[Federal Register Volume 63, Number 174 (Wednesday, September 9, 1998)]
[Rules and Regulations]
[Pages 48372-48375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24066]


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Part III





Department of Labor





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Pension and Welfare Benefits Administration



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29 CFR Part 2520



Interim Rule Amending Summary Plan Description Regulation; Proposed 
Amendments to Summary Plan Description Regulations; Final Rule and 
Proposed Rule

  Federal Register / Vol. 63, No. 174 / Wednesday, September 9, 1998 / 
Rules and Regulations  

[[Page 48372]]



DEPARTMENT OF LABOR

Pension and Welfare Benefits Administration

29 CFR Part 2520

RIN 1210-AA55


Interim Rule Amending Summary Plan Description Regulation

AGENCY: Pension and Welfare Benefits Administration, Department of 
Labor.

ACTION: Interim Rule with request for comments.

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SUMMARY: This document contains an interim rule amending the 
information required to be contained in the Summary Plan Description 
(SPD) required to be furnished to employee benefit plan participants 
and beneficiaries under the Employee Retirement Income Security Act of 
1974, as amended (ERISA). Specifically, this rule amends the 
information required to be disclosed in the SPD with respect to the 
Newborns' and Mothers' Health Protection Act of 1996. The amendment 
contained in this document will affect group health plan sponsors, 
administrators, fiduciaries, participants and beneficiaries.

DATES: Effective date: This amendment is effective November 9, 1998.
    Applicability date: Administrators will be required to comply with 
this amendment no later than the date on which the first summary of 
material modification (or updated SPD) is required to be furnished 
participants and beneficiaries following the effective date of this 
amendment.
    Comments: Written comments on this interim rule must be received by 
November 9, 1998.

ADDRESSES: Interested persons are invited to submit written comments 
(preferably three copies) concerning this amendment to: Office of 
Regulations and Interpretations, Room N-5669, Pension and Welfare 
Benefits Administration, U.S. Department of Labor, 200 Constitution 
Avenue, NW., Washington, DC 20210, ATTENTION: SPD Content Interim Rule. 
All submissions will be open to public inspection in the Public 
Disclosure Room, Pension and Welfare Benefits Administration, Room N-
5638, 200 Constitution Avenue, N.W. Washington, D.C.

FOR FURTHER INFORMATION CONTACT: June Solonsky, Office of Regulations 
and Interpretations, Pension and Welfare Benefits Administration, (202) 
219-8521. This is not a toll-free number.

SUPPLEMENTARY INFORMATION:

A. Background

    The Newborns' and Mothers' Health Protection Act of 1996 (NMHPA) 
amended ERISA by adding a section 711.1 ERISA section 711 
establishes restrictions on the extent which group health plans and 
health insurance issuers may limit hospital lengths of stay for mothers 
and newborn children following childbirth. In an effort to ensure that 
participants and beneficiaries are apprised of the limitations 
established under NMHPA, paragraph (d) of section 711 provides that 
``[t]he imposition of the requirements of this section shall be treated 
as a material modification in the terms of the plan * * * except that 
the summary description required to be provided * * * with respect to 
such modification shall be provided by not later than 60 days after the 
first day of the first plan year in which such requirements apply.''
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    \1\ Pub. L. 104-204, enacted on September 26, 1996.
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    On April 8, 1997, the Department published interim rules 
implementing the provisions of section 711(d) by amending the SPD 
content regulation, at 29 CFR 2520.102-3, to add a new paragraph 
(u).2 Paragraph (u) requires that group health plan SPDs 
provide a statement indicating that ``group health plans and health 
insurance issuers offering group insurance coverage generally may not, 
under Federal law, restrict benefits for any hospital length of stay in 
connection with childbirth for the mother or newborn child to less than 
48 hours following a normal vaginal delivery, or less than 96 hours 
following a caesarean section, or require that a provider obtain 
authorization from the plan or insurance issuer for prescribing a 
length of stay not in excess of the above periods.'' In the preamble to 
the interim rule, the Department explained that the statement included 
in paragraph (u) may be used as sample language by plan administrators 
to satisfy the content requirement of paragraph (u) and section 711(d).
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    \2\ 62 FR 16979, April 8, 1997.
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B. Amendment to Interim Rule

