[Federal Register Volume 79, Number 249 (Tuesday, December 30, 2014)]
[Proposed Rules]
[Pages 78578-78611]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-30243]



[[Page 78577]]

Vol. 79

Tuesday,

No. 249

December 30, 2014

Part II





DEPARTMENT OF THE TREASURY





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Internal Revenue Service





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26 CFR Part 54





DEPARTMENT OF LABOR





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Employee Benefits Security Administration





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29 CFR Part 2590





DEPARTMENT OF HEALTH AND HUMAN SERVICES





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45 CFR Part 147





 Summary of Benefits and Coverage and Uniform Glossary; Proposed Rule

  Federal Register / Vol. 79 , No. 249 / Tuesday, December 30, 2014 / 
Proposed Rules  

[[Page 78578]]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[REG-145878-14]
RIN 1545-BM53

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2590

RIN 1210-AB69

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 147

[CMS-9938-P]
RIN 0938-AS54


Summary of Benefits and Coverage and Uniform Glossary

AGENCY:  Internal Revenue Service, Department of the Treasury; Employee 
Benefits Security Administration, Department of Labor; Centers for 
Medicare & Medicaid Services, Department of Health and Human Services.

ACTION: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations regarding the 
summary of benefits and coverage (SBC) and the uniform glossary for 
group health plans and health insurance coverage in the group and 
individual markets under the Patient Protection and Affordable Care 
Act. It proposes changes to the regulations that implement the 
disclosure requirements under section 2715 of the Public Health Service 
Act to help plans and individuals better understand their health 
coverage, as well as to gain a better understanding of other coverage 
options for comparison. It proposes changes to documents required for 
compliance with section 2715 of the Public Health Service Act, 
including a template for the SBC, instructions, sample language, a 
guide for coverage example calculations, and the uniform glossary.

DATES: Comment date. Comments are due on or before March 2, 2015.

ADDRESSES: Written comments on these proposed regulations and documents 
required for compliance (including the template, instructions, sample 
language, guide for coverage example calculations, and the uniform 
glossary) may be submitted to the Department of Labor as specified 
below. Any comment that is submitted will be shared with the Department 
of Health and Human Services and the Department of the Treasury, and 
will also be made available to the public. Warning: Do not include any 
personally identifiable information (such as name, address, or other 
contact information) or confidential business information that you do 
not want publicly disclosed. All comments are posted on the Internet 
exactly as received, and can be retrieved by most Internet search 
engines. No deletions, modifications, or redactions will be made to the 
comments received, as they are public records. Comments may be 
submitted anonymously.
    Comments, identified by ``Summary of Benefits and Coverage,'' may 
be submitted by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Mail or Hand Delivery: Office of Health Plan Standards and 
Compliance Assistance, Employee Benefits Security Administration, Room 
N-5653, U.S. Department of Labor, 200 Constitution Avenue NW., 
Washington, DC 20210, Attention: Summary of Benefits and Coverage.
    Comments received will be posted without change to http://www.regulations.gov, and available for public inspection at the Public 
Disclosure Room, N-1513, Employee Benefits Security Administration, 200 
Constitution Avenue NW., Washington, DC 20210, including any personal 
information provided.

FOR FURTHER INFORMATION CONTACT: Amy Turner or Beth Baum, Employee 
Benefits Security Administration, Department of Labor, at (202) 693-
8335; Karen Levin, Internal Revenue Service, Department of the 
Treasury, at (202) 622-6080; Heather Raeburn or Tricia Beckmann, 
Centers for Medicare & Medicaid Services, Department of Health and 
Human Services, at (301) 492-4224 or (301) 492-4328.
    Customer service information: Individuals interested in obtaining 
information from the Department of Labor concerning employment-based 
health coverage laws may call the EBSA Toll-Free Hotline at 1-866-444-
EBSA (3272) or visit the Department of Labor's Web site (http://www.dol.gov/ebsa). In addition, information from HHS on private health 
insurance for consumers can be found on CMS's Web site (www.cms.gov/cciio) and information on health reform can be found at http://www.healthcare.gov.

SUPPLEMENTARY INFORMATION: 

I. Background

    The Patient Protection and Affordable Care Act, Public Law 111-148, 
was enacted on March 23, 2010; the Health Care and Education 
Reconciliation Act, Public Law 111-152, was enacted on March 30, 2010 
(these are collectively known as the ``Affordable Care Act''). The 
Affordable Care Act reorganizes, amends, and adds to the provisions of 
part A of title XXVII of the Public Health Service Act (PHS Act) 
relating to group health plans and health insurance issuers in the 
group and individual markets. The term ``group health plan'' includes 
both insured and self-insured group health plans.\1\ The Affordable 
Care Act adds section 715(a)(1) to the Employee Retirement Income 
Security Act (ERISA) and section 9815(a)(1) to the Internal Revenue 
Code (the Code) to incorporate the provisions of part A of title XXVII 
of the PHS Act into ERISA and the Code, and make them applicable to 
group health plans, and health insurance issuers providing health 
insurance coverage in connection with group health plans. The PHS Act 
sections incorporated by this reference are sections 2701 through 2728.
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    \1\ The term ``group health plan'' is used in title XXVII of the 
PHS Act, part 7 of ERISA, and chapter 100 of the Code, and is 
distinct from the term ``health plan,'' as used in other provisions 
of title I of the Affordable Care Act. The term ``health plan'' does 
not include self-insured group health plans.
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    Section 2715 of the PHS Act, added by the Affordable Care Act, 
directs the Departments of Labor, Health and Human Services (HHS), and 
the Treasury (the Departments) to develop standards for use by a group 
health plan and a health insurance issuer offering group or individual 
health insurance coverage in compiling and providing a summary of 
benefits and coverage (SBC) that ``accurately describes the benefits 
and coverage under the applicable plan or coverage.'' PHS Act section 
2715 also calls for the ``development of standards for the definitions 
of terms used in health insurance coverage.''
    In accordance with the statute, the Departments, in developing such 
standards, consulted with the National Association of Insurance 
Commissioners (referred to in this document as the ``NAIC'') through 
``a working group composed of representatives of health insurance-
related consumer advocacy organizations, health insurance issuers, 
health care professionals, patient advocates including those 
representing individuals with limited English proficiency, and other 
qualified

[[Page 78579]]

individuals.'' \2\ On July 29, 2011, the NAIC provided its final 
recommendations to the Departments regarding the SBC. On August 22, 
2011, the Departments published in the Federal Register proposed 
regulations (2011 proposed regulations) and an accompanying document 
with templates, instructions, and related materials for implementing 
the disclosure provisions under PHS Act section 2715.\3\ After 
consideration of all the comments received on the 2011 proposed 
regulations and accompanying documents, the Departments published joint 
final regulations to implement the disclosure requirements under PHS 
Act section 2715 on February 14, 2012 (2012 final regulations) and an 
accompanying document soliciting comments on templates, instructions, 
and related materials.\4\ The 2012 final regulations implemented 
standards for use by a group health plan and a health insurance issuer 
offering group or individual health insurance coverage in compiling and 
providing an SBC that ``accurately describes the benefits and coverage 
under the applicable plan or coverage'' pursuant to PHS Act section 
2715.
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    \2\ The NAIC convened a working group (NAIC working group) 
comprised of a diverse group of stakeholders. This working group met 
frequently for over one year while developing its recommendations. 
In developing its recommendations, the NAIC considered the results 
of various consumer testing sponsored by both insurance industry and 
consumer associations. Throughout the process, NAIC working group 
draft documents and meeting notes were displayed on the NAIC's Web 
site for public review, and several interested parties filed formal 
comments. In addition to participation from the NAIC working group 
members, conference calls and in-person meetings were open to other 
interested parties and individuals and provided an opportunity for 
non-member feedback. See www.naic.org/committees_b_consumer_information.htm.
    \3\ See proposed regulations, published at 76 FR 52442 (August 
22, 2011) and guidance document published at 76 FR 52475 (August 22, 
2011).
    \4\ See final regulations, published at 77 FR 8668 (February 14, 
2012) and guidance document published at 77 FR 8706 (February 14, 
2012).
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    After the 2012 final regulations were published, the Departments 
released Frequently Asked Question (FAQs) regarding implementation of 
the SBC provisions as part of six issuances. The Departments released 
Affordable Care Act Implementation FAQs Parts VII, VIII, IX, X, XIV, 
and XIX to answer outstanding questions, including questions related to 
the SBC.\5\ These FAQs addressed questions related to compliance with 
the requirements of the 2012 final regulations, implemented additional 
safe harbors,\6\ and released updated SBC materials.
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    \5\ See Affordable Care Act Implementation FAQs Part VII 
(available at www.dol.gov/ebsa/faqs/faq-aca7.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs7.html); Part VIII (available at www.dol.gov/ebsa/faqs/faq-aca8.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html); Part IX (available 
at www.dol.gov/ebsa/faqs/faq-aca9.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html); Part 
X (available at www.dol.gov/ebsa/faqs/faq-aca10.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs10.html); Part XIV (available at www.dol.gov/ebsa/faqs/faq-aca14.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html); and Part XIX 
(available at www.dol.gov/ebsa/faqs/faq-aca19.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.html).
    \6\ Some of the enforcement safe harbors and transitions are 
proposed to be made permanent (several with modifications) by these 
proposed regulations. The Departments intend to use this rulemaking 
to develop a permanent approach to those issues and, thereby, 
discontinue all temporary enforcement policies that were used as a 
bridge to a permanent rule.
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    The Departments are issuing these proposed regulations, as well as 
a new set of proposed SBC templates, instructions, an updated uniform 
glossary, and other materials to incorporate some of the feedback the 
Departments have received and to make some improvements to the 
template. This will provide guidance necessary to plans and issuers as 
they continue to issue SBCs, and will improve the SBC for employers, 
participants and beneficiaries, and individuals and dependents for use 
as a tool in making important decisions regarding their health 
coverage. These modifications clarify when and how a plan or issuer 
must provide an SBC, and streamline and shorten the SBC template while 
also adding certain additional elements that the Departments believe 
will be useful to consumers. The draft updated template, instructions, 
and supplementary materials are available at http://cciio.cms.gov and 
http://www.dol.gov/ebsa/healthreform/regulations/summaryofbenefits.html. The Departments invite comments on all of the 
documents. Comments should be submitted as described above.

II. Overview of the Proposed Regulations

A. Requirement To Provide a Summary of Benefits and Coverage

1. Providing the SBC
    Paragraph (a) of the 2012 final regulations implements the general 
disclosure requirement and sets forth the standards for who is required 
to provide an SBC, to whom, and when. PHS Act section 2715 generally 
requires that an SBC be provided to applicants, enrollees, and 
policyholders or certificate holders, at specified times. PHS Act 
section 2715(d)(3) places the responsibility to provide an SBC on ``(A) 
a health insurance issuer (including a group health plan that is not a 
self-insured plan) offering health insurance coverage within the United 
States; or (B) in the case of a self-insured group health plan, the 
plan sponsor or designated administrator of the plan (as such terms are 
defined in section 3(16) of ERISA).'' \7\ Accordingly, the 2012 final 
regulations interpret PHS Act section 2715 to apply to both group 
health plans and health insurance issuers offering group or individual 
health insurance coverage. In addition, consistent with the statute, 
the 2012 final regulations hold the plan administrator of a group 
health plan responsible for providing an SBC. Under the 2012 final 
regulations, the SBC must be provided in writing and free of charge.
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    \7\ ERISA section 3(16) defines an administrator as: (i) the 
person specifically designated by the terms of the instrument under 
which the plan is operated; (ii) if an administrator is not so 
designated, the plan sponsor; or (iii) in the case of a plan for 
which an administrator is not designated and plan sponsor cannot be 
identified, such other person as the Secretary of Labor may by 
regulation prescribe.
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    There are three general scenarios under which an SBC will be 
provided. An SBC will be provided: (1) By a group health insurance 
issuer to a group health plan; (2) by a group health insurance issuer 
or a group health plan to participants and beneficiaries; and (3) by a 
health insurance issuer to individuals and dependents in the individual 
market.
    The 2012 final regulations specify timeframes according to which 
the SBC must be provided. After the 2012 regulations were published, 
the Departments were asked to clarify the meaning of the term 
``provided.'' As the Departments stated in Affordable Care Act 
Implementation FAQs Part VIII, question 7, for purposes of providing an 
SBC in the context of these regulations, the term ``provided'' means 
sent. Accordingly, the SBC is timely if it is sent within seven 
business days, even if not received until after that period.\8\
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    \8\ See Affordable Care Act Implementation FAQs Part VIII, 
question 7, available at www.dol.gov/ebsa/faqs/faq-aca8.html and 
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.
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a. Provision of the SBC by an Issuer to a Plan
    Paragraph (a)(1)(i) of the 2012 final regulations requires a health 
insurance issuer offering group health insurance coverage to provide an 
SBC to a group health plan (or its sponsor) upon an application by the 
plan for health coverage. The issuer must provide the SBC as soon as 
practicable following

[[Page 78580]]

receipt of the application, but in no event later than seven business 
days following receipt of the application. These proposed regulations 
would clarify when the health insurance issuer offering group health 
insurance coverage (or plan, if applicable, under paragraph (a)(1)(ii)) 
must provide the SBC again if the issuer already provided the SBC 
before application to any entity or individual. If the issuer provides 
the SBC before application for coverage pursuant to paragraph 
(a)(1)(i)(D) of the regulations (relating to SBCs upon request), the 
requirement to provide an SBC upon application is deemed satisfied and 
such issuer is not required to automatically provide another SBC upon 
application to the same entity or individual, provided there is no 
change to the information required to be in the SBC. However, if there 
has been a change in the information required, a new SBC that includes 
the correct information must be provided upon application (that is, as 
soon as practicable following receipt of the application, but in no 
event later than seven business days following receipt of the 
application).
    Under the 2012 final regulations and these proposed regulations, if 
there is any change in the information required to be in the SBC that 
was provided upon application and before the first day of coverage, the 
issuer must update and provide a current SBC to the plan (or its 
sponsor) no later than the first day of coverage. If the information is 
unchanged, the issuer does not need to provide the SBC again in 
connection with coverage for that plan year, except upon request. These 
proposed rules would provide clarification with respect to how to 
satisfy the requirement to provide an SBC when the terms of coverage 
are not finalized. If the plan sponsor is negotiating coverage terms 
after an application has been filed and the information required to be 
in the SBC changes, an updated SBC is not required to be provided to 
the plan (or its sponsor) (unless an updated SBC is requested) until 
the first day of coverage. The updated SBC should reflect the final 
coverage terms under the contract, certificate, or policy of insurance 
that was purchased.
b. Provision of the SBC by a Plan or Issuer to Participants and 
Beneficiaries
    Under paragraph (a)(1)(ii) of the 2012 final regulations, a group 
health plan (including the plan administrator), and a health insurance 
issuer offering group health insurance coverage, must provide an SBC to 
a participant or beneficiary \9\ with respect to each benefit package 
offered by the plan or issuer for which the participant or beneficiary 
is eligible.\10\ This includes individuals who are qualified 
beneficiaries under the Consolidated Omnibus Reconciliation Act of 1985 
(COBRA).\11\ In Affordable Care Act Implementation FAQs Part VIII, 
question 8, the Departments clarified that while a qualifying event 
does not, itself, trigger a requirement to provide an SBC, during an 
open enrollment period, any COBRA qualified beneficiary who is 
receiving COBRA coverage must be given the same rights to elect 
different coverage as are provided to similarly situated non-COBRA 
beneficiaries.\12\ In this situation, a COBRA qualified beneficiary who 
has elected coverage must be provided an SBC just as a similarly 
situated non-COBRA beneficiary must be provided with one. There are 
also limited situations in which a COBRA qualified beneficiary may need 
to be offered different coverage at the time of the qualifying event 
than the coverage he or she was receiving before the qualifying event 
and this may trigger a requirement to provide an SBC.\13\
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    \9\ ERISA section 3(7) defines a participant as: Any employee or 
former employee of an employer, or any member or former member of an 
employee organization, who is or may become eligible to receive a 
benefit of any type from an employee benefit plan which covers 
employees of such employers or members of such organization, or 
whose beneficiaries may be eligible to receive any such benefit. 
ERISA section 3(8) defines a beneficiary as: a person designated by 
a participant, or by the terms of an employee benefit plan, who is 
or may become entitled to a benefit thereunder.
    \10\ With respect to insured group health plan coverage, PHS Act 
section 2715 generally places the obligation to provide an SBC on 
both a plan and issuer. As discussed below, under section 
III.A.1.d., ``Special Rules to Prevent Unnecessary Duplication with 
Respect to Group Health Coverage'', if either the issuer or the plan 
provides the SBC, both will have satisfied their obligations. As 
they do with other notices required of both plans and issuers under 
Part 7 of ERISA, Title XXVII of the PHS Act, and Chapter 100 of the 
Code, the Departments expect plans and issuers to make contractual 
arrangements for sending SBCs. Accordingly, the remainder of this 
preamble generally refers to requirements for plans or issuers.
    \11\ See Affordable Care Act Implementation FAQs Part VIII, 
question 7, available at www.dol.gov/ebsa/faqs/faq-aca8.html and 
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.
    \12\ See 26 CFR 54.4980B-5, Q&A-4(c) (requirement to provide 
election) and 54.4980B-3, Q&A-3 (definition of similarly situated 
non-COBRA beneficiary).
    \13\ See 26 CFR 54.4980B-5, Q&A-4(b).
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    If a plan or issuer distributes any written application materials 
for enrollment, including any forms or requests for information (in 
paper form or through a Web site or email) that must be completed for 
enrollment, the plan or issuer must provide the SBC as part of those 
materials. If the plan or issuer does not distribute written 
application materials for enrollment (in either paper or electronic 
form), the SBC must be provided no later than the first date on which 
the participant is eligible to enroll in coverage for the participant 
or any beneficiaries. If there is any change to the information 
required to be in the SBC that was provided upon application for 
coverage and before the first day of coverage, the plan or issuer must 
update and provide a current SBC to a participant or beneficiary no 
later than the first day of coverage.
    These proposed rules would clarify when a plan or issuer must 
provide the SBC again if the plan or issuer already provided the SBC 
prior to application. If the plan or issuer provides the SBC prior to 
application for coverage, the plan or issuer is not required to 
automatically provide another SBC upon application, if there is no 
change to the information required to be in the SBC. If there is any 
change to the information required to be in the SBC by the time the 
application is filed, the plan or issuer must update and provide a 
current SBC as soon as practicable following receipt of the 
application, but in no event later than seven business days following 
receipt of the application.
    These proposed rules also would provide clarification with respect 
to how to satisfy the requirement to provide an SBC when the terms of 
coverage are not finalized. If the plan sponsor is negotiating coverage 
terms after an application has been filed and the information required 
to be in the SBC changes, the plan or issuer is not required to provide 
an updated SBC (unless an updated SBC is requested) until the first day 
of coverage. The updated SBC should reflect the final coverage terms 
under the contract, certificate, or policy of insurance that was 
purchased.
    Under the 2012 final regulations, the plan or issuer must also 
provide the SBC to individuals enrolling through a special enrollment 
period, also called special enrollees.\14\ Special enrollees must be 
provided the SBC no later than when a summary plan description is 
required to be provided under the timeframe set forth in ERISA section 
104(b)(1)(A) and its implementing regulations, which is 90 days from 
enrollment. To the extent individuals who are eligible for special 
enrollment and are contemplating their coverage options would like to 
receive SBCs

