Vol. 79 Tuesday, 

No. 101 May 27, 2014 

Part II 

Department of Health and Human Services 

45 CFR Parts 144, 146, 147, et al. 

Patient Protection and Affordable Care Act; Exchange and Insurance 

Market Standards for 2015 and Beyond; Final Rule 


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30240 Federal Register / Vol. 79, No. 101 / Tuesday, May 27, 2014 / Rules and Regulations 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

45 CFR Parts 144, 146, 147, 148, 153, 

154, 155, 156, and 158 

[CMS–9949–F] 

RIN 0938–AS02 

Patient Protection and Affordable Care 

Act; Exchange and Insurance Market 

Standards for 2015 and Beyond 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), Department 

of Health and Human Services (HHS). 

ACTION: Final rule. 

SUMMARY: This final rule addresses 

various requirements applicable to 

health insurance issuers, Affordable 

Insurance Exchanges (‘‘Exchanges’’), 

Navigators, non-Navigator assistance 

personnel, and other entities under the 

Patient Protection and Affordable Care 

Act and the Health Care and Education 

Reconciliation Act of 2010 (collectively 

referred to as the Affordable Care Act). 

Specifically, the rule establishes 

standards related to product 

discontinuation and renewal, quality 

reporting, non-discrimination standards, 

minimum certification standards and 

responsibilities of qualified health plan 

(QHP) issuers, the Small Business 

Health Options Program, and 

enforcement remedies in Federallyfacilitated Exchanges. It also finalizes: A 

modification of HHS’s allocation of 

reinsurance collections if those 

collections do not meet our projections; 

certain changes to allowable 

administrative expenses in the risk 

corridors calculation; modifications to 

the way we calculate the annual limit 

on cost sharing so that we round this 

parameter down to the nearest $50 

increment; an approach to index the 

required contribution used to determine 

eligibility for an exemption from the 

shared responsibility payment under 

section 5000A of the Internal Revenue 

Code; grounds for imposing civil money 

penalties on persons who provide false 

or fraudulent information to the 

Exchange and on persons who 

improperly use or disclose information; 

updated standards for the consumer 

assistance programs; standards related 

to the opt-out provisions for self-funded, 

non-Federal governmental plans and 

related to the individual market 

provisions under the Health Insurance 

Portability and Accountability Act of 

1996 including excepted benefits; 

standards regarding how enrollees may 

request access to non-formulary drugs 

under exigent circumstances; 

amendments to Exchange appeals 

standards and coverage enrollment and 

termination standards; and time-limited 

adjustments to the standards relating to 

the medical loss ratio (MLR) program. 

The majority of the provisions in this 

rule are being finalized as proposed. 

DATES: This rule is effective July 28, 

2014 except for amendments to 45 CFR 

155.705 which are effective May 27, 

2014. 

FOR FURTHER INFORMATION CONTACT: For 

general matters and matters related to 

Parts 144, 146, 147, 148 and 154: Jacob 

Ackerman, (301) 492–4179. 

For matters related to reinsurance, 

under Part 153: Adrianne Glasgow, 

(410) 786–0686. 

For matters related to risk corridors, 

under Part 153: Jaya Ghildiyal, (301) 

492–5149. 

For matters related to noninterference with Federal law and nondiscrimination standards, and 

Navigator, non-Navigator assistance 

personnel, and certified application 

counselor program standards, under 

Part 155, subparts B and C: Tricia 

Beckmann, (301) 492–4328. 

For matters related to civil money 

penalties for noncompliant consumer 

assistance entities, under Part 155, 

subpart C: Emily Ames, (301) 492–4246. 

For matters related to enrollment of a 

qualified individual, under Part 155, 

subpart E: Jack Lavelle, (410) 786–0639. 

For matters related to civil money 

penalties for false or fraudulent 

information or improper use of 

information, under Part 155, subpart C; 

exemptions under Part 155, subparts D 

and G, and matters related to eligibility 

appeals, under Part 155, subparts F and 

H: Christine Hammer, (301) 492–4431. 

For matters related to special 

enrollment periods under Part 155, 

Subpart E: Spencer Manasse, (301) 492– 

5141. 

For matters related to the Small 

Business Health Options Program, 

under Part 155, subpart H: Christelle 

Jang, (410) 786–8438. 

For matters related to the required 

contribution percentage for affordability 

exemptions, under Part 155, subpart G: 

Ariel Novick, (301) 492–4309. 

For matters related to cost sharing, 

under Part 156, subpart B: Pat Meisol, 

(410) 786–1917. 

For matters related to quality 

standards, under Parts 155 and 156: 

Nidhi Singh Shah, (301) 492–5110. 

For matters related to enforcement 

remedies, under Part 156: Cindy Yen, 

(301) 492–5142. 

For matters related to minimum 

essential coverage, under Part 156, 

subpart G: Cam Clemmons, (410) 786– 

1565. 

For all other matters related to Parts 

155 and 156: Leigha Basini, (301) 492– 

4380. 

For matters related to the medical loss 

ratio program, under Part 158: Julie 

McCune, (301) 492–4196. 

SUPPLEMENTARY INFORMATION: 

Electronic Access 

This Federal Register document is 

also available from the Federal Register 

online database through Federal Digital 

System (FDsys), a service of the U.S. 

Government Printing Office. This 

database can be accessed via the 

internet at http://www.gpo.gov/fdsys. 

Table of Contents 

I. Executive Summary 

II. Background 

A. Legislative Overview 

B. Stakeholder Consultation and Input 

C. Structure of Final Rule 

III. Provisions of the Proposed Regulations 

and Analysis and Responses to Public 

Comments 

A. Part 144—Requirements Relating to 

Health Insurance Coverage 

B. Part 146—Requirements for the Group 

Health Insurance Market 

C. Part 147—Health Insurance Reform 

Requirements for the Group and 

Individual Health Insurance Markets 

Guaranteed Availability and Guaranteed 

Renewability of Coverage (§§ 147.104 

and 147.106) 

a. No Effect on Other Laws 

b. Product Discontinuance and Uniform 

Modification of Coverage Exceptions to 

Guaranteed Renewability Requirements 

D. Part 148—Requirements for the 

Individual Health Insurance Market 

1. Conforming Changes to Individual 

Market Regulations (§§ 148.101 through 

148.128) 

2. Fixed Indemnity Insurance in the 

Individual Health Insurance Market 

(§ 148.220) 

E. Part 153—Standards Related to 

Reinsurance, Risk Corridors, and Risk 

Adjustment Under the Affordable Care 

Act 

1. Provisions and Parameters for the 

Permanent Risk Adjustment Program 

2. Provisions and Parameters for the 

Transitional Reinsurance Program 

3. Provisions for the Temporary Risk 

Corridors Program (§ 153.500) 

F. Part 154—Health Insurance Issuer Rate 

Increases: Disclosure and Review 

Requirements 

G. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. Subpart B—General Standards Related to 

the Establishment of the Exchange NonInterference With Federal Law and NonDiscrimination Standards (§ 155.120) 

2. Subpart C—General Functions of an 

Exchange 

a. Civil Money Penalties for Violations of 

Applicable Exchange Standards by 

Consumer Assistance Entities in 

Federally-Facilitated Exchanges 

(§ 155.206) 


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1The word ‘‘Exchanges’’ refers to both State 

Exchanges, also called State-based Exchanges, and 

Federally-facilitated Exchanges (FFEs). In this final 

rule, we use the terms ‘‘State Exchange’’ or ‘‘FFE’’ 

when we are referring to a particular type of 

Exchange. When we refer to ‘‘FFEs,’’ we are also 

Continued 

b. Navigator, Non-Navigator Assistance 

Personnel, and Certified Application 

Counselor Program Standards 

(§§ 155.210, 155.215, and 155.225) 

c. Payment of Premiums (§ 155.240) 

d. Privacy and Security of Personally 

Identifiable Information (§ 155.260) 

e. Bases and Process for Imposing Civil 

Money Penalties for Provision of False or 

Fraudulent Information to an Exchange 

or Improper Use or Disclosure of 

Information (§ 155.285) 

3. Subpart D—Exchange Functions in the 

Individual Market: Eligibility 

Determinations for Exchange 

Participation and Insurance Affordability 

Programs 

a. Verification Process Related to Eligibility 

for Insurance Affordability Programs 

(§ 155.320) 

b. Eligibility Redetermination During a 

Benefit Year (§ 155.330) 

4. Subpart E—Exchange Functions in the 

Individual Market: Enrollment in 

Qualified Health Plans 

a. Enrollment of Qualified Individuals in a 

QHP (§ 155.400) 

b. Initial and Annual Open Enrollment 

Periods (§ 155.410) 

c. Special Enrollment Periods (§ 155.420) 

d. Termination of Coverage (§ 155.430) 

5. Subpart F—Appeals of Eligibility 

Determinations for Exchange 

Participation and Insurance Affordability 

Programs 

a. General Eligibility Appeals 

Requirements (§ 155.505) 

b. Dismissals (§ 155.530) 

c. Employer Appeals Process (§ 155.555) 

6. Subpart G—Exchange Functions in the 

Individual Market: Eligibility 

Determinations for Exemptions 

a. Required Contribution Percentage 

b. Options for Conducting Eligibility 

Determinations for Exemptions 

(§ 155.625) 

7. Subpart H—Exchange Functions: Small 

Business Health Options Program 

a. Functions of a SHOP (§ 155.705) 

b. Enrollment Periods under SHOP 

(§ 155.725) 

c. SHOP Employer and Employee 

Eligibility Appeals Requirements 

(§ 155.740) 

8. Subpart O—Quality Reporting Standards 

for Exchanges 

a. Quality Rating System (§ 155.1400) 

b. Enrollee Satisfaction Survey System 

(§ 155.1405) 

H. Part 156—Health Insurance Issuer 

Standards under the Affordable Care Act, 

Including Standards Related to 

Exchanges 

1. Subpart B—Essential Health Benefits 

Package 

a. Prescription Drug Benefits (§ 156.122) 

b. Cost-Sharing Requirements (§ 156.130) 

2. Subpart C—General Functions of an 

Exchange 

a. QHP Issuer Participation Standards 

(§ 156.200) 

b. Enrollment Process for Qualified 

Individuals (§ 156.265) 

3. Subpart G—Minimum Essential 

Coverage 

a. Other Coverage that Qualifies as 

Minimum Essential Coverage (§ 156.602) 

b. Requirements for Recognition as 

Minimum Essential Coverage for Types 

of Coverage Not Otherwise Designated 

Minimum Essential Coverage in the 

Statute or This Subpart (§ 156.604) 

4. Subpart I—Enforcement Remedies in 

Federally-Facilitated Exchanges 

a. Available Remedies; Scope (§ 156.800) 

b. Bases and Process for Imposing Civil 

Money Penalties in Federally-Facilitated 

Exchanges (§ 156.805) 

c. Notice of Non-compliance (§ 156.806) 

d. Bases and Process for Decertification of 

a QHP Offered by an Issuer Through a 

Federally-Facilitated Exchange 

(§ 156.810) 

5. Subpart L—Quality Standards 

a. Establishment of Standards for HHSApproved Enrollee Satisfaction Survey 

Vendors for Use by QHP Issuers in 

Exchanges (§ 156.1105) 

b. Quality Rating System (§ 156.1120) 

c. Enrollee Satisfaction Survey (§ 156.1125) 

I. Part 158—Issuer Use of Premium 

Revenue: Reporting and Rebate 

Requirements 

1. Subpart A—Disclosure and Reporting 

a. ICD–10 Conversion Expenses (§ 158.150) 

2. Subpart B—Calculating and Providing 

the Rebate 

a. MLR and Rebate Calculations in States 

with Merged Individual and Small 

Group Markets (§§ 158.211, 158.220, 

158.231) 

b. Accounting for Special Circumstances 

(§ 158.221) 

c. Distribution of De Minimis Rebates 

(§ 158.243) 

IV. Provisions of Final Regulations 

V. Waiver of Delay in Effective Date 

VI. Collection of Information Requirements 

A. ICRs Regarding Recertification for 

Certified Application Counselors 

(§ 155.225) 

B. ICRs Regarding Consumer Authorization 

(§§ 155.210 and 155.215) 

C. ICRs Regarding Enrollee Satisfaction & 

Marketplace Surveys (§§ 155.1200, 

156.1105, and 156.1125) 

D. ICR Regarding Quality Rating System 

(§ 156.1120) 

E. ICRs Regarding Quality Standards for 

Exchanges (§§ 155.1400 and 155.1405) 

F. ICR Regarding Medical Loss Ratio 

Requirements (§§ 158.150, 158.211, 

158.220, 158.221, and 158.231) 

G. ICRs Regarding Civil Money Penalties 

(§§ 155.206 and 155.285) 

H. ICRs Regarding Fixed Indemnity Plans, 

Minimum Essential Coverage, 

Certifications of Creditable Coverage and 

HIPAA Opt-Out Election Notice, Notice 

of Discontinuation, Notice of Renewal 

(§§ 146.152, 146.180, 147.106, 148.122, 

148.220, and 156.602) 

I. Emergency Clearance: Public Information 

Collection Requirements Submitted to 

the Office of Management and Budget 

(OMB) 

VII. Regulatory Impact Analysis 

A. Summary 

B. Executive Orders 13563 and 12866 

1. Need for Regulatory Action 

2. Summary of Impacts 

3. Anticipated Benefits, Costs and 

Transfers 

C. Regulatory Alternatives 

1. Collecting ESS Data at the Product Level 

Instead of Each Product Per Metal Tier 

2. Using Medicaid CAHPS® As Is Instead 

of Adding Additional and New 

Questions to the ESS 

3. Collecting QRS Data for Each Product 

Per Metal Tier Instead of at the Product 

Level 

4. Using the Medicare Advantage (MA) 

CAHPS® Instrument and Star System 

D. Regulatory Flexibility Act 

E. Unfunded Mandates Reform Act 

F. Federalism 

G. Congressional Review Act 

VIII. Regulations Text 

Abbreviations 

Affordable Care Act—The collective term for 

the Patient Protection and Affordable Care 

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

and Education Reconciliation Act of 2010 

(Pub. L. 111–152) 

AV—Actuarial Value 

CAHPS®—Consumer Assessment of 

Healthcare Providers and Systems 

CFR—Code of Federal Regulations 

CMP—Civil Money Penalty 

CMS—Centers for Medicare & Medicaid 

Services 

CSR—Cost-Sharing Reductions 

EHB—Essential Health Benefits 

ERISA—Employee Retirement Income 

Security Act of 1974 (Pub. L. 93–406) 

ESS—Enrollee Satisfaction Survey 

FFE—Federally-facilitated Exchange 

FF–SHOP—Federally-facilitated Small 

Business Health Options Program 

HCC—Hierarchical Condition Category 

HHS—United States Department of Health 

and Human Services 

HIPAA—Health Insurance Portability and 

Accountability Act of 1996 (Pub. L. 104– 

191) 

IRS—Internal Revenue Service 

MLR—Medical Loss Ratio 

NAIC—National Association of Insurance 

Commissioners 

OMB—United States Office of Management 

and Budget 

OPM—United States Office of Personnel 

Management 

PHS—Act Public Health Service Act 

PRA—Paperwork Reduction Act of 1995 

QHP—Qualified health plan 

QRS—Quality Rating System 

SHOP—Small Business Health Options 

Program 

The Code—Internal Revenue Code of 1986 

I. Executive Summary 

Since January 1, 2014, qualified 

individuals and small employers have 

been able to obtain private health 

insurance through Affordable Insurance 

Exchanges, or ‘‘Exchanges’’ (also known 

as Health Insurance Marketplaces, or 

‘‘Marketplaces’’).1 The Exchanges 


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referring to State Partnership Exchanges, which are 

a form of FFEs. 

2FAQs about Affordable Care Act 

Implementation (Part XVIII) and Mental Health 

Parity Implementation, Q11 (January 9, 2014). 

Available at: http://www.cms.gov/CCIIO/Resources/ 

Fact-Sheets-and-FAQs/AffordableCareAct_

implementation_faqs18.html and http://

www.dol.gov/ebsa/faqs/faq-AffordableCare

Act18.html. 

3Amendments to the HIPAA opt-out provision 

(formerly section 2721(b)(2) of the Public Health 

Service Act) made by the Affordable Care Act 

(September 21, 2010). Available at: http://

www.cms.gov/CCIIO/Resources/Files/Downloads/

opt_out_memo.pdf. 

provide competitive marketplaces 

where individuals and small employers 

can compare available private health 

insurance options on the basis of price, 

quality, and other factors. The 

Exchanges help enhance competition in 

the health insurance market, improve 

choice of affordable health insurance, 

and give small businesses the same 

purchasing power as large businesses. 

Individuals who enroll in QHPs 

through individual market Exchanges 

may be eligible to receive premium tax 

credits to make health insurance 

purchased through an Exchange more 

affordable and cost-sharing reductions 

(CSRs) that lower out-of-pocket 

expenses for health care services. The 

premium tax credits, combined with the 

new insurance reforms, have 

significantly increased the number of 

individuals with health insurance 

coverage. The premium stabilization 

programs—risk adjustment, reinsurance, 

and risk corridors—protect against 

adverse selection in the newly enrolled 

population. These programs, in 

combination with the MLR program and 

market reforms extending guaranteed 

availability (also known as guaranteed 

issue) protections, prohibiting the use of 

factors such as health status, medical 

history, gender, and industry of 

employment to set premium rates, will 

help to ensure that every American has 

access to high quality, affordable health 

insurance. 

This final rule addresses various 

requirements applicable to health 

insurance issuers, Exchanges, 

Navigators, non-Navigator assistance 

personnel, and other entities under the 

Affordable Care Act. Specifically, the 

rule establishes standards related to 

product discontinuation and renewal, 

quality reporting, non-discrimination 

standards, minimum certification 

standards and responsibilities of QHP 

issuers, the Small Business Health 

Options Program (SHOP), and 

enforcement remedies in Federallyfacilitated Exchanges (FFEs). It also 

finalizes: A modification of HHS’s 

allocation of reinsurance collections if 

those collections do not meet our 

projections; certain changes to allowable 

administrative expenses in the risk 

corridors calculation; modifications to 

the way we calculate the annual limit 

on cost sharing so that we round this 

parameter down to the nearest $50 

increment; an approach to indexing the 

required contribution used to determine 

eligibility for an exemption from the 

shared responsibility payment under 

section 5000A of the Internal Revenue 

Code; grounds for imposing CMPs on 

persons who provide false or fraudulent 

information to the Exchange and on 

persons who improperly use or disclose 

information; updated standards for 

Exchange consumer assistance 

programs; standards related to the optout provisions for self-funded, nonFederal governmental plans and related 

to the individual market provisions 

under the Health Insurance Portability 

and Accountability Act of 1996 

(HIPAA); amendments to Exchange 

appeals standards and coverage 

enrollment and termination standards; 

and time-limited adjustments to the 

standards relating to the MLR program. 

Product Discontinuance and Uniform 

Modification of Coverage Exceptions to 

Guaranteed Renewability Requirements: 

Under sections 2702 and 2703 of the 

Public Health Service Act (PHS Act), as 

added by the Affordable Care Act, 

health insurance issuers in the group 

and individual markets must guarantee 

the availability and renewability of 

coverage unless an exception applies. In 

this final rule, we establish criteria for 

determining when modifications made 

by an issuer to the health insurance 

coverage for a product would and would 

not constitute the discontinuation of an 

existing product and the creation of a 

new product. The same criteria would 

apply to determine whether the rate 

filing is subject to submission and 

review under 45 CFR part 154. We also 

direct that issuers use standard 

consumer notices in a format designated 

by the Secretary when discontinuing or 

renewing a product in the group or 

individual market. Additionally, we 

clarify that the guaranteed availability 

and renewability requirements should 

not be construed to supersede other 

provisions of Federal law in certain 

circumstances. 

Conforming Changes to Individual 

Market Provisions: Sections 2741 

through 2744 of the PHS Act were 

added by HIPAA to improve the 

portability and continuity of coverage in 

the individual health insurance market. 

These provisions are implemented 

through regulations in 45 CFR part 148. 

In this final rule, we amend the 

individual market provisions in Part 148 

to reflect the amendments made by the 

Affordable Care Act. These amendments 

are for clarity only. 

Fixed Indemnity Insurance in the 

Individual Market: Consistent with 

previously released guidance, we amend 

the criteria for fixed indemnity 

insurance to be treated as an excepted 

benefit in the individual health 

insurance market.2 The amendments 

eliminate the requirement that 

individual fixed indemnity insurance 

must pay on a per-period basis (as 

opposed to a per-service basis), and 

require on a prospective basis, among 

other things, that it be sold only to 

individuals who have other health 

coverage that is minimum essential 

coverage to be considered an excepted 

benefit. 

HIPAA Opt-Out for Self-Funded, NonFederal Governmental Plans: Prior to 

enactment of the Affordable Care Act, 

sponsors of self-funded, non-Federal 

governmental plans were permitted to 

elect to exempt those plans from (‘‘opt 

out of’’) certain provisions of title XXVII 

of the PHS Act. Consistent with 

previously released guidance, we 

finalize amendments to the non-Federal 

governmental plan regulations (45 CFR 

146.180) to reflect the amendments 

made by the Affordable Care Act to 

these provisions, with clarifications 

specifying that, in the case of a plan 

sponsor submitting opt-out elections for 

more than one collectively bargained 

health plan, each such plan must be 

listed in the opt-out election, and in the 

case of a plan sponsor submitting optout elections for group health plans that 

are not subject to a collective bargaining 

agreement, the sponsor must submit 

separate election documents for each 

such plan.3

Essential Health Benefits (EHB) 

Prescription Drug Coverage: Under 45 

CFR 156.122(c), a plan providing EHB 

must have procedures in place that 

allow an enrollee to request and gain 

access to a clinically appropriate drug 

not covered by the plan. In this final 

rule, we are revising paragraph (c) to 

require that the plan’s procedures 

include an expedited process for exigent 

circumstances that requires the health 

plan to make its coverage determination 

within no more than 24 hours after it 

receives the request and that requires 

the health plan to provide the drug for 

the duration of the exigency. 

Premium Stabilization Programs: The 

Affordable Care Act establishes three 

premium stabilization programs—risk 

adjustment, reinsurance, and risk 


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corridors—to protect against adverse 

selection. The Affordable Care Act 

directs that a permanent risk adjustment 

program be established in each State to 

mitigate the impacts of possible adverse 

selection and stabilize premiums in the 

individual and small group markets as 

and after insurance market reforms are 

implemented. The Affordable Care Act 

also directs that a transitional 

reinsurance program be established in 

each State to help stabilize premiums by 

helping to pay the cost of treating highcost enrollees in the individual market 

from 2014 through 2016. The Affordable 

Care Act directs the Secretary to 

establish and administer a temporary 

risk corridors program. In this final rule, 

we modify and finalize our proposal to 

allocate contributions collected under 

that program in the event of a shortfall 

in collections. In that event, we will 

allocate reinsurance contributions first 

to the reinsurance payment pool, and 

second to administrative expenses and 

the U.S. Treasury. We also finalize the 

proposal, unchanged, to increase the 

ceiling on allowable administrative 

costs and the floor on profits by 2 

percent in the risk corridors calculation 

to account for uncertainty and changes 

in the market prior to and during benefit 

year 2015. 

Exchange Establishment and QHP 

Issuer Standards: The rule amends 

oversight standards regarding QHP 

decertification and CMPs. It also directs 

that QHP issuers provide enrollees with 

an annual notice of coverage changes. 

This rule creates a process for survey 

vendors to appeal an HHS decision not 

to approve its application to become an 

enrollee satisfaction survey (ESS) 

vendor, as well as standards for 

revoking HHS-approval of ESS vendors. 

Finally, it establishes standards for the 

ESS and quality rating system (QRS) 

related to the display of such 

information by Exchanges and the 

submission of validated data by QHP 

issuers. 

We align the start of employer 

election periods in FF–SHOPs for plan 

years beginning in 2015 with the start of 

open enrollment in the corresponding 

individual market Exchange for the 

2015 benefit year and, in all SHOPs, 

eliminate the 30-day minimum time 

frames for the employer and employee 

annual election periods. We also allow 

State Insurance Commissioners the 

opportunity to recommend that, in 

2015, a SHOP not provide employers 

with the option of selecting a level of 

coverage as described in section 

1302(d)(1) of the Affordable Care Act 

and making all QHPs at that level of 

coverage available to their employees if 

the commissioner can adequately 

explain that it is his or her expert 

judgment, based on a documented 

assessment of the full landscape of the 

small group market in his or her State, 

that not implementing employee choice 

would be in the best interest of small 

employers and their employees and 

dependents, given the likelihood that 

implementing employee choice would 

cause issuers to price products and 

plans higher in 2015 due to the issuers’ 

beliefs about adverse selection. We 

allow the opportunity for a person 

appealing a determination of SHOP 

eligibility to withdraw an appeal by 

telephone, if the appeals entity is 

capable of accepting telephonic 

signatures. 

Civil Money Penalties for False 

Information or Improper Use of 

Information: The final rule specifies the 

grounds for imposing CMPs on persons 

who provide false or fraudulent 

information to the Exchange and on 

persons who use or disclose information 

in violation of section 1411(g) of the 

Affordable Care Act. The grounds for 

imposing a penalty include: Negligent 

failure to provide correct information, 

knowing and willful provision of false 

or fraudulent information, and knowing 

and willful use or disclosure of 

information in violation of section 

1411(g). This section specifies the 

factors used to determine the amount of 

the CMP to be imposed against a person. 

The section also provides for the 

requirements for notices which must be 

provided to a person if HHS proposes to 

impose a CMP, and the processes a 

person may follow should the person 

wish to challenge HHS’ determination 

that a CMP should be imposed, 

including a process pursuant to which 

a person may request a hearing before 

an administrative law judge. We also 

amend current privacy and security 

regulations at 45 CFR 155.260 to 

reference the new CMP provisions 

associated with knowingly and willfully 

using or disclosing information in 

violation of section 1411(g) of the 

Affordable Care Act. 

Civil Money Penalties for Consumer 

Assistance Entities: The final rule 

provides that HHS may impose CMPs 

against Navigators, non-Navigator 

assistance personnel, certified 

application counselor designated 

organizations, and certified application 

counselors in FFEs, if these entities and/ 

or individuals violate Federal 

requirements applicable to their 

activities. 

Navigator, Non-Navigator Assistance 

Personnel, and Certified Application 

Counselor Program Standards: In this 

final rule, we specify certain types of 

State laws applicable to Navigators, 

non-Navigator assistance personnel, and 

certified application counselors that 

HHS considers to prevent the 

application of the provisions of title I of 

the Affordable Care Act within the 

meaning of section 1321(d) of the 

Affordable Care Act. We also make 

several changes to update the standards 

applicable to these consumer assistance 

entities and individuals, such as 

prohibiting them from specified 

marketing or solicitation activities. We 

require Navigators and non-Navigator 

assistance personnel to obtain 

authorization before accessing a 

consumer’s personally identifiable 

information and to prohibit them from 

charging consumers for their services. 

We also require that certified 

application counselors be recertified on 

at least an annual basis, and prohibit 

certified application counselors and 

certified application counselor 

designated organizations from receiving 

consideration, directly or indirectly, 

from health insurance issuers or stop 

loss insurance issuers in connection 

with the enrollment of consumers in 

QHPs or non-QHPs. We further provide 

that, in specific circumstances, certified 

application counselor designated 

organizations can serve targeted 

populations without violating the broad 

non-discrimination requirement related 

to Exchange functions. 

Indexing of Cost-Sharing 

Requirements: Under §§ 156.130(a) and 

156.130(b), the annual limitation on cost 

sharing and the annual limitation on 

deductibles in the small group market 

for years after 2014 are to be indexed by 

the premium adjustment percentage. We 

established our methodology for 

calculating the premium adjustment 

percentage in the 2015 Payment Notice. 

In this final rule, we provide for the 

annual limitation on cost sharing to be 

updated based on the premium 

adjustment percentage by rounding 

down to the nearest $50 increment. We 

are eliminating the annual limit on 

deductibles for small group plans, 

consistent with the Protecting Access to 

Medicare Act of 2014 (Pub. L. 113–93), 

which was signed into law on April 1, 

2014. 

Required Contribution Percentage: 

Under section 5000A of the Code, an 

applicable individual must maintain 

minimum essential coverage for each 

month, qualify for an exemption, or 

make a shared responsibility payment. 

An individual may qualify for an 

exemption from the shared 

responsibility payment if the amount 

that he or she would be required to pay 

towards minimum essential coverage 

(required contribution) exceeds a 

particular percentage (the required 


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contribution percentage) of his or her 

household income. Under section 

5000A of the Code, the required 

contribution percentage for 2014 is 8 

percent, and for each plan year 

beginning in a calendar year after 2014, 

the percentage, as determined by the 

Secretary of Health and Human Services 

(the Secretary), that reflects the excess 

of the rate of premium growth between 

the preceding calendar year and 2013 

over the rate of income growth for the 

same period. In the preamble to this 

final rule, we establish a methodology 

for determining the percentage 

reflecting the excess of the rate of 

premium growth over the rate of income 

growth for plan years after 2014. We 

also establish a required contribution 

percentage for 2015 of 8.05 percent. For 

calendar years after 2015, the required 

contribution percentage will be 

published in the annual HHS notice of 

benefit and payment parameters. 

Eligibility Appeals: The rule amends 

standards related to eligibility appeals 

provisions in subparts F and H of Part 

155. To facilitate the efficient 

conclusion of an appeal at the request 

of the appellant, we amend the 

withdrawal procedure to permit 

withdrawals made via telephonic 

signature. 

Minimum Essential Coverage: We 

clarify that entities other than plan 

sponsors (for example, issuers) can 

apply for their coverage to be recognized 

as minimum essential coverage, 

pursuant to the process outlined in 45 

CFR 156.604 and guidance thereunder. 

Medical Loss Ratio: The MLR program 

created pursuant to the Affordable Care 

Act generally requires issuers to rebate 

a portion of premiums if their MLR fails 

to meet the applicable MLR standard in 

a State and market for the applicable 

reporting year. An issuer’s MLR is the 

ratio of claims plus quality 

improvement activities to premium 

revenue, with the premium adjusted by 

the amounts paid for taxes, licensing 

and regulatory fees, and the premium 

stabilization programs. On December 1, 

2010, we published an interim final rule 

entitled ‘‘Health Insurance Issuers 

Implementing Medical Loss Ratio (MLR) 

Requirements under the Patient 

Protection and Affordable Care Act’’ (75 

FR 74864), which established standards 

for the MLR program. Since then, we 

have made several revisions and 

technical corrections to those rules. In 

this final rule, we modify the timeframe 

for which issuers can include their ICD– 

10 conversion costs in their MLR 

calculation. We also modify the 

regulation to clarify how issuers would 

calculate MLRs and rebates in States 

that require the individual and small 

group markets to be merged. We note 

that the standards for ICD–10 

conversion costs and merged markets 

also apply to the risk corridors program. 

Further, we modify the regulation to 

account for the special circumstances of 

the issuers affected by the HHS 

transitional policy and the issuers 

impacted by systems challenges during 

the implementation of the Exchanges. 

II. Background 

A. Legislative Overview 

The Patient Protection and Affordable 

Care Act (Pub. L. 111–148) was enacted 

on March 23, 2010. The Health Care and 

Education Reconciliation Act of 2010 

(Pub. L. 111–152), which amended and 

revised several provisions of the Patient 

Protection and Affordable Care Act, was 

enacted on March 30, 2010. In this final 

rule, we refer to the two statutes 

collectively as the ‘‘Affordable Care 

Act.’’ 

The Affordable Care Act reorganizes, 

amends, and adds to the provisions of 

title XXVII of the PHS Act relating to 

group health plans and health insurance 

issuers in the group and individual 

markets. 

Section 1201 of the Affordable Care 

Act added sections 2702 and 2703 of the 

PHS Act. Section 2702 of the PHS Act 

generally requires an issuer that offers 

health insurance coverage in the 

individual or group market in a State to 

offer coverage to and accept every 

individual or employer in the State that 

applies for such coverage. Section 2703 

of the PHS Act generally requires an 

issuer to renew or continue in force 

coverage in the group or individual 

market at the option of the plan sponsor 

or the individual. 

Prior to enactment of the Affordable 

Care Act, HIPAA amended the PHS Act 

to improve access to individual health 

insurance coverage for certain eligible 

individuals who previously had group 

coverage, and to guarantee the 

renewability of all coverage in the 

individual market. These reforms were 

added as sections 2741 through 2744 of 

the PHS Act. 

HIPAA also added PHS Act 

provisions permitting sponsors of selffunded, non-Federal governmental 

plans to elect to exempt those plans 

from (‘‘opt out of’’) certain provisions of 

title XXVII of the PHS Act. This election 

was authorized under section 2721(b)(2) 

of the PHS Act, which is now 

designated as section 2722(a)(2) of the 

PHS Act by the Affordable Care Act. 

Section 2718 of the PHS Act, as added 

by the Affordable Care Act, generally 

requires health insurance issuers to 

submit an annual MLR report to HHS 

and provide rebates to consumers if they 

do not achieve specified MLRs. 

Sections 2722 and 2763 of the PHS 

Act, as implemented in 45 CFR 

146.145(b) and 148.220, provide that the 

requirements of parts A and B of title 

XXVII of the PHS Act shall not apply to 

any individual coverage or any group 

health plan (or group health insurance 

coverage) in relation to its provision of 

excepted benefits. Excepted benefits are 

described in section 2791(c) of the PHS 

Act. One category of excepted benefits, 

called ‘‘noncoordinated excepted 

benefits,’’ includes coverage for only a 

specified disease or illness, and hospital 

indemnity or other fixed indemnity 

insurance. Benefits in this category are 

excepted only if they meet certain 

conditions specified in the statute and 

regulations. 

Section 1302(b) requires the Secretary 

to define EHB, including prescription 

drugs. 

Section 1302(c) of the Affordable Care 

Act establishes an annual limitation on 

cost sharing for 2014, and provides that 

this limitation is to be increased for 

each year after 2014 by the percentage 

by which the average per capita 

premium for health insurance coverage 

in the United States for the preceding 

year exceeds the average per capita 

premium for 2013. Under section 

1302(c), this limitation is to be rounded 

to the next lowest multiple of $50. 

Section 1311(b) of the Affordable Care 

Act provides that each State has the 

opportunity to establish an Exchange 

that: (1) Facilitates the purchase of 

insurance coverage by qualified 

individuals through QHPs; (2) provides 

for the establishment of a SHOP 

designed to assist qualified employers 

in the enrollment of their qualified 

employees in QHPs; and (3) meets other 

requirements specified in the Affordable 

Care Act. 

Section 1311(c)(3) of the Affordable 

Care Act requires the Secretary to 

develop a rating system to rate QHPs 

offered through an Exchange on the 

basis of quality and price. Section 

1311(c)(4) of the Affordable Care Act 

directs the Secretary to establish an ESS 

system that would evaluate the level of 

enrollee satisfaction of members in 

QHPs offered through an Exchange, for 

each QHP with more than 500 enrollees 

in the previous year. Sections 1311(c)(3) 

and 1311(c)(4) of the Affordable Care 

Act further require an Exchange to 

provide information to individuals and 

employers from the rating and ESS 

systems on the Exchange’s Web site. We 

have already promulgated regulations in 

45 CFR 155.200(d) that direct Exchanges 

to oversee implementation of ESSs and 

ratings of health care quality and 


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4Patient Protection and Affordable Care Act; 

Establishment of Exchanges and Qualified Health 

Plans; Exchange Standards for Employers; Final 

Rule, 77 FR 18310 (Mar. 27, 2012) (to be codified 

at 45 CFR parts 155, 156, & 157). 

5Section 1321(c) of the Affordable Care Act 

erroneously cites to section 2736(b) of the PHS Act 

instead of 2723(b) of the PHS Act. This was clearly 

a typographical error, and we have interpreted 

section 1321(c) of the Affordable Care Act to 

incorporate section 2723(b) of the PHS Act. 

outcomes, and 45 CFR 156.200(b)(5) 4

that directs QHP issuers that participate 

in Exchanges to report health care 

quality and outcomes information and 

to implement an ESS consistent with 

the Affordable Care Act. 

Sections 1311(d)(4)(K) and 1311(i) of 

the Affordable Care Act direct all 

Exchanges to establish a Navigator 

program. 

Section 1312(a)(2) of the Affordable 

Care Act provides that a qualified 

employer may provide support for 

coverage of employees under a QHP by 

selecting any level of coverage under 

section 1302(d) to be made available to 

employees through a SHOP. Section 

1312(a)(2) further provides that 

employees of an employer who makes 

such an election may choose to enroll in 

a QHP that offers coverage at that level. 

Section 1321(a) of the Affordable Care 

Act provides authority for the Secretary 

to establish standards and regulations to 

implement the statutory requirements 

related to Exchanges, QHPs and other 

components of title I of the Affordable 

Care Act. Section 1321(a)(1) directs the 

Secretary to issue regulations that set 

standards for meeting the requirements 

of title I of the Affordable Care Act with 

respect to, among other things, the 

establishment and operation of 

Exchanges. Section 1321(a)(2) requires 

the Secretary to engage in consultation 

to ensure balanced representation 

among interested parties. 

Section 1321 of the Affordable Care 

Act provides for State flexibility in the 

operation and enforcement of Exchanges 

and related requirements. Section 

1321(d) provides that nothing in title I 

of the Affordable Care Act shall be 

construed to preempt any State law that 

does not prevent the application of title 

I of the Affordable Care Act. Section 

1311(k) specifies that Exchanges may 

not establish rules that conflict with or 

prevent the application of regulations 

promulgated by the Secretary. 

Section 1321(c)(1) requires the 

Secretary of HHS (referred to throughout 

this rule as the Secretary) to establish 

and operate an FFE within States that 

either: (1) Did not elect to establish an 

Exchange; or (2) as determined by the 

Secretary, did not have any required 

Exchange operational by January 1, 

2014. 

Section 1321(c)(2) of the Affordable 

Care Act provides that the provisions of 

section 2723(b) of the PHS Act 5 shall 

apply to the enforcement under section 

1321(c)(1) of requirements of section 

1321(a)(1), without regard to any 

limitation on the application of those 

provisions to group health plans. 

Section 2723(b) of the PHS Act 

authorizes the Secretary to impose 

CMPs as a means of enforcing the 

individual and group market reforms 

contained in Part A of title XXVII of the 

PHS Act when, in the Secretary’s 

determination, a State fails to 

substantially enforce these provisions. 

Section 1341 of the Affordable Care 

Act requires the establishment of a 

transitional reinsurance program in each 

State to help pay the cost of treating 

high-cost enrollees in the individual 

market from 2014 through 2016. Section 

1342 of the Affordable Care Act directs 

the Secretary to establish a temporary 

risk corridors program that provides for 

the sharing in gains or losses resulting 

from inaccurate rate setting from 2014 

through 2016 between the Federal 

government and certain participating 

health plans. Section 1343 of the 

Affordable Care Act establishes a 

permanent risk adjustment program that 

provides for payments to health 

insurance issuers that attract higher-risk 

populations, such as those with chronic 

conditions, and charges issuers that 

attract lower-risk populations thereby 

reducing incentives for issuers to avoid 

higher-risk enrollees. 

Section 1411(f)(1) of the Affordable 

Care Act provides that the Secretary, in 

consultation with the Secretary of the 

Treasury, the Secretary of Homeland 

Security, and the Commissioner of 

Social Security, shall establish 

procedures by which the Secretary or 

one of such other Federal officers hears 

and makes decisions with respect to 

appeals of any determination under 

subsection (e) and redetermines 

eligibility on a periodic basis in 

appropriate circumstances. Section 

1411(f)(2) of the Affordable Care Act 

provides that the Secretary shall 

establish a separate appeals process for 

employers who are notified under 

section 1411(e)(4)(C) of the Affordable 

Care Act that the employer may be 

liable for a tax imposed by section 

4980H of the Internal Revenue Code of 

1986 (the Code) with respect to an 

employee because of a determination 

that the employer does not provide 

minimum essential coverage through an 

employer-sponsored plan or that the 

employer does provide that coverage but 

it is not affordable coverage with respect 

to an employee. 

Section 1411(h) of the Affordable Care 

Act sets forth CMPs to which any 

person may be subject if that person 

provides inaccurate information as part 

of an Exchange application or 

improperly uses or discloses an 

applicant’s information. 

Section 1501(b) of the Affordable Care 

Act added section 5000A to the Code. 

That section, as amended by the 

TRICARE Affirmation Act of 2010 (Pub. 

L. 111–159, 124 Stat. 1123) and Public 

Law 111–173 (124 Stat. 1215), requires 

nonexempt individuals to either 

maintain minimum essential coverage 

or make a shared responsibility payment 

for each month beginning in 2014. It 

also describes categories of individuals 

who may qualify for an exemption from 

the individual shared responsibility 

payment. 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. Standards relating to these 

provisions were established in IRS 

regulations titled, ‘‘Shared 

Responsibility Payment for Not 

Maintaining Minimum Essential 

Coverage Final Rule,’’ published in the 

August 30, 2013 Federal Register (78 FR 

53646) and HHS regulations titled, 

‘‘Exchange Functions: Eligibility for 

Exemptions; Miscellaneous Minimum 

Essential Coverage Provisions Final 

Rule,’’ published in the July 1, 2013 

Federal Register (78 FR 39494). 

B. Stakeholder Consultation and Input 

HHS has consulted with stakeholders 

on policies related to the operation of 

Exchanges, including the SHOP and the 

premium stabilization programs. HHS 

has held a number of listening sessions 

with consumers, providers, employers, 

health plans, the actuarial community, 

and State representatives to gather 

public input. HHS consulted with 

stakeholders through regular meetings 

with the National Association of 

Insurance Commissioners (NAIC), 

regular contact with States through the 

Exchange Establishment grant and 

Exchange Blueprint approval processes, 

technical health care quality 

measurement experts, health care 

survey development experts, and 

meetings with Tribal leaders and 

representatives, health insurance 

issuers, trade groups, consumer 

advocates, employers, and other 

interested parties. In addition, HHS 

received public comment on various 

notices published in the Federal 


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6Request for Information Regarding Health Care 

Quality for Exchanges: http://www.gpo.gov/fdsys/

pkg/FR-2012-11-27/pdf/2012-28473.pdf. 

7Request for Domains, Instruments, and 

Measures for Development of a Standardized 

Instrument for Use in Public Reporting of Enrollee 

Satisfaction With Their Qualified Health Plan and 

Exchange: http://www.gpo.gov/fdsys/pkg/FR-2012-

06-21/html/2012-15162.htm. 

8Patient Protection and Affordable Care Act; 

Exchanges and Qualified Health Plans, Quality 

Rating System (QRS) Framework, Measures and 

Methodology; Notice with Comment, 78 FR 69418 

(Nov. 19, 2013). 

9Patient Protection and Affordable Care Act; HHS 

Notice of Benefit and Payment Parameters for 2015, 

79 FR 13744 (March 11, 2014). 

Register relating to health care quality 

in the Exchanges,6 enrollee experience 

measures and domains,7 and the QRS, 

which provided valuable feedback on 

quality reporting and quality rating 

requirements.8 We considered all of the 

public input as we developed the 

policies in this final rule. 

C. Structure of Final Rule 

The regulations outlined in this final 

rule will be codified in 45 CFR parts 

144, 146, 147, 148, 153, 154, 155, 156, 

and 158. Part 144 outlines requirements 

relating to health insurance coverage. 

Part 146 outlines the group health 

insurance market requirements of the 

PHS Act added by HIPAA and other 

statutes, including opt-out provisions 

for sponsors of self-funded, non-Federal 

governmental plans. Part 147 outlines 

health insurance reform requirements 

for the group and individual markets 

added by the Affordable Care Act, 

including standards related to 

guaranteed availability and guaranteed 

renewability of coverage. Part 148 

outlines the individual health insurance 

market requirements of the PHS Act 

added by HIPAA and other statutes, 

including standards related to 

guaranteed availability with respect to 

certain eligible individuals and 

guaranteed renewability for all 

individuals. Part 153 outlines standards 

related to the reinsurance and risk 

corridors programs. Part 154 outlines 

standards related to the disclosure and 

review of rate increases. Part 155 

outlines standards related to the 

operations and functions of an 

Exchange, including standards related 

to non-discrimination, accessibility, and 

enforcement remedies; standards 

applicable to the consumer assistance 

functions performed by Navigators, nonNavigator assistance personnel, and 

certified application counselors; 

standards related to eligibility appeals; 

standards related to exemptions; 

standards related to quality reporting; 

and standards related to SHOP. Part 156 

outlines health insurance issuer 

responsibilities, including EHB 

prescription drug standards; the 

methodology for calculating the annual 

limit on cost-sharing for years after 

2014; minimum certification standards; 

standards for recognition of certain 

types of coverage as minimum essential 

coverage; quality standards for QHPs; 

and other QHP issuer responsibilities. 

Part 158 outlines standards related to 

the MLR program, including standards 

related to treatment of ICD–10 

conversion costs, standards related to 

adjustments for issuers affected by the 

HHS transitional policy and issuers that 

incurred costs due to the technical 

issues during the implementation of the 

Exchanges, and standards related to 

MLR reporting and rebate calculations 

in States with merged individual and 

small group markets. 

III. Provisions of the Proposed 

Regulations and Analysis and 

Responses to Public Comments 

The proposed rule titled, ‘‘Patient 

Protection and Affordable Care Act; 

Exchange and Insurance Market 

Standards for 2015 and Beyond,’’ was 

published in the Federal Register on 

March 21, 2014 (79 FR 15808), with 

comment period ending April 21, 2014 

(referred to in this preamble as the 

‘‘proposed rule’’). In total, we received 

approximately 220 comments on the 

proposed rule. Comments represented a 

wide variety of stakeholders, including 

but not limited to States, tribes, tribal 

organizations, health plans, consumer 

groups, employer groups, healthcare 

providers, industry experts, and 

members of the public. 

Some comments were general public 

comments on the Affordable Care Act 

and the government’s role in health 

care, but not specific to the proposed 

rule. We have not addressed such 

comments, and others that are not 

directly related to the proposed rule, 

because they are outside the scope of 

this final rule. 

In this final rule, we provide a 

summary of each proposed provision, a 

summary of and responses to the public 

comments received, and the provisions 

we are finalizing. 

Comment: Some commenters were 

concerned that the 30-day comment 

period did not provided sufficient 

opportunity for public review and 

comment on the proposed rule. One 

commenter stated that the proposed rule 

included many distinct policy issues, 

each of which should be addressed in 

separate rulemaking. 

Response: HHS provided a 30-day 

comment period, which is consistent 

with the Administrative Procedure Act 

and the policy established by the 

Assistant Secretary for Administration 

(ASA) and the Office of Management 

and Budget (OMB). Additionally, HHS 

discussed nearly all of the proposed 

policies in the preamble to the HHS 

Notice of Benefit and Payment 

Parameters for 2015 final rule published 

on March 11, 2014 (79 FR 13744).9 HHS 

believes that interested stakeholders had 

adequate opportunity to provide 

comment on the policies established in 

this final rule. 

A. Part 144—Requirements Relating to 

Health Insurance Coverage 

Definitions of Product and Plan 

(§ 144.103) 

See the discussion in section III.C.1.b, 

‘‘Product Discontinuance and Uniform 

Modification of Coverage Exceptions to 

Guaranteed Renewability 

Requirements.’’ 

B. Part 146—Requirements for the 

Group Health Insurance Market 

1. HIPAA Opt-Out Provisions for Plan 

Sponsors of Self-Funded, Non-Federal 

Governmental Plans (§ 146.180) 

We proposed to codify the 

requirement that self-funded, nonFederal governmental plans may no 

longer elect to be exempt from (‘‘opt out 

of’’) requirements of title XXVII of the 

PHS Act related to limitations on 

preexisting condition exclusion periods; 

requirements for special enrollment 

periods; and prohibitions on health 

status discrimination. Self-funded, nonFederal governmental plans may, 

however, continue to opt-out of 

requirements related to benefits for 

newborns and mothers; parity in mental 

health and substance use disorder 

benefits; required coverage for 

reconstructive surgery following 

mastectomies; and coverage of 

dependent students on a medically 

necessary leave of absence. 

We also proposed to streamline the 

submission process by requiring that 

opt-out elections be submitted 

electronically in a format specified by 

the Secretary in guidance. We solicited 

comment on these proposals, including 

ways to improve the electronic 

submission process. 

The proposed rule provided a special 

effective date for self-funded, nonFederal governmental plans maintained 

pursuant to a collective bargaining 

agreement ratified before March 23, 

2010 (the date of enactment of the 

Affordable Care Act) that had opted out 

of the requirement categories which are 

no longer available for exemption. 

These collectively bargained plans may 

continue to be exempt from the 


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10Amendments to the HIPAA opt-out provision 

(formerly section 2721(b)(2) of the Public Health 

Service Act) made by the Affordable Care Act 

(September 21, 2010). Available at: http:// 

www.cms.gov/CCIIO/Resources/Files/Downloads/ 

opt_out_memo.pdf. 

11See List of HIPAA Opt-Out Elections for SelfFunded Non-Federal Governmental Plans. 

Available at: http://www.cms.gov/CCIIO/Resources/ 

Forms-Reports-and-Other-Resources/Downloads/

hipaa-optout-nfgp-list-05-06-2014.pdf. 

12Patient Protection and Affordable Care Act; 

Maximizing January 1, 2014 Coverage 

Opportunities, 78 FR 76212 (December 17, 2013). 

requirements until the first plan year 

following the expiration of such 

agreement. 

The effect of the Affordable Care Act 

amendments on the HIPAA opt-out 

provisions was discussed in previous 

CMS guidance released on September 

21, 2010.10

We noted that under the current 

regulations, plan sponsors of 

collectively bargained plans may submit 

one opt-out election for all group health 

plans subject to the same collective 

bargaining agreement. We solicited 

comment on whether the plan sponsor 

in such circumstances should be 

required to list all plans subject to the 

agreement. We also solicited comment 

on whether a single opt-out submission 

should be permitted in the case of 

multiple group health plans not subject 

to collective bargaining. 

Comment: One commenter supported 

a requirement that plan sponsors of 

collectively bargained plans must list in 

their opt-out election all group health 

plans subject to the collective 

bargaining agreement. 

Response: We establish this 

requirement in new paragraph (b)(1)(ix) 

of § 146.180. Sponsors of group health 

plans not subject to collective 

bargaining will continue to be required 

to file a separate election for each group 

health plan. 

We solicited comments on whether 

the regulation should be modified to 

allow plan sponsors of multiple group 

health plans not subject to collective 

bargaining to submit one election for all 

of its group health plans. We did not 

receive any comments on this issue; 

accordingly, we are adding regulation 

text to clarify the current requirement 

that a separate election must be filed for 

each group health plan not subject to 

collective bargaining. 

We will continue to accept opt-out 

elections via U.S. Mail or facsimile until 

December 31, 2014. During this time, 

opt-out elections will continue to be 

accepted by mail to: Centers for 

Medicare & Medicaid Services (CMS), 

Center for Consumer Information and 

Insurance Oversight (CCIIO), Attn: 

HIPAA Opt-Out, 200 Independence 

Avenue SW., Room 733H–02, 

Washington, DC 20201. Elections may 

also continue to be submitted via 

facsimile at 301–492–4462. For 

elections submitted via U.S. mail, CMS 

will continue to use the postmark on the 

envelope in which the election is 

submitted to determine that the election 

is timely filed. If the latest filing date 

falls on a Saturday, Sunday, or a State 

or Federal holiday, CMS accepts a 

postmark or a fax on the next business 

day. Questions regarding the opt-out 

process can be submitted to CMS at 

HIPAAOptOut@cms.hhs.gov. CMS’s 

Center for Consumer Information and 

Insurance Oversight makes publicly 

available on its Web site a list of selffunded, non-Federal governmental 

plans that have submitted an opt-out 

election and the PHS Act provisions 

subject to the election.11

Summary of Regulatory Changes 

We are finalizing the revisions 

proposed in § 146.180 of the proposed 

rule, with the following modifications. 

In paragraph (b), we add paragraph 

(b)(1)(ix) to state that, in the case of plan 

sponsor submitting one opt-out election 

for multiple group health plans subject 

to the same collective bargaining 

agreement, the opt-out election must list 

each group health plan subject to the 

agreement. Also in paragraph (b), we 

add paragraph (b)(1)(x) to state that, in 

the case of a plan sponsor submitting 

more than one opt-out election for plans 

that are not collectively bargained, a 

separate opt-out election must be 

submitted for each such plan. In 

paragraph (c)(3), we delete the special 

rule for timely filing with respect to opt 

out elections submitted by U.S. mail, 

and instead specify a special rule for 

timely filing that applies to electronic 

filings. The special rule indicates that, 

if the latest filing date falls on a 

Saturday, Sunday, or a State or Federal 

holiday, CMS accepts filings submitted 

the next business day. 

C. Part 147—Health Insurance Reform 

Requirements for the Group and 

Individual Health Insurance Markets 

Guaranteed Availability and Guaranteed 

Renewability of Coverage (§§ 147.104 

and 147.106) 

a. No Effect on Other Laws 

We proposed that nothing in the 

guaranteed availability requirements 

should be construed to require an issuer 

to offer coverage where other Federal 

laws operate to prohibit the issuance of 

such coverage. Similarly, we proposed 

that nothing in the guaranteed 

renewability requirements should be 

construed to require an issuer to renew 

or continue in force coverage for which 

continued eligibility would otherwise 

be prohibited under applicable Federal 

law. We offered several examples of 

statutory exceptions to the guaranteed 

availability and renewability 

requirements in the preamble to the 

proposed rule (78 FR 15815–6), and 

noted that only Federal law, not State 

law, can create such exceptions. We 

solicited comment on these 

clarifications, as well as other 

clarifications that may be helpful. 

Additionally, we proposed a technical 

correction in § 147.104(b)(1)(i) to delete 

duplicate regulatory text added in 

earlier rulemaking.12 We also proposed 

other minor regulatory revisions in 

paragraph (b)(1)(i) for clarity. 

Comment: Some commenters 

recommended the final rule enumerate 

all current Federal prohibitions on the 

sale of health insurance coverage that 

would create exceptions to the 

guaranteed availability and renewability 

requirements. 

Response: We believe it is neither 

appropriate nor practical to outline 

every specific exception to the 

guaranteed availability and renewability 

requirements and that a general rule of 

construction provides sufficient 

guidance to stakeholders. 

Comment: One commenter sought 

clarification on situations where issuers 

offering coverage through an Exchange 

can sell coverage to individuals who are 

enrolled in Medicare and recommended 

that HHS add additional questions 

within the eligibility application to 

prevent individuals from receiving 

advance payments of the premium tax 

credit (APTC) who are also enrolled in 

Medicare. 

Response: Section 1882(d)(3) of the 

Social Security Act (the ‘‘Medicare antiduplication provision’’) prohibits the 

sale of an individual market insurance 

policy that duplicates Medicare benefits 

to anyone known to be entitled to 

benefits under Part A (receiving free 

Part A) or enrolled in Part B or Premium 

Part A. This prohibition applies to 

individual health insurance coverage 

sold both through and outside an 

Exchange. This final rule clarifies that 

this prohibition creates an exception to 

the guaranteed availability provision 

where the prohibition would be violated 

by a sale. 

While the Medicare anti-duplication 

provision prohibits the sale or issuance 

of a policy, it does not provide for 

discontinuance or non-renewal of a 

policy already issued, such as when an 

individual covered by an individual 

market policy becomes covered by 


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13Standard Notices When Discontinuing or 

Renewing a Particular Product in the Group or 

Individual Market (March 14, 2014). Available at: 

http://www.cms.gov/CCIIO/Resources/Regulationsand-Guidance/Downloads/draft-discontinuancerenewal-notices-03-14-14.pdf. 

14The PHS Act guaranteed renewability sections 

enacted under HIPAA, section 2712 for the group 

market and 2742 for the individual market, both 

include exceptions for uniform modifications of 

coverage. We recognize that PHS Act section 2703 

excludes reference in some paragraphs to the 

individual market. However, we note that the 

provisions of PHS Act section 2742 still apply, and 

we believe that the uniform modification exception 

is still applicable in the individual market. 

Medicare. As stated in the individual 

market regulations at 45 CFR 

148.122(b)(2), implementing the HIPAA 

guaranteed renewability provision, 

Medicare eligibility or entitlement is not 

a basis for non-renewal or termination 

of individual health insurance coverage. 

For ease of reference we are adding 

§ 147.106(g)(2) of this final rule, which 

repeats the regulatory language in 

§ 148.122(b)(2). We note, however, that 

nothing in the Medicare antiduplication provision or the guaranteed 

availability or renewability regulations 

prohibits an issuer from coordinating 

benefits under an individual health 

insurance policy with Medicare benefits 

in the case of a beneficiary. HHS will 

consider including questions in the FFE 

enrollment application to address this 

issue. 

Summary of Regulatory Changes 

We are finalizing the proposed 

provisions with the following 

modification. We add § 147.106(g)(2) to 

restate the standard under the HIPAA 

guaranteed renewability regulations at 

§ 148.122(b)(2) that Medicare eligibility 

or entitlement is not a basis for nonrenewal or termination of an 

individual’s health insurance coverage 

in the individual market. 

b. Product Discontinuance and Uniform 

Modification of Coverage Exceptions to 

Guaranteed Renewability Requirements 

We proposed standards to define 

whether certain modifications to 

coverage constitute ‘‘uniform 

modifications’’ within the meaning of 

the PHS Act. These provisions were 

proposed in the guaranteed renewability 

regulations at 45 CFR 146.152, 147.106, 

and 148.122. Under the proposed rule, 

they would apply to issuers offering 

health insurance coverage in the group 

and individual markets, including both 

grandfathered and non-grandfathered 

health plans. 

Specifically, we proposed that a 

modification made by an issuer solely 

pursuant to applicable Federal or State 

law would be considered a modification 

of the same product, and offered several 

examples of changes in response to 

Federal law that would constitute a 

modification of coverage. 

We further proposed that if an issuer 

makes changes to the health insurance 

coverage for a product that are not 

pursuant to applicable Federal or State 

law, the modifications would also be 

considered a uniform modification of 

coverage if the resulting product meets 

all of the following criteria: 

• The product is offered by the same 

health insurance issuer (within the 

meaning of section 2791(b)(2) of the 

PHS Act); 

• The product is offered as the same 

product type (for example, preferred 

provider organization (PPO) or health 

maintenance organization (HMO)); 

• The product covers a majority of the 

same counties in its service area; 

• The product has the same costsharing structure, except for variation in 

cost sharing solely related to changes in 

cost and utilization of medical care, or 

to maintain the same level of coverage 

described in sections 1302(d) and (e) of 

the Affordable Care Act (for example, 

bronze, silver, gold, platinum or 

catastrophic); and 

• The product provides the same 

covered benefits, except for changes in 

benefits that cumulatively impact the 

rate for the product by no more than 2 

percent (not including changes required 

by applicable Federal or State law). 

These proposed criteria were intended 

to provide flexibility for issuers to make 

reasonable adjustments to coverage, 

while ensuring predictability and 

continuity for consumers and 

minimizing unnecessary terminations of 

coverage. 

We proposed that States have 

flexibility to apply additional criteria 

that broaden the scope of what is 

considered a uniform modification, but 

that narrower State standards would be 

preempted. 

We also proposed to add a provision 

in § 147.106(e)(1) to restate the uniform 

modification of coverage provision for 

individual health insurance coverage 

under § 148.122(g). This was proposed 

for ease of reference and to facilitate 

issuer compliance. 

To provide clear information to 

consumers and help ensure they 

understand the changes and choices 

available to them in the individual and 

group markets, we proposed that issuers 

provide standard notices in a form and 

manner prescribed by the Secretary 

when discontinuing or renewing 

coverage. Contemporaneously with the 

proposed rule, we released draft 

standard notices that issuers would be 

required to use in each of these 

situations, and requested public 

comment.13 In the standard notices 

guidance, we noted that States would 

have the option of developing Staterequired notices for issuers to use in 

place of the Federal notices, if approved 

by CMS. State notices approved for use 

could not be modified in any way by the 

issuer. 

Finally, we stated that HHS or the 

applicable State will review rate 

increases for existing products that an 

issuer withdrew and attempted to re-file 

within a 12-month period as new 

products in order to avoid rate review 

as if they were simply renewed, if the 

changes to the discontinued product do 

not differ from the uniform modification 

criteria outlined above. We indicated 

that the same criteria set forth under the 

guaranteed renewability standards will 

be used to determine whether the refiled product is considered to be the 

same ‘‘product’’ for purposes of 

determining whether the rate filing is 

subject to submission and review under 

45 CFR Part 154. We requested 

comment on whether this clarification, 

or a reference to the uniform 

modification criteria, should be 

incorporated into the rate review 

regulations. 

Comment: Some commenters 

recommended the proposed uniform 

modification of coverage provisions and 

standard notice requirements not apply 

in the large group market. They noted 

that large employers are sophisticated 

purchasers that typically negotiate 

customized products for their 

employees and that will receive little 

value from these protections. One 

commenter recommended the 

requirements not apply to grandfathered 

health plans, noting that grandfathered 

plans are already, as part of the 

requirements related to maintaining 

grandfathered status, subject to 

restrictions on benefit changes that 

make the proposed provisions 

unnecessary. 

Response: We recognize that 

purchasers in the large group market 

have greater leverage than those in the 

individual and small group markets. 

The guaranteed renewability statute 

contemplates these market differences 

by placing the requirement that 

modifications must be ‘‘consistent with 

State law and effective on a uniform 

basis’’ only on products in the 

individual and small group markets, but 

not on products in the large group 

market.14 For these reasons, we do not 

believe that the same interpretation, 

providing additional protection of 

renewability, is necessary in the large 


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15 2015 Letter to Issuers in the Federallyfacilitated Marketplaces (March 14, 2014), available 

at: http://www.cms.gov/CCIIO/Resources/

Regulations-and-Guidance/Downloads/2015-finalissuer-letter-3-14-2014.pdf. 

group market and are finalizing the 

regulation to apply only to coverage in 

the individual and small group markets. 

We also note that, based on the 

statutory language requiring the changes 

to be ‘‘effective on a uniform basis,’’ we 

are adding regulation text explicitly 

stating that the interpretation of uniform 

modification provided for in this rule 

also requires that the modifications be 

made uniformly. 

Because the guaranteed renewability 

statutes applicable to grandfathered 

individual market policies and group 

health insurance plans, PHS Act 

sections 2742 and 2712, respectively, 

use the same terms as the statute 

enacted under the Affordable Care Act 

at PHS Act section 2703, we decline to 

interpret the requirements differently 

for grandfathered plans. We note that in 

proposing to amend § 146.152, we 

unintentionally proposed to replace 

paragraph (g) with the new paragraph 

regarding notice of renewal of coverage, 

rather than adding a new paragraph (h). 

In this final rule, we correctly add the 

new paragraph as paragraph (h). 

Similarly, we note that in proposing to 

amend § 148.122, we unintentionally 

proposed to replace paragraph (h) with 

the new paragraph regarding notice of 

renewal of coverage, rather than adding 

a new paragraph (i). In this final rule, 

we correctly add the new paragraph as 

paragraph (i). 

Comment: The proposed rule 

provided that coverage modifications 

made ‘‘solely pursuant to applicable 

Federal or State law’’ would be 

considered a uniform modification of 

coverage. Some commenters requested 

clarification that references to Federal or 

State law also include Federal or State 

regulations or guidance. Another 

commenter urged HHS to allow issuers 

to increase out-of-pocket maximums 

based on annual index adjustments to 

the annual limitation on cost sharing 

without triggering a product 

discontinuance. 

Response: The regulation text of the 

proposed rule specified that 

modifications made ‘‘solely pursuant to 

applicable Federal or State law’’ would 

be considered uniform modifications of 

coverage. We did not intend the word 

‘‘law’’ to limit the scope of this 

provision to statutory requirements. 

Therefore, we are modifying the 

regulation text to explicitly state that, 

for coverage modifications to meet this 

standard, they must be made ‘‘solely 

pursuant to applicable Federal or State 

requirements.’’ Such requirements 

could be based on statutes, rules, 

regulations and any other applicable 

authority imposing binding 

requirements on issuers. 

In response to the comment 

addressing the example we provided in 

the proposed rule of what would be 

considered ‘‘solely pursuant to 

applicable Federal or State law,’’ we 

also are adding language providing more 

detail on what constitutes a 

modification ‘‘made solely pursuant to 

applicable Federal and State 

requirements.’’ Specifically, the 

modification must be made within a 

reasonable time period after a Federal or 

State requirement is imposed or 

modified, and it must also be directly 

related to the imposition or 

modification of a Federal or State 

requirement. For example, if State 

legislation newly requires a minimum 

level of benefits (for example, imposing 

a new minimum visit limit on specific 

benefits) reducing covered benefits to 

meet the minimum requirement would 

not be directly related to the new 

requirement because the lesser coverage 

of the benefit coverage was previously 

permissible, and the modification did 

not have to be made in order for the 

issuer to comply with the State law. 

Accordingly, the modification would 

not be considered to have been ‘‘made 

solely pursuant to’’ the new 

requirement. Such a modification would 

have to meet the other criteria in the 

final rule to be considered a uniform 

modification of coverage. 

Comment: We received comments 

that requested clarification about 

whether and how the guaranteed 

renewability provisions apply to standalone dental plans (SADPs). 

Response: Pursuant to § 146.145(b)(3) 

and § 148.220(b)(1), if an SADP is 

provided under a separate policy, 

certificate, or contract of insurance or is 

otherwise not an integral part of a group 

health plan, it would constitute 

excepted benefits and, therefore, 

generally would not be subject to the 

requirements of the PHS Act, including 

the guaranteed renewability 

requirements. 

However, in the 2015 Letter to Issuers 

in the Federally-facilitated Marketplaces 

(2015 Letter to Issuers),15 we indicated 

that we will apply the guaranteed 

renewability standards to determine 

whether a plan offered in 2014 is the 

same plan for purposes of recertifying 

the plan for sale in 2015 through the 

Federally-facilitated Exchange, and that 

this standard would also apply to the 

determination of whether SADPs are 

being renewed for purposes of 

recertification. This does not in any way 

change the status of SADPs as excepted 

benefits. We are merely using the 

uniform modification standard for the 

purpose of identifying SADPs that can 

be recertified and renewed, rather than 

certified as different plans from those 

that were Exchange-certified in 2014. 

In the 2015 Payment Notice, we 

established the national annual limit on 

cost sharing for the pediatric dental EHB 

when offered through an SADP of $350 

for one covered child and $700 for two 

or more covered children. We 

acknowledge that, given the change to 

the annual limit on cost sharing, SADP 

issuers may need to modify the cost 

sharing of their currently certified plans 

in order to meet the annual limit 

established for implementation in 2015. 

We interpret any uniform cost-sharing 

changes made to conform to the new 

national annual limit on cost sharing as 

meeting the uniform modification 

standard, because these modifications 

would meet the requirements under 

§ 147.106(e)(2) of this final rule, which 

provides that, ‘‘modifications made 

uniformly and solely pursuant to 

applicable Federal or State requirements 

are considered a uniform modification 

of coverage.’’ We further note that the 

general applicability of the annual 

limitation on cost sharing, if applied to 

all plans, would affect all consumers. 

Therefore, we would consider an 

SADP that is uniformly modified to 

reduce its annual limitation on cost 

sharing pursuant to the change in 

regulations to meet the standards in 

paragraph (e)(2) as being a renewal with 

a uniform modification of the same plan 

for the purposes of recertification. 

Comment: Several commenters urged 

HHS to more clearly distinguish 

whether the proposed uniform 

modification provisions would be 

applied to ‘‘products’’ or ‘‘plans.’’ 

Commenters explained that if our 

proposed rule were interpreted to apply 

to modifications made at the plan level, 

issuers would be forced to discontinue 

all plans associated with a product in 

order to make any plan-level changes 

(such as creating identical new plans to 

reflect network pricing)—causing 

significant market disruption and many 

unnecessary terminations of coverage 

for existing enrollees. 

Response: We interpret the 

guaranteed renewability provisions of 

section 2703 of the PHS Act to apply at 

the product-level. This statute, which 

closely resembles the guaranteed 

renewability statutes enacted under 

HIPAA, uses the terms ‘‘health 

insurance coverage,’’ which, as defined 

at section 2791 of the PHS Act, means 

‘‘benefits consisting of medical care 

(provided directly, through insurance or 


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16See PHS Act section 2791(b)(1). 

reimbursement, or otherwise and 

including items and services paid for as 

medical care) under any hospital or 

medical service policy or certificate, 

hospital or medical service plan 

contract, or health maintenance 

organization contract offered by a health 

insurance issuer.’’ We interpret the 

references to ‘‘health insurance 

coverage’’ throughout section 2703 of 

the PHS Act to mean what is referred to 

in the commercial health insurance 

context as a health insurance ‘‘product.’’ 

To clarify the application of these 

provisions in response to the above 

comments, we are codifying definitions 

of ‘‘product’’ and ‘‘plan’’ for purposes of 

this rule. Because similar language and 

concepts apply in the guaranteed 

availability statutes and regulations, we 

will apply these definitions to those 

regulations as well, by codifying the 

definitions at § 144.103. These 

definitions are adopted largely from the 

Web portal and the rate review 

regulations. 

Under this final rule, for purposes of 

guaranteed availability and guaranteed 

renewability, the term ‘‘product’’ means 

a discrete package of health insurance 

coverage benefits that a health insurance 

issuer offers using a particular product 

network type (for example, health 

maintenance organization (HMO), 

preferred provider organization (PPO), 

exclusive provider organization (EPO), 

point of service (POS), or indemnity) 

within a service area. This term 

generally reflects the definition of 

‘‘health insurance coverage’’ in the PHS 

Act, which primarily refers to a specific 

contract of covered benefits, rather than 

a specific level of cost-sharing 

imposed.16

For purposes of guaranteed 

availability and guaranteed 

renewability, the term ‘‘plan’’ means, 

with respect to an issuer and a product, 

the pairing of the health insurance 

coverage benefits under the product 

with a particular level of coverage (as 

described in sections 1302(d) and (e) of 

the Affordable Care Act) and service 

area. The combination of all plans 

within a product constitutes the total 

product that must be made available 

under guaranteed availability and 

renewed under guaranteed renewability 

to anyone in the service area of the plan 

in question, while the combined service 

areas of all plans constitute the service 

area of the product. If a product, or a 

plan under a product, does not have a 

defined service area, then the service 

area is the entire State in which the 

product is offered. To avoid any 

confusion, we also will change the 

reference to ‘termination of plan’’ to 

‘‘termination of product’’ at 

§ 146.152.(b)(4), § 147.106(b)(4), and 

§ 148.122(c)(3), and make a technical 

grammatical correction to 

§ 146.152.(b)(4) and § 148.122(c)(3). This 

technical correction changes an ‘‘and’’ 

to an ‘‘or,’’ because an issuer is only 

required to comply with one and not 

both of the referenced paragraphs. 

Under these definitions, an issuer 

must guarantee availability and 

guarantee renewability at the option of 

the plan sponsor or individual of the 

particular product that they purchased 

in the group or individual market, 

including each of the plans available in 

the sponsor or individuals service area 

that are part of all the plans that 

comprise the product at the time of 

renewal. The product discontinuance 

and uniform modification exceptions to 

guaranteed renewability also apply at 

the product level. An issuer may 

discontinue offering a particular 

product in a market only if the issuer 

uniformly withdraws the product from 

that market. Similarly, an issuer may 

modify the health insurance coverage 

for a product if the issuer ensures the 

modification is effective uniformly for 

all plans within that product. Issuers 

have flexibility, however, to make 

modifications at the plan level or to 

discontinue plans within a product 

consistent with the provisions of (e)(2) 

or (3). 

As further described in subsequent 

responses to comments in this section, 

we are clarifying how three of the 

proposed criteria—related to costsharing, benefits, and service area— 

apply primarily at the plan level rather 

than the product level. 

Comment: A few commenters sought 

clarification about the changes that 

could be made under the criterion 

related to product type. Two 

commenters raised particular questions 

about changes with respect to combined 

product arrangements, such as adding a 

point of service (POS) option to a health 

maintenance organization (HMO) 

product or removing an exclusive 

provider organization (EPO) benefit 

from a preferred provider organization 

(PPO) product. One commenter 

recommended that restrictions on 

product type be limited to situations 

when a product transitions to or from an 

HMO. 

Response: While an issuer may offer 

particular benefits within a product 

using various network options, HHS 

believes most products generally are 

based on a single primary network type. 

For example, an HMO product with a 

POS option is nonetheless an HMO 

product, and a PPO product with an 

EPO benefit is nonetheless a PPO 

product. Accordingly, a product will not 

cease to be offered as the same product 

type solely because it adds or removes 

certain secondary network options. We 

believe referring to ‘‘product network 

type’’ more accurately conveys the 

intent of this requirement and make that 

revision in the final rule. We also 

provide the examples of HMO, PPO, 

EPO, POS and indemnity as product 

network types in the definition of 

‘‘product’’ in § 144.103 of this final rule. 

Comment: Regarding the proposed 

service area criterion, a number of 

commenters recommended focusing 

only on service area reductions, rather 

than expansions. One commenter 

expressed concern about discriminatory 

service areas and suggested HHS 

establish standards to prevent issuers 

from dropping coverage in areas that are 

expected to have higher health risk. 

Two commenters noted that, in many 

States, product service areas are not 

filed with the State insurance 

department, presenting challenges for 

State regulators to administer 

requirements related to service areas. 

Response: Under the proposed rule, 

for modifications to be considered 

uniform modifications of coverage, a 

product must continue to cover a 

majority of the same counties in its 

service area. This standard prevents 

significant reductions in a product’s 

service area; however, service area 

expansions of any degree would satisfy 

this standard, provided that a majority 

of the original product service area 

remains covered. We acknowledge the 

concerns but believe the standard 

established in this final rule balances 

consumers’ interest in coverage stability 

and issuers’ interest in flexibility to 

appropriately manage their provider 

networks. We note that, since 1996, the 

HIPAA guaranteed renewability 

provisions (sections 2712(b)(5) and 

2742(b)(4) of the PHS Act, as codified 

prior to enactment of the Affordable 

Care Act) have allowed issuers to nonrenew or discontinue coverage under a 

network plan if there is no longer any 

enrollee in connection with the plan 

who lives, resides, or works within the 

service area of issuer (or in the area for 

which the issuer is authorized to do 

business). 

In response to these comments, we are 

finalizing the rule so that the provision 

now requires that, ‘‘The product 

continues to cover a majority of the 

same service area’’ to be considered a 

uniform modification of coverage. We 

are making this change in recognition 

that a service area can be based on units 

other than counties, consistent with 

§ 147.102(b)(3), which indicates that 


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geographical rating areas can be based 

on counties, zip codes, or metropolitan 

statistical areas. 

Comment: Many commenters 

requested clarification about the extent 

of changes that could be made to a 

plan’s cost-sharing structure. Some 

commenters interpreted the provision as 

limiting changes in the type of costsharing used (for example, a co-payment 

versus coinsurance) and recommended 

that issuers be allowed to revise specific 

cost-sharing amounts (for example, 

based on historical or anticipated 

utilization of a particular benefit). Other 

commenters requested flexibility to 

modify cost sharing as long as the plan 

maintains the same metal level, 

meaning the same actuarial value metal 

tier (or catastrophic coverage). 

Response: As stated above, we 

interpret the guaranteed renewability 

provisions of section 2703 of the PHS 

Act to apply at the product-level. But, 

in accordance with our definitions of 

‘‘product’’ and ‘‘plan,’’ we note that 

cost-sharing applies at the plan level. 

Similar to the proposed rule, this final 

rule provides that, for a modification to 

be considered a uniform modification of 

coverage, each plan within the product 

must continue to have the same costsharing structure as before the 

modification, except for any variation in 

cost sharing solely related to changes in 

cost and utilization of medical care 

(medical inflation or demand for 

services based on inflationary increases 

in the cost of medical care), or to the 

extent that changes are necessary to 

maintain the same level of coverage 

(that is, bronze, silver, gold, platinum, 

or catastrophic). This provision is 

intended to establish basic parameters 

around cost sharing modifications to 

protect consumers from extreme 

changes in deductibles, copayments, 

coinsurance, while preserving issuer 

flexibility to make reasonable and 

customary adjustments from year to 

year. Further, States have flexibility to 

permit broader changes to cost sharing 

within the uniform modification 

provisions, as discussed below. We do 

not adopt the suggestion to allow all 

types of changes to cost sharing within 

a metal level, since this could be subject 

to manipulation and potential abuse. 

HHS will monitor compliance with this 

provision and may issue future 

guidance if necessary. 

Comment: The proposed rule 

provided that one of the criteria for 

uniform modification is that the product 

provides the same covered benefits, 

except for changes in benefits that 

cumulatively impact the rate for the 

product by no more than 2 percent (not 

including changes required by 

applicable Federal or State law). Some 

commenters sought clarification that 

benefit changes could either increase or 

decrease the rate by 2 percentage points 

without exceeding the 2 percent rate 

variation threshold. One commenter 

asked whether issuers could adjust for 

medical inflation when making this 

assessment. Other commenters 

requested clarification whether the 

provision includes both benefit 

enhancements and reductions. Some 

commenters requested clarification that 

benefit changes in response to Federal 

or State requirements, such as the 

addition of the pediatric dental benefit 

and State-mandated benefits, are 

excluded from the 2 percent rate 

variation threshold. One commenter 

recommended applying a separate rate 

change threshold to each EHB category 

and providing States and Exchanges the 

discretion to override benefit 

modifications that have the potential to 

substantially harm the consumer. 

Response: While benefit changes 

occur at the product level, consumers 

are affected by plan-adjusted index rates 

based on those changes. We believe that 

benefit changes that affect the rate for 

any plan within a product by more than 

2 percent, regardless of whether they 

increase or decrease the rate, are 

significant to the consumer and should 

therefore constitute a new product 

offering. Therefore, in accordance with 

our definitions of ‘‘product’’ and ‘‘plan’’ 

for purposes of this rule and in response 

to these comments, we are finalizing the 

rule to state that, to be a uniform 

modification under this part of the rule, 

changes that cumulatively impact the 

plan-adjusted index rate for any plan 

within the product must be within an 

allowable variation of +/¥2 percentage 

points. This provision applies only to 

changes in covered benefits, not cost 

sharing. It includes changes both to EHB 

and non-EHB benefits covered under the 

plan, as well as increases or decreases 

in covered benefits. However, rate 

changes that are directly attributable to 

compliance with applicable Federal or 

State legal requirements concerning 

covered benefits (such as those related 

to the requirement to provide EHB) are 

excluded for purposes of determining 

the cumulative rate impact. 

Comment: Several commenters 

favored auto-enrollment of individuals 

whose product is discontinued, where 

issuers would ‘‘map’’ enrollees to 

another product offered by that issuer 

that most closely resembles the 

individuals’ previous product. The 

commenters indicated this practice is 

common in the commercial market and 

Medicare Advantage and promotes 

continuity of coverage. 

Response: Nothing in this final rule 

prevents an issuer from auto-enrolling 

individuals whose product is being 

discontinued into another available 

product offered by that issuer, as long as 

the issuer meets all of the requirements 

for product discontinuance under the 

guaranteed renewability regulations. 

This includes providing at least 90 days’ 

notice of the discontinuation in writing 

and offering each individual the option 

to purchase, on a guaranteed availability 

basis, any other coverage offered by the 

issuer. 

There are some instances in which an 

individual may lose coverage under his 

or her particular plan but not under the 

product. For example, an issuer may 

decide to no longer offer a particular 

plan within a product or to modify a 

plan’s service area within a product 

such that the plan no longer covers 

certain individuals. If these plan-level 

changes do not give rise to a productlevel discontinuance under this final 

rule, the product remains guaranteed 

renewable at the option of the plan 

sponsor or individual, as long other 

plans within that product cover their 

service area. Again, nothing in this rule 

prevents an issuer from re-enrolling 

individuals into another plan that 

covers their service area under the same 

product in which the individuals are 

enrolled. HHS expects that issuers 

would re-enroll individuals in a new 

plan providing the same metal level of 

coverage as their previous plan within 

the same product. If a plan at that metal 

level is not available, HHS expects that 

issuers will re-enroll individuals in a 

plan that is most similar in metal level 

to the individual’s previous plan under 

the same product for that service area. 

We note that this does not address the 

operations of an Exchange, which may 

specify additional standards and 

processes for product termination, 

termination of enrollment, and reenrollment in QHPs through an 

Exchange. 

Comment: Several commenters 

expressed support for using the uniform 

modification standards to determine 

whether a rate filing for a product that 

is discontinued and another product refiled the following year is subject to 

submission and review under 45 CFR 

Part 154, noting that this is an important 

protection to prevent gaming of the rate 

review requirements. Some commenters 

specifically recommended the 

clarification be incorporated into the 

rate review regulations. 

Response: In response to comments, 

we have amended the definition of 

‘‘product’’ in § 154.102 to provide that 

the term includes any product that is 

discontinued and newly filed within a 


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12-month period in a market within a 

State that meets the standards of 

§ 147.106(e)(2) or (3) (relating to 

uniform modification of coverage). 

Comment: Many commenters 

supported the flexibility in the proposed 

rule for States to broaden, but not 

narrow, the scope of what is considered 

a uniform modification of coverage. 

Some commenters sought clarification 

about the meaning of ‘‘broaden’’ in this 

context. Other commenters 

recommended that State laws that 

prevent issuers from discontinuing or 

uniformly modifying coverage be 

expressly preempted by the Federal 

standards. 

Response: After further consideration 

of this issue, we have determined not to 

finalize the ability of States to apply 

additional criteria that broaden the 

scope of what would be considered a 

uniform modification in connection 

with some of the criteria provided for in 

this rule, because the characteristics of 

a product defined in those criteria are so 

integral to the product that they cannot 

be altered without fundamentally 

changing the health insurance coverage 

for that product. These include the 

criteria that a product must continue to 

offered by the same issuer (paragraph 

(c)(3)(i)), maintain the same product 

network type (paragraph (c)(3)(ii)), and 

provide, subject to specific exceptions, 

the same covered benefits (paragraph 

(c)(3)(v)). Modifications that result in a 

product that does not meet these criteria 

will not constitute a uniform 

modification under this final rule. This 

final rule does, however, continue to 

provide States flexibility to broaden the 

definition of uniform modification of 

coverage based on the criteria related to 

service area and cost-sharing structure. 

Thus, States could designate a lower 

threshold for meeting the service area 

standard than the requirement to 

continue to cover at least a majority of 

the same service area standard 

established in this final rule for which 

a product must maintain the same 

service area, or permit greater changes 

to a plan’s cost-sharing structure, and 

still permit the changes to be considered 

a uniform modification under this final 

rule. We reiterate our statement from the 

preamble to the final rule published on 

February 27, 2013 under section 2703 of 

the PHS Act (78 FR 13419) that a State 

standard or requirement that prohibits 

an issuer from uniformly modifying 

coverage in accordance with this final 

rule would prevent the application of a 

Federal requirement and therefore be 

preempted. 

Comment: Some commenters 

supported the proposal to require 

standard consumer notices when issuers 

discontinue or renew coverage. Other 

commenters felt the notices were overly 

prescriptive and advocated for issuer 

flexibility to modify the notices. For 

example, commenters suggested HHS 

provide model notice language or 

specify minimum content requirements. 

Many commenters requested issuers 

have the ability to customize the notices 

in order to provide specific information 

to help consumers make informed 

purchase decisions, such as information 

about premiums, a description of benefit 

changes, and the policy year and 

enrollment deadlines. Some 

commenters recommended eliminating 

the renewal notice requirement 

altogether. Other commenters argued 

that States are in the best position to 

regulate on product discontinuance and 

renewal and suggested that notice 

requirements be left to the States. 

Response: While we acknowledge the 

advantages of tailored consumer 

communications, and recognize the 

importance of State involvement, the 

final rule adopts the proposed language 

that notices be provided in a form and 

manner specified by the Secretary. We 

plan to address the notices in future 

guidance and intend to address the use 

of State-specific notices at that point in 

time. 

Comment: Several commenters 

recommended that notices be sent only 

to the group or individual market 

policyholder, arguing that it would be 

administratively burdensome for issuers 

and confusing for employees and 

dependents to receive information about 

product renewal and discontinuation 

when they are not the primary decision 

makers. 

Response: The final rule maintains 

the requirement that discontinuation 

notices must be provided to all enrollees 

under the plan or coverage. Section 

2703(c)(1) of the PHS Act requires an 

issuer that elects to discontinue offering 

a particular product to provide at least 

90 days’ notice of the discontinuation in 

writing to each plan sponsor or 

individual provided that particular 

product and to ‘‘all participants and 

beneficiaries covered under such 

coverage.’’ We note that an issuer may 

satisfy this requirement by providing 

the notice only to the subscriber. 

By contrast, renewal notices are not 

required to be provided to participants, 

beneficiaries, or enrollees. Both the 

proposed rule and this final rule make 

clear that notices of renewal must only 

be provided to the plan sponsor (for 

example, employer) in the small group 

market or the individual market 

policyholder in the individual market. 

Comment: Several commenters 

recommended that renewal notices be 

sent prior to the beginning of the open 

enrollment period, rather than 90 days 

before the end of the plan or policy year, 

to better align with the options and 

schedule of the Exchange. 

Response: The statute and regulations 

establish a 90-day notice requirement 

only for product discontinuation. In the 

final rule, we have added in § 148.122(i) 

a requirement that renewal notices be 

delivered at least 60 calendar days 

before the date of renewal of the 

coverage for grandfathered products in 

the individual market and, in 

§ 147.106(f)(2) and § 146.152(h), for all 

products in the small group market. For 

non-grandfathered products in the 

individual market, in response to the 

commenters’ request to coordinate the 

notices with enrollment in the 

Exchange, we are requiring in 

§ 147.106(f)(1) the renewal notices be 

delivered before the first day of the 

annual open enrollment period. We 

believe this provides sufficient advance 

notice for consumers in nongrandfathered individual policies to 

review other options for coverage. Since 

the small group market has continuous 

year-round open enrollment, the 60 day 

advanced notice of renewal provides 

sufficient notice to employers. Many 

grandfathered policies in the individual 

market have non-calendar policy years 

that do not line up with the annual open 

enrollment period in the individual 

market. Accordingly, the 60 day 

advanced notice requirement is more 

appropriate for these policies. 

Comment: Some commenters noted 

that the Federal notices will duplicate 

renewal notices developed by issuers, 

States, and Exchanges, and emphasized 

the need for coordination to prevent 

consumer confusion. 

Response: We agree and encourage 

issuers, States, and Exchanges to 

coordinate enrollee communications to 

the extent possible. 

Summary of Regulatory Changes 

We are finalizing the uniform 

modification provisions proposed in 

§ 147.106 of the proposed rule with the 

following modifications and made 

corresponding changes in § 146.152 and 

§ 148.122. We are adding regulation text 

explicitly stating that the interpretation 

of uniform modification provided for in 

this rule also requires that the 

modifications be made uniformly. We 

add language amending and clarifying 

the term ‘‘pursuant to applicable 

Federal and State law’’; replace 

‘‘product type’’ with ‘‘product network 

type’’; and to specify that the product 

must continue to cover at least a 

majority of the same service area, and 

delete the reference to ‘‘counties.’’ We 


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17The Affordable Care Act adds section 715(a)(1) 

of ERISA and section 9815(a)(1) of the Code to 

incorporate the provisions of part A of title XXVII 

of the PHS Act, including section 2704 of the PHS 

Act, into ERISA and the Code, and to make them 

applicable to group health plans and health 

insurance issuers providing health insurance 

coverage in connection with group health plans. 

PHS Act section 2704 applies to grandfathered and 

non-grandfathered group health plans and group 

health insurance coverage, and non-grandfathered 

individual health insurance coverage. It does not 

apply to grandfathered individual health insurance 

coverage. For more information on grandfathered 

health plans, see section 1251 of the Affordable 

Care Act and its implementing regulations at 26 

CFR 54.9815–1251T, 29 CFR 2590.715–1251, and 

45 CFR 147.140. 

18See Ninety-Day Waiting Period Limitation and 

Technical Amendments to Certain Health Coverage 

Requirements Under the Affordable Care Act, 78 FR 

10296 (February 24, 2014). See also Questions and 

Answers Related to Health Insurance Market Rules, 

Q2. Available at: http://www.cms.gov/CCIIO/

Resources/Fact-Sheets-and-FAQs/qa_hmr.html. 

19See FAQs about Affordable Care Act 

Implementation (Part XI), Q7, available at http://

www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/Affordable Care Act_implementation_

faqs11.html and http://www.dol.gov/ebsa/faqs/faqAffordable Care Act11.html. 

only finalize the ability of States to 

apply additional criteria that broaden 

the scope of what would be considered 

a uniform modification in connection 

with the criteria involving service area 

and cost-sharing structure. We clarify 

that the criteria related to cost-sharing 

and covered benefits apply at the planlevel. We do not finalize the 

interpretation of uniform modification 

or the corresponding renewal notice 

requirements with respect to issuers in 

the large group market, only with 

respect to issuers offering coverage in 

the individual and small group markets. 

We also are adding definitions of 

‘‘product’’ and ‘‘plan’’ at § 144.103; 

changing the reference to ‘‘termination 

of plan’’ to ‘‘termination of product’’ at 

§ 146.152(b)(4), § 147.106(b)(4), and 

§ 148.122(c)(3); and are amending the 

definition of ‘‘product’’ in the rate 

review regulations to reflect the 

interpretation of uniform modification, 

as applied in the rate review context. 

