Vol. 78 Monday, 

No. 126 July 1, 2013 

Part IV 

Department of Health and Human Services 

45 CFR Parts 155 and 156 

Patient Protection and Affordable Care Act; Exchange Functions: Eligibility 

for Exemptions; Miscellaneous Minimum Essential Coverage Provisions; 

Final Rule 

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39494 Federal Register / Vol. 78, No. 126 / Monday, July 1, 2013 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Parts 155 and 156 

[CMS–9958–F] 

RIN 0938–AR68 

Patient Protection and Affordable Care 

Act; Exchange Functions: Eligibility for 

Exemptions; Miscellaneous Minimum 

Essential Coverage Provisions 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule. 

SUMMARY: This final rule implements 

certain functions of the Affordable 

Insurance Exchanges (‘‘Exchanges’’). 

These specific statutory functions 

include determining eligibility for and 

granting certificates of exemption from 

the individual shared responsibility 

payment described in section 5000A of 

the Internal Revenue Code. 

Additionally, this final rule implements 

the responsibilities of the Secretary of 

Health and Human Services, in 

coordination with the Secretary of the 

Treasury, to designate other health 

benefits coverage as minimum essential 

coverage by providing that certain 

coverage be designated as minimum 

essential coverage. It also outlines 

substantive and procedural 

requirements that other types of 

individual coverage must fulfill in order 

to be certified as minimum essential 

coverage. 

DATES: Effective Date: These regulations 

are effective on August 26, 2013. 

FOR FURTHER INFORMATION CONTACT: 

Zachary L. Baron, (301) 492–4478, for 

provisions related to exemptions from 

the individual shared responsibility 

payment. Cam Moultrie Clemmons, 

(410) 786–1565, for provisions related to 

minimum essential coverage. 

SUPPLEMENTARY INFORMATION: 

Executive Summary 

To ensure effective and efficient 

implementation of the insurance market 

reforms, the Affordable Care Act 

requires a nonexempt individual to 

maintain minimum essential coverage 

or make a shared responsibility 

payment. The Affordable Care Act 

specifies the categories of individuals 

who are eligible to receive exemptions 

from the individual shared 

responsibility payment under section 

5000A of the Internal Revenue Code (the 

Code), which provides nonexempt 

individuals with a choice: maintain 

minimum essential coverage for 

themselves and any nonexempt family 

members or include an additional 

payment with their federal income tax 

return. Some individuals are exempt 

from the shared responsibility payment, 

including members of recognized 

religious sects whose tenets conflict 

with acceptance of the benefits of 

private or public insurance and those 

who do not have an affordable health 

insurance coverage option available. 

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

Care Act (42 U.S.C. 18031(d)(4)(H)) 

directs the new health insurance 

marketplaces, called Affordable 

Insurance Exchanges (Exchanges), to 

issue certifications of exemption from 

the individual shared responsibility 

payment to eligible individuals. Section 

1411 of the Affordable Care Act (42 

U.S.C. 18081) generally provides 

procedures for determining an 

individual’s eligibility for various 

benefits relating to health coverage, 

including exemptions from the 

application of section 5000A of the 

Code. 

This final rule sets forth standards 

and processes under which the 

Exchange will conduct eligibility 

determinations for, and grant certificates 

of exemption from, the individual 

shared responsibility payment. 

Furthermore, it supports and 

complements rulemaking conducted by 

the Secretary of the Treasury with 

respect to section 5000A of the Code, as 

added by section 1501(b) of the 

Affordable Care Act. The intent of this 

rule is to implement the relevant 

provisions while continuing to afford 

states substantial discretion in the 

design and operation of an Exchange, 

with greater standardization provided 

where directed by the statute or where 

there are compelling practical, 

efficiency, or consumer protection 

reasons. 

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

Code, the Secretary of the Department of 

Health and Human Services (the 

Secretary), in coordination with the 

Secretary of the Treasury, may designate 

other health benefits coverage as 

minimum essential coverage. This final 

rule provides standards for determining 

whether certain other types of health 

insurance coverage constitute minimum 

essential coverage and procedures for 

plan sponsors to follow for a plan to be 

identified as minimum essential 

coverage under section 5000A of the 

Code. This rule also designates certain 

types of existing health coverage as 

minimum essential coverage. Other 

types of coverage, not statutorily 

specified and not designated as 

minimum essential coverage in this 

regulation, may be recognized as 

minimum essential coverage if certain 

substantive and procedural 

requirements are met as set forth in this 

rule. These additional categories of 

minimum essential coverage, both those 

designated per se and those that may 

apply for recognition are neither group 

health insurance coverage nor 

individual health insurance. Consumers 

with types of coverage that are 

recognized as minimum essential 

coverage in accordance with this rule 

would be determined to have minimum 

essential coverage if the coverage is 

certified to be substantially compliant 

with the requirements of title I of the 

Affordable Care Act that apply to nongrandfathered plans in the individual 

market. 

Table of Contents 

Executive Summary 

I. Background 

A. Legislative Overview 

B. Stakeholder Consultation and Input 

C. Alignment With Related Rules and 

Published Information 

II. Provisions of the 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 

a. Definitions (§ 155.20) 

2. Subpart C—General Functions of an 

Exchange 

a. Functions of an Exchange (§ 155.200) 

3. Subpart G—Exchange Functions in the 

Individual Market: Eligibility 

Determinations for Exemptions 

a. Definitions and General Requirements 

(§ 155.600) 

b. Eligibility Standards for Exemptions 

(§ 155.605) 

c. Eligibility Process for Exemptions 

(§ 155.610) 

d. Verification Process Related to 

Eligibility for Exemptions (§ 155.615) 

e. Eligibility Redeterminations for 

Exemptions During a Calendar Year 

(§ 155.620) 

f. Options for Conducting Eligibility 

Determinations for Exemptions 

(§ 155.625) 

g. Reporting (§ 155.630) 

h. Right To Appeal (§ 155.635) 

B. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

a. Definition of Minimum Essential 

Coverage (§ 156.600) 

b. Other Types of Coverage That Qualify as 

Minimum Essential Coverage (§ 156.602) 

c. Requirements for Recognition as 

Minimum Essential Coverage for 

Coverage Not Otherwise Designated 

Minimum Essential Coverage in the 

Statute or This Regulation (§ 156.604) 

d. HHS Audit Authority (§ 156.606) 

III. Provisions of the Final Regulation 

IV. Collection of Information Requirements 

V. Summary of Regulatory Impact Statement 

VI. Regulatory Flexibility Act 

VII. Unfunded Mandates 

VIII. Federalism 

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Federal Register / Vol. 78, No. 126 / Monday, July 1, 2013 / Rules and Regulations 39495 

1State Exchange Implementation Questions and 

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

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

exchange_q_and_a.pdf.pdf. 

2Frequently Asked Questions on Exchanges, 

Market Reforms, and Medicaid, published 

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

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

IX. Congressional Review Act 

Regulation Text 

Abbreviations 

Affordable Care Act—the Affordable Care Act 

of 2010 (which is the collective term for 

the Patient Protection and Affordable Care 

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

and Education Reconciliation Act (Pub. L. 

111–152)) 

BHP Basic Health Program 

CHIP Children’s Health Insurance Program 

CMS Centers for Medicare & Medicaid 

Services 

FPL Federal Poverty Level 

HHS Department of Health and Human 

Services 

IRS Internal Revenue Service 

NAIC National Association of Insurance 

Commissioners 

QHP Qualified Health Plan 

SSA Social Security Administration 

SSN Social Security Number 

Code Internal Revenue Code of 1986, as 

Amended 

I. Background 

A. Legislative Overview 

Section 1501(b) of the Affordable Care 

Act added section 5000A of the Internal 

Revenue Code (the Code) to a new 

chapter 48 of subtitle D (Miscellaneous 

Excise Taxes) of the Code effective for 

months beginning after December 31, 

2013. Section 5000A of the Code, which 

was subsequently amended by the 

TRICARE Affirmation Act of 2010, 

Public Law 111–159 (124 Stat. 1123) 

and Public Law 111–173 (124 Stat. 

1215), requires that nonexempt 

individuals either maintain minimum 

essential coverage or make a shared 

responsibility payment. It also describes 

categories of individuals who may 

qualify for an exemption from the 

individual shared responsibility 

payment, and provides the definition of 

minimum essential coverage. 

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

Affordable Care Act specifies that the 

Exchange will, subject to section 1411 of 

the Affordable Care Act, grant 

certifications of exemption from the 

individual shared responsibility 

payment specified in section 5000A of 

the Code. Section 1311(d)(4)(I)(i) of the 

Affordable Care Act specifies that the 

Exchange will transfer to the Secretary 

of the Treasury a list of the individuals 

to whom the Exchange provided such a 

certification. Section 1411(a)(4) of the 

Affordable Care Act provides that the 

Secretary of Health and Human Services 

(the Secretary) will establish a program 

for determining whether a certification 

of exemption from the individual shared 

responsibility requirement and penalty 

will be issued by an Exchange under 

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

Care Act. We interpret this provision as 

authorizing the Secretary to determine 

‘‘whether,’’ with respect to the nine 

exemptions provided for under section 

5000A of the Code, Exchanges would 

perform the role of issuing certifications 

of exemption under section 

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

Act, whether eligibility for the 

exemption would be claimed solely 

through tax filing, or whether both 

processes would be available. Under 

this interpretation, the responsibility 

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

Affordable Care Act to issue 

certifications of exemption is ‘‘subject 

to’’ these determinations by the 

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

Affordable Care Act, and Exchanges are 

thus only required to issue certifications 

of exemption with respect to 

exemptions not exclusively assigned to 

the Internal Revenue Service (IRS). 

Section 1321 of the Affordable Care 

Act discusses state flexibility in the 

operation and enforcement of Exchanges 

and related requirements. Section 

1321(a) of the Affordable Care Act 

provides broad authority for the 

Secretary to establish standards and 

regulations to implement the statutory 

requirements related to Exchanges and 

other components of title I of the 

Affordable Care Act as amended by the 

Health Care and Education 

Reconciliation Act of 2010. Section 

1311(k) of the Affordable Care Act 

specifies that Exchanges may not 

establish rules that conflict with or 

prevent the application of regulations 

promulgated by the Secretary under 

Subtitle D of title I of the Affordable 

Care Act. 

In accordance with our interpretation 

of these sections of the Affordable Care 

Act, and the authority provided by, inter 

alia, section 1321(a) of the Affordable 

Care Act, we specify that under the 

program established under section 

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

the Exchange will determine eligibility 

for and grant certificates of exemption 

as described below. We also note that 

consistent with prior guidance, in the 

State Exchange Implementation 

Questions and Answers released by 

HHS on November 29, 2011,1 and the 

Frequently Asked Questions on 

Exchanges, Market Reforms, and 

Medicaid released by HHS on December 

10, 2012,2 a state-based Exchange can be 

approved to operate by the Department 

of Health and Human Services (HHS) if 

it uses a federally-managed service to 

make eligibility determinations for 

exemptions. 

On March 27, 2012, HHS published 

the final rule entitled ‘‘Patient 

Protection and Affordable Care Act; 

Establishment of Exchanges and 

Qualified Health Plans; Exchange 

Standards for Employers’’ (77 FR 

18309). The provisions of the final rule, 

herein referred to as the Exchange final 

rule, encompass the key functions of 

Exchanges related to eligibility, 

enrollment, and plan participation and 

management. In the Exchange final rule, 

45 CFR 155.200(b) provided that a 

minimum function of an Exchange is to 

grant certificates of exemption 

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

and 1411 of the Affordable Care Act. 

This final rule cross-references several 

provisions in the Exchange final rule, 

notably the limited situations where 

eligibility and verification processes 

used in determining eligibility for 

enrollment in a qualified health plan 

(QHP) through the Exchange and for 

insurance affordability programs can 

also be used by Exchanges for the 

purpose of determining whether an 

individual is eligible for an exemption 

from the individual shared 

responsibility payment. 

Section 5000A(f) of the Code 

designates certain types of coverage as 

minimum essential coverage. The term 

‘‘minimum essential coverage’’ includes 

all of the following under the statute: 

Government sponsored programs (the 

Medicare program under part A of title 

XVIII of the Social Security Act (the 

Act); the Medicaid program under title 

XIX of the Act; the Children’s Health 

Insurance Program (CHIP) program 

under title XXI of the Act; medical 

coverage under chapter 55 of title 10, 

United States Code, including the 

TRICARE program; a health care 

program under chapter 17 or 18 of title 

38, United States Code, as determined 

by the Secretary of Veterans Affairs, in 

coordination with the Secretaries of the 

Department of Health and Human 

Services and Treasury; a health plan 

under section 2504(e) of title 22, United 

States Code (relating to Peace Corps 

volunteers); or the Nonappropriated 

Fund Health Benefits Program of the 

Department of Defense (established 

under section 349 of the National 

Defense Authorization Act for Fiscal 

Year 1995); coverage under an eligible 

employer-sponsored plan; coverage 

under a health plan offered in the 

individual market within a State; and 

coverage under a grandfathered health 

plan. In addition, section 5000A(f)(1)(E) 

of the Code directs the Secretary, in 

coordination with the Secretary of 

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39496 Federal Register / Vol. 78, No. 126 / Monday, July 1, 2013 / Rules and Regulations 

Treasury, to designate other health 

benefits coverage, such as a state health 

benefits risk pool, as minimum essential 

coverage. This final rule designates 

certain additional types of coverage 

qualify as minimum essential coverage 

and also provides a process by which 

other types of coverage could be 

recognized as minimum essential 

coverage. 

B. Stakeholder Consultation and Input 

On August 3, 2010, HHS published a 

request for comment (the RFC) inviting 

the public to provide input regarding 

the rules that will govern the Exchanges. 

In particular, HHS asked states, tribal 

representatives, consumer advocates, 

employers, insurers, and other 

interested stakeholders to comment on 

the standards Exchanges should meet. 

The comment period closed on October 

4, 2010. 

The public response to the RFC 

yielded comment submissions from 

consumer advocacy organizations, 

medical and health care professional 

trade associations and societies, medical 

and health care professional entities, 

health insurers, insurance trade 

associations, members of the general 

public, and employer organizations. The 

majority of the comments were related 

to the general functions and standards 

for Exchanges, qualified health plans 

(QHPs), eligibility and enrollment, and 

coordination with Medicaid. While this 

final rule does not directly respond to 

comments from the RFC, the comments 

received are described, where 

applicable, in discussing specific 

regulatory proposals. These comments 

are not separately identified, but instead 

are incorporated into each substantive 

section of this final rule as appropriate. 

In addition to the RFC, HHS received 

comments on the proposed rule titled 

‘‘Patient Protection and Affordable Care 

Act; Exchange Functions: Eligibility for 

Exemptions; Miscellaneous Minimum 

Essential Coverage Provisions’’ (78 FR 

7348) that are, similarly not separately 

identified, but incorporated into each 

substantive section of this final rule. 

HHS has also consulted with 

stakeholders through regular meetings 

with the National Association of 

Insurance Commissioners (NAIC), 

regular contact with states through the 

Exchange grant process, and meetings 

with tribal representatives, health 

insurance issuers, trade groups, 

consumer advocates, employers, and 

other interested parties. HHS initiated 

and hosted a tribal consultation on 

February 21, 2013, where we allowed 

federally-recognized tribal leaders and 

representatives from tribal health 

organizations the opportunity to discuss 

and provide feedback regarding the 

provisions within the proposed rule. 

Furthermore, we also received feedback 

from health care sharing ministries 

about the process for how individual 

members can obtain certificates of 

exemption based on their membership 

in a health care sharing ministry, and an 

expression of interest in a process for 

allowing health care sharing ministries 

to obtain recognition that they meet the 

standards under section 5000A(d)(2)(B) 

of the Code. We also received 

information from various stakeholder 

groups regarding types of ‘‘other 

coverage’’ as described in section 

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

C. Alignment With Related Rules and 

Published Information 

The proposed rule, titled ‘‘Patient 

Protection and Affordable Care Act; 

Exchange Functions: Eligibility for 

Exemptions; Miscellaneous Minimum 

Essential Coverage Provisions’’ (78 FR 

7348), was published in the Federal 

Register on February 1, 2013 in 

coordination with the Department of 

Treasury’s proposed rule, ‘‘Shared 

Responsibility Payment for Not 

Maintaining Minimum Essential 

Coverage’’ (78 FR 7314) (hereinafter 

referred to as ‘‘the Treasury proposed 

rule’’). The Department of the Treasury’s 

proposed rule will be finalized at a later 

date. Accordingly, in this final rule, we 

have removed cross-references to the 

Treasury proposed rule and replaced 

them with cross-references to the 

applicable language in the Affordable 

Care Act. Upon publication of the 

Treasury final rule, we intend to replace 

the statutory references with the 

appropriate regulatory references. 

II. Provisions of the Regulation and 

Analysis of and Responses to Public 

Comments 

On February 1, 2013, we published a 

proposed rule, titled ‘‘Patient Protection 

and Affordable Care Act; Exchange 

Functions: Eligibility for Exemptions; 

Miscellaneous Minimum Essential 

Coverage Provisions’’ (78 FR 7348), in 

which we proposed to add subpart G to 

45 CFR part 155, which includes 

standards for Exchanges related to 

conducting eligibility determinations for 

and granting certificates of exemption 

from the individual shared 

responsibility payment. We also 

proposed to amend § 155.200(a) to add 

a reference to indicate that, consistent 

with existing language in § 155.200(b), 

granting certificates of exemption is a 

minimum function of the Exchange. 

Furthermore, we proposed to add 

subpart G to 45 CFR part 156, which set 

forth standards under which the 

Secretary would designate certain types 

of existing coverage, not specified under 

section 5000A, as minimum essential 

coverage. Additionally, under the 

proposed regulation, other types of 

coverage that were neither statutorily 

nor regulatory designated as minimum 

essential coverage, may be recognized as 

minimum essential coverage if certain 

substantive and procedural 

requirements are met. These types of 

coverage, both those designated per se 

and those recognized by application, are 

neither group health insurance coverage 

nor individual health insurance. 

Consumers with coverage recognized as 

minimum essential coverage in 

accordance with this regulation would 

be determined to have minimum 

essential coverage for purposes of the 

individual shared responsibility 

provision. 

We received approximately 220 

public comments from state agencies, 

advocacy groups, health care providers, 

employers, health insurers, health care 

associations, and others. The comments 

ranged from general support or 

opposition to the proposed provisions to 

very specific questions or comments 

regarding the proposed rules. 

Some comments were outside the 

scope of the proposed rule, and 

therefore are not addressed in this final 

rule. In some instances, commenters 

raised policy or operational issues, such 

as those related to certified application 

counselors, authorized representatives, 

and eligibility appeals, that will be 

addressed through forthcoming 

regulatory and subregulatory guidance 

to be provided subsequent to this final 

rule; therefore, some, but not all 

comments are addressed in the 

preamble to this final rule. 

Brief summaries of each proposed 

provision, a summary of the public 

comments we received (with the 

exception of specific comments on the 

paperwork burden or the regulatory 

impact analysis), and our responses to 

the comments are below. Comments 

related to the paperwork burden are 

addressed in the ‘‘Collection of 

Information Requirements’’ and section 

in this final rule. We did not receive 

comments related to the impact 

analysis. 

A. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. Subpart A—General Provisions 

a. Definitions (§ 155.20) 

We proposed to make a technical 

correction to the definitions of 

‘‘applicant’’ and ‘‘application filer’’ to 

note that they do not apply to an 

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Federal Register / Vol. 78, No. 126 / Monday, July 1, 2013 / Rules and Regulations 39497 

applicant or application filer seeking an 

exemption pursuant to proposed 

subpart G. We proposed separate 

definitions specific to exemptions for 

these terms in § 155.600. 

Comment: Several commenters 

expressed concerns about HHS’ preexisting definition of ‘‘application filer’’ 

in § 155.20 based on its cross-reference 

to the definition of ‘‘family’’ within the 

Code and the inclusion of this definition 

as proposed in § 155.600(a). 

Commenters believed the inclusion of 

the definition of ‘‘family’’ within the 

Code would limit the flexibility of an 

applicant to include people who would 

have relationships that may otherwise 

be included on an exemption 

application. Commenters believed that 

these cross-references were inconsistent 

with other provisions, as they noted that 

subject to state rules, QHP issuers can 

allow individuals in multiple tax 

households to enroll in a QHP together, 

and that HHS has proposed to define 

‘‘dependent’’ in 78 FR 4718 for purposes 

of eligibility for special enrollment 

periods based on whether a QHP issuer 

will allow individuals to enroll in a 

QHP together. As such, they urged HHS 

to remove the references to the 

definition of family within the Code and 

its implementing regulation. 

Response: The commenters correctly 

describe different situations in which 

recognition of relationships is 

determined by who can enroll in a QHP 

together. In proposing to amend the 

definition of ‘‘application filer’’ in 

§ 155.20 to exclude those individuals 

seeking eligibility for an exemption 

pursuant to subpart G, we otherwise 

maintained the definition from the 

Exchange final rule regarding the 

coverage application process at 77 FR 

18445 with a few minor technical 

corrections. Further, we note that 

comments regarding eligibility for 

enrollment in a QHP and insurance 

affordability programs are beyond the 

scope of this regulation. Since the 

relevant family unit for the individual 

shared responsibility provision is the 

tax filing unit, our proposed language 

defining ‘‘application filer’’ at 

§ 155.600(a) specific to subpart G crossreferences section 5000A(a) of the Code 

regarding the individual shared 

responsibility provision. Because the 

individual shared responsibility 

provision will be administered by the 

Internal Revenue Service on a taxreturn-by-tax-return basis, we believe it 

is appropriate to provide that only 

members of the same tax filing unit may 

file an exemption application together. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.20 of the proposed 

rule with a few technical corrections. 

We clarify that the term ‘‘applicant’’ in 

this provision excludes those 

individuals seeking eligibility for an 

exemption from the individual shared 

responsibility payment pursuant to 

subpart G. We also clarify that our 

previous inclusion of an authorized 

representative in the definition refers to 

the authorized representative of an 

applicant. We also cite to the applicable 

Treasury regulation instead of section 

36B of the Code. 

2. Subpart C—General Functions of an 

Exchange 

a. Functions of an Exchange (§ 155.200) 

In paragraph (a), we proposed to add 

that the Exchange would also perform 

the minimum functions described in 

subpart G of this part related to 

eligibility determinations for 

exemptions. 

Comment: Commenters generally 

supported our proposal that the 

Exchange would also perform the 

minimum functions described in 

subpart G of this part related to 

eligibility determinations for 

exemptions. Some commenters raised 

concerns that the HHS proposed rule 

and the Treasury proposed rule 

discussed different issues, and wanted 

to ensure that both agencies were 

working in close coordination. Other 

commenters expressed opposition to 

Exchanges determining eligibility for 

exemptions based on overarching 

philosophical complaints regarding this 

proposed rule and this provision of the 

Affordable Care Act. One commenter 

wanted HHS to reduce the number of 

exemptions available to individuals. 

Lastly, another commenter believed that 

HHS was providing too much latitude to 

states in determining the basic 

framework for Exchanges, and rather 

should set more strict guidelines to 

prevent confusion for Exchanges and 

consumers. 

Response: We continue to coordinate 

closely with the Department of Treasury 

and a range of stakeholders to ensure 

that we provide sufficient guidance to 

Exchanges, while also ensuring the 

appropriate level of operational 

flexibility to allow for effective 

implementation. We note that the 

categories of exemptions proposed were 

based on the definitions provided 

within the Affordable Care Act, which 

added section 5000A of the Code. As we 

discuss further below, the Secretary of 

HHS has exercised careful discretion in 

specifying criteria for the hardship 

exemption in accordance with section 

5000A(e)(5) of the Code, to ensure that 

a hardship exemption is only available 

in limited circumstances in which an 

individual has suffered a hardship with 

respect to the capability to obtain 

coverage under a QHP. 

Summary of Regulatory Changes 

We are finalizing the provision 

proposed in § 155.200 of the proposed 

rule without modification. 

3. Subpart G—Exchange Functions in 

the Individual Market: Eligibility 

Determinations for Exemptions 

a. Definitions and General Requirements 

(§ 155.600) 

In paragraph (a) of § 155.600, we 

proposed definitions and sought 

comments for terms that apply 

throughout subpart G. First, we 

proposed to define ‘‘applicant’’ as an 

individual who is seeking an exemption 

from the individual shared 

responsibility payment for him or 

herself through an application 

submitted to the Exchange. We 

proposed to define ‘‘application filer’’ as 

an applicant; an individual who is liable 

for the individual shared responsibility 

payment (in accordance with 26 CFR 

1.5000A–1(c) of the Treasury proposed 

rule) for an applicant; an authorized 

representative; or if the applicant is a 

minor or incapacitated, someone acting 

responsibly for an applicant. We noted 

that we intended to modify the 

proposed language in § 155.227 (78 FR 

4711) and § 155.225 (78 FR 4710) to 

clarify that authorized representatives 

and certified application counselors can 

assist individuals seeking exemptions, 

and sought comments about how 

authorized representatives and certified 

application counselors could best 

support individuals seeking certificates 

of exemption from the Exchange. 

We proposed to define ‘‘exemption’’ 

as an exemption from the individual 

shared responsibility payment, noting 

that there is no meaningful distinction 

between individuals exempt from the 

shared responsibility payment and 

individuals who are not ‘‘applicable 

individuals’’ for purposes of the 

requirement to maintain minimum 

essential coverage in section 5000A of 

the Code. 

We proposed to define ‘‘health care 

sharing ministry’’ in the same manner as 

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

Treasury proposed rule. 

We proposed to define ‘‘required 

contribution’’ in the same manner as 

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

Treasury proposed rule. 

We proposed to define ‘‘Indian tribe’’ 

in the same manner as in 26 CFR 

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39498 Federal Register / Vol. 78, No. 126 / Monday, July 1, 2013 / Rules and Regulations 

1.5000A–3(g) of the Treasury proposed 

rule, which in turn references the 

definition in section 45A(c)(6) of the 

Code. 

In paragraph (b), we proposed that for 

purposes of this subpart, any attestation 

that an applicant is to provide under 

this subpart may also be provided by an 

application filer on behalf of the 

applicant. 

In paragraph (c) of § 155.600, we 

proposed that for the purposes of this 

subpart, the Exchange must consider 

information through electronic data 

sources, other information provided by 

the applicant, or other information as 

available in the records of the Exchange 

to be reasonably compatible with an 

applicant’s attestation if the difference 

or discrepancy does not impact the 

eligibility for the relevant exemption or 

exemptions for which the applicant 

requested. 

We also proposed to add paragraphs 

(d) and (e) in order to specify that the 

accessibility and notice requirements in 

§ 155.205(c) and § 155.230, respectively, 

apply to exemptions as well, given that 

the definition of applicant in this 

subpart is otherwise specific to 

exemptions. 

Comment: One commenter raised 

concerns about health care sharing 

ministries. The commenter noted that 

health care sharing ministries are not 

subject to state insurance laws, and as 

such, the statutory exemption for 

members of health care sharing 

ministries may create circumstances in 

which an individual who is a member 

of a health care sharing ministry does 

not benefit from the Affordable Care 

Act’s broader consumer protections. The 

commenter believed that this might 

motivate organizations to seek to 

establish standing as a health care 

sharing ministry in order to evade 

consumer protections and market 

reforms enacted by the Affordable Care 

Act. The commenter advised HHS and 

IRS to carefully monitor applications 

from entities seeking recognition as a 

health care sharing ministry for the 

purpose of exemptions. 