    Since the publication of that interim rule, concerns have been 
raised whether the specific information delineated in paragraph (u) of 
Sec. 2520.102-3 adequately informs participants and beneficiaries of 
the exception to the Federal law's general rule. In particular, 
concerns have been expressed about the absence of any indication that 
the 48 hour/96 hour minimum stay provisions do not apply in any case in 
which the decision to discharge the mother or newborn prior to the 
minimum length of stay otherwise required is made by the attending 
provider in consultation with the mother. Given the significance of 
this exception, the Department has determined that these concerns have 
merit, that the current rule governing the disclosure of NMHPA 
provisions should be amended, and that such amendment should be 
effective on an interim basis, consistent with the current disclosure 
requirement. In this regard, the Department is amending the language in 
paragraph (u) of Sec. 2520.102-3 to clarify that the attending 
provider, after consulting with the mother, may discharge the mother 
and newborn earlier than 48 hours following a vaginal delivery 
3 or 96 hours following a cesarean section. It is the 
Department's view that this language is more consistent with the 
language in section 711(a) of ERISA.4 The statement included 
in this amended paragraph (u) of the regulation may be used by 
administrators as sample language to satisfy the requirements of that 
paragraph.
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    \3\ A separate interim rule being issued by the Department 
addressing the substantive requirements under the NMHPA makes clear 
that the reference to ``normal'' vaginal delivery is merely intended 
to distinguish vaginal deliveries from cesarean section deliveries. 
All vaginal deliveries, whether with complications or without 
complications, are subject to the 48-hour length-of-stay 
requirement.
    \4\ The amendment also reflects editorial changes intended to 
improve the clarity of the statement.
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C. Effective Date

    The interim rule contained in this document is effective November 
9, 1998. Administrators will be required to comply with this amendment 
no later than the date on which the first summary of material 
modification (or updated SPD) is required to be furnished participants 
and beneficiaries following the effective date of this amendment.
    Consistent with the implementation of the NMHPA amendments through 
the adoption of interim rules,5 the Department has 
determined that there is need to ensure that participants and 
beneficiaries are, consistent with Congressional intent,6 
apprised of the NMHPA provision as soon as practical, and that the 
current language governing the disclosure of such provisions, at 
paragraph (u) of Sec. 2520.102-3, does not, in the Department's view, 
adequately accomplish the statutory mandate for such disclosure. Given 
the nature of the amendment and the need to ensure that participants 
and beneficiaries are adequately apprised of the NMHPA

[[Page 48373]]

provisions, the Department believes that issuance of a notice of 
proposed rulemaking with a period for comments prior to issuing a final 
rule would unnecessarily delay the implementation of this essential 
guidance. In this regard, the Department notes that pursuant to ERISA 
section 734, the Department has the authority to promulgate any interim 
rules the Secretary deems are appropriate to carry out this part. For 
the reasons discussed herein, the Department is adopting this amendment 
on an interim basis.
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    \5\ Id. at 16982-83.
    \6\ See ERISA section 711(d).
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D. Request for Comments

    While the amendment contained herein is being adopted on an interim 
basis, the Department is inviting interested persons to submit written 
comments on the amendment for consideration in the development of a 
final rule. Written comments (preferably three copies) must be 
submitted to: the Office of Regulations and Interpretations, Room N-
5669, Pension and Welfare Benefits Administration, U.S. Department of 
Labor, 200 Constitution Avenue, NW., Washington, DC 20210, ATTENTION: 
SPD Content Interim Rule. All submissions will be open to public 
inspection in the Public Disclosure Room, Pension and Welfare Benefits 
Administration, Room N-5638, 200 Constitution Avenue, N.W. Washington, 
D.C. Written comments on this interim rule must be received by November 
9, 1998.