D. Part 148—Requirements for the 

Individual Health Insurance Market 

1. Conforming Changes to Individual 

Market Regulations (§§ 148.101 through 

148.128) 

We proposed conforming revisions to 

the individual market provisions 

contained in 45 CFR Part 148 to remove 

provisions that are superseded by the 

prohibition on preexisting condition 

exclusions under new section 2704 of 

the PHS Act, added by the Affordable 

Care Act.17 We proposed these 

amendments generally apply when the 

final rule becomes effective. Under our 

proposal, however, the requirement to 

issue certificates of creditable coverage 

would continue to apply until December 

31, 2014. This would allow individuals 

to continue to offset a preexisting 

condition exclusion that could 

potentially be imposed by a group 

health plan with a plan year from 

December 31, 2013 to December 30, 

2014. We indicated that these 

amendments were for clarity only and 

that they were consistent with 

amendments to the group market 

provisions and with previous CMS 

guidance.18 We solicited comment on 

these proposals. 

Comment: Two commenters stated 

that certificates of creditable coverage 

might continue to be needed in limited 

circumstances after 2014, such as when 

a dependent is added to a grandfathered 

individual health insurance plan, which 

is not subject to the prohibition on 

preexisting condition exclusions. The 

commenters recommended that 

certificates be required to be provided 

upon request after December 31, 2014. 

Response: While certain plans in the 

individual market, such as 

grandfathered health plans that are 

individual health insurance coverage 

and transitional individual market 

plans, may impose preexisting 

condition exclusions after 2014, such 

plans are not required to give credit for 

prior coverage against a preexisting 

condition exclusion period. 

Accordingly, there are no circumstances 

in which a certificate of creditable 

coverage will be relevant after December 

30, 2014. 

Summary of Regulatory Changes 

We are finalizing the amendments 

proposed in §§ 148.101 through 148.128 

of the proposed rule without change. 

2. Fixed Indemnity Insurance in the 

Individual Health Insurance Market 

(§ 148.220) 

As indicated in previous CMS 

guidance, which described our intended 

approach, we proposed to amend the 

criteria for fixed indemnity insurance to 

be treated as an excepted benefit in the 

individual health insurance market. 

Excepted benefits are exempt from 

many of the requirements of title XXVII 

of the PHS Act. 

Specifically, under the proposed rule, 

individual fixed indemnity policies 

would be considered an excepted 

benefit if the benefits are provided 

under a separate policy, certificate, or 

contract of insurance and all of the 

following criteria are met: (1) The 

benefits are provided only to 

individuals who have other health 

coverage that is minimum essential 

coverage within the meaning of section 

5000A(f) of the Code; (2) there is no 

coordination between the provision of 

benefits and an exclusion of benefits 

under any other health coverage; (3) the 

benefits are paid in a fixed dollar 

amount per day of hospitalization or 

illness or per service (for example, 

$100/day or $50/visit) regardless of the 

amount of expenses incurred and 

without regard to the amount of benefits 

provided with respect to the event or 

service under any other health coverage; 

and (4) a notice is displayed 

prominently in the plan materials in at 

least 14-point type that has the 

following language: ‘‘THIS IS A 

SUPPLEMENT TO HEALTH 

INSURANCE AND IS NOT A 

SUBSTITUTE FOR MAJOR MEDICAL 

COVERAGE. LACK OF MAJOR 

MEDICAL COVERAGE (OR OTHER 

MINIMUM ESSENTIAL COVERAGE) 

MAY RESULT IN AN ADDITIONAL 

PAYMENT WITH YOUR TAXES.’’ 

This proposal was intended to 

prevent disruption and address 

stakeholder concerns that many fixed 

indemnity insurance policies marketed 

today in the individual market do not 

qualify as excepted under the 

regulations at § 148.220(b)(3) and, as 

further described in a frequently asked 

question (FAQ) published on January 

24, 2013, because they pay on a perservice rather than a per-period basis.19

We solicited comment on this approach, 

including comments on the proposed 

notice language. 

We explained that, to meet the 

standard that fixed indemnity insurance 

must be sold only to individuals who 

have other health coverage that is 

minimum essential coverage, the issuer 

would have to be ‘‘reasonably assured’’ 

that an individual purchasing a fixed 

indemnity policy has minimum 

essential coverage. We sought comment 

on the extent of verification issuers may 

need for reasonable assurance, 

including the possibility of consumer 

self-attestation. We also sought 

comment on whether the ‘‘other health 

coverage that is minimum essential 

coverage’’ standard was sufficient 

protection or if another standard may be 

appropriate (for example, requiring that 

fixed indemnity insurance be sold to 

individuals with other health coverage 

that meets the EHB requirements). 

We noted that under a safe harbor 

approach established by the 

Departments of HHS, Labor, and the 

Treasury (the Departments) for 

supplemental health insurance coverage 

to be considered an excepted benefit, 

the supplemental coverage must be 

issued by an entity that does not 


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20See CMS Insurance Standards Bulletin 08–01 

(available at http://www.cms.gov/CCIIO/Resources/ 

Files/Downloads/hipaa_08_01_508.pdf); the 

Department of Labor’s Employee Benefits Security 

Administration’s Field Assistance Bulletin No. 

2007–04 (available at http://www.dol.gov/ebsa/pdf/ 

fab2007-4.pdf); and Internal Revenue Service 

Notice 2008–23 (available at http://www.irs.gov/irb/ 

2008-7_IRB/ar09.html). 

provide the primary coverage under the 

plan.20 We indicated that were 

considering adopting a similar standard 

for individual fixed indemnity 

insurance to qualify as excepted and 

sought comment. 

Finally, we indicated that, in our 

view, most fixed indemnity products 

offered in the individual market today 

would largely satisfy these proposed 

criteria. We solicited comment, 

nonetheless, on how the proposal might 

affect existing market arrangements. We 

also solicited comment on whether 

applying the provisions for policy years 

beginning on or after January 1, 2015 

would provide a sufficient transition 

period, and whether keeping the current 

regulatory criteria in place on a 

permanent or temporary basis could 

help to alleviate any potential market 

disruption. 

Comment: Several commenters 

questioned HHS’s legal authority to 

impose the requirement that fixed 

indemnity insurance must be sold as 

supplement to minimum essential 

coverage in order to be an excepted 

benefit. They noted that Congress 

created another category of excepted 

benefits for supplemental coverage. 

Some commenters indicated that 

imposing the supplemental requirement 

was an encroachment of States’ 

regulatory authority since States have 

the primary authority to regulate 

excepted benefits. One commenter 

stated that the proposal contravenes the 

holding of the Supreme Court that the 

government cannot compel individuals 

to engage in economic activity. One 

commenter stated that the requirement 

that fixed indemnity insurance be sold 

only as supplemental coverage to 

minimum essential coverage should be 

removed, and that Federal and State 

regulators, along with consumer and 

carrier representatives, should work 

together to develop requirements that 

will protect consumers and also retain 

coverage options. 

Response: We do not agree with these 

comments. As with all excepted 

benefits, what the coverage provides, 

rather than how it is labelled, is 

determinative of whether it is treated as 

excepted benefits. Accordingly, we have 

developed standards for when coverage 

would be considered exempt from the 

requirements of the Affordable Care Act 

and other provisions in Title XXVII of 

the PHS Act. In so doing, we have not 

encroached on State’s regulatory 

authority to regulate excepted benefits. 

Under this final rule, States will 

continue to have primary enforcement 

authority over such benefits, using the 

Federal definition as a floor, consistent 

with the overall framework for 

implementing Title XXVII of the PHS 

Act. We note that the statutory category 

which includes fixed indemnity 

coverage as an excepted benefit 

conditions its status on the coverage 

being ‘‘independent, noncoordinated’’ 

benefits, presuming the existence of 

other coverage. For purposes of the 

individual market, we are clarifying that 

there must be such other coverage, and 

that the other coverage in question must 

be minimum essential coverage. 

Additionally, requiring that fixed 

indemnity insurance in the individual 

market must be sold as supplemental to 

minimum essential coverage in order to 

be an excepted benefit does not compel 

any individual to purchase minimum 

essential coverage or otherwise engage 

in any economic activity. We will 

continue to work in partnership with 

States, along with consumer and issuer 

representatives, as we always have, to 

develop and fine-tune approaches to all 

Affordable Care Act provisions, 

including revisiting any aspect of these 

fixed indemnity provisions, as 

appropriate and necessary. 

Comment: One commenter made the 

general assertion that the purpose of the 

excepted benefits provisions in the 

Affordable Care Act was not to indicate 

that the types of coverage listed as 

excepted benefits are excepted from the 

provisions of the Affordable Care Act, 

but to allow a health plan to include 

such categories of coverage under a 

health plan without having to conform 

this coverage (that is, the excepted 

benefits) to the provisions of the 

Affordable Care Act that apply to the 

health plan. 

Response: Section 2722 of the PHS 

Act (42 U.S.C. 300gg–21) reads in 

relevant part in subparagraph (c)(2): 

‘‘The requirements of subparts 1 and 2 

shall not apply to any individual 

coverage or any group health plan (or 

group health insurance coverage) in 

relation to its provision of excepted 

benefits described in section 2791(c)(3) 

of this title.’’ We believe this statutory 

language is clear that the excepted 

benefits provisions apply to any 

individual coverage that meets the 

definition of any of the excepted 

benefits listed in section 2791(c)(3), 

including, but not limited to, hospital 

and other fixed indemnity policies. (We 

also believe that subparagraphs 2722(b), 

(c)(1), and (c)(3) are similarly clear that 

the excepted benefits provisions apply 

to any individual coverage in relation to 

its provision of any of the excepted 

benefits listed therein. In this final rule, 

we are making a relatively minor change 

to the introductory text (changing 

‘‘individual health insurance coverage’’ 

to ‘‘individual coverage’’), to bring it 

into conformance with the wording of 

the statute. 

Comment: One commenter asserted 

that, because coverage provided as an 

excepted benefit can only be provided 

in relation to a health plan, proposed 

section 148.220(b)(4)(i), which states 

that fixed indemnity insurance is an 

excepted benefit only if, among other 

criteria, the individual has minimum 

essential coverage, is superfluous. 

Response: We disagree that the statute 

and current regulations already 

provided that fixed indemnity coverage 

(or any other excepted benefit listed in 

the statute) is only an excepted benefit 

if provided in relation to another health 

plan (although as noted above, this is 

implicit). 

Comment: While one commenter 

agreed with the inclusion of 

§ 148.220(b)(4)(ii) and (iii) as 

requirements in order for fixedindemnity policies to qualify as 

excepted benefits, several commenters 

believed it would be beneficial to add in 

subparagraph (b)(4)(ii), a requirement 

that benefits may not be reduced on 

account of funds received from any 

other source. The commenter asserted 

that, in order to qualify as excepted 

benefits, a fixed indemnity policy 

should pay without regard to any other 

sources of payment. 

Response: We do not believe such a 

requirement would be necessary. 

Subparagraph (b)(4)(ii) is intended to 

address the statutory provision in the 

PHS Act at section 2791(c)(3) that 

hospital indemnity or other fixed 

indemnity insurance is an excepted 

benefit if the benefits are offered as 

independent, noncoordinated benefits. 

In this context, we interpret 

‘‘noncoordinated’’ as meaning 

noncoordinated with other coverage, as 

opposed to noncoordinated with other 

sources of financial support, such as 

friends or family members. 

Comment: One commenter questioned 

whether it is the intent of HHS to 

regulate, and through such regulation 

prohibit, the sale of fixed indemnity 

policies on a stand-alone basis. 

Response: It is not the intent of HHS 

to regulate or prohibit the sale of fixedindemnity policies on a stand-alone 

basis. Rather, the fixed indemnity 

insurance provisions set forth the 

circumstances under which such a 


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policy would or would not qualify as 

excepted benefits. In the preamble to the 

proposed regulation, we mentioned that 

this proposal for determining whether 

fixed indemnity policies are excepted 

benefits is consistent with previously 

released guidance describing our 

intended approach. 

Comment: One commenter argued 

that it would not make sense to require 

purchasers of fixed-indemnity coverage 

to have minimum essential coverage in 

order for the fixed indemnity coverage 

to be an excepted benefit, when there is 

no such requirement for other types of 

coverage to be an excepted benefit. 

Response: As noted in the preamble to 

the proposed regulation, we proposed 

that fixed indemnity policies in the 

individual market be permitted to pay 

on a per-medical-service basis, to 

accommodate the concerns of several 

stakeholders. In order to accommodate 

those concerns in a reasonable way, we 

are requiring that individuals who 

purchase fixed-indemnity policies in 

the individual market have other 

minimum essential coverage in order for 

the fixed indemnity policy to be an 

excepted benefit. Because we are not 

expanding the definition of any other 

type of excepted benefit as we are here, 

we do not believe it is necessary to 

impose new conditions on other 

categories of excepted benefits that the 

purchaser have other minimum 

essential coverage. 

Comment: The majority of 

commenters supported the disclosure 

requirement in order to inform 

consumers of the nature and extent of 

fixed indemnity insurance coverage. 

One commenter recommended that the 

notice requirement be expanded to 

indicate that the consumer has been 

advised on the difference between major 

medical coverage and fixed indemnity 

insurance and has been informed on 

how to acquire major medical coverage 

from the carrier. Another commenter 

stated that the last line of the HHS 

proposed disclosure notice could easily 

mislead consumers and cause them to 

think supplemental coverage is 

somehow tied to the tax provisions of 

the individual shared responsibility 

payment, and recommended that it be 

replaced with this line: ‘‘This policy 

does not provide the minimum essential 

coverage that individuals may be 

required to have under the Affordable 

Care Act.’’ One commenter requested 

clarification that the requirement that 

the notice be displayed in plan 

materials does not specifically require 

the notice be inserted in the filed 

contract forms. Several commenters 

recommended that the disclosure 

language be consumer tested. One 

commenter objected to a Federal 

prescription of specific wording. 

Response: We believe the proposed 

content of the notice is sufficient to 

meet its objectives. To ensure that the 

objectives are met, we believe the 

standardized language is necessary. 

With respect to where the notice is 

displayed, we believe, for policies 

issued after January 1, 2015, the most 

appropriate place is in the application 

for coverage, as this is the most likely 

document in which a purchaser of fixed 

indemnity coverage would actually see 

the notice. Therefore, in this final rule, 

we are requiring that the notice be 

displayed in the application. As 

described below, policies issued before 

January 1, 2015 are not required to come 

into compliance with the notice 

requirements until the first renewal on 

or after January 1, 2015. For policies 

issued before January 1, 2015, we 

believe it would be appropriate for the 

notice to be delivered shortly before the 

first renewal date occurring on or after 

January 1, 2015, but we defer to State 

law on the timing. In an effort to 

minimize industry burden, we are not 

requiring that fixed indemnity insurers, 

in order for the coverage to be an 

excepted benefit, insert the notice in 

filed contract forms or into any other 

specific document. 

Comment: Many commenters opined 

that an attestation would be sufficient 

but others suggested that issuers be 

required to request documentation from 

the consumer verifying that they have 

minimum essential coverage. One 

commenter requested that the 

attestation be required upon renewal of 

the fixed indemnity coverage, noting 

that individuals could lose their 

minimum essential coverage after the 

initial attestation. Another commenter 

recommended that the attestation be 

expanded to have the consumer attest 

that the difference between major 

medical coverage and fixed indemnity 

insurance had been explained to them 

and had been informed on how to 

purchase major medical coverage. 

Response: Although methods in 

addition to attestation might help 

ensure that individuals have and 

maintain minimum essential coverage, 

we seek to balance this objective against 

the burden of verification. Therefore, 

this final rule requires that the 

purchaser of fixed indemnity coverage 

attest that he or she has minimum 

essential coverage, but does not require 

any further documentation. In this final 

rule, this is a one-time attestation upon 

issuance of the policy that does not have 

to be re-performed upon renewal of the 

policy or any other time. For policies 

issued before January 1, 2015, we 

believe it would be appropriate for the 

one-time attestation to be collected from 

the policyholder shortly before the first 

renewal occurring on or after October 1, 

2016, but we defer to State law on the 

timing. We do not believe it is necessary 

that the attestation be expanded to have 

consumers attest that the difference 

between major medical coverage and 

fixed indemnity insurance had been 

explained to them and they had been 

notified about how to purchase major 

medical coverage. 

Comment: We proposed that 

individuals must have minimum 

essential coverage in order to be sold 

fixed indemnity insurance coverage but 

solicited comments on whether that was 

sufficient protection. As an alternative 

standard, we sought comment on 

whether individuals could be required 

to have a policy that provided all of the 

EHB. Many commenters opined that the 

requirement to have minimum essential 

coverage is sufficient protection. One 

commenter noted that minimum 

essential coverage is a defined term in 

the Affordable Care Act and can be 

applied nationally. Other commenters 

felt that the protection should be 

expanded to require individuals to have 

coverage that complied with the EHB 

requirement in order to be sold fixed 

indemnity insurance. 

Response: We believe it is appropriate 

and sufficient to require that fixed 

indemnity insurance be sold as 

supplemental to minimum essential 

coverage, in order to be an excepted 

benefit. As having minimum essential 

coverage is generally the standard for 

determining whether an individual 

complies with the shared responsibility 

provision, we believe it is also the 

appropriate standard for this purpose. 

Comment: One commenter requested 

clarification that fixed indemnity 

insurance can pay in a combination of 

per day and per service amounts, in 

addition to being able to pay per day or 

per service amounts. 

Response: We believe such a 

clarification would be helpful, and have 

changed ‘‘or’’ to ‘‘and/or’’ in this final 

rule. As part of this clarification, we are 

revising the phrase ‘‘per day of 

hospitalization or illness’’ so it reads 

‘‘per period of hospitalization or 

illness.’’ This clarification makes this 

provision of the individual market rule, 

consistent with the corresponding 

provision in the group market rule on 

hospital and fixed indemnity policies. 

Comment: One commenter indicated 

that it should be clear that the fixed 

indemnity insurance provisions apply 

to individual products as defined in the 

PHS Act regardless of whether the 

products are filed as group products 


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30256 Federal Register / Vol. 79, No. 101 / Tuesday, May 27, 2014 / Rules and Regulations 

under State law. The commenter noted 

that there can be conflicting definitions 

of group and individual products under 

State and Federal law. 

Response: The PHS Act defines 

individual market in terms of health 

insurance (that is, not in terms of 

excepted benefits), and defines 

individual health insurance coverage. 

Nonetheless, our intention is that 

§ 148.220 applies to excepted benefits 

sold in the ‘‘individual market’’ as that 

term is defined in § 144.103, absent the 

reference to ‘‘health insurance.’’ This 

would preempt any State law that 

classifies an individual product as a 

‘‘group’’ product (for example, 

individual products sold through 

associations). 

Comment: Several commenters stated 

that fixed indemnity insurers should be 

permitted to sell policies to certain 

categories of individuals other than 

those who have minimum essential 

coverage, such as healthy and young or 

middle aged individuals with moderate 

income who cannot afford highdeductible coverage under the 

Affordable Care Act, but can afford a 

limited indemnity plan, those who 

qualify for a hardship exemption from 

the individual shared responsibility 

payment, and those who feel they 

cannot afford the price of minimum 

essential coverage offered to their 

dependents through an employer’s 

health plan. These commenters asserted 

that eliminating a valid and possibly 

affordable option to provide these 

individuals with a source of assistance 

during a medical emergency is of 

concern. Several commenters believe 

the requirement to have minimum 

essential coverage will cause negative 

consequences for individuals living in 

States where the Medicaid expansion 

was not adopted, and who earn too 

much money to qualify for Medicaid but 

not enough to qualify for exchange 

subsidies, and to undocumented 

residents who are neither eligible for 

subsidies nor eligible to access the 

exchanges to acquire minimum essential 

coverage. Finally, one commenter 

observed that, according to the code at 

26 U.S.C. 5000(A)(f)(4), residents of U.S. 

territories shall be ‘‘treated as having 

minimum essential coverage.’’ 

Therefore, the commenter asked that we 

clarify in the final rule that fixed 

indemnity insurance sold to residents of 

the U.S. territories are treated as having 

minimum essential coverage, for 

purposes of the requirement that fixed 

indemnity insurance must be sold to 

individuals who have minimum 

essential coverage in order for the fixed 

indemnity coverage to be an excepted 

benefit. 

Response: While we do not agree that 

fixed indemnity insurers should be 

permitted to sell policies to every 

category of individuals who do not have 

minimum essential coverage, we accept 

the commenter’s suggestion that those 

who are treated as having minimum 

essential coverage due to their status as 

residents of U.S. territories should be 

able to purchase fixed indemnity 

insurance without actually having 

minimum essential coverage. We 

believe it is consistent with the nature 

of Code section 5000A(f)(4)(B), to treat 

such individuals similarly to 

individuals who actually have 

minimum essential coverage, for 

purposes of whether a fixed indemnity 

insurer may sell them a policy without 

losing excepted benefits status. 

Therefore, we have incorporated this 

provision into this final rule. We believe 

that expanding this principle any 

further to other populations would 

erode the objective of attempting to 

ensure that as many individuals as 

possible enroll in minimum essential 

coverage. We also note that individuals 

who have hardship exemptions to the 

shared responsibility payment are 

permitted under Federal law to 

purchase a catastrophic plan, which 

typically provides economical health 

insurance benefits. 

Comment: Several commenters stated 

that as an alternative to the proposed 

requirement that fixed indemnity 

coverage be sold only to individuals 

who have minimum essential coverage 

in order for the fixed indemnity 

coverage to be an excepted benefit, fixed 

indemnity insurance should be 

considered excepted benefits if offered, 

marketed, and sold as supplemental 

insurance. 

Response: We do not believe that 

merely offering, marketing, and selling 

fixed indemnity policies as 

supplemental benefits, will effectively 

address the confusion about these 

policies that many consumers have, or 

will effectively contribute to the 

Affordable Care Act’s goal of 

maximizing the number of individuals 

who have comprehensive, major 

medical coverage. 

Comment: One commenter was 

concerned that ‘‘transitional policies,’’ 

that is, policies that do not conform 

with certain Affordable Care Act 

requirements first applicable in 2014, 

but continue to be renewed for policy 

years ending on or before October 1, 

2016 as a result of CMS’ March 5, 2014 

bulletin on Extension of Transitional 

Policy through October 1, 2016, might 

not constitute minimum essential 

coverage. 

Response: Such transitional policies 

are small employer or individual market 

policies that constitute minimum 

essential coverage. 

Comment: We sought comment on 

whether to add a requirement that a 

fixed indemnity policy must be issued 

by a different issuer than minimum 

essential coverage, in order for the fixed 

indemnity insurance to be an excepted 

benefit. Several commenters supported 

adding such a requirement, stating that 

doing so would be an appropriate 

interpretation of the requirement that 

fixed indemnity insurance be 

independent. Other commenters did not 

agree that this requirement be added. 

One such commenter did not believe 

that the problem of an issuer of major 

medical coverage carving out benefits 

for the purpose of selling an enrollee a 

fixed indemnity plan, exists in the 

commenter’s local area, while others 

stated that, under the Affordable Care 

Act requirements, issuers offering major 

medical coverage in the individual and 

small group markets must include 

essential health benefits in their major 

medical coverage. 

Response: We agree with the 

commenters that such a requirement 

might harm consumers by limiting their 

choice of fixed indemnity issuers. Thus, 

we are not including such a requirement 

in this final rule. However, we remind 

commenters that section 2791(c)(3) of 

the Public Health Service Act, which 

prohibits fixed indemnity polices from 

coordinating with other coverage, would 

still apply. 

Comment: One commenter did not 

object to the proposed provisions taking 

effect for policy years beginning on or 

after January 1, 2015. Several 

commenters stated that the proposed 

provisions should apply to coverage 

issued on or after July 1, 2015, rather 

than coverage issued on or after January 

1, 2015. One commenter stated that the 

provisions should apply to policies 

issued after December 31, 2015. One 

commenter noted that a January 1, 2015 

date is unrealistic in light of the time 

needed for filing new products and 

applications, as well as the workload on 

State Insurance Departments in the 

coming months as they review filings 

and rates for insurance products to be 

sold in 2015. 

Response: In order to provide 

sufficient time for such insurers to 

prepare to meet the new minimum 

essential coverage and notice 

requirements, these two new 

requirements will apply to policies first 

issued on or after January 1, 2015. The 

notice requirement will also apply to 

existing policies starting with policy 

years beginning on or after January 1, 


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2015. Prior to that date, upon the final 

rule taking effect, the other criteria in 

section 148.220 will replace the existing 

regulatory criteria (as interpreted in our 

January 24, 2013 FAQ) for fixed 

indemnity insurance to be an excepted 

benefit. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 148.220 of the proposed 

rule with the following modifications. 

In the introductory text, we clarify that 

the requirements of parts 146 and 147 

do not apply to ‘‘any individual 

coverage’’ (as opposed to individual 

health insurance coverage) that meet the 

relevant requirements of that section, 

consistent with statutory language. In 

paragraph (b)(4)(i), we indicate that the 

fixed indemnity benefits must be 

provided only to individuals who attest, 

in their application, that they have other 

health coverage that is minimum 

essential coverage, or that they are 

treated as having minimum essential 

coverage based on their status as a bona 

fide resident of any possession of the 

United States pursuant to Code section 

5000A(f)(4)(B). In paragraph (b)(4)(iii), 

we clarify that the fixed indemnity 

benefit must be paid in a fixed dollar 

amount per period of hospitalization or 

illness ‘‘and/or’’ per service. In 

§ 148.220(b)(4)(iv), we clarify that the 

notice to fixed indemnity policyholders 

must be displayed in the application. In 

new paragraph (b)(4)(v), we state that 

the requirement of paragraph (b)(4) (iv) 

applies to all hospital or other fixed 

indemnity insurance policy years 

beginning on or after January 1, 2015 

and the requirement of paragraph 

(b)(4)(i) applies to hospital or other 

fixed indemnity insurance policies 

issued on or after January 1, 2015, and 

to hospital or other fixed indemnity 

policies issued before that date, upon 

their first renewal occurring on or after 

October 1, 2016. 

E. Part 153—Standards Related to 

Reinsurance, Risk Corridors, and Risk 

Adjustment Under the Affordable Care 

Act 

As noted in the proposed rule, both 

the reinsurance and risk adjustment 

programs are subject to the fiscal year 

2015 sequestration. The risk adjustment 

and reinsurance programs will be 

sequestered at a rate of 7.3 percent in 

fiscal year 2015. The Federal 

government’s 2015 fiscal year begins on 

October 1, 2014. HHS, in coordination 

with the OMB, has determined that, 

pursuant to section 256(k)(6) of the 

Balanced Budget and Emergency Deficit 

Control Act of 1985 as amended, and 

the underlying authority for these 

programs, funds that are sequestered in 

fiscal year 2015 from the reinsurance 

and risk adjustment programs will 

become available for payment to issuers 

in fiscal year 2016 without further 

Congressional action. Should Congress 

fail to enact deficit reduction that 

replaces the Joint Committee reductions, 

these programs would be sequestered in 

future fiscal years, and any sequestered 

funding would become available in the 

fiscal year following that in which it 

was sequestered. 

Comment: Several commenters asked 

that HHS clarify the details regarding 

the payment of sequestered funds, 

particularly for risk adjustment. One 

commenter suggested that reinsurance 

payments that might have otherwise 

been sequestered be made by 

prioritizing collections for reinsurance 

payments over collections for the U.S. 

Treasury. One commenter noted that a 

short delay in risk adjustment and 

reinsurance payments would not pose 

major problems for issuers. 

Response: As we stated in the 

proposed rule, we aim to make 

payments of sequestered fiscal year 

2015 funds for the reinsurance and risk 

adjustment programs as soon as 

practicable in fiscal year 2016, which 

begins on October 1, 2015. We note that 

we cannot sequester amounts from 

reinsurance collections for the U.S. 

Treasury because the U.S. Treasury 

collections are not budgetary resources. 

Therefore, they are not subject to 

sequestration and do not affect HHS’s 

required reductions under the 

sequestration law. We will provide 

further clarification regarding how the 

amount of sequestered funds will be 

calculated and paid in future guidance. 

1. Provisions and Parameters for the 

Permanent Risk Adjustment Program 

We have received input from 

commenters suggesting that the 

coefficients in our risk adjustment 

models may not fully capture the 

relative actuarial risk of certain 

hierarchical condition categories 

(HCCs), in part because those conditions 

may be subject to changing therapies 

and higher trends in medical inflation. 

Although some inaccuracy in our 

coefficients is inevitable due to lags in 

the data, we believe that we will be able 

to mitigate this problem if we 

recalculate, on an annual basis, the 

weights assigned to the various HCCs 

and demographic factors in our risk 

adjustment models using the most 

recent data available, even in the years 

where we do not fully recalibrate the 

models. We intend to propose such a 

reweighting in the HHS notice of benefit 

and payment parameters for 2016, and 

we will consider having those updated 

coefficients apply also for the 2015 

benefit year. These adjusted models 

would be subject to public notice and 

comment. 

2. Provisions and Parameters for the 

Transitional Reinsurance Program 

The Affordable Care Act directs that 

a transitional reinsurance program be 

established in each State to help 

stabilize premiums for coverage in the 

individual market from 2014 through 

2016. In the 2014 Payment Notice and 

the 2015 Payment Notice, we expanded 

on the standards set forth in subparts C 

and E of the Premium Stabilization 

Rule, and established the reinsurance 

payment parameters and uniform 

reinsurance contribution rate for the 

2014 and 2015 benefit years. In this 

final rule, we finalize our allocation 

proposal, with one modification, so that, 

in the event of a shortfall in our 

collections, reinsurance contributions 

will first be allocated to the reinsurance 

payment pool, and second to 

administrative expenses and the U.S. 

Treasury. 

In the 2014 Payment Notice and the 

2015 Payment Notice, we provided that, 

if total contributions collected for 2014 

and 2015 exceed $12.02 billion and 

$8.025 billion, respectively, we would 

allocate $2 billion to the U.S. Treasury, 

$20.3 or $25.4 million, as applicable, to 

administrative expenses, and all 

remaining contributions for reinsurance 

payments, thus prioritizing excess 

contributions towards reinsurance 

payments. Due to the uncertainty in our 

estimates of reinsurance contributions 

to be collected, and to help assure that 

the reinsurance payment pool is 

sufficient to provide the premium 

stabilization benefits intended by the 

statute, we proposed to adopt a similar 

prioritization in the event that 

reinsurance collections fall short of our 

estimates. Specifically, we proposed 

that, if collections fall short of our 

estimates for a particular benefit year, 

we would allocate contributions that are 

collected first to the reinsurance 

payment pool and administrative 

expenses, until our targets for 

reinsurance payments and 

administrative expenses are met. Once 

those targets are met, the remaining 

contributions collected for that benefit 

year would be allocated toward the U.S. 

Treasury. 

We sought comment on this proposal, 

including our legal authority to 

implement a prioritization of 

reinsurance contributions to reinsurance 

payments over payments to the U.S. 

Treasury. 


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Comment: Several commenters 

supported our allocation proposal with 

respect to reinsurance collections if they 

fell short of our estimates for a 

particular benefit year. The commenters 

stated that the proposed allocation 

would further the premium stabilization 

effects of the program and provide more 

certainty that reinsurance payments will 

be fully funded. One commenter stated 

that section 1341 of the Affordable Care 

Act provides HHS with the discretion to 

allocate reinsurance contributions as 

HHS determines appropriate to carry 

out the goals of the statute and that the 

use of contributions first for reinsurance 

payments furthers the program’s goal of 

stabilizing premiums. This commenter 

noted that section 1341 of the 

Affordable Care Act imposes few 

requirements on the expenditure of 

reinsurance contributions, stating that 

the statute does not specify that 

payments must be made to issuers and 

to the U.S. Treasury simultaneously, or 

that the U.S. Treasury must receive its 

full funding before reinsurance pool 

payments are made. Additionally, the 

commenter stated that section 1341 is 

silent on how reinsurance contributions 

are to be distributed if there are 

insufficient collections to satisfy the 

statutory obligations, providing HHS 

with flexibility to interpret and 

implement the statute and to decide the 

priority, method, and timing of the 

allocation of contributions. One 

commenter asked that we allocate 

contributions first to reinsurance 

payments and administrative expenses, 

and then roll over any excess funds for 

the subsequent benefit year, postponing 

the allocation of any contributions to 

the U.S. Treasury until the end of the 

reinsurance program. Some commenters 

suggested that under the revised 

allocation policy administrative 

expenses should have the same priority 

as payments to U.S. Treasury. 

Response: Section 1341 of the 

Affordable Care Act directs that a 

transitional reinsurance program be 

established in each State for a three-year 

period to reduce premiums and to 

ensure market stability for enrollees in 

the individual market as the new 

consumer protections and market 

reforms are implemented in 2014. The 

statute does not, however, prescribe 

how HHS should approach the 

distribution of reinsurance 

contributions if insufficient amounts are 

collected to fully fund all three 

components of the program (that is, 

reinsurance payments, administrative 

expenses, and payments to the U.S. 

Treasury). We agree that HHS has 

discretion to implement the program to 

determine the priority, method, and 

timing for the allocation of reinsurance 

contributions collected. Section 

1341(b)(3)(B)(iii) uses mandatory 

language with respect to the collection 

of amounts for the reinsurance payment 

pool and states that the total 

contribution amounts ‘‘shall . . . equal 

$10,000,000,000’’ for 2014 and specific, 

lesser amounts for 2015 and 2016. Thus, 

the statute explicitly directs the 

Secretary to collect these amounts for 

the reinsurance payment pool (based on 

the best estimates of the NAIC). On the 

other hand, the statute uses more 

permissive language in sections 

1341(b)(3)(B)(ii) and (iv) with respect to 

the collection of amounts for 

administrative expenses and payments 

for the U.S. Treasury (that is, ‘‘can’’ and 

‘‘reflects’’, respectively). We believe that 

this language, as well as language 

directing that amounts collected 

pursuant to section 1341(b)(3)(B)(iv) be 

collected ‘‘in addition to the aggregate 

contribution amounts under clause 

(iii),’’ as well as the general authority 

granted to the Secretary under section 

1341(b)(3)(A) to design the method for 

determining the contribution amount 

toward reinsurance payments, gives the 

Secretary discretion to prioritize the 

collections for the reinsurance program. 

We also believe that it is significant that 

prioritizing the allocation of reinsurance 

contributions to the reinsurance 

payment pool furthers the statutory 

goals for this program by bringing more 

certainty to the individual market and 

helping moderate future premium 

increases. 

We are therefore finalizing our 

proposal, with one modification—we 

will not allocate reinsurance collections 

to administrative expenses or the U.S. 

Treasury until the reinsurance payment 

pool for a benefit year is funded. Thus, 

if our reinsurance collections fall short 

of our estimates for a particular benefit 

year, we will allocate reinsurance 

contributions collected first to the 

reinsurance payment pool, with any 

remaining amounts being then allocated 

to administrative expenses and the U.S. 

Treasury, on a pro rata basis. For 

example, as described in Table 1, for the 

2014 benefit year, reinsurance 

contributions will go first to the 

reinsurance payment pool, up to $10 

billion, and any additional 

contributions collected will be allocated 

to administrative expenses and the U.S. 

Treasury, on a pro rata basis, up to the 

total $12.02 billion. 

TABLE 1—PROPORTION OF REINSURANCE CONTRIBUTIONS COLLECTED UNDER THE UNIFORM REINSURANCE CONTRIBUTION RATE FOR THE 2014 BENEFIT YEAR FOR REINSURANCE PAYMENTS, PAYMENTS TO THE U.S. TREASURY, AND

ADMINISTRATIVE EXPENSES

Proportion or amount for: 

If total contribution collections 

under the 2014 

uniform reinsurance contribution rate are 

less than or 

equal to 

$10 billion 

If total contribution collections under the 

2014 uniform reinsurance contribution 

rate are more than $10 billion, but less 

than or equal to $12.02 billion 

If total contribution collections under the 

2014 uniform reinsurance contribution 

rate are more than $12.02 billion 

Reinsurance payments ........................... Total collections $10 billion ............................................... Total collections less $2.02 billion (U.S. 

Treasury and administrative expenses). 

Payments to the U.S. Treasury .............. $0 ..................... 99.0 percent of the total collections less 

$10 billion ($2 billion/$2.02 billion).

$2 billion. 

Administrative expenses ......................... $0 ..................... 1.0 percent of the total collections less 

$10 billion ($20.3 million/$2.02 billion).

$20.3 million. 

Similarly, for the 2015 benefit year, in 

the event of a shortfall in our 

collections, reinsurance contributions 

will go first to the reinsurance payment 

pool, up to $6 billion, and any 

additional contributions collected will 


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be allocated to administrative expenses and the U.S. Treasury on a pro rata 

basis, up to the total $8.025 billion. 

TABLE 2—PROPORTION OF REINSURANCE CONTRIBUTIONS COLLECTED UNDER THE UNIFORM REINSURANCE CONTRIBUTION RATE FOR THE 2015 BENEFIT YEAR FOR REINSURANCE PAYMENTS, PAYMENTS TO THE U.S. TREASURY, AND

ADMINISTRATIVE EXPENSES

Proportion or amount for: 

If total contribution collections 

under the 2015 

uniform reinsurance contribution rate are 

less than or 

equal to 

$6 billion 

If total contribution collections under the 

2015 uniform reinsurance contribution 

rate are more than $6 billion, but less 

than or equal to $8.025 billion 

If total contribution collections under the 

2015 uniform reinsurance contribution 

rate are more than $8.025 billion 

Reinsurance payments ........................... Total collections $6 billion ................................................. Total collections less $2.025 billion 

(U.S. Treasury and administrative expenses). 

Payments to the U.S. Treasury .............. $0 ..................... 98.8 percent of the total collections less 

$6 billion($2 billion/$2.025 billion).

$2 billion. 

Administrative expenses ......................... $0 ..................... 1.2 percent of the total collections less 

$6 billion($25.4 million/$2.025 billion).

$25.4 million. 

We note that, in the 2015 Payment 

Notice, we amended 45 CFR 153.405(c) 

to provide a bifurcated contribution 

collection schedule, under which 

contributing entities will submit 

reinsurance contributions via two 

payments. The first payment would 

have covered the contribution amount 

allocated to reinsurance payments and 

administrative expenses; the second 

payment would have covered the 

contribution amount allocated to 

payments to the U.S. Treasury for the 

applicable benefit year. In light of our 

revised allocation policy, contributions 

collected in the second collection will 

now be allocated for reinsurance 

payments to the extent the first 

collection does not fully fund the 

reinsurance payment pool. Therefore, 

for example, for the 2014 benefit year, 

if the first collection resulted in a total 

collection of $9 billion, contributions 

collected via the second collection up to 

$1 billion would be allocated for 

reinsurance payments. As we noted in 

the 2014 Payment Notice (78 FR 15460), 

we have considered comments about 

deferring payments to the U.S. Treasury, 

but concluded that we have no authority 

to defer the collection of reinsurance 

contributions for those payments to the 

end of the program. 

Comment: In the 2015 Payment 

Notice, we established the reinsurance 

payment parameters for 2015. For 2015, 

we established an attachment point of 

$70,000, a reinsurance cap of $250,000, 

and a target coinsurance rate of 50 

percent. Several commenters on this 

rule urged us to increase the premium 

stabilization effects of reinsurance by 

lowering the 2015 attachment point. 

Response: We intend to propose 

changes to the reinsurance parameters 

for 2015 generally consistent with these 

recommendations. Specifically, in the 

proposed 2016 Payment Notice, we 

intend to propose to lower the 2015 

attachment point from $70,000 to 

$45,000. We may also propose to modify 

the target 2015 coinsurance rate based 

on estimates of roll-over of funding from 

2014 and estimates of collections and 

payments for 2015. These proposals will 

be subject to notice and comment 

rulemaking. 

Summary of Regulatory Changes 

We are finalizing this provision as 

proposed, with one modification: if 

reinsurance collections fall short of our 

estimates for a particular benefit year, 

we will allocate the reinsurance 

collections for that benefit year first to 

the reinsurance payment pool, and 

second to administrative expenses and 

payments to the U.S. Treasury on a pro 

rata basis. 

3. Provisions for the Temporary Risk 

Corridors Program (§ 153.500) 

In the 2015 Payment Notice, we 

indicated that we would consider 

additional adjustments to the risk 

corridors program for benefit year 2015. 

We did so recognizing that issuers of 

QHPs could face administrative costs 

and risk pool uncertainties from a 

number of sources in 2015. We believe 

those QHP issuers will face pricing 

uncertainties related to: 

• Uncertainties in the number of 

renewals of plans that do not comply 

with 2014 market reforms and rating 

rules—States continue to weigh whether 

to permit transitional plans or whether 

to extend the transitional policy, and in 

States where those decisions have been 

publicized, the willingness of issuers in 

those States to continue to offer 

transitional plans remains unclear; 

• The effects on the risk pool of the 

phase-out of high risk pools—this 

phase-out leads to uncertainty in the 

estimate of likely claims costs from 

these individuals; 

• The greater difficulty and 

additional time it will take to fully 

assess the risk profile of 2014 enrollees 

given the six-month initial open 

enrollment period—issuers will have a 

shorter 2014 claims history on which to 

base modeling; and 

• Uncertainty estimating the number 

of individuals in reinsurance-eligible 

plans, and the number of covered lives 

for which reinsurance contributions will 

be paid. 

As we discussed in the proposed rule, 

because relevant data will be difficult to 

obtain in the near term, we believe these 

uncertainties will continue through the 

summer of 2014, while issuers are in the 

process of setting their rates for the 2015 

benefit year. 

We also recognized in the proposed 

rule that issuers of QHPs may face 

additional administrative costs in order 

to complete the transition into 

compliance with the 2014 market rules. 

In particular, issuers continue to face 

unanticipated infrastructure 

requirements around Exchanges in all 

States, including the distributed data 

collection methodology for risk 

adjustment and reinsurance. 

Therefore, in the proposed rule, we 

proposed to implement a national 

adjustment to the risk corridors formula 

set forth in subpart F of part 153 for 

each of the individual and small group 

markets by increasing the ceiling on 

allowable administrative costs 

(currently set at 20 percent, plus the 


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adjustment percentage, of after-tax 

premiums) by 2 percentage points. We 

also proposed to increase the profit 

margin floor in the risk corridors 

formula (currently set at 3 percent, plus 

the adjustment percentage, of after-tax 

premiums) by 2 percentage points. 

These increases to the profit floor and 

administrative cost ceiling in the risk 

corridors formula would increase a QHP 

issuer’s risk corridors ratio if claims 

costs are unexpectedly high, thereby 

increasing risk corridors payments or 

decreasing risk corridors charges. 

We proposed these increases for 2015 

for QHP issuers in every State because 

we believed that many of these 

additional administrative costs and risk 

pool uncertainties will be faced by 

issuers in all States, not just States 

adopting the transitional policy. Finally, 

under our authority under section 

2718(c) of the PHS Act, we proposed 

that the MLR formula not take into 

account any additional risk corridors 

payments resulting from this 

adjustment. We requested comment on 

all aspects of this proposal. 

Comment: Several commenters 

supported our proposal to implement 

the proposed adjustment on a 

nationwide basis so that it would apply 

equally to QHP issuers in all States. No 

commenters suggested a regional or 

State-level approach. 

Response: We are finalizing the 

adjustment as proposed, and will apply 

the adjustment on a nationwide basis. 

Comment: One commenter stated its 

support of the proposed adjustment to 

raise the ceiling on administrative costs, 

but questioned the necessity of the 

proposed adjustment to profits. 

Response: We believe that an upward 

adjustment to the profit floor is 

necessary to account for unanticipated 

risk pool effects related to State 

decisions to adopt the transitional 

policy, the phase-out of high risk pools, 

and the six-month initial enrollment 

period, which would not be reflected in 

an issuer’s administrative costs. 

Comment: A few commenters urged 

HHS to increase the magnitude of the 

proposed adjustment, and to extend the 

duration of the adjustment so that it 

would apply beyond the 2015 benefit 

year. One commenter believed that 

issuers could face significant operations 

and risk pool challenges for the 2015 

benefit year, and recommended that 

HHS raise the ceiling on allowable 

administrative costs by 5 percentage 

points, instead of 2 percentage points, as 

proposed in the proposed rule. The 

commenters did not specifically 

indicate or estimate any additional or 

greater administrative costs or pricing 

uncertainties that would necessitate an 

increase beyond the proposed 2 

percentage point increase. Several other 

commenters supported our proposal, 

stating that the 2 percentage point 

increase is reasonable to address 

additional administrative costs and 

operational uncertainties in the 2015 

benefit year. One commenter noted that 

the proposed adjustment would suitably 

help smaller issuers forced to amortize 

fixed additional administrative costs 

over a smaller operational base. 

Response: We are finalizing the 

proposed 2 percentage point increase to 

the risk corridors allowable 

administrative cost ceiling and profit 

floor for benefit year 2015. Based on our 

internal estimates and the methodology 

used to determine the administrative 

cost adjustment to the MLR formula 

discussed elsewhere in this final rule, 

we believe that this 2 percentage point 

increase will suitably account for 

additional administrative costs and 

pricing uncertainties that QHP issuers 

will experience in benefit year 2015. 

Comment: One commenter requested 

that we modify the risk corridors 

formula so that reinsurance payments 

are not deducted from allowable costs, 

in order to enhance the protections of 

the risk corridors program. 

Response: Section 1342(c)(1)(B) of the 

Affordable Care Act states that 

allowable costs in the risk corridors 

calculation are to be reduced by risk 

adjustment and reinsurance payments 

received under sections 1341 and 1343. 

Therefore, we are maintaining the 

current definition of ‘‘allowable costs’’ 

for the risk corridors program. 

Comment: A number of commenters 

expressed concern with HHS’s intention 

to implement the risk corridors program 

in a budget neutral manner, as described 

in the preamble to the proposed rule. 

These commenters were concerned that 

an approach that makes risk corridors 

payments only when sufficient risk 

corridors charges are received could 

result in reduced risk corridors 

payments to issuers. The commenters 

questioned how much the payment 

formula specified in the final rules for 

2014 and 2015 may be relied upon in 

setting premiums, if payments might be 

reduced. Several commenters believed 

that an approach implementing the risk 

corridors program in a budget neutral 

manner was counter to the intent of 

Section 1342 of the Affordable Care Act, 

which states that the Secretary of HHS 

will establish a risk corridors program 

that is similar to the Medicare Part D 

risk corridors program, which is not 

budget neutral. One commenter 

believed that implementing the risk 

corridors program in a budget neutral 

manner would result in issuers sharing 

in the gains and losses of other issuers, 

would unintentionally affect market 

dynamics, and could result in solvency 

problems for some issuers if risk 

corridors receipts are insufficient to 

fully fund risk corridors payments. 

Response: We recognize the 

commenters’ concerns. To provide 

greater clarity on how 2014 and 2015 

payments will be made, we issued a 

bulletin on April 11, 2014, titled ‘‘Risk 

Corridors and Budget Neutrality,’’ 

describing how we intend to administer 

risk corridors in a budget neutral way 

over the three-year life of the program, 

rather than annually. Specifically, if risk 

corridors collections in the first or 

second year are insufficient to make risk 

corridors payments as prescribed by the 

regulations, risk corridors collections 

received for the next year will first be 

used to pay off the payment reductions 

issuers experienced in the previous year 

in a proportional manner, up to the 

point where issuers are reimbursed in 

full for the previous year, and remaining 

funds will then be used to fund current 

year payments. If any risk corridors 

funds remain after prior and current 

year payment obligations have been 

met, they will be held to offset potential 

insufficiencies in risk corridors 

collections in the next year. 

As we stated in the bulletin, we 

anticipate that risk corridors collections 

will be sufficient to pay for all risk 

corridors payments. That said, we 

appreciate that some commenters 

believe that there are uncertainties 

associated with rate setting, given their 

concerns that risk corridors collections 

may not be sufficient to fully fund risk 

corridors payments. In the unlikely 

event of a shortfall for the 2015 program 

year, HHS recognizes that the 

Affordable Care Act requires the 

Secretary to make full payments to 

issuers. In that event, HHS will use 

other sources of funding for the risk 

corridors payments, subject to the 

availability of appropriations. 

Comment: One commenter asked that 

HHS apply this adjustment to all States 

for benefit year 2014. The commenter 

believed that this adjustment was 

necessary for the 2014 benefit year 

because of changes in the composition 

of the risk pools that were not 

anticipated when rates for the 2014 

benefit year were developed. 

Response: In the 2015 Payment 

Notice, we implemented an adjustment 

to the risk corridors formula for the 

2014 benefit year that would help to 

further mitigate any unexpected losses 

for issuers of plans subject to risk 

corridors attributable to the effects of 

the transitional policy. In States that 

adopt the transitional policy, this 


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adjustment would increase a QHP 

issuer’s risk corridors ratio and its risk 

corridors payment amount to help offset 

losses that might occur under the 

transitional policy as a result of 

increased claims costs and 

unanticipated changes in the risk pool 

that were not accounted for when 

setting 2014 premiums. For the reasons 

discussed in the 2015 Payment Notice, 

we believe that this adjustment will 

suitably offset any losses that QHP 

issuers may incur as a result of the 

transitional policy, and that no further 

risk corridors adjustments are necessary 

for the 2014 benefit year. 

Comment: One commenter requested 

that HHS allow non-QHPs to participate 

in the risk corridors program, so that 

plans that comply with requirements of 

the Affordable Care Act could receive 

risk corridors protections that would 

help to ameliorate changes in the risk 

pool resulting from the transitional 

policy. 

Response: We believe the risk 

corridors program is intended to share 

risk and stabilize premiums for QHPs 

(and certain substantially similar offExchange plans). Therefore, we decline 

to expand the participation criteria for 

this risk corridors adjustment. Data from 

all individual and small group market 

plans that comply with the Affordable 

Care Act market reforms will be 

included in a QHP issuer’s risk 

corridors calculation as described in 45 

CFR part 153, subpart F. However, 

consistent with our existing regulations 

set forth in subpart F of part 153, any 

risk corridors payment or charge 

amount, including any adjusted 

payment or charge amount resulting 

from the adjustment implemented in 

this final rule or the 2015 Payment 

Notice, will be calculated for a QHP 

issuer in proportion to the premium 

revenue that the issuer receives from its 

QHPs, as defined in § 153.500. 

Comment: One commenter requested 

clarification about whether HHS intends 

to implement risk corridors budget 

neutrality on a national or a State level. 

The commenter believed that budget 

neutrality should be applied on an 

individual State level, because applying 

budget neutrality on a national level 

would add uncertainty to the rate 

setting process. 

Response: The risk corridors program 

is a Federally administered program that 

applies uniformly to all States. 

Summary of Regulatory Changes 

We are finalizing our policy to 

increase the administrative cost ceiling 

and the profit margin floor by 2 

percentage points, as proposed. 

F. Part 154—Health Insurance Issuer 

Rate Increases: Disclosure and Review 

Requirements 

Definition of Product (§ 154.102) 

See the discussion in section III.C.1.b, 

‘‘Product Discontinuance and Uniform 

Modification of Coverage Exceptions to 

Guaranteed Renewability 

Requirements.’’ 

G. Part 155—Exchange Establishment 

Standards and Other Related Standards 

Under the Affordable Care Act 

1. Subpart B—General Standards 

Related to the Establishment of the 

Exchange Non-Interference With 

Federal Law and Non-Discrimination 

Standards (§ 155.120) 

Under 45 CFR 155.120(c), States and 

Exchanges, when carrying out the 

requirements of Part 155, must comply 

with any applicable non-discrimination 

statutes, and must not discriminate on 

the basis of race, color, national origin, 

disability, age, sex, gender identity or 

sexual orientation. The nondiscrimination provisions of 

§ 155.120(c) apply not just to the 

Exchanges themselves, but to Exchange 

contractors and all Exchange activities 

(including but not limited to marketing, 

outreach and enrollment), Navigators, 

non-Navigator assistance personnel, 

certified application counselors, and 

organizations designated to certify their 

staff and volunteers as certified 

application counselors (78 FR 42829). 

Under 45 CFR 155.105(f) this nondiscrimination requirement applies to 

the FFEs. 

In the proposed rule, we proposed 

creating a limited exception to these 

non-discrimination requirements for an 

organization receiving Federal funds to 

provide services to a defined population 

under the terms of Federal legal 

authorities (for example, a Ryan White 

HIV/AIDS Program or an Indian health 

provider) that participates in the 

certified application counselor program 

under 45 CFR 155.225, to permit that 

organization to limit its provision of 

certified application counselor services 

to the same defined population without 

violating the non-discrimination 

provisions in existing § 155.120(c). The 

intent of this proposal was to allow such 

organizations to provide certified 

application counselor services and 

assist their defined populations in 

enrolling in health coverage offered 

through the Exchanges consistent with 

the Federal legal authorities under 

which such organizations operate. 

To the extent that one of these 

organizations decides to take advantage 

of this exception, but is approached for 

certified application counselor services 

by an individual who is not included in 

the defined population that the 

organization serves, we proposed that 

the organization must refer the 

individual to other Exchange-approved 

resources, such as the toll-free Exchange 

call center, a Navigator, non-Navigator 

assistance personnel, or another 

designated certified application 

counselor organization, that is able to 

provide assistance to the individual. 

However, to the extent that one of these 

organizations decides that it will not 

take advantage of this proposed 

exception, we proposed that the nondiscrimination provisions in existing 

§ 155.120(c) would apply. Therefore, if 

an organization decides that it will 

provide certified application counselor 

services to individuals that are not 

included in the defined population that 

it serves, it must provide those services 

to all individuals consistent with the 

non-discrimination provisions in 

existing § 155.120(c). 

We also proposed to make a number 

of technical changes to existing 

§ 155.120(c) to accommodate this new 

limited exception. 

Comment: Commenters generally 

supported the proposed exception to the 

non-discrimination standards to allow 

an organization receiving Federal funds 

to limit their provision of assister 

services to that population. Several 

commenters requested that HHS clarify 

that these organizations are prohibited 

from discriminating against individuals 

who are within their defined population 

that the organization serves under the 

terms of Federal legal authorities. 

Response: With respect to the 

clarification requested from 

commenters, we are revising paragraph 

(c)(2) of § 155.120 to clarify that 

organizations that limit their provision 

of certified application counselor 

services to a defined population under 

this exception must still comply with 

the non-discrimination provisions in 

paragraph (c)(1) with respect to the 

provision of these services to that 

defined population. For example, a 

Ryan White organization that 

participates in the certified application 

counselor program and limits its 

provision of certified application 

services to its target population under 

Federal legal authorities cannot 

discriminate among members of that 

target population on the basis of race, 

color, national origin, disability, age, 

sex, or any of the other prohibited factor 

in 45 CFR 155.120(c) when providing 

those certified application counselor 

services. 

We are also making technical 

revisions to § 155.120(c) to clarify here 


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21Section 1321(c)(2) of the Affordable Care Act 

erroneously cites to section 2736(b) of the PHS Act 

instead of 2723(b) of the PHS Act. This was clearly 

a typographical error, and we have therefore 

interpreted section 1321(c)(2) of the Affordable Care 

Act to incorporate section 2723(b) of the PHS Act. 

that paragraph (1)(i) is included to 

highlight to organizations their 

obligations under other laws. Each 

organization needs to determine what 

other non-discrimination laws, which 

may be Federal or State laws, apply to 

them. We note that the reference to 

statutes incorporates regulatory 

requirements issued pursuant to statute. 

Paragraph (1)(ii), on the other hand, 

references the non-discrimination 

obligations that exist under this Rule. 

Consistent with this technical 

revision, we have made a change to the 

text of § 155.120(c) to clarify that the 

exception to the non-discrimination 

requirement at § 155.120(c)(2) only 

applies in regard to the nondiscrimination provisions created under 

this Rule. We cannot create exceptions 

in regard to requirements that exist 

under other laws. 

Comment: One commenter 

recommended extending the exception 

to organizations that provide services to 

defined populations that speak 

languages other than English, regardless 

of receipt of Federal funds to provide 

services to these populations. 

Response: We understand the desire 

for organizations interested in targeting 

specific populations to have flexibility 

to limit their provision of certified 

application counselor services to these 

populations. However, we believe it is 

appropriate to limit the exception to 

organizations that receive Federal funds 

to provide services to a defined 

population under Federal legal 

authorities because their beneficiaries 

are generally defined under Federal law. 

Although other organizations may 

choose to target the services they 

generally provide to specific 

populations, we do not believe it is 

appropriate to extend the exception in 

§ 155.120(c)(2) to these organizations. If 

all organizations were allowed to target 

certified application counselor services 

to specific, defined populations, the 

situation could arise where a consumer 

may not be able to readily access 

certified application counselor services 

because the consumer is not a part of a 

target population being serviced through 

the organizations in their area. 

Summary of Regulatory Changes 

We are finalizing our proposals to 

make technical changes to § 155.120(c) 

and add a new limited exception to the 

non-discriminations provision in 

§ 155.120(c). We are also further 

revising new § 155.120(c)(2) to clarify 

that organizations that limit their 

provision of certified application 

counselor services to a defined 

population under this exception must 

still comply with the nondiscrimination provisions in paragraph 

(c)(1)(ii) with respect to the provision of 

these services to that defined 

population. 

2. Subpart C—General Functions of an 

Exchange 

a. Civil Money Penalties for Violations 

of Applicable Exchange Standards by 

Consumer Assistance Entities in 

Federally-Facilitated Exchanges 

(§ 155.206) 

In § 155.206, as part of HHS’s 

enforcement authority under section 

1321(c)(2) of the Affordable Care Act, 

we proposed to provide for the 

imposition of CMPs on Navigators, nonNavigator assistance personnel, and 

certified application counselors and 

certified application counselor 

designated organizations in FFEs, 

including State Partnership Exchanges, 

that do not comply with applicable 

Federal requirements. We explained 

that this proposal was designed to deter 

these entities and individuals from 

failing to comply with the Federal 

requirements that apply to them, and to 

ensure that consumers interacting with 

the Exchange receive high-quality 

assistance and robust consumer 

protection. We noted that as a general 

principle, while HHS intends to assess 

CMPs when appropriate, consistent 

with this final rule, we also intend to 

continue to work collaboratively with 

consumer assistance entities and 

personnel to prevent noncompliance 

issues and address any that arise before 

they reach the level where CMPs might 

be assessed. 

The Secretary, under the authority of 

sections 1311(i) and 1321(a)(1) of the 

Affordable Care Act, has previously 

established a range of consumer 

assistance programs to help consumers 

apply for and enroll in QHPs and 

insurance affordability programs 

through the Exchange. These consumer 

assistance programs include the 

Navigator program described at section 

1311(i) of the Affordable Care Act and 

45 CFR 155.210; the consumer 

assistance, outreach, and education 

functions authorized by section 

1321(a)(1) of the Affordable Care Act 

and established at 45 CFR 155.205(d) 

and (e), which can include a nonNavigator assistance personnel program; 

and the certified application counselor 

program authorized by section 

1321(a)(1) of the Affordable Care Act 

and set forth at 45 CFR 155.225. Under 

these authorities and the authority 

granted to the Secretary by section 

1321(c)(1) of the Affordable Care Act, 

the FFE has implemented a Navigator 

and certified application counselor 

program in all States that did not elect 

to establish an Exchange, and has 

implemented a non-Navigator assistance 

program in some of those States through 

an enrollment assistance contract. 

Under section 1321(c)(2) of the 

Affordable Care Act, the provisions of 

section 2723(b) of the PHS Act 21 apply 

to the Secretary’s enforcement, under 

section 1321(c)(1) of the Affordable Care 

Act, of the standards established by the 

Secretary under section 1321(a)(1) of the 

Affordable Care Act for meeting the 

requirements under title I of the 

Affordable Care Act, including the 

establishment and operation of 

Exchanges, without regard to any 

limitation on the application of the 

provisions of section 2723(b) of the PHS 

Act to group health plans. Section 

2723(b) of the PHS Act provides the 

Secretary with authority to assess CMPs 

against health insurance issuers that fail 

to meet certain Federal requirements set 

forth in the PHS Act that apply to group 

health plans, in circumstances where, in 

the Secretary’s determination, the State 

that regulates the issuer has failed to 

‘‘substantially enforce’’ those 

requirements. We interpret the crossreference to section 2723(b) of the PHS 

Act in section 1321(c)(2) of the 

Affordable Care Act as providing the 

Secretary with authority to assess CMPs 

to enforce requirements established 

under section 1321(a)(1) of the 

Affordable Care Act against any entity 

subject to those requirements, under 

circumstances where the Secretary is 

exercising her authority under section 

1321(c)(1) of the Affordable Care Act. 

For purposes of this final rule, we 

would consider that any State that has 

not elected to establish an Exchange, 

and in which the Secretary has therefore 

had to establish and operate an 

Exchange under section 1321(c)(1), is 

not ‘‘substantially enforcing’’ the 

requirements related to Exchanges that 

the Secretary has established under 

section 1321(a)(1). 

Accordingly, HHS has the authority 

under section 1321(c)(2) of the 

Affordable Care Act to assess CMPs 

against Navigators, non-Navigator 

assistance personnel, and certified 

application counselors and certified 

application counselor designated 

organizations in FFEs, including State 

Partnership Exchanges, for violations of 

the requirements of the Navigator, nonNavigator, and certified application 

counselor programs that the Secretary 


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established under section 1321(a)(1) of 

the Affordable Care Act. This rule sets 

forth the circumstances under which the 

Secretary would exercise this authority, 

and is based on the enforcement scheme 

laid out in section 2723(b) of the PHS 

Act, and the implementing regulations 

at 45 CFR 150.301 et seq. 

In § 155.206(a), we proposed to 

establish the scope and purpose of the 

CMP provisions and explained when 

and against whom HHS would assess a 

CMP under this rule. At § 155.206(a)(2), 

we proposed that HHS could permit an 

entity or individual to whom it has 

issued a notice of assessment of CMP to 

enter into a corrective action plan 

instead of paying the CMP. We specified 

that permitting an entity to enter into a 

corrective action plan would not limit 

HHS’s authority to require payment of 

the assessed CMP if the corrective 

action plan is not followed. We 

explained that this approach would 

allow us not only to penalize violations 

if necessary, but also to prioritize 

working collaboratively with consumer 

assistance entities to ensure that 

improvements are made and future 

violations are prevented. We also 

explained that this approach would be 

consistent with the limitation on 

imposing CMPs that is set forth at PHS 

Act section 2723(b)(2)(C)(iii)(II). 

We requested comments on whether 

we should provide for an expedited 

process through which HHS may assess 

and impose CMPs, if extenuating 

circumstances exist or if necessary to 

protect the public. We also considered 

implementing an approach that would 

give the HHS Office of Inspector General 

(OIG) concurrent authority with CMS to 

enforce violations under this section, 

and we requested comments on such an 

approach and how it might be 

structured. 

In § 155.206(b), we proposed that the 

individuals and entities who would be 

subject to HHS’ enforcement authority 

under this proposal would include the 

following entities in FFEs, including in 

State Partnership Exchanges: 

Navigators, non-Navigator assistance 

personnel (also referred to as in-person 

assistance personnel) authorized under 

§ 155.205(d) and (e), and certified 

application counselors and 

organizations designated as certified 

application counselor organizations. We 

explained that we refer to these 

individuals and entities as ‘‘consumer 

assistance entities,’’ but these CMPs 

could be assessed against both entities 

and individuals. We requested comment 

on whether all of the individuals and 

entities listed in proposed § 155.205(b) 

should be subject to CMPs, and on 

whether other entities and individuals 

should be added to that list. 

In § 155.206(c), we proposed the 

grounds on which HHS could assess 

CMPs on the entities and individuals 

specified in § 155.206(b). Section 

1321(c)(2) of the Affordable Care Act 

authorizes the Secretary to enforce the 

requirements of section 1321(a)(1) of the 

Affordable Care Act, which include the 

requirements established by the 

Secretary regarding Exchange consumer 

assistance functions. This statutory 

provision authorizes HHS to assess a 

CMP or, in lieu of a CMP, a corrective 

action plan against Navigators, nonNavigator assistance personnel, certified 

application counselors, and certified 

application counselor organizations in 

FFEs if HHS determines that these 

individuals or entities are not in 

compliance with the Exchange 

standards applicable to them. We 

proposed that these Exchange standards 

would include any applicable 

regulations implemented under title I of 

the Affordable Care Act, as interpreted 

through applicable HHS guidance, such 

as the regulations governing consumer 

assistance tools and programs of an 

Exchange at § 155.205; those governing 

Navigators at § 155.210 and Navigators 

in FFEs at § 155.215; those governing 

certified application counselors at 

§ 155.225; and those under § 155.215 

governing non-Navigator assistance 

personnel in FFEs; as well as any 

applicable HHS guidance interpreting 

an existing regulatory or statutory 

provision. 

We note that § 155.285 of this final 

rule extends CMPs to consumer 

assistance entities who misuse or 

impermissibly disclose personally 

identifiable information in violation of 

section 1411 of the Affordable Care Act. 

Therefore, we have not addressed 

penalties for those actions here. That 

section also extends CMPs to anyone 

providing false or fraudulent 

information on an Exchange 

application. Consequently, some 

conduct by consumer assistance entities 

may warrant CMPs under either 

§ 155.285 or § 155.206, and in such 

cases we believe HHS has discretion to 

determine whether to assess a CMP 

under this regulation or under § 155.285 

of this subpart. However, we proposed 

in § 155.206(c) that HHS would not 

assess a CMP under this section if a 

CMP has already been assessed for the 

same conduct under § 155.285. 

In § 155.206(d), we proposed the basis 

for initiating an investigation of a 

potential violation. We proposed that 

HHS could initiate an investigation 

based on any information it receives 

indicating that a consumer assistance 

entity might be in noncompliance with 

applicable Exchange standards. 

In § 155.206(e), (f) and (g), we 

proposed the process that HHS would 

follow to investigate potential violations 

in order to determine whether the 

consumer assistance entity has engaged 

in noncompliance of applicable 

Exchange standards. Under § 155.206(e), 

we proposed that if HHS learns of a 

potential violation through the means 

described in paragraph (d) in this 

section and determines that further 

investigation is warranted, HHS would 

provide written notice of its 

investigation to the consumer assistance 

entity. Such notice would describe the 

potential violation, provide 30 days 

from the date of the notice for the 

consumer assistance entity to respond 

and provide HHS with information and 

documents, including information and 

documents to refute an alleged 

violation, and would state that a CMP 

might be assessed if the consumer 

assistance entity fails to refute the 

allegations in HHS’ determination. 

In § 155.206(f), we proposed a process 

for a consumer assistance entity to 

request an extension from HHS when 

the entity cannot prepare a response to 

HHS’s notice of investigation within the 

30 days provided in the notice. We 

proposed that if HHS granted the 

extension, the responsible entity would 

be required to respond to the notice of 

investigation within the time frame 

specified in HHS’s letter granting the 

extension of time, and failure to respond 

within 30 days, or within the extended 

time frame, could result in HHS’s 

imposition of the CMP that would apply 

based upon HHS’s initial determination 

of a potential violation as set forth in the 

notice of investigation under 

§ 155.206(e). 

In § 155.206(g), we proposed that HHS 

could review and consider documents 

or information received or collected in 

accordance with paragraph (d)(1) of this 

section or provided by the consumer 

assistance entity in response to 

receiving a notice in accordance with 

paragraph (e)(2) of this section. We also 

proposed that HHS may conduct an 

independent investigation into the 

alleged violation, which may include 

site visits and interviews, if applicable, 

and may consider the results of this 

investigation in its determination. 

In § 155.206(h), we proposed the 

factors that HHS would use to 

determine the appropriate CMP amount, 

and to determine whether it would be 

appropriate to offer the entity or 

individual an opportunity to enter into 

a corrective action plan in place of the 

CMP. These proposed factors included 

HHS’s assessment of the consumer 


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assistance entity’s previous or ongoing 

record of compliance; the gravity of the 

violation, as determined in part by the 

frequency of the violation and the 

financial harm incurred by a consumer; 

and the culpability of the consumer 

assistance entity, as determined, in part, 

by whether the entity received payment 

for committing the violation. 

Section 2723(b)(2)(C)(i) of the PHS 

Act limits the amount of CMPs 

authorized under section 1321(c)(2) of 

the Affordable Care Act to $100 for each 

day for each individual directly 

affected. Therefore in § 155.206(i), we 

proposed that the maximum daily 

amount of penalty assessed for each 

violation would be $100 for each day, 

for each consumer assistance entity, for 

each individual directly affected by the 

entity’s non-compliance. We also 

proposed that, consistent with the 

approach under existing rules at 45 CFR 

156.805(c), where HHS cannot 

determine the number of individuals 

directly affected, HHS may reasonably 

estimate this number based on available 

information, such as data from an FFE 

Navigator grantee’s quarterly or weekly 

report concerning the number of 

consumers assisted. We requested 

comment on whether we should 

implement a cap on the total penalty 

that could be assessed by HHS. 

In proposed § 155.206(j), we proposed 

that nothing in this section would limit 

HHS’s authority to settle any issue or 

case described in the notice furnished in 

accordance with paragraph (e), or to 

compromise on any CMP provided for 

in this section. 

Section 2723(b)(2)(C)(iii) of the PHS 

Act places certain limitations on CMPs 

authorized under section 1321(c)(2) of 

the Affordable Care Act, including the 

limitation that HHS will not assess a 

CMP where the entity did not know, or 

exercising reasonable diligence would 

not have known, of the violation. We 

proposed to implement these limitations 

in § 155.206(k). We also proposed, based 

on the HIPAA enforcement structure at 

45 CFR 150.341, that the burden is on 

the consumer assistance entity to 

establish that the circumstances 

triggering these limitations existed. 

In § 155.206(l), we proposed 

standards for notifying consumer 

assistance entities of the intent to assess 

a CMP, which notice would include an 

explanation of the entity’s right to an 

appeal pursuant to the process set forth 

at 45 CFR Part 150, Subpart D, as 

provided in proposed § 155.206(m). We 

sought comment on whether all aspects 

of that process should be applicable to 

appeals of these CMPs. Finally, in 

§ 155.205(n), we proposed that HHS 

may require payment of the proposed 

CMP if the consumer assistance entity 

does not timely request a hearing. 

We also requested comment on 

whether other provisions of 45 CFR Part 

150 should be adopted and made 

applicable to the proposed enforcement 

scheme, and whether a specific 

limitations period should apply, and if 

so, what limitations period would be 

appropriate for violations of applicable 

Exchange standards by consumer 

assistance entities in FFEs. 

Comment: We received many 

comments in support of the proposed 

CMP provisions under § 155.206. Some 

commenters expressed appreciation that 

the proposed rule struck a balance 

between holding consumer assistance 

entities accountable and protecting the 

public from wrongdoing, on the one 

hand, while not being overly punitive, 

on the other. A few commenters were 

concerned that the threat of CMPs might 

discourage participation in the 

Navigator, non-Navigator assistance 

personnel, or certified application 

counselor programs. Some commenters 

expressed concern that CMPs for 

violations of consumer assistance entity 

requirements would be an extreme 

response to such noncompliance, and 

one commenter expressed the view that 

the imposition of financial 

responsibility on consumer assistance 

entities muddies the distinction 

between these entities and agents and 

brokers. 

Response: We do not see similarities 

between these penalties and the 

licensing, errors and omissions 

coverage, or other financial 

responsibility requirements that States 

may impose on agents and brokers as a 

prerequisite to performing the duties of 

an agent or broker. Consumer assistance 

entities will have no required fees or 

payments under this section unless they 

violate the Federal requirements that 

apply to them as described in 

§ 155.206(c). On the other hand, States 

may require agents and brokers to pay 

licensing, errors and omissions 

coverage, or other financial 

responsibilities up front before acting as 

a licensed agent or broker. Any CMPs 

assessed under this provision would be 

penalties for noncompliance, aimed at 

discouraging and rectifying violations of 

Federal requirements by consumer 

assistance entities in the FFEs, rather 

than financial conditions of 

participation in the Navigator, nonNavigator assistance personnel, or 

certified application counselor programs 

for the FFEs. Additionally, we believe 

that many aspects of the final rule help 

ensure that individuals and entities are 

not deterred from performing consumer 

assistance functions in good faith, while 

also serving to protect members of the 

public from potential wrongdoing by 

consumer assistance entities. For 

example, the rule requires HHS to make 

individualized inquiries into the nature 

and consequences of each violation, and 

provides consumer assistance entities 

being investigated with the opportunity 

to explain the reasons behind their 

conduct. Further, the rule provides HHS 

with the opportunity to work 

collaboratively with entities by entering 

into a corrective action plan in lieu of 

paying a CMP, and HHS will continue 

to assist entities with avoiding and 

informally resolving any violations. 

Comment: A number of commenters 

recommended that HHS extend the CMP 

provisions to cover consumer assistance 

entities operating in State Exchanges, 

work in conjunction with State 

Exchanges when implementing this 

section, or require State Exchanges to 

implement similar provisions. Some 

commenters appeared to suggest that 

HHS should have the ability to assess 

CMPs against consumer assistance 

entities in State Exchanges where the 

State fails to substantially enforce the 

Federal standards applicable to 

consumer assistance entities. 

Response: Given the nature of the 

relationship between HHS and 

consumer assistance entities in FFEs, 

including the existence of formal 

agreements or grants between HHS and 

the FFE consumer assistance entities 

subject to these CMPs, and HHS’s 

responsibility for providing training, 

technical assistance, and support to 

consumer assistance entities in FFEs, 

we believe that HHS is in the best 

position to exercise primary 

enforcement authority for Federal 

requirements that apply to consumer 

assistance entities in FFEs, including 

State Partnership Exchanges. At this 

time, we are not extending the CMP 

provisions under § 155.206 to apply to 

consumer assistance entities working in 

State Exchanges. We will instead look to 

each State Exchange to exercise its 

authority to enforce any Federal 

requirements applicable to these 

assistance programs in the State 

Exchange. We may take additional 

action in the future. 

Comment: Some commenters believed 

that the proposed grounds for assessing 

CMPs in proposed § 155.206(c) would 

not permit CMPs for violations of State 

Partnership Exchange rules where those 

rules differ from FFE rules. 

Response: The CMP provisions under 

§ 155.206 are directed at consumer 

assistance entities that violate Federal 

requirements for assisters in FFEs, 

including assisters in State Partnership 

Exchanges. Under current 


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§ 155.210(c)(1)(iii), as well as provisions 

finalized in this rulemaking at 

§ 155.215(f) and § 155.225(d)(8), the 

consumer assistance entities subject to 

those regulations must meet any State 

licensing, certification, or other 

standards prescribed by the State, if 

applicable, so long as such standards do 

not prevent the application of the 

provisions of title I of the Affordable 

Care Act. Although HHS has authority 

under these provisions to enforce State 

requirements applicable to consumer 

assistance entities because the State 

requirements are incorporated into the 

entities’ Federal regulatory 

requirements, at this time we do not 

intend to enforce State requirements 

using § 155.206. We believe that States 

are in the best position to enforce their 

own requirements. 

Comment: We requested comment on 

whether CMS should have concurrent 

enforcement authority under the 

provisions of § 155.206 with the HHS 

Office of the Inspector General (OIG), 

and if so, what process OIG would 

follow in enforcing these CMPs. The 

vast majority of commenters who 

responded to this request recommended 

against concurrent enforcement 

authority and believed that CMS is 

better situated than OIG to enforce 

CMPs for noncompliant consumer 

assistance entities. These commenters 

reasoned that because of CMS’s 

expertise and familiarity with the 

outreach and enrollment process, as 

well as CMS’s working relationships 

with consumer assistance entities, CMS 

would be the most effective enforcement 

authority and is in a better position to 

effectively collaborate with consumer 

assistance entities and pursue corrective 

action, when appropriate, to resolve 

issues that may arise. Only one 

commenter expressed a preference for 

including concurrent enforcement 

authority in § 155.206 so that the OIG 

could exercise enforcement authority 

under appropriate circumstances. 

Response: We agree with the 

commenters who recommended against 

concurrent enforcement authority that, 

at least initially, CMS should have sole 

responsibility for CMP enforcement 

against noncompliant consumer 

assistance entities under this section. 

CMPs assessed under this section would 

be penalties for programmatic 

violations, and we agree that CMS is in 

the best position to investigate and 

enforce its own program standards. 

Additionally, consumer assistance 

entities who provide false or fraudulent 

information in an Exchange application 

on a consumer’s behalf, or who 

improperly use or disclose a consumer’s 

personally identifiable information, 

might be in violation of another CMP 

provision finalized in this rule, 45 CFR 

155.285, which provides concurrent 

enforcement authority for CMS and OIG. 

Therefore, certain consumer assistance 

entity violations might fall under OIG 

jurisdiction, when appropriate. 

Additionally, as we indicated in the 

preamble to the proposed rule, we 

intend to continue to work 

collaboratively with consumer 

assistance entities to address 

noncompliance issues before they reach 

the level where a CMP might be 

assessed. Consequently, we do not 

anticipate that CMS will assess a large 

volume of CMPs against consumer 

assistance entities for noncompliance 

with Federal requirements. However, 

we note that we are not foreclosing the 

possibility that we would pursue the 

addition of OIG concurrent enforcement 

authority for these provisions at some 

point in the future. 

Comment: We also requested 

comments on whether we should 

implement an expedited process 

through which HHS might assess and 

impose CMPs if extenuating 

circumstances exist or if necessary to 

protect the public. One commenter did 

not believe an expedited process was 

necessary because the regulation as 

proposed contained sufficient 

mechanisms to prevent or address abuse 

by consumer assistance entities. 

Another commenter suggested that an 

expedited process should only be 

implemented at the request of the entity 

being investigated to ensure that no 

entity was denied adequate time to 

gather evidence and respond to the 

investigation. 

Response: We agree with the 

commenters’ concerns. To ensure that 

consumer assistance entities are 

afforded adequate due process, we have 

not provided for an expedited 

investigative process in finalizing these 

provisions. Where exceptional 

circumstances exist, or if necessary to 

protect the public, HHS has the option 

to take swift action to address consumer 

assistance entity noncompliance by 

using remedies available pursuant to its 

agreements with these entities, such as 

the terms and conditions of Federal 

Navigator grants, agreements with 

Enrollment Assistance Program entities 

that provide non-Navigator in-person 

assistance, or agreements between HHS 

and certified application counselor 

designated organizations. If the 

circumstances warrant, we also will 

consider referring cases to appropriate 

law enforcement officials. Additionally, 

as we noted in the preamble to the 

proposed rule, we intend to continue to 

work collaboratively with consumer 

assistance individuals and entities to 

prevent noncompliance issues and 

address any problems that arise before 

they reach the level where CMPs might 

be assessed. 

Comment: Many commenters 

supported HHS’s intention to prioritize 

the use of alternative remedies over 

assessment of CMPs. A large number of 

commenters strongly supported giving 

consumer assistance entities the 

opportunity to enter into a corrective 

action plan to correct the violation 

instead of paying a CMP. Some 

recommended that HHS require these 

entities to participate in a corrective 

action plan before assessing a CMP. 

Response: We agree that alternative 

remedies should be used where 

appropriate, and we have crafted this 

provision to include flexibility for HHS 

to help prevent and resolve 

noncompliance issues in lieu of 

collecting a CMP. However, we do not 

believe that requiring corrective action 

plans from consumer assistance entities 

will be a suitable response to every 

instance of noncompliance. For 

example, if a consumer assistance 

entity’s conduct is so egregious that in 

order to protect the public we have 

terminated our relationship with the 

entity pursuant to our agreement or 

contract with the entity, a corrective 

action plan may not be appropriate. 

Therefore, we are finalizing § 155.206(a) 

as proposed. 

Comment: We requested comment on 

whether all of the consumer assistance 

individuals and entities listed in 

proposed § 155.206(b) should be subject 

to CMPs, and on whether other entities 

and individuals should be added to that 

list. Many commenters supported the 

inclusion of Navigator individuals and 

organizations, non-Navigator assistance 

personnel and entities, and certified 

application counselor designated 

organizations and individual certified 

application counselors operating in an 

FFE, as proposed. Several commenters 

recommended that volunteers serving as 

Navigators, non-Navigator assistance 

personnel, or certified application 

counselors should be exempt from 

CMPs under this section. One 

commenter argued that the Volunteer 

Protection Act protects volunteer 

certified application counselors from 

liability under this section. Another 

commenter suggested that Exchange 

employees should also be subject to 

CMPs. 

Response: We believe that the 

consumer protection interests that are 

served by the CMP provisions under 

§ 155.206 are equally important whether 

they apply to volunteer or paid staff 

providing application assistance. The 


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application of the Volunteer Protection 

Act of 1997 to CMPs assessed against 

volunteers of Navigator, non-Navigator 

assistance, or certified application 

counselor organizations would be 

examined by courts or other reviewing 

entities on a case-by-case basis. We 

further clarify that no Navigators, nonNavigator assistance personnel, or 

certified application counselors in the 

FFEs would be volunteers for the 

Federal government because the 

consumer assistance entities with which 

they are affiliated provide services to 

the public, not to the Federal 

government. 

While we will monitor the activities 

of FFE employees carefully and reserve 

the right to add them to this rule in the 

future, we do not believe it is necessary 

to extend these penalties to FFE 

employees at this time, because in our 

view, the range of employment-based 

remedies available to the FFE provides 

adequate enforcement authority in the 

event of employee misconduct. In 

addition, FFE employees might be 

subject to CMPs under § 155.285 if they 

provide false or fraudulent information 

in an Exchange application or misuse 

consumers’ personally identifiable 

information. We are finalizing 

§ 155.206(b) as proposed. 

Comment: Many commenters 

addressed our proposed grounds for 

assessing CMPs at § 155.206(c). Some 

commenters worried that the proposed 

grounds for assessing penalties were 

stated too broadly, and did not provide 

adequate notice to consumer assistance 

entities and personnel regarding the 

specific requirements and standards that 

would apply when a determination is 

made as to whether a CMP should be 

assessed for noncompliance. These 

commenters recommended that we 

specify the statutory and regulatory 

requirements with which consumer 

assistance entities and personnel must 

comply to avoid potential CMPs, and 

various commenters suggested that 

these might include the regulatory 

requirements specific to consumer 

assistance entities at 45 CFR 155.205, 

155.210, 155.215, and 155.225; statutory 

and regulatory nondiscrimination 

requirements at 42 U.S.C. 18116, 45 CFR 

155.105(f), and 155.120(c); and the 

Affordable Care Act requirements on 

health insurance consumer information 

at 42 U.S.C. 300gg–93, and affordable 

choices of health benefit plans at 42 

U.S.C. 18031. 

Response: We agree that more 

specificity regarding the FFE 

requirements and standards that, if 

violated, might trigger CMPs under this 

section would help provide adequate 

notice to consumer assistance entities 

and help prevent inadvertent violations 

of those standards. Therefore, we have 

modified § 155.206(c) to make more 

clear that the requirements and 

standards applicable to consumer 

assistance entities under this section 

refer to the Federal regulatory 

requirements applicable to consumer 

assistance entities that have been 

promulgated by the Secretary pursuant 

to section 1321(a)(1) of the Affordable 

Care Act, as well as the terms of any 

agreements, contracts, and grant terms 

and conditions between the consumer 

assistance entity and HHS, to the extent 

that these documents interpret those 

Federal regulatory requirements or set 

forth procedures for compliance with 

them. We note that HHS has authority 

to assess CMPs under section 1321(c)(2) 

of the Affordable Care Act only to 

enforce requirements that the Secretary 

establishes under section 1321(a)(1) of 

the Affordable Care Act. Therefore, 

Federal requirements that have not been 

established pursuant to section 

1321(a)(1) of the Affordable Care Act 

could not be enforced pursuant to this 

section. 

We have not included in the final rule 

a more specific list of the requirements 

that could be enforced under this 

section because we anticipate that these 

may change over time. However, we 

anticipate that any list of such 

requirements would include, but not be 

limited to, the requirements specific to 

consumer assistance entities at 45 CFR 

155.205(c)–(e), 155.210, 155.215, and 

155.225; the Exchange 

nondiscrimination requirements at 45 

CFR 155.105(f) and 155.120(c); and the 

Exchange privacy and security 

requirements implemented pursuant to 

45 CFR 155.260. Consumer assistance 

entities would also be required to 

comply with other future requirements 

when any such requirements go into 

effect. 

Comment: Some commenters were 

concerned that consumer assistance 

entities might be penalized for 

inadvertent, technical, or administrative 

errors, or misunderstandings, and 

wanted to ensure that consumer 

assistance personnel would not be 

responsible for errors due to system 

issues, complex and changing systems, 

policies, workarounds, as well as lack of 

information from issuers. Other 

commenters expressed concern about 

being found in noncompliance on the 

basis of subregulatory guidance or 

frequently answered questions (FAQs) 

that they may not have seen or known 

about. Some commenters suggested that 

HHS develop a publicly available, 

searchable database or warehouse of 

rules and processes. Additional 

commenters requested that we provide 

clarity regarding the level of violation 

that might trigger investigation, and 

asked that we limit the use of CMPs to 

cases of egregious behavior, such as 

when the violation was a result of 

willful neglect or results in significant 

harm to a consumer. 

Response: We expect that the changes 

we have made to proposed § 155.206(c) 

in this final rule will help provide 

clarity regarding the standards 

consumers assistance entities must meet 

in order to avoid any potential CMPs 

under this section. We also understand 

commenters’ concerns about changes in 

best practices and FAQs. As we 

explained above, HHS’s enforcement 

authority under this section extends 

only to requirements that are 

established under section 1321(a)(1) of 

the Affordable Care Act. From time to 

time, we have issued and will continue 

to issue best practices, FAQs, and other 

subregulatory guidance interpreting 

these requirements. We further note that 

we offer anyone being investigated 

under this section an opportunity to 

respond under § 155.206(e) and (g), and 

consumer assistance entities may use 

this opportunity to discuss any barriers 

they may have encountered to fulfilling 

their duties as required, including 

confusion regarding requirements as 

interpreted through subregulatory 

guidance. Finally, pursuant to section 

2723(b)(2)(C)(iii) of the PHS Act, we 

have provided in § 155.206(k) that no 

penalties will be assessed for any period 

of time during which a consumer 

assistance entity neither knew nor 

exercising reasonable diligence should 

have known of the violation, or any time 

afterwards if the violation was corrected 

within 30 days and due to reasonable 

cause and not wilful neglect. 

Comment: Some commenters asked us 

to further define ‘‘reasonably 

determined,’’ the standard in 

§ 155.206(c) for HHS’s finding that a 

consumer assistance entity has failed to 

comply with applicable Federal 

regulatory requirements. 

Response: In § 155.206(c), we 

proposed that a reasonable 

determination would be ‘‘based on the 

outcome of the investigative process 

outlined in paragraphs (d) through (i) of 

this section.’’ This standard is meant to 

capture the fact that a CMP would not 

immediately be imposed, but instead 

imposed only after HHS provides a 

process involving notice, consideration 

of any additional information or 

documentation submitted by the 

consumer assistance entity pursuant to 

§ 155.206(e), consideration of the factors 

outlined in § 155.206(h), and the 

consumer assistance entity’s right to a 


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hearing pursuant to § 155.206(m). If 

HHS identifies circumstances that meet 

the standard set in § 155.206(c), it will 

send a notice informing the consumer 

assistance entity of the assessment of a 

CMP under § 155.206(l). The consumer 

assistance entity then has the right to 

request a hearing in front of an 

Administrative Law Judge in accordance 

with § 155.206(m) before the CMP is 

levied. 

Comment: Several commenters 

advocated against the duplication of 

penalties in instances where certain 

types of violations may already subject 

them to other types of penalties. A few 

commenters noted that the Health 

Insurance Portability and 

Accountability Act already governs 

certain critical aspects of compliance 

related to protected health information. 

Response: We understand 

commenters’ concern about the 

potential for a violation to be punished 

twice under different enforcement 

schemes, and we have amended 

§ 155.206(h) to include a factor allowing 

HHS to take into consideration whether 

other remedies or penalties have been 

assessed and/or imposed for the same 

conduct or occurrence. It would be the 

responsibility of the consumer 

assistance entity to bring such 

information to HHS’s attention. 

Comment: Several commenters 

emphasized the need for consumer 

assistance training about CMP 

implementation, and more robust 

training regarding any rules whose 

violation might trigger a CMP 

investigation, including circumstances 

in which consumers’ personally 

identifiable information (PII) can be 

collected, and appropriate uses and 

storage of PII. A few commenters were 

concerned that the restrictions on 

retaining consumer PII might prevent 

consumer assistance entities from 

keeping sufficient information to refute 

allegations of misconduct. 

Response: We believe that the 

protection of consumer information is 

one of the most critical duties of 

consumer assistance entities. Section 

155.215(b)(2)(xi) requires all Navigators 

in FFEs, including State Partnership 

Exchanges, as well as all non-Navigator 

assistance personnel to which § 155.215 

applies, to receive training on the 

privacy and security standards 

applicable under § 155.260 for handling 

and safeguarding consumers’ personally 

identifiable information. Section 

155.215(b)(1)(iii) requires that all 

Navigators in FFEs, including State 

Partnership Exchanges, and all nonNavigator assistance personnel to which 

§ 155.215 applies, complete and achieve 

a passing score on all approved 

certification examinations prior to 

carrying out any consumer assistance 

functions under § 155.205(d) and (e) or 

§ 155.210. And § 155.225(d)(3) requires 

certified application counselors to 

comply with the Exchange’s privacy and 

security standards adopted consistent 

with § 155.260, and applicable 

authentication and data security 

standards. To implement these 

requirements, HHS has included 

detailed privacy and security 

requirements in its agreements, 

contracts, and grant terms and 

conditions with the consumer assistance 

entities that are carrying out functions 

in States with an FFE, including a State 

Partnership Exchange. We recognize 

that these strong consumer protections 

restrict the personal consumer 

information that consumer assistance 

entities are able to retain and therefore 

limit the information available to them 

in preparing a response to a notice of 

investigation in § 155.206(e). If any 

consumer assistance entity feels limited 

in their ability to respond to a notice of 

investigation, we encourage them to 

explain any rules and policies that 

prevented them from retaining 

information they believe would have 

been exculpatory. HHS may take such 

explanations into account under the 

factors outlined in § 155.206(h). 