Response: The Affordable Care Act 

defines health care sharing ministry for 

purposes of an exemption in section 

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

appreciate the concerns raised regarding 

organizations that may improperly seek 

standing as a health care sharing 

ministry. As we discuss further below, 

we believe that the process discussed in 

§ 155.615(c) will ensure that HHS only 

provides exemptions based on 

membership in a health care sharing 

ministry for individuals who are 

members of health care sharing 

ministries that meet the standards in the 

statute, which specify that a health care 

sharing ministry or its predecessor must 

have been in existence at all times since 

December 31, 1999. 

Comment: Commenters generally 

supported allowing an application filer 

to attest for an applicant on the 

exemptions application. However, one 

commenter believed that ‘‘attestation’’ 

was not defined clearly enough in 

§ 155.600(b), and as such recommended 

that HHS revise this provision to more 

clearly specific the acceptable form and 

manner of an attestation. 

Response: The proposed language 

regarding attestations in § 155.600(b) 

mirrors the language in 45 CFR 

155.300(c), which is used in the 

coverage process. As we believe this 

definition provides sufficient flexibility 

and clarity for Exchanges, we do not 

deviate from the language used in the 

coverage process to describe an 

attestation. 

Comment: Several commenters 

requested that HHS ensure that the 

application process, including eligibility 

notices, be accessible to individuals 

with limited English proficiency (LEP) 

as well as those individuals with 

disabilities. Commenters also urged 

HHS to include clearer guidelines 

regarding the exemption eligibility 

process in order to ensure that the 

processes do not discriminate against 

individuals, particularly LEP 

individuals. Commenters requested 

translation of the requisite materials in 

non-English languages, and suggested 

that HHS refer to LEP guidance adopted 

by the HHS Office of Civil Rights. 

Response: We appreciate commenters’ 

concerns regarding ensuring that the 

application process and eligibility 

notices are accessible to individuals 

with LEP as well as those individuals 

with disabilities. In proposed 

§ 155.600(d) and (e), we crossreferenced § 155.205(c) and § 155.230 

respectively, which provide standards 

to ensure the suggested protections are 

in place. As such, we do not believe that 

additional standards are necessary in 

subpart G to ensure the application 

process and eligibility notices are 

accessible to individuals with LEP as 

well as those individuals with 

disabilities. 

Summary of Regulatory Changes 

We finalize the provisions proposed 

in § 155.600 of the proposed rule with 

one modification and a few nonsubstantive technical corrections for 

clarity. We finalize the definition of 

‘‘Indian tribe’’ as proposed, but move 

the definition earlier in paragraph (a). 

We make a technical correction for the 

purpose of clarity in finalizing the 

definition of ‘‘shared responsibility 

payment’’ to specify that it means the 

payment imposed with respect to a nonexempt individual. We also include the 

definition of ‘‘tax filer’’ in paragraph (a) 

to specify that it has the same meaning 

in subpart G as it does in § 155.300(a). 

b. Eligibility Standards for Exemptions 

(§ 155.605) 

Under the program established in 

accordance with section 1411(a)(4) of 

the Affordable Care Act for determining 

whether certificates of exemption are to 

be issued by Exchanges under section 

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

Act, we proposed that Exchanges would 

issue certificates of exemption in the 

categories of religious conscience and 

hardship. With respect to the other 

seven exemptions, for reasons set forth 

below, we proposed that under the 

program provided for in section 

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

Exchanges would also issue certificates 

of exemption with respect to three 

additional categories (with exemptions 

also available through the tax filing 

process) based on membership in a 

health care sharing ministry, 

membership in an Indian tribe, and 

incarceration. In the four remaining 

exemption categories, however, we 

proposed that under the program 

established under section 1411(a)(4) of 

the Affordable Care Act, certificates 

would not be issued by Exchanges 

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

Affordable Care Act, and instead 

individuals would claim an exemption 

in one of those categories exclusively 

through the tax return filing process 

with the IRS. 

In paragraph (a) of § 155.605, we 

proposed that except as specified in 

paragraph (g), the Exchange would 

determine an applicant eligible for and 

grant a certificate of exemption for a 

month if the Exchange determines that 

he or she meets the requirements for one 

of the categories of exemptions 

described in this section for at least one 

day in the month, consistent with 26 

CFR 1.5000A–3 of the Treasury 

proposed rule. We noted that depending 

on the circumstances for each specific 

proposed hardship exemption category, 

the certificate may be provided for an 

entire calendar year or instead for a 

specific month or period of months, 

including periods of time that stretch 

across more than one calendar year. 

We noted that an applicant could 

apply for multiple exemptions 

simultaneously in case some are denied, 

and also receive any exemptions for 

which he or she is eligible. We solicited 

comments on this approach. 

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In paragraph (b), we proposed that 

except as specified, an applicant is 

required to submit a new application for 

each year for which an applicant wants 

to be considered for an exemption 

through the Exchange, and that an 

exemption will only be provided for a 

calendar year in which the applicant 

submitted an application for an 

exemption. We provided exceptions for 

exemptions provided based on 

membership in an Indian tribe and for 

religious conscience, in recognition that 

an individual’s qualification for these 

exemptions is expected to remain the 

same from year to year. We also 

specified an exception for hardship, 

since some categories of hardship will 

be provided for one or more months and 

may be provided for periods of time that 

stretch across more than one calendar 

year, and some categories of hardship 

can only be provided after the close of 

a calendar year. We welcomed 

comments on this approach and how 

the Exchange could expedite and 

streamline the process. 

We considered whether to specify that 

the Exchange send a notice to each 

individual who had an exemption 

certificate from the Exchange for a 

calendar year, in order to remind him or 

her about the opportunity to apply to for 

an exemption for the following calendar 

year, and whether this notice could be 

sent only at the individual’s direction. 

We solicited comments regarding the 

use of such a reminder and on a renewal 

process more generally. 

In paragraph (c), we proposed to 

codify the statutory eligibility standards 

for the exemption based on religious 

conscience. In paragraph (c)(1), we 

proposed that the Exchange would 

determine an applicant eligible for an 

exemption for a month if he or she is a 

member of a recognized religious sect or 

division described in section 1402(g)(1) 

of the Code, and an adherent of 

established tenets or teachings of such 

sect or division for such month, in 

accordance with 26 CFR 1.5000A–3(a) 

of the Treasury proposed rule. 

In paragraph (c)(2), we proposed 

eligibility standards regarding the 

duration of the exemption for religious 

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

proposed that the Exchange grant the 

exemption for religious conscience to an 

applicant that meets the standards of 

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

month on a continuing basis, until such 

time that the applicant either reaches 

the age of 18, or reports that he or she 

no longer meets the standards provided 

in (c)(1) of this section. 

We proposed to add paragraph 

(c)(2)(ii) to specify how the Exchange 

should handle a situation in which an 

individual who has a certificate of 

exemption based on religious 

conscience that was granted prior to the 

individual reaching the age of 18. We 

proposed that the Exchange send such 

an individual a notice when he or she 

reaches the age of 18 that informs the 

individual that he or she needs to 

submit a new exemption application if 

he or she would like to maintain the 

certificate of exemption. 

We proposed to add paragraph (c)(3) 

to specify that the Exchange will grant 

an exemption in this category 

prospectively or retrospectively. 

In paragraph (d), we proposed that the 

Exchange determine an applicant 

eligible for an exemption for a month if 

the applicant is a member of a health 

care sharing ministry for such month in 

accordance with 26 CFR 1.5000A–3(b) 

of the Treasury proposed rule. We 

proposed that an applicant who wanted 

to retain this exemption for an 

additional calendar year would re-apply 

for this exemption each calendar year, 

and that the Exchange may only provide 

an exemption in this category 

retrospectively. 

In paragraph (e), we proposed the 

eligibility standards for the exemption 

based on incarceration. We specified 

that the Exchange would determine an 

individual eligible for an exemption for 

a month that he or she meets the 

definition specified in 26 CFR 1.5000A– 

3(d) of the Treasury proposed rule. We 

proposed that the Exchange would only 

provide this exemption for months in 

which an individual was incarcerated, 

since there is no assurance that an 

incarcerated individual will be released 

on the expected date. 

In paragraph (f), we proposed 

eligibility standards for the exemption 

based on membership in an Indian tribe. 

In paragraph (f)(1), we proposed to 

codify that the Exchange would 

determine an applicant eligible for an 

exemption for a month if he or she is a 

member of an Indian tribe for such 

month, in accordance with 26 CFR 

1.5000A–3(g) of the Treasury proposed 

rule. 

In paragraph (f)(2), we proposed 

eligibility standards regarding the 

duration of the exemption for 

membership in an Indian tribe, such 

that the Exchange would grant the 

exemption for membership in an Indian 

tribe to an applicant who meets the 

standards of paragraph (f)(1) of this 

section for a month on a continuing 

basis, until such time that the 

individual reports that he or she no 

longer meets the standards provided in 

(f)(1) of this section. 

We proposed to add paragraph (f)(3) 

to specify that the Exchange will grant 

an exemption in this category during the 

year prospectively or retrospectively. 

In paragraph (g), we proposed 

eligibility standards for the exemption 

based on hardship, which is defined in 

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

applying to ‘‘any applicable individual 

who for any month is determined by the 

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

the Affordable Care Act to have suffered 

a hardship with respect to the capability 

to obtain coverage under a qualified 

health plan.’’ In developing some of 

these standards, we considered the 

standards established by the 

Commonwealth of Massachusetts. We 

proposed some specific time standards 

for each category of hardship, but we 

solicited comments regarding whether 

these are appropriate, or if we should 

adopt a more uniform approach across 

the category. 

In paragraph (g)(1) of § 155.605, we 

proposed that the Exchange provide an 

exemption for hardship for a month or 

months in which an applicant 

experienced financial or domestic 

circumstances, including an unexpected 

natural or human-caused event, such 

that he or she has a significant, 

unexpected increase in essential 

expenses; the expense of purchasing 

minimum essential coverage would 

have caused him or her to experience 

serious deprivation of food, shelter, 

clothing or other necessities; or he or 

she has experienced other factors 

similar to those described in paragraphs 

(g)(1)(i) and (ii) of this section that 

prevented him or her from obtaining 

minimum essential coverage. We 

proposed broad language to include a 

range of personal scenarios that could 

negatively impact an applicant such that 

he or she would be eligible for this 

exemption, and noted that we expected 

to clarify these criteria in future 

guidance. We listed expected standards 

and solicited comments on these 

criteria, including on whether 

additional criteria should be established 

in regulation or guidance. We also 

solicited comments regarding whether 

the proposed time standard could be 

effectively implemented, or whether we 

should take a different approach. 

In paragraph (g)(2), we proposed that 

the Exchange provide an exemption for 

hardship for a calendar year if an 

applicant, or another individual for 

whom the applicant attests will be 

included in the applicant’s family (as 

defined in 26 CFR 1.5000A–1(d)(6) of 

the Treasury proposed rule), is unable to 

afford coverage for such calendar year in 

accordance with 26 CFR 1.5000A–3(e) 

of the Treasury proposed rule, 

calculated using projected annual 

household income. We proposed 

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identical standards to those defined for 

the lack of affordable coverage 

exemption in 26 CFR 1.5000A–3(e) of 

the Treasury proposed rule, except that 

the Exchange would use projected 

household income to determine whether 

coverage is affordable under this 

exemption, instead of actual household 

income from the tax return for the year 

for which the exemption is requested. 

We solicited comments regarding 

whether the approach in paragraph 

(g)(5) of this section regarding the 

aggregate cost of employer-sponsored 

coverage for all the employed members 

of the family should also be applied in 

determining eligibility for this hardship 

category. 

We proposed that this exemption is 

not available for an application that is 

submitted after the last date on which 

an applicant could enroll in a QHP 

through the Exchange for a calendar 

year for which the exemption is 

requested to ensure that an applicant 

can obtain the information needed to 

make a purchasing decision, including 

for a catastrophic plan, which is not 

applicable after the last date on which 

enrollment would be possible. 

We proposed in paragraph (g)(3) of 

§ 155.605 that the Exchange provide an 

exemption for hardship for a calendar 

year if an individual taxpayer who was 

not required to file an income tax return 

for such calendar year because his or 

her gross income was below the filing 

threshold, but who nevertheless filed to 

receive a tax benefit, claimed a 

dependent who was required to file a 

tax return, and as a result had 

household income exceeding the 

applicable return filing threshold 

outlined in 26 CFR 1.5000A–3(f)(2) of 

the Treasury proposed rule. 

We proposed to add paragraph (g)(4) 

to specify that the Exchange provide an 

exemption for hardship for a calendar 

year for an individual who has been 

determined ineligible for Medicaid for 

one or more months during the benefit 

year solely as a result of a State not 

implementing section 2001(a) of the 

Affordable Care Act. We sought 

comments on whether this exemption 

should be limited to such individuals 

who are also not eligible for advance 

payments of the premium tax credit 

(that is, with projected household 

income below 100% of the poverty 

threshold). 

We proposed to add paragraph (g)(5) 

of § 155.605 to specify that the Exchange 

provide an exemption for hardship for 

a calendar year if an applicant and one 

or more employed members of his or her 

family, as defined in 26 CFR 1.5000A– 

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

are each determined eligible for selfonly coverage in separate eligible 

employer-sponsored plans that are 

affordable, pursuant to 26 CFR 

1.5000A–3(e) of the Treasury proposed 

rule for one or more months during the 

calendar year, but for whom the 

aggregate cost of employer-sponsored 

coverage for all the employed members 

of the family exceeds 8 percent of the 

household income for that month or 

those months. 

Lastly, as noted above, we proposed 

under our authority in section 

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

that the Exchange would not issue 

certifications of exemption with respect 

to household income below the filing 

threshold (other than the limited 

hardship exemption proposed in 

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

not being lawfully present; short 

coverage gaps; and inability to afford 

coverage (other than the limited 

hardship exemption proposed in 

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

We specified that these exemptions 

would be available solely through the 

tax filing process. We solicited 

comments on this approach and if there 

were alternative approaches that HHS 

should consider. 

Comment: Multiple commenters 

expressed support for HHS’ proposal to 

allow an individual to apply for and 

enable the Exchange to grant multiple 

exemptions, as well as the provision 

specifying that an individual eligible for 

an exemption for at least one day of the 

month receive the exemption for a full 

month. Another commenter expressed 

broad support for the proposed 

exemptions process, but wanted HHS to 

maintain its focus on ensuring 

individuals receive coverage through 

the Exchange. 

Response: In fulfilling the goals of the 

Affordable Care Act, we are committed 

to ensuring that all individuals have 

access to quality, affordable health 

coverage. Furthermore, as specified in 

the statute, we are also committed to 

providing access to exemptions from the 

shared responsibility payment to those 

individuals who meet specified 

standards. 

Comment: Commenters expressed 

differing opinions regarding whether the 

Exchange should send notices to 

individuals in possession of certain 

certificates of exemption at the end of a 

calendar year to remind them of the 

need to submit an application for the 

same exemption for the next calendar 

year. Several commenters wanted HHS 

to specify that the Exchange send such 

a reminder notice that would arrive 

during open enrollment, to allow an 

individual to make the appropriate 

purchasing decision. Another 

commenter opposed specifying that the 

Exchange send such a reminder notice, 

noting that most exemptions are meant 

to be temporary, and that the primary 

goal of the Exchange should be ensuring 

that individuals have access to coverage. 

Response: We will maintain the 

language as proposed, which does not 

specify that Exchanges will send an 

additional reminder notice to an 

individual at the end of a calendar year. 

Pursuant to the eligibility standards for 

exemptions described throughout 

§ 155.605, individuals have broad 

flexibility in terms of the time periods 

which Exchanges will grant exemptions, 

and thus we do not believe the 

corresponding administrative burden on 

Exchanges to send an additional notice 

is outweighed by the benefits of such a 

notice for individuals. We note that an 

Exchange also has the flexibility to send 

such a notice at its discretion. 

Comment: Several commenters raised 

concerns regarding our proposed 

codification of the eligibility standards 

for the religious conscience exemption 

specified in the Affordable Care Act. 

Some commenters expressed 

philosophical opposition to the notion 

that the government would exempt 

individuals for religious purposes. 

Other commenters opposed our 

proposal to allow children of 

individuals in recognized religious sects 

or divisions to be exempt in addition to 

their parents. Commenters believed that 

as a result, parents would not have to 

maintain minimum essential coverage 

for their dependent children, which 

they feared would permit parents to 

avoid caring for their children’s health. 

Response: Section 5000A(d)(2) of the 

Code, as added by section 1501(b) of the 

Affordable Care Act, establishes the 

religious conscience exemption. We 

note that state laws governing domestic 

relations allow parents to attest on 

behalf of minor children, which was the 

basis of our proposal. We note that we 

do not intend this provision to modify 

or supersede any other laws regarding 

health responsibility for children. 

Comment: One commenter suggested 

the IRS or the Social Security 

Administration (SSA) is better 

positioned to determine eligibility for 

the religious conscience exemption. 

Furthermore, the commenter expressed 

concerns about how the Exchange 

should handle an appeal when a 

religious sect is not recognized by the 

SSA. The commenter indicated that it 

would be more appropriate for an 

individual to instead appeal to IRS or 

SSA in this situation as opposed to the 

Exchange. 

Response: As noted above, the statute 

specifies that the religious conscience 

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exemption may only be granted by the 

Exchange. We are working closely with 

the SSA to define an appropriate 

process to address religious sects that 

are not yet recognized, and we clarify in 

§ 155.615(b)(4) that if an applicant 

attests to membership in a religious sect 

or division that is not recognized by the 

Social Security Administration as an 

approved religious sect or division 

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

Exchange must provide the applicant 

with information regarding how his or 

her religious sect or division can pursue 

recognition under section 1402(g)(1) of 

the Code, and determine the applicant 

ineligible for this exemption until such 

time as the Exchange obtains 

information indicating that the religious 

sect or division has been approved. We 

agree with the commenter that the 

Exchange is not an ideal venue for an 

appeal of a denial that was based on a 

finding that a sect or division did not 

meet the statutory requirements. We 

intend to provide further guidance on 

this process in collaboration with the 

SSA. 

Comment: One commenter requested 

that HHS expand the religious sects and 

divisions whose members qualify for the 

religious conscience exemption. 

Response: HHS does not have the 

authority to expand the criteria set in 

the statute, which reference section 

1402(g)(1) of the Code, and so we are 

finalizing the cross-reference to the 

statutory criteria as proposed. 

Comment: Commenters expressed 

differing opinions regarding our 

proposal that when an individual who 

has a religious conscience exemption 

turns 18, he or she must re-apply for the 

exemption in order to maintain it. One 

commenter opposed specifying that the 

Exchange send a notice, instead arguing 

that the individual turning 18 should be 

responsible for reapplying without a 

prompt. Another commenter noted that 

based on the practices of the religious 

sects and divisions that this exemption 

covers, HHS should modify this 

provision such that the age standard is 

21. 

Response: In response to comments, 

to align with other Affordable Care Act 

definitions of children, and to reduce 

burden on individuals under the age of 

21, we are modifying this provision in 

the final rule to specify that individuals 

receiving the religious conscience 

exemption will have to re-apply for the 

exemption upon turning 21. We will 

maintain the provision specifying that 

the Exchange send a notice prompting 

an individual to reapply upon turning 

21, since this notice is needed to notify 

him or her that his or her exemption 

will end absent a new application. 

Nothing precludes individuals affected 

by this change from obtaining coverage 

on their own. 

Comment: One commenter suggested 

that the Exchange should have the 

flexibility not to grant exemptions based 

on membership in a health care sharing 

ministry or incarceration. The 

commenter noted the limited benefit for 

individuals in having an Exchange grant 

such exemptions since the proposed 

rule specifies that they are only 

available through the Exchange 

retrospectively within a calendar year, 

and are otherwise available through the 

tax filing process. 

Response: We believe that individuals 

will benefit from the opportunity to 

receive the exemptions based on 

membership in a health care sharing 

ministry or incarceration through the 

Exchange in addition to through the tax 

filing process, and as such, are 

finalizing the provision as proposed. 

Comment: One commenter suggested 

that HHS clarify the language used in 

§ 155.605(c)(3) and (f)(3) such that the 

text of the regulation appropriately 

describe the flexibility for Exchanges to 

grant an exemption in these categories 

retrospectively or prospectively. 

Response: In proposed § 155.605(c)(3) 

and (f)(3), we specified that the 

Exchange ‘‘must provide an exemption 

in this category prospectively or 

retrospectively.’’ The intent of this 

provision was not to allow flexibility to 

the Exchange whether or not to grant the 

exemption but, rather, to specify that 

the Exchange will provide an exemption 

in these categories retrospectively, 

prospectively, or both, depending on the 

period of time for which such an 

exemption is requested and the period 

of time for which an applicant meets the 

criteria for such an exemption. 

Accordingly, we have modified the 

language in paragraphs (c), (d), (e), (f), 

and (g) to specify as appropriate when 

the Exchange must make the various 

categories of exemptions available 

prospectively or retrospectively. 

Comment: One commenter expressed 

support for HHS’ proposal that the 

Exchange grant the exemption based on 

membership in an Indian tribe as long 

as individuals still maintained the 

opportunity to file for this exemption 

through the tax filing process. Another 

commenter suggested that Exchanges 

should not grant exemptions based on 

membership in an Indian tribe, but that 

rather such exemption should only be 

available through the tax filing process. 

Alternatively, this commenter said that 

if the Exchange does grant this 

exemption, it should only do so 

prospectively. 

Response: We believe that individuals 

will benefit from the opportunity to 

receive the exemption based on 

membership in an Indian tribe through 

the Exchange in addition to through the 

tax filing process. Furthermore, we do 

not believe that granting this 

retrospectively and prospectively will 

result in significant burden for the 

Exchange, since no work is necessary to 

determine eligibility for this exemption 

retrospectively beyond what would be 

necessary to determine eligibility for it 

prospectively. Accordingly, we are 

finalizing this provision as proposed. 

Comment: Some commenters 

expressed concerns about the definition 

of Indian tribe proposed in § 155.600(a), 

which referred to section 45A(c)(6) of 

the Code. These commenters 

recommended a broader definition of 

Indian for purposes of an exemption. 

Several commenters recommended that 

HHS add a hardship exemption category 

for Indians as defined in 42 CFR 447.50, 

and another commenter suggested that 

Exchanges add a hardship exemption 

category for individuals who are eligible 

to receive services provided by the 

Indian Health Service (IHS) pursuant to 

25 U.S.C. 1680c(a) or (b). A commenter 

asked HHS to specify that the duration 

for these hardship exemptions would 

parallel the duration of the exemption 

for a member of an Indian tribe. 

Response: We have thoroughly 

reviewed the definitions of the term 

‘‘Indian’’ in the Affordable Care Act. 

HHS does not have the legal authority 

to modify through regulation the 

statutory definitions of ‘‘Indian’’ as 

referenced in the Affordable Care Act. 

There is no administrative flexibility to 

align these definitions. Any changes to 

the definition must be legislative. In 

response to comments, we added a 

category of hardship exemption in 

§ 155.605(g)(6) for an individual who is 

not a member of a federally-recognized 

tribe, and is an Indian eligible for 

services through an Indian health care 

provider, as defined in 42 CFR 447.50, 

or an individual eligible for services 

through IHS in accordance with 25 

U.S.C. 1680c(a), (b), or (d)(3). We also 

redesignate proposed § 155.615(f)(3) as 

§ 155.615(f)(4), and add new § 155.615 

to specify that the Exchange will use the 

same verification procedures for this 

exemption as it will use for the 

exemption for members of a federallyrecognized tribe. We also note that the 

duration of this exemption mirrors that 

as provided for members of federallyrecognized tribes, such that whether it 

is granted prospectively or 

retrospectively, it is granted for a month 

on a continuing basis until the 

individuals specified above report a 

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change in their eligibility status for this 

exemption. This ensures that the 

individuals specified above who have 

access to health care through the IHS, 

Tribes and Tribal organizations, and 

urban Indian organizations (I/T/U) are 

treated in the same manner as members 

of federally-recognized tribes for 

purposes of the individual shared 

responsibility payment. 

Comment: Multiple commenters 

expressed overall support for our 

proposal in § 155.605(g)(1), whereby the 

Exchange would determine an 

individual eligible for a hardship 

exemption based on circumstances that 

resulted in an unexpected increase in 

essential expenses that prevented an 

individual from obtaining coverage 

under a qualified health plan. One 

commenter suggested that HHS should 

provide further flexibility to allow 

Exchanges to define additional 

eligibility criteria for this exemption. 

Another commenter expressed support 

for HHS providing minimum standards 

for hardship. While we mentioned 

several examples of events that would 

qualify as hardships in preamble, based 

on standards used for similar purposes 

in the Commonwealth of Massachusetts, 

some commenters wanted HHS to 

clarify in the final text of the regulation 

that an applicant who met the 

circumstances discussed in the 

preamble as well as other circumstances 

used in Massachusetts but not 

specifically mentioned in preamble 

would qualify for a hardship exemption. 

Response: In preamble to the 

proposed rule, we noted that we 

expected to clarify detailed hardship 

criteria in future guidance. Accordingly, 

to assist Exchanges in determining 

eligibility for a hardship exemption for 

an individual who experienced 

circumstances that prevented him or her 

from obtaining coverage under a QHP, 

we are publishing guidance 

simultaneously with this rule that 

provides detailed criteria for this 

exemption. 

Comment: One commenter 

recommended that Exchanges have 

greater flexibility in determining the 

duration of a single exemption, 

particularly due to the many 

circumstances that could be covered by 

the hardship exemption. Several 

commenters recommended that HHS 

provide Exchanges with clearer 

guidance regarding the duration of 

hardship exemptions that could be 

granted according to § 155.605(g)(1), 

including events that may span multiple 

calendar years. Some commenters urged 

that in particular situations, such as 

those where victims suffer natural and 

human-caused disasters, Exchanges 

should grant exemptions that last 2 

years. Other commenters suggested that 

any hardship exemption be provided for 

a minimum of 6 months or a year. One 

commenter recommended that the 

Exchange grant a hardship exemption 

for more than a calendar year if an 

individual experiences an event that 

occurs across 2-calendar years. Another 

commenter requested clarification 

regarding the language in § 155.605(a) 

specifying that the Exchange would 

provide an exemption for a month if the 

Exchange determines that an individual 

meets the requirements for an 

exemption for at least one day of the 

month, with the exception of 

§ 155.605(g). 

Response: In response to comments, 

we clarify that a hardship exemption 

granted under § 155.605(g)(1) will at 

minimum be provided for the month 

before the hardship, the month or 

months of the hardship, and the month 

after the hardship, and that Exchanges 

have flexibility to provide it for 

additional months after the hardship, 

consistent with the circumstances of the 

hardship. This ensures that such a 

hardship exemption addresses the time 

period where an individual actually 

experienced the hardship, while also 

providing flexibility for Exchanges to 

evaluate the particular circumstances of 

an event that may necessitate an 

extended duration of an exemption. As 

such, the hardship exemptions provided 

under § 155.605(g)(1), which will be 

provided before and after the occurrence 

of when the individual actually 

experienced the hardship, necessitate an 

exception in regards to the general 

provision of § 155.605(a). 

Comment: Numerous commenters 

urged HHS to specify additional 

categories of hardship exemptions 

outside of those proposed or to expand 

the scope of certain categories of 

hardship exemptions as proposed. 

