.290 as 

proposed. 

q. Prescription Drug Distribution and 

Cost Reporting (§ 156.295) 

In accordance with section 6005 of 

the Affordable Care Act, we proposed in 

§ 156.295 that QHP issuers provide the 

following information related to 

prescription drug distribution—(1) The 

percentage of all prescriptions that were 

provided under the contract through 

retail pharmacies compared to mail 

order pharmacies, and the percentage of 

prescriptions for which a generic drug 

was available and dispensed compared 

to all drugs dispensed, broken down by 

pharmacy type, that is paid by the QHP 

issuer or pharmacy benefit manager 

(PBM) under the contract; (2) the 

aggregate amount, and the type of 

rebates, discounts, or price concessions, 

with certain exceptions, that the PBM 

negotiates that are attributable to patient 

utilization under the plan, and the 

aggregate amount of the rebates, 

discounts, or price concessions that are 

passed through to the plan sponsor, and 

the total number of prescriptions that 

were dispensed; and (3) the aggregate 

amount of the difference between the 

amount the QHP issuer pays the PBM 

and the amount that the PBM pays retail 

pharmacies, and mail order pharmacies, 

and the total number of prescriptions 

that were dispensed. We sought 

comment on how a QHP issuer whose 

contracted PBM operates its own mail 

order pharmacy can meaningfully report 

on element (3). We also requested 

comment on potential definitions for 

‘‘rebates,’’ ‘‘discounts’’ and ‘‘price 

concessions’’; and noted that we were 

considering using the term ‘‘direct and 

indirect remuneration,’’ to encompass 

these various arrangements. We also 

requested comment on our proposed 

definition of PBM and whether we 

should define PBMs as any entities that 

perform specific functions on behalf of 

a health insurance issuer. We sought 

comment on how to minimize the 

burden of these reporting standards. 

Finally, we also proposed to codify 

the statutory penalties for 

noncompliance, including $10,000 per 

day that information is not provided; 

contract termination if the information 

is not reported within 90 days of the 

deadline; and $100,000 per piece of 

false information provided. 

Comment: In response to proposed 

§ 156.295(a)(1)—(3) and the discussion 

in the preamble to the proposed rule, 

many commenters requested 

clarification of key terms used in this 

section, such as ‘‘PBM,’’ ‘‘generic drug,’’ 

‘‘bona fide service fees,’’ and ‘‘rebates, 

discounts, or price concessions.’’ One 

commenter requested that stakeholders 

have future opportunities to review and 

comment on the technical specifications 

of this section. Some commenters 

supported the proposed definition of 

‘‘PBM,’’ while others recommended a 

broader definition that would 

encompass all entities that provide 

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management services but do not 

negotiate directly with manufacturers. A 

few commenters requested clarification 

of this definition with respect to 

medical benefit and physicianadministered drugs. With respect to the 

definition of ‘‘generic drug,’’ 

commenters offered numerous alternate 

definitions that HHS could adopt, 

including the definition provided in the 

Social Security Act, single source versus 

multiple source drugs, or 

therapeutically and bioequivalent. 

Several commenters responded to HHS’ 

request for comment on the definition of 

‘‘rebates, discounts, or price 

concessions.’’ Some urged HHS to 

codify the statute as written, or 

proposed specific definitions for these 

terms. Other commenters recommended 

use of the term ‘‘direct and indirect 

remuneration’’ and recommended that 

CMS maintain consistent definitions 

across the Exchange and the Medicare 

program. 

Response: Section 6005 of the 

Affordable Care Act includes similar 

standards for both the Medicare 

program and the Exchange. We believe 

that many of the entities and issuers that 

will report these data may participate in 

both programs. Therefore, we will align 

definitions with the Medicare program 

to the extent possible. We note that we 

are maintaining the proposed definition 

of ‘‘PBM’’, which we believe 

encompasses a sufficiently broad 

spectrum of entities and activities. We 

are similarly maintaining the proposed 

interpretations of ‘‘generic drug’’ and 

‘‘rebates, discounts, or price 

concessions.’’ Finally, we are revising 

the description of ‘‘bona fide service 

fees’’ to better align with the definition 

included by the Medicare program in a 

proposed rule released on October 11, 

2011, and to provide for greater 

flexibility with respect to this 

definition, given that bona fide services 

are subject to change as new ones are 

developed or other bona fide services 

are discontinued. Accordingly, we are 

not finalizing the specific examples of 

bona fide service fees included in the 

proposed rule. 

As we noted in the preamble to the 

proposed rule, we intend to clarify these 

standards through forthcoming 

guidance. We anticipate continuing to 

work with stakeholders to refine these 

standards. 

Comment: One commenter requested 

that HHS clarify the standard in 

proposed § 156.295(a)(1) that QHP 

issuers report generic dispending rates 

‘‘broken down by pharmacy type.’’ 

Response: We clarify that paragraph 

(a)(1) directs QHP issuers to report 

generic dispensing rates separately for 

each of four types of pharmacies: mail 

order pharmacies, independent 

pharmacies, supermarket pharmacies, 

and mass merchandiser pharmacies. 

Comment: In response to HHS’ 

request for comment on how a QHP 

issuer whose contracted PBM operates 

its own mail order pharmacy can 

meaningfully report on the aggregate 

difference between what the issuer pays 

the PBM and what the PBM pays the 

pharmacy, several commenters 

suggested that mail order pharmacies 

owned by PBMs do not present unique 

challenges with respect to this reporting 

activity. 

Response: As noted in the preamble to 

the proposed rule, we expect to issue 

further guidance on this section, and 

will continue to engage stakeholders to 

refine these reporting activities. 

Comment: In response to HHS’ 

request for comment on how to 

minimize the burden associated with 

proposed § 156.295(a)(1)—(3), several 

commenters recommended that HHS 

limit the collection of information to 

those data elements listed in the 

Affordable Care Act. Commenters also 

suggested that HHS harmonize reporting 

standards across programs to the extent 

possible, such as by using the PDE 

reporting format currently used in the 

Medicare Part D program. Multiple 

commenters recommended that HHS 

monitor compliance with this section 

through audits only, either of QHP 

issuers or of PBMs. 

Response: We clarify that HHS will 

only collect those data elements 

specified in the Affordable Care Act. We 

further intend to be consistent across 

programs to minimize burden and 

promote consistency, and are aligning 

the definitions of key terms used in this 

section with the Medicare Part D 

program. We expect to provide 

additional detail on the exact format 

and content of this reporting in future 

guidance. 

Comment: In response to the reporting 

standards identified in proposed 

§ 156.295(a), a few commenters 

requested more detailed information on 

why HHS needs to receive the data and 

how the data will be used. Conversely, 

some commenter favored greater 

transparency of prescription drug cost 

information and recommended that the 

information be reported to the 

Exchange. 

Response: Section 6005 of the 

Affordable Care Act directs HHS to 

collect the data elements listed in the 

statute. We note that the Affordable Care 

Act limits the disclosure of these data, 

which we codify in paragraph (b). At 

this time we are still refining the 

process for reporting and uses for these 

data, and expect to provide additional 

guidance on this section in the future. 

Comment: A few commenters raised 

concerns about QHP issuers’ ability to 

comply with the reporting standards in 

proposed § 156.295(a)(1) through (3), 

noting that current contracts between 

issuers and PBMs do not typically cover 

these data elements. 

Response: We believe that issuers and 

PBMs will have sufficient time to 

renegotiate or modify these contracts 

before reporting becomes necessary. 

Comment: One commenter 

recommended that HHS establish some 

flexibility in the application of penalties 

to accommodate delays in the 

realization of price concessions and 

exceptional circumstances such as IT 

failure or human error. 

Response: HHS intends to issue 

further guidance on these reporting 

standards, including how the statutory 

penalties may be applied. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.295 of the proposed 

rule, with the following modification: in 

paragraph (a)(2)(i) we revised the 

description of ‘‘bona fide service fees’’ 

to better align with the definition 

included by the Medicare program in a 

proposed rule released on October 11, 

2011, published at 76 FR 63018, and to 

provide for greater flexibility with 

respect to this definition, given that 

bona fide services are subject to change 

as new ones are developed or other bona 

fide services are discontinued. 

1. Subpart F—Consumer Operated and 

Oriented Plan Program 

Definitions (§ 156.505) 

Section 156.505 sets forth definitions 

for terms that are used throughout 

subpart F for the CO–OP program. In the 

final rule, ‘‘Establishment of Consumer 

Operated and Oriented Plan (CO–OP) 

Program (76 FR 77392), we revised the 

definitions of several terms to remove 

references to the ‘‘Establishment of 

Exchanges and QHPs’’ rule (76 FR 

41866), because it had not yet been 

finalized. We also added definitions for 

several terms as they were proposed in 

the rule, ‘‘Establishment of Exchanges 

and QHPs’’ (76 FR 41866), because 

those terms were referred to within the 

revised definitions. 

In the CO–OP Program Final Rule, we 

stated that once the ‘‘Establishment of 

Exchanges and QHPs’’ rule (76 FR 

77392) was finalized, we would revise 

the definitions in section 156.505 to 

incorporate the definitions adopted in 

the new part 155. Consistent with this 

intent, we have revised the definitions 

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Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 18433 

for the terms ‘‘CO OP QHP,’’ 

‘‘Exchange,’’ ‘‘individual market,’’ 

‘‘issuer,’’ ‘‘small group market,’’ 

‘‘SHOP,’’ and ‘‘State’’ from the CO–OP 

Program Final Rule to reference the 

definitions in the new part 155. As 

explained later in this preamble, the 

changes in this section are being issued 

on an interim basis. These revisions 

ensure that the definitions used in 

subpart F of section 156 are consistent 

with the definitions in the new part 155. 

We also removed the definitions of 

‘‘group health plans,’’ ‘‘health insurance 

coverage,’’ ‘‘small employer,’’ ‘‘qualified 

employer,’’ and ‘‘QHP’’ because these 

terms are no longer referenced in the 

aforementioned definitions. 

We made a technical change to 

section 156.510(b)(2)(ii). When referring 

to an applicant that ‘‘has as a sponsor 

a nonprofit, not-for-profit, public 

benefit, or similarly organized entity 

that is also a sponsor for a pre-existing 

issuer,’’ we inadvertently used the 

defined term ‘‘sponsor.’’ Our intent was 

to refer to an entity that sponsors a preexisting issuer and not an entity that 

serves as a CO–OP’s sponsor. Therefore, 

we revised this provision to refer to an 

applicant that ‘‘has as a sponsor a 

nonprofit, not-for-profit, public benefit, 

or similarly organized entity that also 

sponsors a pre-existing issuer.’’ 

C. Part 157—Employer Interactions with 

Exchange and SHOP Participation 

In part 157, we proposed standards 

that address qualified employer 

participation in SHOP. Also, we briefly 

outlined employer interactions with 

Exchanges related to the verification of 

employees’ eligibility for qualifying 

coverage in an eligible employersponsored plan. 

1. Subpart A—General Provisions 

Subpart A outlines the basis and 

scope for part 157 and defines terms 

used throughout part 157. 

a. Basis and scope (§ 157.10) 

In § 157.10, we proposed the general 

statutory authority for the proposed 

regulations and outlined the scope of 

part 157, which is to establish the 

standards for employers in connection 

with Exchanges. We did not receive 

specific comments on this section and 

are finalizing the provisions as 

proposed. 

b. Definitions (§ 157.20) 

In § 157.20, we proposed definitions 

for terms used in part 157 that need 

clarification. The definitions presented 

in § 157.20 are taken directly from the 

statute or based on definitions we 

proposed in part 155 or part 156. For 

instance, we stated that the terms 

‘‘qualified employer,’’ ‘‘qualified 

employee’’ and ‘‘small employer’’ have 

the meaning given to the terms in 

§ 155.20. 

We did not receive specific comments 

on this section and are finalizing the 

provisions as proposed. Furthermore, 

we are finalizing the definitions 

proposed in § 157.20 of the proposed 

rule without modification. 

2. Subpart C—Standards for Qualified 

Employers 

Subpart C of this part outlines the 

general provisions for employer 

participation in SHOPs. As we noted in 

the preamble to the proposed rule, this 

subpart substantially mirrors and 

complements subpart H of part 155. 

a. Eligibility of Qualified Employers to 

Participate in the SHOP (§ 157.200) 

In § 157.200, we proposed the 

standards for an employer that seeks to 

offer health coverage to its employees 

through a SHOP. We proposed that only 

qualified employers may participate in 

a SHOP. In the preamble to the 

proposed rule, we noted that some small 

employers may have employees in 

multiple States or SHOP service areas, 

referencing proposed § 155.710, which 

would allow multi-State employers 

flexibility in offering coverage to their 

employees. We did not receive specific 

comments on this section and are 

finalizing the provisions as proposed. 

b. Employer Participation Process in the 

SHOP (§ 157.205) 

In § 157.205, we proposed the process 

for employer participation in the SHOP. 

Specifically, we proposed that a 

qualified employer make available 

QHPs to employees in accordance with 

the process developed by the SHOP 

pursuant to § 155.705, and that a 

qualified employer participating in a 

SHOP disseminate information to its 

employees about the methods for 

selecting and enrolling in a QHP. We 

also proposed that a qualified employer 

submit premium payments according to 

the process proposed in § 155.705. 

Additionally, we proposed that a 

qualified employer must provide an 

employee hired outside of the initial 

enrollment or annual open enrollment 

period with specific information. 

We further proposed that a qualified 

employer provide the SHOP with 

information about individuals or 

employees whose eligibility to purchase 

coverage through the employer has 

changed. We also proposed that a 

qualified employer adhere to the annual 

employer election period to change 

program participation for the next plan 

year. In § 155.725, we proposed that a 

qualified employer may begin 

participating in the SHOP at any time. 

Finally, we proposed that if a 

qualified employer remains eligible for 

coverage and does not take action 

during the annual employer election 

period, the employer would continue to 

offer the same plan, coverage level or 

plans selected the previous year for the 

next plan year unless the QHP or QHPs 

are no longer available. We invited 

comments regarding the feasibility of 

the processes established in this section 

and the implications for small 

employers and their employees. 

Comment: Some commenters 

requested that the final rule direct the 

SHOP to create a specific timeline for 

employers to notify their employees 

regarding their coverage options. Some 

commenters strongly supported the 

suggestion that the SHOP create a 

toolkit to help qualified employers 

explain the enrollment process and the 

choices available to employees. 

Response: SHOPs may support 

employers through electronic means 

and through informational packages in 

communicating with their employees 

about available coverage options, and 

note that nothing in this section would 

preclude a SHOP from developing such 

resources. We do not codify an 

employer notification standard because 

we think it unnecessary. 

Comment: One commenter stated that 

HHS should clarify that qualified 

employers offering coverage through the 

SHOP should be able to choose which 

QHPs they will offer their employees 

rather than allowing SHOPs to 

potentially decide employer offerings. 

Response: Section 1311 of the 

Affordable Care Act directs a SHOP to, 

at a minimum, offer coverage to 

qualified employees as follows: 

qualified employers select a cost sharing 

level, within which qualified employees 

may select any available QHP. We 

recognize the need to balance the extent 

of employer and employee choice 

against the potential for risk selection 

resulting from those choices. As 

discussed more fully in the comment 

and response section of § 155.705(b)(2) 

and (3), we have neither specified nor 

restricted the range of additional 

employer options a SHOP may offer. 

Therefore, we are finalizing the 

provisions of this section as proposed 

with minor edits for better clarity and 

precision. 

Summary of Regulatory Changes 

We are finalizing the definitions 

proposed in § 157.205 of the proposed 

rule with the following modification: in 

paragraph (e)(1) we clarify that a SHOP 

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18434 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

must offer an enrollment period to a 

newly qualified employee beginning on 

the first day of such employee becoming 

qualified. 

IV. Waiver of Proposed Rulemaking 

We ordinarily publish a notice of 

proposed rulemaking in the Federal 

Register and invite public comment on 

the proposed rule. The notice of 

proposed rulemaking includes a 

reference to the legal authority under 

which the rule is proposed, and the 

terms and substance of the proposed 

rule or a description of the subjects and 

issues involved. This procedure can be 

waived, however, if an agency finds 

good cause that a notice-and-comment 

procedure is impracticable, 

unnecessary, or contrary to the public 

interest and incorporates a statement of 

the finding and its reasons in the rule 

issued. 

Based on the comments that we 

received on the Exchange establishment 

and eligibility proposed rules, we 

believe that there are new options and 

specific standards that should be 

implemented in connection with 

eligibility determinations. Specifically, 

we finalize here the ability of an 

Exchange to fulfill minimum functions 

without making eligibility 

determinations for Medicaid or CHIP, 

advance payments of premium tax 

credits, or cost-sharing reductions, 

provided that certain conditions and 

performance standards are met. As this 

option for a bifurcation of the 

responsibility to determine eligibility 

was not included in the proposed rule, 

the proposal also did not address the 

regulatory framework and standards 

necessary under this option to achieve 

a system of streamlined and coordinated 

eligibility and enrollment, the major 

goal underpinning our proposals in the 

Exchange eligibility proposed rule (76 

FR 51204). In this rule, in part 155 

subpart D in the sections identified 

below, we outline the options and 

approach to maintain the seamless 

consumer experience while allowing 

States to design the eligibility process to 

best match their current systems and 

capacity and State policy goals. 

A compliant system for eligibility 

determination is critical to the 

establishment and implementation of 

Exchanges. In this final rule, we provide 

additional flexibility for how and by 

which eligibility for various insurance 

affordability programs will be made 

than was proposed in the Exchange 

proposed rules released in the summer 

of 2011. We also outline certain 

timeliness standards and agreements to 

permit a non-integrated approach to 

eligibility determination that still 

affords applicants a seamless path to 

enrollment in coverage but would not 

increase administrative burden and 

costs. 

In addition, we finalize on an interim 

basis certain eligibility standards for 

cost-sharing reductions for multi-state 

households, Exchange timeliness 

standards for eligibility determinations, 

Exchange timeliness standards for 

administration of cost-sharing reduction 

and advance payments of premium tax 

credit, and a limited exception to the 

general verification rules for individuals 

in special circumstances. Although the 

proposed rule did not clearly and 

consistently address these timeliness 

provisions, commenters indicated the 

importance of such standards and we 

recognize the importance of providing 

finality for these standards at this time. 

We finalize an interim provision, at 

§ 155.315(g), to provide a process by 

which the Exchange must complete 

verifications of information for 

applicants without documentation; this 

interim provision is also included in the 

Medicaid final rule. This provision was 

not proposed but several commenters 

raised the need for such a limited 

exception to the verification procedures 

otherwise required in subpart D. 

Further, HHS and CMS received 

comments in response to the Exchange 

Eligibility proposed rule and the 

Medicaid proposed rule related to better 

alignment of the Exchange and 

Medicaid and CHIP programs. Interim 

final provisions to set parameters for 

cooperation and coordination of these 

programs are included here at 

§ 155.345(a) and (g). 

The process for approval of Statebased Exchanges must begin prior to 

January 1, 2013, a date by which HHS 

must approve (or conditionally-approve) 

States-based Exchanges for the 2014 

coverage year. States that elect to 

establish an Exchange must make and 

implement critical decisions in order to 

seek approval of a State-based 

Exchange, including those about how 

eligibility determinations will be made. 

As they make these decisions, it is 

essential that States know the standards 

and necessary agreements associated 

with the new bifurcation alternatives for 

making eligibility determinations, the 

additional parameters for cooperation 

and alignment with Medicaid and CHIP 

programs, and the new rules governing 

Exchange eligibility determinations. 

Like the new bifurcation options 

described above, the new standards 

associated with Exchange 

determinations are also integral to 

developing and establishing an 

Exchange—and the systems to support 

it—in order to meet the January 1, 2013 

deadline for HHS approval. For 

example, the timeliness and verification 

standards for Exchange eligibility 

determinations need to be part of the 

eligibility determination system that is 

developed. Similarly, the timeliness 

standards associated with 

administration of cost sharing 

reductions and premium tax credits are 

necessary to include in the initial 

establishment of Exchange systems. 

Accordingly, we believe we need to 

finalize these provisions as soon as 

possible to provide States the 

information they need for Exchange 

establishment. 

As a result, based on the comments to 

the 2011 Exchange proposed rules 

regarding these policies, we believe it 

would be contrary to the public interest 

to delay issuing new eligibility 

determination and timeliness standards 

rules. Further, providing public notice 

and additional comment periods for 

these policies would not provide States 

with sufficient lead time to take 

advantage of and incorporate these 

additional policies, prepare their State 

Exchange Blueprints, and complete the 

State Exchange readiness assessments 

process as set out in the proposed and 

this final rule. In light of the timing 

constraints, we are soliciting additional 

comment and issuing as interim final 

the following provisions: 

• § 155.300(b)—Related to Medicaid 

and CHIP regulations; 

• § 155.302—Related to options for 

conducting eligibility determinations; 

• § 155.305(g)—Related to eligibility 

standards for cost-sharing reductions; 

• § 155.310(e)—Related to timeliness 

standards for Exchange eligibility 

determinations; 

• § 155.315(g)—Related to 

verification for applicants with special 

circumstances; 

• § 155.340(d)—Related to timeliness 

standards for the transmission of 

information for the administration of 

advance payments of the premium tax 

credit and cost-sharing reductions; and 

• § 155.345(a) and § 155.345(g)— 

Related to agreements between agencies 

administering insurance affordability 

programs. 

We also received comments on the 

Exchanges establishment proposed rule 

regarding the need for performance and 

training standards that should be 

developed by HHS or required by HHS 

for agent and brokers who are assisting 

individuals with applications for 

insurance affordability programs. The 

proposed rule discussed and solicited 

comment about how to incorporate 

agents and brokers in the process of 

enrolling qualified individuals and 

qualified employers through the 

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Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 18435 

16We direct attention to § 155.220(a)(2) and the 

preamble for that section for a more detailed 

discussion. 

Exchange; provisions to achieve that 

policy goal are finalized in this rule in 

light of the comments received to the 

proposed rule.16 We did not propose or 

solicit comment on specific standards 

related to the provision of application 

assistance by agents and brokers. To 

provide useful assistance, agents and 

brokers should be fully aware of the 

complex eligibility and verification 

standards that will be used to determine 

eligibility for advance payment of 

premium tax credits and cost-sharing 

reductions. Also, in connection with 

this assistance, agents and brokers may 

gain access to a potential enrollee’s 

income information, including access to 

sensitive tax data. Because the proposed 

rule did not apply training or 

performance standards to agents and 

brokers in connection with providing 

assistance to applicants, we did not 

address the regulatory framework 

supporting standards to ensure that 

agents and brokers are cognizant of the 

eligibility determination standards and 

process, maintain the confidentiality of 

such data, and operate in a manner that 

support their access to such data. In 

§ 155.220, we describe these standards 

in more detail and outline their 

importance and connection to privacy 

and security standards described 

elsewhere in this rule. 

Agent and brokers, where permitted 

to operate in a State, may serve an 

important role in assisting individuals 

in applying for coverage in the 

Exchange and with assisting individuals 

in gaining access to health insurance 

affordability programs. Because open 

enrollment for Exchanges will begin on 

October 1, 2013, and Exchanges require 

lead time to develop and implement 

privacy and security standards, 

agreements, training programs for agent 

and brokers, as well as systems to 

support agents and brokers working 

with Exchanges. As a result, we find 

that providing public notice and 

additional comment periods for these 

policies would not provide States with 

sufficient lead time to take advantage of 

and incorporate these additional 

policies prior to Exchange approval 

under the processes as set out in the 

proposed and this final rule. In light of 

the timing constraints, we are also 

soliciting additional comment and 

issuing as interim final the following 

provision: 

• § 155.220(a)(3)—Related to the 

ability of a State to permit agents and 

brokers to assist qualified individuals in 

applying for advance payments of the 

premium tax credit and cost-sharing 

reductions for QHPs. 

For the reasons stated above, we find 

good cause to waive the notice of 

proposed rulemaking and to issue these 

specific portions of this final rule on an 

interim basis. We are providing a 45-day 

public comment period in connection 

with these provisions. 

Finally, this final rule makes a small 

number of technical changes to the 

provisions relating to CO–OPs, 45 CFR 

part 156 subpart F. We find there is 

good cause to waive notice and 

comment rulemaking for these changes 

because soliciting comment on them is 

unnecessary. These changes do not alter 

the substance of the CO–OP regulations 

and are therefore being finalized in this 

rule. As discussed the preamble above, 

they are being made principally to 

minimize duplicative definitions within 

parts 155 and 156. 

IV. Provisions of the Final Regulations 

For the most part, this final rule 

incorporates the provisions of the 

proposed rule. Those provisions of this 

final rule that differ from the proposed 

rule are as follows: 

Changes to § 155.20 

• Changes full definitions to statutory 

and regulatory definitions, where 

applicable, including the definitions of 

‘‘applicant,’’ ‘‘eligible employersponsored plan,’’ ‘‘health plan,’’ ‘‘plain 

language,’’ ‘‘individual market,’’ and 

‘‘small group market.’’ 

• Added definitions for ‘‘application 

filer,’’ ‘‘educated health care consumer,’’ 

and ‘‘Exchange Blueprint.’’ 

Changes to § 155.105 

• Adds that HHS would consult with 

other relevant Federal agencies in 

approval of State Exchanges. 

• Establishes timeframe for review of 

significant changes to one where any 

change would receive written approved 

or denial within 60 days, or the 

approval would be automatic after 60 

days (which may be extended by 30 

days by HHS). 

Changes to § 155.110 

• Establishes that other State agencies 

are eligible contracting entities (such as 

departments of insurance). 

• Establishes that Exchange boards 

must have at least one consumer 

representative on a governing board. 

Changes to § 155.160 

• Streamlines language regarding user 

fees, and removed policy that States 

announce user fees annually. 

Changes to § 155.200 

• Removes appeals of eligibility 

determinations as a minimum Exchange 

function. 

• Adds a clarification that in carrying 

out its statutorily-required 

responsibilities, the Exchange is not 

construed to be acting on behalf of a 

QHP to convey that Exchanges are not 

automatically considered HIPAA 

business associates. 

Changes to § 155.205 

• Adds more detail regarding 

meaningful access standards. 

• Clarifies standards for persons with 

disabilities, including the provision of 

auxiliary aids at no cost to the 

individual. 

• Outlines standards for limited 

English proficient individuals, 

including oral and written translations 

and the use of taglines on the Exchange 

Web site. 

Changes to § 155.210 

• Directs Exchanges to develop and 

publicly disseminate conflict of interest 

standards and training standards for 

entities to be awarded Navigator grants. 

• Applies privacy and security 

standards to Navigators. 

• Establishes that at least one 

Navigator entity must be a community 

and consumer-focused non-profit group. 

• Clarifies entities that are not eligible 

to serve as Navigators. 

• Prohibits Navigators from receiving 

compensation by issuers for enrollment 

into plans outside of the Exchange. 

Changes to § 155.220 

• Establishes standards related to the 

ability of a State to permit agents and 

brokers to assist qualified individuals 

enrolling in QHPs through an Exchange; 

as described elsewhere in this rule, this 

provision is being published as interim. 

• Establishes participation standards 

for agents and brokers to facilitate QHP 

selection through a non-Exchange Web 

site. 

Changes to § 155.230 

• Aligns notices with expanded 

meaningful access standards in 

§ 155.205. 

• Maintains standard that the 

Exchange must re-evaluate the 

appropriateness and usability of 

applications, forms, and notices, but 

removes the policy that this must occur 

‘‘on an annual basis and in consultation 

with HHS in instances when significant 

changes are made.’’ 

• Adds that a notice must include a 

reason for intended action. 

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18436 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

Changes to § 155.240 

• Removes duplicative standard for 

the Exchange to accept aggregated 

payments from qualified employers; 

§ 155.705(b)(4) retains the premium 

aggregation function for the SHOP. 

Changes to § 155.260 

• Removed definition of ‘‘personally 

identifiable information.’’ 

• Includes more specific standards for 

privacy and security of personally 

identifiable information. 

• Includes privacy and security 

principles based on the Fair Information 

Practice Principles (FIPPs) framework 

adopted by ONCHIT and a list of critical 

security outcomes. 

• Clarifies that the privacy and 

security standards of this section apply 

only to information created or collected 

for the purposes of carrying out 

Exchange minimum functions. 

• Expands the scope of information to 

which the standards apply to 

information created, collected, used, or 

disclosed by an Exchange or other 

individual or entity that has an 

agreement with the Exchange. 

• Adds the standard that the 

Exchange workforce complies with the 

privacy and security policies and 

procedures developed and implemented 

by the Exchange. 

• Establishes that Exchanges must 

develop and utilize secure electronic 

interfaces when sharing personally 

identifiable information electronically. 

• Adds standards for data matching 

and sharing arrangements that facilitate 

the sharing of personally identifiable 

information between the Exchange and 

agencies administering Medicaid, CHIP, 

or the BHP. 

Changes to § 155.300 

• Adds that references to Medicaid 

and CHIP regulations in this subpart 

refer to those regulations as 

implemented in accordance with rules 

and procedures which are the same as 

those applied by the State Medicaid or 

State CHIP agency or approved by such 

agency in the agreement described in 

§ 155.435(a), and as described elsewhere 

in this rule, this provision is being 

published as interim final. 

Adds § 155.302 

• Adds section outlining options for 

(1) the Exchange to conduct assessments 

of eligibility for Medicaid and CHIP 

rather than an eligibility determination 

for Medicaid and CHIP, and; (2) the 

Exchange to implement a determination 

of eligibility for advance payments of 

the premium tax credit and cost-sharing 

reductions for the Exchange, and as 

described elsewhere in this rule, this 

provision is being published as interim. 

• Includes standards for such 

assessments and eligibility 

determinations, and as described 

elsewhere in this rule, this provision is 

being published as interim. 

Changes to § 155.305 

• Adds language throughout to clarify 

that individuals must be ‘‘living’’ in the 

service area of the Exchange in addition 

to the prior standards for residency, in 

order to align with changes to Medicaid 

residency standards. 

• Adds that an applicant age 21 and 

over also meets the residency standard 

if he or she has entered the service area 

of the Exchange with a job commitment 

or seeking employment (whether or not 

currently employed), in order to align 

with changes to Medicaid residency 

standards. 

• Adds language clarifying how to 

address cost-sharing reductions in 

situations in which multiple tax 

households are covered by a single 

policy, and as described elsewhere in 

this rule, this provision is being 

published as interim. 

• Clarifies that cost-sharing 

reductions use the same household 

income and FPL definitions as advance 

payments of the premium tax credit. 

Changes to § 155.310 

• Adds language directing Exchanges 

to obtain attestations from a tax filer 

regarding advance payments of the 

premium tax credit, with flexibility to 

identify specific attestations in future 

guidance. 

• Adds language clarifying that 

applicants must provide social security 

numbers. 

• Adds a standard that the Exchange 

must determine eligibility promptly and 

without undue delay, and as described 

elsewhere in this rule, this provision is 

being published as interim. 

• Adds content, consistent with the 

statute, to the notice to an employer 

regarding an employee’s eligibility for 

the advanced payment of tax credits. 

• Adds the standard to provide 

employer with an indication the 

employee has been determined eligible 

for advance payments of the premium 

tax credit, that the employer may be 

liable for the payment assessed under 

section 4980H of the Code if they have 

more than 50 full-time employees, and 

that the employer has the right to appeal 

the determination. 

Changes to § 155.315 

• Provides flexibility for the 

Exchange to accept attestation of 

residency or examine electronic data 

sources, regardless of the choices made 

by the State Medicaid or CHIP agencies. 

• Adds provision specifying that the 

Exchange will validate all social 

security numbers with SSA. 

• Allows applicants and application 

filers to submit documentation to 

resolve inconsistencies via channels 

available for submission of application. 

• Includes a new provision which 

specifies that the Exchange will accept 

an applicant’s attestation if 

documentation with which to resolve an 

inconsistency does not exist or is not 

reasonably available, with the exception 

of inconsistencies related to citizenship 

and immigration status, and as 

described elsewhere in this rule, this 

provision is being published as interim. 

Changes to § 155.320 

• Sets forth that if an applicant’s 

attestation to projected annual 

household income is no more than ten 

percent below his or her prior tax data, 

the Exchange must rely on the 

attestation without further verification 

as part of the alternate verification 

process, and specifies that if his or her 

attestation is greater than ten percent 

below his or her prior tax data, the 

Exchange will conduct further 

verification. 

• Allows the use of the alternate 

income verification process when a tax 

filer’s filing status has changed, as 

directed by statute. 

• Allows the use of the alternate 

income verification process when a tax 

filer’s family composition has changed 

or is reasonably expected to change. 

• Clarifies that if there is no tax data, 

the Exchange must discontinue advance 

payments of the premium tax credit and 

cost-sharing reductions at the end of the 

90 day inconsistency period. 

• Clarifies that the Exchange verify 

whether an applicant reasonably 

expects to be enrolled in employersponsored insurance the year for which 

he or she is seeking coverage, in 

addition to whether the applicant is 

currently enrolled. 

Changes to § 155.330 

• Allows the Exchange to establish a 

reasonable threshold for changes in 

income that an enrollee must report. 

• Allows the Exchange to expand 

data matching during the benefit year 

within certain standards and without 

HHS approval. 

• Adds procedures for notifying and 

redetermining an enrollee’s eligibility 

upon obtaining data via data matches; 

outlines different procedures for data 

related to income, family size, or family 

composition and data not related to 

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income, family size, or family 

composition. 

• Allows the Exchange to align 

eligibility effective dates for 

redeterminations with coverage effective 

dates in subpart E. 

