Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Rules and Regulations 16979

1Pub. L. 104–191, enacted on August 21, 1996.

2Pub. L. 104–204, enacted on September 26,

1996.

3Section 733 was enacted as section 706 of ERISA

by section 101(a) of HIPAA and subsequently

redesignated as section 733 of ERISA pursuant to

section 603(a)(3) of NMHPA.

4 ‘‘Medical care’’ is defined in paragraph (a)(2) of

section 733 to mean ‘‘amounts paid for—(A) the

diagnosis, cure, mitigation, treatment, or prevention

of disease, or amounts paid for the purpose of

affecting any structure or function of the body, (B)

amounts paid for transportation primarily for and

essential to medical care referred to in

subparagraph (A), and (C) amounts paid for

insurance covering medical care referred to in

subparagraphs (A) and (B).’’

5 ‘‘Health insurance issuer’’ is defined in section

733(b)(2) to mean ‘‘an insurance company,

insurance service, or insurance organization

(including a health maintenance organization, as

defined in paragraph (3)) which is licensed to

engage in the business of insurance in a State and

which is subject to State law which regulates

insurance (within the meaning of section 514(b)(2)).

Such term does not include a group health plan.’’

DEPARTMENT OF LABOR

Pension and Welfare Benefits

Administration

29 CFR Part 2520

RIN 1210 AA55

Interim Rules Amending ERISA

Disclosure Requirements for Group

Health Plans

AGENCY: Pension and Welfare Benefits

Administration, Department of Labor.

ACTION: Interim rules with request for

comments.

SUMMARY: This document contains

interim rules governing the content of

the summary plan description (SPD) for

group health plans, the furnishing of

summaries of material reductions in

covered services or benefits by group

health plans, and the disclosure of SPD

and related information through

electronic media. The rules contained in

this document implement amendments

to the disclosure provisions of the

Employee Retirement Income Security

Act of 1974 (ERISA) enacted as part of

the Health Insurance Portability and

Accountability Act of 1996 (HIPAA) and

the Newborns’ and Mothers’ Health

Protection Act of 1996 (NMHPA).

Interested persons are invited to

submit comments on the interim rules

for consideration by the Department in

developing final rules. The rules

contained in this document are being

adopted on an interim basis to

accommodate statutorily established

time frames intended to ensure that

sponsors and administrators of group

health plans, as well as participants and

beneficiaries covered by such plans,

have timely guidance concerning

compliance with the recently enacted

amendments to ERISA.

DATES: Comments. Written comments

on these interim rules must be received

by the Department of Labor on or before

May 31, 1997.

Effective date. This regulation is

effective on June 1, 1997. However,

affected parties do not have to comply

with the information collection

requirements in the amendments to 29

CFR 2520.102–3, 2520.104b–1, and

2520.104b–3 made by these interim

rules until the Department publishes in

the Federal Register the control

numbers assigned by the Office of

Management and Budget (OMB) to these

information collection requirements.

Publication of the control numbers

notifies the public that OMB has

approved these information collection

requirements under the Paperwork

Reduction Act of 1995. The Department

has asked for OMB clearance as soon as

possible, and OMB approval is

anticipated by or before June 1, 1997.

Applicability dates. The regulatory

amendments implementing provisions

enacted as part of HIPAA generally

apply as of the first day of the first plan

year beginning after June 30, 1997. The

regulatory amendments implementing

provisions enacted as part of NMHPA

generally apply as of the first day of the

first plan year beginning on or after

January 1, 1998.

ADDRESSES: Interested persons are

invited to submit written comments

(preferably three copies) on these

interim rules to: Pension and Welfare

Benefits Administration, Room N–5669,

U.S. Department of Labor, 200

Constitution Avenue, N.W., Washington

D.C. 20210. Attention: Interim

Disclosure Rules. All submissions will

be open to public inspection at the

Public Documents Room; Pension and

Welfare Benefits Administration; U.S.

Department of Labor; Room N–5638;

200 Constitution Avenue N.W.;

Washington, D.C. 20210.

FOR FURTHER INFORMATION CONTACT: Eric

A. Raps, Office of Regulations and

Interpretations, Pension and Welfare

Benefits Administration, (202) 219–8515

(not a toll-free number).

SUPPLEMENTARY INFORMATION:

A. Background

The rules contained in this document

implement amendments to the

disclosure provisions of ERISA enacted

as part of HIPAA 1 and NMHPA. 2 The

amendments affect group health plans

as defined in section 733 of ERISA. 3

ERISA section 733(a) defines a ‘‘group

health plan’’ as an ‘‘employee welfare

benefit plan to the extent that the plan

provides medical care (as defined in

paragraph (2) and including items and

services paid for as medical care) to

employees or their dependents (as

defined under the terms of the plan)

directly or through insurance,

reimbursement or otherwise.’’ 4

As discussed herein, these rules affect

the content of SPDs, the furnishing of

summaries of material reductions in

covered services or benefits to

participants, and the disclosure of SPD

and related information through

electronic media. As also discussed

herein, these rules are being adopted on

an interim basis in order to

accommodate statutorily established

time frames for provision of regulatory

guidance. The Department, however, is

inviting public comment on the interim

rules to assist in the formulation of final

rules in this area.

B. Content of SPDs

Pursuant to ERISA section 101(a)(1),

the administrator of an employee benefit

plan is required to furnish an SPD to

each participant covered under the plan

and to each beneficiary who is receiving

benefits under the plan. Section 102(b)

and the Department’s regulations issued

thereunder, 29 CFR 2520.102–3,

describe the information required to be

contained in the SPD.