[[Page 78581]]

earlier, they may always request an SBC with respect to any particular 
plan, policy, or benefit package and the SBC is required to be provided 
as soon as practicable, but in no event later than seven business days 
following receipt of the request (as discussed more fully below).
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    \14\ Regulations regarding special enrollment are available at 
26 CFR 54.9801-6, 29 CFR 2590.701-6, and 45 CFR 146.117.
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c. Provision of the SBC Upon Request in Group Health Coverage
    A health insurance issuer offering group health insurance coverage 
must provide the SBC to a group health plan or its sponsor (and a plan 
or issuer must provide the SBC to a participant or beneficiary) upon 
request for an SBC or summary information about the health coverage, as 
soon as practicable, but in no event later than seven business days 
following receipt of the request. The SBC must be provided upon request 
to participants, beneficiaries, and plans (or plan sponsors), including 
prior to submitting an application for coverage, because the SBC 
provides information that not only helps consumers and employers 
understand their coverage, but also helps consumers and employers 
compare coverage options prior to selecting coverage. Health insurance 
issuers offering individual market coverage must also provide the SBC 
to individuals upon request, according to the same timeframe, to allow 
consumers the same ability to compare coverage options in the 
individual market as the group market.
    Since the issuance of the 2012 final regulations, the Departments 
have continued to receive questions about providing SBCs upon request, 
including whether issuers are required to provide SBCs to plans or 
their sponsors who are ``shopping'' for coverage from different issuers 
but have not yet submitted an application for coverage. In Affordable 
Care Act Implementation FAQs Part IX, question 4, the Departments 
reiterated that an SBC must be provided upon request for an SBC or 
``summary information about a health insurance product.'' The latter 
phrase is intended to ensure that persons who do not ask exactly for a 
``summary of benefits and coverage'' still receive one when they 
explicitly ask for a summary document with respect to a specific health 
coverage product.\15\ The FAQ also referred to other guidance outlining 
the circumstances in which an SBC may be provided electronically, to 
assist in reducing the burden of providing multiple SBCs in paper form 
when requested. Additional information on electronic disclosure of SBCs 
is discussed later in this preamble.
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    \15\ The FAQ stated that other general questions about coverage 
options or discussions about health products do not trigger the 
requirement to provide an SBC.
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d. Special Rules To Prevent Unnecessary Duplication With Respect to 
Group Health Coverage
    Paragraph (a)(1)(iii) of the 2012 final regulations includes three 
special rules to streamline provision of the SBC and avoid unnecessary 
duplication with respect to group health coverage. The first provides 
that the requirement to provide an SBC generally will be considered 
satisfied for all applicable entities if it is provided by any entity, 
so long as all timing and content requirements are satisfied. The 
second provides that a single SBC may be provided to a participant and 
any beneficiaries at the participant's last known address. However, if 
a beneficiary's last known address is different than the participant's 
last known address, a separate SBC is required to be provided to the 
beneficiary at the beneficiary's last known address. Third, the 2012 
final regulations provide that SBCs are not required to be provided 
automatically upon renewal for each benefit package option in group 
health plans that offer multiple benefit packages. Rather, a plan or 
issuer is required to provide an SBC automatically upon renewal or 
reissuance only with respect to the benefit package in which a 
participant or beneficiary is enrolled. In cases in which an issuer 
will automatically re-enroll participants and beneficiaries, these 
proposed rules propose to add that a new SBC is required to be provided 
with respect to the plan or product in which a participant or 
beneficiary will be automatically enrolled in accordance with the same 
timing requirements that apply to a renewal or reissuance. Consistent 
with the 2012 final regulations, if a participant or beneficiary 
requests an SBC with respect to one or more other benefit packages for 
which he or she is eligible, that requested SBC or SBCs must be 
provided as soon as practicable, but in no event later than seven 
business days following the receipt of the request.
    In addition to retaining these three existing special rules, these 
proposed regulations would add an additional provision to ensure 
participants receive information while preventing unnecessary 
duplication. This would address circumstances where an entity required 
to provide an SBC with respect to an individual has entered into a 
binding contract with another party to provide the SBC to the 
individual. In such a case, the proposed regulations state that the 
entity would be considered to satisfy the requirement to provide the 
SBC with respect to the individual if specified conditions are met:
    (1) The entity monitors performance under the contract; \16\
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    \16\ The selection and monitoring of service providers for a 
group health plan, including parties assuming responsibility to 
complete, provide information for, or deliver SBCs, is a fiduciary 
act subject to prudence and loyalty duties and prohibited 
transaction provisions of ERISA. No single fiduciary procedure will 
be appropriate in all cases; the procedure for selecting and 
monitoring service providers may vary in accordance with the nature 
of the plan and other facts and circumstances relevant to the choice 
of the service provider. More general information on hiring and 
monitoring service providers is contained in the Department of Labor 
publication ``Understanding Your Fiduciary Responsibilities Under a 
Group Health Plan,'' which is available on the Department's Web site 
at: www.dol.gov/ebsa/publications/ghpfiduciaryresponsibilities.html.
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    (2) If the entity has knowledge that the SBC is not being provided 
in a manner that satisfies the requirements of this section and the 
entity has all information necessary to correct the noncompliance, the 
entity corrects the noncompliance as soon as practicable; and
    (3) If the entity has knowledge the SBC is not being provided in a 
manner that satisfies the requirements of this section and the entity 
does not have all information necessary to correct the noncompliance, 
the entity communicates with participants and beneficiaries who are 
affected by the noncompliance regarding the noncompliance, and begins 
taking significant steps as soon as practicable to avoid future 
violations.
    The proposed regulations would also add a provision to prevent 
unnecessary duplication with respect to a group health plan that uses 
two or more insurance products provided by separate issuers to insure 
benefits under the plan. The proposed regulations would place 
responsibility for providing complete SBCs with respect to the plan in 
such a case on the group health plan administrator. This provision of 
the proposed regulations states that the group health plan 
administrator may contract with one of its issuers (or other service 
providers) to provide the SBC; however, absent a contract to perform 
the function, an issuer has no obligation to provide an SBC containing 
information for benefits that it does not insure.
    The Departments recognize that a plan sponsor may purchase an 
insurance product for certain coverage from a particular issuer and 
purchase a separate insurance product or self-insure with respect to 
other coverage (such as outpatient prescription drug

[[Page 78582]]

coverage). In these circumstances, the first issuer may or may not know 
of the existence of other coverage, or whether the plan sponsor has 
arranged the two benefit packages as a single plan or two separate 
plans. To address these arrangements, these proposed rules propose 
that, with respect to a group health plan that uses two or more 
insurance products provided by separate issuers, the group health plan 
administrator is responsible for providing complete SBCs with respect 
to the plan. The group health plan administrator may contract with one 
of its issuers (or other service providers) to perform that function. 
Absent a contract to perform the function, an issuer has no obligation 
to provide coverage information for benefits that it does not insure.
    The Departments published an FAQ on May 11, 2012 \17\ regarding the 
responsibility to provide an SBC in situations where plans may have 
benefits provided by more than one issuer. This FAQ provides an 
enforcement safe harbor for a group health plan that uses two or more 
insurance products provided by separate issuers with respect to a 
single group health plan. Under this enforcement safe harbor, the group 
health plan administrator may synthesize the information into a single 
SBC or provide multiple partial SBCs that, together, provide all the 
relevant information to meet the SBC content requirements. In such 
circumstances, the plan administrator should take steps (such as a 
cover letter or a notation on the SBCs themselves) to indicate that the 
plan provides coverage using multiple insurance products and that 
individuals may contact the plan administrator for more information 
(and provide the contact information). The Departments extended this 
enforcement safe harbor for one year on April 23, 2013,\18\ and 
indefinitely on May 2, 2014,\19\ and reiterate that the safe harbor 
continues to apply. The Departments seek comment on whether to codify 
this policy in the regulation.
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    \17\ See Affordable Care Act Implementation FAQs Part IX, 
question 10, available at http://www.dol.gov/ebsa/faqs/faq-aca9.html 
and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
    \18\ Affordable Care Act Implementation FAQs Set XIV, question 
5, available at www.dol.gov/ebsa/faqs/faq-aca14.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html.
    \19\ Affordable Care Act FAQ Set XIX, question 8, available at 
www.dol.gov/ebsa/faqs/faq-aca19.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.html.
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e. Provision of the SBC by an Issuer Offering Individual Market 
Coverage
    Paragraph (a)(1)(iv) of the HHS 2012 final regulations sets forth 
standards applicable to individual health insurance coverage, under 
which the provision of the SBC by an issuer offering individual market 
coverage largely parallels the group market requirements described 
above, with only those changes necessary to reflect the differences 
between the two markets. The SBC must be provided upon application. 
That is, a health insurance issuer offering individual health insurance 
coverage must provide an SBC to an individual or dependent upon 
receiving an application for any health insurance policy, as soon as 
practicable following receipt of the application, but in no event later 
than seven business days following receipt of the application. If there 
is any change in the information required to be in the SBC that was 
provided upon application and before the first day of coverage, the 
issuer must update and provide a current SBC to an individual or 
dependent no later than the first day of coverage. These proposed rules 
would clarify when the issuer must provide the SBC again if the issuer 
already provided the SBC prior to application. If the issuer provides 
the SBC prior to application for coverage, the issuer is not required 
to automatically provide another SBC upon application, if there is no 
change to the information required to be in the SBC. If there is any 
change to the information required to be in the SBC that was provided 
prior to application for coverage by the time the application is filed, 
the issuer must update and provide a current SBC to the same individual 
or dependent as soon as practicable following receipt of the 
application, but in no event later than seven business days following 
receipt of the application. Under the 2012 final regulations, a health 
insurance issuer offering individual health insurance coverage must 
provide the SBC to an individual or dependent upon request for the SBC 
or summary information about the health insurance product, as soon as 
practicable, but in no event later than seven business days following 
receipt of the request.
    These proposed rules would also address situations where an issuer 
offering individual market insurance coverage, consistent with 
applicable Federal and State law, automatically re-enrolls an 
individual and any dependents into a different plan or product than the 
plan in which these individuals were previously enrolled. If the issuer 
automatically re-enrolls an individual covered under a policy, 
certificate, or contract of insurance (including every dependent) into 
a policy, certificate, or contract of insurance under a different plan 
or product, HHS proposes that the issuer would be required to provide 
an SBC with respect to the coverage in which the individual (including 
every dependent) will be enrolled, consistent with the timing 
requirements that apply when the policy is renewed or reissued.
f. Special Rules To Prevent Unnecessary Duplication With Respect to 
Individual Health Insurance Coverage
    In paragraph (a)(1)(v) of the 2012 final regulations, the Secretary 
of HHS states that, if a single SBC is provided to an individual and 
any dependents at the individual's last known address, then the 
requirement to provide the SBC to the individual and any dependents is 
generally satisfied. However, if a dependent's last known address is 
different than the individual's last known address, a separate SBC is 
required to be provided to the dependent at the dependent's last known 
address.
    Student health insurance coverage is a type of individual health 
insurance coverage provided pursuant to a written agreement between an 
institution of higher education and a health insurance issuer to 
students enrolled in that institution of higher education, and their 
dependents, that meet certain specified conditions.\20\ These proposed 
rules propose to extend an anti-duplication rule similar to that 
provided with respect to group health coverage to student health 
insurance coverage, as defined in in 45 CFR 147.145(a). Specifically, 
HHS proposes that the requirement to provide an SBC with respect to an 
individual will be considered satisfied for an entity (such as an 
institution of higher education) if another party (such as a health 
insurance issuer) provides a timely and complete SBC to the individual. 
The Departments are also soliciting comments on whether or not a 
requirement to monitor the provisioning of the SBC in this circumstance 
should be added.
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    \20\ See 45 CFR 147.145, published at 77 FR 16453 (March 21, 
2012).
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2. Content
    PHS Act section 2715(b)(3) generally provides that the SBC must 
include:
    a. Uniform definitions of standard insurance terms and medical 
terms so that consumers may compare health coverage and understand the 
terms of (or exceptions to) their coverage;