Changes to § 155.335 

• Adds timing standard for annual 

redetermination notice and provides 

that the annual redetermination notice 

be combined with the annual notice of 

open enrollment into a single, 

coordinated notice in the first two years. 

• Provides flexibility to States on 

timing of notice starting with 

redeterminations of coverage effective 

on or after January 1, 2017, and sets 

forth standards for such flexibility. 

• Clarifies effective dates of annual 

redetermination. 

• Adds that the Exchange is 

authorized to obtain tax data for a 

period of up to five years, unless the 

individual declines this authorization or 

chooses to authorize for a period of less 

than five years. 

• Adds limitation to redetermination 

if an individual requests eligibility 

determination for insurance 

affordability programs but does not have 

an authorization for the Exchange to 

obtain tax data as part of annual 

redetermination process; Exchange must 

notify enrollee and not proceed with 

redetermination until authorization has 

been obtained or enrollee declines 

financial assistance. 

Changes to § 155.340 

• Replaces ‘‘Social Security number’’ 

with ‘‘taxpayer identification number,’’ 

in accordance with statute. 

• Adds the standard that the 

Exchange must transmit promptly and 

without undue delay information to 

enable advance payments of the 

premium tax credits and cost-sharing 

reductions, and as described elsewhere 

in this rule, this provision is being 

published as interim. 

Changes to § 155.345 

• Adds standards for agreements 

between the Exchange and other 

insurance affordability programs, and as 

described elsewhere in this rule, this 

provision is being published as interim. 

• Clarifies responsibilities of the 

Exchange when applicants are found 

potentially eligible for Medicaid based 

on factors other than MAGI which 

includes notifying the applicant; 

clarifies standards for providing 

advance payments of the premium tax 

credit and cost-sharing reductions to 

such individuals. 

• Adds standards for the Exchange 

when accepting applications from other 

insurance affordability programs and 

sending applications to agencies 

administering other insurance 

affordability programs, and as described 

elsewhere in this rule, this provision is 

being published as interim. 

• Adds a special rule providing that 

if the Exchange finds a tax filer’s 

household income is less than 100 

percent of the FPL and one or more 

applicant in the tax filer’s household is 

found ineligible for Medicaid or CHIP, 

the Exchange follow the procedures in 

§ 155.320(c)(3). 

Changes to § 155.350 

• Clarifies that an individual must be 

eligible for advance payments of the 

premium tax credit in order to be 

eligible for cost-sharing reductions, in 

accordance with statute. 

• Clarifies that cost-sharing 

reductions use the same household 

income and FPL definitions as advance 

payments of the premium tax credit. 

Changes to § 155.400 

• Adds policy in § 155.400(b)(2) for 

Exchanges to submit eligibility and 

enrollment information to HHS and 

QHP issuers promptly and without 

undue delay. 

• Removes policy from § 155.400(c) 

that the Exchange must submit 

enrollment information to HHS on a 

monthly basis. 

• Adds policy in § 155.400(d) that the 

Exchange must reconcile enrollment 

information with HHS and QHP issuers 

on a monthly basis. 

Changes to § 155.410 

• Extends the initial open enrollment 

period from February 28, 2014 to March 

31, 2014. 

• Modifies the standards in this 

section such that an enrollment 

transaction must be received by the 15th 

of the month to secure an effective date 

of the first of the following month. 

• Gives the Exchange flexibility to 

negotiate earlier effective dates and/or 

later plan selection cutoff dates, but 

notes that the Exchange must secure 

agreement from all participating QHP 

issuers. Further, an earlier effective date 

can only be offered to an individual 

who is not determined eligible for or 

forgoes advance payments of the 

premium tax credit/cost-sharing 

reductions for the first partial month of 

coverage. 

• Gives the Exchange the option to 

automatically enroll individuals 

contingent upon demonstrating good 

cause to HHS. 

Changes to § 155.420 

• Aligns coverage effective dates for 

special enrollment periods with the new 

dates for the initial open enrollment 

periods as described in § 155.410, 

except in the case of marriage or loss of 

minimum essential coverage. 

• Removes the limits on special 

enrollment periods formerly in 

§ 155.420(f). 

Changes to § 155.430 

• Defines reasonable notice, for the 

purposes of effectuating a termination, 

as 14 days. 

• Clarifies the effective dates of 

terminations for enrollees under various 

scenarios, including individuals newly 

eligible for Medicaid, or CHIP; and 

individuals receiving advance payments 

of the premium tax credit. 

Changes to § 155.700 

• Adds a definition for minimum 

participation rules. 

Changes to § 155.705 

• Permits the SHOP to impose 

minimum participation rules at the 

SHOP level. 

• Adds a standard that the SHOP 

develop and offer a premium calculator. 

Changes to § 155.715 

• Clarifies that SHOPs may not use 

section 1411(b)(2) or 1411(c) verification 

processes for the SHOP eligibility 

determination process. 

• Clarifies that for eligibility 

determination purposes, the SHOP may 

collect only the minimum information 

necessary to make such a determination. 

Changes to § 155.720 

• Adds a standard that the SHOP 

must report to the IRS employer 

participation and employee enrollment 

information in a form and manner 

specified by HHS. 

Changes to § 155.725 

• Adds a standard that the SHOP 

offer the same special enrollment 

periods as the individual Exchange, 

with the exception of changes in 

citizenship status or eligibility for 

insurance affordability programs. 

• Clarifies that the annual election/ 

open enrollment periods for employers/ 

employees must be at least 30 days. 

• Clarifies that the SHOP provide 

newly qualified employees with a 

specified enrollment period. 

Changes to § 155.730 

• Adds safeguards to protect 

information collected on application. 

Changes to § 155.1010 

• Clarifies that multi-State plans and 

CO–OPs are recognized as QHPs. 

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• Allows Exchanges to certify QHPs 

during the plan/benefit year if 

necessary. 

Changes to § 155.1020 

• Clarifies that multi-State plans are 

exempt from the Exchange process for 

receiving and considering rate increase 

justifications, and from the Exchange 

process for receiving annual rate and 

benefit information. 

• Establishes that the Exchange must 

post rate increase justifications on its 

Web site. 

Changes to § 155.1040 

• Clarifies that multi-State plans must 

submit transparency data in a time and 

manner determined by the U.S. Office of 

Personnel Management. 

Changes to § 155.1045 

• Clarifies that the U.S. Office of 

Personnel Management will establish 

the accreditation timeline for multiState plans. 

Changes to § 155.1050 

• Clarifies that the U.S. Office of 

Personnel Management will ensure 

compliance with network adequacy 

standards by multi-State plans. 

• Clarifies that a QHP issuer in an 

Exchange may not be prohibited from 

contracting with any essential 

community provider designated under 

§ 156.235(c). 

Changes to § 155.1065 

• Clarifies that stand-alone dental 

plans must meet most QHP certification 

standards, including § 155.1020(c) and 

that stand-alone dental plans must offer 

the pediatric dental essential health 

benefit without annual and lifetime 

limits as applied to the essential health 

benefits in section 1302(b) of the 

Affordable Care Act. 

• Adds a standard for the Exchange to 

ensure sufficient access to pediatric 

dental coverage. 

Changes to § 155.1075 

• Exempts multi-State plans and CO– 

OPs from the Exchange recertification 

process. 

Changes to § 155.1080 

• Exempts multi-State plans and CO– 

OPs from the Exchange decertification 

process. 

Changes to § 156.50 

• Clarifies that participating issuers 

must remit user fees, as defined by an 

Exchange, and other assessments, if 

applicable, to a State-based or Federallyfacilitated Exchange. 

Changes to § 156.225 

• Codifies the statutory prohibition 

against QHP benefit designs that have 

the effect of discouraging enrollment by 

higher-need individuals. 

Changes to § 156.230 

• Expands the proposed standard 

such that a QHP must maintain a 

network that is sufficient in number and 

types of providers, including providers 

that specialize in mental health and 

substance abuse, to assure that all 

services will be accessible without 

unreasonable delay. 

Changes to § 156.235 

• Sets minimum standards that a 

QHP must have a sufficient number and 

geographic distribution of essential 

community providers to ensure 

reasonable and timely access to a broad 

range such providers for low-income, 

medically underserved individuals in 

the QHP’s service area. 

• Clarifies the definition of essential 

community provider to include 

providers that met the criteria to be an 

essential community provider on the 

publication date of this regulation 

unless the provider lost its status as an 

essential community provider as a result 

of violating Federal law. 

• Establishes an alternate standard for 

integrated delivery systems and staff 

model plans. 

• Clarifies payment policy with 

respect to FQHCs and all other essential 

community providers. 

Changes to § 156.255 

• Removes provision related to 

covering specific rating categories or 

groups. 

Changes to § 156.265 

• Clarifies the role of the QHP issuer 

in the enrollment process for enrollment 

through the Exchange. 

Changes to § 156.270 

• Adds a standard that the QHP 

issuer must notify the affected 

individual 30 days in advance of a 

termination. 

• Clarifies that for individuals 

receiving advance payments of the 

premium tax credit who are terminated 

for non-payment, the QHP issuer must 

pay all claims for the first month of the 

grace period. The issuer may pend 

claims during the second and third 

months, but must notify providers. 

Finally, the issuer must return to 

Treasury any advance payment of the 

premium tax credit for the second and 

third months at the conclusion of the 

grace period and effectuate termination 

of coverage at the end of the first month 

of the grace period. 

Changes to § 156.280 

• Codifies the pre-regulatory model 

guidelines on issuer segregation plans. 

Changes to § 156.285 

• Clarifies that QHP issuers must 

provide newly qualified employees with 

a specified enrollment period. 

• Clarifies that QHP issuers 

participating in the SHOP may not set 

minimum participation rules for 

offering health coverage in connection 

with a QHP. 

Changes to § 156.295 

• Modifies definition of ‘‘bona fide 

service fees.’’ 

Changes to § 157.205 

• Removes requirement for SHOP to 

continue coverage if employer fails to 

take action during election period. 

V. Collection of Information 

Requirements 

Paperwork Reduction Act 

As noted above, this final rule 

incorporates provisions originally 

published as two proposed rules, the 

July 15, 2011 rule titled Establishment 

of Exchanges and Qualified Health 

Plans, and the August 17, 2011 rule 

titled Exchange Functions in the 

Individual Market: Eligibility 

Determinations and Exchange Standards 

for Employers. These proposed rules are 

referred to collectively as the Exchange 

establishment and eligibility proposed 

rules. In the Exchange establishment 

proposed rule published on July 15, 

2011, we sought comment on certain 

information collection requirements 

associated with that proposed rule. We 

received one comment that stated a 

concern regarding the adequacy of the 

burden estimates stated in the 

Collection of Information Requirements 

section. We considered the commenter’s 

concern and plan to issue more detail 

regarding the collection of information 

requirements in this rule. 

In the Exchange establishment 

proposed rule, we explained that we 

would seek comments on the standards 

associated with § 155.105, which are 

finalized in this rule as the standards for 

the Exchange Blueprint. On November 

10, 2011, we issued a 60-day Federal 

Register Notice seeking comments on a 

template for the Exchange Blueprint. 

For more information, please see page 

70418 of Vol. 76, No. 218 of the Federal 

Register. 

In the Exchange eligibility proposed 

rule published on August 17, 2011, we 

did not seek comment on the associated 

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information collection requirements. In 

accordance with the Paperwork 

Reduction Act (PRA), we will issue a 

Federal Register Notice in the coming 

weeks to seek public comments on these 

provisions. 

In addition, this final rule includes 

certain regulatory provisions that differ 

from those included in the Exchange 

establishment proposed rule. Some of 

those provisions involve changes from 

the information collection requirements 

described in the Exchange 

establishment proposed rule. These 

changes include the following: 

• Exchange up-to-date Internet Web 

site (§ 155.205); 

• Standard for Exchanges to maintain 

records of enrollment (§ 155.400); 

• Standard for Exchanges to submit 

eligibility and enrollment information to 

QHP issuers and HHS promptly and 

without undue delay and reconcile 

enrollment information with QHP 

issuers and HHS on at least a monthly 

basis (§ 155.400); 

• Notice of eligibility to applicant 

(§ 155.405); 

• Notice of annual open enrollment 

period to applicant (§ 155.410); 

• Standard for Exchanges to maintain 

records of coverage terminations 

(§ 155.430); 

• Notice to employers (§ 155.715); 

• Notice to individual of inability to 

substantiate employee status 

(§ 155.715); 

• Notice of employer eligibility 

(§ 155.715); 

• Notice of employee eligibility 

(§ 155.715); 

• Notice of employer withdrawal 

from SHOP (§ 155.715); 

• Notice of effective date to 

employees (§ 155.720); 

• Notice of employee termination of 

coverage to employer (§ 155.720); 

• Standard for the SHOP to maintain 

records of enrollment (§ 155.720); 

• Standard for the SHOP to reconcile 

enrollment information (§ 155.720); 

• Notice of annual employer election 

period (§ 155.725); 

• Notice to employee of open 

enrollment period (§ 155.725); 

• Standard for Exchanges to collect 

QHP issuer reports on covered benefits, 

rates, and cost sharing requirements 

(§ 155.1020); 

• Notice to the QHP issuer, enrollees, 

HHS, and the State insurance 

department of the decertification of a 

QHP (§ 155.1080); 

• Issuer reporting of benefit and rate 

information (§ 156.210); 

• Issuer reporting of rate increase 

justifications (§ 156.210); 

• Issuer reporting of transparency in 

coverage information (§ 156.220); 

• Standard for QHP issuers to make 

available enrollee cost sharing 

information (§ 156.220); 

• Notice to applicants and enrollees 

that includes the provider directory 

(§ 156.230); 

• Notice of effective date of coverage 

to individuals (§ 156.260); 

• Standard for QHP issuers to collect 

enrollment information and submit the 

enrollment information to the Exchange 

(§ 156.265); 

• Standard for QHP issuers to provide 

an enrollment package to enrollee 

(§ 156.265); 

• Summary of cost and coverage 

document(§ 156.265); 

• Standard for QHP issuers to 

reconcile enrollment information with 

the Exchange (§ 156.265); 

• Notice to the enrollee of the 

termination of coverage (§ 156.270); 

• Notice to the enrollee of payment 

delinquency (§ 156.270); 

• Standard for QHP issuers to 

maintain records of coverage 

terminations (§ 156.270); 

• Standard for QHP issuers to provide 

enrollment information package to 

SHOP enrollees (§ 156.285); 

• Summary of cost and coverage 

document for employees and employers 

(§ 156.285); 

• Standard for QHP issuers to 

reconcile enrollment information with 

the SHOP (§ 156.285); 

• Notice to SHOP enrollee of the 

termination of coverage (§ 156.285); 

• Notice of QHP issuer non-renewal 

of certification to Exchange (§ 156.290); 

• Notice of QHP issuer non-renewal 

of certification to enrollees (§ 156.290); 

and 

• Standard for QHP issuers to submit 

prescription drug distribution and cost 

reporting (§ 156.295); 

This final rule also includes some 

information collection requirements for 

which we did not seek comment in the 

Exchange establishment proposed rule. 

In accordance with the Paperwork 

Reduction Act (PRA), we will issue a 

Federal Register Notice in the coming 

weeks to seek public comments on these 

provisions. 

Finally, this final rule describes some 

information collections for which CMS 

plans to seek approval at a later date. 

For these information collections, CMS 

will issue future Federal Register 

notices to seek comments on those 

information collections, as required by 

the PRA. This includes, among other 

collections: 

• Navigator standards (§ 155.210); 

• Single streamlined application to 

determine eligibility and collect 

information for enrollment (§ 155.405); 

• SHOP single employer application 

(§ 155.715); 

• SHOP single employee application 

(§ 155.715); 

• Alternative employer application 

(§ 155.730); 

• Collection of rates, covered benefits, 

and cost sharing information 

(§ 155.200); 

• Collection of transparency of 

coverage information (§ 155.1040); 

• Evaluation of service area 

(§ 155.1055); 

• Standards for the certification of 

stand-alone dental plans (§ 155.1065); 

• Submission of rates, covered 

benefits, and cost sharing information 

(§ 156.210); and 

• Submission of transparency of 

coverage information (§ 156.220). 

VI. Summary of Regulatory Impact 

Analysis 

The summary analysis of benefits and 

costs included in this rule is drawn 

from the detailed Regulatory Impact 

Analysis. That impact analysis evaluates 

the impacts of this rule and a second 

rule, ‘‘Patient Protection and Affordable 

Care Act; Standards Related to 

Reinsurance, Risk Corridors and Risk 

Adjustment.’’ The second final rule will 

be published separately. The following 

summary focuses on the benefits and 

costs of this final rule. 

A. Introduction 

HHS has examined the impacts of this 

final rule under Executive Orders 12866 

and 13563, the Regulatory Flexibility 

Act (5 U.S.C. 601–612), the Unfunded 

Mandates Reform Act of 1995 (Pub. L. 

104–4), and the Executive Order 13132 

on Federalism. Executive Orders 13563 

and 12866 direct agencies to assess all 

costs and benefits (both quantitative and 

qualitative) 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. This rule 

has been designated an ‘‘economically’’ 

significant rule, under section 3(f)(1) of 

Executive Order 12866. Accordingly, 

the rule has been reviewed by the Office 

of Management and Budget. 

The Regulatory Flexibility Act 

requires agencies to analyze regulatory 

options that would minimize any 

significant impact of a rule on small 

entities. Using the Small Business 

Administration (SBA) definitions of 

small entities for issuers, agents and 

brokers, and employers, HHS concludes 

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17Congressional Budget Office, ‘‘Letter to the 

Honorable Evan Bayh: An Analysis of Health 

Insurance Premiums Under the Patient Protection 

and Affordable Care Act ’’ (Washington, 2009). 

that a significant number of firms 

affected by this final rule are not small 

businesses. 

Section 202(a) of the Unfunded 

Mandates Reform Act of 1995 requires 

that agencies prepare a written 

statement, which includes an 

assessment of anticipated costs and 

benefits, before promulgating ‘‘any rule 

that includes any Federal mandate that 

may result in the expenditure by State, 

local, and tribal governments, in the 

aggregate, or by the private sector, of 

$100,000,000 or more (adjusted 

annually for inflation) in any one year.’’ 

The current threshold after adjustment 

for inflation is approximately $136 

million, using the most current (2011) 

Implicit Price Deflator for the Gross 

Domestic Product. HHS does not expect 

this final rule to result in one-year 

expenditures that would meet or exceed 

this amount. 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a final 

rule that imposes substantial direct 

costs on State and local governments, 

preempts State law, or otherwise has 

Federalism implications. Specifically, 

an agency must act in strict accordance 

with the governing law, consult with 

State officials, and address their 

concerns. 

B. Need for This Regulation 

This final rule implements standards 

related to the Establishment of 

Exchanges and Qualified Health Plans 

and standards for Qualified Employers 

consistent with the Affordable Care Act. 

The Exchanges will provide competitive 

marketplaces for individuals and small 

employers to directly compare available 

private health insurance options on the 

basis of price, quality, and other factors. 

The Exchanges, which will become 

operational by January 1, 2014, will 

help enhance competition in the health 

insurance market, improve choice of 

affordable health insurance, and give 

small business the same purchasing 

power as large businesses. 

C. Summary of Costs and Benefits of the 

Regulation 

This summary focuses on the benefits 

and costs of the requirements in this 

Exchange final rule that combines the 

policies in the Exchange establishment 

proposed rule and the Exchange 

eligibility proposed rule. 

Benefits in Response to the Regulation 

The Exchanges and their associated 

policies, according to CBO’s letter to 

Evan Bayh from November 30, 2009, 

reduce premiums for the same benefits 

compared to prior law. CBO estimated 

that, in 2016, people purchasing nongroup coverage through the Exchanges 

would pay 7 to 10 percent less due to 

the healthier risk pool that results from 

the coverage expansion. An additional 7 

to 10 percent in savings would result 

from gains in economies of scale in 

purchasing insurance and lower 

administrative costs from elimination of 

underwriting, decreased marketing 

costs, and the Exchanges’ simpler 

system for finding and enrolling 

individuals in health insurance plans.17

CBO also estimates that premiums for 

small businesses purchasing through the 

Exchanges would be up to 2 percent 

lower than they would be without the 

Affordable Care Act, for comparable 

reasons. CBO estimated that the 

administrative costs to health plans 

(described in greater detail below) 

would be more than offset by savings 

resulting from lower overhead due to 

new policies to limit benefit variation, 

and end underwriting. Premium savings 

to individuals and small businesses 

allow for alternative uses of income and 

resources, such as increasing retirement 

savings for families or investing in new 

jobs for small businesses. 

Simplified eligibility processes will 

increase take-up of health insurance 

leading to improved health. In a recent 

study, compared to the uninsured 

group, the insured received more 

hospital care, more outpatient care, had 

lower medical debt, better self-reported 

health, and other health related benefits. 

The evaluation concluded that for lowincome uninsured adults, coverage has 

the following benefits: (1) Significantly 

higher utilization of preventive care 

(mammograms, cholesterol monitoring, 

blood tests for high blood sugar related 

to diabetes, etc.); (2) a significant 

increase in the probability of having a 

regular office or clinic for primary care; 

and, (3) significantly better self-reported 

health. In addition, the use of electronic 

records among State and Federal 

agencies with information to verify 

eligibility will minimize the transaction 

costs associated with purchasing health 

insurance improving market efficiency 

and minimizing time cost for enrollees 

on enrollment. 

Costs in Response to the Regulation 

Meeting the requirements of this rule 

will have costs affecting Exchanges and 

issuers of qualified health plans (QHPs). 

The administrative costs of operating an 

Exchange will almost certainly vary by 

the number of enrollees in the Exchange 

due to economies of scale, variation in 

the scope of the Exchange’s activities, 

and variation in average premium in the 

Exchange service areas. However, we 

believe major cost components for 

Exchanges will include: IT 

infrastructure, Navigators, notifications, 

enrollment standards, application 

process, SHOP, certification of QHPs, 

and quality reporting. The major costs 

on issuers of QHPs will include: 

accreditation, network adequacy 

standards, and quality improvement 

strategy reporting. CBO estimates that 

the administrative costs to QHP issuers 

would be more than offset by savings 

resulting from lower overhead due to 

new policies to limit benefit variation, 

prohibit ‘‘riders,’’ and end underwriting. 

To support the new eligibility 

structure, States are expected to build 

new or modify existing information 

technology systems. How each State 

constructs and assembles the 

components necessary to support its 

Exchange and Medicaid infrastructure 

will vary and depend on the level of 

maturity of current systems, current 

governance and business models, size, 

and other factors. Administrative costs 

to support the vision for a streamlined 

and coordinated eligibility and 

enrollment process will also vary for 

each State depending on the specific 

approaches taken regarding the 

integration between programs and its 

decision to build a new system or use 

existing systems; while the Affordable 

Care Act requires a high level of 

integration, States have the option to go 

beyond the requirements of the Act. 

We also believe that overall 

administrative costs may increase in the 

short term as States build information 

technology systems; however, in the 

long-term States will see savings 

through the use of more efficient 

systems. As noted in the preamble, we 

believe the approach we are taking to 

supporting the verification of applicant 

information with SSA, IRS, and DHS 

reduces administrative complexity and 

associated costs. Administrative costs to 

States incurred in the development of 

information technology infrastructure to 

support the Exchange are funded wholly 

through State Exchange Planning and 

Establishment Grants. Costs for 

information technology infrastructure 

that will also support Medicaid must be 

allocated to Medicaid, but are eligible 

for a time-limited 90 percent Federal 

matching rate to assist in development. 

Methods of Analysis 

This impact analysis references both 

estimates from the Congressional Budget 

Office (CBO), as well as Center for 

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Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 18441 

Medicare & Medicaid Services (CMS) 

estimates from the FY 2013 President’s 

Budget. The CBO estimate remains the 

most comprehensive accounting of all 

the interacting provisions pertaining to 

the Affordable Care Act, and contains 

cost estimates of some provisions that 

have not been independently estimated 

by CMS. Based on our review, we 

expect that the requirements in these 

final rules will not significantly alter 

CBO’s estimates of the budget impact of 

Exchanges or enrollment. The 

requirements are well within the 

parameters used in the modeling of the 

Affordable Care Act. Our review and 

analysis of the requirements indicate 

that the impacts are within the model’s 

margin of error. In the regulatory impact 

analysis that accompanied the proposed 

Exchange establishment rule, we 

displayed CBO estimates of Exchange 

grant outlays. The estimates in this 

analysis reflect the most up-to-date 

estimates from the FY 2013 President’s 

Budget for State Planning and 

Establishment Grants. 

Table 1 includes the estimates of 

grants to States for Exchange start up 

from 2012 to 2016. It does not include 

costs related to reduced Federal 

revenues from refundable premium tax 

credits, which are administered by the 

Department of the Treasury subject to 

IRS rulemaking, the Medicaid effects, 

which are subject to separate 

rulemaking, or the policies whose 

offsets led CBO to estimate that the 

Affordable Care Act would reduce the 

Federal budget deficit by over $100 

billion over the next 10 years. As this 

is a summary of the final impact 

analysis, for further information on the 

expected benefits and costs of this rule, 

please see the final regulatory impact 

analysis. 

TABLE 1—ESTIMATED OUTLAYS FOR THE AFFORDABLE INSURANCE EXCHANGES FY 2012–FY2016 

[In billions of dollars] 

Year 2012 2013 2014 2015 2016 2012– 

2016 

Grant Authority for Exchange Start up a .......................................................................... 0.9 1.1 0.8 0.4 0.1 3.4 

aFY 2013 President’s Budget, Analytical Perspectives, Table 32–1. 

Regulatory Options Considered 

In addition to a baseline, HHS has 

identified three regulatory options for 

this final rule as required by Executive 

Order 12866 for Exchange establishment 

and eligibility. 

(1) Uniform Standard for Operations 

of an Exchange. Under this alternative 

HHS would require a single standard for 

State operations of Exchanges. The 

regulation offers States the choice of 

whether to establish an Exchange, how 

to structure governance of the Exchange, 

whether to join with other States to form 

a regional Exchange, and how much 

education and outreach to engage in, 

among other factors. This alternative 

model would restrict State flexibility, 

requiring a more uniform standard that 

States must enact in order to achieve 

approval of an Exchange. 

(2) Uniform Standard for Health 

Insurance Coverage. Under this 

alternative, there would be a single 

uniform standard for certifying QHPs. 

QHPs would need to meet a single 

standard in terms of benefit packages, 

network adequacy, premiums, etc. HHS 

would set these standards in advance of 

the certification process and QHPs 

would either meet those standards and 

thereby be certified or would fail to 

meet those standards and therefore 

would not be available to enrollees. 

(3) Require a Paper-Driven Process for 

Conducting Eligibility Determinations. 

In this final rule, to verify applicant 

information used to support an 

eligibility determination, we generally 

require the Exchange first use electronic 

data, where available, prior to 

requesting paper documentation. Under 

this rule, individuals will be asked to 

provide only the minimum amount of 

information necessary to complete an 

eligibility determination, and will only 

be required to submit paper if electronic 

data cannot be used to complete the 

verification process. Under this 

alternative, the Exchange would require 

individuals to submit paper 

documentation to verify information 

necessary for an eligibility 

determination. This would not only 

increase the amount of burden placed 

on individuals to identify and collect 

this information, which may not be 

readily available to the applicant, but 

would also necessitate additional time 

and resources for Exchanges to accept 

and verify the paper documentation 

needed for an eligibility determination. 

Summary of Costs for Each Option 

HHS notes that Option 1, which 

promotes uniformity, could produce a 

benefit of reduced Federal oversight 

cost; however this option would reduce 

innovation and therefore limit diffusion 

of successful policies and furthermore 

interfere with Exchange functions and 

needs. HHS also notes that while Option 

2 could produce administrative burdens 

on Exchanges, this approach could 

reduce Exchanges’ and QHP issuers’ 

ability to innovate. These costs and 

benefits are discussed more fully in the 

detailed Regulatory Impact Analysis. 

The paper-driven process in option 3 

would ultimately increase the amount of 

time it would take for an individual to 

receive health coverage, would reduce 

the number of States likely to operate an 

Exchange due to increased 

administrative costs, and would 

dissuade individuals from seeking 

coverage through the Exchange. We 

believe using technology to minimize 

burden on individuals and States will 

help increase access to coverage by 

streamlining the eligibility process, and 

will reduce administrative burden on 

Exchanges, while increasing accuracy 

by relying on trusted data for eligibility. 

VIII. Accounting Statement 

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18 ‘Table of Size Standards Matched To North 

American Industry Classification System Codes,’’ 

effective November 5, 2010, U.S. Small Business 

Administration, available at http://www.sba.gov. 

Category 

Estimates Units 

Primary estimate Low 

estimate 

High 

estimate Year dollar Discount rate 

Period 

covered 

Benefits 

Annualized Monetized ($millions/ 

year).

Not Estimated ............... $ .................................... $ .................................... 2011 ........ 7% 2012–2016 

Not Estimated ............... $ .................................... $ .................................... 2011 ........ 3% 2012–2016 

Qualitative ................ The Exchanges, combined with other actions being taken to implement the Affordable Care Act, will improve access to 

health insurance, with numerous positive effects, including earlier treatment and improved morbidity, fewer bankruptcies and decreased use of uncompensated care. The Exchange will also serve as a distribution channel for insurance reducing administrative costs as a part of premiums and providing comparable information on health plans 

to allow for a more efficient shopping experience. 

Costs 

Annualized Monetized ($millions/ 

year).

$690.55 ......................... Not Estimated ............... Not Estimated ............... 2011 ........ 7% 2012–2016 

$673.50 ......................... Not Estimated ............... Not Estimated ............... 2011 ........ 3% 2012–2016 

Qualitative ................ These costs include grant outlays to States to establish Exchanges. 

Transfers 

Federal Annualized 

Monetized 

($millions/year).

0 .................................... $ .................................... $ .................................... 2011 ........ 7% 2012–2016 

0 .................................... $0.00 ............................. $0.00 ............................. 2011 ......... 3% 2012–2016 

From/To ................... From: To: 

Other Annualized 

Monetized 

($millions/year).

0.0 ................................. 0.0 ................................. 0.0.

0.0 ................................. 0.0 ................................. 0.0.

From/To ................... From: To: 

VII. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

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

agencies to prepare an regulatory 

flexibility analysis to describe the 

impact of the final 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 discussed above, this final rule is 

necessary to implement standards 

related to the Establishment of 

Exchanges and Qualified Health Plans 

as authorized by the Affordable Care 

Act. For purpose of the Regulatory 

Flexibility Analysis, we expect the 

following types of entities to be affected 

by this final rule: (1) QHP issuers; (2) 

agents and brokers; (3) employers. We 

believe that health insurers and agents 

and brokers would be classified under 

the North American Industry 

Classification System (NAICS) Codes 

524114 (Direct Health and Medical 

Insurance Carriers) and 524210 

(Insurance Agencies and Brokers). 

According to SBA size standards, 

entities with average annual receipts of 

$7 million or less would be considered 

small entities for both of these NAICS 

codes. Health issuers could possibly be 

classified in 621491 (HMO Medical 

Centers) and, if this is the case, the SBA 

size standard would be $10 million or 

less. 

As discussed in the Web Portal 

interim final rule (75 FR 24481), HHS 

examined the health insurance industry 

in depth in the Regulatory Impact 

Analysis we prepared for the proposed 

rule on establishment of the Medicare 

Advantage program (69 FR 46866, 

August 3, 2004). In that analysis we 

determined that there were few, if any, 

insurance firms underwriting 

comprehensive health insurance 

policies (in contrast, for example, to 

travel insurance policies or dental 

discount policies) that fell below the 

size thresholds for ‘‘small’’ business 

established by the SBA (currently $7 

million in annual receipts for health 

insurers, based on North American 

Industry Classification System Code 

524114).18

Additionally, as discussed in the 

Medical Loss Ratio interim final rule (75 

FR 74918), the Department used a data 

set created from 2009 National 

Association of Insurance Commissioners 

(NAIC) Health and Life Blank annual 

financial statement data to develop an 

updated estimate of the number of small 

entities that offer comprehensive major 

medical coverage in the individual and 

group markets. For purposes of that 

analysis, the Department used total 

Accident and Health (A&H) earned 

premiums as a proxy for annual 

receipts. The Department estimated that 

there were 28 small entities with less 

than $7 million in accident and health 

earned premiums offering individual or 

group comprehensive major medical 

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coverage; however, this estimate may 

overstate the actual number of small 

health insurance issuers offering such 

coverage, since it does not include 

receipts from these companies’ other 

lines of business. 

This rule finalizes Exchange 

standards related to offering the QHPs. 

These standards and the associated 

certification process will impose costs 

on issuers, but these costs will vary 

depending on a number of factors, 

including the operating model chosen 

by the Exchange, their current 

accreditation status, and the variation 

between these standards and current 

practice. Some QHP issuers will be 

more prepared to meet the standards 

than others and will incur fewer costs. 

For example, if data reporting functions 

required for certification already exist at 

the QHP issuer, there would be no 

additional cost. Exchanges also have the 

flexibility in some cases to set 

requirements. For example, the rule 

provides discretion for Exchanges in 

setting network adequacy standards for 

participating health insurance issuers. 

The cost to the issuer will depend on 

whether the Exchange determines that 

compliance with relevant State law and 

licensure requirements is sufficient for a 

QHP issuer to participate in the 

Exchange or whether they decide to set 

additional standards in accordance with 

current provider market characteristics 

and consumer needs. 