Section 101(c)(2) of HIPAA amended

ERISA section 102(b) to require SPDs of

group health plans to include

information indicating whether a health

insurance issuer (as defined in section

733(b)(2)) 5 is responsible for the

financing or administration of the plan.

This amendment, in the view of the

Department, is intended to ensure that

SPDs clearly inform participants and

beneficiaries about the role of insurance

issuers with respect to their group

health plan, particularly in those cases

when the plan is self-funded and an

insurance issuer is serving as a contract

administrator or claims payor, rather

than an insurer. In such instances, it is

important that participants and

beneficiaries understand that the

insurance issuer is not acting as insurer

of their health benefits under the plan.

In this regard, the Department is

amending paragraph (q) of § 2520.102–

3, relating to the identification of

funding media through which benefits

are provided, to add at the end thereof

a requirement that, where a health

insurance issuer is responsible, in

whole or in part, for the financing or

administration of a group health plan,

the SPD of such plan include the name

and address of the issuer, whether and

to what extent benefits under the plan
16980 Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Rules and Regulations

6Section 2520.104b–3 prescribes the

requirements applicable to the furnishing of

summaries of material modifications to the plan

and changes in the information required to be

included in the summary plan description.

7Section 104(b)(1) generally requires summary

descriptions of material modifications to the plan

to be furnished to participants and beneficiaries not

later than 210 days after the end of the plan year

in which the change is adopted.

are guaranteed under a contract or

policy of insurance issued by the issuer,

and the nature of any administrative

services (e.g., payment of claims)

provided by the issuer.

Section 101(c)(2) of HIPAA also

amended ERISA section 102(b) to

require SPDs of group health plans to

include the office at the Department of

Labor through which participants and

beneficiaries may seek assistance or

information regarding their rights under

ERISA and HIPAA with respect to

health benefits. Currently,

individualized participant assistance on

all aspects of ERISA is offered through

the Pension and Welfare Benefits

Administration’s field offices and, in the

national office, the Division of

Technical Assistance and Inquiries. To

ensure that participants and

beneficiaries are provided assistance

information consistent with HIPAA

section 101(c)(2), the Department is

amending the model statement of ERISA

rights, at § 2520.102–3(t)(2), to replace

for group health plans the last sentence

of that statement with an updated

sentence that reads as follows: ‘‘If you

have any questions about this statement

or about your rights under ERISA, you

should contact the nearest office of the

Pension and Welfare Benefits

Administration, U.S. Department of

Labor, listed in your telephone directory

or the Division of Technical Assistance

and Inquiries, Pension and Welfare

Benefits Administration, U.S.

Department of Labor, 200 Constitution

Avenue, N.W., Washington, D.C.

20210.’’ Administrators may include in

the statement the address and telephone

number of the nearest office or offices of

the Pension and Welfare Benefits

Administration (PWBA). A directory of

current PWBA regional and district

offices is printed below.

PWBA Offices

Atlanta Regional Office, 61 Forsyth St.,

S.W., Suite 7B54, Atlanta, Georgia

30303, Phone: 404/562–2156

Boston Regional Office, One Bowdoin

Square, 7th Floor, Boston, MA 02114,

Phone: 617/424–4950

Chicago Regional Office, 200 West

Adams Street, Suite 1600, Chicago, IL

60606, Phone: 312/353–0900

Cincinnati Regional Office, 1885 Dixie

Highway, Suite 210, Ft. Wright, KY

41011–2664, Phone: 606/578–4680

Dallas Regional Office, 525 Griffin

Street, Rm. 707, Dallas, Texas 75202–

5025, Phone: 214/767–6831

Detroit District Office, 211 West Fort

Street, Suite 1310, Detroit, MI 48226–

3211, Phone: 313/226–7450

Kansas City Regional Office, City Center

Square, 1100 Main, Suite 1200,

Kansas City, MO 64105–2112, Phone:

816/426–5131

Los Angeles Regional Office, 790 E.

Colorado Boulevard, Suite 514,

Pasadena, CA 91101, Phone: 818/583–

7862

Miami District Office, 111 NW 183rd

St., Suite 504, Miami, Florida 33169,

Phone: 305/651–6464

New York Regional Office, 1633

Broadway, Rm. 226, New York, N.Y.

10019, Phone: 212/399–5191

Philadelphia Regional Office, Gateway

Bldg., 3535 Market Street, Room

M300, Philadelphia, PA 19104,

Phone: 215/596–1134

St. Louis District Office, 815 Olive

Street, Rm. 338, St. Louis, MO 63101–

1559, Phone: 314/539–2691

San Francisco Regional Office, 71

Stevenson St., Suite 915, P.O. Box

190250, San Francisco, CA 94119–

0250, Phone: 415/975–4600

Seattle District Office, 1111 Third

Avenue, Suite 860, MIDCOM Tower,

Seattle, Washington 98101–3212,

Phone: 206/553–4244

Washington D.C. District Office, 1730 K

Street, N.W., Suite 556, Washington,

D.C. 20006, Phone: 202/254–7013

The Department notes that, in the case

of group health plans not utilizing the

model statement in § 2520.102–3(t)(2),

the foregoing information is required to

be included in a statement of ERISA

rights intended to satisfy the

requirements of paragraph (t)(1) of that

section.