[[Page 78583]]

    b. A description of the coverage, including cost sharing, for each 
category of essential health benefits, and other benefits as identified 
by the Departments;
    c. The exceptions, reductions, and limitations on coverage;
    d. The cost-sharing provisions of the coverage, including 
deductible, coinsurance, and copayment obligations;
    e. The renewability and continuation of coverage provisions;
    f. A coverage facts label that includes examples to illustrate 
common benefits scenarios (including pregnancy and serious or chronic 
medical conditions) and related cost sharing based on recognized 
clinical practice guidelines;
    g. A statement of whether the plan or coverage provides minimum 
essential coverage (MEC) as defined under section 5000A(f) of the Code, 
and whether the plan's or coverage's share of the total allowed costs 
of benefits provided under the plan or coverage is not less than 60% of 
such costs;
    h. A statement that the SBC is only a summary and that the plan 
document, policy, or certificate of insurance should be consulted to 
determine the governing contractual provisions of the coverage; and
    i. A contact number to call with questions and an Internet web 
address where a copy of the actual individual coverage policy or group 
certificate of coverage can be reviewed and obtained.
    Consistent with the Departments' authority to develop standards 
with respect to the SBC and with the statutory requirement to consult 
with the NAIC and other stakeholders, after considering recommendations 
by the NAIC and comments received on the 2011 proposed regulations, the 
2012 final regulations added three content elements: (1) For plans and 
issuers that maintain one or more networks of providers, an Internet 
address (or similar contact information) for obtaining a list of the 
network providers; (2) for plans and issuers that use a formulary in 
providing prescription drug coverage, an Internet address (or similar 
contact information) for obtaining information on prescription drug 
coverage under the plan or coverage; and (3) an Internet address for 
obtaining the uniform glossary, as well as a contact phone number to 
obtain a paper copy of the uniform glossary, and a disclosure that 
paper copies of the uniform glossary are available.
    The Departments have received several questions related to content 
requirements under the 2012 final regulations. One such question 
relates to the statements about whether a plan or coverage provides 
MEC, as defined under section 5000A(f) of the Code, and whether the 
plan's or coverage's share of the total allowed costs of benefits 
provided under the plan or coverage meets applicable minimum value (MV) 
requirements. The preamble to the 2012 final regulations stated that 
future guidance would address these statements. In April 2013, the 
Departments issued an updated SBC template (and sample completed SBC) 
with the addition of statements of whether the plan or coverage 
provides MEC (as defined under section 5000A(f) of the Code) and 
whether the plan or coverage meets the MV requirements.\21\ In 
Affordable Care Act Implementation FAQs Part XIV, issued 
contemporaneously with the updated SBC template, the Departments stated 
this language is required to be included in SBCs provided with respect 
to coverage beginning on or after January 1, 2014.\22\
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    \21\ See Affordable Care Act Implementation FAQs Part XIV, 
question 1, available at www.dol.gov/ebsa/faqs/faq-aca14.html and 
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html.
    \22\ The guidance with respect to statements regarding MEC and 
MV was originally issued for SBCs provided with respect to coverage 
beginning on or after January 1, 2014, and before January 1, 2015 
(referred to as the ``second year of applicability''). See 
Affordable Care Act Implementation FAQs Part XIV, question 1, 
available at www.dol.gov/ebsa/faqs/faq-aca14.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html. This guidance was extended to be 
applicable until further guidance was issued. See Affordable Care 
Act Implementation FAQs Part XIX, question 7, available at 
www.dol.gov/ebsa/faqs/faq-aca19.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.html.
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    An FAQ issued at that time stated that if a plan or issuer was 
unable to modify the SBC template for these disclosures, the 
Departments will not take any enforcement action against a plan or 
issuer for using the original template authorized at the time the 2012 
final regulations were issued, provided that the SBC was furnished with 
a cover letter or similar disclosure stating whether the plan or 
coverage does or does not provide MEC and whether the plan's or 
coverage's share of the total allowed costs of benefits provided under 
the plan or coverage does or does not meet the MV standard under the 
Affordable Care Act.\23\ The Departments decline to extend this 
temporary enforcement safe harbor. Accordingly, effective for SBCs 
provided in accordance with the applicability date described below for 
these proposed rules, the statements regarding MEC and MV are required 
to be included in the SBC. These statements have been modified for 
added clarity and relevance for consumers, including consumers in the 
individual market. As of the applicability date described below, the 
option previously available to include this information in a cover 
letter or similar disclosure furnished with the SBC is no longer 
available.
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    \23\ See Affordable Care Act Implementation FAQs Part XIV, 
question 2, available at www.dol.gov/ebsa/faqs/faq-aca14.html and 
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html.
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    Under section 1303(b)(3)(A) of the Affordable Care Act and 
implementing regulations at 45 CFR 156.280(f), a QHP issuer that elects 
to offer a QHP that provides coverage of abortion services for which 
public funding is prohibited (non-excepted abortion services) must 
provide a notice to enrollees, as part of the SBC provided at the time 
of enrollment, of coverage of such services.
    In the interest of increasing transparency for consumers shopping 
for coverage, and to assist issuers with meeting applicable disclosure 
requirements under section 1303(b)(3)(A) of the Affordable Care Act and 
its implementing regulations, we are updating the SBC template 
published contemporaneously with these proposed rules. These proposed 
rules would require a QHP issuer to disclose on the SBC whether 
abortion services are covered or excluded and whether coverage is 
limited to services for which federal funding is allowed (excepted 
abortion services). The draft instruction guide for individual health 
insurance, released concurrently with these proposed rules, indicates 
that coverage of abortion services must be described in the ``services 
your plan does not cover'' or ``other covered services'' section. We 
seek comments on this guidance, including whether coverage of abortion 
services should be included in another section of the template, such as 
the table occurring immediately prior.
    Neither the 2012 final regulations nor these proposed regulations 
require the SBC to include premium information. The Departments 
previously stated their understanding that it is administratively and 
logistically complex to convey premium information in an SBC due to a 
number of variables, including, for example, when premiums differ based 
on family size; when, in the group market, employer contributions 
impact cost of coverage paid by participants and beneficiaries; and 
when, for coverage sold through an individual market Exchange, advance 
payments of the premium tax credit impact the cost of coverage paid by 
individuals and dependents. In Affordable Care Act

[[Page 78584]]

Implementation FAQs Part VIII, question 16, the Departments clarified 
that a plan or issuer may choose to add premium information to the 
SBC.\24\ If a plan or issuer wishes to include this information, it 
should be added at the end of the SBC template.\25\
---------------------------------------------------------------------------

    \24\ See Affordable Care Act Implementation FAQs Part VIII, 
question 16, available at www.dol.gov/ebsa/faqs/faq-aca8.html and 
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.
    \25\ In accordance with section 1303(b)(3)(B) of the Affordable 
Care Act and 45 CFR 156.280(f)(2), if the SBC provided at the time 
of enrollment notice includes the QHP premium amount, it must 
display only the total premium for the plan, inclusive of all 
covered benefits and services.
---------------------------------------------------------------------------

    As mentioned above, the statute provides that the SBC must include 
``a contact number for the consumer to call with additional questions 
and an Internet web address where a copy of the actual individual 
coverage policy or group certificate of coverage can be reviewed and 
obtained.'' The 2012 final regulations state the SBC must include 
``contact information for questions and obtaining a copy of the plan 
document or the insurance policy, certificate, or contract of insurance 
(such as a telephone number for customer service and an Internet 
address for obtaining a copy of the plan document or the insurance 
policy, certificate, or contact of insurance).'' Questions have arisen 
as to whether this provision of the statute and regulations requires 
that all plans and issuers must post underlying plan documents 
automatically on an Internet Web site.
    These proposed rules would clarify that all plans and issuers must 
include on the SBC contact information for questions. However, because 
the statutory language regarding Internet posting uses the terms 
``individual coverage policy'' and ``group certificate of coverage,'' 
which we interpret to refer only to insurance, these proposed 
regulations propose that only issuers must also include an Internet web 
address where a copy of the actual individual coverage policy or group 
certificate of coverage can be reviewed and obtained. The Departments 
note that this proposal would require these documents to be easily 
available to individuals, plan sponsors, and participants and 
beneficiaries shopping for coverage prior to submitting an application 
for coverage. For the group market only, because the actual 
``certificate of coverage'' is not available until after the plan 
sponsor has negotiated the terms of coverage with the issuer, an issuer 
is permitted to satisfy this requirement with respect to plan sponsors 
that are shopping for coverage by posting a sample group certificate of 
coverage for each applicable product. After the actual certificate of 
coverage is executed, it must be easily available to plan sponsors and 
participants and beneficiaries via an Internet web address. The 
Departments invite comments on this approach, including the costs and 
benefits of also requiring self-insured plans to post underlying plan 
documents on the Internet.
    The Departments also note that, separate from the SBC requirement, 
provisions of other applicable law require disclosure of plan documents 
and other instruments governing the plan. For example, ERISA section 
104 and the Department of Labor's implementing regulations \26\ provide 
that, for plans subject to ERISA, the plan documents and other 
instruments under which the plan is established or operated must 
generally be furnished by the plan administrator to plan participants 
\27\ upon request. In addition, the Department of Labor's claims 
procedure regulations (applicable to ERISA plans), as well as the 
Departments' claims and appeals regulations under the Affordable Care 
Act (applicable to all non-grandfathered group health plans and health 
insurance issuers in the group and individual markets),\28\ set forth 
rules regarding claims and appeals, including the right of claimants 
(or their authorized representatives) upon appeal of an adverse benefit 
determination (or a final internal adverse benefit determination) to be 
provided by the plan or issuer, upon request and free of charge, 
reasonable access to and copies of all documents, records, and other 
information relevant to the claimant's claim for benefits. Plans and 
issuers must continue to comply with these provisions and any other 
applicable laws.
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    \26\ 29 CFR 2520.104b-1.
    \27\ ERISA section 3(7) defines a ``participant'' to include any 
employee or former employee who is or may become eligible to receive 
a benefit of any type from an employee benefit plan or whose 
beneficiaries may be eligible to receive any such benefit. 
Accordingly, employees who are not enrolled but are, for example, in 
a waiting period for coverage, or who are otherwise shopping amongst 
benefit package options at open season, generally are considered 
plan participants for this purpose.
    \28\ 29 CFR 2560.503-1. See also 29 CFR 2590.715-2719(b)(2)(i) 
and 45 CFR 147.136(b)(2)(i), requiring nongrandfathered plans and 
issuers to incorporate the internal claims and appeals processes set 
forth in 29 CFR 2560.503-1.
---------------------------------------------------------------------------

    Section 2715(b)(3)(F) of the PHS Act also requires that an SBC 
contain a ``coverage facts label.'' For ease of reference, the 2012 
final regulations used the term ``coverage examples'' in place of the 
statutory term. Consumer testing performed on behalf of the NAIC \29\ 
demonstrated that the coverage examples facilitated individuals' 
understanding of the benefits and limitations of a plan or policy and 
helped them make more informed choices about their options. That 
testing also showed that individuals were able to comprehend that the 
examples were only illustrative. Additionally, while some plans provide 
useful coverage calculators to their enrollees to help them make health 
coverage decisions, they are not uniform across all plans and most are 
not available to individuals prior to enrollment, making it difficult 
for individuals and employers to make coverage comparisons.
---------------------------------------------------------------------------

    \29\ A summary of the focus group testing done by America's 
Health Insurance Plans is available at: http://www.naic.org/documents/committees_b_consumer_information_101012_ahip_focus_group_summary.pdf
, a summary of the focus group testing done by Consumers Union on 
the coverage examples is available at: http://prescriptionforchange.org/wordpress/wp-content/uploads/2011/08/A_New_Way_of_Comparing_Health_Insurance.pdf.
---------------------------------------------------------------------------

    The Departments have taken a phased approach to implementing the 
coverage examples. The 2012 final regulations require the SBC to 
include two coverage examples: Having a baby (normal delivery) and 
routine maintenance of well-controlled type 2 diabetes. Each benefit 
scenario represents a hypothetical situation consisting of a sample 
treatment plan and medical costs, based on national average allowed 
charges, for each of the conditions stated above. Each example 
describes the sample care costs and how much the hypothetical patient 
will be responsible for paying, including deductibles, copayments and 
coinsurance.
    In addition to the two existing coverage examples, these proposed 
regulations would require a third coverage example--a simple foot 
fracture (with emergency room visit). This example is proposed as a 
health problem that most individuals could experience (whereas having a 
baby and type 2 diabetes affect a subset of the population). Comments 
are welcome on the choice of this coverage example.
    In documents published contemporaneously with these proposed rules, 
the Departments are publishing draft updated claims and pricing data 
underlying the two existing coverage examples as well as a narrative 
description and claims and pricing data associated with the third 
proposed coverage example.\30\ These materials

[[Page 78585]]

would provide plans and issuers with the specific information necessary 
to simulate benefits covered under the plan or policy for the coverage 
example portion of the SBC (including relevant medical items and 
services, dates of service, billing codes, and allowed charges). The 
Departments invite comment on all aspects of the benefits scenario 
proposed as a third coverage example and on all aspects of the coverage 
example materials made available on the HHS Web site contemporaneously 
with the publication of these proposed regulations.
---------------------------------------------------------------------------

    \30\ For further discussion of changes to the claims and pricing 
data underlying the two existing coverage examples, as well as the 
claims and pricing data with respect to the new coverage example, 
see section III later in this preamble.
---------------------------------------------------------------------------

    In May 2012, the Departments announced the development of a 
calculator that plans and issuers could use as a safe harbor for the 
first year of applicability to complete the coverage examples in a 
streamlined fashion.\31\ The calculator allows plans and issuers to 
input a discrete number of informational elements about the benefit 
package, taken from data fields used to populate the ``Important 
Questions'' and ``Common Medical Events'' chart sections of the SBC 
template.'' The output of the calculator is a coverage example that can 
be added to the SBC. On its Web site, HHS provided the coverage 
examples calculator, instructions for using the calculator, the 
algorithm that was used to create the calculator, and a checklist 
providing information on the inputs needed to use the coverage 
calculator.
---------------------------------------------------------------------------

    \31\ See ACA Implementation FAQ Set IX, question 9, available at 
www.dol.gov/ebsa/faqs/faq-aca9.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
---------------------------------------------------------------------------

    The original FAQ regarding the coverage example calculator stated 
that because using a limited number of inputs in the calculator will be 
less accurate than the results that a plan or issuer could obtain by 
processing the full list of claims associated with each coverage 
example through the plan's or issuer's system, the calculator would be 
allowed as a transitional tool for the first year of applicability of 
the SBC requirements. Use of the coverage example calculator was 
subsequently extended for the second year of applicability, and later 
extended until superseded by further guidance.\32\ Given the complexity 
of the existing coverage examples, the addition of a proposed new, 
third coverage example to the SBC requirements, and the fact that all 
coverage examples are merely illustrative and will not be an accurate 
predictor of a specific individual's actual costs, the Departments are 
proposing that the coverage example calculator be authorized for 
continued use. The Departments invite comments on this proposal.
---------------------------------------------------------------------------

    \32\ The FAQ with respect to the coverage example calculator was 
originally issued for SBCs provided for coverage beginning before 
January 1, 2014 (referred to as the ``first year of applicability). 
See Affordable Care Act Implementation FAQs Part IX, question 9, 
available at www.dol.gov/ebsa/faqs/faq-aca9.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html. It was extended for SBCs provided for 
coverage beginning on or after January 1, 2014, and before January 
1, 2015 (referred to as the ``second year of applicability''), in 
Affordable Care Act Implementation FAQs Part XIV, question 5 
(available at www.dol.gov/ebsa/faqs/faq-aca14.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs14.html) and later extended until superseded 
by further guidance is issued in Affordable Care Act Implementation 
FAQs Part XIX, question 7 (available at www.dol.gov/ebsa/faqs/faq-aca19.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.html).
---------------------------------------------------------------------------

3. Appearance
    PHS Act section 2715 sets forth standards related to the appearance 
and language of the SBC. Specifically, the statute provides that the 
SBC is to be presented in a uniform format, in a culturally and 
linguistically appropriate manner utilizing terminology understandable 
by the average plan enrollee, that does not exceed four double-sided 
pages in length, and does not include print smaller than 12-point font. 
Since the issuance of the 2011 proposed regulations, plans and issuers 
have informed the Departments that they are concerned about including 
all of the required information in the SBC while also satisfying the 
limitation on the length of the document of four double-sided pages.
    The instruction guides for completing the SBC template (issued 
contemporaneously with the 2012 final regulations) included a special 
rule stating that, to the extent a plan's terms that are required to be 
in the SBC template cannot reasonably be described in a manner 
consistent with the template format and instructions, the plan or 
issuer must accurately describe the relevant plan terms while using its 
best efforts to do so in a manner that is still as consistent with the 
instructions and template format as reasonably possible. Such 
situations may occur, for example, if a plan provides a different 
structure for provider network tiers or drug tiers than is contemplated 
by the template and associated instructions, if a plan provides 
different benefits based on facility type (such as hospital inpatient 
versus non-hospital inpatient), in a case where the effects of a health 
flexible spending arrangement (health FSA) or a health reimbursement 
arrangement (HRA) are being described, or if a plan provides different 
cost sharing based on participation in a wellness program. The new SBC 
template that is being published contemporaneously with these proposed 
regulations eliminates some information from the SBC that is not 
required by statute based on comments from stakeholders, which is 
intended to make it easier for plans to include all of the required 
information in the SBC while also satisfying the statutory page limit. 
These reductions are significant; the sample completed template has 
been reduced from four double-sided pages to two and a half double-
sided pages. The Departments invite comments on whether the 
modifications maintain critical information while shortening it enough 
to ensure that SBCs do not extend beyond the statutory page limit and, 
if not, what other changes should be made to ensure the minimum 
content, appearance, and language requirements are met while also 
providing consistency in formatting to allow comparisons for 
individuals. Comments are invited on potential ways to reconcile the 
statutory page limit with the statutory contents, appearance, and 
format requirements, particularly the need for the summary to present 
information in an understandable, accurate, and meaningful way that 
facilitates comparisons of health options, including those that have 
disparate and comparatively complex features. Specifically, comments 
are invited on the sorts of plans that have difficulty meeting the 
statutory limit, and what other sorts of accommodations may be 
appropriate for those plans.
    Paragraph (a)(3) of the 2012 final regulations requires plans and 
issuers to provide the SBC in the form, and in accordance with the 
instructions for completing the SBC, that are specified by the 
Secretaries in guidance. A guidance document published 
contemporaneously with the 2012 final regulations served as such 
guidance specified by the Secretaries, and stated that SBCs provided in 
connection with group health plan coverage may be provided either as a 
stand-alone document or in combination with other summary materials 
(for example, a summary plan description (SPD)), if the SBC information 
is intact and prominently displayed at the beginning of the materials 
(such as immediately after the Table of Contents in an SPD) and in 
accordance with the timing requirements for providing an SBC.\33\ For 
health insurance coverage offered in