Comment: We received a number of 

comments on our proposed bases for 

initiating an investigation of a potential 

violation in § 155.206(d). Commenters 

supported explicitly allowing any 

entity, individual, or individual’s 

authorized representative to file a 

complaint with HHS alleging that a 

consumer assistance entity has violated 

the FFE rules applicable to them. Some 

commenters asked HHS to clarify the 

process for filing complaints, including 

whether complaints filed at other HHS 

offices for other enforcement purposes 

would, if applicable, be shared with the 

office responsible for initiating 

investigations under § 155.206 and 

trigger investigations under this section. 

Other commenters asked that we require 

consumer assistance entities to post 

information about the complaint process 

to ensure that consumers understand 

their rights about how to file a 

complaint. 

Response: We anticipate providing 

further guidance regarding how and 

where individuals and entities may file 

complaints against consumer assistance 

entities or individuals. To ensure that 

the basis for initiating an investigation 

is sufficiently broad, we have modified 

proposed § 155.206(d)(1) to clarify that 

all information received or learned by 

HHS, whether through communications 

from sources outside HHS or not, could 

trigger an investigation into consumer 

assistance entity noncompliance. For 

example, if HHS discovers possible 

noncompliance by reviewing data or 

information already available to it 

through its own monitoring efforts, 

rather than by reviewing new 

information given to it by external, nonHHS sources, under final § 155.206(d)(1) 

that information could serve as the basis 

for initiating an investigation. We have 

also modified proposed 

§ 155.206(d)(1)(iii) to align it with 

language in § 155.206(d)(1) and 

§ 155.206(d)(2) indicating that HHS may 

consider information ‘‘that a consumer 

assistance entity may have engaged or 

may be engaging’’ in noncompliance as 

described in § 155.206(c). We are 

finalizing the rest of § 155.206(d) as 

proposed. 

Comment: A few commenters asked 

for clarification regarding the standards 

HHS will use to determine whether an 

investigation is warranted. As proposed, 

§ 155.206(e) required HHS to provide 

consumer assistance entities notice of 

an investigation and 30 days to respond 

with evidence, each time HHS learns of 

a potential violation. Instead, 

commenters requested that HHS make a 

preliminary assessment of complaints to 

determine their credibility before 

initiating a formal investigation under 

§ 155.206(e), to avoid imposing 

unnecessary administrative burdens on 

consumer assistance entities, and to 

prevent individuals and organizations 

from submitting complaints with the 

purpose of disrupting Exchange 

operations. 

Response: We agree with commenters 

that HHS should not issue notice to a 

consumer assistance entity, with the 

accompanying 30 days to respond to the 

allegation, until HHS has determined 

that a formal investigation is warranted. 

We have amended § 155.206(e) to 

specify that HHS will provide a written 

notice to the consumer assistance entity 

when HHS performs a formal 

investigation, rather than each time it 

learns of a potential violation. 

Comment: One commenter agreed that 

the CMP process, as proposed, provides 

a reasonable time frame to close out 

investigations. Another commenter 

asked that the time frame for consumer 

assistance entities to respond to the 

notice of investigation be increased from 

30 days to 60 days. 

Response: We believe 30 days to 

respond to HHS’s notice of investigation 

in § 155.206(e) is a reasonable amount of 

time, particularly because the consumer 

assistance entity may request an 

extension of another 30 days under 

§ 155.206(f) if the entity cannot prepare 

a response within the initial 30-day 


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period. Therefore, we are finalizing the 

30-day response period in § 155.206(e) 

as proposed. 

Comment: Commenters generally 

supported the proposed factors in 

§ 155.206(h) for determining 

noncompliance and the amount of any 

CMPs assessed. Several commenters 

appreciated the case-by-case nature of 

this process, and agreed that the 

determination should take into account 

factors like the consumer assistance 

entity’s previous or ongoing record of 

compliance, the gravity and frequency 

of the violation, and any financial harm 

incurred by the consumer. One 

commenter suggested that HHS should 

assess penalties only if the violation is 

intentional and causes harm, and 

another asked that CMPs be suspended 

if the entity was acting in good faith on 

behalf of the individual assisted. One 

commenter recommended that we move 

the factor regarding the degree of 

culpability of the consumer assistance 

entity, proposed at § 155.206(h)(2)(i), 

from the list of factors that HHS may 

consider under § 155.206(h)(2), to the 

list of factors that HHS must consider 

under § 155.206(h)(1). 

Response: We believe that the factors 

as proposed in § 155.206(h) are 

responsive to commenters concerns. For 

example, HHS is required to take into 

account the harm caused by a violation 

under § 155.206(h)(1)(ii), which 

provides that HHS must take into 

account the gravity of the violation, 

which may be determined in part by 

whether the violation caused, or could 

reasonably be expected to cause, 

adverse impacts, and the magnitude of 

those impacts. We based these factors 

on a longstanding interpretation of what 

‘‘gravity of the violation’’ means and 

what it may include under the HIPAA 

enforcement scheme at 45 CFR 150.317. 

HHS may also take into account the 

degree of culpability of the consumer 

assistance entity under 

§ 155.206(h)(2)(i). We believe this factor 

will generally play an important role in 

HHS’s determination of whether CMPs 

should be assessed, but we are finalizing 

this factor as proposed because the 

mandatory factors in § 155.206(h)(1) 

track the requirements of section 

2723(b)(2)(C)(ii) of the PHS Act, while 

the permissive factors in § 155.206(h)(2) 

are not statutory requirements. 

Additionally, we believe that the 

limitations on CMPs described in 

§ 155.206(k) provide sufficient 

protections for consumer assistance 

entities acting in good faith on behalf of 

consumers. Therefore, we are finalizing 

the other factors listed in § 155.206(h) as 

proposed, with the addition, as 

discussed above, of a factor regarding 

whether other remedies or penalties 

have been assessed and/or imposed for 

the same conduct or occurrence. 

Comment: One commenter requested 

clarity regarding whether HHS could 

assess a lesser amount per day than the 

maximum of $100, and recommended 

against the assessment of a lesser 

amount. One commenter suggested that 

when the number of individuals directly 

affected by the violation cannot be 

determined, there should be a maximum 

placed on the estimate calculated by 

HHS, based on the size of the consumer 

population previously assisted by the 

entity. One commenter requested that 

HHS exclude from the time frame for 

which a penalty is assessed any time 

during which the investigation is being 

conducted, provided the entity or 

individual stops the behavior at issue 

during that period. 

Response: The maximum penalty 

provided in § 155.206(i) is the per-day 

limit on the amount of any CMP that 

may be assessed. HHS may determine 

that a lesser amount is appropriate, 

based on an analysis of the relevant 

factors in § 155.206(h). We believe that 

a reasonable estimate of individuals 

directly affected, as we explained in the 

preamble to the proposed rule, would be 

based on available information, such as 

the data from a Federal Navigator 

grantee’s quarterly or weekly report 

concerning the number of consumers 

assisted. Therefore, we do not think it 

is necessary to place a maximum on 

such an estimate based on the size of the 

population assisted by the entity. In 

addition, we have not included a 

requirement that would toll the 

maximum penalty from accruing while 

HHS conducts its investigation because 

of the possibility that consumers may 

continue to be affected by previous 

misconduct during this period, even if 

the entity has stopped the behavior at 

issue. However, under 

§ 155.206(k)(1)(ii), HHS cannot assess 

penalties for any period of time after a 

consumer assistance entity knew, or 

exercising reasonable diligence would 

have known, of the failure, if the 

violation was due to reasonable cause 

and not due to willful neglect and the 

violation was corrected within 30 days 

of the first day that any of the consumer 

assistance entities against whom the 

penalty would be imposed knew, or 

exercising reasonable diligence would 

have known, that the violation existed. 

Additionally, HHS may consider a 

consumer assistance entity’s cessation 

of misconduct when determining 

whether penalties should be assessed 

and in what amount, under 

§ 155.206(h)(2)(ii). Taken together, we 

believe these factors strike the right 

balance to ensure that any CMPs 

assessed by HHS are reasonable and 

appropriate. 

Comment: We requested comment on 

whether we should provide a cap on the 

total penalty that could be assessed by 

HHS in addition to the maximum per 

day penalty. The majority of 

commenters who responded to this 

request recommended that we 

implement such an aggregate cap. These 

commenters were concerned that the 

lack of such a cap might chill 

participation, particularly for those 

organizations with fewer resources, and 

might unduly penalize consumer 

assistance entities for mistakes made 

due to lack of sophistication or 

confusion during the initial open 

enrollment period. A few commenters 

recommended against implementing an 

aggregate penalty cap because the costbenefit of CMPs for certain violations 

might not serve as an adequate 

deterrent. One commenter 

recommended a tiered system of caps 

based on the time frame of the violation. 

Response: We agree with commenters 

that if we were to set an aggregate cap 

for CMPs assessed against a consumer 

assistance entity, CMPs might not serve 

as a sufficient deterrent for certain types 

of misconduct or noncompliance. 

Therefore, we are finalizing § 155.206(i) 

as proposed. However, we have 

modified the text of § 155.206(h) to 

make clear that, as was discussed in the 

preamble to the proposed rule, the 

factors listed are to be used not just to 

determine whether CMPs are warranted 

under the circumstances surrounding 

the violation, but also to determine the 

amount of any CMPs assessed. We 

believe this change will help HHS 

ensure that the amount of any penalty 

assessed is in proportion to the 

consumer assistance entity’s violation. 

Comment: One commenter suggested 

that the CMPs collected by HHS related 

to consumer harm should be distributed 

to consumers as restitution. 

Response: Section 2723(b)(2)(G) of the 

PHS Act states that penalties collected 

under paragraph (b) of that Act must be 

‘‘expended for the purpose of enforcing 

the provisions with respect to which the 

penalty was imposed.’’ HHS does not 

interpret restitution to consumers to fall 

within this statutory purpose, and 

therefore does not interpret the statute 

to permit restitution to consumers. 

Accordingly, we do not provide for 

consumer restitution as an alternative 

use of CMPs collected under this 

authority. 

Comment: One commenter expressed 

support for our proposal in § 155.206(j) 

that HHS retain authority to settle or 


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compromise on any penalties provided 

for in this section. 

Response: We agree that HHS should 

have the flexibility to settle or 

compromise on any penalties that could 

be collected. We are therefore finalizing 

§ 155.206(j) as proposed. 

Comment: Many commenters 

supported our proposal in § 155.206(k) 

to implement the limitations that HHS 

will not assess a CMP where the entity 

did not know, or exercising reasonable 

diligence would not have known, of the 

violation; or for any period of time after 

a consumer assistance entity knew, or 

exercising reasonable diligence would 

have known, of the failure, if the 

violation was due to reasonable cause 

and not due to willful neglect and the 

violation was corrected within 30 days 

of the first day that any of the consumer 

assistance entities against whom the 

penalty would be imposed knew, or 

exercising reasonable diligence would 

have known, that the violation existed. 

Some commenters expressed that these 

limitations would help encourage a 

broader group of organizations with 

varying degrees of experience to 

participate as consumer assistance 

entities, and ensure that CMPs are 

reserved for the most egregious offenses. 

Several commenters also supported our 

proposal to place the burden on 

demonstrating the existence of the 

factors that trigger these limitations on 

the consumer assistance entity. 

Response: We agree with these 

comments, and are finalizing 

§ 155.206(k)(1) and (2) as proposed. We 

believe these limitations will help 

balance the interests of HHS, the 

Exchange, and consumers to have 

consumer assistance entities exercise 

reasonable diligence in understanding 

and executing their obligations, while 

not unnecessarily penalizing consumer 

assistance entities who are acting in 

good faith. 

Comment: We requested comment on 

whether a statute of limitations should 

apply to actions under this section. One 

commenter responded to this request, 

suggesting that a statute of limitations 

period would be appropriate and 

recommending a period of 5 years. 

Response: We agree that a statute of 

limitations period is appropriate. We 

believe such a period will help give 

assurance to consumer assistance 

entities that any violations will not be 

actionable indefinitely, particularly 

since we understand that some 

commenters are concerned about the 

potential for these penalties to 

discourage program participation. 

Additionally, HHS’s goals in issuing 

this CMP rule are to encourage program 

compliance, prevent misconduct, and 

remedy violations promptly. We do not 

think these goals will be served by 

prosecuting violations many years after 

they have occurred. 

The regulations finalized elsewhere in 

this rulemaking at § 155.285 regarding 

application fraud and misuse of PII have 

adopted a six-year statute of limitations 

following the date of the occurrence. We 

believe that consistency with § 155.285 

regarding the statute of limitations 

period is important because the same 

conduct by a consumer assistance entity 

in an FFE might trigger CMPs under 

either that provision or under § 155.206. 

Additionally, we believe that six years 

provides ample time for HHS to 

discover, investigate, and assess any 

potential CMP against a consumer 

assistance entity. We have therefore 

added a new § 155.206(k)(3) to provide 

for a six-year statute of limitations 

period. 

Comment: We requested comment on 

whether all aspects of 45 CFR Part 150, 

Subpart D should apply to appeals of 

CMPs assessed under § 155.206. No 

commenters responded to this request, 

although one commenter supported the 

proposed appeals process. One 

commenter recommended that CMPs 

should continue to accrue pending an 

appeal in the event the imposition of 

CMPs is upheld on appeal and the 

Exchange participant failed to correct 

the instance of noncompliance 

following the imposition. 

Response: We are finalizing 

§ 155.206(m)–(n) as proposed. We do 

not believe it is necessary to provide 

that CMPs should continue to accrue 

pending appeal. If HHS receives or 

learns of any information indicating that 

a consumer assistance entity may have 

engaged or may be engaging in 

noncompliant activity in violation of 

§ 155.206(c), including any violation for 

the period following an initial 

assessment, such as the period during 

which an appeal is pending, HHS could 

initiate a new investigation and assess 

new CMPs as appropriate. 

Comment: Several commenters agreed 

with our proposal that where conduct 

by consumer assistance entities may 

warrant CMPs under either § 155.285 or 

§ 155.206, HHS has discretion to 

determine whether to assess a CMP 

under § 155.285 or under § 155.206. 

Other commenters recommended that 

consumer assistance entities be exempt 

from penalties under § 155.285. A few 

argued that consumer assistance entities 

do not actually provide information as 

part of the process of applying for 

coverage or an exemption, and therefore 

it was difficult to see how they could 

provide false or fraudulent information 

in violation of section 1411(b) of the 

Affordable Care Act. 

Response: We disagree that consumer 

assistance entities should be exempt 

from the provisions of § 155.285. Any 

Navigator, non-Navigator assistance 

personnel, or certified application 

counselor who misuses consumer 

information in violation of section 

1411(g) of the Affordable Care Act, or 

who knowingly enters false or 

fraudulent information in a consumer’s 

application with or without the 

knowledge of the consumer, might be in 

violation of either § 155.285 or 

§ 155.206. Therefore, we maintain that 

where conduct by a consumer assistance 

entity may warrant CMPs under either 

§ 155.285 or § 155.206, HHS should 

have discretion to determine whether to 

assess a CMP under § 155.285 or under 

§ 155.206. We have also finalized the 

portion of § 155.206(c) that indicates 

that HHS will not assess a CMP under 

§ 155.206 if a CMP has been assessed for 

the same conduct under § 155.285. If a 

consumer assistance entity is in a 

situation where CMPs could be imposed 

under both § 155.285 and § 155.206, 

when determining whether to assess 

CMPs under § 155.285, HHS will take 

the possibility that it may be penalizing 

conduct that is being investigated or has 

already been penalized under § 155.206 

into account as a factor under 

§ 155.285(b)(1)(viii). 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.206 of the proposed 

rule, with the following modifications. 

We modified proposed § 155.206(c) to 

more clearly explain that HHS could 

assess a CMP against a consumer 

assistance entity for failure to comply 

with the Federal regulatory 

requirements applicable to the 

consumer assistance entity that have 

been implemented pursuant to section 

1321(a)(1) of the Affordable Care Act, 

including provisions of any agreements, 

contracts, and grant terms and 

conditions that interpret those Federal 

regulatory requirements or establish 

procedures for compliance with them. 

We added language to final 

§ 155.206(d)(1), to specify that 

information learned, not just received, 

by HHS indicating that a consumer 

assistance entity may have engaged or 

may be engaging in activity specified in 

paragraph (c) may warrant an 

investigation. We modified 

§ 155.206(d)(1)(iii) to align with 

language elsewhere in this section that 

HHS may consider information ‘‘that a 

consumer assistance entity may have 

engaged or may be engaging’’ in 

noncompliance under § 155.206(c), 


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rather than information concerning 

‘‘potential involvement’’ in such 

activity. We revised § 155.206(e) to 

specify that HHS must provide a written 

notice to a consumer assistance entity of 

its investigation, rather than requiring 

HHS to provide a written notice to an 

entity each time HHS learns of a 

potential violation. We revised 

§ 155.206(h) to clarify that, consistent 

with the preamble discussion of the 

proposed rule, the factors listed are to 

be used not just to determine whether 

CMPs are warranted, but also to 

determine the amount of any CMPs 

assessed. In § 155.206(h)(1)(i), we 

removed the erroneous reference to 

corrective action plans ‘‘under section 

(c) of this section.’’ We also included a 

new factor at § 155.206(h)(2)(iii) that 

allows HHS to take into consideration 

whether other remedies or penalties 

have been assessed and/or imposed for 

the same conduct or occurrence, and 

adjusted the numbering of the final 

factor (‘‘Other such factors as justice 

may require’’) from § 155.206(h)(2)(iii) 

to § 155.206(h)(2)(iv). In § 155.206(i), we 

changed ‘‘the Exchange’’ to ‘‘HHS’’ for 

consistency with the rest of the section. 

We added new § 155.206(k)(3) to 

provide for a six-year statute of 

limitations period. We corrected some 

numbering errors throughout 

§ 155.206(l). We also made several 

minor wording changes throughout final 

§ 155.206, to replace ‘‘Federallyfacilitated Exchanges’’ with ‘‘a 

Federally-facilitated Exchange’’ and to 

use the abbreviation ‘‘CMP’’ 

consistently. 

b. Navigator, Non-Navigator Assistance 

Personnel, and Certified Application 

Counselor Program Standards 

(§§ 155.210, 155.215, and 155.225) 

1. Provisions Related to Non-Federal 

Requirements for Navigators, NonNavigator Assistance Personnel, and 

Certified Application Counselors 

(§§ 155.210, 155.215, and 155.225) 

In the proposed rule, we proposed 

amending § 155.210(c)(1)(iii) to add new 

paragraphs (A) through (F) to specify a 

non-exhaustive list of certain nonFederal requirements that would 

prevent the application of the 

provisions of title I of the Affordable 

Care Act within the meaning of section 

1321(d) of the Affordable Care Act, with 

respect to the Navigator program. We 

also proposed amending § 155.215(f) to 

make clear that we would consider the 

same types of non-Federal requirements 

listed in proposed § 155.210(c)(1)(iii)(A) 

through (F) (except for 

155.210(c)(1)(iii)(D)) to prevent the 

application of the provisions of title I of 

the Affordable Care Act within the 

meaning of section 1321(d) of the 

Affordable Care Act, when applied to 

non-Navigator assistance personnel 

subject to § 155.215. Similarly, with 

respect to the certified application 

counselor program, we proposed 

amending § 155.225(d) to add a new 

paragraph (d)(8) to specify that certified 

application counselors must meet any 

licensing, certification or other 

standards prescribed by the State or 

Exchange, if applicable, so long as such 

standards do not prevent the application 

of the provisions of title I of the 

Affordable Care Act within the meaning 

of section 1321(d) of the Affordable Care 

Act. We further proposed in 

§ 155.225(d)(8) to specify a nonexhaustive list of non-Federal 

requirements, similar to those listed in 

proposed § 155.210(c)(1)(iii)(A) through 

(F) (except for 155.210(c)(1)(iii)(D)), that 

would prevent the application of the 

provisions of title I of the Affordable 

Care Act within the meaning of section 

1321(d) of the Affordable Care Act, 

when applied to certified application 

counselors. We explained that the 

proposed amendments were intended as 

a non-exhaustive list of certain nonFederal requirements that prevent the 

application of the provisions of title I of 

the Affordable Care Act in one or more 

of the following three ways: (1) On their 

face, they prevent Navigators, nonNavigator assistance personnel subject 

to § 155.215, and certified application 

counselors or their designated 

organizations from performing their 

Federally required duties; (2) on their 

face, they make it impossible for an 

Exchange to implement the consumer 

assistance programs it is authorized or 

required to operate in a manner 

consistent with Federal requirements; 

and (3) they conflict with Federal 

standards or requirements in specific 

factual circumstances based on how a 

non-Federal requirement is applied or 

implemented. In addition, we 

recognized that a Federal court may also 

find other non-Federal requirements 

that we did not expressly mention in the 

proposed rule to be preempted within 

the meaning of section 1321(d) of the 

Affordable Care Act. We further 

explained that the proposed provisions 

would not preclude a State from 

establishing or implementing State law 

protections for its consumers, so long as 

such laws do not prevent the 

application of Federal requirements for 

the applicable consumer assistance 

programs. As an example, we stated that 

a State may require assisters to undergo 

fingerprinting or background checks 

before they can operate in a State, so 

long as a State’s implementation of 

these additional requirements does not 

prevent the Exchange from 

implementing these programs in the 

State consistent with Federal standards 

or make it impossible for the assisters to 

perform their Federally-required duties. 

First, in proposed 

§§ 155.210(c)(1)(iii)(A) and 

155.225(d)(8)(i), we proposed to specify 

that non-Federal requirements which 

require Navigators, non-Navigator 

assistance personnel subject to 

§ 155.215, and certified application 

counselors to refer consumers to other 

entities not required to provide them 

with fair, accurate, and impartial 

information or act in the consumer’s 

best interests, would prevent the 

application of the provisions of title I of 

the Affordable Care Act within the 

meaning of section 1321(d) of the 

Affordable Care Act because such nonFederal requirements would conflict 

with an assister’s duty to provide fair, 

accurate, and impartial information or 

to act in the consumer’s best interests. 

Second, we proposed to specify under 

§§ 155.210(c)(1)(iii)(B) and 

155.225(d)(8)(ii) that non-Federal 

requirements that prevent Navigators, 

non-Navigator assistance personnel 

subject to § 155.215, and certified 

application counselors from providing 

services to all persons to whom they are 

required to provide assistance would 

also prevent the application of the 

provisions of title I of the Affordable 

Care Act because assisters are required 

to provide information and services in 

a fair and impartial manner and to 

provide information to employees about 

the full range of QHP options for which 

they are eligible, which we have 

interpreted to mean that assisters must 

have the ability to help any individual 

who presents themselves for assistance. 

With respect to proposed 

§§ 155.210(c)(1)(iii)(A) and (B), we 

explained that where a State has elected 

to establish and operate only a SHOP 

Exchange pursuant to 45 CFR 

155.100(a)(2), and has opted under 45 

CFR 155.705(d) to permit Navigator 

duties at § 155.210(e)(3) and (4) in the 

State SHOP-only Exchange to be 

fulfilled through referrals to agents and 

brokers, we would not consider the 

State’s exercise of this option under 

§ 155.705(d) to prevent the application 

of the provisions of title I of the 

Affordable Care Act, since that option is 

authorized under Federal law. Third, 

under §§ 155.210(c)(1)(iii)(C) and 

155.225(d)(8)(iii), we proposed to 

specify that non-Federal requirements 

that prevent Navigators, non-Navigator 

assistance personnel subject to 


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22The preamble discussion to the proposed rule 

addressed only non-Federal requirements that 

would interpret ‘‘principal place of business’’ to 

mean that an organization could have only one 

principal place of business nationwide, similar to 

the legal concept that may be used in determining 

corporate citizenship for purposes of establishing 

diversity jurisdiction in Federal court, as required 

under 28 U.S.C. 1332(c). 

§ 155.215, and certified application 

counselors from providing advice 

regarding substantive benefits or 

comparative benefits of different health 

plans, would also prevent the 

application of the provisions of title I of 

the Affordable Care Act because 

assisters are required to provide 

information about QHPs, and to 

facilitate either selection of or 

enrollment in a QHP, and CMS 

interprets these requirements to mean 

that assisters must be prepared to 

discuss the terms and features of any 

coverage for which a consumer is or 

might be eligible, consistent with each 

consumer’s expressed interests and 

needs. As proposed, these three 

provisions would apply to Navigators, 

non-Navigator assistance personnel 

subject to § 155.215, and certified 

application counselors (or certified 

application counselor designated 

organizations) that are operating in State 

Exchanges or in FFEs. Fourth, under 

§§ 155.210(c)(1)(iii)(D), we proposed 

that a non-Federal requirement that 

required a Navigator (but not a certified 

application counselor or non-Navigator 

assistance personnel) to hold an agent or 

broker license or to carry errors and 

omissions coverage (typically held only 

by licensed professionals such as agents 

and brokers) would also prevent the 

application of the provisions of title I of 

the Affordable Care Act because 

imposing these requirements on all 

Navigators in a State would mean that 

all Navigators would fall under only one 

type of entity listed in § 155.210(c)(2), 

specifically, agents and brokers, in 

violation of the requirement set forth 

under § 155.210(c)(2)(i) that there be 

two types of Navigator entities in each 

Exchange, and that at least one type 

must be a community and consumerfocused nonprofit group. We explained 

that we believed that the four provisions 

listed above should apply in both FFEs 

and State Exchanges because they 

address requirements that, in HHS’s 

view, would facially conflict with 

Federal requirements or standards. 

The proposed rule also specified two 

additional provisions regarding certain 

non-Federal requirements that would 

prevent the application of the 

provisions of title I of the Affordable 

Care Act with respect to FFEs only. We 

explained that these two provisions 

would not apply in State Exchanges 

since we had observed an enhanced 

ability for a State Exchange to work with 

other offices within the State to 

establish Exchange standards and 

coordinate the implementation of State 

law applicable to assisters in a manner 

that does not conflict with Federal 

standards or prevent the State Exchange 

from implementing consumer assistance 

programs consistent with Federal 

requirements. Under proposed 

§§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv), we proposed to 

specify that non-Federal requirements 

that impose standards that would 

prohibit individuals or entities from 

acting as Navigators, non-Navigator 

assistance personnel, or certified 

application counselors or certified 

application counselor designated 

organizations, when they would be 

eligible to participate in these respective 

capacities under FFE standards, would 

prevent the application of the 

provisions of title I of the Affordable 

Care Act within the meaning of section 

1321(d) of the Affordable Care Act. We 

illustrated this provision in two 

examples. First, we explained that a 

non-Federal requirement that prohibits 

consumer assistance entities and 

individuals from receiving any 

consideration, directly or indirectly, 

from a health insurance issuer offering 

health insurance coverage in or outside 

of an Exchange, even if not in 

connection with the enrollment of 

individuals into a QHP, would not only 

exceed applicable Federal conflict-ofinterest standards but would also render 

ineligible certain entities, such as 

hospitals and community health care 

clinics, that would otherwise be eligible 

to serve as Navigators, non-Navigator 

assistance personnel subject to 

§ 155.215, or certified application 

counselors and organizations. Second, 

we explained that a non-Federal law 

that prohibits an individual or entity 

from serving in an assister program on 

the basis that the individual or entity 

does not maintain its principal place of 

business in that State (which could 

include an organization that is 

organized in the State, but maintains its 

principal place of business outside of 

the State), would prevent the FFE from 

implementing consumer assistance 

programs that it is required or 

authorized to implement.22

Finally, under proposed 

§§ 155.210(c)(1)(iii)(F) and 

155.225(d)(8)(v), we proposed to specify 

that in an FFE, non-Federal 

requirements that, as applied or as 

implemented in the State, prevent the 

application of Federal standards 

applicable to Exchanges, Navigators, 

non-Navigator assistance personnel 

subject to § 155.215, or certified 

application counselors and certified 

application counselor designated 

organizations, would prevent the 

application of the provisions of title I of 

the Affordable Care Act within the 

meaning of section 1321(d). For 

example, with respect to the Navigator 

program, if a State with an FFE 

implemented a requirement that 

prevented the only Navigator entity 

operating in the State from continuing 

to perform its Federally-required duties, 

then such a provision, as applied, 

would prevent the Exchange from 

operating a Navigator program as 

required by section 1311(i)(1) of the 

Affordable Care Act and § 155.210(a). As 

a second example, we explained that if 

a State imposed certain requirements as 

mandatory conditions for continuing to 

perform any applicable Federallyrequired duties, such as additional 

training or background or fingerprinting 

checks, which, on their face, we 

consider as generally permissible, but 

also set a deadline for compliance that 

made it impossible for any individual or 

entity approved by the FFE to comply 

on a timely basis, despite good faith 

efforts to comply, then as long as those 

assisters were prevented from fulfilling 

any of their Federally-required duties 

until they could come into compliance 

with the State requirements, the FFE 

would be prevented from operating the 

consumer assistance programs that it is 

required or authorized to implement 

consistent with Federal standards. 

Comment: A large number of 

commenters commended HHS for 

listing specific examples of non-Federal 

standards that would, in HHS’s view, 

prevent the application of the 

provisions of title I of the Affordable 

Care Act, within the meaning of its 

section 1321(d). The commenters stated 

that the level of specificity in the 

proposed provisions and accompanying 

preamble provided important clarity 

regarding the types of non-Federal 

requirements that would prevent 

Navigators, non-Navigator assistance 

personnel and certified application 

counselors from performing their 

Federally-required duties. In expressing 

their support, these commenters stated 

that enrollment into Exchange coverage 

and insurance affordability programs 

during the initial open enrollment 

period was aided in significant part by 

assistance offered through in-person 

assistance programs, and that these 

proposed regulations should be 

finalized to help facilitate the continued 

ability of assisters to provide in-person 


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assistance during the 2014 coverage year 

as well as during the next Exchange 

open enrollment period in fall 2014 and 

beyond. 

A few commenters objected to the 

proposed provisions and asserted that 

they were overly broad, and/or exceed 

the authority of HHS, in violation of the 

Tenth Amendment of the U.S. 

Constitution and the McCarranFerguson Act that provides, ‘‘[t]he 

business of insurance, and every person 

engaged therein, shall be subject to the 

laws of the several States which relate 

to the regulation or taxation of such 

business.’’ (15 U.S.C. 1012(a) (1945)) 

Citing 15 U.S.C. 1012(b), these 

commenters asserted that the McCarranFerguson Act exempts the business of 

insurance from most Federal regulation, 

providing that Federal statutes cannot 

be construed to invalidate, impair or 

supersede State insurance law unless 

they specifically relate to the business of 

insurance. 

Response: We agree that Navigators, 

non-Navigator assistance personnel, and 

certified application counselors have 

played and will continue to play an 

important role in providing application 

assistance to consumers, with respect to 

enrollment in both QHPs and insurance 

affordability programs. It is therefore 

important, in the view of HHS, to 

provide guidance regarding which types 

of non-Federal laws would, within the 

meaning of section 1321(d) of the 

Affordable Care Act, prevent the 

application of the Federal requirements 

to which assisters and Exchanges are 

subject. The finalized provisions are a 

non-exhaustive list of non-Federal 

requirements that, in the view of HHS, 

prevent the application of the 

provisions of title I of the Affordable 

Care Act. We are therefore finalizing, 

with a few modifications, proposed 

§§ 155.210(c)(1)(iii)(A)–(D) and (F) and 

155.225(d)(8)(i)–(iii) and (v). 

We are not finalizing proposed 

§§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv). The concerns raised 

by commenters about the breadth of 

these provisions, and the questions 

raised in comments raised about the 

interpretations we provided in the 

preamble to the proposed rule of the 

substantive Federal requirements whose 

application would be prevented by 

certain non-Federal requirements, have 

instead provided us with an opportunity 

to further define those substantive 

Federal requirements, consistent with 

our preamble discussion in the 

proposed rule, through the addition of 

language in §§ 155.210(d)(4) and (e)(7) 

and §§ 155.225(b)(3) and (g)(2) in the 

final rule. 

With respect to the proposed 

requirement that Navigators, nonNavigator assistance personnel subject 

to § 155.215 and certified application 

counselors maintain a physical presence 

in the Exchange service area, we are 

finalizing this requirement under 

§§ 155.210(e)(7) and 155.215(h) with 

respect to Navigators and non-Navigator 

assistance personnel subject to 

§ 155.215, but we are not finalizing this 

requirement with respect to certified 

application counselors under proposed 

§ 155.225(b)(1)(iii). We are also 

modifying the proposed regulation text 

in §§ 155.210(e)(7), 155.215(h) and are 

finalizing a new provision at 

§ 155.225(b)(3) to clarify that in an FFE, 

Navigators, non-Navigator assistance 

personnel subject to 155.215 and 

certified application counselors, 

respectively, are not required to 

maintain their principal place of 

business in the Exchange service area, 

defined as the entire area served by the 

Exchange. A requirement that these 

assister entities maintain their principal 

place of business within the Exchange 

service area for an FFE would limit the 

pool of entities which would be eligible 

to serve in this capacity, and could 

prevent the FFE from fully 

implementing the consumer assistance 

programs that it is required (or 

authorized) to implement, within the 

meaning of section 1321(d) of the 

Affordable Care Act. 

With respect to the requirement under 

existing §§ 155.210(d)(4) and 

155.215(a)(2)(i) (which applies 

§ 155.210(d)(4) to non-Navigator 

assistance personnel subject to 

§ 155.215 by cross-reference), and 

finalized in this rule at § 155.225(g)(2), 

that Navigators, non-Navigator 

assistance personnel subject to 

§ 155.215 and certified application 

counselors, respectively, are prohibited 

from receiving any consideration 

directly or indirectly from a health 

insurance issuer (or stop-loss insurance 

issuer) in connection with enrollment of 

any individuals in a QHP or non-QHP, 

we are modifying the text in 

§ 155.210(d)(4) and adding text in 

§ 155.225(g)(2) to clarify that in the FFE, 

this requirement does not mean that a 

health care provider shall be ineligible 

to operate in an assister program solely 

because it receives consideration from a 

health insurance issuer for health care 

services provided. We make these 

clarifications to make it easier for the 

public to understand the purpose and 

scope of the applicable Federal 

standards in the FFE and to identify 

circumstances in which additional nonFederal requirements would be in 

conflict with Federal requirements. This 

places in regulation text previous 

interpretations of these provisions, in 

which we have stated that ‘‘the 

prohibition on receiving direct or 

indirect consideration from a health 

insurance or stop loss insurance issuer 

[applies to] consideration received for 

enrolling individuals or employees in 

health insurance plans or stop loss 

insurance inside or outside the 

Exchanges; it does not apply to 

consideration received by a provider to 

support specific activities, such as the 

provision of medical services, that are 

not connected to the enrollment of 

individuals or employees in QHPs.’’ (78 

FR 42832) In addition, this prohibition 

does not apply in situations where an 

individual or entity that is otherwise 

eligible to serve as a Navigator, nonNavigator assistance personnel subject 

to § 155.215, certified application 

counselor or certified application 

counselor designated organization, in 

accordance with applicable Exchange 

standards, receives consideration from a 

health insurance or stop loss insurance 

issuer that is not in connection with the 

enrollment of any individual(s) in a 

QHP or non-QHP. 

We do not agree that HHS is 

exceeding its authority in finalizing the 

proposed provisions. These provisions 

set forth HHS’s interpretation of the 

preemption standard established by 

Congress in section 1321(d) of the 

Affordable Care Act, which provides 

that State laws that do not prevent the 

application of the provisions of title I of 

the Affordable Care Act are not 

preempted. This preemption standard 

applies to all of the Federal 

requirements applicable to Navigators, 

non-Navigator assistance personnel and 

certified application counselors, as well 

as to all of the Federal requirements that 

Exchanges implementing these 

programs must follow, as all these 

standards are authorized and 

established under title I of the 

Affordable Care Act. In section 1321(d) 

of the Affordable Care Act, therefore, in 

HHS’s view, Congress made clear that 

while States continue to have authority 

to enact laws that affect programs 

established under the provisions of title 

I of the Affordable Care Act, that 

authority is not unlimited. Rather, 

States do not have the authority to enact 

laws that prevent the application of the 

provisions of title I of the Affordable 

Care Act, including the provisions that 

provide authority and establish Federal 

requirements for the Navigator 

programs, non-Navigator programs, and 

certified application counselor 

programs. 


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Moreover, in promulgating the 

provisions in this final rule, HHS is 

simply interpreting how the preemption 

standard that Congress established in 

section 1321(d) of the Affordable Care 

Act applies to a non-exhaustive list of 

certain non-Federal requirements for 

these assister programs. HHS has a 

unique understanding of the statutes it 

administers and is responsible for 

interpreting, and Congress has expressly 

delegated to HHS, under section 

1321(a)(1) of the Affordable Care Act, 

authority for issuing Federal regulations 

setting standards for meeting the 

requirements under the Affordable Care 

Act with respect to the establishment 

and operation of Exchanges, including 

the establishment and operation of the 

Navigator, non-Navigator, and certified 

application counselor programs. HHS 

expects that this final rule will provide 

valuable guidance to both States and 

assisters, as well as other stakeholders, 

by helping to resolve questions about 

the types of non-Federal laws that, in 

HHS’s view, would prevent the 

application of the provisions of title I of 

the Affordable Care Act, within the 

meaning of section 1321(d) of the 

Affordable Care Act. We recognize that 

a Federal court might find that other 

non-Federal requirements not listed in 

this rule would prevent the application 

of Federal requirements within the 

meaning of section 1321(d). 

Comment: Some commenters, while 

supporting the provisions generally, 

also expressed concerns that the 

proposed regulations do not address 

non-Federal laws that create obstacles to 

the implementation of the goals of 

Federal law. Commenters urged us to 

specifically address requirements that 

impose unreasonable burdens for 

assisters in the performance of their 

Federally-required duties and expressed 

concern that by not doing so, HHS could 

be seen as interpreting section 1321(d) 

of the Affordable Care Act to preempt 

State law only when it is impossible for 

an assister or an Exchange to comply 

with both Federal and non-Federal 

requirements. Some of these 

commenters requested that HHS clarify 

that it does not mean to suggest that a 

non-Federal requirement that imposes 

an unreasonable burden on assisters or 

serves as an obstacle to the 

implementation of Federal law could 

not prevent the application of the 

provisions of title I of the Affordable 

Care Act, within the meaning of section 

1321(d) of the Affordable Care Act. 

Response: These provisions contain a 

non-exhaustive list of circumstances 

under which HHS would consider a 

non-Federal requirement applicable to 

Navigators, non-Navigator assistance 

personnel, or certified application 

counselors to prevent the application of 

provisions of title I of the Affordable 

Care Act, within the meaning of section 

1321(d) of the Affordable Care Act. 

There may be other types of non-Federal 

requirements, not specified in these 

provisions, that would also prevent the 

application of Federal requirements 

related to the assister programs. We do 

not intend to suggest that non-Federal 

requirements which place unreasonable 

burdens on assisters and assister entities 

or that create obstacles to the 

implementation of Federal law could 

not also prevent the application of title 

I of the Affordable Care Act within the 

meaning of section 1321(d) of the 

Affordable Care Act. 

Comment: Some commenters 

supported the proposed regulations’ 

acknowledgement of the State’s role in 

imposing State-level registration and 

other reasonable consumer protections 

for its residents. However, a few 

commenters asserted that the proposed 

provisions would prevent States from 

establishing additional consumer 

protections and would therefore conflict 

with section 1321(d) of the Affordable 

Care Act. 

Response: We clearly expressed in the 

preamble to the proposed rule, and 

reiterate here, that we do not intend the 

provisions regarding non-Federal 

requirements for assisters to suggest that 

a State cannot establish or implement 

additional State law protections for its 

consumers, such as requiring 

registration, passing fingerprinting and 

background checks, or completing State 

training, provided that its 

implementation of these additional 

requirements does not prevent the 

Exchange from implementing Navigator, 

non-Navigator and certified application 

counselor programs in the State 

consistent with Federal standards or 

prevent assisters in these programs from 

meeting Federal requirements. We 

acknowledge, however, that there is an 

apparent tension between the general 

permissibility of additional, nonconflicting State requirements and the 

language in proposed 

§§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv), in which we proposed 

that non-Federal requirements that 

would render ineligible any assister 

entities or individuals that would 

otherwise be eligible to participate in an 

FFE would prevent the application of 

Federal requirements for assisters. 

Because these provisions could have 

been construed, contrary to our intent, 

as limiting the States’ authority or 

ability to implement reasonable 

consumer protection measures in 

addition to those established by the 

FFE, we have decided not to finalize 

them. Instead, as we explain above, we 

are adding language to other provisions 

of the regulations governing the 

Navigator, non-Navigator, and certified 

application counselor programs to 

codify our interpretations of those 

provisions, consistent with our 

preamble discussion in the proposed 

rule and in other preambles (see 78 FR 

42832), so that our existing policies 

related to these provisions are clarified. 

First, we are adding language to 

current § 155.210(d)(4), which applies to 

non-Navigator assistance personnel 

subject to § 155.215 by cross-reference, 

as well as to new § 155.225(g)(2) (which 

is being finalized in this rulemaking) to 

codify the principle we previously 

espoused in the preamble to the 

proposed rule: that a hospital or other 

health care provider shall not be 

ineligible to participate in the Navigator, 

non-Navigator assistance personnel, or 

certified application counselor program 

solely because it receives payment for 

health services from health insurance 

issuers. Our approach to finalizing this 

provision reflects the fact that HHS 

continues to have concerns regarding 

certain types of non-Federal 

requirements that were described in the 

preamble to the proposed rule. 

Specifically, we continue to have 

concerns about non-Federal 

requirements that would prohibit a 

hospital or other health care provider 

from participating in an assister 

program solely because it receives 

payment for health services from a 

health insurance issuer, because such 

non-Federal requirements could prevent 

the Exchange from operating an assister 

program that includes individuals and 

entities that are otherwise extremely 

well qualified. 

We also continue to have concerns 

about non-Federal requirements that 

require Navigators, non-Navigator 

assistance personnel subject to 

§ 155.215, and certified application 

counselors or certified application 

counselor designated organizations to 

maintain their principal place of 

business in the State, even though we 

are not finalizing the specific provisions 

that were directed at these types of nonFederal requirements in proposed 

§§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv). We have therefore 

decided to add text to the Federal 

standards being finalized in this 

rulemaking at §§ 155.210(e)(7) and 

155.215(h) to clarify that although 

Navigators and non-Navigator personnel 

subject to § 155.215 must maintain a 

physical presence in the Exchange 

service area, they shall not be rendered 

ineligible to participate in the 


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applicable assister program merely 

because their principal place of business 

is outside of the Exchange service area. 

While we are not finalizing the 

proposed requirement in 

§ 155.225(b)(1)(iii)) which would have 

required an organization to maintain a 

physical presence in the Exchange 

service area in order to be designated as 

a certified application counselor 

organization by an Exchange, we are 

finalizing in § 155.225(b)(3) the 

clarification that an organization shall 

not be rendered ineligible to participate 

in the applicable assister program 

merely because its principal place of 

business is outside of the Exchange 

service area. We hope that by codifying 

these principles through amendments to 

the regulations governing these assister 

programs, we will resolve any confusion 

caused by our proposals at 

§§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv), while at the same time 

addressing the concerns about nonFederal requirements that motivated 

these proposals and were presented in 

the preamble discussion related to those 

proposals. 

Comment: Several commenters 

recommended that the list of provisions 

specifying non-Federal requirements 

that would prevent the application of 

the provisions of title I of the Affordable 

Care Act remain non-exhaustive and 

that HHS should continue to engage in 

monitoring of non-Federal requirements 

and their effects on consumer assistance 

functions that are required or permitted 

in an Exchange. A few commenters 

urged HHS to monitor the 

implementation of non-Federal 

requirements and their effects on 

assister programs, with one commenter 

suggesting that HHS be more proactive 

by delineating a process for how it will 

review non-Federal standards in the 

event that these provisions become 

finalized as proposed. 

Response: We agree that, at this time, 

HHS should not attempt to provide an 

exhaustive list of provisions specifying 

the types of non-Federal requirements 

that would prevent the application of 

Federal requirements. We agree that 

continued monitoring of the passage 

and implementation of non-Federal 

requirements as they apply to 

Navigators, non-Navigator assistance 

personnel subject to § 155.215, and 

certified application counselors is 

critical to ensuring the implementation 

and ultimate success of consumer 

assistance functions of an Exchange to 

provide meaningful assistance to all 

consumers who seek such assistance. 

HHS has monitored, and will continue 

to monitor, new and existing nonFederal requirements as they are issued 

and implemented, and will continue to 

assess whether such laws prevent the 

application of the provisions of title I of 

the Affordable Care Act. 

Comment: We received comments on 

whether all the proposed provisions 

regarding non-Federal requirements 

should apply in State Exchanges or 

whether only some of the provisions 

would apply to State Exchanges, as 

proposed. A few commenters expressed 

support for applying certain of the 

proposed provisions in all types of 

Exchanges, while applying other types 

of provisions only in FFEs (including 

State Partnership Exchanges). Others 

recommended that the provisions 

should apply consistently ‘‘across-theboard’’ to all Exchanges because doing 

so would create a bright line across all 

Exchanges and make it easier for all 

stakeholders to administer the various 

consumer assistance programs in an 

efficient, cohesive fashion and would 

minimize confusion if a State transitions 

from an FFE to a State Exchange. 

Response: In light of the fact that we 

are not finalizing proposed 

§§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv) in this final rule (and 

our related decision to instead clarify 

certain Federal standards as they apply 

to assisters in the FFE, as discussed 

above), there are five preemption 

provisions being finalized in this rule 

under renumbered 

§§ 155.210(c)(1)(iii)(A)–(E) and four 

preemption provisions being finalized 

in both § 155.215(f)(1)–(4) and 

§ 155.225(d)(8)(i)–(iv). We agree with 

commenters that these specific 

provisions, as finalized, should be 

directed at non-Federal requirements in 

all Exchanges, including State 

Exchanges. We continue to anticipate, 

based on our observations thus far, that 

a State Exchange would have an 

enhanced ability to coordinate with 

other State offices to ensure that State 

law applicable to assisters does not 

prevent the application of Federal 

requirements applicable to Navigators, 

non-Navigators and certified application 

counselors. However, we acknowledge 

that it is possible that a non-Federal 

requirement, as applied or implemented 

in a State, could prevent a State 

Exchange from operating the consumer 

assistance programs it is required (or 

authorized) to implement, or otherwise 

prevent the Exchange from 

implementing applicable consumer 

assistance programs consistent with 

Federal requirements, or could prevent 

consumer assistance entities or 

individuals in the State from performing 

their Federally-required duties. Rather 

than rule out the possibility that an ‘‘asapplied’’ conflict could occur with 

respect to a State Exchange, as captured 

in the provisions that were proposed at 

§§ 155.210(c)(1)(iii)(F) and 

155.225(d)(8)(v) to be applicable only in 

an FFE, we are extending the 

applicability of these provisions, now 

renumbered as §§ 155.210(c)(1)(iii)(E) 

and 155.225(d)(8)(iv), and reformatted 

in § 155.215(f)(4), so that they apply 

equally to all types of Exchanges. 

Therefore, in finalizing these provisions, 

we have removed the reference to a 

‘‘Federally-facilitated Exchange.’’ 

We are also amending § 155.210(e)(2) 

in the final rule, to specify, consistent 

with our discussion in the preamble to 

the proposed rule (see, for example, 79 

FR 15828–15829), that in addition to the 

existing requirements under this 

provision and 155.210(e)(3) that 

Navigators must provide information 

and services in a fair, accurate, and 

impartial manner and must facilitate 

selection of a QHP, the duties of a 

Navigator include providing 

information that assists consumers with 

submitting the eligibility application; 

clarifying the distinctions among health 

coverage options, including QHPs; and 

helping consumers make informed 

decisions during the health coverage 

selection process. Under existing 

provisions at 45 CFR 155.215(a)(2)(i), 

these duties will also apply to nonNavigators subject to § 155.215. In 

addition, in this rulemaking, we are 

finalizing a new § 155.225(c)(1), to make 

certified application counselors subject 

to a similar set of duties. 

We have also made a minor change to 

the parallel provisions for Navigators, 

non-Navigator personnel subject to 

§ 155.215, and certified application 

counselors that are being finalized 

under § 155.210(c)(1)(iii)(E), 

§ 155.215(f)(4) and § 155.225(d)(8)(iv). 

Specifically, we changed the reference 

to standards that would, as applied or 

as implemented in a State, prevent the 

application of Federal requirements 

applicable to the Exchange’s 

implementation of the respective 

Navigator, non-Navigator assistance 

personnel or certified application 

counselor program ‘‘consistent with 

Federal requirements,’’ by deleting 

‘‘consistent with Federal requirements’’ 

to eliminate redundancy. 

Comment: Several commenters 

expressed support for the clear and 

specific acknowledgement in proposed 

§ 155.215(f) that non-Navigator 

assistance personnel subject to 

§ 155.215 must meet non-Federal 

requirements, as applicable, except 

when such non-Federal requirements 

prevent the application of the 

provisions of title I of the Affordable 

Care Act. As originally proposed, 


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§ 155.215(f) did not specify the types of 

non-Federal requirements which would 

prevent the application of title I of the 

Affordable Care Act, but instead 

incorporated them by reference to 

applicable provisions under proposed 

§ 155.210(c)(1)(iii). A few commenters 

requested that HHS, in the interest of 

added clarity and ease of 

comprehension, revise proposed 

§ 155.215(f) to spell out in the text of 

this provision the non-exhaustive list of 

non-Federal requirements that would 

prevent the application of the 

provisions of title I of the Affordable 

Care Act as applied to non-Navigator 

assistance personnel, rather than crossreferencing the applicable provisions 

under § 155.210(c)(1)(iii), as we had 

originally proposed. 

Response: We agree with the 

comment that, consistent with section 

1321(d) of the Affordable Care Act, nonNavigator assistance personnel subject 

to § 155.215 must meet any non-Federal 

requirements that may apply to them, so 

long as such requirements do not 

prevent the application of the 

provisions of title I of the Affordable 

Care Act. In the interest of added clarity 

and comprehension, we have modified 

this provision to add subparagraphs (1) 

through (4) to § 155.215(f), in which we 

list the previously cross-referenced 

provisions proposed in the Navigator 

rule at § 155.210(c)(1)(iii). 

Comment: Several commenters 

supported the clear and specific 

acknowledgement in proposed 

§ 155.225(d)(8) that certified application 

counselors and their designated 

organizations must meet non-Federal 

requirements, as applicable, except 

when such non-Federal requirements 

prevent the application of the 

provisions of title I of the Affordable 

Care Act. A few commenters asserted 

that the certified application counselor 

program operating in an FFE should not 

be subject to non-Federal requirements 

because, in the commenters’ view, this 

program was created under HHS’s 

regulatory authority—not by statute. 

Response: We are finalizing the 

provisions of § 155.225(d)(8) with 

modifications consistent with those 

made to the parallel Navigator and nonNavigator provisions. These finalized 

provisions establish that certified 

application counselors must meet 

licensing, certification, or other 

standards prescribed by a State or 

Exchange, so long as they do not 

prevent the application of the 

provisions of title I of the Affordable 

Care Act. 

It is unclear to HHS why some 

commenters believe that a certified 

application counselor program 

operating in an FFE should not be 

subject to non-Federal requirements 

simply because it was established 

through an HHS regulation 

implementing the Affordable Care Act, 

rather than being expressly provided for 

by the statute. As we have previously 

explained, the Secretary established the 

certified application counselor program 

under the authority provided in section 

1321(a)(1) of the Affordable Care Act. 

Section 1321(a)(1) directs and 

authorizes the Secretary to issue 

regulations setting standards for meeting 

the requirements under title I of the 

Affordable Care Act, with respect to, 

among other things, the establishment 

and operation of Exchanges. Therefore, 

the certified application counselor 

program is authorized by the statute, 

even if the program was established 

through rulemaking. Whether a certified 

application counselor organization 

should be subject to non-Federal 

requirements will turn on application of 

the preemption standard set forth in 

section 1321(d) of the Affordable Care 

Act, namely whether the non-Federal 

requirement prevents the application of 

the provisions of title I of the Affordable 

Care Act, regardless of whether it is 

operating in an FFE. 

Comment: Some commenters asserted 

that since 45 CFR 155.225(a) established 

that ‘‘the Exchange must have a certified 

application counselor program that 

complies with the requirements of this 

section,’’ it follows that it is the 

responsibility of ‘‘the Exchange’’ to 

regulate certified application 

counselors, and therefore any State that 

has opted for HHS to operate an FFE has 

relinquished authority to regulate the 

certified application counselor program 

in the State. In support of this view, the 

commenters noted a Federal court 

decision at St. Louis Effort for AIDS, et 

al. v. Huff, No. 13–4246–CV–C–ODS, 

2014 WL 273201, at *9 (W.D. Mo. Jan. 

23, 2014) (order granting preliminary 

injunction). This decision is currently 

on appeal before the United States Court 

of Appeals for the Eighth Circuit, St. 

Louis Effort for AIDS v. Huff, No. 14– 

1520 (8th Cir. Appeal docketed Mar. 6, 

2014). Accordingly, commenters 

recommended that proposed 

§ 155.225(d)(8) be modified to state: 

‘‘meets any licensing, certification, or 

other standards prescribed by the State 

or Exchange, as applicable’’ (emphasis 

added). 

Response: The issue presented in 

these comments is the subject of 

pending litigation before the United 

States Court of Appeals for the Eighth 

Circuit in St. Louis Effort for AIDS v. 

Huff, No. 14–1520 (8th Cir. Appeal 

docketed Mar. 6, 2014). In light of that 

ongoing litigation, we are refraining 

from making the recommended change 

to § 155.225(d)(8) of the final rule at this 

time. We will consider making changes 

in the future. 

Comment: We received several 

comments in support of proposed 

§§ 155.210(c)(1)(iii)(A) and 

155.225(d)(8)(i), with a few of these 

commenters noting that these provisions 

could bring an ancillary benefit of 

enhancing conflict-of-interest rules and 

mitigating the risk that assisters might 

receive ‘‘kickbacks’’ from entities not 

required to act impartially. Several of 

these commenters requested that we 

modify the provision to mirror the 

characterization included in the 

preamble by adding ‘‘insurance agents 

and brokers’’ explicitly into the rule 

text, in addition to retaining ‘‘other 

entities not required to provide fair, 

accurate, and impartial information.’’ 

On the other hand, a few commenters 

objected to the characterization in the 

preamble discussion of the proposed 

rule that, in their view, implied that 

licensed health insurance agents and 

brokers are permitted to engage in unfair 

acts or make false and misleading 

statements. The commenters explained 

that in most States, licensing and unfair 

trade practices laws require agents and 

brokers to refrain from engaging in 

deceptive behavior or making 

misrepresentations regarding benefits 

and terms of coverage. 

A few commenters, while supporting 

the proposed provision’s specification 

that mandated referrals to third parties 

not required to provide information in 

a fair, impartial, accurate manner are in 

conflict with applicable Federal 

standards, also requested that we 

explain that this provision applies only 

to non-Federal requirements that 

mandate such referrals, and asked that 

we confirm that assisters would be 

permitted to refer consumers to agents 

and brokers voluntarily in specific 

circumstances, such as when the 

consumer’s needs exceed the assister’s 

expertise, or when the assister or entity 

lacks the capacity and resources to 

assist all individuals who seek 

assistance. In addition, a few 

commenters recommended that HHS 

clarify that this provision should not be 

construed to mean that assisters are 

barred from making referrals to entities 

not required to provide fair, accurate, 

and impartial information. These 

commenters suggested, for example, that 

assisters should be permitted to make 

such referrals when a consumer requests 

a specific recommendation regarding 

which plan to choose, because making 

a specific plan recommendation might 

violate an assister’s duties under the 


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30276 Federal Register / Vol. 79, No. 101 / Tuesday, May 27, 2014 / Rules and Regulations 

applicable Federal standards, and doing 

so might also violate certain State laws 

that prohibit anyone other than a 

licensed health insurance agent or 

broker from recommending a plan. In 

addition, a few commenters asserted 

that it is appropriate for Navigators to 

fulfill requirements to assist small 

employers with enrollment through 

referral to agents and brokers in 

instances where Navigators do not have 

expertise in small business insurance, 

because agents and brokers continue to 

be an important source of information 

and enrollment assistance for both 

individuals and for small employers. 

Response: We are finalizing this 

provision as proposed, with one 

modification with respect to proposed 

§ 155.225(d)(8)(i). We do not believe 

that the regulation, or our discussion in 

the preamble to the proposed rule, 

suggests that agents and brokers engage 

in unfair or deceptive practices. We 

nonetheless believe that that the 

proposed language describing ‘‘entities 

not required to act in the best interests 

of applicants assisted’’ was confusing on 

this point, and have replaced it, 

consistent with the changes we are 

finalizing in this rule to 155.225(c)(1), 

with a reference to ‘‘entities not 

required to provide fair, accurate, and 

impartial information.’’ We decline to 

mention agents and brokers explicitly in 

the regulation text, because, as some 

commenters point out, agents and 

brokers may be required to act 

impartially and may be subject to 

standards that would require them to 

provide fair, accurate, and impartial 

information in a way that is similar to 

Exchange-approved consumer 

assistance entities and individuals. 

We agree with the commenters who 

supported our view in the proposed rule 

that a non-Federal requirement 

mandating that Navigators, nonNavigator assistance personnel subject 

to § 155.215, and certified application 

counselors refer consumers to third 

parties not obligated to provide fair, 

accurate, and impartial information 

would conflict with the Federal duties 

required of Navigators, non-Navigator 

assistance personnel subject to 

§ 155.215, and certified application 

counselors and their designated 

organizations under various authorities: 

for Navigators, sections 1311(i)(3)(B) 

and 1311(i)(5) of the Affordable Care 

Act, as well as 45 CFR 155.210(e)(2) and 

155.215(a)(1)(iii); for Non-Navigator 

assistance personnel, 45 CFR 155.215 

(a)(2)(i) and (iv); and for certified 

application counselors, 45 CFR 

155.225(c)(1) as amended in this final 

rule. In light of the regulation text 

changes, discussed in greater detail 

below, that we make under 

§ 155.225(c)(1) to align that provision 

more consistently with the standards 

that apply across Exchange consumer 

assistance programs, and to explicitly 

specify that certified application 

counselors must provide information 

‘‘in a fair, accurate, and impartial 

manner,’’ we are clarifying the language 

of final § 155.225(d)(8)(i). Specifically, 

we are finalizing § 155.225(d)(8)(i) to 

specify that a referral to a third party 

that is not required to ‘‘act in the best 

interest’’ of applicants assisted, as 

required under § 155.225(d)(4), or to a 

third party that is not required to 

provide information in a fair, accurate, 

and impartial manner, as required under 

the clarifications to § 155.225(c)(1) that 

we make in this final rule, would 

prevent certified application counselors 

from meeting Federal standards that 

apply to them. To reiterate and, in 

recognition of the fact that a third party 

may be required to act in the best 

interest of the applicants they assist or 

provide information in a fair, accurate, 

and impartial manner to the same extent 

that a certified application counselor is 

required to, we would not construe a 

non-Federal requirement that required 

such a referral to that particular type of 

third party to prevent the application of 

the provisions of title I of the Affordable 

Care Act. 

In addition, these comments present 

us with the opportunity to explain that 

we interpret certain Federal standards 

applicable to Navigators, non-Navigator 

assistance personnel subject to 

§ 155.215, and certified application 

counselors and their designated 

organizations to prohibit these assisters 

from making specific plan 

recommendations. With respect to 

Navigators and the non-Navigator 

assistance personnel who are subject to 

§ 155.215, the recommendation of a 

specific plan would be inconsistent 

with CMS’s interpretation of 45 CFR 

155.210(e)(2) and (3) (applicable to 

Navigators in all Exchanges) and 45 CFR 

155.215(a)(1)(iii) (applicable to 

Navigators in an FFE) and (a)(2)(i) and 

(iv) (applicable to non-Navigator 

assistance personnel subject to 

§ 155.215, which require these assisters 

to provide information in a fair, 

accurate, and impartial manner, 

including by acknowledging other 

programs; to provide information to 

individuals and employees about the 

full range of QHP options and insurance 

affordability programs for which they 

are eligible; and to facilitate selection of 

a QHP. With respect to certified 

application counselors, the 

recommendation of a specific plan 

would violate their duties to act in the 

best interests of the consumer (45 CFR 

155.225(d)(4)), to provide information to 

individuals and employees about the 

full range of QHP options and insurance 

affordability programs for which they 

are eligible, and help to facilitate their 

enrollment in QHPs and insurance 

affordability programs (45 CFR 

155.225(c)(1) and (3)). Specifically, in 

our view, permitting assisters to 

recommend a specific plan would 

undermine one overall purpose of 

consumer assistance programs, which is 

to provide interpretive guidance that 

enables consumers to become fully 

informed and health literate, to assess 

the full range of their coverage options 

and the strengths and weaknesses of 

different options or plans based on the 

information provided to them, and 

ultimately to be able to make their own 

informed choices about which coverage 

option best meets their needs and 

budget. Further, Federal standards 

require an assister to act to ‘‘facilitate’’ 

plan selection or enrollment (as 

applicable), which we interpret to mean 

that the act of plan selection and 

enrollment itself rests with the 

consumer (see our previously expressed 

interpretations of these requirements in 

preamble at 78 FR 42844–45). 

Consistent with these principles, we are 

amending § 155.210(e)(2) in the final 

rule, to specify that in addition to the 

existing requirement under this 

provision that Navigators provide 

information and services in a fair, 

accurate, and impartial manner, the 

duties of a Navigator include providing 

information that assists consumers with 

submitting the eligibility application; 

clarifying the distinctions among health 

coverage options, including QHPs; and 

helping consumers make informed 

decisions during the health coverage 

selection process. We are also adding 

these standards through amendments to 

§ 155.225(c)(1) in the final rule, to 

clarify the existing duty of certified 

application counselors to provide 

information to individuals and 

employees about the full range of QHP 

options and affordability programs for 

which they are eligible which includes 

providing fair, impartial, and accurate 

information that assists consumers with 

submitting the eligibility application; 

clarifying the distinctions among health 

coverage options, including QHPs; and 

helping consumers make informed 

decisions during the health coverage 

selection process. 

While consumers need to make the 

ultimate decision regarding the type of 

coverage that best meets their health 

care needs and budget, assisters may 


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23 § 155.705(d) permits a State operating a State 

SHOP-only Exchange to allow Navigators to fulfill 

certain Navigator duties under § 155.210(e)(3) and 

(4) through referrals to agents and brokers. 

24See question 40 at http://marketplace.cms.gov/ 

help-us/common-qandas-about-cacdesignation.pdf. 

facilitate enrollment in a QHP by 

providing comprehensive information 

about the substantive benefits and 

features of a plan, clarifying the 

similarities and distinctions among 

plans, and assisting consumers with 

making informed decisions in the plan 

selection process, consistent with the 

consumer’s expressed interests and 

needs. Therefore, as part of facilitating 

a consumer’s enrollment in a QHP, or 

selection of a QHP, Navigators, nonNavigator assistance personnel subject 

to § 155.215, and certified application 

counselors may provide information to 

the consumer that includes, but is not 

limited to, information regarding plan 

features such as deductibles, 

coinsurance and copayments, coverage 

limitations or exclusions, identifying 

plans for which an eligible consumer 

may receive CSRs or other Federal 

financial assistance (for example, Ryan 

White HIV/AIDS Program premium and 

cost-sharing assistance) and information 

about whether a particular provider or 

hospital is included within a plan’s 

network. Offering this type of 

information is particularly important for 

consumers, who, without such 

assistance, might otherwise not 

complete the enrollment process or 

might not have all of the information 

they need to make a plan selection. 

To the extent an assister is asked by 

a consumer to recommend a plan, we 

interpret the above-cited authorities as 

requiring the assister to refrain from 

providing a recommendation or 

otherwise steering a consumer to a 

particular plan. In addition, if a 

consumer asks an assister to recommend 

a specific plan, an assister should 

remind the consumer that they are 

prohibited from making plan 

recommendations because Federal 

standards require them to remain fair 

and impartial. The assister may, 

consistent with the consumer’s 

expressed needs and desires, determine 

that it is appropriate to inform the 

consumer of the general availability of 

licensed, Exchange-trained health 

insurance agents and brokers as a 

resource that could provide specific 

plan recommendations, if licensed 

health insurance agents or brokers are 

permitted to do so under State law. The 

assister may direct the consumer to 

listings of agents and brokers; however, 

the assister should not make a referral 

to any specific agent or broker or 

specific set of agents or brokers. 

With one limited exception,23

assisters may not fulfill their Federallyrequired duties through referrals to 

agents and brokers. As we have stated 

previously, Navigators subject to 

§ 155.215 (that is, Navigators in the 

FFEs and State Partnership Exchanges) 

and non-Navigator assistance personnel 

subject to § 155.215 must be prepared to 

serve both SHOP and the individual 

market Exchange, including small 

businesses with SHOP (see 

§ 155.215(b)(1)(v) and 78 FR 42835–36). 

Certified application counselors in the 

FFEs are expected to assist employees 

with SHOP options and are permitted, 

but not required, to assist small 

employers with SHOP.24 In the event 

that a particular consumer’s individual 

needs go beyond the assister’s expertise, 

or the assister or entity lacks the 

resources to assist all individuals who 

present themselves for assistance, an 

assister may, consistent with the 

consumer’s expressed needs and 

desires, determine that it is in the 

consumer’s best interests to inform the 

consumer of the general availability of 

other consumer assistance entities who 

may possess the requisite expertise and 

capacity to assist them, including the 

Exchange Call Center, non-Navigator 

assistance personnel or certified 

application counselors. With respect to 

the FFEs, we note that HHS maintains 

on its Web site and at its Call Center a 

public registry of Exchange-approved 

consumer assistance resources in each 

FFE, including Navigators, nonNavigators, and certified application 

counselor organizations. HHS also 

maintains on its Web site links to agent 

and broker trade association Web sites, 

which would allow a consumer to look 

up agents and brokers in a particular 

local area. We encourage State 

Exchanges to make consumer assistance 

resources publicly available in a similar 

manner and understand that many, if 

not most, State Exchanges have done so. 

Comment: Many commenters 

indicated support for proposed 

§§ 155.210(c)(1)(iii)(B) and 

155.225(d)(8)(ii) and agreed that nonFederal requirements that prevent 

Navigators, non-Navigator assistance 

personnel subject to 155.215, and 

certified application counselors from 

providing services to any individual 

who presents him or herself for 

assistance would prevent the 

application of the provisions of title I of 

the Affordable Care Act and should be 

interpreted as in conflict with the 

requirement for Navigator and nonNavigator assistance personnel subject 

to § 155.215 to provide information and 

services fairly and impartially. 

However, a few commenters asserted 

that one type of non-Federal 

requirement discussed in the preamble 

to the proposed rule, which would 

require assisters to suggest or encourage 

any consumer who is insured, or 

previously bought insurance through 

the aid of an agent or broker, to consult 

with that agent or broker before 

enrolling in a plan, serves a legitimate 

purpose because it is designed to 

prevent consumers from making 

uninformed or impulsive decisions. 

These commenters asserted that these 

non-Federal requirements do not 

prevent assisters from performing their 

Federal obligations because they require 

merely ‘‘advising’’ an insured consumer 

that they should consider talking to an 

insurance professional before changing 

health plans and do not necessarily 

result in the assister being unable to 

perform application and enrollment 

assistance for these types of consumers, 

to the extent that these consumers reject 

the assister’s advice to consult with an 

agent or broker. Some commenters 

argued that certain non-Federal 

requirements of this nature strike the 

right balance and should not be viewed 

as preventing assisters from performing 

their Federally-mandated duties. 

Specifically, these commenters reasoned 

that although certain non-Federal 

requirements of this nature require an 

assister to advise an individual to 

consult first with a health insurance 

professional with whom they may have 

consulted previously, they permit an 

assister to continue to provide services 

to that insured individual if that 

individual expresses a preference not to 

consult with that health insurance 

professional. 

Response: We are not persuaded by 

comments suggesting that assisters can 

uphold their duties to provide 

information in a fair and impartial 

manner and act in the consumer’s best 

interests if they are required to advise a 

consumer to consult with an insurance 

professional when they learn that the 

consumer is insured or previously 

purchased health insurance with the aid 

of an agent or broker. While such nonFederal requirements might be intended 

to prevent consumers from making 

impulsive or uninformed decisions, the 

same is true of the Federal standards for 

Navigators, non-Navigator assistance 

personnel, and certified application 

counselors. These Federal standards are 

designed to ensure that these Exchangeapproved assisters help a consumer 

make a fully informed decision. 


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25 § 155.705(d) permits a State operating a State 

SHOP-only Exchange to allow Navigators to fulfill 

certain Navigator duties under § 155.210(e)(3) and 

(4) through referrals to agents and brokers. 

Specifically, assisters must provide 

information in a fair, accurate, and 

impartial manner, provide information 

on the full range of QHP options for 

which they are eligible, clarify 

distinctions among QHPs, and act in the 

consumer’s best interests. Assisters 

must also provide fair, impartial, and 

accurate information that assists 

consumers with submitting the 

eligibility application; clarify the 

distinctions among health coverage 

options, including QHPs; and help 

consumers make informed decisions 

during the health coverage selection 

process, as specified in the 

modifications made to § 155.210(e)(2) 

(which is made applicable to certain 

non-Navigators through reference in 

§ 155.215(a)(2)(i)) and § 155.225(c)(1) of 

this final rule. 

Further, we note that under existing 

regulations at § 155.210(d)(4) and 

155.215(a)(2)(i) and regulations 

finalized in this final rule at 

§ 155.225(g)(2), Navigators, nonNavigator assistance personnel subject 

to § 155.215, and certified application 

counselors are subject to a conflict of 

interest standard which prohibits them 

from receiving consideration, directly or 

indirectly, in connection with 

enrollment in a QHP or non-QHP; and 

the requirement that one of these 

assisters refer or direct a consumer to 

another individual, such as an agent or 

broker, who receives such consideration 

in connection with QHP enrollment, 

would be inconsistent with this conflict 

of interest requirement under Federal 

law. 

Comment: One commenter asserted 

that proposed §§ 155.210(c)(1)(iii)(B) 

and 155.225(d)(8)(ii)’s specification that 

prohibitions against an assister’s ability 

to provide services to any individual 

who presents him or herself for 

assistance would prevent the 

application of the provisions of title I of 

the Affordable Care Act, were too 

broadly worded because they referred to 

‘‘services’’ generically, and suggested 

that the provision be revised to read 

‘‘services required of [assisters] by the 

Affordable Care Act to all persons to 

whom they are required to provide 

assistance.’’ The commenter further 

asserted that the consumer assistance 

programs created under the Affordable 

Care Act are intended to assist the 

uninsured, and therefore consumers 

such as employers and employees with 

employer-sponsored insurance offered 

through the small group market as well 

as those shopping in the individual 

market who already have insurance are 

not the types of consumers to whom 

assisters are intended or required to 

provide assistance. 

Response: We are not modifying the 

regulation text in the manner suggested 

by the commenter. We do not agree with 

the commenter’s view that the consumer 

assistance programs were created to 

serve the uninsured exclusively. As we 

explained in the preamble to the 

proposed rule, we interpret the 

requirement that Navigators and nonNavigator assistance personnel subject 

to § 155.215 provide information and 

services fairly and impartially to require 

that that these assisters provide services 

to all consumers seeking assistance and 

have explained in preambles to prior 

rulemakings that all Navigators and 

non-Navigator assistance personnel 

should have the ability to help any 

individual who presents him or herself 

for assistance (see 78 FR 20589 and 78 

FR 42830). Further, § 155.215(b)(1)(v) 

requires that Navigators in FFEs and 

State Partnership Exchanges, and nonNavigator assistance personnel subject 

to § 155.215 be prepared to serve both 

the individual market Exchange and 

SHOP. In addition, section 1311(i)(3)(D) 

of the Affordable Care Act and 

§ 155.210(e)(4) provide that Navigators 

are required to assist ‘‘any enrollee with 

a grievance, complaint, or question 

regarding their health plan, coverage, or 

a determination under such plan or 

coverage’’ (emphasis added).25

Similarly, if a non-Federal requirement 

barred certified application counselors 

from assisting an employee with 

Exchange coverage, then such a 

requirement would prevent them from 

performing all of their Federal duties in 

amended § 155.225(c)(1) and in existing 

§ 155.225(c)(2) to provide information to 

employees about the full range of QHP 

options for which they are eligible— 

including providing fair, impartial, and 

accurate information that assists 

consumers with submitting the 

eligibility application; clarifying the 

distinctions among health coverage 

options, including QHPs; and helping 

consumers make informed decisions 

during the health coverage selection 

process and assist employees to apply 

for coverage in a QHP through the 

Exchange and for insurance affordability 

programs. Accordingly, assisters would 

violate these various Federal standards 

if they withheld application or 

enrollment services from a consumer on 

the basis of any particular status, 

including status as an insured 

individual. 

Comment: We solicited specific 

comments related to the exception 

noted in proposed 

§§ 155.210(c)(1)(iii)(A) and (B) with 

respect to non-Federal requirements for 

Navigators in States with a State SHOPonly Exchange and a FFE for the 

individual market. A commenter 

supported our approach in the proposed 

rule to provide an exception in 

proposed §§ 155.210(c)(1)(iii)(A) and (B) 

to account for existing Federal 

regulations that allow SHOP-only State 

Exchanges to permit Navigators to fulfill 

certain requirements through referral to 

agents and brokers. 

Response: We are finalizing 

§§ 155.210(c)(1)(iii)(A) and (B) and 

§ 155.225(d)(8)(i) and (ii), as proposed, 

without modification. As we explained 

in the preamble to the proposed 

rulemaking promulgating § 155.705(d), 

we believe that building and operating 

just a SHOP allows a State to move 

towards operating both a SHOP and an 

individual market Exchange. (78 FR 

37044) Additionally, where the State 

elects to establish and operate only a 

SHOP Exchange, there will be two 

separate Navigator programs operating 

in the State: a Federal Navigator 

program for the individual market, and 

a State Navigator program for the SHOP. 

In conjunction with the various other 

areas of flexibility provided to States 

electing to operate a State SHOP-only 

Exchange, we continue to believe that it 

is prudent to give a State SHOP-only 

Exchange the flexibility to choose to 

focus its Navigator program on outreach 

and education to small employers by 

permitting SHOP Navigators to satisfy 

their duties under §§ 155.210(e)(3) and 

(4) through referrals to agents and 

brokers. Giving States this extra level of 

flexibility could further incentivize 

States to operate a SHOP Exchange as an 

intermediate step towards establishing 

and operating both a SHOP and an 

individual market Exchange in the 

future, because it could reduce 

operational costs in running a SHOP, 

and could help leverage existing 

coordination regarding small group 

market enrollment activities with the 

agent and broker community in the 

State, as may be applicable. While we 

recognize that allowing Navigators to 

fulfill two of their duties via referrals to 

agents and brokers might appear 

somewhat inconsistent with our general 

view that referrals to third parties who 

are not required to act impartially 

would prevent Navigators from meeting 

Federal standards, we believe that the 

benefit of providing administrative 

flexibility to a State SHOP-only 

Exchange’s operation in this regard, and 

thus providing perhaps greater incentive 

to States to operate a SHOP-only 


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Exchange, compensates for the potential 

fact that a SHOP Navigator, if he or she 

makes referrals to agents and brokers, 

might be referring consumers to 

individuals who might not have the 

same duty to provide fair and impartial 

information. We therefore note, as we 

did in the preamble to the proposed 

rule, that we would not consider State 

laws or regulations that permit a State 

SHOP-only Exchange to take the option 

authorized under Federal regulations at 

§ 155.705(d) to prevent the application 

of the provisions of title I of the 

Affordable Care Act. 

Comment: We received a number of 

comments in support of proposed 

§§ 155.210(c)(1)(iii)(C) and 

155.225(d)(8)(iii) and the view 

expressed in those proposals that nonFederal requirements that prohibit 

assisters from providing advice 

regarding substantive benefits or 

comparative benefits of different health 

plans would prevent assisters from 

fulfilling their duty to facilitate 

selection of or (as applicable) 

enrollment in a QHP. In support of these 

proposals, commenters reasoned that 

while consumers should make the 

ultimate decision about what type of 

coverage meets their health care needs 

and budget, providing comprehensive 

information about the substantive 

benefits and features of a plan, 

clarifying the distinctions among plans, 

and assisting consumers with making 

informed decisions in the plan selection 

process, consistent with the consumer’s 

expressed interests and needs, are 

critical components of facilitating 

enrollment in a QHP, particularly for 

consumers, who, without such 

assistance, might not complete the 

enrollment process. However, many 

commenters indicated that the inclusion 

of the word ‘‘advice’’ in the proposed 

provision improperly implies that 

assisters are permitted to make 

recommendations regarding plan 

selection or are permitted to ‘‘negotiate’’ 

insurance, which are duties preserved 

for licensed health insurance agents and 

brokers in most States. To address this 

concern, these commenters 

recommended that we replace the word 

‘‘advice’’ with ‘‘information.’’ On the 

other hand, many other commenters 

urged retention of the word ‘‘advice’’ 

because the use of this term in nonFederal laws and regulations is 

ambiguous enough to pose a conflict 

with an assister’s duties under Federal 

requirements, given the nature of the 

information that assisters must provide 

in order to facilitate selection (or 

enrollment) in a QHP. 

Response: In light of these comments, 

we are finalizing this provision with a 

few modifications. We reiterate that as 

an aspect of assisters’ Federally-required 

duties under §§ 155.210(e)(2) and (3) 

(Navigators in all Exchanges), 

155.215(a)(1)(iii) (Navigators in FFEs), 

155.215(a)(2)(iv) (Non-Navigators in 

FFEs), and 155.225(c)(1) and (3) 

(certified application counselors in all 

Exchanges) to facilitate (as applicable) 

selection of a QHP or enrollment of 

eligible individuals in QHPs and 

insurance affordability programs and to 

provide information about coverage 

options, they are required to engage in 

substantive discussions about the terms 

and features of any coverage for which 

a consumer is or might be eligible, 

consistent with the consumer’s 

expressed interests and needs. (See 79 

FR 15829). This includes, but is not 

limited to, providing information 

regarding features such as deductibles, 

coinsurance and copayments, coverage 

limitations or exclusions, plans for 

which an eligible consumer may receive 

CSRs, and/or whether a particular 

provider or hospital is included within 

a plan’s network. (79 FR 15829). We 

understand the difficulty faced by 

assisters to understand where the line 

should be drawn between a prohibition 

on ‘‘advice’’ and the ‘‘information’’ they 

are required to give to perform their 

duties, given the nature of the 

information that assisters must provide 

to fulfill their duties to provide fair and 

impartial information concerning 

enrollment in QHPs and insurance 

affordability programs and facilitate 

enrollment. In light of the need for 

further clarity, we have modified the 

applicable existing Federal standards, as 

we explained above, to clarify explicitly 

in the regulation text that providing fair, 

impartial, and accurate information that 

assists consumers with submitting the 

eligibility application, clarifying the 

distinctions among health coverage 

options, including QHPs, and helping 

consumers make informed decisions 

during the health plan coverage process, 

are components of an assister’s 

Federally required duties. We are 

making these additions to the applicable 

Federal regulations for Navigators at 

§ 155.210(e)(2), which applies to nonNavigator assistance personnel subject 

to § 155.215 by a cross-reference at 

§ 155.215(a)(2)(i), and to the applicable 

certified application counselor 

regulations at § 155.225(c)(1). 

In addition, we agree that while 

consumers need to make the ultimate 

decision about what type of coverage 

meets their health care needs and 

budget, providing comprehensive 

information about the substantive 

benefits and features of a plan, 

clarifying the similarities and 

distinctions among plans, and assisting 

consumers with making informed 

decisions in the plan selection process, 

consistent with the consumer’s 

expressed interests and needs, are a 

critical part of assisters’ required duties, 

particularly for consumers, who, 

without such assistance, might 

otherwise not complete the enrollment 

process or might not have all of the 

information they need to make a plan 

selection. Therefore, a non-Federal 

requirement that prohibits assisters from 

providing ‘‘advice’’ regarding 

substantive benefits or comparative 

features of different health plans would 

prevent the application of the 

provisions of title I of the Affordable 

Care Act, insofar as such a requirement, 

as interpreted or applied under State 

law, would prohibit assisters from doing 

any of the following: (1) Providing fair, 

impartial, and accurate information that 

assists consumers with submitting the 

eligibility application; (2) clarifying the 

distinctions among health coverage 

options, including QHPs; or (3) helping 

consumers make informed decisions 

during the health coverage selection 

process. We have always interpreted the 

Affordable Care Act and our regulations 

implementing its provisions to prohibit 

Navigators, non-Navigator personnel 

subject to § 155.215, and certified 

application counselors from 

recommending a particular plan or 

steering a consumer toward a particular 

plan or plans as because of their 

specified duties to distribute fair and 

impartial information to consumers and 

act in the consumer’s best interests, 

while at the same time requiring them 

to provide consumers with all relevant 

and applicable information about the 

coverage options available to them. For 

example, we have stated that a 

Navigator cannot make the decision for 

an applicant as to which QHP to select, 

but they may play an important role in 

facilitating a consumer’s enrollment in a 

QHP by providing fair, impartial, and 

accurate information that assists 

consumers with submitting the 

eligibility application, clarifying the 

distinctions among QHPs, and helping 

qualified individuals make informed 

decisions during the health plan 

selection process (78 FR 20583; see also 

79 FR 15829). 

Comment: We received a number of 

comments in support of our proposal at 

§ 155.210(c)(1)(iii)(D) that non-Federal 

requirements that would require 

Navigators to hold an agent or broker 

license or carry errors or omissions 

insurance would prevent the 

application of the requirement at 


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155.210(c)(2) that there to be at least two 

types of Navigator entities, including at 

least one community and consumerfocused nonprofit organization. 

However, many commenters stated that 

this provision should be modified to 

apply more broadly to include other 

types of assisters, such as non-Navigator 

assistance personnel subject to 

§ 155.215, certified application 

counselors and certified application 

counselor designated organizations. 

Further, a number of commenters 

recommended broadening the scope of 

the proposed provision to include other 

types of financial responsibility 

requirements, such as surety bond 

requirements or security deposits. These 

commenters noted that in some cases 

Navigators and other assisters have 

reported difficulty in obtaining surety 

bonds because issuers have been 

unwilling to underwrite a business 

service for which it is difficult to assess 

risk. Further, commenters described 

how some Navigators experienced so 

much difficulty in obtaining a surety 

bond from a vendor that they could only 

meet a non-Federal surety bond 

requirement by purchasing errors and 

omissions coverage. They reasoned that 

the potential imposition of civil money 

penalties for violations of privacy and 

security standards under § 155.260 or 

program standards (as proposed in 

§§ 155.206 and 155.285), as well as the 

availability of a special enrollment 

period for assister misconduct in 

accordance with § 155.420(d)(10), 

would be sufficient remedies in the 

event that an assister causes consumer 

harm, such that a surety bond would not 

be necessary to protect consumers. On 

the other hand, a few commenters 

indicated that the proposed rule’s scope 

was appropriate and indicated that nonFederal requirements that require some 

form of financial responsibility, such as 

a surety bond, serve as an added 

consumer protection to make a 

consumer whole in the event of fraud or 

some other wrongdoing on the part of 

the assister. These commenters further 

reasoned that requiring assisters to hold 

a surety bond or other proof of financial 

responsibility does not necessarily 

inhibit a community and consumerfocused nonprofit organization from 

participating in any consumer 

assistance program because surety 

bonds are generally available to all types 

of businesses. 

Response: We are finalizing this 

provision as proposed, with one 

modification. We appreciate 

commenters’ concerns about the lack of 

parity that results from not extending 

this provision to non-Navigator 

assistance personnel subject to 

§ 155.215 and certified application 

counselors. At this time, however, we 

decline to extend this provision to these 

other types of consumer assistance 

programs because we are not able to 

discern a facial conflict between nonFederal requirements that would require 

non-Navigator assistance personnel or 

certified application counselors to hold 

an agent or broker license or carry errors 

and omissions insurance coverage and 

the Federal standards applicable to 

these programs. However, we recognize 

that within the meaning of the statutory 

preemption standard set forth at section 

1321(d) of the Affordable Care Act and 

proposed §§ 155.210(c)(1)(iii)(F) and 

155.225(d)(8)(v), there might be specific 

factual circumstances in which these 

types of non-Federal requirements 

would prevent these individuals or 

entities from fulfilling their Federally 

required duties or would prevent an 

Exchange from operating the nonNavigator or certified application 

counselor programs that it is required 

(or authorized) to implement consistent 

with Federal requirements. In such 

cases, non-Federal requirements that 

require non-Navigator assistance 

personnel subject to § 155.215 or 

certified application counselors or their 

designated organizations to hold an 

agent or broker license or carry errors 

and omissions insurance or other forms 

of financial responsibility might prevent 

the application of the provisions of title 

I of the Affordable Care Act. 

In addition, at this time, we believe it 

is appropriate to limit the scope of this 

provision so that it is directed only at 

non-Federal laws requiring Navigators 

to hold an agent or broker license and 

are not finalizing the reference to laws 

that require Navigators to carry errors or 

omissions insurance, as proposed. As 

we explained in the preamble to the 

proposed rule, requiring that each 

Navigator be a licensed agent or broker 

would mean, in effect, that all 

Navigators would be agents and brokers, 

and would therefore prevent the 

application of § 155.210(c)(2), which 

established the requirement that in all 

Exchanges, at least two types of entities, 

including one community and 

consumer-focused nonprofit group, 

must serve as Navigators. HHS has 

previously advised (see 77 FR 18331– 

32) that such requirements would 

prevent the application of 

§ 155.210(c)(2). Since we understand, 

based on the comments, that in at least 

some jurisdictions, errors and omissions 

insurance coverage is not exclusively 

available to agents and brokers and 

other types of professionals might carry 

it, we cannot discern a facial conflict 

between a non-Federal requirement 

requiring errors and omissions 

insurance and Federal requirements 

applicable to Navigators or the 

Exchange. However, as we made clear in 

prior rulemaking and now make explicit 

here in finalizing the regulation text, 

any non-Federal requirement that 

would, in effect, require all Navigators 

to be licensed agents or brokers would 

prevent the application of the Federal 

standards that apply to an Exchange’s 

operation of the Navigator program 

(specifically, would prevent the 

application of 45 CFR 155.210(c)(2)) and 

therefore would prevent the application 

of the provisions of title I of the 

Affordable Care Act. By removing the 

reference to errors and omissions 

coverage, we do not intend to foreclose 

the possibility that there might be 

specific factual circumstances under 

which a non-Federal financial 

responsibility requirement that does not 

facially conflict with a Federal 

requirement might, as applied or 

implemented, prevent the application of 

Federal requirements for Navigators 

within the meaning of section 1321(d) of 

the Affordable Care Act. 

Comment: Many commenters 

indicated support for proposed 

§§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv) and the accompanying 

preamble discussion illustrating HHS’s 

views regarding situations in which 

non-Federal requirements prevent 

otherwise eligible and qualified 

Exchange-approved assisters from 

operating in a State with an FFE. In 

particular, these commenters stated that 

non-Federal requirements that prohibit 

consumer assistance entities from 

receiving any consideration, directly or 

indirectly, from a health insurance 

issuer, even if not in connection with 

QHP enrollment, are unnecessary and 

have precluded some extremely 

qualified organizations from serving as 

an Exchange-approved assister 

organization. A few commenters 

recommended that HHS explain the 

interplay of this proposed provision and 

existing § 155.210(d)(4) (applicable to 

Navigators and, through155.215(a)(2)(i), 

to non-Navigator assistance personnel 

subject to § 155.215) and the parallel 

provision under proposed 

§ 155.225(g)(2) (for certified application 

counselors and their designated 

organizations) prohibiting these 

assisters from receiving any 

consideration directly or indirectly from 

any health insurance issuer or issuer of 

stop loss insurance in connection with 

the enrollment of any individuals (or 

employees, for Navigators) in a QHP or 


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a non-QHP. The commenters explained 

that it appeared that these Federal 

standards were ‘‘somewhat in conflict’’ 

with the proposed rule’s preamble 

discussion which stated that in HHS’s 

view, a non-Federal requirement that 

imposes prohibitions on receiving any 

financial compensation from a QHP 

issuer even if not in connection with 

enrollment, would go beyond these 

Federal conflict-of-interest rules. 

Response: As discussed above, we are 

not finalizing proposed 

§§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv). We are convinced by 

the concerns raised by commenters that 

it may not be possible to specify through 

rulemaking where the line should be 

drawn between non-Federal eligibility 

standards that prevent the application of 

Federal requirements and those that do 

not. These types of non-Federal 

requirements will likely need to be 

analyzed on a case by case basis. For 

example, a non-Federal requirement 

that, in its application, effectively limits 

the pool of assisters in the Exchange, to 

such an extent that the Exchange cannot 

operate its consumer assistance 

functions effectively, might prevent the 

application of the provisions of title I of 

the Affordable Care Act within the 

meaning of section 1321(d) of the 

Affordable Care Act. As already 

addressed in detail above, we are not 

finalizing §§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv), but have determined 

that the better approach is to clarify in 

regulation text two standards that we 

discussed in the preamble connected to 

these proposed provisions. First, we 

specify that in an FFE, an entity that 

seeks to become a Navigator entity, nonNavigator assistance personnel entity 

subject to § 155.215, or certified 

application counselor organization shall 

not be ineligible to operate as an assister 

entity solely because its principal place 

of business is outside of the Exchange 

service area. Second, we specify that in 

an FFE, no health care provider shall be 

ineligible to operate as a Navigator, nonNavigator assistance personnel subject 

to § 155.215, or a certified application 

counselor solely because it receives 

consideration from a health insurance 

issuer for health care services provided. 