Pursuant to HIPAA section 101(g), the

foregoing amendments to the SPD

content requirements apply with respect

to group health plans for plan years

beginning after June 30, 1997. The

Department is amending § 2520.102–3

to add a new paragraph (v),

‘‘applicability dates’’, that treats the

HIPAA content changes as changes in

the information required to be contained

in the SPD and applies the requirements

of 29 CFR 2520.104b–3 6 to the

disclosure of such changes, except that

the changes have to be disclosed to

participants and beneficiaries not later

than 60 days after the first day of the

first plan year for which the changes are

applicable to the plan.

While the interim rule amendment of

the model statement of ERISA rights

corrects outdated name and address

information for contacting the U.S.

Department of Labor, and therefore has

obvious applicability beyond group

health plans, the Department is limiting

the interim rule to group health plans in

view of directive under HIPAA section

101(c)(2). The Department, however,

specifically invites public comment on

the extent to which application of the

rule should be extended to other plans.

Section 603(a) of the NMHPA also

amended ERISA by adding a new

section 711 establishing restrictions on

the extent to which group health plans

and health insurance issuers may limit

hospital lengths of stay for mothers and

newborn children following delivery. In

an effort to ensure that participants and

beneficiaries are apprised of the

limitations established under NMHPA,

paragraph (d) of section 711 provides

that ‘‘[t]he imposition of the

requirements of this section [section

711] shall be treated as a material

modification in the terms of the plan

* * * except that the summary

description required to be provided

under the last sentence of section

104(b)(1) with respect to such

modification shall be provided by not

later than 60 days after the first day of

the first plan year in which such

requirements apply.’’ 7 Pursuant to

NMHPA section 603(c), the provisions

of section 603 apply to group health

plans for plan years beginning on or

after January 1, 1998. In this regard, the

Department is amending § 2520.102–3,

the SPD content regulations, by adding

a new paragraph (u) requiring that the

SPDs of group health plans offering

maternity benefits include a statement

indicating that ‘‘group health plans and

health insurance issuers offering group

health insurance coverage generally may

not, under Federal law, restrict benefits

for any hospital length of stay in

connection with childbirth for the

mother or newborn child to less than 48

hours following a normal vaginal

delivery, or less than 96 hours following

a caesarean section, or require that a

provider obtain authorization from the

plan or insurance issuer for prescribing

a length of stay not in excess of the

above periods.’’ To facilitate

compliance, the Department views the

statement included in this new

paragraph (u) of the regulation as

sample language that may be used by

administrators to satisfy this content

requirement for group health plan SPDs.

Consistent with NMHPA section

603(c), new paragraph (v) of § 2520.102–

3, relating to applicability dates,

provides that the information described

in paragraph (u) of § 2520.102–3 shall be

furnished to each participant covered
Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Rules and Regulations 16981

8Section 2520.104b–1 permits the disclosure of

plan information through periodicals, such as union

newspapers and company publications, if the

distribution list for the periodical is comprehensive

and up-to-date and a prominent notice on the front

page of the periodical advises the reader that the

issue contains an insert with important information

about the plan which should be read and retained

for future reference.

under the plan and each beneficiary

receiving benefits under the plan not

later than 60 days after the first day of

the first plan year beginning on or after

January 1, 1998.

C. Material Reductions In Covered

Services or Benefits

Section 104(b)(1) of ERISA requires,

among other things, that participants

and beneficiaries be furnished summary

descriptions of material modifications

in the terms of their plans and changes

in the information required to be

included in the SPD not later than 210

days after the end of the plan year in

which the change is adopted. Section

101(c)(1) of HIPAA amended ERISA

section 104(b)(1) to provide that in the

case of any modification or change that

is a ‘‘material reduction in covered

services or benefits provided under a

group health plan’’, participants and

beneficiaries must be furnished the

summary of such modification or

change not later than 60 days after the

adoption of the modification or change,

unless plan sponsors provide

summaries of modifications or changes

at regular intervals of not more than 90

days.

The interim rules contained herein

amend the regulations governing the

furnishing of summaries of material

modifications, at 29 CFR 2520.104b–3,

to establish a special rule for the

furnishing of summaries of material

modifications and changes by group

health plans when such modifications

or changes constitute a material

reduction in covered services or benefits

under the plan. The rules governing the

furnishing of such summaries are

contained in a new paragraph (d) of

§ 2520.104b–3.

Section 2520.104b–3(d)(1) provides,

consistent with HIPAA section

101(c)(1), that the administrator of a

group health plan must furnish to each

participant covered under the plan and

each beneficiary receiving benefits

under the plan, a summary of any

modification to the plan or change in

the information required to be included

in the SPD that is a material reduction

in covered services or benefits not later

than 60 days after the date of adoption

of the modification or change.

Section 2520.104b–3(d)(2) provides

that the 60-day period for furnishing

summaries of modifications or changes,

described in paragraph (d)(1), does not

apply to any participant covered by the

plan or any beneficiary receiving

benefits who would reasonably be

expected to be furnished such summary

in connection with a system of

communication maintained by the plan

sponsor or administrator, with respect

to which plan participants and

beneficiaries are provided information

concerning their plan, including

modifications and changes thereto, at

regular intervals of not more than 90

days. For example, a summary of

material reduction in services or

benefits would not have to be furnished

to participants within the prescribed 60-

day period if such summary is included

as an insert in a union newspaper or a

company publication regularly

furnished to participants at intervals of

not more than 90 days. It should be

noted that the use of such periodicals

must otherwise meet the requirements

of 29 CFR 2520.104b–1.8 It should also

be noted that if a plan has participants

or beneficiaries (e.g., separated

participants, qualified beneficiaries with

continuation coverage, etc.) that do not

receive the newspaper, company

publication or periodic disclosure, such

participants and beneficiaries must be

furnished the summaries of material

reductions in services or benefits under

the group health plan not later than 60

days after the date of adoption.