[[Page 78586]]

the individual market, the SBC must be provided as a stand-alone 
document, but HHS notes that it can be included in the same mailing as 
other plan materials. These proposed rules do not make any changes to 
these requirements.
---------------------------------------------------------------------------

    \33\ Summary of Benefits and Coverage and Uniform Glossary--
Templates, Instructions, and Related Materials; and Guidance for 
Compliance, 77 FR 8706, 8707 (February 14, 2012).
---------------------------------------------------------------------------

    In Affordable Care Act Implementation FAQs Part VIII, question 8, 
the Departments stated that an SBC provided in connection with a group 
health plan may include a reference to the SPD (although not as a 
substitute for any required content element of the SBC).\34\ Another 
FAQ provided that for SBCs provided in connection with coverage in the 
individual market, while it is not permitted to substitute a reference 
to any other document for any content element of the SBC, an SBC may 
include a reference to another document in the SBC footer.\35\ In 
addition, wherever an SBC provides information that fully satisfies a 
particular content element of the SBC, it may add to that information a 
reference to specified pages or portions of other documents in order to 
supplement or elaborate on that information. As stated in the previous 
FAQs, SBCs provided in connection with a group health plan may include 
a reference to the SPD or other documents and SBCs provided in 
connection with individual market coverage may reference other 
documents to supplement or elaborate on information in the SBC.
---------------------------------------------------------------------------

    \34\ See Affordable Care Act Implementation FAQs Part VIII, 
question 8, available at www.dol.gov/ebsa/faqs/faq-aca8.html and 
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.
    \35\ See Affordable Care Act Implementation FAQs Part IX, 
question 5, available at http://www.dol.gov/ebsa/faqs/faq-aca9.html 
and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
---------------------------------------------------------------------------

    Affordable Care Act Implementation FAQs Part IX, question 7, 
addressed combining SBCs or SBC elements to provide a side-by-side 
comparison.\36\ Some plans or issuers provide web-based or print 
materials to illustrate the differences between benefit package options 
(including comparison charts and broker comparison Web sites). Issuers 
and plans (and agents and brokers working with such plans) may display 
SBCs, or parts of SBCs, in a way that facilitates comparisons of 
different benefit package options by individuals and employers shopping 
for coverage. For example, on a Web site, viewers could be allowed to 
select a comparison of only the deductibles, out-of-pocket limits, or 
other cost sharing information relating to several benefit package 
options. This could be achieved by providing the information from the 
Answers column in the ``What is the overall deductible?'' row of the 
SBC for several benefit packages, but without having to repeat the 
first ``Important Questions'' and ``Why this Matters'' columns, or the 
other content rows, of the SBC for each of the benefit packages. 
However, such a chart, Web site, or other comparison would not, itself, 
satisfy the requirements under PHS Act section 2715 and the 2012 final 
regulations to provide the SBC. The full SBC for each of the benefit 
packages included in the comparison view or tool must be made available 
in accordance with the statute and regulations.
---------------------------------------------------------------------------

    \36\ See Affordable Care Act Implementation FAQs Part IX, 
question 7, available at http://www.dol.gov/ebsa/faqs/faq-aca9.html 
and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
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4. Form
a. Group Health Plan Coverage
    To facilitate faster and less burdensome disclosure of the SBC, and 
to be consistent with PHS Act section 2715(d)(2), which permits 
disclosure in either paper or electronic form, the 2012 final 
regulations set forth rules to permit greater use of electronic 
transmittal of the SBC. For SBCs provided electronically by a plan or 
issuer to participants and beneficiaries, the 2012 final regulations 
make a distinction between a participant or beneficiary who is already 
covered under the group health plan, and a participant or beneficiary 
who is eligible for coverage but not enrolled in a group health plan. 
This distinction should provide new flexibility in some circumstances, 
while also ensuring adequate consumer protections. For participants and 
beneficiaries who are already covered under the group health plan, the 
2012 final regulations permit provision of the SBC electronically if 
the requirements of the Department of Labor's regulations at 29 CFR 
2520.104b-1 are met. (Paragraph (c) of those regulations includes an 
electronic disclosure safe harbor.\37\) For participants and 
beneficiaries who are eligible for but not enrolled in coverage, the 
2012 final regulations permit the SBC to be provided electronically if 
the format is readily accessible and a paper copy is provided free of 
charge upon request. Additionally, to reduce paper copies that may be 
unnecessary, if the electronic form is an Internet posting, the plan or 
issuer must timely advise the individual in paper form (such as a 
postcard) or email that the documents are available on the Internet, 
provide the Internet address, and notify the individual that the 
documents are available in paper form upon request. The Departments 
note that the rules for participants and beneficiaries who are eligible 
for but not enrolled in coverage are substantially similar to the 
requirements for an issuer providing an electronic SBC to a group 
health plan (or its sponsor) under paragraph (a)(4)(i) of the 
regulations. Finally, plans, and participants and beneficiaries (both 
those covered and those eligible but not enrolled) have the right to 
receive an SBC in paper format, free of charge, upon request.
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    \37\ On April 7, 2011, the Department of Labor published a 
Request for Information regarding electronic disclosure at 76 FR 
19285. In it, the Department of Labor stated that it is reviewing 
the use of electronic media by employee benefit plans to furnish 
information to participants and beneficiaries covered by employee 
benefit plans subject to ERISA. Because these proposed regulations 
propose to adopt the ERISA electronic disclosure rules by cross-
reference, any changes that may be made to 29 CFR 2520.104b-1 in the 
future would also apply to the SBC.
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    In Affordable Care Act Implementation FAQs Part IX, question 1, the 
Departments adopted an additional safe harbor related to electronic 
delivery of SBCs.\38\ That FAQ stated that SBCs may be provided 
electronically to participants and beneficiaries in connection with 
their online enrollment or online renewal of coverage under the plan. 
The FAQ also stated SBCs also may be provided electronically to 
participants and beneficiaries who request an SBC online. In either 
case, the individual must have the option to receive a paper copy upon 
request. These proposed regulations would include this additional safe 
harbor into the applicable regulations.
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    \38\ See Affordable Care Act Implementation FAQs Part IX, 
question 4, available at http://www.dol.gov/ebsa/faqs/faq-aca9.html 
and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
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    After the publication of the 2012 final regulations, the 
Departments were asked to provide model language to meet the 
requirement to advise participants and beneficiaries that the SBC is 
available on the Internet. In Affordable Care Act FAQs Part VIII, 
question 12, the Departments provided the following model language: 
\39\
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    \39\ See Affordable Care Act Implementation FAQs Part VIII, 
question 12, available at http://www.dol.gov/ebsa/faqs/faq-aca8.html 
and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs8.html.

Availability of Summary Health Information

    As an employee, the health benefits available to you represent a 
significant component of your compensation package. They also 
provide important protection for you and your family in the case of 
illness or injury.

[[Page 78587]]

    Your plan offers a series of health coverage options. Choosing a 
health coverage option is an important decision. To help you make an 
informed choice, your plan makes available a Summary of Benefits and 
Coverage (SBC), which summarizes important information about any 
health coverage option in a standard format, to help you compare 
across options.
    The SBC is available on the web at: www.Web site.com/SBC. A 
paper copy is also available, free of charge, by calling 1-XXX-XXX-
XXXX (a toll-free number).

    The FAQ also stated that plans and issuers have flexibility with 
respect to the postcard and may choose to tailor it in many ways.
b. Individual Health Insurance Coverage and Self-Insured Non-Federal 
Governmental Plans
    The HHS 2012 final regulations established a provision under 
paragraph (a)(4)(iii)(C) that deems health insurance issuers in the 
individual market to be in compliance with the requirement to provide 
the SBC to an individual requesting summary information about a health 
insurance product prior to submitting an application for coverage if 
the issuer provides the content required under paragraph (a)(2) of the 
regulations to the federal health reform Web portal described in 45 CFR 
159.120. Issuers must submit all of the content required under 
paragraph (a)(2), as specified in guidance by the Secretary, to be 
deemed compliant with the requirement to provide an SBC to an 
individual requesting summary information prior to submitting an 
application for coverage. HHS intends to continue to facilitate the 
operation of this deemed compliance option for individual market 
issuers. An issuer must provide all SBCs other than the ``shopper'' SBC 
contemplated in the deemed compliance provision as required under the 
2012 final regulations (and any future final regulations), including 
providing the SBC at the time of application and renewal.
    The Departments note that consistent with the 2012 final 
regulations, an issuer in the individual market must provide the SBC in 
a manner that can reasonably be expected to provide actual notice 
regardless of the format. An issuer in the individual market satisfies 
the form requirements set forth in the 2012 final regulations if it 
does at least one of the following: (1) Hand-delivers a printed copy of 
the SBC to the individual or dependent; (2) mails a printed copy of the 
SBC to the mailing address provided to the issuer by the individual or 
dependent; (3) provides the SBC by email after obtaining the 
individual's or dependent's agreement to receive the SBC or other 
electronic disclosures by email; (4) posts the SBC on the Internet and 
advises the individual or dependent in paper or electronic form, in a 
manner compliant with 45 CFR 147.200(a)(4)(iii)(A)(1) through (3), that 
the SBC is available on the Internet and includes the applicable 
Internet address; or (5) provides the SBC by any other method that can 
reasonably be expected to provide actual notice.
    The 2012 final regulations also provide that the obligation to 
provide an SBC cannot be satisfied electronically in the individual 
market unless: the format is readily accessible; the SBC is displayed 
in a location that is prominent and readily accessible; the SBC is 
provided in an electronic form that can be electronically retained and 
printed; the SBC is consistent with the appearance, content and 
language requirements; and the issuer notifies the individual that a 
paper SBC is available upon request without charge.
    These proposed rules would clarify the form and manner for SBCs 
provided by a self-insured non-Federal governmental plan. Such SBCs may 
be provided in paper form. Alternatively, such SBCs may be provided 
electronically if the plan conforms to either the substance of the 
provisions applicable to ERISA plans (in paragraph (a)(4)(ii) of the 
regulations) or to individual health insurance coverage (in paragraph 
(a)(4)(iii) of the regulations).
5. Language
    PHS Act section 2715(b)(2) provides that standards shall ensure 
that the SBC ``is presented in a culturally and linguistically 
appropriate manner.'' The 2012 final regulations provide that a plan or 
issuer for this purpose is considered to provide the SBC in a 
culturally and linguistically appropriate manner if the thresholds and 
standards of 45 CFR 147.136(e), implementing standards for the form and 
manner of notices related to internal claims appeals and external 
review, are met as applied to the SBC.\40\ At the time of publication 
of these proposed regulations, 268 U.S. counties (78 of which are in 
Puerto Rico) meet this threshold. The overwhelming majority of these 
are Spanish; however, Chinese, Navajo, and Tagalog are present in a few 
counties, affecting five states (specifically, Alaska, Arizona, 
California, New Mexico, and Utah).\41\
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    \40\ See 75 FR 43330 (July 23, 2010), as amended by 76 FR 37208 
(June 24, 2011).
    \41\ Guidance on the HHS Web site contains a list of the 
counties that meet this threshold. This information is available at 
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/2009-13-CLAS-County-Data_12-05-14_clean_508.pdf.
---------------------------------------------------------------------------

    To help plans and issuers meet the language requirements of 
paragraph (a)(5) of the 2012 final regulations, as requested by 
commenters, HHS has provided written translations of the SBC template, 
sample language, and the uniform glossary in Chinese, Navajo, Spanish, 
and Tagalog.\42\ HHS may also make these materials available in other 
languages to facilitate voluntary distribution of SBCs to other 
individuals with limited English proficiency. We seek comment on this 
standard, and on other potential standards that could facilitate 
consistency across the Departments' programs. The Departments 
anticipate that translations of the updated SBC template, sample 
language, and uniform glossary will be available when these proposed 
regulations are finalized.
---------------------------------------------------------------------------

    \42\ Translations are available at http://cciio.cms.gov/programs/consumer/summaryandglossary/index.html.
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    Nothing in these proposed regulations should be construed as 
limiting an individual's rights under Federal or State civil rights 
statutes, such as Title VI of the Civil Rights Act of 1964 (Title VI) 
which prohibits recipients of Federal financial assistance, including 
issuers participating in Medicare Advantage, from discriminating on the 
basis of race, color, or national origin. To ensure non-discrimination 
on the basis of national origin, recipients are required to take 
reasonable steps to ensure meaningful access to their programs and 
activities by limited English proficient persons. For more information, 
see, ``Guidance to Federal Financial Assistance Recipients Regarding 
Title VI Prohibition Against National Origin Discrimination Affecting 
Limited English Proficient Persons,'' available at http://www.hhs.gov/ocr/civilrights/resources/specialtopics/lep/policyguidancedocument.html.

B. Notice of Modification

    PHS Act section 2715(d)(4) directs that a group health plan or 
health insurance issuer offering group or individual health insurance 
coverage must provide notice of any material modification (as defined 
under ERISA section 102) in any of the terms of the plan or coverage 
involved that is not reflected in the most recently provided SBC. For 
purposes of PHS Act section 2715, the 2012 final regulations interpret 
the statutory reference to the SBC to mean that only a material 
modification in the terms of the plan or coverage that would affect the 
content of the SBC, that is not reflected in the most recently provided 
SBC, and that occurs

[[Page 78588]]

other than in connection with a renewal or reissuance of coverage would 
trigger the notice. In these circumstances, the notice would be 
required to be provided to enrollees (or, in the individual market, 
covered individuals) no later than 60 days prior to the date on which 
such change will become effective. A material modification, within the 
meaning of section 102 of ERISA, includes any modification to the 
coverage offered under a plan or policy that, independently, or in 
conjunction with other contemporaneous modifications or changes, would 
be considered by an average plan participant (or in the case of 
individual market coverage, an average individual covered under a 
policy) to be an important change in covered benefits or other terms of 
coverage under the plan or policy.\43\ A material modification could be 
an enhancement of covered benefits or services or other more generous 
plan or policy terms. It includes, for example, coverage of previously 
excluded benefits or reduced cost-sharing. A material modification 
could also be a material reduction in covered services or benefits, as 
defined in 29 CFR 2520.104b-3(d)(3) of the Department of Labor's 
regulations, or more stringent requirements for receipt of benefits. As 
a result, it also includes changes or modifications that reduce or 
eliminate benefits, increase cost-sharing, or impose a new referral 
requirement.\44\ (However, changes to the information in the SBC 
resulting from changes in the regulatory requirements for an SBC are 
not changes to the plan or policy requiring the mid-year provision of a 
notice of modification, unless specified in such new requirements.)
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    \43\ See DOL Information Letter, Washington Star/Washington-
Baltimore Newspaper Guild to Munford Page Hall, II, Baker & McKenzie 
(February 8, 1985).
    \44\ See, e.g., Ward v. Maloney, 386 F.Supp.2d 607, 612 
(M.D.N.C. 2005), which discusses judicial interpretations of when an 
amendment is and is not a material modification.
---------------------------------------------------------------------------

    The 2012 final regulations require that this notice be provided 
only for changes other than in connection with a renewal or reissuance 
of coverage. At renewal, plans and issuers must provide an updated SBC 
in accordance with the requirements otherwise applicable to SBCs. PHS 
Act section 2715 and paragraph (b) of the 2012 final regulations 
specify the timing for providing a notice of modification in situations 
other than in connection with a renewal or reissuance of coverage. To 
the extent a plan or policy implements a mid-year change that is a 
material modification that affects the content of the SBC, and that 
occurs other than in connection with a renewal or reissuance of 
coverage, the 2012 final regulations require a notice of modification 
to be provided 60 days in advance of the effective date of the 
change.\45\ Plans and issuers are permitted to either provide an 
updated SBC reflecting the modifications or provide a separate notice 
describing the material modifications. These proposed regulations do 
not make any changes to these requirements.
---------------------------------------------------------------------------

    \45\ In Affordable Care Act Implementation FAQs Part XX, the 
Departments addressed notice requirements triggered by a closely-
held for-profit corporation's health plan ceasing to provide 
coverage for some or all contraceptive services mid-plan year. The 
FAQ clarified that, for plans subject to ERISA that reduce or 
eliminate coverage of contraceptive services after having provided 
such coverage, expedited disclosure requirements for material 
reductions in covered services or benefits apply. See http://www.dol.gov/ebsa/pdf/faq-aca20.pdf and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs20.html.
---------------------------------------------------------------------------

    For ERISA-covered group health plans subject to PHS Act section 
2715, this notice is required in advance of the timing requirements 
under the Department of Labor's regulations at 29 CFR 2520.104b-3 for 
providing a summary of material modification (SMM) (generally not later 
than 210 days after the close of the plan year in which the 
modification or change was adopted, or, in the case of a material 
reduction in covered services or benefits, not later than 60 days after 
the date of adoption of the modification or change). In situations 
where a complete notice is provided in a timely manner under PHS Act 
section 2715(d)(4), an ERISA-covered plan will also satisfy the 
requirement to provide an SMM under Part 1 of ERISA.