These suggestions include providing 

hardship exemptions for: Employees 

who have an offer of self-only employersponsored coverage that costs less than 

8 percent of household income, but for 

whom family coverage costs more than 

8 percent of household income; 

individuals with income less than 150 

percent of the FPL; individuals for 

whom the aggregate cost of employersponsored coverage (not only employed 

members) exceeds 8 percent of 

household income for that month(s); 

individuals and families with 

household income below 250 percent of 

the FPL that are offered affordable 

employer-sponsored coverage (less than 

8 percent of household income), but the 

amount that the individual or family 

would have to pay for the lowest-cost 

bronze plan on the Exchange exceeds 8 

percent of household income; 

individuals and their dependents who 

have an offer of employer-sponsored 

coverage that is affordable but that does 

not provide minimum value; 

individuals participating in special nonminimum essential coverage programs 

that already require financial 

determinations by a state; individuals 

who already receive certain kinds of 

public assistance benefits; or 

individuals who in good faith attempted 

to purchase insurance but were unable 

to do so based on limited enrollment 

opportunities. 

Response: As specified in guidance 

published simultaneously with this 

final rule, we have identified several 

events that Exchanges can refer to in 

order to help them in determining 

eligibility for hardship exemptions. 

These will also be the detailed criteria 

used by the Federally-facilitated 

Exchange. Due to the broad range of 

circumstances that will qualify an 

individual for a hardship exemption, we 

do not believe that further categories of 

exemptions need to be added to the text 

of the regulation. However, as discussed 

further below, we have modified the 

eligibility standards for the hardship 

exemption for situations in which 

coverage is unaffordable based on 

projected income such that if an 

individual and his or her dependents 

have an offer of employer-sponsored 

coverage that does not meet the 

minimum value standard, the Exchange 

will not consider this offer in 

determining affordability. Rather, in 

such a situation, the Exchange will 

consider affordability based on the 

lowest-cost offer of employer-sponsored 

coverage that does meet the minimum 

value standard, and if no such offer 

exists, on the cost of the applicable 

lowest cost bronze plan in the relevant 

rating area of the Exchange, reduced by 

any available advance payments of the 

premium tax credit. This is similar to 

the considerations for eligibility for 

advance payments of the premium tax 

credit based on eligibility for coverage 

in an eligible employer-sponsored plan, 

which take into account both cost and 

minimum value. 

Comment: One commenter expressed 

concerns about the burden on 

Exchanges to handle eligibility 

determinations for exemptions, 

including the hardship exemption, as 

they viewed the eligibility 

determination process for exemptions as 

more appropriately handled through the 

tax filing process, particularly when 

exemptions are not available 

prospectively through the Exchange. 

Some commenters supported the 

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proposed hardship exemption at 

§ 155.605(g)(3) (related to the tax filing 

threshold), while another commenter 

stated that the proposed hardship 

exemption at § 155.605(g)(3) should not 

be granted by the Exchange as it 

concerned tax filing. Other commenters 

generally supported the hardship 

exemption proposed at § 155.605(g)(5) 

(related to affordable self-only 

coverage), even if suggesting 

modifications as noted above, for 

employed members determined eligible 

for affordable self-only insurance, but 

for whom the aggregate cost of 

employer-sponsored coverage for all the 

employed members of the family 

exceeds 8 percent of household income. 

Response: Based on comments 

received, and in order to minimize 

burden on Exchanges while ensuring 

efficient processing of exemptions 

applications, we will modify 

§ 155.605(g) such that the hardship 

exemptions proposed at § 155.605(g)(3) 

and (5) will be provided exclusively 

through the tax filing process, and not 

by the Exchange. These exemptions 

necessitate information that will only be 

available at the time of tax filing, such 

that if they were exclusively available 

through the Exchange, an individual 

would need to file a tax return, request 

an exemption from the Exchange, 

receive a determination from the 

Exchange, and depending on the 

determination, potentially amend his or 

her return. Accordingly, to streamline 

the process for consumers, we grant 

limited authority to the IRS to 

administer these two hardship 

exemptions. We note that we will 

continue to consider the administrative 

feasibility of Exchanges granting the 

hardship exemption under 

§ 155.605(g)(5) after the conclusion of 

the first year of operations. 

Comment: Commenters expressed 

broad support for our proposal at 

§ 155.605(g)(4) to provide a hardship 

exemption for individuals ineligible for 

Medicaid in states that chose not to 

expand Medicaid under the Affordable 

Care Act, but expressed differing 

opinions regarding whether such a 

hardship exemption should be limited 

to those individuals who are not 

determined eligible for advance 

payments of the premium tax credit. 

Some commenters supported the policy 

as proposed based on affordability 

concerns even for those individuals 

eligible for advance payments of the 

premium tax credit, while others 

suggested that the individuals who are 

eligible for advance payments of the 

premium tax credit should not be 

eligible to receive a hardship 

exemption. 

Response: We appreciate the concerns 

raised by commenters arguing both for 

and against maintaining this hardship 

exemption as proposed. We continue to 

believe that it is appropriate that 

individuals, even those eligible for 

advance payments of the premium tax 

credit, to be eligible for this hardship 

exemption if ineligible for Medicaid 

solely as a result of a state that chose not 

to expand Medicaid eligibility under the 

Affordable Care Act. We expect that 

these exemptions will be provided 

through the eligibility process for 

coverage, and note that notwithstanding 

receiving a hardship exemption, such 

individuals may still decide to enroll in 

a QHP and receive advance payments of 

the premium tax credit in this situation. 

We also note that these exemptions will 

be available retrospectively following 

the close of a coverage year. 

Comment: Several commenters 

expressed general support for 

§ 155.605(g)(2), which provides a 

hardship exemption based on projected 

annual household income. However, 

some commenters believed that this still 

did not fully address the consequences 

of 26 CFR 1.36B–2(c)(3)(v)(A)(2) 

concerning the affordability of an 

eligible employer-sponsored plan for a 

related individual. One commenter 

requested clarification as to whether 

this hardship exemption applied to the 

individual or the entire tax filing unit. 

Another commenter did not support 

limiting the availability of this hardship 

exemption only within open enrollment 

periods. 

Response: We note that while the lack 

of affordable coverage based on 

projected income hardship exemption 

and the lack of affordable coverage 

exemption described in section 

5000A(e)(1) of the Code address certain 

situations where a related individual is 

ineligible for advance payments of the 

premium tax credit based on 26 CFR 

1.36B–2(c)(3)(v)(A)(2), these provisions 

are not intended to provide an 

exemption in all cases in which an 

individual may be ineligible for advance 

payments of the premium tax credit. 

We finalize this exemption to 

generally follow the standards in section 

5000A(e)(1) of the Code. As in the 

proposed rule, we specify in paragraph 

(g)(2)(i) of the final rule that this 

exemption differs from the exemption 

described in section 5000A(e)(1) of the 

Code in that it relies on projected 

household income. In order to facilitate 

implementation of this exemption, we 

add paragraphs (g)(2)(ii), (iii), and (iv) to 

clarify the applicable standards. First, in 

paragraph (g)(2)(ii), we clarify that as 

described above, the Exchange will only 

consider the affordability of an eligible 

employer-sponsored plan for this 

exemption if it meets the minimum 

value standard. Second, in paragraph 

(g)(2)(iii), we describe how the 

Exchange will determine the cost of 

coverage for an individual who is 

eligible to purchase coverage under an 

eligible employer-sponsored plan. 

We note that, under the Treasury 

proposed rule, the standards for 

determining the required contribution 

for coverage through an eligible 

employer-sponsored plan vary 

depending on whether an individual is 

an employee eligible to purchase 

coverage under an eligible employersponsored plan through the employee’s 

employer, or is eligible to purchase 

coverage under an eligible employersponsored plan because of a 

relationship to an employee, with 

respect to eligibility for an exemption. 

For an individual employee who is 

eligible through his or her own 

employer, the affordability calculation 

is based on the lowest cost option for 

self-only coverage. For all other 

individuals eligible to purchase 

coverage under an eligible employersponsored plan, the required 

contribution is the portion of the annual 

premium that the employee would pay 

for the lowest cost option for family 

coverage that would cover the employee 

and all individuals who are included in 

the employee’s family and are not 

otherwise exempt. We note that the 

Exchange will only know whether an 

individual within the employee’s family 

has been granted an exemption by that 

Exchange. Accordingly, we specify in 

paragraph (g)(2)(iii)(C) that the 

Exchange will consider the lowest cost 

family coverage that meets the 

minimum value standard and would 

cover the employee and all other 

individuals who are included in the 

employee’s family who have not 

otherwise been granted an exemption 

through the Exchange. 

We also note that proposed 26 CFR 

1.36B–2(c)(3)(v)(A)(4) (78 FR 25914), 

provides that for purposes of 

determining eligibility for the premium 

tax credit, the affordability of coverage 

in an eligible employer-sponsored plan 

is determined by assuming that each 

employee satisfies the requirements of 

available nondiscriminatory wellness 

programs related to tobacco use, and 

does not satisfy the requirements of any 

available wellness programs that are not 

related to tobacco use. That is, if a plan 

includes a nondiscriminatory wellness 

program for tobacco users, such as 

smoking cessation classes, the 

affordability of coverage under that plan 

will be determined based on the 

premium that is charged to tobacco 

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users who complete this program. In the 

preamble to proposed 26 CFR 1.36B– 

2(c)(3)(v)(4) (78 FR 25911), Treasury 

also noted that it expects to specify that 

this treatment of nondiscriminatory 

wellness programs will also be used in 

determining the required contribution 

for purposes of the lack of affordable 

coverage exemption under section 

5000A(e)(1) of the Code. 

Accordingly, in order to ensure that 

an individual is not liable for the shared 

responsibility payment if he or she is 

ineligible for advance payments of the 

premium tax credit and cost-sharing 

reductions as a result of a finding by the 

Exchange that he or she is eligible for 

qualifying coverage in an eligible 

employer-sponsored plan based on 

incorporating the completion of a 

tobacco-related wellness program, we 

specify in paragraph (g)(2)(iii)(A) that 

the Exchange will determine eligibility 

for the exemption specified in 

paragraph (g)(2) for an individual who 

uses tobacco without incorporating any 

discount resulting from the completion 

of a wellness program designed to 

prevent or reduce tobacco use. We also 

specify in paragraph (g)(2)(iii)(B) that 

discounts from wellness incentives 

offered by an eligible employersponsored plan that do not relate to 

tobacco use are treated as not earned. 

In paragraph (g)(2)(iv), we clarify that 

in the case of an individual who is 

ineligible to purchase coverage under an 

eligible employer-sponsored plan, or 

only eligible to purchase coverage under 

an eligible employer-sponsored plan 

that does not meet the minimum value 

standard, the Exchange will determine 

the required contribution for coverage in 

accordance with section 

5000A(e)(1)(B)(ii) of the Code, inclusive 

of all members of the individual’s 

family who have not otherwise been 

granted an exemption through the 

Exchange, and who are not treated as 

eligible to purchase coverage under an 

eligible employer-sponsored plan that 

meets the minimum value standard. 

This determination is based on the 

premium for the single lowest cost 

bronze plan available, less any credit 

allowable under section 36B of the 

Code, in the individual market through 

the Exchange serving the rating area in 

which the individual resides. 

Furthermore, we clarify that in 

finalizing this provision, we specify in 

paragraphs (g)(2)(v) and (g)(2)(vi) that 

this exemption will be available 

throughout the calendar year 

prospectively for a month or months 

until the last date on which an 

individual could enroll in a QHP 

through the calendar year for which the 

exemption is requested. This refers not 

only to the open enrollment period, but 

to any special enrollment period, 

notwithstanding special effective dates, 

for which an individual may potentially 

be determined eligible during the 

calendar year under 45 CFR 155.420(b). 

As such, an individual may be 

determined eligible for this exemption 

for the remaining month or months of a 

calendar year as late as November of 

that calendar year, as the effective dates 

for a special enrollment period under 

§ 155.420(b) would still allow such an 

individual to enroll in a QHP by 

December of that calendar year. Lastly, 

in order to reduce administrative 

burden, we also specify in paragraph 

(g)(2)(vi) that an exemption in this 

category will be provided for all 

remaining months in a coverage year, 

notwithstanding any change in an 

individual’s circumstances. 

Comment: Some commenters wanted 

to ensure that Exchanges would provide 

clear and easily understandable 

information to explain different 

exemptions available to individuals, 

including the steps needed to apply for 

an exemption. 

Response: We recognize the need for 

consumer information that explains the 

available exemptions as well as the 

necessary documentation and steps 

needed for individuals to apply. We 

expect to work with states and other 

stakeholders to ensure that individuals 

are properly educated about the 

exemption eligibility process. 

Comment: One commenter wanted to 

ensure that the Exchange would issue a 

certificate of exemption to any 

individual who is qualified and not 

limit the availability of certificates to 

only those individuals who are seeking 

coverage through the Exchange. 

Response: We agree with the 

commenter that the Exchange will not 

limit certificates of exemption to 

individuals who are seeking coverage 

through the Exchange. We note that a 

hardship exemption will allow an 

individual to enroll in a catastrophic 

plan, both inside and outside the 

Exchange, and the Exchange may not 

limit the availability of an exemption 

contingent on an individual seeking 

coverage through the Exchange or 

elsewhere. Further, while a portion of 

the eligibility process for the hardship 

exemption proposed in § 155.605(g)(4) 

for individuals who are determined 

ineligible for Medicaid based on a 

state’s choice not to expand Medicaid 

eligibility under the Affordable Care Act 

relies on the eligibility process for 

Medicaid, proposed § 155.610(a) 

specifies that the Exchange will 

generally use a separate application for 

exemptions. We finalize this provision 

as proposed. 

Comment: One commenter was 

supportive of HHS’ decision not to 

specify that the Exchange would grant 

the exemption specified in section 

5000A(d)(3) of the Code for individuals 

who are not lawfully present, but also 

recommended clear guidance and 

instructions regarding individuals who 

nevertheless attempt to apply for this 

exemption through the Exchange to 

ensure that the Exchange will follow the 

appropriate privacy and confidentiality 

protections, and also to direct 

individuals to claim this exemption 

through the tax filing process. 

Response: We note that the privacy 

and confidentiality protections in 45 

CFR 155.260 apply to the exemption 

eligibility process, and are sufficient to 

address these concerns. Furthermore, 

we expect that the Exchange will 

provide clear guidance regarding the 

exemptions available through the 

Exchange as well as the exemptions that 

can be claimed solely through the tax 

filing process, in order to appropriately 

direct individuals. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.605 of the proposed 

rule with the following modifications: 

We make technical corrections in 

paragraphs (c) through (g) for the 

purpose of clarity to specify when the 

Exchange must make different 

exemptions available, whether 

prospectively or retrospectively. In 

paragraph (c)(2) concerning the duration 

of the exemption for religious 

conscience, we specify that an 

exemption in this category will be 

provided on a continuing basis until the 

month after the month of the 

individual’s 21st birthday, and as such 

if an Exchange granted such an 

individual an exemption prior to the age 

of 21, would have to send the applicant 

a notice at that point to remind him or 

her to submit a new application to 

maintain the certificate of exemption. 

We make revisions throughout 

paragraph (g) to specify which hardship 

exemptions must be granted by the 

Exchange, and which can be claimed 

only through the tax filing process. We 

clarify that an Exchange will determine 

an applicant eligible for an exemption 

under paragraph (g)(1) of this section for 

the month before, a month or months 

during which they experience the 

circumstances that qualify as a 

hardship, and the month after. We make 

a technical correction in paragraph 

(g)(1)(i) to clarify that the financial or 

domestic circumstances caused a 

significant and unexpected increase in 

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essential expenses that prevented the 

individual from obtaining coverage 

under a QHP. We make a technical 

correction in paragraphs (g)(1)(ii) to 

replace ‘‘minimum essential coverage’’ 

with ‘‘qualified health plan’’ to align 

with the statutory language describing 

the hardship exemption, and modify 

paragraph (g)(1)(iii) to clarify that 

Exchange will determine an individual 

eligible for a hardship exemption if he 

or she experienced circumstances that 

prevented him or her from obtaining 

coverage under a QHP in accordance 

with the statute. 

We add paragraph (g)(2)(ii) to clarify 

that the Exchange will only consider the 

affordability of an eligible employersponsored plan for the exemption 

described in paragraph (g)(2) if the 

eligible employer-sponsored plan meets 

the minimum value standard. We add 

paragraph (g)(2)(iii) to clarify the 

applicable standards if an individual is 

eligible for coverage through an eligible 

employer-sponsored plan that meets the 

minimum value standard, and note in 

paragraph (g)(2)(iii)(A) that an 

individual who uses tobacco is treated 

as not earning any premium incentive 

related to participation in a wellness 

program designed to prevent or reduce 

tobacco use that is offered by an eligible 

employer-sponsored plan, and in 

paragraph (g)(2)(iii)(B) that discounts 

from wellness incentives offered by an 

eligible employer-sponsored plan that 

do not relate to tobacco use are treated 

as not earned. That is, for purposes of 

this exemption, the cost of an eligible 

employer-sponsored plan that includes 

a premium differential for smokers and 

non-smokers is calculated using the 

non-smoker premium for non-smokers, 

and the smoker premium for smokers, 

without any discounts that may be 

available through smoking cessation 

programs. We outline the appropriate 

methods to determine the required 

contribution for coverage through an 

eligible employer-sponsored plan that 

meets the minimum value standard in 

paragraphs (g)(2)(iii)(C) and (D), 

depending on whether an individual is 

an employee eligible to purchase 

coverage under an eligible employersponsored plan through the employee’s 

employer, or is eligible to purchase 

coverage under an eligible employersponsored plan by reason of a 

relationship to an employee. We specify 

in paragraph (g)(2)(iii)(D) that the 

Exchange will consider the lowest cost 

family coverage that meets the 

minimum value standard that would 

cover the employee and all other 

individuals who are included in the 

employee’s family who have not 

otherwise been granted an exemption 

through the Exchange. We specify in 

paragraph (g)(2)(iv) that the Exchange 

will determine the required contribution 

for coverage in the individual market in 

the case of an individual who is 

ineligible to purchase coverage under an 

eligible employer-sponsored plan in 

accordance with section 

5000A(e)(1)(B)(i) of the Code, or eligible 

only to purchase coverage under an 

eligible employer-sponsored plan that 

does not meet the minimum value 

standard, inclusive of all members of 

the individual’s family who have not 

otherwise been granted an exemption 

through the Exchange, or are treated as 

eligible to purchase coverage under an 

eligible employer-sponsored plan that 

meets the minimum value standard. We 

also clarify in paragraphs (g)(2)(v) and 

(g)(2)(vi) that this exemption will be 

available throughout the calendar year 

prospectively for a month or months 

until the last date on which an 

individual could enroll in a QHP 

through the calendar year for which the 

exemption is requested, and that the 

Exchange will provide an exemption in 

this category for all remaining months 

in a coverage year, notwithstanding any 

change in an individual’s 

circumstances. 

We clarify that the Exchange may not 

grant the hardship exemptions under 

paragraph (g)(3) and (5) of this section, 

but rather only the IRS will allow an 

applicant to claim these exemptions. We 

add paragraph (g)(6) to provide that an 

Exchange will determine an applicant 

eligible for a hardship exemption for 

any month for which he or she is an 

Indian eligible for services through an 

Indian health care provider, as defined 

in 42 CFR 447.50, or an individual 

eligible for services through the Indian 

Health Service in accordance with 25 

U.S.C. 1680c(a), (b), or (d)(3). We clarify 

that the duration for the exemption 

provided under paragraph (g)(6) of this 

section is the same as specified in 

paragraph (f)(2) of this section. 

c. Eligibility Process for Exemptions 

(§ 155.610) 

In § 155.610, we proposed the process 

by which the Exchange would 

determine an applicant’s eligibility for 

exemptions. In paragraph (a), we 

proposed to specify that the Exchange 

would use an application established by 

HHS in order to collect the information 

necessary to determine eligibility and 

grant a certificate of exemption for an 

applicant, unless the Exchange receives 

approval to use an alternative 

application. We also clarified that in 

cases in which relevant information has 

already been collected through the 

eligibility process for enrollment in a 

QHP and for insurance affordability 

programs, the Exchange would use this 

information for the purpose of eligibility 

for an exemption to the maximum 

extent possible. 

In paragraph (b), we proposed that the 

Exchange may seek approval from HHS 

for an alternative application. We 

further specified that such alternative 

application must only request the 

minimum information necessary for the 

purposes identified in paragraph (a) of 

this section. 

In noting that there are exemptions 

that share common data and 

verifications with the eligibility process 

for enrollment in a QHP and for 

insurance affordability programs, in 

paragraph (c) we proposed that if an 

individual submits the application in 45 

CFR 155.405 and then requests an 

exemption, the Exchange would use the 

information collected on the application 

for coverage and not duplicate any 

verification processes that share the 

standards specified in this subpart. We 

solicited comments on how best to 

coordinate these processes to ensure 

maximum administrative simplicity for 

all involved parties. 

In paragraph (d), we proposed the 

Exchange would accept the application 

for an exemption from an application 

filer, and provide tools for the 

submission of an application. We did 

not specify particular channels for 

application acceptance, but we solicited 

comments regarding whether we should 

specify some or all of the channels 

included in 45 CFR 155.405. 

In paragraph (e), we proposed that the 

Exchange would specify that an 

applicant who has a social security 

number (SSN) will provide such 

number to the Exchange in order to 

coordinate information in the tax filing 

process and provide the Exchange with 

additional information with which to 

ensure program integrity. However, we 

proposed to clarify in paragraphs (e)(2) 

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

require an individual who is not seeking 

an exemption for him or herself to 

provide a SSN, except that the Exchange 

would require an application filer to 

provide the SSN for a non-applicant tax 

filer only if the applicant attests that the 

tax filer has a SSN and filed a tax return 

for the year for which tax data would be 

utilized to verify household income and 

family size for a hardship exemption. 

We solicited comments on the 

applicability of this provision in the 

context of the exemption eligibility 

process. 

In paragraph (f), we proposed that the 

Exchange would grant a certificate of 

exemption to any applicant determined 

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eligible in accordance with the 

standards for exemptions provided in 

§ 155.605. 

In paragraph (g)(1), we proposed that 

the Exchange determine eligibility for 

exemptions promptly and without 

undue delay, which is the same timing 

threshold used throughout subpart D of 

this part, including in 45 CFR 

155.310(e)(1), with respect to eligibility 

determinations for enrollment in a QHP 

and for insurance affordability 

programs. In paragraph (g)(2), we 

proposed that the assessment of 

timeliness of eligibility determinations 

by the Exchange is based on the period 

from the date of the application until 

the date on which the Exchange notifies 

the applicant of its decision. We 

solicited comments regarding specific 

performance standards for the eligibility 

process described in this subpart, and 

whether we should define an outer 

bound in which an eligibility 

determination will be made. 

In paragraph (h), we proposed to 

clarify that except for the exemptions 

for religious conscience and 

membership in an Indian tribe proposed 

in § 155.605(c) and § 155.605(f), 

respectively, after December 31 of a 

given calendar year, the Exchange will 

not accept an application for an 

exemption for months for such calendar 

year. We intended to specify that this 

provision also apply to the hardship 

exemption under § 155.605(g), but 

inadvertently did not include such 

language in the text of the regulation. 

We solicited comments regarding this 

approach, and whether there should be 

additional categories of exemptions for 

which the Exchange would grant 

exemptions after the close of a calendar 

year. 

In paragraph (i), we proposed that the 

Exchange provide timely written notice 

to an applicant of any eligibility 

determination for an exemption made in 

accordance with this subpart, which 

could be provided through electronic 

means, consistent with § 155.230(d). 

In paragraph (j), we proposed that an 

individual who has been certified by an 

Exchange as qualifying for an exemption 

retain the records that demonstrate not 

only receipt of the certificate of 

exemption but also qualification for the 

underlying exemption. We noted that to 

the extent that the Exchange provides a 

certificate of exemption for which the 

underlying verification is based in part 

on the special circumstances exception 

proposed in § 155.615(h), an individual 

would retain records that demonstrate 

receipt of the certificate of exemption, 

as well as the circumstances that 

warranted the use of the special 

circumstances exception. 

Comment: Commenters were 

generally supportive of our proposals 

throughout this section. One commenter 

suggested that HHS codify the preamble 

language specifying that individuals 

could apply for multiple exemptions 

simultaneously. Another commenter 

sought clearer standards regarding the 

eligibility process for exemptions in 

order to limit administrative burden. 

Response: We believe that the 

language proposed in this section 

provides the appropriate amount of 

detail to guide the Exchange in 

establishing an efficient process for 

exemptions, while also allowing for the 

Exchange to have the necessary 

flexibility to administer these processes 

effectively. We clarify that while we 

believe individuals will benefit from the 

opportunity to seek multiple 

exemptions simultaneously, we feel that 

the existing regulation text is sufficient, 

and so are finalizing it as proposed. 

Comment: One commenter 

recommended that HHS revise the 

language in § 155.610(a) to clarify that 

except as specified, the Exchange must 

use an application established by HHS 

to collect only the information that is 

‘‘strictly’’ necessary for determining 

eligibility for an exemption. Another 

commenter wanted HHS to crossreference to § 155.260 so that 

information collected on the exemption 

application was subject to the 

appropriate security and privacy 

protections. 

Response: We share the commenter’s 

concern regarding Exchanges using an 

exemptions application that minimizes 

the information individuals must 

provide to receive an eligibility 

determination for an exemption, and is 

subject to robust privacy and security 

protections. We believe that the 

comment regarding limiting requests for 

information to only what is necessary is 

addressed in proposed § 155.615(j), 

which limits the ability of the Exchange 

to require the provision of information 

by an applicant to support the eligibility 

process for exemptions to the minimum 

necessary, and is finalized as proposed. 

We also note that § 155.260(a) already 

includes language specifying that the 

provisions of § 155.260 apply to the 

exemptions process. Accordingly, we 

are not including additional language in 

this final regulation. 

Comment: Commenters made several 

suggestions with the goal of enhancing 

the efficiency of the coverage and 

exemptions application processes. 

Several commenters supported our 

proposals to re-use information from the 

coverage application for the purposes of 

exemptions eligibility determinations 

when possible in order to prevent 

collecting duplicate information. One 

commenter recommended combining 

the coverage application and 

exemptions application in order to 

streamline the eligibility determination 

process for both enrollment in a QHP 

and exemptions, reduce burden on 

individuals and Exchanges, and inform 

an applicant of all potential coverage or 

exemptions options based on his or her 

particular circumstances. 

Response: As noted in our proposed 

rule, we continue to believe that where 

possible, individuals who apply for 

coverage should not have to provide 

duplicate information to the Exchange if 

they subsequently decide to apply for an 

exemption. We also believe that it is 

important to have separate applications 

for coverage and exemptions to avoid 

creating burden on those individuals 

who are only seeking coverage or 

exemptions. Accordingly, we are 

finalizing these provisions as proposed. 

Comment: One commenter viewed the 

language in § 155.610(c) regarding the 

reuse of information collected through 

the eligibility process for enrollment in 

a QHP through the Exchange and for 

insurance affordability programs as 

confusing, and recommended the phrase 

‘‘that adhere to the standards specified 

in this subpart’’ be eliminated. 

Response: We are modifying this 

language to clarify that when an 

Exchange has verified information 

through the eligibility process for 

enrollment in a QHP through the 

Exchange and for insurance affordability 

programs, and such verifications occur 

in accordance with the standards 

specified in this subpart, the Exchange 

may not repeat the verification for 

purposes of determining eligibility for 

an exemption. For example, we note 

that the verification procedures for the 

exemption for members of an Indian 

tribe cross-references the verification 

procedures in subpart D of this part; 

accordingly, if the Exchange verified 

that an individual meets the standards 

through the eligibility process for 

enrollment in a QHP and for insurance 

affordability programs, and such an 

individual subsequently requests an 

exemption based on membership in an 

Indian tribe, the Exchange will not 

repeat the verification. 