Section 2520.104b–3(d)(3) defines the

term ‘‘material reduction in covered

services or benefits’’ provided under a

group health plan. For purposes of

furnishing summaries of material

modifications or changes, paragraph

(d)(3)(i) defines a ‘‘material reduction in

covered services or benefits’’ to mean

any modification to the plan or change

in the information required to be

included in the SPD that, independently

or in conjunction with other

contemporaneous modifications or

changes, would be considered by the

average plan participant to be an

important reduction in covered services

or benefits.

While it is the view of the Department

that determinations as to whether a

particular plan modification or SPD

change constitutes a ‘‘material reduction

in covered services or benefits’’

generally will depend on the facts of

each case, the Department believes that

in making such determinations it is

appropriate, given the nature of the

required disclosure, to assess in each

case whether the average participant in

the plan would view the modification or

change as an important reduction in

covered services or benefits under the

plan. Also, recognizing that the

significance of plan modifications or

changes may be affected by other

contemporaneous modifications or

changes, it is the view of the

Department that plan modifications and

SPD changes must be viewed in the

aggregate for purposes of determining

whether such modifications or changes,

individually or together, result in a

‘‘material reduction in covered services

or benefits.’’

To facilitate compliance, paragraph

(d)(3)(ii) sets forth a listing of

modifications or changes that generally

would constitute a ‘‘reduction in

covered services or benefits.’’ In this

regard, paragraph (d)(3)(ii) provides that

a ‘‘reduction in covered services or

benefits’’ generally would include any

modification or change that: eliminates

benefits payable under the plan; reduces

benefits payable under the plan,

including a reduction that occurs as a

result of a change in formulas,

methodologies or schedules that serve

as the basis for making benefit

determinations; increases deductibles,

co-payments, or other amounts to be

paid by a participant or beneficiary;

reduces the service area covered by a

health maintenance organization;

establishes new conditions or

requirements (e.g., preauthorization

requirements) to obtaining services or

benefits under the plan.

The interim rules add a new

paragraph (e) to § 2520.104b–3 setting

forth the dates on which the

requirements of § 2520.104b–3(d) take

effect. Under § 2520.104b–3(e), the

requirements of paragraph (d) apply to

material reductions in covered services

or benefits under a group health plan

adopted on or after the first day of the

first plan year beginning after June 30,

1997.

D. Alternative Delivery Mechanisms—

Disclosure Through Electronic Media

In addition to amending ERISA

section 104(b)(1) to provide for the

furnishing of summaries of material

reductions in covered services or

benefits, section 101(c) of HIPAA

amended section 104(b)(1) to provide

that ‘‘[t]he Secretary shall issue

regulations within 180 days after the

date of enactment of the Health

Insurance Portability and

Accountability Act of 1996, providing

alternative mechanisms to delivery by

mail through which group health plans

(as so defined) may notify participants

and beneficiaries of material reductions

in covered services or benefits.’’

The Department has issued a

regulation, at 29 CFR 2520.104b–1,

governing the delivery of information

required to be furnished to participants
16982 Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Rules and Regulations

9 In the Department’s view, a method of delivery,

and conditions applicable thereto, appropriate for

furnishing summaries of material reductions in

covered services or benefits is necessarily

appropriate to the furnishing by group health plans

of other types of material modifications, SPDs and

updated SPDs, given the similar, if not identical,

nature of the information being provided.

and beneficiaries under ERISA. The

Department notes that the regulation

does not require delivery by mail where

other methods of delivery are

reasonably calculated to ensure actual

receipt of materials by participants and

beneficiaries and likely to result in full

distribution of the information. See

§ 2520.104b–1(b). In this regard,

paragraph (b) of § 2520.104b–1 cites, as

an example, in-hand delivery of

materials to employees at their worksite

locations. The regulation also references

the use of union newsletters and

company publications as a means by

which an administrator may satisfy its

disclosure obligation. An alternative to

mail delivery not specifically referenced

in the current regulation is delivery of

disclosure materials through electronic

media. Accordingly, the Department is

amending § 2520.104b–1 to clarify the

circumstances under which a group

health plan administrator will be

deemed to satisfy its disclosure

obligation under § 2520.104b–1 with

respect to the delivery of SPDs,

summaries of material reductions in

covered services or benefits and other

summaries of plan modifications and

SPD changes through electronic media.9

This amendment is intended to

establish, on an interim basis, a ‘‘safe

harbor’’ on which administrators of

group health plans may rely in

delivering plan disclosures through

electronic media. The amendment is not

intended to represent the exclusive

means by which the requirements of

§ 2520.104b–1 may be satisfied in using

electronic media as a method of

delivering plan disclosures.