C. Requirement To Provide the Uniform Glossary

    Sections 2715(g)(2) and (g)(3) of the PHS Act direct the 
Departments to develop standards for definitions, at a minimum, for 
certain insurance-related and medical terms (and also directs the 
Departments to develop standards for such other insurance-related and 
medical terms as will help consumers compare the terms of their 
coverage and the extent of medical benefits (or exceptions to those 
benefits)).\46\ The 2012 final regulations included several additional 
terms in the uniform glossary.\47\ As discussed later in this preamble, 
the Departments propose to revise definitions for several of these 
terms and also add several new terms to the Glossary.\48\
---------------------------------------------------------------------------

    \46\ The insurance-related terms identified in the statute are: 
co-insurance, co-payment, deductible, excluded services, grievance 
and appeals, non-preferred provider, out-of-network co-payments, 
out-of-pocket limit, preferred provider, premium, and UCR (usual, 
customary and reasonable) fees. The medical terms identified in the 
statute are: durable medical equipment, emergency medical 
transportation, emergency room care, home health care, hospice 
services, hospital outpatient care, hospitalization, physician 
services, prescription drug coverage, rehabilitation services, and 
skilled nursing care.
    \47\ The additional terms in the uniform glossary issued with 
the 2012 final regulations are: allowed amount, balance billing, 
complications of pregnancy, emergency medical condition, emergency 
services, habilitation services, health insurance, in-network co-
insurance, in-network co-payment, medically necessary, network, out-
of-network co-insurance, plan, preauthorization, prescription drugs, 
primary care physician, primary care provider, provider, 
reconstructive surgery, specialist, and urgent care.
    \48\ For further discussion of proposed changes to the Uniform 
Glossary, see section III later in this preamble.
---------------------------------------------------------------------------

    A plan or issuer must make the uniform glossary available upon 
request within seven business days. To satisfy this requirement, a plan 
or issuer must provide the content described in paragraph (a)(2)(i)(L) 
of the 2012 final regulations, discussed earlier in this preamble, 
which requires that the SBC include an Internet address for obtaining 
the uniform glossary, a contact phone number to obtain a paper copy of 
the uniform glossary, and a disclosure that paper copies are available 
upon request. The Internet address may be a place where the document 
can be found on the plan's or issuer's Web site, or the Web site of 
either the Department of Labor or HHS. However, a plan or issuer must 
make the glossary available upon request, in either paper or electronic 
form (as requested), within seven business days after receipt of the 
request. Group health plans and health insurance issuers must provide 
the uniform glossary in the appearance specified by the Departments and 
without modification, so that the glossary is presented in a uniform 
format and uses terminology understandable by the average plan enrollee 
or individual covered under an individual policy.

D. Preemption

    Section 2715 of the PHS Act is incorporated into ERISA section 715, 
and Code section 9815, and is subject to the preemption provisions of 
ERISA section 731 and PHS Act section 2724 (implemented in 29 CFR 
2590.731(a) and 45 CFR 146.143(a)). Under these provisions, the 
requirements of part 7 of ERISA and part A of title XXVII of the PHS 
Act, as amended by the Affordable Care Act, are not to be ``construed 
to supersede any provision of State law which establishes, implements, 
or continues in effect any standard or requirement solely relating to 
health

[[Page 78589]]

insurance issuers in connection with group or individual health 
insurance coverage except to the extent that such standard or 
requirement prevents the application of a requirement'' of part A of 
title XXVII of the PHS Act. Accordingly, State laws that impose 
requirements on health insurance issuers that are stricter than those 
imposed by the Affordable Care Act will not be superseded by the 
Affordable Care Act. In addition, PHS Act section 2715(e) provides that 
the standards developed under PHS Act section 2715(a), ``shall preempt 
any related State standards that require [an SBC] that provides less 
information to consumers than that required to be provided under this 
section, as determined by the [Departments].'' Reading these two 
preemption provisions together, the 2012 final regulations do not, and 
these proposed regulations would not, prevent States from imposing 
separate, additional disclosure requirements on health insurance 
issuers.

E. Failure To Provide

    PHS Act section 2715(f), incorporated into ERISA section 715 and 
Code section 9815, provides that a group health plan (including its 
administrator), and a health insurance issuer offering group or 
individual health insurance coverage, that ``willfully fails to provide 
the information required under this section shall be subject to a fine 
of not more than $1,000 for each such failure.'' In addition, under PHS 
Act section 2715(f), a separate fine may be imposed for each individual 
or entity for whom there is a failure to provide an SBC. The 2012 final 
regulations addressed the different underlying enforcement structures 
and penalty mechanisms for the Departments.
    HHS clarified in the 2012 final regulations that HHS will enforce 
these provisions in a manner consistent with 45 CFR 150.101 through 
150.465. In these proposed regulations, the Department of Labor 
proposes to clarify that it will use the same process and procedures 
for assessment of the civil fine as used for failure to file an annual 
report under 29 CFR 2560.502c-2 and 29 CFR part 2570, subpart C. In 
accordance with ERISA section 502(b)(3), 29 U.S.C. 1132(b)(3), the 
Secretary of Labor is not authorized to assess this fine against a 
health insurance issuer. Moreover, in these proposed regulations, the 
IRS proposes to clarify that the IRS will enforce this section using a 
process and procedure consistent with section 4980D of the Code.

III. Proposed Documents Authorized for Plan Years Beginning on or After 
September 1, 2015

    Contemporaneously with the issuance of these proposed regulations, 
the Departments are making available on their Web sites a proposed 
revised SBC template and attendant materials (including a proposed 
revised uniform glossary) to comply with the disclosure requirements of 
PHS Act section 2715. These materials are proposed to be authorized by 
the Departments for disclosure provided in accordance with the 
applicability date proposed later in this preamble.\49\ This section of 
the preamble describes the changes proposed to each document.
---------------------------------------------------------------------------

    \49\ See section IV of this preamble for a full discussion of 
the proposed applicability date.
---------------------------------------------------------------------------

    The following documents, available at http://cciio.cms.gov and 
www.dol.gov/ebsa/healthreform, are available for review and the 
Departments solicit comment on them:
    1. SBC template. The document is available in accessible format 
(PDF) and modifiable format (MS Word).
    2. Sample completed SBC. This document was completed using 
information for sample health coverage and provides a general 
illustration of a completed SBC for coverage under a group health plan.
    3. Instructions. For assistance in completing the SBC template, 
separate instructions are available for group health coverage and for 
individual health insurance coverage. Additionally, with respect to the 
individual market instructions, the Office of Personnel Management 
(OPM) may provide additional instructions for Multi-State Plan issuers.
    4. Why This Matters language. The SBC instructions include language 
that must be used when completing the ``Why This Matters'' column on 
the first page of the SBC template. Two language options are provided 
depending on whether the answer in the applicable row is ``yes'' or 
``no'', according to the terms of the plan or coverage.
    5. Coverage examples. Information provided by HHS at http://cciio.cms.gov (and accessible via hyperlink from www.dol.gov/ebsa/healthreform) the information necessary to perform the coverage example 
calculations.
    6. Uniform glossary. The uniform glossary of health coverage and 
medical terms may not be modified by plans or issuers.
    Many of the changes proposed in the updated versions of these 
documents streamline the SBC. As discussed earlier in this preamble, 
these changes were made after feedback the Departments received from 
stakeholders, and the revised proposed template and other documents are 
intended to make it easier for plans to satisfy the statutory page 
limit. The revised documents also incorporate information from several 
sets of FAQs that addressed implementation of the SBC provisions.
    Additionally, the revised documents include changes made to conform 
with new requirements that have become applicable since the issuance of 
the 2012 final regulations. These changes include the addition of 
information regarding minimum value and minimum essential coverage and 
changes to be consistent with the Affordable Care Act's requirement to 
eliminate all annual limits on essential health benefits.
    Finally, the revised documents reflect changes to the coverage 
examples. The coding and pricing data for the existing coverage 
examples (having a baby through normal delivery and managing well 
controlled type 2 diabetes) have been updated to account for changes in 
the data since the issuance of the final regulations in 2012. 
Additionally the Departments proposed to change the data source for the 
claims and pricing information from a data source that used multiple 
commercial payor databases, to one based on a single database, the 
Truven Health Analytics MarketScan[supreg] Commercial Claims and 
Encounters database, adjusted to estimate 2014 pricing to account for 
health care inflation since 2010. The Departments seek comment on 
whether to update this data using more recent 2013 Marketscan[supreg] 
database claims data that will be available for the final rule, and on 
appropriate ways to inform consumers of the resulting increases in 
sample care costs when the pricing data is updated, for example, 
through a cover letter or other disclosure provided along with the SBC. 
The Departments also seek specific comment on two diagnosis codes in 
the having a baby (normal delivery) scenario. The pricing data 
associated with these two codes, DRG 775 and DRG 795 (inpatient 
hospital charges for the mother, and inpatient hospital charges for the 
baby, respectively), appears higher than expected. These diagnosis 
codes represent bundled services and may include charges that are 
duplicated by other codes currently included in the scenario. The 
Departments seek comment on the accuracy of this pricing data.
    Additionally, the SBC template, sample completed template, and 
coverage example documents have been updated to reflect that these 
proposed regulations would require a third

[[Page 78590]]

coverage example--a simple foot fracture (with emergency room visit), 
as described earlier in this preamble. The same Marketscan[supreg] 
database has been used to produce the claim and pricing data for this 
scenario.
    The Departments invite comment on all aspects of the proposed 
changes to the SBC template and other materials, and the uniform 
glossary. The Departments also request specific comments regarding the 
Instruction Guides about whether plans and issuers should be permitted 
to add additional benefits that are either covered or excluded in the 
``other covered services'' and ``excluded services'' section that are 
not already required to be disclosed by the instructions.

IV. Applicability

    After publication of the 2012 final regulations, the Departments 
received questions about the applicability of the SBC requirements to 
certain types of group health plans, including expatriate health plans, 
Medicare Advantage plans, and insurance products that are no longer 
being offered for purchase (closed blocks of business). The Departments 
addressed the applicability of the SBC requirements to each of these 
types of coverage in FAQs issued after publication of the 2012 final 
regulations. The Departments also received questions regarding the 
applicability of the SBC requirements to benefits provided under 
certain account-type arrangements such as health FSAs,\50\ HRAs,\51\ 
and health savings accounts (HSAs),\52\ as well as benefits provided 
through an employee assistance program (EAP) and other excepted 
benefits.
---------------------------------------------------------------------------

    \50\ See Code section 106(c)(2).
    \51\ See IRS Notice 2002-45, 2002-2 C.B. 93.
    \52\ See Code section 223.
---------------------------------------------------------------------------

    In May 2012, the Departments issued FAQs that discussed the special 
circumstances and considerations faced by expatriate plans in complying 
with the SBC requirements.\53\ The FAQs provided temporary relief from 
enforcement. Under recently enacted legislation,\54\ expatriate health 
plans are not subject to the requirement to provide an SBC. The 
Departments intend to issue guidance implementing this legislation. The 
temporary relief from enforcement for expatriate plans will remain in 
place until such guidance is issued.
---------------------------------------------------------------------------

    \53\ See Affordable Care Act Implementation FAQs Part IX, 
question 13, available at http://www.dol.gov/ebsa/faqs/faq-aca9.html 
and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
    \54\ See Consolidated and Further Continuing Appropriations Act, 
2015, Division M, Expatriate Health Coverage Clarification Act of 
2014, Section 3(d).
---------------------------------------------------------------------------

    Moreover, in August 2012, the Departments issued FAQs that 
discussed group health plans providing Medicare Advantage benefits, 
which are Medicare benefits financed by the Medicare Trust Funds, for 
which the benefits are set by Congress and regulated by the Centers for 
Medicare & Medicaid Services. Again, the FAQs provided a temporary 
nonenforcement policy, because Medicare Advantage benefits are not 
health insurance coverage and Medicare Advantage organizations are not 
required to provide an SBC with respect to such benefits. Additionally, 
there are separately required disclosures required to be provided by 
Medicare Advantage organizations, to ensure that enrollees in these 
plans receive the necessary information about their coverage and 
benefits. These rules propose to exempt from the SBC requirements a 
group health plan benefit package that provides Medicare Advantage 
benefits.
    The Departments also issued FAQs in May 2012 addressing insurance 
products that are no longer being offered for purchase (``closed blocks 
of business''). Some interested stakeholders had requested enforcement 
relief with respect to such products because the products are no longer 
offered for purchase and the SBC is intended to be a tool to help group 
health plans and individuals as they shop for coverage. The Departments 
had provided temporary relief through an FAQ provided that certain 
conditions were met: (1) The insurance product is no longer being 
actively marketed; (2) the health insurance issuer stopped actively 
marketing the product prior to September 23, 2012, when the requirement 
to provide an SBC was first applicable to health insurance issuers; and 
(3) the health insurance issuer has never provided an SBC with respect 
to such product. \55\ The Departments reiterate that relief here, but 
note that if an insurance product was actively marketed for business on 
or after September 23, 2012, and is no longer being actively marketed 
for business, or if the plan or issuer ever provided an SBC in 
connection with the product, the plan and issuer must provide the SBC 
with respect to such coverage, as required by PHS Act section 2715 and 
the regulations.
---------------------------------------------------------------------------

    \55\ See Affordable Care Act Implementation FAQs Part IX, 
question 12, available at http://www.dol.gov/ebsa/faqs/faq-aca9.html 
and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs9.html.
---------------------------------------------------------------------------

    As under the 2012 final regulations, an SBC need not be provided 
for plans, policies, or benefit packages that constitute excepted 
benefits. Thus, for example, an SBC need not be provided for stand-
alone dental or vision plans or health FSAs if they constitute excepted 
benefits under the Departments' regulations.\56\ If benefits under a 
health FSA do not constitute excepted benefits, the health FSA is a 
group health plan generally subject to the SBC requirements. For a 
health FSA that does not meet the criteria for excepted benefits and 
that is integrated with other major medical coverage, the SBC is 
prepared for the other major medical coverage, and the effects of the 
health FSA can be denoted in the appropriate spaces on the SBC, 
including those for deductibles, copayments, coinsurance, and benefits 
otherwise not covered by the major medical coverage. A stand-alone 
health FSA, which does not meet the criteria for excepted benefits, 
must satisfy the SBC requirements independently.
---------------------------------------------------------------------------

    \56\ See 26 CFR 54.9831-1(c), 29 CFR 2590.732(c), 45 CFR 
146.145(c).
---------------------------------------------------------------------------

    On October 1, 2014, the Departments published final rules on 
excepted benefits.\57\ These regulations stated that an EAP constitutes 
excepted benefits if it satisfies certain requirements.\58\ If an EAP 
qualifies as excepted benefits, the EAP need not separately satisfy the 
SBC requirements.
---------------------------------------------------------------------------

    \57\ 79 FR 59130 (October 1, 2014).
    \58\ The first requirement is that the EAP does not provide 
significant benefits in the nature of medical care. For this 
purpose, the amount, scope, and duration of covered services are 
taken into account. (See preamble discussion at 79 FR 59133 for 
examples). The second requirement is that the EAP's benefits cannot 
be coordinated with the benefits under another group health plan. 
For this purpose, participants in the group health plan must not be 
required to use and exhaust benefits under the EAP (making the EAP a 
``gatekeeper'') before an individual is eligible for benefits under 
the other group health plan; and participant eligibility for 
benefits under the EAP must not be dependent on participation in 
another group health plan. The third requirement is that no employee 
premiums or contributions may be required as a condition of 
participation in the EAP. The fourth requirement is that an EAP that 
constitutes excepted benefits may not impose any cost-sharing 
requirements.
---------------------------------------------------------------------------

    The Departments have issued guidance regarding HRAs since the 
publication of the 2012 final regulations.\59\ An HRA is a group health

[[Page 78591]]

plan. The Departments' guidance on HRAs clarifies that such 
arrangements are subject to the group market reform provisions of the 
Affordable Care Act, including the prohibition on annual limits under 
PHS Act section 2711 and the requirement to provide certain preventive 
services without cost sharing under PHS Act section 2713. The 
Departments' guidance further clarifies that such arrangements will not 
violate the market reform provisions when integrated with a group 
health plan that complies with those provisions (and that such 
arrangements cannot be integrated with individual market policies to 
satisfy the market reforms).
---------------------------------------------------------------------------

    \59\ On September 13, 2013, DOL and the Treasury published 
guidance on the application of the market reforms and other 
provisions of the Affordable Care Act to health reimbursement 
arrangements (HRAs), certain health flexible spending arrangements 
(health FSAs) and certain other employer health care arrangements. 
See DOL Technical Release 2013-03, available at http://www.dol.gov/ebsa/newsroom/tr13-03.html, and IRS Notice 2013-54, available at 
http://www.irs.gov/pub/irs-drop/n-13-54.pdf. HHS also issued 
guidance to reflect that HHS concurs in the application of the laws 
under its jurisdiction as set forth in the DOL and Treasury 
Department guidance. See Insurance Standards Bulletin, Application 
of Affordable Care Act Provisions to Certain Healthcare 
Arrangements, September 16, 2013, available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/cms-hra-notice-9-16-2013.pdf. On May 13, 2013, two FAQs were made available on the 
IRS Web site addressing employer healthcare arrangements, available 
at: www.irs.gov/uac/Newsroom/Employer-Health-Care-Arrangements. On 
November 6, 2014, the Departments issued three FAQs on the 
compliance of premium reimbursement arrangements. See ACA 
Implementation FAQs Part XXII, available at http://www.dol.gov/ebsa/pdf/faq-aca22.pdf and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs22.html.
---------------------------------------------------------------------------

    Benefits under an HRA generally do not constitute excepted 
benefits, and thus HRAs are generally subject to the SBC requirements. 
An HRA integrated with other major medical coverage under a group 
health plan need not separately satisfy the SBC requirements; the SBC 
is prepared for the other major medical coverage, and the effects of 
employer allocations to an account under the HRA can be denoted in the 
appropriate spaces on the SBC, including those for deductibles, 
copayments, coinsurance, and benefits otherwise not covered by the 
other major medical coverage.
    HSAs generally are not group health plans and thus generally are 
not subject to the SBC requirements. Nevertheless, an SBC prepared for 
a high deductible health plan associated with an HSA can (but is not 
required to) mention the effects of employer contributions to HSAs in 
the appropriate spaces on the SBC, including those for deductibles, 
copayments, coinsurance, and benefits otherwise not covered by the high 
deductible health plan.