The cost of participating in an 

Exchange is an investment for QHP 

issuers, with benefits expected to accrue 

to QHP issuers. The Exchange will 

function as an important distribution 

channel for QHPs. QHP issuers 

currently fund their own sales and 

marketing efforts. As a centralized outlet 

to attract and enroll consumers, the 

Exchanges will supplement and reduce 

incremental health plan sales and 

marketing costs with their consumer 

assistance, education and outreach 

functions. 

We anticipate that the agent and 

broker industry, which is comprised of 

large brokerage organizations, small 

groups, and independent agents, will 

play a critical role in enrolling qualified 

individuals in QHPs. We are codifying 

section 1312(e) of the Affordable Care 

Act, which gives States the option to 

permit agents or brokers to assist 

individuals in enrolling in QHPs 

through the Exchange. If a State chooses 

to allow agents and brokers to assist 

individuals in enrolling in QHPs 

through the Exchange, we establish 

standards that would apply for such 

enrollment. Agents and brokers must 

meet these standards and any 

conditions imposed by the State and, as 

a result, could incur costs. In addition, 

agents and brokers who become 

Navigators will also agree to comply 

with associated requirements and are 

likely to incur some costs. Because the 

States and the Exchanges will make 

these determinations, we cannot 

provide an estimate of the potential 

number of small entities that will be 

affected or the costs associated with 

these decisions. 

This final rule establishes 

requirements on employers that choose 

to participate in a SHOP. As discussed 

above, the SHOP is limited by statute to 

employers with at least one but not 

more than 100 employees. For this 

reason, we expect that many employers 

would meet the SBA Standard for Small 

entities. We do not believe that the 

regulation imposes requirements on 

employers offering health insurance 

through SHOP that are more restrictive 

than the current requirements on 

employers offering employer sponsored 

health insurance. For this reason, we 

also believe the processes that we have 

established constitute the minimum 

amount of requirements necessary to 

implement statutory mandates and 

accomplish our policy goals, and that no 

appropriate regulatory alternatives 

could be developed to lessen the 

compliance burden. We also expect that 

for some employers, risk pooling and 

economies of scale will reduce the 

administrative cost of offering coverage 

through the SHOP and that they will, 

therefore, benefit from participation. 

VIII. Unfunded Mandates 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires that agencies assess anticipated 

costs and benefits and take certain other 

actions before issuing a final rule that 

includes any Federal mandate that may 

result in expenditures in any one year 

by a State, local, or tribal governments, 

in the aggregate, or by the private sector, 

of $100 million in 1995 dollars, updated 

annually for inflation. In 2011, that 

threshold is approximately $136 

million. Because States are not required 

to set up an Exchange, and because 

grants are available for funding of the 

establishment of an Exchange by a State, 

we anticipate that this final rule would 

not impose costs above that $136 

million UMRA threshold on State, local, 

or tribal governments. 

IX. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a final 

rule that imposes substantial direct 

costs on State and local governments, 

pre-empts State law, or otherwise has 

Federalism implications. Because States 

have flexibility in designing their 

Exchange, State decisions will 

ultimately influence both administrative 

expenses and overall premiums. States 

are not required to establish an 

approved Exchange. For States electing 

to create an Exchange, much of the 

initial costs to the creation of Exchanges 

will be funded by Exchange Planning 

and Establishment Grants. After this 

time, Exchanges will be financially selfsustaining with revenue sources at the 

discretion of the State. Current State 

Exchanges charge user fees to issuers. 

In the Department’s view, while this 

final rule does not impose substantial 

direct requirement costs on State and 

local governments, this regulation 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 an Exchange must adopt the 

Federal standards contained in the 

Affordable Care Act and in this final 

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 under 

the statute, States have choices 

regarding the structure and governance 

of their Exchanges. Additionally, the 

Affordable Care Act does not require 

States to establish an Exchange; if a 

State elects not to establish an Exchange 

or the State’s Exchange is not approved, 

HHS, either directly or through 

agreement with a non-profit entity, must 

establish and operate an Exchange in 

that State. 

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 insurance officials on an 

individual basis. 

Throughout the process of developing 

this rule, the Department has attempted 

to balance the States’ interests in 

regulating health insurance issuers, and 

Congress’ intent to provide access to 

Affordable Insurance Exchanges for 

consumers in every State. By doing so, 

it is the Department’s view that we have 

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complied with the requirements of 

Executive Order 13132. 

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 regulation in a 

meaningful and timely manner. 

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. 

45 CFR Part 157 

Employee benefit plans, Health 

insurance, Health maintenance 

organization (HMO), Health records, 

Hospitals, Indians, Individuals with 

disabilities, 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. 

For the reasons set forth in the 

preamble, the Department of Health and 

Human Services amends 45 CFR subtitle 

A, subchapter B, as set forth below: 

Subchapter B—Requirements Relating to 

Health Care Access 

PART 155—EXCHANGE 

ESTABLISHMENT STANDARDS AND 

OTHER RELATED STANDARDS 

UNDER THE AFFORDABLE CARE ACT 

■ 1. The authority citation for part 155 

is revised 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. 

■ 2. Revise the part 155 heading to read 

as set forth above. 

■ 3. Add subparts A through E to read 

as follows: 

Subpart A—General Provisions 

Sec. 

155.10 Basis and scope. 

155.20 Definitions. 

Subpart B—General Standards Related to 

the Establishment of an Exchange 

155.100 Establishment of a State Exchange. 

155.105 Approval of a State Exchange. 

155.106 Election to operate an Exchange 

after 2014. 

155.110 Entities eligible to carry out 

Exchange functions. 

155.120 Non-interference with Federal law 

and non-discrimination standards. 

155.130 Stakeholder consultation. 

155.140 Establishment of a regional 

Exchange or subsidiary Exchange. 

155.150 Transition process for existing 

State health insurance exchanges. 

155.160 Financial support for continued 

operations. 

Subpart C—General Functions of an 

Exchange 

155.200 Functions of an Exchange. 

155.205 Consumer assistance tools and 

programs of an Exchange. 

155.210 Navigator program standards. 

155.220 Ability of States to permit agents 

and brokers to assist qualified 

individuals, qualified employers, or 

qualified employees enrolling in QHPs. 

155.230 General standards for Exchange 

notices. 

155.240 Payment of premiums. 

155.260 Privacy and security of personally 

identifiable information. 

155.270 Use of standards and protocols for 

electronic transactions. 

Subpart D—Exchange Functions in the 

Individual Market: Eligibility Determinations 

for Exchange Participation and Insurance 

Affordability Programs 

155.300 Definitions and general standards 

for eligibility determinations. 

155.302 Options for conducting eligibility 

determinations. 

155.305 Eligibility standards. 

155.310 Eligibility process. 

155.315 Verification process related to 

eligibility for enrollment in a QHP 

through the Exchange. 

155.320 Verification process related to 

eligibility for insurance affordability 

programs. 

155.330 Eligibility redetermination during 

the benefit year. 

155.335 Annual eligibility redetermination. 

155.340 Administration of advance 

payments of the premium tax credit and 

cost-sharing reductions. 

155.345 Coordination with Medicaid, CHIP, 

the Basic Health Program, and the Preexisting Condition Insurance Plan. 

155.350 Special eligibility standards and 

process for Indians. 

155.355 Right to appeal. 

Subpart E—Exchange Functions in the 

Individual Market: Enrollment in Qualified 

Health Plans 

155.400 Enrollment of qualified individuals 

into QHPs. 

155.405 Single streamlined application. 

155.410 Initial and annual open enrollment 

periods. 

155.420 Special enrollment periods. 

155.430 Termination of coverage. 

Subpart A—General Provisions. 

§ 155.10 Basis and scope. 

(a) Basis. This part is based on the 

following sections of title I of the 

Affordable Care Act: 

(1) 1301. Qualified health plan 

defined 

(2) 1302. Essential health benefits 

requirements 

(3) 1303. Special rules 

(4) 1304. Related definitions 

(5) 1311. Affordable choices of health 

benefit plans. 

(6) 1312. Consumer choice 

(7) 1313. Financial integrity. 

(8) 1321. State flexibility in operation 

and enforcement of Exchanges and 

related requirements. 

(9) 1322. Federal program to assist 

establishment and operation of 

nonprofit, member-run health insurance 

issuers. 

(10) 1331. State flexibility to establish 

Basic Health Programs for low-income 

individuals not eligible for Medicaid. 

(11) 1334. Multi-State plans. 

(12) 1402. Reduced cost-sharing for 

individuals enrolling in QHPs. 

(13) 1411. Procedures for determining 

eligibility for Exchange participation, 

advance premium tax credits and 

reduced cost sharing, and individual 

responsibility exemptions. 

(14) 1412. Advance determination and 

payment of premium tax credits and 

cost-sharing reductions. 

(15) 1413. Streamlining of procedures 

for enrollment through an exchange and 

State Medicaid, CHIP, and health 

subsidy programs. 

(b) Scope. This part establishes 

minimum standards for the 

establishment of an Exchange, 

minimum Exchange functions, 

eligibility determinations, enrollment 

periods, minimum SHOP functions, 

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certification of QHPs, and health plan 

quality improvement. 

§ 155.20 Definitions. 

The following definitions apply to 

this part: 

Advance payments of the premium 

tax credit means payment of the tax 

credits specified in section 36B of the 

Code (as added by section 1401 of the 

Affordable Care Act) which are 

provided on an advance basis to an 

eligible individual enrolled in a QHP 

through an Exchange in accordance 

with sections 1402 and 1412 of the 

Affordable Care Act. 

Affordable Care Act means the Patient 

Protection and Affordable Care Act of 

2010 (Pub. L. 111–148), as amended by 

the Health Care and Education 

Reconciliation Act of 2010 (Pub. L. 111– 

152). 

Agent or broker means a person or 

entity licensed by the State as an agent, 

broker or insurance producer. 

Annual open enrollment period 

means the period each year during 

which a qualified individual may enroll 

or change coverage in a QHP through 

the Exchange. 

Applicant means: 

(1) An individual who is seeking 

eligibility for him or herself through an 

application submitted to the Exchange 

or transmitted to the Exchange by an 

agency administering an insurance 

affordability program for at least one of 

the following: 

(i) Enrollment in a QHP through the 

Exchange; or 

(ii) Medicaid, CHIP, and the BHP, if 

applicable. 

(2) An employer or employee seeking 

eligibility for enrollment in a QHP 

through the SHOP, where applicable. 

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. 

Benefit year means a calendar year for 

which a health plan provides coverage 

for health benefits. 

Code means the Internal Revenue 

Code of 1986. 

Cost sharing means any expenditure 

required by or on behalf of an enrollee 

with respect to essential health benefits; 

such term includes deductibles, 

coinsurance, copayments, or similar 

charges, but excludes premiums, 

balance billing amounts for nonnetwork providers, and spending for 

non-covered services. 

Cost-sharing reductions means 

reductions in cost sharing for an eligible 

individual enrolled in a silver level plan 

in the Exchange or for an individual 

who is an Indian enrolled in a QHP in 

the Exchange. 

Educated health care consumer has 

the meaning given the term in section 

1304(e) of the Affordable Care Act. 

Eligible employer-sponsored plan has 

the meaning given the term in section 

5000A(f)(2) of the Code. 

Employee has the meaning given to 

the term in section 2791 of the PHS Act. 

Employer has the meaning given to 

the term in section 2791 of the PHS Act, 

except that such term includes 

employers with one or more employees. 

All persons treated as a single employer 

under subsection (b), (c), (m), or (o) of 

section 414 of the Code are treated as 

one employer. 

Employer contributions means any 

financial contributions towards an 

employer sponsored health plan, or 

other eligible employer-sponsored 

benefit made by the employer including 

those made by salary reduction 

agreement that is excluded from gross 

income. 

Enrollee means a qualified individual 

or qualified employee enrolled in a 

QHP. 

Exchange means a governmental 

agency or non-profit entity that meets 

the applicable standards of this part and 

makes QHPs available to qualified 

individuals and qualified employers. 

Unless otherwise identified, this term 

refers to State Exchanges, regional 

Exchanges, subsidiary Exchanges, and a 

Federally-facilitated Exchange. 

Exchange Blueprint means 

information submitted by a State, an 

Exchange, or a regional Exchange that 

sets forth how an Exchange established 

by a State or a regional Exchange meets 

the Exchange approval standards 

established in § 155.105(b) and 

demonstrates operational readiness of 

an Exchange as described in 

§ 155.105(c)(2). 

Exchange service area means the area 

in which the Exchange is certified to 

operate, in accordance with the 

standards specified in subpart B of this 

part. 

Grandfathered health plan has the 

meaning given the term in § 147.140. 

Group health plan has the meaning 

given to the term in § 144.103. 

Health insurance issuer or issuer has 

the meaning given to the term in 

§ 144.103. 

Health insurance coverage has the 

meaning given to the term in § 144.103. 

Health plan has the meaning given to 

the term in section 1301(b)(1) of the 

Affordable Care Act. 

Individual market has the meaning 

given the term in section 1304(a)(2) of 

the Affordable Care Act. 

Initial open enrollment period means 

the period during which a qualified 

individual may enroll in coverage 

through the Exchange for coverage 

during the 2014 benefit year. 

Large employer means, in connection 

with a group health plan with respect to 

a calendar year and a plan year, an 

employer who employed an average of 

at least 101 employees on business days 

during the preceding calendar year and 

who employs at least 1 employee on the 

first day of the plan year. In the case of 

plan years beginning before January 1, 

2016, a State may elect to define large 

employer by substituting ‘‘51 

employees’’ for ‘‘101 employees.’’ 

Lawfully present has the meaning 

given the term in § 152.2. 

Minimum essential coverage has the 

meaning given in section 5000A(f) of the 

Code. 

Navigator means a private or public 

entity or individual that is qualified, 

and licensed, if appropriate, to engage 

in the activities and meet the standards 

described in § 155.210. 

Plan year means a consecutive 12 

month period during which a health 

plan provides coverage for health 

benefits. A plan year may be a calendar 

year or otherwise. 

Plain language has the meaning given 

to the term in section 1311(e)(3)(B) of 

the Affordable Care Act. 

Qualified employee means an 

individual employed by a qualified 

employer who has been offered health 

insurance coverage by such qualified 

employer through the SHOP. 

Qualified employer means a small 

employer that elects to make, at a 

minimum, all full-time employees of 

such employer eligible for one or more 

QHPs in the small group market offered 

through a SHOP. Beginning in 2017, if 

a State allows large employers to 

purchase coverage through the SHOP, 

the term ‘‘qualified employer’’ shall 

include a large employer that elects to 

make all full-time employees of such 

employer eligible for one or more QHPs 

in the large group market offered 

through the SHOP. 

Qualified health plan or QHP means 

a health plan that has in effect a 

certification that it meets the standards 

described in subpart C of part 156 

issued or recognized by each Exchange 

through which such plan is offered in 

accordance with the process described 

in subpart K of part 155. 

Qualified health plan issuer or QHP 

issuer means a health insurance issuer 

that offers a QHP in accordance with a 

certification from an Exchange. 

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Qualified individual means, with 

respect to an Exchange, an individual 

who has been determined eligible to 

enroll through the Exchange in a QHP 

in the individual market. 

SHOP means a Small Business Health 

Options Program operated by an 

Exchange through which a qualified 

employer can provide its employees and 

their dependents with access to one or 

more QHPs. 

Small employer means, in connection 

with a group health plan with respect to 

a calendar year and a plan year, an 

employer who employed an average of 

at least 1 but not more than 100 

employees on business days during the 

preceding calendar year and who 

employs at least 1 employee on the first 

day of the plan year. In the case of plan 

years beginning before January 1, 2016, 

a State may elect to define small 

employer by substituting ‘‘50 

employees’’ for ‘‘100 employees.’’ 

Small group market has the meaning 

given to the term in section 1304(a)(3) 

of the Affordable Care Act. 

Special enrollment period means a 

period during which a qualified 

individual or enrollee who experiences 

certain qualifying events may enroll in, 

or change enrollment in, a QHP through 

the Exchange outside of the initial and 

annual open enrollment periods. 

State means each of the 50 States and 

the District of Columbia. 

Subpart B—General Standards Related 

to the Establishment of an Exchange 

§ 155.100 Establishment of a State 

Exchange. 

(a) General requirements. Each State 

may elect to establish an Exchange that 

facilitates the purchase of health 

insurance coverage in QHPs and 

provides for the establishment of a 

SHOP. 

(b) Eligible Exchange entities. The 

Exchange must be a governmental 

agency or non-profit entity established 

by a State, consistent with § 155.110. 

§ 155.105 Approval of a State Exchange. 

(a) State Exchange approval 

requirement. Each State Exchange must 

be approved by HHS by no later than 

January 1, 2013 to offer QHPs on 

January 1, 2014, and thereafter required 

in accordance with § 155.106. HHS may 

consult with other Federal Government 

agencies in determining whether to 

approve an Exchange. 

(b) State Exchange approval 

standards. HHS will approve the 

operation of an Exchange established by 

a State provided that it meets the 

following standards: 

(1) The Exchange is able to carry out 

the required functions of an Exchange 

consistent with subparts C, D, E, H, and 

K of this part; 

(2) The Exchange is capable of 

carrying out the information reporting 

requirements in accordance with section 

36B of the Code; 

(3) The entire geographic area of the 

State is in the service area of an 

Exchange, or multiple Exchanges 

consistent with § 155.140(b). 

(c) State Exchange approval process. 

In order to have its Exchange approved, 

a State must: 

(1) Elect to establish an Exchange by 

submitting, in a form and manner 

specified by HHS, an Exchange 

Blueprint that sets forth how the 

Exchange meets the standards outlined 

in paragraph (b) of this section; and 

(2) Demonstrate operational readiness 

to execute its Exchange Blueprint 

through a readiness assessment 

conducted by HHS. 

(d) State Exchange approval. Each 

Exchange must receive written approval 

or conditional approval of its Exchange 

Blueprint and its performance under the 

operational readiness assessment 

consistent with paragraph (c) of this 

section in order to be considered an 

approved Exchange. 

(e) Significant changes to Exchange 

Blueprint. The State must notify HHS in 

writing before making a significant 

change to its Exchange Blueprint; no 

significant change to an Exchange 

Blueprint may be effective until it is 

approved by HHS in writing or 60 days 

after HHS receipt of a completed 

request. For good cause, HHS may 

extend the review period by an 

additional 30 days to a total of 90 days. 

HHS may deny a request for a 

significant change to an Exchange 

Blueprint within the review period. 

(f) HHS operation of an Exchange. If 

a State is not an electing State under 

§ 155.100(a) or an electing State does 

not have an approved or conditionally 

approved Exchange by January 1, 2013, 

HHS must (directly or through 

agreement with a not-for-profit entity) 

establish and operate such Exchange 

within the State. In the case of a 

Federally-facilitated Exchange, the 

requirements in § 155.130 and subparts 

C, D, E, H, and K of this part will apply. 

§ 155.106 Election to operate an Exchange 

after 2014. 

(a) Election to operate an Exchange 

after 2014. A State electing to seek 

approval of its Exchange later than 

January 1, 2013 must: 

(1) Comply with the State Exchange 

approval requirements and process set 

forth in § 155.105; 

(2) Have in effect an approved, or 

conditionally approved, Exchange 

Blueprint and operational readiness 

assessment at least 12 months prior to 

the Exchange’s first effective date of 

coverage; and 

(3) Develop a plan jointly with HHS 

to facilitate the transition from a 

Federally-facilitated Exchange to a State 

Exchange. 

(b) Transition process for State 

Exchanges that cease operations. A 

State that ceases operations of its 

Exchange after January 1, 2014 must: 

(1) Notify HHS that it will no longer 

operate an Exchange at least 12 months 

prior to ceasing operations; and 

(2) Coordinate with HHS on a 

transition plan to be developed jointly 

between HHS and the State. 

§ 155.110 Entities eligible to carry out 

Exchange functions. 

(a) Eligible contracting entities. The 

State may elect to authorize an 

Exchange established by the State to 

enter into an agreement with an eligible 

entity to carry out one or more 

responsibilities of the Exchange. Eligible 

entities are: 

(1) An entity: 

(i) Incorporated under, and subject to 

the laws of, one or more States; 

(ii) That has demonstrated experience 

on a State or regional basis in the 

individual and small group health 

insurance markets and in benefits 

coverage; and 

(iii) Is not a health insurance issuer or 

treated as a health insurance issuer 

under subsection (a) or (b) of section 52 

of the Code of 1986 as a member of the 

same controlled group of corporations 

(or under common control with) as a 

health insurance issuer; or 

(2) The State Medicaid agency, or any 

other State agency that meets the 

qualifications of paragraph (a)(1) of this 

section. 

(b) Responsibility. To the extent that 

an Exchange establishes such 

agreements, the Exchange remains 

responsible for ensuring that all Federal 

requirements related to contracted 

functions are met. 

(c) Governing board structure. If the 

Exchange is an independent State 

agency or a non-profit entity established 

by the State, the State must ensure that 

the Exchange has in place a clearlydefined governing board that: 

(1) Is administered under a formal, 

publicly-adopted operating charter or 

by-laws; 

(2) Holds regular public governing 

board meetings that are announced in 

advance; 

(3) Represents consumer interests by 

ensuring that overall governing board 

membership: 

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(i) Includes at least one voting 

member who is a consumer 

representative; 

(ii) Is not made up of a majority of 

voting representatives with a conflict of 

interest, including representatives of 

health insurance issuers or agents or 

brokers, or any other individual 

licensed to sell health insurance; and 

(4) Ensures that a majority of the 

voting members on its governing board 

have relevant experience in health 

benefits administration, health care 

finance, health plan purchasing, health 

care delivery system administration, 

public health, or health policy issues 

related to the small group and 

individual markets and the uninsured. 

(d) Governance principles. (1) The 

Exchange must have in place and make 

publicly available a set of guiding 

governance principles that include 

ethics, conflict of interest standards, 

accountability and transparency 

standards, and disclosure of financial 

interest. 

(2) The Exchange must implement 

procedures for disclosure of financial 

interests by members of the Exchange 

board or governance structure. 

(e) SHOP independent governance. (1) 

A State may elect to create an 

independent governance and 

administrative structure for the SHOP, 

consistent with this section, if the State 

ensures that the SHOP coordinates and 

shares relevant information with the 

Exchange operating in the same service 

area. 

(2) If a State chooses to operate its 

Exchange and SHOP under a single 

governance or administrative structure, 

it must ensure that the Exchange has 

adequate resources to assist individuals 

and small employers in the Exchange. 

(f) HHS review. HHS may periodically 

review the accountability structure and 

governance principles of a State 

Exchange. 

§ 155.120 Non-interference with Federal 

law and non-discrimination standards. 

(a) Non-interference with Federal law. 

An Exchange must not establish rules 

that conflict with or prevent the 

application of regulations promulgated 

by HHS under subtitle D of title I of the 

Affordable Care Act. 

(b) Non-interference with State law. 

Nothing in parts 155, 156, or 157 of this 

subchapter shall be construed to 

preempt any State law that does not 

prevent the application of the 

provisions of title I of the Affordable 

Care Act. 

(c) Non-discrimination. In carrying 

out the requirements of this part, the 

State and the Exchange must: 

(1) Comply with applicable nondiscrimination statutes; and 

(2) Not discriminate based on race, 

color, national origin, disability, age, 

sex, gender identity or sexual 

orientation. 

§ 155.130 Stakeholder consultation. 

The Exchange must regularly consult 

on an ongoing basis with the following 

stakeholders: 

(a) Educated health care consumers 

who are enrollees in QHPs; 

(b) Individuals and entities with 

experience in facilitating enrollment in 

health coverage; 

(c) Advocates for enrolling hard to 

reach populations, which include 

individuals with mental health or 

substance abuse disorders; 

(d) Small businesses and selfemployed individuals; 

(e) State Medicaid and CHIP agencies; 

(f) Federally-recognized Tribes, as 

defined in the Federally Recognized 

Indian Tribe List Act of 1994, 25 U.S.C. 

479a, that are located within such 

Exchange’s geographic area; 

(g) Public health experts; 

(h) Health care providers; 

(i) Large employers; 

(j) Health insurance issuers; and 

(k) Agents and brokers. 

§ 155.140 Establishment of a regional 

Exchange or subsidiary Exchange. 

(a) Regional Exchange. A State may 

participate in a regional Exchange if: 

(1) The Exchange spans two or more 

States, regardless of whether the States 

are contiguous; and 

(2) The regional Exchange submits a 

single Exchange Blueprint and is 

approved to operate consistent with 

§ 155.105(c). 

(b) Subsidiary Exchange. A State may 

establish one or more subsidiary 

Exchanges within the State if: 

(1) Each such Exchange serves a 

geographically distinct area; and 

(2) The area served by each subsidiary 

Exchange is at least as large as a rating 

area described in section 2701(a) of the 

PHS Act. 

(c) Exchange standards. Each regional 

or subsidiary Exchange must: 

(1) Otherwise meet the requirements 

of an Exchange consistent with this part; 

and 

(2) Meet the following standards for 

SHOP: 

(i) Perform the functions of a SHOP 

for its service area in accordance with 

subpart H of this part; and 

(ii) If a State elects to operate its 

individual market Exchange and SHOP 

under two governance or administrative 

structures as described in § 155.110(e), 

the SHOP must encompass a geographic 

area that matches the geographic area of 

the regional or subsidiary Exchange. 

§ 155.150 Transition process for existing 

State health insurance exchanges. 

(a) Presumption. Unless an exchange 

is determined to be non-compliant 

through the process in paragraph (b) of 

this section, HHS will otherwise 

presume that an existing State exchange 

meets the standards under this part if: 

(1) The exchange was in operation 

prior to January 1, 2010; and 

(2) The State has insured a percentage 

of its population not less than the 

percentage of the population projected 

to be covered nationally after the 

implementation of the Affordable Care 

Act, according to the Congressional 

Budget Office estimates for projected 

coverage in 2016 that were published on 

March 30, 2011. 

(b) Process for determining noncompliance. Any State described in 

paragraph (a) of this section must work 

with HHS to identify areas of noncompliance with the standards under 

this part. 

§ 155.160 Financial support for continued 

operations. 

(a) Definition. For purposes of this 

section, participating issuers has the 

meaning provided in § 156.50. 

(b) Funding for ongoing operations. A 

State must ensure that its Exchange has 

sufficient funding in order to support its 

ongoing operations beginning January 1, 

2015, as follows: 

(1) States may generate funding, such 

as through user fees on participating 

issuers, for Exchange operations; and 

(2) No Federal grants under section 

1311 of the Affordable Care Act will be 

awarded for State Exchange 

establishment after January 1, 2015. 

Subpart C—General Functions of an 

Exchange 

§ 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, H, and K of this part. 

(b) Certificates of exemption. The 

Exchange must issue certificates of 

exemption consistent with sections 

1311(d)(4)(H) and 1411 of the 

Affordable Care Act. 

(c) Oversight and financial integrity. 

The Exchange must perform required 

functions related to oversight and 

financial integrity requirements in 

accordance with section 1313 of the 

Affordable Care Act. 

(d) Quality activities. The Exchange 

must evaluate quality improvement 

strategies and oversee implementation 

of enrollee satisfaction surveys, 

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assessment and ratings of health care 

quality and outcomes, information 

disclosures, and data reporting in 

accordance with sections 1311(c)(1), 

1311(c)(3), and 1311(c)(4) of the 

Affordable Care Act. 

(e) Clarification. In carrying out its 

responsibilities under this subpart, an 

Exchange is not operating on behalf of 

a QHP. 

§ 155.205 Consumer assistance tools and 

programs of an Exchange. 

(a) Call center. The Exchange must 

provide for operation of a toll-free call 

center that addresses the needs of 

consumers requesting assistance and 

meets the requirements outlined in 

paragraphs (c)(1), (c)(2)(i), and (c)(3) of 

this section. 

(b) Internet Web site. The Exchange 

must maintain an up-to-date Internet 

Web site that meets the requirements 

outlined in paragraph (c) of this section 

and: 

(1) Provides standardized comparative 

information on each available QHP, 

including at a minimum: 

(i) Premium and cost-sharing 

information; 

(ii) The summary of benefits and 

coverage established under section 2715 

of the PHS Act; 

(iii) Identification of whether the QHP 

is a bronze, silver, gold, or platinum 

level plan as defined by section 1302(d) 

of the Affordable Care Act, or a 

catastrophic plan as defined by section 

1302(e) of the Affordable Care Act; 

(iv) The results of the enrollee 

satisfaction survey, as described in 

section 1311(c)(4) of the Affordable Care 

Act; 

(v) Quality ratings assigned in 

accordance with section 1311(c)(3) of 

the Affordable Care Act; 

(vi) Medical loss ratio information as 

reported to HHS in accordance with 45 

CFR part 158; 

(vii) Transparency of coverage 

measures reported to the Exchange 

during certification in accordance with 

§ 155.1040; and 

(viii) The provider directory made 

available to the Exchange in accordance 

with § 156.230. 

(2) Publishes the following financial 

information: 

(i) The average costs of licensing 

required by the Exchange; 

(ii) Any regulatory fees required by 

the Exchange; 

(iii) Any payments required by the 

Exchange in addition to fees under 

paragraphs (b)(2)(i) and (ii) of this 

section; 

(iv) Administrative costs of such 

Exchange; and 

(v) Monies lost to waste, fraud, and 

abuse. 

(3) Provides applicants with 

information about Navigators as 

described in § 155.210 and other 

consumer assistance services, including 

the toll-free telephone number of the 

Exchange call center required in 

paragraph (a) of this section. 

(4) Allows for an eligibility 

determination to be made in accordance 

with subpart D of this part. 

(5) Allows a qualified individual to 

select a QHP in accordance with subpart 

E of this part. 

(6) Makes available by electronic 

means a calculator to facilitate the 

comparison of available QHPs after the 

application of any advance payments of 

the premium tax credit and any costsharing reductions. 

(c) Accessibility. Information must be 

provided to applicants and enrollees in 

plain language and in a manner that is 

accessible and timely to— 

(1) Individuals living with disabilities 

including accessible Web sites and the 

provision of auxiliary aids and services 

at no cost to the individual in 

accordance with the Americans with 

Disabilities Act and section 504 of the 

Rehabilitation Act. 

(2) Individuals who are limited 

English proficient through the provision 

of language services at no cost to the 

individual, including 

(i) Oral interpretation; 

(ii) Written translations; and 

(iii) Taglines in non-English languages 

indicating the availability of language 

services. 

(3) Inform individuals of the 

availability of the services described in 

paragraphs (c)(1) and (2) of this section 

and how to access such services. 

(d) Consumer assistance. The 

Exchange must have a consumer 

assistance function that meets the 

standards in paragraph (c) of this 

section, including the Navigator 

program described in § 155.210, and 

must refer consumers to consumer 

assistance programs in the State when 

available and appropriate. 

(e) Outreach and education. The 

Exchange must conduct outreach and 

education activities that meet the 

standards in paragraph (c) of this 

section to educate consumers about the 

Exchange and insurance affordability 

programs to encourage participation. 

§ 155.210 Navigator program standards. 

(a) General Requirements. The 

Exchange must establish a Navigator 

program consistent with this section 

through which it awards grants to 

eligible public or private entities or 

individuals described in paragraph (c) 

of this section. 

(b) Standards. The Exchange must 

develop and publicly disseminate— 

(1) A set of standards, to be met by all 

entities and individuals to be awarded 

Navigator grants, designed to prevent, 

minimize and mitigate any conflicts of 

interest, financial or otherwise, that may 

exist for an entity or individuals to be 

awarded a Navigator grant and to ensure 

that all entities and individuals carrying 

out Navigator functions have 

appropriate integrity; and 

(2) A set of training standards, to be 

met by all entities and individuals 

carrying out Navigator functions under 

the terms of a Navigator grant, to ensure 

expertise in: 

(i) The needs of underserved and 

vulnerable populations; 

(ii) Eligibility and enrollment rules 

and procedures; 

(iii) The range of QHP options and 

insurance affordability programs; and, 

(iv) The privacy and security 

standards applicable under § 155.260. 

(c) Entities and individuals eligible to 

be a Navigator. (1) To receive a 

Navigator grant, an entity or individual 

must— 

(i) Be capable of carrying out at least 

those duties described in paragraph (e) 

of this section; 

(ii) Demonstrate to the Exchange that 

the entity has existing relationships, or 

could readily establish relationships, 

with employers and employees, 

consumers (including uninsured and 

underinsured consumers), or selfemployed individuals likely to be 

eligible for enrollment in a QHP; 

(iii) Meet any licensing, certification 

or other standards prescribed by the 

State or Exchange, if applicable; 

(iv) Not have a conflict of interest 

during the term as Navigator; and, 

(v) Comply with the privacy and 

security standards adopted by the 

Exchange as required in accordance 

with § 155.260. 

(2) The Exchange must include an 

entity as described in paragraph (c)(2)(i) 

of this section and an entity from at 

least one of the other following 

categories for receipt of a Navigator 

grant: 

(i) Community and consumer-focused 

nonprofit groups; 

(ii) Trade, industry, and professional 

associations; 

(iii) Commercial fishing industry 

organizations, ranching and farming 

organizations; 

(iv) Chambers of commerce; 

(v) Unions; 

(vi) Resource partners of the Small 

Business Administration; 

(vii) Licensed agents and brokers; and 

(viii) Other public or private entities 

or individuals that meet the 

requirements of this section. Other 

entities may include but are not limited 

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to Indian tribes, tribal organizations, 

urban Indian organizations, and State or 

local human service agencies. 