E. Other Amendments to the SPD Content Requirements

    In addition to the amendment contained herein, the Department is 
publishing in the ``proposed rules'' section of today's Federal 
Register a number of proposed amendments to the regulations governing 
the content of SPDs. These amendments, upon adoption, will clarify the 
information required to be disclosed by group health plans and update 
other information required to be set forth in employee benefit plan 
SPDs.

Economic Analysis Under Executive Order 12866

    Under Executive Order 12866, the Department must determine whether 
the regulatory action is ``significant'' and therefore subject to the 
requirements of the Executive Order and subject to review by the Office 
of Management and Budget (OMB). Under section 3(f), the order defines a 
``significant regulatory action'' as an action that is likely to result 
in a rule: (1) Having an annual effect on the economy of $100 million 
or more, or adversely and materially affecting a sector of the economy, 
productivity, competition, jobs, the environment, public health or 
safety, or State, local or tribal governments or communities (also 
referred to as ``economically significant''); (2) creating serious 
inconsistency or otherwise interfering with an action taken or planned 
by another agency; (3) materially altering the budgetary impacts of 
entitlement grants, user fees, or loan programs or the rights and 
obligations of recipients thereof; or (4) raising novel legal or policy 
issues arising out of legal mandates, the President's priorities, or 
the principles set forth in the Executive Order.
    Pursuant to the terms of the Executive Order, it has been 
determined that this action is consistent with the President's 
priorities with respect to ensuring that all participants in group 
health plans receive understandable information about their plans, as 
described in the Consumer Bill of Rights and Responsibilities issued by 
the President's Advisory Commission on Consumer Protection and Quality 
in the Health Care Industry. Therefore, this notice is ``significant'' 
and subject to OMB review under section 3(f)(4) of the Executive Order.
    The cost of compliance with this interim rule is expected to total 
$250,949 in 1999, and $387,708 in the year 2000. These costs are 
expected to be incurred in connection with other changes to the 
required content of SPDs. A detailed discussion of the basis for these 
cost estimates, as well as the nature and costs of other changes being 
proposed, may be found in the Notice of Proposed Rulemaking with 
respect to Proposed Amendments to Summary Plan Description Regulations, 
which is also published in today's Federal Register.
    Although the effective date of this interim rule differs from the 
effective date that may apply for the proposed rulemaking with respect 
to SPDs, the Department believes that a meaningful economic analysis 
should contemplate as a whole the nature and timing of all changes to 
existing SPDs expected to be made by plan administrators due to 
regulatory amendments. As a result, the economic analysis of the 
Proposed Amendments to Summary Plan Description Regulations addresses 
the impact of this interim rule, as well as the changes proposed in the 
separate rulemaking action.
    To avoid unnecessary duplication of economic analysis, or of public 
comment thereon, comments received on the methodology and assumptions 
used in estimating the consolidated economic impact of both the 
proposed rule and this interim rule, and on the resulting estimates, 
will be treated as comments on this interim rule.
    The benefits of this interim rule, as yet unquantified, will arise 
as participants and beneficiaries receive clearer and more accurate 
communications concerning their group health plan benefits. The 
Department is publishing this interim rule, in part, to address public 
concerns about existing disclosures with respect to exceptions to the 
minimum hospital stay provisions of NMHPA.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes 
certain requirements with respect to Federal rules that are subject to 
the notice and comment requirements of section 553(b) of the 
Administrative Procedure Act (5 U.S.C. 551 et seq.) and which are 
likely to have a significant economic impact on a substantial number of 
small entities. If an agency determines that a proposed rule is likely 
to have a significant economic impact on a substantial number of small 
entities, section 603 of the RFA requires that the agency present an 
initial regulatory flexibility analysis at the time of the publication 
of the notice of proposed rulemaking describing the impact of the rule 
on small entities and seeking public comment on such impact. Small 
entities include small businesses, organizations, and governmental 
jurisdictions.
    Because these rules are issued as interim final rules, and not as a 
notice of proposed rulemaking, a formal regulatory flexibility analysis 
has not been prepared. Nonetheless, in its analysis of economic impact 
of both this interim rule and the Notice of Proposed Rulemaking with 
respect to Proposed Amendments to Summary Plan Description Regulations, 
which is also published in today's Federal Register, the Department 
presents an analysis addressing many of the same issues otherwise 
required to be addressed under the RFA.
    The Department invites interested persons to submit comments 
regarding its preliminary discussion of potential impacts on small 
entities. The Department also requests comments from small entities 
regarding what, if any, special problems they might encounter under 
these interim rules, or if the separate proposal concerning amendments 
to the SPD content rules were to be adopted as final, and what changes, 
if any, could be made to minimize those problems.