V. Applicability Date

    Changes to the current requirements to provide an SBC, notice of 
modification, and uniform glossary under PHS Act section 2715 and the 
2012 final regulations are proposed to apply for disclosures with 
respect to participants and beneficiaries who enroll or re-enroll in 
group health coverage through an open enrollment period (including re-
enrollees and late enrollees) beginning on the first day of the first 
open enrollment period that begins on or after September 1, 2015. With 
respect to disclosures to participants and beneficiaries who enroll in 
group health coverage other than through an open enrollment period 
(including individuals who are newly eligible for coverage and special 
enrollees), the requirements of these proposed regulations are proposed 
to apply beginning on the first day of the first plan year that begins 
on or after September 1, 2015. For disclosures to plans, and to 
individuals and dependents in the individual market, these requirements 
are proposed to apply to health insurance issuers beginning on 
September 1, 2015. We solicit comments on these proposed applicability 
dates.

VI. Economic Impact and Paperwork Burden

A. Executive Orders 12866 and 13563--Departments of Labor and HHS

    Executive Orders 12866 and 13563 direct 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 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. This rule has been designated a ``significant regulatory 
action'' under section 3(f) of Executive Order 12866. Accordingly, the 
rule has been reviewed by the Office of Management and Budget.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any one 
year). As discussed below, the Departments have concluded that these 
proposed regulations would not have economic impacts of $100 million or 
more in any one year or otherwise meet the definition of an 
``economically significant rule'' under Executive Order 12866. 
Nonetheless, consistent with Executive Orders 12866 and 13563, the 
Departments have provided an assessment of the potential benefits and 
the costs associated with this proposed regulation.
    The primary benefits of these proposed regulations come from 
improved information, which will enable consumers, both individuals and 
employers, to better understand the health insurance coverage they have 
and provide, and make better coverage decisions based on their 
preferences with respect to benefit design, level of financial 
protection, and cost. The Departments believe that such improvements 
will result in a more efficient, competitive market. These proposed 
regulations will also benefit consumers by reducing the time they spend 
searching for and compiling health plan and coverage information.
    The Departments have continued using the cost methodology that was 
used to estimate the costs presented in the 2012 final regulations. 
Since publication of the 2012 final regulations, the Departments have 
refined assumptions and estimates to incorporate better data. The 
estimates presented in these proposed regulations are a result of those 
efforts and represent the Departments' best estimates.
    The primary cost of the proposed regulations is requiring issuers 
and plans to create a third coverage example, a simple foot fracture 
(with emergency room visit). This third coverage example will fit on 
the same page as the two existing coverage examples in the SBC 
template, so no new material costs are required by these proposed 
regulations. The quantified costs of these proposed regulations are for 
the actual production of the new coverage example.
    These proposed regulations allow issuers and plans to continue to 
use the ``Coverage Example Calculator.'' \60\ This calculator benefits 
issuers and plan sponsors by reducing the required time to produce the 
coverage examples. The calculator allows plans to either manually 
populate less than 20 data points on the plan's design for one plan at 
a time, or to enter the data points for multiple plans at once. Most of 
the data fields needed for the new, proposed coverage example are 
already required to create the other two, already required coverage 
examples. While plan sponsors and issuers are not required to use the 
Coverage Example Calculator, the Departments expect that many will. 
Those choosing to perform the calculations without the calculator will 
make their own determination that it is more efficient and economically 
advantageous, or otherwise more appropriate for them to do so.
---------------------------------------------------------------------------

    \60\ http://www.cms.gov/cciio/Resources/forms-reports-and-other-resources/index.html#sbcug. For more information on the calculator, 
see section II.A.3 earlier in this preamble.
---------------------------------------------------------------------------

    Using assumptions similar to those used in the regulatory impact 
analysis of the 2012 final regulations, with respect

[[Page 78592]]

to plans and issuers that do not use the Coverage Example Calculator, 
the Departments estimate that large issuers and third-party 
administrators (TPAs), for all their plans and products, would spend a 
total of approximately 40 additional hours creating the new coverage 
example (30 hours for medium firms, and 20 hours for small firms). Once 
the new coverage example is completed, the Departments estimate that 
large firms would spend an estimated 25 hours in later years updating, 
while medium firms would spend 19 hours and small firms would spend 13 
hours.
    This leads to an estimated cost in the first year of $3.4 million 
and for each subsequent year of $2.1 million to produce the coverage 
example. Actual cost could be lower as firms organize their data in a 
manner that will allow them to use the automated functions of the 
Coverage Example Calculator. Tables 1 and 2 detail the calculations 
used to obtain the cost estimate for creating the new, proposed 
coverage example. The Paperwork Reduction Act section below contains a 
discussion of additional assumptions and data used to develop this 
estimate.

                                 Table 1--Year 1, Creating New Coverage Example
----------------------------------------------------------------------------------------------------------------
                                     Number of                                      Total hour      Equivalent
          Type of labor                firms      Hours per firm   Cost per hour      burden      costs of hours
----------------------------------------------------------------------------------------------------------------
                                                     Issuers
----------------------------------------------------------------------------------------------------------------
Large:
    IT..........................              75            22.0             $84           1,650        $138,584
    Benefits....................              75            16.0              62           1,200          74,796
    Legal.......................              75             2.0             130             150          19,491
                                 -------------------------------------------------------------------------------
        Sub-total...............  ..............  ..............  ..............           3,000         232,871
Medium:
    IT..........................             250            16.5              84           4,125         346,459
    Benefits....................             250            12.0              62           3,000         186,990
                                 -------------------------------------------------------------------------------
    Legal.......................             250             1.5             130             375          48,728
        Sub-total...............  ..............  ..............  ..............           7,500         582,176
Small:
    IT..........................             175            11.0              84           1,925         161,681
    Benefits....................             175             8.0              62           1,400          87,262
    Legal.......................             175             1.0             130             175          22,740
                                 -------------------------------------------------------------------------------
        Sub-total...............  ..............  ..............  ..............           3,500         271,682
----------------------------------------------------------------------------------------------------------------
                                                      TPAs
----------------------------------------------------------------------------------------------------------------
Large:
    IT..........................             158            22.0              84           3,476         291,949
    Benefits....................             158            16.0              62           2,528         157,570
    Legal.......................             158             2.0             130             316          41,061
                                 -------------------------------------------------------------------------------
        Sub-total...............  ..............  ..............  ..............           6,320         490,581
Medium:
    IT..........................             526            16.5              84           8,679         728,949
    Benefits....................             526            12.0              62           6,312         393,427
    Legal.......................             526             1.5             130             789         102,523
                                 -------------------------------------------------------------------------------
        Sub-total...............  ..............  ..............  ..............          15,780       1,224,899
Small:
    IT..........................             368            11.0              84           4,048         339,992
    Benefits....................             368             8.0              62           2,944         183,500
    Legal.......................             368             1.0             130             368          47,818
                                 -------------------------------------------------------------------------------
        Sub-total...............  ..............  ..............  ..............           7,360         571,309
                                 -------------------------------------------------------------------------------
            Total...............  ..............  ..............  ..............          43,460       3,373,517
----------------------------------------------------------------------------------------------------------------


                                 Table 2--Year 2, Creating New Coverage Example
----------------------------------------------------------------------------------------------------------------
                                     Number of                                      Total hour      Equivalent
          Type of labor                firms      Hours per firm   Cost per hour      burden      costs of hours
----------------------------------------------------------------------------------------------------------------
                                                     Issuers
----------------------------------------------------------------------------------------------------------------
Large:
    IT..........................              75            13.8             $84           1,031         $86,615
    Benefits....................              75            10.0              62             750          46,748
    Legal.......................              75             1.3             130              94          12,182
                                 -------------------------------------------------------------------------------
        Sub-total...............  ..............  ..............  ..............           1,875         145,544
Medium:

[[Page 78593]]

 
    IT..........................             250            10.3              84           2,578         216,537
    Benefits....................             250             7.5              62           1,875         116,869
    Legal.......................             250             0.9             130             234          30,455
                                 -------------------------------------------------------------------------------
        Sub-total...............  ..............  ..............  ..............           4,688         363,860
Small:
    IT..........................             175             6.9              84           1,203         101,050
    Benefits....................             175             5.0              62             875          54,539
    Legal.......................             175             0.6             130             109          14,212
                                 -------------------------------------------------------------------------------
        Sub-total...............  ..............  ..............  ..............           2,188         169,801
----------------------------------------------------------------------------------------------------------------
                                                      TPAs
----------------------------------------------------------------------------------------------------------------
Large:
    IT..........................             158            13.8              84           2,173         182,468
    Benefits....................             158            10.0              62           1,580          98,481
    Legal.......................             158             1.3             130             198          25,663
                                 -------------------------------------------------------------------------------
        Sub-total...............  ..............  ..............  ..............           3,950         306,613
Medium:
    IT..........................             526            10.3              84           5,424         455,593
    Benefits....................             526             7.5              62           3,945         245,892
    Legal.......................             526             0.9             130             493          64,077
                                 -------------------------------------------------------------------------------
        Sub-total...............  ..............  ..............  ..............           9,863         765,562
Small:
    IT..........................             368             6.9              84           2,530         212,495
    Benefits....................             368             5.0              62           1,840         114,687
    Legal.......................             368             0.6             130             230          29,886
                                 -------------------------------------------------------------------------------
        Sub-total...............  ..............  ..............  ..............           4,600         357,068
                                 -------------------------------------------------------------------------------
            Total...............  ..............  ..............  ..............          27,163       2,108,448
----------------------------------------------------------------------------------------------------------------

B. Paperwork Reduction Act

1. Department of Labor and Department of the Treasury
    To implement PHS Act section 2715 and these proposed regulations, 
collection of information requirements relate to the provision of the 
following:
     Summary of benefits and coverage.
     Coverage examples (as components of each SBC).
     A uniform glossary of health coverage and medical terms 
(uniform glossary).
     Notice of modifications.
    A copy of the information collection request (ICR) may be obtained 
by contacting the PRA addressee: G. Christopher Cosby, Office of Policy 
and Research, U.S. Department of Labor, Employee Benefits Security 
Administration, 200 Constitution Avenue NW., Room N-5718, Washington, 
DC 20210. Telephone: (202) 693-8410; Fax: (202) 219-4745. These are not 
toll-free numbers. Email: [email protected]. ICRs submitted to OMB also 
are available at reginfo.gov (http://www.reginfo.gov/public/do/PRAMain).
    This analysis includes the coverage examples that are part of the 
SBC disclosure, therefore, the Departments calculate a single burden 
estimate for purposes of this section, assuming the information 
collection request for the SBC (including coverage examples) totals 
eight (8) sides of a page in length.
    The Departments assume fully-insured ERISA plans will rely on 
health insurance issuers and self-insured plans will rely on TPAs to 
perform these functions. While self-insured plans may prepare SBCs 
internally, the Departments make this simplifying assumption because 
most plans appear to rely on issuers and TPAs for the purpose of 
administrative duties, such as enrollment and claims processing. Thus, 
the Departments use health insurance issuers and TPAs as the unit of 
analysis for the purposes of estimating administrative costs.
    The Departments estimate there are a total of 500 issuers and 1,050 
TPAs affected by this information collection.\61\ Because HHS shares 
the hour and cost burden for fully-insured plans with the Departments 
of Labor and the Treasury, HHS assumes 50 percent of the hour and cost 
burden estimates to account for burden for issuers in the individual 
market and 15 percent of the burden for TPAs to account for those TPAs 
serving self-insured non-Federal governmental plans. The Departments of 
Labor and the Treasury assume the other 50 percent of the burden 
related to issuers to account for burden servicing fully insured ERISA 
plans, and 85 percent of the burden related to TPAs to account for the 
burden related to ERISA self-insured plans.
---------------------------------------------------------------------------

    \61\ The estimate for the number of issuers is based on the 
number of issuers for the group and individual market filing with 
HHS for the Medical Loss Ratio regulations. See 45 CFR part 158. The 
number of TPAs is based on the U.S. Census's 2011 Statistics of U.S. 
Businesses that reports there are 3,157 TPA's. Previous discussions 
with industry experts led to assuming about one-third of the TPA's 
(1,052) could be providing services to self-insured plans.
---------------------------------------------------------------------------

    To account for variation in costs due to firm size and the number 
of plans and individuals they service, the Departments divide issuers 
into small, medium, and large categories.\62\

[[Page 78594]]

Accordingly, the Departments estimate that there are approximately 175 
small, 250 medium, and 75 large issuers. The Departments lack 
information to create a similar split for TPAs, so they assume a 
similar distribution resulting in an estimate of approximately 368 
small, 526 medium, and 158 large TPAs.
---------------------------------------------------------------------------

    \62\ The Departments define small issuers as those with total 
earned premiums less than $50 million; medium issuers as those with 
total earned premiums between $50 million and $999 million; and 
large issuers as those with total earned premiums of $1 billion or 
more. The premium revenue data come from the 2009 NAIC financial 
statements, also known as ``Blanks,'' where insurers report 
information about their various lines of business.
---------------------------------------------------------------------------

    The estimated hour burden and equivalent cost for the collections 
of information are as follows: The Departments estimate an 
administrative burden on issuers and TPAs to make appropriate changes 
to IT systems and processes and make updates to the SBCs and coverage 
examples. The Departments estimate that large firms would spend 190 
hours (40 hours of which would be new due to the proposed regulation) 
in the first year, medium firms would spend 75 percent of large firm 
hour burden, and small firms would spend 50 percent of the large firm 
hour burden to perform these tasks. The total burden would be split 
among IT professionals (55 percent), benefits professionals (40 
percent), and legal professionals (5 percent), with hourly labor rates 
of $83.99, $62.33, and $129.94 respectively.\63\ Clerical labor rates 
are $30.42 per hour.
---------------------------------------------------------------------------

    \63\ The Departments' estimated 2015 hourly labor rates include 
wages, other benefits, and overhead are calculated as follows: mean 
wage from the 2013 National Occupational Employment Survey (April 
2014, Bureau of Labor Statistics http://www.bls.gov/news.release/pdf/ocwage.pdf); wages as a percent of total compensation from the 
Employer Cost for Employee Compensation (June 2014, Bureau of Labor 
Statistics http://www.bls.gov/news.release/ecec.t02.htm); overhead 
as a multiple of compensation is assumed to be 25 percent of total 
compensation for paraprofessionals, 20 percent of compensation for 
clerical, and 35 percent of compensation for professional; annual 
inflation assumed to be 2.3 percent annual growth of total labor 
cost since 2013 (Employment Costs Index data for private industry, 
September 2014 http://www.bls.gov/news.release/eci.nr0.htm). 
Computer Systems Analysts (15-1121): $41.02(2013 BLS Wage rate)/
0.69(ECEC ratio) *1.35(Overhead Load Factor) *1.023(Inflation rate) 
-2(Inflated 2 years from base year) = $83.99; Compensation, 
benefits, and job analysis specialists (13-1141): $30.44(2013 BLS 
Wage rate)/0.69(ECEC ratio) *1.35(Overhead Load Factor) 
*1.023(Inflation rate) -2(Inflated 2 years from base year) = $62.33; 
Legal Professional (23-1011): $63.46(2013 BLS Wage rate)/0.69(ECEC 
ratio) *1.35(Overhead Load Factor) *1.023(Inflation rate) 
-2(Inflated 2 years from base year) = $129.94; Secretaries, Except 
Legal, Medical, and Executive (43-6014): $16.35(2013 BLS Wage rate)/
0.675(ECEC ratio) *1.2(Overhead Load Factor) *1.023(Inflation rate) 
-2(Inflated 2 years from base year) = $30.42.
---------------------------------------------------------------------------

    Tables 3 (first year) and 4 (subsequent years) show the 
calculations used to obtain the hours burden of 153,600 hours (first 
year) and 141,600 hours (subsequent years) and the equivalent cost 
burden of $11.9 million (first year) and $11.0 million (subsequent 
years) for issuers and TPAs to prepare the SBCs and coverage examples. 
In addition, clerical employees would spend 653,000 hours with an 
equivalent cost of $19.8 million in each year preparing and 
distributing the SBCs.
    Based on the foregoing, the total hours burden for this information 
collection would be 806,000 hours for the first year (794,000 hours for 
subsequent years) with an equivalent cost of $31.7 million for the 
first year ($30.8 million for subsequent years). This burden is split 
evenly between the Departments of Labor and the Treasury.