(d) Prohibition on Navigator conduct. 

The Exchange must ensure that a 

Navigator must not— 

(1) Be a health insurance issuer; 

(2) Be a subsidiary of a health 

insurance issuer; 

(3) Be an association that includes 

members of, or lobbies on behalf of, the 

insurance industry; or, 

(4) Receive any consideration directly 

or indirectly from any health insurance 

issuer in connection with the 

enrollment of any individuals or 

employees in a QHP or a non-QHP. 

(e) Duties of a Navigator. An entity 

that serves as a Navigator must carry out 

at least the following duties: 

(1) Maintain expertise in eligibility, 

enrollment, and program specifications 

and conduct public education activities 

to raise awareness about the Exchange; 

(2) Provide information and services 

in a fair, accurate and impartial manner. 

Such information must acknowledge 

other health programs; 

(3) Facilitate selection of a QHP; 

(4) Provide referrals to any applicable 

office of health insurance consumer 

assistance or health insurance 

ombudsman established under section 

2793 of the PHS Act, or any other 

appropriate State agency or agencies, for 

any enrollee with a grievance, 

complaint, or question regarding their 

health plan, coverage, or a 

determination under such plan or 

coverage; and 

(5) Provide information in a manner 

that is culturally and linguistically 

appropriate to the needs of the 

population being served by the 

Exchange, including individuals with 

limited English proficiency, and ensure 

accessibility and usability of Navigator 

tools and functions for individuals with 

disabilities in accordance with the 

Americans with Disabilities Act and 

section 504 of the Rehabilitation Act. 

(f) Funding for Navigator grants. 

Funding for Navigator grants may not be 

from Federal funds received by the State 

to establish the Exchange. 

§ 155.220 Ability of States to permit agents 

and brokers to assist qualified individuals, 

qualified employers, or qualified employees 

enrolling in QHPs. 

(a) General rule. A State may permit 

agents and brokers to— 

(1) Enroll individuals, employers or 

employees in any QHP in the individual 

or small group market as soon as the 

QHP is offered through an Exchange in 

the State; 

(2) Subject to paragraphs (c), (d), and 

(e) of this section, enroll qualified 

individuals in a QHP in a manner that 

constitutes enrollment through the 

Exchange; and 

(3) Subject to paragraphs (d) and (e) 

of this section, assist individuals in 

applying for advance payments of the 

premium tax credit and cost-sharing 

reductions for QHPs. 

(b) Web site disclosure. The Exchange 

may elect to provide information 

regarding licensed agents and brokers 

on its Web site for the convenience of 

consumers seeking insurance through 

that Exchange. 

(c) Enrollment through the Exchange. 

A qualified individual may be enrolled 

in a QHP through the Exchange with the 

assistance of an agent or broker if— 

(1) The agent or broker ensures the 

applicant’s completion of an eligibility 

verification and enrollment application 

through the Exchange Web site as 

described in § 155.405; 

(2) The Exchange transmits 

enrollment information to the QHP 

issuer as provided in § 155.400(a) to 

allow the issuer to effectuate enrollment 

of qualified individuals in the QHP. 

(3) When an Internet Web site of the 

agent or broker is used to complete the 

QHP selection, at a minimum the 

Internet Web site must: 

(i) Meet all standards for disclosure 

and display of QHP information 

contained in § 155.205(b)(1) and (c); 

(ii) Provide consumers the ability to 

view all QHPs offered through the 

Exchange; 

(iii) Not provide financial incentives, 

such as rebates or giveaways; 

(iv) Display all QHP data provided by 

the Exchange; 

(v) Maintain audit trails and records 

in an electronic format for a minimum 

of ten years; and 

(vi) Provide consumers with the 

ability to withdraw from the process 

and use the Exchange Web site 

described in § 155.205(b) instead at any 

time. 

(d) Agreement. An agent or broker 

that enrolls qualified individuals in a 

QHP in a manner that constitutes 

enrollment through the Exchange or 

assists individuals in applying for 

advance payments of the premium tax 

credit and cost-sharing reductions for 

QHPs must comply with the terms of an 

agreement between the agent or broker 

and the Exchange under which the 

agent or broker at least: 

(1) Registers with the Exchange in 

advance of assisting qualified 

individuals enrolling in QHPs through 

the Exchange; 

(2) Receives training in the range of 

QHP options and insurance affordability 

programs; and 

(3) Complies with the Exchange’s 

privacy and security standards adopted 

consistent with § 155.260. 

(e) Compliance with State law. An 

agent or broker that enrolls qualified 

individuals in a QHP in a manner that 

constitutes enrollment through the 

Exchange or assists individuals in 

applying for advance payments of the 

premium tax credit and cost-sharing 

reductions for QHPs must comply with 

applicable State law related to agents 

and brokers, including applicable State 

law related to confidentiality and 

conflicts of interest. 

§ 155.230 General standards for Exchange 

notices. 

(a) General requirement. Any notice 

required to be sent by an Exchange to 

applicants, qualified individuals, 

qualified employees, qualified 

employers, and enrollees must be 

written and include: 

(1) Contact information for available 

customer service resources; 

(2) An explanation of appeal rights, if 

applicable; and 

(3) A citation to or identification of 

the specific regulation supporting the 

action, including the reason for the 

intended action. 

(b) Accessibility and readability 

requirements. All applications, forms, 

and notices, including the single, 

streamlined application described in 

§ 155.405 and notice of annual 

redetermination described in 

§ 155.335(c), must conform to the 

standards outlined in § 155.205(c). 

(c) Re-evaluation of appropriateness 

and usability. The Exchange must reevaluate the appropriateness and 

usability of applications, forms, and 

notices. 

§ 155.240 Payment of premiums. 

(a) Payment by individuals. The 

Exchange must allow a qualified 

individual to pay any applicable 

premium owed by such individual 

directly to the QHP issuer. 

(b) Payment by tribes, tribal 

organizations, and urban Indian 

organizations. The Exchange may 

permit Indian tribes, tribal organizations 

and urban Indian organizations to pay 

aggregated QHP premiums on behalf of 

qualified individuals, including 

aggregated payment, subject to terms 

and conditions determined by the 

Exchange. 

(c) Payment facilitation. The 

Exchange may establish a process to 

facilitate through electronic means the 

collection and payment of premiums to 

QHP issuers. 

(d) Required standards. In conducting 

an electronic transaction with a QHP 

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issuer that involves the payment of 

premiums or an electronic funds 

transfer, the Exchange must comply 

with the privacy and security standards 

adopted in accordance with § 155.260 

and use the standards and operating 

rules referenced in § 155.270. 

§ 155.260 Privacy and security of 

personally identifiable information. 

(a) Creation, collection, use and 

disclosure. (1) Where the Exchange 

creates or collects personally 

identifiable information for the 

purposes of determining eligibility for 

enrollment in a qualified health plan; 

determining eligibility for other 

insurance affordability programs, as 

defined in 155.20; or determining 

eligibility for exemptions from the 

individual responsibility provisions in 

section 5000A of the Code, the 

Exchange may only use or disclose such 

personally identifiable information to 

the extent such information is necessary 

to carry out the functions described in 

§ 155.200 of this subpart. 

(2) The Exchange may not create, 

collect, use, or disclose personally 

identifiable information while the 

Exchange is fulfilling its responsibilities 

in accordance with § 155.200 of this 

subpart unless the creation, collection, 

use, or disclosure is consistent with this 

section. 

(3) The Exchange must establish and 

implement privacy and security 

standards that are consistent with the 

following principles: 

(i) Individual access. Individuals 

should be provided with a simple and 

timely means to access and obtain their 

personally identifiable health 

information in a readable form and 

format; 

(ii) Correction. Individuals should be 

provided with a timely means to dispute 

the accuracy or integrity of their 

personally identifiable health 

information and to have erroneous 

information corrected or to have a 

dispute documented if their requests are 

denied; 

(iii) Openness and transparency. 

There should be openness and 

transparency about policies, procedures, 

and technologies that directly affect 

individuals and/or their personally 

identifiable health information; 

(iv) Individual choice. Individuals 

should be provided a reasonable 

opportunity and capability to make 

informed decisions about the collection, 

use, and disclosure of their personally 

identifiable health information; 

(v) Collection, use, and disclosure 

limitations. Personally identifiable 

health information should be created, 

collected, used, and/or disclosed only to 

the extent necessary to accomplish a 

specified purpose(s) and never to 

discriminate inappropriately; 

(vi) Data quality and integrity. 

Persons and entities should take 

reasonable steps to ensure that 

personally identifiable health 

information is complete, accurate, and 

up-to-date to the extent necessary for 

the person’s or entity’s intended 

purposes and has not been altered or 

destroyed in an unauthorized manner; 

(vii) Safeguards. Personally 

identifiable health information should 

be protected with reasonable 

operational, administrative, technical, 

and physical safeguards to ensure its 

confidentiality, integrity, and 

availability and to prevent unauthorized 

or inappropriate access, use, or 

disclosure; and, 

(viii) Accountability. These principles 

should be implemented, and adherence 

assured, through appropriate monitoring 

and other means and methods should be 

in place to report and mitigate nonadherence and breaches. 

(4) For the purposes of implementing 

the principle described in paragraph 

(a)(3)(vii) of this section, the Exchange 

must establish and implement 

operational, technical, administrative 

and physical safeguards that are 

consistent with any applicable laws 

(including this section) to ensure— 

(i) The confidentiality, integrity, and 

availability of personally identifiable 

information created, collected, used, 

and/or disclosed by the Exchange; 

(ii) Personally identifiable 

information is only used by or disclosed 

to those authorized to receive or view it; 

(iii) Return information, as such term 

is defined by section 6103(b)(2) of the 

Code, is kept confidential under section 

6103 of the Code; 

(iv) Personally identifiable 

information is protected against any 

reasonably anticipated threats or 

hazards to the confidentiality, integrity, 

and availability of such information; 

(v) Personally identifiable information 

is protected against any reasonably 

anticipated uses or disclosures of such 

information that are not permitted or 

required by law; and 

(vi) Personally identifiable 

information is securely destroyed or 

disposed of in an appropriate and 

reasonable manner and in accordance 

with retention schedules; 

(5) The Exchange must monitor, 

periodically assess, and update the 

security controls and related system 

risks to ensure the continued 

effectiveness of those controls. 

(6) The Exchange must develop and 

utilize secure electronic interfaces when 

sharing personally identifiable 

information electronically. 

(b) Application to non-Exchange 

entities. Except for tax return 

information, which is governed by 

section 6103 of the Code, when 

collection, use or disclosure is not 

otherwise required by law, an Exchange 

must require the same or more stringent 

privacy and security standards (as 

§ 155.260(a)) as a condition of contract 

or agreement with individuals or 

entities, such as Navigators, agents, and 

brokers, that: 

(1) Gain access to personally 

identifiable information submitted to an 

Exchange; or 

(2) Collect, use or disclose personally 

identifiable information gathered 

directly from applicants, qualified 

individuals, or enrollees while that 

individual or entity is performing the 

functions outlined in the agreement 

with the Exchange. 

(c) Workforce compliance. The 

Exchange must ensure its workforce 

complies with the policies and 

procedures developed and implemented 

by the Exchange to comply with this 

section. 

(d) Written policies and procedures. 

Policies and procedures regarding the 

collection, use, and disclosure of 

personally identifiable information 

must, at minimum: 

(1) Be in writing, and available to the 

Secretary of HHS upon request; and 

(2) Identify applicable law governing 

collection, use, and disclosure of 

personally identifiable information. 

(e) Data sharing. Data matching and 

sharing arrangements that facilitate the 

sharing of personally identifiable 

information between the Exchange and 

agencies administering Medicaid, CHIP 

or the BHP for the exchange of 

eligibility information must: 

(1) Meet any applicable requirements 

described in this section; 

(2) Meet any applicable requirements 

described in section 1413(c)(1) and 

(c)(2) of the Affordable Care Act; 

(3) Be equal to or more stringent than 

the requirements for Medicaid programs 

under section 1942 of the Act; and 

(4) For those matching agreements 

that meet the definition of ‘‘matching 

program’’ under 5 U.S.C. 552a(a)(8), 

comply with 5 U.S.C. 552a(o). 

(f) Compliance with the Code. Return 

information, as defined in section 

6103(b)(2) of the Code, must be kept 

confidential and disclosed, used, and 

maintained only in accordance with 

section 6103 of the Code. 

(g) Improper use and disclosure of 

information. Any person who 

knowingly and willfully uses or 

discloses information in violation of 

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section 1411(g) of the Affordable Care 

Act will be subject to a civil penalty of 

not more than $25,000 per person or 

entity, per use or disclosure, in addition 

to other penalties that may be 

prescribed by law. 

§ 155.270 Use of standards and protocols 

for electronic transactions. 

(a) HIPAA administrative 

simplification. To the extent that the 

Exchange performs electronic 

transactions with a covered entity, the 

Exchange must use standards, 

implementation specifications, 

operating rules, and code sets adopted 

by the Secretary in 45 CFR parts 160 

and 162. 

(b) HIT enrollment standards and 

protocols. The Exchange must 

incorporate interoperable and secure 

standards and protocols developed by 

the Secretary in accordance with section 

3021 of the PHS Act. Such standards 

and protocols must be incorporated 

within Exchange information 

technology systems. 

Subpart D—Exchange Functions in the 

Individual Market: Eligibility 

Determinations for Exchange 

Participation and Insurance 

Affordability Programs 

§ 155.300 Definitions and general 

standards for eligibility determinations. 

(a) Definitions. In addition to those 

definitions in § 155.20, for purposes of 

this subpart, the following terms have 

the following meaning: 

Adoption taxpayer identification 

number has the same meaning as it does 

in 26 CFR 301.6109–3(a). 

Applicable Children’s Health 

Insurance Program (CHIP) MAGI-based 

income standard means the applicable 

income standard as defined at 42 CFR 

457.310(b)(1), as applied under the State 

plan adopted in accordance with title 

XXI of the Act, or waiver of such plan 

and as certified by the State CHIP 

Agency in accordance with 42 CFR 

457.348(d), for determining eligibility 

for child health assistance and 

enrollment in a separate child health 

program. 

Applicable Medicaid modified 

adjusted gross income (MAGI)-based 

income standard has the same meaning 

as ‘‘applicable modified adjusted gross 

income standard,’’ as defined at 42 CFR 

435.911(b), as applied under the State 

plan adopted in accordance with title 

XIX of the Act, or waiver of such plan, 

and as certified by the State Medicaid 

agency in accordance with 42 CFR 

435.1200(b)(2) for determining 

eligibility for Medicaid. 

Federal poverty level or FPL means 

the most recently published Federal 

poverty level, updated periodically in 

the Federal Register by the Secretary of 

Health and Human Services under the 

authority of 42 U.S.C. 9902(2), as of the 

first day of the annual open enrollment 

period for coverage in a QHP through 

the Exchange, as specified in § 155.410. 

Indian means any individual as 

defined in section 4(d) of the Indian 

Self-Determination and Education 

Assistance Act (Pub. L. 93–638). 

Insurance affordability program has 

the same meaning as ‘‘insurance 

affordability program,’’ as specified in 

42 CFR 435.4. 

MAGI-based income has the same 

meaning as it does in 42 CFR 435.603(e). 

Minimum value, when used to 

describe coverage in an eligible 

employer-sponsored plan, means that 

the plan meets the requirements with 

respect to coverage of the total allowed 

costs of benefits set forth in section 

36B(c)(2)(C)(ii) of the Code. 

Modified Adjusted Gross Income 

(MAGI) has the same meaning as it does 

in section 36B(d)(2)(B) of the Code. 

Non-citizen means an individual who 

is not a citizen or national of the United 

States, in accordance with section 

101(a)(3) of the Immigration and 

Nationality Act. 

Qualifying coverage in an eligible 

employer-sponsored plan means 

coverage in an eligible employersponsored plan that meets the 

affordability and minimum value 

standards specified in section 

36B(c)(2)(C) of the Code. 

State CHIP Agency means the agency 

that administers a separate child health 

program established by the State under 

title XXI of the Act in accordance with 

implementing regulations at 42 CFR 

457. 

State Medicaid Agency means the 

agency established or designated by the 

State under title XIX of the Act that 

administers the Medicaid program in 

accordance with implementing 

regulations at 42 CFR parts 430 through 

456. 

Tax dependent has the same meaning 

as the term dependent under section 

152 of the Code. 

Tax filer means an individual, or a 

married couple, who indicates that he, 

she or they expects— 

(1) To file an income tax return for the 

benefit year, in accordance with 26 

U.S.C. 6011, 6012, and implementing 

regulations; 

(2) If married (within the meaning of 

26 CFR 1.7703–1), to file a joint tax 

return for the benefit year; 

(3) That no other taxpayer will be able 

to claim him, her or them as a tax 

dependent for the benefit year; and 

(4) That he, she, or they expects to 

claim a personal exemption deduction 

under section 151 of the Code on his or 

her tax return for one or more 

applicants, who may or may not include 

himself or herself and his or her spouse. 

(b) Medicaid and CHIP. In general, 

references to Medicaid and CHIP 

regulations in this subpart refer to those 

regulations as implemented in 

accordance with rules and procedures 

which are the same as those applied by 

the State Medicaid or State CHIP agency 

or approved by such agency in the 

agreement described in § 155.345(a). 

(c) Attestation. (1) Except as specified 

in paragraph (c)(2) of this section, for 

the purposes of this subpart, an 

attestation may be made by the 

application filer. 

(2) The attestations specified in 

§ 155.310(d)(2)(ii) and § 155.315(f)(4)(ii) 

must be provided by the tax filer. 

(d) Reasonably compatible. For 

purposes of this subpart, the Exchange 

must consider information obtained 

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, including the 

amount of advance payments of the 

premium tax credit or category of costsharing reductions. 

§ 155.302 Options for conducting eligibility 

determinations. 

(a) Options for conducting eligibility 

determinations. The Exchange may 

satisfy the requirements of this 

subpart— 

(1) Directly or through contracting 

arrangements in accordance with 

§ 155.110(a); or 

(2) Through a combination of the 

approach described in paragraph (a)(1) 

of this section and one or both of the 

options described in paragraph (b) or (c) 

of this section, subject to the standards 

in paragraph (d) of this section. 

(b) Medicaid and CHIP. 

Notwithstanding the requirements of 

this subpart, the Exchange may conduct 

an assessment of eligibility for Medicaid 

and CHIP, rather than an eligibility 

determination for Medicaid and CHIP, 

provided that— 

(1) The Exchange makes such an 

assessment based on the applicable 

Medicaid and CHIP MAGI-based income 

standards and citizenship and 

immigration status, using verification 

rules and procedures consistent with 42 

CFR parts 435 and 457, without regard 

to how such standards are implemented 

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by the State Medicaid and CHIP 

agencies. 

(2) Notices and other activities 

required in connection with an 

eligibility determination for Medicaid or 

CHIP are performed by the Exchange 

consistent with the standards identified 

in this subpart or the State Medicaid or 

CHIP agency consistent with applicable 

law. 

(3) Applicants found potentially 

eligible for Medicaid or CHIP. When the 

Exchange assesses an applicant as 

potentially eligible for Medicaid or 

CHIP consistent with the standards in 

subparagraph (b)(1) of this section, the 

Exchange transmits all information 

provided as a part of the application, 

update, or renewal that initiated the 

assessment, and any information 

obtained or verified by the Exchange to 

the State Medicaid agency or CHIP 

agency via secure electronic interface, 

promptly and without undue delay. 

(4) Applicants not found potentially 

eligible for Medicaid and CHIP. (i) If the 

Exchange conducts an assessment in 

accordance with paragraph (b) of this 

section and finds that an applicant is 

not potentially eligible for Medicaid or 

CHIP based on the applicable Medicaid 

and CHIP MAGI-based income 

standards, the Exchange must consider 

the applicant as ineligible for Medicaid 

and CHIP for purposes of determining 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions and must notify such 

applicant, and provide him or her with 

the opportunity to— 

(A) Withdraw his or her application 

for Medicaid and CHIP; or 

(B) Request a full determination of 

eligibility for Medicaid and CHIP by the 

applicable State Medicaid and CHIP 

agencies. 

(ii) To the extent that an applicant 

described in paragraph (b)(4)(i) of this 

section requests a full determination of 

eligibility for Medicaid and CHIP, the 

Exchange must— 

(A) Transmit all information provided 

as a part of the application, update, or 

renewal that initiated the assessment, 

and any information obtained or 

verified by the Exchange to the State 

Medicaid agency and CHIP agency via 

secure electronic interface, promptly 

and without undue delay; and 

(B) Consider such an applicant as 

ineligible for Medicaid and CHIP for 

purposes of determining eligibility for 

advance payments of the premium tax 

credit and cost-sharing reductions until 

the State Medicaid or CHIP agency 

notifies the Exchange that the applicant 

is eligible for Medicaid or CHIP. 

(5) The Exchange adheres to the 

eligibility determination for Medicaid or 

CHIP made by the State Medicaid or 

CHIP agency; 

(6) The Exchange and the State 

Medicaid and CHIP agencies enter into 

an agreement specifying their respective 

responsibilities in connection with 

eligibility determinations for Medicaid 

and CHIP. 

(c) Advance payments of the premium 

tax credit and cost-sharing reductions. 

Notwithstanding the requirements of 

this subpart, the Exchange may 

implement a determination of eligibility 

for advance payments of the premium 

tax credit and cost-sharing reductions 

made by HHS, provided that— 

(1) Verifications, notices, and other 

activities required in connection with 

an eligibility determination for advance 

payments of the premium tax credit and 

cost-sharing reductions 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 (c)(4) 

of this section; 

(2) The Exchange transmits all 

information provided as a part of the 

application, update, or renewal that 

initiated the eligibility determination, 

and any information obtained or 

verified by the Exchange, to HHS via 

secure electronic interface, promptly 

and without undue delay; 

(3) The Exchange adheres to the 

eligibility determination for advance 

payments of the premium tax credit and 

cost-sharing reductions made by HHS; 

and 

(4) The Exchange and HHS enter into 

an agreement specifying their respective 

responsibilities in connection with 

eligibility determinations for advance 

payments of the premium tax credit and 

cost-sharing reductions. 

(d) Standards. To the extent that 

assessments of eligibility for Medicaid 

and CHIP based on MAGI or eligibility 

determinations for advance payments of 

the premium tax credit and cost-sharing 

reductions are made in accordance with 

paragraphs (b) or (c) of this section, the 

Exchange must ensure that— 

(1) Eligibility processes for all 

insurance affordability programs are 

streamlined and coordinated across 

HHS, the Exchange, the State Medicaid 

agency, and the State CHIP agency, as 

applicable; 

(2) Such arrangement does not 

increase administrative costs and 

burdens on applicants, enrollees, 

beneficiaries, or application filers, or 

increase delay; and 

(3) Applicable requirements under 45 

CFR 155.260, 155.270, and 155.315(i), 

and section 6103 of the Code with 

respect to the confidentiality, 

disclosure, maintenance, and use of 

information are met. 

§ 155.305 Eligibility standards. 

(a) Eligibility for enrollment in a QHP 

through the Exchange. The Exchange 

must determine an applicant eligible for 

enrollment in a QHP through the 

Exchange if he or she meets the 

following requirements: 

(1) Citizenship, status as a national, 

or lawful presence. Is a citizen or 

national of the United States, or is a 

non-citizen who is lawfully present in 

the United States, and is reasonably 

expected to be a citizen, national, or a 

non-citizen who is lawfully present for 

the entire period for which enrollment 

is sought; 

(2) Incarceration. Is not incarcerated, 

other than incarceration pending the 

disposition of charges; and 

(3) Residency. Meets the applicable 

residency standard identified in this 

paragraph (a)(3). 

(i) For an individual who is age 21 

and over, is not living in an institution 

as defined in 42 CFR 435.403(b), is 

capable of indicating intent, and is not 

receiving an optional State 

supplementary payment as addressed in 

42 CFR 435.403(f), the service area of 

the Exchange of the individual is the 

service areas of the Exchange in which 

he or she is living and— 

(A) Intends to reside, including 

without a fixed address; or 

(B) Has entered with a job 

commitment or is seeking employment 

(whether or not currently employed). 

(ii) For an individual who is under 

the age of 21, is not living in an 

institution as defined in 42 CFR 

435.403(b), is not eligible for Medicaid 

based on receipt of assistance under title 

IV–E of the Social Security Act as 

addressed in 42 CFR 435.403(g), is not 

emancipated, is not receiving an 

optional State supplementary payment 

as addressed in 42 CFR 435.403(f), the 

Exchange service area of the 

individual— 

(A) Is the service area of the Exchange 

in which he or she resides, including 

without a fixed address; or 

(B) Is the service area of the Exchange 

of a parent or caretaker, established in 

accordance with paragraph (a)(3)(i) of 

this section, with whom the individual 

resides. 

(iii) Other special circumstances. In 

the case of an individual who is not 

described in paragraphs (a)(3)(i) or (ii) of 

this section, the Exchange must apply 

the residency requirements described in 

42 CFR 435.403 with respect to the 

service area of the Exchange. 

(iv) Special rule for tax households 

with members in multiple Exchange 

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service areas. (A) Except as specified in 

paragraph (a)(3)(iv)(B) of this section if 

all of the members of a tax household 

are not within the same Exchange 

service area, in accordance with the 

applicable standards in paragraphs 

(a)(3)(i), (ii), and (iii) of this section, any 

member of the tax household may enroll 

in a QHP through any of the Exchanges 

for which one of the tax filers meets the 

residency standard. 

(B) If both spouses in a tax household 

enroll in a QHP through the same 

Exchange, a tax dependent may only 

enroll in a QHP through that Exchange, 

or through the Exchange that services 

the area in which the dependent meets 

a residency standard described in 

paragraphs (a)(3)(i), (ii), or (iii) of this 

section. 

(b) Eligibility for QHP enrollment 

periods. The Exchange must determine 

an applicant eligible for an enrollment 

period if he or she meets the criteria for 

an enrollment period, as specified in 

§§ 155.410 and 155.420. 

(c) Eligibility for Medicaid. The 

Exchange must determine an applicant 

eligible for Medicaid if he or she meets 

the non-financial eligibility criteria for 

Medicaid for populations whose 

eligibility is based on MAGI-based 

income, as certified by the Medicaid 

agency in accordance with 42 CFR 

435.1200(b)(2), has a household income, 

as defined in 42 CFR 435.603(d), that is 

at or below the applicable Medicaid 

MAGI-based income standard as defined 

in 42 CFR 435.911(b)(1) and— 

(1) Is a pregnant woman, as defined in 

the Medicaid State Plan in accordance 

with 42 CFR 435.4; 

(2) Is under age 19; 

(3) Is a parent or caretaker relative of 

a dependent child, as defined in the 

Medicaid State plan in accordance with 

42 CFR 435.4; or 

(4) Is not described in paragraph 

(c)(1), (2), or (3) of this section, is under 

age 65 and is not entitled to or enrolled 

for benefits under part A of title XVIII 

of the Social Security Act, or enrolled 

for benefits under part B of title XVIII 

of the Social Security Act. 

(d) Eligibility for CHIP. The Exchange 

must determine an applicant eligible for 

CHIP if he or she meets the 

requirements of 42 CFR 457.310 through 

457.320 and has a household income, as 

defined in 42 CFR 435.603(d), at or 

below the applicable CHIP MAGI-based 

income standard. 

(e) Eligibility for BHP. If a BHP is 

operating in the service area of the 

Exchange, the Exchange must determine 

an applicant eligible for the BHP if he 

or she meets the requirements specified 

in section 1331(e) of the Affordable Care 

Act and regulations implementing that 

section. 

(f) Eligibility for advance payments of 

the premium tax credit. (1) In general. 

The Exchange must determine a tax filer 

eligible for advance payments of the 

premium tax credit if the Exchange 

determines that— 

(i) He or she is expected to have a 

household income, as defined in section 

36B(d)(2) of the Code, of greater than or 

equal to 100 percent but not more than 

400 percent of the FPL for the benefit 

year for which coverage is requested; 

and 

(ii) One or more applicants for whom 

the tax filer expects to claim a personal 

exemption deduction on his or her tax 

return for the benefit year, including the 

tax filer and his or her spouse— 

(A) Meets the requirements for 

eligibility for enrollment in a QHP 

through the Exchange, as specified in 

paragraph (a) of this section; and 

(B) Is not eligible for minimum 

essential coverage, with the exception of 

coverage in the individual market, in 

accordance with section 36B(c)(2)(B) 

and (C) of the Code. 

(2) Special rule for non-citizens who 

are lawfully present and who are 

ineligible for Medicaid by reason of 

immigration status. The Exchange must 

determine a tax filer eligible for advance 

payments of the premium tax credit if 

the Exchange determines that— 

(i) He or she meets the requirements 

specified in paragraph (f)(1) of this 

section, except for paragraph (f)(1)(i); 

(ii) He or she is expected to have a 

household income, as defined in section 

36B(d)(2) of the Code, of less than 100 

percent of the FPL for the benefit year 

for which coverage is requested; and 

(iii) One or more applicants for whom 

the tax filer expects to claim a personal 

exemption deduction on his or her tax 

return for the benefit year, including the 

tax filer and his or her spouse, is a noncitizen who is lawfully present and 

ineligible for Medicaid by reason of 

immigration status, in accordance with 

section 36B(c)(1)(B) of the Code. 

(3) Enrollment required. The 

Exchange may provide advance 

payments of the premium tax credit on 

behalf of a tax filer only if one or more 

applicants for whom the tax filer attests 

that he or she expects to claim a 

personal exemption deduction for the 

benefit year, including the tax filer and 

his or her spouse, is enrolled in a QHP 

through the Exchange. 

(4) Compliance with filing 

requirement. The Exchange may not 

determine a tax filer eligible for advance 

payments of the premium tax credit if 

HHS notifies the Exchange as part of the 

process described in § 155.320(c)(3) that 

advance payments of the premium tax 

credit were made on behalf of the tax 

filer or either spouse if the tax filer is 

a married couple for a year for which 

tax data would be utilized for 

verification of household income and 

family size in accordance with 

§ 155.320(c)(1)(i), and the tax filer or his 

or her spouse did not comply with the 

requirement to file an income tax return 

for that year as required by 26 U.S.C. 

6011, 6012, and implementing 

regulations and reconcile the advance 

payments of the premium tax credit for 

that period. 

(5) Calculation of advance payments 

of the premium tax credit. The 

Exchange must calculate advance 

payments of the premium tax credit in 

accordance with section 36B of the 

Code. 

(6) Collection of Social Security 

numbers. 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. 

(g) Eligibility for cost-sharing 

reductions. (1) Eligibility criteria. (i) The 

Exchange must determine an applicant 

eligible for cost-sharing reductions if he 

or she— 

(A) Meets the requirements for 

eligibility for enrollment in a QHP 

through the Exchange, as specified in 

paragraph (a) of this section; 

(B) Meets the requirements for 

advance payments of the premium tax 

credit, as specified in paragraph (f) of 

this section; and 

(C) Is expected to have a household 

income that does not exceed 250 

percent of the FPL, for the benefit year 

for which coverage is requested. 

(ii) The Exchange may only provide 

cost-sharing reductions to an enrollee 

who is not an Indian if he or she is 

enrolled through the Exchange in a 

silver-level QHP, as defined by section 

1302(d)(1)(B) of the Affordable Care Act. 

(2) Eligibility categories. The 

Exchange must use the following 

eligibility categories for cost-sharing 

reductions when making eligibility 

determinations under this section— 

(i) An individual who is expected to 

have a household income greater than or 

equal to 100 percent of the FPL and less 

than or equal to 150 percent of the FPL 

for the benefit year for which coverage 

is requested, or for an individual who is 

eligible for advance payments of the 

premium tax credit under paragraph 

(f)(2) of this section, a household 

income less than 100 percent of the FPL 

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for the benefit year for which coverage 

is requested; 

(ii) An individual is expected to have 

a household income greater than 150 

percent of the FPL and less than or 

equal to 200 percent of the FPL for the 

benefit year for which coverage is 

requested; and 

(iii) An individual who is expected to 

have a household income greater than 

200 percent of the FPL and less than or 

equal to 250 percent of the FPL for the 

benefit year for which coverage is 

requested. 

(3) Special rule for multiple tax 

households. To the extent that an 

enrollment in a QHP under a single 

policy covers individuals who are 

expected to be in different tax 

households for the benefit year for 

which coverage is requested, the 

Exchange must apply only the first 

category of cost-sharing reductions 

listed below for which the Exchange has 

determined that one of the applicants in 

the tax households is eligible. 

(i) § 155.350(b); 

(ii) Paragraph (g)(2)(iii) of this section; 

(iii) Paragraph (g)(2)(ii) of this section; 

(iv) Paragraph (g)(3)(i) of this section; 

(v) § 155.350(a). 

(4) For the purposes of paragraph (g) 

of this section, ‘‘household income’’ 

means household income as defined in 

section 36B(d)(2) of the Code. 

§ 155.310 Eligibility process. 

(a) Application. (1) Accepting 

applications. The Exchange must accept 

applications from individuals in the 

form and manner specified in § 155.405. 

(2) Information collection from nonapplicants. The Exchange may not 

request information regarding 

citizenship, status as a national, or 

immigration status for an individual 

who is not seeking coverage for himself 

or herself on any application or 

supplemental form. 

(3) Collection of Social Security 

numbers. (i) The Exchange must require 

an applicant who has a Social Security 

number to provide such number to the 

Exchange. 