Under the interim rule, § 2520.104b–

1 is amended by adding a new

paragraph (c) setting forth the

conditions under which the use by a

group health plan of electronic media

for furnishing documents described in

ERISA section 104(b)(1), i.e., SPDs and

summaries of material modifications

and changes, will be deemed to be a

method of delivery that is calculated to

ensure actual receipt and result in full

distribution, within the meaning of

paragraph of § 2520.104b–1. New

paragraph (c)(1) of § 2520.104b–1 sets

forth criteria that are generally intended

to ensure that the system of electronic

communication utilized by a plan

administrator for distribution of

disclosure information results in the

actual delivery of such information to

participants and that the information

delivered is equivalent in both

substance and form to the disclosure

information the participants would have

received had they been furnished the

information in paper form. In general,

paragraph (c)(1) (i)–(ii) provides for the

utilization of an electronic delivery

system that: (i) the administrator takes

appropriate and necessary steps to

ensure results in actual receipt by

participants of transmitted information,

such as through the use of a returnreceipt electronic mail feature or

periodic reviews or surveys by the plan

administrator to confirm the integrity of

the delivery system; and (ii) results in

the furnishing of disclosure information

that is consistent with the style, format

and content requirements applicable to

the disclosure (See 29 CFR 2520.102–2

et seq.). New paragraph (c)(1)(iii)

requires notification to each participant,

through electronic or other means,

apprising the participant of the

disclosure documents furnished

electronically (e.g., SPDs, summaries of

material changes to the plan and

changes to information included in the

SPD), the significance of the documents

(e.g., the document contains summary

descriptions of changes in the benefits

described in your SPD), and the

participant’s right to request and

receive, free of charge, a paper copy of

each such document from the plan

administrator. The Department believes

such notification is necessary so that

participants who, for example, receive a

disclosure document as an attachment

to an electronically transmitted message

will be put on notice that the

attachment contains important plan

information.

It is the view of the Department that

participants have a general right to

receive required plan disclosures in

paper form from the plan administrator.

Accordingly, the Department believes

that where a plan administrator elects to

utilize electronic media as the method

for delivering required plan disclosures,

participants must be afforded the

opportunity to obtain the disclosures

from the plan administrator in paper

form, free of charge. The obligation to

furnish paper copies of documents

furnished through electronic media is

set forth in paragraph (c)(1)(iv). The

Department specifically invites public

comment on the relative costs and

benefits of this requirement to furnish

paper copies to participants on request

of documents furnished through

electronic media.

New paragraph (c)(2) describes the

participants with respect to whom the

electronic delivery of plan disclosures

will be deemed to be an acceptable

method of delivery for fulfilling the

disclosure obligation described in

§ 2520.104b–1(b)(1). Such participants,

in the view of the Department, must

have: the ability to effectively access at

their worksite documents furnished in

electronic form; and the opportunity at

their worksite to readily convert

furnished documents from electronic

form to paper form, free of charge. In

this regard, the Department believes

that, however effective an electronic

system may be for delivering plan

disclosures, the critical determination in

assessing the adequacy of the system, as

a means for communicating to plan

participants, will be the extent to which

participants can readily access and

retain the delivered information.

While the Department believes the

criteria set forth in the interim rule have

applicability beyond group health plans,

the Department is limiting the interim

rule ‘‘safe harbor’’ to group health plans

in view of directive under HIPAA

section 101(c)(1) and the absence of a

public record on the matter. The

Department, however, specifically

invites public comment on the criteria

established by the interim rule, the

extent to which application of the rule

should be extended to other plans, the

extent to which application of the rule

should be expanded to other plan

disclosures (e.g., summary annual

reports, individual benefit statements)

and, if expanded, whether additional

criteria may be necessary to ensure

private, confidential communications of

individual account or benefit-related

information.

Administrators of group health plans

may rely on this interim amendment on

or after June 1, 1997.

E. Interim Rules and Request for

Comments

The rules contained herein are being

adopted on an interim basis in order to

ensure that plan sponsors and

administrators of group health plans, as

well as participants and beneficiaries,

are provided timely guidance

concerning compliance with recently

enacted amendments to ERISA.

Specifically, HIPAA section 101(a) adds

a new ERISA part 7, and within this

new part, section 707 (redesignated as

section 734 by section 603(a)(3) of the

NMHPA) provides that the Secretary of

Labor may promulgate any interim final

rules as the Secretary determines are

appropriate to carry out this part. The

rules herein complement changes made

in the new part 7 of ERISA and are

being adopted on an interim basis

because the Department finds that

issuance of such regulations in interim
Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Rules and Regulations 16983

final form with a request for comments

is appropriate to carry out the new

regulatory structure imposed by HIPAA

on group health plans and health

insurance issuers, and is necessary to

ensure that plan sponsors and

administrators of group health plans, as

well as participants and beneficiaries,

are provided timely guidance

concerning compliance with new and

important disclosure obligations

imposed by HIPAA. The Department

also finds for the above reasons that the

publication of a proposed regulation

would be impracticable, unnecessary,

and contrary to the public interest.

The statutory provisions of HIPAA

and NMHPA implemented by the

pertinent regulatory amendments in this

document are generally applicable for

group health plans for plan years

beginning on or after July 1, 1997, and

January 1, 1998, respectively. Plan

administrators and sponsors, and

participants and beneficiaries, will need

guidance on how to comply with the

new statutory provisions before these

effective dates. Pursuant to section

101(g) of HIPAA, the Secretary must

first issue regulations necessary to carry

out the amendments made by section

101 by April 1, 1997. Issuance of a

notice of proposed rulemaking with a

period for comments prior to issuing a

final rule could delay the issuance of

essential guidance and prevent the

Department from complying with its

deadline. Furthermore, although the

rules herein are being adopted on an

interim basis, the Department is inviting

interested persons to submit written

comments on the rules for consideration

in the development of final rules in this

area. Such final rules may be issued in

advance of the above July 1, 1997, and

January 1, 1998, dates.

Executive Order 12866 Statement

Under Executive Order 12866 (58 FR

51735, Oct. 4, 1993), it must be

determined whether a departmental

action is ‘‘significant’’ and therefore

subject to review by the Office of

Management and Budget (OMB) and the

requirements of the Executive Order.