                             Table 3--Update SBC Including Coverage Examples, Year 1
----------------------------------------------------------------------------------------------------------------
                                     Number of                                      Total hour      Total cost
          Type of Labor                firms      Hours per firm   Cost per hour      burden          burden
----------------------------------------------------------------------------------------------------------------
                                                     Issuers
----------------------------------------------------------------------------------------------------------------
Large:
    IT..........................              75            52.3              84           3,919         329,136
    Benefits....................              75            38.0              62           2,850         177,641
    Legal.......................              75             4.8             130             356          46,291
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............           7,125         553,067
Medium:
    IT..........................             250            39.9              84           9,969         837,275
    Benefits....................             250            29.0              62           7,250         451,893
    Legal.......................             250             3.6             130             906         117,758
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............          18,125       1,406,926
Small:
    IT..........................             175            26.1              84           4,572         383,992
    Benefits....................             175            19.0              62           3,325         207,247
    Legal.......................             175             2.4             130             416          54,006
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............           8,313         645,245
----------------------------------------------------------------------------------------------------------------
                                                      TPAs
----------------------------------------------------------------------------------------------------------------
Large:
    IT..........................             158            88.8              84          14,034       1,178,745
    Benefits....................             158            64.6              62          10,207         636,190
    Legal.......................             158             8.1             130           1,276         165,784
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............          25,517       1,980,719
Medium:
    IT..........................             526            67.8              84          35,656       2,994,766
    Benefits....................             526            49.3              62          25,932       1,616,329
    Legal.......................             526             6.2             130           3,241         421,197
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............          64,830       5,032,293
----------------------------------------------------------------------------------------------------------------

[[Page 78595]]

 
                                                      Small
----------------------------------------------------------------------------------------------------------------
IT..............................             368            44.4              84          16,344       1,372,716
    Benefits....................             368            32.3              62          11,886         740,879
    Legal.......................             368             4.0             130           1,486         193,065
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............          29,716       2,306,660
                                 -------------------------------------------------------------------------------
            Total...............  ..............  ..............  ..............         153,625      11,924,910
----------------------------------------------------------------------------------------------------------------



                        TABLE 4--Update SBC Including Coverage Examples, Subsequent Years
----------------------------------------------------------------------------------------------------------------
                                     Number of                                      Total hour      Total cost
          Type of Labor                firms      Hours per firm   Cost per hour      burden          burden
----------------------------------------------------------------------------------------------------------------
                                                     Issuers
----------------------------------------------------------------------------------------------------------------
Large
    IT..........................              75            48.1              84           3,609         303,151
    Benefits....................              75            35.0              62           2,625         163,616
    Legal.......................              75             4.4             130             328          42,637
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............           6,563         509,404
Medium
    IT..........................             250            36.8              84           9,195         772,314
    Benefits....................             250            26.8              62           6,688         416,832
    Legal.......................             250             3.3             130             836         108,622
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............          16,719       1,297,768
                                 -------------------------------------------------------------------------------
Small:
    IT..........................             175            24.1              84           4,211         353,677
    Benefits....................             175            17.5              62           3,063         190,886
    Legal.......................             175             2.2             130             383          49,743
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............           7,656         594,305
----------------------------------------------------------------------------------------------------------------
                                                      TPAs
----------------------------------------------------------------------------------------------------------------
Large
    IT..........................             158            81.8              84          12,926       1,085,686
    Benefits....................             158            59.5              62           9,401         585,964
    Legal.......................             158             7.4             130           1,175         152,696
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............          23,503       1,824,346
Medium:
    IT..........................             526            62.5              84          32,890       2,762,414
    Benefits....................             526            45.5              62          23,920       1,490,924
    Legal.......................             526             5.7             130           2,990         388,518
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............          59,800       4,641,856
                                 -------------------------------------------------------------------------------
Small
    IT..........................             368            40.9              84          15,054       1,264,343
    Benefits....................             368            29.8              62          10,948         682,389
    Legal.......................             368             3.7             130           1,369         177,823
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............          27,370       2,124,555
                                 -------------------------------------------------------------------------------
            Total...............  ..............  ..............  ..............         141,610      10,992,235
----------------------------------------------------------------------------------------------------------------

    The Departments also estimate the cost burden associated with the 
SBC, Uniform Glossary and Notice of Modification. These costs are 
discussed below.
     SBC--The Departments estimate that approximately 60.6 
million SBCs will be delivered with 527,000 going to ERISA plans and 
60.1 million going to participants and beneficiaries

[[Page 78596]]

annually.\64\ The Departments assume 50 percent of the SBCs going to 
plans would be sent electronically while 38 percent of SBCs would be 
sent electronically to plan participants. Accordingly, the Departments 
estimate that about 23.4 million SBCs would be distributed 
electronically and about 37.2 million SBCs would be distributed on 
paper. The Departments assume there are costs only for paper 
disclosures, with de minimis costs for electronic disclosures. The SBC, 
with coverage examples, is assumed to be four double-sided pages (eight 
page sides) in length. Paper SBCs sent to participants would have no 
postage costs as they could be included in mailings with other plan 
materials, however all notices sent to beneficiaries living apart from 
the participant would be mailed and have a 49 cent postage costs. 
Printing costs would be five cents per page. Each document sent by mail 
would have a one minute preparation burden, with the task performed by 
a clerical worker. Based on the foregoing, the total cost burden to 
prepare and distribute the SBC would be $16.4 million.
---------------------------------------------------------------------------

    \64\ Based on the 2012 Current Population Survey the Department 
estimates there are 58.0 million policy holders in ERISA plans 
http://www.dol.gov/ebsa/pdf/coveragebulletin2013.pdf table 2.
---------------------------------------------------------------------------

     Uniform Glossary--The Departments assume that 2.5 percent 
of those who receive paper SBCs will request glossaries in paper form 
(that is, about 1.1 million glossary requests). The total cost burden 
to prepare and distribute paper copies of the Uniform Glossaries would 
be $760,000.
     Notice of Modifications--The Departments assume that 
issuers and plans will send notices of modification to covered 
participants and beneficiaries, and that 2 percent of covered 
participants and beneficiaries will receive such notices (1.2 million 
notices). As with the SBC, 50 percent of plans and 38 percent of policy 
holders will receive electronic notices. Paper notices are assumed to 
be of the same length as an SBC, and will incur a postage cost of 49 
cents. The total cost burden to prepare and distribute the notices of 
modification would be $640,000.
    Based on the foregoing, the total annual cost burden is estimated 
to be $16.4 million. This burden is split evenly between the 
Departments of Labor and the Treasury.

                            Table 5--Preparation and Distribution Costs: Cost Burden
----------------------------------------------------------------------------------------------------------------
                                                     Number of
                                     Number of      disclosures    Material and    Postage costs    Total cost
                                    disclosures    sent on paper  printing costs                      burden
----------------------------------------------------------------------------------------------------------------
SBC with Coverage Examples to
 Group Health Plan:
    Renewal or Application......         527,328         263,664        $105,466              $0        $105,466
                                 -------------------------------------------------------------------------------
        Sub-total...............         527,328         263,664         105,466               0         105,466
SBC with Coverage Examples to
 Participants and Beneficiaries:
    Upon Application or                2,030,000       1,015,000         406,000               0         406,000
     Eligibility................
    Upon Renewal................      58,000,000      35,960,000      14,384,000               0      14,384,000
    Beneficiaries Living Apart..          90,000          90,000          36,000          44,100          80,100
                                 -------------------------------------------------------------------------------
        Sub-total...............      60,120,000      36,975,000      14,826,000          44,100      14,870,100
Uniform Glossary................       1,102,000       1,102,000         220,400         539,980         760,380
Notice of Modification..........       1,160,000         719,200         287,680         352,408         640,088
                                 -------------------------------------------------------------------------------
            Total...............      62,909,328      39,059,864      15,439,546         936,488      16,376,034
----------------------------------------------------------------------------------------------------------------


                                                Table 6--Preparation and Distribution Costs: Hour Burden
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Number of                                                         Total
                                                             Number of      disclosures   Clerical hours  Clerical costs    Total hour      equivalent
                                                            disclosures    sent on paper                                      burden           cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
SBC with Coverage Examples to Group Health Plan:
    Renewal or Application..............................         527,328         263,664           4,394        $130,074           4,394        $130,074
                                                         -----------------------------------------------------------------------------------------------
        Sub-total.......................................         527,328         263,664           4,394         130,074           4,394         130,074
SBC with Coverage Examples To Participants and
 Beneficiaries:
    Upon Application or Eligibility.....................       2,030,000       1,015,000          16,917         500,733          16,917         500,733
    Upon Renewal........................................      58,000,000      35,960,000         599,333      17,740,267         599,333      17,740,267
    Beneficiaries Living Apart..........................          90,000          90,000           1,500          44,400           1,500          44,400
                                                         -----------------------------------------------------------------------------------------------
        Sub-total.......................................      60,120,000      36,975,000         617,750      18,285,400         617,750      18,285,400
Uniform Glossary........................................       1,102,000       1,102,000          18,367         543,653          18,367         543,653
Notice of Modification..................................       1,160,000         719,200          11,987         354,805          11,987         354,805
                                                         -----------------------------------------------------------------------------------------------
            Total.......................................      62,909,328      39,059,864         652,498      19,313,933         652,498      19,313,933
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Departments note that persons are not required to respond to, 
and generally are not subject to any penalty for failing to comply 
with, an ICR unless the ICR has a valid OMB control number. The 2015-
2017 paperwork

[[Page 78597]]

burden estimates are summarized as follows:
    Type of Review:
    Agencies: Employee Benefits Security Administration, Department of 
Labor; Internal Revenue Service, U.S. Department of the Treasury.
    Title: Affordable Care Act Uniform Explanation of Coverage 
Documents
    OMB Number: 1210-0147; 1545-2229.
    Affected Public: Business or other for profit; not-for-profit 
institutions.
    Total Respondents: 2,389,000.
    Total Responses: 62,909,000.
    Frequency of Response: On-going.
    Estimated Total Annual Burden Hours (three year average): 399,000 
hours (Employee Benefits Security Administration); 399,000 hours 
(Internal Revenue Service).
    Estimated Total Annual Cost Burden (three year average): $8,188,000 
(Employee Benefits Security Administration); $8,188,000 (Internal 
Revenue Service).
2. Department of Health and Human Services
    The Paperwork Reduction Act (PRA) section for the Departments of 
Labor and the Treasury above contain the assumptions, data sources, and 
explanations of the Departments' methodology for estimating the PRA 
burden. The following tables summarize the Department of Health and 
Human Services' burden estimates.

                             Table 7--Update SBC Including Coverage Examples; Year 1
----------------------------------------------------------------------------------------------------------------
                                     Number of                                      Total hour      Equivalent
          Type of labor                firms      Hours per firm   Cost per hour      burden           costs
----------------------------------------------------------------------------------------------------------------
                                                     Issuers
----------------------------------------------------------------------------------------------------------------
Large:
    IT..........................              75            52.3             $84           3,919        $329,136
    Benefits....................              75            38.0              62           2,850         177,641
    Legal.......................              75             4.8             130             356          46,291
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............           7,125         553,067
Medium:
    IT..........................             250            39.9              84           9,969         837,275
    Benefits....................             250            29.0              62           7,250         451,893
    Legal.......................             250             3.6             130             906         117,758
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............          18,125       1,406,926
Small:
    IT..........................             175            26.1              84           4,572         383,992
    Benefits....................             175            19.0              62           3,325         207,247
    Legal.......................             175             2.4             130             416          54,006
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............           8,313         645,245
----------------------------------------------------------------------------------------------------------------
                                                      TPAs
----------------------------------------------------------------------------------------------------------------
Large:
    IT..........................             158            15.7              84           2,477         208,014
    Benefits....................             158            11.4              62           1,801         112,269
    Legal.......................             158             1.4             130             225          29,256
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............           4,503         349,539
Medium:
    IT..........................             526            12.0              84           6,292         528,488
    Benefits....................             526             8.7              62           4,576         285,235
    Legal.......................             526             1.1             130             572          74,329
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............          11,441         888,052
Small:
    IT..........................             368             7.8              84           2,884         242,244
    Benefits....................             368             5.7              62           2,098         130,743
    Legal.......................             368             0.7             130             262          34,070
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............           5,244         407,058
                                 -------------------------------------------------------------------------------
            Total...............  ..............  ..............  ..............          54,750       4,249,887
----------------------------------------------------------------------------------------------------------------


                        Table 8--Update SBC Including Coverage Examples, Subsequent Years
----------------------------------------------------------------------------------------------------------------
                                     Number of                                      Total hour      Equivalent
          Type of labor                firms      Hours per firm   Cost per hour      burden           costs
----------------------------------------------------------------------------------------------------------------
                                                     Issuers
----------------------------------------------------------------------------------------------------------------
Large:
    IT..........................              75            48.1             $84           3,609        $303,151
    Benefits....................              75            35.0              62           2,625         163,616
    Legal.......................              75             4.4             130             328          42,637
                                 -------------------------------------------------------------------------------

[[Page 78598]]

 
        Sub-Total...............  ..............  ..............  ..............           6,563         509,404
Medium:
    IT..........................             250            36.8              84           9,195         772,314
    Benefits....................             250            26.8              62           6,688         416,832
    Legal.......................             250             3.3             130             836         108,622
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............          16,719       1,297,768
Small:
    IT..........................             175            24.1              84           4,211         353,677
    Benefits....................             175            17.5              62           3,063         190,886
    Legal.......................             175             2.2             130             383          49,743
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............           7,656         594,305
----------------------------------------------------------------------------------------------------------------
                                                      TPAs
----------------------------------------------------------------------------------------------------------------
Large:
    IT..........................             158            14.4              84           2,281         191,592
    Benefits....................             158            10.5              62           1,659         103,405
    Legal.......................             158             1.3             130             207          26,946
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............           4,148         321,943
                                 -------------------------------------------------------------------------------
Medium:
    IT..........................             526            11.0              84           5,804         487,485
    Benefits....................             526             8.0              62           4,221         263,104
    Legal.......................             526             1.0             130             528          68,562
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............          10,553         819,151
Small:
    IT..........................             368             7.2              84           2,657         223,119
    Benefits....................             368             5.3              62           1,932         120,422
    Legal.......................             368             0.7             130             242          31,381
                                 -------------------------------------------------------------------------------
        Sub-Total...............  ..............  ..............  ..............           4,830         374,922
                                 -------------------------------------------------------------------------------
            Total...............  ..............  ..............  ..............          50,468       3,917,493
----------------------------------------------------------------------------------------------------------------