(ii) The Exchange may not require an 

individual who is not seeking coverage 

for himself or herself to provide a Social 

Security number, except as specified in 

§ 155.305(f)(6). 

(b) Applicant choice for Exchange to 

determine eligibility for insurance 

affordability programs. The Exchange 

must permit an applicant to request 

only an eligibility determination for 

enrollment in a QHP through the 

Exchange; however, the Exchange may 

not permit an applicant to request an 

eligibility determination for less than all 

insurance affordability programs. 

(c) Timing. The Exchange must accept 

an application and make an eligibility 

determination for an applicant seeking 

an eligibility determination at any point 

in time during the year. 

(d) Determination of eligibility. (1) 

The Exchange must determine an 

applicant’s eligibility, in accordance 

with the standards specified in 

§ 155.305. 

(2) Special rules relating to advance 

payments of the premium tax credit. (i) 

The Exchange must permit an enrollee 

to accept less than the full amount of 

advance payments of the premium tax 

credit for which he or she is determined 

eligible. 

(ii) The Exchange may authorize 

advance payments of the premium tax 

credit on behalf of a tax filer only if the 

Exchange first obtains necessary 

attestations from the tax filer regarding 

advance payments of the premium tax 

credit, including, but not limited to 

attestations that— 

(A) He or she will file an income tax 

return for the benefit year, in 

accordance with 26 U.S.C. 6011, 6012, 

and implementing regulations; 

(B) If married (within the meaning of 

26 CFR 1.7703–1), he or she will file a 

joint tax return for the benefit year; 

(C) No other taxpayer will be able to 

claim him or her as a tax dependent for 

the benefit year; and 

(D) He or she will claim a personal 

exemption deduction on his or her tax 

return for the applicants identified as 

members of his or her family, including 

the tax filer and his or her spouse, in 

accordance with § 155.320(c)(3)(i). 

(3) Special rule relating to Medicaid 

and CHIP. To the extent that the 

Exchange determines an applicant 

eligible for Medicaid or CHIP, the 

Exchange must notify the State 

Medicaid or CHIP agency and transmit 

all information from the records of the 

Exchange to the State Medicaid or CHIP 

agency, promptly and without undue 

delay, that is necessary for such agency 

to provide the applicant with coverage. 

(e) Timeliness standards. (1) The 

Exchange must determine eligibility 

promptly and without undue delay. 

(2) The Exchange must assess the 

timeliness of eligibility determinations 

based on the period from the date of 

application or transfer from an agency 

administering an insurance affordability 

program to the date the Exchange 

notifies the applicant of its decision or 

the date the Exchange transfers the 

application to another agency 

administering an insurance affordability 

program, when applicable. 

(f) Effective dates for eligibility. Upon 

making an eligibility determination, the 

Exchange must implement the eligibility 

determination under this section for 

enrollment in a QHP through the 

Exchange, advance payments of the 

premium tax credit, and cost-sharing 

reductions as follows— 

(1) For an initial eligibility 

determination, in accordance with the 

dates specified in § 155.410(c) and (f) 

and § 155.420(b), as applicable, 

(2) For a redetermination, in 

accordance with the dates specified in 

§ 155.330(f) and § 155.335(i), as 

applicable. 

(g) Notification of eligibility 

determination. The Exchange must 

provide timely written notice to an 

applicant of any eligibility 

determination made in accordance with 

this subpart. 

(h) Notice of an employee’s eligibility 

for advance payments of the premium 

tax credit and cost-sharing reductions to 

an employer. The Exchange must notify 

an employer that an employee has been 

determined eligible for advance 

payments of the premium tax credit or 

cost-sharing reductions upon 

determination that an employee is 

eligible for advance payments of the 

premium tax credit or cost-sharing 

reductions. Such notice must: 

(1) Identify the employee; 

(2) Indicate that the employee has 

been determined eligible for advance 

payments of the premium tax credit; 

(3) Indicate that, if the employer has 

50 or more full-time employees, the 

employer may be liable for the payment 

assessed under section 4980H of the 

Code; and 

(4) Notify the employer of the right to 

appeal the determination. 

(i) Duration of eligibility 

determinations without enrollment. To 

the extent that an applicant who is 

determined eligible for enrollment in a 

QHP does not select a QHP within his 

or her enrollment period in accordance 

with subpart E, and seeks a new 

enrollment period— 

(1) Prior to the date on which his or 

her eligibility would have been 

redetermined in accordance with 

§ 155.335 had he or she enrolled in a 

QHP, the Exchange must require the 

applicant to attest as to whether 

information affecting his or her 

eligibility has changed since his or her 

most recent eligibility determination 

before determining his or her eligibility 

for an enrollment period, and must 

process any changes reported in 

accordance with the procedures 

specified in § 155.330. 

(2) On or after the date on which his 

or her eligibility would have been 

redetermined in accordance with 

§ 155.335 had he or she enrolled in a 

QHP, the Exchange must apply the 

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procedures specified in § 155.335 before 

determining his or her eligibility for an 

enrollment period. 

§ 155.315 Verification process related to 

eligibility for enrollment in a QHP through 

the Exchange. 

(a) General requirement. Unless a 

request for modification is granted in 

accordance with paragraph (h) 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 enrollment in a 

QHP through the Exchange. 

(b) Validation of Social Security 

number. (1) For any individual who 

provides his or her Social Security 

number to the Exchange, the Exchange 

must transmit the Social Security 

number and other identifying 

information to HHS, which will submit 

it to the Social Security Administration. 

(2) To the extent that the Exchange is 

unable to validate an individual’s Social 

Security number through the Social 

Security Administration, the Exchange 

must follow the procedures specified in 

paragraph (f) of this section, except that 

the Exchange must provide the 

individual with a period of 90 days from 

the date on which the notice described 

in paragraph (f)(2)(i) of this section is 

received for the applicant to provide 

satisfactory documentary evidence or 

resolve the inconsistency with the 

Social Security Administration. The 

date on which the notice is received 

means 5 days after the date on the 

notice, unless the individual 

demonstrates that he or she did not 

receive the notice within the 5 day 

period. 

(c) Verification of citizenship, status 

as a national, or lawful presence. (1) 

Verification with records from the 

Social Security Administration. For an 

applicant who attests to citizenship and 

has a Social Security number, the 

Exchange must transmit the applicant’s 

Social Security number and other 

identifying information to HHS, which 

will submit it to the Social Security 

Administration. 

(2) Verification with the records of the 

Department of Homeland Security. For 

an applicant who has documentation 

that can be verified through the 

Department of Homeland Security and 

who attests to lawful presence, or who 

attests to citizenship and for whom the 

Exchange cannot substantiate a claim of 

citizenship through the Social Security 

Administration, the Exchange must 

transmit information from the 

applicant’s documentation and other 

identifying information to HHS, which 

will submit necessary information to the 

Department of Homeland Security for 

verification. 

(3) Inconsistencies and inability to 

verify information. For an applicant 

who attests to citizenship, status as a 

national, or lawful presence, and for 

whom the Exchange cannot verify such 

attestation through the Social Security 

Administration or the Department of 

Homeland Security, the Exchange must 

follow the procedures specified in 

paragraph (f) of this section, except that 

the Exchange must provide the 

applicant with a period of 90 days from 

the date on which the notice described 

in paragraph (f)(2)(i) of this section is 

received for the applicant to provide 

satisfactory documentary evidence or 

resolve the inconsistency with the 

Social Security Administration or the 

Department of Homeland Security, as 

applicable. The date on which the 

notice is received means 5 days after the 

date on the notice, unless the applicant 

demonstrates that he or she did not 

receive the notice within the 5 day 

period. 

(d) Verification of residency. The 

Exchange must verify an applicant’s 

attestation that he or she meets the 

standards of § 155.305(a)(3) as follows— 

(1) Except as provided in paragraphs 

(d)(3) and (4) of this section, accept his 

or her attestation without further 

verification; or 

(2) Examine electronic data sources 

that are available to the Exchange and 

which have been approved by HHS for 

this purpose, based on evidence 

showing that such data sources are 

sufficiently current and accurate, and 

minimize administrative costs and 

burdens. 

(3) If information provided by an 

applicant regarding residency is not 

reasonably compatible with other 

information provided by the individual 

or in the records of the Exchange the 

Exchange must examine information in 

data sources that are available to the 

Exchange and which have been 

approved by HHS for this purpose, 

based on evidence showing that such 

data sources are sufficiently current and 

accurate. 

(4) If the information in such data 

sources is not reasonably compatible 

with the information provided by the 

applicant, the Exchange must follow the 

procedures specified in paragraph (f) of 

this section. Evidence of immigration 

status may not be used to determine that 

an applicant is not a resident of the 

Exchange service area. 

(e) Verification of incarceration 

status. The Exchange must verify an 

applicant’s attestation that he or she 

meets the requirements of 

§ 155.305(a)(2) by— 

(1) Relying on any electronic data 

sources that are available to the 

Exchange and which have been 

approved by HHS for this purpose, 

based on evidence showing that such 

data sources are sufficiently current, 

accurate, and offer less administrative 

complexity than paper verification; or 

(2) Except as provided in paragraph 

(e)(3) of this section, if an approved data 

source is unavailable, accepting his or 

her attestation without further 

verification. 

(3) To the extent that an applicant’s 

attestation is not reasonably compatible 

with information from approved data 

sources described in paragraph (e)(1) of 

this section or other information 

provided by the applicant or in the 

records of the Exchange, the Exchange 

must follow the procedures specified in 

§ 155.315(f). 

(f) Inconsistencies. Except as 

otherwise specified in this subpart, for 

an applicant for whom the Exchange 

cannot verify information required to 

determine eligibility for enrollment in a 

QHP, advance payments of the premium 

tax credit, and cost-sharing reductions, 

including when electronic data is 

required in accordance with this subpart 

but not available, the Exchange: 

(1) Must make a reasonable effort to 

identify and address the causes of such 

inconsistency, including through 

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 (f)(1) of this 

section, must— 

(i) Provide notice to the applicant 

regarding the inconsistency; and 

(ii) Provide the applicant with a 

period of 90 days from the date on 

which the notice described in paragraph 

(f)(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 

§ 155.405(c), except for by telephone 

through a call center, or otherwise 

resolve the inconsistency. 

(3) May extend the period described 

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

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 (f)(2)(ii) of this section, must: 

(i) Proceed with all other elements of 

eligibility determination using the 

applicant’s attestation, and provide 

eligibility for enrollment in a QHP to the 

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extent that an applicant is otherwise 

qualified; and 

(ii) Ensure that advance payments of 

the premium tax credit and cost-sharing 

reductions are provided on behalf of an 

applicant within this period who is 

otherwise qualified for such payments 

and reductions, as described in 

§ 155.305, if the tax filer attests to the 

Exchange that he or she understands 

that any advance payments of the 

premium tax credit paid on his or her 

behalf are subject to reconciliation. 

(5) If, after the period described in 

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

Exchange remains unable to verify the 

attestation, must— 

(i) Determine the applicant’s 

eligibility based on the information 

available from the data sources specified 

in this subpart, unless such applicant 

qualifies for the exception provided 

under paragraph (i) of this section, and 

notify the applicant of such 

determination in accordance with the 

notice requirements specified in 

§ 155.310(g), including notice that the 

Exchange is unable to verify the 

attestation; and 

(ii) Effectuate the determination 

specified in paragraph (f)(5)(i) of this 

section no earlier than 10 days after and 

no later than 30 days after the date on 

which the notice in paragraph (f)(5)(i) of 

this section is sent. 

(g) Exception for special 

circumstances. For an applicant who 

does not have documentation with 

which to resolve the inconsistency 

through the process described in 

paragraph (f)(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, with the 

exception of an inconsistency related to 

citizenship or immigration status, the 

Exchange must provide an exception, on 

a case-by-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. 

(h) Flexibility in information 

collection and verification. HHS may 

approve an Exchange Blueprint in 

accordance with § 155.105(d) or a 

significant change to the Exchange 

Blueprint in accordance with 

§ 155.105(e) to modify the methods to be 

used for collection of information and 

verification of information 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, that it would not 

undermine coordination with Medicaid 

and CHIP, and that applicable 

requirements under § 155.260, 

§ 155.270, paragraph (i) of this section, 

and section 6103 of the Code with 

respect to the confidentiality, 

disclosure, maintenance, or use of such 

information will be met. 

(i) Applicant information. The 

Exchange must not require an applicant 

to provide information beyond the 

minimum necessary to support the 

eligibility and enrollment processes of 

the Exchange, Medicaid, CHIP, and the 

BHP, if a BHP is operating in the service 

area of the Exchange, described in this 

subpart. 

§ 155.320 Verification process related to 

eligibility for insurance affordability 

programs. 

(a) General requirements. (1) The 

Exchange must verify information in 

accordance with this section only for an 

applicant or tax filer who requested an 

eligibility determination for insurance 

affordability programs in accordance 

with § 155.310(b). 

(2) Unless a request for modification 

is granted in accordance with 

§ 155.315(h), the Exchange must verify 

or obtain information in accordance 

with this section before making an 

eligibility determination for insurance 

affordability programs, and must use 

such information in such determination. 

(b) Verification of eligibility for 

minimum essential coverage other than 

through an eligible employer-sponsored 

plan. (1) The Exchange must verify 

whether an applicant is eligible for 

minimum essential coverage other than 

through an eligible employer-sponsored 

plan, Medicaid, CHIP, or the BHP, using 

information obtained by transmitting 

identifying information specified by 

HHS to HHS. 

(2) The Exchange must verify whether 

an applicant has already been 

determined eligible for coverage through 

Medicaid, CHIP, or the BHP, if a BHP 

is operating in the service area of the 

Exchange, within the State or States in 

which the Exchange operates using 

information obtained from the agencies 

administering such programs. 

(c) Verification of household income 

and family/household size. (1) Data. (i) 

Tax return data. (A) For all individuals 

whose income is counted in calculating 

a tax filer’s household income, in 

accordance with section 36B(d)(2) of the 

Code, or an applicant’s household 

income, in accordance with 42 CFR 

435.603(d), and for whom the Exchange 

has a Social Security number or an 

adoption taxpayer identification 

number, the Exchange must request tax 

return data regarding MAGI and family 

size from the Secretary of the Treasury 

by transmitting identifying information 

specified by HHS to HHS. 

(B) If the identifying information for 

one or more individuals does not match 

a tax record on file with the Secretary 

of the Treasury that may be disclosed in 

accordance with section 6103(l)(21) of 

the Code and its accompanying 

regulations, the Exchange must proceed 

in accordance with § 155.315(f)(1). 

(ii) Data regarding MAGI-based 

income. For all individuals whose 

income is counted in calculating a tax 

filer’s household income, in accordance 

with section 36B(d)(2) of the Code, or an 

applicant’s household income, in 

accordance with 42 CFR 435.603(d), the 

Exchange must request data regarding 

MAGI-based income in accordance with 

42 CFR 435.948(a). 

(2) Verification process for Medicaid 

and CHIP. (i) Household size. (A) The 

Exchange must verify household size in 

accordance with 42 CFR 435.945(a) or 

through other reasonable verification 

procedures consistent with the 

requirements in 42 CFR 435.952. 

(B) The Exchange must verify the 

information in paragraph (c)(2)(i)(A) of 

this section by accepting an applicant’s 

attestation without further verification, 

unless the Exchange finds that an 

applicant’s attestation to the individuals 

that comprise his or her household for 

Medicaid and CHIP is not reasonably 

compatible with other information 

provided by the application filer for the 

applicant or in the records of the 

Exchange, in which case the Exchange 

must utilize data obtained through 

electronic data sources to verify the 

attestation. If such data sources are 

unavailable or information in such data 

sources is not reasonably compatible 

with the applicant’s attestation, the 

Exchange must request additional 

documentation to support the 

attestation within the procedures 

specified in 42 CFR 435.952. 

(ii) Verification process for MAGIbased household income. The Exchange 

must verify MAGI-based income, within 

the meaning of 42 CFR 435.603(d), for 

the household described in paragraph 

(c)(2)(i) in accordance with the 

procedures specified in Medicaid 

regulations 42 CFR 435.945, 42 CFR 

435.948, and 42 CFR 435.952 and CHIP 

regulations at 42 CFR 457.380. 

(3) Verification process for advance 

payments of the premium tax credit and 

cost-sharing reductions. (i) Family size. 

(A) The Exchange must require an 

applicant to attest to the individuals 

that comprise a tax filer’s family for 

advance payments of the premium tax 

credit and cost-sharing reductions. 

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(B) To the extent that the applicant 

attests that the information described in 

paragraph (c)(1)(i) of this section 

represents an accurate projection of a 

tax filer’s family size for the benefit year 

for which coverage is requested, the 

Exchange must determine the tax filer’s 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions based on the family size data 

in paragraph (c)(1)(i) of this section. 

(C) To the extent that the data 

described in paragraph (c)(1)(i) of this 

section is unavailable, or an applicant 

attests that a change in circumstances 

has occurred or is reasonably expected 

to occur, and so it does not represent an 

accurate projection of a tax filer’s family 

size for the benefit year for which 

coverage is requested, the Exchange 

must verify the tax filer’s family size for 

advance payments of the premium tax 

credit and cost-sharing reductions by 

accepting an applicant’s attestation 

without further verification, except as 

specified in paragraph (c)(3)(i)(D) of this 

section. 

(D) If Exchange finds that an 

applicant’s attestation of a tax filer’s 

family size is not reasonably compatible 

with other information provided by the 

application filer for the family or in the 

records of the Exchange, with the 

exception of the data described in 

paragraph (c)(1)(i) of this section, the 

Exchange must utilize data obtained 

through other electronic data sources to 

verify the attestation. If such data 

sources are unavailable or information 

in such data sources is not reasonably 

compatible with the applicant’s 

attestation, the Exchange must request 

additional documentation to support the 

attestation within the procedures 

specified in § 155.315(f). 

(ii) Basic verification process for 

annual household income. (A) The 

Exchange must compute annual 

household income for the family 

described in paragraph (c)(3)(i)(A) of 

this section based on the tax return data 

described in paragraph (c)(1)(i) of this 

section; 

(B) The Exchange must require the 

applicant to attest regarding a tax filer’s 

projected annual household income; 

(C) To the extent that the applicant’s 

attestation indicates that the 

information described in paragraph 

(c)(3)(ii)(A) of this section represents an 

accurate projection of the tax filer’s 

household income for the benefit year 

for which coverage is requested, the 

Exchange must determine the tax filer’s 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions based on the household 

income data in paragraph (c)(3)(ii)(A) of 

this section. 

(D) To the extent that the data 

described in paragraph (c)(1)(i) of this 

section is unavailable, or an applicant 

attests that a change in circumstances 

has occurred or is reasonably expected 

to occur, and so it does not represent an 

accurate projection of the tax filer’s 

household income for the benefit year 

for which coverage is requested, the 

Exchange must require the applicant to 

attest to the tax filer’s projected 

household income for the benefit year 

for which coverage is requested. 

(iii) Verification process for increases 

in household income. (A) If an 

applicant’s attestation, in accordance 

with paragraph (c)(3)(ii)(B) of this 

section, indicates that a tax filer’s 

annual household income has increased 

or is reasonably expected to increase 

from the data described in paragraph 

(c)(3)(ii)(A) of this section to the benefit 

year for which the applicant(s) in the 

tax filer’s family are requesting coverage 

and the Exchange has not verified the 

applicant’s MAGI-based income through 

the process specified in paragraph 

(c)(2)(ii) of this section to be within the 

applicable Medicaid or CHIP MAGIbased income standard, the Exchange 

must accept the applicant’s attestation 

for the tax filer’s family without further 

verification, except as provided in 

paragraph (c)(3)(iii)(B) of this section. 

(B) If the Exchange finds that an 

applicant’s attestation of a tax filer’s 

annual household income is not 

reasonably compatible with other 

information provided by the application 

filer or available to the Exchange in 

accordance with paragraph (c)(1)(ii) of 

this section, the Exchange must utilize 

data obtained through electronic data 

sources to verify the attestation. If such 

data sources are unavailable or 

information in such data sources is not 

reasonably compatible with the 

applicant’s attestation, the Exchange 

must request additional documentation 

using the procedures specified in 

§ 155.315(f). 

(iv) Eligibility for alternate verification 

process for decreases in annual 

household income and situations in 

which tax return data is unavailable. 

The Exchange must determine a tax 

filer’s annual household income for 

advance payments of the premium tax 

credit and cost-sharing reductions based 

on the alternate verification procedures 

described in paragraph (c)(3)(v) of this 

section, if an applicant attests to 

projected annual household income in 

accordance with paragraph (c)(3)(ii)(B) 

of this section, the tax filer does not 

meet the criteria specified in paragraph 

(c)(3)(iii) of this section, the applicants 

in the tax filer’s family have not 

established MAGI-based income 

through the process specified in 

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

within the applicable Medicaid or CHIP 

MAGI-based income standard, and one 

of the following conditions is met— 

(A) The Secretary of the Treasury does 

not have tax return data that may be 

disclosed under section 6103(l)(21) of 

the Code for the tax filer that is at least 

as recent as the calendar year two years 

prior to the calendar year for which 

advance payments of the premium tax 

credit or cost-sharing reductions would 

be effective; 

(B) The applicant attests that the tax 

filer’s applicable family size has 

changed or is reasonably expected to 

change for the benefit year for which the 

applicants in his or her family are 

requesting coverage, or the members of 

the tax filer’s family have changed or are 

reasonably expected to change for the 

benefit year for which the applicants in 

his or her family are requesting 

coverage; 

(C) The applicant attests that a change 

in circumstances has occurred or is 

reasonably expected to occur, and so the 

tax filer’s annual household income has 

decreased or is reasonably expected to 

decrease from the data described in 

paragraph (c)(1)(i) of this section for the 

benefit year for which the applicants in 

his or her family are requesting 

coverage; 

(D) The applicant attests that the tax 

filer’s filing status has changed or is 

reasonably expected to change for the 

benefit year for which the applicants in 

his or her family are requesting 

coverage; or 

(E) An applicant in the tax filer’s 

family has filed an application for 

unemployment benefits. 

(v) Alternate verification process. If a 

tax filer qualifies for an alternate 

verification process based on the 

requirements specified in paragraph 

(c)(3)(iv) of this section and the 

applicant’s attestation to projected 

annual household income, as described 

in paragraph (c)(3)(ii)(B) of this section, 

is no more than ten percent below the 

annual household income computed in 

accordance with paragraph (c)(3)(ii)(A) 

of this section, the Exchange must 

accept the applicant’s attestation 

without further verification. 

(vi) Alternate verification process for 

decreases in annual household income 

and situations in which tax return data 

is unavailable. If a tax filer qualifies for 

an alternate verification process based 

on the requirements specified in 

paragraph (c)(3)(iv) of this section and 

the applicant’s attestation to projected 

annual household income, as described 

in paragraph (c)(3)(ii)(B) of this section, 

is greater than ten percent below the 

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18458 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

annual household income computed in 

accordance with paragraph (c)(3)(ii)(A), 

or if data described in paragraph (c)(1)(i) 

of this section is unavailable, the 

Exchange must attempt to verify the 

applicant’s attestation of the tax filer’s 

projected annual household income for 

the tax filer by— 

(A) Using annualized data from the 

MAGI-based income sources specified 

in paragraph (c)(1)(ii) of this section; 

(B) Using other electronic data 

sources that have been approved by 

HHS, based on evidence showing that 

such data sources are sufficiently 

accurate and offer less administrative 

complexity than paper verification; or 

(C) If electronic data are unavailable 

or do not support an applicant’s 

attestation, the Exchange must follow 

the procedures specified in 

§ 155.315(f)(1) through (4). 

(D) If, following the 90-day period 

described in paragraph (c)(3)(vi)(C) of 

this section, an applicant has not 

responded to a request for additional 

information from the Exchange and the 

data sources specified in paragraph 

(c)(1) of this section indicate that an 

applicant in the tax filer’s family is 

eligible for Medicaid or CHIP, the 

Exchange must not provide the 

applicant with eligibility for advance 

payments of the premium tax credit, 

cost-sharing reductions, Medicaid, CHIP 

or the BHP, if a BHP is operating in the 

service area of the Exchange. 

(E) If, at the conclusion of the period 

specified in paragraph (c)(3)(vi)(C) of 

this section, the Exchange remains 

unable to verify the applicant’s 

attestation, the Exchange must 

determine the applicant’s eligibility 

based on the information described in 

paragraph (c)(3)(ii)(A) of this section, 

notify the applicant of such 

determination in accordance with the 

notice requirements specified in 

§ 155.310(g), and implement such 

determination in accordance with the 

effective dates specified in § 155.330(f). 

(F) If, at the conclusion of the period 

specified in paragraph (c)(3)(vi)(C) of 

this section, the Exchange remains 

unable to verify the applicant’s 

attestation for the tax filer and the 

information described in paragraph 

(c)(3)(ii)(A) of this section is 

unavailable, the Exchange must 

determine the tax filer ineligible for 

advance payments of the premium tax 

credit and cost-sharing reductions, 

notify the applicant of such 

determination in accordance with the 

notice requirement specified in 

§ 155.310(g), and discontinue any 

advance payments of the premium tax 

credit and cost-sharing reductions in 

accordance with the effective dates 

specified in § 155.330(f). 

(vii) For the purposes of this 

paragraph (c)(3), ‘‘household income’’ 

means household income as specified in 

section 36B(d)(2) of the Code. 

(viii) For purposes of paragraph (c)(3) 

of this section, ‘‘family size’’ means 

family size as specified in section 

36B(d)(1) of the Code. 

(4) The Exchange must provide 

education and assistance to an applicant 

regarding the process specified in this 

paragraph. 

(d) Verification related to enrollment 

in an eligible employer-sponsored plan. 

(1) Except as provided in paragraph 

(d)(2) of this section, the Exchange must 

verify whether an applicant who 

requested an eligibility determination 

for insurance affordability programs is 

enrolled in an eligible employersponsored plan or reasonably expects to 

be enrolled in an eligible employersponsored plan for the benefit year for 

which coverage is requested by 

accepting an applicant’s attestation 

without further verification. 

(2) If the Exchange finds that an 

applicant’s attestation regarding 

enrollment in an eligible employersponsored plan is not reasonably 

compatible with other information 

provided by the applicant or in the 

records of the Exchange, the Exchange 

must utilize data obtained through 

electronic data sources to verify the 

attestation. If such data sources are 

unavailable or information in such data 

sources is not reasonably compatible 

with the applicant’s attestation, the 

Exchange may request additional 

documentation to support the 

attestation within the procedures 

specified in § 155.315(f). 

(e) Verification related to eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan. (1) The 

Exchange must require an applicant to 

attest to an applicant’s eligibility for 

qualifying coverage in an eligible 

employer-sponsored plan for the benefit 

year for which coverage is requested for 

the purposes of eligibility for advance 

payments of the premium tax credit and 

cost-sharing reductions, and to provide 

information identified in section 

1411(b)(4) of the Affordable Care Act. 

(2) The Exchange must verify whether 

an applicant is eligible for qualifying 

coverage in an eligible employersponsored plan for the purposes of 

eligibility for advance payments of the 

premium tax credit and cost-sharing 

reductions. 

(f) Additional verification related to 

immigration status for Medicaid and 

CHIP. (1) For purposes of determining 

eligibility for Medicaid, the Exchange 

must verify whether an applicant who 

does not attest to being a citizen or a 

national has satisfactory immigration 

status to be eligible for Medicaid, as 

required by 42 CFR 435.406 and, if 

applicable under the State Medicaid 

plan, section 1903(v)(4) of the Act. 

(2) For purposes of determining 

eligibility for CHIP, the Exchange must 

verify whether an applicant who does 

not attest to being a citizen or a national 

has satisfactory immigration status to be 

eligible for CHIP, in accordance with 42 

CFR 457.320(b) and if applicable under 

the State Child Health Plan, section 

2107(e)(1)(J) of the Act. 

§ 155.330 Eligibility redetermination during 

a benefit year. 

(a) General requirement. The 

Exchange must redetermine the 

eligibility of an enrollee in a QHP 

through the Exchange during the benefit 

year if it receives and verifies new 

information reported by an enrollee or 

identifies updated information through 

the data matching described in 

paragraph (d) of this section. 

(b) Requirement for individuals to 

report changes. (1) Except as specified 

in paragraphs (b)(2) and (3) of this 

section, the Exchange must require an 

enrollee to report any change with 

respect to the eligibility standards 

specified in § 155.305 within 30 days of 

such change. 

(2) The Exchange must not require an 

enrollee who did not request an 

eligibility determination for insurance 

affordability programs to report changes 

that affect eligibility for insurance 

affordability programs. 

(3) The Exchange may establish a 

reasonable threshold for changes in 

income, such that an enrollee who 

experiences a change in income that is 

below the threshold is not required to 

report such change. 

(4) The Exchange must allow an 

enrollee, or an application filer, on 

behalf of the enrollee, to report changes 

via the channels available for the 

submission of an application, as 

described in § 155.405(c). 

(c) Verification of reported changes. 

The Exchange must— 

(1) Verify any information reported by 

an enrollee in accordance with the 

processes specified in §§ 155.315 and 

155.320 prior to using such information 

in an eligibility redetermination; and 

(2) Provide periodic electronic 

notifications regarding the requirements 

for reporting changes and an enrollee’s 

opportunity to report any changes as 

described in paragraph (b)(3) of this 

section, to an enrollee who has elected 

to receive electronic notifications, 

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unless he or she has declined to receive 

notifications under this paragraph (c)(2). 

(d) Periodic examination of data 

sources. (1) The Exchange must 

periodically examine available data 

sources described in § 155.315(b)(1) and 

§ 155.320(b) to identify the following 

changes: 

(i) Death; and 

(ii) Eligibility determinations for 

Medicare, Medicaid, CHIP, or the BHP, 

if a BHP is operating in the service area 

of the Exchange. 

(2) Flexibility. The Exchange may 

make additional efforts to identify and 

act on changes that may affect an 

enrollee’s eligibility for enrollment in a 

QHP through the Exchange or for 

insurance affordability programs, 

provided that such efforts— 

(i) Would reduce the administrative 

costs and burdens on individuals while 

maintaining accuracy and minimizing 

delay, that it would not undermine 

coordination with Medicaid and CHIP, 

and that applicable requirements under 

§§ 155.260, 155.270, 155.315(i), and 

section 6103 of the Code with respect to 

the confidentiality, disclosure, 

maintenance, or use of such information 

will be met; and 

(ii) Comply with the standards 

specified in paragraphs (e)(2) and (3) of 

this section. 

(e) Redetermination and notification 

of eligibility. (1) Enrollee-reported data. 

If the Exchange verifies updated 

information reported by an enrollee, the 

Exchange must— 

(i) Redetermine the enrollee’s 

eligibility in accordance with the 

standards specified in § 155.305; 

(ii) Notify the enrollee regarding the 

determination in accordance with the 

requirements specified in § 155.310(g); 

and 

(iii) Notify the enrollee’s employer, as 

applicable, in accordance with the 

requirements specified in § 155.310(h). 

(2) Data matching not regarding 

income, family size and family 

composition. If the Exchange identifies 

updated information through the data 

matching taken in accordance with 

paragraph (d)(1) or through other data 

matching under paragraph (d)(2) of this 

section, with the exception of data 

matching related to income, the 

Exchange must— 

(i) Notify the enrollee regarding the 

updated information, as well as the 

enrollee’s projected eligibility 

determination after considering such 

information; 

(ii) Allow an enrollee 30 days from 

the date of the notice to notify the 

Exchange that such information is 

inaccurate; and 

(iii) If the enrollee responds 

contesting the updated information, 

proceed in accordance with § 155.315(f). 

(iv) If the enrollee does not respond 

within the 30-day period specified in 

paragraph (e)(2)(ii), proceed in 

accordance with paragraphs (e)(1)(i) and 

(ii) of this section. 

(3) Data matching regarding income, 

family size and family composition. If 

the Exchange identifies updated 

information regarding income, family 

size and composition through the data 

matching taken in accordance with 

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

Exchange must— 

(i) Follow procedures described in 

paragraph (e)(2)(i) and (ii) of this 

section; and 

(ii) If the enrollee responds 

confirming the updated information or 

providing more up to date information, 

proceed in accordance with paragraphs 

(e)(1)(i) and (ii) of this section. 

(iii) If the enrollee does not respond 

within the 30-day period specified in 

paragraph (e)(2)(ii) of this section, 

maintain the enrollee’s existing 

eligibility determination without 

considering the updated information. 

(f) Effective dates. (1) Except as 

specified in paragraphs (f)(2) or (3) of 

this section, the Exchange must 

implement changes resulting from a 

redetermination under this section on 

the first day of the month following the 

date of the notice described in 

paragraph (e)(1)(ii) of this section. 

(2) The Exchange may determine a 

reasonable point in a month after which 

a change captured through a 

redetermination will not be effective 

until the first day of the month after the 

month specified in paragraph (f)(1) of 

this section. Such reasonable point in a 

month must be no earlier than the date 

described in § 155.420(b)(2). 

(3) In the case of a redetermination 

that results in an enrollee being 

ineligible to continue his or her 

enrollment in a QHP through the 

Exchange, the Exchange must maintain 

his or her eligibility for enrollment in a 

QHP without advance payments of the 

premium tax credit and cost-sharing 

reductions, in accordance with the 

effective dates described in 

§ 155.430(d)(3). 

§ 155.335 Annual eligibility 

redetermination. 

(a) General requirement. Except as 

specified in paragraph (l) of this section, 

the Exchange must redetermine the 

eligibility of an enrollee in a QHP 

through the Exchange on an annual 

basis. 