We are finalizing these standards, 

consistent with discussions set forth in 

preamble discussions in the proposed 

rule and in prior rulemaking (78 FR 

42832), through the provisions at 

§§ 155.210(e)(7), 155.215(h) and 

155.225(b)(3), with respect to the 

principal place of business standard, 

and in § 155.210(d)(4) (made applicable 

to non-Navigator assistance personnel 

through § 155.215(a)(2)(i)) and 

§ 155.225(g)(2), with respect to the 

consideration standard. 

Comment: We received an 

overwhelming number of comments that 

supported including proposed 

§§ 155.210(c)(1)(iii)(F) and 

155.225(d)(8)(v) in the final rule because 

the provisions appropriately recognized 

that other non-Federal requirements not 

specified expressly in other proposed 

provisions might also prevent the 

application of title I of the Affordable 

Care Act, if, as implemented or applied 

in a State, they would prevent assisters 

from performing their Federally 

required duties or prevent the Exchange 

from implementing the consumer 

assistance programs consistent with 

Federal standards. A few commenters 

recommended that this provision apply 

to State Exchanges in addition to FFEs. 

Several commenters identified a myriad 

of other types of non-Federal 

requirements that, in the commenters’ 

view, should be expressly included in 

the finalized regulations under these 

provisions, such as: establishing 

requirements for current Navigator 

grantees after Navigator grants have 

been awarded, setting unreasonable or 

duplicative training requirements, 

setting unreasonable time limitations on 

meeting State standards, imposing 

unreasonable costs on Navigators or 

other assisters, imposing credit rating 

reporting requirements, requiring a GED 

or high school diploma, or 

implementing State requirements in a 

manner that is unduly burdensome for 

Navigators or that disadvantages certain 

Navigator entities. 

Response: We are finalizing proposed 

§§ 155.210(c)(1)(iii)(F) and 

155.225(d)(8)(v), which is now 

renumbered in this final rule under 

§§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv), as proposed, with a 

few modifications. We agree with the 

commenters who found that the 

proposed provisions appropriately 

recognize that non-Federal 

requirements, including but not limited 

to registration requirements, 

fingerprinting or background checks, 

and additional training, may not be in 

conflict with Federal standards on their 

face, but nevertheless could, as 

implemented or applied in a State, 

ultimately prevent assisters from 

meeting the Federal standards that 

apply to them or interfere with the 

Exchange’s ability to operate the 

consumer assistance programs it is 

required (or authorized) to implement 

consistent with Federal requirements. In 

such circumstances, the non-Federal 

requirements would, in HHS’s view, 

prevent the application of the 

provisions of title I of the Affordable 

Care Act within the meaning of section 

1321(d). Consistent with our approach 

in the proposed rule, we do not think it 

is necessary or appropriate to enumerate 

in the final regulation text every type of 

non-Federal requirement that would fall 

under this provision. We view this 

provision largely as interpreting one 

way that the statutory preemption 

standard under section 1321(d) of the 

Affordable Care Act could apply to nonFederal requirements pertaining to 

assister programs in an Exchange. We 

decline to specify every conceivable 

type of non-Federal requirement which 

would, as applied or on its face, prevent 

the application of Federal requirements 

for assisters or assister programs in an 

Exchange. In many cases, the 

identification of such non-Federal 

requirements will depend on highly 

fact-specific circumstances that would 

be impractical, if not impossible, to 

enumerate in an exhaustive list. As 

explained in greater detail above, we 

agree with the recommendation that this 

provision should apply to State 

Exchanges in addition to FFEs because 

the preemption standard under section 

1321(d) of the Affordable Care Act is 

generally applicable to all types of 

Exchanges. Therefore, in finalizing this 

provision, we have removed the 

reference that would have limited its 

applicability to FFEs. In addition, we 

have revised the provision to 

incorporate language included in 

preamble discussion to the proposed 

rule to state that a non-Federal 

requirement would also prevent the 

application of the provisions of title I of 

the Affordable Care Act if, as applied or 

implemented in the State, it prevents 

the Exchange’s implementation of the 

applicable assister program consistent 

with Federal requirements under 

section 1311(i) of the Affordable Care 

Act, and 45 CFR 155.205, 155.210, 

155.215, and 155.225. For example, if a 

State registration requirement is 

implemented in a way that makes it 

impossible for any individuals or 

entities to operate as an Exchangeapproved assister, that requirement 

would prevent the Exchange from 

operating the consumer assistance 

program that it is required (or 

authorized) to implement. As such, we 

believe it is important to clarify this 

possibility explicitly in the regulation 

text. 

Comment: A few commenters 

recommended that HHS specify that 

non-Federal requirements that prohibit 

certain health centers from performing 

voter registration activity would also 

prevent the application of title I of the 

Affordable Care Act, since the National 


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Voter Registration Act of 1993 

(‘‘NVRA’’) requires States to designate 

all offices in the State that provide 

‘‘public assistance’’ (which may include 

health centers who are Exchangeapproved consumer assistance entities) 

as ‘‘voter registration agencies’’ to 

perform voter registration activities (42 

U.S.C. 1973gg–5(a)(2)(A)). 

Response: Because title I of the 

Affordable Care Act does not address 

voter registration activities, HHS 

expresses no view in this rulemaking 

regarding whether State laws regulating 

voter registration activities would be 

preempted by the NVRA. 

2. Navigator, Non-Navigator Assistance 

Personnel, and Certified Application 

Counselor Program Standards 

(§§ 155.210, 155.215, and 155.225) 

In the proposed rule, we also 

proposed a number of provisions to 

bring the standards for Navigators, nonNavigator assistance personnel subject 

to § 155.215, and certified application 

counselors into alignment. Specifically, 

with respect to Navigators and nonNavigator assistance personnel subject 

to § 155.215, we proposed that they 

must obtain consumer authorization 

before accessing an applicant’s 

personally identifiable information (PII), 

and that a record of authorization be 

provided, just as is already the case for 

certified application counselors under 

§ 155.225(f). In addition, we proposed 

that Navigators and non-Navigator 

assistance personnel subject to 

§ 155.215 must not charge any applicant 

or enrollee, or request or receive any 

form of remuneration from or on behalf 

of an applicant or enrollee, for 

application or other assistance related to 

the applicable assister’s duties, just as is 

already the case for certified application 

counselors under § 155.225(g). With 

respect to the certified application 

counselor program, we proposed that 

certified application counselors must be 

recertified on at least an annual basis 

and complete Exchange-required 

training, just as is already the case for 

Navigators in FFEs and State 

Partnership Exchanges and NonNavigator assistance personnel subject 

to § 155.215, under § 155.215(b). 

Further, we proposed that certified 

application counselors and their 

organizations would be prohibited from 

receiving consideration, directly or 

indirectly, from health insurance issuers 

or stop loss issuers in connection with 

the enrollment of any individuals in a 

QHP or a non-QHP, just as is already the 

case for all Navigators and for nonNavigator assistance personnel subject 

to § 155.215, under §§ 155.210(d)(4) and 

155.215(a)(2)(i). 

We also proposed a number of new 

standards for Navigators, non-Navigator 

assistance personnel subject to 

§ 155.215, and certified application 

counselors. First, we proposed to 

require that these entities and 

individuals maintain a physical 

presence in their Exchange service area. 

We also proposed the following 

prohibitions on their conduct: providing 

compensation to individual Navigators, 

non-Navigator assistance personnel 

subject to § 155.215, or certified 

application counselors on a perapplication, per-individual assisted, or 

per-enrollment basis; providing gifts, 

including gift cards or cash, unless they 

are of a nominal value, or providing 

promotional items that market or 

promote the products or services of a 

third party, to any applicant or potential 

enrollee in connection with or as an 

inducement for application assistance or 

enrollment; soliciting any consumer for 

application or enrollment assistance by 

going door-to-door or through other 

unsolicited means of direct contact, 

including calling a consumer to provide 

application or enrollment assistance 

without the consumer initiating the 

contact; and initiating any telephone 

call to a consumer using an automatic 

telephone dialing system, or an artificial 

or prerecorded voice. 

Comment: Commenters generally 

supported the alignment of provisions 

applicable to Navigators, non-Navigator 

assistance personnel subject to 

§ 155.215, and certified application 

counselors. However, some commenters 

raised concerns that applying the newly 

proposed provisions at § 155.225(g)(3)– 

(6), without modification, to certified 

application counselors would be overly 

burdensome and would discourage 

individuals and organizations from 

serving as certified application 

counselors or certified application 

counselor entities. 

Response: We understand the 

concerns raised by commenters about 

potential burdens that the new 

provisions might place on certified 

application counselors. However, we are 

finalizing the certified application 

counselor provisions consistent with the 

finalization of parallel provisions for 

Navigators and the non-Navigator 

assistance personnel that are subject to 

§ 155.215. The purpose of aligning these 

provisions is to ensure that consumers 

are all afforded the same protections, no 

matter which type of assister they seek 

services from. As a result, we are not 

modifying the provisions specifically 

applicable to certified application 

counselors, except to bring them 

generally into alignment with the way 

we have finalized the parallel 

provisions for Navigators and the nonNavigator assistance personnel subject 

to § 155.215. There are two instances 

where the provisions are not parallel 

because it is not appropriate due to 

fundamental differences between the 

certified application counselor program 

and the Navigator and non-Navigator 

assistance personnel programs. We are 

not finalizing any restriction for 

certified application counselors 

regarding the use of Exchange funds to 

purchase gifts and promotional items 

because certified application counselors 

are generally not expected to receive 

Exchange funds. These distinctions are 

further discussed below. 

Comment: Commenters agreed with 

and supported the proposal at 

§ 155.210(d)(5) prohibiting Navigators 

and non-Navigator assistance personnel 

subject to § 155.215 (applicable through 

a cross-reference to § 155.210(d) in 

§ 155.215(a)(2)(i)) from charging for 

application assistance services. Some 

commenters requested clarification that 

this does not otherwise prohibit an 

assister from charging for other services 

the assister might provide, such as 

clinical or legal services. 

Response: Given support from 

commenters for the provision 

prohibiting Navigators and nonNavigator assistance personnel from 

charging consumers for application or 

other assistance services, we are 

finalizing this provision without 

change. We note that the language in the 

provision specifically limits this 

prohibition to charging for application 

assistance or other assistance provided 

as part of Navigator duties. We interpret 

the cross-reference in § 155.215(a)(2)(i) 

to this provision in § 155.210(d) to 

similarly limit the prohibition to 

charging for application assistance or 

other assistance provided as part of the 

duties of non-Navigator assistance 

personnel who are subject to § 155.215. 

We also note that this provision would 

not prohibit Navigators or nonNavigator assistance personnel subject 

to § 155.215 from charging consumers 

for services, such as clinical health care 

services or legal aid services, that are 

not provided as part of their duties as 

Navigators or non-Navigator assistance 

personnel. 

Comment: We requested comment on 

the proposal to prohibit compensation 

paid to Navigators (proposed at 

§ 155.210(d)(6)), non-Navigators subject 

to § 155.215 (applicable through a crossreference to § 155.210(d) in 

§ 155.215(a)(2)(i)), or certified 

application counselors (at 

§ 155.225(g)(3)) on a per-application, 

per-individual-assisted, or perenrollment basis. We also asked 


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26Non-Navigator assistance personnel subject to 

§ 155.215 are only required to carry out one of the 

Navigator duties set forth at § 155.210(e), the duty 

at § 155.210(e)(2) to provide fair, accurate, and 

impartial information and services that 

acknowledge other health programs; however nonNavigator assistance personnel subject to § 155.215 

are not prohibited from carrying out the other 

duties outlined for Navigators at § 155.210(e). 

whether there might be other 

alternatives for building rewards for 

performance without creating adverse 

incentives. Several commenters agreed 

that compensation paid to individual 

assistance personnel on a perapplication, per individual-assisted, or 

per-enrollment basis could provide 

adverse incentives and invite behavior 

that is not in the best interest of 

consumers. These commenters 

recommended, for the same reasons, 

that we extend the prohibition so that 

Exchange-funded assister entities, and 

not just individual assisters, should not 

be compensated on a per-application, 

per individual-assisted, or perenrollment basis. Other commenters 

raised concerns about this prohibition, 

noting that some State Exchanges are 

already using compensation models that 

would be prohibited by the proposed 

rule, and recommending that these 

States should be allowed to continue 

using their current compensation 

models. These commenters requested 

that, at a minimum, States currently 

using these compensation models be 

given an adequate transition period, 

with one recommendation being that 

this standard not become effective 

before the start of open enrollment for 

2016 coverage in the individual market 

Exchanges. In general, commenters 

opposed to this prohibition 

recommended that HHS further evaluate 

these compensation models, and assess 

their effects in States using them, prior 

to regulating their use. 

Response: We appreciate the concerns 

raised by commenters regarding this 

provision. We are finalizing these 

provisions, but have edited them to 

apply only to Navigators, non-Navigator 

assistance personnel, and certified 

application counselors in FFEs. We 

moved proposed § 155.210(d)(6) to 

§ 155.215(i) and specified that it is 

applicable only to Navigators in FFEs, 

including State Partnership Exchanges, 

and to non-Navigator assistance 

personnel in FFEs and State Partnership 

Exchanges, by indicating that it applies 

only to Navigators and non-Navigator 

assistance personnel operating in an 

Exchange operated by HHS during the 

exercise of its authority under 

§ 155.105(f). This provision is not 

applicable to Navigators and nonNavigator assistance personnel in State 

Exchanges, even if those non-Navigator 

assistance personnel are funded with 

Exchange Establishment Grants. We 

have made a similar edit to 

§ 155.225(g)(3), by indicating that this 

provision applies only beginning 

November 15, 2014, and only to 

certified application counselors 

operating in an FFE, including a State 

Partnership Exchange. 

We are making these modifications in 

an effort to balance the interests of the 

FFEs and State Exchanges. We 

understand that there are some State 

Exchanges currently using these types of 

compensation models for Navigators, 

non-Navigator assistance personnel, 

and/or certified application counselors. 

These States have noted successful 

enrollment efforts with these 

compensation models, and it is not our 

intent to disrupt compensation practices 

that are currently used or authorized by 

State Exchanges. However, for assisters 

operating in the FFEs, including State 

Partnership Exchanges, we have an 

interest and a concern in ensuring that 

they are not incentivized to hurry 

through an assistance session with a 

consumer, and possibly to avoid 

assisting those consumers who may 

have complex situations that require 

them to have extra time for completing 

an application. Additionally, these 

compensation structures create an 

incentive for Navigators, non-Navigator 

assistance personnel, and certified 

application counselors to focus 

primarily on facilitating enrollment in 

or selection of a QHP, as applicable, 

which is only one of the several duties 

required of Navigators and certified 

application counselors, and is not a 

required duty under Federal regulations 

for non-Navigator assistance personnel 

(although non-Navigator assistance 

personnel subject to § 155.215 may 

provide this assistance).26 We will 

continue to evaluate and monitor the 

use of these compensation models in 

State Exchanges, while we give further 

consideration to whether the proposed 

prohibitions should apply to all 

Navigators, non-Navigator assistance 

personnel, and certified application 

counselors in all Exchanges. 

For all assisters to whom the final 

provisions will apply, the provisions 

prohibiting compensation on a perapplication, per-individual-assisted, or 

per-enrollment basis will become 

applicable November 15, 2014 to 

coincide with the beginning of the 2015 

open enrollment period for the 

individual market Exchanges. 

Comment: Commenters generally 

supported the principle behind 

prohibiting Navigators (at proposed 

§ 155.210(d)(7)), non-Navigator 

assistance personnel subject to 

§ 155.215 (through the cross reference to 

§ 155.210(d) in § 155.215(a)(2)(i)), and 

certified application counselors (at 

§ 155.225(g)(4)) from providing gifts, 

unless they are of nominal value, or 

providing promotional items that 

market or promote the products or 

services of a third party to applicants or 

potential enrollees as an inducement for 

application assistance or enrollment. 

However, most commenters who 

responded to this proposal raised 

concerns that the proposed language 

was too broad and would prohibit 

creative outreach and education 

strategies both relating to the FFE and 

to other community services. For 

example, some commenters raised a 

concern about whether this provision 

would prohibit an organization from 

reimbursing travel costs for consumers 

traveling long distances to receive 

application assistance, or from 

providing supplies or materials for 

legitimate care purposes (for example, 

diabetic testing supplies or medication 

samples) which in many cases would 

exceed $15. One commenter, on the 

other hand, raised a concern that this 

provision expressly allows the provision 

of gifts up to $15 in value, since we 

defined nominal value in the proposed 

rule as a cash value of $15 of less, or an 

item worth $15 or less, based on the 

retail purchase price of the item 

regardless of the actual cost. In addition, 

commenters worried that the third-party 

promotional item prohibition would 

prevent assisters from providing 

promotional materials about the 

Exchange or other community 

resources, noting that promotional 

materials about other community 

resources can help connect consumers 

with additional supportive services. 

Commenters indicated that the use of 

gifts and promotional items have helped 

them successfully encourage 

individuals to seek application 

assistance, and therefore that a 

prohibition on using these tools in 

connection with application assistance 

would be too proscriptive. Many 

commenters recommended expressly 

excluding outreach and education 

activities from the prohibition on thirdparty promotional items. Commenters 

also requested clarification about 

parameters regarding the provision of 

gifts and third-party promotional items. 

Response: In light of the numerous 

comments received regarding this issue, 

we are modifying this provision to make 

clear that gifts and third-party 

promotional items are prohibited only 

when they are used to induce 


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27As previously noted, though, Navigators are not 

permitted to solicit customers for their other, nonNavigator-related services in connection with their 

Navigator duties (79 FR 15831). Therefore, while 

Navigators may provide items that are inherently 

beneficial to a consumer at the same time the 

consumer is receiving application assistance, these 

items may not be used as a means of soliciting the 

consumers for their other, non-Navigator-related 

services. 

28While section 1311(i)(6) of the Affordable Care 

Act prohibits Exchanges from using Exchange 

Establishment grant funds on Navigator grants, 

these funds can be used to fund the activities of 

non-Navigator assistance personnel (see 78 FR 

20583–84). 

enrollment. In other words, gifts and 

third-party promotional items are 

prohibited when they are conditioned 

on an applicant’s enrollment in 

coverage with the help of the assister or 

the assister’s organization. This means 

that while nominal gifts and third-party 

promotional items may be provided as 

a way of encouraging consumers to seek 

or receive application assistance, they 

cannot be conditioned on a consumer’s 

actually enrolling in coverage. We agree 

with commenters that prohibiting gifts 

and third-party promotional items in 

connection with application assistance 

would potentially prohibit assisters 

from providing items promoting other 

available community services, such as 

an item which promotes the services of 

a school, hospital, or clinic in the 

community, simply because it was 

provided at the same time a consumer 

is present for Exchange application 

assistance. We do not want to prohibit 

assisters from providing items that are 

inherently beneficial to consumers only 

because a consumer is present for 

Exchange application assistance and not 

for other services.27 Therefore, 

promotional items may be provided so 

long as they are not provided to induce 

enrollment. We have finalized 

§ 155.210(d)(6) (renumbered from 

§ 155.210(d)(7) of the proposed rule) 

and § 155.225(g)(4) to reflect this policy, 

and have omitted the language 

prohibiting the provision of gifts or 

third-party promotional items ‘‘in 

connection with’’ enrollment, and 

finalized the prohibition on providing 

them ‘‘as an inducement for 

enrollment.’’ We have also omitted the 

provisions’ reference to application 

assistance, and only finalized the 

language relating to inducing 

enrollment. 

Further, the nominal value limit does 

not apply to third-party promotional 

items, so these items may exceed $15 in 

value. We note that we would consider 

items such as diabetic testing supplies 

to be third-party promotional items to 

the extent that they have the effect of 

promoting the brand for the supplies 

that are provided. We also note that 

there may be other Federal laws 

regarding providing promotional-items 

to consumers, and these regulations do 

not supersede those laws. Therefore, 

assisters should ensure their compliance 

with all applicable laws. 

We are also modifying this provision 

to make clear that reimbursement for 

legitimate expenses, such as (but not 

limited to) expenses for travel or postage 

that a consumer incurs in seeking 

Exchange application assistance may 

exceed the nominal value threshold of 

$15. We anticipate that the 

circumstances where such 

reimbursement exceeds this amount 

will be rare. However, we acknowledge 

that commenters have indicated there 

may be times when consumers might 

incur expenses that exceed $15 when 

seeking Exchange application 

assistance, and we would not want to 

prohibit a reimbursement for legitimate 

expenses that exceed this amount. 

Because we are modifying the 

provisions to be less proscriptive, we 

are also adding a new provision at 

§ 155.210(d)(7) (applicable to nonNavigator assistance personnel to whom 

§ 155.215 applies through a crossreference to § 155.210(d) in 

§ 155.215(a)(2)(i)) to clarify that in no 

event is it permissible for a Navigator or 

for non-Navigator assistance personnel 

subject to § 155.215 to use Exchange 

funds to purchase gifts or third-party 

promotional items for provision to 

applicants or potential enrollees. 

Pursuant to Affordable Care Act section 

1311(d)(5)(B), all Exchanges, both FFEs 

(including State Partnership Exchanges) 

and State Exchanges, are prohibited 

from using any funds intended for the 

administrative and operational expenses 

of the Exchange for promotional 

giveaways. HHS would consider any 

funds used by an Exchange to pay for 

Navigator grants, to contract with or 

otherwise pay non-Navigator assistance 

personnel subject to § 155.215 carrying 

out the consumer assistance functions 

under 45 CFR 155.205(d) and (e), and 

any Federal Exchange Establishment 

grant funds used to pay for nonNavigator activities,28 to be funds 

intended for the administrative and 

operational expenses of the Exchange. 

Therefore, Navigators and nonNavigator assistance personnel subject 

to § 155.215 are prohibited from using 

funding received from an Exchange to 

purchase items for promotional 

giveaways. In this final rule, therefore, 

we are also prohibiting Navigators and 

non-Navigator assistance personnel 

subject to § 155.215 from using 

Exchange funds to purchase gifts, 

including gift cards and cash, and 

promotional items. 

We are not including a provision 

regarding the use of Exchange funds by 

certified application counselors because 

certified application counselors 

generally are not expected or required to 

receive Exchange funds. 

Comment: Commenters generally 

supported our proposals at 

§§ 155.210(d)(8) and 155.225(g)(5) 

prohibiting Navigators, certified 

application counselors, and nonNavigator assistance personnel subject 

to § 155.215 (through the cross-reference 

in § 155.215(a)(2)(i) to § 155.210(d)), 

from soliciting any consumer for 

application or enrollment assistance by 

going door-to-door or through other 

unsolicited means of direct contact. 

However, most commenters who 

addressed these provisions were 

concerned that the proposals might also 

prohibit solicitation with respect to 

outreach and education activities. 

Commenters noted that the proposed 

language would inhibit outreach 

activities that have proven effective 

with respect to Medicaid and CHIP 

outreach. Additional commenters noted 

that some organizations have had great 

success during the 2014 open 

enrollment with door-to-door outreach 

and that at times some consumers were 

ready to enroll and wanted immediate 

application assistance. These 

commenters are concerned that the 

proposed language would prohibit these 

methods going forward. Some 

commenters requested that we clarify 

the definitions of ‘‘application or 

enrollment assistance’’ and ‘‘unsolicited 

means’’ to help establish clear 

parameters of what is and is not 

prohibited. 

Response: We agree that that door-todoor consumer education and outreach 

can be a useful and effective method for 

improving public awareness about the 

Affordable Care Act, insurance 

affordability programs, and the 

Exchanges. We have edited the final 

provisions at § 155.210(d)(8) and 

§ 155.225(g)(5) to clarify that the 

prohibitions on door-to-door solicitation 

for ‘‘application or enrollment 

assistance’’ prohibit assisters from 

engaging in door-to-door solicitation for 

the purpose of offering in-home 

application or enrollment assistance; 

they do not prohibit assisters from going 

door-to-door to conduct general 

consumer education or outreach, 

including to let the community know 

that the organization is available to 

provide application and enrollment 

assistance services to the public. In final 

§ 155.210(d)(8) and § 155.225(g)(5), 

therefore, we specified that outreach 


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and education activities may be 

conducted by going door-to-door or 

through other unsolicited means of 

direct contact, including calling a 

consumer. 

We clarify that nothing in these 

provisions would prohibit a Navigator, 

non-Navigator assistance personnel, or 

certified application counselor from 

providing in-home application 

assistance, if such assistance is 

requested by a consumer. We note that 

in cases where a consumer is ill or has 

a disability that would make meeting an 

assister outside of the consumer’s home 

difficult or impossible, in-home 

application and enrollment assistance 

might be appropriate. In these or other 

cases in which the consumer prefers inhome assistance or such assistance is 

appropriate for the consumer, the 

request for in-home assistance must 

come from the consumer and the 

consumer must give their consent. In 

such cases, we also recommend that two 

assistance personnel should go to the 

home, not one, because this is a best 

practice that promotes the safety of both 

the consumer and the assister. 

We further explain that by 

‘‘unsolicited means,’’ we refer to any 

means of contacting consumers directly 

to help them apply for or enroll in 

coverage through the Exchange, where 

the consumer did not initiate, request, 

or give prior consent to the contact, 

although we reiterate that this provision 

does not apply to public education and 

outreach activities. Additionally, we 

have added language to allow for 

assisters to contact consumers for 

application assistance in cases where 

the individual assister or assister entity 

has a relationship with the consumer, 

but we note that other State or Federal 

laws may apply with regards to these 

preexisting relationships, and those 

laws must also be complied with. 

Comment: Commenters acknowledged 

the concerns that HHS addressed 

through the proposal that would 

prohibit Navigators (at § 155.210(d)(9)), 

non-Navigator assistance personnel 

(through the cross reference to 

§ 155.210(d) in § 155.215(a)(2)(i)), and 

certified application counselors (at 

§ 155.225(g)(6)), from making robocalls, 

or calls that use an automatic telephone 

dialing system or an artificial or 

prerecorded voice, when initiating 

contact with consumers. However, 

commenters were concerned that the 

language of this proposal might be 

overly broad and might prohibit 

effective uses of such tools in ways that 

have strong benefits for consumers. For 

example, some organizations have used 

such tools to provide notice to 

consumers about upcoming enrollment 

events, sometimes partnering with other 

community organizations to target 

certain populations. Other organizations 

pointed out that in the future, such tools 

might be useful to remind consumers 

when it is time to re-enroll in coverage. 

Some commenters noted that many 

States already have laws that would 

apply to assisters to protect consumers 

from unwanted solicitation, and 

therefore further prohibitions are 

unnecessary. Many commenters 

provided recommendations for revising 

the proposed language and requested 

that certain clarifications be made if the 

proposed provision is finalized. For 

example, commenters recommended 

revising the language to allow the use of 

these tools for consumers who have 

previously provided contact information 

via an outreach or education event, or 

for consumers who may have a preexisting relationship with the 

organization itself (for example, as a 

patient or a client). Health centers, in 

particular, requested a clarification that 

this provision would not prohibit their 

use of these tools in their capacity as a 

health center since, for example, 

automated dialing is frequently used to 

remind health center patients about 

upcoming appointments. Some 

commenters also noted that certain ‘‘inreach’’ activities that use these types of 

tools are required of organizations in 

order for them to be eligible for HRSA 

grants provided in the Health Center 

Outreach and Enrollment Assistance 

program, and therefore this proposed 

provision could create a conflict for 

these organizations. 

Response: We understand that many 

entities operating as Navigators, nonNavigator assistance entities subject to 

§ 155.215, and certified application 

counselors also function as other types 

of organizations with an existing client 

base, such as community health clinics, 

hospitals, or primary care associations. 

These prohibitions on assister conduct 

are not meant to disrupt any outreach or 

in-reach strategies that these 

organizations use to connect with their 

client base outside of their work as 

Exchange Navigators, non-Navigator 

assistance personnel, or certified 

application counselors. Therefore, we 

clarify that the provision prohibiting 

Navigators (at § 155.210(d)(9)), nonNavigator assistance personnel (through 

the cross-reference to § 155.210(d) in 

§ 155.215(a)(2)(i)), and certified 

application counselors (at 

§ 155.225(g)(6)) from making calls using 

an automatic dialing system would not 

prohibit a health center from 

automatically dialing patients to remind 

them of upcoming health care 

appointments. We also appreciate 

commenters’ interest in using automatic 

calls to communicate with consumers 

with whom they already have a 

relationship. Therefore, we are 

finalizing § 155.210(d)(9) and 

§ 155.225(g)(6) with an exception added 

for cases where the individual assister 

or assister entity has a pre-existing 

relationship with the consumer. 

Although the edited regulation text at 

§ 155.210(d)(9) refers to Navigators, we 

interpret the cross-reference in 

§ 155.215(a)(2)(i) to § 155.210(d) mean 

that that provision also applies to nonNavigator assistance personnel to whom 

§ 155.215 applies. We are also noting 

that other State or Federal laws may 

apply with regards to these pre-existing 

relationships, and those laws must also 

be complied with, and have included 

this caveat in the final § 155.210(d)(9) 

and § 155.225(g)(6). We will monitor 

and evaluate this practice. 

Comment: Some commenters 

requested that the disclosure of an 

assister’s functions and responsibilities 

required under existing § 155.225(f)(1) 

and new §§ 155.210(e)(6)(i) and 

155.215(g)(1) also include disclosure of 

the nondiscrimination requirements 

applicable to the assister. 

Response: We agree that the 

nondiscrimination requirements 

applicable to the assister, such as those 

described in § 155.120(c) and 

§ 155.105(f), would be appropriate 

information to include as part of the 

disclosure. While § 155.210(e)(6), 

§ 155.215(g), and § 155.225(f) require 

assisters to inform consumers about the 

assister’s functions and responsibilities, 

we have not outlined specific content 

for this disclosure in these provisions. 

Comment: Commenters supported the 

proposed requirements that all 

Navigators (at § 155.210(e)(6)) and the 

non-Navigator assistance personnel 

subject to § 155.215 (at § 155.215(g)) 

obtain authorization from consumers 

before accessing their personally 

identifiable information, together with 

our proposal in these provisions, as well 

as in the proposed amendment to 

existing § 155.225(f), that the Exchange 

must establish a reasonable retention 

period for maintaining these records. In 

FFEs, we proposed that this period 

would be three years, unless a different 

retention period has already been 

provided under other applicable Federal 

law. Some commenters recommended 

that we identify a specific period of time 

for which the authorization will be 

valid, such as two years, so that the 

authorization will automatically expire 

at the end of that time frame, as well as 

a separate period of time after the 

expiration for which the assister must 


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maintain the record of the authorization. 

Some commenters requested a retention 

period of only one year because plan 

years operate on a 12-month cycle. 

Response: We are modifying these 

provisions to specify that in FFEs, the 

minimum retention period for the 

authorization form is no less than six 

years, unless a longer retention period 

has already been provided in applicable 

Federal law in the FFEs, including State 

Partnership Exchanges. The six-year 

minimum retention period is consistent 

with the statute of limitations that has 

been included in the CMP provisions 

being finalized in this rule under 45 

CFR 155.206 and 155.285, because we 

recognize that it may be relevant to 

some CMP investigations whether 

authorization for the disclosure of a 

consumer’s personally identifiable 

information was given to an assister. We 

also note that there are record retention 

requirements already applicable to 

Navigators in the FFEs and State 

Partnership Exchanges under Federal 

grant laws, such as 45 CFR 92.42 and 45 

CFR 74.53. Since we are specifying a 

minimum retention period of six years 

in this final rule, if a shorter retention 

period is provided under other 

applicable Federal requirements, the 

six-year minimum provided in 

§ 155.210(e)(6)(ii), § 155.215(g)(2), and 

§ 155.225(f)(2) will apply. We have 

modified these provisions to reflect this 

policy by indicating that in FFEs, the 

retention period is no less than six 

years, unless a different and longer 

retention period has already been 

provided under other applicable Federal 

law. Because we are aligning the 

requirement to obtain the authorization 

and maintain a record of the 

authorization so that there are 

consistent requirements for Navigators, 

non-Navigator assistance personnel 

subject to § 155.215, and certified 

application counselors, we think it is 

appropriate to apply a consistent 

retention period standard to all three 

assister types as well and are therefore 

modifying the provisions for 

consistency across all three assister 

types. 

We are not adding language to include 

an automatic expiration date for the 

authorization because it could become 

burdensome for a consumer consistently 

seeking services from the same assister 

to have to routinely fill out a new 

authorization form, and for the assister 

to have to maintain each new form for 

a minimum of six years. We do note, 

however, that consumers are allowed to 

revoke their authorization at any time, 

and may place a time restriction on the 

authorization, if they desire. 

Comment: Many commenters 

requested that we create a standard 

authorization form for assisters to use, 

rather than leaving it to assisters to 

create their own form, which 

commenters believed would cause 

assisters to incur considerable costs. 

Commenters also recommended that 

low literacy levels should be taken into 

consideration when creating the form, 

and that the form be translated into at 

least the top 15 languages to meet the 

needs of limited English proficient 

consumers served in an FFE. 

Response: We support the 

commenters’ suggestion to have a model 

form to use for obtaining this 

authorization, and share the 

commenters’ concerns about the costs to 

assisters of creating an authorization 

form if there were no model form 

available. We note that, for Navigators 

in FFEs, including State Partnership 

Exchanges, a model form is included in 

the grant award materials, and for 

certified application counselors in FFEs 

and State Partnership Exchanges, a 

model form is among the documents 

provided to certified application 

counselor designated organizations 

upon designation by the Exchange; in 

both cases, these forms are provided in 

both English and Spanish versions. HHS 

intends to develop a model form for use 

by non-Navigator assistance personnel 

in FFEs and State Partnership 

Exchanges in the future. We will take 

into consideration the comments 

regarding literacy levels and language 

translations as we develop a model 

authorization form for use by nonNavigator assistance personnel subject 

to § 155.215, and as we review the 

current Navigator and certified 

application counselor model forms for 

the FFEs and State Partnership 

Exchanges. 

Comment: Some commenters 

requested that the disclosure to 

consumers include information about 

the permissible and impermissible ways 

an assister may use a consumer’s 

personally identifiable information, as 

well as how consumers may opt out of 

follow-up from the assister. 

Response: These regulations do not 

require specific content in the consumer 

authorization form. However, we note 

that the model authorization form 

currently provided in the FFE and State 

Partnership Exchange Navigator grant 

award materials and to certified 

application counselor designated 

organizations in the FFEs, including 

State Partnership Exchanges, includes 

information about how a consumer’s 

personally identifiable information may 

be used, as well as an option for 

consumers to authorize follow-up 

contact from the Navigator or certified 

application counselor, as applicable. As 

we develop a model form for nonNavigator assistance personnel in the 

FFEs and State Partnership Exchanges, 

we will also consider including these 

same content elements. 

Comment: Commenters submitted 

several requests and recommendations 

regarding the form of the authorization. 

Many commenters requested that the 

authorization be allowed to be collected 

and maintained in electronic form to 

help reduce the costs and burden 

associated with paper forms. Some 

commenters also requested that a voicerecorded authorization be allowed when 

assisters are helping consumers over the 

phone. Additionally, several 

commenters requested that Exchanges 

be permitted to retain the record of 

authorization on behalf of the assister, 

noting that some State Exchanges are 

already doing this. 

Response: We note that these 

regulations do not specify acceptable 

formats for obtaining the authorization 

or for maintaining its record. 

Additionally, to allow for the flexibility 

in State Exchanges requested by 

commenters, we have modified the 

proposed language specifying that the 

authorization be provided ‘‘in a form 

and manner as determined by the 

Secretary’’ to indicate that the 

authorization must instead be provided 

in a form and manner as determined by 

the Exchange. As a result of this change, 

each Exchange will have discretion to 

determine the appropriate form and 

manner for these authorizations. In 

response to commenters’ concerns about 

whether these regulations would 

prohibit a State Exchange from retaining 

these authorizations on behalf of their 

assisters, we have also revised the 

language in this provision of the final 

rule to indicate that the form and 

manner of the assistance entity’s or 

personnel’s maintenance of the 

authorization is to be determined by the 

Exchange. This modification will allow 

State Exchanges that have chosen to 

retain these authorizations on behalf of 

their assisters to continue to do so, 

provided it is consistent with the ‘‘form 

and manner as determined by the 

Exchange.’’ 

We acknowledge that the language 

regarding the form and manner of 

obtaining or maintaining the 

authorization was not included with 

respect to certified application 

counselors at proposed § 155.225(f)(2). 

To align the provision with those 

provisions applicable to Navigators and 

non-Navigator assistance personnel 

subject to § 155.215, we are adding this 

language to § 155.225(f)(2). 


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Finally, we are deleting the cross 

references in proposed 

§ 155.210(e)(6)(ii) to 45 CFR 92.42 and 

45 CFR 74.53 due to the potential for 

these cross references to become 

obsolete or inaccurate in the future. We 

believe the remaining phrase ‘‘other 

applicable Federal law’’ will capture the 

intent of the cross references to ensure 

that Navigators comply with retention 

periods for maintaining these records in 

accordance with all Federal laws that 

may apply. This cross reference was 

only included in the proposed provision 

applicable to Navigators; therefore no 

change is necessary to the provisions at 

§ 155.215(g)(2) or § 155.225(f)(2). 

Comment: Several commenters raised 

concerns about the requirement for 

Navigators, non-Navigator assistance 

entities subject to § 155.215, and 

certified application counselor 

designated organizations to maintain a 

physical presence in their Exchange 

service area under proposed 

§ 155.210(e)(7) and § 155.225(b)(1)(iii). 

Commenters claimed that this proposed 

provision eliminates vital flexibility for 

consumer assistance personnel, noting 

that these assistance personnel often 

provide effective service over the phone 

or internet. Commenters pointed out 

that in large, rural, or frontier States, 

consumers often rely on remote 

assistance. Commenters also mentioned 

that some State Exchanges are working 

on software that would allow assistance 

personnel to help clients remotely, by 

facilitating screen sharing and split 

screen views for assistance personnel 

and clients, and these commenters 

expressed the concern that the proposed 

language would inhibit such 

technological innovations. Commenters 

requested that, at a minimum, 

clarification be provided that this 

provision will not affect the ability of 

assisters to provide remote assistance to 

consumers. However, there were a few 

commenters who supported this 

requirement, and recommended that the 

provision be broadened to require 

Navigator organizations, non-Navigator 

assistance entities subject to § 155.215, 

and certified application counselor 

organizations to maintain a principal 

place of business within their Exchange 

service area. 

Response: The proposed requirement 

that Navigators, non-Navigator 

assistance personnel subject to 

§ 155.215, and certified application 

counselors maintain a physical presence 

in their service area so that face-to-face 

assistance can be provided was 

designed to ensure that these consumer 

assistance personnel understand and are 

able to meet the specific needs of the 

communities they serve, to foster trust 

between these consumer assistance 

personnel and community members, 

and to encourage participation in the 

Navigator, non-Navigator assistance, 

and certified application counselor 

programs by individuals whose 

backgrounds and experiences reflect 

those of the communities they serve. 

In light of the comments we received 

indicating that this requirement may be 

too restrictive for certified application 

counselor organizations already 

providing remote assistance, we are not 

finalizing proposed § 155.225(b)(1)(iii) 

which would have required certified 

application counselor organizations to 

maintain a physical presence in the 

Exchange service area. We understand 

that unique circumstances may exist 

that would make remote assistance more 

effective or practical than face-to-face 

assistance, particularly when a certified 

application counselor is providing 

services to individuals or populations 

that might otherwise be difficult to 

reach. We continue to believe that faceto-face, in-person assistance is 

important, and we encourage certified 

application counselors to provide this 

type of assistance as much as possible. 

We will continue to evaluate the 

effectiveness of remote assistance 

offered by certified application 

counselors and certified application 

counselor organizations, to determine 

whether a physical presence 

requirement may be necessary in the 

future. 

We are finalizing these requirements 

at § 155.210(e)(7) and § 155.215(h) that 

Navigators and non-Navigator assistance 

personnel subject to § 155.215 must 

maintain a physical presence in the 

Exchange service area, so that face-toface assistance can be provided to 

applicants and enrollees. We believe 

this provision will improve the ability 

of Navigators and non-Navigator 

assistance personnel subject to 

§ 155.215 to provide culturally 

competent application and enrollment 

assistance. As we explained in the 

preamble to the proposed rule, this 

requirement may also facilitate State 

consumer protection efforts. 

We agree with commenters that 

remote application and enrollment 

assistance can be extremely important 

and effective, especially as a way to 

provide this assistance to consumers in 

rural or remote areas. Therefore, we 

want to make clear that nothing in this 

provision prohibits Navigators or nonNavigator assistance personnel subject 

to § 155.215 from providing assistance 

via the telephone, Internet, or through 

other remote means, as long as the 

organization with which they are 

affiliated also maintains a physical 

presence in the Exchange service area, 

consistent with § 155.210(e)(7) and 

§ 155.215(h). We also clarify that 

Exchange service area refers to the 

entire area served by the Exchange, and 

not to smaller regions within the area 

served by the Exchange. 

We disagree with comments 

suggesting that these assister 

organizations should be required to 

maintain a principal place of business 

within their Exchange service area. 

Many trusted national organizations 

have State or local branches that operate 

as Navigators, non-Navigator assistance 

personnel subject to § 155.215, or 

certified application counselors, and 

who, partly because of their physical 

presence in the State, are able to provide 

high-quality assistance tailored to the 

needs of their communities. Therefore, 

we are finalizing § 155.210(e)(7) as 

proposed with a modification to specify 

that in an FFE, no individual or entity 

shall be ineligible to operate as a 

Navigator solely because its principal 

place of business is outside of the 

Exchange service area. With respect to 

the certified application counselor 

program, we are adding a new 

§ 155.225(b)(3) to specify that in an FFE, 

no individual or entity shall be 

ineligible to operate in this program 

solely because its principal place of 

business is outside of the Exchange 

service area. 

We indicated in the preamble to the 

proposed rule that we were proposing to 

make the same provision specifying that 

Navigators maintain a physical presence 

in their Exchange service area under 

§ 155.210(e)(7) also applicable to nonNavigator assistance personnel subject 

to § 155.215, and we proposed adding a 

new paragraph under § 155.215 for that 

purpose. However, the rule text of the 

proposed rule omitted the new 

paragraph under § 155.215. In the final 

rule, therefore, we are correcting this 

oversight, and adding this standard to 

§ 155.215 as a new paragraph 

§ 155.215(h) to specify that all nonNavigator assistance personnel subject 

to § 155.215 who operate in FFEs must 

maintain a physical presence in the 

Exchange service area, so that face-toface assistance can be provided to 

applicants and enrollees. Similarly, we 

are modifying this provision to add a 

specification that no individual or entity 

shall be ineligible to operate as nonNavigator assistance personnel subject 

to § 155.215 solely because its principal 

place of business is outside of the 

Exchange service area. 

Summary of Regulatory Changes 

We revised § 155.210(c)(1)(iii) to 

remove reference to ‘‘errors and 


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omissions insurance’’ and replaced it 

with ‘‘any requirement that, in effect, 

would require all Navigators in the 

Exchange to be licensed agents and 

brokers.’’ 

We are not finalizing proposed 

§§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv). 

We renumbered proposed 

§§ 155.210(c)(1)(iii)(F) and 

155.225(d)(8)(v) as new 

§§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv). We modified newly 

renumbered §§ 155.210(c)(1)(iii)(E) and 

155.225(d)(8)(iv) to extend these 

provisions to all Exchanges by removing 

the reference to ‘‘in a Federallyfacilitated Exchange’’ and by specifying 

that non-Federal standards that would, 

as applied or implemented in a State, 

prevent the application of Federal 

requirements applicable to Navigators 

(or non-Navigator assistance personnel 

subject to § 155.215), or certified 

application counselors or designated 

organizations or, as added in this final 

rule, ‘‘the Exchange’s implementation of 

the [respective assister] program’’ would 

prevent the application of the 

provisions of title I of the Affordable 

Care Act. We revise § 155.215(f) to add 

subparagraphs (1) through (4) explicitly 

under that provision, rather than 

incorporating by reference parallel 

provisions in the applicable Navigator 

standards under § 155.210(c)(1)(iii), as 

was proposed. 

We revised §§ 155.210(d)(4) and 

155.225(g)(2) to add that in an FFE no 

health care provider individual or entity 

shall be ineligible to operate as 

Navigators (or non-Navigator assistance 

personnel subject to § 155.215), or 

certified application counselors or 

certified application counselor 

designated organizations solely on the 

basis of receiving consideration from a 

health insurance issuer for health care 

services provided. 

We also revised § 155.210(e)(7) to 

provide that in an FFE, no individual or 

entity shall be ineligible to operate as a 

Navigator solely because its principal 

place of business is outside of the 

Exchange service area. We added 

§ 155.215(h) to create a parallel 

provision to §§ 155.210(e)(7) for nonNavigator assistance personnel subject 

to § 155.215, as was discussed in the 

preamble to the proposed rule. We did 

not finalize § 155.225(b)(1)(iii), but we 

added a new § 155.225(b)(3) to specify 

that in an FFE, no individual or entity 

shall be ineligible to operate as a 

certified application counselor or 

designated organization solely because 

its principal place of business is outside 

of the Exchange service area. 

We moved § 155.210(d)(6) to 

§ 155.215(i) and limited this provision, 

as well as § 155.225(g)(3), to Navigators, 

non-Navigator assistance personnel, and 

certified application counselors 

operating in FFEs, including State 

Partnership Exchanges, and revised 

these provisions to specify that they do 

not take effect until November 15, 2014. 

We renumbered proposed 

§ 155.210(d)(7) to § 155.210(d)(6), and 

revised newly renumbered 

§ 155.210(d)(6) along with 

§ 155.225(g)(4) to clarify that gifts, gift 

cards, or cash, and promotional items 

that market or promote the products or 

services of a third party provided by 

assisters to consumers are prohibited for 

the purposed of inducing enrollment, 

and that gifts, gift cards, or cash may 

exceed nominal value for the purpose of 

providing reimbursement for legitimate 

expenses incurred by a consumer in 

effort to receive Exchange application 

assistance, such as (but not limited to) 

travel or postage expenses. We also add 

new § 155.210(d)(7) to prohibit the use 

of Exchange funds to purchase gifts or 

gift cards, or promotional items that 

market or promote the products or 

services of a third party, that would be 

provided to any applicant or potential 

enrollee. 

We revised §§ 155.210(d)(8) and 

155.225(g)(5) to clarify that the 

prohibitions on door-to-door solicitation 

for application or enrollment assistance 

do not prohibit Navigators, nonNavigator assistance personnel, or 

certified application counselors from 

going door-to-door to conduct general 

consumer education or outreach, or 

from soliciting consumers with whom 

the assister has a preexisting 

relationship so long as other applicable 

State and Federal laws are complied 

with. 

We revised §§ 155.210(d)(9) and 

155.225(g)(6) to clarify that the 

prohibitions on using an automatic 

telephone dialing system or an artificial 

or prerecorded voice to initiate a 

telephone call to a consumer, do not 

prohibit Navigators, non-Navigator 

assistance personnel, or certified 

application counselors from using those 

means to communicate with consumers 

with whom they already have a 

relationship, so long as other applicable 

State and Federal laws are complied 

with. 

We revised §§ 155.210(e)(2) and 

155.225(c)(1) to add that the duties of 

Navigators, non-Navigator assistance 

personnel subject to § 155.215, and 

certified application counselors 

includes a duty to provide information 

in a fair, accurate, and impartial manner 

to individuals and employees about the 

full range of QHP options and insurance 

affordability programs for which they 

are eligible, which includes providing 

fair, impartial, and accurate information 

that assists consumers with submitting 

the eligibility application, clarifying the 

distinctions among QHPs, and helping 

consumers make informed decisions 

during the health coverage selection 

process. 

We made technical edits to preserve 

the grammatical pattern that appears in 

the existing list at § 155.210(d)(1)–(4) 

and extended it through § 155.210(d)(9) 

by placing semicolons after each 

subparagraph and moving the ‘‘or’’ 

following proposed § 155.210(d)(5) to 

follow § 155.210(d)(8). 

We revised §§ 155.210(e)(6)(ii) and 

155.215(g)(2) to change the word 

‘‘Secretary’’ to ‘‘Exchange’’ to allow for 

State Exchanges to determine their own 

appropriate form and manner for 

obtaining the consumer authorization 

that is required for a Navigator or nonNavigator assistance personnel to obtain 

access to the consumer’s personally 

identifiable information. We also 

specified that the Navigator and nonNavigator assistance personnel subject 

to § 155.215 must maintain a record of 

the authorization provided ‘‘in a form 

and manner as determined by the 

Exchange,’’ and that the period is no 

less than six years (not three years, as 

proposed), unless a different and longer 

retention period has already been 

provided. In § 155.210(e)(6)(iii), we 

removed reference to 45 CFR 92.42 and 

45 CFR 74.53 and retain only ‘‘other 

applicable Federal law.’’ We also 

revised § 155.225(f)(2) to add parallel 

language to require certified application 

counselors to obtain and maintain 

record of the authorization in a form 

and manner as determined by the 

Exchange, and to specify that the 

retention period is no less than six 

years, unless a different and longer 

retention period has already been 

provided under other applicable Federal 

law. 

We revised proposed 

§ 155.225(d)(8)(i) to replace the phrase 

‘‘act in the best interest of applicants’’ 

with the phrase ‘‘provide fair, accurate, 

and impartial information.’’ 

c. Payment of Premiums (§ 155.240) 

In order to address situations in 

which enrollees have mid-month 

changes in enrollment, we proposed in 

§ 155.240(e) standards for providing 

partial month premiums. First, we 

proposed to provide flexibility for 

Exchanges to establish a standardized 

methodology for partial month 

premiums or to rely on issuers to 

prorate premiums in accordance with 


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State law and issuer policies. Second, 

we proposed in § 155.240(e)(1) that, for 

the FFE, the premium for coverage 

lasting less than one month must equal 

the product of the premium for one 

month of coverage divided by the 

number of days in the month and the 

number of days for which coverage is 

being provided in the month. 

Comment: We received several 

comments expressing general support 

for the proposed provisions in 

§ 155.240(e). Commenters also 

specifically supported the proposed 

methodology for partial month 

premiums in the Federally-facilitate 

Exchange. Commenters viewed the 

methodology proposed in 

§ 155.240(e)(1) as an equitable and 

beneficial solution to a common issue 

that consumers face with respect to their 

health insurance premiums. The 

methodology proposed for the FFE was 

also noted as being simple and easy for 

consumers to understand. Additionally, 

several of these commenters requested 

that HHS require all Exchanges to use 

the partial month premium 

methodology originally proposed for the 

FFE to promote consistency across 

Exchanges. 

Response: We appreciate the support 

received for the proposed provisions in 

§ 155.240(e). We maintain that 

Exchanges are in the best position to 

determine the methodology used for 

partial month premiums within their 

jurisdiction. However, in the case of the 

FFE, the methodology we proposed is 

appropriate given the Exchange’s 

unique circumstances. Specifically, 

CMS jointly administers the FFEs 

currently operating in multiple States, 

each of which may have different rules 

for proration and, therefore, the 

administrative burden to enforce 

varying rules across these States would 

be overwhelming without the 

implementation of a single, standard 

approach. For example, in order to 

provide the appropriate amount of 

advance premium tax credit to the 

issuer, the issuer must inform the 

Exchange of the premium amount 

charged to each individual. Without a 

standardized approach in the FFE, this 

information would come to us in a 

variety of forms in accordance with 

various State laws and issuer practices 

for partial month premiums, which 

would be burdensome to manage. 

Consequently, we note that the 

standards for partial month premiums 

in the FFE apply even if State 

requirements in those FFE States differ 

from this final rule. There is also a 

customer service advantage to using a 

single methodology because it makes it 

easier for customer service 

representatives to explain one clear, 

comprehensive policy for all consumers 

throughout the FFE. Because of the high 

degree of variability across the States in 

the FFE, we maintain that the proposed 

methodology for calculating prorated 

premiums is the most efficient and 

equitable approach. We are finalizing 

the regulation as proposed. 

Comment: A few members of the 

issuer community provided comment 

on the implementation of the proposed 

provision for the FFE. We received 

comments requesting that HHS limit 

premium proration to the FF–SHOP and 

not extend the policy to the individual 

market FFE. Commenters argued that 

current standard industry practices are 

simpler and more cost effective for 

issuers because they do not require 

reconciliation of daily proration. A 

commenter also noted that, because the 

Exchange will not perform premium 

aggregation in the individual market, 

there is no need to adopt a standard 

method for proration of premiums. 

Commenters noted that implementing 

the proposed policy would require 

reconfiguration of issuer information 

technology systems, including billing 

mechanisms, which takes significant 

time and investment; therefore, 

commenters requested that 

implementation not occur before the 

2015 benefit year. These commenters 

also requested that the requirement not 

be implemented retroactively and, 

instead, for months prior to the effective 

date of this policy, issuers have the 

flexibility to use their own proration 

methodology or follow State law. 

Response: While premium aggregation 

is a compelling reason to adopt 

premium proration, there are numerous 

other reasons to adopt it as noted in the 

comment response above and in the 

proposed rule’s preamble. We 

previously have been asked by States 

and issuers for guidance in this area and 

implementing a standard policy for the 

FFE will establish a clear standard with 

which issuers can comply and for 

consumers to understand. Issuers have 

also told us that proration of partial 

month premiums is a methodology that 

can be implemented. We believe that 

having a policy in place is vastly 

preferable to operating without any 

guidance and we remain committed to 

working closely with issuers on 

implementation. In order to ensure that 

issuers have sufficient time to 

implement this proposal, the FFE will 

implement it effective January 1, 2015. 

Issuers may also choose to implement 

the policy immediately. We also note 

that, in response to the comment, we 

will not seek retroactive implementation 

of the partial month premium policy for 

the FFE but note that State Exchanges 

have flexibility to determine how to 

implement their policy in this area. 

Comment: One commenter expressed 

concern that the preamble to this 

section specified the events for which 

an Exchange may require proration of 

premiums, such as voluntary 

withdrawal. The commenter believed 

that these policies are more suitably 

addressed at the State level, where they 

can reflect a State’s unique market 

dynamics. 

Response: The examples used in the 

preamble to the proposed rule were 

illustrative of the policy but not 

intended to replace our previous 

guidance for partial month enrollments 

found at 45 CFR 155.420 and 155.430. 

Comment: Finally, one commenter 

requested clarification as to whether a 

prorated premium could count as a first 

month’s premium (for example, in the 

case of a newborn) and how that would 

also impact the 3-month grace period 

provided in § 156.270(d) and (e). 

Response: A partial month premium 

does count as a first month’s premium. 

Additionally, payment of a prorated 

premium in full can be considered 

payment in full for the purpose of the 

3-month grace period in § 156.270(d) 

and (e). 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.240 without 

modification. 

d. Privacy and Security of Personally 

Identifiable Information (§ 155.260) 

We proposed amending § 155.260(g) 

to add a reference to § 155.285, which 

is being added as part of this final rule. 

Section 155.285 specifies the grounds 

for imposing CMPs, the notice required 

to be given to a person when a civil 

money penalty is assessed, and factors 

to be used to determine the amount of 

CMPs assessed, as well as some aspects 

of the process for imposing CMPs. We 

proposed this addition to § 155.260(g) to 

clearly link these two regulatory 

provisions and to ensure that readers 

fully understand how CMPs will be 

assessed for any improper use or 

disclosure of information. 

Comment: We received some 

comments in support of the proposed 

amendments to § 155.260(g). However, a 

few commenters also requested 

additional amendments to the 

provision. For example, one commenter 

requested that we amend § 155.260(g) to 

clarify that outreach and follow-up 

efforts made by community assisters is 

not impeded by the reference to 

§ 155.285. Specifically, the commenter 

encouraged HHS to specify that, with 


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receipt of express consumer consent, PII 

can be used to conduct outreach to 

follow up with individuals who still 

need to complete applications or for 

outreach to help individuals maintain 

and renew existing health coverage. 

Another commenter suggested that the 

provision note that the use and 

retention of PII is permissible with the 

consumer’s consent, in order to ensure 

consistency with the Navigator 

provisions at § 155.210(e)(6) and 

§ 155.225(f) which permit such use. The 

commenter also requested amendments 

to § 155.260(a) and (b) to specify that 

retention of PII is permissible with the 

consent of the consumer. 

Response: We acknowledge the 

importance of consumer assistance 

entities being able to contact consumers 

in order to follow-up regarding 

applications for coverage or annual 

renewals. However, § 155.260 as 

proposed, does not impede these types 

of outreach. Rather, § 155.260 prohibits 

improper use and disclosure of 

information, as described in the 

preamble to the proposed rule at 

§ 155.285. Similarly, a Navigator’s use of 

information as described in 

§ 155.210(e)(6) and § 155.225(f) is not 

prohibited under § 155.260(g) and we do 

not see the need to include further 

clarification of that in the rule. Finally, 

the requested amendments to 

§ 155.260(a) and (b) are outside the 

scope of this proposed rule. Therefore, 

we intend to finalize § 155.260(g) as 

proposed. 

Comment: Some commenters 

expressed concern about the proposed 

amendment. Commenters thought the 

reference to § 155.285 was duplicative 

and that the application of § 155.260 

may, in some cases, be broader than the 

specific prohibitions on disclosure 

intended by section 1411(g) of the 

Affordable Care Act and should not be 

linked to § 155.260. 

Response: We disagree with the 

contention that the reference to 

§ 155.285 in § 155.260 is duplicative. 

The cross-reference links the improper 

use and disclosure of PII to the 

imposition of CMPs as prescribed in 

section 1411(g) and (h) of the Affordable 

Care Act. Therefore, we finalize the 

provision as proposed. 

Comment: We received many 

comments to both § 155.260 and 

§ 155.285 requesting clarification about 

the role of PII with respect to CMPs. 

Response: Because of the relationship 

between § 155.260 and § 155.285, we 

address comments on § 155.206 in the 

preamble related to § 155.285(a) of this 

final rule. 

Summary of Regulatory Changes 

We are finalizing the addition to 

§ 155.260 as proposed, with a minor 

change where we have inserted the 

numerical penalty amount instead of a 

reference to section 1411(h) of the 

Affordable Care Act where the 

maximum penalty is specified. 

e. Bases and Process for Imposing Civil 

Money Penalties for Provision of False 

or Fraudulent Information to an 

Exchange or Improper Use or Disclosure 

of Information (§ 155.285) 

In § 155.285(a), in accordance with 

the grounds on which penalties may be 

imposed as specified in section 1411(h) 

of the Affordable Care Act, we proposed 

the circumstances under which HHS 

may impose CMPs on a person if HHS 

determines that the person has provided 

false or fraudulent information as 

prohibited by section 1411(h)(1) or 

improperly used or disclosed 

information in violation of section 

1411(g). In § 155.285(a)(1)(i), we 

proposed that if any person fails to 

provide correct information under 

section 1411(b) of the Affordable Care 

Act and such failure is attributable to 

negligence or disregard of any 

regulations of the Secretary, the person 

may be subject to a CMP. Under 

proposed § 155.285(a)(1)(i), if a person 

fails to make a reasonable attempt to 

provide accurate, complete and 

comprehensive information and as a 

result provides incorrect information, 

the person may be subject to a CMP. 

Second, in § 155.285(a)(1)(ii), we 

proposed that if a person knowingly and 

willfully provides false or fraudulent 

information under section 1411(b) of the 

Affordable Care Act, the person may be 

subject to a CMP. We noted that if 

consumer assistance personnel such as 

an agent, broker, Navigator, certified 

application counselor, or non-Navigator 

assistance personnel, were to in some 

manner directly provide false or 

incorrect information required under 

section 1411(b), they may also be 

subject to a CMP. Third, in 

§ 155.285(a)(1)(iii), we proposed that if 

a person knowingly and willfully uses 

or discloses information in violation of 

Affordable Care Act section 1411(g), the 

person may be subject to a CMP. In 

§ 155.285(a)(1)(iii)(A) through (C), we 

proposed types of activities that would 

be in violation of section 1411(g) of the 

Affordable Care Act and in 

§ 155.285(a)(2), we proposed a 

definition of the term ‘‘person.’’ 

In § 155.285(b), we proposed the 

factors that HHS may take into 

consideration when determining the 

amount of CMPs to impose. In 

§ 155.285(b)(3), we implemented the 

reasonable cause exception of section 

1411(h)(1)(A)(ii) of the Affordable Care 

Act pursuant to which no penalty will 

be imposed under § 155.285(a)(1)(i) if 

HHS determines that there was a 

reasonable cause for the failure to 

provide correct information required on 

an Exchange application and that the 

person acted in good faith. 

In § 155.285(c), we proposed 

maximum penalties for each different 

type of violation. In § 155.285(d), we 

proposed standards for a notice of intent 

to issue a CMP that HHS must send to 

the person against whom the CMP may 

be imposed. In § 155.285(d)(1)(i)–(viii), 

we proposed eight elements that must 

be included in the notice. We proposed 

that the person may request a hearing 

before an ALJ on the proposed penalty 

by filing a request pursuant to the 

procedure that will be outlined in the 

notice of intent to impose a penalty that 

the person receives. 

In § 155.285(e), we proposed the 

consequences for a person who fails to 

request a hearing in a timely manner. 

We proposed that HHS may assess the 

proposed CMP 60 calendar days after 

the date of issuance printed on the 

notice of intent to issue a CMP. In 

§ 155.285(e)(1), we proposed that HHS 

will notify the person in writing of any 

penalty that has been imposed, the 

means by which the person can satisfy 

the penalty, and the date on which the 

penalty is due. We proposed in 

§ 155.285(e)(2) that a person has no right 

to appeal a penalty with respect to 

which the person has not timely 

requested a hearing. 

In § 155.285(f), we proposed to use 

the existing appeals framework in 

regulation at 45 CFR Part 150, Subpart 

D. In § 155.285(g), we proposed that 

CMS and OIG will share enforcement 

authority to impose the CMPs in 

§ 155.285. 

In § 155.285(h), we proposed a 

settlement authority provision to ensure 

CMS is able to settle any issue or case 

described in § 155.285(a) if necessary. 

Finally, in § 155.285(i), we proposed a 

six year statute of limitations, beginning 

from the date on which the violation 

occurred, within which HHS may 

impose a CMP against a person. 

Comment: We received some 

comments regarding § 155.285(a)’s 

reference to basing the imposition of a 

CMP on ‘‘credible evidence’’ if HHS 

‘‘reasonably determines’’ that someone 

has violated the rule. The commenters 

recommended that, because a CMP 

could be potentially significant, the 

standard should be based on a 

preponderance of the evidence. The 

commenters also noted that this 


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standard is consistent with the 

Administrative Procedures Act. 

Response: We maintain that the 

standard proposed in § 155.285(a) is 

appropriate in light of the fact that a 

CMP is not immediately imposed but, 

instead, imposed only after a process 

involving notice and the right to a 

hearing is provided. If HHS identifies 

circumstances that meet the standard set 

in § 155.285(a), the resultant action is a 

notice informing the person of the 

potential imposition of a CMP. The 

person then has the right to request a 

hearing in front of an ALJ in accordance 

with h§ 155.285(d)(2) before the CMP is 

levied. For these reasons, we finalize the 

standard as proposed. 

Comment: We received one comment 

regarding the definition of negligence, 

provided in § 155.285(a)(i)(A). The 

commenter sought clarification as to 

what is considered a ‘‘reasonable’’ 

attempt to provide accurate, complete, 

and comprehensive information. 

Response: The proposed definition of 

‘‘negligence’’ is modeled on section 

6662 of the Internal Revenue Code and 

was incorporated based on the 

similarities between providing 

information on tax filing forms and 

completing an application for Exchange 

coverage. This definition should 

provide CMS and the public with ample 

history on which they may rely to assess 

negligence in this context. We also 

believe this definition is appropriate 

because it holds actions that are made 

through honest mistake and error 

(which are protected by the reasonable 

cause provision in § 155.285(b)(3)) not 

culpable for a violation. We finalize the 

definition as proposed. 

Comment: We received many 

comments regarding the imposition of 

CMPs under § 155.206 and § 155.285. 

Some commenters recommended that 

HHS retain discretion to impose CMPs 

under both sections, citing some 

violations under § 155.285 will also 

violate consumer assistance standards 

and, in those instances, HHS should 

levy penalties under both provisions. 

These commenters noted that allowing 

penalties under both provisions will 

give Navigators and assisters in the 

Federally-facilitate Exchange an extra 

incentive to maintain the privacy of 

those they assist. Another group of 

commenters recommended that where 

violations of § 155.206 and § 155.285 

overlap, HHS should use its discretion 

to impose a CMP under only one 

section. Similarly, many commenters in 

this cohort urged HHS to exempt 

consumer assistance entities from 

§ 155.285, explaining that assistance 

personnel do not actually provide 

information as part of the process of 

applying for coverage or an exemption, 

and therefore it was difficult to see how 

they could provide false or fraudulent 

information in violation of § 155.285. 

These commenters considered imposing 

violations for consumer assistance 

entities under both sections would be 

duplicative. 

Response: We disagree that consumer 

assistance personnel should be exempt 

from the provisions of 45 CFR 155.285. 

Any Navigator, non-Navigator assistance 

personnel, or certified application 

counselor who encourages a consumer 

to submit false or fraudulent 

information and then enters that 

information into the application for the 

consumer, or enters false or fraudulent 

information without the knowledge of 

the consumer, might be in violation of 

either § 155.285 or § 155.206. Therefore, 

we maintain that where conduct by a 

consumer assistance entity may warrant 

CMPs under either § 155.285 or 

§ 155.206, HHS should have discretion 

to determine whether to impose a CMP 

under § 155.285 or under § 155.206. If a 

consumer assistance entity is in a 

situation where CMPs could be imposed 

under both § 155.206 and § 155.285, 

CMS will take that into account as a 

factor under § 155.285(b)(1)(viii). 

Comment: Commenters expressed a 

general concern that the provisions of 

§ 155.285 might have a chilling effect on 

consumer assistance entities, 

particularly those that rely on voluntary 

participation. These commenters urged 

us to limit CMPs to egregious violations 

of selected requirements where there are 

no other enforcement mechanisms in 

place. Commenters felt that fewer 

people might be willing to become 

assisters if they feared being held 

responsible for CMPs, particularly for 

information provided and attested to by 

applicants. 

Response: We understand the 

concerns raised by commenters about 

the potential for these penalties to 

discourage participation as a consumer 

assistance entity. However, we are 

finalizing the provisions, and their 

application to consumer assistance 

entities, as proposed. The purpose of 

these provisions is to ensure consumer 

information is safeguarded, no matter 

where it is in the eligibility or 

enrollment process or whether the 

consumer seeks the assistance of a 

consumer assistance entity. HHS’s goal 

in issuing the CMP rule is to encourage 

program compliance, prevent 

misconduct, and remedy violations 

promptly. We do not think these goals 

will be served by lessening the proposed 

standards for imposing CMPs. 

Comment: We received comments 

expressing support for the grounds 

proposed for imposing CMPs. These 

commenters viewed the authority to 

impose CMPs as an effective way to 

safeguard the use of consumer 

information. However, many 

commenters also sought clarification 

about what constitutes improper use 

and disclosure of PII under the NPRM 

and in relation to section 1411(g) of the 

Affordable Care Act. Several of these 

commenters requested that § 155.285 be 

amended to note that, with receipt of 

consent, PII can be used to conduct 

outreach to follow up with individuals 

who still need to complete applications 

or for outreach to help individuals 

maintain and renew existing health 

coverage. Other commenters feared any 

relaxation of PII standards would 

compromise consumer information and 

cause harm. 

Response: Protection of consumer 

information is one of the most critical 

duties of consumer assistance entities 

and Exchanges. Section 155.260 

provides privacy and security standards 

handling and safeguarding consumers’ 

PII. Section 155.260 also provides that 

the Secretary can determine additional 

uses and disclosures of PII and develop 

a framework through which Exchanges 

can seek the Secretary’s approval of 

other requested uses and disclosures of 

eligibility and enrollment PII that would 

ensure the efficient operation of the 

Exchange, comply with other applicable 

law and policy, and require the consent 

of the individual subject of the PII prior 

to the requested use or disclosure. Uses 

and disclosures of information that are 

not permitted by § 155.260 or otherwise 

permitted by statute or regulation, 

therefore, are prohibited. Those 

prohibited uses and disclosures are the 

focus of the penalties imposed in 

§ 155.285 to the extent they are knowing 

and willful. But, we note that some uses 

and disclosures, as specified in rule, are 

permissible with the specific consent of 

the consumer. 

Comment: We received several 

comments on the definition of ‘‘person’’ 

in § 155.285(a)(2). Some commenters 

found the broad definition of ‘‘person’’ 

warranted for imposing CMPs for 

violations of section 1411(g) of the 

Affordable Care Act. However, a portion 

of commenters requested that HHS 

exclude assisters from the definition of 

‘‘person.’’ We also received one 

comment noting that the inclusion of 

QHP issuers potentially creates 

confusion regarding the source of 

required application information 

provided to establish eligibility to 

purchase a QHP. 

Response: Exchanges involve the 

coordination of a wide variety of 

individuals and entities for their 


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success. Therefore, our definition of 

‘‘person’’ is broad to encompass each of 

these and the possibility that they could 

engage in the actions enumerated in 

§ 155.285(a)(1). We want to ensure that 

these individuals and entities are on 

notice of the penalties they could incur 

for the misuse of information. The 

inclusion of assisters and similar 

consumer assistance entities within 

§ 155.285 is discussed in detail above in 

the comment response to questions 

regarding the application of § 155.206 

and § 155.285 to assisters. Finally, the 

inclusion of QHP issuers in the 

definition is purposeful for the reasons 

noted above and we do not share the 

concern of the commenter that this 

creates confusion. Many of the entities 

included in the definition are required 

to provide information for use by the 

Exchange, including QHP issuers; 

however, it is only the provision of false 

or fraudulent information or improper 

use or disclosure of information that is 

penalized. We finalize the definition as 

proposed. 

Comment: We received many 

comments in support of the proposed 

provisions of § 155.285(b), which lists 

the factors used to determine the 

amount of CMPs imposed. A few 

commenters suggested additional factors 

to be considered including, whether the 

violation resulted in other legal 

consequences for an individual, 

attempts at taking corrective action, and 

the extent to which assistance personnel 

were deceived by the consumer into 

providing false or incorrect information. 

Response: We appreciate the support 

we received for the proposed factors 

used to determine the amount of CMPs 

imposed. We have considered the 

factors commenters suggested and find 

that only minor revisions to the 

proposed set of factors are necessary. 

For example, we have added one 

additional factor at subparagraph 

(b)(1)(viii) to include a factor allowing 

HHS to take into consideration whether 

other remedies or penalties have been 

imposed for the same conduct or 

occurrence. We have also clarified the 

scope of the factors in subparagraphs 

(b)(2)(i) and (ii) to account for violations 

that could have resulted in financial 

harm or could have caused harm to an 

individual’s reputation, respectively. 

We note that harm to an individual’s 

reputation could include, for example, 

actions impacting a consumer’s credit 

rating or incurring costs on behalf of 

another person without their knowledge 

or consent. Additionally, § 155.285 does 

not require a corrective action plan, so 

we do not include corrective steps taken 

in the factors provided. We believe the 

extent to which assistance personnel 

were deceived by the consumer is 

adequately encompassed in 

subparagraph (b)(2). Therefore, we 

finalize the provisions with the 

modifications to § 155.285(b)(1)(viii) 

and (b)(2)(i) and (ii) as noted above. 

Comment: We received considerable 

support for the reasonable cause 

provision proposed in § 155.285(b)(3). 

In addition, several commenters sought 

clarification or safe harbors regarding 

circumstances where false information 

is provided due to a mistake or 

misunderstanding. We received a 

couple comments requesting a safe 

harbor specifically for QHP issuers who 

rely on information provided to them 

from both the Exchange and consumers, 

since QHP issuers may have no way to 

verify information independently. 

Another commenter sought a safe harbor 

for conduct relating to calendar years 

2014 and 2015 because of the uncertain 

environment issuers worked in during 

initial open enrollment. Commenters 

believed that levying a CMP in such 

cases would be too severe. 

Response: Section 155.285(b)(3) states 

that no penalty will be imposed if HHS 

determines that there was a reasonable 

cause for the failure to provide correct 

information and that the person acted in 

good faith. The situations commenters 

cited would likely fall within this 

exception. We note that violations must 

be knowing and willful and information 

provided merely by mistake and in good 

faith is not subject to a CMP. 

Comment: We received a handful of 

comments regarding the imposition of 

penalties, as described in § 155.285(c). 

A few commenters expressed general 

support for the proposed provisions. 

One commenter shared concern that 

there is no maximum penalty defined, 

which could cause financial devastation 

to some consumer assistance entities. A 

couple commenters requested more 

clarity on what constitutes a submission 

of information and questioned whether 

an application which is started on the 

phone but completed online results in 

two submissions or one. Another 

commenter was concerned about 

permitting HHS to estimate the number 

of consumers affected by the violation to 

calculate the maximum penalty. The 

commenter supported, instead, using 

the number of consumers directly 

affected by the violation or placing a 

maximum on the estimate calculated by 

HHS based on the size of the consumer 

population served by the consumer 

assistance entity to prevent 

unreasonable penalties for the assister 

community. Finally, one commenter 

requested clarification that § 155.285(c) 

does not limit penalties under State law 

or a State’s ability to take action to 

protect consumers. 

Response: Although § 155.285(c) 

provides a maximum cap per violation, 

there is no global cap on CMPs. CMPs 

are intended to discourage the misuse of 

information; therefore, we believe that 

providing a global cap on CMPs would 

defeat there intended purpose. In 

response to the questions received, we 

note that one application, no matter the 

number of modes used to complete it, is 

considered one submission for purposes 

of imposing a CMP. This concern is 

further mitigated by the availability of 

an appeal prior to the imposition of a 

penalty during which this issue may be 

explored. We finalize the provisions as 

proposed. Finally, in response to the 

request for clarity about the role of State 

law in relation to § 155.285, we note 

that the standards in § 155.285 do not 

limit a State’s ability to impose 

penalties or protect consumers under 

State law. 

Comment: In response to § 155.285(d), 

we received a comment requesting that 

notices be written clearly and be 

culturally and linguistically. 

Response: All Exchange-related 

notices, including those related to 

CMPs, must comply with the 

requirements for notices established in 

§ 155.230. 

Comment: Some commenters 

requested that § 155.285(e) be amended 

to provide additional time to request a 

hearing. The commenters noted, that 

under the proposed regulation, there are 

no additional options for an individual 

who misses the 60-day timeframe to 

request a hearing. One commenter 

suggested permitting additional time to 

request a hearing under a good cause 

exception. Another commenter 

suggested permitting an additional 60- 

day period to request a hearing 

following the due date of a CMP 

payment. The commenter noted that a 

payment date may provide more 

effective notice to the individual and 

also that many entities may have 

segregated chains of duty and the 

appropriate person may not be notified 

in time to request a hearing. 

Response: We disagree with 

commenters that 60 days from the date 

of the notice in § 155.285(d) is 

insufficient for an individual to request 

a hearing. We believe 60 days to be 

neither too short to provide adequate 

notice nor too long to delay the process 

of imposing a CMP. We finalize the 

provision as proposed. 

Comment: As proposed in § 155.206, 

several commenters recommended that 

CMS first require any consumer 

assistance entity that is alleged to have 

provided false information or 


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improperly used or disclosed 

information to enter into a corrective 

action plan before a CMP could be 

issued. 

Response: We believe that § 155.285 

provides HHS or OIG sufficient 

flexibility to offer an entity or 

individual an opportunity to take 

corrective action or propose a plan of 

corrective action to avoid penalties prior 

to HHS or OIG issuing a notice of intent 

to impose a civil money penalty. 

Particularly, HHS might offer an 

opportunity for corrective action in 

relation to minor infractions that expose 

entities or individuals to a penalty 

under § 155.285. 

Comment: Some commenters 

requested clarification regarding 

payment methodologies and timeframes 

for CMPs. For example, one commenter 

questioned whether the entirety of the 

penalty would be due upon payment of 

taxes or upon notification of being 

found guilty of a violation. 

Response: We do not provide this 

level of detail in the regulation at this 

time. We will address this issue in the 

future. 

Comment: One commenter expressed 

disagreement with the proposed six-year 

statute of limitations in § 155.285(i). The 

commenter noted that between IRS 

review, issuer validation of payments, 

and other methods of cross-referencing 

and auditing, each incident of a 

violation should be able to be 

discovered within two years. The 

commenter also noted that a longer 

statute of limitations may lead to 

collection procedures, such as wage 

garnishments, to collect unpaid debt, 

which can extend the efforts needed to 

collect the money for a CMP. 

Response: We believe the six-year 

statute of limitations period is 

appropriate. This period is not 

indefinite and, therefore, will hopefully 

not discourage efforts by consumer 

assistance entities. However, HHS’s goal 

in issuing the CMP rule is to encourage 

program compliance, prevent 

misconduct, and remedy violations 

promptly and, therefore, we do not want 

to provide a period that is too short to 

encourage strict compliance with the 

rule and provide protection for PII. We 

believe six years provides sufficient 

time for HHS to discover and investigate 

any potential CMPs and acknowledges 

the reality that in many situations, 

misuse of a consumer’s personally 

identifiable information may not be 

discovered by a consumer and reported 

to HHS for some time after the unlawful 

use. 

Comment: Several commenters 

advocated against duplication of 

penalties in instances where certain 

types of violations may already subject 

them to other types of penalties. A few 

commenters noted that the Health 

Insurance Portability and 

Accountability Act already governs 

certain critical aspects of compliance 

related to the protection of consumer 

personal information. 

Response: We understand 

commenters’ concern about the 

potential duplication of penalties, and 

have amended § 155.285(b)(1) to include 

a factor allowing HHS to take into 

consideration whether other remedies or 

penalties have been imposed for the 

same conduct or occurrence. It would be 

the responsibility of the entity to bring 

such information to HHS’s attention. 

However, we also note that HHS will 

consider referring cases to appropriate 

law enforcement officials based on the 

facts and circumstances of the violation. 

Comment: One commenter requested 

clarification regarding whether an 

individual would be held accountable 

for repayment of an overpayment of the 

advance premium tax credit or CSRs 

paid on a consumer’s behalf, in addition 

to a CMP. 

Response: The provisions of § 155.285 

concern only the imposition of CMPs 

and not payment or repayment of 

advance payments of the premium tax 

credit or CSRs as a result of the misuse 

of information. This provision has no 

effect on the Department of Treasury’s 

authority to recoup overpayments of the 

advance payment of the premium tax 

credit or CSRs paid on a consumer’s 

behalf. 

Comment: We received one comment 

that, although, we reference PII, it is not 

defined in regulation. 

Response: There are various 

definitions of PII, and we believe the 

adoption of any one of them at this stage 

may unduly limit HHS’s ability to 

adequately redress violations of the rule. 

Given the advanced state of technology 

and developments in the way 

information may be manipulated, 

combined, and ultimately used to reidentify persons based on de-identified 

data, we believe that PII is an evolving 

concept that may not be fully captured 

in a single definition. We, therefore, will 

not provide a specific definition of PII 

in the text of § 155.285 at this time. We 

do note that OMB Memoranda M–07–16 

(May 22, 2007) generally defines PII as 

information which can be used to 

distinguish or trace an individual’s 

identity, such as their name, social 

security number, biometric records, 

alone, or when combined with other 

personal or identifying information that 

is linked or linkable to a specific 

individual, such as date and place of 

birth, mother’s maiden name. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.285 of the proposed 

rule regarding CMPs, with the following 

modifications: In an effort to prevent 

confusion, in § 155.285(c) we have 

removed the references to section 

1411(h)(1) and (2) of the Affordable Care 

Act and have instead inserted the 

numerical maximum penalty amounts. 

In § 155.285(a)(1)(ii), we have added ‘‘or 

fraudulent’’ after ‘‘knows to be false’’ to 

make the text consistent with section 

1411(h)(1) of the Affordable Care Act. In 

§ 155.285(b)(1) and (2), we have added 

language to clarify that the factors in 

these provisions are ‘‘including, but not 

limited to’’ the factors listed in their 

subparagraphs. In § 155.285(b)(1)(viii), 

we have added a factor allowing HHS to 

take into consideration whether other 

remedies or penalties have been 

imposed for the same conduct or 

occurrence. We have clarified the scope 

of the factors in subparagraphs (b)(2)(i) 

and (ii) to account for violations that 

could have resulted in actual or 

potential financial harm or could have 

resulted in actual or potential harm to 

an individual’s reputation, respectively. 

We have made a minor change to the 

wording in § 155.285(d)(2) by 

substituting the word ‘‘appeal’’ for 

‘‘request.’’ We have also made a 

technical correction to substitute ‘‘the 

notice of intent to issue a civil money 

penalty’’ in § 155.285(d)(2) with a cross 

reference to § 155.285(f). In § 155.285(f), 

we have rephrased the paragraph to read 

‘‘HHS has proposed to impose’’ rather 

than ‘‘HHS has imposed.’’ Finally, we 

are substituting the reference to ‘‘CMS’’ 

with ‘‘HHS’’ in (g)(1) and, in 

consultation with OIG, we are finalizing 

concurrent jurisdiction with respect to 

§ 155.285(a)(1)(ii) and not 

§ 155.285(a)(1)(iii) at this time. 

3. Subpart D—Exchange Functions in 

the Individual Market: Eligibility 

Determinations for Exchange 

Participation and Insurance 

Affordability Programs 

a. Verification Process Related to 

Eligibility for Insurance Affordability 

Programs (§ 155.320) 

In § 155.320(d)(4), we established an 

option under which a State Exchange 

could rely on HHS to conduct 

verifications of enrollment in an eligible 

employer-sponsored plan and eligibility 

for qualifying coverage in an eligible 

employer-sponsored plan for purposes 

of eligibility for advance payments of 

the premium tax credit. This option was 

made available for eligibility 

determinations that are effective on or 

after January 1, 2015. However, we have 


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determined that the benefit gained by 

having HHS provide this function is 

outweighed by the information 

technology development and 

administrative and consumer 

complexity that would be introduced for 

a State through this approach. As such, 

we proposed to strike paragraph (d)(4). 

Comment: We received comments 

from several State Exchanges urging 

HHS to retain the option of the 

employer-sponsored coverage 

verification process. Many of the 

comments focused on the need for State 

Exchanges to develop functionality and 

administrative capacity to verify 

employer-sponsored coverage in the 

absence of this Federally-managed 

service and the administrative and 

financial burden this would place on 

State Exchanges. One commenter 

suggested retaining the service at the 

Federal level would take advantage of 

economies of scale rather than 

burdening each State Exchange, 

individually. Several States noted that 

their system builds and operating 

budgets could not accommodate this 

change in time for the 2015 benefit year 

and recommended that, if HHS does 

finalize the proposal, HHS postpone 

eliminating the service for an additional 

year. 

Response: We appreciate the 

comments received from State 

Exchanges on this proposed rule 

change. We understand the 

administrative costs and development 

burden associated with providing 

verifications for Exchange 

determinations. However, even with the 

Federally-managed service, State 

Exchanges and HHS would need to 

develop a way to send, receive, and 

process the information and provide 

dual customer service functionality to 

communicate with consumers. In 

addition, the State Exchange would 

need to modify systems to integrate the 

HHS verification response into what 

should be a near-real-time eligibility 

process. Therefore, we do not believe 

that there are significant efficiencies to 

be gained by providing this service to 

State Exchanges. However, we do 

understand the time and budget 

constraints some State Exchanges face 

in order to adjust their processes to 

accommodate this change and agree that 

additional time is needed for States to 

come into compliance with this 

requirement. Therefore, we are 

finalizing the provision as proposed, 

removing the original regulatory 

language at § 155.320(d)(4), but 

extending the flexibility previously 

provided at 78 FR 42257 to permit State 

Exchanges to implement the samplebased reviews for employer-sponsored 

coverage for eligibility determinations 

for insurance affordability programs 

starting January 1, 2016. 

Comment: Additionally, some 

commenters shared concern that 

employer coverage data currently 

available to States is insufficient to 

perform this verification and that a 

comprehensive national resource is 

needed to sufficiently perform the 

verification. Without such a source, the 

commenters noted that States would 

have to employ and administer an 

alternative data source, causing a lack of 

uniform documentation and verification 

across Exchanges. The commenters 

suggested that HHS allow selfattestation to be sufficient verification 

until HHS can make available approved 

data sources for verification. 

Response: Verification standards for 

employer-sponsored coverage are 

provided in 45 CFR 155.320(d)(2) and 

include: (1) Federal employment data 

from the Office of Personnel 

Management, which is currently 

provided to State Exchanges by HHS, (2) 

SHOP data that is available to the State 

Exchange, and (3) any electronic data 

sources that are available to the 

Exchange and which have been 

approved by HHS. We remain 

committed to working with State 

Exchanges to develop effective solutions 

for verifying enrollment in an eligible 

employer-sponsored plan and eligibility 

for qualifying coverage in an eligible 

employer-sponsored plan, and will 

work to make any additional electronic 

data sources that become available to 

HHS equally available to State 

Exchanges. 

Summary of Regulatory Changes 

We are finalizing the changes to 

§ 155.320(d)(4) as proposed but note 

that we are extending the flexibility 

previously provided at 78 FR 42257 to 

permit State Exchanges to implement 

the sample-based reviews for employersponsored coverage for eligibility 

determinations for insurance 

affordability programs starting January 

1, 2016. 

b. Eligibility Redetermination During a 

Benefit Year (§ 155.330) 

In the proposed rule, we proposed a 

technical correction in paragraph 

(d)(2)(ii) of § 155.330 to remove the 

reference to paragraph (e)(3) of this 

section. In the final rule, titled, 

‘‘Medicaid and Children’s Health 

Insurance Programs: Essential Health 

Benefits in Alternative Benefit Plans 

Eligibility Notices, Fair Hearing and 

Appeal Processes and Premiums and 

Cost Sharing; Exchanges: Eligibility and 

Enrollment, 78 FR 32319, we previously 

removed paragraph (e)(3) from this 

section. As such, we clarified in the 

proposed rule that paragraph (d)(2)(ii) 

should only refer to the standards 

specified in paragraph (e)(2) of this 

section. 

Summary of Regulatory Changes 

We did not receive any comments on 

this proposal and are finalizing the 

provision as proposed. 

4. Subpart E—Exchange Functions in 

the Individual Market: Enrollment in 

Qualified Health Plans 

a. Enrollment of Qualified Individuals 

in a QHP (§ 155.400) 

In § 155.400, we proposed to add 

paragraph (e) to establish that 

Exchanges may, and the FFE would, 

require payment of the first month’s 

premium to effectuate enrollments. 

We also proposed to add paragraph 

(f), which would authorize Exchanges to 

provide requirements to QHP issuers 

regarding the instructions for processing 

electronic enrollment-related 

transactions. 

Additionally, in § 156.265 we 

proposed to establish a requirement for 

issuers in the FFEs to collect premiums 

no later than the day before the coverage 

effective date. Our intention was to give 

the Exchange the flexibility to establish 

policy and process rules regarding 

premium payment. 

Comment: One commenter suggested 

that the Exchange should not provide 

instructions to issuers regarding 

payment of the first month’s premium 

for enrollments. The commenter 

recommended that the Exchange should 

allow issuers to establish their own 

business rules on first month’s premium 

for enrollments. However, another 

commenter supported establishing a 

date by which an enrollee must make a 

first premium payment to effectuate 

coverage creating greater transparency 

for payment deadlines and reducing 

cancellations of coverage due to failure 

to pay in a timely manner. We also 

received a comment that urged us to 

amend the regulation to allow payment 

of the first premium up to the day before 

the coverage effective date, rather than 

allowing plans to set payment dates that 

are earlier than this day. The commenter 

also suggested that issuers should be 

required to provide timely invoicing for 

consumers, 

Response: We recognize that 

decisions regarding payment of the first 

month’s premium have traditionally 

been a business decisions made by 

issuers. Accordingly, we are not 

finalizing § 156.265(d)(2) which would 

revise premium payment dates for first 


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month’s premiums in the FFE, and are 

deleting current § 156.265(d)(2). We will 

therefore redesignate § 156.265(d)(1) as 

§ 156.265(d). However, because we 

appreciate the comment about giving 

consumers adequate time to pay their 

first month’s premium, we maintain the 

proposed § 155.400(e) in the final rule to 

allow Exchanges to establish a 

consistent process throughout each 

Exchange regarding first month’s 

premium. In particular, each Exchange 

can determine how to handle first 

month’s premium payment dates for 

special enrollment periods that may 

occur close to or after the effective date. 

We believe giving each Exchange the 

flexibility to establish uniform guidance 

for all issuers for first month’s premium 

for enrollments will benefit the 

Exchange, issuers, and consumers by 

ensuring a consistent operational 

procedure. It is our expectation that 

QHP issuers will send consumers their 

bills within one to two business days 

after receiving enrollment transactions 

to accomplish the goal of timely 

effectuating coverage. 

Comment: We received several 

comments that acknowledged 

establishing a payment due date the day 

before coverage is effective in most 

situations, but there are several 

scenarios that commonly occur today 

that make this approach challenging and 

in some cases, impossible to implement. 

For example, the birth of a child can 

cause retroactive coverage in which the 

premium cannot be paid by the effective 

date, or an individual may lose minimal 

essential coverage and be given an 

effective date with only one day prior to 

coverage effectiveness in which to pay. 

There are also instances where the 

consumer does not receive the bill until 

after the due date. One commenter 

voiced concern that some States give 10 

day grace periods and recommended 

that we should allow the FFE the same 

flexibility offered to SBEs when it 

comes to how the first premium 

payment effectuates coverage. 