Under section 3(f), the order defines a

‘‘significant regulatory action’’ as an

action that is likely to result in a rule

(1) having an annual effect on the

economy of $100 million or more, 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.

Pursuant to the terms of the Executive

Order, it has been determined that the

action that is the subject of the interim

rules is ‘‘significant’’ under category (4),

supra, and subject to OMB review on

that basis. The estimated cost of

compliance with HIPAA and the interim

rules are set forth in the Paperwork

Reduction Act Analysis, below. The

benefits of the interim rules, as yet

unquantified, will arise as participants

and beneficiaries become better

informed about their health care

coverage because of additional

disclosures and more timely

distribution of plan information.

Paperwork Reduction Act Analysis

The Department of Labor has

submitted this emergency processing

public information collection request

(ICR) to the Office of Management and

Budget for review and clearance under

the Paperwork Reduction Act of 1995

(Pub. L. 104–13, 44 U.S.C. Chapter 35).

The Department has asked for OMB

clearance as soon as possible, and OMB

approval is anticipated by or before June

1, 1997. As part of its continuing effort

to reduce paperwork and respondent

burden, the Department conducts a preclearance consultation program to

provide the general public and Federal

agencies with an opportunity to

comment on ICRs in accordance with

the Paperwork Reduction Act of 1995

(PRA 95)(Pub. L. 104–13, 44 U.S.C.

Chapter 35) and 5 CFR 1320.11. This

program helps to ensure that requested

data can be provided in the desired

format, reporting burden (time and

financial resources) is minimized,

collection instruments are clearly

understood, and the impact of collection

requirements on respondents can be

properly assessed. Currently, the

Pension and Welfare Benefits

Administration is soliciting comments

concerning the revised collection of

Summary Plan Description

Requirements under ERISA.

DATES: Written comments must be

submitted to the offices listed in the

addressee section below on or before

May 31, 1997. In light of the request for

OMB clearance by June 1, 1997,

submission of comments within the first

30 days is encouraged to ensure their

consideration.

The Department and the Office of

Management and Budget are

particularly interested in comments

which:

• evaluate whether the proposed

collection is necessary for the proper

performance of the functions of the

agency, including whether the

information will have practical utility;

• evaluate the accuracy of the

agency’s estimate of the burden of the

proposed collection of information,

including the validity of the

methodology and assumptions used;

• enhance the quality, utility, and

clarify the information to be collected;

and

• minimize the burden of the

collection of information on those who

are to respond, including through the

use of appropriate automated,

electronic, mechanical, or other

technological collection techniques or

other forms of information technology,

e.g., permitting electronic submissions

of responses.

ADDRESSES: Comments and questions

about the ICR should be forwarded to:

Gerald B. Lindrew, Office of Policy and

Research, U.S. Department of Labor,

Pension and Welfare Benefits

Administration, 200 Constitution

Avenue, Room N–5647, Washington,

D.C. 20210, Telephone: (202) 219–4782

(this is not a toll-free number), Fax:

(202) 219–4745; and the Office of

Information and Regulatory Affairs,

Attn: OMB Desk Officer for the Pension

and Welfare Benefits Administration,

Office of Management and Budget,

Room 10235, Washington, D.C. 20503,

Telephone: (202) 395–7316. Additional

PRA 95 Information:

I. Background: The administrator of

an employee benefit plan is required to

furnish an SPD to each participant

covered under the plan and to each

beneficiary who is receiving benefits

under the plan. The SPD must be

written in a manner calculated to be

understood by the average plan

participant and must be sufficiently

comprehensive to apprise the plan’s

participants and beneficiaries of their

rights and obligations under the plan.

To the extent that there is a material

modification in the terms of the plan or

a change in the information required to

be contained in the SPD, ERISA requires

that the administrator furnish

participants covered under the plan and

beneficiaries receiving benefits with a

summary of such changes.

II. Current Actions: HIPAA and

NMHPA amend certain reporting and

disclosure provisions of ERISA

Type of Review: Revision of currently

approved collection.
16984 Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Rules and Regulations

Agency: Pension and Welfare Benefits

Administration.

Title: The title of the interim rule is

Amendment of Summary Plan

Description and Related ERISA

Regulations To Implement Statutory

Changes In the Health Insurance

Portability and Accountability Act of

1996 (HIPAA).

OMB Number: 1210–0039.

Affected Public: Business or other forprofit, not-for-profit.

Total Responses (annual): 43,952,715

(1997), 62,728,915 (1998), 31,896,715

(1999).

Total Respondents (annual): 176,315

(1997), 194,235 (1998), 163,515 (1999).

Frequency: On occasion.

Average Time per Response:

Average SPD/SMM—We estimate it

takes an average of 6 hours for

preparation of SPDs/SMMs, including

the time to copy, assemble, and mail the

document to the Department of Labor.

SMM Compliance—We estimate that

preparation of an SMM sufficient to

satisfy the requirements of this

regulation will take an average of 1

hour.

Distribution—We estimate that 2

minutes per participant is the time

needed to distribute an SMM/SPD,

including time spent reproducing the

document and mailing the document.

Estimated Total Burden Hours:

1,007,425 (1997), 1,130,282 (1998),

942,980 (1999).

There is estimated to be no capital/

start-up cost. Total Burden Cost for

operating/maintenance is estimated to

be $72,310,858 in 1997, $82,338,958 in

1998 and $65,002,858 in 1999.