(b) Updated income and family size 

information. In the case of an enrollee 

who requested an eligibility 

determination for insurance 

affordability programs in accordance 

with § 155.310(b), the Exchange must 

request updated tax return information, 

if the enrollee has authorized the 

request of such tax return information, 

and data regarding MAGI-based income 

as described in § 155.320(c)(1) for use in 

the enrollee’s eligibility 

redetermination. 

(c) Notice to enrollee. The Exchange 

must provide an enrollee with an 

annual redetermination notice including 

the following: 

(1) The data obtained under paragraph 

(b) of this section, if applicable; and 

(2) The data used in the enrollee’s 

most recent eligibility determination; 

and 

(3) The enrollee’s projected eligibility 

determination for the following year, 

after considering any updated 

information described in paragraph 

(c)(1) of this section, including, if 

applicable, the amount of any advance 

payments of the premium tax credit and 

the level of any cost-sharing reductions 

or eligibility for Medicaid, CHIP or BHP. 

(d) Timing. (1) For redeterminations 

under this section for coverage effective 

January 1, 2015, the Exchange must 

satisfy the notice provisions of 

paragraph (c) of this section and 

§ 155.410(d) through a single, 

coordinated notice. 

(2) For redeterminations under this 

section for coverage effective on or after 

January 1, 2017, the Exchange may send 

the notice specified in paragraph (c) of 

this section separately from the notice of 

annual open enrollment specified in 

§ 155.410(d), provided that— 

(i) The Exchange sends the notice 

specified in paragraph (c) of this section 

no earlier than the date of the notice of 

annual open enrollment specified in 

§ 155.410(d); and 

(ii) The timing of the notice specified 

in paragraph (c) of this section allows a 

reasonable amount of time for the 

enrollee to review the notice, provide a 

timely response, and for the Exchange to 

implement any changes in coverage 

elected during the annual open 

enrollment period. 

(e) Changes reported by enrollees. (1) 

The Exchange must require an enrollee 

to report any changes with respect to the 

information listed in the notice 

described in paragraph (c) of this 

section within 30 days from the date of 

the notice. 

(2) The Exchange must allow an 

enrollee, or an application filer, on 

behalf of the enrollee, to report changes 

via the channels available for the 

submission of an application, as 

described in § 155.405(c)(2). 

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(f) Verification of reported changes. 

The Exchange must verify any 

information reported by an enrollee 

under paragraph (e) of this section using 

the processes specified in § 155.315 and 

§ 155.320, including the relevant 

provisions in those sections regarding 

inconsistencies, prior to using such 

information to determine eligibility. 

(g) Response to redetermination 

notice. (1) The Exchange must require 

an enrollee, or an application filer, on 

behalf of the enrollee, to sign and return 

the notice described in paragraph (c) of 

this section. 

(2) To the extent that an enrollee does 

not sign and return the notice described 

in paragraph (c) of this section within 

the 30-day period specified in paragraph 

(e) of this section, the Exchange must 

proceed in accordance with the 

procedures specified in paragraph (h)(1) 

of this section. 

(h) Redetermination and notification 

of eligibility. (1) After the 30-day period 

specified in paragraph (e) of this section 

has elapsed, the Exchange must— 

(i) Redetermine the enrollee’s 

eligibility in accordance with the 

standards specified in § 155.305 using 

the information provided to the 

individual in the notice specified in 

paragraph (c), as supplemented with 

any information reported by the enrollee 

and verified by the Exchange in 

accordance with paragraphs (e) and (f) 

of this section; 

(ii) Notify the enrollee in accordance 

with the requirements specified in 

§ 155.310(g); and 

(iii) If applicable, notify the enrollee’s 

employer, in accordance with the 

requirements specified in § 155.310(h). 

(2) If an enrollee reports a change 

with respect to the information 

provided in the notice specified in 

paragraph (c) of this section that the 

Exchange has not verified as of the end 

of the 30-day period specified in 

paragraph (e) of this section, the 

Exchange must redetermine the 

enrollee’s eligibility after completing 

verification, as specified in paragraph (f) 

of this section. 

(i) Effective date of annual 

redetermination. The Exchange must 

ensure that a redetermination under this 

section is effective on the first day of the 

coverage year following the year in 

which the Exchange provided the notice 

in paragraph (c) of this section, or in 

accordance with the rules specified in 

§ 155.330(f) regarding effective dates, 

whichever is later. 

(j) Renewal of coverage. If an enrollee 

remains eligible for coverage in a QHP 

upon annual redetermination, such 

enrollee will remain in the QHP 

selected the previous year unless such 

enrollee terminates coverage from such 

plan, including termination of coverage 

in connection with enrollment in a 

different QHP, in accordance with 

§ 155.430. 

(k) Authorization of the release of tax 

data to support annual redetermination. 

(1) The Exchange must have 

authorization from an enrollee in order 

to obtain updated tax return information 

described in paragraph (b) of this 

section for purposes of conducting an 

annual redetermination. 

(2) The Exchange is authorized to 

obtain the updated tax return 

information described in paragraph (b) 

of this section for a period of no more 

than five years based on a single 

authorization, provided that— 

(i) An individual may decline to 

authorize the Exchange to obtain 

updated tax return information; or 

(ii) An individual may authorize the 

Exchange to obtain updated tax return 

information for fewer than five years; 

and 

(iii) The Exchange must allow an 

individual to discontinue, change, or 

renew his or her authorization at any 

time. 

(l) Limitation on redetermination. To 

the extent that an enrollee has requested 

an eligibility determination for 

insurance affordability programs in 

accordance with § 155.310(b) and the 

Exchange does not have an active 

authorization to obtain tax data as a part 

of the annual redetermination process, 

the Exchange must notify the enrollee in 

accordance with the timing described in 

paragraph (d) of this section. The 

Exchange may not proceed with the 

redetermination process described in 

paragraphs (c) and (e) through (j) of this 

section until such authorization has 

been obtained or the enrollee 

discontinues his or her request for an 

eligibility determination for insurance 

affordability programs in accordance 

with § 155.310(b). 

§ 155.340 Administration of advance 

payments of the premium tax credit and 

cost-sharing reductions. 

(a) Requirement to provide 

information to enable advance 

payments of the premium tax credit and 

cost-sharing reductions. In the event 

that the Exchange determines that a tax 

filer is eligible for advance payments of 

the premium tax credit, an applicant is 

eligible for cost-sharing reductions, or 

that such eligibility for such programs 

has changed, the Exchange must, 

simultaneously— 

(1) Transmit eligibility and 

enrollment information to HHS 

necessary to enable HHS to begin, end, 

or change advance payments of the 

premium tax credit or cost-sharing 

reductions; and 

(2) Notify and transmit information 

necessary to enable the issuer of the 

QHP to implement, discontinue the 

implementation, or modify the level of 

advance payments of the premium tax 

credit or cost-sharing reductions, as 

applicable, including: 

(i) The dollar amount of the advance 

payment; and 

(ii) The cost-sharing reductions 

eligibility category. 

(b) Requirement to provide 

information related to employer 

responsibility. (1) In the event that the 

Exchange determines that an individual 

is eligible for advance payments of the 

premium tax credit or cost-sharing 

reductions based in part on a finding 

that an individual’s employer does not 

provide minimum essential coverage, or 

provides minimum essential coverage 

that is unaffordable, within the standard 

of section 36B(c)(2)(C)(i) of the Code, or 

does not meet the minimum value 

requirement specified in section 

36B(c)(2)(C)(ii) of the Code, the 

Exchange must transmit the individual’s 

name and taxpayer identification 

number to HHS. 

(2) If an enrollee for whom advance 

payments of the premium tax credit are 

made or who is receiving cost-sharing 

reductions notifies the Exchange that he 

or she has changed employers, the 

Exchange must transmit the enrollee’s 

name and taxpayer identification 

number to HHS. 

(3) In the event that an individual for 

whom advance payments of the 

premium tax credit are made or who is 

receiving cost-sharing reductions 

terminates coverage from a QHP through 

the Exchange during a benefit year, the 

Exchange must— 

(i) Transmit the individual’s name 

and taxpayer identification number, and 

the effective date of coverage 

termination, to HHS, which will 

transmit it to the Secretary of the 

Treasury; and, 

(ii) Transmit the individual’s name 

and the effective date of the termination 

of coverage to his or her employer. 

(c) Requirement to provide 

information related to reconciliation of 

advance payments of the premium tax 

credit. The Exchange must comply with 

the requirements specified in section 

36B(f)(3) of the Code regarding reporting 

to the IRS and to taxpayers. 

(d) Timeliness standard. The 

Exchange must transmit all information 

required in accordance with paragraphs 

(a) and (b) of this section promptly and 

without undue delay. 

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§ 155.345 Coordination with Medicaid, 

CHIP, the Basic Health Program, and the 

Pre-existing Condition Insurance Plan. 

(a) Agreements. The Exchange must 

enter into agreements with agencies 

administering Medicaid, CHIP, and the 

BHP as are necessary to fulfill the 

requirements of this subpart and 

provide copies of any such agreements 

to HHS upon request. Such agreements 

must include a clear delineation of the 

responsibilities of each program to— 

(1) Minimize burden on individuals; 

(2) Ensure prompt determinations of 

eligibility and enrollment in the 

appropriate program without undue 

delay, based on the date the application 

is submitted to or redetermination is 

initiated by the agency administering 

Medicaid, CHIP, or the BHP, or to the 

Exchange; and 

(3) Ensure compliance with 

paragraphs (c), (d), (e), and (g) of this 

section. 

(b) Responsibilities related to 

individuals potentially eligible for 

Medicaid based on other information or 

through other coverage groups. For an 

applicant who is not eligible for 

Medicaid based on the standards 

specified in § 155.305(c), the Exchange 

must assess the information provided by 

the applicant on his or her application 

to determine whether he or she is 

potentially eligible for Medicaid based 

on factors not otherwise considered in 

this subpart. 

(c) Individuals requesting additional 

screening. The Exchange must notify an 

applicant of the opportunity to request 

a full determination of eligibility for 

Medicaid based on eligibility criteria 

that are not described in § 155.305(c), 

and provide such an opportunity. The 

Exchange must also make such 

notification to an enrollee and provide 

an enrollee such opportunity in any 

determination made in accordance with 

§ 155.330 or § 155.335. 

(d) Notification of applicant and State 

Medicaid agency. If an Exchange 

identifies an applicant as potentially 

eligible for Medicaid under paragraph 

(b) of this section or an applicant 

requests a full determination for 

Medicaid under paragraph (c) of this 

section, the Exchange must— 

(1) Transmit all information provided 

on the application and any information 

obtained or verified by, the Exchange to 

the State Medicaid agency, promptly 

and without undue delay; and 

(2) Notify the applicant of such 

transmittal. 

(e) Treatment of referrals to Medicaid 

on eligibility for advance payments of 

the premium tax credit and cost-sharing 

reductions. The Exchange must consider 

an applicant who is described in 

paragraph (d) of this section and has not 

been determined eligible for Medicaid 

based on the standards specified in 

§ 155.305(c) as ineligible for Medicaid 

for purposes of eligibility for advance 

payments of the premium tax credit or 

cost-sharing reductions until the State 

Medicaid agency notifies the Exchange 

that the applicant is eligible for 

Medicaid. 

(f) Special rule. If the Exchange 

verifies that a tax filer’s household 

income, as defined in section 36B(d)(2) 

of the Code, is less than 100 percent of 

the FPL for the benefit year for which 

coverage is requested, determines that 

the tax filer is not eligible for advance 

payments of the premium tax credit 

based on § 155.305(f)(2), and one or 

more applicants in the tax filer’s 

household has been determined 

ineligible for Medicaid and CHIP based 

on income, the Exchange must— 

(1) Provide the applicant with any 

information regarding income used in 

the Medicaid and CHIP eligibility 

determination; and 

(2) Follow the procedures specified in 

§ 155.320(c)(3). 

(g) Determination of eligibility for 

individuals submitting applications 

directly to an agency administering 

Medicaid, CHIP, or the BHP. The 

Exchange, in consultation with the 

agencies administering Medicaid, CHIP, 

or the BHP, if a BHP is operating in the 

service area of the Exchange, must 

establish procedures to ensure that an 

eligibility determination for enrollment 

in a QHP, advance payments of the 

premium tax credit and cost-sharing 

reductions is performed when an 

application is submitted directly to an 

agency administering Medicaid, CHIP, 

or the BHP, if a BHP is operating in the 

service area of the Exchange. Under 

such procedures, the Exchange must— 

(1) Accept, via secure electronic 

interface, all information provided on 

the application and any information 

obtained or verified by, the agency 

administering Medicaid, CHIP, or the 

BHP, if a BHP is operating in the service 

area of the Exchange, for the individual, 

and not require submission of another 

application; 

(2) Not duplicate any eligibility and 

verification findings already made by 

the transmitting agency, to the extent 

such findings are made in accordance 

with this subpart; 

(3) Not request information of 

documentation from the individual 

already provided to another insurance 

affordability program and included in 

the transmission of information 

provided on the application or other 

information transmitted from the other 

program; 

(4) Determine the individual’s 

eligibility for enrollment in a QHP, 

advance payments of the premium tax 

credit, and cost-sharing reductions, 

promptly and without undue delay, and 

in accordance with this subpart; and 

(5) Provide for following a 

streamlined process for eligibility 

determinations regardless of the agency 

that initially received an application. 

(h) Standards for sharing information 

between the Exchange and the agencies 

administering Medicaid, CHIP, and the 

BHP. (1) The Exchange must utilize a 

secure electronic interface to exchange 

data with the agencies administering 

Medicaid, CHIP, and the BHP, if a BHP 

is operating in the service area of the 

Exchange, including to verify whether 

an applicant for insurance affordability 

programs has been determined eligible 

for Medicaid, CHIP, or the BHP, as 

specified in § 155.320(b)(2), and for 

other functions required under this 

subpart. 

(2) Model agreements. The Exchange 

may utilize any model agreements as 

established by HHS for the purpose of 

sharing data as described in this section. 

(i) Transition from the Pre-existing 

Condition Insurance Plan (PCIP). The 

Exchange must follow procedures 

established in accordance with 45 CFR 

152.45 to transition PCIP enrollees to 

the Exchange to ensure that there are no 

lapses in health coverage. 

§ 155.350 Special eligibility standards and 

process for Indians. 

(a) Eligibility for cost-sharing 

reductions. (1) The Exchange must 

determine an applicant who is an Indian 

eligible for cost-sharing reductions if he 

or she— 

(i) Meets the requirements specified 

in § 155.305(a) and § 155.305(f); 

(ii) Is expected to have a household 

income, as defined in section 36B(d)(2) 

of the Code, that does not exceed 300 

percent of the FPL for the benefit year 

for which coverage is requested. 

(2) The Exchange may only provide 

cost-sharing reductions to an individual 

who is an Indian if he or she is enrolled 

in a QHP through the Exchange. 

(b) Special cost-sharing rule for 

Indians regardless of income. The 

Exchange must determine an applicant 

eligible for the special cost-sharing rule 

described in section 1402(d)(2) of the 

Affordable Care Act if he or she is an 

Indian, without requiring the applicant 

to request an eligibility determination 

for insurance affordability programs in 

accordance with § 155.310(b) in order to 

qualify for this rule. 

(c) Verification related to Indian 

status. To the extent that an applicant 

attests that he or she is an Indian, the 

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Exchange must verify such attestation 

by— 

(1) Utilizing any relevant 

documentation verified in accordance 

with § 155.315(f); 

(2) Relying on any electronic data 

sources that are available to the 

Exchange and which have been 

approved by HHS for this purpose, 

based on evidence showing that such 

data sources are sufficiently accurate 

and offer less administrative complexity 

than paper verification; or 

(3) To the extent that approved data 

sources are unavailable, an individual is 

not represented in available data 

sources, or data sources are not 

reasonably compatible with an 

applicant’s attestation, the Exchange 

must follow the procedures specified in 

§ 155.315(f) and verify documentation 

provided by the applicant in accordance 

with the standards for acceptable 

documentation provided in section 

1903(x)(3)(B)(v) of the Social Security 

Act. 

§ 155.355 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 eligibility 

determination notice issued to the 

applicant in accordance with 

§ 155.310(g), § 155.330(e)(1)(ii), or 

§ 155.335(h)(1)(ii). 

Subpart E—Exchange Functions in the 

Individual Market: Enrollment in 

Qualified Health Plans 

§ 155.400 Enrollment of qualified 

individuals into QHPs. 

(a) General requirements. The 

Exchange must accept a QHP selection 

from an applicant who is determined 

eligible for enrollment in a QHP in 

accordance with subpart D, and must— 

(1) Notify the issuer of the applicant’s 

selected QHP; and 

(2) Transmit information necessary to 

enable the QHP issuer to enroll the 

applicant. 

(b) Timing of data exchange. The 

Exchange must: 

(1) Send eligibility and enrollment 

information to QHP issuers and HHS 

promptly and without undue delay; and 

(2) Establish a process by which a 

QHP issuer acknowledges the receipt of 

such information. 

(c) Records. The Exchange must 

maintain records of all enrollments in 

QHP issuers through the Exchange. 

(d) Reconcile files. The Exchange 

must reconcile enrollment information 

with QHP issuers and HHS no less than 

on a monthly basis. 

§ 155.405 Single streamlined application. 

(a) The application. The Exchange 

must use a single streamlined 

application to determine eligibility and 

to collect information necessary for: 

(1) Enrollment in a QHP; 

(2) Advance payments of the premium 

tax credit; 

(3) Cost-sharing reductions; and 

(4) Medicaid, CHIP, or the BHP, 

where applicable. 

(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) Filing the single streamlined 

application. The Exchange must— 

(1) Accept the single streamlined 

application from an application filer; 

(2) Provide the tools to file an 

application— 

(i) Via an Internet Web site; 

(ii) By telephone through a call center; 

(iii) By mail; and 

(iv) In person, with reasonable 

accommodations for those with 

disabilities, as defined by the Americans 

with Disabilities Act. 

§ 155.410 Initial and annual open 

enrollment periods. 

(a) General requirements. (1) The 

Exchange must provide an initial open 

enrollment period and annual open 

enrollment periods consistent with this 

section, during which qualified 

individuals may enroll in a QHP and 

enrollees may change QHPs. 

(2) The Exchange may only permit a 

qualified individual to enroll in a QHP 

or an enrollee to change QHPs during 

the initial open enrollment period 

specified in paragraph (b) of this 

section, the annual open enrollment 

period specified in paragraph (e) of this 

section, or a special enrollment period 

described in § 155.420 of this subpart 

for which the qualified individual has 

been determined eligible. 

(b) Initial open enrollment period. 

The initial open enrollment period 

begins October 1, 2013 and extends 

through March 31, 2014. 

(c) Effective coverage dates for initial 

open enrollment period. (1) Regular 

effective dates. For a QHP selection 

received by the Exchange from a 

qualified individual— 

(i) On or before December 15, 2013, 

the Exchange must ensure a coverage 

effective date of January 1, 2014; 

(ii) Between the first and fifteenth day 

of any subsequent month during the 

initial open enrollment period, the 

Exchange must ensure a coverage 

effective date of the first day of the 

following month; and 

(iii) Between the sixteenth and last 

day of the month for any month 

between December 2013 and March 31, 

2014, the Exchange must ensure a 

coverage effective date of the first day of 

the second following month. 

(2) Option for earlier effective dates. 

Subject to the Exchange demonstrating 

to HHS that all of its participating QHP 

issuers agree to effectuate coverage in a 

timeframe shorter than discussed in 

paragraphs (c)(1)(ii) and (iii) of this 

section, the Exchange may do one or 

both of the following for all applicable 

individuals: 

(i) For a QHP selection received by 

the Exchange from a qualified 

individual in accordance with the dates 

specified in paragraph (c)(1)(ii) or (iii) of 

this section, the Exchange may provide 

a coverage effective date for a qualified 

individual earlier than specified in such 

paragraphs, provided that either— 

(A) The qualified individual has not 

been determined eligible for advance 

payments of the premium tax credit or 

cost-sharing reductions; or 

(B) The qualified individual pays the 

entire premium for the first partial 

month of coverage as well as all cost 

sharing, thereby waiving the benefit of 

advance payments of the premium tax 

credit and cost-sharing reduction 

payments until the first of the next 

month. 

(ii) For a QHP selection received by 

the Exchange from a qualified 

individual on a date set by the Exchange 

after the fifteenth of the month for any 

month between December 2013 and 

March 31, 2014, the Exchange may 

provide a coverage effective date of the 

first of the following month. 

(d) Notice of annual open enrollment 

period. Starting in 2014, the Exchange 

must provide a written annual open 

enrollment notification to each enrollee 

no earlier than September 1, and no 

later than September 30. 

(e) Annual open enrollment period. 

For benefit years beginning on or after 

January 1, 2015, the annual open 

enrollment period begins October 15 

and extends through December 7 of the 

preceding calendar year. 

(f) Effective date for coverage after the 

annual open enrollment period. The 

Exchange must ensure coverage is 

effective as of the first day of the 

following benefit year for a qualified 

individual who has made a QHP 

selection during the annual open 

enrollment period. 

(g) Automatic enrollment. The 

Exchange may automatically enroll 

qualified individuals, at such time and 

in such manner as HHS may specify, 

and subject to the Exchange 

demonstrating to HHS that it has good 

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cause to perform such automatic 

enrollments. 

§ 155.420 Special enrollment periods. 

(a) General requirements. The 

Exchange must provide special 

enrollment periods consistent with this 

section, during which qualified 

individuals may enroll in QHPs and 

enrollees may change QHPs. 

(b) Effective dates. (1) Regular 

effective dates. Except as specified in 

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

for a QHP selection received by the 

Exchange from a qualified individual— 

(i) Between the first and the fifteenth 

day of any month, the Exchange must 

ensure a coverage effective date of the 

first day of the following month; and 

(ii) Between the sixteenth and the last 

day of any month, the Exchange must 

ensure a coverage effective date of the 

first day of the second following month. 

(2) Special effective dates. (i) In the 

case of birth, adoption or placement for 

adoption, the Exchange must ensure 

that coverage is effective on the date of 

birth, adoption, or placement for 

adoption, but advance payments of the 

premium tax credit and cost-sharing 

reductions, if applicable, are not 

effective until the first day of the 

following month, unless the birth, 

adoption, or placement for adoption 

occurs on the first day of the month; and 

(ii) In the case of marriage, or in the 

case where a qualified individual loses 

minimum essential coverage, as 

described in paragraph (d)(1) of this 

section, the Exchange must ensure 

coverage is effective on the first day of 

the following month. 

(3) Option for earlier effective dates. 

Subject to the Exchange demonstrating 

to HHS that all of its participating QHP 

issuers agree to effectuate coverage in a 

timeframe shorter than discussed in 

paragraph (b)(1) or (b)(2)(ii) of this 

section, the Exchange may do one or 

both of the following for all applicable 

individuals: 

(i) For a QHP selection received by 

the Exchange from a qualified 

individual in accordance with the dates 

specified in paragraph (b)(1) or (b)(2)(ii) 

of this section, the Exchange may 

provide a coverage effective date for a 

qualified individual earlier than 

specified in such paragraphs, provided 

that either— 

(A) The qualified individual has not 

been determined eligible for advance 

payments of the premium tax credit or 

cost-sharing reductions; or 

(B) The qualified individual pays the 

entire premium for the first partial 

month of coverage as well as all cost 

sharing, thereby waiving the benefit of 

advance payments of the premium tax 

credit and cost-sharing reduction 

payments until the first of the next 

month. 

(ii) For a QHP selection received by 

the Exchange from a qualified 

individual on a date set by the Exchange 

after the fifteenth of the month, the 

Exchange may provide a coverage 

effective date of the first of the following 

month. 

(c) Length of special enrollment 

periods. Unless specifically stated 

otherwise herein, a qualified individual 

or enrollee has 60 days from the date of 

a triggering event to select a QHP. 

(d) Special enrollment periods. The 

Exchange must allow qualified 

individuals and enrollees to enroll in or 

change from one QHP to another as a 

result of the following triggering events: 

(1) A qualified individual or 

dependent loses minimum essential 

coverage; 

(2) A qualified individual gains a 

dependent or becomes a dependent 

through marriage, birth, adoption or 

placement for adoption; 

(3) An individual, who was not 

previously a citizen, national, or 

lawfully present individual gains such 

status; 

(4) A qualified individual’s 

enrollment or non-enrollment in a QHP 

is unintentional, inadvertent, or 

erroneous and is the result of the error, 

misrepresentation, or inaction of an 

officer, employee, or agent of the 

Exchange or HHS, or its 

instrumentalities as evaluated and 

determined by the Exchange. In such 

cases, the Exchange may take such 

action as may be necessary to correct or 

eliminate the effects of such error, 

misrepresentation, or inaction; 

(5) An enrollee adequately 

demonstrates to the Exchange that the 

QHP in which he or she is enrolled 

substantially violated a material 

provision of its contract in relation to 

the enrollee; 

(6) An individual is determined 

newly eligible or newly ineligible for 

advance payments of the premium tax 

credit or has a change in eligibility for 

cost-sharing reductions, regardless of 

whether such individual is already 

enrolled in a QHP. The Exchange must 

permit individuals whose existing 

coverage through an eligible employersponsored plan will no longer be 

affordable or provide minimum value 

for his or her employer’s upcoming plan 

year to access this special enrollment 

period prior to the end of his or her 

coverage through such eligible 

employer-sponsored plan; 

(7) A qualified individual or enrollee 

gains access to new QHPs as a result of 

a permanent move; 

(8) An Indian, as defined by section 

4 of the Indian Health Care 

Improvement Act, may enroll in a QHP 

or change from one QHP to another one 

time per month; and 

(9) A qualified individual or enrollee 

demonstrates to the Exchange, in 

accordance with guidelines issued by 

HHS, that the individual meets other 

exceptional circumstances as the 

Exchange may provide. 

(e) Loss of minimum essential 

coverage. Loss of minimum essential 

coverage includes those circumstances 

described in 26 CFR 54.9801–6(a)(3)(i) 

through (iii). Loss of coverage does not 

include termination or loss due to— 

(1) Failure to pay premiums on a 

timely basis, including COBRA 

premiums prior to expiration of COBRA 

coverage, or 

(2) Situations allowing for a rescission 

as specified in 45 CFR 147.128. 

§ 155.430 Termination of coverage. 

(a) General requirements. The 

Exchange must determine the form and 

manner in which coverage in a QHP 

may be terminated. 

(b) Termination events. (1) The 

Exchange must permit an enrollee to 

terminate his or her coverage in a QHP, 

including as a result of the enrollee 

obtaining other minimum essential 

coverage, with appropriate notice to the 

Exchange or the QHP. 

(2) The Exchange may initiate 

termination of an enrollee’s coverage in 

a QHP, and must permit a QHP issuer 

to terminate such coverage, in the 

following circumstances: 

(i) The enrollee is no longer eligible 

for coverage in a QHP through the 

Exchange; 

(ii) Non-payment of premiums for 

coverage of the enrollee, and 

(A) The 3-month grace period 

required for individuals receiving 

advance payments of the premium tax 

credit has been exhausted as described 

in § 156.270(g); or, 

(B) Any other grace period not 

described in paragraph (b)(2)(ii)(A) of 

this section has been exhausted; 

(iii) The enrollee’s coverage is 

rescinded in accordance with § 147.128 

of this subtitle; 

(iv) The QHP terminates or is 

decertified as described in § 155.1080; 

or 

(v) The enrollee changes from one 

QHP to another during an annual open 

enrollment period or special enrollment 

period in accordance with § 155.410 or 

§ 155.420. 

(c) Termination of coverage tracking 

and approval. The Exchange must— 

(1) Establish mandatory procedures 

for QHP issuers to maintain records of 

termination of coverage; 

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(2) Send termination information to 

the QHP issuer and HHS, promptly and 

without undue delay, at such time and 

in such manner as HHS may specify, in 

accordance with § 155.400(b). 

(3) Require QHP issuers to make 

reasonable accommodations for all 

individuals with disabilities (as defined 

by the Americans with Disabilities Act) 

before terminating coverage for such 

individuals; and 

(4) Retain records in order to facilitate 

audit functions. 

(d) Effective dates for termination of 

coverage. (1) For purposes of this 

section, reasonable notice is defined as 

fourteen days from the requested 

effective date of termination. 

(2) In the case of a termination in 

accordance with paragraph (b)(1) of this 

section, the last day of coverage is— 

(i) The termination date specified by 

the enrollee, if the enrollee provides 

reasonable notice; 

(ii) Fourteen days after the 

termination is requested by the enrollee, 

if the enrollee does not provide 

reasonable notice; or 

(iii) On a date determined by the 

enrollee’s QHP issuer, if the enrollee’s 

QHP issuer is able to effectuate 

termination in fewer than fourteen days 

and the enrollee requests an earlier 

termination effective date. 

(iv) If the enrollee is newly eligible for 

Medicaid, CHIP, or the BHP, if a BHP 

is operating in the service area of the 

Exchange, the last day of coverage is the 

day before such coverage begins. 

(3) In the case of a termination in 

accordance with paragraph (b)(2)(i) of 

this section, the last day of coverage is 

the last day of the month following the 

month in which the notice described in 

§ 155.330(e)(1)(ii) is sent by the 

Exchange unless the individual requests 

an earlier termination effective date per 

paragraph (b)(1) of this section. 

(4) In the case of a termination in 

accordance with paragraph (b)(2)(ii)(A) 

of this section, the last day of coverage 

will be the last day of the first month 

of the 3-month grace period. 

(5) In the case of a termination in 

accordance with paragraph (b)(2)(ii)(B) 

of this section, the last day of coverage 

should be consistent with existing State 

laws regarding grace periods. 

(6) In the case of a termination in 

accordance with paragraph (b)(2)(v) of 

this section, the last day of coverage in 

an enrollee’s prior QHP is the day before 

the effective date of coverage in his or 

her new QHP. 

■ 4. Add subpart H to read as follows: 

Subpart H—Exchange Functions: Small 

Business Health Options Program (SHOP) 

Sec. 

155.700 Standards for the establishment of 

a SHOP. 

155.705 Functions of a SHOP. 

155.710 Eligibility standards for SHOP. 

155.715 Eligibility determination process 

for SHOP. 

155.720 Enrollment of employees into 

QHPs under SHOP. 

155.725 Enrollment periods under SHOP. 

155.730 Application standards for SHOP. 

Subpart H—Exchange Functions: 

Small Business Health Options 

Program (SHOP) 

§ 155.700 Standards for the establishment 

of a SHOP. 

(a) General requirement. An Exchange 

must provide for the establishment of a 

SHOP that meets the requirements of 

this subpart and is designed to assist 

qualified employers and facilitate the 

enrollment of qualified employees into 

qualified health plans. 

(b) Definition. For the purposes of this 

subpart: 

Group participation rule means a 

requirement relating to the minimum 

number of participants or beneficiaries 

that must be enrolled in relation to a 

specified percentage or number of 

eligible individuals or employees of an 

employer. 

§ 155.705 Functions of a SHOP. 

(a) Exchange functions that apply to 

SHOP. The SHOP must carry out all the 

required functions of an Exchange 

described in this subpart and in 

subparts C, E, and K of this part, except: 

(1) Requirements related to individual 

eligibility determinations in subpart D 

of this part; 

(2) Requirements related to 

enrollment of qualified individuals 

described in subpart E of this part; 

(3) The requirement to issue 

certificates of exemption in accordance 

with § 155.200(b); and 

(4) Requirements related to the 

payment of premiums by individuals, 

Indian tribes, tribal organizations and 

urban Indian organizations under 

§ 155.240. 

(b) Unique functions of a SHOP. The 

SHOP must also provide the following 

unique functions: 

(1) Enrollment and eligibility 

functions. The SHOP must adhere to the 

requirements outlined in §§ 155.710, 

155.715, 155.720, 155.725, and 155.730. 

(2) Employer choice requirements. 

With regard to QHPs offered through the 

SHOP, the SHOP must allow a qualified 

employer to select a level of coverage as 

described in section 1302(d)(1) of the 

Affordable Care Act, in which all QHPs 

within that level are made available to 

the qualified employees of the 

employer. 

(3) SHOP options with respect to 

employer choice requirements. With 

regard to QHPs offered through the 

SHOP, the SHOP may allow a qualified 

employer to make one or more QHPs 

available to qualified employees by a 

method other than the method 

described in paragraph (b)(2) of this 

section. 

(4) Premium aggregation. The SHOP 

must perform the following functions 

related to premium payment 

administration: 

(i) Provide each qualified employer 

with a bill on a monthly basis that 

identifies the employer contribution, the 

employee contribution, and the total 

amount that is due to the QHP issuers 

from the qualified employer; 

(ii) Collect from each employer the 

total amount due and make payments to 

QHP issuers in the SHOP for all 

enrollees; and 

(iii) Maintain books, records, 

documents, and other evidence of 

accounting procedures and practices of 

the premium aggregation program for 

each benefit year for at least 10 years. 

(5) QHP Certification. With respect to 

certification of QHPs in the small group 

market, the SHOP must ensure each 

QHP meets the requirements specified 

in § 156.285 of this subchapter. 

(6) Rates and rate changes. The SHOP 

must— 

(i) Require all QHP issuers to make 

any change to rates at a uniform time 

that is either quarterly, monthly, or 

annually; and 

(ii) Prohibit all QHP issuers from 

varying rates for a qualified employer 

during the employer’s plan year. 