Comment: Commenters urged that the 

Exchange allow individuals to apply for 

an exemption via the same channels as 

the coverage application, including 

online, by telephone, by mail, and in 

person. One commenter raised 

particular concerns in terms of allowing 

individuals to have the full range of 

options to apply for a religious 

conscience exemption. 

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Response: We are committed to 

providing an efficient and consumerfriendly application process for 

exemptions. In § 155.610(d)(3), we 

specify that for applications submitted 

before October 15, 2014, the Exchange 

must, at a minimum, accept such 

applications in paper, via mail. We 

believe that this will ensure the 

availability of an effective process 

within the time constraints that the 

Exchange is facing for implementation, 

while allowing for state flexibility to 

utilize other channels sooner than 

October 15, 2014. We intend to discuss 

the availability of applications through 

other channels beginning on or after 

October 15, 2014 in a future regulation. 

Comment: Several commenters 

appreciated HHS’ proposal in 

§ 155.610(e)(2) that the Exchange may 

not require an individual who is seeking 

an exemption on behalf of someone else 

other than himself or herself to provide 

a SSN. However, another commenter 

expressed concerns that the broad 

language used here would prevent the 

collection of a SSN who are not seeking 

an exemption, but rather are applying 

for enrollment in a QHP. 

Response: We appreciate the 

commenter’s concerns, and note that 

§ 155.610(e)(2) only applies to subpart G 

regarding eligibility determinations for 

exemptions, whereas 45 CFR 

155.310(a)(3) provides the standards for 

collecting Social Security numbers as 

part of the eligibility process for 

enrollment in a QHP through the 

Exchange and for insurance affordability 

programs. Accordingly, we are 

finalizing the language as proposed. 

Comment: Several commenters were 

generally supportive of HHS specifying 

that Exchanges determine individuals 

eligible for an exemption ‘‘promptly and 

without undue delay,’’ but also raised 

concerns about the lack of clear 

timeliness standards proposed at 

§ 155.605(g). One commenter noted that 

due to the lack of specificity, an 

applicant for an exemption should not 

be considered uninsured for the time it 

takes to evaluate whether he or she is 

qualified for an exemption. Other 

commenters urged HHS to set more 

clear timeliness standards. Another 

commenter suggested that HHS specify 

that Exchanges will grant an exemption 

in real time when all documentation is 

available electronically, and where an 

applicant must submit paper 

documentation, suggested specific 

timeliness standards. A commenter 

recommended that HHS more clearly 

specify the meaning of the ‘‘date of the 

application’’ in terms of the procedures 

that Exchanges will use to log or stamp 

an application date, and wanted to 

ensure that the date of the application 

would be based on when an individual 

submitted the application regardless of 

when it is received by the Exchange. 

The commenter also wanted to make 

sure an individual receives the 

appropriate notice and appeals rights if 

the Exchange fails to promptly 

determine eligibility. 

Response: We drafted this provision 

based on the timeliness standards for 

the coverage process and believe that 

the current language is appropriate. 

Accordingly, we are finalizing this 

provision as proposed. We are also 

finalizing proposed paragraph (g)(2), 

which specifies that the Exchange will 

assess the timeliness of eligibility 

determinations. As with the coverage 

process, we intend to work closely with 

Exchanges to monitor timeliness and 

identify opportunities to improve 

performance. We note that HHS does 

not have authority to determine whether 

an individual is liable for the shared 

responsibility payment, as such 

authority belongs to the Internal 

Revenue Service. Comments addressing 

the appeals process will be discussed in 

a future regulation. 

Comment: One commenter noticed a 

discrepancy between the preamble 

associated with § 155.610(h) and the 

corresponding regulation text, whereby 

the preamble mentioned that after 

December 31 of a given calendar year, 

the Exchange will not accept an 

application for an exemption except for 

the exemptions described in 

§ 155.605(c) (religious conscience) and 

(g) (hardship), but the regulation text 

referenced § 155.605(c) and (f) 

(membership in an Indian tribe). 

Another commenter noted that the 

preamble language associated with this 

provision only allows an individual to 

receive an exemption retrospectively 

through the Exchange until an 

individual could file an income tax 

return, and asked whether HHS 

intended to limit this to the regular tax 

filing due date or to a potentially later 

date if a taxpayer applies for an 

extension or amends a previously filed 

return. If HHS intended to limit this to 

the regular tax filing date, the 

commenter asked that HHS modify this 

provision to clarify that the Exchange 

will provide a retrospective exemption 

for a calendar year up to the extended 

filing date or amended filing date for 

such year, should a taxpayer request an 

extension or amend a return. 

Response: We believe that it is 

appropriate to provide exemptions 

based on religious conscience and 

membership in a federally-recognized 

Indian tribe retrospectively, without a 

time limit for filing. We note that as a 

result of a drafting oversight, we did not 

include a reference to the hardship 

exemption in the regulation text to 

specify that this should also be treated 

differently than under the general rule, 

and we correct this in the final 

regulation. We also provide for further 

special treatment for hardship 

exemptions; specifically, that the 

Exchange will only accept an 

application for the hardship exemption 

under paragraph § 155.605(g)(1) for a 

month or months during a calendar year 

when the application is filed during one 

of the 3 calendar years after the month 

or months during which the applicant 

attests that the hardship occurred. We 

believe that the circumstances of a 

hardship exemption will motivate an 

individual to seek such an exemption in 

a timely manner, and also recognize the 

need to balance the availability of this 

exemption for an individual who 

amends his or her tax return with the 

administrative burden associated with 

processing requests for prior years. We 

further note that section 6511 of the 

Code provides the period of limitations 

on filing a claim for refund or credit 

with the IRS. A taxpayer generally must 

file an amended tax return by the later 

of three years from the filing of the 

original tax return or two years from the 

time the tax was paid. Taxpayers need 

to file amended returns within these 

timeframes to ensure the receipt of a 

refund of the shared responsibility 

payment for a prior year through the 

IRS, even though the Exchange may 

appropriately grant a hardship 

exemption anytime during the period 

specified in § 155.605(g)(1). We 

maintain the general rule regarding 

exemptions for incarcerated individuals 

and individuals who are members of a 

health care sharing ministry, since these 

will also be available through the tax 

filing process, which should facilitate 

access to these exemptions in the case 

of amended returns. 

Comment: Based on HHS’ proposal to 

allow individuals to apply for multiple 

exemptions, one commenter worried 

about the potential that individuals 

would be confused if receiving multiple 

notices as a result. The commenter 

requested that once an exemption is 

granted for a period, HHS specify that 

the Exchange would not provide a 

notice regarding any further exemptions 

for which an individual applied for the 

same time period. The commenter 

suggested that an individual should 

only receive a denial notice for a month 

or months where he or she does not 

already have a certificate of exemption 

in effect. 

Response: We share the commenter’s 

concerns regarding limiting potential 

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confusion for a consumer who applies 

for multiple exemptions 

simultaneously. Accordingly, we clarify 

that in a situation in which an 

individual applies for multiple 

exemptions, we expect the Exchange 

will provide the appropriate notice 

regarding each exemption for which an 

individual applied, as we believe that 

not providing feedback for all requested 

exemptions could create additional 

confusion for consumers. We also 

expect that if an applicant is approved 

for an exemption, and then is later 

denied for a different exemption for the 

same period of time, the notice 

describing the denial will clearly state 

that the applicant’s prior exemption 

remains in effect. 

Comment: Regarding the proposed 

recordkeeping provision at § 155.610(j), 

commenters expressed concern that an 

individual might think he or she only 

needs to retain the exemption 

certificate, and not records that 

demonstrate his or her qualification for 

the underlying exemption, and 

recommended that HHS specify that the 

Exchange notify individuals of their 

obligation to retain the underlying 

records as well. Another commenter 

recommended deleting this paragraph 

from the regulation, as they felt the 

responsibility should rest on the IRS as 

opposed to the Exchange. 

Response: We agree with the 

commenters’ suggestion to clarify that 

the Exchange will notify individuals to 

retain both the certificate of exemption 

as well as records that demonstrate the 

underlying qualification for the 

exemption. We are maintaining this 

paragraph with that clarification in the 

final regulation, since the Exchange is 

providing the certificate of exemption 

and is thus ideally positioned to notify 

individuals of this issue. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.610 of the proposed 

rule with a few slight modifications: We 

clarify that the Exchange must use 

information collected for purposes of 

the eligibility determination for 

enrollment in a QHP and for insurance 

affordability programs in making the 

exemption eligibility determination to 

the extent that the Exchange finds that 

such information is still applicable. In 

§ 155.610(d)(3), we specify that until 

October 15, 2014, the Exchange must, at 

a minimum, permit an individual to 

apply for an exemption via mail, using 

a paper application. We correct the 

oversight in paragraph § 155.610(h) by 

providing that an applicable exemption 

that is available retrospectively and 

described in § 155.605(g) can also be 

provided for previous tax years based on 

an application that is submitted after 

December 31 of a given calendar year, 

except for § 155.605(g)(1), which may 

only be provided during one of the 3 

calendar years after the month or 

months during which the applicant 

attests that the hardship occurred. Due 

to the range of hardship exemptions 

available, we redesignate paragraph (h) 

as paragraph (h)(1), make a technical 

correction for clarity in paragraph (h)(1), 

and add paragraph (h)(2) to specify that 

the Exchange will only accept an 

application for a hardship exemption 

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

or months during a calendar year when 

the application is filed during one of the 

3 calendar years after the month or 

months during which the applicant 

attests that the hardship occurred. We 

also modify paragraph (j)(1) to specify 

that an Exchange will also notify an 

individual who is determined eligible 

for an exemption to retain the certificate 

of exemption, and also records 

demonstrating his or her qualification 

for the underlying exemption. 

d. Verification Process Related to 

Eligibility For Exemptions (§ 155.615) 

In this section, we proposed language 

regarding the verification process 

related to eligibility for exemptions. 

These processes were designed not only 

to minimize the burden on applicants, 

but also to serve a valuable program 

integrity function in order to assure that 

applicants are only deemed eligible for 

exemptions if they meet the standards 

specified in § 155.605. 

In paragraph (a), we proposed that 

unless HHS grants a request for 

modification under paragraph (i) of this 

section, the Exchange will verify or 

obtain information as provided in this 

section in order to determine that the 

applicant is eligible for an exemption. 

In paragraph (b), we proposed the 

verification process concerning the 

exemption for religious conscience. We 

specified that for any applicant 

requesting this exemption, the Exchange 

will verify that he or she meets the 

standards as outlined in § 155.605(c). 

First, in paragraph (b)(1), we proposed 

that except as specified in paragraph 

(b)(2) of this section, the Exchange will 

accept a Form 4029 that reflects that an 

applicant has been approved for an 

exemption from Social Security and 

Medicare taxes under section 1402(g)(1) 

of the Code by the IRS. Second, in 

paragraph (b)(2), we proposed that 

except as specified in paragraphs (b)(3) 

and (4) of this section, the Exchange 

will accept an applicant’s attestation 

that he or she is a member of a 

recognized religious sect or division 

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

Code, and an adherent of established 

tenets or teachings of such sect or 

division. Next, the Exchange will verify 

that the religious sect or division to 

which the applicant attests membership 

is recognized by SSA as a religious sect 

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

the Code. 

Third, in paragraph (b)(3), we 

proposed that if the information 

provided by an applicant regarding his 

or her membership in a recognized 

religious sect or division is not 

reasonably compatible with other 

information provided by the individual 

or the records of the Exchange, the 

Exchange will follow the procedures 

specified in paragraph (g) of this section 

concerning situations in which the 

Exchange is unable to verify 

information. 

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

proposed that if an applicant attests to 

membership in a religious sect or 

division that is not recognized by SSA 

as a religious sect or division under 

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

Exchange must provide the applicant 

with information regarding how his or 

her religious sect or division can pursue 

recognition under section 1402(g)(1) of 

the Code, and determine the applicant 

ineligible for this exemption until such 

time as the Exchange obtains 

information indicating that the religious 

sect or division has been approved. 

In paragraph (c), we proposed the 

verification process concerning the 

exemption for membership in a health 

care sharing ministry. We specified that 

for any applicant requesting this 

exemption, the Exchange will verify 

whether he or she meets the standards 

in § 155.605(d). First, in paragraph 

(c)(1), we proposed that except as 

specified in paragraphs (c)(2) and (3) of 

this section, the Exchange will first 

accept an attestation from an applicant 

that he or she is a member of a health 

care sharing ministry. Next, we 

proposed that the Exchange will verify 

that the health care sharing ministry to 

which the applicant attests membership 

is known to the Exchange as a health 

care sharing ministry, based on a list 

that would be developed by HHS based 

on outreach to heath care sharing 

ministries, which HHS would then 

make available to Exchanges. 

In paragraph (c)(2), we proposed that 

if the information provided by an 

applicant regarding his or her 

membership in a health care sharing 

ministry is not reasonably compatible 

with other information provided by the 

individual or the records of the 

Exchange, the Exchange will follow the 

procedures specified in paragraph (g) of 

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this section concerning situations in 

which the Exchange is unable to verify 

information. 

In paragraph (c)(3), we proposed that 

if an applicant attests to membership in 

a health care sharing ministry that is 

unknown to the Exchange as a health 

care sharing ministry according to the 

standards in § 155.605(d), the Exchange 

will then notify HHS and not determine 

an applicant eligible or ineligible for 

this exemption until HHS informs the 

Exchange regarding the attested health 

care sharing ministry’s status with 

respect to the standards specified in 26 

CFR 1.5000A–3(b) of the Treasury 

proposed rule. 

In paragraph (d), we proposed the 

verification process concerning the 

exemption for incarceration. We 

specified that for any applicant 

requesting this exemption, the Exchange 

will verify, through the process 

described in 45 CFR 155.315(e), that he 

or she was incarcerated. In paragraph 

(d)(2), we proposed that if the Exchange 

is unable to verify an applicant’s 

incarceration status through the 

verification process outlined, the 

Exchange will follow the procedures in 

paragraph (g) of this section concerning 

situations in which the Exchange is 

unable to verify information. 

In paragraph (e), we proposed the 

verification process concerning the 

exemption for members of Indian tribes. 

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

any applicant requesting this 

exemption, the Exchange will verify his 

or her membership in an Indian tribe 

through the process outlined in 45 CFR 

155.350(c). In paragraph (e)(2), we also 

proposed that the Exchange follow the 

procedures specified in paragraph (g) of 

this section if it is unable to verify an 

applicant’s tribal membership. 

In paragraph (f), we proposed the 

verification process concerning 

exemptions for hardship. In paragraph 

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

applying for a hardship exemption 

prospectively based on an inability to 

afford coverage, as described in 

§ 155.605(g)(2), the Exchange use 

procedures established under subpart D 

of this part to verify the availability of 

affordable coverage through the 

Exchange based on projected income 

and eligibility for advance payments of 

the premium tax credit, as specified in 

subpart D of this part, which involves 

verifying several attestations by the 

applicant, including an attestation 

related to citizenship, as well as the 

procedures described in § 155.320(e) to 

verify eligibility for qualifying coverage 

in an eligible employer-sponsored plan. 

We solicited comments regarding 

appropriate verification procedures for 

other categories of hardship that will 

ensure a high degree of program 

integrity while minimizing 

administrative burden. 

In paragraph (g), we proposed 

procedures for the Exchange to follow in 

the event the Exchange is unable to 

verify information necessary to make an 

eligibility determination for an 

exemption, including situations in 

which an applicant’s attestation is not 

reasonably compatible with information 

in electronic data sources or other 

information in the records of the 

Exchange, or when electronic data are 

required but unavailable. These 

procedures mirror those provided in 

§ 155.315(f), with modifications to 

preclude eligibility pending the 

outcome of the verification process, 

made in accordance with the Secretary’s 

authority under section 1411 of the 

Affordable Care Act. 

First, under paragraph (g)(1), we 

proposed that the Exchange will make a 

reasonable effort to identify and address 

the causes of the issue, including 

through typographical or other clerical 

errors, by contacting the application 

filer to confirm the accuracy of the 

information submitted by the 

application filer. Second, in paragraph 

(g)(2)(i), we proposed that if the 

Exchange is unable to resolve the issue, 

the Exchange will notify the applicant 

of the issue. After providing this notice, 

in paragraph (g)(2)(ii), we proposed that 

the Exchange will provide 30 days from 

the date on which the notice is sent for 

the applicant to present satisfactory 

documentary evidence via the channels 

available for the submission of an 

application, except by telephone, or 

otherwise resolve the issues. In 

paragraph (g)(3), we proposed that the 

Exchange may extend the period for an 

applicant to resolve the issue if the 

applicant can provide evidence that a 

good faith effort has been made to 

obtain the necessary documentation. 

And in paragraph (g)(4), we proposed 

that the Exchange will not grant a 

certificate of exemption during this 

period based on the information that is 

the subject of the request under this 

paragraph. 

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

if after the conclusion of the period 

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

section, the Exchange is unable to verify 

the applicant’s attestation, the Exchange 

will determine the applicant’s eligibility 

based on the information available from 

the data sources specified in this 

subpart, as applicable, unless such 

applicant qualifies for the exception 

provided under paragraph (h) of this 

section, and notify the applicant in 

accordance with the procedures 

described under § 155.610(i), including 

the inability to verify the applicant’s 

attestation. 

In paragraph (h), we proposed a 

provision under which the Exchange 

would provide a case-by-case exception 

for applicants for whom documentation 

does not exist or is not reasonably 

available to account for situations in 

which documentation cannot be 

obtained. 

In paragraph (i), we proposed that 

HHS have the flexibility to approve an 

Exchange Blueprint or a significant 

change to an Exchange Blueprint to 

modify the methods for the collection 

and verification of information as 

described in this subpart, as well as the 

specific information to be collected, 

based on a finding by HHS that the 

requested modification would reduce 

the administrative costs and burdens on 

individuals while maintaining accuracy 

and minimizing delay, and that any 

applicable requirements under 45 CFR 

155.260, 45 CFR 155.270, paragraph (j) 

of this section, and section 6103 of the 

Code with respect to the confidentiality, 

disclosure, maintenance, or use of 

information will be met. 

In paragraph (j), we proposed that the 

Exchange will not require an applicant 

to provide information beyond what is 

necessary to support the process of the 

Exchange for eligibility determinations 

for exemptions, including the process 

for resolving inconsistencies described 

in paragraph (g) of this section. 

Comment: One commenter raised 

broad concerns about potential 

challenges for consumers regarding 

verification, and requested that HHS 

specify a 1-year transition period during 

which the Exchange would rely 

primarily on self-attestation, using a 

form signed under penalty of perjury, or 

auditing a portion of applications 

submitted by individuals. 

Response: We share the commenter’s 

desire for a good consumer experience 

for those individuals who are seeking an 

exemption. However, we believe that 

statutory and program integrity 

concerns argue in favor of the Exchange 

applying a more comprehensive 

verification process than self-attestation. 

We expect to learn from the initial 

months and years of operations, and to 

work with states to achieve continuous 

improvement, with a particular focus on 

the consumer experience. 

Comment: One commenter 

recommended that a taxpayer who 

already has an approved IRS Form 4029 

should not have to request an 

exemption through the Exchange, and 

instead should be able to write ‘‘Exempt 

Form 4029’’ on his or her tax return. 

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Response: We strive to establish an 

Exchange exemption process that 

minimizes the burden on individuals to 

the extent possible. We note that section 

5000A(d)(2) of the Code specifies that 

the religious conscience exemption is 

available only through the Exchange. 

However, we note that we are finalizing 

proposed § 155.615(b)(1), which 

specifies that the verification process for 

this exemption will include the 

Exchange accepting an approved IRS 

Form 4029 for any individual who has 

one. 

Comment: One commenter 

recommended that in situations in 

which the health care sharing ministry 

to which an individual attests 

membership is not included on the list 

provided to the Exchange by HHS, HHS 

should issue the eligibility 

determination notice denying the 

exemption as opposed to the Exchange. 

Response: If an Exchange accepts the 

original exemption application from an 

individual, we continue to believe that 

it is appropriate for the Exchange to 

issue the corresponding eligibility 

determination notice in order to prevent 

confusion that individuals may 

experience if receiving a separate notice 

from HHS. We note that nothing 

precludes an Exchange from notifying 

such an individual that the 

determination is based on a list 

provided by HHS. 

Comment: One commenter requested 

further specificity about the process and 

standards HHS will use in developing 

the list of health care sharing ministries 

that meet the standards specified in the 

statute. 

Response: We recognize the 

importance of providing a clear process 

for establishing the list of health care 

sharing ministries that meet the 

statutory standards. Accordingly, we are 

renumbering proposed § 155.615(c) as 

§ 155.615(c)(1)(i) through (iii), and 

adding § 155.615(c)(2) to specify a 

process that is substantially similar to 

the approach discussed in § 155.604(c) 

regarding how HHS will determine that 

certain types of coverage meet the 

substantive and procedural 

requirements for consideration as 

minimum essential coverage. 

Specifically, we note that to be 

considered a health care sharing 

ministry for the purposes of this 

subpart, an organization will submit 

information to HHS that substantiates 

the organization’s compliance with the 

standards specified in section 

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

note that if at any time HHS determines 

that an organization previously 

considered a health care sharing 

ministry for the purposes of this subpart 

no longer meets the standards specified 

in section 5000A(d)(2)(B)(ii) of the 

Code, HHS may revoke its earlier 

decision. This revocation refers to the 

status of the health care sharing 

ministry, and not to the status of an 

individual’s exemption related to 

membership in a health care sharing 

ministry. As such, while the Exchange 

would not grant an exemption to an 

individual attesting membership in such 

a health care sharing ministry after 

revoking its status, the Exchange would 

not revoke a prior exemption granted to 

an individual based on the status of a 

health care sharing ministry. We discuss 

this information collection in the 

Information Collection Requirements 

section of this final rule. 

We also clarify in paragraph (c)(1)(iii) 

that if an applicant attests to 

membership in a health care sharing 

ministry that is not known to the 

Exchange as a health care sharing 

ministry based on information provided 

by HHS, the Exchange must provide the 

applicant with information regarding 

how an organization can pursue 

recognition under § 155.615(c)(2), and 

determine the applicant ineligible for 

this exemption until such time as HHS 

notifies the Exchange that the health 

care sharing ministry’s meets the 

standards specified in section 

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

that individual members cannot seek 

recognition under § 155.615(c)(2) on 

behalf of their health care sharing 

ministry, as HHS will only review 

information submitted by the health 

care sharing ministry itself. 

Comment: One commenter urged HHS 

to remove the reference to reasonable 

compatibility as part of verifying 

membership in a health care sharing 

ministry, or to clarify that an individual 

could still receive an exemption based 

on membership in a health care sharing 

ministry if he or she had been enrolled 

in health insurance in the past or was 

currently enrolled in health insurance. 

Response: In response to the 

commenter, we will clarify that the 

Exchange will not consider an 

individual’s current or previous health 

coverage as reasonably incompatible 

with membership in a health care 

sharing ministry, since nothing in the 

statute limits the availability of such an 

exemption to an individual who was or 

is uninsured. 

Comment: One commenter suggested 

that for purposes of the FederallyFacilitated Exchange, HHS work with 

local tribes and the Bureau of Indian 

Affairs to contract for the verification of 

membership in an Indian tribe. 

Response: We appreciate this 

comment, and are committed to creating 

an efficient eligibility process for all 

applicants. In proposed § 155.615(e), we 

specified that the Exchange would use 

the same verification process that is 

used for the verification of Indian status 

for purposes of special cost-sharing 

provisions and special enrollment 

periods for enrollment in a QHP through 

the Exchange. The cross-referenced 

section allows an Exchange to rely on 

any electronic data sources that have 

been approved by HHS for this purpose, 

including electronic data acquired from 

tribes. Based on the short timeline for 

implementation, for October 1, 2013, the 

Federally-facilitated Exchange will be 

unable to collect data from individual 

tribes, and so will rely on a paper 

documentation process. State-based 

Exchanges may have additional 

opportunities for October 1, 2013. 

Comment: One commenter 

recommended that HHS should specify 

that an individual renew an exemption 

based on membership in an Indian tribe 

on an annual basis. Other commenters 

urged HHS to use electronic data 

matching with the Indian Health Service 

(IHS) as one tool to verify membership 

in an Indian tribe as well as the 

suggested hardship exemptions 

discussed above. Commenters asked 

HHS to specify that the Exchange first 

consult all available electronic data 

sources; second, if electronic data 

sources do not support an applicant’s 

attestation, seek paper documentation; 

and third, and if individuals lack the 

appropriate documentation, call the 

listed tribe’s Contract Health Services 

Officer or tribal enrollment office. 

Response: We modeled the 

verification process for the exemption 

based on an individual’s membership in 

an Indian tribe on the verification 

process that will be used for individuals 

seeking coverage at 45 CFR 155.350(c). 

We appreciate the suggestions from 

commenters, as they generally follow 

our approach in 45 CFR 155.350(c). 

Specifically, in 45 CFR 155.350(c), we 

specify that the Exchange will first use 

any approved electronic data sources, 

and only request paper documentation 

when electronic data sources are 

unavailable or do not support an 

applicant’s attestation. 45 CFR 

155.350(c) does not specify that the 

Exchange will contact a tribe’s Contract 

Health Services Officer or tribal 

enrollment office when documentation 

is unavailable. Rather, in § 155.615(h), 

we proposed that when documentation 

does not exist or is not reasonably 

available, the Exchange will provide an 

exception on a case-by-case basis and 

accept an applicant’s attestation. We 

also note that Exchanges have flexibility 

to work with local tribes to gain 

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information that could be used on an 

electronic basis. 

Comment: One commenter worried 

that the proposed verifications process 

placed too much burden on individuals 

as opposed to the Exchange, and urged 

HHS to shift this burden in the future. 

Response: We have attempted to limit 

burden on individuals as much as 

possible in the proposed and final 

regulations. We intend to work with all 

relevant stakeholders in the future to 

identify opportunities to increase the 

efficiency and integrity of the 

verification process. 

Comment: Commenters expressed 

concerns regarding proposed 

§ 155.615(g) and situations where the 

Exchange is unable to verify the 

necessary information to determine 

eligibility for an exemption. Some 

commenters requested greater 

clarification to limit any possible 

confusion about when attestations 

should be accepted, when attestations 

must be verified, when documents must 

be provided, and what type of 

documents would be sufficient. 

Additionally commenters expressed 

concerns about the 30-day time period 

for individuals to present satisfactory 

documentary evidence to the Exchange 

in order to resolve an inconsistency, and 

urged extending this time period, or 

providing flexibility for the Exchange to 

ensure that individuals have a 

‘‘reasonable opportunity’’ to submit 

documentation. 

Response: In response to comments, 

we will modify proposed 

§ 155.615(g)(2)(ii) to allow an individual 

90 days to present satisfactory 

documentary evidence to the Exchange, 

which is the time period used in the 

eligibility process for enrollment in a 

QHP, advance payments of the premium 

tax credit, and cost-sharing reductions. 

We will maintain the proposed language 

specifying that an individual is not 

eligible for an exemption during this 

time period. As the language from 

paragraph (g) is modeled after the 

inconsistency process from § 155.315(f), 

we believe that this provision already 

describes the process concerning an 

Exchange’s inability to verify necessary 

information with sufficient clarity to 

limit confusion. The notices that the 

Exchange provides to an individual for 

whom the Exchange is unable to verify 

necessary information will specify the 

documentation that such an individual 

can submit to resolve an inconsistency. 

Comment: Multiple commenters 

expressed support for our proposal at 

§ 155.615(h) to provide an exception on 

a case-by-case basis for individuals who 

lack certain documentation, although 

some sought further clarification to 

prevent confusion. One commenter 

suggested that paragraph (h) of this 

section should extend not only to 

circumstances when the Exchange has 

information that is inconsistent with an 

individual’s attestation but also to 

circumstances when the attestation 

itself cannot be verified through other 

data sources. 