[[Page 48374]]

Paperwork Reduction Act

    The Department of Labor, as part of its continuing effort to reduce 
paperwork and respondent burden, conducts a preclearance consultation 
program to provide the general public and Federal agencies with an 
opportunity to comment on proposed and continuing collections of 
information in accordance with the Paperwork Reduction Act of 1995 (PRA 
95) (44 U.S.C. 3506(c)(2)(A)). This helps to ensure that requested data 
can be provided in the desired format, reporting burden (time and 
financial resources) is minimized, collection instruments are clearly 
understood, and the impact of collection requirements on respondents 
can be properly assessed.
    Currently, the Pension and Welfare Benefits Administration is 
soliciting comments concerning the revision of the information 
collection request (ICR) included in this Interim Rule Amending Summary 
Plan Description Regulation. A copy of the existing ICR may be obtained 
by contacting the office listed in the addressee section of this 
notice.
    The Department of Labor (Department) has submitted a copy of the 
existing information collection, as revised by both the Interim Rule 
Amending Summary Plan Description Regulation and the Proposed 
Amendments to Summary Plan Description Regulations, to the Office of 
Management and Budget (OMB) in accordance with 44 U.S.C. 3507(d) for 
review of its information collection provisions. The Department has 
requested emergency clearance for that portion of the ICR that is 
changed by this interim rule, specifically, the SPD disclosure 
provision concerning hospital lengths of stay in connection with 
childbirth for the mother or newborn child, by November 9, 1998.
    The Department and OMB are particularly interested in comments 
that:
     Evaluate whether the proposed collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the proposed collection of information, including the 
validity of the methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, e.g., permitting 
electronic submission of responses.
    Comments should be sent to the individual identified in the 
Addressee section of this notice, and to Office of Information and 
Regulatory Affairs, Office of Management and Budget, Room 10235, New 
Executive Office Building, Washington, D.C. 20503; Attention: Desk 
Officer for the Pension and Welfare Benefits Administration. Although 
comments may be submitted through November 9, 1998, in light of the 
request for emergency clearance by November 9, 1998, submission of 
comments within the first 30 days is encouraged to ensure their 
consideration.

ADDRESSES (PRA 95): Gerald B. Lindrew, Office of Policy and Research, 
U.S. Department of Labor, Pension and Welfare Benefits Administration, 
200 Constitution Avenue, NW, Room N-5647, Washington, D.C. 20210. 
Telephone: (202) 219-4782; Fax: (202) 219-4745. These are not toll-free 
numbers.

I. Background

    Pursuant to ERISA section 101(a)(1), the administrator of an 
employee benefit plan is required to furnish an SPD to each participant 
covered under the plan and each beneficiary who is receiving benefits 
under the plan. The SPD is required to be written in a manner 
calculated to be understood by the average plan participant and must be 
sufficiently comprehensive to apprise the plan's participants and 
beneficiaries of their rights and obligations under the plan. To the 
extent that there is a material modification in the terms of the plan 
or a change in the information required to be included in the SPD, 
ERISA requires that the administrator furnish participants covered 
under the plan and beneficiaries receiving benefits with a summary of 
such changes.
    ERISA section 102(b) describes the types of information 
specifically required to be included in the plan description and SPD. 
The Department has previously issued guidance concerning the required 
contents of SPDs in regulations published at 29 CFR 2520.102-3.