(7) QHP availability in merged 

markets. If a State merges the individual 

market and the small group market risk 

pools in accordance with section 

1312(c)(3) of the Affordable Care Act, 

the SHOP may permit a qualified 

employee to enroll in any QHP meeting 

the following requirements of the small 

group market: 

(i) Deductible maximums described in 

section 1302(c) of the Affordable Care 

Act; and 

(ii) Levels of coverage described in 

section 1302(d) of the Affordable Care 

Act. 

(8) QHP availability in unmerged 

markets. If a State does not merge the 

individual and small group market risk 

pools, the SHOP must permit each 

qualified employee to enroll only in 

QHPs in the small group market. 

(9) SHOP expansion to large group 

market. If a State elects to expand the 

SHOP to the large group market, a SHOP 

must allow issuers of health insurance 

coverage in the large group market in 

the State to offer QHPs in such market 

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through a SHOP beginning in 2017 

provided that a large employer meets 

the qualified employer requirements 

other than that it be a small employer. 

(10) Participation rules. The SHOP 

may authorize uniform group 

participation rules for the offering of 

health insurance coverage in the SHOP. 

If the SHOP authorizes a minimum 

participation rate, such rate must be 

based on the rate of employee 

participation in the SHOP, not on the 

rate of employee participation in any 

particular QHP or QHPs of any 

particular issuer. 

(11) Premium calculator. In the 

SHOP, the premium calculator 

described in § 155.205(b)(6) must 

facilitate the comparison of available 

QHPs after the application of any 

applicable employer contribution in lieu 

of any advance payment of the premium 

tax credit and any cost-sharing 

reductions. 

§ 155.710 Eligibility standards for SHOP. 

(a) General requirement. The SHOP 

must permit qualified employers to 

purchase coverage for qualified 

employees through the SHOP. 

(b) Employer eligibility requirements. 

An employer is a qualified employer 

eligible to purchase coverage through a 

SHOP if such employer— 

(1) Is a small employer; 

(2) Elects to offer, at a minimum, all 

full-time employees coverage in a QHP 

through a SHOP; and 

(3) Either— 

(i) Has its principal business address 

in the Exchange service area and offers 

coverage to all its full-time employees 

through that SHOP; or 

(ii) Offers coverage to each eligible 

employee through the SHOP serving 

that employee’s primary worksite. 

(c) Participating in multiple SHOPs. If 

an employer meets the criteria in 

paragraph (b) of this section and makes 

the election described in (b)(3)(ii) of this 

section, a SHOP shall allow the 

employer to offer coverage to those 

employees whose primary worksite is in 

the SHOP’s service area. 

(d) Continuing eligibility. The SHOP 

must treat a qualified employer which 

ceases to be a small employer solely by 

reason of an increase in the number of 

employees of such employer as a 

qualified employer until the qualified 

employer otherwise fails to meet the 

eligibility criteria of this section or 

elects to no longer purchase coverage for 

qualified employees through the SHOP. 

(e) Employee eligibility requirements. 

An employee is a qualified employee 

eligible to enroll in coverage through a 

SHOP if such employee receives an offer 

of coverage from a qualified employer. 

§ 155.715 Eligibility determination process 

for SHOP. 

(a) General requirement. Before 

permitting the purchase of coverage in 

a QHP, the SHOP must determine that 

the employer or individual who 

requests coverage is eligible in 

accordance with the requirements of 

§ 155.710. 

(b) Applications. The SHOP must 

accept a SHOP single employer 

application form from employers and 

the SHOP single employee application 

form from employees wishing to elect 

coverage through the SHOP, in 

accordance with the relevant standards 

of § 155.730. 

(c) Verification of eligibility. For the 

purpose of verifying employer and 

employee eligibility, the SHOP— 

(1) Must verify that an individual 

applicant is identified by the employer 

as an employee to whom the qualified 

employer has offered coverage and must 

otherwise accept the information 

attested to within the application unless 

the information is inconsistent with the 

employer-provided information; 

(2) May establish, in addition to or in 

lieu of reliance on the application, 

additional methods to verify the 

information provided by the applicant 

on the applicable application; 

(3) Must collect only the minimum 

information necessary for verification of 

eligibility in accordance with the 

eligibility standards described in 

§ 155.710; and 

(4) May not perform individual 

eligibility determinations described in 

sections 1411(b)(2) or 1411(c) of the 

Affordable Care Act. 

(d) Eligibility adjustment period. (1) 

When the information submitted on the 

SHOP single employer application is 

inconsistent with the eligibility 

standards described in § 155.710, the 

SHOP must— 

(i) Make a reasonable effort to identify 

and address the causes of such 

inconsistency, including through 

typographical or other clerical errors; 

(ii) Notify the employer of the 

inconsistency; 

(iii) Provide the employer with a 

period of 30 days from the date on 

which the notice described in paragraph 

(d)(1)(ii) of this section is sent to the 

employer to either present satisfactory 

documentary evidence to support the 

employer’s application, or resolve the 

inconsistency; and 

(iv) If, after the 30-day period 

described in paragraph (d)(1)(iii) of this 

section, the SHOP has not received 

satisfactory documentary evidence, the 

SHOP must— 

(A) Notify the employer of its denial 

of eligibility in accordance with 

paragraph (e) of this section and of the 

employer’s right to appeal such 

determination; and 

(B) If the employer was enrolled 

pending the confirmation or verification 

of eligibility information, discontinue 

the employer’s participation in the 

SHOP at the end of the month following 

the month in which the notice is sent. 

(2) For an individual requesting 

eligibility to enroll in a QHP through the 

SHOP for whom the SHOP receives 

information on the application 

inconsistent with the employer 

provided information, the SHOP must— 

(i) Make a reasonable effort to identify 

and address the causes of such 

inconsistency, including through 

typographical or other clerical errors; 

(ii) Notify the individual of the 

inability to substantiate his or her 

employee status; 

(iii) Provide the employee with a 

period of 30 days from the date on 

which the notice described in paragraph 

(d)(2)(ii) of this section is sent to the 

employee to either present satisfactory 

documentary evidence to support the 

employee’s application, or resolve the 

inconsistency; and 

(iv) If, after the 30-day period 

described in paragraph (d)(2)(iii) of this 

section, the SHOP has not received 

satisfactory documentary evidence, the 

SHOP must notify the employee of its 

denial of eligibility in accordance with 

paragraph (f) of this section. 

(e) Notification of employer eligibility. 

The SHOP must provide an employer 

requesting eligibility to purchase 

coverage with a notice of approval or 

denial of eligibility and the employer’s 

right to appeal such eligibility 

determination. 

(f) Notification of employee eligibility. 

The SHOP must notify an employee 

seeking to enroll in a QHP offered 

through the SHOP of the determination 

by the SHOP whether the individual is 

eligible in accordance with § 155.710 

and the employee’s right to appeal such 

determination. 

(g) Notification of employer 

withdrawal from SHOP. If a qualified 

employer ceases to purchase coverage 

through the SHOP, the SHOP must 

ensure that— 

(1) Each QHP terminates the coverage 

of the employer’s qualified employees 

enrolled in the QHP through the SHOP; 

and 

(2) Each of the employer’s qualified 

employees enrolled in a QHP through 

the SHOP is notified of the termination 

of coverage prior to such termination. 

Such notification must also provide 

information about other potential 

sources of coverage, including access to 

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individual market coverage through the 

Exchange. 

§ 155.720 Enrollment of employees into 

QHPs under SHOP. 

(a) General requirements. The SHOP 

must process the SHOP single employee 

applications of qualified employees to 

the applicable QHP issuers and facilitate 

the enrollment of qualified employees 

in QHPs. All references to QHPs in this 

section refer to QHPs offered through 

the SHOP. 

(b) Enrollment timeline and process. 

The SHOP must establish a uniform 

enrollment timeline and process for all 

QHP issuers and qualified employers to 

follow, which includes the following 

activities that must occur before the 

effective date of coverage for qualified 

employees: 

(1) Determination of employer 

eligibility for purchase of coverage in 

the SHOP as described in § 155.715; 

(2) Qualified employer selection of 

QHPs offered through the SHOP to 

qualified employees, consistent with 

§ 155.705(b)(2) and (3); 

(3) Provision of a specific timeframe 

during which the qualified employer 

can select the level of coverage or QHP 

offering, as appropriate; 

(4) Provision of a specific timeframe 

for qualified employees to provide 

relevant information to complete the 

application process; 

(5) Determination and verification of 

employee eligibility for enrollment 

through the SHOP; 

(6) Processing enrollment of qualified 

employees into selected QHPs; and 

(7) Establishment of effective dates of 

employee coverage. 

(c) Transfer of enrollment 

information. In order to enroll qualified 

employees of a qualified employer 

participating in the SHOP, the SHOP 

must— 

(1) Transmit enrollment information 

on behalf of qualified employees to QHP 

issuers in accordance with the timeline 

and process described in paragraph (b) 

of this section; and 

(2) Follow requirements set forth in 

§ 155.400(c) of this part. 

(d) Payment. The SHOP must— 

(1) Follow requirements set forth in 

§ 155.705(b)(4) of this part; and 

(2) Terminate participation of 

qualified employers that do not comply 

with the process established in 

§ 155.705(b)(4). 

(e) Notification of effective date. The 

SHOP must ensure that a QHP issuer 

notifies a qualified employee enrolled in 

a QHP of the effective date of coverage 

consistent with § 156.260(b). 

(f) Records. The SHOP must receive 

and maintain for at least 10 years 

records of enrollment in QHPs, 

including identification of— 

(1) Qualified employers participating 

in the SHOP; and 

(2) Qualified employees enrolled in 

QHPs. 

(g) Reconcile files. The SHOP must 

reconcile enrollment information and 

employer participation information with 

QHPs on no less than a monthly basis. 

(h) Employee termination of coverage 

from a QHP. If any employee terminates 

coverage from a QHP, the SHOP must 

notify the employee’s employer. 

(i) Reporting requirement for tax 

administration purposes. The SHOP 

must report to the IRS employer 

participation, employer contribution, 

and employee enrollment information 

in a time and format to be determined 

by HHS. 

§ 155.725 Enrollment periods under SHOP. 

(a) General requirements. The SHOP 

must— 

(1) Adhere to the start of the initial 

open enrollment period set forth in 

§ 155.410; 

(2) Ensure that enrollment 

transactions are sent to QHP issuers and 

that such issuers adhere to coverage 

effective dates in accordance with 

§ 156.260 of this subchapter; and 

(3) Provide the special enrollment 

periods described in § 155.420 

excluding paragraphs (d)(3) and (6). 

(b) Rolling enrollment in the SHOP. 

The SHOP must permit a qualified 

employer to purchase coverage for its 

small group at any point during the 

year. The employer’s plan year must 

consist of the 12-month period 

beginning with the qualified employer’s 

effective date of coverage. 

(c) Annual employer election period. 

The SHOP must provide qualified 

employers with a period of no less than 

30 days prior to the completion of the 

employer’s plan year and before the 

annual employee open enrollment 

period, in which the qualified employer 

may change its participation in the 

SHOP for the next plan year, 

including— 

(1) The method by which the 

qualified employer makes QHPs 

available to qualified employees 

pursuant to § 155.705(b)(2) and (3); 

(2) The employer contribution 

towards the premium cost of coverage; 

(3) The level of coverage offered to 

qualified employees as described in 

§ 155.705(b)(2) and (3); and 

(4) The QHP or QHPs offered to 

qualified employees in accordance with 

§ 155.705. 

(d) Annual employer election period 

notice. The SHOP must provide 

notification to a qualified employer of 

the annual election period in advance of 

such period. 

(e) Annual employee open enrollment 

period. The SHOP must establish a 

standardized annual open enrollment 

period of no less than 30 days for 

qualified employees prior to the 

completion of the applicable qualified 

employer’s plan year and after that 

employer’s annual election period. 

(f) Annual employee open enrollment 

period notice. The SHOP must provide 

notification to a qualified employee of 

the annual open enrollment period in 

advance of such period. 

(g) Newly qualified employees. The 

SHOP must provide an employee who 

becomes a qualified employee outside of 

the initial or annual open enrollment 

period an enrollment period to seek 

coverage in a QHP beginning on the first 

day of becoming a qualified employee. 

(h) Effective dates. The SHOP must 

establish effective dates of coverage for 

qualified employees consistent with the 

effective dates of coverage described in 

§ 155.720. 

(i) Renewal of coverage. If a qualified 

employee enrolled in a QHP through the 

SHOP remains eligible for coverage, 

such employee will remain in the QHP 

selected the previous year unless— 

(1) The qualified employee terminates 

coverage from such QHP in accordance 

with standards identified in § 155.430; 

(2) The qualified employee enrolls in 

another QHP if such option exists; or 

(3) The QHP is no longer available to 

the qualified employee. 

§ 155.730 Application standards for SHOP. 

(a) General requirements. Application 

forms used by the SHOP must meet the 

requirements set forth in this section. 

(b) Single employer application. The 

SHOP must use a single application to 

determine employer eligibility and to 

collect information necessary for 

purchasing coverage. Such application 

must collect the following— 

(1) Employer name and address of 

employer’s locations; 

(2) Number of employees; 

(3) Employer Identification Number 

(EIN); and 

(4) A list of qualified employees and 

their taxpayer identification numbers. 

(c) Single employee application. The 

SHOP must use a single application for 

eligibility determination, QHP selection 

and enrollment for qualified employees 

and their dependents. 

(d) Model application. The SHOP may 

use the model single employer 

application and the model single 

employee application provided by HHS. 

(e) Alternative employer and 

employee application. The SHOP may 

use an alternative application if such 

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application is approved by HHS and 

collects the following: 

(1) In the case of the employer 

application, the information in 

described in paragraph (b); and 

(2) In the case of the employee 

application, the information necessary 

to establish eligibility of the employee 

as a qualified employee and to complete 

the enrollment of the qualified 

employee and any dependents to be 

enrolled. 

(f) Filing. The SHOP must allow an 

employer to file the SHOP single 

employer application and employees to 

file the single employee application in 

the form and manner described in 

§ 155.405(c). 

(g) Additional safeguards. The SHOP 

may not provide to the employer any 

information collected on the employee 

application with respect to spouses or 

dependents other than the name, 

address, and birth date of the spouse or 

dependent. 

■ 5. Subpart K is added to read as 

follows: 

Subpart K—Exchange Functions: 

Certification of Qualified Health Plans 

Sec. 

155.1000 Certification standards for QHPs. 

155.1010 Certification process for QHPs. 

155.1020 QHP issuer rate and benefit 

information. 

155.1040 Transparency in coverage. 

155.1045 Accreditation timeline. 

155.1050 Establishment of Exchange 

network adequacy standards. 

155.1055 Service area of a QHP. 

155.1065 Stand-alone dental plans. 

155.1075 Recertification of QHPs. 

155.1080 Decertification of QHPs. 

Subpart K—Exchange Functions: 

Certification of Qualified Health Plans 

§ 155.1000 Certification standards for 

QHPs. 

(a) Definition. The following 

definition applies in this subpart: 

Multi-State plan means a health plan 

that is offered in accordance with 

section 1334 of the Affordable Care Act. 

(b) General requirement. The 

Exchange must offer only health plans 

which have in effect a certification 

issued or are recognized as plans 

deemed certified for participation in an 

Exchange as a QHP, unless specifically 

provided for otherwise. 

(c) General certification criteria. The 

Exchange may certify a health plan as a 

QHP in the Exchange if— 

(1) The health insurance issuer 

provides evidence during the 

certification process in § 155.1010 that it 

complies with the minimum 

certification requirements outlined in 

subpart C of part 156, as applicable; and 

(2) The Exchange determines that 

making the health plan available is in 

the interest of the qualified individuals 

and qualified employers, except that the 

Exchange must not exclude a health 

plan— 

(i) On the basis that such plan is a feefor-service plan; 

(ii) Through the imposition of 

premium price controls; or 

(iii) On the basis that the health plan 

provides treatments necessary to 

prevent patients’ deaths in 

circumstances the Exchange determines 

are inappropriate or too costly. 

§ 155.1010 Certification process for QHPs. 

(a) Certification procedures. The 

Exchange must establish procedures for 

the certification of QHPs consistent with 

§ 155.1000(c). 

(1) Completion date. The Exchange 

must complete the certification of the 

QHPs that will be offered during the 

open enrollment period prior to the 

beginning of such period, as outlined in 

§ 155.410. 

(2) Ongoing compliance. The 

Exchange must monitor the QHP issuers 

for demonstration of ongoing 

compliance with the certification 

requirements in § 155.1000(c). 

(b) Exchange recognition of plans 

deemed certified for participation in an 

Exchange. Notwithstanding paragraph 

(a) of this section, an Exchange must 

recognize as certified QHPs: 

(1) A multi-State plan certified by and 

under contract with the U.S. Office of 

Personnel Management. 

(2) A CO–OP QHP as described in 

subpart F of part 156 and deemed as 

certified under § 156.520(e). 

§ 155.1020 QHP issuer rate and benefit 

information. 

(a) Receipt and posting of rate 

increase justification. The Exchange 

must ensure that a QHP issuer submits 

a justification for a rate increase for a 

QHP prior to the implementation of 

such an increase, except for multi-State 

plans, for which the U.S. Office of 

Personnel Management will provide a 

process for the submission of rate 

justifications. The Exchange must 

ensure that the QHP issuer has 

prominently posted the justification on 

its Web site as required under § 156.210. 

To ensure consumer transparency, the 

Exchange must also provide access to 

the justification on its Internet Web site 

described in § 155.205(b). 

(b) Rate increase consideration. (1) 

The Exchange must consider rate 

increases in accordance with section 

1311(e)(2) of the Affordable Care Act, 

which includes consideration of the 

following: 

(i) A justification for a rate increase 

prior to the implementation of the 

increase; 

(ii) Recommendations provided to the 

Exchange by the State in accordance 

with section 2794(b)(1)(B) of the PHS 

Act; and 

(iii) Any excess of rate growth outside 

the Exchange as compared to the rate of 

such growth inside the Exchange. 

(2) This paragraph does not apply to 

multi-State plans for which the U.S. 

Office of Personnel Management will 

provide a process for rate increase 

consideration. 

(c) Benefit and rate information. The 

Exchange must receive the information 

described in this paragraph, at least 

annually, from QHP issuers for each 

QHP in a form and manner to be 

specified by HHS. Information about 

multi-State plans may be provided in a 

form and manner determined by the 

U.S. Office of Personnel Management. 

The information identified in this 

paragraph is: 

(1) Rates; 

(2) Covered benefits; and 

(3) Cost-sharing requirements. 

§ 155.1040 Transparency in coverage. 

(a) General requirement. The 

Exchange must collect information 

relating to coverage transparency as 

described in § 156.220 of this subtitle 

from QHP issuers, and from multi-State 

plans in a time and manner determined 

by the U.S. Office of Personnel 

Management. 

(b) Use of plain language. The 

Exchange must determine whether the 

information required to be submitted 

and made available under paragraph (a) 

of this section is provided in plain 

language. 

(c) Transparency of cost-sharing 

information. The Exchange must 

monitor whether a QHP issuer has made 

cost-sharing information available in a 

timely manner upon the request of an 

individual as required by § 156.220(d) of 

this subtitle. 

§ 155.1045 Accreditation timeline. 

The Exchange must establish a 

uniform period following certification of 

a QHP within which a QHP issuer that 

is not already accredited must become 

accredited as required by § 156.275 of 

this subtitle, except for multi-State 

plans. The U.S. Office of Personnel 

Management will establish the 

accreditation period for multi-State 

plans. 

§ 155.1050 Establishment of Exchange 

network adequacy standards. 

(a) An Exchange must ensure that the 

provider network of each QHP meets the 

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standards specified in § 156.230 of this 

subtitle, except for multi-State plans. 

(b) The U.S. Office of Personnel 

Management will ensure compliance 

with the standards specified in 

§ 156.230 of this subtitle for multi-State 

plans. 

(c) A QHP issuer in an Exchange may 

not be prohibited from contracting with 

any essential community provider 

designated under § 156.235(c) of this 

subtitle. 

§ 155.1055 Service area of a QHP. 

The Exchange must have a process to 

establish or evaluate the service areas of 

QHPs to ensure such service areas meet 

the following minimum criteria: 

(a) The service area of a QHP covers 

a minimum geographical area that is at 

least the entire geographic area of a 

county, or a group of counties defined 

by the Exchange, unless the Exchange 

determines that serving a smaller 

geographic area is necessary, 

nondiscriminatory, and in the best 

interest of the qualified individuals and 

employers. 

(b) The service area of a QHP has been 

established without regard to racial, 

ethnic, language, health status-related 

factors specified under section 2705(a) 

of the PHS Act, or other factors that 

exclude specific high utilizing, high cost 

or medically-underserved populations. 

§ 155.1065 Stand-alone dental plans. 

(a) General requirements. The 

Exchange must allow the offering of a 

limited scope dental benefits plan 

through the Exchange, if— 

(1) The plan meets the requirements 

of section 9832(c)(2)(A) of the Code and 

2791(c)(2)(A) of the PHS Act; and 

(2) The plan covers at least the 

pediatric dental essential health benefit 

as defined in section 1302(b)(1)(J) of the 

Affordable Care Act, provided that, with 

respect to this benefit, the plan satisfies 

the requirements of section 2711 of the 

PHS Act; and 

(3) The plan and issuer of such plan 

meets QHP certification standards, 

including § 155.1020(c), except for any 

certification requirement that cannot be 

met because the plan covers only the 

benefits described in paragraph (a)(2) of 

this section. 

(b) Offering options. The Exchange 

may allow the dental plan to be 

offered— 

(1) As a stand-alone dental plan; or 

(2) In conjunction with a QHP. 

(c) Sufficient capacity. An Exchange 

must consider the collective capacity of 

stand-alone dental plans during 

certification to ensure sufficient access 

to pediatric dental coverage. 

(d) QHP Certification standards. If a 

plan described in paragraph (a) of this 

section is offered through an Exchange, 

another health plan offered through 

such Exchange must not fail to be 

treated as a QHP solely because the plan 

does not offer coverage of benefits 

offered through the stand-alone plan 

that are otherwise required under 

section 1302(b)(1)(J) of the Affordable 

Care Act. 

§ 155.1075 Recertification of QHPs. 

(a) Recertification process. Except 

with respect to multi-State plans and 

CO–OP QHPs, an Exchange must 

establish a process for recertification of 

QHPs that, at a minimum, includes a 

review of the general certification 

criteria as outlined in § 155.1000(c). 

Upon determining the recertification 

status of a QHP, the Exchange must 

notify the QHP issuer. 

(b) Timing. The Exchange must 

complete the QHP recertification 

process on or before September 15 of the 

applicable calendar year. 

§ 155.1080 Decertification of QHPs. 

(a) Definition. The following 

definition applies to this section: 

Decertification means the termination 

by the Exchange of the certification 

status and offering of a QHP. 

(b) Decertification process. Except 

with respect to multi-State plans and 

CO–OP QHPs, the Exchange must 

establish a process for the 

decertification of QHPs, which, at a 

minimum, meet the requirements in this 

section. 

(c) Decertification by the Exchange. 

The Exchange may at any time decertify 

a health plan if the Exchange 

determines that the QHP issuer is no 

longer in compliance with the general 

certification criteria as outlined in 

§ 155.1000(c). 

(d) Appeal of decertification. The 

Exchange must establish a process for 

the appeal of a decertification of a QHP. 

(e) Notice of decertification. Upon 

decertification of a QHP, the Exchange 

must provide notice of decertification to 

all affected parties, including: 

(1) The QHP issuer; 

(2) Exchange enrollees in the QHP 

who must receive information about a 

special enrollment period, as described 

in § 155.420; 

(3) HHS; and 

(4) The State department of insurance. 

PART 156—HEALTH INSURANCE 

ISSUER STANDARDS UNDER THE 

AFFORDABLE CARE ACT, INCLUDING 

STANDARDS RELATED TO 

EXCHANGES 

■ 6. The authority citation for part 156 

continues to read as follows: 

Authority: Title I of the Affordable Care 

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

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

1402, Pub. L. 111–148, 124 Stat. 119 (42 

U.S.C. 18042). 

■ 7. Revise the part 156 heading to read 

as set forth above. 

■ 8. Add subpart A to read as follows: 

Subpart A—General Provisions 

Sec. 

156.10 Basis and scope. 

156.20 Definitions. 

156.50 Financial support. 

Subpart A—General Provisions 

§ 156.10 Basis and scope. 

(a) Basis. (1) This part is based on the 

following sections of title I of the 

Affordable Care Act: 

(i) 1301. QHP defined. 

(ii) 1302. Essential health benefits 

requirements. 

(iii) 1303. Special rules. 

(iv) 1304. Related definitions. 

(v) 1311. Affordable choices of health 

benefit plans. 

(vi) 1312. Consumer choice. 

(vii) 1313. Financial integrity. 

(viii) 1321. State flexibility in 

operation and enforcement of Exchanges 

and related requirements. 

(ix) 1322. Federal program to assist 

establishment and operation of 

nonprofit, member-run health insurance 

issuers. 

(x) 1331. State flexibility to establish 

Basic Health Programs for low-income 

individuals not eligible for Medicaid. 

(xi) 1334. Multi-State plans. 

(xii) 1402. Reduced cost-sharing for 

individuals enrolling in QHPs. 

(xiii) 1411. Procedures for 

determining eligibility for Exchange 

participation, advance premium tax 

credits and reduced cost sharing, and 

individual responsibility exemptions. 

(xiv) 1412. Advance determination 

and payment of premium tax credits 

and cost-sharing reductions. 

(xv) 1413. Streamlining of procedures 

for enrollment through an Exchange and 

State, Medicaid, CHIP, and health 

subsidy programs. 

(2) This part is based on section 

1150A, Pharmacy Benefit Managers 

Transparency Requirements, of title I of 

the Act: 

(b) Scope. This part establishes 

standards for QHPs under Exchanges, 

and addresses other health insurance 

issuer requirements. 

§ 156.20 Definitions. 

The following definitions apply to 

this part, unless the context indicates 

otherwise: 

Applicant has the meaning given to 

the term in § 155.20 of this subchapter. 

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Benefit design standards means 

coverage that provides for all of the 

following: 

(1) The essential health benefits as 

described in section 1302(b) of the 

Affordable Care Act; 

(2) Cost-sharing limits as described in 

section 1302(c) of the Affordable Care 

Act; and 

(3) A bronze, silver, gold, or platinum 

level of coverage as described in section 

1302(d) of the Affordable Care Act, or is 

a catastrophic plan as described in 

section 1302(e) of the Affordable Care 

Act. 

Benefit year has the meaning given to 

the term in § 155.20 of this subtitle. 

Cost-sharing has the meaning given to 

the term in § 155.20 of this subtitle. 

Cost-sharing reductions has the 

meaning given to the term in § 155.20 of 

this subtitle. 

Group health plan has the meaning 

given to the term in § 144.103 of this 

subtitle. 

Health insurance coverage has the 

meaning given to the term in § 144.103 

of this subtitle. 

Health insurance issuer or issuer has 

the meaning given to the term in 

§ 144.103 of this subtitle. 

Level of coverage means one of four 

standardized actuarial values as defined 

by section 1302(d)(2) of the Affordable 

Care Act of plan coverage. 

Plan year has the meaning given to 

the term in § 155.20 of this subchapter. 

Qualified employer has the meaning 

given to the term in § 155.20 of this 

subchapter. 

Qualified health plan has the meaning 

given to the term in § 155.20 of this 

subchapter. 

Qualified health plan issuer has the 

meaning given to the term in § 155.20 of 

this subchapter. 

Qualified individual has the meaning 

given to the term in § 155.20 of this 

subchapter. 

§ 156.50 Financial support. 

(a) Definitions. The following 

definitions apply for the purposes of 

this section: 

Participating issuer means any issuer 

offering a plan that participates in the 

specific function that is funded by user 

fees. This term may include: health 

insurance issuers, QHP issuers, issuers 

of multi-State plans (as defined in 

§ 155.1000(a) of this subchapter), issuers 

of stand-alone dental plans (as 

described in § 155.1065 of this subtitle), 

or other issuers identified by an 

Exchange. 

(b) Requirement for Exchanges user 

fees. A participating issuer must remit 

user fee payments, or any other 

payments, charges, or fees, if assessed 

by the Federally-facilitated Exchange 

under 31 U.S.C. 9701 or a State-based 

Exchange under § 155.160 of this 

subchapter. 

■ 9. Add subpart C to read as follows: 

Subpart C—Qualified Health Plan Minimum 

Certification Standards 

Sec. 

156.200 QHP issuer participation standards. 

156.210 QHP rate and benefit information. 

156.220 Transparency in coverage. 

156.225 Marketing and Benefit Design of 

QHPs. 

156.230 Network adequacy standards. 

156.235 Essential community providers. 

156.245 Treatment of direct primary care 

medical homes. 

156.250 Health plan applications and 

notices. 

156.255 Rating variations. 

156.260 Enrollment periods for qualified 

individuals. 

156.265 Enrollment process for qualified 

individuals. 

156.270 Termination of coverage for 

qualified individuals. 

156.275 Accreditation of QHP issuers. 

156.280 Segregation of funds for abortion 

services. 

156.285 Additional standards specific to 

SHOP. 

156.290 Non-renewal and decertification of 

QHPs. 

156.295 Prescription drug distribution and 

cost reporting. 

Subpart C—Qualified Health Plan 

Minimum Certification Standards 

§ 156.200 QHP issuer participation 

standards. 

(a) General requirement. In order to 

participate in an Exchange, a health 

insurance issuer must have in effect a 

certification issued or recognized by the 

Exchange to demonstrate that each 

health plan it offers in the Exchange is 

a QHP. 

(b) QHP issuer requirement. A QHP 

issuer must— 

(1) Comply with the requirements of 

this subpart with respect to each of its 

QHPs on an ongoing basis; 

(2) Comply with Exchange processes, 

procedures, and requirements set forth 

in accordance with subpart K of part 

155 and, in the small group market, 

§ 155.705 of this subchapter; 

(3) Ensure that each QHP complies 

with benefit design standards, as 

defined in § 156.20; 

(4) Be licensed and in good standing 

to offer health insurance coverage in 

each State in which the issuer offers 

health insurance coverage; 

(5) Implement and report on a quality 

improvement strategy or strategies 

consistent with the standards of section 

1311(g) of the Affordable Care Act, 

disclose and report information on 

health care quality and outcomes 

described in sections 1311(c)(1)(H) and 

(I) of the Affordable Care Act, and 

implement appropriate enrollee 

satisfaction surveys consistent with 

section 1311(c)(4) of the Affordable Care 

Act; 

(6) Pay any applicable user fees 

assessed under § 156.50; and 

(7) Comply with the standards related 

to the risk adjustment program under 45 

CFR part 153. 

(c) Offering requirements. A QHP 

issuer must offer through the Exchange: 

(1) At least one QHP in the silver 

coverage level and at least one QHP in 

the gold coverage level as described in 

section 1302(d)(1) of the Affordable Care 

Act; and, 

(2) A child-only plan at the same level 

of coverage, as described in section 

1302(d)(1) of the Affordable Care Act, as 

any QHP offered through the Exchange 

to individuals who, as of the beginning 

of the plan year, have not attained the 

age of 21. 

(d) State requirements. A QHP issuer 

certified by an Exchange must adhere to 

the requirements of this subpart and any 

provisions imposed by the Exchange, or 

a State in connection with its Exchange, 

that are conditions of participation or 

certification with respect to each of its 

QHPs. 

(e) Non-discrimination. A QHP issuer 

must not, with respect to its QHP, 

discriminate on the basis of race, color, 

national origin, disability, age, sex, 

gender identity or sexual orientation. 

§ 156.210 QHP rate and benefit 

information. 

(a) General rate requirement. A QHP 

issuer must set rates for an entire benefit 

year, or for the SHOP, plan year. 

(b) Rate and benefit submission. A 

QHP issuer must submit rate and benefit 

information to the Exchange. 

(c) Rate justification. A QHP issuer 

must submit to the Exchange a 

justification for a rate increase prior to 

the implementation of the increase. A 

QHP issuer must prominently post the 

justification on its Web site. 

§ 156.220 Transparency in coverage. 

(a) Required information. A QHP 

issuer must provide the following 

information in accordance with the 

standards in paragraph (b) of this 

section: 

(1) Claims payment policies and 

practices; 

(2) Periodic financial disclosures; 

(3) Data on enrollment; 

(4) Data on disenrollment; 

(5) Data on the number of claims that 

are denied; 

(6) Data on rating practices; 

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(7) Information on cost-sharing and 

payments with respect to any out-ofnetwork coverage; and 

(8) Information on enrollee rights 

under title I of the Affordable Care Act. 

(b) Reporting requirement. A QHP 

issuer must submit, in an accurate and 

timely manner, to be determined by 

HHS, the information described in 

paragraph (a) of this section to the 

Exchange, HHS and the State insurance 

commissioner, and make the 

information described in paragraph (a) 

of this section available to the public. 

(c) Use of plain language. A QHP 

issuer must make sure that the 

information submitted under paragraph 

(b) is provided in plain language as 

defined under § 155.20 of this subtitle. 

(d) Enrollee cost sharing 

transparency. A QHP issuer must make 

available the amount of enrollee cost 

sharing under the individual’s plan or 

coverage with respect to the furnishing 

of a specific item or service by a 

participating provider in a timely 

manner upon the request of the 

individual. At a minimum, such 

information must be made available to 

such individual through an Internet 

Web site and such other means for 

individuals without access to the 

Internet. 