Response: As this exception for 

special circumstances mirrors similar 

language used in regards to the coverage 

process at § 155.315(g), we maintain the 

language as proposed. We clarify that 

this provision is designed to address 

any situation in which documentation is 

needed, but does not exist or is not 

reasonably available. 

Comment: One commenter expressed 

support for § 155.615(j), which limits 

the collection of application information 

to the minimum amount necessary, 

while also recommending that HHS 

amend this provision to ensure 

alignment with section 1411(g) of the 

Affordable Care Act. 

Response: We affirm that the 

Exchange should collect only the 

minimum information necessary to 

support the eligibility process for 

exemptions. The proposed language 

mirrors that used in 45 CFR 155.315(i), 

which is designed to implement section 

1411(g)(1) of the Affordable Care Act. 

We also note that the overarching 

privacy and security protections 

specified in 45 CFR 155.260 apply to the 

exemptions process. Together, we 

believe that these sections already 

appropriately address the commenter’s 

concerns regarding information 

collection and privacy. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.615 of the proposed 

rule with several modifications, as 

follows. First, we make a technical 

correction in paragraph (b)(1) to specify 

that the Exchange must accept a form 

that reflects he or she is exempt from 

Social Security and Medicare taxes 

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

Second, we clarify that if an applicant 

attests to membership in a religious sect 

or division that is not recognized by the 

SSA as an approved religious sect or 

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

Code, the Exchange will provide the 

applicant with information regarding 

how his or her religious sect or division 

can pursue recognition under section 

1402(g)(1) of the Code, and determine 

the applicant ineligible for this 

exemption until such time as the 

Exchange obtains information indicating 

that the religious sect or division has 

been approved. Third, we renumber 

proposed § 155.615(c), move the 

language from previous paragraph (c)(1) 

into paragraph (c), redesignating 

paragraphs (c)(2) and (c)(3) as 

paragraphs (c)(1)(i) and (ii), and add 

§ 155.615(c)(2) to specify a process for 

establishing the list of health care 

sharing ministries that meet the 

statutory standards that is substantially 

similar to the approach discussed in 

§ 155.604(c) regarding how HHS will 

determine that certain types of coverage 

meet the substantive and procedural 

requirements for consideration as 

minimum essential coverage. We also 

specify in paragraph (c)(1)(i) that the 

Exchange may not consider an 

applicant’s prior or current enrollment 

in health coverage as not reasonably 

compatible with an applicant’s 

attestation of membership in a health 

care sharing ministry, and we specify in 

paragraph (c)(1)(ii) that if an applicant 

attests to membership in a health care 

sharing ministry that is not known to 

the Exchange as a health care sharing 

ministry based on information provided 

by HHS, the Exchange will provide the 

applicant with information regarding 

how an organization can pursue 

recognition under § 155.615(c)(2), and 

determine the applicant ineligible for 

this exemption until such time as HHS 

notifies the Exchange that the health 

care sharing ministry’s meets the 

standards specified in section 

5000A(d)(2)(B)(ii) of the Code. 

We specify in paragraph (f)(1) that the 

Exchange will not verify whether an 

applicant experienced a hardship under 

§ 155.605(g)(3) or (5); rather, these 

exemptions will be claimed directly 

with the IRS at tax filing. We 

redesignate paragraph (f)(2) as 

paragraph (f)(2)(i), make a technical 

correction in redesignated paragraph 

(f)(2)(i) to clarify that the procedures 

used to determine eligibility for advance 

payments of the premium tax credit in 

subpart D include § 155.315(c)(1). We 

note that at 78 FR 4638, we proposed to 

consolidate § 155.320(d) and (e) into 

§ 155.320(d). To the extent that we 

finalize this redesignation, we intend to 

make a simultaneous technical 

correction to this cross-reference. We 

add new paragraph (f)(2)(ii) to clarify 

that in determining eligibility for the 

lack of affordable coverage based on 

projected income hardship exemption, 

the Exchange will accept an application 

filer’s attestation for an applicant 

regarding eligibility for minimum 

essential coverage other than through an 

eligible employer-sponsored plan. We 

redesignate paragraph (f)(3) as 

paragraph (f)(4), and add new paragraph 

(f)(3) to specify that the Exchange will 

use the same verification procedures for 

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the exemption for an individual who is 

eligible for services through an Indian 

health care provider as it will use for the 

exemption for members of a federallyrecognized tribe. 

In 78 FR 4636, we proposed to modify 

§ 155.315(f) to specify that the Exchange 

would trigger an inconsistency when 

electronic data is required but not 

reasonably expected to be available 

within 2 days. To ensure alignment 

across the eligibility process for 

enrollment in a QHP through the 

Exchange and insurance affordability 

programs with the eligibility process for 

exemptions, we make a technical 

correction to specify that the Exchange 

will trigger the process under 

§ 155.615(g) when electronic data is 

required but not reasonably expected to 

be available within the time period 

specified as § 155.315(f). We modify 

§ 155.615(g)(2)(ii) to allow an applicant 

90 days to present satisfactory 

documentary evidence to resolve an 

inconsistency. Lastly, we add paragraph 

(k) to mirror the Exchange’s requirement 

regarding the validation of a Social 

Security number for an individual 

applying for an exemption from the 

shared responsibility payment with the 

same validation process for purposes of 

individual seeking coverage as 

described in § 155.315(b). 

e. Eligibility Redeterminations for 

Exemptions During a Calendar Year 

(§ 155.620) 

In § 155.620, we proposed in 

paragraph (a) to implement section 

1411(f) of the Affordable Care Act by 

providing that the Exchange will 

redetermine an individual’s eligibility 

for an exemption if the Exchange 

receives and verifies new information as 

reported by an individual. In paragraph 

(b)(1), we proposed that the Exchange 

will require an individual with a 

certificate of exemption to report any 

changes related to the eligibility 

standards described in § 155.605. We 

solicited comments as to whether we 

should provide flexibility such that the 

Exchange may establish a reasonable 

threshold for changes in income, such 

that an individual who experiences a 

change in income that is below the 

threshold is not required to report such 

change. 

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

the Exchange would allow an individual 

to report changes through the channels 

acceptable for the submission of an 

exemption application. 

In paragraph (c), we proposed that the 

Exchange use the verification processes 

used at the point of initial application, 

as described in § 155.615, in order to 

verify any changes reported by an 

individual prior to using the selfreported information in an eligibility 

determination for an exemption. In 

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

Exchange notify an individual in 

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

on a reported change. Lastly, in 

paragraph (c)(3), we proposed that the 

Exchange provide periodic electronic 

notifications regarding the requirements 

for reporting changes and an 

individual’s opportunity to report any 

changes, to an individual who has a 

certificate of exemption and who has 

elected to receive electronic 

notifications, unless he or she has 

declined to receive such notifications. 

We noted that unlike § 155.330, we did 

not propose that the Exchange conduct 

periodic data matching regarding an 

individual’s eligibility for an exemption. 

We solicited comments as to whether 

we should establish similar data 

matching provisions, and if so, whether 

we should specify that the Exchange 

should handle changes identified 

through the matching process in a 

similar manner as to that specified in 

§ 155.330, or take a different approach. 

Also unlike the eligibility process for 

enrollment in a QHP and for insurance 

affordability programs, we did not 

propose an annual Exchange 

redetermination process for exemptions. 

We solicited comments regarding how 

the Exchange could expedite and 

streamline the process for individuals 

with a certificate of exemption that is 

not approved indefinitely who wish to 

maintain the exemption for a 

subsequent year. 

Comment: One commenter stated that 

individuals should not have to report 

changes in religious status or their 

status as a member of an Indian tribe, 

but rather the religious sect or tribe 

should report such a change in status to 

the Exchange or HHS in order to prevent 

fraud. 

Response: We share the commenter’s 

program integrity concerns, but 

continue to believe that the 

responsibility to report changes remains 

appropriately on the individual who has 

received an exemption. As Exchanges 

start to grant exemptions, we will work 

with states to monitor the process and 

determine whether changes would be 

appropriate. 

Comment: One commenter sought 

clarification as to whether 

redeterminations only occur when an 

individual reports a change or whether 

the Exchange has the authority to cancel 

an exemption it previously granted on 

its own. 

Response: We clarify that 

redeterminations under this section can 

only occur when an individual reports 

a change that impacts his or her 

eligibility determination for an 

exemption. 

Comment: Several commenters 

expressed concerns regarding the 

burden involved in requiring an 

individual to report changes that would 

impact his or her eligibility for an 

exemption. One commenter inquired 

about how HHS would enforce the 

regulatory reporting requirements. 

Response: The proposed approach is 

identical to the approach taken in 

§ 155.330(b), and we believe that it is 

generally appropriate for eligibility for 

enrollment in a QHP through the 

Exchange, advance payments of the 

premium tax credit, cost-sharing 

reductions, and exemptions. With that 

said, as noted above, we have modified 

the eligibility standards, in order to 

reduce administrative burden, for the 

hardship exemption specified in 

§ 155.605(g)(2), which covers situations 

in which an individual lacks affordable 

coverage based on projected household 

income, such that the Exchange will 

provide this exemption for all remaining 

months in a coverage year, 

notwithstanding any change in an 

individual’s circumstances. 

Accordingly, we modify paragraphs (a), 

(b), and (c)(3) to conform to this change 

by clarifying that the Exchange will not 

conduct mid-year redeterminations for 

this exemption, will not require 

individuals receiving this exemption to 

report changes, and will not send 

periodic reminders to report changes to 

individuals who have this exemption. 

As Exchanges start to grant exemptions, 

we will work with states to monitor the 

process and determine whether other 

changes would be appropriate. 

Comment: Commenters raised 

concerns about requiring individuals to 

report changes, and suggested that if 

HHS maintains these requirements, they 

should provide a special enrollment 

period for an individual who loses their 

exemption in the middle of a calendar 

year as a result of a redetermination and 

who has no opportunity to enroll in 

coverage, which would leave them 

potentially liable for the shared 

responsibility payment. 

Response: We do not want to create 

an incentive for an individual who has 

an exemption to not report changes in 

their eligibility. We also do not want to 

create a situation in which an 

individual who has followed procedures 

and wants to enroll in health coverage 

is instead liable for the shared 

responsibility payment. We are adding 

paragraph (d) to clarify that the 

Exchange will implement a change 

resulting from a redetermination under 

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this section for the month or months 

after the month in which the 

redetermination occurs such that a 

certificate that was provided for the 

month in which the redetermination 

occurs, and for prior months, remains 

effective. We address the ability of an 

individual who loses eligibility for an 

exemption following a redetermination 

to enroll in a QHP in the guidance 

published simultaneously with this 

final regulation. 

Comment: One commenter suggested 

that the Exchange provide periodic 

electronic notifications regarding 

reporting changes to individuals only if 

they decide to receive such notifications 

as opposed to providing individuals 

periodic electronic notifications 

regarding reporting changes unless they 

affirmatively decline to receive such 

notifications. 

Response: As we proposed this 

provision to mirror a similar provision 

concerning the coverage process at 

§ 155.330(c)(2), we maintain the 

provision as proposed, with the 

modification discussed above to 

eliminate this notification for 

individuals who have the exemption 

specified in § 155.605(g)(2). 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.620 of the proposed 

rule with a few slight modifications. We 

clarify in paragraph (a) that the 

Exchange only must redetermine the 

eligibility of an individual with an 

exemption granted by the Exchange, and 

that it will not conduct 

redeterminations for the exemption 

described in § 155.605(g)(2). In 

paragraph (b), we specify that the 

Exchange will not require an individual 

who has an exemption under 

§ 155.605(g)(2) to report changes with 

respect to his or her eligibility for this 

exemption; accordingly, in paragraph 

(c)(3), we clarify that the Exchange will 

not provide periodic reminders to report 

changes to this group of individuals. We 

also add paragraph (d) to specify that 

the Exchange will implement a change 

resulting from a redetermination under 

this section for the month or months 

after the month in which the 

redetermination occurs, such that a 

certificate that was provided for the 

month in which the redetermination 

occurs, and for prior months, remains 

effective. 

f. Options for Conducting Eligibility 

Determinations for Exemptions 

(§ 155.625) 

In § 155.625, we proposed that a statebased Exchange can satisfy the 

requirements of subpart G if it uses a 

federally-managed service to make 

eligibility determinations for 

exemptions, and we solicited comments 

regarding the specific configuration of a 

service that would be useful for states 

and also feasible within the time 

remaining for implementation. 

First, in paragraph (a), we proposed 

that the Exchange may satisfy the 

requirements of this subpart by either 

executing all eligibility functions, 

directly or through contracting 

arrangements described in 45 CFR 

155.110(a), or through the use of a 

federally-managed service described in 

paragraph (b) of § 155.625. 

Second, in paragraph (b), we 

proposed that the Exchange may 

implement an eligibility determination 

for an exemption made by HHS, 

provided that the Exchange accepts the 

application, as specified in § 155.610(d), 

and issues the eligibility notice, as 

specified in § 155.610(i), and that 

verifications and other activities 

required in connection with eligibility 

determinations for exemptions are 

performed by the Exchange in 

accordance with the standards 

identified in this subpart or by HHS in 

accordance with the agreement 

described in paragraph (b)(4) of this 

section. We also proposed that under 

this option, the Exchange will transmit 

all applicant information and other 

information obtained by the Exchange to 

HHS, and adhere to HHS’ 

determination. Lastly, in paragraph 

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

and HHS enter into an agreement 

specifying their respective 

responsibilities in connection with 

eligibility determinations for 

exemptions. 

In paragraph (c), we proposed the 

standards to which the Exchange will 

adhere when eligibility determinations 

are made in accordance with paragraph 

(b) of this section. Such standards 

included that the arrangement does not 

increase administrative costs and 

burdens on individuals, or increase 

delay, and that applicable requirements 

under § 155.260, § 155.270, and 

§ 155.315(i), and section 6103 of the 

Code are met with respect to the 

confidentiality, disclosure, maintenance 

or use of information. 

Comment: Commenters expressed 

general support for the proposals in 

§ 155.625 in regards to the ability for a 

state-based Exchange to satisfy the 

requirements of this subpart by either 

executing all eligibility functions 

directly, through contracting 

arrangements, or through the use of a 

federally-managed service described in 

paragraph (b). Commenters urged HHS 

to further help reduce the burden on 

Exchanges developing the operational 

capacity needed to conduct eligibility 

determinations for exemptions. Another 

commenter wanted to clarify that an 

Exchange relying on HHS to make an 

eligibility determination for an 

exemption could also rely on HHS to 

administer the exemptions appeals 

process. 

Response: In response to comments 

seeking to limit the burden on 

Exchanges, and based on the operational 

capacity of the Exchange and HHS being 

able to comply with the statutory 

requirements to accept exemptions 

applications and issue eligibility 

determination notices for the first year 

of operations, we are modifying the 

proposed language regarding how the 

Exchange may rely on the use of an HHS 

service. 

We specify that for an application 

submitted prior to October 15, 2014, the 

Exchange may rely on HHS to process 

exemptions applications, complete the 

necessary verifications, determine 

eligibility, and issue notices, including 

any certificates of exemption. Exchanges 

will still assist individuals seeking a 

lack of affordable coverage based on 

projected income hardship exemption 

by providing an individual with the 

resulting cost of his or her lowest-cost 

bronze plan that incorporates any 

advance payments of the premium tax 

credit allowable under section 36B of 

the Code. Additionally, the Exchange 

call center and Internet Web site as 

specified in 45 CFR 155.205(a) and (b) 

respectively, must be responsible for 

providing information to consumers 

regarding the exemption eligibility 

process. 

For an application submitted on or 

after October 15, 2014, the Exchange 

may adopt an exemption eligibility 

determination made by HHS provided 

that the Exchange accepts the 

application and issues the eligibility 

notice in the same manner as discussed 

in the proposed rule. As a result of 

clarifying the flexibility for Exchanges 

prior to October 15, 2014, we 

accordingly remove paragraph (c). 

We also note that comments regarding 

the appeals process for exemptions will 

be addressed in a future regulation. We 

expect that future rulemaking will 

clarify that if an Exchange relies on HHS 

to make an eligibility determination for 

an exemption, the Exchange may also 

rely on HHS to administer the 

exemptions appeals process as well, 

provided that any underlying decisions 

made by the Exchange are addressed 

through the appropriate Exchange 

appeals process. 

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Summary of Regulatory Changes 

We are modifying the provisions 

proposed in § 155.625 to eliminate 

proposed paragraph (c). We redesignate 

paragraphs (b)(1) through (b)(5) as 

(b)(2)(i) through (b)(2)(v) to clarify that 

the standards discussed therein apply to 

an Exchange seeking to rely on an 

exemption eligibility determination 

made by HHS on or after October 15, 

2014. We add (b)(1) to reflect that HHS 

will administer the entire eligibility 

process for exemptions for Exchanges 

that decide to rely on HHS to conduct 

eligibility determinations for an 

application submitted before October 

15, 2014, provided that the Exchange 

adheres to the eligibility determination 

made by HHS furnishes any information 

available through the Exchange that is 

necessary for an applicant to utilize the 

process administered by HHS, and the 

Exchange call center and Internet Web 

site provide information to assist 

consumers regarding the exemption 

eligibility process. 

g. Reporting (§ 155.630) 

In § 155.630, we proposed to codify 

the provisions specified in section 

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

Act regarding reporting by the Exchange 

to IRS regarding eligibility 

determinations for exemptions. If the 

Exchange grants an individual a 

certificate of exemption in accordance 

with § 155.610(i), we proposed that the 

Exchange will transmit to IRS the 

individual’s name and SSN, exemption 

certificate number, and any additional 

information specified in additional 

guidance published by IRS in 

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

We solicited comments as to how this 

interaction could work as smoothly as 

possible. 

Comment: One commenter raised 

concerns about the lack of an IRS 

interface to report exemptions, and 

wanted HHS to ensure that Exchanges 

will be provided sufficient time to 

implement such an interface. 

Response: We recognize the 

commenter’s concerns regarding the 

reporting process for exemptions. HHS 

continues to work closely with the IRS 

to ensure an efficient interface to report 

exemptions, and anticipates releasing 

technical guidance on this shortly. We 

also anticipate that this reporting will be 

accomplished through a monthly file, 

which will be sent to IRS for the first 

time in February, 2014, and will also 

incorporate information regarding 

enrollment in a QHP through the 

Exchange and advance payments of the 

premium tax credit, based on other 

provisions. 

Comment: One commenter 

recommended that HHS provide 

Exchanges flexibility to obtain and 

report taxpayer identification numbers, 

if relevant, rather than only SSNs as 

proposed. The commenter also wanted 

to ensure that this provision explicitly 

specifies that Exchanges will comply 

with existing confidentiality protections 

for individual tax information under the 

Affordable Care Act and section 6103 of 

the Code. 

Response: We maintain the language 

of the proposed regulation. We also note 

that in response to this comment, in 

order to limit the administrative burden 

on Exchanges associated with reporting 

to IRS, we have clarified in § 155.615(k) 

that similar to the coverage process, the 

Exchange will validate application SSNs 

that are included on an exemptions 

application. Similar to eligibility for 

enrollment in a QHP, having a SSN is 

not a requirement to receiving an 

exemption, and as such the inability to 

validate a SSN will not preclude an 

eligibility determination for an 

exemption. However, the successful 

validation of a SSN will help in the 

efficient administration of the tax filing 

process. Furthermore, we note that 45 

CFR 155.260 specifies that tax 

information will be protected in 

accordance with section 6103 of the 

Code. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.630 of the proposed 

rule without modification. 

h. Right To Appeal (§ 155.635) 

In § 155.635, we proposed that the 

Exchange will include notice of the 

right to appeal and instructions for how 

to appeal in any notification issued in 

accordance with § 155.610(i) and 

§ 155.625(b)(1). We proposed that an 

individual may appeal any eligibility 

determination or redetermination made 

by the Exchange in relation to an 

exemption. Additional detail about the 

appeal process is described in subpart F 

of the proposed rule titled, ‘‘Medicaid, 

Children’s Health Insurance Programs, 

and Exchanges: Essential Health 

Benefits in Alternative Benefit Plans, 

Eligibility Notices, Fair Hearing and 

Appeal Processes for Medicaid and 

Exchange Eligibility Appeals and Other 

Provisions Related to Eligibility and 

Enrollment for Exchanges, Medicaid 

and CHIP, and Medicaid Premiums and 

Cost Sharing’’ (78 FR 4719). 

Comment: One commenter expressed 

concerns about individuals with access 

to eligible employer-sponsored coverage 

that would prevent an individual from 

receiving advance payments of the 

premium tax credit, while still leaving 

them subject to the shared responsibility 

payment. The commenter wanted the 

Exchange to have discretion through the 

appeals process to consider the totality 

of an applicant’s circumstances. 

Another commenter urged HHS to 

specify that translation services are 

available for LEP individuals to ensure 

they have appropriate access to the 

appeals process, including the content 

of notices and requests for hearings. 

Response: Comments concerning the 

appeals process for exemptions will be 

addressed in future rulemaking. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.635 of the proposed 

rule with three modifications. First, we 

are deleting the reference to 

§ 155.625(b)(1), as we are modifying 

proposed § 155.625 to specify that an 

Exchange that relies on HHS to make 

eligibility determinations for 

exemptions will not issue the eligibility 

notice. Second, we also make a 

technical correction in paragraph (b) to 

replace the reference to the 

Commissioner of the IRS with the 

Secretary of the Treasury. Third, we 

make a technical correction to remove 

the introductory text, which is not 

substantive. 

B. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

a. Definition of Minimum Essential 

Coverage (§ 156.600) 

The proposed rule cross referenced 

the Treasury regulation under section 

5000A of the Code for the definition of 

minimum essential coverage. 

Summary of Regulatory Changes 

We made minor changes to the 

provisions of § 156.600 to clarify the 

meaning of the final rule. 

b. Other Types of Coverage That Qualify 

as Minimum Essential Coverage 

(§ 156.602) 

The proposed rule specifically 

designated the following types of 

coverage as minimum essential coverage 

for purposes of the Code: Self-funded 

student health insurance plans; foreign 

health coverage; Refugee Medical 

Assistance supported by the 

Administration for Children and 

Families (45 CFR Part 400 Subpart G); 

Medicare advantage plans; AmeriCorps 

coverage (45 CFR 2522.10 through 

2522.950), and state high risk pools (as 

defined in § 2744 of the Public Health 

Service Act (PHS Act)). We solicited 

comments on these types of coverage 

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and whether there are other existing 

categories of coverage that should be 

recognized as minimum essential 

coverage. We also solicited comments 

regarding whether self-funded student 

health coverage should be limited to 

institutions of higher education, as 

defined by the Higher Education Act of 

1965, or if coverage offered by other 

institutions, such as primary or 

secondary educational institution, or 

unaccredited educational institutions, 

should be included. Lastly, we solicited 

comments on the inclusion of 

AmeriCorps coverage in the designated 

list. 

Under the proposed rule, state high 

risk pools were designated as minimum 

essential coverage for a period of time 

to be determined by the Secretary. We 

reserved the right to review and monitor 

the extent and quality of coverage, and 

in the future to reassess whether they 

should be designated minimum 

essential coverage or should be required 

to go through the process outlined in 

§ 156.604 of this proposed rule. We 

solicited comments on whether state 

high risk pools should automatically be 

designated as minimum essential 

coverage or whether they should be 

required to follow the process outlined 

in § 156.604 of this proposed rule. 

The comments and our responses are 

set forth below. 

Comment: Many commenters were 

concerned that the unregulated status of 

self-funded student health coverage may 

leave students unable to benefit from 

the protections of the Affordable Care 

Act, and that students who are offered 

a self-funded plan through their college 

or university may find it difficult or 

impossible to obtain coverage through 

the Exchanges and to access the 

Affordable Care Act premium and costsharing subsidies. These commenters 

conceded that some self-funded student 

health coverage is good coverage, but 

other plans do not provide adequate 

coverage. These commenters 

specifically cited annual and lifetime 

limits, prescription drug limits, preexisting condition exclusions and 

rescissions as reasons that some selffunded student health coverage is not 

satisfactory coverage for many students. 

In contrast, other commenters stated 

their support for designating self-funded 

student health coverage as minimum 

essential coverage, citing the ACHA 

guidelines document, Standards for 

Student Health Insurance/Benefits 

Programs, which will ‘‘encourage 

provision of benefits in self-funded 

plans that are consistent with 

Affordable Care Act requirements that 

have been established for student 

insured plans.’’ 

Response: After reviewing the 

comments regarding designating selffunded student health plans as 

minimum essential coverage for 

purposes of the Code, we agree that 

because self-funded student health 

plans can be varied in the types of 

benefits being provided, these plans 

should not be permanently designated 

as minimum essential coverage. In this 

final rule we designate self-funded 

student health coverage as minimum 

essential coverage for plan or policy 

years beginning on or before December 

31, 2014. For coverage beginning after 

December 31, 2014, sponsors of selffunded student health plans may apply 

to be recognized as minimum essential 

coverage through the process outlined 

in § 156.604 of the final rule. In 

addition, the Department of the 

Treasury intends to publish guidance 

under section 36B of the Code about 

whether individuals who are eligible to 

enroll in self-funded student health 

plans will be treated as eligible for 

qualified health plan coverage 

subsidized by the premium tax credit. 

In the proposed rule we designated 

state high risk pools as minimum 

essential coverage for a transition period 

and solicited comments on whether 

state high risk pools should be 

recognized as minimum essential 

coverage. We did not receive any 

comments on state high risk pools and 

we are finalizing the proposed rule. To 

be consistent with the treatment of selffunded student health plans which 

under the final rule are designated as 

minimum essential coverage for plan or 

policy years beginning on or before 

December 31, 2014, we are applying the 

same one-year transitional period to 

state high risk pools. For coverage 

beginning after December 31, 2014, 

sponsors of state high risk pools may 

apply to be recognized as minimum 

essential coverage through the process 

outlined in § 156.604 of the final rule. 

In addition, the Department of the 

Treasury intends to publish guidance 

under section 36B of the Code about 

whether individuals who are eligible to 

enroll in state high risk pools will be 

treated as eligible for qualified health 

plan coverage subsidized by the 

premium tax credit. 

Comment: Some commenters 

supported the designation of foreign 

health coverage as minimum essential 

coverage because foreign health 

coverage provides meaningful health 

care benefits to, legally admitted, noncitizens temporarily working in the 

United States. Other commenters 

expressed concern that foreign health 

coverage, which is generally provided to 

non-citizens by a foreign home country 

or through foreign commercial health 

coverage, provides limited or no out-ofcountry benefits to such persons while 

legally in the United States. 

Response: We agree that the health 

care benefits provided by foreign 

governments or through foreign 

insurance for legally admitted noncitizens of the United States vary from 

country to country and may create a 

barrier to care if health care providers in 

the United States do not accept payment 

from such coverage. Therefore, foreign 

health coverage is not designated as 

minimum essential coverage in this 

final rule. However, sponsors of foreign 

health coverage may apply for their 

coverage to be recognized as minimum 

essential coverage in the process 

outlined in § 156.604 of this final rule. 

Comment: Some commenters 

supported the designation of coverage 

provided by AmeriCorps programs to 

their AmeriCorps members as minimum 

essential coverage. They stated that the 

lack of an employer/employee 

relationship creates difficulties for 

programs seeking insurance on their 

own through traditional group 

insurance markets. Further, coverage 

provided by AmeriCorps programs to 

their AmeriCorps members has 

produced economies of scale and a 

solution to the accessibility challenges 

particular to smaller programs. 