Response: For similar reasons given 

above, we are not finalizing 

§ 156.265(d)(2) which would establish 

premium payment dates for first 

month’s premiums and expect the FFE 

to address this in subregulatory 

guidance. 

Summary of Regulatory Changes 

We are finalizing § 155.400(e) and (f) 

of the proposed rule without 

modification. Additionally, we are 

finalizing the provisions proposed in 

§ 156.265(d)(1) of the proposed rule as 

the entire paragraph (d), and we are not 

finalizing any § 156.265(d)(2), allowing 

each Exchange to establish its own 

premium payment dates. 

b. Initial and Annual Open Enrollment 

Periods (§ 155.410) 

In 45 CFR 155.410(d), we specified 

that starting in 2014, the Exchange must 

provide a written annual open 

enrollment notification to each enrollee 

no earlier than September 1, and no 

later than September 30. In 45 CFR 

155.335(d), we specified that notice of 

annual redetermination for coverage 

effective January 1, 2015 be provided as 

a single, consolidated notice with the 

notice specified in 45 CFR 155.410(d). 

In the 2015 Payment Notice, we 

amended 45 CFR 155.410(e) to specify 

that for the benefit year beginning on 

January 1, 2015, the annual open 

enrollment period begins on November 

15, 2014. Accordingly, we believe that 

it is appropriate to modify the timing of 

the notice of annual open enrollment 

and annual redetermination. We 

proposed two options for this notice: (1) 

shifting the period during which the 

notice would be sent by a month, so that 

the notice would be sent no earlier than 

October 1, and no later than October 31, 

and (2) shifting the period during which 

the notice would be sent by a month 

and lengthening this period so that the 

notice would be sent no earlier than 

October 1, and no later than November 

15, provided that electronic notices are 

available for any consumer who 

contacts the Exchange on November 15. 

We sought comment on which of these 

options we should implement, or if we 

should implement another option. 

Comment: We received many 

comments from States, issuers, and 

consumer advocates about the timeline 

for issuing the notice of annual open 

enrollment and annual redetermination. 

The majority of comments from States 

and the issuer community support the 

extended timeframe of October 1 to 

November 15. States noted the 

additional flexibility to decide when to 

send the notice as a benefit to the 

extended timeframe. Issuers also saw a 

benefit to extending the timeframe 

because it would allow for additional 

attempts to contact enrollees if the first 

contact was unsuccessful. Several 

consumer advocacy groups found the 

shorter timeframe of October 1 to 

October 31 preferable because it would 

permit consumers two weeks advance 

notice before open enrollment and 

additional time for consumers to contact 

enrollment assisters and assemble any 

documents needed for redetermination. 

A limited number of commenters 

supported timeframes outside the two 

proposed options. One supported 

keeping the original timeframe for 

sending the notice no earlier than 

September 1 and no later than 

September 30; another sought flexibility 

to send notices no earlier than August 

1. We also received a comment 

expressing concern over shifting the 

timeframe either way due to 

misalignment between open enrollment 

notices, issuer 90-day renewal notices, 

and Exchange redetermination notices. 

Response: In order to best meet the 

needs of Exchanges, which are 

responsible for sending the notices, and 

consumers, who need enough 

information about open enrollment in a 

timely manner, we are finalizing 

§ 155.410(d) to state that, starting in 

2014, the Exchange must provide a 

written notice of annual open 

enrollment and redetermination to each 

enrollee no earlier than the first day of 

the month before the open enrollment 

period begins and no later than the first 

day of the open enrollment period. This 

reflects the second of our proposed 

options. 

Comment: We received one comment 

recommending that the notice be 

provided to existing enrollees as well as: 

(1) Potential enrollees who submitted 

applications after the close of the last 

open enrollment period and were 

subsequently determined eligible for a 

QHP but unable to enroll, (2) 

individuals who had applied for a 

special enrollment period but were 

denied during the past year, (3) 

individuals who had requested 

enrollment information from the 

Exchange during the period between 

open enrollment periods, and (4) 

individuals who were terminated from a 

QHP during the period between open 

enrollments periods. 

Response: This comment is outside 

the scope of the provisions included in 

the proposed rule; however, we note 

that § 155.335(c) provides that the 

Exchange must provide every qualified 

individual with an annual 

redetermination notice that, for coverage 

effective January 1, 2015, must be 

provided as a single, coordinated notice 

including notice of the annual open 

enrollment period. Therefore, outreach 

will extend to individuals beyond 

current enrollees. We also note that 

Exchanges have the flexibility to 

conduct outreach beyond the 

individuals cited in the rule. 

Comment: One commenter requested 

the addition of language clarifying that 

States may set an open enrollment 

period for the Exchange that is broader 

than the Federal open enrollment 

period. 

Response: This comment is beyond 

the scope of this rulemaking and we 

direct the commenter to the open 


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enrollment period rule at 45 CFR 

155.410. 

Summary of Regulatory Changes 

We are amending § 155.410(d) to state 

that, starting in 2014, the Exchange 

must provide written notice of annual 

open enrollment to each enrollee no 

earlier than the first day of the month 

before the open enrollment period 

begins and no later than the first day of 

the open enrollment period. 

c. Special Enrollment Periods 

(§ 155.420) 

In 45 CFR 155.420, we set forth 

provisions for special enrollment 

periods. In the proposed rule, we 

proposed amending § 155.420(b)(2)(ii), 

(d)(1), (d)(6)(iii) and (e), which pertain 

to the special enrollment period for loss 

of coverage; § 155.420(b)(2)(i) and (iii), 

which pertain to effective dates for 

certain special enrollment periods; and 

§ 155.420(c), which pertains to the 

length of the special enrollment periods. 

In paragraph (b)(2)(i), we proposed to 

provide flexibility for coverage effective 

dates in the case of birth, adoption, 

placement for adoption, or placement in 

foster care. We require the Exchange to 

ensure that coverage is effective for a 

qualified individual or enrollee on the 

date of birth, adoption, placement for 

adoption, or placement in foster care, 

unless Exchanges permit the qualified 

individual or enrollee to elect a later 

coverage effective date. If the Exchange 

permits the qualified individual or 

enrollee to elect a later coverage 

effective date, the Exchange must ensure 

coverage is effective on the date elected 

by the qualified individual or enrollee. 

In § 147.104(b)(2), we specified that a 

health insurance issuer in the 

individual market must provide, with 

respect to individuals enrolled in noncalendar year individual health 

insurance policies, a limited open 

enrollment period. Accordingly, in 

order to align Exchange regulations with 

those of the broader insurance market, 

in paragraph (d)(1), we proposed that 

the Exchange permit qualified 

individuals and their dependents to 

enroll in or change from one QHP to 

another if they are enrolled in a noncalendar year individual health 

insurance policy in 2014 described in 

§ 147.104(b)(2), even if issuers of such 

non-calendar year policies offer to 

renew the policy. Thus, consumers 

whose individual health insurance 

policies would renew outside the 

Exchange open enrollment period 

would have an opportunity to enroll in 

an Exchange, just as they would if their 

policies were offered for renewal during 

the Exchange open enrollment period. 

Without this addition, consumers with 

individual health insurance policies 

renewing outside the Exchange open 

enrollment period would be required to 

renew such policies, and wait to 

terminate the policies during the 

Exchange open enrollment period, 

should they wish to enroll through the 

Exchange, thus disadvantaging these 

consumers as compared to consumers 

enrolled in calendar year individual 

market policies. 

In 26 CFR 1.5000A–2(b)(1)(ii)(C), the 

Secretary of the Treasury specified that 

coverage of pregnancy-related services 

under section 1902(a)(10)(A)(i)(IV) and 

(a)(10)(A)(ii)(IX) of the Social Security 

Act (42 U.S.C. 1396a(a)(10)(A)(i)(IV), 

(a)(10)(A)(ii)(IX)) was not minimum 

essential coverage. In order to ensure 

that women losing eligibility for 

coverage of pregnancy-related services 

as described above are not left without 

an option to enroll in a QHP after the 

conclusion of Medicaid eligibility, in 

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

Exchange permit qualified individuals 

and their dependents to enroll in a new 

QHP if they lose eligibility for such 

pregnancy-related services. We solicited 

comments regarding whether there are 

other situations in which an individual 

loses coverage that is not defined as 

minimum essential coverage and should 

be provided with a special enrollment 

period. 

We proposed to add to paragraph (c) 

to specify that the Exchange must 

permit qualified individuals and their 

dependents to access the special 

enrollment periods described in 

paragraph (d)(1) for up to 60 days prior 

to the end of the qualified individual’s 

or his or her dependent’s existing 

coverage. This is consistent with 

existing regulations in paragraph 

(d)(6)(iii) that are specific to an 

individual who is enrolled in an eligible 

employer-sponsored plan who is 

determined newly eligible for advance 

payments of the premium tax credit 

based in part on a finding that such 

individual is ineligible for qualifying 

coverage in an eligible employersponsored plan. To improve the clarity 

and structure of this rule, we proposed 

to move the language in paragraph 

(d)(6)(iii) regarding the 60 days prior 

access to the special enrollment period 

to paragraph (c). The proposed change, 

to paragraph (d)(1) that would expand 

the ability to report a change and select 

a plan in advance to all individuals who 

are described in paragraph (d)(1) is 

designed to allow an individual who is 

losing eligibility for coverage outside 

the Exchange to transition to coverage 

offered through an Exchange without a 

gap in coverage, but with protections to 

ensure that advance payments of the 

premium tax credit are not provided in 

advance of the loss of eligibility for 

minimum essential coverage outside the 

Exchange. Accordingly, we note that 

individuals are not eligible for advance 

payments of the premium tax credit 

until they are no longer enrolled in 

minimum essential coverage outside the 

Exchange. While consumers will be able 

to report the loss of coverage and select 

a QHP offered on the Exchange in 

advance of the loss, their coverage 

effective date will be no earlier than the 

first day of the month following the loss 

of coverage (for example, if the loss of 

minimum essential coverage is on May 

31, 2014 and the consumer reports the 

loss on March 5, 2014, coverage will not 

be effective until June 1, 2014). Lastly, 

we proposed to make conforming 

changes to paragraphs (b)(2)(ii) and (e) 

to align with the changes in terminology 

proposed in paragraph (d)(1). 

In paragraphs (d)(4), (d)(5), (d)(9) and 

(d)(10), we provide special enrollment 

periods for errors of the Exchange or 

HHS, contract violations by the QHP, 

exceptional circumstances and 

misconduct by a non-Exchange entity. 

Existing paragraph (b)(2)(iii) specifies 

that for a plan selection made during 

one of the special enrollment periods 

under paragraphs (d)(4), (d)(5), and 

(d)(9), coverage must be effective on an 

appropriate date based on the 

circumstances of the special enrollment 

period, in accordance with guidelines 

issued by HHS, and provides two 

options for that effective date. We 

proposed to add special enrollment 

periods triggered under paragraph 

(d)(10) to those special enrollment 

periods for which these special coverage 

effective dates are available. In order to 

ensure that the Exchange has sufficient 

flexibility with which to address the 

types of scenarios that may trigger these 

special enrollment periods, we 

proposed to amend paragraph (b)(2)(iii) 

to remove the restriction to these two 

options. The resulting proposed 

regulatory text would allow the 

Exchange to set an effective date based 

on what is appropriate to the 

circumstances, in accordance with any 

guidelines issued by HHS. Similarly, in 

order to ensure that the Exchange sets 

the length of these same special 

enrollment periods to be appropriate to 

the circumstances of the specific 

enrollment period, we proposed to 

modify paragraph (c) to specify that the 

Exchange may define the length of these 

special enrollment periods as 

appropriate based on the circumstances 

of the special enrollment period, in 

accordance with any guidelines issued 


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by HHS. We believe that this flexibility 

is important to ensure that the special 

enrollment periods can be implemented 

as intended. 

Section 155.420(e) clarifies what 

qualifies as loss of coverage for purposes 

of the special enrollment period 

described in paragraph (d)(1). We 

proposed to modify this paragraph to 

clarify that voluntary termination does 

not qualify as loss of coverage for 

purposes of a special enrollment period, 

since the intent of this special 

enrollment period is to ensure that an 

individual who is losing coverage can 

transition to the Exchange without 

interruption, and not to allow an 

individual to switch from another form 

of coverage to the Exchange during the 

year when the other form of coverage 

remains available and he or she does not 

qualify for another special enrollment 

period described in this section. We 

solicited comments regarding this 

clarification. 

Comment: We received comments 

both in support of, and opposed to, the 

proposed language providing flexibility 

for Exchanges to allow either retroactive 

coverage back to the date of the birth, 

adoption, placement for adoption, or 

placement in foster care, or a coverage 

effective date later than the date of the 

birth, adoption, placement for adoption, 

or placement in foster care.. Some 

commenters supported providing 

prospective enrollment at the option of 

the Exchange, and the consumer. Other 

commenters opposed allowing 

retroactive coverage and preferred that 

Exchanges follow regular effective dates. 

One commenter suggested we clarify 

that coverage may be effective no later 

than the first of the month following the 

occurrence of the triggering event. 

Additionally, commenters sought 

clarification on the length of time before 

the coverage may become effective 

following the triggering event 

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

Affordable Care Act which references 

section 9801 of the Internal Revenue 

Code of 1986 requires retroactivity for 

birth, adoption, or placement for 

adoption, and we received commenter 

support for allowing retroactive or 

prospective enrollment at the option of 

the Exchange. We therefore are 

finalizing paragraph (b)(2)(i) with the 

clarification that coverage may be 

effective no later than the first of the 

month following the occurrence of the 

triggering event at the option of the 

consumer. Without this clarification 

there is a potential for adverse selection 

whereby a consumer could choose an 

effective date on which they knew 

services would be utilized. Accordingly, 

we are finalizing this provision with the 

clarification. State Exchanges have 

flexibility when and if they will provide 

the option. 

Comment: One commenter 

recommended allowing for mid-month 

coverage effective dates in the case of 

loss of minimum essential coverage, as 

described in paragraph (d)(1) of this 

section. 

Response: We do not intend to allow 

for mid-month coverage effective dates 

in the case of loss of minimum essential 

coverage at this time. The language in 

(c)(2)(i) provides consumers with 

adequate flexibility to avoid a gap in 

coverage. We appreciate the comment 

and may consider mid-month coverage 

effective dates in future rulemaking. 

Comment: Commenters encouraged 

clarification on effective dates provided 

in § 155.420(b)(2)(iii). Specifically, 

commenters recommended allowing for 

retroactive effective dates back to when 

the triggering event occurred and 

recommended retroactivity be at the 

option of the consumer. 

Response: The language proposed in 

this section does not prohibit Exchanges 

from providing retroactive coverage for 

special enrollment periods as described 

in paragraphs (d)(4), (d)(5), (d)(9), or 

(d)(10) of this section. Rather, the 

proposed language provides flexibility 

for Exchanges to determine the 

appropriate effective date based on the 

circumstances of the special enrollment 

period. Exchanges may provide 

retroactive coverage at the choice of the 

consumer provided it is deemed 

appropriate by the Exchange. 

Accordingly, we are finalized this 

paragraph as proposed. 

Comment: Commenters asked that 

HHS consistently define and apply 

effective dates and lengths of special 

enrollment periods to increase 

consistent application across enrollees. 

One commenter requested HHS develop 

a minimum length of 60 days for all 

special enrollment periods. 

Response: As provided in paragraph 

(b)(2)(iii) of this section, Exchanges 

must ensure that coverage is effective on 

an appropriate date based on the 

circumstances of the special enrollment 

period. Due to the unique circumstances 

of each special enrollment period, it 

could be harmful to the consumer to 

implement a general effective date 

policy. If a consumer does not agree 

with a special enrollment decision they 

may request an appeal of the effective 

date as provided in § 155.505(b)(1)(i). 

Therefore, we are finalizing this 

paragraph as proposed. 

Comment: One commenter 

recommended that special enrollment 

periods conclude at the end of the 

enrollment period, or when an 

individual selects a QHP, whichever is 

sooner. 

Response: The current regulation at 

§ 155.410(a)(1) provides that ‘‘The 

Exchange must provide an initial open 

enrollment period and annual open 

enrollment periods consistent with this 

section, during which qualified 

individuals may enroll in a QHP and 

enrollees may change QHPs.’’ This 

regulation does not provide for limiting 

consumers’ opportunity to enroll during 

the specified enrollment periods. 

Because the language recommended by 

the commentator would directly conflict 

with § 155.410(a)(1), we decline to 

accept this recommendation. 

Comment: One commenter requested 

the length of the special enrollment 

period provided in § 155.420(d)(6)(iii) 

be extended to allow the employee time 

to receive the notice of their COBRA 

rights. The commenter also requested 

clarification that a consumer could elect 

COBRA coverage prior to their coverage 

effective date. 

Response: We believe that providing 

the individual with the flexibility 

provided in (c)(2)(ii) of this section to 

select an Exchange QHP based on their 

anticipated loss of qualifying employer 

sponsored coverage up to 60 days in 

advance of the loss combined with the 

60 day special enrollment period 

provided in (c)(1) of this section will 

minimize any potential gap in coverage 

resulting from a loss of employment 

notwithstanding the required timeline 

associated with the employer notifying 

the group plan administrator and the 

group plan administration notifying the 

employee of their COBRA rights. On 

May 2, 2014 we published a bulletin 

that provided a special enrollment 

period for persons eligible or COBRA 

and COBRA beneficiaries. Additionally, 

on May 2, 2014 the Department of Labor 

released revised model notices for group 

health plans to provide to covered 

employees and their families which 

provides updated information on 

COBRA benefits and the Exchange. 

Finally, we note that an individual 

could elect to enroll in COBRA coverage 

and enroll in Exchange coverage when 

he or she loses employer-sponsored 

coverage, and disenroll from COBRA 

when Exchange coverage becomes 

effective. The consumer is not eligible 

for advance payments of the premium 

tax credit or CSRs while enrolled in 

COBRA. Accordingly, we are finalizing 

as proposed. 

Comment: One commenter requested 

that HHS extend the proposal to allow 

individuals prior access to a special 

enrollment period for individuals who 

are gaining access to a new QHP as a 

result of a move. 


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Response: While we did not solicit 

comments on this provision. In future 

rulemaking we may allow consumers 

eligible for special enrollment periods 

other than those provided in (c)(2)(i) of 

this section to report in advance. 

Comment: Commenters supported the 

proposed flexibility provided for 

consumers to select a plan in advance 

of the triggering events described in 

paragraphs (d)(1) and (d)(6)(iii) of this 

section, which pertain to the loss of 

coverage or qualifying coverage in an 

eligible employer-sponsored plan, 

respectively to prevent a gap in 

coverage. 

Response: Given commenter support, 

we are finalizing this provision with 

clarification. We note that a consumer 

who loses coverage as described in 

paragraphs (d)(1) or (d)(6)(iii) may 

report a loss of coverage 60 days before 

or 60 days after the loss. If plan 

selection occurs on or before the date of 

the loss, the effective date will be the 

first day of the month following plan 

selection. If plan selection is made after 

the date of the loss, Exchanges may 

choose to either follow regular effective 

dates under paragraph (b)(1) of this 

section or allow for an effective date of 

the first of the month following plan 

selection, as the previous rule allowed 

for both scenarios. The FFE allows for 

coverage to be effective the first day of 

the month following plan selection 

when plan selection is made after the 

loss. For purposes of (d)(1) and 

(d)(6)(iii), the date of the ‘‘loss of 

coverage’’ means the last day a 

consumer would have coverage. 

Exchanges will have the flexibility 

provided under (b)(3)(i) of this section 

to allow for earlier effective dates if all 

issuers in the service area agree. 

Comment: Multiple commenters 

supported the proposed additions to 

establish a special enrollment period for 

consumers who are enrolled in noncalendar year individual health 

insurance policies. Commenters 

requested HHS align the length of the 

special enrollment period in accordance 

with 45 CFR 147.104(b)(2). 

Additionally, commenters requested 

this special enrollment period be 

provided to consumers whose 

transitional policy, or group health plan, 

is renewing. 

Response: Section 147.104(b)(2) 

allows consumer to report the nonrenewal in the plan 30 days prior to the 

date the policy year ends while 

147.104(b)(4) provides 60 days for the 

special enrollment period. The 

proposed rule allows consumers to 

report their intent not to renew a noncalendar year policy (including a 

transitional policy) 60 days in advance 

of the date the policy year ends and 

select a plan although the coverage 

effective date will not be until the first 

day of the month following the 

termination date. Additionally, the 

proposed rule provides 60 days from 

that date to select a QHP through the 

Exchange. We are finalizing this 

provision in the proposed rule without 

modification. Since the intention of this 

provision is to align with the market 

rules, we are citing directly to 

§ 147.104(b)(2). In addition, on May 2, 

2014 we released guidance allowing 

consumers in this scenario to report a 

loss of coverage to the Exchange under 

the authority provided in paragraph 

(d)(9) of this section. 

Comment: Commenters were 

supportive of the newly established 

special enrollment period for women 

losing pregnancy-related Medicaid 

coverage. 

Response: We are finalizing the 

language as proposed. 

Comment: Commenters requested 

special enrollment periods be 

established for a variety of triggering 

events including; pregnancy, tobacco 

cessation after six months which may 

impact the consumer’s premium, same 

sex couples who enter into a legally 

recognized relationship other than 

marriage, individuals who make an 

individual responsibility payment for 

not having coverage in 2014, and 

persons who are victims of domestic 

violence. Additionally, commenters 

requested HHS regulate on certain 

special enrollment periods which exist 

in sub-regulatory guidance including; 

benefit display errors and loss of 

exemptions. 

Response: We did not solicit comment 

on this provision and the comments 

received are out of scope with this 

regulation. However, Exchanges retain 

the flexibility provided in paragraph 

(d)(4) and (d)(9) of this section to define 

errors of the Exchange and provide 

special enrollment periods for 

exceptional circumstances to provide 

such special enrollment periods as 

determined appropriate by the 

Exchange. For instance, the Federallyfacilitated Exchange recently provided 

guidance that survivors of domestic 

abuse are eligible for a limited duration 

special enrollment period as a result of 

guidance released by the Internal 

Revenue Service. 

Comment: Multiple commenters 

responded to our solicitation regarding 

situations other than loss of eligibility of 

pregnancy-related services in which an 

individual loses coverage that is not 

defined as minimum essential coverage 

and should be provided a special 

enrollment period. Suggestions 

included; AmeriCorps, Indian Health 

Service, student health coverage that is 

not designated minimum essential 

coverage, foreign health coverage that is 

not designated minimum essential 

coverage, excepted benefits offered by 

an employer, medically needy Medicaid 

coverage, and family planning Medicaid 

services. 

Response: To ensure individuals who 

lose certain types of limited Medicaid 

coverage which generally meets their 

primary and specialty health care needs, 

but which is not recognized as 

minimum essential coverage, have the 

option to enroll in a QHP at the 

conclusion of Medicaid eligibility, we 

are expanding the special enrollment 

period to include loss of medically 

needy as well as pregnancy-related 

coverage which is not recognized as 

minimum essential coverage. With 

respect to the loss of medically needy 

coverage, we are limiting beneficiaries 

to one special enrollment period per 

calendar year based on loss of medically 

needy coverage. This enables 

individuals with only medically needy 

coverage to enroll in a QHP outside of 

the open enrollment period, but avoids 

permitting individuals to switch QHPs 

multiple times a year each time they 

reach the end of their medically needy 

budget period within the same calendar 

year. We are not extending a special 

enrollment period to individuals who 

lose Medicaid coverage of family 

planning services, as such coverage is 

limited to a narrow set of benefits which 

does not meet the covered individuals’ 

primary or specialty health care needs, 

other than family planning services. 

HHS may provide a special enrollment 

period for other similar situations in 

future rulemaking or guidance. In 

addition, on May 2, 2014 we published 

a bulletin that provided a special 

enrollment period for individuals who 

are beginning service in the AmeriCorps 

State and National, VISTA, or NCCC 

programs and for individuals who are 

concluding their service in the 

AmeriCorps State and National, VISTA, 

or NCCC programs and are losing access 

to short-term limited duration coverage 

or self-funded coverage. 

Comment: We received comments 

requesting we clarify the criteria for 

qualifying events described in 

paragraphs (d)(4), (d)(5), (d)(9), and 

(d)(10). Commenters also requested 

clarification on the process for notifying 

consumers who are impacted by an 

exchange error. 

Response: We believe the ability for 

Exchanges to respond appropriately to 

the circumstances surrounding an 

individual’s special enrollment period 

is necessary. CMS has previously issued 


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guidance describing guidelines on the 

criteria for special enrollment periods 

which fall under the authority of 

paragraphs (d)(4), (d)(9), and (d)(10) in 

the FFE. 

Comment: Commenters recommended 

amending paragraph (d)(6)(i) to include 

individuals who are not current 

Exchange enrollees. Such revision 

would allow the following groups of 

consumers to utilize the special 

enrollment period; people who live in 

States that did not adopt Medicaid 

expansion, people who divorce during 

the year, victims of domestic violence 

that occurs after May 31, 2014, people 

who experience the death of a spouse, 

and people who lose a job but did not 

enroll in employer-sponsored coverage 

because of high costs. 

Response: We note that many 

individuals in these circumstances may 

have other triggering events that would 

qualify them for an existing special 

enrollment period. However, we remain 

concerned that expanding paragraph 

(d)(6)(iii) could result in adverse 

selection and destabilization of the 

individual insurance market. We have 

provided sub-regulatory guidance on 

special enrollment periods under 

paragraph (d)(4) and (d)(9) of this 

section including for COBRA 

beneficiaries, survivors of domestic 

abuse, and people who divorce during 

the year and may continue to do so in 

the future. Accordingly, we are 

finalizing as proposed without 

additional modification. 

Comment: We received comments 

both for and against the proposed 

addition to paragraph (e) of this section 

stating that voluntary termination does 

not qualify an individual for a loss of 

coverage special enrollment period. 

Response: The proposed language 

clarifies existing regulations that 

termination includes voluntary 

termination by an enrollee. The 

intention of paragraph (e) of this section 

is to stabilize the market by preventing 

individuals from voluntarily 

terminating their coverage and then 

utilizing the loss of minimum essential 

coverage special enrollment period 

provided in paragraph (d)(1) of this 

section. Accordingly, we are finalizing 

as proposed. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in section § 155.420 of the 

proposed rule with the following 

modifications. In paragraph (b)(2)(i), we 

provide that coverage must be effective 

on the date of the birth, adoption or 

placement for adoption, placement for 

foster care, or the Exchange may allow 

the consumer to select a coverage 

effective date of the first of the month 

following the date of birth, adoption, 

placement for foster care, or placement 

for adoption. In paragraph (b)(2)(ii), we 

clarify that coverage is effective the first 

day of the month following plan 

selection. In paragraph (b)(2)(iii) we 

provide flexibility for Exchanges to 

ensure coverage is effective based on the 

specific circumstances of the special 

enrollment period. We also have added 

a new paragraph (b)(2)(iv) that clarifies 

a consumer’s ability to select a plan 60 

days before and after a loss of coverage 

described in subparagraph (d)(1) and 

(d)(6)(iii). Finally, in paragraph (d)(1), 

we define the date of the loss of 

coverage for each triggering event 

described under paragraph and establish 

a special enrollment period for 

individuals losing medically needy 

coverage. 

d. Termination of Coverage (§ 155.430) 

We proposed to add paragraph (e) to 

§ 155.430 to establish the difference 

between a termination and a 

cancellation and establish the 

significance of a reinstatement action in 

the context of QHP coverage offered 

through an Exchange. Specifically, we 

proposed to specify that a cancellation 

is a specific type of termination action 

taken that ends a qualified individual’s 

coverage on or before the effective date, 

thus rendering coverage as never 

effective. In contrast, a termination is an 

action taken after the effective date of 

coverage that ends an enrollee’s 

coverage effective on a date after the 

coverage effective date. In a 

cancellation, the effect of the QHP’s 

action would be that a qualified 

individual does not receive coverage 

from the QHP, whereas in a termination 

the QHP covers the enrollee for some 

period of time and would be liable for 

covered services that the enrollee 

received during the time period between 

the coverage effective date and the 

termination date, under the terms of the 

coverage. A reinstatement action is a 

correction of an erroneous termination 

or cancellation action resulting in 

restoration of an enrollment with no 

break in coverage. 

In addition to establishing the 

difference between cancellations and 

terminations, we also proposed that an 

Exchange may establish operational 

standards for QHP issuers for 

implementing terminations, 

cancellations, and reinstatements. 

Enrollment systems for both SBEs and 

the FFE continue to evolve, and we 

believe that the Exchange’s ability to 

issue operational instructions will 

enable both the Exchange and the issuer 

community to respond more effectively 

to changing systems and changing 

processes. We believe the effectiveness 

of this approach has been demonstrated 

in other programs administered by CMS, 

specifically the Medicare Advantage 

and Medicare Part D programs. 

Further, we proposed to clarify in 

paragraph (d)(6) that the termination 

effective date for a QHP would be the 

day before the effective date of coverage 

in a different QHP even in cases of 

retroactive enrollments. This could 

occur when a consumer is granted a 

special enrollment period to change 

QHPs with a retroactive coverage 

effective date under 155.420(b)(2)(iii). 

For coverage that is terminated 

retroactively, CMS would adjust any 

applicable payments to the original QHP 

issuer based on the retroactive 

termination date, in order to recoup any 

advance payments of the premium tax 

credit and cost-sharing reductions made 

to the former issuer for the enrollee. The 

Exchange would be required to ensure 

that the former issuer refunds or credits 

any premium paid to the issuer by the 

enrollee and reverse claim payments for 

services rendered during the retroactive 

coverage period. We sought comment on 

whether to add a specific requirement to 

this effect on issuers in Part 156. 

Conversely, in the case of a retroactive 

coverage date, CMS would provide the 

gaining issuer any applicable advance 

payments of the premium tax credit and 

CSRs based on the retroactive coverage 

effective date. CSR reconciliation would 

occur for all CSRs provided beginning 

with the retroactive coverage date. The 

gaining issuer would collect the 

enrollee’s portion of the premium for all 

months of coverage and would be 

required to adjudicate the enrollee’s 

claims incurred during the retroactive 

period, and provide any applicable 

CSRs. 

Comment: We received several 

comments supporting the provision 

ensuring that consumers receive the 

benefit of the advance payments of the 

premium tax credits and CSRs to which 

they are entitled and refunded any 

premiums from the issuer from which 

the consumer terminated coverage. 

However, some commenters opposed 

the requirement for issuers to refund 

out-of-pocket payments since those 

payments are made by consumers 

directly to providers. Another 

commenter asked for clarification of the 

impact of a retroactive termination and 

effective date on deductibles and 

accumulators. 

Response: The Exchange must ensure 

that appropriate actions are taken 

following a retroactive termination. 

Under the policy finalized in this rule, 

when a retroactive termination and 


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enrollment results in the enrollee 

changing issuers, the Exchange must 

ensure that the former issuer refunds or 

credits any premium paid to the issuer 

by or for the enrollee for coverage after 

the retroactive date, reverses any claims 

for services provided after the 

retroactive termination date, and 

recoups payments made to providers for 

services provided to the enrollee after 

the retroactive termination date. The 

former issuer must also ensure that 

providers refund to the enrollee any cost 

sharing paid by or for the enrollee (other 

than CSRs to be reimbursed by the 

Federal government). CMS will also 

recoup any advance payments of the 

premium tax credit and CSRs provided 

to the issuer for the enrollee back to the 

retroactive termination date 

The gaining issuer in turn, should 

collect the enrollee’s portion of the 

premium and is responsible for any 

covered services incurred, in each case 

for the period following the retroactive 

effective date of coverage. CMS will also 

provide the gaining issuer any 

applicable advance payments of the 

premium tax credit and CSRs for the 

enrollee back to the retroactive effective 

date of coverage. (We intend to provide 

additional guidance regarding how 

issuers should handle a claim that spans 

a period of time in which the enrollee 

has coverage from two separate issuers 

in such circumstances.) Providers are 

responsible for billing the gaining issuer 

for any covered services incurred back 

the retroactive enrollment date, and the 

issuer must ensure that the provider 

collects only the cost sharing for the 

covered service to reflect the enrollee’s 

cost-sharing obligation for the service 

under the gaining issuer. We 

acknowledge that such an adjustment 

may result in the enrollee owing the 

provider additional funds, depending 

on the cost sharing and benefit structure 

of the new plan. We note that consistent 

with 45 CFR 156.410(c)(1) and our CMS 

Bulletin to Exchanges on the 

Availability of Retroactive Advance 

Payments of the PTC and CSRs in 2014 

Due to Exceptional Circumstances, 

dated February 27, 2014, any refund or 

credit for any excess cost sharing or 

premium paid for or on behalf of the 

individual must be provided (or begin to 

be provided in the case of a credit) with 

45 calendar days of the date of 

discovery of the excess cost sharing or 

premium paid. 

If an applicant switches QHP issuers, 

we do not require out-of-pocket 

amounts paid under the prior plan to 

carry over to the new QHP issuer, but 

defer to issuers and State laws with 

regard to how out-of-pocket payments 

under the former issuer’s plan should be 

accounted for in the deductibles and 

limitations on cost sharing under the 

new issuer’s plan. 

Comment: We received a comment 

recommending that if a consumer 

enrolls in a different QHP with the same 

issuer, the issuer should not be required 

to reverse claim payments, and should 

not be required to refund out-of-pocket 

payments, but could instead apply any 

cost-sharing paid to the new QHP’s 

annual limitation on cost sharing. The 

same commenter also sought 

clarification on how out-of-pocket 

payments for prescription drugs, most of 

which are adjudicated at the point of 

sale, will be handled in the case of a 

change in QHP issuers with a retroactive 

effective date. 

Response: We are finalizing the 

proposed provision as proposed, noting 

that the processes set forth in the final 

rule are designed to ensure that 

consumers are provided the CSRs and 

advance payments of the premium tax 

credit for which they determined 

eligible, and are refunded any excess 

premiums paid or out-of-pocket 

payments made by or for the enrollee for 

covered benefits and services incurred. 

Applying enrollee cost sharing or other 

out-of-pocket spending already paid to 

the new QHP’s accumulators, such as 

deductibles, or limitations on cost 

sharing or out-of-pocket spending, will 

not always be equivalent to providing a 

refund. For example, for an enrollee that 

does not exceed the deductible for a 

benefit year, simply accumulating 

excess cost sharing already paid may 

mean the enrollee will have paid more 

in cost sharing than required under the 

new plan. However, we recognize that, 

when the enrollee switch plans within 

the same issuer (or between variations 

of the same plan), reversing the claims 

and providing refunds may not be the 

most efficient way of adjusting the 

enrollee’s portion of the premium and 

any differences in cost sharing. 

Therefore, in such circumstances, the 

Exchange and the issuer will be 

considered to be in compliance with the 

policy set forth in this rule as long the 

enrollee’s premium payments and cost 

sharing are adjusted to reflect the 

enrollee’s obligations under the new 

plan or variation and providers are 

made whole. Thus, the issuer may elect 

to make the enrollee whole for cost 

sharing directly through a refund or 

credit without requiring the provider to 

provide any refund directly to the 

enrollee, and may net provider 

payments to reflect the provider’s 

obligations and payments due. 

Furthermore, consistent with 45 CFR 

156.425(b), in the case of a change in 

assignment to a different plan variation 

(or standard plan without CSRs) of the 

same QHP in the course of a benefit year 

under this section, the QHP issuer must 

ensure that any cost sharing paid by the 

applicable individual under the 

previous plan variations (or standard 

plan without CSRs) for that benefit year 

is taken into account in the new plan 

variation. 

Under the policy and processes set 

forth in this final rule, prescription 

claims should be treated in the same 

manner as other claims. 

Comment: Many commenters 

supported the new definitions for 

terminations and cancellations to codify 

the existing practices included in the 

enrollment standards as well as the 

inclusion of a definition for 

reinstatement. One commenter did not 

recommend guidance to issuers to 

follow operational instructions issued 

by the Exchange given the limited 

nature of retroactive effective dates that 

result in a termination. However, 

another commenter recommended that 

that HHS require, not solely permit, 

Exchanges to establish operational 

procedures for issuers in these 

circumstances and place a requirement 

on issuers to follow the established 

procedures. In doing so, all issuers 

participating in the Exchange would be 

required to comply with similar 

procedures on terminations, 

cancellations, and reinstatements to 

ensure a consistent process. 

Additionally, the commenter stated that 

simplifying the procedures among QHP 

issuers would be in the consumers’ 

interest and avoid consumer confusion, 

especially in situations where members 

of the household may be in different 

QHPs. 

Response: We agree that if an 

Exchange establishes operational 

instructions for implementing 

terminations, cancellations, and 

reinstatements, then issuers should be 

required to follow such procedures. 

However, we still believe it is up to the 

Exchange to determine whether or not 

to establish procedures. Therefore, we 

are finalizing § 155.430(e) as proposed, 

while adding a corresponding paragraph 

(j) to § 156.270, to specify that QHP 

issuers must follow the transaction rules 

established by the Exchange in 

accordance with § 155.430(e). 

Comment: We received a comment 

requesting that CMS reconsider the 

implementation of the 90-day grace 

period and require that health plans pay 

any claims during the entire grace 

period. 

Response: We note that the comment 

is outside the scope of this rulemaking. 

Requirements for issues regarding grace 


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periods are addressed at 45 CFR 

§ 156.270. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.430 of the proposed 

rule without modification. However, we 

are adding § 156.270(j) to specify that 

QHP issuers must follow the transaction 

rules established by the Exchange in 

accordance with § 155.430(e) based on 

comments we solicited and ensuring a 

consistency of operational procedures 

among issuers in the Exchange. 

5. Subpart F—Appeals of Eligibility 

Determinations for Exchange 

Participation and Insurance 

Affordability Programs 

a. General Eligibility Appeals 

Requirements (§ 155.505) 

In § 155.505, we proposed a technical 

correction to paragraph (b)(4) by 

removing ‘‘; and’’ at the end of the 

paragraph and adding a period in its 

place. 

Summary of Regulatory Changes 

We receive no comments on this 

proposal and are finalizing the 

provision as proposed. 

b. Dismissals (§ 155.530) 

In § 155.530, we proposed to amend 

paragraph (a)(1) to provide an additional 

method for appellants to withdraw 

appeal requests. The existing provision 

requires an appellant who wishes to 

withdraw his or her appeal request to do 

so in writing (hard copy or electronic). 

We proposed to include the alternative 

for an appellant to withdraw his or her 

appeal by telephone, if the appeals 

entity is capable of accepting telephonic 

withdrawals. In paragraphs (a)(1)(i)(A) 

and (B), we proposed the requirements 

for providing a telephonic withdrawal 

process. Specifically, we proposed that 

the appeals entity must record in full 

the appellant’s statement and telephonic 

signature made under penalty of 

perjury, and provide a written (in hard 

copy or electronically) confirmation to 

the appellant documenting the 

telephonic interaction. We sought 

comment on this proposed amendment, 

including the proposed requirements for 

accepting telephonic withdrawals and 

the potential misalignment with 

Medicaid fair hearing rules caused by 

this proposed amendment. 

Comment: Nearly all the comments 

we received in response to the proposal 

to provide the option for telephonic 

withdrawals were supportive. This 

included many positive comments from 

State Exchanges. Commenters noted the 

additional method to withdraw appeals 

would ease the burden on appeals 

entities by protecting resources while 

providing an efficient means for 

consumers to end their appeal at their 

discretion. We also received support 

from consumer advocate groups for the 

proposed provision requiring written 

documentation of the telephonic 

interaction as well as the proposed 

requirement that the appellant’s 

telephonic statement be recorded in full 

and include a telephonic signature 

made under penalty of perjury. 

However, we also received a comment 

requesting that we not finalize the 

provisions requiring the appellant’s 

telephonic statement be recorded in full 

and a written confirmation because they 

are burdensome and duplicative. The 

commenter suggested that simply 

providing written documentation of a 

telephonic withdrawal with an option 

for the appellant to request to vacate the 

withdrawal within a specific period of 

time is sufficient. 

Response: We agree with commenters 

that incorporating this option for 

telephonic withdrawals will assist 

appeals entities in maintaining an 

efficient process by providing a 

convenient method for appellants to end 

an appeal at their option, thereby, 

protecting resources for other appealsrelated activities. We understand the 

concern that the requirements for 

providing a telephonic withdrawal 

process are significant and call for both 

a full recording of the appellant’s 

telephonic withdrawal and a 

confirmation of the telephonic 

withdrawal sent in writing. However, 

the appellant’s right to a hearing is the 

central concern of the appeals process 

and any mechanism for relinquishing 

the right to the hearing must include 

sufficient safeguards. The requirement 

for both a recording and a written 

confirmation of the telephonic 

withdrawal are meant to ensure that the 

appellant’s right to a hearing is 

safeguarded. Further, we note that the 

preamble to the proposed rule 

acknowledged that the requirement to 

provide confirmation of a telephonic 

withdrawal can be met through issuance 

of the dismissal notice, which is 

required to contain instructions on how 

to request to vacate the dismissal in 

accordance with § 155.530(b)(3). 

Therefore, we finalize the provision for 

telephonic withdrawal as proposed. 

Comment: A few commenters cited 

the potential vulnerabilities of 

appellants under a telephonic 

withdrawal process. For instance, 

appellants may be vulnerable to 

coaching by appeals entity staff to 

withdraw their appeal over the 

telephone. Similarly, an appellant may 

feel pressured to withdraw an appeal 

prematurely after an informal resolution 

if the appeals entity initiates such a 

discussion with the appellant by 

telephone. However, the commenter 

also acknowledged that if an appellant 

initiates the call to withdraw the appeal, 

no such concern exists. One commenter 

recommended that HHS create scripted 

information about the significance of 

withdrawing an appeal that includes an 

attestation of understanding by the 

consumer to be used by Exchange 

appeals entities to help protect 

appellants. 

Response: While there is potential for 

undue influence on an appellant to 

close an appeal in some cases, we also 

realize that appeals entities aim to run 

an efficient process. As noted above, we 

believe the process we have proposed 

fairly balances these concerns and 

provides sufficient protections for 

appellants, including the requirement 

that telephonic withdrawals be recorded 

in full, made under penalty of perjury, 

and confirmed in writing. In addition, 

withdrawals result in dismissal notices 

under § 155.530(b), which provide for 

the opportunity to request to vacate a 

dismissal for good cause. With these 

protections in place, we are confident 

that appellant’s interests will be 

safeguarded. 

Comment: We received one comment 

on the alignment of our proposed policy 

with Medicaid fair hearing rules. The 

commenter opposed the potential 

misalignment caused by the proposed 

provision and noted that only 

permitting a written withdrawal, as in 

the current rule and in Medicaid fair 

hearing rules, is a strong consumer 

protection measure. 

Response: Although the option to 

implement telephonic withdrawals will 

put the Exchange rules out of alignment 

with the Medicaid fair hearing rules, it 

is our intent to provide a modernized 

appeals process that can take advantage 

of technology and still safeguard 

appellant rights, as noted above. CMS is 

considering its policy regarding written 

and telephonic withdrawals in 

Medicaid and may issue future guidance 

on this issue. However, we note that as 

a result of this current incongruence in 

rules, appeals entities must ensure that 

appellants are afforded the appropriate 

rights. Individuals appealing denials of 

Medicaid eligibility may not withdraw 

their appeal via telephone, even if the 

appeals entity meets the requirements 

for providing such a process under the 

Exchange rule. Current appellants of 

Medicaid eligibility determinations may 

only withdraw an appeal in writing in 

accordance with 42 CFR 431.223(a). 

Comment: Some commenters 

suggested that the written confirmation 


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of the telephonic withdrawal should 

include a mechanism for challenging 

the validity of the telephonic signature. 

Response: As noted in the preamble to 

the proposed rule, the requirement to 

provide confirmation of a telephonic 

withdrawal can be met through issuance 

of the dismissal notice, which is 

required to contain instructions on how 

to request to vacate the dismissal in 

accordance with § 155.530(b)(3). 

However, even if the appeals entity 

decides to provide confirmation of the 

telephonic withdrawal in a notice 

separate from the dismissal notice, a 

dismissal notice, including instructions 

on requesting to vacate a dismissal, is 

required in the case of a withdrawal 

nonetheless. Therefore, all appellants 

who provide a telephonic withdrawal 

will receive instructions on requesting 

to vacate the dismissal, which would 

have the effect of reopening the appeal. 

Comment: We received one comment 

suggesting that telephonic withdrawals 

only be accepted through the Exchange 

toll-free number and that assisters, 

Navigators, and certified application 

counselors not be authorized to accept 

telephonic withdrawals. 

Response: If an appeals entity wishes 

to provide telephonic withdrawals in 

accordance with the final requirements, 

the appeals entity must maintain a 

phone line, capable of recording calls 

from appellants for the purposes of 

withdrawing an appeal. Whether that 

phone line is the same as the Exchange’s 

customer service number or not is at the 

discretion of the appeals entity. We also 

note that, although appellants may seek 

assistance from assisters, Navigators, 

and certified application counselors, 

these consumer support entities are not 

authorized to operate any portion of the 

Exchange appeals process, including 

accepting telephonic withdrawals. 

Summary of Regulatory Changes 

We are finalizing the provision as 

proposed and note, as in the proposed 

rule, that this change also impacts 

employer appeal withdrawals by crossreference at § 155.555(f)(1). 

c. Employer Appeals Process (§ 155.555) 

We proposed to amend § 155.555 by 

redesignating paragraphs (d)(1) through 

(d)(4) to more clearly delineate between 

the requirements associated with valid 

appeal requests versus invalid appeal 

requests. We note that under this 

proposed redesignation, paragraph 

(d)(4) would become new paragraph 

(d)(2), stating that upon receipt of an 

invalid appeal request, the appeals 

entity must promptly and without 

undue delay send written notice to the 

employer that the appeal request is not 

valid because it fails to meet the 

requirements of this section. New 

paragraph (d)(2) would also provide 

introductory language for the 

requirements provided in paragraphs 

(d)(2)(i) through (iv). The result of these 

proposed revisions would be to separate 

the requirements for valid appeal 

requests in redesignated paragraph 

(d)(1) and the requirements for invalid 

appeal requests in new paragraph (d)(2). 

Summary of Regulatory Changes 

We received no comments on the 

proposed redesignations and are 

finalizing the redesignations as 

proposed. 

6. Subpart G—Exchange Functions in 

the Individual Market: Eligibility 

Determinations for Exemptions 

a. Required Contribution Percentage 

Under section 5000A of the Code, an 

individual must maintain minimum 

essential coverage for each month, 

qualify for an exemption, or make a 

shared responsibility payment. Sections 

5000A(d) and (e) provide for nine 

categories of exemptions, and authorize 

the Secretary to determine individuals’ 

eligibility for some of the exemptions, 

including the hardship exemption. 

Sections 1.5000A–3(a) through (h) of 26 

CFR enumerate the circumstances in 

which an individual may be exempt 

from the shared responsibility payment. 

These grounds for exemption include: 

(1) under 26 CFR 1.5000A–3(e), the 

individual lacks affordable coverage 

because the individual’s annualized 

required contribution for minimum 

essential coverage for the month 

exceeds the required contribution 

percentage of the individual’s 

household income; (2) under 26 CFR 

1.5000A–3(h), the individual has in 

effect a hardship exemption certification 

issued by an Exchange because, based 

on the individual’s projected household 

income, the individual is not eligible for 

affordable minimum essential coverage; 

and (3) as described in 45 CFR 

155.605(g)(5), the individual and one or 

more employed members of his or her 

family have been determined eligible for 

affordable self-only employer-sponsored 

coverage through their respective 

employers, 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. Determining 

eligibility for these exemptions requires 

comparison between the individual’s 

share of the costs for obtaining 

minimum essential coverage and a 

certain percentage of the individual’s 

household income, actual or projected, 

for the taxable year (the required 

contribution percentage). Under section 

5000A(e)(1)(A) of the Code, the required 

contribution percentage is 8 percent. 

Section 5000A(e)(1)(D) of the Code and 

26 CFR 1.5000A–3(e)(2)(ii) further 

provide that, for plan years beginning in 

any calendar year after 2014, the 

percentage will be the percentage 

determined by the Secretary to reflect 

the excess of the rate of premium 

growth between the preceding calendar 

year and 2013 over the rate of income 

growth for that period. 

As discussed below, in this final rule, 

we establish a methodology for 

determining the excess of the rate of 

premium growth over the rate of income 

growth for a period, and establish the 

required contribution percentage for the 

2015 calendar year. For calendar years 

after 2015, the required contribution 

percentage will be published in the 

annual HHS notice of benefit and 

payment parameters. We also define the 

required contribution percentage under 

§ 155.600(a) to mean the product of 8 

percent and the rate of premium growth 

over the rate of income growth for the 

calendar year, rounded to the nearest 

one-hundredth of one percent. Finally, 

we modify § 155.605(g)(5), which 

currently sets the required contribution 

percentage at 8 percent, so that the 

required contribution percentage for 

purpose of section 5000A in future years 

reflects the required contribution 

percentage for the applicable calendar 

year. 

Methodology for Determining the Excess 

of the Rate of Premium Growth Over the 

Rate of Income Growth 

In the proposed rule, we outlined and 

requested comments on methodologies 

for determining the excess of the rate of 

premium growth over the rate of income 

growth. We discussed an approach 

under which the rate of premium 

growth over the rate of income growth 

for a particular calendar year would be 

calculated as the quotient of (x) one plus 

the rate of premium growth between the 

preceding calendar year and 2013, 

divided by (y) one plus the rate of 

income growth between the preceding 

calendar year and 2013. We sought 

comment on whether we should 

constrain this ratio to be greater than or 

equal to one, as well as the impact of 

these constraints on the excess of the 

rate of premium growth over the rate of 

income growth. We sought comment on 

this and other approaches for 

determining the excess of the rate of 

premium growth over the rate of income 

growth, and in particular, whether the 

excess of the rate of premium growth 

over income growth should be 


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29Patient Protection and Affordable Care Act; 

HHS Notice of Benefit and Payment Parameters for 

2015, 79 FR 13744 (March 11, 2014). 

30See Table 1 in http://www.cms.gov/ResearchStatistics-Data-and-Systems/Statistics-Trends-andReports/NationalHealthExpendData/Downloads/

Proj2012.pdf. 

calculated based on the difference 

between the growth rates, the ratio of 

the growth rates, or through other 

methods, and whether the result should 

be subject to other adjustments. 

In response to comments, we are 

finalizing the methodology outlined in 

the proposed rule, such that the rate of 

premium growth over the rate of income 

growth for a particular calendar year 

will be the quotient of (x) one plus the 

rate of premium growth between the 

preceding calendar year and 2013, 

carried out to ten significant digits, 

divided by (y) one plus the rate of 

income growth between the preceding 

calendar year and 2013, carried out to 

ten significant digits. The quotient will 

be carried out to ten significant digits, 

and multiplied by the required 

contribution percentage for 2014 (8 

percent). The result will then be 

rounded to the nearest hundredth of a 

percent, to yield the required 

contribution percentage for the calendar 

year. We do not constrain this 

percentage to be greater than or equal to 

one, or subject it to other adjustments or 

constraints. 

Comment: Several commenters 

supported our proposal that we perform 

this calculation using a ratio rather than 

a difference. One commenter suggested 

the formula be the quotient of (x) one 

plus the rate of premium growth 

between the preceding calendar year 

and 2013, over (y) one plus the 

difference between the rate of premium 

growth between the preceding calendar 

year and 2013, and the rate of income 

growth between the preceding calendar 

year and 2013, stating that this would 

minimize volatility of the formula. 

Some commenters supported permitting 

the ratio to be less than one, while 

another commenter suggested that the 

ratio should be constrained to be greater 

than or equal to one, to avoid the 

required contribution increasing when 

both premium growth and income 

growth are negative. One commenter 

suggested a ceiling on the index factor 

of 1.1 to ensure that premium 

contributions do not increase by more 

than 1 percent of consumers’ incomes. 

Response: We believe that the 

methodology described above most 

accurately measures the relationship 

between changes in premiums and 

income. While we recognize some of the 

policy concerns raised by commenters, 

we believe that any constraints on the 

ratio could result in the required 

contribution percentage not fully 

reflecting the growth rates of premiums 

and income, which we believe is the 

general intent of the statute. 

Comment: Some commenters 

recommended delaying any adjustments 

to the required contribution percentage. 

One commenter stated that adjustments 

to the required contribution percentage 

and to the applicable percentages used 

to calculate the premium tax credits 

under section 36B of the Code should be 

delayed until at least 2016, to permit 

fuller assessments of the consequences 

of these adjustments. Another 

commenter suggested delaying any 

increase in premium contributions for 

the foreseeable future, noting significant 

technical and administrative costs, such 

as revising online calculators and 

coding Exchange functions. 

Response: While we recognize the 

commenters’ concerns, we believe the 

required contribution percentage should 

track premium and income changes 

from year to year, and delaying this 

adjustment would conflict with the 

general intent of the statute. We also 

anticipate that the operational changes 

associated with these adjustments will 

be manageable. 

Premium Growth: In the proposed 

rule, we sought comment on whether 

we should use the premium adjustment 

percentage as a measure of premium 

growth for the purpose of calculating 

the adjustment to the required 

contribution percentage, and whether 

that adjustment should be constrained 

through the use of ceilings or floors. We 

also sought comment on whether other 

data sources or methods should be used 

to measure premium growth. 

Taking into consideration the 

comments received, we are finalizing 

our proposal to measure the rate of 

premium growth for a calendar year by 

using the premium adjustment 

percentage for the year, without any 

adjustments or constraints. We provided 

in the 2015 Payment Notice 29 that the 

premium adjustment percentage, 

described at 45 CFR 156.130(e), will be 

published each year in the HHS notice 

of benefit and payment parameters, and 

will be used to adjust certain costsharing parameters established by the 

Affordable Care Act. As established in 

the 2015 Payment Notice, the premium 

adjustment percentage for 2015 is 

4.213431463 percent. 

Comment: Several commenters 

supported setting the rate of premium 

growth equal to the premium 

adjustment percentage. One commenter 

stated we should not consider 

constraining the annual rate of premium 

growth to equal or exceed zero, while 

another commenter argued that 

premium growth should constrained to 

be a positive number. Another 

commenter suggested that HHS use 

actual, rather than projected, growth in 

private insurance premiums, and 

suggested that HHS delay 

implementation of any adjustment until 

the 2016 plan year, when a number of 

significant market changes would have 

concluded and when actual premium 

growth between 2014 and 2015 will be 

known. One commenter was concerned 

that the trend in employer plan 

premiums may understate premium 

growth in the individual market. 

Response: The premium adjustment 

percentage is calculated based on 

projections of average per enrollee 

employer-sponsored insurance 

premiums from the National Health 

Expenditure Accounts (NHEA), which 

are calculated by the CMS Office of the 

Actuary. As discussed in the 2015 

Payment Notice, these projected 

premiums reflect premiums from nearly 

the entire private health insurance 

market. However, because these 

projected premiums will exclude 

premiums from the individual market, 

which are likely to be subject to a 

number of short-term effects related to 

implementation of market reforms, we 

believe these projections provide an 

appropriate measure of average per 

capita premiums for health insurance 

coverage for the initial years. However, 

as noted in the proposed rule, after the 

initial year(s) of implementation of 

market reforms, we may propose to 

change the methodology for calculating 

the premium adjustment percentage. 

Income Growth: In the proposed rule, 

we discussed measuring the rate of 

income growth for a calendar year as the 

percentage by which the per capita GDP 

for the preceding calendar year exceeds 

the per capita GDP for 2013, carried out 

to ten significant digits. We stated that 

we were considering using the 

projections of per capita GDP used for 

the NHEA.30 We sought comment on 

alternative sources of income data that 

we should consider, and whether 

adjustments should be made to our data 

source, or to the methodology outlined 

in the proposed rule. We also sought 

comment on whether we should seek to 

measure income growth per person 

under the age of 65 or per worker. 

In response to comments, in this final 

rule, we are establishing as the measure 

of income growth for a calendar year the 

percentage by which the per capita GDP 

for the preceding calendar year exceeds 

the per capita GDP for 2013, carried out 

to ten significant digits, using the 


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projections of per capita GDP used for 

the NHEA. Under this methodology, the 

rate of income growth for 2015 is 

3.608458790 percent. This measure is 

based on data sources that are consistent 

with the data sources used for 

determining premium projections, 

resulting in a consistent estimate of the 

ratio of premiums to income. In future 

years we may consider alternative 

income measures. 

Comment: Commenters supported 

using per capita GDP for the purpose of 

calculating income growth, stating that 

this is a widely used measure of income. 

One commenter noted that it would not 

be technically sound to measure growth 

in GDP per person under age 65 or per 

worker, because GDP estimates are not 

available for those subsets of the 

population. Another commenter 

suggested that we consider whether per 

capita GDP sufficiently accounts for 

inflation and housing costs, and 

whether it overstates the income growth 

rate for lower income populations. 

Another commenter urged HHS not to 

use wage growth. 

Response: Following consideration of 

comments received, we believe that 

growth in per capita GDP provides the 

most comprehensive and accurate 

measure of income growth available at 

this time. This measure is also 

consistent with the data that the CMS 

Office of the Actuary uses to project 

premiums for the NHEA. We may 

consider revising this measure in the 

future to account for future 

circumstances or data availability, 

including if alternative income 

measures or subsets of GDP become 

available. 

Comment: One commenter stated that 

in order to avoid an increase in the 

required contribution percentage during 

a recession, the annual change in per 

capita GDP should be constrained to 

equal or exceed zero, and that 

benchmark revisions should not be 

allowed to affect the calculation of the 

rate of income growth. Another 

commenter suggested that the formula 

should account for negative income 

changes, such that in a year where 

income decreases, there should be a 

decrease in the affordability threshold. 

Another commenter opposed negative 

income growth, because it would 

increase the required contribution 

percentage during times of economic 

decline. 

Response: We acknowledge that in a 

recession a negative change in per 

capita GDP could result in an increase 

in the ratio of premiums to income. 

However, we note that such occurrences 

have been rare in recent decades, and 

constraining income growth to be 

positive would risk the required 

contribution percentage not fully 

reflecting the growth rates of premiums 

and income, which we believe is the 

general intent of the statute. 

Required Contribution Percentage for 

2015 

The required contribution percentage 

for 2014 is 8.00 percent. Based on the 

methodology finalized in this final rule, 

the rate of premium growth over the rate 

of income growth for 2015 is 

1.04213431463/1.0360845879 or 

1.005839028. This results in a required 

contribution percentage for 2015 of 

8.00*1.005839028, or 8.05 percent, 

when rounded to the nearest onehundredth of one percent. 

Summary of Regulatory Changes 

We define the required contribution 

percentage under § 155.600(a) to mean 

the product of eight percent and the rate 

of premium growth over the rate of 

income growth for the calendar year, 

rounded to the nearest one-hundredth of 

one percent. We are also amending 

§ 155.605(g)(5), so that the required 

contribution percentage for this 

exemption in future years reflects the 

required contribution percentage for the 

applicable calendar year. 

b. Options for Conducting Eligibility 

Determinations for Exemptions 

(§ 155.625) 

In § 155.625, we established an option 

under which a State Exchange could 

adopt an eligibility determination for an 

exemption from the shared 

responsibility payment that was made 

by HHS, provided that certain 

conditions were met. We proposed to 

revise § 155.625 to remove the option 

for a State Exchange to adopt an 

eligibility determination for an 

exemption from the shared 

responsibility payment made by HHS 

for applications submitted on or after 

November 15, 2014. Under this 

proposal, HHS would continue to 

provide support in this area for 

applications up until that date. 

Comment: We received several 

comments, many from State Exchanges, 

urging HHS not to eliminate the option 

described in § 155.625(b). Commenters 

opposed this change because of the 

burden, in terms of cost, time and 

resources it would put on State 

Exchanges to accommodate the 

provision of exemption determinations. 

Several commenters from State 

Exchanges noted that resources have 

already been allocated and timelines 

already established for the systems 

development and shared the concern 

that States will not have the resources 

or administrative capacity to carry out 

this function by November 15, 2014. 

Under the proposed timeline, one 

commenter anticipated that State 

Exchanges would, at best, only be able 

to implement a paper-based and manual 

exemption eligibility determination 

process. One commenter shared the 

belief that the current process could be 

modified to HHS’ concerns by asking 

the consumer to include the information 

that only State Exchanges have, such as 

the lowest cost bronze plan. A majority 

of commenters agreed that, if HHS 

proceeds with the proposed change, 

State Exchanges need additional time to 

develop their own exemption processes; 

therefore, commenters suggested that 

implementation begin November 15, 

2015. Finally, one commenter agreed 

that having a single entity conduct 

exemption determinations makes the 

most sense but, to achieve this, HHS 

must provide clear implementation 

standards to guide State Exchanges and 

consumers for uniform application of 

the law. 

Response: We appreciate the 

comments received on this proposed 

change, particularly those from State 

Exchanges. We acknowledge the impact 

of such a change on State Exchanges in 

terms of administrative costs and 

development timelines. As noted below, 

we are providing Exchanges additional 

time to make this change. 

Additionally, and as previously stated 

in the proposed rule, we support this 

change because the current procedure 

introduces significant information 

technology development and 

administrative burden into a process 

that could otherwise be executed at a 

single entity. For example, it requires 

coordinated information sharing 

systems between State Exchanges and 

HHS to send, receive, and process the 

information needed to make an 

exemption determination, particularly 

for those exemptions that require 

information only held by the State 

Exchange, such as the cost of the lowestcost bronze plan net of advance 

payments of the premium tax credit. 

Furthermore, the current process 

requires dual customer service 

responsibilities at both HHS and the 

State Exchange, which creates 

challenges for consumers and Exchange 

customer service representatives. 

Therefore, we do not believe that there 

are significant efficiencies to be gained 

by HHS providing this service to State 

Exchanges. 

HHS is committed to providing 

technical assistance to State Exchanges 

to develop the capacity to handle the 

minimum functions of granting 

certificates of exemption. HHS has 


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developed and released a set of model 

paper applications that can be adopted 

by State Exchanges and will consider 

providing additional guidance, such as 

example standard operating procedures, 

to assist State Exchanges as they 

develop their own exemption processes. 

We do understand the time and budget 

constraints State Exchanges face in 

order to adjust their processes to 

accommodate this change and agree that 

additional time is needed for State 

Exchanges to come into compliance 

with this requirement. Accordingly, we 

are finalizing the provision with an 

amendment to eliminate the option for 

HHS to provide exemption 

determinations for State Exchanges for 

applications submitted after the start of 

open enrollment for the 2016 plan year. 

Summary of Regulatory Changes 

We are amending § 155.625(a) and (b) 

to state that the Exchange may adopt an 

exemption eligibility determination 

made by HHS for applications 

submitted before the start of open 

enrollment for the 2016 plan year. 

7. Subpart H—Exchange Functions: 

Small Business Health Options Program 

a. Functions of a SHOP (§ 155.705) 

Sections 155.705(b)(2) and (3) 

currently provide that, for plan years 

beginning on or after January 1, 2015, all 

SHOPs must make available to qualified 

employers the option of selecting an 

actuarial value level of coverage as 

described in section 1302(d)(1) of the 

Affordable Care Act and make all QHPs 

at that level available to qualified 

employees (‘‘employee choice’’). 

Additionally, pursuant to section 

1312(a)(2) of the Affordable Care Act, 

qualified employers may provide 

support for coverage of employees 

under a QHP by selecting any level of 

coverage under section 1302(d) to be 

made available to employees, and each 

employee of an employer that elects a 

level of coverage may choose to enroll 

in a QHP that offers coverage at that 

level. Based on communications with 

issuers and State Insurance 

Commissioners early in 2014, HHS 

became concerned that, in some 

circumstances, implementing employee 

choice in 2015 might significantly 

disrupt some small group markets, and 

it might therefore have a negative effect 

on the ability of small business owners 

to access coverage. 

To address these concerns, we 

proposed to amend § 155.705(b)(2) and 

(3) to provide for a one year transition 

policy under which a SHOP would be 

permitted to not implement employee 

choice in 2015 under specific 

circumstances: (1) if employee choice 

would result in significant adverse 

selection in the State’s small group 

market that could not be fully 

remediated by the single risk pool or 

premium stabilization programs; or (2) if 

there is an insufficient number of 

issuers offering QHPs or qualified 

SADPs to allow for meaningful plan 

choice among QHPs or qualified SADPs 

for all actuarial value levels in the 

State’s SHOP. We proposed that 

meaningful choice would mean 

sufficient competition in the market to 

allow for participation in the SHOP 

from multiple issuers throughout the 

State. 

We proposed that a State regulatory 

agency, such as the State Department of 

Insurance, could submit a 

recommendation to the State’s SHOP (or 

in the case of an FF–SHOP, to the 

Secretary) showing why either of the 

two proposed circumstances applied in 

2015. We sought comment on whether 

the State regulatory agency 

recommendation should include a 

mitigation plan describing the process 

the State regulatory agency would take 

to ensure that full implementation of 

employee choice in 2016 would not 

result in the occurrence of either 

proposed circumstance. We proposed 

that the State would be required to 

provide in the recommendation to the 

SHOP concrete evidence that one of the 

two proposed circumstances applied. 

The SHOP would then evaluate the 

State’s recommendation and determine 

whether the State’s small group market 

would be significantly adversely 

affected as a result of the 

implementation of employee choice. 

In the preamble to the proposed rule, 

we also recognized the importance of 

the timing of a State regulatory agency’s 

recommendation and the SHOP’s 

decision regarding employee choice 

under this proposal. Whether or not 

employee choice is available in a SHOP 

may be relevant information for issuers 

to consider as they make QHP 

submissions, but State regulatory 

agencies also need time to evaluate 

market dynamics before they can make 

a recommendation about whether the 

SHOP should not implement employee 

choice in 2015. We considered 

establishing a deadline for the State 

regulatory agency’s recommendation to 

the SHOP. We considered a timeline 

under which State regulatory agencies 

would make recommendations prior to 

the close of the initial QHP certification 

application window, with sufficient 

time for issuers to decide whether or not 

to participate in SHOP for the following 

plan year. We also considered a second 

timeline as follows: (1) All issuers 

interested in participating in SHOP 

would apply during the initial 

application window; (2) State regulatory 

agencies then would have a specific 

window of time within which to make 

a recommendation regarding whether to 

not implement employee choice in 2015 

based on the applications received; (3) 

the SHOP would then have a specific 

window of time to decide whether to 

implement employee choice in 2015 

based on that recommendation; (4) 

issuers could, based upon the SHOP’s 

decision, decide whether to maintain, 

modify, or withdraw their QHP 

applications. In the FF–SHOPs, under 

this second scenario, issuers would be 

able to submit applications after the 

initial deadline to apply for QHP 

certification had passed. 

We are finalizing this provision with 

the following modifications. First, based 

on a careful re-evaluation of the two 

conditions under which the State 

regulatory agency could make the 

proposed recommendation, we have 

recognized that some issuers have 

concerns about the potential for adverse 

selection in the small group market 

under employee choice and these 

concerns might cause them to price 

their products and plans higher than 

they might otherwise price them if the 

SHOP did not offer employee choice. 

Therefore, in the final rule, we specify 

that a State Insurance Commissioner 

could recommend to the SHOP that 

employee choice not be implemented in 

that State in 2015 if the Commissioner 

can adequately explain that this would 

be in the best interest of small 

employers and their employees and 

dependents, given the likelihood that 

implementing employee choice would 

cause issuers to price their products and 

plans higher than they would otherwise 

price them. Second, we are finalizing 

the first timeline in the proposed rule, 

and are requiring that a State Insurance 

Commissioner make its 

recommendation to the SHOP, and that 

the SHOP make its decision about 

implementing employee choice, 

sufficiently in advance of the end of the 

QHP certification application window 

such that issuers can make informed 

decisions about whether to participate 

in the SHOP. In the FF–SHOPs, State 

Insurance Commissioner must submit to 

HHS their recommendation on or before 

June 2, 2014. This will provide HHS (as 

operator of the FF–SHOPs) sufficient 

time to review any recommendations. 

HHS anticipates that its decision 

regarding the implementation of 

employee choice in States with an FF– 

SHOP would be made by June 10, 2014, 

which would provide sufficient time for 


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issuers to decide whether to participate 

in the SHOP for the following year. 

Comment: We received several 

comments in support of providing an 

opportunity for a State to recommend 

that a SHOP not implement employee 

choice in 2015, so that States and 

issuers could develop a Statewide plan 

for a full and successful implementation 

of employee choice in 2016. We also 

received several comments opposing the 

proposal, stating that employee choice 

is both statutorily required and is a core 

element necessary to establish SHOP’s 

value and attract participation by small 

employers. One commenter urged HHS 

to not implement employee choice in 

2015 only when there is clear harm that 

outweighs any of the value presented by 

employee choice and there is no other 

way to mitigate such harm. Several 

commenters expressed concern that an 

additional year without employee 

choice will not reduce the ultimate 

impact of any adverse selection 

concerns, but will just postpone its 

effects until 2016. Commenters 

expressed concern that the deferral of 

employee choice could go on for years, 

and could possibly be permanent. 

Response: We believe that the option 

to permit a State to recommend that 

employee choice not be implemented, if 

the State fulfills the regulatory 

requirements, might be important to 

preserve market stability in certain 

States in 2015. We recognize that some 

State Insurance Commissioners and 

issuers have concerns about the 

potential for adverse selection in the 

small group market in light of the fact 

that employee choice will be a new 

feature in many markets and issuers at 

this point in time may feel that they do 

not have sufficient data available 

concerning expected enrollee risk in an 

employee choice environment. This 

may lead issuers to price coverage more 

conservatively than they otherwise 

would price it, even taking into account 

premium stabilization programs and 

other considerations. Further, we 

understand that some State Insurance 

Commissioners believe that this 

potential for adverse selection will 

result in less robust issuer participation 

in a SHOP that offers employee choice. 

Therefore, consistent with the 

proposal that this policy reflect issuer 

and State concerns about adverse 

selection we are finalizing 

§ 155.705(b)(3)(vi) to allow a SHOP to 

elect to provide employers only with the 

option set forth at paragraph 

(b)(3)(ii)(B), or in the case of a FF– 

SHOP, only with the option set forth at 

paragraph (b)(3)(iv)(B) only if the State’s 

Insurance Commissioner can adequately 

explain that it is his or her expert 

judgment, based on a documented 

assessment of the full landscape of the 

small group market in his or her State, 

that not implementing employee choice 

in 2015 would be in the best interest of 

small employers and their employees 

and dependents, given the likelihood 

that implementing employee choice 

would cause issuers to price products 

and plans higher in 2015 due to the 

issuers’ beliefs about adverse section. 

This transitional policy only applies for 

plan years beginning in 2015. We expect 

that by 2016, States and issuers will be 

able to learn from the experiences of 

issuers in a wider range of SHOPs that 

have implemented employee choice so 

that any adverse selection concerns will 

no longer be material. For example, we 

believe that by 2016, issuers will have 

much more information on which to 

make pricing and plan design decisions 

for an employee choice environment. 

HHS anticipates that the conditions for 

a State to recommend a transition in 

employee choice will apply in a subset 

of markets, and HHS remains committed 

to implementing employee choice in all 

SHOPs by 2016. In any event, in light 

of the statutory language providing that 

employee choice should be 

implemented in all SHOPs, this policy 

will not be extended beyond 2015. HHS 

will approve an FF–SHOP State’s 

recommendations with the 

understanding that the transitional 

policy applies for one year. 

While the rule would also permit 

State-based SHOPs to decide against 

implementing employee choice in 2015, 

HHS believes it is unlikely that Statebased SHOPs will opt not to implement 

employee choice in 2015 because most 

of them currently offer employee choice. 

We are not finalizing the proposal that 

States include a statement describing 

how the plan to increase meaningful 

choice or reduce adverse selection 

concerns for 2016 and beyond in their 

recommendation because HHS 

anticipates that the conditions that 

would support the State 

recommendation required under this 

final rule will not apply in most 

markets. 

Comment: One commenter does not 

support allowing States to not 

implement employee choice because the 

participation provision in 45 CFR 

§ 156.200(g) requires issuers with more 

than a 20 percent share of the State’s 

small group market share participate in 

the FF–SHOP as a condition of 

participating in the FFE individual 

market. Therefore, most issuers 

participating in the FFE are unlikely to 

decline participating in an FF–SHOP. 

The commenter expressed the view that 

employee choice would make it easier 

for plans that do not meet the 20 percent 

threshold to participate in an FF–SHOP, 

thus expanding the competitive choices 

available to small business employees. 

Response: 45 CFR 156.200(g) was 

finalized to help provide employers a 

choice of QHPs in FF–SHOPs. While 

employee choice may encourage rather 

than limit choice of issuers and plans, 

we believe that States are in the best 

position to make an assessment of the 

choice of issuers and plans that are 

available at this time. 

Comment: We received several 

comments on the proposed 

circumstance under which a State 

Insurance Commissioner could 

recommend that the SHOP not 

implement employee choice based on 

significant adverse selection that could 

not be remediated by the single risk 

pool or the premium stabilization 

programs. One commenter 

recommended that adverse selection 

could be addressed by limiting choice 

within one issuer. Another commenter 

stated that risk adjustment would 

eliminate the risk of adverse selection, 

but that this would not happen until 

several months after the State must 

submit its recommendation regarding 

employee choice. Another expressed 

concern about employers continuing to 

offer grandfathered health plans. 

Response: We generally agree with the 

commenters who questioned including 

the adverse selection circumstance as 

drafted in the proposed rule and agree 

that the single risk pool, risk adjustment 

program, and other considerations are 

likely to address adverse selection 

concerns in the small group market, 

including small group markets in which 

the SHOP offers employee choice. 

Nonetheless, we recognize that some 

State Insurance Commissioners and 

issuers have concerns about the 

potential for adverse selection in the 

small group market due to employee 

choice, given that this will be a new 

feature in many markets and issuers at 

this point in time may feel that they do 

not have sufficient data available 

concerning expected enrollee risk in an 

employee choice environment. This 

may lead to issuers to price products 

and plans more conservatively than they 

otherwise would price, even taking into 

account premium stabilization programs 

and other considerations. We also 

understand that some State Insurance 

Commissioners believe that issuer 

concerns about adverse selection will 

result in less robust issuer participation 

in a SHOP that offers employee choice. 

Accordingly, in this final rule, we have 

modified the proposed recommendation 

that the State Insurance Commissioner 

would submit regarding adverse 


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selection to better capture the 

circumstances under which issuers’ 

concerns about adverse selection might 

negatively affect the small group market. 

Comment: Several commenters 

provided recommendations about how 

to define meaningful choice. Such 

definitions ranged from ensuring 

employees have a choice among health 

plans within those metal levels to 

ensuring there was at least one plan in 

every metal level. 

Response: In response to concerns 

from commenters, HHS is not finalizing 

the provision of the proposed rule that 

would permit the State Insurance 

Commissioner to recommend that the 

SHOP not implement employee choice 

based on a lack of meaningful choice 

among QHPs or SADPs. Instead, HHS is 

modifying the proposal to permit State 

Insurance Commissioners to submit a 

written recommendation to the SHOP 

adequately explaining that it is the State 

Insurance Commissioner’s expert 

judgment, based on a documented 

assessment of the full landscape of the 

small group market in his or her State, 

that not implementing employee choice 

would be in the best interests of small 

employers and their employees and 

dependents, given the likelihood that 

implementing employee choice would 

cause issuers to price products and 

plans higher in 2015 due to the issuers’ 

beliefs about adverse selection. A State 

Commissioner’s recommendation must 

be based on concrete evidence, 

including but not limited to discussions 

with those issuers expected to 

participate in the SHOP in 2015. 

Comment: Several commenters are 

concerned about whether HHS will be 

ready to fully implement employee 

choice in the FF–SHOPs and 

recommended that concerns about 

operational readiness be added to the 

list of circumstances under which a 

State may recommend not 

implementing employee choice in 2015. 

They also stated that FF–SHOP 

functionality and design would also 

need to be completed well in advance 

of the launch and must be scalable to all 

FF–SHOP States. 

Response: HHS, with the assistance of 

appropriate vendors, has finalized 

business requirements necessary for the 

launch of the FF–SHOP online portal for 

2015. We do not expect that operational 

and technological processes will pose a 

limitation to implementing employee 

choice and premium aggregation 

services in the FF–SHOPs. 

Comment: Some commenters support 

allowing a SHOP to have the discretion 

of determining whether employee 

choice would have to exist for both 

medical QHPs and SADPs. One 

commenter stated that SADPs do not 

have the protections of the single risk 

pool, risk corridors, and risk 

adjustment, which differentiates SADPs 

from QHPs. 

Response: Because of operational 

limitations in the build of the FF–SHOP 

online portal, employee choice will 

either be implemented or not 

implemented for both SADPs and QHPs 

in the FF–SHOPs, depending on 

whether State Insurance Commissioners 

submit recommendations consistent 

with this final rule. However, Statebased SHOPs could choose to provide 

employee choice for medical QHPs and 

SADPs, or vice versa for the 2015 plan 

year, if their IT systems can 

accommodate employee choice 

variation by plan type, and if a 

recommendation from a State Insurance 

Commissioner consistent with this final 

rule would support that approach. 

Comment: Some commenters 

recommended that HHS require that the 

State’s recommendation include 

concrete, specific details of employee 

choice’s estimated impact on the small 

group market. One commenter 

specifically recommended that the 

requirement for concrete evidence be 

included in regulatory text. Other 

commenters recommended that HHS 

adopt a more simplified waiver process 

giving States, including State-based 

SHOPs, greater discretion and flexibility 

in choosing SHOP options that meet 

local needs. These commenters stated 

that HHS should not include 

requirements, criteria, or standards that 

prescribe or limit State flexibility or 

State decision-making processes 

regarding implementation of employee 

choice. Additionally, some commenters 

urged HHS to require that a State’s 

recommendation include a mitigation 

plan describing how any adverse effects 

of not implementing employee choice in 

2015 would be addressed so that these 

conditions do not persist into 2016. One 

commenter recommended that the 

requirement for a mitigation plan 

should indicate how the State intends to 

increase stand-alone dental plan 

participation in the employee choice 

market. Some commenters believe that 

all States should be required to have a 

public review and comment period on 

the State’s recommendation to not 

implement employee choice in 2015 

and that all evidence should be subject 

to public review and comment. 

Response: We are finalizing language 

in this rule requiring that the State’s 

recommendation must be sent by the 

State’s Insurance Commissioner to HHS 

(as operator of the FF–SHOP) or to the 

State-based SHOP and must be based on 

documented assessment of the full 

landscape of the State’s small group 

market. HHS is not being prescriptive 

about the specific types of evidence that 

must be included in this documented 

assessment, as this evidence may vary 

based on the State’s small group market. 

However, the documented assessment of 

the full landscape of the State’s small 

group market in a State must support 

the Insurance Commissioner’s expert 

judgment that not implementing 

employee choice would be in the best 

interests of small employers and their 

employees and dependents, given the 

likelihood that implementing employee 

choice would cause issuers to price 

products and plans higher in 2015 due 

to the issuers’ beliefs about adverse 

selection. A State Insurance 

Commissioner’s recommendation would 

need to be based on concrete evidence, 

including but not limited to discussions 

with those issuers expected to 

participate in the SHOP in 2015. 

Nonetheless, in order that SHOPs will 

make an informed, fair decision about 

whether to approve a State’s 

recommendation, HHS has included in 

this final rule text the overarching 

standards on which the State Insurance 

Commissioner must base its 

recommendation. We think that the 

finalized standard accommodates the 

unique variation of States’ small group 

markets and provides flexibility to 

States in making their recommendation 

to a SHOP. The timeline and schedule 

that is being finalized in this rule does 

not make it feasible for FF–SHOPs to 

solicit public input on a State’s 

recommendation not to implement 

employee choice. However, State-based 

SHOPs and State Insurance 

Commissioners who make 

recommendations about not 

implementing employee choice in 2015 

may choose to have a public comment 

period on their proposed 

recommendation. If a State elects to 

hold a public comment period, it must 

submit a summary of all comments 

received with its recommendation to not 

implement employee choice in 2015 to 

the relevant SHOP. 

Comment: We received several 

comments about how to address the 

timing issue presented in the preamble 

of the proposed rule. Some commenters 

prefer the timing option whereby the 

State agency would have to make 

recommendations prior to the close of 

the initial QHP certification application 

window, and stated that this provides 

time for QHPs to make informed 

participation decisions. One commenter 

recommended that the decision and 

announcement of a State’s 

recommendation regarding employee 


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choice be made no later than one month 

prior to the deadline for filing rates for 

the 2015 benefit year to assure 

actuarially sound rates. One commenter 

preferred the second proposed timeline 

from the preamble of the proposed rule 

whereby issuers would have the option 

to maintain, modify, or withdraw their 

products from the SHOP market after 

the SHOP’s employee choice decision 

has been made. Another commenter 

asked how issuers would file rates 

without knowing whether employee 

choice is required and was concerned 

that the timing of the letters from the 

States and the State decision were not 

in alignment with the QHP certification 

timelines. 

Response: HHS is finalizing in this 

rule that a State Insurance 

Commissioner should submit a 

recommendation to the SHOP, and that 

the SHOP should make a decision based 

on that recommendation, sufficiently in 

advance of the close of the QHP 

certification application window such 

that issuers can make informed 

decisions about whether to participate 

in the SHOP. In a FF–SHOP, State 

Insurance Commissioners must submit 

to HHS the recommendation on or 

before June 2, 2014, and HHS will make 

a decision based on any 

recommendations submitted by that 

deadline before the close of the QHP 

certification application window. Only 

States interested in not implementing 

employee choice would need to make a 

recommendation. State Insurance 

Commissioners making such 

recommendations should submit them 

via email to shop@cms.hhs.gov. HHS 

expects that no later than June 10, 2014, 

the FF–SHOP will post the list of States 

approved for their transition of 

employee choice for one year, creating 

a public record. HHS will make publicly 

available the State’s recommendation to 

the FF–SHOP and the results of its 

review in a written decision explaining 

whether HHS agreed with the State’s 

recommendation. This timeline ensures 

that HHS’ decisions will be made prior 

to the close of the initial QHP 

certification application window for the 

FF–SHOPs, with sufficient time for 

issuers to decide whether or not to 

participate in the FF–SHOP in 2015. 

This timeline reduces uncertainty for 

issuers because issuers will know if 

employee choice is being offered in a 

SHOP prior to the end of the QHP 

application period. Issuers will be able 

to make a decision about SHOP 

participation based on final information 

about whether employee choice will be 

implemented and will be less likely to 

seek to modify their rates or withdraw 

their applications. 

State-based SHOPs will be required to 

follow the same timeline as FF–SHOPs, 

but exact dates for State Insurance 

Commissioner recommendations and 

SHOP decisions may differ from the FF– 

SHOP. 

Summary of Regulatory Changes 

We are finalizing the provision as 

proposed, with the modification that a 

SHOP’s decision not to implement 

employee choice in 2015 should be 

based on a written recommendation 

submitted by the State Insurance 

Commissioner adequately explaining 

that it is the Insurance Commissioner’s 

expert judgment, based on a 

documented assessment of the full 

landscape of the small group market in 

his or her State, that not implementing 

employee choice would be in the best 

interests of small employers and their 

employees and dependents, given the 

likelihood that implementing employee 

choice would cause issuers to price 

products and plans higher in 2015 due 

to the issuers’ beliefs about adverse 

selection. A State Insurance 

Commissioner’s recommendation must 

be based on concrete evidence, 

including but not limited to discussions 

with those issuers expected to 

participate in the SHOP in 2015. We 

clarify that this policy only applies in 

2015 by adding the word ‘‘only.’’ We 

also changed in § 155.705(b)(3)(vi) the 

word options to be singular as one 

option is available for FF–SHOPs and 

another for State-based SHOPs. Finally, 

we have established in the final rule the 

first of two proposed timelines under 

which States to make their 

recommendations to SHOP. 

b. Enrollment Periods Under SHOP 

(§ 155.725) 

We proposed amendments to 

§ 155.725(c) and (e) to amend the dates 

for the annual open enrollment periods 

for qualified employers and qualified 

employees in all SHOPs, both Statebased and Federally-facilitated. In 

proposed §§ 155.725(c)(1), we proposed 

to align the start of annual employer 

election periods in all SHOPs for plan 

years beginning in 2015 with the start of 

open enrollment in the corresponding 

individual market Exchange for the 

2015 benefit year. Under the proposal, 

the annual employer and employee 

election periods would begin no sooner 

than November 15, 2014 with employers 

making selections first, followed by 

employees. We are finalizing this 

proposal with one modification. Based 

on comments we received through the 

public comment period, we are 

modifying § 155.725(c)(1) to limit this 

provision to FF–SHOPs. State-based 

SHOPs may start their annual employer 

election periods earlier than November 

15, 2014. We further clarify that nothing 

in this rule eliminates the rolling 

monthly enrollments in the SHOPs 

outlined at 45 CFR 155.725(b) and the 

requirement also outlined at 45 CFR 

155.725(b) that a plan year in the SHOP 

be 12 months. 

We note that pursuant to 

§ 147.104(b)(1)(i), group coverage 

purchased in the SHOP between 

November 15 and December 15 of each 

year is not subject to employer 

contribution or group participation 

rules. As explained in Chapter 5 of the 

2015 Letter to Issuers published on 

March 14, 2014, FF–SHOPs do not 

enforce minimum participation 

requirements between November 15 and 

December 15 of each year, but they are 

enforced upon initial enrollment and at 

renewal outside of this window. 

Aligning the start of the annual 

employer election period in the FF– 

SHOPs with the start of the individual 

market Exchange such that the employer 

election period would begin no sooner 

than November 15, 2014, will provide 

qualified employers and employees 

with a period of time to enroll for 2015 

coverage when the FF–SHOP minimum 

participation provisions are not 

enforced. State-based SHOPs wishing to 

begin annual employer election periods 

prior to November 15 may extend the 

window of time when employers are not 

subject to employer contribution or 

group participation rules. For example, 

a State-based SHOP may extend the 

window of time during which minimum 

contribution and participation rules are 

not applicable from October 15 through 

December 15, so long as November 15 

through December 15 is included in the 

time period. 

In §§ 155.725(c)(2) and 155.725(e), we 

proposed to remove the required 

minimum lengths of both the annual 

employer election period and the 

employee open enrollment period to 

provide additional flexibility to all 

SHOPs and qualified employers. The 

existing minimum standards may make 

it difficult for groups participating in 

the SHOP to renew coverage in a timely 

manner, as under those minimums, it 

might take 75 days or longer to complete 

a group renewal. This proposal will 

permit employers to expedite their 

enrollment timeline. Also, this proposal 

increases a qualified employer’s access 

to the most up-to-date rate information 

by permitting alignment with the 

quarterly rate update cycle. We are 

finalizing these provisions as proposed. 

Comment: We received several 

comments on our proposal to align the 

start of the employer election periods 


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for plan years beginning in 2015 with 

the start of open enrollment in the 

corresponding individual market 

Exchange for the 2015 plan year, as 

amended in the 2015 Payment Notice, 

so that the annual employer and 

employee election periods would begin 

no sooner than November 15, 2014. 

Some commenters supported having a 

uniform timeline for enrollment in the 

individual Exchange and SHOPs, to 

reduce confusion, improve efficiencies, 

and possibly bring about cost savings. 

Another commenter believed that there 

are too many election periods for 

different populations and therefore 

recommends that the annual open 

enrollment period be more spread out. 

One commenter recommended that 

employers be able to make decisions 

whether to participate in the SHOP 

prior to November 15 so that employees 

can shop in both Exchanges beginning 

November 15. We also received several 

comments recommending that Statebased SHOPs should have the flexibility 

to maintain their own employer election 

periods to remain in alignment with the 

broader small group market in the State. 

Several commenters noted that aligning 

the timing of the SHOP employer 

election period for 2015 with the 

individual market annual open 

enrollment period may pose challenges 

for certain State-based SHOPs, and 

encouraged HHS to maintain the 

flexibility afforded to State-based 

SHOPs discussed in the preamble to the 

Exchange Establishment final rule at 77 

FR 18402–18403. For example, 

commenters observed that some Statebased SHOPs see benefits from 

dedicating staff to separate enrollment 

periods for individuals and employees 

of qualified employers, rather than 

administering these enrollment periods 

concurrently. 

Response: To ensure States have the 

flexibility to operate their State-based 

SHOPs in a manner that works in their 

small group markets, we are finalizing 

this provision as proposed, but limiting 

it to FF–SHOPs. State-based SHOPs will 

be able to begin their employer and 

employee election periods in a manner 

that works with their small group 

markets. 

Comment: Some comments were 

received in support of the proposal to 

remove the 30-day minimum timeframe 

for the employer and employee annual 

election period. However, several 

comments were also received stating 

that removing this minimum timeframe 

would cause system and human 

resource strain by forcing SHOP 

enrollment into a more compressed 

timeframe. Some commenters also 

stated that this approach does not 

compare favorably with traditional 

small group insurance coverage. One 

commenter stated that employers need a 

minimum of 30 days to evaluate their 

options, costs, and budget forecasts for 

the upcoming year and employees 

would then need a similar timeframe to 

make a decision by the 15th of the 

month. 

Response: We believe that removing 

the 30-day minimum timeframe 

requirement provides the most 

flexibility to SHOPs, employers and 

employees, and allows consumers to 

obtain SHOP coverage in a quicker 

timeframe. This flexibility allows 

employers and employees to complete 

their shopping in a more condensed 

time, if desired. We note that nothing in 

this final rule removes the ability of a 

State-based SHOP or an employer to 

establish enrollment periods lasting at 

least 30 days. 