§ 156.225 Marketing and Benefit Design of 

QHPs. 

A QHP issuer and its officials, 

employees, agents and representatives 

must— 

(a) State law applies. Comply with 

any applicable State laws and 

regulations regarding marketing by 

health insurance issuers; and 

(b) Non-discrimination. Not employ 

marketing practices or benefit designs 

that will have the effect of discouraging 

the enrollment of individuals with 

significant health needs in QHPs. 

§ 156.230 Network adequacy standards. 

(a) General requirement. A QHP issuer 

must ensure that the provider network 

of each of its QHPs, as available to all 

enrollees, meets the following 

standards— 

(1) Includes essential community 

providers in accordance with § 156.235; 

(2) Maintains a network that is 

sufficient in number and types of 

providers, including providers that 

specialize in mental health and 

substance abuse services, to assure that 

all services will be accessible without 

unreasonable delay; and, 

(3) Is consistent with the network 

adequacy provisions of section 2702(c) 

of the PHS Act. 

(b) Access to provider directory. A 

QHP issuer must make its provider 

directory for a QHP available to the 

Exchange for publication online in 

accordance with guidance from the 

Exchange and to potential enrollees in 

hard copy upon request. In the provider 

directory, a QHP issuer must identify 

providers that are not accepting new 

patients. 

§ 156.235 Essential community providers. 

(a) General requirement. (1) A QHP 

issuer must have a sufficient number 

and geographic distribution of essential 

community providers, where available, 

to ensure reasonable and timely access 

to a broad range of such providers for 

low-income, medically underserved 

individuals in the QHP’s service area, in 

accordance with the Exchange’s 

network adequacy standards. 

(2) A QHP issuer that provides a 

majority of covered professional 

services through physicians employed 

by the issuer or through a single 

contracted medical group may instead 

comply with the alternate standard 

described in paragraph (b) of this 

section. 

(3) Nothing in this requirement shall 

be construed to require any QHP to 

provide coverage for any specific 

medical procedure provided by the 

essential community provider. 

(b) Alternate standard. A QHP issuer 

described in paragraph (a)(2) of this 

section must have a sufficient number 

and geographic distribution of 

employed providers and hospital 

facilities, or providers of its contracted 

medical group and hospital facilities to 

ensure reasonable and timely access for 

low-income, medically underserved 

individuals in the QHP’s service area, in 

accordance with the Exchange’s 

network adequacy standards. 

(c) Definition. Essential community 

providers are providers that serve 

predominantly low-income, medically 

underserved individuals, including 

providers that meet the criteria of 

paragraph (c)(1) or (2) of this section, 

and providers that met the criteria 

under paragraph (c)(1) or (2) of this 

section on the publication date of this 

regulation unless the provider lost its 

status under paragraph (c)(1) or (2) of 

this section thereafter as a result of 

violating Federal law: 

(1) Health care providers defined in 

section 340B(a)(4) of the PHS Act; and 

(2) Providers described in section 

1927(c)(1)(D)(i)(IV) of the Act as set 

forth by section 221 of Public Law 111– 

8. 

(d) Payment rates. Nothing in 

paragraph (a) of this section shall be 

construed to require a QHP issuer to 

contract with an essential community 

provider if such provider refuses to 

accept the generally applicable payment 

rates of such issuer. 

(e) Payment of federally-qualified 

health centers. If an item or service 

covered by a QHP is provided by a 

federally-qualified health center (as 

defined in section 1905(l)(2)(B) of the 

Act) to an enrollee of a QHP, the QHP 

issuer must pay the federally-qualified 

health center for the item or service an 

amount that is not less than the amount 

of payment that would have been paid 

to the center under section 1902(bb) of 

the Act for such item or service. Nothing 

in this paragraph (e) would preclude a 

QHP issuer and federally-qualified 

health center from mutually agreeing 

upon payment rates other than those 

that would have been paid to the center 

under section 1902(bb) of the Act, as 

long as such mutually agreed upon rates 

are at least equal to the generally 

applicable payment rates of the issuer 

indicated in paragraph (d) of this 

section. 

§ 156.245 Treatment of direct primary care 

medical homes. 

A QHP issuer may provide coverage 

through a direct primary care medical 

home that meets criteria established by 

HHS, so long as the QHP meets all 

requirements that are otherwise 

applicable and the services covered by 

the direct primary care medical home 

are coordinated with the QHP issuer. 

§ 156.250 Health plan applications and 

notices. 

QHP issuers must provide all 

applications and notices to enrollees in 

accordance with the standards 

described in § 155.230(b) of this subtitle. 

§ 156.255 Rating variations. 

(a) Rating areas. A QHP issuer, 

including an issuer of a multi-State 

plan, may vary premiums by the 

geographic rating area established under 

section 2701(a)(2) of the PHS Act. 

(b) Same premium rates. A QHP 

issuer must charge the same premium 

rate without regard to whether the plan 

is offered through an Exchange, or 

whether the plan is offered directly from 

the issuer or through an agent. 

§ 156.260 Enrollment periods for qualified 

individuals. 

(a) Individual market requirement. A 

QHP issuer must: 

(1) Enroll a qualified individual 

during the initial and annual open 

enrollment periods described in 

§ 155.410(b) and (e) of this subchapter, 

and abide by the effective dates of 

coverage established by the Exchange in 

accordance with § 155.410(c) and (f) of 

this subchapter; and 

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(2) Make available, at a minimum, 

special enrollment periods described in 

§ 155.420(d) of this subchapter, for 

QHPs and abide by the effective dates of 

coverage established by the Exchange in 

accordance with § 155.420(b) of this 

subchapter. 

(b) Notification of effective date. A 

QHP issuer must notify a qualified 

individual of his or her effective date of 

coverage. 

§ 156.265 Enrollment process for qualified 

individuals. 

(a) General requirement. A QHP issuer 

must process enrollment in accordance 

with this section. 

(b) Enrollment through the Exchange 

for the individual market. (1) A QHP 

issuer must enroll a qualified individual 

only if the Exchange— 

(i) Notifies the QHP issuer that the 

individual is a qualified individual; and 

(ii) Transmits information to the QHP 

issuer as provided in § 155.400(a) of this 

subchapter. 

(2) If an applicant initiates enrollment 

directly with the QHP issuer for 

enrollment through the Exchange, the 

QHP issuer must either— 

(i) Direct the individual to file an 

application with the Exchange in 

accordance with § 155.310, or 

(ii) Ensure the applicant received an 

eligibility determination for coverage 

through the Exchange through the 

Exchange Internet Web site. 

(c) Acceptance of enrollment 

information. A QHP issuer must accept 

enrollment information consistent with 

the privacy and security requirements 

established by the Exchange in 

accordance with § 155.260 and in an 

electronic format that is consistent with 

§ 155.270. 

(d) Premium payment. A QHP issuer 

must follow the premium payment 

process established by the Exchange in 

accordance with § 155.240. 

(e) Enrollment information package. 

A QHP issuer must provide new 

enrollees an enrollment information 

package that is compliant with 

accessibility and readability standards 

established in § 155.230(b). 

(f) Enrollment reconciliation. A QHP 

issuer must reconcile enrollment files 

with the Exchange no less than once a 

month in accordance with § 155.400(d). 

(g) Enrollment acknowledgement. A 

QHP issuer must acknowledge receipt of 

enrollment information transmitted 

from the Exchange in accordance with 

Exchange standards established in 

accordance with § 155.400(b)(2) of this 

subchapter. 

§ 156.270 Termination of coverage for 

qualified individuals. 

(a) General requirement. A QHP issuer 

may only terminate coverage as 

permitted by the Exchange in 

accordance with § 155.430(b) of this 

subchapter. 

(b) Termination of coverage notice 

requirement. If an enrollee’s coverage in 

a QHP is terminated for any reason, the 

QHP issuer must: 

(1) Provide the enrollee with a notice 

of termination of coverage that includes 

the reason for termination at least 30 

days prior to the last day of coverage, 

consistent with the effective date 

established by the Exchange in 

accordance with § 155.430(d) of this 

subchapter. 

(2) Notify the Exchange of the 

termination effective date and reason for 

termination. 

(c) Termination of coverage due to 

non-payment of premium. A QHP issuer 

must establish a standard policy for the 

termination of coverage of enrollees due 

to non-payment of premium as 

permitted by the Exchange in 

§ 155.430(b)(2)(ii) of this subchapter. 

This policy for the termination of 

coverage: 

(1) Must include the grace period for 

enrollees receiving advance payments of 

the premium tax credits as described in 

paragraph (d) of this section; and 

(2) Must be applied uniformly to 

enrollees in similar circumstances. 

(d) Grace period for recipients of 

advance payments of the premium tax 

credit. A QHP issuer must provide a 

grace period of three consecutive 

months if an enrollee receiving advance 

payments of the premium tax credit has 

previously paid at least one full month’s 

premium during the benefit year. During 

the grace period, the QHP issuer must: 

(1) Pay all appropriate claims for 

services rendered to the enrollee during 

the first month of the grace period and 

may pend claims for services rendered 

to the enrollee in the second and third 

months of the grace period; 

(2) Notify HHS of such non-payment; 

and, 

(3) Notify providers of the possibility 

for denied claims when an enrollee is in 

the second and third months of the 

grace period. 

(e) Advance payments of the premium 

tax credit. For the 3-month grace period 

described in paragraph (d) of this 

section, a QHP issuer must: 

(1) Continue to collect advance 

payments of the premium tax credit on 

behalf of the enrollee from the 

Department of the Treasury. 

(2) Return advance payments of the 

premium tax credit paid on the behalf 

of such enrollee for the second and third 

months of the grace period if the 

enrollee exhausts the grace period as 

described in paragraph (g) of this 

section. 

(f) Notice of non-payment of 

premiums. If an enrollee is delinquent 

on premium payment, the QHP issuer 

must provide the enrollee with notice of 

such payment delinquency. 

(g) Exhaustion of grace period. If an 

enrollee receiving advance payments of 

the premium tax credit exhausts the 3- 

month grace period in paragraph (d) of 

this section without paying all 

outstanding premiums, the QHP issuer 

must terminate the enrollee’s coverage 

on the effective date described in 

§ 155.430(d)(4) of this subchapter, 

provided that the QHP issuer meets the 

notice requirement specified in 

paragraph (b) of this section. 

(h) Records of termination of 

coverage. QHP issuers must maintain 

records in accordance with Exchange 

standards established in accordance 

with § 155.430(c) of this subchapter. 

(i) Effective date of termination of 

coverage. QHP issuers must abide by the 

termination of coverage effective dates 

described in § 155.430(d) of this 

subchapter. 

§ 156.275 Accreditation of QHP issuers. 

(a) General requirement. A QHP issuer 

must: 

(1) Be accredited on the basis of local 

performance of its QHPs in the 

following categories by an accrediting 

entity recognized by HHS: 

(i) Clinical quality measures, such as 

the Healthcare Effectiveness Data and 

Information Set; 

(ii) Patient experience ratings on a 

standardized CAHPS survey; 

(iii) Consumer access; 

(iv) Utilization management; 

(v) Quality assurance; 

(vi) Provider credentialing; 

(vii) Complaints and appeals; 

(viii) Network adequacy and access; 

and 

(ix) Patient information programs, and 

(2) Authorize the accrediting entity 

that accredits the QHP issuer to release 

to the Exchange and HHS a copy of its 

most recent accreditation survey, 

together with any survey-related 

information that HHS may require, such 

as corrective action plans and 

summaries of findings. 

(b) Timeframe for accreditation. A 

QHP issuer must be accredited within 

the timeframe established by the 

Exchange in accordance with § 155.1045 

of this subchapter. The QHP issuer must 

maintain accreditation so long as the 

QHP issuer offers QHPs. 

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18472 Federal Register / Vol. 77, No. 59 / Tuesday, March 27, 2012 / Rules and Regulations 

§ 156.280 Segregation of funds for 

abortion services. 

(a) State opt-out of abortion coverage. 

A QHP issuer must comply with a State 

law that prohibits abortion coverage in 

QHPs. 

(b) Termination of opt out. A QHP 

issuer may provide coverage of abortion 

services through the Exchange in a State 

described in paragraph (a) of this 

section if the State repeals such law. 

(c) Voluntary choice of coverage of 

abortion services. Notwithstanding any 

other provision of title I of the 

Affordable Care Act (or any other 

amendment made under that title): 

(1) Nothing in title I of the Affordable 

Care Act (or any amendments by that 

title) shall be construed to require a 

QHP issuer to provide coverage of 

services described in paragraph (d) of 

this section as part of its essential health 

benefits, as described in section 1302(b) 

of the Affordable Care Act, for any plan 

year. 

(2) Subject to paragraphs (a) and (b) of 

this section, the QHP issuer must 

determine whether or not the QHP 

provides coverage of services described 

in paragraph (d) of this section as part 

of such benefits for the plan year. 

(d) Abortion services. (1) Abortions for 

which public funding is prohibited. The 

services described in this paragraph are 

abortion services for which the 

expenditure of Federal funds 

appropriated for HHS is not permitted, 

based on the law in effect 6 months 

before the beginning of the plan year 

involved. 

(2) Abortions for which public 

funding is allowed. The services 

described in this paragraph are abortion 

services for which the expenditure of 

Federal funds appropriated for HHS is 

permitted, based on the law in effect 6 

months before the beginning of the plan 

year involved. 

(e) Prohibition on the use of Federal 

funds. (1) If a QHP provides coverage of 

services described in paragraph (d)(1) of 

this section, the QHP issuer must not 

use any amount attributable to any of 

the following for the purposes of paying 

for such services: 

(i) The credit under section 36B of the 

Code and the amount (if any) of the 

advance payment of the credit under 

section 1412 of the Affordable Care Act; 

(ii) Any cost-sharing reduction under 

section 1402 of the Affordable Care Act 

and the amount (if any) of the advance 

payments of the reduction under section 

1412 of the Affordable Care Act. 

(2) Establishment of allocation 

accounts. In the case of a QHP to which 

paragraph (e)(1) of this section applies, 

the QHP issuer must: 

(i) Collect from each enrollee in the 

QHP (without regard to the enrollee’s 

age, sex, or family status) a separate 

payment for each of the following: 

(A) An amount equal to the portion of 

the premium to be paid directly by the 

enrollee for coverage under the QHP of 

services other than services described in 

(d)(1) of this section (after reductions for 

credits and cost-sharing reductions 

described in paragraph (e)(1) of this 

section); and 

(B) An amount equal to the actuarial 

value of the coverage of services 

described in paragraph (d)(1) of this 

section. 

(ii) Deposit all such separate 

payments into separate allocation 

accounts as provided in paragraph (e)(3) 

of this section. In the case of an enrollee 

whose premium for coverage under the 

QHP is paid through employee payroll 

deposit, the separate payments required 

under this subparagraph shall each be 

paid by a separate deposit. 

(3) Segregation of funds. (i) The QHP 

issuer to which paragraph (e)(1) of this 

section applies must establish allocation 

accounts described in paragraph 

(e)(3)(ii) of this section for enrollees 

receiving the amounts described in 

paragraph (e)(1) of this section. 

(ii) Allocation accounts. The QHP 

issuer to which paragraph (e)(1) of this 

section applies must deposit: 

(A) All payments described in 

paragraph (e)(2)(i)(A) of this section into 

a separate account that consists solely of 

such payments and that is used 

exclusively to pay for services other 

than the services described in paragraph 

(d)(1) of this section; 

(B) All payments described in 

paragraph (e)(2)(i)(B) of this section into 

a separate account that consists solely of 

such payments and that is used 

exclusively to pay for services described 

in paragraph (d)(1) of this section. 

(4) Actuarial value. The QHP issuer 

must estimate the basic per enrollee, per 

month cost, determined on an average 

actuarial basis, for including coverage 

under the QHP of services described in 

paragraph (d)(1) of this section. In 

making such an estimate, the QHP 

issuer: 

(i) May take into account the impact 

on overall costs of the inclusion of such 

coverage, but may not take into account 

any cost reduction estimated to result 

from such services, including prenatal 

care, delivery, or postnatal care; 

(ii) Must estimate such costs as if such 

coverage were included for the entire 

population covered; and 

(iii) May not estimate such a cost at 

less than one dollar per enrollee, per 

month. 

(5) Ensuring compliance with 

segregation requirements. (i) Subject to 

paragraph (e)(5)(iv) of this section, the 

QHP issuer must comply with the 

efforts or direction of the State health 

insurance commissioner to ensure 

compliance with this section through 

the segregation of QHP funds in 

accordance with applicable provisions 

of generally accepted accounting 

requirements, circulars on funds 

management of the Office of 

Management and Budget and guidance 

on accounting of the Government 

Accountability Office. 

(ii) Each QHP issuer that participates 

in an Exchange and offers coverage for 

services described in paragraph (d)(1) of 

this section should, as a condition of 

participating in an Exchange, submit a 

plan that details its process and 

methodology for meeting the 

requirements of section 1303(b)(2)(C), 

(D), and (E) (hereinafter, ‘‘segregation 

plan’’) to the State health insurance 

commissioner. The segregation plan 

should describe the QHP issuer’s 

financial accounting systems, including 

appropriate accounting documentation 

and internal controls, that would ensure 

the segregation of funds required by 

section 1303(b)(2)(C), (D), and (E), and 

should include: 

(A) The financial accounting systems, 

including accounting documentation 

and internal controls, that would ensure 

the appropriate segregation of payments 

received for coverage of services 

described in paragraph (d)(1) of this 

section from those received for coverage 

of all other services; 

(B) The financial accounting systems, 

including accounting documentation 

and internal controls, that would ensure 

that all expenditures for services 

described in paragraph (d)(1) of this 

section are reimbursed from the 

appropriate account; and 

(C) An explanation of how the QHP 

issuer’s systems, accounting 

documentation, and controls meet the 

requirements for segregation accounts 

under the law. 

(iii) Each QHP issuer participating in 

the Exchange must provide to the State 

insurance commissioner an annual 

assurance statement attesting that the 

plan has complied with section 1303 of 

the Affordable Care Act and applicable 

regulations. 

(iv) Nothing in this clause shall 

prohibit the right of an individual or 

QHP issuer to appeal such action in 

courts of competent jurisdiction. 

(f) Rules relating to notice. (1) Notice. 

A QHP that provides for coverage of 

services in paragraph (d)(1) of this 

section, must provide a notice to 

enrollees, only as part of the summary 

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of benefits and coverage explanation, at 

the time of enrollment, of such 

coverage. 

(2) Rules relating to payments. The 

notice described in paragraph (f)(1) of 

this section, any advertising used by the 

QHP issuer with respect to the QHP, any 

information provided by the Exchange, 

and any other information specified by 

HHS must provide information only 

with respect to the total amount of the 

combined payments for services 

described in paragraph (d)(1) of this 

section and other services covered by 

the QHP. 

(g) No discrimination on basis of 

provision of abortion. No QHP offered 

through an Exchange may discriminate 

against any individual health care 

provider or health care facility because 

of its unwillingness to provide, pay for, 

provide coverage of, or refer for 

abortions. 

(h) Application of State and Federal 

laws regarding abortions. (1) No 

preemption of State laws regarding 

abortion. Nothing in the Affordable Care 

Act shall be construed to preempt or 

otherwise have any effect on State laws 

regarding the prohibition of (or 

requirement of) coverage, funding, or 

procedural requirements on abortions, 

including parental notification or 

consent for the performance of an 

abortion on a minor. 

(2) No effect on Federal laws 

regarding abortion. Nothing in the 

Affordable Care Act shall be construed 

to have any effect on Federal laws 

regarding: 

(i) Conscience protection; 

(ii) Willingness or refusal to provide 

abortion; and 

(iii) Discrimination on the basis of the 

willingness or refusal to provide, pay 

for, cover, or refer for abortion or to 

provide or participate in training to 

provide abortion. 

(3) No effect on Federal civil rights 

law. Nothing in section 1303(c) of the 

Affordable Care Act shall alter the rights 

and obligations of employees and 

employers under Title VII of the Civil 

Rights Act of 1964. 

(i) Application of emergency services 

laws. Nothing in the Affordable Care Act 

shall be construed to relieve any health 

care provider from providing emergency 

services as required by State or Federal 

law, including section 1867 of the Act 

(popularly known as ‘‘EMTALA’’). 

§ 156.285 Additional standards specific to 

SHOP. 

(a) SHOP rating and premium 

payment requirements. QHP issuers 

offering a QHP through a SHOP must: 

(1) Accept payment from the SHOP on 

behalf of a qualified employer or an 

enrollee in accordance with 

§ 155.705(b)(4) of this subchapter; 

(2) Adhere to the SHOP timeline for 

rate setting as established in 

§ 155.705(b)(6) of this subchapter; and 

(3) Charge the same contract rate for 

a plan year. 

(b) Enrollment periods for the SHOP. 

QHP issuers offering a QHP through the 

SHOP must: 

(1) Enroll a qualified employee in 

accordance with the qualified 

employer’s annual employee open 

enrollment period described in 

§ 155.725 of this subchapter; 

(2) Provide special enrollment periods 

described in § 155.420 excluding 

paragraphs (d)(3) and (6); 

(3) Provide an enrollment period for 

an employee who becomes a qualified 

employee outside of the initial or 

annual open enrollment period as 

described in § 155.725(g) of this 

subchapter; and 

(4) Adhere to effective dates of 

coverage in accordance with § 156.260 

and those established through § 155.720 

of this subchapter. 

(c) Enrollment process for the SHOP. 

A QHP issuer offering a QHP through 

the SHOP must: 

(1) Adhere to the enrollment timeline 

and process for the SHOP as described 

in § 155.720(b) of this subchapter; 

(2) Receive enrollment information in 

an electronic format, in accordance with 

the requirements in §§ 155.260 and 

155.270 of this subchapter, from the 

SHOP as described in § 155.720(c); 

(3) Provide new enrollees with the 

enrollment information package as 

described in § 156.265(e); 

(4) Reconcile enrollment files with the 

SHOP at least monthly; 

(5) Acknowledge receipt of 

enrollment information in accordance 

with SHOP standards; and 

(6) Enroll all qualified employees 

consistent with the plan year of the 

applicable qualified employer. 

(d) Termination of coverage in the 

SHOP. QHP issuers offering a QHP 

through the SHOP must: 

(1) Comply with the following 

requirements with respect to coverage 

termination of enrollees in the SHOP: 

(i) General requirements regarding 

termination of coverage established in 

§ 156.270(a); 

(ii) Requirements for notices to be 

provided to enrollees and qualified 

employers in § 156.270(b) and 

§ 156.290(b); and 

(iii) Requirements regarding 

termination of coverage effective dates 

as set forth in § 156.270(i). 

(2) If a qualified employer chooses to 

withdraw from participation in the 

SHOP, the QHP issuer must terminate 

coverage for all enrollees of the 

withdrawing qualified employer. 

(e) Participation rules. QHP issuers 

offering a QHP through the SHOP may 

impose group participation rules for the 

offering of health insurance coverage in 

connection with a QHP only if and to 

the extent authorized by the SHOP in 

accordance with § 155.705 of this 

subchapter. 

§ 156.290 Non-renewal and decertification 

of QHPs. 

(a) Non-renewal of recertification. If a 

QHP issuer elects not to seek 

recertification with the Exchange, the 

QHP issuer, at a minimum, must— 

(1) Notify the Exchange of its decision 

prior to the beginning of the 

recertification process and procedures 

adopted by the Exchange in accordance 

with § 155.1075 of this subchapter; 

(2) Fulfill its obligation to cover 

benefits for each enrollee through the 

end of the plan or benefit year; 

(3) Fulfill data reporting obligations 

from the last plan or benefit year of the 

certification; 

(4) Provide notice to enrollees as 

described in paragraph (b) of this 

section; and 

(5) Terminate coverage for enrollees 

in the QHP in accordance with 

§ 156.270, as applicable. 

(b) Notice of QHP non-renewal. If a 

QHP issuer elects not to seek 

recertification with the Exchange for its 

QHP, the QHP issuer must provide 

written notice to each enrollee. 

(c) Decertification. If a QHP is 

decertified by the Exchange, the QHP 

issuer must terminate coverage for 

enrollees only after: 

(1) The Exchange has made 

notification as described in § 155.1080 

of this subchapter; and 

(2) Enrollees have an opportunity to 

enroll in other coverage. 

§ 156.295 Prescription drug distribution 

and cost reporting. 

(a) General requirement. In a form, 

manner, and at such times specified by 

HHS, a QHP issuer must provide to HHS 

the following information: 

(1) The percentage of all prescriptions 

that were provided under the QHP 

through retail pharmacies compared to 

mail order pharmacies, and the 

percentage of prescriptions for which a 

generic drug was available and 

dispensed compared to all drugs 

dispensed, broken down by pharmacy 

type, which includes an independent 

pharmacy, supermarket pharmacy, or 

mass merchandiser pharmacy that is 

licensed as a pharmacy by the State and 

that dispenses medication to the general 

public, that is paid by the QHP issuer 

or the QHP issuer’s contracted PBM; 

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(2) The aggregate amount, and the 

type of rebates, discounts or price 

concessions (excluding bona fide 

service fees) that the QHP issuer or its 

contracted PBM negotiates that are 

attributable to patient utilization under 

the QHP, and the aggregate amount of 

the rebates, discounts, or price 

concessions that are passed through to 

the QHP issuer, and the total number of 

prescriptions that were dispensed. 

(i) Bona fide service fees means fees 

paid by a manufacturer to an entity that 

represent fair market value for a bona 

fide, itemized service actually 

performed on behalf of the manufacturer 

that the manufacturer would otherwise 

perform (or contract for) in the absence 

of the service arrangement, and that are 

not passed on in whole or in part to a 

client or customer of an entity, whether 

or not the entity takes title to the drug. 

(ii) [Reserved] 

(3) The aggregate amount of the 

difference between the amount the QHP 

issuer pays its contracted PBM and the 

amounts that the PBM pays retail 

pharmacies, and mail order pharmacies, 

and the total number of prescriptions 

that were dispensed. 

(b) Confidentiality. Information 

disclosed by a QHP issuer or a PBM 

under this section is confidential and 

shall not be disclosed by HHS or by a 

QHP receiving the information, except 

that HHS may disclose the information 

in a form which does not disclose the 

identity of a specific PBM, QHP, or 

prices charged for drugs, for the 

following purposes: 

(1) As HHS determines to be 

necessary to carry out section 1150A or 

part D of title XVIII of the Act; 

(2) To permit the Comptroller General 

to review the information provided; 

(3) To permit the Director of the 

Congressional Budget Office to review 

the information provided; or 

(4) To States to carry out section 1311 

of the Affordable Care Act. 

(c) Penalties. A QHP issuer that fails 

to report the information described in 

paragraph (a) of this section to HHS on 

a timely basis or knowingly provides 

false information will be subject to the 

provisions of subsection (b)(3)(C) of 

section 1927 of the Act. 

■ 9. Section 156.505 is amended by— 

■ A. Revising the definitions of ‘‘CO–OP 

qualified health plan,’’ ‘‘Exchange,’’ 

Individual market,’’ ‘‘Issuer,’’ ‘‘SHOP,’’ 

‘‘Small group market,’’ and ‘‘State.’’ 

■ B. Removing the definitions of ‘‘Group 

health plan,’’ ‘‘Health insurance 

coverage,’’ ‘‘Qualified employer,’’ 

‘‘Qualified health plan,’’ and ‘‘Small 

employer.’’ 

The revisions read as follows: 

§ 156.505 Definitions. 

* * * * * 

CO–OP qualified health plan means a 

health plan that has in effect a 

certification that it meets the standards 

described in subpart C of this part, 

except that the plan can be deemed 

certified by CMS or an entity designated 

by CMS as described in § 156.520(e). 

Exchange has the meaning given to 

the term in § 155.20 of this subchapter. 

* * * * * 

Individual market has the meaning 

given to the term in § 155.20 of this 

subchapter. 

Issuer has the meaning given to the 

term in § 155.20 of this subchapter. 

* * * * * 

SHOP has the meaning given to the 

term in § 155.20 of this subchapter. 

Small group market has the meaning 

given to the term in § 155.20 of this 

subchapter. 

* * * * * 

State has the meaning given to the 

term in § 155.20 of this subchapter. 

■ 10. Section 156.510 is amended by 

revising paragraph (b)(2)(i) to read as 

follows: 

§ 156.510 Eligibility. 

* * * * * 

(b) * * * 

(2) * * * 

(i) Has as a sponsor a nonprofit, notfor-profit, public benefit, or similarly 

organized entity that also sponsors a 

pre-existing issuer but is not an issuer, 

a foundation established by a preexisting issuer, a holding company that 

controls a pre-existing issuer, or a trade 

association comprised of pre-existing 

issuers and whose purpose is to 

represent the interests of the health 

insurance industry, provided that the 

pre-existing issuer sponsored by the 

nonprofit organization does not share 

any of its board or the same chief 

executive with the applicant; or 

* * * * * 

§ 156.520 [Amended] 

■ 11. Section 156.520 is amended by 

removing paragraph (e)(1), and 

redesignating paragraphs (e)(2), (3), and 

(4) as paragraphs (e)(1), (2), and (3) 

respectively. 

■ 12. Part 157 is added to read as 

follows: 

PART 157—EMPLOYER 

INTERACTIONS WITH EXCHANGES 

AND SHOP PARTICIPATION 

Subpart A—General Provisions 

Sec. 

157.10 Basis and scope. 

157.20 Definitions. 

Subpart B—[Reserved] 

Subpart C—Standards for Qualified 

Employers 

157.200 Eligibility of qualified employers to 

participate in a SHOP. 

157.205 Qualified employer participation 

process in a SHOP. 

Authority: Title I of the Affordable Care 

Act, Sections 1311, 1312, 1321, 1411, 1412, 

Pub. L. 111–148, 124 Stat. 199. 

Subpart A—General Provisions 

§ 157.10 Basis and scope. 

(a) Basis. This part is based on the 

following sections of title I of the 

Affordable Care: 

(1) 1311. Affordable choices of health 

benefits plans. 

(2) 1312. Consumer Choice. 

(3) 1321. State flexibility in operation 

and enforcement of Exchanges and 

related requirements. 

(4) 1411. Procedures for determining 

eligibility for Exchange participation, 

advance payments of the premium tax 

credit and cost-sharing reductions, and 

individual responsibility exemptions. 

(5) 1412. Advance determination and 

payment of the premium tax credit and 

cost-sharing reductions. 

(b) Scope. This part establishes the 

requirements for employers in 

connection with the operation of 

Exchanges. 

§ 157.20 Definitions. 

The following definitions apply to 

this part, unless otherwise indicated: 

Qualified employee has the meaning 

given to the term in § 155.20 of this 

subchapter. 

Qualified employer has the meaning 

given to the term in § 155.20 of this 

subchapter. 

Small employer has the meaning 

given to the term in § 155.20 of this 

subchapter. 

Subpart B—[Reserved] 

Subpart C—Standards for Qualified 

Employers 

§ 157.200 Eligibility of qualified employers 

to participate in a SHOP. 

(a) General requirement. Only a 

qualified employer may participate in 

the SHOP in accordance with § 155.710 

of this subchapter. 

(b) Continuing participation for 

growing small employers. A qualified 

employer may continue to participate in 

the SHOP if it ceases to be a small 

employer in accordance with § 155.710 

of this subchapter. 

(c) Participation in multiple SHOPs. A 

qualified employer may participate in 

multiple SHOPs in accordance with 

§ 155.710 of this subchapter. 

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§ 157.205 Qualified employer participation 

process in a SHOP. 

(a) General requirements. When 

joining the SHOP, a qualified employer 

must comply with the requirements, 

processes, and timelines set forth by this 

part and must remain in compliance for 

the duration of the employer’s 

participation in the SHOP. 

(b) Selecting QHPs. During an election 

period, a qualified employer may make 

coverage in a QHP available through the 

SHOP in accordance with the processes 

developed by the SHOP in accordance 

with § 155.705 of this subchapter. 

(c) Information dissemination to 

employees. A qualified employer 

participating in the SHOP must 

disseminate information to its qualified 

employees about the process to enroll in 

a QHP through the SHOP. 

(d) Payment. A qualified employer 

must submit any contribution towards 

the premiums of any qualified employee 

according to the standards and 

processes described in § 155.705 of this 

subchapter. 

(e) Employees hired outside of the 

initial or annual open enrollment 

period. Qualified employers must 

provide employees hired outside of the 

initial or annual open enrollment period 

with: 

(1) A period to seek coverage in a 

QHP beginning on the first day of 

becoming a qualified employee; and 

(2) Information about the enrollment 

process in accordance with § 155.725 of 

this subchapter. 

(f) New employees and changes in 

employee eligibility. Qualified 

employers participating in the SHOP 

must provide the SHOP with 

information about dependents or 

employees whose eligibility status for 

coverage purchased through the 

employer in the SHOP has changed, 

including: 

(1) Newly eligible dependents and 

employees; and 

(2) Loss of qualified employee status. 

(g) Annual employer election period. 

Qualified employers must adhere to the 

annual employer election period to 

change their program participation for 

the next plan year described in 

§ 155.725(c) of this subchapter. 

Dated: March 1, 2012. 

Marilyn Tavenner, 

Acting Administrator, Centers for Medicare 

& Medicaid Services. 

Approved: March 2, 2012. 

Kathleen Sebelius, 

Secretary. 

[FR Doc. 2012–6125 Filed 3–12–12; 11:15 am] 

BILLING CODE 4120–01–P 

mstockstill on DSK4VPTVN1PROD with RULES2