Commenters also stated that the 

demographics and full funding of 

premiums by the program has led to 

stable claims experience. 

Other commenters opposed 

designating the coverage provided by 

AmeriCorps programs to AmeriCorps 

volunteers as minimum essential 

coverage because some of the provided 

benefits fall below the minimal coverage 

requirements required by the Affordable 

Care Act. In addition, commenters noted 

that stipends for most volunteers are 

between 100–200 percent FPL, meaning 

that they may either qualify for a 

premium assistance program or a 

hardship exemption. 

Response: In response to these 

comments concerning consumer 

protections, the final rule does not 

automatically designate coverage 

provided by AmeriCorps programs to 

AmeriCorps volunteers as minimum 

essential coverage. However, 

AmeriCorps coverage provided to 

volunteers may be recognized as 

minimum essential coverage through 

the certification process outlined in 

§ 156.604 of this final rule. 

Comment: Several commenters urged 

HHS to recognize multi-share plans as 

minimum essential coverage. These 

commenters also requested that if multishare plans were not designated as 

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39516 Federal Register / Vol. 78, No. 126 / Monday, July 1, 2013 / Rules and Regulations 

minimum essential coverage, that they 

be eligible to apply for recognition as 

minimum essential coverage. These 

commenters described the unique 

structure of multi-share plans, stating 

that these programs already meet the 

community needs of affordable health 

insurance; multi-share programs often 

focus on specific geographic areas or 

populations; and that multi-share plans 

are community funded, receive no 

federal subsidies and are a 

demonstrated alternative to traditional 

health insurance. Multi-share plans are 

designed to be coverage of last resort for 

low-income small businesses, students 

and individuals when other programs 

are unavailable. 

Response: While multi-share plans are 

not designated as minimum essential 

coverage in this final rule, HHS invites 

all multi-share organizations to apply 

for their coverage to be recognized as 

minimum essential coverage in the 

process outlined in § 156.604 of this 

final rule. 

Summary of Regulatory Changes 

As proposed in the proposed rule, in 

§ 156.602 we designate Medicare 

Advantage, and Refugee Medical 

Assistance supported by the 

Administration for Children and 

Families (45 CFR Subpart G), as 

minimum essential coverage. We also 

designate self-funded student health 

plans and state high risk pools as 

minimum essential coverage for plan or 

policy years beginning on or before 

December 31, 2014. For coverage 

beginning after December 31, 2014, 

sponsors of self-funded student health 

plans and state high risk pools may 

apply to be recognized as minimum 

essential coverage through the process 

outlined in § 156.604 of the final rule. 

Section 156.602 no longer specifically 

designates foreign health coverage or 

coverage provided by AmeriCorps 

programs to AmeriCorps volunteers as 

minimum essential coverage. However, 

plans that provide coverage to 

AmeriCorps volunteers as well as 

coverage provided by foreign 

governments may receive designation as 

minimum essential coverage by 

following the process for recognition 

explained in § 156.604. 

c. Requirements for Recognition as 

Minimum Essential Coverage for Types 

of Coverage Not Otherwise Designated 

Minimum Essential Coverage in the 

Statute or This Regulation (§ 156.604) 

The proposed rule outlined a process 

by which other types of coverage could 

seek to be recognized as minimum 

essential coverage. Coverage recognized 

as minimum essential coverage through 

this process would need to offer 

substantially the same consumer 

protections as those enumerated in the 

Title I of Affordable Care Act relating to 

non-grandfathered, individual coverage 

to ensure consumers are receiving the 

protections of the Affordable Care Act. 

We solicited comments on the proposed 

‘‘substantially comply’’ standard as it 

applies to other types of individual 

coverage. We also solicited comments 

on the process for recognizing other 

coverage as minimum essential 

coverage. 

In the proposed regulation, sponsors 

of minimum essential coverage must 

also meet other criteria specified by the 

Secretary. We solicited comments on 

the types of criteria the Secretary should 

consider in this process as well as 

whether they should be added to the 

final rule. We proposed that sponsors of 

a plan that seeks to have such coverage 

recognized as minimum essential 

coverage adhere to certain procedures. 

Sponsors would submit to HHS 

electronically the following information: 

(1) Name of the organization sponsoring 

the plan; (2) name and title of the 

individual who is authorized to make, 

and makes, this certification on behalf 

of the organization; (3) address of the 

individual named above; (4) phone 

number of the individual named above; 

(5) number of enrollees; (6) eligibility 

criteria; (7) cost sharing requirements, 

including deductible and out-of-pocket 

maximum; (8) essential health benefits 

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

Affordable Care Act and its 

implementing regulations); and (9) a 

certification that the plan substantially 

complies with the provisions of Title I 

of the Affordable Care Act as applicable 

to non-grandfathered individual health 

insurance coverage. If at any time HHS 

determines that a type of coverage 

previously recognized as minimum 

essential coverage no longer meets the 

coverage requirements, HHS may revoke 

the recognition of such coverage. We 

solicited comments on whether there 

should be an appeal process for 

sponsors of coverage that had the 

minimum essential coverage status 

revoked by the Secretary. We also 

solicited comment on whether this 

appeal process should be available to 

sponsors whose initial request for 

recognition of minimal essential 

coverage status for their coverage was 

denied by HHS. 

The comment and our response are 

set forth below. 

Comment: A commenter suggested 

that the process for designating coverage 

not otherwise designated as minimum 

essential coverage should include 

definitive timelines for the submission 

and consideration of each plan applying 

to be designated at minimum essential 

coverage, opportunities for such plans 

to exchange ideas with HHS, and an 

appeals process for plans that are 

denied. 

Response: We appreciate the 

commenter’s suggestions regarding this 

process and we will take them under 

further consideration while developing 

this administrative process. 

As previously stated, we solicited 

comments on the types of criteria that 

the Secretary should require a sponsor 

to meet in order for HHS to recognize 

the coverage of the organization as 

minimum essential coverage and 

indicated that we might specify criteria 

for sponsoring organizations. We did 

not get any comments specifically 

addressing this issue, and we have 

decided that the focus of the CMS 

review of applications for health 

coverage to be recognized as minimum 

essential coverage will not be on the 

type of organization providing coverage 

but on the extent of the coverage itself 

and the protections provided in the 

coverage. We made minor changes to 

certification requirement to clarify that 

the organization must certify that the 

coverage substantially complies with 

the requirements of title I of the 

Affordable Care Act that apply to nongrandfathered plans in the individual 

market and the organization must 

submit any plan documentation or other 

information that demonstrate that the 

coverage substantially comply with 

these requirements. 

Summary of Regulatory Changes 

We made minor changes to the 

provisions of § 156.604 to clarify that, in 

addition to the organization certifying 

that the coverage substantially complies 

with the requirements of title I of the 

Affordable Care Act that apply to nongrandfathered plans in the individual 

market, the organization must submit 

any plan documentation or other 

information that demonstrates that the 

coverage substantially complies with 

these requirements. 

d. HHS Audit Authority (§ 156.606) 

Under this proposed rule, HHS would 

have the ability to audit plans to ensure 

the accuracy of the certification either 

randomly or when triggered by certain 

information. We solicited comments on 

the proposed procedures and if and 

when audits should be conducted. We 

also solicited comments on whether 

sponsors of the types of coverage that 

have been designated as minimum 

essential coverage in the proposed rule 

should also submit the above 

information required to HHS. 

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Under the proposed rule, once 

recognized as minimum essential 

coverage, a plan would have to provide 

notice to its enrollees, specifying that 

the plan has been recognized as 

minimum essential coverage for the 

purposes of the individual shared 

responsibility provision. The sponsor of 

any plan recognized as minimum 

essential coverage would also be 

required to provide the annual 

information reporting to the IRS 

specified in section 6055 of the Code 

and implementing regulations and 

furnish statements to individuals 

enrolled in such coverage to assist them 

in establishing that they are not liable 

for the shared responsibility payment 

under section 5000A of the Code. We 

requested comments on whether all 

plans and programs designated as 

minimum essential coverage under this 

regulation must provide notice to 

enrollees, or only plans recognized 

through the process in § 156.604 of this 

regulation. 

Comment: A commenter suggested 

that the process for designating coverage 

not otherwise designated as minimum 

essential coverage should include 

definitive timelines for the submission 

and consideration of each plan applying 

to be designated at minimum essential 

coverage, opportunities for such plans 

to exchange ideas with HHS, and an 

appeals process for plans that are 

denied. 

Response: We appreciate the 

commenter’s suggestions regarding this 

process and we will take them under 

further consideration while developing 

this administrative process. 

Summary of Regulatory Changes 

We made minor changes to the 

provisions of section 156.606 to clarify 

the meaning of the final regulation. 

III. Provisions of the Final Regulation 

For the most part, this final rule 

incorporates the provisions of the 

proposed rule. Those provisions of this 

final rule that differ substantively from 

the proposed rule are as follows: 

Changes to § 155.605 

• Modifies eligibility standards for 

the religious conscience exemption such 

that if an exemption is provided to an 

individual under the age of 21, an 

exemption will be provided on a 

continuing basis until the month after 

the individual’s 21st birthday, which 

triggers a corresponding notice and 

opportunity for the individual turning 

21 to file another application to 

maintain this exemption. 

• Clarifies which hardship 

exemptions must be granted by the 

Exchange and which are available solely 

through the tax filing process. 

• Clarifies that hardship exemption 

under paragraph (g)(1) of this section 

must be granted for the month before, 

the month or months during which an 

individual experiences the 

circumstances that qualify as a hardship 

preventing him or her from purchasing 

a qualified health plan, and the month 

after. 

• Clarifies that an eligible employersponsored plan is only considered for 

the lack of affordable coverage based on 

projected income hardship exemption if 

it meets the minimum value standard. 

• Specifies how the Exchange will 

determine the required contribution to 

purchase coverage under an eligible 

employer-sponsored plan or in the 

individual market for the lack of 

affordable coverage based on projected 

income hardship exemption, including 

clarifying that in determining the 

required contribution for an eligible 

employer-sponsored plan, an individual 

who uses tobacco is treated as not 

earning any premium incentive related 

to participation in a wellness program 

designed to prevent or reduce tobacco 

use that is offered by an eligible 

employer-sponsored plan, and wellness 

incentives offered by an eligible 

employer-sponsored plan that do not 

relate to tobacco use are treated as not 

earned. 

• Clarifies that the lack of affordable 

coverage based on projected income 

hardship exemption is only available 

prospectively for the month or months 

of a calendar year after which the 

exemption is requested, and that it will 

be provided for all remaining months in 

a coverage year, notwithstanding any 

change in an individual’s 

circumstances. 

• Adds a hardship exemption for any 

month in which an individual is an 

Indian eligible for services through an 

Indian health care provider, as defined 

in 42 CFR 447.50, or an individual 

eligible for services through the Indian 

Health Service in accordance with 25 

USC 1680c(a), (b), or (d)(3), and 

specifies that the duration of this 

exemption is the same as that for a 

member of an Indian tribe. 

Changes to § 155.610 

• Clarifies that the Exchange must use 

information collected for purposes of 

the eligibility determination for 

enrollment in a QHP and for insurance 

affordability programs in making the 

exemption eligibility determination to 

the extent that the Exchange finds that 

such information is still applicable. 

• Specifies that at a minimum, the 

Exchange must provide a paper 

application process for applications 

submitted prior to October 15, 2014. 

• Clarifies that hardship exemptions 

can also be provided for previous tax 

years after December 31 of a given 

calendar year, noting that the Exchange 

will only accept an application for an 

exemption described in § 155.605(g)(1) 

during one of the 3-calendar years after 

the month or months during which the 

applicant attests that the hardship 

occurred. 

• Clarifies that the Exchange will 

notify an individual to retain records 

that demonstrate the receipt of a 

certificate of exemption, as well as 

records demonstrating his or her 

qualification for the underlying 

exemption. 

Changes to § 155.615 

• Clarifies how the Exchange will 

address a situation in which an 

applicant attests to membership in a 

religious sect or division that is not 

recognized under section 1402(g)(1) of 

the Code. 

• Clarifies how the Exchange will 

address a situation in which an 

applicant attests to membership in an 

organization that is not known to the 

Exchange as a health care sharing 

ministry based on information provided 

by HHS. 

• Provides a process for establishing 

the list of health care sharing ministries 

that meet the statutory standards. 

• Clarifies that the Exchange will not 

find that an applicant’s previous or 

current enrollment in health coverage is 

not reasonably compatible with his or 

her attestation of membership in a 

health care sharing ministry. 

• Clarifies that the Secretary of the 

Treasury will administer the 

exemptions specified in § 155.605(g)(3) 

and (5). 

• Clarifies the applicability of 

verification procedures specified in 45 

CFR subpart D to the lack of affordable 

coverage based on projected income 

hardship exemption. 

• Specifies that the Exchange will use 

the same verification procedures for the 

exemption for an individual who is 

eligible for services through an Indian 

health care provider as it will use for the 

exemption for members of a federallyrecognized tribe. 

• Clarifies when an inconsistency 

process should be triggered when 

certain data sources are not reasonably 

expected to be available. 

• Allows an applicant 90 days to 

present satisfactory documentary 

evidence to resolve an inconsistency. 

• Specifies how an Exchange must 

validate a Social Security number for an 

individual seeking an exemption. 

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39518 Federal Register / Vol. 78, No. 126 / Monday, July 1, 2013 / Rules and Regulations 

3The estimates may be found in the information 

collection request entitled, ‘‘Data Collection to 

Support Eligibility Determinations for Insurance 

Affordability Programs and Enrollment through 

Affordable Insurance Exchanges, Medicaid and 

Children’s Health Insurance Program Agencies.’’ 

4Congressional Budget Office, ‘‘Payments of 

Penalties for Being Uninsured Under the Affordable 

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

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

Indiv_Mandate_Penalty.pdf. 

Changes to § 155.620 

• Specifies that the Exchange will not 

conduct mid-year redeterminations for 

the hardship exemption for an 

individual who has a lack of affordable 

coverage based on projected household 

income, will not require individuals 

receiving this exemption to report 

changes, and will not send periodic 

reminders to report changes to 

individuals who have this exemption. 

• Specifies that the Exchange will 

implement a change resulting from a 

redetermination under this section for 

the month or months after the month in 

which the redetermination occurs, such 

that a certificate that was provided for 

the month in which the redetermination 

occurs, and for prior months remains 

effective. 

Changes to § 155.625 

• Specifies that for applications 

submitted before October 15, 2014, a 

state-based Exchange can be approved if 

relying on HHS to administer the entire 

eligibility process for exemptions, 

provided that the Exchange furnishes 

any information available through the 

Exchange that is necessary for an 

applicant to utilize the process 

administered by HHS, and the Exchange 

call center and Internet Web site assist 

consumers seeking exemptions. 

Changes to § 155.635 

• Clarifies that an Exchange relying 

on HHS to make eligibility 

determinations for exemptions will not 

issue the eligibility notice for 

applications submitted prior to October 

15, 2014. 

Changes to § 156.600 

• Makes minor changes to the 

provisions of 45 CFR § 156.600 to clarify 

the meaning of the regulation. 

Changes to § 156.602 

• Designates self-funded student 

health plans and state high risk pools as 

minimum essential coverage for a one 

year transitional period, and allows selffunded student health plans and state 

high risk pools to apply to be recognized 

as minimum essential coverage through 

the process outlined in § 156.604 of the 

final rule after January 1, 2015. 

• Removes the designation of foreign 

health coverage and AmeriCorps as 

minimum essential coverage. In order to 

be recognized as minimum essential 

coverage, foreign health coverage and 

coverage for AmeriCorps must follow 

the process for recognition explained in 

§ 156.604. 

Changes to § 156.604 

• Makes minor changes to the 

provisions of § 156.604 to clarify the 

meaning of the regulation. 

Changes to § 156.606 

• Makes minor changes to the 

provisions of 45 CFR § 156.606 to clarify 

the meaning of the regulation. 

IV. Collection of Information 

Requirements 

The final rule entitled ‘‘Exchange 

Functions: Eligibility for Exemptions; 

Miscellaneous Minimum Essential 

Coverage Provisions’’ finalizes 

standards with regard to the minimum 

function of an Exchange to perform 

eligibility determinations and issue 

certificates of exemption from the 

individual shared responsibility 

payment. The rule also finalizes 

standards related to eligibility for 

exemptions, including the verification 

and eligibility determination process, 

eligibility redeterminations, options for 

conducting eligibility determinations, 

and reporting related to exemptions. In 

addition, the rule finalizes rules 

designating certain types of coverage as 

minimum essential coverage and 

outlining substantive and procedural 

requirements that other types of 

coverage must fulfill in order to be 

recognized as minimum essential 

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

the Code. 

This section outlines the information 

collection requirements in the proposed 

regulation on which we solicited public 

comment in the exemptions proposed 

rule. We used data from the Bureau of 

Labor Statistics to derive average costs 

for all estimates of salary in establishing 

the information collection requirements. 

Salary estimates included the cost of 

fringe benefits, calculated at 30.4 

percent of salary, which is based on the 

June 2012 Employer Costs for Employee 

Compensation report by the U.S. Bureau 

of Labor Statistics. Additionally, we 

used estimates from the Congressional 

Budget Office to derive estimates of the 

number of exemption applications we 

anticipate Exchanges to receive, and the 

number of exemption eligibility 

determination notifications we 

anticipate Exchanges to generate. 

Finally, this final rule describes an 

information collection requirement for 

which we did not solicit public 

comment in the exemptions proposed 

rule. The information collection 

requirement related to Health Care 

Sharing Ministries will be addressed 

through a separate notice and comment 

process under the Paperwork Reduction 

Act (PRA). 

1. Exemption Application (§ 155.610) 

Throughout this subpart, we specify 

that the Exchange will collect 

attestations from applicants for a 

certificate of exemption. These 

attestations will be collected using the 

application described in § 155.610(a). In 

§ 155.610(a), we provide that the 

Exchange use an application created by 

HHS to collect the information 

necessary for determining eligibility for 

and granting certificates of exemption 

from the individual shared 

responsibility payment. The burden 

associated with this requirement is the 

time and effort estimated for an 

applicant to complete an application. 

The exemption application may be 

available in both paper and electronic 

formats. An electronic application 

process would vary depending on each 

applicant’s circumstances and which 

exemption an applicant is applying for, 

such that an applicant is only presented 

with questions relevant to the 

exemption for which he or she is 

applying. The goal is to solicit sufficient 

information so that in most cases no 

further inquiry will be needed. We 

estimate that on average, it will take .27 

hours (16 minutes) for an application 

filer to complete an application, which 

is based on the estimates created for the 

single, streamlined application for 

enrollment in a QHP 3, with a 90 percent 

electronic/10 percent paper mix (noting 

that no specific application channel is 

specified in this proposed rule). While 

the Congressional Budget Office 4

estimates that 24 million individuals 

would be exempt from the individual 

shared responsibility payment in 2016, 

it is unclear how many individuals will 

seek these exemptions from an 

Exchange. Some of these individuals 

will claim an exemption through the tax 

filing process, others will be exempt but 

not need to file for an exemption (for 

example those below the filing 

threshold), while others will apply for 

and receive an exemption through the 

Exchange. Therefore, of the 24 million 

individuals, we conservatively 

anticipate that up to half will apply for 

an exemption through the Exchange. We 

specifically sought comment on this 

assumption. Accordingly, we estimate 

that approximately 12 million 

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5Massachusetts Health Connector and 

Department of Revenue, ‘‘Data on the Individual 

Mandate, Tax Year 2010’’, June, 2012. Retrieved 

from http://www.mahealthconnector.org. 

applications for exemptions will be 

submitted to the Exchange for calendar 

year 2016, for a total of 3.2 million 

burden hours. We note, however, that 

the Commonwealth of Massachusetts 

saw a very small number of individuals 

apply for exemptions from a similar 

individual shared responsibility 

payment 5. We also note that some 

individuals will apply for an exemption 

but be determined ineligible for an 

exemption, but it is difficult for us to 

estimate this number, and that in an 

unknown number of cases, multiple 

individuals in a single household may 

submit a single application. 

We do not estimate any cost to the 

Exchanges of evaluating the exemption 

applications. For the purposes of this 

estimate, we expect all applications to 

be submitted electronically and 

processed through the system, which 

would result in no additional labor costs 

to evaluate and review the exemption 

applications. We requested comment on 

this assumption. 

We estimate that the cost to develop 

the exemption application will be 

significantly less than the estimated cost 

of developing the coverage application 

because the coverage application takes 

into account additional factors 

necessary in order to perform eligibility 

determinations for insurance 

affordability programs. We also note 

that as with the coverage application, 

HHS will be releasing a model 

application for use by Exchanges, which 

will significantly decrease the burden 

associated with the implementation of 

the application. On average, we estimate 

that the implementation of the 

exemption application will take 

approximately 1,059 hours of software 

development at a labor cost of $98.50 

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

Exchange and a total cost of $1,877,607 

for 18 state-based Exchanges. 

2. Notices (§§ 155.610, 155.615, 

155.620) 

Several provisions in subpart G 

outline specific notices that the 

Exchange will send to individuals 

during the exemption eligibility 

determination process, including the 

notice of eligibility determination 

described in § 155.610(i). The purpose 

of these notices is to alert an applicant 

of his or her eligibility determination for 

an exemption and related actions taken 

by the Exchange. To the extent that an 

applicant is determined eligible for an 

exemption, the notice of eligibility 

determination described in § 155.610(i) 

will serve as the certificate of 

exemption. Accordingly, we do not 

provide a separate burden estimate for 

the certificates of exemption described 

throughout this subpart. When possible, 

we anticipate that the Exchange will 

consolidate notices when multiple 

members of a household are applying 

together and receive an eligibility 

determination at the same time. 

Consistent with 45 CFR 155.230(d), the 

notice may be in paper or electronic 

format, based on the election of an 

individual, will be in writing, and will 

be sent after an eligibility determination 

has been made by the Exchange; these 

are the same standards that are used for 

eligibility notices for enrollment in a 

QHP through the Exchange and for 

insurance affordability programs, as 

described in 45 CFR 155.310(g). It is 

difficult to estimate the number of 

applicants that will opt for electronic 

versus paper notices, although we 

anticipate that a large volume of 

applicants will request electronic 

notification. We estimated the 

associated mailing costs for the time and 

effort needed to mail notices in bulk to 

applicants who request paper notices. 

We expect that the exemption 

eligibility determination notice will be 

dynamic and include information 

tailored to all possible outcomes of an 

application throughout the eligibility 

determination process. A health policy 

analyst, senior manager, and an attorney 

would review the notice. HHS is 

currently developing model notices, 

which will decrease the burden on 

Exchanges associated with developing 

such notices. If a state opts to use the 

model notices provided by HHS, we 

estimate that the Exchange effort related 

to the development and implementation 

of the exemption eligibility 

determination notice will necessitate 44 

hours from a health policy analyst at an 

hourly cost of $49.35 to learn 

exemptions rules and draft notice text; 

20 hours from an attorney at an hourly 

cost of $90.14, and four hours from a 

senior manager at an hourly cost of 

$79.08 to review the notice; and 32 

hours from a computer programmer at 

an hourly cost of $52.50 to conduct the 

necessary development. In total, we 

estimate that this will take a total of 100 

hours for each Exchange, at a cost of 

approximately $5,971 per Exchange and 

a total cost of $107,469 for 18 statebased Exchanges. For most notices 

outlined in subpart G of this proposed 

rule, we estimate that the notice 

development as outlined in the 

paragraph above, including the systems 

programming, would take each 

Exchange an estimated 100 hours to 

complete in the first year. 

We expect that the burden on the 

Exchange to maintain this notice will be 

significantly lower than to develop it. 

We estimate that it will take each 

professional approximately a quarter of 

the time to maintain the notice as 

compared to developing the notice. 

Accordingly, we estimate the 

maintenance of the eligibility 

determination notice in subsequent 

years will necessitate 11 hours from a 

health policy analyst at an hourly cost 

of $49.35; 5 hours from an attorney at 

an hourly cost of $90.14; one hour from 

a senior manager at an hourly cost of 

$79.08 and eight hours from a computer 

programmer at an hourly cost of $52.50. 

In total, we estimate that this will take 

a total of 25 hours for each Exchange, 

at a cost of approximately $1,492 per 

Exchange and a total cost of $26,856 for 

18 state-based Exchanges. 

Pursuant to section 5000A of the 

Code, the IRS must collect the necessary 

data from QHP issuers to determine the 

national average bronze monthly 

premiums in order to assist in the 

computation of the shared responsibility 

payment. To assist the IRS, HHS must 

request the monthly premium for all 

bronze level QHP’s through all 51 

Exchanges from QHP issuers. The 

burden associated on states and QHP 

issuers is already included in the 

information collection request entitled, 

‘‘Initial Plan Data Collection to Support 

QHP Certification and other Financial 

Management and Exchange 

Operations,’’ and as such, we do not 

include a separate burden estimate here. 

As this information is already being 

collected for another purpose, there will 

be no additional burden on QHP issuers 

or states. 

3. Electronic Transmissions (§§ 155.615, 

155.630) 

Section 155.615 specifies that the 

Exchange will utilize applicable 

procedures established under subpart D 

of the Exchange final rule in order to 

obtain data through electronic data 

sources for purposes of determining 

eligibility for and granting certificates of 

exemption. This involves the electronic 

transmission of data through procedures 

established under subpart D in order to 

verify an applicant’s incarceration 

status, to verify eligibility for qualifying 

coverage in an eligible employersponsored plan, and to determine 

eligibility for advance payments of the 

premium tax credit. Section 155.615 

also includes additional electronic 

transmissions that are specific to the 

eligibility process for exemptions, 

including those related to health care 

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39520 Federal Register / Vol. 78, No. 126 / Monday, July 1, 2013 / Rules and Regulations 

sharing ministries and religious 

conscience. In section 155.630, we 

proposed that the Exchange will provide 

relevant information to IRS regarding 

certificates of exemption for the 

purposes of tax administration, such as 

the name and other identifying 

information for the individual who 

received the exemption. As we expect 

that these transmissions of information 

will all be electronic, and through the 

same channels used for reporting to IRS 

established in § 155.340, we do not 

anticipate for there to be any additional 

burden other than that which is 

required to design the overall eligibility 

and enrollment system. We do not 

provide a burden estimate for the 

electronic transmissions, as the cost is 

incorporated into the development of 

the IT system for the Exchange 

eligibility and enrollment system. 

4. Verification and Change Reporting 

(§§ 155.615, 155.620) 

The Exchange will use the same 

verification processes for new 

applications and for changes that are 

reported during the year. This includes 

the process for situations in which the 

Exchange is unable to verify the 

information necessary to determine an 

applicant’s eligibility, which is 

described in section 155.615(g). It is not 

possible at this time to provide 

estimates for the number of applicants 

for whom additional information will be 

required to complete an eligibility 

determination, but we anticipate that 

this number will decrease as applicants 

become more familiar with the 

eligibility process for exemptions and as 

more data become available 

electronically. As such, for now, we 

estimate the burden associated with the 

processing of documentation for one 

submission from an applicant. We note 

that the burden associated with this 

provision is one hour for an individual 

to collect and submit documentation, 

and 12 minutes for eligibility support 

staff at an hourly cost of $28.66 to 

review the documentation, for a total 

cost of $6 per document submission. 

5. ICRs Regarding Health Care Sharing 

Ministries (§ 155.615) 

In order to facilitate the provision of 

an exemption for membership in a 

health care sharing ministry to the 

members of such ministry, we specify in 

§ 155.615(c)(2) that an organization that 

believes that it meets the statutory 

standards to be considered a health care 

sharing ministry will submit certain 

information to HHS. We are aware of 

four organizations that have made 

public statements regarding their status 

as a health care sharing ministry. We 

note that we will account for the 

additional burden associated with 

healthcare sharing ministries in a future 

information collection request that will 

go through the requisite notice and 

comment period and subsequent OMB 

review and approval process. 