Note: The Average Time Per Response,

Estimated Total Burden Hours, and Total

Burden Cost have been estimated without

accounting for those respondents that will

implement the ‘‘alternative mechanisms to

delivery by mail’’ provision contained in the

interim rule. It is expected that some

respondents will use these alternatives, and

that these alternatives will reduce burden

hours and costs.

Comments submitted in response to

this notice will be summarized and/or

included in the request for OMB

approval of the information collection

request; they will also become a matter

of public record.

Congressional Review

This interim rule has been transmitted

to Congress and the Comptroller General

for review under section 801(a)(1)(A) of

the Small Business Regulatory

Enforcement Fairness Act of 1996 (5

U.S.C. 801 et seq.).

Unfunded Mandates Reform Act

For purposes of the Unfunded

Mandates Reform Act of 1995 (Pub. L.

104–4), as well as Executive Order

12875, this interim rule does not

include any Federal mandate that may

result in expenditures by State, local or

tribal governments, and does not impose

an annual burden exceeding $100

million on the private sector.

Statutory Authority

This interim regulation is adopted

pursuant to authority contained in

section 505 of ERISA (Pub. L. 93–406,

88 Stat. 894, 29 U.S.C. 1135) and

sections 104(b) and 734 of ERISA, as

amended, (Pub. L. 104–191, 110 Stat.

1936, 1951 and Pub. L. 104–204, 110

Stat. 2935, 29 U.S.C. 1024 and 1191c)

and under Secretary of Labor’s Order

No. 1–87, 52 FR 13139, April 21, 1987.

List of Subjects in 29 CFR Part 2520

Employee benefit plans, Employee

Retirement Income Security Act, Group

health plans, Pension plans, Welfare

benefit plans.

For the reasons set forth above, Part

2520 of Title 29 of the Code of Federal

Regulations is amended as follows:

PART 2520—[AMENDED]

1. The authority for Part 2520 is

revised to read as follows:

Authority: Secs. 101, 102, 103, 104, 105,

109, 110, 111(b)(2), 111(c), and 505, Pub. L.

93–406, 88 Stat. 840–52 and 894 (29 U.S.C.

1021–1025, 1029–31, and 1135); Secretary of

Labor’s Order No. 27–74, 13–76, 1–87, and

Labor Management Services Administration

Order 2–6.

Sections 2520.102–3, 2520.104b–1

and 2520.104b–3 also are issued under

sec. 101 (a), (c) and (g)(4) of Pub. L. 104–

191, 110 Stat. 1936, 1939, 1951 and

1955 and, sec. 603 of Pub. L. 104–204,

110 Stat. 2935 (29 U.S.C. 1185 and

1191c).

2. Section 2520.102–3 is amended by

adding a sentence at the end of

paragraph (q) to read as follows:

§ 2520.102–3 Contents of summary plan

description.

* * * * *

(q) * * * If a health insurance issuer,

within the meaning of section 733(b)(2)

of the Act, is responsible, in whole or

in part, for the financing or

administration of a group health plan,

the summary plan description shall

indicate the name and address of the

issuer, whether and to what extent

benefits under the plan are guaranteed

under a contract or policy of insurance

issued by the issuer, and the nature of

any administrative services (e.g.,

payment of claims) provided by the

issuer.

* * * * *

3. Section 2520.102–3 is further

amended by revising the last sentence of

the undesignated paragraph following

paragraph (t)(2) to read as follows:

§ 2520.102–3 Contents of summary plan

description.

* * * * *

(t) * * *

(2) * * *

If you have any questions about this

statement or about your rights under

ERISA, you should contact the nearest

office of the Pension and Welfare

Benefits Administration, U.S.

Department of Labor, listed in your

telephone directory or the Division of

Technical Assistance and Inquiries,

Pension and Welfare Benefit

Administration, U.S. Department of

Labor, 200 Constitution Avenue N.W.,

Washington, D.C. 20210.

4. Section 2520.102–3 is further

amended by adding paragraphs (u) and

(v) to read as follows:

§ 2520.102–3 Contents of summary plan

description.

* * * * *

(u) In the case of a group health plan,

as defined in section 733(a)(1) of the

Act, that provides maternity or newborn

infant coverage, a statement indicating

that group health plans and health

insurance issuers offering group

insurance coverage generally may not,

under Federal law, restrict benefits for

any hospital length of stay in

connection with childbirth for the

mother or newborn child to less than 48

hours following a normal vaginal

delivery, or less than 96 hours following

a caesarean section, or require that a

provider obtain authorization from the

plan or the insurance issuer for

prescribing a length of stay not in excess

of the above periods.

(v) Applicability dates. (1) The

information described in the last

sentence of paragraph (q) and in the last

two sentences of paragraph (t)(2) shall

be treated as a change in the information

required to be included in the summary

plan description for a group health plan

for purposes of 29 CFR 2520.104b–3,

except that such information shall be

furnished to each participant covered

under the plan and each beneficiary

receiving benefits under the plan not

later than 60 days after the first day of

the first plan year beginning after June

30, 1997.

(2) The information described in

paragraph (u) of this section shall be

furnished to each participant covered

under a group health plan and each

beneficiary receiving benefits under a

group health plan not later than 60 days

after the first day of the first plan year

beginning on or after January 1, 1998.
Federal Register / Vol. 62, No. 67 / Tuesday, April 8, 1997 / Rules and Regulations 16985

5. Section 2520.104b–3 is amended by

revising the second sentence of

paragraph (a), redesignating paragraphs

(d) and (e) as paragraphs (f) and (g),

respectively, and adding new

paragraphs (d) and (e) to read as follows:

§ 2520.104b–3 Summary of material

modifications to the plan and changes in

the information required to be included in

the summary plan description.