Summary of Regulatory Changes 

We are finalizing the amendments 

proposed in § 155.725 of the proposed 

rule with the modification that the 

provision aligning the annual employer 

election period with the start of the start 

of open enrollment in the corresponding 

individual market Exchange for the 

2015 benefit year applies only in FF– 

SHOPs. State-based SHOPs may start 

their annual employer election periods 

earlier than November 15, 2014. 

c. SHOP Employer and Employee 

Eligibility Appeals Requirements 

(§ 155.740) 

We proposed to amend § 155.740(g) 

by redesignating paragraphs (g)(1) 

through (g)(3) to more clearly delineate 

the requirements associated with valid 

appeals separately from those associated 

with invalid appeals. 

We proposed to amend 

§ 155.740(i)(1)(i) by cross-referencing 

the withdrawal standards proposed in 

the individual market at § 155.530(a)(1). 

Under current rules, an appellant who 

wishes to withdraw his or her appeal 

request must do so in writing (hard copy 

or electronic). The amended provision 

would allow an appellant to withdraw 

his or her appeal request in writing or 

by telephone, if the appeals entity is 

capable of accepting telephonic 

withdrawals. 

Comment: We received a handful of 

comments regarding the proposed 

change to the SHOP appeals withdrawal 

procedure and all were supportive of 

the change. As with the individual 

market provision, commenters cited the 

benefits to having a telephonic 

withdrawal option, including increased 

efficiency for appellants to conclude the 

appeals process. Commenters also noted 

with support the importance of 

recording the telephonic interaction and 

providing written confirmation of the 

withdrawal along with instructions on 

how to request to vacate a withdrawal 

in order to protect the appellant’s right 

to a hearing. 

Response: We agree with commenters 

that incorporating this option for 

telephonic withdrawals for SHOP 

employer and employee appeals will 

assist appeals entities in maintaining an 

efficient process by providing a 

convenient method for appellants to end 

an appeal at their option. We also 

consider the requirements to record the 

appellant’s telephonic withdrawal and 

the telephonic signature under penalty 

of perjury in full along with sending 

written confirmation of the withdrawal 

to be critical safeguards for appellants 

and appreciate the support commenters 

expressed for these aspects of the 

process. We, therefore, finalize the 

provision for telephonic withdrawal as 

proposed. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 155.740 without 

modification. 

8. Subpart O—Quality Reporting 

Standards for Exchanges 

In § 155.1400, we proposed that the 

Exchange must prominently display on 

its Web site, in accordance with 45 CFR 

155.205(b)(1)(v), quality rating 

information assigned for each QHP 

under the QRS, as calculated by HHS 

and in a form and manner specified by 

HHS, starting in 2016. We stated our 

intentions to have a beta testing period 

in 2015 to provide early feedback to 

Exchanges and QHP issuers and begin 

public reporting of quality rating 

information during the 2016 open 

enrollment period for the 2017 coverage 

year. The standards for QHP issuers 

regarding the collection and submission 

of validated quality measures data for 

the QRS are described in Part 156, 

Subpart L of this final rule. 

Comment: Many commenters agreed 

with the proposed provision and 

supported our approach for HHS to 

provide calculated quality rating 

information for display on an Exchange 

Web site on an annual basis for the open 

enrollment period. One commenter 

requested clarification as to whether 

HHS will select and calculate the QRS 

rating for both the FFE and State 

Exchanges, or whether the State 

Exchanges will be able to select and 

calculate their own QRS ratings 

independent of HHS. Commenters 

suggested that State Exchanges be 

allowed to calculate quality ratings 


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using the same approach as the FFE but 

with data for plans operating within the 

State’s Exchange and that beta test data 

be used to compare QHP quality rating 

results from HHS with State Exchange 

results to determine relative 

comparability in national versus State 

approaches. 

Response: We clarify that HHS will be 

obtaining data from all QHP issuers 

from all Exchanges consistent with 

§ 156.1120(a) and using a standardized 

methodology to calculate QHP quality 

ratings for display on the FFE Web site 

and to provide for display to State 

Exchanges on their Web sites. We 

believe that an approach where each 

Exchange displays quality ratings 

calculated by HHS based on a standard 

scoring methodology allows for reliable, 

uniform, and comparable QHP ratings 

across Exchanges. The HHS-calculated 

scores and rating information provided 

to a State Exchange by HHS will be for 

the QHPs offered on the Exchange in 

that State. We anticipate sharing the 

validated QRS summary measure level 

data with State Exchanges; however 

State Exchanges will be required to 

display the HHS-calculated quality 

ratings for QHPs offered on the 

Exchange in their respective States. At 

the same time, we believe it is important 

that States have opportunity to build on 

this uniform strategy by displaying 

additional quality measures that reflect 

local priorities and we anticipate 

issuing future guidance that will 

include standards for States who wish 

to exercise this flexibility. 

Comment: Many commenters urged 

HHS to require that State Exchanges 

display the data directly on their Web 

sites instead of linking to a Federal Web 

site. 

Response: We understand 

commenters’ concerns regarding 

providing consumers direct access to 

QHP quality data on the Exchange Web 

site where they are choosing a plan and 

these comments will help inform 

consumer testing and final guidance 

regarding display of quality rating 

information. We agree that health plan 

quality-related information should be 

provided to consumers in an easily 

understandable format and manner to 

support the comparison of plan options. 

We intend to provide details regarding 

display requirements in future technical 

guidance and will work with State 

Exchanges that do not have the 

technical capacity to display data 

directly on their Web sites during the 

initial implementation phase-in period. 

Comment: Several commenters 

supported flexibility for States to 

display additional quality data and 

recommended that such data be 

collected and displayed consistently 

with the Federal measures. Other 

commenters expressed concern 

regarding States posting additional data 

because of the potential for conflicting 

measures to confuse consumers. They 

also expressed concern about consumer 

comprehension of displayed QRS data 

and allowing for approaches to meet 

diverse needs including regional, 

cultural, language, and demographic 

differences. One commenter suggested 

criteria for establishing governing 

principles for States choosing to display 

additional quality information, such as 

requiring States to only use NQFendorsed measures or required 

measures for QHP accreditation. 

Another commenter suggested that 

States such as California that have 

implemented their own QHP quality 

ratings be used to inform quality 

reporting on the FFE. 

Response: We maintain in the final 

rule that the Exchange must 

prominently display the Federal QRS 

rating information, as calculated by 

HHS, and results from the ESS for each 

QHP on its Web site. We believe that the 

Federal quality standards regarding QRS 

establishes a foundation for a uniform, 

national strategy for monitoring quality 

activities in the Exchanges with a core 

set of measures and standard 

approaches to health plan quality 

reporting. We also believe it is 

important that States have the 

opportunity to build on this uniform 

strategy with the display of additional 

measures that reflect local priorities. We 

anticipate issuing future guidance that 

will include standards for States who 

wish to exercise this flexibility. 

However, we clarify that HHS would 

not include any State-level data in 

calculations for the Federal QRS. HHS 

is currently conducting research and 

consumer testing regarding display of 

consumer-friendly information and 

terminology of health plan quality data 

and as we noted in the proposed rule, 

we intend to issue technical guidance 

including standardized display 

requirements in the near future. We will 

work with States to prevent display of 

both Federal and State-level quality 

measure data in a manner that confuses 

consumers. 

Comment: Many commenters 

supported a five-star display for QRS 

ratings that would ensure consistency 

across commercial and Medicare 

markets and increase enrollee 

familiarity with the rating systems. One 

commenter recommended that CMS 

report QHP summary ratings at half-star 

levels (for example, 3.5, 4.0, 4.5) to 

enable consumers to better distinguish 

between plans, similar to the Medicare 

Advantage and Part D ratings. 

Response: As stated in the proposed 

rule, we intend to display star ratings 

that would be similar in style and 

format to that of Medicare Advantage 

and Prescription Drug Plan ratings. 

These comments regarding display 

requirements will inform the future 

technical guidance that we intend to 

issue in the near future. For more 

detailed information on the proposed 

QRS scoring specifications approach, 

including the proposed process of 

scoring QHPs and converting scores into 

ratings on a five-star scale, we refer 

commenters to the March 28, 2014, draft 

QRS Scoring Specifications document 

available at https://www.cms.gov/

Medicare/Quality-Initiatives-PatientAssessment-Instruments/

QualityInitiativesGenInfo/Downloads/

QRS-Scoring-Specification.pdf. 

Comment: We also received a number 

of comments on quality measures for 

dental plans, sampling design and 

methodology for the ESS, quality rating 

and survey measure sets, QRS 

framework, process for selection of ESS 

vendors and quality reporting for QHPs 

offered outside the Exchange. 

Response: We have not addressed 

such comments, and others that are not 

directly related to the proposed rule, 

because they are outside the scope of 

this rulemaking. 

Summary of Regulatory Changes 

For the reasons described above, we 

are finalizing the provision as proposed. 

b. Enrollee Satisfaction Survey System 

(§ 155.1405) 

In § 155.1405, we proposed that the 

Exchange would prominently display 

results from the ESS on its Web site, in 

accordance with § 155.205(b)(1)(iv), as 

calculated by HHS, and in a form and 

manner specified by HHS, starting in 

2016. We also proposed that the display 

of the QRS information (which 

incorporates member experience data 

from the ESS) by an Exchange would 

meet the requirement of displaying the 

ESS information and satisfy the 

standard outlined in 45 CFR 

155.205(b)(1)(iv). The standards for QHP 

issuers regarding the collection and 

submission of validated data for the ESS 

are described in Part 156, Subpart L of 

this final rule. 

Comment: The majority of 

commenters supported the proposed 

display requirement for Exchanges in 

§ 155.1405. Several commenters did not 

support the approach to provide State 

Exchanges the flexibility to make ESS 

beta test results publicly available in 

2015 because these results are intended 


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31See Appendix C of the 2014 Letter to Issuers 

on Federally-facilitated and State Partnership 

Exchanges (April 5, 2013). Available at: http://

www.cms.gov/CCIIO/Resources/Regulations-andGuidance/Downloads/2014_letter_to_issuers_

04052013.pdf. 

for process improvement and not 

official. Some commenters supported 

allowing all Exchanges to make the beta 

test information available in 2015 to 

identify best practices and provide 

access to information to support 

consumer choice. One commenter 

suggested requiring several criteria to be 

met prior to publicly presenting ESS 

2015 beta test results. 

Response: We agree that the purpose 

of the 2015 ESS beta test results is 

primarily for process improvement. 

However, we also believe that if reliable 

QHP-level assessment scores are 

available in the ESS beta test results, 

this information could provide 

important early feedback to Exchanges 

and consumers. We intend to provide 

State Exchanges and QHP issuers with 

the ESS beta test results with 

appropriate disclaimers including that 

beta test results are not finalized and are 

part of the survey development process. 

HHS would not require nor restrict a 

State Exchange from posting this 

information on its Web site but would 

encourage inclusion of appropriate 

disclaimers to inform the consumer 

about the limitations of the data (for 

example, the information reflects beta 

test results that are not finalized and are 

part of the survey development process). 

HHS does not plan on posting the 2015 

ESS beta test results on the FFE Web 

site. 

Comment: Many commenters urged 

HHS to have a uniform policy for ESS 

scoring calculations and for display and 

require that complete ESS results, by 

metal-tier level, be made publicly 

available on all Exchange Web sites for 

consumers, accessible to researchers 

and advocates. One commenter 

expressed concern with displaying all 

ESS results including those scores not 

used in the QRS because of concerns 

that the survey may not capture 

information regarding a QHP’s quality 

that are applicable to areas that a health 

plan can directly influence. 

Response: We intend to provide the 

HHS standardized, calculated full ESS 

results to State Exchanges and to 

display the results at the product-level 

on the FFE Web site and will provide 

further details regarding display of the 

data, to consumers, in future technical 

guidance. As noted in the proposed 

rule, we believe that by displaying the 

QRS information (which incorporates 

member experience data from the ESS), 

an Exchange would meet the 

requirement, during the initial years of 

implementation, of displaying the ESS 

information and satisfy the standards 

outlined in 45 CFR 155.205(b)(1)(iv) and 

45 CFR 155.1405. Therefore, State 

Exchanges will have the flexibility, in 

the initial years, to decide whether to 

display the full ESS results, as 

calculated by HHS. In the initial years, 

we believe that display of ESS results 

should align with the QRS and be 

presented at the product-level. We 

anticipate using the metal level data, as 

reported to HHS, to inform ESS 

implementation in future years and will 

re-examine the possibility of displaying 

the ESS results at a more granular level 

following an analysis of the 2015 beta 

test results. We believe that the ESS will 

provide valuable information regarding 

QHPs offered on Exchanges to 

consumers since it is largely based on 

the industry standard CAHPS® 5.0 

Health Plan Survey that assesses 

commercial and Medicaid health plans. 

In addition, we are considering different 

ways to make QHP quality data, 

including ESS results, publicly available 

and accessible to consumers in a 

meaningful way. 

Comment: A few commenters urged 

HHS to require State Exchanges to have 

a plan preview period for review of the 

ESS results. Some commenters 

requested that HHS provide access to 

full ESS results to issuers during a plan 

preview period, similar to QRS measure 

data. One commenter urged HHS to 

offer a three month plan preview period 

for QRS and ESS results at a different 

time than review of quality ratings for 

Medicare Advantage plans. 

Response: We appreciate the 

comments in support of HHS imposing 

a requirement on State Exchanges to 

have a plan preview period for review 

of the QRS and ESS results and may 

consider adopting this approach in 

future rulemaking. We note that some 

State Exchanges already have instituted 

a plan preview process for issuers to 

have the opportunity to review and 

correct data provided for display on 

Exchange Web sites. HHS also intends 

to host a plan preview period of QRS 

and ESS data for all QHP issuers 

participating in all Exchanges. We 

intend to balance alignment of data 

collection, submission, and plan 

preview timeframes for the QRS and 

ESS with existing processes, with the 

goal of minimal burden to issuers and 

State Exchanges. 

Summary of Regulatory Changes 

We are finalizing this provision as 

proposed. 

H. Part 156—Health Insurance Issuer 

Standards Under the Affordable Care 

Act, Including Standards Related to 

Exchanges 

1. Subpart B—Essential Health Benefits 

Package 

a. Prescription Drug Benefits (§ 156.122) 

Section 156.122(c) requires issuers 

that provide EHB to have procedures in 

place that allow an enrollee to request 

and gain access to clinically appropriate 

drugs not covered by the plan. In the 

proposed rule, we sought comment on 

amending the sought comment on 

amending the formulary exceptions 

standards under § 156.122(c) to require 

that these processes can be expedited 

when necessary based on exigent 

circumstances, such as when an 

enrollee is suffering from a serious 

health condition or an enrollee is in a 

current course of treatment using a nonformulary drug. We considered, for 

example, whether issuers should be 

required to render decisions regarding 

formulary exceptions requests within 24 

hours following the issuers’ receipt of 

the exceptions requests, as suggested in 

the ‘‘2014 Letter to Issuers on Federallyfacilitated and State Partnership 

Exchanges’’ (2014 Letter to Issuers).31

As clarification, the prescription drug 

standard in § 156.122(a)(1) was not 

intended to discourage issuers from 

offering clinically appropriate drugs to 

enrollees, including combination drugs. 

We sought comment on what specific 

standards would be appropriate for 

defining this expedited exceptions 

process, and on all other aspects of this 

proposal. 

Comment: Some commenters 

supported the proposal to add 

additional parameters in regulation for 

the exceptions process and had 

recommendations regarding the 

parameters, including the timing of the 

reviews and the need for expedited 

reviews due to exigent circumstances. 

Many commenters supported a general 

72-hour review timeframe and a 24-hour 

review timeframe due to exigency when 

the life or immediate health of the 

insured is at stake. Several of these 

commenters recommended other 

standards in use today, such as the 

standards in the Medicare Part D 

program or Department of Labor 

standards for coverage determinations, 

and supported greater uniformity. Of 

those commenters who supported 


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greater uniformity, the majority of 

commenters favored a process similar to 

that in Medicare Part D. Conversely, 

some commenters did not support any 

additional regulatory standards 

regarding the exceptions process. These 

commenters cited the timing of the 

rulemaking, potential for conflicting 

State law, desire for flexibility in 

prescription drug management 

practices, and desire for a better 

understanding of drug access issues. 

Response: We have heard from several 

stakeholders about enrollee difficulty in 

accessing, understanding, and using 

issuers’ exception processes under 

§ 156.122(c), since there is currently no 

requirement for uniformity across plans. 

Based on comments regarding the need 

for a uniform standard, we are finalizing 

standards for a health plan’s exceptions 

process that includes a process for 

exigent circumstances. Specifically, we 

are modifying § 156.122(c) to include a 

policy that allows an enrollee (or 

enrollee’s designee) or the enrollee’s 

prescribing physician (or other 

prescriber) to request an expedited 

exceptions process based on exigent 

circumstances that are defined as when 

an enrollee is suffering from a health 

condition that may seriously jeopardize 

the enrollee’s life, health, or ability to 

regain maximum function or when an 

enrollee is undergoing a current course 

of treatment using a non-formulary 

drug. We are also finalizing a 

requirement that issuers must provide a 

decision on an exception request based 

on exigent circumstances and notify the 

enrollee (and the prescribing physician 

or other prescriber as appropriate) of the 

determination no later than 24 hours 

after receiving the request. We believe 

that this policy will better ensure 

enrollee access to critical medications in 

a timely manner. These provisions are 

effective for the 2015 plan year. 

Comment: Commenters asked for 

clarification on operational 

considerations for implementing any 

specific exceptions process 

requirements, including a definition of 

‘‘exigent,’’ when any timeframes begin, 

how long the enrollee has access to the 

medication if granted an exception, and 

if the enrollee is required to have access 

to the drug throughout the review 

processes. 

Response: The timeframe for 

expedited (24-hour) review begins when 

the issuer or its designee receives an 

exception request based on exigent 

circumstances. An enrollee or the 

enrollee’s prescribing physician (or 

other prescriber) should strive to submit 

a complete request; however, issuers 

should not fail to commence review if 

they have not yet received information 

that is largely procedural but not 

necessary to begin review. Further, 

issuers should not request irrelevant or 

overly burdensome information. 

We believe an exigency exists when 

an enrollee is suffering from a health 

condition that may seriously jeopardize 

the enrollee’s life, health, or ability to 

regain maximum function or when an 

enrollee is undergoing a current course 

of treatment using a non-formulary 

drug. Either the enrollee (or enrollee’s 

designee) or prescribing physician (or 

other prescribing provider as 

appropriate) may submit the request for 

an expedited review based on exigent 

circumstances. Issuers must be 

equipped to intake these requests in 

writing, electronically, and 

telephonically. 

As part of the request for an expedited 

review based on exigent circumstances, 

the prescribing physician or other 

prescriber should support the request by 

including an oral or written statement 

that (1) an exigency exists and the basis 

for the exigency (that is, the harm that 

could reasonably come to the enrollee if 

the requested drug were not provided 

within the timeframes specified by the 

issuer’s standard drug exceptions 

process), and (2) a justification 

supporting the need for the nonformulary drug to treat the enrollee’s 

condition, including a statement that all 

covered formulary drugs on any tier will 

be or have been ineffective, would not 

be as effective as the non-formulary 

drug, or would have adverse effects. 

Following a favorable decision on the 

expedited request, the enrollee must be 

provided access to the prescribed drug 

without unreasonable delay. Therefore, 

issuers need to be prepared to 

communicate rapidly with pharmacies 

and pharmacy benefit managers, as 

applicable. At a minimum, we expect 

issuers to update certificates of coverage 

to reflect the availability of this process 

and to be able to provide instruction to 

enrollees or their designees and 

providers or their designees regarding 

how to use the process. While these 

review standards are specific to the 

expedited review process, we encourage 

issuers to have a similar type of review 

process in place for their non-expedited 

review under § 156.122(c). 

While some commenters 

recommended that issuers be required 

to provide coverage of the drug in 

question pending the outcome of the 

expedited request, we are also cognizant 

that some commenters opposed the 

proposal altogether and that we are 

finalizing an expedited timeframe for 

coverage determination under this 

process due to exigency as no more than 

24 hours. Therefore, while we 

encourage issuers to provide the drug 

pending the outcome of the exceptions 

request, we are not requiring it at this 

time. 

We are also concerned about enrollees 

having to continue to make requests 

under § 156.122(c) throughout the plan 

year to access the same clinically 

appropriate drug not on the plan’s 

formulary, whether for each refill or 

otherwise, and for exceptions granted 

pursuant to the exigent circumstance 

exceptions process, issuers must make 

the drug available to the enrollee for the 

duration of the exigency. We will 

monitor this issue to consider whether 

we should propose additional standards 

through rulemaking. 

Comment: Some commenters 

requested clarification as to whether 

drugs accessed through the exceptions 

process under § 156.122(c) should count 

towards the plan’s annual limit on cost 

sharing as established under 

§ 156.130(a), and other commenters 

noted concerns about cost-sharing and 

tiering for drugs accessed through the 

exceptions process. Other commenters 

commented on a variety of other issues 

related to the EHB prescription drug 

policy that were not mentioned in the 

proposed rule. 

Response: Because these issues are 

not specifically related to the exigent 

circumstance exceptions process 

standards for § 156.122(c) and the 

preamble to the proposed rule, we 

consider them to be outside the scope of 

the rulemaking but will take them under 

consideration for future rulemaking. 

Comment: Commenters noted that 

there is no requirement to cover 

combination drugs considered first line 

therapy, but other commenters 

supported efforts to better ensure access 

to combination drugs, as well as 

requested requirements related to new 

drugs. Some commenters requested 

clarification that combination drugs do 

not have any special regulatory status in 

plans that must comply with EHB 

standards. 

Response: The requirements at 

§ 156.122(a)(1) were intended to be the 

minimum standard for an issuer 

providing EHB. The intention of the 

exceptions process at § 156.122(c) is for 

enrollees to request and gain access to 

clinically appropriate drugs that are not 

on the plan’s formulary, which could 

include combination drugs considered 

first line therapies and new drugs, 

particularly when these drugs are 

supported by sound science and widely 

accepted guidelines. While there is no 

mandate that a health plan cover these 

drugs under § 156.122(a)(1), in absence 

of coverage under § 156.122(a)(1), 

combination drugs or new drugs may be 


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32See 26 CFR 1.45R–2(f)(1). 

33See http://www.irs.gov/pub/irs-drop/rp-13- 

25.pdf. 

determined to be clinically appropriate 

for an enrollee under § 156.122(c). We 

do not intend for this policy to create 

any special regulatory status for 

combination drugs. 

Comment: Some commenters 

recommended that HHS use its 

enforcement authority for noncompliance with the exceptions process. 

Some commenters also recommended 

that HHS collect tracking data on the 

use of the exceptions process and 

provide assistance to enrollees who 

were denied coverage through the 

exceptions process. 

Response: Because States generally 

are the primary enforcers of the EHB 

prescription drug policy, we are not 

collecting nationwide data on the use of 

the exceptions process. Enrollees who 

are having difficulty accessing a health 

plan’s exceptions process should first 

contact the issuer and then contact the 

State’s Department of Insurance if 

necessary. 

Summary of Regulatory Changes 

Based on comments received, we are 

finalizing revisions to § 156.122(c) to 

require that a health plan’s procedures 

include an expedited exceptions process 

based on exigent circumstances that is 

defined as when an enrollee is suffering 

from a health condition that may 

seriously jeopardize the enrollee’s life, 

health, or ability to regain maximum 

function or when an enrollee is 

undergoing a current course of 

treatment using a non-formulary drug 

and that the health plan must make its 

coverage determination on such 

requests within no more than 24 hours 

after receiving them and continue to 

provide the drug for the duration of the 

exigency. 

b. Cost-Sharing Requirements 

(§ 156.130) 

Under § 156.130(a), cost sharing for 

2014 for self-only coverage may not 

exceed the annual dollar limit described 

in section 223(c)(2)(A)(ii)(I) of the Code. 

The proposed rule also provided that 

under § 156.130(b), for a plan year 

beginning in calendar year 2014, the 

annual deductible for a health plan in 

the small group market for self-only 

coverage could not exceed $2,000. 

However, § 156.130(b) is being removed 

from the regulation text to comply with 

Public Law 113–93, which eliminated 

the limits on deductibles for plans in 

the small group market. 

For 2015 and later years, the annual 

limitation on cost sharing is to be 

increased by an amount equal to the 

product of the annual dollar amount 

described in section 223(c)(2)(A)(ii)(I) of 

the Code and the premium adjustment 

percentage established pursuant to 

paragraph (e) of that section. (The 

limitation for other than self-only 

coverage is twice the limitation for selfonly coverage.) Under § 156.130(d), any 

increase in these annual limits that does 

not result in a multiple of $50 is to be 

rounded to the next lowest multiple of 

50 dollars. 

Section 156.130(e) provides that the 

premium adjustment percentage is the 

percentage (if any) by which the average 

per capita premium for health insurance 

coverage for the preceding calendar year 

exceeds such average per capita 

premium for health insurance for 2013, 

and that this percentage will be 

published annually in the HHS notice of 

benefit and payment parameters. The 

2015 Payment Notice established our 

methodology for calculating the 

premium adjustment percentage. 

In calculating limitations on cost 

sharing and small group deductible in 

the proposed 2015 Payment Notice, we 

rounded these limitations up to the next 

lowest multiple of $50. However, we 

subsequently learned that the IRS 

convention for interpreting similar 

language for a number of longstanding 

tax parameters—such as indexing 

methodologies for the alternative 

minimum tax and the standard 

deduction—is to round down to the 

nearest applicable multiple. For 

example, the Department of the 

Treasury, in a rule on how employers 

should calculate average annual fulltime-equivalent wages for purposes of 

the small employer health insurance tax 

credit, provides that if the result is not 

a multiple of $1,000, employers should 

round the result to the next lowest 

multiple of $1,000.32

As a result, we proposed to align our 

rounding rules with those used by the 

Department of the Treasury and the 

Internal Revenue Service, by amending 

§ 156.130(d) to specify that when 

indexing the annual limitation on cost 

sharing and the annual limitation on 

small group deductibles for years after 

2014, we will round to the multiple of 

50 dollars that is lower than the number 

calculated by the formula. 

Under the proposed amendment, 

using the 2015 premium adjustment 

percentage of 4.213431463 percent we 

established in the 2015 Payment Notice 

and the 2014 maximum annual 

limitation on cost sharing of $6,350 for 

self-only coverage, which was published 

by the IRS on May 2, 2013,33 the 2015 

maximum annual limitation on cost 

sharing would be $6,600 for self-only 

coverage and $13,200 for other than selfonly coverage. 

Similarly, under the proposed 

amendment to § 156.130(d), we applied 

the premium adjustment percentage for 

2015 to calculate the annual limit on 

deductibles for the small group market 

for 2015. However, after the proposed 

rule was published, on April 1, 2014, 

the President signed into law Protecting 

Access to Medicare Act for 2014, which 

includes a provision that eliminates the 

annual limitation on deductibles for 

plans in the small group market. 

Therefore, there is no annual limitation 

on deductibles for small group plans, 

and the premium adjustment percentage 

is no longer applicable. 

Comment: A number of commenters 

supported our proposal to round the 

annual limitation on cost sharing down 

to a lower multiple of $50, to be 

consistent with the practice at the 

Department of the Treasury. A few 

commenters requested that HHS use this 

final rule to amend the regulation to 

reflect new law, which eliminates the 

annual limit on deductibles for small 

group plans. 

Response: We agree with the 

comments and are removing references 

to an annual limit on deductibles for 

plans in the small group market from 

our regulations. We also note that 

issuers do not need to make any changes 

to their 2014 plan cost-sharing 

structures as a result of this change. 

Summary of Regulatory Changes 

We are finalizing our proposal 

regarding rounding as proposed, and we 

are removing from our regulations 

references to the annual limit on 

deductibles for plans in the small group 

market under § 156.130(b) from 

§ 156.130(c) and (d), and are removing 

§ 156.130(b). The 2015 maximum 

annual limitation on cost sharing is 

$6,600 for self-only coverage and 

$13,200 for other than self-only 

coverage. 

2. Subpart C—General Functions of an 

Exchange 

a. QHP Issuer Participation Standards 

(§ 156.200) 

In § 156.200(b)(5), we proposed 

technical amendments to clarify that 

implementing and reporting for the QRS 

and implementing a quality 

improvement strategy are conditions of 

participation in an Exchange. 

Specifically, we proposed to include a 

reference to sections 1311(c)(3) and 

(c)(1)(E) of the Affordable Care Act to 

correctly align with other quality 

standards listed as part of QHP 

certification standards, including the 

ESS. 


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34Shared Responsibility Payment for Not 

Maintaining Minimum Essential Coverage, 78 FR 

53646 (August 30, 2013). 

35Patient Protection and Affordable Care Act; 

Exchange Functions: Eligibility for Exemptions; 

Miscellaneous Minimum Essential Coverage 

Provisions, 78 FR 39494 (July 1, 2013). 

36See CCIIO Sub-Regulatory Guidance: Process 

for Obtaining Recognition as Minimum Essential 

Coverage (October 31, 2013). Available at: http://

www.cms.gov/CCIIO/Resources/Regulations-andGuidance/Downloads/mec-guidance-10-31- 

2013.pdf. 

We also proposed to amend § 156.200 

to add paragraph (h) to require that, in 

order to receive QHP certification, the 

offering issuer attest that, subsequent to 

receiving such certification, it will 

comply with all operational 

requirements contained in Part 156, 

Subparts D, E, H, K, L, and M. We 

proposed to add paragraph (h) to ensure 

that issuers seeking QHP certification 

understand and have fully committed to 

compliance with all operational 

requirements. 

Summary of Regulatory Changes 

We received comments in support of 

the proposed amendments and therefore 

are finalizing § 156.200(b)(5) and (h) as 

proposed. 

b. Enrollment Process for Qualified 

Individuals (§ 156.265) 

We refer readers to the preamble in 

connection with § 155.400 of this final 

rule for a discussion of comments on 

§ 156.265. 

3. Subpart G—Minimum Essential 

Coverage 

a. Other Coverage That Qualifies as 

Minimum Essential Coverage 

(§ 156.602) 

The Affordable Care Act added 

section 5000A of the Code, which 

requires all non-exempt individuals to 

maintain minimum essential coverage 

or pay the individual shared 

responsibility payment. Section 

5000A(f) of the Code defines minimum 

essential coverage as any of the 

following: (1) Coverage under a 

specified government sponsored 

program; (2) coverage under an eligible 

employer-sponsored plan; (3) coverage 

under a health plan offered in the 

individual market within a State; (4) 

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 the 

Treasury, to designate other health 

benefits coverage as minimum essential 

coverage. 

The Treasury Department and the IRS 

published final regulations under Code 

section 5000A on August 30, 2013 (78 

FR 53646).34 On July 1, 2013, HHS 

published final regulations 

implementing certain functions of an 

Exchange for determining eligibility for 

and granting certain exemptions from 

the individual shared responsibility 

payment (78 FR 39494).35 The HHS 

final regulations, codified in 45 CFR 

156.602 and 156.604, also designate 

certain types of coverage as minimum 

essential coverage, and outline 

substantive and procedural 

requirements for other types of coverage 

to apply for recognition as minimum 

essential coverage. 

We proposed to amend § 156.602 by 

adding paragraph (e) to designate 

certain types of foreign group health 

coverage for expatriates as minimum 

essential coverage. These proposed 

provisions would codify previous CMS 

guidance published on October 31, 

2013,36 with some additional detail. 

We are not finalizing this section of 

the proposed rule at this time. We will 

consider finalizing the proposal in the 

future, and will address comments 

received on the proposal at that time. In 

the interim, stakeholders and others can 

rely on the published October 31, 2013 

guidance. 

Summary of Regulatory Changes 

We are not finalizing the provision 

proposed in § 156.602(e) of the 

proposed rule at this time. 

b. Requirements for Recognition as 

Minimum Essential Coverage for Types 

of Coverage Not Otherwise Designated 

Minimum Essential Coverage in the 

Statute or This Subpart (§ 156.604) 

We proposed a technical correction in 

§ 156.604 to clarify that health 

insurance issuers and plan 

administrators, in addition to sponsors 

of coverage and government agencies, 

may apply to HHS on behalf of a plan 

or coverage for recognition as minimum 

essential coverage. 

Summary of Regulatory Changes 

We received no comments on this 

proposal and are finalizing the 

provision as proposed. 

4. Subpart I—Enforcement Remedies in 

Federally-Facilitated Exchanges 

a. Available Remedies; Scope 

(§ 156.800) 

In § 156.800(d), we proposed that 

HHS may consult and share information 

about QHP issuers with other Federal 

and State regulatory and enforcement 

entities to the extent that the 

consultation and information is 

necessary for HHS to determine whether 

an enforcement remedy under subpart I 

is appropriate. 

Comment: We received multiple 

comments in support of our proposed 

regulation, including comments that 

requested we consider expanding this 

authority to include sharing information 

about QHP issuers to other State and 

Federal regulatory and enforcement 

entities that may need this information 

for their oversight purposes. 

Response: Because we intend to share 

information about QHP issuers used for 

oversight and enforcement activities 

with other State and Federal regulatory 

and enforcement entities, and such 

entities have legitimate oversight and 

enforcement purposes for using such 

information, we agree that it is not 

necessary or appropriate for us to limit 

the ways in which such entities could 

use the information we would be 

sharing in a manner that would prohibit 

legitimate oversight and enforcement 

activities. We are finalizing the 

regulation accordingly. 

Summary of Regulatory Changes 

We are finalizing § 156.800(d) as 

proposed, with the modification of 

removing ‘‘to the extent that the 

consultation and information is 

necessary for HHS to determine whether 

an enforcement remedy under subpart I 

is appropriate’’ and replacing it with ‘‘to 

the extent that the consultation and 

information is necessary for purposes of 

State or Federal oversight activities.’’ 

b. Bases and Process for Imposing Civil 

Money Penalties in Federally-Facilitated 

Exchanges (§ 156.805) 

We did not receive comments on the 

proposed addition of § 156.805(d)(3) 

and are finalizing the provision as 

proposed. 

c. Notice of Non-Compliance (§ 156.806) 

We proposed adding § 156.806 to 

explain that HHS will provide a written 

notice to the issuer, to include a 

description of the potential violation, a 

30-day period for the QHP issuer to 

respond and to provide additional 

information to refute an alleged 

violation. 

Comment: Some commenters 

requested that we permit extensions to 

the 30-day period for QHP issuers to 

respond and to provide additional 

information to refute an alleged 

violation. One of these commenters also 

requested that we allow QHP issuers to 

have 60 days, rather than the proposed 

30 days, to respond and provide 

additional information. 

Response: We believe that 30 days 

provides QHP issuers with sufficient 

opportunity to respond and provide 


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37Patient Protection and Affordable Care Act; 

Program Integrity: Exchange, SHOP, and Eligibility 

Appeals, 78 FR 54070 (August 30, 2013) (to be 

codified at 45 CFR parts 147, 153, 155, and 156). 

additional information to refute an 

alleged violation. Additionally, a QHP 

issuer that fails to act within the 30-day 

period will have an opportunity to 

request a hearing under Subpart J of 45 

CFR Part 156. The QHP issuer will have 

the opportunity present its arguments 

and supporting documents at the time of 

the hearing. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.806 of the proposed 

rule without modification. 

d. Bases and Process for Decertification 

of a QHP Offered by an Issuer Through 

a Federally-Facilitated Exchange 

(§ 156.810) 

In § 156.810, we proposed several 

modifications to better align our bases 

for decertification, including bases for 

expedited decertifications, with 

regulatory provisions which have been 

finalized and to clarify certain 

regulatory text. We proposed rewording 

paragraph (a)(6) to clarify that the 

certification criteria means the 

standards under subpart C of this part. 

We also proposed in § 156.810(d) that 

the FFE will be able to pursue an 

expedited decertification for violation of 

paragraph (a)(6). Additionally, we 

proposed clarifying in paragraph (a)(9) 

that violation of State or Federal law 

relating to internal claims and appeals 

and external review processes are bases 

for decertification under this paragraph. 

We proposed aligning the standards set 

forth under subparts K and M with the 

bases for decertification. We proposed 

adding a paragraph (12) to reflect that 

HHS may decertify a QHP if the QHP 

issuer substantially fails to meet the 

requirements related to the cases 

forwarded to QHP issuers under Subpart 

K, and adding a paragraph (13) to reflect 

that HHS may decertify a QHP if the 

QHP issuer substantially fails to meet 

the requirements in Subpart M. 

Comment: We received general 

comments supporting our modifications 

to § 156.810, including the inclusion of 

§ 156.810(a)(6) as a basis for expedited 

decertification and clarification that 

HHS may pursue decertifications for 

violations of applicable standards under 

Subpart C of 45 CFR Part 156. In 

addition, we received comments 

requesting that HHS not include 

violations of the provisions set forth 

under Subparts K and M as bases for 

decertification because the commenters 

indicated that not all of the provisions 

proposed under these Subparts have 

been finalized. One of the commenters 

requested that we extend the good faith 

policy adopted for 2014 until all 

provisions under these Subparts have 

been finalized. 

Response: We recognize that there 

may be instances in which new 

regulations proposed under Subparts K 

or M have not yet been finalized. In 

such instances, HHS would not enforce 

these regulations until they have been 

finalized absent a separate authority to 

enforce these regulations. In the 

meantime, there are provisions set forth 

under Subparts K and M that have been 

finalized and are enforceable, and 

accordingly, we believe that our 

proposed modification to include those 

provisions in § 156.810 is appropriate.37

In the 2015 Letter to Issuers, we stated 

that we did not intend to extend the 

2014 good faith compliance safe harbor. 

Comment: One commenter requested 

that we expressly limit expedited 

decertifications to violations that put 

QHP enrollees’ ability to access 

necessary medical items or services at 

risk or substantially compromise the 

operation of the Exchange. 

Response: We believe there may a few 

rare situations in which expedited 

decertifications may be necessary, but 

which may not be resulting from 

violations that put QHP enrollees’ 

ability to access necessary medical 

items or services at risk or substantially 

compromise the operation of the 

Exchange. For example, if a QHP issuer 

loses its ability offer a QHP based on an 

applicable State law or State action, 

HHS would need a mechanism to 

remove the QHP from the Exchange 

expeditiously. Recognizing that such 

possibility should be rare, but possible, 

we decline to limit expedited 

decertifications as requested, and 

finalize this section as proposed. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.810 of the proposed 

rule, correcting only the numbering of 

the added provisions in paragraph (a). 

5. Subpart L—Quality Standards 

a. Establishment of Standards for HHSApproved Enrollee Satisfaction Survey 

Vendors for Use by QHP Issuers in 

Exchanges (§ 156.1105) 

We proposed to amend § 156.1105 to 

include monitoring and appeals 

processes for HHS-approved ESS 

vendors that would apply for plan years 

beginning 2015. In paragraph (d), we 

proposed that HHS will monitor HHSapproved ESS vendors to ensure 

ongoing compliance with the 

application and approval standards in 

paragraphs (a) and (b). Further, we 

proposed that if HHS determines that an 

approved vendor is non-compliant with 

the standards outlined in paragraph (b), 

they may be removed from the approved 

list described in paragraph (c) and/or 

the submitted survey results may be 

ineligible to be included for ESS results. 

Lastly, we proposed in paragraph (e) an 

appeals process for an ESS vendor that 

submits an application to HHS for 

approval, as described in paragraph (a), 

and is not approved. Specifically, we 

proposed that an ESS vendor may 

appeal HHS’s decision by notifying HHS 

in writing within 15 days of the 

notification of not being approved by 

HHS and submitting additional 

documentation demonstrating how the 

vendor meets the standards in 

paragraph (b). HHS would review the 

submitted documentation and make a 

final approval determination within 30 

days from receipt of the additional 

documentation. An ESS vendor that 

becomes approved via the appeals 

process would be included in the 

approved list, described in paragraph 

(c). 

Comment: Many commenters 

supported the provisions in § 156.1105 

relating to the monitoring and appeals 

processes for ESS vendors. Several 

commenters requested clarification 

how, if HHS determines survey results 

ineligible to be included in ESS results 

because of a non-compliant vendor, the 

affected QHP’s global quality rating 

would be calculated and displayed. 

Commenters urged HHS to minimize 

such circumstances when results would 

not be published and to have adequate 

disclaimers explaining the reason for 

ESS results that are unavailable. A few 

commenters urged HHS to add a hold 

harmless provision to mitigate the harm 

on compliant QHPs who should not be 

penalized due to vendor behavior and to 

have alternative processes in such 

circumstances such as permit use of 

prior year’s scores. 

Response: We clarify that, if HHS 

determines an ESS vendor to be noncompliant with the required standards 

and its survey results are deemed 

ineligible to be included in ESS results, 

HHS would designate those ESS 

measures that are included in the QRS 

as not being available for the current 

reporting year. Similar to the business 

relationships that issuers have with 

survey vendors to administer other 

CAHPS®-like surveys for other products 

(for example, Medicare Advantage), we 

expect issuers to work closely with their 

contracted vendors to mitigate harm on 

compliant QHPs. In such circumstances, 

we will work with affected QHP issuers 


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and ESS vendors and consider 

approaches so that having unavailable 

ESS data is minimized (that is, 

opportunity to re-administer the survey 

using a compliant vendor). These 

standards and processes have been 

informed by our experience with the 

Medicare CAHPS® survey vendor 

program, under which it has been a rare 

occurrence for a vendor to be found 

non-complaint and its survey results 

deemed ineligible. We maintain and 

finalize the standards in 156.1105 as 

proposed. 

Summary of Regulatory Changes 

We are finalizing the provisions 

proposed in § 156.1105 of the proposed 

rule without modification. 

b. Quality Rating System (§ 156.1120) 

In § 156.1120, we proposed standards 

for QHP issuers offering coverage on 

Exchanges to collect and report the 

necessary information to implement the 

QRS pursuant to section 1311(c)(3) of 

the Affordable Care Act. In paragraph 

(a), we proposed data submission 

requirements for a QHP issuer for the 

information necessary to calculate the 

quality ratings for coverage offered on 

Exchanges under the QRS, and in 

§ 156.1120(b), we proposed to direct a 

QHP issuer to annually submit data 

necessary to calculate the QHP’s quality 

ratings to HHS and the Exchange, on a 

timeline and in a standardized form and 

manner specified by HHS. In paragraph 

(a)(1), we proposed that a QHP issuer 

must submit data to calculate quality 

ratings for each QHP that has been 

offered in an Exchange for at least one 

year. In paragraph (a)(2), we proposed to 

direct a QHP issuer to submit data that 

has been validated in a form and 

manner specified by HHS. 

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

a QHP issuer must include information 

in its data submission only for those 

QHP enrollees at the reporting level 

specified by HHS that is necessary to 

calculate the quality ratings. 

We noted that multi-State plans, as 

defined in § 155.1000(a), are subject to 

reporting QRS data for calculation of 

quality ratings by HHS, as described in 

paragraph (a). The U.S. Office of 

Personnel Management (OPM) will 

provide guidance on quality reporting to 

issuers with whom it holds multi-State 

plan contracts. 

Lastly, in paragraph (c), we proposed 

that an issuer may reference its QHP’s 

quality rating information in its 

marketing materials, in a manner 

specified by HHS. Similarly, in the 

subsequent section 156.1125 regarding 

the ESS, we proposed a similar 

marketing standard in § 156.1125(c) that 

a QHP issuer may reference the ESS 

results for its QHPs in its marketing 

materials, in a manner specified by 

HHS. 

Comment: Many commenters 

expressed concern that the proposed 

data validation process provides an 

unfair advantage to NCQA, would lead 

to NCQA having a monopoly and 

eliminate competition among 

accrediting entities. Commenters also 

noted that the proposed approach could 

disadvantage those issuers seeking 

accreditation from the other two 

recognized accrediting entities. Some 

commenters stated that some issuers 

may incur additional fees for services 

already purchased by URAC which may 

increase consumer premiums and affect 

their ability to continue participating in 

Exchanges. 

Response: We acknowledge that in the 

initial years of QRS implementation, 

some QHP issuers may incur additional 

costs and burden for data validation 

since the QRS measure stewards may 

not be aligned with their chosen 

accrediting entity. However, we believe 

that the majority of QHP issuers offering 

coverage through the Exchanges in the 

initial years already have established 

relationships with HEDIS (Healthcare 

Effectiveness Data and Information Set) 

compliance auditors such that there 

should be minimal overall costs and 

burdens to the health care system. We 

refer commenters to the relevant 

estimated burden and costs in the 

Marketplace Quality Standards PRA 

package that is associated with the 

NPRM and available at http://

www.cms.gov/Regulations-andGuidance/Legislation/

PaperworkReductionActof1995/PRAListing.html. We believe that aligning 

QRS measure validation requirements 

with the existing processes of the 

measure stewards provides consistency 

to ensure that valid and appropriate 

data are used to calculate quality rating 

information for public reporting. HHS 

anticipates refining the QRS over time 

as we gain experience about measures 

that are the most appropriate to the 

Exchange and approaches to quality 

measurement and health plan reporting 

evolve. As the QRS matures, we intend 

to consider changes to measures as well 

as ways to minimize the burden of QRS 

data collection, validation and 

submission. In addition, we are 

exploring ways to further streamline 

and align the accreditation standards 

with the quality reporting requirements 

to reduce duplicative and overlapping 

requirements. 

Comment: Several commenters 

requested clarification of the data 

validation process and suggested 

alignment and coordination with the 

measure stewards so that there would 

not be multiple, independent audit 

requirements. They did not support 

having independent third party 

validation and monitoring by HHS 

because of concerns of duplicative 

requirements and cost. One commenter 

expressed concern regarding combining 

the HEDIS and CAHPS® validation 

processes causing issues with 

coordination with vendors and 

unnecessary burden. 

Response: We clarify that we intend 

to direct QHP issuers to follow the data 

validation process of the QRS measure 

stewards. We do not intend to combine 

data validation processes for HEDIS and 

CAHPS® or ESS measure data; however, 

we clarify that, consistent with 

§ 156.1125(b)(2), the survey sample data 

that the QHP issuer will need to provide 

to their contracted ESS vendor would 

need to be validated in a form and 

manner specified by HHS. We anticipate 

directing QHP issuers to use an 

independent third party to perform this 

validation. We intend to allow issuers to 

use the same third party validator used 

for QRS measures for validating the ESS 

survey sample, similar to the HEDIS 

CAHPS® process. We anticipate 

releasing technical guidance in 2014 to 

provide further details regarding data 

validation, finalized measures and 

measure specifications. We agree with 

commenters and believe that it is 

important to align and coordinate with 

existing data validation and submission 

requirements. 

Comment: Several commenters 

requested that if HHS uses proprietary 

measures related to one accrediting 

entity, that HHS require that those data 

sets and quality measures be made 

freely available to all QHP issuers and 

to recognized accrediting entities to 

avoid imposing additional regulatory 

costs on those issuers seeking 

accreditation through the other entities. 

Some commenters requested 

consideration of allowing reporting of 

either HEDIS or quality measure data 

from the other two accrediting entities. 

Response: We understand 

commenters’ concerns regarding the 

need to make information on the QRS 

measure data sets available to all QHP 

issuers. We intend to provide details 

including QRS quality measure 

specifications (which will include 

details on the underlying measures that 

comprise the QRS) in technical 

guidance to be posted on an HHS Web 

site. Any organization may use the QRS 

measure specifications to report its 

performance without charge, and health 

plans may share their results. However, 

to designate the results as HEDIS data, 


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38Patient Protection and Affordable Care Act; 

Exchanges and Qualified Health Plans, Quality 

Rating System (QRS) Framework, Measures and 

Methodology; Notice with Comment, 78 FR 69418 

(Nov. 19, 2013). 

the results must have been audited by 

an NCQA-Certified HEDIS Auditor. A 

successful audit ensures reliability and 

comparability of results for measures 

that are designated as HEDIS. We 

believe that requiring submission of a 

standard set of QRS quality measures, 

validated in a consistent manner as 

specified by the measure stewards, for 

all QHP issuers is critical to the goals of 

the QRS including the ability to provide 

reliable, comparable, and uniform 

quality data to consumers regardless of 

the Exchange. In addition, we 

considered non-HEDIS health plan 

quality measures during the measure 

selection process. However, based on 

the measure selection and measure set 

evaluation criteria, that were developed 

using the National Quality Forum (NQF) 

Measure Evaluation Criteria and the 

Measures Application Partnership 

(MAP) Measure-Selection Criteria 

(which factored in importance, 

performance gap, reliability and 

validity, feasibility and alignment) the 

majority of proposed measures to be 

included in the QRS for the initial years 

are HEDIS measures. As noted in the 

proposed rule, after considering public 

comments and review of the measures 

outlined in the November 19, 2013 

Federal Register Notice with 

Comment 38 on the QRS framework 

(QRS Notice), we intend to finalize the 

quality measures and anticipate 

publishing the finalized 2015 QRS 

measure set in the near future on a HHS 

Web site. We anticipate greater 

availability over time of more robust, 

data-driven clinical quality measures 

specified for health plans and which 

provide meaningful information 

regarding changes in a patient’s health 

outcome and intend to continue to seek 

feedback regarding evolution of the 

QRS. In addition, we are exploring ways 

to further streamline and align the 

accreditation standards with the quality 

reporting requirements to reduce 

duplication and minimize the burden of 

QRS data collection, validation and 

submission. 

Comment: One commenter requested 

that the QHP rating information be 

accessible in an easy electronic format 

and that the rating methodology be 

released to issuers at the same time as 

the scores are released to allow issuers 

to estimate their own ratings. 

Response: We agree and clarify that 

the QRS and ESS information will be 

easy to access in an electronic format. 

We intend to minimize burden by 

providing QRS and ESS information to 

issuers in an electronic format such as 

through Electronic File Transfers so that 

the vast majority of stakeholders would 

be able to easily download and view the 

data. Further we clarify that the 2015 

beta test QRS scoring specifications and 

technical guidance which will include 

the ESS scoring methodology, would be 

released in 2014, in advance of the 

release of scores, to provide issuers 

ample time to estimate ratings if they so 

choose. 

Comment: Many commenters 

suggested revisions to the QRS measure 

set. Some commenters urged CMS to 

incorporate all CAHPS® measures from 

the ESS into the QRS and not just a 

subset. 

Response: As we noted earlier in the 

rule, we appreciate comments related to 

the QRS measure set, as well as the ESS 

measures, and they will inform future 

modifications and evolution of 

Exchange quality reporting; however, 

these comments are outside the scope of 

this rulemaking. 

Comment: Several commenters 

supported the proposed approach for 

product-level reporting for the QRS in 

the initial years because more granular 

reporting would not be feasible due to 

potential sample size issues. One 

commenter urged CMS to clarify what it 

means by product-level reporting and to 

align the level of reporting with the 

process used by accreditors. Many 

commenters recommended collection 

and reporting for the QRS at the metal 

tier level because consumer experience 

will be different for plans at different 

metal levels and this information is 

critical for enrollees’ ability to make 

informed decisions about a particular 

plan. 

Response: Although we acknowledge 

that consumer experience and 

characteristics may be different for 

QHPs at different metal levels, we 

believe that it is necessary, in the initial 

years of implementation, to provide a 

balanced approach regarding the level of 

data collection and public display for 

the QRS and ESS. We believe that there 

are fewer potential sample size issues 

with ESS reporting versus QRS 

reporting based on the populations 

eligible to participate in the ESS (that is, 

most measures include the entire 

enrollee population) and the limitations 

of eligible populations for the majority 

of QRS clinical quality measures (that 

is, most measures do not include the 

entire patient population, rather a 

subset of the population for which a 

clinical action is being measured). We 

also believe it is important to align the 

initial reporting of QRS information 

with the product-level requirements for 

QHP accreditation requirements. While 

we are maintaining the requirement that 

ESS data be submitted at the metal tier 

level, we anticipate aligning the public 

display of the ESS results with the QRS 

at the product-level for consistency 

across the quality measures and 

associated accreditation standards. We 

will re-examine the possibility of 

displaying the ESS results at a more 

granular level following an analysis of 

the 2015 beta test results. HHS is 

currently researching implementation of 

a process to collect data in a way that 

would allow us to assess the feasibility 

of level of coverage (for example, 

platinum, gold, silver, bronze, and 

catastrophic) reporting for the QRS as 

Exchanges mature and QHP enrollment 

grows. We maintain in the final rule that 

a QHP issuer must submit data at the 

level that will be specified by HHS but 

reiterate that the level of data 

submission may not align with the level 

of public reporting during the initial 

implementation of the QRS and ESS to 

provide greater flexibility regarding 

calculating scores based on different 

factors including adequate sample sizes 

and reliable measurement data. 

Comment: Many commenters urged 

HHS to review and monitor the content 

of marketing materials as part of 

ongoing compliance reviews. Some 

commenters did not support the 

proposed marketing provision without 

accompanying HHS guidelines and a 

review process for marketing materials. 

Response: We are finalizing the 

marketing provisions for the QRS and 

ESS, in § 156.1120 and § 156.1125 

respectively, as proposed. We believe 

that it is important to set initial 

guidelines regarding referencing the 

QRS ratings and ESS results in issuer 

marketing materials for its respective 

QHPs and will be issuing future 

technical guidance that provides details 

regarding use and display of QRS and 

ESS results in issuer marketing 

materials. We note that we will consider 

effective and streamlined approaches of 

reviewing marketing materials as QHP 

issuer monitoring and oversight 

activities evolve in future years. As we 

stated in the Exchange final rule, States 

have significant experience with, and 

existing infrastructure to support 

monitoring and oversight of health plan 

marketing activities. We encourage a 

streamlined approach of incorporating 

review of a QHP issuer’s marketing 

materials referencing quality ratings and 

ESS results as part of an Exchange’s 

monitoring and oversight activities. 

Comment: Some commenters 

supported the proposal to allow data 

collection based on combined 

populations if the plan offerings are the 


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same inside and outside the Exchange to 

enhance sample size and reliability of 

data. Several commenters did not 

support the proposed approach because 

of potential differences that may be 

reflected in quality, confusion for 

consumers and skewed QRS results. 

One commenter noted that some issuers 

may only offer QHPs on the Exchanges 

and therefore may not have the ability 

to combine data with products offered 

outside the Exchange. Commenters 

urged HHS to reconsider the proposed 

approach and consider alternatives such 

as comparison within a peer group. 

Response: We agree with commenters 

regarding potential differences in 

enrollee characteristics of QHPs offered 

inside and outside the Exchange that 

may impact QRS and ESS results. We 

believe that it is important for the 

reliability and validity of the QRS to 

have adequate sample sizes and have 

the appropriate enrollee data to reflect 

meaningful information and differences 

regarding QHP quality to consumers 

selecting plans in the Exchange. During 

the 2015 beta testing period, we will not 

use data from QHPs outside the 

Exchange. We will assess the impact 

that this approach has on quality ratings 

in the beta test and will consider the 

feasibility of alternative approaches to 

ensure appropriate sample size and 

reliability of data. We anticipate issuing 

future guidance on whether plan 

offerings outside the Exchange that 

would be considered the same as one 

that is certified as a QHP and offered 

through the Exchange, as defined in 

§ 153.500, can be included in the QRS 

and ESS. 

Comment: Several commenters 

supported alignment of accreditation 

standards with QRS, ESS and QIS 

reporting. One commenter supported 

continued use of HEDIS and CAHPS®

measures to ensure alignment with 

accrediting entities. 

Response: We agree with commenters 

and note that to minimize burden and 

costs, it is important that alignment of 

QHP accreditation standards and quality 

reporting in the Exchanges be achieved 

as much as possible. We are considering 

updating standards for recognized 

accrediting entities and QHP 

accreditation in the near future and will 

solicit comment at that time regarding 

the potential of deeming QHP issuers 

and recognized accrediting entities in 

compliance with the accreditation 

requirements related to clinical quality 

measures and patient experience ratings 

by meeting the ESS and QRS 

requirements. We expect to continue 

use of robust, evidence-based measures 

including HEDIS, CAHPS® and other 

measures that reflect the National 

Quality Strategy priorities. 

Comment: Many commenters 

supported the proposed timeframes of 

QRS and ESS implementation including 

2015 beta testing and public reporting 

during the 2016 open enrollment period 

for the 2017 coverage year. A few 

commenters urged HHS to finalize the 

QRS measures and measure 

specifications to provide to issuers by 

May 2014 at the latest so that issuers 

would have sufficient time to collect 

and submit data in time for beta testing. 

A few commenters expressed concern 

that consumers would have to wait until 

the 2016 open enrollment period to 

access quality rating information. And 

some commenters requested further 

delay for implementation because of the 

disproportionate financial and staff 

burden on new and smaller plans. 

Response: We believe that the 2015 

beta testing and 2016 public reporting 

timeframes are appropriate and 

consistent with QHP issuer 

accreditation requirements for the FFE 

and most State Exchanges to report 

clinical quality and CAHPS® data in 

2016. In addition, we believe the 

proposed timeframes offer a balanced 

approach to providing consumers with 

meaningful, tested QHP quality 

information and providing issuers 

ample time to prepare for collection and 

submission of validated data. The 

majority of plans already have 

established processes and experience for 

similar, existing quality reporting and 

we acknowledge that new and smaller 

plans may have increased burden; 

however, we believe that the phase in 

implementation of QRS and ESS 

beginning in 2015 with beta testing is 

the appropriate approach. We anticipate 

publishing the finalized QRS measure 

set soon after the publication of this 

final rule. 

Summary of Regulatory Changes 

We are finalizing the proposed 

provision with the following 

modification: In paragraph 

§ 156.1120(a)(3), we replace ‘‘at the 

reporting level specified by HHS’’ with 

‘‘at the level specified by HHS’’ to better 

distinguish between the level at which 

collection of QRS data as well as the 

level of public display of QRS data that 

would be required. 

c. Enrollee Satisfaction Survey 

(§ 156.1125) 

At § 156.1125(a), we proposed to 

direct QHP issuers to contract with an 

HHS-approved ESS vendor, as 

identified by § 156.1105, to administer 

the ESS of the QHP’s enrollees. We also 

proposed to direct a QHP issuer to 

authorize its contracted ESS vendor to 

report survey results to HHS and the 

Exchange on the issuer’s behalf. In 

paragraph (b), we proposed several data 

requirements to clarify the standards for 

collection and submission of ESS data. 

At § 156.1125(b)(1), we proposed to 

direct a QHP issuer to collect data of 

eligible enrollees for each QHP with 

more than 500 enrollees in the previous 

year that has been offered in an 

Exchange for at least one year following 

a survey sampling methodology 

provided by HHS. In paragraph (b)(2), 

we proposed to direct a QHP issuer to 

submit data, necessary to conduct the 

ESS, that has been validated in a form 

and manner specified by HHS. 

In paragraph (b)(3), we proposed to 

direct a QHP issuer to include only 

those QHP enrollees at the reporting 

level specified by HHS, for data 

submitted for the ESS. 

In paragraph (d), we proposed to 

direct a QHP issuer to submit data 

necessary to conduct the survey to its 

contracted ESS vendor on a timeline 

and in a form and manner specified by 

HHS. We stated our intention to align 

the timeframes of the proposed 

reporting requirements for the ESS and 

the QRS. 

We also noted that Multi-State Plans, 

as defined in 45 CFR 155.1000(a), are 

subject to providing the data described 

in paragraph (b). The OPM will provide 

guidance on ESS reporting to issuers 

with whom it holds Multi-State Plan 

contracts. 

Comment: The majority of 

commenters supported the proposed 

approach of aligning the ESS with 

existing CAHPS® surveys and processes. 

Some commenters requested that we 

leverage the annual, existing CAHPS®

survey to meet the ESS requirement. 

One commenter requested clarification 

of how the CAHPS® 5.0 Adult Medicaid 

Survey would be modified for the 

Exchanges. 

Response: We have leveraged existing 

CAHPS® surveys and processes in the 

development of the ESS (or QHP 

Enrollee Survey). In addition, we are 

considering approaches and will seek 

comment in future rulemaking for 

further alignment of QHP issuer 

accreditation and quality reporting in 

the Exchanges, including but not 

limited to ESS reporting. We clarify that 

the QHP Enrollee Survey includes all of 

the CAHPS® Health Plan 5.0 (Adult 

Medicaid) items with additional items 

based on a comprehensive review of the 

literature and related surveys, focus 

groups, stakeholder discussions, and 

input from a technical expert panel, as 

we described in the PRA supporting 

statements available under CMS Form 


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39Agency Information Collection Activities: 

Health Insurance Marketplace Consumer 

Experience Surveys: Enrollee Satisfaction Survey 

and Marketplace Survey Data Collection; Notice, 78 

FR 65658 (Nov. 1, 2013). 

Number 10488 at http://www.cms.gov/

Regulations-and-Guidance/Legislation/

PaperworkReductionActof1995/PRAListing.html. 

Comment: One commenter urged HHS 

to use the term ‘‘experience’’, rather 

than ‘‘satisfaction’’ when describing the 

survey because ‘‘experience’’ is 

considered a more objective and 

relevant source of data. A few 

commenters sought clarification 

regarding enrollee eligibility for the ESS 

and the QHP sample size requirements. 

Two commenters recommended larger 

sample sizes to ensure adequate 

response rates and to align with 

commercial CAHPS® or other 

satisfaction surveys. 

Response: We have used the term ESS 

in this rule to mirror the statutory 

language of section 1311(c)(4) of the 

Affordable Care Act. However, the name 

of the ESS survey that will be 

administered to enrollees is ‘‘QHP 

Enrollee Experience Survey’’. We 

incorporate the size requirement in 

156.1125(b) to align with the statutory 

language in section 1311(c)(4) that 

requires the development of an ESS to 

evaluate enrollee satisfaction with QHPs 

offered through an Exchange, ‘‘for each 

such qualified health plan that had 

more than 500 enrollees in the previous 

year.’’ We agree that adequate sample 

sizes and response rates are needed for 

statistically valid measurement rates. 

For more information on our approach 

to adequate sample size and response 

rates for the survey, we refer 

commenters to the PRA supporting 

statements available under CMS Form 

Number 10488 at http://www.cms.gov/

Regulations-and-Guidance/Legislation/

PaperworkReductionActof1995/PRAListing.html. 

Comment: A few commenters 

supported collecting and reporting ESS 

measure data at the metal tier level to 

provide meaningful, disaggregated 

information to consumers. However, 

several commenters acknowledged that 

sample sizes could be too small to 

ensure valid and reliable measurement, 

especially in the early years of the 

Exchanges and therefore urged HHS to 

follow the same approach as QRS data 

collection, at the product-level. 

Response: We believe that, similar to 

the approach for QRS data collection 

and reporting, it is important to have a 

balanced approach that will allow for us 

to provide useful information to 

consumers while ensuring that the data 

is statistically significant and reliable. 

We agree with commenters and 

acknowledge that sample sizes may be 

too small to report at the metal-tier level 

and therefore maintain in the final rule 

the intention to publicly display ESS 

measure data at the product-level in 

alignment with the QRS. However, we 

note that we believe that there are fewer 

potential sample size issues with ESS 

reporting versus QRS reporting based on 

the populations eligible to participate in 

the ESS. Most measures for the ESS 

include the entire enrollee population, 

while the majority of QRS measures are 

limited because they would not extend 

to the entire patient population. Similar 

to the QRS, we clarify that we intend to 

require QHPs to submit data at a level 

specified by HHS that will allow for us 

to determine the feasibility of using 

more granular levels for data reporting 

and public display in the future. At this 

point in time, we anticipate requiring 

the submission of ESS data at the more 

granular metal tier level and will be 

issuing technical guidance in the near 

future that provides further details 

regarding the ESS data reporting 

process. 

Marketplace Survey 

Sections 1313 and 1321(a) of the 

Affordable Care Act provide the 

Secretary with general authority to 

establish standards and regulations 

related to Exchanges, QHPs, and other 

components of title I of the Affordable 

Care Act. In § 155.1200(b)(3), we direct 

State Exchanges to submit performance 

monitoring data on an annual basis, 

which would include information on 

consumer satisfaction. Pursuant to this 

legal authority, HHS proposed a 

consumer experience survey, or the 

Marketplace survey, to assess consumer 

experience with the Exchanges 39

including obtaining information 

regarding aspects such as the 

application and eligibility 

determination process for Medicaid/

Children’s Health Insurance Program 

(CHIP) coverage and the Insurance 

Affordability Programs. 

Comment: Many commenters 

supported establishing the Marketplace 

survey and directing State Exchanges to 

submit survey sampling data to HHS. 

Commenters also urged HHS to provide 

full access to the public of survey 

results, similar to the ESS. A few 

commenters recommended inclusion of 

Medicaid eligibles and data based on 

various demographics such as gender, 

language preference, and disability 

status. 

Response: We maintain that the 

purpose of the Marketplace survey is to 

inform the quality improvement of 

Exchanges; we, therefore, intend to 

provide Exchanges with the results of 

the Marketplace survey and will 

consider ways to make this information 

available to the public. We appreciate 

the comments regarding suggestions for 

sampling data criteria which will inform 

future years of Marketplace survey 

implementation and may consider 

directing State Exchanges to submit 

survey sampling data to HHS. For more 

information on the Marketplace Survey, 

we refer commenters to the PRA 

supporting statements available under 

the CMS Form Number 10488 at http:// 

www.cms.gov/Regulations-andGuidance/Legislation/Paperwork

ReductionActof1995/PRA-Listing.html. 

Summary of Regulatory Changes 

We are finalizing the proposals for 

ESS and Marketplace Surveys with the 

following modification: In paragraph 

§ 156.1125(b)(3), we replace ‘‘at the 

reporting level specified by HHS’’ with 

‘‘at the level specified by HHS’’ to better 

distinguish between the level at which 

collection and submission of ESS data 

by QHP issuers that would be required, 

as opposed to the level of public display 

or reporting of ESS data by Exchanges 

that would be required. 

I. Part 158—Issuer Use of Premium 

Revenue: Reporting and Rebate 

Requirements 

1. Subpart A—Disclosure and Reporting 

a. ICD–10 Conversion Expenses 

(§ 158.150) 

In September 2012, the Secretary 

changed the date on which issuers are 

required to adopt ICD–10 as the 

standard medical code set from October 

1, 2013 to October 1, 2014. 

Subsequently, the Protecting Access to 

Medicare Act of 2014 (Pub. L. 113–93), 

enacted on April 1, 2014, mandated that 

this date be further delayed to October 

1, 2015. Because the ICD–10 

implementation date has been 

postponed past 2013, issuers may incur 

conversion costs beyond 2013 that 

would otherwise have been incurred 

only in 2012 and 2013. Therefore, in the 

proposed rule, we proposed to permit 

issuers to continue including their ICD– 

10 conversion costs as activities that 

improve health care quality (QIA), up to 

0.3 percent of an issuer’s earned 

premium in the relevant State and 

market, through the MLR reporting year 

in which ICD–10 implementation is 

required by the Secretary. 

Comment: We received several 

comments supporting inclusion of ICD– 

10 conversion costs in QIA past 2013, as 

well as several comments opposing 

inclusion of these costs past 2014. Some 

commenters supporting the extension 


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40Letter to Insurance Commissioners, Center for 

Consumer Information and Insurance Oversight, 

November 14, 2013. Available at: http://

www.cms.gov/CCIIO/Resources/Letters/Downloads/

commissioner-letter-11-14-2013.pdf. 

also requested that the 0.3 percent cap 

be raised to 0.4 percent. 

Response: Because data continue to 

show that ICD–10 expenses have not, on 

average, exceeded 0.3 percent of 

premium, we are not raising the cap to 

0.4 percent. In addition, because we 

recognize that the recent Congressional 

delay of the ICD–10 implementation 

date to 2015 may cause issuers to 

continue to incur implementation costs, 

such as concurrently maintaining ICD– 

9 and ICD–10 systems and performing 

additional testing, we are continuing to 

allow inclusion of ICD–10 conversion 

costs in QIA through the MLR reporting 

year in which ICD–10 implementation is 

required by the Secretary. 

Summary of Regulatory Changes 

We are finalizing the changes to 

§ 158.150 as proposed. 

2. Subpart B—Calculating and Providing 

the Rebate 

a. MLR and Rebate Calculations in 

States with Merged Individual and 

Small Group Markets (§§ 158.211, 

158.220, 158.231) 

In the proposed rule, we proposed to 

amend § 158.220(a) and § 158.231(a) to 

specify that the individual and small 

group market data must always be 

aggregated if a State requires these two 

markets to be merged, and to amend 

§ 158.211 to clarify that if a State 

establishes a higher MLR standard for 

the merged market, this higher standard 

must be used to calculate any rebates for 

the merged market. 

Comment: We received one comment 

supporting the requirement to use the 

higher State MLR standards in 

calculating rebates. We received no 

comments specific to the proposed data 

aggregation standard in States that 

require the individual and small group 

markets to be merged. 

Response: We appreciate the 

comment regarding the higher State 

MLR standards. 

Summary of Regulatory Changes 

We are finalizing the amendments 

proposed in §§ 158.211, 158.220, and 

158.231 of the proposed rule without 

modification. 

b. Accounting for Special Circumstances 

(§ 158.221) 

On November 14, 2013, the Federal 

government announced a policy under 

which, if certain conditions were met, it 

would decline to enforce certain 

specified 2014 market reforms against 

certain non-grandfathered health 

insurance coverage in the individual or 

small group market renewed between 

January 1, 2014 and October 1, 2014, 

and requested that States adopt a similar 

non-enforcement policy.40 CMS noted 

in the Proposed 2015 Payment Notice 

(78 FR 72322) that this transitional 

policy would not have been anticipated 

by issuers in setting rates for 2014 and 

stated that we were exploring 

modifications to different programs 

(including but not limited to the MLR 

program) to help mitigate the impact of 

this policy. 

As we explained in the proposed rule, 

issuers that provided transitional 

coverage may have incurred additional 

administrative costs, such as expenses 

related to developing and sending 

required consumers notices, and 

creating and submitting new policy and 

rate filings. As further stated in the 

proposed rule, we also recognize that 

issuers of QHPs in the individual and 

small group markets may have incurred 

costs due to technical issues during the 

launch of the State Exchanges and FFEs. 

Therefore, in the proposed rule, we 

proposed to account for the special 

circumstances of plans affected by the 

transitional policy and plans affected by 

the technical issues during the launch of 

the State Exchanges and FFEs by 

amending § 158.221 to allow for an 

adjustment to the MLR calculation for 

such issuers. Specifically, we proposed 

to allow issuers offering transitional 

coverage in the individual and small 

group markets to multiply the incurred 

claims and expenses for quality 

improving activities incurred in 2014 in 

the MLR numerator by 1.0001. We also 

proposed to allow issuers offering 

coverage through the State and Federal 

Exchanges in the individual and small 

group markets to multiply the incurred 

claims and expenses for quality 

improving activities incurred in 2014 in 

the MLR numerator by 1.0004. These 

adjustments would only extend to 

issuers in the individual and/or small 

group markets that offered transitional 

coverage or participated in the State 

Exchanges and FFEs, and only for the 

2014 reporting year. A transitional 

policy cost adjustment to the formula 

for calculating an issuer’s MLR would 

not apply in States that did not 

implement the transitional policy, or in 

States that did, to issuers that did not 

elect to implement it. Similarly, the 

proposed adjustment to the formula for 

calculating an issuer’s MLR related to 

the initial Exchange technical issues 

would not be available to issuers that 

did not elect to participate in the 

Exchanges. 

Comment: Some commenters 

expressed support for adjustments to the 

MLR formula for plans affected by the 

transitional policy and plans affected by 

the technical issues during the launch of 

the State and Federal Exchanges. These 

commenters also expressed concern that 

the adjustments are inadequate, but 

none provided specific data to support 

this assertion or suggested specific 

alternative adjustments. Commenters 

requested that both adjustments also be 

provided for 2013; one of these 

commenters requested that the 

adjustment related to Exchange 

technical issues continue in 2015; while 

two of these commenters requested that 

the adjustment related to transitional 

policy continue while transitional 

coverage remains in force. One 

commenter additionally recommended 

that instead of multiplying the MLR 

numerator by an adjustment factor, CMS 

permit issuers to deduct actual 

administrative costs related to Exchange 

implementation from the MLR 

denominator. Another commenter 

recommended this alternative approach 

(that is, to permit a deduction of actual 

administrative expenses) for costs 

related to the transitional policy, and 

recommended that CMS waive the 

Exchange user fee for issuers affected by 

Exchange implementation problems 

instead of the proposed adjustment. 

Both these commenters argued that such 

alternative approaches would benefit 

issuers who meet or exceed the MLR 

standard. 

In contrast, other commenters 

expressed concern that adjustments to 

the MLR formula may undermine the 

MLR program’s effectiveness in keeping 

premiums down, and urged CMS not to 

extend the proposed adjustments 

beyond 2014. One commenter further 

requested that issuers be required to 

demonstrate that they in fact incurred 

additional administrative costs. 

Response: The proposed adjustments 

were based on the best data available to 

us, and the types of expenses we 

considered were the types of expenses 

described by the commenters. Absent 

more specific and substantiated 

recommendations with accompanying 

supporting data, we do not have a basis 

for increasing the adjustments. Further, 

the costs issuers incurred in connection 

with the transitional policy are often 

one-time and will decline over time, 

and the same is true of the Exchangesrelated costs as the functioning of the 

Exchanges improves in 2015. Lastly, we 

recognize that the proposed adjustments 

to the MLR numerator only provide 

relief to issuers that did not meet the 

MLR standard, since such adjustments 

would merely cause issuers meeting the 


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MLR standard to exceed the standard by 

a larger percentage than they already 

did. However, we find that the 

alternative adjustments to the MLR 

denominator suggested by some 

commenters have similar limitations. In 

addition, such alternative adjustments 

would be more administratively 

burdensome to implement than the 

proposed uniform adjustments, and 

would be more susceptible to abuse. We 

believe that the proposed adjustments 

appropriately account for the special 

circumstances related to 

implementation of the transitional 

policy and initial technical problems of 

the Exchanges, while still requiring 

issuers to comply with the statutory 

MLR requirement. 

Summary of Regulatory Changes 

We are finalizing the amendments 

proposed in § 158.221 of the proposed 

rule without modification. 

c. Distribution of De Minimis Rebates 

(§ 158.243) 

The MLR December 7, 2011 final rule 

defines the threshold amounts below 

which rebates are considered to be de 

minimis and sets forth the provisions for 

distribution of such rebates. In the 

proposed rule, we proposed to amend 

the provisions for de minimis rebates in 

§ 158.243 to clarify how issuers must 

distribute rebates where: (1) all of an 

issuer’s rebates are de minimis, or (2) 

distribution of de minimis rebates to 

enrollee(s) whose rebates are not de 

minimis would result in an enrollee 

receiving a rebate that exceeds the 

enrollee’s annual premium. In these two 

situations, we proposed requiring the 

issuer to distribute de minimis rebates 

to enrollees in the policies that 

generated the de minimis rebates, and 

not to aggregate such rebates and 

distribute them to other enrollees whose 

rebates are not de minimis. 

Comment: We received several 

comments opposing the proposed 

amendments to the de minimis 

provisions. The commenters argue that 

requiring distribution of any de minimis 

rebates directly to enrollees is contrary 

to the rationale behind the MLR de 

minimis provision. The commenters 

assert that the administrative burden of 

directly distributing de minimis rebates 

would exceed the benefit to consumers. 

One of these commenters recommended 

including the total amount of de 

minimis rebates, when all of an issuer’s 

rebates are de minimis, in premium rate 

calculations for the following year. This 

commenter also recommended that in 

cases where distribution of de minimis 

rebates to enrollee(s) whose rebate are 

not de minimis would result in an 

enrollee receiving a rebate that exceeds 

the enrollee’s annual premium, the 

issuer be allowed to place the excess of 

the aggregated de minimis rebate over 

premium in a reserve fund, and use it 

first toward the cost of operating this 

fund, and second in premium rate 

calculations for the following year. 

Another commenter recommended that 

issuers be allowed to distribute the de 

minimis rebates to the State for use in 

health education. 

Response: We acknowledge the 

commenters’ concern that the 

administrative costs of directly 

distributing de minimis rebates may 

impose administrative costs in excess of 

the rebate amounts. At this time, few, if 

any, enrollees are known to be affected 

by the two situations described in the 

proposed rule. Therefore, in order to 

consider alternative approaches to the 

treatment of de minimis rebates in these 

two situations, we are not finalizing the 

proposed clarifications and will address 

this issue in future rulemaking. 

Summary of Regulatory Changes 

We are not finalizing the amendments 

proposed in § 158.243 of the proposed 

rule at this time. 

IV. Provisions of Final Regulations 

For the most part, this final rule 

incorporates the provisions of the 

proposed rule. Those provisions of this 

final rule that differ from the proposed 

rule are as follows: 

Changes to § 144.103 

• Adds definitions of ‘‘product’’ and 

‘‘plan’’ and clarifies that standards for 

uniform modification related to benefits 

and cost sharing apply at the plan-level. 

Changes to § 146.152 

• Applies the definition of uniform 

modification of coverage and renewal 

notice requirements to issuers offering 

coverage in the small group market. 

• Indicates that a State may only 

broaden the uniform modification 

standard criteria addressing cost-sharing 

structure and service area. 

• Adds language to clarify and amend 

the term ‘‘pursuant to applicable 

Federal or State requirements.’’ 

• Deletes the reference to ‘‘counties’’ 

in the service area criterion. 

Changes to § 146.180 

• Adds that an opt-out election for 

multiple self-funded, non-Federal 

governmental plans subject to a single 

collective bargaining agreement must 

specify each group health plan subject 

to the agreement. 

• Adds that a sponsor submitting optout elections for multiple self-funded, 

non-Federal governmental plans that are 

not subject to a collective bargaining 

agreement, must submit a separate optout election document for each such 

plan. 

• Replaces the special rule for timely 

filings of opt-out elections by U.S. mail 

with a special rule for timely filings of 

opt-out elections in electronic format, 

and provides that if the latest filing date 

falls on a Saturday, Sunday, or a State 

or Federal holiday, CMS accepts filings 

submitted the next business day. 

Changes to § 147.106 

• Applies the definition of uniform 

modification of coverage and renewal 

notice requirements only to issuers 

offering coverage in the individual and 

small group markets. 

• Adds language to clarify and amend 

the term ‘‘pursuant to applicable 

Federal or State requirements.’’ 

• Indicates that a State may only 

broaden the uniform modification 

standard criteria addressing cost-sharing 

structure and service area. 

• Deletes the reference to ‘‘counties’’ 

in the service area criterion. 

• Adds that Medicare eligibility or 

entitlement is not a basis for 

nonrenewal or termination of an 

individual’s health insurance coverage 

in the individual market. 

Changes to § 148.122 

• Applies the definition of uniform 

modification of coverage and renewal 

notice requirements to issuers offering 

coverage in the individual market. 

• Adds language to clarify and amend 

the term ‘‘pursuant to applicable 

Federal or State requirements.’’ 

• Indicates that a State may only 

broaden the uniform modification 

standard criteria addressing cost-sharing 

structure and service area. 

• Deletes the reference to ‘‘counties’’ 

in the service area criterion. 

Changes to § 148.220 

• Aligns introductory text with the 

statutory language. 

• Clarifies that, to be an excepted 

benefit, fixed indemnity insurance in 

the individual market can be provided 

only to individuals who attest in their 

application (1) that they have other 

health coverage that is minimum 

essential coverage; or (2). that they are 

treated as having minimum essential 

coverage due to their status as a bona 

fide resident of any possession of the 

United States pursuant to Code section 

5000A(f)(4)(B). 

• Clarifies that fixed indemnity 

insurance pays in a fixed dollar amount 

per period of hospitalization or illness, 

per service, or both. 


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• Requires notice to be displayed in 

the application for the fixed indemnity 

insurance (as opposed to the plan 

materials). 

• Adds a new paragraph specifying 

an applicability date for the minimum 

essential coverage and notice 

requirements to policies issued on or 

after January 1, 2015. For policies issued 

before that date, this paragraph also 

specifies an applicability date for the 

notice requirement to plan years 

beginning on or after January 1, 2015, 

and for the attestation requirement, to 

plan years beginning on or after October 

1, 2016. 

Changes to the Allocation of 

Reinsurance Contributions 

• Modifies our allocation of 

reinsurance collections if those 

collections fall short of our estimates for 

a particular benefit year: we will 

allocate the reinsurance collections for 

that benefit year first to the reinsurance 

payment pool, and second to 

administrative expenses and the U.S. 

Treasury. 

Changes to § 155.120 

• Makes technical revisions to 

§ 155.120(c) to clarify that organizations 

must comply with other, non-Exchange, 

applicable non-discrimination statutes. 

• Revises § 155.120(c)(2) to clarify 

that organizations that limit their 

provision of certified application 

counselor services to a defined 

population under this exception must 

still comply with the nondiscrimination provisions in paragraph 

(c)(1)(ii) with respect to the provision of 

these services to that defined 

population. 

Changes to § 155.206 

• Clarifies that the requirements 

applicable to consumer assistance 

entities under this section refer to the 

applicable Federal regulatory 

requirements that have been 

implemented pursuant to section 

1321(a)(1) of the Affordable Care Act, 

including provisions of any agreements, 

contracts, and grant terms and 

conditions between HHS and the 

consumer assistance entity that interpret 

those statutory and regulatory 

requirements or establish procedures for 

compliance with them. 

• Clarifies that HHS must provide a 

written notice to a consumer assistance 

entity of its investigation, rather than 

requiring HHS to provide a written 

notice to an entity each time HHS learns 

of a potential violation. 

• Adds a factor allowing HHS to take 

into consideration whether other 

remedies or penalties have been 

imposed for the same conduct or 

occurrence. 

• Provides a six-year statute of 

limitations period. 

Changes to § 155.210 

• Removes the provision specifying 

non-Federal standards that prohibit any 

individual or entity from acting as 

Navigators that would be eligible to 

participate under standards applicable 

to the FFE. 

• Renumbers and extends to all 

Exchanges the provision regarding nonFederal standards that would, as 

applied or implemented in a State, 

prevent the application of Federal 

requirements applicable to Navigators. 

Adds specification for requirements that 

prevent the Exchange’s implementation 

of the Navigator program consistent 

with Federal requirements. 

• Revises the provision specifying 

requirements to carry errors and 

omissions coverage and replaces it with 

‘‘any requirement that, in effect, would 

render all Navigators in the Exchange to 

be licensed agents and brokers.’’ 

• Adds that in an FFE, no health care 

provider individual or entity shall be 

ineligible to operate as a Navigator 

solely because it receives consideration 

from a health insurance issuer for health 

care services provided. 

• Adds that in an FFE, no individual 

or entity shall be ineligible to operate as 

a Navigator solely on the basis that it 

does not maintain its principal place of 

business in the Exchange service area. 

• Moves the provision prohibiting 

compensation on a per-application, perindividual-assisted, or per-enrollment 

basis to § 155.215 to apply only in the 

FFE. 

• Adds that gifts, gift cards, or cash 

may exceed nominal value for the 

purpose of providing reimbursement for 

legitimate expenses incurred by a 

consumer in effort to receive Exchange 

application assistance, such as, but not 

limited to, travel or postage expenses. 

• Adds that Exchange funds cannot 

be used to purchase gifts or gift cards, 

or promotional items that market or 

promote the products or services of a 

third party. 

• Adds that consumers may be 

solicited by going door-to-door or other 

unsolicited means of direct contact, 

including calling a consumer if there is 

a pre-existing relationship and other 

applicable laws are complied with. 

• Adds that outreach and education 

activities may include going door-todoor or other unsolicited means of 

direct contact, including calling a 

consumer. 

• Adds that automatic telephone 

dialing system or an artificial or 

prerecorded voice may be used to 

initiate contact consumers if there is a 

pre-existing relationship and other 

applicable laws are complied with. 

• Changes the requirement to obtain 

authorization to access a consumer’s 

personally identifiable information in a 

form and manner determined by the 

Secretary to a form and manner 

determined by the Exchange, adds that 

the authorization must be retained in a 

form and manner determined by the 

Exchange, and clarifies the retention 

period is no less than six years. 

Removes explicit reference to Federal 

regulations at 45 CFR 92.42 and 45 CFR 

74.53. 

• Clarifies that the duty to provide 

information in a fair, accurate and 

impartial manner includes providing 

fair, impartial, and accurate information 

that assists consumers with submitting 

the eligibility application, clarifying the 

distinctions among QHPs, and helping 

consumers make informed decisions 

during the health coverage selection 

process. 

Changes to § 155.215 

• Expressly enumerates, rather than 

incorporates applicable provisions 

under § 155.210 by reference, the 

provisions regarding non-Federal 

standards that would prevent the 

application of the provisions of title I of 

the Affordable Care Act as applied to 

the non-Navigator assistance personnel 

program subject to § 155.215. 

• Removes the provision specifying 

non-Federal standards that prohibit any 

individual or entity from acting as nonNavigator assistance personnel subject 

to § 155.215 that would be eligible to 

participate under standards applicable 

to the FFE. 

• Extends to all Exchanges the 

provision regarding non-Federal 

standards that would, as applied or 

implemented in a State, prevent the 

application of Federal requirements 

applicable to non-Navigator assistance 

personnel subject to § 155.215. Adds 

specification for requirements that 

prevent the Exchange’s implementation 

of the non-Navigator assistance program 

consistent with Federal requirements. 

• Adds that in an FFE, no health care 

provider individual or entity shall be 

ineligible to operate as non-Navigator 

assistance personnel solely because it 

receives consideration from a health 

insurance issuer for health care services 

provided. 

• Adds that in an FFE, no individual 

or entity shall be ineligible to operate as 

non-Navigator assistance personnel 

solely on the basis that it does not 

maintain its principal place of business 

in the Exchange service area. 


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• Adds a provision prohibiting 

compensation on a per-application, perindividual-assisted, or per-enrollment 

basis to § 155.215 to apply only in the 

Federally-facilitated Exchange. 

• Adds an effective date of November 

15, 2014 for the prohibition on 

compensation on a per-application, perindividual-assisted, or per-enrollment 

basis. 

• Changes the requirement to obtain 

and maintain authorization to access a 

consumer’s personally identifiable 

information in a form and manner 

determined by the Secretary to a form 

and manner determined by the 

Exchange, and clarifies the retention 

period is no less than six years. 

Changes to § 155.225 

• Adds duty to provide information 

to individuals and employees about the 

full range of QHP options and insurance 

affordability programs for which they 

are eligible, which includes providing 

fair, impartial, and accurate information 

that assists consumers with submitting 

the eligibility application, clarifying the 

distinctions among QHPs, and helping 

consumers make informed decisions 

during the health coverage selection 

process. 

• Revises provision specifying 

referrals to third parties not required to 

act in the best interest of applicants 

assisted to those not required to provide 

fair, accurate, and impartial 

information. 

• Removes the provision specifying 

non-Federal standards that prohibit any 

individual or entity from acting as 

certified application counselors that 

would be eligible to participate under 

standards applicable to the FFE. 

• Renumbers and extends to all 

Exchanges the provision regarding nonFederal standards that would, as 

applied or implemented in a State, 

prevent the application of Federal 

requirements applicable to certified 

application counselors. Adds 

specification for requirements that 

prevent the Exchange’s implementation 

of the certified application counselor 

program consistent with Federal 

requirements. 

• Adds that in an FFE, no health care 

provider individual or entity shall be 

ineligible to operate as certified 

application counselors solely because it 

receives consideration from a health 

insurance issuer for health care services 

provided. 

• Removes proposed requirement to 

maintain a physical presence in the 

Exchange service area. Adds that in an 

FFE, no individual or entity shall be 

ineligible to operate as a certified 

application counselor solely on the 

basis that it does not maintain its 

principal place of business in the 

Exchange service area. 

• Adds that gifts, gift cards, or cash 

may exceed nominal value for the 

purpose of providing reimbursement for 

legitimate expenses incurred by a 

consumer in effort to receive Exchange 

application assistance, such as, but not 

limited to, travel or postage expenses. 

• Adds that consumers may be 

solicited by going door-to-door or other 

unsolicited means of direct contact, 

including calling a consumer if there is 

a pre-existing relationship and other 

applicable laws are complied with. 

• Adds that outreach and education 

activities may include going door-todoor or other unsolicited means of 

direct contact, including calling a 

consumer. 

• Adds that automatic telephone 

dialing system or an artificial or 

prerecorded voice may be used to 

initiate contact consumers if there is a 

pre-existing relationship and other 

applicable laws are complied with. 

• Adds an effective date of November 

15, 2014 for the prohibition on 

compensation on a per-application, perindividual-assisted, or per-enrollment 

basis, and limits the application of this 

provision to certified application 

counselors in FFEs. 

• Adds a requirement to obtain and 

maintain authorization to access a 

consumer’s personally identifiable 

information in a form and manner 

determined by the Secretary to a form 

and manner determined by the 

Exchange, and changes the retention 

period for the authorization to access a 

consumer’s personally identifiable 

information to no less than six years. 

Changes to § 155.260 

• Inserts the numerical penalty 

amount instead of a reference to section 

1411(h) of the Affordable Care Act 

where the maximum penalty is 

specified. 

Changes to § 156.265 

• Revises the provisions proposed in 

156.265(d)(1) of the proposed rule as the 

entire paragraph (d), and removes all 

156.265(d)(2), allowing each Exchange 

to establish its own premium payment 

dates. 

Changes to § 156.270 

• Directs that QHP issuers must 

follow the transaction rules established 

by the Exchange in accordance with 

§ 155.430(e). 

Changes to § 155.285 

• Removes the references to sections 

1411(h)(1) and (2) of the Affordable Care 

Act and instead inserts the numerical 

maximum penalty amounts. 

• Adds a factor allowing HHS to take 

into consideration whether other 

remedies or penalties have been 

imposed for the same conduct or 

occurrence at § 155.285(b)(1)(viii). 

Changes to § 155.410 

• Clarifies that starting in 2014, the 

Exchange must provide written notice of 

annual open enrollment to each enrollee 

no earlier than the first day of the month 

before the open enrollment period 

begins and no later than the first day of 

the open enrollment period. 