6. ICRs Regarding Agreements 

(§ 155.625) 

These provisions specify that an 

Exchange that decides to utilize the 

HHS service for making eligibility 

determinations for exemptions for 

application submitted on or after 

October 15, 2014, will enter into a 

written agreement with HHS. These 

agreements are necessary to ensure that 

the use of the service will minimize 

burden on individuals, ensure prompt 

determinations of eligibility without 

undue delay, and provide for secure, 

timely transfers of application 

information. 

The burden associated with these 

provisions is the time and effort 

necessary for the Exchange to establish 

an agreement with HHS. We estimate 

that the creation of the necessary 

agreement will necessitate 35 hours 

from a health policy analyst at an hourly 

cost of $49.35, and 35 hours from an 

operations analyst at an hourly cost of 

$54.45 to develop the agreement; and 30 

hours from an attorney at an hourly cost 

of $90.14 and five hours from a senior 

manager at an hourly cost of $79.14 to 

review the agreement. For the purpose 

of this estimate, we assume that the 18 

state-based Exchanges will utilize the 

HHS service for exemptions. 

Accordingly, the total burden on the 

Exchange associated with the creation of 

the necessary agreement will be 

approximately 105 hours and $6,733 per 

Exchange, for a total cost of $121,194 for 

18 Exchanges. 

7. ICRs Regarding Minimum Essential 

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

Organizations that currently provide 

health coverage that are not statutorily 

specified and not designated as 

minimum essential coverage in this 

regulation may submit a request to CMS 

that their coverage be recognized as 

minimum essential coverage. As 

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

organizations would have to 

electronically submit to CMS 

information regarding their plans and 

certify that their plans meet 

substantially all of the requirements in 

the Title I of Affordable Care Act, as 

applicable to non-grandfathered, 

individual coverage. Some commenters 

suggested that organizations submitting 

such requests provide more information 

regarding their plans rather than simply 

certifying that their plans meet 

substantially all of the requirements in 

the Title I of Affordable Care Act. We 

have revised the certification to request 

plan documentation or other 

information that demonstrate that the 

coverage sponsored by the organization 

substantially complies with the 

provisions of Title I of the Affordable 

Care Act applicable to nongrandfathered individual health 

insurance coverage. 

We sought comments on how many 

organizations are likely to submit such 

requests but did not receive any 

information that would allow us to 

estimate the number of requests. We 

assume that at least 10 organizations 

will submit such a request. The burden 

associated with this certification 

includes the time needed to collect and 

input the necessary plan information, 

and maintain a copy for recordkeeping 

by clerical staff and for a manager and 

legal counsel to review it and for a 

senior executive to review and sign it. 

The certification and attachments will 

be submitted to CMS electronically at 

minimal cost. We estimate that it will 

take a combined total of 5.25 hours (4 

hours for clerical staff at an hourly cost 

of $30.64, 0.5 hours for a manager at an 

hourly cost of $55.22, 0.5 hours for legal 

counsel at an hourly cost of $83.10 and 

0.25 hours for a senior executive at an 

hourly cost of $112.43) to prepare and 

submit the information and certification 

to CMS and to retain a copy for 

recordkeeping purposes. The total cost 

for one organization is estimated to be 

approximately $220. Therefore, the total 

burden for 10 organizations will be 52.5 

hours, with an equivalent cost of $2,200. 

Section 156.604(d) specifies that 

sponsoring organizations whose health 

coverage are recognized as minimum 

essential coverage will have to provide 

a notice to enrollees informing them 

that the plan has been recognized as 

minimum essential coverage for the 

purposes of the Code. The notice 

requirement may be satisfied by 

inserting a statement into existing plan 

documents. Plan documents are usually 

reviewed and updated annually before a 

new plan year begins. Sponsoring 

organizations may insert the statement 

in their plan documents at that time at 

minimal cost. Once the notice is 

included in the plan documents the first 

year, no additional cost will be incurred 

in future years. Therefore this notice is 

not subject to the Paperwork Reduction 

Act of 1995. Commenters suggested that 

a sponsoring organization should be 

required to provide a notice to enrollees 

if its request is denied and its plan is not 

recognized as minimum essential 

coverage. To minimize the burden on 

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sponsoring organizations, we are not 

requiring such a notice. 

The sponsor of any type of coverage 

recognized as minimum essential 

coverage is also required to provide the 

annual information reporting to the IRS 

specified in section 6055 of the Code 

and furnish statements to individuals 

enrolled in such coverage to assist them 

in establishing that they are not liable 

for the shared responsibility payment 

under section 5000A of the Code. The 

Department of Treasury plans to publish 

for public comment, in accordance with 

the Paperwork Reduction Act of 1995 

(44 U.S.C. Chapter 35), the required 

ICRs in the near future. 

TABLE 1—ANNUAL INFORMATION COLLECTION REQUIREMENTS

Regulation section(s) Description Number of 

respondents 

Number of 

responses 

Burden per 

response 

(hours) 

Total annual 

burden 

(hours) 

§ 155.610 ............................... Application Development .......................... 18 18 1,059 19,062 

§ 155.610 ............................... Application Completion ............................. 12,000,000 12,000,000 0 .27 3,200,000 

§§ 155.610, 155.620 ............. Notice Development and Maintenance .... 18 18 125 2,250 

§ 155.620 ............................... Change Reporting .................................... 1 1 0 .2 0 .2 

§ 155.625 ............................... Agreements .............................................. 18 18 105 1,890 

§§ 156.604(a)(3) .................... Minimum Essential Coverage Certification.10 10 5 .25 52 .5 

Total ............................... ................................................................... ........................ ........................ .......................... 3,223,255 

C. Submission of PRA-Related 

Comments 

We have submitted a copy of this final 

rule to OMB for its review of the rule’s 

information collection and 

recordkeeping requirements. These 

requirements are not effective until they 

have been approved by OMB. 

To obtain copies of the supporting 

statement and any related forms for the 

proposed paperwork collections 

referenced above, access the CMS Web 

site at http://www.cms.gov/Regulationsand-Guidance/Legislation/ 

PaperworkReductionActof1995/PRAListing.html, or call the Reports 

Clearance Office at 410–786–1326. 

V. Summary of Regulatory Impact 

Statement 

A. Summary 

As stated earlier in this preamble, this 

final rule implements certain functions 

of the Exchanges. These specific 

statutory functions include determining 

eligibility for and granting certificates of 

exemption from the individual shared 

responsibility payment described in 

section 5000A of the Internal Revenue 

Code. Additionally, this final rule 

implements the responsibility of the 

Secretary of Health and Human 

Services, in coordination with the 

Secretary of the Treasury, to designate 

other health benefits coverage as 

minimum essential coverage by 

designating certain coverage as 

minimum essential coverage. It also 

outlines substantive and procedural 

requirements that other types of 

individual coverage must fulfill in order 

to be recognized as minimum essential 

coverage under the Internal Revenue 

Code. 

HHS has crafted this rule to 

implement the protections intended by 

Congress in an economically efficient 

manner. We have examined the effects 

of this rule as required by Executive 

Order 12866 (58 FR 51735, September 

1993, Regulatory Planning and Review), 

the Regulatory Flexibility Act (RFA) 

(September 19, 1980, Pub. L. 96–354), 

section 1102(b) of the Social Security 

Act, the Unfunded Mandates Reform 

Act of 1995 (Pub. L. 104–4), Executive 

Order 13132 on Federalism, and the 

Congressional Review Act (5 U.S.C. 

804(2)). In accordance with OMB 

Circular A–4, CMS has quantified the 

benefits, costs and transfers where 

possible, and has also provided a 

qualitative discussion of some of the 

benefits, costs and transfers that may 

stem from this final rule. 

B. Executive Orders 13563 and 12866 

Executive Order 12866 (58 FR 51735) 

directs agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects; distributive impacts; and 

equity). Executive Order 13563 (76 FR 

3821, January 21, 2011) is supplemental 

to and reaffirms the principles, 

structures, and definitions governing 

regulatory review as established in 

Executive Order 12866. 

Section 3(f) of Executive Order 12866 

defines a ‘‘significant regulatory action’’ 

as an action that is likely to result in a 

final rule—(1) having an annual effect 

on the economy of $100 million or more 

in any one year, or adversely and 

materially affecting a sector of the 

economy, productivity, competition, 

jobs, the environment, public health or 

safety, or State, local or tribal 

governments or communities (also 

referred to as ‘‘economically 

significant’’); (2) creating a serious 

inconsistency or otherwise interfering 

with an action taken or planned by 

another agency; (3) materially altering 

the budgetary impacts of entitlement 

grants, user fees, or loan programs or the 

rights and obligations of recipients 

thereof; or (4) raising novel legal or 

policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in the Executive 

Order. 

A regulatory impact analysis (RIA) 

must be prepared for major rules with 

economically significant effects ($100 

million or more in any 1 year), and a 

‘‘significant’’ regulatory action is subject 

to review by the OMB. This rule has 

been designated a ‘‘significant 

regulatory action’’ under Executive 

Order 12866. Accordingly, OMB has 

reviewed this final regulation pursuant 

to the Executive Order. 

1. Need for Regulatory Action 

This final rule sets forth standards 

and processes under which the 

Exchange will conduct eligibility 

determinations for and grant certificates 

of exemption from the individual shared 

responsibility payment. Furthermore, it 

supports and complements rulemaking 

conducted by the Secretary of the 

Treasury with respect to section 5000A 

of the Code, as added by section 1501(b) 

of the Affordable Care Act. The intent of 

this rule is to implement the relevant 

provisions while continuing to afford 

states substantial discretion in the 

design and operation of an Exchange, 

with greater standardization provided 

where directed by the statute or where 

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39522 Federal Register / Vol. 78, No. 126 / Monday, July 1, 2013 / Rules and Regulations 

there are compelling practical, 

efficiency, or consumer protection 

reasons. In addition, this final rule 

provides standards for determining 

whether certain other types of health 

insurance coverage constitute minimum 

essential coverage and procedures for 

sponsors to follow for a plan to be 

identified as minimum essential 

coverage under section 5000A of the 

Code. This rule also designates certain 

types of existing health coverage as 

minimum essential coverage. Other 

types of coverage, not statutorily 

specified and not designated as 

minimum essential coverage in this 

regulation, may be recognized as 

minimum essential coverage if certain 

substantive and procedural 

requirements are met as set forth in this 

rule. 

2. Summary of Impacts 

In developing this final rule, HHS 

carefully considered its potential effects 

including costs and benefits. Because of 

data limitations, HHS did not attempt to 

quantify the benefits, costs and transfers 

resulting from this final rule. 

Nonetheless, HHS was able to identify 

several potential impacts which are 

discussed qualitatively below. 

The exemption provisions of this final 

rule set forth how and what exemptions 

can be received through the Exchange. 

Given the statute, these rules would 

generate exemption request activity; the 

final rules could also potentially affect 

the amount of shared responsibility 

payments made in a given year and the 

number of individuals who would 

enroll in health insurance plans to avoid 

shared responsibility payments. The 

impact of the minimum essential 

coverage provisions would be similar; 

individuals whose coverage would be 

designated minimum essential coverage, 

under the authority of the Secretary of 

Health and Human Services to designate 

other health benefit coverage as 

minimum essential coverage, would, in 

the absence of the rule, pay shared 

responsibility payments or switch 

health insurance coverage so as not to 

incur those penalties. 

As noted in our discussion, above, of 

information collection requirements, 

while CBO estimates that 24 million 

individuals would be exempt from the 

penalty in 2016, it is unclear how many 

individuals will seek these exemptions 

from an Exchange. These submissions 

would be associated with a variety of 

effects, including: costs to Exchanges to 

review the exemption requests; costs to 

applicants to request exemptions and 

retain documents; potential effects on 

enrollment in health coverage and its 

benefits; and a transfer from the federal 

government to individuals receiving 

exemptions in cases in which there is a 

foregone shared responsibility payment. 

We note that the cost to an applicant 

of submitting a request and retaining 

documents is bounded by the expected 

shared responsibility payment; 

otherwise, he or she would not 

necessarily apply for the exemption. 

Though we lack data to precisely 

characterize the effects of these 

provisions, we note that the potential 

number of individuals seeking 

exemptions through the Exchange could 

place the overall impact of the final rule 

over the $100 million threshold for 

economic significance, even at a low 

economic cost per individual. 

The minimum essential coverage 

provisions included in this final rule 

could lead to transfers from the federal 

government to affected individuals (in 

this case, individuals whose coverage is 

designated to be minimum essential 

coverage) and have effects on health 

coverage enrollment (for example, 

decreased switching between plans). 

Decreased switching between plans 

would entail time savings for affected 

individuals and uncertain effects on 

premium payments and use of medical 

services and products. We currently 

lack data to estimate the number of 

individuals whose coverage would be 

designated minimum essential coverage 

by this rule. 

C. Alternatives Considered 

Under the Executive Order, HHS is 

required to consider alternatives to 

issuing rules and alternative regulatory 

approaches. HHS considered the 

regulatory alternatives below: 

1. Grant Certificates for All Categories of 

Exemptions 

Section 155.605 provides the 

eligibility standards for exemptions that 

will be granted by the Exchange. The 

preamble to this section notes that 

Exchanges will not grant certificates of 

exemption in four categories: (1) Lack of 

affordable coverage; (2) household 

income below the filing threshold; (3) 

not lawfully present; and (4) short 

coverage gaps. Also, Exchanges will not 

grant certificates of exemptions for 

certain hardship exemptions, 

specifically § 155.605(g)(3) and (5). 

These exemptions instead are solely 

available during the tax filing process, 

as we believe that the IRS is in a better 

position to issue these exemptions. 

The alternative model would specify 

that the Exchange would provide 

certificates of exemption in all nine 

categories described in section 5000A of 

the Code. This alternative model was 

not selected for practical and 

administrative reasons; the specific 

reasons for taking this approach are 

discussed in the preamble associated 

with this section of the final regulation. 

For example, for certain categories of 

exemptions, the information needed 

will only be available on a retrospective 

basis, and is most efficiently available 

through the tax filing process. Thus, we 

believe that the least burdensome 

approach for individuals and Exchanges 

is to make these exemptions available 

only through the tax filing process. 

2. Designation of State High Risk Pools, 

Self-Funded Student Health Plans and 

AmeriCorps as Minimum Essential 

Coverage 

We considered designating state high 

risk pools, self-funded student health 

plans, foreign health coverage and 

AmeriCorps as minimum essential 

coverage in section 156.602. After 

careful review of comments received, 

state high risk pools and self-funded 

student health plans will be designated 

as minimum essential coverage for plan 

or policy years beginning on or before 

December 31, 2014. For coverage 

beginning after December 31, selffunded student health plans and state 

high risk pools may apply to be 

recognized as minimum essential 

coverage. HHS hopes that during this 

transitional year, such plans will 

voluntarily adopt Affordable Care Act 

consumer protections to ensure their 

qualification as minimum essential 

coverage. We also considered 

automatically designating AmeriCorps 

and foreign health coverage as 

minimum essential coverage but did not 

adopt that policy in this final rule. 

These types of coverage may be 

recognized as minimum essential 

coverage through the certification 

process outlined in § 156.604 of this 

final rule. We believe that the options 

adopted in this final rule provide the 

best balance between allowing 

individuals to retain their current 

coverage and ensuring that they receive 

the consumer protections in the 

Affordable Care Act. 

VI. Regulatory Flexibility Act 

The Regulatory Flexibility Act (5 

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

agencies to prepare an initial regulatory 

flexibility analysis to describe the 

impact of the 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-formstockstill on DSK4VPTVN1PROD with RULES3

Federal Register / Vol. 78, No. 126 / Monday, July 1, 2013 / Rules and Regulations 39523 

profit organization that is not dominant 

in its field; or (3) a small government 

jurisdiction with a population of less 

than 50,000. States and individuals are 

not included in the definition of ‘‘small 

entity.’’ HHS uses as its measure of 

significant economic impact on a 

substantial number of small entities a 

change in revenues of more than 3 to 5 

percent. As the burden for this final 

regulation falls on either Exchanges or 

individuals, the finalized regulations 

will not have a significant economic 

impact on a substantial number of small 

entities, and therefore, a regulatory 

flexibility analysis is not required. 

VII. Unfunded Mandates 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 (UMRA) 

requires that agencies assess anticipated 

costs and benefits before issuing any 

rule whose mandates require spending 

in any 1 year of $100 million in 1995 

dollars, updated annually for inflation, 

by state, local, or tribal governments, in 

the aggregate, or by the private sector. In 

2013, that threshold is approximately 

$141 million. This final rule does not 

mandate expenditures by state 

governments, local governments, tribal 

governments, in the aggregate, or the 

private sector, of $141 million. The 

majority of state, local, and private 

sector costs related to implementation of 

the Affordable Care Act were described 

in the RIA accompanying the March 

2012 Medicaid eligibility rule. 

Furthermore, this final rule does not set 

any mandate on states to set up an 

Exchange. 

VIII. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a final 

rule that imposes substantial direct 

effects on states, preempts state law, or 

otherwise has federalism implications. 

We note again that the impact of 

changes related to implementation of 

the Affordable Care Act was described 

in the RIA associated with the Exchange 

final rule. As discussed in the Exchange 

final rule RIA, we have consulted with 

states to receive input on how the 

various Affordable Care Act provisions 

codified in this proposed rule would 

affect states. 

Because states have flexibility in 

designing their Exchange, state 

decisions will ultimately influence both 

administrative expenses and overall 

premiums. However, because states are 

not required to create an Exchange, 

these costs are not mandatory. For states 

electing to create an Exchange, the 

initial costs of the creation of the 

Exchange will be funded by Exchange 

Planning and Establishment Grants. 

After this time, Exchanges will be 

financially self-sustaining with revenue 

sources left to the discretion of the state. 

In the Department’s view, while this 

proposed rule does not impose 

substantial direct costs on state and 

local governments, it has federalism 

implications due to direct effects on the 

distribution of power and 

responsibilities among the state and 

federal governments relating to 

determining standards relating to health 

insurance coverage (that is, for QHPs) 

that is offered in the individual and 

small group markets. Each state electing 

to establish a state-based Exchange must 

adopt the federal standards contained in 

the Affordable Care Act and in this 

proposed rule, or have in effect a state 

law or regulation that implements these 

federal standards. However, the 

Department anticipates that the 

federalism implications (if any) are 

substantially mitigated because states 

have choices regarding the structure and 

governance of their Exchanges. 

Additionally, the Affordable Care Act 

does not require states to establish an 

Exchange; but if a state elects not to 

establish an Exchange or the state’s 

Exchange is not approved, HHS, will 

establish and operate an Exchange in 

that state. Additionally, states will have 

the opportunity to participate in state 

Partnership Exchanges that would allow 

states to leverage work done by other 

states and the federal government, and 

will be able to leverage a federallymanaged service for eligibility 

determination for exemptions. 

In compliance with the requirement 

of Executive Order 13132 that agencies 

examine closely any policies that may 

have federalism implications or limit 

the policy making discretion of the 

states, the Department has engaged in 

efforts to consult with and work 

cooperatively with affected states, 

including participating in conference 

calls with and attending conferences of 

the National Association of Insurance 

Commissioners, and consulting with 

state officials on an individual basis. 

Pursuant to the requirements set forth 

in section 8(a) of Executive Order 

13132, and by the signatures affixed to 

this regulation, the Department certifies 

that CMS has complied with the 

requirements of Executive Order 13132 

for the attached final regulation in a 

meaningful and timely manner. 

IX. Congressional Review Act 

This rule is subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (5 

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

before a rule can take effect, the federal 

agency promulgating the rule shall 

submit to each House of the Congress 

and to the Comptroller General a report 

containing a copy of the rule along with 

other specified information, and has 

been transmitted to the Congress and 

the Comptroller General for review. 

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. 

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: 

PART 155—EXCHANGE 

ESTABLISHMENT STANDARDS AND 

OTHER RELATED STANDARDS 

UNDER THE AFFORDABLE CARE ACT 

■ 1. The authority citation for part 155 

continues to read as follows: 

Authority: Title I of the Affordable Care 

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

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

1411, 1412, 1413, Pub. L. 111–148, 124 Stat. 

119 (42 U.S.C. 18021–18024, 18031–18033, 

18041–18042, 18051, 18054, 18071, and 

18081–18083. 

■ 2. Amend § 155.20 by revising the 

introductory text to paragraph (1) for the 

definition of ‘‘Applicant’’ and revising 

the definition of ‘‘Application filer’’ to 

read as follows: 

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39524 Federal Register / Vol. 78, No. 126 / Monday, July 1, 2013 / Rules and Regulations 

§ 155.20 Definitions. 

* * * * * 

Applicant means: 

(1) An individual who is seeking 

eligibility for him or herself through an 

application submitted to the Exchange, 

excluding those individuals seeking 

eligibility for an exemption from the 

individual shared responsibility 

payment pursuant to subpart G of this 

part, or transmitted to the Exchange by 

an agency administering an insurance 

affordability program for at least one of 

the following: 

* * * * * 

Application filer means an applicant, 

an adult who is in the applicant’s 

household, as defined in 42 CFR 

435.603(f), or family, as defined in 26 

CFR 1.36B–1(d), an authorized 

representative of an applicant, or if the 

applicant is a minor or incapacitated, 

someone acting responsibly for an 

applicant, excluding those individuals 

seeking eligibility for an exemption 

from the individual shared 

responsibility payment pursuant to 

subpart G of this part. 

* * * * * 

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

read as follows: 

§ 155.200 Functions of an Exchange. 

(a) General requirements. The 

Exchange must perform the minimum 

functions described in this subpart and 

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

* * * * * 

■ 4. Add subpart G to part 155 to read 

as follows: 

Subpart G—Exchange Functions in the 

Individual Market: Eligibility Determinations 

for Exemptions. 

Sec. 

155.600 Definitions and general 

requirements. 

155.605 Eligibility standards for 

exemptions. 

155.610 Eligibility process for exemptions. 

155.615 Verification process related to 

eligibility for exemptions. 

155.620 Eligibility redeterminations for 

exemptions during a calendar year. 

155.625 Options for conducting eligibility 

determinations for exemptions. 

155.630 Reporting. 

155.635 Right to appeal. 

Subpart G—Exchange Functions in the 

Individual Market: Eligibility 

Determinations for Exemptions 

§ 155.600 Definitions and general 

requirements. 

(a) Definitions. For purposes of this 

subpart, the following terms have the 

following meaning: 

Applicant means an individual who is 

seeking an exemption for him or herself 

through an application submitted to the 

Exchange. 

Application filer means an applicant, 

an individual who is liable for the 

shared responsibility payment in 

accordance with section 5000A of the 

Code for an applicant, an authorized 

representative, or if the applicant is a 

minor or incapacitated, someone acting 

responsibly for an applicant. 

Exemption means an exemption from 

the shared responsibility payment. 

Health care sharing ministry has the 

same meaning as it does in section 

5000A(d)(2)(B)(ii) of the Code. 

Indian tribe has the same meaning as 

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

Required contribution has the same 

meaning as it does in section 

5000A(e)(1)(B) of the Code. 

Shared responsibility payment means 

the payment imposed with respect to a 

non-exempt individual who does not 

maintain minimum essential coverage 

in accordance with section 5000A(b) of 

the Code. 

Tax filer has the same meaning as it 

does in § 155.300(a). 

(b) Attestation. For the purposes of 

this subpart, any attestation that an 

applicant is to provide under this 

subpart may be made by the application 

filer on behalf of the applicant. 

(c) Reasonably compatible. For 

purposes of this subpart, the Exchange 

must consider information through 

electronic data sources, other 

information provided by the applicant, 

or other information in the records of 

the Exchange to be reasonably 

compatible with an applicant’s 

attestation if the difference or 

discrepancy does not impact the 

eligibility of the applicant for the 

exemption or exemptions for which he 

or she applied. 

(d) Accessibility. Information, 

including notices, forms, and 

applications, must be provided to 

applicants in accordance with the 

standards specified in § 155.205(c). 

(e) Notices. Any notice required to be 

sent by the Exchange to an individual in 

accordance with this subpart must be 

provided in accordance with the 

standards specified in § 155.230. 

§ 155.605 Eligibility standards for 

exemptions. 

(a) Eligibility for an exemption 

through the Exchange. Except as 

specified in paragraph (g) of this 

section, the Exchange must determine 

an applicant eligible for and issue a 

certificate of exemption for any month 

if the Exchange determines that he or 

she meets the requirements for one or 

more of the categories of exemptions 

described in this section for at least one 

day of the month. 

(b) Duration of single exemption. 

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

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

Exchange may provide a certificate of 

exemption only for the calendar year in 

which an applicant submitted an 

application for such exemption. 

(c) Religious conscience. (1) The 

Exchange must determine an applicant 

eligible for an exemption for any month 

if the applicant is a member of a 

recognized religious sect or division 

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

Code, and an adherent of established 

tenets or teachings of such sect or 

division, for such month in accordance 

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

(2) Duration of exemption for religious 

conscience. (i) The Exchange must grant 

the certificate of exemption specified in 

this paragraph to an applicant who 

meets the standards provided in 

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

month on a continuing basis, until the 

month after the month of the 

individual’s 21st birthday, or until such 

time that an individual reports that he 

or she no longer meets the standards 

provided in paragraph (c)(1) of this 

section. 

(ii) If the Exchange granted a 

certificate of exemption in this category 

to an applicant prior to his or her 

reaching the age of 21, the Exchange 

must send the applicant a notice upon 

reaching the age of 21 informing the 

applicant that he or she must submit a 

new exemption application to maintain 

the certificate of exemption. 

(3) The Exchange must make an 

exemption in this category available 

prospectively or retrospectively. 

(d) Membership in a health care 

sharing ministry. (1) The Exchange must 

determine an applicant eligible for an 

exemption for a month if for such 

month the applicant is a member of a 

health care sharing ministry as defined 

in section 5000A(d)(2)(B)(ii) of the 

Code. 

(2) The Exchange must make an 

exemption in this category available 

only retrospectively. 

(e) Incarceration. (1) The Exchange 

must determine an applicant eligible for 

an exemption for a month if he or she 

meets the standards in section 

5000A(d)(4) of the Code for such month. 

(2) The Exchange must make an 

exemption in this category available 

only retrospectively. 

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

The Exchange must determine an 

applicant eligible for an exemption for 

any month if he or she is a member of 

an Indian tribe, as defined in section 

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

as provided in section 5000A(e)(3) of 

the Code. 

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(2) Duration of exemption for 

membership in an Indian tribe. The 

Exchange must grant the exemption 

specified in this paragraph to an 

applicant who meets the standards 

specified in paragraph (f)(1) of this 

section for a month on a continuing 

basis, until such time that the applicant 

reports that he or she no longer meets 

the standards provided in paragraph 

(f)(1) of this section. 

(3) The Exchange must make an 

exemption available in this category 

prospectively or retrospectively. 

(g) Hardship—(1) General. The 

Exchange must grant a hardship 

exemption to an applicant eligible for an 

exemption for at least the month before, 

a month or months during which, and 

the month after, if the Exchange 

determines that— 

(i) He or she experienced financial or 

domestic circumstances, including an 

unexpected natural or human-caused 

event, such that he or she had a 

significant, unexpected increase in 

essential expenses that prevented him 

or her from obtaining coverage under a 

qualified health plan; 

(ii) The expense of purchasing a 

qualified health plan would have 

caused him or her to experience serious 

deprivation of food, shelter, clothing or 

other necessities; or 

(iii) He or she has experienced other 

circumstances that prevented him or her 

from obtaining coverage under a 

qualified health plan. 