(a) * * * Except as provided in

paragraph (d) of this section, the plan

administrator shall furnish this

summary, written in a manner

calculated to be understood by the

average plan participant, not later than

210 days after the close of the plan year

in which the modification or change

was adopted. * * *

* * * * *

(d) Special rule for group health

plans. (1) General. Except as provided

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

administrator of a group health plan, as

defined in section 733(a)(1) of the Act,

shall furnish to each participant covered

under the plan and each beneficiary

receiving benefits under the plan a

summary, written in a manner

calculated to be understood by the

average plan participant, of any

modification to the plan or change in

the information required to be included

in the summary plan description, within

the meaning of paragraph (a) of this

section, that is a material reduction in

covered services or benefits not later

than 60 days after the date of adoption

of the modification or change.

(2) 90-day alternative rule. The

administrator of a group health plan

shall not be required to furnish a

summary of any material reduction in

covered services or benefits within the

60-day period described in paragraph

(d)(1) of this section to any participant

covered under the plan or any

beneficiary receiving benefits who

would reasonably be expected to be

furnished such summary in connection

with a system of communication

maintained by the plan sponsor or

administrator, with respect to which

plan participants and beneficiaries are

provided information concerning their

plan, including modifications and

changes thereto, at regular intervals of

not more than 90 days and such

communication otherwise meets the

disclosure requirements of 29 CFR

2520.104b–1.

(3) ‘‘Material reduction’’. (i) For

purposes of this paragraph (d), a

‘‘material reduction in covered services

or benefits’’ means any modification to

the plan or change in the information

required to be included in the summary

plan description that, independently or

in conjunction with other

contemporaneous modifications or

changes, would be considered by the

average plan participant to be an

important reduction in covered services

or benefits under the plan.

(ii) A ‘‘reduction in covered services

or benefits’’ generally would include

any plan modification or change that:

eliminates benefits payable under the

plan; reduces benefits payable under the

plan, including a reduction that occurs

as a result of a change in formulas,

methodologies or schedules that serve

as the basis for making benefit

determinations; increases deductibles,

co-payments, or other amounts to be

paid by a participant or beneficiary;

reduces the service area covered by a

health maintenance organization;

establishes new conditions or

requirements (e.g., preauthorization

requirements) to obtaining services or

benefits under the plan.

(e) Applicability date. Paragraph (d) of

this section is applicable as of the first

day of the first plan year beginning after

June 30, 1997.

* * * * *

6. Section 2520.104b–1 is amended by

redesignating paragraph (c) as paragraph

(d) and adding a new paragraph (c) to

read as follows:

§ 2520.104b–1 Disclosure.

* * * * *

(c) Disclosure through electronic

media. (1) The administrator of a group

health plan furnishing documents

described in section 104(b)(1) of the Act

through electronic media will be

deemed to satisfy the requirements of

paragraph (b)(1) of this section with

respect to participants described in

paragraph (c)(2) of this section if:

(i) The administrator takes

appropriate and necessary measures to

ensure that the system for furnishing

documents results in actual receipt by

participants of transmitted information

and documents (e.g., uses return-receipt

electronic mail feature or conducts

periodic reviews or surveys to confirm

receipt of transmitted information);

(ii) Electronically delivered

documents are prepared and furnished

in a manner consistent with the

applicable style, format and content

requirements (See 29 CFR 2520.102–2

through 2520.102–5);

(iii) Each participant is provided

notice, through electronic means or in

writing, apprising the participant of the

document(s) to be furnished

electronically, the significance of the

document (e.g., the document describes

changes in the benefits provided by

your plan) and the participant’s right to

request and receive, free of charge, a

paper copy of each such document; and

(iv) Upon request of any participant,

the administrator furnishes, free of

charge, a paper copy of any document

delivered to the participant through

electronic media.

(2) For purposes of paragraph (c)(1) of

this section, the furnishing of

documents through electronic media

satisfies the requirements of paragraph

(b)(1) of this section only with respect

to participants:

(i) Who have the ability to effectively

access at their worksite documents

furnished in electronic form; and

(ii) Who have the opportunity at their

worksite location to readily convert

furnished documents from electronic

form to paper form free of charge.

(3) This paragraph (c) applies on or

after June 1, 1997.

* * * * *

Signed at Washington, D.C., this 27th day

of March, 1997.

Olena Berg,

Assistant Secretary, Pension and Welfare

Benefits Administration, U.S. Department of

Labor.

[FR Doc. 97–8173 Filed 4–1–97; 12:52 pm]

BILLING CODE 4510–29–P

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

45 CFR Part 148

[BPD–882–IFC]

RIN 0938–AH75

Individual Market Health Insurance

Reform: Portability From Group to

Individual Coverage; Federal Rules for

Access in the Individual Market; State

Alternative Mechanisms to Federal

Rules

AGENCY: Department of Health and

Human Services.

ACTION: Interim final rule with comment

period.

SUMMARY: This interim final rule with

comment period implements section

111 of the Health Insurance Portability

and Accountability Act of 1996, which

sets forth Federal requirements designed

to improve access to the individual

health insurance market. Certain

‘‘eligible individuals’’ who lose group

health insurance coverage are assured

availability of coverage in the individual

market, on a guaranteed issue basis,

without preexisting condition

exclusions. In addition, all individual

health insurance coverage must be

guaranteed renewable. This rule also

sets forth procedures that apply to

States that choose to implement a