Changes to § 155.420 

• Clarifies that later coverage effective 

dates for birth, adoption, placement for 

adoption, or placement for foster care 

will be effective the first of the month. 

• Clarifies that earlier effective dates 

are allowed if all issuers in an Exchange 

agree to effectuate coverage only on the 

first day of the specified month. 

• Adds that consumers may report a 

move in advance of the date of the 

move. 

• Establishes a special enrollment 

period for individuals losing medically 

needy coverage. 

Changes to § 155.625 

• Clarifies, in paragraphs (a) and (b), 

that the Exchange may adopt an 

exemption eligibility determination 

made by HHS for applications 

submitted before the start of open 

enrollment for 2016. 

Changes to § 155.705 

• Revises the conditions under which 

a SHOP may permit a one-year 

transition to employee choice. 

• Adds a time frame for submission of 

the State Insurance Commissioner’s 

recommendation that employee choice 

not be implemented and for the SHOP’s 

decision based on that recommendation. 

• Clarifies that the transitional policy 

only applies in 2015. 

• Revised in 155.705(b)(3)(vi) that 

options should be singular as one option 

is available for FF–SHOPs and another 

for State-based SHOPs 

Changes to § 155.725 

• Limits the annual employer and 

employee election period, which begins 

no sooner than November 15, 2014, so 

that it applies only in FF–SHOPs. 

Changes to § 156.122 

• Requires a health plan’s exception 

process to include the ability to 

expedite the reviews for exigent 

circumstances. 


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41We estimate 18 State Exchanges (which 

includes Utah’s SHOP) will develop their own 

processes for recertification. HHS will establish a 

single process in all FFEs. 

Changes to § 156.130 

• Removes the annual limitation on 

deductibles for small group plans. 

Changes to § 156.1120 and § 156.1125 

• Clarifies, for the QRS and the ESS, 

the distinction between the required 

level of data submission and collection 

by QHP issuers, specified by HHS, and 

the level of public reporting or display 

by Exchanges. 

Changes to § 158.243 

• Does not finalize requirements for 

distribution of de minimis rebates. 

V. Waiver of Delay in Effective Date 

Section 553(d) of the APA (5 U.S.C. 

553(d)) requires that a final rule be 

effective not less than 30 days from the 

date of its publication in the Federal 

Register and the Congressional Review 

Act (5 U.S.C. 801(a)(3)), which requires 

a 60-day delayed effective date for major 

rules. This 30-day delay in effective date 

can be waived, however, if otherwise 

provided by an agency for good cause 

found and published with the rule. For 

the reasons set forth below, we find 

good cause to waive the 30-day delay in 

effective date in connection with the 

amendments made in this rule at 

§ 155.705 related to employee choice, 

because the delay is impracticable and 

contrary to the public interest. 

A 30-day delay in the effectiveness of 

the amendments made to § 155.705 in 

this rule would mean that, in States 

with an FF–SHOP, State Insurance 

Commissioners could not comply with 

the deadline to recommend that 

employee choice not be implemented, 

and for a SHOP to make a decision 

based on that recommendation, as set 

forth in the rule. Pursuant to 

§ 155.705(b)(3)(vii), HHS requires that 

both the State Insurance 

Commissioner’s recommendation and 

the SHOP’s decision be completed prior 

to the end of the window within which 

QHPs can submit applications for QHP 

certification, and that in States with an 

FF–SHOP, the State Insurance 

Commissioner’s recommendations must 

be submitted on or before June 2, 2014. 

The QHP certification application 

window for the FFE is expected to open 

on May 27, 2014, and is expected to 

close on June 27, 2014. This would 

mean that issuers would not know 

whether employee choice would be 

available in a State within an FF–SHOP 

prior to the close of the QHP application 

window. Accordingly, issuers would be 

unable to make fully informed decisions 

about SHOP participation and 

appropriate product pricing when 

compiling and submitting their QHP 

certification applications, including the 

rate information included in their 

applications. This uncertainty regarding 

implementation of employee choice 

potentially could result in fewer QHPs 

being offered in the State’s FF–SHOP or 

products being unnecessarily priced 

higher than necessary, which would 

negatively affect the small employers 

that would participate in the FF–SHOP, 

as well as their employees. In order to 

avoid these potential harms to small 

employers and employees, we believe 

the 30-day delay in the effective date of 

this provision would be impracticable 

and contrary to the public interest. 

Additionally, it was impracticable for 

HHS to have proposed this approach 

sooner. The full scope of the issuer and 

State concerns about implementing 

employee choice that motivated the 

amendments to § 155.705 were not 

made known to HHS until early 2014. 

HHS previously had anticipated that its 

2013 decision not to require employee 

choice in SHOPs in 2014 would provide 

issuers of QHPs and SADPs with ample 

time to prepare to fully implement 

employee choice for plan years 

beginning in 2015. However, early in 

2014, HHS learned that some issuers 

and State Departments of Insurance 

continued to be concerned about the 

potential effect of employee choice on 

State small group markets. Because 

employee choice is, for the most part, a 

relatively new concept in the small 

group market and because many issuers 

and States do not have a lot of 

experience in an employee choice 

environment, we understand that some 

issuers believe they do not have 

sufficient information to make pricing 

and plan design decisions for 2015 that 

would not adversely affect small group 

market consumers. 

For the reasons outlined above, CMS 

finds good cause under the APA, 5 

U.S.C. 553(d)(3) to waive the delay in 

effective date and proceed directly with 

the issuance of a final rule with an 

immediate effective date. 

VI. Collection of Information 

Requirements 

Under the Paperwork Reduction Act 

(PRA) of 1995, we are required to 

provide 30-day notice in the Federal 

Register and solicit public comment 

before a collection of information 

requirement is submitted to the Office of 

Management and Budget (OMB) for 

review and approval. This final rule 

contains information collection 

requirements (ICRs) that are subject to 

review by OMB. In order to fairly 

evaluate whether an information 

collection should be approved by OMB, 

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

Reduction Act of 1995 requires that we 

solicit comment on the following issues: 

• The need for the information 

collection and its usefulness in carrying 

out the proper functions of our agency. 

• The accuracy of our estimate of the 

information collection burden. 

• The quality, utility, and clarity of 

the information to be collected. 

• Recommendations to minimize the 

information collection burden on the 

affected public, including automated 

collection techniques. 

We are soliciting public comment on 

each of these issues, which contain 

ICRs. All comments received on these 

ICRs will be addressed at the time the 

30-day notice is published to solicit 

public comments. 

A. ICRs Regarding Recertification for 

Certified Application Counselors 

(§ 155.225) 

Under § 155.225(d)(7), certified 

application counselors are required to 

be recertified on at least an annual basis 

after successfully completing 

recertification training as required by 

the Exchange. Each Exchange is 

required to establish its own 

recertification process and standards 

consistent with these requirements. We 

expect that establishing a process for 

recertification will include creating a 

recertification request form (or similar 

document) in Exchanges that directly 

certify certified application counselors. 

We estimate that up to 18 State 

Exchanges will develop their own 

recertification request form.41 We 

estimate that the development of a 

recertification request form, as may be 

applicable for Exchanges that directly 

certify certified application counselors, 

will take a health policy analyst (at 

$49.35 labor cost per hour) up to 1 hour 

to create, a senior manager (at $79.08 

cost per hour) up to .5 hours (30 

minutes) for review, and an attorney up 

to .5 hours (at $90.15 labor cost per 

hour) for legal review. We estimate that 

the one-time burden will be two hours 

with a cost burden of $134 for each 

Exchange, and the total burden for 18 

State Exchanges will be 36 hours with 

a cost burden of $2,412. 

There are recordkeeping requirements 

associated with developing and 

maintaining a request form. We estimate 

that the time burden associated with 

maintaining a copy of the request form 

will be .016 hours (1 minute); we 

assume that a mid-level health policy 

analyst will maintain electronic copies 


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of the form at minimal cost, which we 

estimate as $0.79 as a one-time 

requirement for the Exchange. The total 

burden for 18 Exchanges is estimated to 

be 1.08 hours and the total cost burden 

will be $14.22. 

There will also be third-party 

disclosure requirements for 18 State 

Exchanges associated with reviewing 

each certified application counselor’s 

recertification request, which will 

require the Exchange to notify the 

individual of the result of its review and 

issue a new certificate for each 

individual who successfully completes 

recertification. This notice requirement 

will apply to the Exchange on an annual 

basis. We estimate that it will take a 

mid-level health policy analyst in the 

Exchange up to .08 hours (5 minutes) to 

notify an individual. The estimated cost 

burden is $4.11 for each individual 

notice, including the certificate. For 

purposes of this analysis, we estimate 

that there will be approximately 30,000 

certified application counselors 

nationwide, or approximately 10,600 

application counselors in 18 State 

Exchanges. The total cost burden will be 

approximately $2,422 for each State 

Exchange. The total burden for 18 State 

Exchanges will be approximately 883 

hours and the total cost burden will be 

$43,593. There will be recordkeeping 

requirements associated with issuing 

each individual notice. We estimate that 

the time burden associated with 

maintaining a copy of the notice and 

certificate will be .016 hours (1 minute); 

we assume that a mid-level health 

policy analyst, with a labor cost of 

$49.35 an hour, will maintain electronic 

copies of the form at minimal cost, 

which we estimate as $0.79 per notice 

for each individual certified application 

counselor. The total recordkeeping 

burden for 10,600 certified application 

counselors in 18 State Exchanges is 

estimated to be 170 hours and the total 

cost burden will be $8,374, or $265 per 

Exchange. 

For Exchanges that designate 

organizations to directly certify certified 

application counselors under 

§ 155.225(b)(1), there will be 

requirements associated with 

implementing a recertification process 

under the applicable Exchange’s 

standards. We expect that this process 

will include creating and issuing a 

recertification request form (or similar 

document) for an organization’s 

certified application counselors to 

submit to indicate their intention to be 

recertified and provide an updated 

conflicts of interest disclosure or other 

attestations as may be required. We 

estimate that up to 5,000 designated 

organizations will develop their own 

recertification request form. We estimate 

that the development of a recertification 

request form will take a health policy 

analyst (at $49.35 labor cost per hour) 

up to 1 hour to create, a senior manager 

(at $79.08 labor cost per hour) up to .5 

hours (30 minutes) for review, and an 

attorney (at $90.15 labor cost per hour) 

up to .5 hours (30 minutes) for legal 

review. We estimate that the one-time 

cost burden will be $134 for each 

organization. The total one-time burden 

for 5,000 organizations nationwide will 

be 10,000 hours and the total cost 

burden will be $670,000. 

There will be recordkeeping 

requirements associated with 

developing and maintaining a request 

form. We estimate that the time burden 

associated with maintaining a copy of 

the request form will be .016 hours (1 

minute); we assume that a mid-level 

health policy analyst with a labor cost 

of $49.35 an hour will maintain 

electronic copies of the form at minimal 

cost, which we estimate as $0.79 as a 

one-time requirement for each 

organization. The total one-time burden 

for 5,000 organizations nationwide is 

estimated to be 80 hours and the total 

cost burden will be $3,950. 

There will also be third-party 

disclosure requirements for designated 

organizations associated with reviewing 

each certified application counselor’s 

recertification request, which will 

require the organization to notify the 

individual of the result of its review and 

issue a new certificate as appropriate. 

This notice requirement will apply to 

the organization on an annual basis. For 

purposes of estimating the burden on 

designated organizations, we assume 

that of the estimated 30,000 certified 

application counselors nationwide, 

approximately 19,400 will be directly 

certified by designated organizations, or 

four certified applications counselors on 

average per designated organization. We 

estimate that it will take a mid-level 

health policy analyst up to .08 hours (5 

minutes) to notify an individual and 

issue a new certificate. The estimated 

cost burden is $4.11 for each individual 

notice. For an estimated 19,400 certified 

application counselors nationwide, or 

approximately four certified application 

counselors on average in each 

organization, the total cost burden will 

be approximately $16.44 for each 

organization. The total burden for 5,000 

designated organizations nationwide 

will be approximately 1,617 hours and 

the total cost burden will be 

approximately $79,734. 

There will be recordkeeping 

requirements associated with issuing a 

certificate. We estimate that the time 

burden associated with maintaining a 

copy of each certificate issued at 

recertification will be .016 hours (1 

minute). We assume that a mid-level 

health policy analyst with a labor cost 

of $49.35 an hour will maintain 

electronic copies of the form at minimal 

cost, which we estimate as $0.79 per 

certificate for each organization. The 

total recordkeeping cost per 

organization will be $3.16. The total 

burden for 5,000 organizations 

nationwide will be 323 hours and the 

total cost burden will be approximately 

$ 15,326. 

There will be third-party disclosure 

requirements for individual certified 

application counselors associated with 

completing the requirements for 

recertification, whether done directly 

through the Exchange or through an 

Exchange-designated certified 

application counselor organization. 

Such recertification requirements will 

include completing Exchange required 

training and might also include 

satisfying other requirements consistent 

with the Exchange-established 

processes, such as providing conflicts of 

interest disclosures, other attestations 

and submitting a recertification request 

form (or similar document) and other 

attestations. These requirements will 

apply to certified application counselors 

on an annual basis. Although nothing 

prohibits individual certified 

application counselors or organizations 

from being funded through sources such 

as applicable private, State, or Federal 

programs, we expect that certified 

application counselors will not be 

guaranteed any specific funding. We 

estimate the professional wage of 

certified application counselors for this 

type of work as equivalent to that of an 

eligibility interviewer for assistance 

from government programs and agency 

resources. We estimate that it will take 

a certified application counselor with a 

labor cost of $26.65 an hour up to 0.17 

hours (10 minutes) to complete and 

submit the recertification request to the 

organization or Exchange, as applicable. 

The estimated cost burden will be $4.53 

for each individual seeking 

recertification. We estimate that there 

will be approximately 30,000 

recertification requests provided, for a 

total burden of 5,000 hours and a total 

cost burden of $135,915 for all certified 

application counselors nationwide. 

There will be third-party disclosure 

requirements associated with taking 

recertification training. We expect that 

an individual certified application 

counselor will provide proof to the 

organization or Exchange that he or she 

has successfully completed the 

recertification training, in accordance 

with the Exchange’s process. We 


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estimate that it will take a certified 

application counselor with a labor cost 

of $26.65 an hour up to .03 hours (2 

minutes) to provide the training 

certificate to the organization or 

Exchange, as may be required. The total 

estimated cost burden is $0.80 for each 

individual seeking recertification. We 

estimate that there will be 

approximately 30,000 training 

certificates provided, and the total 

burden will be 1,000 hours, with a total 

cost burden of $24,000 for all certified 

application counselors nationwide. 

In addition, there will be 

recordkeeping requirements associated 

with the training certification. We 

expect each person who receives 

training will obtain and maintain a 

record of training certification. We 

estimate that the time burden associated 

with maintaining proof of training 

certification is .016 hours (1 minute), 

since we assume this proof will be 

maintained through electronic copies, at 

minimal cost. The total cost estimated 

for each individual to maintain proof of 

training certification will be $0.43. The 

total burden will be 500 hours and the 

total cost burden will be $12,900 for all 

certified application counselors 

nationwide. 

B. ICRs Regarding Consumer 

Authorization (§§ 155.210 and 155.215) 

For purposes of the ICRs associated 

with these provisions, we use the same 

labor cost estimates that were used in 

the final Navigator and non-Navigator 

assistance personnel standards rule 

(Patient Protection and Affordable Care 

Act; Exchange Functions: Standards for 

Navigators and Non-Navigator 

Assistance Personnel, July 17, 2013, 78 

FR 42842). Navigator personnel and 

non-Navigator assistance personnel to 

which § 155.215 applies are estimated to 

have a labor cost of $20 per hour. 

Project leads for Navigator and nonNavigator assistance entities to which 

§ 155.215 applies are estimated to have 

a labor cost of $29 per hour. Senior 

executives for Navigator and nonNavigator assistance entities to which 

§ 155.215 applies are estimated to have 

a labor cost of $48 per hour. These are 

estimates commonly used for estimating 

paperwork burden and do not represent 

a recommendation or a requirement of 

how much Navigator and non-Navigator 

personnel to which § 155.215 applies 

are to be paid. There is nothing in the 

regulations that require any of these 

workers to be paid any specific amount. 

In the ICR currently approved under 

OMB control number 0938–1220, we 

noted that there were 105 Navigator 

grantee organizations at that time in 

FFEs, including SPEs, and we estimated 

that there were 3,000 individuals 

working as Navigators. We estimated the 

number of non-Navigator assistance 

project leads to be 300 and 1,800 for 

personnel and we use those estimates 

here as well. 

In accordance with § 155.210(e)(6) 

and § 155.215(g), Navigators, as well as 

those non-Navigator personnel to whom 

§ 155.215 applies, will be required to 

maintain procedures to inform 

consumers of the functions and 

responsibilities of Navigators and nonNavigator assistance personnel (as 

applicable), and to obtain authorization 

for the disclosure of consumer 

information to the Navigator or nonNavigator assistance personnel (as 

applicable). This will be a one-time 

requirement for the organization. We 

estimate that it will take a Navigator or 

non-Navigator assistance personnel 

project lead up to 2 hours to create the 

form for providing authorization to 

applicants, and a Navigator or nonNavigator senior executive up to 1 hour 

to review the procedure, for a total time 

burden of up to 3 hours. We estimate 

the cost burden associated with creating 

this procedure will be $106 per 

organization. The total cost for all 105 

Navigator grantee organizations is 

estimated to be $11,130. The total cost 

for all 300 non-Navigator assistance 

personnel organizations is estimated to 

be $31,800. 

There are also recordkeeping 

requirements associated with 

developing and maintaining a model 

agreement and authorization form. Each 

organization is expected to maintain a 

copy of the executed forms. We estimate 

that the time burden associated with 

maintaining a copy of executed 

agreement and authorization forms for 

each consumer will be 0.016 hours (1 

minute); we assume these will be 

maintained through electronic copies 

with minimal cost. 

In addition, there will be burdens on 

individual Navigators, as well as those 

non-Navigator assistance personnel to 

whom § 155.215 applies. Under 

§ 155.210(e)(6) and § 155.215(g), 

respectively, Navigators and nonNavigator assistance personnel will be 

required to inform consumers of the 

functions and responsibilities of 

Navigators and non-Navigator assistance 

personnel and obtain authorization for 

the disclosure of consumer information 

to a Navigator or non-Navigator 

assistance personnel prior to obtaining 

the consumer’s personally identifiable 

information. In the final rule on 

certified application counselors (78 FR 

42824, 42854–42855), we estimated that 

it will take a certified application 

counselor 0.25 hours (15 minutes) to 

provide consumers with information 

about the functions and responsibilities 

of a certified application counselor, 

obtain their authorizations, and provide 

any applicable conflict of interest 

disclosures. Because here we are only 

estimating the time required to provide 

consumers with information about the 

functions and responsibilities of a 

Navigator or non-Navigator assistance 

personnel and obtain their 

authorization, we estimate that it will 

take a Navigator or non-Navigator 

assistance personnel 0.1667 hours (10 

minutes) to perform this task. The total 

cost estimate for the consumer 

authorization process for Navigators and 

non-Navigator assistance personnel 

therefore will be $3.33. The total time 

burden on all 3,000 Navigators is 

estimated to be approximately 500 

hours, and the total cost burden on all 

3,000 Navigators is estimated to be 

$9,990. The total time burden on all 

1,800 non-Navigator assistance 

personnel is estimated to be 300 hours, 

and the total cost burden on all 1,800 

non-Navigator assistance personnel is 

estimated to be $5,994. 

C. ICRs Regarding Enrollee Satisfaction 

& Marketplace Surveys (§§ 155.1200, 

156.1105 and 156.1125) 

In § 156.1105 of this rule, we establish 

a monitoring and appeals process for 

HHS-approved ESS vendors. 

Specifically, in § 156.1105(d), we 

establish a process in which HHS will 

monitor approved vendors for ongoing 

compliance. HHS may require 

additional information from approved 

vendors to be periodically submitted in 

order to ensure continued compliance. 

We estimate that HHS will receive 

applications from approximately 40 ESS 

vendors. We estimate that it will take no 

longer than one hour for each vendor (at 

a cost of $24.10 per hour) to comply 

with any additional monitoring by HHS. 

Therefore, we estimate a total annual 

burden of 40 hours for all vendors for 

a total cost burden estimate of $964.00. 

In § 156.1105(e) of this rule, we 

establish a process by which an ESS 

vendor that is not approved by HHS can 

appeal HHS’s determination. It is 

estimated that filing an appeal with 

HHS will take no longer than one hour. 

We estimate that five survey vendors 

that apply may not be approved and all 

of those vendors will appeal HHS’s 

determination and submit additional 

documentation to HHS. Therefore, we 

estimate five responses, for a total of 

five burden hours, for a total cost of 

$120.50. 

The burden estimate associated with 

quality standards for QHP issuers 

related to the ESS outlined in 


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§ 156.1125 will include the time and 

effort required for QHP issuers to 

collect, submit and validate ESS data on 

an annual basis. The burden and cost 

related to the survey respondents and 

ESS vendors associated with the ESS 

has been approved under OMB Control 

Number 0938–1221. In addition, we 

estimate that each QHP will need an 

average of 54 hours or $1,349.60 for the 

ESS to be administered by mail, phone 

and/or by web for its QHPs. Assuming 

a total of 575 QHP issuers, we estimate 

that the annual burden will be 31,050 

hours or $776,020. 

The burden with the Marketplace 

survey under § 155.1200(b)(3) will 

include the time, cost and effort related 

to survey respondents and has been 

approved under OMB Control Number 

0938–1221. In addition, we will revise 

the information collection currently 

approved under OMB Control Number 

0938–1119 to account for any additional 

burden for an Exchange if sampling data 

is needed from State Exchanges for CMS 

to administer the Marketplace survey. 

D. ICR Regarding Quality Rating System 

(§ 156.1120) 

The burden and cost estimates 

associated with quality standards for 

QHP issuers related to the QRS outlined 

in § 156.1120 include estimates for QRS 

measure data collection, validation, and 

submission to CMS. We estimate that a 

total of 575 QHP issuers will collect and 

report QRS measure data, by product 

type, using administrative data sources 

and medical records. Using the BLS 

labor category estimates for a general 

operations manager, computer 

programmer, business operations 

specialist, registered nurse, and medical 

records and health information analyst, 

the estimated annual cost and hourly 

burden for a QHP issuer will be 1650 

hours or $117,424, for an issuer who has 

performance measures data collection 

experience. We estimate that 

approximately eighty percent of all 

issuers, or 460 issuers, have such 

experience. We anticipate additional 

software purchases to generate measure 

data and rates and increased third-party 

data validation fees for issuers that do 

not have the experience in data 

collection and reporting for the QRS as 

required in § 156.1120. Therefore, we 

estimate that the additional cost burden 

for each of the remaining 115 issuers 

will be approximately $102,500 in the 

initial year as they develop their data 

collection systems and processes, for a 

total of approximately $11,787,500. We 

estimate 948,750 hours or $67,518,800 

as the total annual burden for the 

anticipated 575 QHP issuers to collect 

and report QRS data. 

E. ICRs Regarding Quality Standards for 

Exchanges (§§ 155.1400 and 155.1405) 

In § 155.1400 and § 155.1405, we 

direct that each Exchange must display, 

on its Web site, quality rating and ESS 

result information for QHPs offered on 

the Exchange. We estimate 18 State 

Exchanges and the FFE will collect the 

relevant QRS and ESS information for 

display. The burden estimate associated 

with these standards will include 

collection of the necessary data by each 

Exchange to display on its Web site. 

This burden and cost for Exchanges are 

currently approved under OMB Control 

Number 0938–1156 in the total 

estimates related to § 155.205(b) which 

requires the Exchange to maintain an 

up-to-date Internet Web site that 

provides information including ESS and 

quality ratings, on available QHPs 

offered on the Exchange. The provisions 

of this final rule will not affect the 

burden. 

F. ICR Regarding Medical Loss Ratio 

Requirements (§§ 158.150, 158.211, 

158.220, 158.221, and 158.231) 

This rule amends the MLR provisions 

regarding the treatment of ICD–10 

conversion costs. This rule further 

provides MLR calculation adjustments 

for issuers affected by the transitional 

policy announced in the CMS letter 

dated November 14, 2013 and for 

issuers participating in the Exchanges. 

This rule also clarifies how issuers are 

to calculate their MLRs in States that 

require the small group market and 

individual market to be merged. Both 

MLRs and rebates are reported on the 

MLR annual reporting form. 

The burden for the existing 

information collection requirement is 

approved under OMB Control Number 

0938–1164. This includes the annual 

reporting form and instructions that are 

currently used by issuers to submit MLR 

information to HHS. The MLR annual 

reporting form collects information on 

all distributed and owed rebate 

amounts. Prior to the July 31, 2015 

deadline for the submission of the 

annual MLR report for the 2014 MLR 

reporting year, and in accordance with 

the PRA, HHS plans to solicit public 

comment and seek OMB approval for an 

updated MLR annual form that will 

reflect the changes in MLR calculations. 

We do not anticipate that the 

amendments finalized in this rule will 

increase the burden on issuers because 

the changes utilize data that is a subset 

of information that issuers already 

submit to HHS. 

G. ICRs Regarding Civil Money Penalties 

(§§ 155.206 and 155.285) 

Section 155.206 describes the bases 

and processes HHS proposes to use to 

impose CMPs on noncompliant 

consumer assistance personnel and 

organizations. Section 155.285 describes 

the bases and processes HHS proposes 

to use to impose CMPs on persons who 

provide false or fraudulent information 

required under section 1411(b) of the 

Affordable Care Act or who knowingly 

and willfully use or disclose 

information in violation of section 

1411(g) of the Affordable Care Act. The 

ICRs in these provisions are exempt 

from PRA requirements in accordance 

with 5 CFR 1320.4(a)(2) because this 

information will be collected during the 

conduct of an administrative action or 

investigation involving an agency 

against specific individuals or entities. 

H. ICRs Regarding Fixed Indemnity 

Insurance, Notice of Discontinuation, 

Notice of Renewal, Certifications of 

Creditable Coverage and HIPAA OptOut Election Notice, (§§ 146.152, 

146.180, 147.106, 148.122, 148.124, and 

148.220) 

In § 148.220 of this rule, we require 

that issuers of individual market fixed 

indemnity insurance provide a notice 

stating that the coverage is not a 

substitute for major medical coverage 

and that lack of minimum essential 

coverage may result in an additional 

payment with one’s taxes. For policies 

issued after January 1, 2015 the notice 

must be included in the application for 

coverage and for policies issued before 

that date, the notice must be delivered 

shortly before the first renewal date 

occurring on or after January 1, 2015. 

HHS has provided the exact text of the 

notice and it will not need to be 

customized. Sections 146.152, 147.106 

and 148.122 of this rule provide that 

issuers that discontinue a product in the 

group or individual market, and issuers 

that provide the option to renew 

coverage in the small group or 

individual market, must provide written 

notices to enrollees in a form and 

manner specified by the Secretary. HHS 

will provide the exact text of the notices 

in future guidance and they will not 

need to be customized. The burden 

associated with these notices are not 

subject to the Paperwork Reduction Act 

of 1995 in accordance with 5 CFR 

1320.3(c)(2). 

Certifications of creditable coverage 

under § 148.124 will no longer be 

required to be provided starting 

December 31, 2014. The burden is 

currently approved under OMB Control 

Number 0938–0702. In the individual 


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market, the anticipated reduction in 

annual burden hours will be 835,517, 

with an anticipated reduction in cost of 

$25,625,306. The burden for HIPAA 

Opt-out Election notices under 

§ 146.180 is currently approved under 

OMB Control Number 0938–0702 as 

well. Electronic submission of opt-out 

election notice will also reduce costs for 

plans by eliminating the need for 

mailing paper forms. 

I. Emergency Clearance: Public 

Information Collection Requirements 

Submitted to the Office of Management 

and Budget (OMB) 

In compliance with section 

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

Reduction Act of 1995, the Centers for 

Medicare & Medicaid Services (CMS), 

Department of Health and Human 

Services, is publishing a summary of 

this proposed information collection for 

public comment. Interested persons are 

invited to send comments regarding this 

collection’s proposed burden estimates 

or any other aspect of this collection of 

information, including any of the 

following subjects: (1) The necessity and 

utility of the proposed information 

collection for the proper performance of 

the agency’s functions; (2) the accuracy 

of the estimated burden; (3) ways to 

enhance the quality, utility, and clarity 

of the information to be collected; and 

(4) the use of automated collection 

techniques or other forms of information 

technology to minimize the information 

collection burden. 

In compliance with section 

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

Reduction Act of 1995, we have also 

submitted to the Office of Management 

and Budget (OMB) the proposed 

information collection for their 

emergency review. While the collection 

is necessary to ensure compliance with 

an initiative of the Administration, we 

are requesting emergency review under 

5 CFR 1320(a)(2)(i) because public harm 

is reasonably likely to result if the 

regular clearance procedures are 

followed. The approval of this data 

collection process is essential to 

ensuring that States seeking to transition 

to employee choice in 2015 can submit 

recommendations to the SHOP by the 

deadline established in this final rule, 

which, in the FF–SHOPs, is on or before 

June 2, 2014. Without an emergency 

clearance process, many States seeking 

to not implement employee choice in 

2015 will not be able to submit their 

recommendation and have it reviewed 

in a timely manner by the SHOP. Given 

the short time until the QHP 

certification window opens and closes, 

it is critical that the information 

concerning this process be posted by the 

day of publication of this final rule so 

issuers are aware if their particular 

States will not be implementing 

employee choice in 2015 before they 

decide to participate and submit their 

final rates for certification during the 

initial QHP certification window. If 

CMS is required to delay 

recommendation collection and review, 

this will severely impede its ability to 

implement this transitional policy in the 

FF–SHOPs. 

ICR Regarding 2015 Transition to 

Employee Choice (§ 155.705) 

For the FF–SHOP States that would 

like to submit a recommendation that 

the FF–SHOP not implement employee 

choice in 2015, pursuant to 

§ 155.705(b)(2), there will be a formal 

application process. This process will 

include the submission of a 

recommendation by the State’s 

Insurance Commissioner. The written 

recommendation must adequately 

explain that it is the State Insurance 

Commissioner’s expert judgment, based 

on a documented assessment of the full 

landscape of the small group market in 

his or her State, that not implementing 

employee choice would be in the best 

interests of small employers and their 

employees and dependents, given the 

likelihood that implementing employee 

choice would cause issuers to price 

products and plans higher in 2015 due 

to the issuers’ beliefs about adverse 

selection. A State Insurance 

Commissioner’s recommendation would 

need to be based on concrete evidence, 

including but not limited to discussions 

with those issuers expected to 

participate in the SHOP in 2015. 

We estimate that the development of 

an application by the Insurance 

Commissioner will take up to 40 hours 

to create (at $50.00 labor cost per hour). 

We estimate that up to 16 States will 

submit the application and the one-time 

cost burden will be $2,000 for each 

State. The total burden for all States is 

estimated to be 640 hours or $32,000. 

We are requesting OMB review and 

approval of this emergency collection by 

May 27, 2014, with a 180-day approval 

period. Written comments and 

recommendations for this emergency 

request only will be considered from the 

public if received by the date and 

address noted below. 

Copies of the supporting statement 

and any related forms can be found at: 

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

PaperworkReductionActof1995 or can 

be obtained by emailing your request, 

including your address, phone number, 

OMB number, and CMS document 

identifier, to: Paperwork@cms.hhs.gov, 

or by calling the Reports Clearance 

Office at: 410–786–1326. 

When commenting on this proposed 

information collection, please reference 

the CMS document identifier and the 

OMB control number. To be assured 

consideration, comments and 

recommendations must be received in 

one of the following ways by May 23, 

2014: 

1. Electronically. You may submit 

your comments electronically to http:// 

www.regulations.gov. Follow the 

instructions for ‘‘Comment or 

Submission’’ or ‘‘More Search Options’’ 

to find the information collection 

document(s) accepting comments. 

2. By regular mail. You may mail 

written comments to the following 

address: 

CMS, Office of Strategic Operations and 

Regulatory Affairs, Division of 

Regulations Development, Attention: 

Document Identifier (CMS–10523), 

Room C4–26–05, 7500 Security 

Boulevard, Baltimore, Maryland 

21244–1850, and, 

OMB Office of Information and 

Regulatory Affairs, Attention: CMS 

Desk Officer, New Executive Office 

Building, Room 10235, Washington, 

DC 20503, Fax Number: 202–395– 

6974. 

VII. Regulatory Impact Analysis 

A. Summary 

This final rule addresses various 

requirements applicable to health 

insurance issuers, Exchanges, 

Navigators, non-Navigator assistance 

personnel, and other entities under the 

Affordable Care Act. Specifically, the 

rule establishes standards related to 

product discontinuation and renewal, 

quality reporting, non-discrimination 

standards, minimum certification 

standards and responsibilities of QHP 

issuers, the SHOP, and enforcement 

remedies in FFEs. It also provides a 

number of amendments relating to the 

premium stabilization programs, 

calculation of annual limit on cost 

sharing, the MLR program, certified 

application counselor programs, 

affordability exemptions, standards 

regarding how enrollees may request 

access to non-formulary drugs under 

exigent circumstances, and guaranteed 

availability and renewability of coverage 

requirements. Additionally, it 

establishes the grounds for imposing 

CMPs on persons who provide false or 

fraudulent information to the Exchange 

and on persons improperly using or 

disclosing information; and modifies 

standards related to opt-out provisions 

for self-funded non-Federal 


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governmental plans and individual 

market provisions under HIPAA. 

CMS 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. HHS has 

concluded that this rule is likely to have 

economic impacts of $100 million or 

more in any one year, and therefore 

meets the definition of ‘‘significant 

rule’’ under Executive Order 12866. 

Therefore, HHS has provided an 

assessment of the potential costs, 

benefits, and transfers associated with 

this final regulation. 

1. Need for Regulatory Action 

Starting in 2014, qualified individuals 

and qualified employers are able to 

obtain coverage provided through 

Exchanges. The provisions, 

amendments and clarifications in this 

final rule address stakeholder concerns 

and inquiries and help ensure smooth 

functioning of health insurance markets 

and Exchanges and ensure that 

individuals have access to high quality 

and affordable health insurance 

coverage. In addition, this rule amends 

the methodologies for calculating the 

MLR to address ICD–10 conversion 

costs, MLR and rebate calculations in 

States that require the individual and 

small group markets to be merged, and 

to accommodate the special 

circumstances of issuers affected by the 

transitional policy announced in the 

CMS letter dated November 14, 2013, 

and issuers participating in the State 

and Federal Exchanges. 

2. Summary of Impacts 

In accordance with OMB Circular A– 

4, Table VII.1 below depicts an 

accounting statement summarizing 

CMS’s assessment of the benefits, costs, 

and transfers associated with this 

regulatory action. The period covered by 

the RIA is 2014–2018. 

HHS anticipates that the provisions of 

this final rule will help ensure that all 

consumers have access to quality and 

affordable health care coverage and are 

able to make informed choices, ensure 

smooth operation of Exchanges, ensure 

that premium stabilization programs 

work as intended, provide flexibility to 

SHOPs and employers, and protect 

consumers from fraudulent and criminal 

activities and help to mitigate issuers’ 

unexpected administrative costs and 

uncertainties around operations and the 

risk pool, and to stabilize the market as 

it continues to transition to full 

compliance with Affordable Care Act 

requirements. Affected entities such as 

QHP issuers, Navigators and nonNavigator assistance personnel, 

designated certified application 

counselor organizations, certified 

application counselors, survey vendors, 

and States may incur costs to comply 

with the provisions in this final rule, 

including administrative costs related to 

notices, surveys, training, and 

recertification requirements. In 

accordance with Executive Order 12866, 

HHS believes that the benefits of this 

regulatory action justify the costs. 

TABLE VII.1—ACCOUNTING TABLE

Benefits: 

Qualitative: 

* Ensure access to affordable and quality health insurance coverage for all individuals. 

* Minimize unnecessary terminations of coverage and ensure predictability and continuity for consumers. 

* Allow consumers to make informed choices. 

* Lower out-of-pocket costs for individuals who purchase fixed indemnity insurance. 

* Possible reduction in cost sharing due to adjustment in methodology for calculating annual limitations on cost-sharing. 

* Help ensure sufficiency of funds in the reinsurance payment pool. 

* Ensure consumer protection and privacy and security of PII. 

* Discourage fraudulent or criminal activity by consumer assistance personnel and entities. 

* Provide additional flexibility to FF–SHOPs and employers and allow employers to select plans with updated rate information. 

* Improve consistency of MLR calculations among issuers in States with merged individual and small group markets and improve accuracy of 

rebate payments. 


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TABLE VII.1—ACCOUNTING TABLE—Continued 

Costs: Estimate Year 

dollar 

Discount 

rate percent 

Period 

covered 

Annualized Monetized ($millions/year) $48.78 million 1

$49.52 million 1

2013 

2013 

7 

3 

2014–2018 

2014–2018 

Net annual costs to enrollees related to ESS and Marketplace survey; recertification of certified application counselors by States; costs to States 

to submit recommendations to not implement employee choice in 2015; administrative costs incurred by survey vendors to appeal application 

denials; administrative costs to QHP issuers related to data submissions for QRS and ESS administration; costs related to notice and disclosure requirements for certified application counselor recertification; consumer authorization for Navigators and non-Navigator personnel; and a 

reduction in costs for issuers in the individual market due to discontinuation of certification of creditable coverage. 

Qualitative: 

* Costs to certified application counselors to obtain required training for recertification. 

* Reduction in costs to consumers due to ability to make requests to dismiss appeals by telephone. 

* Costs to issuers to comply with the standards for expedited review of a formulary exception request based on exigent circumstances. 

Transfers: Estimate Year 

dollar 

Discount 

rate percent 

Period 

covered 

Annualized Monetized ($millions/year) $2.93 million 

$2.99 million 

2013 

2013 

7 

3 

2014–2018 

2014–2018 

Net annual transfer of rebate dollars to enrollees from shareholders or nonprofit stakeholders, resulting from adjustment in MLR methodology for 

issuers in States with merged individual and small group markets. 

Qualitative: 

* Possible reduction in rebates paid by issuers to enrollees due to adjustment in MLR methodology for issuers affected by the November 2013 

transitional policy and unexpected costs during the implementation of the Exchanges, and to account for ICD–10 conversion costs. 

* Possible transfer of transitional reinsurance program funds collected by the Federal government to non-grandfathered reinsurance-eligible 

plans in the individual market. 

* Possible increase in total risk corridors payment amounts made by the Federal government and decrease in total risk corridors receipts. 

1 Note: Approximately $13 million in costs are estimated in the RIA below and the remaining costs related to ICRs are estimated in section VI 

above. 

3. Anticipated Benefits, Costs and 

Transfers 

The impacts of the existing 

regulations that are being amended and 

clarified in this final rule have already 

been addressed in RIAs included in 

previous rulemaking. This RIA only 

includes the impacts of new provisions 

and any changes to previous estimates 

as a result of amendments to existing 

provisions. 

Benefits 

Provisions of this final rule will help 

ensure that all individuals have access 

to affordable and quality health 

insurance coverage and the necessary 

information to make informed choices. 

Making quality rating and ESS 

information available to consumers will 

allow them to make informed choices 

and provide issuers with an incentive to 

improve quality of care and consumer 

experience. The results from the 

Marketplace survey will drive quality 

improvement in Exchanges by collecting 

information on the consumer experience 

with the Exchange. In addition, the 

quality rating and ESS information will 

also provide regulators and stakeholders 

with information to use for monitoring 

and oversight purposes. The 

amendments to special enrollment 

periods will ensure that individuals 

who experience loss of coverage or 

exceptional circumstances have 

continued access to healthcare. The 

provisions regarding the formulary 

exceptions process will ensure that 

enrollees will have continued access to 

necessary prescription drugs. 

The provisions of this final rule also 

establish minimum Federal standards 

that determine whether coverage 

modifications constitute continuance of 

an existing product in a market within 

a State for products offered both through 

and outside of an Exchange in the 

individual and small group markets. 

This will minimize unnecessary 

terminations of coverage and ensure 

predictability and continuity for 

consumers, while providing issuers the 

flexibility to make the necessary 

adjustments to coverage. The notices of 

product discontinuance and renewal 

will ensure that consumers have 

necessary information regarding their 

choices and the changes in coverage. 

The amendments for fixed indemnity 

insurance will allow such plans to be 

sold as secondary to other health 

insurance coverage that meets the 

definition of minimum essential 

coverage. Such plans may also be sold 

to individuals who are deemed to have 

minimum essential coverage based on 

their status as bona fide residents of 

U.S. territories. This will allow 

individuals that buy such coverage to 

lower their out-of-pocket costs. 

The adjustments to the transitional 

reinsurance program will help ensure 

that the reinsurance payment pool is 

sufficient to provide the premium 

stabilization benefits intended by the 

statute. This policy may lower 

premiums by reducing the uncertainty 

associated with reinsurance payments to 

individual market plans eligible for 

reinsurance payments. The adjustments 

to the risk corridors formula for the 

2015 benefit year will help to mitigate 

issuers’ unexpected administrative costs 

and uncertainties around operations and 

the risk pool, and to stabilize the market 

as it continues to transition to full 

compliance with Affordable Care Act 

requirements. 

The provisions in this final rule will 

ensure that non-Federal requirements 

do not prevent Navigators, nonNavigator assistance personnel, certified 

application counselors and 

organizations from providing 

information and assisting individuals to 

make informed choices and obtain 

health insurance coverage. The 

provisions in this rule also specify some 

of the standards for Navigator and 

certified application counselor conduct 

that will ensure consumer protection 


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42 Detailed burden estimates can be found in the 

Supporting Statement for the Health Insurance 

Marketplace Consumer Experience Surveys: 

Enrollee Satisfaction Survey and Marketplace 

Survey Data Collection, found at https://

www.cms.gov/Regulations-and-Guidance/

Legislation/PaperworkReductionActof1995/PRAListing.html. 

43 Detailed burden estimates can be found in the 

Supporting Statement for the Health Insurance 

Marketplace Consumer Experience Surveys: 

Enrollee Satisfaction Survey and Marketplace 

Survey Data Collection, found at https://

www.cms.gov/Regulations-and-Guidance/

Legislation/PaperworkReductionActof1995/PRAListing.html. 

and ensure that Navigators provide 

information and services concerning 

enrollment in QHPs in a fair and 

impartial manner and that certified 

application counselors act in 

consumers’ best interests. The rule will 

also provide HHS with the authority to 

impose CMPs on Navigators, nonNavigator assistance personnel, certified 

application counselors, and certified 

application counselor organizations in 

the FFE who violate certain Exchange 

standards applicable to them. This will 

ensure that consumers interacting with 

the Exchange receive high-quality 

assistance and robust consumer 

protections. The provisions to impose 

CMPs for provision of false or 

fraudulent information, and improper 

use or disclosure of information will 

also ensure privacy and security of 

consumers’ PII. 

Aligning the start of annual employer 

election periods in the FF–SHOPs with 

the start of open enrollment in the 

corresponding individual market 

Exchange will benefit issuers. A 

uniform QHP filing and review timeline 

for both markets for 2015 will reduce 

confusion and provide efficiencies to 

scale in review, providing potential 

resource savings to QHP issuers. 

Removing the required minimum 

lengths of both the employer election 

period and the employee open 

enrollment period will provide 

additional flexibility to State-based 

SHOPs and employers and allow 

employers to select plans with the most 

up-to-date rate information. 

The amendment to provide a one-year 

transition policy under which a SHOP 

will be permitted to not implement 

employee choice in 2015 will alleviate 

State and issuer concerns that employee 

choice would cause issuers to price 

their products and plans higher in 2015 

due to issuers’ beliefs about adverse 

selection. Allowing for this transitional 

policy in 2015 will provide minimal 

disruption to small group markets. 

The amendment to our methodology 

for calculating the annual limitation on 

cost sharing may reduce cost sharing 

paid by some enrollees in the individual 

market. 

The amendments to the MLR 

methodology in States that require the 

small group market and individual 

market to be merged will improve the 

consistency of MLR calculations among 

issuers in those States and improve the 

accuracy of rebate payments. 

The methodology for determining the 

required contribution percentage will 

provide that determinations of 

affordability exemptions will take into 

account the rate of premium growth 

over the rate of income growth. We do 

not anticipate that this approach will 

significantly alter the number of 

individuals who are expected to enroll 

in health insurance plans or make 

shared responsibility payments. 

Costs 

Affected entities will incur costs to 

comply with the provisions of this final 

rule. Costs related to ICRs subject to 

PRA are discussed in detail in section 

VI and include administrative costs 

incurred by survey vendors to appeal 

application denials; costs to QHP 

issuers related to data submissions for 

QRS, ESS administration; costs related 

to notice and disclosure requirements 

for certified application counselor 

recertification, consumer authorization 

for Navigators and non-Navigator 

assistance personnel; costs to States to 

submit a recommendation for a 2015 

transition to employee choice; and a 

reduction in costs for issuers in the 

individual market due to 

discontinuation of certification of 

creditable coverage. In this section, we 

discuss other costs related to the 

provisions of this rule. 

Each Exchange must establish its own 

recertification process for certified 

application counselors and designated 

certified application counselor 

organizations. We expect that 

establishing a process for recertification 

will include updating recertification 

training materials in all Exchanges. We 

estimate that up to 18 State Exchanges 

will develop their own training 

materials. We expect that an Exchange 

will develop training materials for 

recertification on an annual basis. We 

assume that it will take a mid-level 

health insurance analyst (with an hourly 

labor cost of $49.35) 8 hours to update 

the training, 4 hours for a computer 

programmer (at $52.50 per hour) to 

update the online training module and 

1 hour by a senior manager (at $79.08 

per hour) to review. The total cost for 

each State Exchange is estimated to be 

approximately $680, and the total cost 

for18 State Exchanges will be 

approximately $12,240. 

The requirement for appeals entities 

to dismiss an appeal if the request is 

received via telephonic signature (if the 

appeals entity is capable of accepting 

telephonic withdrawals) will make the 

process more efficient and may reduce 

costs to the appellant. 

The ESS will impact enrollees 

responding to the survey, survey 

vendors and QHP issuers offering 

coverage in the Exchanges. In 2014, a 

psychometric test of the survey will be 

carried out, while in 2015 a beta test 

will be performed. The cost to issuers is 

addressed in section VI. We anticipate 

that in 2014, 4,200 enrollees will 

participate in the psychometric test and 

in 2015 onwards, 6,000,040 enrollees 

will complete the survey. The total cost 

in 2014 of administering the survey to 

enrollees is estimated to be 

approximately $45,549 and the total 

cost to enrollees and survey vendors is 

estimated to be approximately 

$6,507,964 in 2015 and future years. In 

2014, only one survey vendor will 

conduct the psychometric test and in 

the following years, about 40 vendors 

are expected to conduct the survey.42 In 

addition, each QHP issuer will have to 

contract with an ESS vendor. We 

estimate approximately $16,000 as the 

annual cost for a QHP issuer to contract 

with an ESS vendor, for a total annual 

cost of $9.2 million for 575 QHP issuers. 

The Marketplace survey will be 

administered by a survey vendor under 

contract with HHS. A psychometric test 

will be conducted in 2014 with a beta 

test in 2015. Consumers will incur 

burden to respond to the survey. We 

estimate that each response will take 0.4 

hours for a total of 3,150 responses 

requiring 1,260 hours in 2014 and a 

total of 61,200 responses requiring 

24,480 hours in 2015 onwards. Total 

costs will be approximately $30,366 in 

2014 and $589,968 in following years.43

Issuers that provide EHB should 

already have procedures in place that 

allow an enrollee to request and gain 

access to clinically appropriate drugs 

not covered by the plan. This final rule 

includes standards for a health plan’s 

exception process that includes an 

expedited process for exigent 

circumstances. This final rule requires 

issuers to provide a decision on an 

exception request based on exigent 

circumstances and notify the enrollee or 

the enrollee’s designee and the 

prescribing physician (or other 

prescriber as appropriate) of the 

determination no later than 24 hours 

after receiving the request. Depending 

on their current formulary exceptions 

processes, some issuers may incur costs 

to modify them to comply with these 

requirements. 


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Transfers 

Previously, the MLR regulation 

permitted inclusion of ICD–10 

conversion costs in quality improving 

activity expenses only through the 2013 

MLR reporting year. However, the date 

by which issuers are required to adopt 

ICD–10 as the standard medical code 

has been postponed past 2013. 

Therefore, this final rule permits issuers 

to include their ICD–10 conversion costs 

through the MLR reporting year in 

which the Secretary requires conversion 

to be completed. Based on the 2012 

MLR data, we estimate that the ICD–10 

provision reduced total rebates for 2012 

by less than 2 percent. 

This final rule also accounts for the 

special circumstances of issuers affected 

by the CMS November 2013 transitional 

policy by allowing those issuers to 

multiply the incurred claims and 

expenses for quality improving 

activities incurred in 2014 in the MLR 

numerator by 1.0001. This adjustment is 

limited to issuers that provided 

transitional coverage in the individual 

or small group markets in States that 

adopted the transitional policy. In 

addition, this final rule accounts for the 

special circumstances of the issuers that 

provided coverage through the State and 

Federal Exchanges by allowing those 

issuers to multiply the incurred claims 

and expenses for quality improving 

activities incurred in 2014 in the 

numerator by 1.0004. This adjustment is 

limited to issuers offering coverage in 

the individual or small group markets 

through the Exchanges. Based on the 

2012 MLR data, we estimate that the 

adjustment for issuers affected by the 

transitional policy and for issuers 

affected by the Exchanges rollout may 

reduce the total rebates by 0.5 percent 

for 2014. 

In addition, this final rule amends the 

MLR methodology to clarify how issuers 

must calculate MLRs in States that 

require the small group market and 

individual market to be merged for MLR 

calculation purposes. This will improve 

the consistency of MLR calculations 

among issuers in those States and 

improve the accuracy of rebate 

payments. Currently, only 

Massachusetts and Vermont require the 

small group market and individual 

market to be merged Vermont 

requirements take effect in 2014). If an 

issuer met the respective MLR standards 

in the separate markets, then this 

provision will not have any impact on 

rebates. However, if an issuer met the 

MLR standards only in one market and 

merging the two markets results in the 

issuer meeting (or being unable to meet) 

the MLR standards in the merged 

market, the issuer may have to pay 

lower (or higher) rebates and there will 

be a transfer from enrollees to issuers (or 

from issuers to enrollees). Based on the 

2012 MLR data, we anticipate that this 

change may result in issuers paying an 

additional $3.8 million in rebates. 

This rule revises the allocation of 

reinsurance contributions collected for 

the 2014 and 2015 benefit years so that 

if reinsurance collections fall short of 

our estimates, reinsurance collections 

are allocated first to the reinsurance 

pool, and second to administrative 

expenses and the U.S. Treasury on a pro 

rata basis. We expect that this policy 

will not have a significant effect on 

transfers, because we estimate that we 

will collect the full amount of 

reinsurance contributions to fully fund 

the reinsurance payment pool. This 

policy may lower premiums by reducing 

the uncertainty associated with 

reinsurance payments to individual 

market plans eligible for reinsurance 

payments. The Affordable Care Act 

creates a temporary risk corridors 

program for the years 2014, 2015, and 

2016 that applies to QHPs, as defined in 

§ 153.500. The risk corridors program 

creates a mechanism for sharing gains 

and losses between the Federal 

government and QHP issuers. The 

Affordable Care Act establishes the risk 

corridors program as a Federal program; 

consequently, HHS will operate the risk 

corridors program under Federal rules. 

The risk corridors program will help 

protect against inaccurate rate setting in 

the early years of the Exchanges by 

limiting the extent of issuer losses and 

gains. For the 2015 benefit year, we are 

adjusting the risk corridors formula to 

help mitigate QHP issuers’ unexpected 

administrative costs. Although our 

initial modeling suggests that this 

adjustment can increase the total risk 

corridors payment amount made by the 

Federal government and decrease risk 

corridors receipts, we believe that this 

temporary program will be budget 

neutral on the net over three years. 

C. Regulatory Alternatives 

Under the Executive Order, CMS is 

required to consider alternatives to 

issuing rules and alternative regulatory 

approaches. CMS considered the 

regulatory alternatives below: 

1. Collecting ESS Data at the Product 

Level Instead of Each Product Per Metal 

Tier 

Under this alternative, HHS would 

have required QHPs to collect ESS data 

from a single sample for each product 

(versus each product in each metal tier). 

This option would have reduced the 

cost for issuers who offer the same 

product in multiple tiers. However, 

collecting data at the product level 

would have prevented consumers from 

understanding differences in enrollee 

satisfaction at the individual product 

per tier level, which may vary with 

differences in cost sharing. This would 

have reduced the benefits that 

consumers derive from ESS data. 

2. Using Medicaid CAHPS® As Is 

Instead of Adding Additional and New 

Questions to the ESS 

Under this alternative, HHS would 

have required QHPs to collect enrollee 

satisfaction information using the 

Medicaid CAHPS® instrument without 

further enhancement. The ESS will 

include more questions than the 

Medicaid CAHPS®—including detailed 

questions about the patient’s costs—that 

are particularly appropriate to Exchange 

enrollees. Eliminating these questions 

would have reduced the cost to issuers, 

but also would have reduced benefits 

that consumers derive from the ESS 

data. 

3. Collecting QRS Data for Each Product 

Per Metal Tier Instead of at the Product 

Level 

Under this alternative, HHS would 

have required QHPs to collect the QRS 

data at the same level (individual 

product per metal tier) as they collect 

ESS information. Assuming that QHPs 

offer each product in two metal tiers 

this option would have doubled the cost 

to QHPs of collecting QRS data. 

However, it might not have appreciably 

increased consumer information about 

QHPs in the early years of the 

Exchanges if the quality of care in the 

same product does not differ 

significantly within tiers (that is, the 

variation should only be by the 

configuration of cost sharing within a 

limited range of actuarial value). 

Further, a QHP’s enrollment size at the 

product metal level may be too small in 

the early years of Exchange 

implementation to ensure reliable 

results. 

4. Using the Medicare Advantage (MA) 

CAHPS® Instrument and Star System 

Under this alternative, HHS would 

have required QHPs to collect enrollee 

satisfaction information from Exchange 

enrollees using the MA CAHPS®

instrument. The ESS presently includes 

29 more questions than MA CAHPS®. 

Use of the MA CAHPS® would have 

reduced the cost to consumers and also 

the QHP cost of data entry. However, 

the MA CAHPS® instrument and Star 

ratings are designed for a different 

population and are not necessarily 

suitable to measure experience among 


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44These data can be accessed at http://

www.cms.gov/CCIIO/Resources/Data-Resources/

mlr.html. 45The size threshold for ‘‘small’’ business 

established by the SBA is currently $35.5 million 

in annual receipts for health insurance issuers. See 

‘‘Table of Small Business Size Standards Matched 

To North American Industry Classification System 

Codes,’’ effective July 23, 2013, U.S. Small Business 

Administration, available at http://www.sba.gov. 

Exchange enrollees. It also would have 

had limited applicability for use by 

consumers for QHP comparison and 

selection purposes. 

CMS believes that the options 

adopted for this final rule will be more 

efficient ways to extend the protections 

of the Affordable Care Act to enrollees 

without imposing significant burden on 

issuers and States. 

D. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

requires agencies that issue a rule to 

analyze options for regulatory relief of 

small businesses if a rule has a 

significant impact on a substantial 

number of small entities. The RFA 

generally defines a ‘‘small entity’’ as— 

(1) a proprietary firm meeting the size 

standards of the Small Business 

Administration (SBA), (2) a nonprofit 

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 

percent to 5 percent. 

As discussed in the Web Portal 

interim final rule with comment period 

published on May 5, 2010 (75 FR 

24481), HHS examined the health 

insurance industry in depth in the RIA 

we prepared for the proposed rule on 

establishment of the Medicare 

Advantage program (69 FR 46866, 

August 3, 2004). In that analysis it was 

determined that there were few, if any, 

insurance firms underwriting 

comprehensive health insurance 

policies (in contrast, for example, to 

travel insurance policies or dental 

discount policies) that fell below the 

size thresholds for ‘‘small entity’’ 

established by the SBA. Based on data 

from MLR annual report submissions for 

the 2012 MLR reporting year,44 out of 

510 companies offering comprehensive 

health insurance policies nationwide, 

there are 58 small entities, each with 

less than $35.5 million in earned 

premiums, that offer individual or group 

health insurance coverage and will 

therefore be subject to the provisions of 

this final rule.45 Forty three percent of 

these small entities belong to holding 

groups, and many if not all of these 

small entities are likely to have other 

lines of business (for example, 

insurance business other than health 

insurance, and business other than 

insurance) that will result in their 

revenues exceeding $35.5 million. 

Based on this analysis, HHS expects that 

the provisions of this final rule will not 

affect a substantial number of small 

issuers. 

The amendments to the annual 

employer and employee election 

periods in the SHOPs, including 

removing the required minimum lengths 

of both the employer election period 

and the employee open enrollment 

period will benefit State-based SHOPs 

and employers. HHS does not anticipate 

that this will impose any costs on small 

employers. 

Some of the entities that voluntarily 

act as Navigators and non-Navigator 

assistance personnel subject to 

§ 155.215, or as designated certified 

application counselor organizations, 

may be small entities and will incur 

costs to comply with the provisions of 

this final rule. It should be noted that 

HHS, in its role as the operator of the 

FFEs, does not impose any fees on these 

entities for participating in their 

respective programs, nor are there fees 

for taking the Federally required 

training or completing continuing 

education or recertification in FFEs. 

Further, the cost burden related to 

continuing education and 

recertification, and recordkeeping will 

generally be considered an allowed cost 

that will be covered by the Navigator 

grants for the FFEs, and these grant 

funds may be drawn down as the 

grantee incurs such costs. The costs 

associated with these proposals may 

also be covered by other compensation 

provided by an Exchange, such as 

payments through contracts to nonNavigator assistance personnel. Though 

it is very likely that all costs associated 

with these proposals will be largely 

covered by affected entities’ and 

individuals’ funding sources, HHS 

cannot guarantee that all such costs will 

be covered because of the possibility of 

budget limitations applicable to the FFE 

in any given period, and because there 

may be variations in how State 

Exchanges provide funding for these 

programs. To the extent that all such 

costs will not be covered by these 

funding sources, other outside sources 

may also be available to cover unfunded 

costs that remain. Costs incurred by 

designated certified application 

counselor organizations related to 

continuing education and recertification 

and recordkeeping are expected to be 

low. In some circumstances funds from 

sources outside of the Exchange, 

including Federal funds such as Health 

Resources and Services Administration 

(HRSA) grants to health centers, or 

private or State funds may be available 

to cover certified application counselor 

costs. 

E. Unfunded Mandates Reform Act 

Section 202 of the Unfunded 

Mandates Reform Act (UMRA) of 1995 

requires that agencies assess anticipated 

costs and benefits before issuing any 

final rule that includes a Federal 

mandate that could result in 

expenditure in any one year by State, 

local or tribal governments, in the 

aggregate, or by the private sector, of 

$100 million in 1995 dollars, updated 

annually for inflation. In 2014, that 

threshold level is approximately $141 

million. 

UMRA does not address the total cost 

of a final rule. Rather, it focuses on 

certain categories of cost, mainly those 

‘‘Federal mandate’’ costs resulting 

from—(1) imposing enforceable duties 

on State, local, or tribal governments, or 

on the private sector; or (2) increasing 

the stringency of conditions in, or 

decreasing the funding of, State, local, 

or tribal governments under entitlement 

programs. 

This final rule includes mandates on 

State governments and the private 

sector. Issuers, non-Navigator assistance 

personnel, certified application 

counselors and Exchanges are expected 

to incur costs of approximately $13 

million in 2014 and approximately $85 

million in 2015 onwards to comply with 

the provisions of this final rule. 

However, beginning in 2015, issuers in 

the individual market will experience a 

reduction in costs of approximately $26 

million due to the discontinuation of 

the certification of creditable coverage. 

Consistent with policy embodied in 

UMRA, this final rule has been designed 

to be the least burdensome alternative 

for State, local and tribal governments, 

and the private sector while achieving 

the objectives of the Affordable Care 

Act. 

F. Federalism 

Executive Order 13132 establishes 

certain requirements that an agency 

must meet when it promulgates a final 

rule that imposes substantial direct 

requirement costs on State and local 

governments, preempts State law, or 

otherwise has Federalism implications. 

Since States are the primary 

regulators of health insurance coverage, 

State laws will continue to apply to 

health insurance coverage and the 

business of insurance. A State’s 

authority to pass and implement 


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30334 Federal Register / Vol. 79, No. 101 / Tuesday, May 27, 2014 / Rules and Regulations 

additional State requirements that affect 

programs established under the 

provisions of title I of the Affordable 

Care Act is not unlimited, however, but 

extends only to the implementation of 

requirements that would not prevent the 

application of the provisions of title I of 

the Affordable Care Act, including but 

not limited to those provisions which 

provide authority for functions of an 

Exchange, such as the application 

assistance provided by Navigator 

programs, non-Navigator programs and 

certified application counselor 

programs. 

The final rule provides that nonNavigator assistance personnel subject 

to § 155.215, and certified application 

counselors must meet any licensing, 

certification or other standards 

prescribed by the State so long as such 

standards do not prevent the application 

of the provisions of title I of the 

Affordable Care Act, within the meaning 

of section 1321(d) of the Affordable Care 

Act. The final rule also includes a nonexhaustive list of non-Federal 

requirements applicable to Navigators, 

non-Navigator assistance personnel 

subject to § 155.215, and certified 

application counselors that, in HHS’s 

view, prevent the application of the 

provisions of title I of the Affordable 

Care Act, within the meaning of section 

1321(d) of the Affordable Care Act. They 

include non-Federal requirements that 

require referrals to entities or 

individuals not required to provide 

impartial information or act in a 

consumer’s best interest; non-Federal 

requirements that prevent Navigators, 

non-Navigator assistance personnel 

subject to § 155.215, or certified 

application counselors from providing 

services to all individuals seeking 

assistance; non-Federal requirements 

that prevent these assisters from 

providing information regarding 

substantive benefits or comparative 

benefits of different health plans; nonFederal requirements that facially, or as 

applied, make it impossible to fulfill 

required duties; non-Federal standards 

that would, as applied or as 

implemented in a State, prevent an 

Exchange’s implementation of the 

programs for Navigators, non-Navigator 

personnel subject to § 155.215 and 

certified application counselors 

consistent with Federal requirements; 

and non-Federal requirements that 

Navigators hold an agent or broker 

license or requirements that, in effect, 

would require all Navigators in the 

Exchange to be licensed agents and 

brokers. These provisions provide 

HHS’s interpretation of how the 

preemption standard that Congress 

established in section 1321(d) of the 

Affordable Care Act applies to this nonexhaustive list of non-Federal 

requirements for these assister 

programs. 

The final rule establishes Federal 

standards to determine whether 

coverage modifications constitute the 

continuance of an existing product in a 

market within a State for coverage 

offered both through and outside of an 

Exchange in the individual and small 

group markets. Some States may have 

different definitions of what changes to 

a health insurance product constitute 

modifications and what changes 

constitute terminations and re-filings of 

new products. The definitions finalized 

in this rule will preempt any conflicting 

State definitions. The guaranteed 

renewability sections of the PHS Act 

provide in pertinent part that a uniform 

modification of coverage must be 

‘‘consistent with State law.’’ We 

interpret this statutory language as 

governing the extent or type of 

modifications that may legally be made 

under State law. As discussed in the 

preamble to the final rule published on 

February 27, 2013 under section 2703 of 

the PHS Act (78 FR 13419), State laws 

that prevent issuers from uniformly 

modifying coverage to comply with 

Federal law requirements would, in 

effect, prevent the application of such 

requirements and therefore be 

preempted. States, however, have the 

flexibility to broaden the scope of two 

of the criteria for what is considered a 

uniform modification, but not narrow its 

scope. 

Some States already have 

requirements for and publicly report 

health plan quality and outcomes data, 

and we want to encourage State 

flexibility and innovation, consistent 

with the Affordable Care Act. In 

addition to prominently displaying 

quality rating information for each QHP, 

as calculated by HHS in accordance 

with the QRS, a State Exchange may 

display additional QHP quality-related 

information, as appropriate. 

In compliance with the requirement 

of Executive Order 13132 that agencies 

examine closely any policies that may 

have Federalism implications or limit 

the policymaking discretion of the 

States, HHS has engaged in efforts to 

consult with and work cooperatively 

with affected States. HHS has consulted 

with stakeholders on policies related to 

the operation of Exchanges, including 

the SHOP and the premium stabilization 

programs. HHS has held a number of 

listening sessions with State 

representatives to gather public input. 

HHS consulted with State 

representatives through regular 

meetings with the NAIC and regular 

contact with States through the 

Exchange Establishment grant and 

Exchange Blueprint approval processes. 

Throughout the process of developing 

this final rule, HHS has attempted to 

balance the States’ interests in 

regulating health insurance issuers and 

other entities, such as Navigators, nonNavigator assistance personnel, and 

certified application counselors with 

creating a Federal baseline for 

protecting the consumers’ interests. By 

doing so, it is HHS’ view that it has 

complied with the requirements of 

Executive Order 13132. Under the 

requirements set forth in section 8(a) of 

Executive Order 13132, and by the 

signatures affixed to this rule, HHS 

certifies that the CMS Center for 

Consumer Information and Insurance 

Oversight has complied with the 

requirements of Executive Order 13132 

for the attached final rule in a 

meaningful and timely manner. 

G. Congressional Review Act 

This final rule is subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (5 

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

before a rule can take effect, the Federal 

agency promulgating the rule shall 

submit to each House of the Congress 

and to the Comptroller General a report 

containing a copy of the rule along with 

other specified information, and has 

been transmitted to Congress and the 

Comptroller General for review. 

List of Subjects 

45 CFR part 144 

Health care, Health insurance, 

Reporting and record keeping 

requirements. 

45 CFR Part 146 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements. 

45 CFR Part 147 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, State regulation of health 

insurance. 

45 CFR Part 148 

Administrative practice and 

procedure, Health care, Health 

insurance, Penalties, Reporting and 

recordkeeping requirements. 

45 CFR Part 153 

Administrative practice and 

procedure, Adverse selection, Health 

care, Health insurance, Health records, 

Organization and functions 


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(Government agencies), Premium 

stabilization, Reporting and 

recordkeeping requirements, 

Reinsurance, Risk adjustment, Risk 

corridors, Risk mitigation, State and 

local governments. 

45 CFR Part 154 

Administrative practice and 

procedure, Claims, Health care, Health 

insurance, Health plans, Penalties, 

Reporting and recordkeeping 

requirements. 

45 CFR Part 155 

Administrative practice and 

procedure, Health care access, Health 

insurance, Reporting and recordkeeping 

requirements, State and local 

governments, Cost-sharing reductions, 

Advance payments of premium tax 

credit, Administration and calculation 

of advance payments of the premium 

tax credit, Plan variations, Actuarial 

value. 

45 CFR Part 156 

Administrative appeals, 

Administrative practice and procedure, 

Administration and calculation of 

advance payments of premium tax 

credit, Advertising, Advisory 

Committees, Brokers, Conflict of 

interest, Consumer protection, Costsharing reductions, Grant programshealth, Grants administration, Health 

care, Health insurance, Health 

maintenance organization (HMO), 

Health records, Hospitals, American 

Indian/Alaska Natives, Individuals with 

disabilities, Loan programs-health, 

Organization and functions 

(Government agencies), Medicaid, 

Payment and collections reports, Public 

assistance programs, Reporting and 

recordkeeping requirements, State and 

local governments, Sunshine Act, 

Technical assistance, Women, and 

Youth. 

45 CFR Part 158 

Administrative practice and 

procedure, Claims, Health care, Health 

insurance, Health plans, Penalties, 

Reporting and recordkeeping 

requirements, Premium revenues, 

Medical loss ratio, Rebating. 

For the reasons set forth in the 

preamble, the Department of Health and 

Human Services amends 45 CFR parts 

144, 146, 147, 148, 153, 154, 155, 156, 

and 158 as set forth below: 

PART 144—REQUIREMENTS 

RELATING TO HEALTH INSURANCE 

COVERAGE 

■ 1. The authority citation for part 144 

continues to read as follows: 

Authority: Secs. 2701 through 2763, 2791, 

and 2792 of the Public Health Service Act, 

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

and 300gg–92. 

■ 2. Section 144.103 is amended by 

adding new definitions of ‘‘plan’’ and 

‘‘product’’ in alphabetical order to read 

as follows: 

§ 144.103 Definitions. 

* * * * * 

Plan means, with respect to an issuer 

and a product, the pairing of the health 

insurance coverage benefits under the 

product with a metal tier level (as 

described in sections 1302(d) and (e) of 

the Affordable Care Act) and service 

area. The product comprises all plans 

offered within the product, and the 

combination of all plans offered within 

a product constitutes the total service 

area of the product. 

* * * * * 

Product means a discrete package of 

health insurance coverage benefits that 

a health insurance issuer offers using a 

particular product network type within 

a service area. 

* * * * * 

PART 146—REQUIREMENTS FOR THE 

GROUP HEALTH INSURANCE 

MARKET 

■ 3. The authority citation for part 146 

continues to read as follows: 

Authority: Secs. 2702 through 2705, 2711 

through 2723, 2791, and 2792 of the PHS Act 

(42 U.S.C. 300gg–1 through 300gg–5, 300gg– 

11 through 300gg–23, 300gg–91, and 300gg– 

92). 

■ 4. Section 146.152 is amended by— 

■ a. Revising paragraphs (b)(4), (c)(1) 

and (f); and 

■ b. Adding new paragraph (h). 

The revision and addition read as 

follows: 

§ 146.152 Guaranteed renewability of 

coverage for employers in the group 

market. 

* * * * * 

(b) * * * 

* * * * * 

(4) Termination of product. The issuer 

is ceasing to offer coverage in the market 

in accordance with paragraph (c) or (d) 

of this section and applicable State law. 

* * * * * 

(c) * * * 

(1) The issuer provides notice in 

writing, in a form and manner specified 

by the Secretary, to each plan sponsor 

provided that particular product in that 

market (and to all participants and 

beneficiaries covered under such 

coverage) of the discontinuation at least 

90 days before the date the coverage will 

be discontinued; 

* * * * * 

(f) Exception for uniform modification 

of coverage. (1) Only at the time of 

coverage renewal may issuers modify 

the health insurance coverage for a 

product offered to a group health plan 

in the following— 

(i) Large group market; and 

(ii) Small group market if, for 

coverage available in this market (other 

than only through one or more bona fide 

associations), the modification is 

consistent with State law and is 

effective uniformly among group health 

plans with that product. 

(2) For purposes of paragraph (f)(1)(ii) 

of this section, modifications made 

uniformly and solely pursuant to 

applicable Federal or State requirements 

are considered a uniform modification 

of coverage if: 

(i) The modification is made within a 

reasonable time period after the 

imposition or modification of the 

Federal or State requirement; and 

(ii) The modification is directly 

related to the imposition or 

modification of the Federal or State 

requirement. 

(3) For purposes of paragraph (f)(1)(ii) 

of this section, other types of 

modifications made uniformly are 

considered a uniform modification of 

coverage if the health insurance 

coverage for the product in the small 

group market meets all of the following 

criteria: 

(i) The product is offered by the same 

health insurance issuer (within the 

meaning of section 2791(b)(2) of the 

PHS Act); 

(ii) The product is offered as the same 

product network type (for example, 

health maintenance organization, 

preferred provider organization, 

exclusive provider organization, point 

of service, or indemnity); 

(iii) The product continues to cover at 

least a majority of the same service area; 

(iv) Within the product, each plan has 

the same cost-sharing structure as before 

the modification, except for any 

variation in cost sharing solely related 

to changes in cost and utilization of 

medical care, or to maintain the same 

metal tier level described in sections 

1302(d) and (e) of the Affordable Care 

Act; and 

(v) The product provides the same 

covered benefits, except for any changes 

in benefits that cumulatively impact the 

rate for any plan within the product 

within an allowable variation of +/¥2 

percentage points (not including 

changes pursuant to applicable Federal 

or State requirements). 


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(4) A State may only broaden the 

standards in paragraphs (f)(3)(iii) and 

(iv) of this section. 

* * * * * 

(h) Notice of renewal of coverage. If an 

issuer in the small group market is 

renewing grandfathered coverage as 

described in paragraph (a) of this 

section, or uniformly modifying 

grandfathered coverage as described in 

paragraph (f) of this section, the issuer 

must provide to each plan sponsor 

written notice of the renewal at least 60 

calendar days before the date the 

coverage will be renewed in a form and 

manner specified by the Secretary. 

■ 5. Section 146.180 is revised to read 

as follows: 

§ 146.180 Treatment of non-Federal 

governmental plans. 

(a) Opt-out election for self-funded 

non-Federal governmental plans—(1) 

Requirements subject to exemption. The 

PHS Act requirements described in this 

paragraph are the following: 

(i) Limitations on preexisting 

condition exclusion periods in 

accordance with section 2701 of the 

PHS Act as codified before enactment of 

the Affordable Care Act. 

(ii) Special enrollment periods for 

individuals and dependents described 

under section 2704(f) of the PHS Act. 

(iii) Prohibitions against 

discriminating against individual 

participants and beneficiaries based on 

health status under section 2705 of the 

PHS Act, except that the sponsor of a 

self-funded non-Federal governmental 

plan cannot elect to exempt its plan 

from requirements under section 

2705(a)(6) and 2705(c) through (f) that 

prohibit discrimination with respect to 

genetic information. 

(iv) Standards relating to benefits for 

mothers and newborns under section 

2725 of the PHS Act. 

(v) Parity in mental health and 

substance use disorder benefits under 

section 2726 of the PHS Act. 

(vi) Required coverage for 

reconstructive surgery following 

mastectomies under section 2727 of the 

PHS Act. 

(vii) Coverage of dependent students 

on a medically necessary leave of 

absence under section 2728 of the PHS 

Act. 

(2) General rule. For plan years 

beginning on or after September 23, 

2010, a sponsor of a non-Federal 

governmental plan may elect to exempt 

its plan, to the extent the plan is not 

provided through health insurance 

coverage (that is, it is self-funded), from 

one or more of the requirements 

described in paragraphs (a)(1)(iv) 

through (vii) of this section. 

(3) Special rule for certain collectively 

bargained plans. In the case of a plan 

that is maintained pursuant to a 

collective bargaining agreement that was 

ratified before March 23, 2010, and 

whose sponsor made an election to 

exempt its plan from any of the 

requirements described in paragraphs 

(a)(1)(i) through (iii) of this section, the 

provisions of paragraph (a)(2) of this 

section apply for plan years beginning 

after the expiration of the term of the 

agreement. 

(4) Examples—(i) Example 1. A nonFederal governmental employer has 

elected to exempt its self-funded group 

health plan from all of the requirements 

described in paragraph (a)(1) of this 

section. The plan year commences 

September 1 of each year. The plan is 

not subject to the provisions of 

paragraph (a)(2) of this section until the 

plan year that commences on September 

1, 2011. Accordingly, for that plan year 

and any subsequent plan years, the plan 

sponsor may elect to exempt its plan 

only from the requirements described in 

paragraphs (a)(1)(iv) through (vii) of this 

section. 

(ii) Example 2. A non-Federal 

governmental employer has elected to 

exempt its collectively bargained selffunded plan from all of the 

requirements described in paragraph 

(a)(1) of this section. The collective 

bargaining agreement applies to five 

plan years, October 1, 2009 through 

September 30, 2014. For the plan year 

that begins on October 1, 2014, the plan 

sponsor is no longer permitted to elect 

to exempt its plan from the 

requirements described in paragraph 

(a)(1) of this section. Accordingly, for 

that plan year and any subsequent plan 

years, the plan sponsor may elect to 

exempt its plan only from the 

requirements described in paragraphs 

(a)(1)(iv) through (vii) of this section. 

(5) Limitations. (i) An election under 

this section cannot circumvent a 

requirement of the PHS Act to the extent 

the requirement applied to the plan 

before the effective date of the election. 

(A) Example 1. A plan is subject to 

requirements of section 2727 of the PHS 

Act, under which a plan that covers 

medical and surgical benefits with 

respect to a mastectomy must cover 

reconstructive surgery and certain other 

services following a mastectomy. An 

enrollee who has had a mastectomy 

receives reconstructive surgery on 

August 24. Claims with respect to the 

surgery are submitted to and processed 

by the plan in September. The group 

health plan commences a new plan year 

each September 1. Effective September 

1, the plan sponsor elects to exempt its 

plan from section 2727 of the PHS Act. 

The plan cannot, on the basis of its 

exemption election, decline to pay for 

the claims incurred on August 24. 

(B) [Reserved] 

(ii) If a group health plan is cosponsored by two or more employers, 

then only plan enrollees of the nonFederal governmental employer(s) with 

a valid election under this section are 

affected by the election. 

(6) Stop-loss or excess risk coverage. 

For purposes of this section— 

(i) Subject to paragraph (a)(6)(ii) of 

this section, the purchase of stop-loss or 

excess risk coverage by a self-funded 

non-Federal governmental plan does not 

prevent an election under this section. 

(ii) Regardless of whether coverage 

offered by an issuer is designated as 

‘‘stop-loss’’ coverage or ‘‘excess risk’’ 

coverage, if it is regulated as group 

health insurance under an applicable 

State law, then for purposes of this 

section, a non-Federal governmental 

plan that purchases the coverage is 

considered to be fully insured. In that 

event, a plan may not be exempted 

under this section from the 

requirements described in paragraph 

(a)(1) of this section. 

(7) Construction. Nothing in this part 

should be construed as imposing 

collective bargaining obligations on any 

party to the collective bargaining 

process. 

(b) Form and manner of election—(1) 

Election requirements. The election 

must meet the following requirements: 

(i) Be made in an electronic format in 

a form and manner as described by the 

Secretary in guidance. 

(ii) Be made in conformance with all 

of the plan sponsor’s rules, including 

any public hearing requirements. 

(iii) Specify the beginning and ending 

dates of the period to which the election 

is to apply. This period can be either of 

the following periods: 

(A) A single specified plan year, as 

defined in § 144.103 of this subchapter. 

(B) The ‘‘term of the agreement,’’ as 

specified in paragraph (b)(2) of this 

section, in the case of a plan governed 

by collective bargaining. 

(iv) Specify the name of the plan and 

the name and address of the plan 

administrator, and include the name 

and telephone number of a person CMS 

may contact regarding the election. 

(v) State that the plan does not 

include health insurance coverage, or 

identify which portion of the plan is not 

funded through health insurance 

coverage. 

(vi) Specify each requirement 

described in paragraph (a)(1) of this 

section from which the plan sponsor 

elects to exempt the plan. 

(vii) Certify that the person signing 

the election document, including (if 


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applicable) a third party plan 

administrator, is legally authorized to 

do so by the plan sponsor. 

(viii) Include, as an attachment, a 

copy of the notice described in 

paragraph (f) of this section. 

(ix) In the case of a plan sponsor 

submitting one opt-out election for all 

group health plans subject to the same 

collective bargaining agreement, include 

a list of plans subject to the agreement. 

(x) In the case of a plan sponsor 

submitting opt-out elections for more 

than one group health plan that is not 

subject to a collective bargaining 

agreement, submit a separate election 

document for each such plan. 

(2) ‘‘Term of the agreement’’ defined. 

Except as provided in paragraphs 

(b)(2)(i) and (ii) of this section, for 

purposes of this section ‘‘term of the 

agreement’’ means all group health plan 

years governed by a single collective 

bargaining agreement. 

(i) In the case of a group health plan 

for which the last plan year governed by 

a prior collective bargaining agreement 

expires during the bargaining process 

for a new agreement, the term of the 

prior agreement includes all plan years 

governed by the agreement plus the 

period of time that precedes the latest of 

the following dates, as applicable, with 

respect to the new agreement: 

(A) The date of an agreement between 

the governmental employer and union 

officials. 

(B) The date of ratification of an 

agreement between the governmental 

employer and the union. 

(C) The date impasse resolution, 

arbitration or other closure of the 

collective bargaining process is finalized 

when agreement is not reached. 

(ii) In the case of a group health plan 

governed by a collective bargaining 

agreement for which closure is not 

reached before the last plan year under 

the immediately preceding agreement 

expires, the term of the new agreement 

includes all plan years governed by the 

agreement excluding the period that 

precedes the latest applicable date 

specified in paragraph (b)(2)(i) of this 

section. 

(3) Construction—(i) Dispute 

resolution. Nothing in paragraph 

(b)(1)(ii) of this section should be 

construed to mean that CMS arbitrates 

disputes between plan sponsors, 

participants, beneficiaries, or their 

representatives regarding whether an 

election complies with all of a plan 

sponsor’s rules. 

(ii) Future elections not preempted. If 

a plan must comply with one or more 

requirements described in paragraph 

(a)(1) of this section for a given plan 

year or period of plan coverage, nothing 

in this section should be construed as 

preventing a plan sponsor from 

submitting an election in accordance 

with this section for a subsequent plan 

year or period of plan coverage. 

(c) Filing a timely election—(1) Plan 

not governed by collective bargaining. 

Subject to paragraph (c)(4) of this 

section, if a plan is not governed by a 

collective bargaining agreement, a plan 

sponsor or entity acting on behalf of a 

plan sponsor must file an election with 

CMS before the first day of the plan 

year. 

(2) Plan governed by a collective 

bargaining agreement. Subject to 

paragraph (d)(4) of this section, if a plan 

is governed by a collective bargaining 

agreement that was ratified before 

March 23, 2010, a plan sponsor or entity 

acting on behalf of a plan sponsor must 

file an election with CMS before the first 

day of the first plan year governed by a 

collective bargaining agreement, or by 

the 45th day after the latest applicable 

date specified in paragraph (b)(2)(i) of 

this section, if the 45th day falls on or 

after the first day of the plan year. 

(3) Special rule for timely filing. If the 

latest filing date specified under 

paragraphs (c)(1) or (c)(2) of this section 

falls on a Saturday, Sunday, or a State 

or Federal holiday, CMS accepts filings 

submitted on the next business day. 

(4) Filing extension based on good 

cause. CMS may extend the deadlines 

specified in paragraphs (c)(1) and (2) of 

this section for good cause if the plan 

substantially complies with the 

requirements of paragraph (e) of this 

section. 

(5) Failure to file a timely election. 

Absent an extension under paragraph 

(c)(4) of this section, a plan sponsor’s 

failure to file a timely election under 

paragraph (c)(1) or (2) of this section 

makes the plan subject to all 

requirements of this part for the entire 

plan year to which the election would 

have applied, or, in the case of a plan 

governed by a collective bargaining 

agreement, for any plan years under the 

agreement for which the election is not 

timely filed. 

(d) Additional information required— 

(1) Written notification. If an election is 

timely filed, but CMS determines that 

the election document (or the notice to 

plan enrollees) does not meet all of the 

requirements of this section, CMS may 

notify the plan sponsor, or other entity 

that filed the election, that it must 

submit any additional information that 

CMS has determined is necessary to 

meet those requirements. The additional 

information must be filed with CMS by 

the later of the following dates: 

(i) The last day of the plan year. 

(ii) The 45th day after the date of 

CMS’s written notification requesting 

additional information. 

(2) Timely response. For submissions 

via hard copy via U.S. Mail, CMS uses 

the postmark on the envelope in which 

the additional information is submitted 

to determine that the information is 

timely filed as specified under 

paragraph (d)(1) of this section. If the 

latest filing date falls on a Saturday, 

Sunday, or a State or Federal holiday, 

CMS accepts a postmark on the next 

business day. 

(3) Failure to respond timely. CMS 

may invalidate an election if the plan 

sponsor, or other entity that filed the 

election, fails to timely submit the 

additional information as specified 

under paragraph (d)(1) of this section. 

(e) Notice to enrollees—(1) Mandatory 

notification. (i) A plan that makes the 

election described in this section must 

notify each affected enrollee of the 

election, and explain the consequences 

of the election. For purposes of 

paragraph (e) of this section, if the 

dependent(s) of a participant reside(s) 

with the participant, a plan need only 

provide notice to the participant. 

(ii) The notice must be in writing and, 

except as provided in paragraph (e)(2) of 

this section with regard to initial 

notices, must be provided to each 

enrollee at the time of enrollment under 

the plan, and on an annual basis no later 

than the last day of each plan year (as 

defined in § 144.103 of this subchapter) 

for which there is an election. 

(iii) A plan may meet the notification 

requirements of paragraph (e) of this 

section by prominently printing the 

notice in a summary plan description, 

or equivalent description, that it 

provides to each enrollee at the time of 

enrollment, and annually. Also, when a 

plan provides a notice to an enrollee at 

the time of enrollment, that notice may 

serve as the initial annual notice for that 

enrollee. 

(2) Initial notices. (i) If a plan is not 

governed by a collective bargaining 

agreement, with regard to the initial 

plan year to which an election under 

this section applies, the plan must 

provide the initial annual notice of the 

election to all enrollees before the first 

day of that plan year, and notice at the 

time of enrollment to all individuals 

who enroll during that plan year. 

(ii) In the case of a collectively 

bargained plan, with regard to the initial 

plan year to which an election under 

this section applies, the plan must 

provide the initial annual notice of the 

election to all enrollees before the first 

day of the plan year, or within 30 days 

after the latest applicable date specified 

in paragraph (b)(2)(i) of this section if 


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the 30th day falls on or after the first 

day of the plan year. Also, the plan must 

provide a notice at the time of 

enrollment to individuals who— 

(A) Enroll on or after the first day of 

the plan year, when closure of the 

collective bargaining process is reached 

before the plan year begins; or 

(B) Enroll on or after the latest 

applicable date specified in paragraph 

(b)(2)(i) of this section if that date falls 

on or after the first day of the plan year. 

(3) Notice content. The notice must 

include at least the following 

information: 

(i) The specific requirements 

described in paragraph (a)(1) of this 

section from which the plan sponsor is 

electing to exempt the plan, and a 

statement that, in general, Federal law 

imposes these requirements upon group 

health plans. 

(ii) A statement that Federal law gives 

the plan sponsor of a self-funded nonFederal governmental plan the right to 

exempt the plan in whole, or in part, 

from the listed requirements, and that 

the plan sponsor has elected to do so. 

(iii) A statement identifying which 

parts of the plan are subject to the 

election. 

(iv) A statement identifying which of 

the listed requirements, if any, apply 

under the terms of the plan, or as 

required by State law, without regard to 

an exemption under this section. 

(f) Subsequent elections—(1) Election 

renewal. A plan sponsor may renew an 

election under this section through 

subsequent elections. The timeliness 

standards described in paragraph (c) of 

this section apply to election renewals 

under paragraph (f) of this section. 

(2) Form and manner of renewal. 

Except for the requirement to forward to 

CMS a copy of the notice to enrollees 

under paragraph (b)(1)(viii) of this 

section, the plan sponsor must comply 

with the election requirements of 

paragraph (b)(1) of this section. In lieu 

of providing a copy of the notice under 

paragraph (b)(1)(viii) of this section, the 

plan sponsor may include a statement 

that the notice has been, or will be, 

provided to enrollees as specified under 

paragraph (e) of this section. 

(3) Election renewal includes 

provisions from which plan not 

previously exempted. If an election 

renewal includes a requirement 

described in paragraph (a)(1) of this 

section from which the plan sponsor did 

not elect to exempt the plan for the 

preceding plan year, the advance 

notification requirements of paragraph 

(e)(2) of this section apply with respect 

to the additional requirement(s) of 

paragraph (a) of this section from which 

the plan sponsor is electing to exempt 

the plan. 

(4) Special rules regarding renewal of 

an election under a collective 

bargaining agreement—(i) If protracted 

negotiations with respect to a new 

agreement result in an extension of the 

term of the prior agreement (as provided 

under paragraph (b)(2)(i) of this section) 

under which an election under this 

section was in effect, the plan must 

comply with the enrollee notification 

requirements of paragraph (e)(1) of this 

section, and, following closure of the 

collective bargaining process, must file 

an election renewal with CMS as 

provided under paragraph (c)(2) of this 

section. 

(ii) If a single plan applies to more 

than one bargaining unit, and the plan 

is governed by collective bargaining 

agreements of varying lengths, 

paragraph (c)(2) of this section, with 

respect to an election renewal, applies 

to the plan as governed by the 

agreement that results in the earliest 

filing date. 

(g) Requirements not subject to 

exemption—(1) Genetic information. 

Without regard to an election under this 

section that exempts a non-Federal 

governmental plan from any or all of the 

provisions of §§ 146.111 and 146.121, 

the exemption election must not be 

construed to exempt the plan from any 

provisions of this part that pertain to 

genetic information. 

(2) Enforcement. CMS enforces these 

requirements as provided under 

paragraph (j) of this section. 

(h) Effect of failure to comply with 

certification and notification 

requirements—(1) Substantial failure— 

(i) General rule. Except as provided in 

paragraph (h)(1)(iii) of this section, a 

substantial failure to comply with 

paragraph (e) or (g)(1) of this section 

results in the invalidation of an election 

under this section with respect to all 

plan enrollees for the entire plan year. 

That is, the plan is subject to all 

requirements of this part for the entire 

plan year to which the election 

otherwise would have applied. 

(ii) Determination of substantial 

failure. CMS determines whether a plan 

has substantially failed to comply with 

a requirement of paragraph (e) or (g)(1) 

of this section based on all relevant facts 

and circumstances, including previous 

record of compliance, gravity of the 

violation and whether a plan corrects 

the failure, as warranted, within 30 days 

of learning of the violation. However, in 

general, a plan’s failure to provide a 

notice of the fact and consequences of 

an election under this section to an 

individual at the time of enrollment, or 

on an annual basis before a given plan 

year expires, constitutes a substantial 

failure. 