II. Current Actions

    As described in this preamble, the interim rule amending 
Sec. 2520.102-3 modifies the required content of group health plan SPDs 
to clarify the applicability of minimum hospital lengths of stay for 
mothers and newborn children following childbirth under NMHPA. This 
modification to disclosure requirements implemented by the previous 
publication of the Interim Rules Amending ERISA Disclosure Requirements 
for Group Health Plans (62 FR 16979, April 8, 1997) is intended to 
clarify that the attending provider, after consulting with the mother, 
may discharge the mother or newborn child earlier than 48 hours 
following a vaginal delivery or 96 hours following a cesarean section.
    The total additional hour burden estimated to result from this 
interim rule is 821 hours in 1999 and 2,219 hours in 2000. This interim 
rule is expected to result in operating and maintenance cost increases 
of $209,907 in 1999 and $276,741 in 2000. These estimates are based 
upon the Department's assumptions concerning the number of affected 
plans and participants, the time required to make the modification, and 
the percentage of plans that perform the required tasks in-house as 
compared with those that purchase services from outside parties. This 
accounting for the purchase of services in burden estimates results in 
the differences in costs developed for purposes of PRA 95 and those 
developed for purposes of Executive Order 12866.
    These burden estimates also rely on assumptions made about the 
distribution of other disclosure materials required as a result of 
proposed regulatory changes. This is because it is assumed that plans 
will prepare and distribute revised disclosure materials in the most 
cost-efficient way, which would likely involve incorporating as many 
changes as possible in a single distribution. A detailed discussion of 
the basis for these estimates, as well as the nature and burden 
associated with the other changes being proposed to the content of 
SPDs, may be found in the Notice of Proposed Rulemaking with respect to 
Proposed Amendments to Summary Plan Description Regulations, which is 
also published in today's Federal Register.
    Because this single ICR is currently the subject of two separate 
regulatory actions, the Department believes that a meaningful burden 
analysis should contemplate as a whole the nature and timing of all 
changes to existing SPDs expected to be made by plan administrators due 
to regulatory amendments. As a result, the burden analysis included in 
the Proposed Amendments to Summary Plan Description Regulations 
addresses the impact of this interim rule, as well as the changes 
proposed in the separate rulemaking action. Both the total burden of 
the ICR and the burden specifically

[[Page 48375]]

associated with this interim rule are displayed in this notice.
    To avoid unnecessary duplication of analysis, or of public comment 
thereon, comments received on the methodology and assumptions used in 
estimating the consolidated cost and hour burden of the proposed rule 
and this interim rule, and on the resulting burden estimates, will be 
treated as comments on this interim rule.
    Type of Review: Revision of a currently approved collection.
    Agency: Pension and Welfare Benefits Administration.
    Title: Regulations Regarding Required Contents of Summary Plan 
Descriptions for Employee Benefit Plans (Interim Rule Amending Summary 
Plan Description Regulation).
    OMB Number: 1210-0039.
    Affected Public: Individuals or households; business or other for-
profit; not-for-profit institutions.
    Frequency of Response: On occasion.
    Total Respondents: 2,027,293 (1998); 888,393 (1999); 2,641,818 
(2000).
    Total Responses: 83,332,000 (1998); 52,115,000 (1999); 160,703,000 
(2000).
    Estimated Burden Hours: 842,586 (1998); 815,850 total, including 
821 for this Interim Rule (1999): 2,101,624 total, including 2,219 for 
this Interim Rule (2000).
    Estimated Annual Costs (Operating and Maintenance): $95,265,366 
(1998); $101,465,306 total, including $209,907 for this Interim Rule 
(1999); $218,395,191 total, including $276,741 for this Interim Rule 
(2000).
    Comments submitted in response to this notice will be summarized 
and/or included in the request for OMB approval of the information 
collection request; they will also become a matter of public record.