(2) Lack of affordable coverage based 

on projected income. The Exchange 

must determine an applicant eligible for 

an exemption for a month or months 

during which he or she, or another 

individual the applicant attests will be 

included in the applicant’s family, as 

defined in 26 CFR 1.36B–1(d), is unable 

to afford coverage in accordance with 

the standards specified in section 

5000A(e)(1) of the Code, provided that— 

(i) Eligibility for this exemption is 

based on projected annual household 

income; 

(ii) An eligible employer-sponsored 

plan is only considered under 

paragraphs (g)(2)(iii) and (iv) of this 

section if it meets the minimum value 

standard described in § 156.145 of this 

subchapter. 

(iii) For an individual who is eligible 

to purchase coverage under an eligible 

employer-sponsored plan, the Exchange 

determines the required contribution for 

coverage such that— 

(A) An individual who uses tobacco is 

treated as not earning any premium 

incentive related to participation in a 

wellness program designed to prevent or 

reduce tobacco use that is offered by an 

eligible employer-sponsored plan; 

(B) Wellness incentives offered by an 

eligible employer-sponsored plan that 

do not relate to tobacco use are treated 

as not earned; 

(C) In the case of an employee who is 

eligible to purchase coverage under an 

eligible employer-sponsored plan 

sponsored by the employee’s employer, 

the required contribution is the portion 

of the annual premium that the 

employee would pay (whether through 

salary reduction or otherwise) for the 

lowest cost self-only coverage. 

(D) In the case of an individual who 

is eligible to purchase coverage under 

an eligible employer-sponsored plan as 

a member of the employee’s family, as 

defined in 26 CFR 1.36B–1(d), the 

required contribution is the portion of 

the annual premium that the employee 

would pay (whether through salary 

reduction or otherwise) for the lowest 

cost family coverage that would cover 

the employee and all other individuals 

who are included in the employee’s 

family who have not otherwise been 

granted an exemption through the 

Exchange. 

(iv) For an individual who is 

ineligible to purchase coverage under an 

eligible employer-sponsored plan, the 

Exchange determines the required 

contribution for coverage in accordance 

with section 5000A(e)(1)(B)(ii) of the 

Code, inclusive of all members of the 

family, as defined in 26 CFR 1.36B–1(d), 

who have not otherwise been granted an 

exemption through the Exchange and 

who are not treated as eligible to 

purchase coverage under an eligible 

employer-sponsored plan, in accordance 

with paragraph (g)(2)(ii) of this section; 

and 

(v) The applicant applies for this 

exemption prior to the last date on 

which he or she could enroll in a QHP 

through the Exchange for the month or 

months of a calendar year for which the 

exemption is requested. 

(vi) The Exchange must make an 

exemption in this category available 

prospectively, and provide it for all 

remaining months in a coverage year, 

notwithstanding any change in an 

individual’s circumstances. 

(3) Filing threshold. The IRS may 

allow an applicant to claim an 

exemption for a calendar year if he or 

she was not required to file an income 

tax return for such calendar year 

because his or her gross income was 

below the filing threshold, but who 

nevertheless filed, claimed a dependent 

with a filing requirement, and as a 

result, had household income exceeding 

the applicable return filing threshold 

described in section 5000A(e)(2) of the 

Code; 

(4) Ineligible for Medicaid based on a 

state’s decision not to expand. The 

Exchange must determine an applicant 

eligible for an exemption for a calendar 

year if he or she has been determined 

ineligible for Medicaid for one or more 

months during the benefit year solely as 

a result of a State not implementing 

section 2001(a) of the Affordable Care 

Act; 

(5) Self-only coverage in an eligible 

employer-sponsored plan. The IRS may 

allow an applicant to claim an 

exemption for a calendar year if he or 

she, as well as one or more employed 

members of his or her family, as defined 

in 26 CFR 1.36B–1(d), has been 

determined eligible for affordable selfonly employer-sponsored coverage 

pursuant to section 5000A(e)(1) of the 

Code through their respective employers 

for one or more months during the 

calendar year, but the aggregate cost of 

employer-sponsored coverage for all the 

employed members of the family 

exceeds 8 percent of household income 

for that calendar year; or 

(6) Eligible for services through an 

Indian health care provider. (i) The 

Exchange must determine an applicant 

eligible for an exemption for any month 

if he or she is an Indian eligible for 

services through an Indian health care 

provider, as defined in 42 CFR 447.50 

and not otherwise eligible for an 

exemption under paragraph (f) of this 

section, or an individual eligible for 

services through the Indian Health 

Service in accordance with 25 USC 

1680c(a), (b), or (d)(3). 

(ii) The Exchange must grant the 

exemption specified in paragraph (g)(6) 

of this section to an applicant who 

meets the standards specified in 

paragraph (g)(6) of this section for a 

month on a continuing basis, until such 

time that the applicant reports that he 

or she no longer meets the standards 

provided in paragraph (g)(6) of this 

section. 

§ 155.610 Eligibility process for 

exemptions. 

(a) Application. Except as specified in 

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

the Exchange must use an application 

established by HHS to collect 

information necessary for determining 

eligibility for and granting certificates of 

exemption as described in § 155.605. 

(b) Alternative application. If the 

Exchange seeks to use an alternative 

application, such application, as 

approved by HHS, must request the 

minimum information necessary for the 

purposes identified in paragraph (a) of 

this section. 

(c) Exemptions through the eligibility 

process for coverage. If an individual 

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submits the application described in 

§ 155.405 and then requests an 

exemption, the Exchange must use 

information collected for purposes of 

the eligibility determination for 

enrollment in a QHP and for insurance 

affordability programs in making the 

exemption eligibility determination, and 

must not request duplicate information 

or conduct repeat verifications to the 

extent that the Exchange finds that such 

information is still applicable, where 

the standards for such verifications 

adhere to the standards specified in this 

subpart. 

(d) Filing the exemption application. 

The Exchange must— 

(1) Accept the application from an 

application filer; and 

(2) Provide the tools to file an 

application. 

(3) For applications submitted before 

October 15, 2014, the Exchange must, at 

a minimum, accept the application by 

mail. 

(e) Collection of Social Security 

Numbers. (1) The Exchange must 

require an applicant who has a Social 

Security number to provide such 

number to the Exchange. 

(2) The Exchange may not require an 

individual who is not seeking an 

exemption for himself or herself to 

provide a Social Security number, 

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

this section. 

(3) The Exchange must require an 

application filer to provide the Social 

Security number of a tax filer who is not 

an applicant only if an applicant attests 

that the tax filer has a Social Security 

number and filed a tax return for the 

year for which tax data would be 

utilized for verification of household 

income and family size for an 

exemption under § 155.605(g)(2) that 

requires such verification. 

(f) Determination of eligibility; 

granting of certificates. The Exchange 

must determine an applicant’s eligibility 

for an exemption in accordance with the 

standards specified in § 155.605, and 

grant a certificate of exemption to any 

applicant determined eligible. 

(g) Timeliness standards. (1) The 

Exchange must determine eligibility for 

exemption promptly and without undue 

delay. 

(2) The Exchange must assess the 

timeliness of eligibility determinations 

made under this subpart based on the 

period from the date of application to 

the date the Exchange notifies the 

applicant of its decision. 

(h) Exemptions for previous tax years. 

(1) Except for the exemptions described 

in § 155.605(c), (f), and (g), after 

December 31 of a given calendar year, 

the Exchange will not accept an 

application for an exemption that is 

available retrospectively for months for 

such calendar year, and must provide 

information to individuals regarding 

how to claim an exemption through the 

tax filing process. 

(2) The Exchange will only accept an 

application for an exemption described 

in § 155.605(g)(1) during one of the 3 

calendar years after the month or 

months during which the applicant 

attests that the hardship occurred. 

(i) Notification of eligibility 

determination for exemptions. The 

Exchange must provide timely written 

notice to an applicant of any eligibility 

determination made in accordance with 

this subpart. In the case of a 

determination that an applicant is 

eligible for an exemption, this 

notification must include the exemption 

certificate number for the purposes of 

tax administration. 

(j) Retention of records for tax 

compliance. (1) An Exchange must 

notify an individual to retain the 

records that demonstrate receipt of the 

certificate of exemption and 

qualification for the underlying 

exemption. 

(2) In the case of any factor of 

eligibility that is verified through use of 

the special circumstances exception 

described in § 155.615(h), the records 

that demonstrate qualification for the 

underlying exemption are the 

information submitted to the Exchange 

regarding the circumstances that 

warranted the use of the exception, as 

well as records of the Exchange decision 

to allow such exception. 

§ 155.615 Verification process related to 

eligibility for exemptions. 

(a) General rule. Unless a request for 

modification is granted under paragraph 

(i) of this section, the Exchange must 

verify or obtain information as provided 

in this section in order to determine that 

an applicant is eligible for an 

exemption. 

(b) Verification related to exemption 

for religious conscience. For any 

applicant who requests an exemption 

based on religious conscience, the 

Exchange must verify that he or she 

meets the standards specified in 

§ 155.605(c) by— 

(1) Except as specified in paragraph 

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

that reflects that he or she is exempt 

from Social Security and Medicare taxes 

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

(2) Except as specified in paragraphs 

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

his or her attestation of membership in 

a religious sect or division, and 

verifying that the religious sect or 

division to which the applicant attests 

membership is recognized by the Social 

Security Administration as an approved 

religious sect or division under section 

1402(g)(1) of the Code. 

(3) If information provided by an 

applicant regarding his or her 

membership in a religious sect or 

division is not reasonably compatible 

with other information provided by the 

individual or in the records of the 

Exchange, the Exchange must follow the 

procedures specified in paragraph (g) of 

this section. 

(4) If an applicant attests to 

membership in a religious sect or 

division that is not recognized by the 

Social Security Administration as an 

approved religious sect or division 

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

Exchange must provide the applicant 

with information regarding how his or 

her religious sect or division can pursue 

recognition under section 1402(g)(1) of 

the Code, and determine the applicant 

ineligible for this exemption until such 

time as the Exchange obtains 

information indicating that the religious 

sect or division has been approved. 

(c) Verification related to exemption 

for membership in a health care sharing 

ministry. (1) For any applicant who 

requests an exemption based on 

membership in a health care sharing 

ministry, the Exchange must verify that 

the applicant meets the standards 

specified in § 155.605(d) by, except as 

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

(c)(1)(ii) of this section, accepting his or 

her attestation; and verifying that the 

health care sharing ministry to which 

the applicant attests membership is 

known to the Exchange as a valid health 

care sharing ministry based on data 

provided by HHS— 

(i) If information provided by an 

applicant regarding his or her 

membership in a health care sharing 

ministry is not reasonably compatible 

with other information provided by the 

individual or in the records of the 

Exchange, the Exchange must follow the 

procedures specified in paragraph (g) of 

this section. The Exchange may not 

consider an applicant’s prior or current 

enrollment in health coverage as not 

reasonably compatible with an 

applicant’s attestation of membership in 

a health care sharing ministry. 

(ii) If an applicant attests to 

membership in a health care sharing 

ministry that is not known to the 

Exchange as a health care sharing 

ministry based on information provided 

by HHS, the Exchange must provide the 

applicant with information regarding 

how an organization can pursue 

recognition under § 155.615(c)(2), and 

determine the applicant ineligible for 

this exemption until such time as HHS 

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notifies the Exchange that the health 

care sharing ministry’s meets the 

standards specified in section 

5000A(d)(2)(B)(ii) of the Code. 

(2) To be considered a health care 

sharing ministry for the purposes of this 

subpart, an organization must submit 

information to HHS that substantiates 

the organization’s compliance with the 

standards specified in section 

5000A(d)(2)(B)(ii) of the Code. If at any 

time HHS determines that an 

organization previously considered a 

health care sharing ministry for the 

purposes of this subpart no longer meets 

the standards specified in section 

5000A(d)(2)(B)(ii) of the Code, HHS may 

revoke its earlier decision regarding the 

status of the health care sharing 

ministry. 

(d) Verification related to exemption 

for incarceration. (1) For any applicant 

who provides information attesting that 

he or she was incarcerated for a given 

month in accordance with the standards 

specified in § 155.605(e), the Exchange 

must verify his or her attestation 

through the same process as described 

in § 155.315(e). 

(2) To the extent that the Exchange is 

unable to verify an applicant’s 

attestation that he or she was 

incarcerated for a given month in 

accordance with the standards specified 

in § 155.605(e) through the process 

described in § 155.315(e), the Exchange 

must follow the procedures specified in 

paragraph (g) of this section. 

(e) Verification related to exemption 

for members of Indian tribes. (1) For any 

applicant who provides information 

attesting that he or she is a member of 

an Indian tribe, the Exchange must use 

the process outlined in § 155.350(c) to 

verify that the applicant is a member of 

an Indian tribe. 

(2) To the extent that the Exchange is 

unable to verify an applicant’s status as 

a member of an Indian tribe through the 

process described in § 155.350(c), the 

Exchange must follow the procedures 

specified in paragraph (g) of this 

section. 

(f) Verification related to exemption 

for hardshi—(1) In general. For any 

applicant who requests an exemption 

based on hardship, except for the 

hardship exemptions described in 

§ 155.605(g)(3) and (5), the Exchange 

must verify whether he or she has 

experienced the hardship to which he or 

she is attesting. 

(2) Lack of affordable coverage based 

on projected income. (i) For any 

applicant who requests an exemption 

based on the hardship described in 

§ 155.605(g)(2), the Exchange must 

verify the unavailability of affordable 

coverage through the procedures used to 

determine eligibility for advance 

payments of the premium tax credit, as 

specified in subpart D of this part, 

including the procedures described in 

§ 155.315(c)(1), and the procedures used 

to verify eligibility for qualifying 

coverage in an eligible employersponsored plan, as specified in 

§ 155.320(e), except as specified in 

§ 155.615(f)(2)(ii). 

(ii) The Exchange must accept an 

application filer’s attestation for an 

applicant regarding eligibility for 

minimum essential coverage other than 

through an eligible employer-sponsored 

plan, instead of following the 

procedures specified in § 155.320(b). 

(3) Eligible for services through an 

Indian health care provider. For any 

applicant who requests an exemption 

based on the hardship described in 

§ 155.605(g)(6), the Exchange must 

verify whether he or she meets the 

standards specified in § 155.605(g)(6) 

through the same process described in 

§ 155.615(e). 

(4) To the extent that the Exchange is 

unable to verify any of the information 

needed to determine an applicant’s 

eligibility for an exemption based on 

hardship, the Exchange must follow the 

procedures specified in paragraph (g) of 

this section. 

(g) Inability to verify necessary 

information. Except as otherwise 

specified in this subpart, for an 

applicant for whom the Exchange 

cannot verify information required to 

determine eligibility for an exemption, 

including but not limited to when 

electronic data is required in accordance 

with this subpart but data for 

individuals relevant to the eligibility 

determination for an exemption are not 

included in such data sources or when 

electronic data is required but it is not 

reasonably expected that data sources 

will be available within the time period 

as specified in § 155.315(f), the 

Exchange— 

(1) Must make a reasonable effort to 

identify and address the causes of such 

inconsistency, including typographical 

or other clerical errors, by contacting the 

application filer to confirm the accuracy 

of the information submitted by the 

application filer; 

(2) If unable to resolve the 

inconsistency through the process 

described in paragraph (g)(1) of this 

section, must— 

(i) Provide notice to the applicant 

regarding the inconsistency; and 

(ii) Provide the applicant with a 

period of 90 days from the date on 

which the notice described in paragraph 

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

applicant to either present satisfactory 

documentary evidence via the channels 

available for the submission of an 

application, as described in 

§ 155.610(d), except for by telephone, or 

otherwise to resolve the inconsistency. 

(3) May extend the period described 

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

an applicant if the applicant 

demonstrates that a good faith effort has 

been made to obtain the required 

documentation during the period. 

(4) During the period described in 

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

section, must not grant a certificate of 

exemption based on the information 

subject to this paragraph. 

(5) If, after the period described in 

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

Exchange remains unable to verify the 

attestation, the Exchange must 

determine the applicant’s eligibility for 

an exemption based on any information 

available from the data sources used in 

accordance with this subpart, if 

applicable, unless such applicant 

qualifies for the exception provided 

under paragraph (h) of this section, and 

notify the applicant of such 

determination in accordance with the 

notice requirements specified in 

§ 155.610(i), including notice that the 

Exchange is unable to verify the 

attestation. 

(h) Exception for special 

circumstances. For an applicant who 

does not have documentation with 

which to resolve the inconsistency 

through the process described in 

paragraph (g)(2) of this section because 

such documentation does not exist or is 

not reasonably available and for whom 

the Exchange is unable to otherwise 

resolve the inconsistency, the Exchange 

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

attestation as to the information which 

cannot otherwise be verified along with 

an explanation of circumstances as to 

why the applicant does not have 

documentation. 

(i) Flexibility in information collection 

and verification. HHS may approve an 

Exchange Blueprint in accordance with 

§ 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 as set forth in this 

subpart, as well as the specific 

information required to be collected, 

provided that HHS finds that such 

modification would reduce the 

administrative costs and burdens on 

individuals while maintaining accuracy 

and minimizing delay, and that 

applicable requirements under 

§§ 155.260, 155.270, and paragraph (j) of 

this section, and section 6103 of the 

Code with respect to the confidentiality, 

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disclosure, maintenance, or use of such 

information will be met. 

(j) Applicant information. The 

Exchange may not require an applicant 

to provide information beyond the 

minimum necessary to support the 

eligibility process for exemptions as 

described in this subpart. 

(k) 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, or the Social 

Security Administration indicates that 

the individual is deceased, the 

Exchange must follow the procedures 

specified in paragraph (g) 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 (g)(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. 

§ 155.620 Eligibility redeterminations for 

exemptions during a calendar year. 

(a) General requirement. The 

Exchange must redetermine the 

eligibility of an individual with an 

exemption granted by the Exchange if it 

receives and verifies new information 

reported by such an individual, except 

for the exemption described in 

§ 155.605(g)(2). 

(b) Requirement for individuals to 

report changes. (1) Except as specified 

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

Exchange must require an individual 

who has a certificate of exemption from 

the Exchange to report any change with 

respect to the eligibility standards for 

the exemption as specified in § 155.605, 

except for the exemption described in 

§ 155.605(g)(2), within 30 days of such 

change. 

(2) The Exchange must allow an 

individual with a certificate of 

exemption to report changes via the 

channels available for the submission of 

an application, as described in 

§ 155.610(d). 

(c) Verification of reported changes. 

The Exchange must— 

(1) Verify any information reported by 

an individual with a certificate of 

exemption in accordance with the 

processes specified in § 155.615 prior to 

using such information in an eligibility 

redetermination. 

(2) Notify an individual in accordance 

with § 155.610(i) after redetermining his 

or her eligibility based on a reported 

change. 

(3) Provide periodic electronic 

notifications regarding the requirements 

for reporting changes and an 

individual’s opportunity to report any 

changes, to an individual who has a 

certificate of exemption for which 

changes must be reported in accordance 

with § 155.620(b) and who has elected 

to receive electronic notifications, 

unless he or she has declined to receive 

such notifications. 

(d) Effective date of changes. The 

Exchange must implement a change 

resulting from a redetermination under 

this section for the month or months 

after the month in which the 

redetermination occurs, such that a 

certificate that was provided for the 

month in which the redetermination 

occurs, and for prior months remains 

effective. 

§ 155.625 Options for conducting eligibility 

determinations for exemptions. 

(a) Options for conducting eligibility 

determinations. The Exchange may 

satisfy the requirements of this 

subpart— 

(1) Directly or through contracting 

arrangements in accordance with 

§ 155.110(a); or (2) Through the 

approach described in paragraph (b) of 

this section. 

(b) Use of HHS service. 

Notwithstanding the requirements of 

this subpart— 

(1) For an application submitted 

before October 15, 2014, the Exchange 

may adopt an exemption eligibility 

determination made by HHS, provided 

that— 

(i) The Exchange adheres to the 

eligibility determination made by HHS; 

(ii) The Exchange furnishes to HHS 

any information available through the 

Exchange that is necessary for an 

applicant to utilize the process 

administered by HHS; and 

(iii) The Exchange call center and 

Internet Web site specified in 

§ 155.205(a) and (b), respectively, 

provide information to consumers 

regarding the exemption eligibility 

process. 

(2) For an application submitted on or 

after October 15, 2014, the Exchange 

may adopt an exemption eligibility 

determination made by HHS, provided 

that— 

(i) The Exchange accepts the 

application, as specified in § 155.610(c), 

and issues the eligibility notice, as 

specified in § 155.610(i); 

(ii) Verifications and other activities 

required in connection with eligibility 

determinations for exemptions are 

performed by the Exchange in 

accordance with the standards 

identified in this subpart or by HHS in 

accordance with the agreement 

described in paragraph (b)(2)(v) of this 

section; 

(iii) The Exchange transmits to HHS 

promptly and without undue delay and 

via secure electronic interface, all 

information provided as a part of the 

application or update that initiated the 

eligibility determination, and any 

information obtained or verified by the 

Exchange; 

(iv) The Exchange adheres to the 

eligibility determination made by HHS; 

and 

(v) The Exchange and HHS enter into 

an agreement specifying their respective 

responsibilities in connection with 

eligibility determinations for 

exemptions. 

§ 155.630 Reporting. 

Requirement to provide information 

related to tax administration. If the 

Exchange grants an individual a 

certificate of exemption in accordance 

with § 155.610(i), the Exchange must 

transmit to the IRS at such time and in 

such manner as the IRS may specify— 

(a) The individual’s name, Social 

Security number, and exemption 

certificate number; 

(b) Any other information required in 

guidance published by the Secretary of 

the Treasury in accordance with 26 CFR 

601.601(d)(2). 

§ 155.635 Right to appeal. 

(a) For an application submitted 

before October 15, 2014, the Exchange 

must include the notice of the right to 

appeal and instructions regarding how 

to file an appeal in any notification 

issued in accordance with § 155.610(i). 

(b) For an application submitted on or 

after October 15, 2014, the Exchange 

must include the notice of the right to 

appeal and instructions regarding how 

to file an appeal in any notification 

issued in accordance with § 155.610(i) 

and § 155.625(b)(2)(i). 

PART 156—HEALTH INSURANCE 

ISSUER STANDARDS UNDER THE 

AFFORDABLE CARE ACT, INCLUDING 

STANDARDS RELATED TO 

EXCHANGES 

■ 5. The authority citation for part 156 

is revised to read as follows: 

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Federal Register / Vol. 78, No. 126 / Monday, July 1, 2013 / Rules and Regulations 39529 

Authority: Title I of the Affordable Care 

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

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

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

(42 U.S.C. 18042). 

■ 6. Add subpart G to part 156 to read 

as follows: 

Subpart G—Minimum Essential Coverage 

Sec. 

156.600 The definition of minimum 

essential coverage. 

156.602 Other coverage that qualifies as 

minimum essential coverage. 

156.604 Requirements for recognition as 

minimum essential coverage for types of 

coverage not otherwise designated 

minimum essential coverage in the 

statute or this subpart. 

156.606 HHS audit authority. 

Subpart G—Minimum Essential 

Coverage 

§ 156.600 The definition of minimum 

essential coverage. 

The term minimum essential coverage 

has the same meaning as provided in 

section 5000A(f) of the Code and its 

implementing regulations for purposes 

of this subpart. 

§ 156.602 Other coverage that qualifies as 

minimum essential coverage. 

The following types of coverage are 

designated by the Secretary as minimum 

essential coverage for purposes of 

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

(a) Self-funded student health 

coverage. Coverage offered to students 

by an institution of higher education (as 

defined in the Higher Education Act of 

1965), where the institution assumes the 

risk for payment of claims, are 

designated as minimum essential 

coverage for plan or policy years 

beginning on or before December 31, 

2014. For coverage beginning after 

December 31, 2014, sponsors of selffunded student health coverage may 

apply to be recognized as minimum 

essential coverage pursuant to the 

process provided under 45 CFR 156.604. 

(b) Refugee Medical Assistance 

supported by the Administration for 

Children and Families. Coverage under 

Refugee Medical Assistance, authorized 

under section 412(e)(7)(A) of The 

Immigration and Nationality Act, 

provides up to eight months of coverage 

to certain noncitizens who are 

considered Refugees, as defined in 

section 101(a)(42) of the Act. 

(c) Medicare advantage plans. 

Coverage under the Medicare program 

pursuant to Part C of title XVIII of the 

Social Security Act, which provides 

Medicare Parts A and B benefits through 

a private insurer. 

(d) State high risk pool coverage. State 

high risk pools are designated as 

minimum essential coverage for plan or 

policy years beginning on or before 

December 31, 2014. For coverage 

beginning after December 31, 2014, 

sponsors of high risk pool coverage may 

apply to be recognized as minimum 

essential coverage pursuant to the 

process provided under § 156.604. 

(e) Other coverage. Other coverage 

that qualifies pursuant to § 156.604. 

§ 156.604 Requirements for recognition as 

minimum essential coverage for types of 

coverage not otherwise designated 

minimum essential coverage in the statute 

or this subpart. 

(a) The Secretary may recognize 

‘‘other coverage’’ as minimum essential 

coverage provided HHS determines that 

the coverage meets the following 

substantive and procedural 

requirements: 

(1) Coverage requirements. A plan 

must meet substantially all the 

requirements of title I of the Affordable 

Care Act pertaining to nongrandfathered, individual health 

insurance coverage. 

(2) Procedural requirements. 

Procedural requirements for recognition 

as minimum essential coverage. To be 

considered for recognition as minimum 

essential coverage, the sponsor of the 

coverage, or government agency, must 

submit the following information to 

HHS: 

(i) Identity of the plan sponsor and 

appropriate contact persons; 

(ii) Basic information about the plan, 

including: 

(A) Name of the organization 

sponsoring the plan; 

(B) Name and title of the individual 

who is authorized to make, and makes, 

this certification on behalf of the 

organization; 

(C) Address of the individual named 

above; 

(D) Phone number of the individual 

named above; 

(E) Number of enrollees; 

(F) Eligibility criteria; 

(G) Cost sharing requirements, 

including deductible and out-of-pocket 

maximum limit; 

(H) Essential health benefits covered; 

and 

(I) A certification by the appropriate 

individual, named pursuant to 

paragraph (a)(3)(ii)(b), that the 

organization substantially complies 

with the requirements of title I of the 

Affordable Care Act that apply to nongrandfathered plans in the individual 

market and any plan documentation or 

other information that demonstrate that 

the coverage substantially comply with 

these requirements. 

(b) CMS will publish a list of types of 

coverage that the Secretary has 

recognized as minimum essential 

coverage pursuant to this provision. 

(c) If at any time the Secretary 

determines that a type of coverage 

previously recognized as minimum 

essential coverage no longer meets the 

coverage requirements of paragraph 

(a)(1) of this section, the Secretary may 

revoke the recognition of such coverage. 

(d) Notice. Once recognized as 

minimum essential coverage, a plan 

must provide notice to all enrollees of 

its minimum essential coverage status 

and must comply with the information 

reporting requirements of section 6055 

of the Code and implementing 

regulations. 

§ 156.606 HHS audit authority. 

The Secretary may audit a plan or 

program recognized as minimum 

essential coverage under § 156.604 at 

any time to ensure compliance with the 

requirements of § 156.604(a). 

Dated: June 7, 2013. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services 

Approved: June 11, 2013. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2013–15530 Filed 6–26–13; 11:15 am] 

BILLING CODE 4120–01–P 

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