(iii) Exceptions—(A) Multiple 

employers. If the plan is sponsored by 

multiple employers, and only certain 

employers substantially fail to comply 

with the requirements of paragraph (e) 

or (g)(1) of this section, then the election 

is invalidated with respect to those 

employers only, and not with respect to 

other employers that complied with 

those requirements, unless the plan 

chooses to cancel its election entirely. 

(B) Limited failure to provide notice. 

If a substantial failure to notify enrollees 

of the fact and consequences of an 

election is limited to certain 

individuals, the election under this 

section is valid only if, for the plan year 

with respect to which the failure has 

occurred, the plan agrees not to apply 

the election with respect to the 

individuals who were not notified and 

so informs those individuals in writing. 

(2) Examples—(i) Example 1. A selffunded, non-Federal group health plan 

is co-sponsored by 10 school districts. 

Nine of the school districts have fully 

complied with the requirements of 

paragraph (e) of this section, including 

providing notice to new employees at 

the time of their enrollment in the plan, 

regarding the group health plan’s 

exemption under this section from 

requirements of this part. One school 

district, which hired 10 new teachers 

during the summer for the upcoming 

school year, neglected to notify three of 

the new hires about the group health 

plan’s exemption election at the time 

they enrolled in the plan. The school 

district has substantially failed to 

comply with a requirement of paragraph 

(e) of this section with respect to these 

individuals. The school district learned 

of the oversight six weeks into the 

school year, and promptly (within 30 

days of learning of the oversight) 

provided notice to the three teachers 

regarding the plan’s exemption under 

this section and that the exemption does 

not apply to them, or their dependents, 

during the plan year of their enrollment 

because of the plan’s failure to timely 

notify them of its exemption. The plan 

complies with the requirements of this 

part for these individuals for the plan 

year of their enrollment. CMS would not 

require the plan to come into 

compliance with the requirements of 

this part for other enrollees. 

(ii) Example 2. Two non-Federal 

governmental employers cosponsor a 

self-funded group health plan. One 

employer substantially fails to comply 

with the requirements of paragraph (e) 

of this section. While the plan may limit 

the invalidation of the election to 

enrollees of the plan sponsor that is 


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Federal Register / Vol. 79, No. 101 / Tuesday, May 27, 2014 / Rules and Regulations 30339 

responsible for the substantial failure, 

the plan sponsors determine that 

administering the plan in that manner 

would be too burdensome. Accordingly, 

in this example, the plan sponsors 

choose to cancel the election entirely. 

Both plan sponsors come into 

compliance with the requirements of 

this part with respect to all enrollees for 

the plan year for which the substantial 

failure has occurred. 

(i) Election invalidated. If CMS finds 

cause to invalidate an election under 

this section, the following rules apply: 

(1) CMS notifies the plan sponsor 

(and the plan administrator if other than 

the plan sponsor and the administrator’s 

address is known to CMS) in writing 

that CMS has made a preliminary 

determination that an election is 

invalid, and States the basis for that 

determination. 

(2) CMS’s notice informs the plan 

sponsor that it has 45 days after the date 

of CMS’s notice to explain in writing 

why it believes its election is valid. The 

plan sponsor should provide applicable 

statutory and regulatory citations to 

support its position. 

(3) CMS verifies that the plan 

sponsor’s response is timely filed as 

provided under paragraph (c)(3) of this 

section. CMS will not consider a 

response that is not timely filed. 

(4) If CMS’s preliminary 

determination that an election is invalid 

remains unchanged after CMS considers 

the plan sponsor’s timely response (or 

in the event that the plan sponsor fails 

to respond timely), CMS provides 

written notice to the plan sponsor (and 

the plan administrator if other than the 

plan sponsor and the administrator’s 

address is known to CMS) of CMS’s 

final determination that the election is 

invalid. Also, CMS informs the plan 

sponsor that, within 45 days of the date 

of the notice of final determination, the 

plan, subject to paragraph (i)(1)(iii) of 

this section, must comply with all 

requirements of this part for the 

specified period for which CMS has 

determined the election to be invalid. 

(j) Enforcement. To the extent that an 

election under this section has not been 

filed or a non-Federal governmental 

plan otherwise is subject to one or more 

requirements of this part, CMS enforces 

those requirements under part 150 of 

this subchapter. This may include 

imposing a civil money penalty against 

the plan or plan sponsor, as determined 

under subpart C of part 150. 

(k) Construction. Nothing in this 

section should be construed to prevent 

a State from taking the following 

actions: 

(1) Establishing, and enforcing 

compliance with, the requirements of 

State law (as defined in § 146.143(d)(1)), 

including requirements that parallel 

provisions of title XXVII of the PHS Act, 

that apply to non-Federal governmental 

plans or sponsors. 

(2) Prohibiting a sponsor of a nonFederal governmental plan within the 

State from making an election under 

this section. 

PART 147—HEALTH INSURANCE 

REFORM REQUIREMENTS FOR THE 

GROUP AND INDIVIDUAL HEALTH 

INSURANCE MARKETS 

■ 6. The authority citation for part 147 

continues to read as follows: 

Authority: Secs. 2701 through 2763, 2791, 

and 2792 of the Public Health Service Act (42 

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

and 300gg–92), as amended. 

■ 7. Section 147.104 is amended by 

revising paragraph (b)(1)(i) and adding 

paragraph (h) to read as follows: 

§ 147.104 Guaranteed availability of 

coverage. 

* * * * * 

(b) * * * 

(1) * * * 

(i) Group market. (A) Subject to 

paragraph (b)(1)(i)(B) of this section, a 

health insurance issuer in the group 

market must allow an employer to 

purchase health insurance coverage for 

a group health plan at any point during 

the year. 

(B) In the case of a group health plan 

in the small group market that cannot 

comply with employer contribution or 

group participation rules for the offering 

of health insurance coverage, as allowed 

under applicable State law and in the 

case of a QHP offered in the SHOP, as 

permitted by § 156.1250(c) of this 

subchapter, a health insurance issuer 

may restrict the availability of coverage 

to an annual enrollment period that 

begins November 15 and extends 

through December 15 of each calendar 

year. 

(C) With respect to coverage in the 

small group market, and in the large 

group market if such coverage is offered 

through a Small Business Health 

Options Program (SHOP) in a State, 

coverage must become effective 

consistent with the dates described in 

§ 155.725(a)(2) of this subchapter, 

except as provided in paragraph 

(b)(1)(iii) of this section. 

* * * * * 

(h) Construction. Nothing in this 

section should be construed to require 

an issuer to offer coverage otherwise 

prohibited under applicable Federal 

law. 

■ 8. Section 147.106 is amended by— 

■ a. Revising paragraphs (b)(4), (c)(1), 

and (e); 

■ b. Redesignating paragraphs (f), (g), 

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

respectively; and 

■ c. Adding new paragraphs (f) and (g). 

The revisions and additions read as 

follows: 

§ 147.106 Guaranteed renewability of 

coverage. 

* * * * * 

(b) * * * 

(4) Termination of product. The issuer 

is ceasing to offer coverage in the market 

in accordance with paragraph (c) or (d) 

of this section and applicable State law. 

* * * * * 

(c) * * * 

(1) The issuer provides notice in 

writing, in a form and manner specified 

by the Secretary, to each plan sponsor 

or individual, as applicable, provided 

that particular product in that market 

(and to all participants and beneficiaries 

covered under such coverage) of the 

discontinuation at least 90 calendar 

days before the date the coverage will be 

discontinued. 

* * * * * 

(e) Exception for uniform 

modification of coverage. (1) Only at the 

time of coverage renewal may issuers 

modify the health insurance coverage 

for a product offered to a group health 

plan or an individual, as applicable, in 

the following: 

(i) Large group market. 

(ii) Small group market if, for 

coverage available in this market (other 

than only through one or more bona fide 

associations), the modification is 

consistent with State law and is 

effective uniformly among group health 

plans with that product. 

(iii) Individual market if the 

modification is consistent with State 

law and is effective uniformly for all 

individuals with that product. 

(2) For purposes of paragraphs 

(e)(1)(ii) and (iii) of this section, 

modifications made uniformly and 

solely pursuant to applicable Federal or 

State requirements are considered a 

uniform modification of coverage if: 

(i) The modification is made within a 

reasonable time period after the 

imposition or modification of the 

Federal or State requirement; and 

(ii) The modification is directly 

related to the imposition or 

modification of the Federal or State 

requirement. 

(3) Other types of modifications made 

uniformly are considered a uniform 

modification of coverage if the health 

insurance coverage for the product in 

the individual or small group market 

meets all of the following criteria: 


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30340 Federal Register / Vol. 79, No. 101 / Tuesday, May 27, 2014 / Rules and Regulations 

(i) The product is offered by the same 

health insurance issuer (within the 

meaning of section 2791(b)(2) of the 

PHS Act); 

(ii) The product is offered as the same 

product network type (for example, 

health maintenance organization, 

preferred provider organization, 

exclusive provider organization, point 

of service, or indemnity); 

(iii) The product continues to cover at 

least a majority of the same service area; 

(iv) Within the product, each plan has 

the same cost-sharing structure as before 

the modification, except for any 

variation in cost sharing solely related 

to changes in cost and utilization of 

medical care, or to maintain the same 

metal tier level described in sections 

1302(d) and (e) of the Affordable Care 

Act; and 

(v) The product provides the same 

covered benefits, except for any changes 

in benefits that cumulatively impact the 

plan-adjusted index rate (as described in 

§ 156.80(d)(2) of this subchapter) for any 

plan within the product within an 

allowable variation of +/¥2 percentage 

points (not including changes pursuant 

to applicable Federal or State 

requirements). 

(4) A State may only broaden the 

standards in paragraphs (e)(3)(iii) and 

(iv) of this section. 

(f) Notice of renewal of coverage. (1) 

If an issuer in the individual market is 

renewing non-grandfathered coverage as 

described in paragraph (a) of this 

section, or uniformly modifying nongrandfathered coverage as described in 

paragraph (e) of this section, the issuer 

must provide to each individual written 

notice of the renewal before the date of 

the first day of the next annual open 

enrollment period in a form and manner 

specified by the Secretary. 

(2) If an issuer in the small group 

market is renewing coverage as 

described in paragraph (a) of this 

section, or uniformly modifying 

coverage as described in paragraph (e) of 

this section, the issuer must provide to 

each plan sponsor or individual, as 

applicable, written notice of the renewal 

at least 60 calendar days before the date 

of the coverage will be renewed in a 

form and manner specified by the 

Secretary. 

(g) Construction. (1) Nothing in this 

section should be construed to require 

an issuer to renew or continue in force 

coverage for which continued eligibility 

would otherwise be prohibited under 

applicable Federal law. 

(2) Medicare eligibility or entitlement 

is not a basis for nonrenewal or 

termination of an individual’s health 

insurance coverage in the individual 

market. 

* * * * * 

PART 148—REQUIREMENTS FOR THE 

INDIVIDUAL HEALTH INSURANCE 

MARKET 

■ 9. The authority citation for part 148 

is revised to read as follows: 

Authority: Secs. 2701 through 2763, 2791, 

and 2792 of the Public Health Service Act (42 

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

and 300gg–92), as amended. 

■ 10. Section 148.101 is revised to read 

as follows: 

§ 148.101 Basis and purpose. 

This part implements sections 2741 

through 2763 and 2791 and 2792 of the 

PHS Act. Its purpose is to guarantee the 

renewability of all coverage in the 

individual market. It also provides 

certain protections for mothers and 

newborns with respect to coverage for 

hospital stays in connection with 

childbirth and protects all individuals 

and family members who have, or seek, 

individual health insurance coverage 

from discrimination based on genetic 

information. 

■ 11. Section 148.102 is revised to read 

as follows: 

§ 148.102 Scope, applicability, and 

effective dates. 

(a) Scope and applicability. (1) 

Individual health insurance coverage 

includes all health insurance coverage 

(as defined in § 144.103 of this 

subchapter) that is neither health 

insurance coverage sold in connection 

with an employment-related group 

health plan, nor short-term, limitedduration coverage as defined in 

§ 144.103 of this subchapter. 

(2) The requirements that pertain to 

guaranteed renewability for all 

individuals, to protections for mothers 

and newborns with respect to hospital 

stays in connection with childbirth, and 

to protections against discrimination 

based on genetic information apply to 

all issuers of individual health 

insurance coverage in the State. 

(b) Applicability date. Except as 

provided in § 148.124 (certificate of 

creditable coverage), § 148.170 

(standards relating to benefits for 

mothers and newborns), and § 148.180 

(prohibition of health discrimination 

based on genetic information), the 

requirements of this part apply to health 

insurance coverage offered, sold, issued, 

renewed, in effect, or operated in the 

individual market after June 30, 1997. 

§ 148.103 [Removed] 

■ 12. Section 148.103 is removed. 

■ 13. Section 148.120 is revised to read 

as follows: 

§ 148.120 Guaranteed availability of 

individual health insurance coverage to 

certain individuals with prior group 

coverage. 

The rules for guaranteeing the 

availability of individual health 

insurance coverage to certain eligible 

individuals with prior group coverage 

have been superseded by the 

requirements of § 147.104 of this 

subchapter, which set forth Federal 

requirements for guaranteed availability 

of coverage in the group and individual 

markets. 

■ 14. Section 148.122 is amended by— 

■ a. Revising paragraphs (a), (c)(3), 

(d)(1), and (g); and 

■ b. Adding new paragraph (i). 

The revision and addition read as 

follows: 

§ 148.122 Guaranteed renewability of 

individual health insurance coverage. 

(a) Applicability. This section applies 

to non-grandfathered and grandfathered 

health plans (within the meaning of 

§ 147.140 of this subchapter) that are 

individual health insurance coverage. 

See also § 147.106 of this subchapter for 

requirements relating to guaranteed 

renewability of coverage with respect to 

non-grandfathered health plans. 

* * * * * 

(c) * * * 

(3) Termination of product. The issuer 

is ceasing to offer coverage in the market 

in accordance with paragraph (d) or (e) 

of this section and applicable State law. 

* * * * * 

(d) * * * 

(1) Provides notice in writing, in a 

form and manner specified by the 

Secretary, to each individual provided 

coverage of that type of health insurance 

at least 90 calendar days before the date 

the coverage will be discontinued. 

* * * * * 

(g) Exception for uniform 

modification of coverage. (1) An issuer 

may, only at the time of coverage 

renewal, modify the health insurance 

coverage for a product offered in the 

individual market if the modification is 

consistent with State law and is 

effective uniformly for all individuals 

with that product. 

(2) For purposes of paragraph (g) of 

this section, modifications made 

uniformly and solely pursuant to 

applicable Federal or State requirements 

are considered a uniform modification 

of coverage if: 

(i) The modification is made within a 

reasonable time period after the 

imposition or modification of the 

Federal or State requirement; and 


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(ii) The modification is directly 

related to the imposition or 

modification of the Federal or State 

requirement. 

(3) For purposes of paragraph (g) of 

this section, other types of 

modifications made uniformly are 

considered a uniform modification of 

coverage if the health insurance 

coverage for the product meets all of the 

following criteria: 

(i) The product is offered by the same 

health insurance issuer (within the 

meaning of section 2791(b)(2) of the 

PHS Act); 

(ii) The product is offered as the same 

product network type (for example, 

health maintenance organization, 

preferred provider organization, 

exclusive provider organization, point 

of service, or indemnity); 

(iii) The product continues to cover at 

least a majority of the same service area; 

(iv) Within the product, each plan has 

the same cost-sharing structure as before 

the modification, except for any 

variation in cost sharing solely related 

to changes in cost and utilization of 

medical care, or to maintain the same 

metal tier level described in sections 

1302(d) and (e) of the Affordable Care 

Act; and 

(v) The product provides the same 

covered benefits, except for any changes 

in benefits that cumulatively impact rate 

for any plan within the product within 

an allowable variation of +/¥ 2 

percentage points (not including 

changes pursuant to applicable Federal 

or State requirements). 

(4) A State may only broaden the 

standards in paragraphs (g)(3)(iii) and 

(iv) of this section. 

* * * * * 

(i) Notice of renewal of coverage. If an 

issuer is renewing grandfathered 

coverage as described in paragraph (b) 

of this section, or uniformly modifying 

grandfathered coverage as described in 

paragraph (g) of this section, the issuer 

must provide to each individual written 

notice of the renewal at least 60 

calendar days before the date the 

coverage will be renewed in a form and 

manner specified by the Secretary. 

■ 15. Section 148.124 is revised to read 

as follows: 

§ 148.124 Certification and disclosure of 

coverage. 

(a) General rule. The rules for 

providing certificates of creditable 

coverage and demonstrating creditable 

coverage have been superseded by the 

prohibition on preexisting condition 

exclusions. See § 147.108 of this 

subchapter for rules prohibiting the 

imposition of a preexisting condition 

exclusion. 

(b) Applicability. The provisions of 

this section apply beginning December 

31, 2014. 

■ 16. Section 148.126 is revised to read 

as follows: 

§ 148.126 Determination of an eligible 

individual. 

The rules for guaranteeing the 

availability of individual health 

insurance coverage to certain eligible 

individuals with prior group coverage 

have been superseded by the 

requirements of § 147.104 of this 

subchapter, which set forth Federal 

requirements for guaranteed availability 

of coverage in the group and individual 

markets. 

■ 17. Section 148.128 is revised to read 

as follows: 

§ 148.128 State flexibility in individual 

market reforms—alternative mechanisms. 

The rules for a State to implement an 

acceptable alternative mechanism for 

purposes of guaranteeing the availability 

of individual health insurance coverage 

to certain eligible individuals with prior 

group coverage have been superseded 

by the requirements of § 147.104 of this 

subchapter, which set forth Federal 

requirements for guaranteed availability 

of coverage in the group and individual 

markets. 

■ 18. Section 148.220 is amended by— 

■ a. Revising the introductory text and 

paragraph (b)(3); 

■ b. Redesignating paragraphs (b)(4) 

through (6) as paragraphs (b)(5) through 

(7), respectively; and 

■ c. Adding new paragraph (b)(4). 

The revisions and additions read as 

follows: 

§ 148.220 Excepted benefits. 

The requirements of this part and part 

147 of this subchapter do not apply to 

any individual coverage in relation to its 

provision of the benefits described in 

paragraphs (a) and (b) of this section (or 

any combination of the benefits). 

* * * * * 

(b) * * * 

(3) Coverage only for a specified 

disease or illness (for example, cancer 

policies) if the policies meet the 

requirements of § 146.145(b)(4)(ii)(B) 

and (C) of this subchapter regarding 

noncoordination of benefits. 

(4) Hospital indemnity or other fixed 

indemnity insurance only if— 

(i) The benefits are provided only to 

individuals who attest, in their fixed 

indemnity insurance application, that 

they have other health coverage that is 

minimum essential coverage within the 

meaning of section 5000A(f) of the 

Internal Revenue Code, or that they are 

treated as having minimum essential 

coverage due to their status as a bona 

fide resident of any possession of the 

United States pursuant to Code section 

5000A(f)(4)(B). 

(ii) There is no coordination between 

the provision of benefits and an 

exclusion of benefits under any other 

health coverage. 

(iii) The benefits are paid in a fixed 

dollar amount per period of 

hospitalization or illness and/or per 

service (for example, $100/day or $50/ 

visit) regardless of the amount of 

expenses incurred and without regard to 

the amount of benefits provided with 

respect to the event or service under any 

other health coverage. 

(iv) A notice is displayed prominently 

in the application materials in at least 

14 point type that has the following 

language: ‘‘THIS IS A SUPPLEMENT TO 

HEALTH INSURANCE AND IS NOT A 

SUBSTITUTE FOR MAJOR MEDICAL 

COVERAGE. LACK OF MAJOR 

MEDICAL COVERAGE (OR OTHER 

MINIMUM ESSENTIAL COVERAGE) 

MAY RESULT IN AN ADDITIONAL 

PAYMENT WITH YOUR TAXES.’’ 

(v) The requirement of paragraph 

(b)(4)(iv) of this section applies to all 

hospital or other fixed indemnity 

insurance policy years beginning on or 

after January 1, 2015, and the 

requirement of paragraph (b)(4)(i) of this 

section applies to hospital or other fixed 

indemnity insurance policies issued on 

or after January 1, 2015, and to hospital 

or other fixed indemnity policies issued 

before that date, upon their first renewal 

occurring on or after October 1, 2016. 

* * * * * 

PART 153—STANDARDS RELATED TO 

REINSURANCE, RISK CORRIDORS, 

AND RISK ADJUSTMENT UNDER THE 

AFFORDABLE CARE ACT 

■ 19. The authority citation for part 153 

continues to read as follows: 

Authority: Secs. 1311, 1321, 1341–1343, 

Pub. L. 111–148, 24 Stat. 119. 

■ 20. Section 153.500 is amended by 

revising the definition of ‘‘Adjustment 

percentage’’ to read as follows: 

§ 153.500 Definitions. 

* * * * * 

Adjustment percentage means, with 

respect to a QHP: 

(1) For benefit year 2014, for a QHP 

offered by a health insurance issuer 

with allowable costs of at least 80 

percent of after-tax premium in a 

transitional State, the percentage 

specified by HHS for such QHPs in the 

transitional State; and otherwise zero 

percent. 


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(2) For benefit year 2015, for a QHP 

offered by a health insurance issuer in 

any State, two percent. 

* * * * * 

PART 154—HEALTH INSURANCE 

ISSUER RATE INCREASES: 

DISCLOSURE AND REVIEW 

REQUIREMENTS 

■ 21. The authority citation for part 154 

continues to read as follows: 

Authority: Section 2794 of the Public 

Health Service Act (42 U.S.C. 300gg–94). 

■ 22. Section 154.102 is amended by 

revising the definition of ‘‘Product’’ to 

read as follows: 

§ 154.102 Definitions. 

* * * * * 

Product means a package of health 

insurance coverage benefits with a 

discrete set of rating and pricing 

methodologies that a health insurance 

issuer offers in a State. The term 

product includes any product that is 

discontinued and newly filed within a 

12-month period when the changes to 

the product meet the standards of 

§ 147.106(e)(2) or (3) of this subchapter 

(relating to uniform modification of 

coverage). 

* * * * * 

PART 155—EXCHANGE 

ESTABLISHMENT STANDARDS AND 

OTHER RELATED STANDARDS 

UNDER THE AFFORDABLE CARE ACT 

■ 23. 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, 1332, 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). 

■ 24. Section 155.120 is amended by 

revising paragraph (c) to read as follows: 

§ 155.120 Non-interference with Federal 

law and non-discrimination standards. 

* * * * * 

(c) Non-discrimination. (1) In carrying 

out the requirements of this part, the 

State and the Exchange must: 

(i) Comply with applicable nondiscrimination statutes; and 

(ii) Not discriminate based on race, 

color, national origin, disability, age, 

sex, gender identity or sexual 

orientation. 

(2) Notwithstanding the provisions of 

paragraph (c)(1)(ii) of this section, an 

organization that receives Federal funds 

to provide services to a defined 

population under the terms of Federal 

legal authorities that participates in the 

certified application counselor program 

under § 155.225 may limit its provision 

of certified application counselor 

services to the same defined population, 

but must comply with paragraph 

(c)(1)(ii) of this section with respect to 

the provision of certified application 

counselor services to that defined 

population. If the organization limits its 

provision of certified application 

counselor services pursuant to this 

exception, but is approached for 

certified application counselor services 

by an individual who is not included in 

the defined population that the 

organization serves, the organization 

must refer the individual to other 

Exchange-approved resources that can 

provide assistance. If the organization 

does not limit its provision of certified 

application counselor services pursuant 

to this exception, the organization must 

comply with paragraph (c)(1)(ii) of this 

section. 

■ 25. Section 155.206 is added to read 

as follows: 

§ 155.206 Civil money penalties for 

violations of applicable Exchange 

standards by consumer assistance entities 

in Federally-facilitated Exchanges. 

(a) Enforcement actions. If an 

individual or entity specified in 

paragraph (b) of this section engages in 

activity specified in paragraph (c) of this 

section, the Department of Health and 

Human Services (HHS) may impose the 

following sanctions: 

(1) Civil money penalties (CMPs), 

subject to the provisions of this section. 

(2) Corrective action plans. In the 

notice of assessment of CMPs specified 

in paragraph (l) of this section, HHS 

may provide an individual or entity 

specified in paragraph (b) of this section 

the opportunity to enter into a 

corrective action plan to correct the 

violation instead of paying the CMP, 

based on evaluation of the factors set 

forth in paragraph (h) of this section. In 

the event that the individual or entity 

does not follow such a corrective action 

plan, HHS could require payment of the 

CMP. 

(b) Consumer assistance entities. 

CMPs may be assessed under this 

section against the following consumer 

assistance entities: 

(1) Individual Navigators and 

Navigator entities in a Federallyfacilitated Exchange, including grantees, 

sub-grantees, and all personnel carrying 

out Navigator duties on behalf of a 

grantee or sub-grantee; 

(2) Non-Navigator assistance 

personnel authorized under § 155.205(d) 

and (e) and non-Navigator assistance 

personnel entities in a Federallyfacilitated Exchange, including but not 

limited to individuals and entities 

under contract with HHS to facilitate 

consumer enrollment in QHPs in a 

Federally-facilitated Exchange; and 

(3) Organizations that a Federallyfacilitated Exchange has designated as 

certified application counselor 

organizations and individual certified 

application counselors carrying out 

certified application counselor duties in 

a Federally-facilitated Exchange. 

(c) Grounds for assessing CMPs. HHS 

may assess CMPs against a consumer 

assistance entity if, based on the 

outcome of the investigative process 

outlined in paragraphs (d) through (i) of 

this section, HHS has reasonably 

determined that the consumer 

assistance entity has failed to comply 

with the Federal regulatory 

requirements applicable to the 

consumer assistance entity that have 

been implemented pursuant to section 

1321(a)(1) of the Affordable Care Act, 

including provisions of any agreements, 

contracts, and grant terms and 

conditions between HHS and the 

consumer assistance entity that interpret 

those Federal regulatory requirements or 

establish procedures for compliance 

with them, unless a CMP has been 

assessed for the same conduct under 45 

CFR 155.285. 

(d) Basis for initiating an investigation 

of a potential violation. (1) Information. 

Any information received or learned by 

HHS that indicates that a consumer 

assistance entity may have engaged or 

may be engaging in activity specified in 

paragraph (c) of this section may 

warrant an investigation. Information 

that might trigger an investigation 

includes, but is not limited to, the 

following: 

(i) Complaints from the general 

public; 

(ii) Reports from State regulatory 

agencies, and other Federal and State 

agencies; or 

(iii) Any other information that 

indicates that a consumer assistance 

entity may have engaged or may be 

engaging in activity specified in 

paragraph (c) of this section. 

(2) Who may file a complaint. Any 

entity or individual, or the legally 

authorized representative of an entity or 

individual, may file a complaint with 

HHS alleging that a consumer assistance 

entity has engaged or is engaging in an 

activity specified in paragraph (c) of this 

section. 

(e) Notice of investigation. When HHS 

performs an investigation under this 

section, it must provide a written notice 

to the consumer assistance entity of its 

investigation. This notice must include 

the following: 


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(1) Description of the activity that is 

being investigated. 

(2) Explanation that the consumer 

assistance entity has 30 days from the 

date of the notice to respond with 

additional information or 

documentation, including information 

or documentation to refute an alleged 

violation. 

(3) State that a CMP might be assessed 

if the allegations are not, as determined 

by HHS, refuted within 30 days from the 

date of the notice. 

(f) Request for extension. In 

circumstances in which a consumer 

assistance entity cannot prepare a 

response to HHS within the 30 days 

provided in the notice of investigation 

described in paragraph (e) of this 

section, the entity may make a written 

request for an extension from HHS 

detailing the reason for the extension 

request and showing good cause. If HHS 

grants the extension, the consumer 

assistance entity must respond to the 

notice within the time frame specified 

in HHS’s letter granting the extension of 

time. Failure to respond within 30 days, 

or, if applicable, within an extended 

time frame, may result in HHS’s 

imposition of a CMP depending upon 

the outcome of HHS’s investigation of 

the alleged violation. 

(g) Responses to allegations of 

noncompliance. In determining whether 

to impose a CMP, HHS may review and 

consider documents or information 

received or collected in accordance with 

paragraph (d)(1) of this section, as well 

as additional documents or information 

provided by the consumer assistance 

entity in response to receiving a notice 

of investigation in accordance with 

paragraph (e)(2) of this section. HHS 

may also conduct an independent 

investigation into the alleged violation, 

which may include site visits and 

interviews, if applicable, and may 

consider the results of this investigation 

in its determination. 

(h) Factors in determining 

noncompliance and amount of CMPs, if 

any. In determining whether there has 

been noncompliance by the consumer 

assistance entity, and whether CMPs are 

appropriate: 

(1) HHS must take into account the 

following: 

(i) The consumer assistance entity’s 

previous or ongoing record of 

compliance, including but not limited to 

compliance or noncompliance with any 

corrective action plan. 

(ii) The gravity of the violation, which 

may be determined in part by— 

(A) The frequency of the violation, 

taking into consideration whether any 

violation is an isolated occurrence, 

represents a pattern, or is widespread; 

and 

(B) Whether the violation caused, or 

could reasonably be expected to cause, 

financial or other adverse impacts on 

consumer(s), and the magnitude of those 

impacts; 

(2) HHS may take into account the 

following: 

(i) The degree of culpability of the 

consumer assistance entity, including 

but not limited to— 

(A) Whether the violation was beyond 

the direct control of the consumer 

assistance entity; and 

(B) The extent to which the consumer 

assistance entity received 

compensation—legal or otherwise—for 

the services associated with the 

violation; 

(ii) Aggravating or mitigating 

circumstances; 

(iii) Whether other remedies or 

penalties have been assessed and/or 

imposed for the same conduct or 

occurrence; or 

(iv) Other such factors as justice may 

require. 

(i) Maximum per-day penalty. The 

maximum amount of penalty imposed 

for each violation is $100 for each day 

for each consumer assistance entity for 

each individual directly affected by the 

consumer assistance entity’s 

noncompliance; and where the number 

of individuals cannot be determined, 

HHS may reasonably estimate the 

number of individuals directly affected 

by the violation. 

(j) Settlement authority. Nothing in 

§ 155.206 limits the authority of HHS to 

settle any issue or case described in the 

notice furnished in accordance with 

paragraph (e) of this section or to 

compromise on any penalty provided 

for in this section. 

(k) Limitations on penalties. (1) 

Circumstances under which a CMP is 

not imposed. HHS will not impose any 

CMP on: 

(i) Any violation for the period of time 

during which none of the consumer 

assistance entities knew, or exercising 

reasonable diligence would have 

known, of the violation; or 

(ii) The period of time after any of the 

consumer assistance entities knew, or 

exercising reasonable diligence would 

have known, of the failure, if the 

violation was due to reasonable cause 

and not due to willful neglect and the 

violation was corrected within 30 days 

of the first day that any of the consumer 

assistance entities against whom the 

penalty would be imposed knew, or 

exercising reasonable diligence would 

have known, that the violation existed. 

(2) Burden of establishing knowledge. 

The burden is on the consumer 

assistance entity or entities to establish 

to HHS’s satisfaction that the consumer 

assistance entity did not know, or 

exercising reasonable diligence would 

have known, that the violation existed, 

as well as the period of time during 

which that limitation applies; or that the 

violation was due to reasonable cause 

and not due to willful neglect and was 

corrected pursuant to the elements in 

paragraph (k)(1)(ii) of this section. 

(3) Time limit for commencing action. 

No action under this section will be 

entertained unless commenced, in 

accordance with § 155.206(l), within six 

years from the date on which the 

violation occurred. 

(l) Notice of assessment of CMP. If 

HHS proposes to assess a CMP in 

accordance with this section, HHS will 

send a written notice of this decision to 

the consumer assistance entity against 

whom the sanction is being imposed, 

which notice must include the 

following: 

(1) A description of the basis for the 

determination; 

(2) The basis for the CMP; 

(3) The amount of the CMP, if 

applicable; 

(4) The date the CMP, if applicable, is 

due; 

(5) Whether HHS would permit the 

consumer assistance entity to enter into 

a corrective action plan in place of 

paying the CMP, and the terms of any 

such corrective action plan; 

(6) An explanation of the consumer 

assistance entity’s right to a hearing 

under paragraph (m) of this section; and 

(7) Information about the process for 

filing a request for a hearing. 

(m) Appeal of proposed sanction. Any 

consumer assistance entity against 

which HHS has assessed a sanction may 

appeal that penalty in accordance with 

the procedures set forth at 45 CFR part 

150, subpart D. 

(n) Failure to request a hearing. (1) If 

the consumer assistance entity does not 

request a hearing within 30 days of the 

issuance of the notice of assessment of 

CMP described in paragraph (l) of this 

section, HHS may require payment of 

the proposed CMP. 

(2) HHS will notify the consumer 

assistance entity in writing of any CMP 

that has been assessed and of the means 

by which the consumer assistance entity 

may pay the CMP. 

(3) The consumer assistance entity 

has no right to appeal a CMP with 

respect to which it has not requested a 

hearing in accordance with paragraph 

(m) of this section unless the consumer 

assistance entity can show good cause 

in accordance with § 150.405(b) of this 

subchapter for failing to timely exercise 

its right to a hearing. 


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■ 26. Section 155.210 is amended— 

■ a. By revising paragraph (c)(1)(iii); 

■ b. In paragraph (d)(3) by removing 

‘‘or,’’ after the semicolon; 

■ c. By revising paragraph (d)(4); 

■ d. By adding paragraphs (d)(5) 

through (9) and (e)(6) and (7); and 

■ e. By revising paragraph (e)(2). 

The revision and additions read as 

follows: 

§ 155.210 Navigator program standards. 

* * * * * 

(c) * * * 

(1) * * * 

(iii) Meet any licensing, certification 

or other standards prescribed by the 

State or Exchange, if applicable, so long 

as such standards do not prevent the 

application of the provisions of title I of 

the Affordable Care Act. Standards that 

would prevent the application of the 

provisions of title I of the Affordable 

Care Act include but are not limited to 

the following: 

(A) Except as otherwise provided 

under § 155.705(d), requirements that 

Navigators refer consumers to other 

entities not required to provide fair, 

accurate, and impartial information. 

(B) Except as otherwise provided 

under § 155.705(d), requirements that 

would prevent Navigators from 

providing services to all persons to 

whom they are required to provide 

assistance. 

(C) Requirements that would prevent 

Navigators from providing advice 

regarding substantive benefits or 

comparative benefits of different health 

plans. 

(D) Requiring that a Navigator hold an 

agent or broker license or imposing any 

requirement that, in effect, would 

require all Navigators in the Exchange to 

be licensed agents or brokers. 

(E) Imposing standards that would, as 

applied or as implemented in a State, 

prevent the application of Federal 

requirements applicable to Navigator 

entities or individuals or applicable to 

the Exchange’s implementation of the 

Navigator program. 

* * * * * 

(d) * * * 

(4) Receive any consideration directly 

or indirectly from any health insurance 

issuer or issuer of stop loss insurance in 

connection with the enrollment of any 

individuals or employees in a QHP or a 

non-QHP. Notwithstanding the 

requirements of this paragraph (d)(4), in 

a Federally-facilitated Exchange, no 

health care provider shall be ineligible 

to operate as a Navigator solely because 

it receives consideration from a health 

insurance issuer for health care services 

provided; 

(5) Charge any applicant or enrollee, 

or request or receive any form of 

remuneration from or on behalf of an 

individual applicant or enrollee, for 

application or other assistance related to 

Navigator duties; 

(6) Provide gifts, including gift cards 

or cash, unless they are of nominal 

value, or provide promotional items that 

market or promote the products or 

services of a third party, to any 

applicant or potential enrollee as an 

inducement for enrollment. Gifts, gift 

cards, or cash may exceed nominal 

value for the purpose of providing 

reimbursement for legitimate expenses 

incurred by a consumer in effort to 

receive Exchange application assistance, 

such as, but not limited to, travel or 

postage expenses; 

(7) Use Exchange funds to purchase 

gifts or gift cards, or promotional items 

that market or promote the products or 

services of a third party, that would be 

provided to any applicant or potential 

enrollee; 

(8) Solicit any consumer for 

application or enrollment assistance by 

going door-to-door or through other 

unsolicited means of direct contact, 

including calling a consumer to provide 

application or enrollment assistance 

without the consumer initiating the 

contact, unless the individual has a preexisting relationship with the individual 

Navigator or Navigator entity and other 

applicable State and Federal laws are 

otherwise complied with. Outreach and 

education activities may be conducted 

by going door-to-door or through other 

unsolicited means of direct contact, 

including calling a consumer or 

(9) Initiate any telephone call to a 

consumer using an automatic telephone 

dialing system or an artificial or 

prerecorded voice, except in cases 

where the individual Navigator or 

Navigator entity has a relationship with 

the consumer and so long as other 

applicable State and Federal laws are 

otherwise complied with. 

(e) * * * 

(2) Provide information and services 

in a fair, accurate, and impartial 

manner, which includes providing 

information that assists consumers with 

submitting the eligibility application; 

clarifying the distinctions among health 

coverage options, including QHPs; and 

helping consumers make informed 

decisions during the health coverage 

selection process. Such information 

must acknowledge other health 

programs; 

* * * * * 

(6) Ensure that applicants— 

(i) Are informed of the functions and 

responsibilities of Navigators; 

(ii) Provide authorization in a form 

and manner as determined by the 

Exchange prior to a Navigator’s 

obtaining access to an applicant’s 

personally identifiable information, and 

that the Navigator maintains a record of 

the authorization provided in a form 

and manner as determined by the 

Exchange. The Exchange must establish 

a reasonable retention period for 

maintaining these records. In Federallyfacilitated Exchanges, this period is no 

less than six years, unless a different 

and longer retention period has already 

been provided under other applicable 

Federal law; and 

(iii) May revoke at any time the 

authorization provided the Navigator 

pursuant to paragraph (e)(6)(ii) of this 

section. 

(7) Maintain a physical presence in 

the Exchange service area, so that faceto-face assistance can be provided to 

applicants and enrollees. In a Federallyfacilitated Exchange, no individual or 

entity shall be ineligible to operate as a 

Navigator solely because its principal 

place of business is outside of the 

Exchange service area. 

* * * * * 

■ 27. Section 155.215 is amended by 

adding paragraphs (f) through (i) to read 

as follows: 

§ 155.215 Standards applicable to 

Navigators and Non-Navigator Assistance 

Personnel carrying out consumer 

assistance functions under §§ 155.205(d) 

and (e) and 155.210 in a Federally-facilitated 

Exchange and to Non-Navigator Assistance 

Personnel funded through an Exchange 

Establishment Grant. 

* * * * * 

(f) State or Exchange standards. All 

non-Navigator entities or individuals 

carrying out consumer assistance 

functions under § 155.205(d) and (e) in 

an Exchange operated by HHS during 

the exercise of its authority under 

§ 155.105(f) and all non-Navigator 

assistance personnel funded through an 

Exchange Establishment Grant under 

section 1311(a) of the Affordable Care 

Act must meet any licensing, 

certification, or other standards 

prescribed by the State or Exchange, if 

applicable, so long as such standards do 

not prevent the application of the 

provisions of title I of the Affordable 

Care Act. Standards that would prevent 

the application of the provisions of title 

I of the Affordable Care Act include but 

are not limited to the following: 

(1) Requirements that non-Navigator 

entities or individuals refer consumers 

to other entities not required to provide 

fair, accurate, and impartial 

information. 

(2) Requirements that would prevent 

non-Navigator entities or individuals 

from providing services to all persons to 


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whom they are required to provide 

assistance. 

(3) Requirements that would prevent 

non-Navigator entities or individuals 

from providing advice regarding 

substantive benefits or comparative 

benefits of different health plans. 

(4) Imposing standards that would, as 

applied or as implemented in a State, 

prevent the application of Federal 

requirements applicable to nonNavigator entities or individuals or 

applicable to the Exchange’s 

implementation of the non-Navigator 

assistance personnel program. 

(g) Consumer authorization. All nonNavigator entities or individuals 

carrying out consumer assistance 

functions under § 155.205(d) and (e) in 

an Exchange operated by HHS during 

the exercise of its authority under 

§ 155.105(f) and all non-Navigator 

assistance personnel funded through an 

Exchange Establishment Grant under 

section 1311(a) of the Affordable Care 

Act must establish procedures to ensure 

that applicants— 

(1) Are informed of the functions and 

responsibilities of non-Navigator 

assistance personnel; 

(2) Provide authorization in a form 

and manner as determined by the 

Exchange prior to a non-Navigator 

assistance personnel’s obtaining access 

to an applicant’s personally identifiable 

information, and that the non-Navigator 

assistance personnel maintains a record 

of the authorization provided in a form 

and manner as determined by the 

Exchange. The Exchange must establish 

a reasonable retention period for 

maintaining these records. In Federallyfacilitated Exchanges, this period is no 

less than six years, unless a different 

and longer retention period has already 

been provided under other applicable 

Federal law; and 

(3) May revoke at any time the 

authorization provided the nonNavigator assistance personnel pursuant 

to paragraph (g)(2) of this section. 

(h) All non-Navigator entities carrying 

out consumer assistance functions 

under § 155.205(d) and (e) in an 

Exchange operated by HHS during the 

exercise of its authority under 

§ 155.105(f) and all non-Navigator 

assistance personnel funded through an 

Exchange Establishment Grant under 

section 1311(a) of the Affordable Care 

Act must maintain a physical presence 

in the Exchange service area, so that 

face-to-face assistance can be provided 

to applicants and enrollees. In a 

Federally-facilitated Exchange, no 

individual or entity shall be ineligible to 

operate as a non-Navigator entity or as 

non-Navigator assistance personnel 

solely because its principal place of 

business is outside of the Exchange 

service area. 

(i) Prohibition on compensation per 

enrollment. Beginning November 15, 

2014, Navigators and Non-Navigator 

assistance personnel carrying out 

consumer assistance functions under 

§§ 155.205(d) and (e) and 155.210, if 

operating in an Exchange operated by 

HHS during the exercise of its authority 

under § 155.105(f), are prohibited from 

providing compensation to individual 

Navigators or non-Navigator assistance 

personnel on a per-application, perindividual-assisted, or per-enrollment 

basis. 

■ 28. Section 155.225 is amended— 

■ a. By adding paragraph (b)(3); 

■ b. By revising paragraph (c)(1); 

■ c. In paragraph (d)(5) by removing 

‘‘and’’ after the semicolon; 

■ d. In paragraph (d)(6) by removing the 

period at the end of the paragraph and 

adding a semicolon in its place; 

■ e. By adding paragraphs (d)(7) and (8); 

and 

■ f. By revising paragraphs (f)(1) and (2) 

and (g). 

The revisions and additions read as 

follows: 

§ 155.225 Certified application counselors. 

* * * * * 

(b) * * * 

(3) In a Federally-facilitated 

Exchange, no individual or entity shall 

be ineligible to operate as a certified 

application counselor or organization 

designated by the Exchange under 

paragraph (b) of this section solely 

because its principal place of business 

is outside of the Exchange service area. 

(c) * * * 

(1) Provide information to individuals 

and employees about the full range of 

QHP options and insurance affordability 

programs for which they are eligible, 

which includes providing fair, 

impartial, and accurate information that 

assists consumers with submitting the 

eligibility application; clarifying the 

distinctions among health coverage 

options, including QHPs; and helping 

consumers make informed decisions 

during the health coverage selection 

process; 

* * * * * 

(d) * * * 

(7) Is recertified on at least an annual 

basis after successfully completing 

recertification training as required by 

the Exchange; and 

(8) Meets any licensing, certification, 

or other standards prescribed by the 

State or Exchange, if applicable, so long 

as such standards do not prevent the 

application of the provisions of title I of 

the Affordable Care Act. Standards that 

would prevent the application of the 

provisions of title I of the Affordable 

Care Act include but are not limited to 

the following: 

(i) Requirements that certified 

application counselors refer consumers 

to other entities not required to provide 

fair, accurate, and impartial 

information. 

(ii) Requirements that would prevent 

certified application counselors from 

providing services to all persons to 

whom they are required to provide 

assistance. 

(iii) Requirements that would prevent 

certified application counselors from 

providing advice regarding substantive 

benefits or comparative benefits of 

different health plans. 

(iv) Imposing standards that would, as 

applied or as implemented in a State, 

prevent the application of Federal 

requirements applicable to certified 

application counselors, to an 

organization designated by the 

Exchange under paragraph (b) of this 

section, or to the Exchange’s 

implementation of the certified 

application program. 

* * * * * 

(f) * * * 

(1) Are informed of the functions and 

responsibilities of certified application 

counselors; 

(2) Provide authorization in a form 

and manner as determined by the 

Exchange prior to a certified application 

counselor obtaining access to an 

applicant’s personally identifiable 

information, and that the organization 

or certified application counselor 

maintains a record of the authorization 

in a form and manner as determined by 

the Exchange. The Exchange must 

establish a reasonable retention period 

for maintaining these records. In 

Federally-facilitated Exchanges, this 

period is no less than six years, unless 

a different and longer retention period 

has already been provided under other 

applicable Federal law; and 

* * * * * 

(g) Fees, consideration, solicitation, 

and marketing. Organizations 

designated by the Exchange under 

paragraph (b) of this section and 

certified application counselors must 

not— 

(1) Impose any charge on applicants 

or enrollees for application or other 

assistance related to the Exchange; 

(2) Receive any consideration directly 

or indirectly from any health insurance 

issuer or issuer of stop-loss insurance in 

connection with the enrollment of any 

individuals in a QHP or a non-QHP. In 

a Federally-facilitated Exchange, no 

health care provider shall be ineligible 


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to operate as a certified application 

counselor or organization designated by 

the Exchange under paragraph (b) of this 

section solely because it receives 

consideration from a health insurance 

issuer for health care services provided; 

(3) Beginning November 15, 2014, if 

operating in a Federally-facilitated 

Exchange, provide compensation to 

individual certified application 

counselors on a per-application, perindividual-assisted, or per-enrollment 

basis; 

(4) Provide gifts, including gift cards 

or cash, unless they are of nominal 

value, or provide promotional items that 

market or promote the products or 

services of a third party, to any 

applicant or potential enrollee as an 

inducement for enrollment. Gifts, gift 

cards, or cash may exceed nominal 

value for the purpose of providing 

reimbursement for legitimate expenses 

incurred by a consumer in effort to 

receive Exchange application assistance, 

such as, but not limited to, travel or 

postage expenses. 

(5) Solicit any consumer for 

application or enrollment assistance by 

going door-to-door or through other 

unsolicited means of direct contact, 

including calling a consumer to provide 

application or enrollment assistance 

without the consumer initiating the 

contact, unless the individual has a preexisting relationship with the individual 

certified application counselor or 

designated organization and other 

applicable State and Federal laws are 

otherwise complied with. Outreach and 

education activities may be conducted 

by going door-to-door or through other 

unsolicited means of direct contact, 

including calling a consumer; or 

(6) Initiate any telephone call to a 

consumer using an automatic telephone 

dialing system or an artificial or 

prerecorded voice, except in cases 

where the individual certified 

application counselor or designated 

organization has a relationship with the 

consumer and so long as other 

applicable State and Federal laws are 

otherwise complied with. 

■ 29. Section 155.240 is amended by 

adding paragraph (e) to read as follows: 

§ 155.240 Payment of premium. 

* * * * * 

(e) Premium calculation. The 

Exchange may establish one or more 

standard processes for premium 

calculation. 

(1) For a Federally-facilitated 

Exchange, the premium for coverage 

lasting less than one month must equal 

the product of— 

(i) The premium for one month of 

coverage divided by the number of days 

in the month; and 

(ii) The number of days for which 

coverage is being provided in the month 

described in paragraph (e)(1)(i) of this 

section. 

(2) [Reserved] 

■ 30. Section 156.260 is amended by 

revising paragraph (g) to read as follows: 

§ 155.260 Privacy and security of 

personally identifiable information. 

* * * * * 

(g) Improper use and disclosure of 

information. Any person who 

knowingly and willfully uses or 

discloses information in violation of 

section 1411(g) of the Affordable Care 

Act will be subject to a CMP of not more 

than $25,000 per person or entity, per 

use or disclosure, consistent with the 

bases and process for imposing civil 

penalties specified at § 155.285, in 

addition to other penalties that may be 

prescribed by law. 

■ 31. Section 155.285 is added to 

subpart C to read as follows: 

§ 155.285 Bases and process for imposing 

civil penalties for provision of false or 

fraudulent information to an Exchange or 

improper use or disclosure of information. 

(a) Grounds for imposing civil money 

penalties. (1) HHS may impose civil 

money penalties on any person, as 

defined in paragraph (a)(2) of this 

section, if, based on credible evidence, 

HHS reasonably determines that a 

person has engaged in one or more of 

the following actions: 

(i) Failure to provide correct 

information under section 1411(b) of the 

Affordable Care Act where such failure 

is attributable to negligence or disregard 

of any rules or regulations of the 

Secretary with negligence and disregard 

defined as they are in section 6662 of 

the Internal Revenue Code of 1986: 

(A) ‘‘Negligence’’ includes any failure 

to make a reasonable attempt to provide 

accurate, complete, and comprehensive 

information; and 

(B) ‘‘Disregard’’ includes any careless, 

reckless, or intentional disregard for any 

rules or regulations of the Secretary. 

(ii) Knowing and willful provision of 

false or fraudulent information required 

under section 1411(b) of the Affordable 

Care Act, where knowing and willful 

means the intentional provision of 

information that the person knows to be 

false or fraudulent; or 

(iii) Knowing and willful use or 

disclosure of information in violation of 

section 1411(g) of the Affordable Care 

Act, where knowing and willful means 

the intentional use or disclosure of 

information in violation of section 

1411(g). Such violations would include, 

but not be limited to, the following: 

(A) Any use or disclosure performed 

which violates relevant privacy and 

security standards established by the 

Exchange pursuant to § 155.260; 

(B) Any other use or disclosure which 

has not been determined by the 

Secretary to be in compliance with 

section 1411(g)(2)(A) of the Affordable 

Care Act pursuant to § 155.260(a); and 

(C) Any other use or disclosure which 

is not necessary to carry out a function 

described in a contract with a nonExchange entity executed pursuant to 

§ 155.260(b)(2). 

(2) For purposes of this section, the 

term ‘‘person’’ is defined to include, but 

is not limited to, all individuals; 

corporations; Exchanges; Medicaid and 

CHIP agencies; other entities gaining 

access to personally identifiable 

information submitted to an Exchange 

to carry out additional functions which 

the Secretary has determined ensure the 

efficient operation of the Exchange 

pursuant to § 155.260(a)(1); and nonExchange entities as defined in 

§ 155.260(b) which includes agents, 

brokers, Web-brokers, QHP issuers, 

Navigators, non-Navigator assistance 

personnel, certified application 

counselors, in-person assistors, and 

other third party contractors. 

(b) Factors in determining the amount 

of civil money penalties imposed. In 

determining the amount of civil money 

penalties, HHS may take into account 

factors which include, but are not 

limited to, the following: 

(1) The nature and circumstances of 

the conduct including, but not limited 

to: 

(i) The number of violations; 

(ii) The severity of the violations; 

(iii) The person’s history with the 

Exchange including any prior violations 

that would indicate whether the 

violation is an isolated occurrence or 

represents a pattern of behavior; 

(iv) The length of time of the 

violation; 

(v) The number of individuals 

affected or potentially affected; 

(vi) The extent to which the person 

received compensation or other 

consideration associated with the 

violation; 

(vii) Any documentation provided in 

any complaint or other information, as 

well as any additional information 

provided by the individual to refute 

performing the violation; and 

(viii) Whether other remedies or 

penalties have been imposed for the 

same conduct or occurrence. 

(2) The nature of the harm resulting 

from, or reasonably expected to result 


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from, the violation, including but not 

limited to: 

(i) Whether the violation resulted in 

actual or potential financial harm; 

(ii) Whether there was actual or 

potential harm to an individual’s 

reputation; 

(iii) Whether the violation hindered or 

could have hindered an individual’s 

ability to obtain health insurance 

coverage; 

(v) The actual or potential impact of 

the provision of false or fraudulent 

information or of the improper use or 

disclosure of the information; and 

(vi) Whether any person received a 

more favorable eligibility determination 

for enrollment in a QHP or insurance 

affordability program, such as greater 

advance payment of the premium tax 

credits or cost-sharing reductions than 

he or she would be eligible for if the 

correct information had been provided. 

(3) No penalty will be imposed under 

paragraph (a)(1)(i) of this section if HHS 

determines that there was a reasonable 

cause for the failure to provide correct 

information required under section 

1411(b) of the Affordable Care Act and 

that the person acted in good faith. 

(c) Maximum penalty. The amount of 

a civil money penalty will be 

determined by HHS in accordance with 

paragraph (b) of this section. 

(1) The following provisions provide 

maximum penalties for a single ‘‘plan 

year,’’ where ‘‘plan year’’ has the same 

meaning as at § 155.20: 

(i) Any person who fails to provide 

correct information as specified in 

paragraph (a)(1)(i) of this section may be 

subject to a maximum civil money 

penalty of $25,000 for each application, 

as defined at paragraph (c)(1)(iii) of this 

section, pursuant to which a person fails 

to provide correct information. 

(ii) Any person who knowingly and 

willfully provides false information as 

specified in paragraph (a)(1)(ii) of this 

section may be subject to a maximum 

civil money penalty of $250,000 for 

each application, as defined at 

paragraph (c)(1)(iii) of this section, on 

which a person knowingly and willfully 

provides false information. 

(iii) For the purposes of this 

subsection, ‘‘application’’ is defined as 

a submission of information, whether 

through an online portal, over the 

telephone through a call center, or 

through a paper submission process, in 

which the information is provided in 

relation to an eligibility determination; 

an eligibility redetermination based on 

a change in an individual’s 

circumstances; or an annual eligibility 

redetermination for any of the 

following: 

(A) Enrollment in a qualified health 

plan; 

(B) Premium tax credits or cost 

sharing reductions; or 

(C) An exemption from the individual 

shared responsibility payment. 

(2) Any person who knowingly or 

willfully uses or discloses information 

as specified in paragraph (a)(1)(iii) of 

this section may be subject to the 

following civil money penalty: 

(i) A civil money penalty for each use 

or disclosure described in paragraph 

(a)(1)(iii) of this section of not more than 

$25,000 per use or disclosure. 

(ii) For purposes of paragraph (c) of 

this section, a use or disclosure includes 

one separate use or disclosure of a 

single individual’s personally 

identifiable information where the 

person against whom a civil money 

penalty may be imposed has made the 

use or disclosure. 

(3) These penalties may be imposed in 

addition to any other penalties that may 

be prescribed by law. 

(d) Notice of intent to issue civil 

money penalty. If HHS intends to 

impose a civil money penalty in 

accordance with this part, HHS will 

send a written notice of such intent to 

the person against whom it intends to 

impose a civil money penalty. 

(1) This written notice will be either 

hand delivered, sent by certified mail, 

return receipt requested, or sent by 

overnight delivery service with 

signature upon delivery required. The 

written notice must include the 

following elements: 

(i) A description of the findings of fact 

regarding the violations with respect to 

which the civil money penalty is 

proposed; 

(ii) The basis and reasons why the 

findings of fact subject the person to a 

penalty; 

(iii) Any circumstances described in 

paragraph (b) of this section that were 

considered in determining the amount 

of the proposed penalty; 

(iv) The amount of the proposed 

penalty; 

(v) An explanation of the person’s 

right to a hearing under any applicable 

administrative hearing process; 

(vi) A statement that failure to request 

a hearing within 60 calendar days after 

the date of issuance printed on the 

notice permits the assessment of the 

proposed penalty; and 

(vii) Information explaining how to 

file a request for a hearing and the 

address to which the hearing request 

must be sent. 

(2) The person may request a hearing 

before an ALJ on the proposed penalty 

by filing a request in accordance with 

the procedure to file an appeal specified 

in paragraph (f) of this section. 

(e) Failure to request a hearing. If the 

person does not request a hearing 

within 60 calendar days of the date of 

issuance printed on the notice described 

in paragraph (d) of this section, HHS 

may impose the proposed civil money 

penalty. 

(1) HHS will notify the person in 

writing of any penalty that has been 

imposed, the means by which the 

person may satisfy the penalty, and the 

date on which the penalty is due. 

(2) A person has no right to appeal a 

penalty with respect to which the 

person has not timely requested a 

hearing in accordance with paragraph 

(d) of this section. 

(f) Appeal of proposed penalty. 

Subject to paragraph (e)(2) of this 

section, any person against whom HHS 

proposed to impose a civil money 

penalty may appeal that penalty in 

accordance with the rules and 

procedures outlined at 45 CFR part 150, 

subpart D, excluding §§ 150.461, 

150.463, and 150.465. 

(g) Enforcement authority. (1) HHS. 

HHS may impose civil money penalties 

up to the maximum amounts specified 

in paragraph (d) of this section for any 

of the violations described in paragraph 

(a) of this section. 

(2) OIG. In accordance with the rules 

and procedures of 42 CFR part 1003, 

and in place of imposition of penalties 

by CMS, the OIG may impose civil 

money penalties for violations described 

in paragraph (a)(1)(ii) of this section. 

(h) Settlement authority. Nothing in 

this section limits the authority of HHS 

to settle any issue or case described in 

the notice furnished in accordance with 

§ 155.285(d) or to compromise on any 

penalty provided for in this section. 

(i) Limitations. No action under this 

section will be entertained unless 

commenced, in accordance with 

§ 155.285(d), within 6 years from the 

date on which the violation occurred. 

■ 32. Section 155.320 is amended by 

revising the section heading to read as 

follows and by removing paragraph 

(d)(4). 

§ 155.320 Verification process related to 

eligibility for insurance affordability 

programs. 

* * * * * 

■ 33. Section 155.330 is amended by 

revising paragraph (d)(2)(ii) to read as 

follows: 

§ 155.330 Eligibility redetermination during 

a benefit year. 

* * * * * 

(d) * * * 

(2) * * * 


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(ii) Comply with the standards 

specified in paragraph (e)(2) of this 

section. 

* * * * * 

■ 34. Section 155.400 is amended by 

adding paragraphs (e) and (f) to read as 

follows: 

§ 155.400 Enrollment of qualified 

individuals into QHPs. 

* * * * * 

(e) Premium payment. Exchanges 

may, and the Federally-facilitated 

Exchange will, require payment of the 

first month’s premium to effectuate an 

enrollment. 

(f) Processing enrollment transactions. 

The Exchange may provide 

requirements to QHP issuers regarding 

the instructions for processing 

electronic enrollment-related 

transactions. 

■ 35. Section 155.410 is amended by 

revising paragraph (d) to read as 

follows: 

§ 155.410 Initial and annual open 

enrollment periods. 

* * * * * 

(d) Notice of annual open enrollment 

period. Starting in 2014, the Exchange 

must provide a written annual open 

enrollment notification to each enrollee 

no earlier than the first day of the month 

before the open enrollment period 

begins and no later than the first day of 

the open enrollment period. 

* * * * * 

■ 36. Section 155.420 is amended by 

revising paragraphs (b)(2)(i) through 

(iii), (c), (d)(1), (d)(6)(iii), and (e) 

heading and introductory text to read as 

follows: 

§ 155.420 Special enrollment periods. 

* * * * * 

(b) * * * 

(2) * * * 

(i) In the case of birth, adoption, 

placement for adoption, or placement in 

foster care as described in paragraph 

(d)(2) of this section, the Exchange must 

ensure that coverage is effective for a 

qualified individual or enrollee on the 

date of birth, adoption, placement for 

adoption, or placement in foster care, or 

it may permit the qualified individual or 

enrollee to elect a coverage effective 

date of the first day of the month 

following the date of birth, adoption, 

placement for adoption, or placement in 

foster care. If the Exchange permits the 

qualified individual or enrollee to elect 

a coverage effective date of the first day 

of the month following the date of birth, 

adoption, placement for adoption, or 

placement in foster care, the Exchange 

must ensure coverage is effective on 

such date elected by the qualified 

individual or enrollee. 

(ii) In the case of marriage as 

described in paragraph (d)(2) of this 

section the Exchange must ensure that 

coverage is effective for a qualified 

individual or enrollee on the first day of 

the month following plan selection. 

(iii) In the case of a qualified 

individual or enrollee eligible for a 

special enrollment period as described 

in paragraphs (d)(4), (d)(5), (d)(9), or 

(d)(10) of this section, the Exchange 

must ensure that coverage is effective on 

an appropriate date based on the 

circumstances of the special enrollment 

period. 

(iv) In a case where a consumer loses 

coverage as described in paragraph 

(d)(1) or (d)(6)(iii) of this section, if the 

plan selection is made before or on the 

day of the loss of coverage, the 

Exchange must ensure that the coverage 

effective date is on the first day of the 

month following the loss of coverage. If 

the plan selection is made after the loss 

of coverage, the Exchange must ensure 

that coverage is effective in accordance 

with paragraph (b)(1) of this section or 

on the first day of the month following 

plan selection in accordance with 

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

option of the Exchange; 

* * * * * 

(c) Availability and length of special 

enrollment periods. (1) General rule. 

Unless specifically stated otherwise 

herein, a qualified individual or 

enrollee has 60 days from the date of a 

triggering event to select a QHP. 

(2) Advance availability. (i) A 

qualified individual or his or her 

dependent who is described in 

paragraph (d)(1) of this section has 60 

days before and after the loss of 

coverage to select a QHP. 

(ii) A qualified individual or his or 

her dependent who is described in 

paragraph (d)(6)(iii) of this section has 

60 days before and after the loss of 

eligibility for qualifying coverage in an 

eligible employer-sponsored plan to 

select a QHP. 

(3) Special rule. In the case of a 

qualified individual or enrollee who is 

eligible for a special enrollment period 

as described in paragraphs (d)(4), (d)(5), 

(d)(9), or (d)(10) of this section, the 

Exchange may define the length of the 

special enrollment period as appropriate 

based on the circumstances of the 

special enrollment period, but in no 

event shall the length of the special 

enrollment period exceed sixty (60) 

days. 

(d) * * * 

(1) The qualified individual or his or 

her dependent either: 

(i) Loses minimum essential coverage. 

The date of the loss of coverage is the 

last day the consumer would have 

coverage under his or her previous plan 

or coverage. 

(ii) Is enrolled in any non-calendar 

year health insurance policy that will 

expire in 2014 as described in 

§ 147.104(b)(2) of this subchapter, even 

if the qualified individual or his or her 

dependent has the option to renew the 

expiring non-calendar year individual 

health insurance policy. The date of the 

loss of coverage is the date in 2014 of 

the expiration of the non-calendar year 

policy; 

(iii) Loses pregnancy-related coverage 

described under section 

1902(a)(10)(A)(i)(IV) and 

(a)(10)(A)(ii)(IX) of the Social Security 

Act (42 U.S.C. 1396a(a)(10)(A)(i)(IV), 

(a)(10)(A)(ii)(IX)). The date of the loss of 

coverage is the last day the consumer 

would have pregnancy-related coverage; 

or 

(iv) Loses medically needy coverage 

as described under section 

1902(a)(10)(C) of the Social Security Act 

only once per calendar year. The date of 

the loss of coverage is the last day the 

consumer would have medically needy 

coverage. 

* * * * * 

(6) * * * 

(iii) A qualified individual or his or 

her dependent who is enrolled in an 

eligible employer-sponsored plan is 

determined newly eligible for advance 

payments of the premium tax credit 

based in part on a finding that such 

individual is ineligible for qualifying 

coverage in an eligible-employer 

sponsored plan in accordance with 26 

CFR 1.36B–2(c)(3), including as a result 

of his or her employer discontinuing or 

changing available coverage within the 

next 60 days, provided that such 

individual is allowed to terminate 

existing coverage. 

* * * * * 

(e) Loss of coverage. Loss of coverage 

described in paragraph (d)(1) of this 

section includes those circumstances 

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

through (iii) and in paragraphs (d)(1)(ii) 

through (iv) of this section. Loss of 

coverage does not include voluntary 

termination of coverage or other loss 

due to— 

* * * * * 

■ 37. Section 155.430 is amended by 

revising paragraph (d)(6) and adding 

paragraph (e) to read as follows: 

§ 155.430 Termination of coverage. 

* * * * * 

(d) * * * 


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(6) In the case of a termination in 

accordance with paragraph (b)(2)(v) of 

this section, the last day of coverage in 

an enrollee’s prior QHP is the day before 

the effective date of coverage in his or 

her new QHP, including any retroactive 

enrollments effectuated under 

§ 155.420(b)(2)(iii). In cases of 

retroactive terminations dates, the 

Exchange will ensure that appropriate 

actions are taken to make necessary 

adjustments to advance payments of the 

premium tax credit, cost-sharing 

reductions, premiums, and claims. 

* * * * * 

(e) Termination, cancellation, and 

reinstatement. The Exchange may 

establish operational instructions as to 

the form, manner, and method for 

addressing each of the following: 

(1) Termination. A termination is an 

action taken after a coverage effective 

date that ends an enrollee’s coverage 

through the Exchange for a date after the 

original coverage effective date, 

resulting in a period during which the 

individual was covered by the issuer. 

(2) Cancellation. A cancellation is 

specific type of termination action that 

ends a qualified individuals’ enrollment 

on the date coverage became effective 

resulting in coverage never having been 

effective with the QHP. 

(3) Reinstatement. A reinstatement is 

a correction of an erroneous termination 

or cancellation action and results in 

restoration of an enrollment with no 

break in coverage. 

§ 155.505 [Amended] 

■ 38. Section 155.505 is amended in 

paragraph (b)(4) by removing ‘‘; and’’ at 

the end of the paragraph and adding a 

period in its place. 

■ 39. Section 155.530 is amended by 

revising paragraph (a)(1) to read as 

follows: 

§ 155.530 Dismissals. 

(a) * * * 

(1) Withdraws the appeal request in 

writing or by telephone, if the appeals 

entity is capable of accepting telephonic 

withdrawals. 

(i) Accepting telephonic withdrawals 

means the appeals entity— 

(A) Records in full the appellant’s 

statement and telephonic signature 

made under penalty of perjury; and 

(B) Provides a written confirmation to 

the appellant documenting the 

telephonic interaction. 

(ii) [Reserved] 

* * * * * 

■ 40. Section 155.555 is amended by— 

■ a. Redesignating paragraphs (d) 

introductory text, (d)(1), (d)(2) 

introductory text, (d)(2)(i), (ii), (iii), 

(d)(3), and (d)(4) as paragraphs (d)(1) 

introductory text, (d)(1)(i), (d)(1)(ii) 

introductory text, (d)(1)(ii)(A), (B), (C), 

(d)(1)(iii), and (d)(2), respectively; and 

■ b. Revising new paragraph (d)(2) 

introductory text. 

The revision reads as follows: 

§ 155.555 Employer appeals process. 

* * * * * 

(d) * * * 

(2) Upon receipt of an invalid appeal 

request, the appeals entity must 

promptly and without undue delay send 

written notice to the employer that the 

appeal request is not valid because it 

fails to meet the requirements of this 

section. The written notice must inform 

the employer— 

* * * * * 

■ 41. Section 155.600(a) is amended by 

adding a definition of ‘‘Required 

contribution percentage’’ in alphabetical 

order to read as follows: 

§ 155.600 Definitions and general 

requirements. 

(a) * * * 

Required contribution percentage 

means the product of eight percent and 

the rate of premium growth over the rate 

of income growth for the calendar year, 

rounded to the nearest one-hundredth of 

one percent. 

* * * * * 

■ 42. Section 155.605 is amended by 

revising paragraph (g)(5) to read as 

follows: 

§ 155.605 Eligibility standards for 

exemptions. 

* * * * * 

(g) * * * 

(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 the required contribution 

percentage of household income for that 

calendar year; or 

* * * * * 

■ 43. Section 155.625 is revised to read 

as follows: 

§ 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) For an application submitted 

before the start of open enrollment for 

2016, through the approach described in 

paragraph (b) of this section. 

(b) Use of HHS service. 

Notwithstanding the requirements of 

this subpart, for an application 

submitted before the start of open 

enrollment for 2016, the Exchange may 

adopt an exemption eligibility 

determination made by HHS, provided 

that— 

(1) The Exchange adheres to the 

eligibility determination made by HHS; 

(2) 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 

(3) 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. 

■ 44. Section 155.705 is amended by— 

■ a. Revising paragraphs (b)(2) and 

(b)(3)(ii) introductory text and (b)(3)(iv) 

introductory text; and 

■ b. Adding paragraphs (b)(3)(vi) and 

(vii). 

The revisions and addition read as 

follows: 

§ 155.705 Functions of a SHOP. 

* * * * * 

(b) * * * 

(2) Employer choice requirements. 

With regard to QHPs offered through the 

SHOP for plan years beginning on or 

after January 1, 2015, the SHOP must 

allow a qualified employer to select a 

level of coverage as described in section 

1302(d)(1) of the Affordable Care Act, in 

which all QHPs within that level are 

made available to the qualified 

employees of the employer, unless the 

SHOP makes an election pursuant to 

paragraph (b)(3)(vi) of this section. 

(3) * * * 

(ii) Unless the SHOP makes an 

election pursuant to paragraph (b)(3)(vi) 

of this section, for plan years beginning 

on or after January 1, 2015, a SHOP: 

* * * * * 

(iv) Unless the Secretary makes an 

election pursuant to paragraph (b)(3)(vi) 

of this section, for plan years beginning 

on or after January 1, 2015, a Federallyfacilitated SHOP will provide a 

qualified employer a choice of two 

methods to make QHPs available to 

qualified employees: 

* * * * * 


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(vi) For plan years beginning in 2015 

only, the SHOP may, elect to provide 

employers only with the option set forth 

at paragraph (b)(3)(ii)(B) of this section, 

or in the case of a Federally-facilitated 

SHOP, only with the option set forth at 

paragraph (b)(3)(iv)(B) of this section, 

only if the State Insurance 

Commissioner submits a written 

recommendation to the SHOP 

adequately explaining that it is the State 

Insurance Commissioner’s expert 

judgment, based on a documented 

assessment of the full landscape of the 

small group market in his or her State, 

that not implementing employee choice 

would be in the best interests of small 

employers and their employees and 

dependents, given the likelihood that 

implementing employee choice would 

cause issuers to price products and 

plans higher in 2015 due to the issuers’ 

beliefs about adverse selection. A State 

Insurance Commissioner’s 

recommendation must be based on 

concrete evidence, including but not 

limited to discussions with those issuers 

expected to participate in the SHOP in 

2015. 

(vii) For plan years beginning in 2015 

only, a State Insurance Commissioner 

should submit the recommendation 

specified in paragraph (b)(3)(vi) of this 

section, and the SHOP should make a 

decision based on that recommendation 

sufficiently in advance of the end of the 

QHP certification application window 

such that issuers can make informed 

decisions about whether to participate 

in the SHOP. In a Federally-facilitatedSHOP, State Insurance Commissioners 

must submit to HHS the 

recommendation specified in paragraph 

(b)(3)(vi) of this section on or before 

June 2, 2014, and HHS will make a 

decision based on any recommendations 

submitted by that deadline before the 

close of the QHP certification 

application window. 

* * * * * 

■ 45. Section 155.725 is amended by 

revising paragraphs (c) and (e) to read as 

follows: 

§ 155.725 Enrollment periods under SHOP. 

* * * * * 

(c) Annual employer election period. 

(1) Notwithstanding any other 

paragraph in this section, for coverage 

beginning in 2015, in a Federallyfacilitated SHOP a qualified employer’s 

annual election period may begin no 

sooner than November 15, 2014. 

(2) The SHOP must provide qualified 

employers with a standard election 

period prior to the completion of the 

employer’s plan year and before the 

annual employee open enrollment 

period, in which the qualified employer 

may change its participation in the 

SHOP for the next plan year, 

including— 

(i) The method by which the qualified 

employer makes QHPs available to 

qualified employees pursuant to 

§ 155.705(b)(2) and (3); 

(ii) The employer contribution 

towards the premium cost of coverage; 

(iii) The level of coverage offered to 

qualified employees as described in 

§ 155.705(b)(2) and (3); and 

(iv) The QHP or QHPs offered to 

qualified employees in accordance with 

§ 155.705. 

* * * * * 

(e) Annual employee open enrollment 

period. The SHOP must establish a 

standardized annual open enrollment 

period for qualified employees prior to 

the completion of the applicable 

qualified employer’s plan year and after 

that employer’s annual election period. 

* * * * * 

■ 46. Section 155.740 is amended by— 

■ a. Redesignating paragraphs (g) 

introductory text, (g)(1) introductory 

text, (g)(1)(i), (g)(1)(ii), (g)(2), and (g)(3) 

as paragraphs (g)(1) introductory text, 

(g)(1)(i) introductory text, (g)(1)(i)(A), 

(g)(1)(i)(B), (g)(1)(ii), and (g)(2), 

respectively; and 

■ b. Revising paragraph (i)(1)(i). 

The revision read as follows: 

§ 155.740 SHOP employer and employee 

eligibility appeals requirements. 

* * * * * 

(i) * * * 

(1) * * * 

(i) Withdraws the request in 

accordance with the standards set forth 

in § 155.530(a)(1); or 

* * * * * 

■ 47. Subpart O is added to read as 

follows: 

Subpart O—Quality Reporting Standards for 

Exchanges 

Sec. 

155.1400 Quality rating system. 

155.1405 Enrollee satisfaction survey 

system. 

Subpart O—Quality Reporting 

Standards for Exchanges 

§ 155.1400 Quality rating system. 

The Exchange must prominently 

display the quality rating information 

assigned to each QHP on its Web site, 

in accordance with § 155.205(b)(1)(v), as 

calculated by HHS and in a form and 

manner specified by HHS. 

§ 155.1405 Enrollee satisfaction survey 

system. 

The Exchange must prominently 

display results from the Enrollee 

Satisfaction Survey for each QHP on its 

Web site, in accordance with 

§ 155.205(b)(1)(iv), as calculated by HHS 

and in a form and manner specified by 

HHS. 

PART 156—HEALTH INSURANCE 

ISSUER STANDARDS UNDER THE 

AFFORDABLE CARE ACT, INCLUDING 

STANDARDS RELATED TO 

EXCHANGES 

■ 48. The authority citation for part 156 

is revised to read as follows: 

Authority: Title I of the Affordable Care 

Act, sections 1301–1304, 1311–1313, 1321– 

1322, 1324, 1334, 1342–1343, 1401–1402, 

Pub. L. 111–148, 124 Stat. 119 (42 U.S.C. 

18021–18024, 18031–18032, 18041–18042, 

18044, 18054, 18061, 18063, 18071, 18082, 

26 U.S.C. 36B, and 31 U.S.C. 9701). 

■ 49. Section 156.122 is amended by 

revising paragraph (c) to read as follows: 

§ 156.122 Prescription drug benefits. 

* * * * * 

(c) A health plan providing essential 

health benefits must have procedures in 

place that allow an enrollee to request 

and gain access to clinically appropriate 

drugs not covered by the health plan. 

(1) Such procedures must include a 

process for an enrollee, the enrollee’s 

designee, or the enrollee’s prescribing 

physician (or other prescriber) to 

request an expedited review based on 

exigent circumstances. 

(i) Exigent circumstances exist when 

an enrollee is suffering from a health 

condition that may seriously jeopardize 

the enrollee’s life, health, or ability to 

regain maximum function or when an 

enrollee is undergoing a current course 

of treatment using a non-formulary 

drug. 

(ii) A health plan must make its 

coverage determination on an expedited 

review request based on exigent 

circumstances and notify the enrollee or 

the enrollee’s designee and the 

prescribing physician (or other 

prescriber, as appropriate) of its 

coverage determination no later than 24 

hours after it receives the request. 

(iii) A health plan that grants an 

exception based on exigent 

circumstances must provide coverage of 

the non-formulary drug for the duration 

of the exigency. 

(2) [Reserved] 

■ 50. Section 156.130 is amended by 

removing and reserving paragraph (b) 

and revising paragraphs (c) and (d) to 

read as follows: 

§ 156.130 Cost-sharing requirements. 

* * * * * 

(c) Special rule for network plans. In 

the case of a plan using a network of 


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providers, cost-sharing paid by, or on 

behalf of, an enrollee for benefits 

provided outside of such network shall 

not count toward the annual limitation 

on cost-sharing (as defined in paragraph 

(a) of this section). 

(d) Increase annual dollar limits in 

multiples of 50. For a plan year 

beginning in a calendar year after 2014, 

any increase in the annual dollar limits 

described in paragraph (a) of this 

section that does not result in a multiple 

of 50 dollars will be rounded down, to 

the next lowest multiple of 50 dollars. 

* * * * * 

51. Section 156.200 is amended by 

revising paragraph (b)(5) and adding 

paragraph (h) to read as follows: 

§ 156.200 QHP issuer participation 

standards. 

* * * * * 

(b) * * * 

(5) Implement and report on a quality 

improvement strategy or strategies 

described in section 1311(c)(1)(E) of the 

Affordable Care Act consistent with the 

standards of section 1311(g) of the 

Affordable Care Act, disclose and report 

information on health care quality and 

outcomes described in sections 

1311(c)(1)(H), (c)(1)(I), and (c)(3) of the 

Affordable Care Act, and implement 

appropriate enrollee satisfaction surveys 

consistent with section 1311(c)(4) of the 

Affordable Care Act; 

* * * * * 

(h) Operational requirements. As a 

condition of certification of a QHP, an 

issuer must attest that it will comply 

with all QHP operational requirements 

described in subparts D, E, H, K, L, and 

M of this part. 

■ 52. Section 156.265 is amended by 

revising paragraph (d) to read as 

follows: 

§ 156.265 Enrollment process for qualified 

individuals. 

* * * * * 

(d) Premium payment. A QHP issuer 

must follow the premium payment 

process established by the Exchange in 

accordance with § 155.240 of the 

subchapter. 

* * * * * 

■ 53. Section 156.270 is amended by 

adding a new paragraph (j) to read as 

follows: 

§ 156.270 Termination of coverage for 

qualified individuals. 

* * * * * 

(j) Operational instructions. QHP 

issuers must follow the transaction rules 

established by the Exchange in 

accordance with § 155.430(e) of this 

subchapter. 

■ 54. Section 156.604 is amended by 

revising paragraphs (a)(2) heading and 

introductory text and (d) to read as 

follows: 

§ 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) * * * 

(2) Procedural requirements for 

recognition as minimum essential 

coverage. To be considered for 

recognition as minimum essential 

coverage, the sponsor of the coverage, 

government agency, health insurance 

issuer, or plan administrator must 

submit the following information to 

HHS: 

* * * * * 

(d) Notice. Once recognized as 

minimum essential coverage, the 

sponsor of the coverage, government 

agency, health insurance issuer, or plan 

administrator 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 Internal Revenue 

Code and implementing regulations. 

■ 55. Section 156.800 is amended by 

adding paragraph (d) to read as follows: 

§ 156.800 Available remedies; Scope. 

* * * * * 

(d) Information sharing. HHS may 

consult and share information about 

QHP issuers with other Federal and 

State regulatory and enforcement 

entities to the extent that the 

consultation and information is 

necessary for purposes of State or 

Federal oversight and enforcement 

activities. 

■ 56. Section 156.805 is amended— 

■ a. By adding paragraph (d)(3); and 

■ b. By revising paragraph (e)(2). 

The revisions and additions read as 

follows: 

§ 156.805 Bases and process for imposing 

civil money penalties in Federally-facilitated 

Exchanges. 

* * * * * 

(d) * * * 

(3) HHS will deliver notice under this 

paragraph by either hand delivery, 

certified mail, return receipt requested, 

or by overnight delivery service with 

signature upon delivery required. 

(e) * * * 

(2) HHS will notify the issuer in 

writing of any penalty that has been 

assessed under this subpart and of the 

means by which the QHP issuer or 

another responsible entity may satisfy 

the CMP assessment. 

* * * * * 

■ 57. Section 156.806 is added to read 

as follows: 

§ 156.806 Notice of non-compliance. 

If HHS learns of a potential violation 

described in § 156.805 or if a State 

informs HHS of a potential violation, 

prior to imposing any CMPs, HHS must 

provide a written notice to the issuer, to 

include the following: 

(a) Describe the potential violation. 

(b) Provide 30 days from the date of 

the notice for the QHP issuer to respond 

and to provide additional information to 

refute an alleged violation. 

(c) State that a civil money penalty 

may be assessed if the allegations are 

not, as determined by HHS, refuted. 

■ 58. Section 156.810 is amended— 

■ a. By revising paragraph (a)(6); 

■ b. In paragraph (a)(9) by removing 

‘‘or’’ after the semicolon; 

■ c. In paragraphs (a)(10) and (11) by 

removing the period and adding a 

semicolon in its place; 

■ d. By adding new paragraphs (a)(12) 

and (13); and 

■ e. By revising paragraph (d) 

introductory text. 

The revisions and additions read as 

follows: 

§ 156.810 Bases and process for 

decertification of a QHP offered by an 

issuer through a Federally-facilitated 

Exchange. 

(a) * * * 

(6) The QHP no longer meets the 

applicable standards set forth under 

subpart C of this part. 

* * * * * 

(12) The QHP issuer substantially fails 

to meet the requirements related to the 

cases forwarded to QHP issuers under 

subpart K of this part; or 

(13) The QHP issuer substantially fails 

to meet the requirements related to the 

offering of a QHP under subpart M of 

this part. 

* * * * * 

(d) Expedited decertification process. 

For decertification actions on grounds 

described in paragraphs (a)(6), (7), (8), 

or (9) of this section, HHS will provide 

written notice to the QHP issuer, 

enrollees, and the State department of 

insurance in the State in which the QHP 

is being decertified. The written notice 

must include the following: 

* * * * * 

■ 59. Section 156.1105 is amended by 

adding paragraphs (d) and (e) to read as 

follows: 

§ 156.1105 Establishment of standards for 

HHS-approved enrollee satisfaction survey 

vendors for use by QHP issuers in 

Exchanges. 

* * * * * 


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(d) Monitoring. HHS will periodically 

monitor HHS-approved enrollee 

satisfaction survey vendors to ensure 

ongoing compliance with the standards 

in paragraph (b) of this section. If HHS 

determines that an HHS-approved 

enrollee satisfaction survey vendor is 

non-compliant with the standards 

required in paragraph (b) of this section, 

the survey vendor may be removed from 

the approved list described in paragraph 

(c) of this section and/or the submitted 

survey results may be ineligible to be 

included for ESS results. 

(e) Appeals. An enrollee satisfaction 

survey vendor that is not approved by 

HHS after submitting the application 

described in paragraph (a) of this 

section may appeal HHS’s decision by 

notifying HHS in writing within 15 days 

from receipt of the notification of not 

being approved and submitting 

additional documentation 

demonstrating how the vendor meets 

the standards in paragraph (b) of this 

section. HHS will review the submitted 

documentation and make a final 

approval determination within 30 days 

from receipt of the additional 

documentation. 

■ 60. Section 156.1120 is added to 

subpart L to read as follows: 

§ 156.1120 Quality rating system. 

(a) Data submission requirement. (1) 

A QHP issuer must submit data to HHS 

and Exchanges to support the 

calculation of quality ratings for each 

QHP that has been offered in an 

Exchange for at least one year. 

(2) In order to ensure the integrity of 

the data required to calculate the QRS, 

a QHP issuer must submit data that has 

been validated in a form and manner 

specified by HHS. 

(3) A QHP issuer must include in its 

data submission information only for 

those QHP enrollees at the level 

specified by HHS. 

(b) Timeline. A QHP issuer must 

annually submit data necessary to 

calculate the QHP’s quality ratings to 

HHS and Exchanges, on a timeline and 

in a standardized form and manner 

specified by HHS. 

(c) Marketing requirement. A QHP 

issuer may reference the quality ratings 

for its QHPs in its marketing materials, 

in a manner specified by HHS. 

(d) Multi-State plans. Issuers of multiState plans, as defined in § 155.1000(a) 

of this subchapter, must provide the 

data described in paragraph (a) of this 

section to the U.S. Office of Personnel 

Management, in the time and manner 

specified by the U.S. Office of Personnel 

Management. 

■ 61. Section 156.1125 is added to 

subpart L to read as follows: 

§ 156.1125 Enrollee satisfaction survey 

system. 

(a) General requirement. A QHP issuer 

must contract with an HHS-approved 

enrollee satisfaction survey (ESS) 

vendor, as identified by § 156.1105, in 

order to administer the Enrollee 

Satisfaction Survey of the QHP’s 

enrollees. A QHP issuer must authorize 

its contracted ESS vendor to report 

survey results to HHS and the Exchange 

on the issuer’s behalf. 

(b) Data requirement. (1) A QHP 

issuer must collect data for each QHP, 

with more than 500 enrollees in the 

previous year that has been offered in an 

Exchange for at least one year and 

following a survey sampling 

methodology provided by HHS. 

(2) In order to ensure the integrity of 

the data required to conduct the survey, 

a QHP issuer must submit data that has 

been validated in a form and manner 

specified by HHS, and submit this data 

to its contracted ESS vendor. 

(3) A QHP issuer must include in its 

data submission information only for 

those QHP enrollees at the level 

specified by HHS. 

(c) Marketing requirement. A QHP 

issuer may reference the survey results 

for its QHPs in its marketing materials, 

in a manner specified by HHS. 

(d) Timeline. A QHP issuer must 

annually submit data necessary to 

conduct the survey to its contracted ESS 

vendor on a timeline and in a 

standardized form and manner specified 

by HHS. 

(e) Multi-State plans. Issuers of multiState plans, as defined in § 155.1000(a) 

of this subchapter, must provide the 

data described in paragraph (b) of this 

section to the U.S. Office of Personnel 

Management, in the time and manner 

specified by the U.S. Office of Personnel 

Management. 

PART 158—ISSUER USE OF PREMIUM 

REVENUE: REPORTING AND REBATE 

REQUIREMENTS 

■ 62. The authority citation for part 158 

is revised to read as follows: 

Authority: Section 2718 of the Public 

Health Service Act (42 U.S.C. 300gg–18), as 

amended. 

■ 63. Section 158.150 is amended by 

revising paragraph (b)(2)(i)(A)(6) to read 

as follows: 

§ 158.150 Activities that improve health 

care quality. 

* * * * * 

(b) * * * 

(2) * * * 

(i) * * * 

(A) * * * 

(6) Commencing with the 2012 

reporting year and extending through 

the first reporting year in which the 

Secretary requires ICD–10 as the 

standard medical data code set, 

implementing ICD–10 code sets that are 

designed to improve quality and are 

adopted pursuant to the Health 

Insurance Portability and 

Accountability Act (HIPAA), 42 U.S.C. 

1320d-2, as amended, limited to 0.3 

percent of an issuer’s earned premium 

as defined in § 158.130. 

* * * * * 

■ 64. Section 158.211 is amended by 

revising paragraph (a) to read as follows: 

§ 158.211 Requirement in States with a 

higher medical loss ratio. 

(a) State option to set higher 

minimum loss ratio. For coverage 

offered in a State whose law provides 

that issuers in the State must meet a 

higher MLR than that set forth in 

§ 158.210, the State’s higher percentage 

must be substituted for the percentage 

stated in § 158.210. If a State requires 

the small group market and individual 

market to be merged and also sets a 

higher MLR standard for the merged 

market, the State’s higher percentage 

must be substituted for the percentage 

stated in § 158.210 for both the small 

group and individual markets. 

* * * * * 

■ 65. Section 158.220 is amended by 

revising paragraph (a) to read as follows: 

§ 158.220 Aggregation of data in 

calculating an issuer’s medical loss ratio. 

(a) Aggregation by State and by 

market. In general, an issuer’s MLR 

must be calculated separately for the 

large group market, small group market 

and individual market within each 

State. However, if a State requires the 

small group market and individual 

market to be merged, then the data 

reported separately under subpart A of 

this part for the small group and 

individual market in that State must be 

merged for purposes of calculating an 

issuer’s MLR and any rebates owing. 

* * * * * 

■ 66. Section 158.221 is amended by 

adding paragraphs (b)(6) and (7) to read 

as follows: 

§ 158.221 Formula for calculating an 

issuer’s medical loss ratio. 

* * * * * 

(b) * * * 

(6) The numerator of the MLR in the 

individual and small group markets in 

States that adopted the transitional 

policy outlined in the CMS letter dated 

November 14, 2013 must be the amount 

specified in paragraph (b) of this 

section, except that issuers that 

provided transitional coverage may 


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Federal Register / Vol. 79, No. 101 / Tuesday, May 27, 2014 / Rules and Regulations 30353 

multiply the total incurred claims and 

expenditures for activities that improve 

health care quality incurred in 2014 in 

the respective State and market by a 

factor of 1.0001. 

(7) The numerator of the MLR in the 

individual and small group markets for 

issuers participating in the State and 

Federal Exchanges (sometimes referred 

to as ‘‘Marketplaces’’) must be the 

amount specified in paragraph (b) of 

this section, except that the total 

incurred claims and expenditures for 

activities that improve health care 

quality incurred in 2014 in the 

respective State and market may be 

multiplied by a factor of 1.0004. 

* * * * * 

■ 67. Section 158.231 is amended by 

revising paragraph (a) to read as follows: 

§ 158.231 Life-years used to determine 

credible experience. 

(a) The life-years used to determine 

the credibility of an issuer’s experience 

are the life-years for the MLR reporting 

year plus the life-years for the two prior 

MLR reporting years. If a State requires 

the small group market and individual 

market to be merged, then life-years 

used to determine credibility must be 

the life-years from the small group 

market and the individual market for 

the MLR reporting year plus the lifeyears from the small group market and 

the individual market for the two prior 

MLR reporting years. 

* * * * * 

Dated: May 12, 2014. 

Marilyn Tavenner, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: May 14, 2014. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

[FR Doc. 2014–11657 Filed 5–16–14; 5:00 pm] 

BILLING CODE 4120–01–P 


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