Unfunded Mandates Reform Act

    These rules are not subject to the Unfunded Mandates Reform Act of 
1995 (Pub. L. 104-4) because they are interim rules. However, for 
purposes of the Unfunded Mandates Reform Act, as well as Executive 
Order 12875, this interim rule does not include any Federal mandate 
that may result in expenditures by State, local, or tribal governments, 
or the private sector, of $100 million or more. The basis for this 
statement is described in the analysis of costs for purposes of 
Executive Order 12866 and the Regulatory Flexibility Act.

Small Business Regulatory Enforcement Fairness Act

    This interim rule is subject to the provisions of the Small 
Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et 
seq.) (SBREFA), and has been transmitted to Congress and the 
Comptroller General for review. The Department has determined that this 
is not a ``major rule'' as that term is defined in 5 U.S.C. 804, 
because it is not likely to result in: (1) an annual effect on the 
economy of $100 million or more; (2) a major increase in costs or 
prices for consumers, individual industries, or federal, State, or 
local government agencies, or geographic regions; or (3) significant 
adverse effects on competition, employment, investment, productivity, 
innovation, or on the ability of United States-based enterprises to 
compete with foreign-based enterprises in domestic or export markets.

Statutory Authority

    This interim regulation is adopted pursuant to authority contained 
in section 505 of ERISA (Pub. L. 93-406, 88 Stat. 894, 29 U.S.C. 1135) 
and sections 104(b) and 734 of ERISA, as amended, (Pub. L. 104-191, 110 
Stat.1936 and Pub. L. 104-204, 110 Stat. 2935, 29 U.S.C. 1024 and 
1191c) and under Secretary of Labor's Order No. 1-87, 52 FR 13139, 
April 21, 1987.

List of Subjects in 29 CFR Part 2520

    Employee benefit plans, Employee Retirement Income Security Act, 
Group health plans, Pension plans, Welfare benefit plans.

    For the reasons set forth above, Part 2520 of Title 29 of the Code 
of Federal Regulations is amended as follows:

PART 2520--[AMENDED]

    1. The authority for Part 2520 continues to read as follows:

    Authority: Secs. 101, 102, 103, 104, 105, 109, 110, 111(b)(2), 
111(c), and 505, Pub. L. 93-406, 88 Stat. 840-52 and 894 (29 U.S.C. 
1021-1025, 1029-31, and 1135); Secretary of Labor's Order No. 27-74, 
13-76, 1-87, and Labor Management Services Administration Order 2-6.
    Sections 2520.102-3, 2520.104b-1 and 2520.104b-3 also are issued 
under section 101(a) of Pub. L. 104-191, 110 Stat. 1936 and 1939, 
sec. 603 of Pub. L. 104-204, 110 Stat. 2935 (29 U.S.C. 1185 and 
1191c).

    2. Section 2520.102-3 is amended by revising paragraph (u) to read 
as follows:


Sec. 2520.102-3  Contents of summary plan description.

* * * * *
    (u) In the case of a group health plan, as defined in section 
733(a)(1) of the Act, that provides maternity or newborn infant 
coverage, a statement indicating the following: Group health plans and 
health insurance issuers generally may not, under Federal law, restrict 
benefits for any hospital length of stay in connection with childbirth 
for the mother or newborn child to less than 48 hours following a 
vaginal delivery, or less than 96 hours following a cesarean section. 
However, Federal law generally does not prohibit the mother's or 
newborn's attending provider, after consulting with the mother, from 
discharging the mother or her newborn earlier than 48 hours (or 96 
hours as applicable). In any case, plans and issuers may not, under 
Federal law, require that a provider obtain authorization from the plan 
or the issuer for prescribing a length of stay not in excess of 48 
hours (or 96 hours).
* * * * *
    Signed at Washington, D.C., this 28th day of August, 1998.
Meredith Miller,
Deputy Assistant Secretary for Policy, Pension and Welfare Benefits 
Administration, U.S. Department of Labor.
[FR Doc. 98-24066 Filed 9-4-98; 8:45 am]
BILLING CODE 4510-29-P