                                   Table 9--Preparation and Distribution Costs
----------------------------------------------------------------------------------------------------------------
                                                                     Number of                         Total
                                                     Number of      disclosures    Clerical hour    equivalent
                                                    disclosures    sent on paper      burden           cost
----------------------------------------------------------------------------------------------------------------
Group Health Plan:
    SBC with Coverage Examples..................          15,750           7,875          131.25          $3,885
SBC with Coverage Examples--Participants and
 Beneficiaries:
    Upon Application or Eligibility.............         222,680         111,340        1,855.67          54,928
    Upon Renewal................................      17,129,262       8,564,631      142,743.85       4,225,218
    Beneficiaries Living Apart..................          33,000          33,000          550.00          16,280
                                                 ---------------------------------------------------------------
        Sub-Total...............................      17,384,942       8,708,971         145,150       4,296,426
Uniform Glossary................................         428,232         428,232           7,137         211,261
Notice of Modification..........................         342,585         171,293           2,855          84,504
Individual Market:
    SBC with Coverage Examples..................      21,784,217       6,535,265         108,921       3,224,064
    Uniform Glossary............................         762,448         762,448          12,707         376,141
    Notice of Modification......................      435,684.34         130,705           2,178          64,481
                                                 ---------------------------------------------------------------
            Total...............................      41,153,858      16,744,788         279,080       8,260,762
----------------------------------------------------------------------------------------------------------------


                                  Table 10--Preparation and Distribution Costs
----------------------------------------------------------------------------------------------------------------
                                                     Number of
                                     Number of      disclosures    Material and    Postage costs    Total cost
                                    disclosures    sent on paper  printing costs                      burden
----------------------------------------------------------------------------------------------------------------
Group Health Plan:
    SBC with Coverage Examples..          15,750           7,875          $3,150  ..............          $3,150
SBC with Coverage Examples--
 Participants and Beneficiaries:

[[Page 78599]]

 
    Upon Application or                  222,680         111,340          44,536  ..............          44,536
     Eligibility................
    Upon Renewal................      17,129,262       8,564,631       3,425,852  ..............       3,425,852
    Beneficiaries Living Apart..          33,000          33,000          13,200         $16,170          29,370
                                 -------------------------------------------------------------------------------
        Sub-Total...............      17,384,942       8,708,971       3,483,588          16,170       3,499,758
Uniform Glossary................         428,232         428,232          85,646         209,833         295,480
Notice of Modification..........         342,585         171,293          68,517          83,933         152,450
Individual Market:
    SBC with Coverage Examples..      21,784,217       6,535,265       2,614,106  ..............       2,614,106
    Uniform Glossary............         762,448         762,448         152,490         373,599         526,089
    Notice of Modification......      435,684.34         130,705          52,282          64,046         116,328
                                 -------------------------------------------------------------------------------
            Total...............      41,153,858      16,744,788       6,459,780         747,582       7,207,361
----------------------------------------------------------------------------------------------------------------

    HHS is proposing that issuers be required to make available on an 
Internet web address a copy of the actual individual coverage policy or 
group certificate of coverage.\65\ HHS estimates that the burden of 
this request will be de minimis because the documents will have already 
been created and issuers already have web addresses on which the 
materials can be made available.
---------------------------------------------------------------------------

    \65\ See proposed 45 CFR 147.200(a)(2)(i)(J).
---------------------------------------------------------------------------

    The Department notes that persons are not required to respond to, 
and generally are not subject to any penalty for failing to comply 
with, an ICR unless the ICR has a valid OMB control number.
    The 2015-2017 paperwork burden estimates are summarized as follows:
    Type of Review: Revision.
    Agency: Department of Health and Human Services.
    Title: Summary of benefits and Coverage Uniform Glossary
    CMS Identifier (OMB Control Number): CMS-10407 (0938-1146).
    Affected Public: State, Local, or Tribal Governments.
    Total Respondents: 126,500.
    Total Responses: 41,154,000.
    Frequency of Response: On-going.
    Estimated Total Annual Burden Hours (three year average): 331,000 
hours.
    Estimated Total Annual Cost Burden (three year average): 
$7,207,000.
ICRs Related to Deemed Compliance Reporting (45 CFR 
147.200(a)(4)(iii)(C))
    Under 45 CFR 147.200(a)(4)(iii)(C), if individual health insurance 
issuers provide the content required for the SBC to the federal health 
reform Web portal described in 45 CFR 159.120 (HealthCare.gov), then 
they will be deemed to have satisfied the requirement to provide an SBC 
to individuals who request information about coverage prior to 
submitting an application for coverage. Individual health insurance 
issuers already provide most SBC content elements to HealthCare.gov, 
except for five data elements related to patient responsibility for 
each coverage example: Deductibles, co-payments, co-insurance, coverage 
limits or exclusions, and the total out-of-pocket cost to the enrollee 
in view of these cost-sharing amounts and coverage limits or 
exclusions.
    Accordingly, the additional burden associated with the requirements 
under Sec.  147.200(a)(4)(iii)(C) is the time and effort it would take 
each of the 320 issuers submitting this data in the individual market 
to enter the five additional data elements into an Excel spreadsheet. 
We estimate that it will take these issuers about 160 hours, at a total 
estimated cost of about $4,800, for each coverage example. For three 
coverage examples, the burden and cost would be about 480 hours at a 
cost of about $14,400.
    In deriving these figures, we used the following hourly labor rates 
and estimated the time to complete each task: $ 30.78/hr. and 0.5 hr./
issuer for clerical staff to enter data into an Excel spreadsheet, or 
about $15 per respondent per coverage example.
    This information collection requirement reflects the requirement 
that issuers must provide all content required in the SBC, including 
the information necessary for coverage examples, to HealthCare.gov to 
be deemed compliant. The aforementioned burden estimates will be 
submitted for OMB review and approval as a revision to the information 
collection request currently approved under OMB control number 0938-
1086.
    To obtain copies of the supporting statement and any related forms 
for the proposed paperwork collections referenced above, access CMS' 
Web site at http://www.cms.gov/PaperworkReductionActof1995/PRAL/list.asp#TopOfPage or email your request, including your address, phone 
number, OMB control number, and CMS document identifier, to 
[email protected], or call the Reports Clearance Office at 410-786-
1326.

C. 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. Unless the head of an agency certifies that a proposed 
rule is not 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 
(IRFA) describing the rule's impact on small entities and explaining 
how the agency made its decisions with respect to the application of 
the rule to small entities.
    The RFA generally defines a ``small entity'' as (1) a proprietary 
firm meeting the size standards of the Small Business Administration 
(SBA) (13 CFR 121.201) pursuant to the Small Business Act (15 U.S.C. 
631 et seq.), (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.'')
    There are several different types of small entities affected by 
these proposed regulations. For issuers and TPAs, the Departments use 
as their measure of significant economic impact on a

[[Page 78600]]

substantial number of small entities a change in revenues of more than 
3 to 5 percent. For plans, the Departments continue to consider a small 
plan to be an employee benefit plan with fewer than 100 
participants.\66\ Further, while some large employers may have small 
plans, in general small employers maintain most small plans. Thus, the 
Departments believe that assessing the impact of this proposed rule on 
small plans is an appropriate substitute for evaluating the effect on 
small entities. The definition of small entity considered appropriate 
for this purpose differs, however, from a definition of small business 
that is based on size standards promulgated by the Small Business 
Administration (SBA) (13 CFR 121.201) pursuant to the Small Business 
Act (15 U.S.C. 631 et seq.). The Departments therefore request comments 
on the appropriateness of the size standard used in evaluating the 
impact of these proposed regulations on small entities.
---------------------------------------------------------------------------

    \66\ The basis for this definition is found in section 104(a)(2) 
of ERISA, which permits the Secretary of Labor to prescribe 
simplified annual reports for pension plans that cover fewer than 
100 participants.
---------------------------------------------------------------------------

    The Departments carefully considered the likely impact of the rule 
on small entities in connection with their assessment under Executive 
Order 12866. The Departments believe that the proposed regulations 
include flexibility like allowing use of the Coverage Example 
Calculator that would minimize the burden on small entities. Also, the 
Departments believe that the burden imposed by the proposed regulation 
on small insurers and small TPAs will be 20 hours or less annually.
    The Departments hereby certify that these proposed regulations will 
not have a significant economic impact on a substantial number of small 
entities, as described above. Consistent with the policy of the RFA, 
the Departments encourage the public to submit comments that would 
allow the Departments to assess the impacts specifically on small 
entities or suggest alternative rules that accomplish the stated 
purpose of PHS Act section 2715 and minimize the impact on small 
entities.

D. Unfunded Mandates Reform Act--Department of Labor and Department of 
Health and Human Services

    Section 202 of the Unfunded Mandates Reform Act (UMRA) of 1995 
requires that agencies assess anticipated costs and benefits before 
issuing any proposed 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. These proposed 
regulations include no mandates on State, local, or Tribal governments. 
These proposed regulations propose requirements regarding standardized 
consumer disclosures that would affect private sector firms (for 
example, health insurance issuers offering coverage in the individual 
and group markets, and third-party administrators providing 
administrative services to group health plans), but we conclude that 
these costs would not exceed the $141 million threshold. Thus, the 
Departments of Labor and HHS conclude that these proposed regulations 
would not impose an unfunded mandate on State, local or Tribal 
governments or the private sector. Regardless, consistent with policy 
embodied in UMRA, the proposed requirements described in this notice of 
proposed rulemaking 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.

E. Federalism Statement--Department of Labor and Department of Health 
and Human Services

    Executive Order 13132 outlines fundamental principles of 
federalism, and requires the adherence to specific criteria by Federal 
agencies in the process of their formulation and implementation of 
policies that have ``substantial direct effects'' on the States, the 
relationship between the national government and States, or on the 
distribution of power and responsibilities among the various levels of 
government. Federal agencies promulgating regulations that have 
federalism implications must consult with State and local officials and 
describe the extent of their consultation and the nature of the 
concerns of State and local officials in the preamble to the 
regulation.
    In the Departments of Labor's and HHS' view, these proposed rules 
have federalism implications because they would have direct effects on 
the States, the relationship between national governments and States, 
or on the distribution of power and responsibilities among various 
levels of government relating to the disclosure of health insurance 
coverage information to consumers. Under these proposed rules, all 
group health plans and health insurance issuers offering group or 
individual health insurance coverage, including self-funded non-federal 
governmental plans as defined in section 2791 of the PHS Act, would be 
required to follow uniform standards for compiling and providing a 
summary of benefits and coverage to consumers. Such Federal standards 
developed under PHS Act section 2715(a) would preempt any related State 
standards that require a summary of benefits and coverage that provides 
less information to consumers than that required to be provided under 
PHS Act section 2715(a).
    In general, through section 514, ERISA supersedes State laws to the 
extent that they relate to any covered employee benefit plan, and 
preserves State laws that regulate insurance, banking, or securities. 
While ERISA prohibits States from regulating a plan as an insurance or 
investment company or bank, the preemption provisions of section 731 of 
ERISA and section 2724 of the PHS Act (implemented in 29 CFR 
2590.731(a) and 45 CFR 146.143(a)) apply so that the HIPAA requirements 
(including those of the Affordable Care Act) are not to be ``construed 
to supersede any provision of State law which establishes, implements, 
or continues in effect any standard or requirement solely relating to 
health insurance issuers in connection with group health insurance 
coverage except to the extent that such standard or requirement 
prevents the application of a requirement'' of a Federal standard. The 
conference report accompanying HIPAA indicates that this is intended to 
be the ``narrowest'' preemption of State laws (See House Conf. Rep. No. 
104-736, at 205, reprinted in 1996 U.S. Code Cong. & Admin. News 2018).
    States may continue to apply State law requirements except to the 
extent that such requirements prevent the application of the Affordable 
Care Act requirements that are the subject of this rulemaking. 
Accordingly, States have significant latitude to impose requirements on 
health insurance issuers that are more restrictive than the Federal 
law. However, under these proposed rules, a State would not be allowed 
to impose a requirement that modifies the summary of benefits and 
coverage required to be provided under PHS Act section 2715(a), because 
it would prevent the application of this proposed rule's uniform 
disclosure requirement.
    In compliance with the requirement of Executive Order 13132 that 
agencies examine closely any policies that may have federalism 
implications or limit the policy making discretion of the States, the 
Departments of Labor and HHS have engaged in efforts to consult

[[Page 78601]]

with and work cooperatively with affected States, including consulting 
with, and attending conferences of, the National Association of 
Insurance Commissioners and consulting with State insurance officials 
on an individual basis. It is expected that the Departments of Labor 
and HHS will act in a similar fashion in enforcing the Affordable Care 
Act, including the provisions of section 2715 of the PHS Act. 
Throughout the process of developing these proposed regulations, to the 
extent feasible within the specific preemption provisions of HIPAA as 
it applies to the Affordable Care Act, the Departments of Labor and HHS 
have attempted to balance the States' interests in regulating health 
insurance issuers, and Congress' intent to provide uniform minimum 
protections to consumers in every State. By doing so, it is the 
Departments of Labor's and HHS ' view that they have complied with the 
requirements of Executive Order 13132.
    Pursuant to the requirements set forth in section 8(a) of Executive 
Order 13132, and by the signatures affixed to this proposed rule, the 
Departments certify that the Employee Benefits Security Administration 
and the Centers for Medicare & Medicaid Services have complied with the 
requirements of Executive Order 13132 for the attached proposed rule in 
a meaningful and timely manner.

F. Special Analyses--Department of the Treasury

    For purposes of the Department of the Treasury it has been 
determined that this notice of proposed rulemaking is not a significant 
regulatory action as defined in Executive Order 12866, as supplemented 
by Executive Order 13563. Therefore, a regulatory assessment is not 
required. It has also been determined that section 553(b) of the 
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to 
these proposed regulations. For a discussion of the impact of this 
proposed rule on small entities, please see section V.C. of this 
preamble. Pursuant to section 7805(f) of the Code, this notice of 
proposed rulemaking has been submitted to the Small Business 
Administration for comment on its impact on small business.

G. Congressional Review Act

    This proposed 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.

VII. Statutory Authority

    The Department of the Treasury regulations are proposed to be 
adopted pursuant to the authority contained in sections 7805 and 9833 
of the Code.
    The Department of Labor regulations are proposed to be adopted 
pursuant to the authority contained in 29 U.S.C. 1027, 1059, 1135, 
1161-1168, 1169, 1181-1183, 1181 note, 1185, 1185a, 1185b, 1185d, 1191, 
1191a, 1191b, and 1191c; sec. 101(g), Public Law 104-191, 110 Stat. 
1936; sec. 401(b), Public Law 105-200, 112 Stat. 645 (42 U.S.C. 651 
note); sec. 512(d), Public Law 110-343, 122 Stat. 3881; sec. 1001, 
1201, and 1562(e), Public Law 111-148, 124 Stat. 119, as amended by 
Public Law 111-152, 124 Stat. 1029; Secretary of Labor's Order 1-2011, 
77 FR 1088 (January 9, 2012).
    The Department of Health and Human Services regulations are 
proposed to be adopted pursuant to the authority contained in sections 
2701 through 2763, 2791, and 2792 of the PHS Act (42 U.S.C. 300gg 
through 300gg-63, 300gg-91, and 300gg-92), as amended.

List of Subjects

26 CFR Part 54

    Excise taxes, Health care, Health insurance, Pensions, Reporting 
and recordkeeping requirements.

29 CFR Part 2590

    Continuation coverage, Disclosure, Employee benefit plans, Group 
health plans, Health care, Health insurance, Medical child support, 
Reporting and recordkeeping requirements.

45 CFR Part 147

    Health care, Health insurance, Reporting and recordkeeping 
requirements, and State regulation of health insurance.

    Signed this 19th day of December, 2014.
John M. Dalrymple,
Deputy Commissioner for Services and Enforcement, Internal Revenue 
Service.
    Signed this 18th day of December, 2014.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor. CMS-9938-P
    Dated: December 18, 2014.
Marilyn Tavenner,
Administrator, Centers for Medicare & Medicaid Services.
    Dated: December 19, 2014.
Sylvia Burwell,
Secretary, Department of Health and Human Services.

Department of the Treasury

Internal Revenue Service

26 CFR Chapter 1

    Accordingly, 26 CFR part 54 is proposed to be amended as follows:

PART 54--PENSION EXCISE TAXES

0
Paragraph 1. The authority citation for Part 54 continues to read in 
part as follows:

    Authority:  Authority: 26 U.S.C. 7805. * * *
    Section 54.9815-2715 also issued under 26 U.S.C. 9833.

0
Paragraph 2. Section 54.9815-2715 is revised to read as follows:


Sec.  54.9815-2715  Summary of benefits and coverage and uniform 
glossary.

    (a) Summary of benefits and coverage--(1) In general. A group 
health plan (and its administrator as defined in section 3(16)(A) of 
the Employee Retirement Income Security Act of 1974 (ERISA)), and a 
health insurance issuer offering group health insurance coverage, is 
required to provide a written summary of benefits and coverage (SBC) 
for each benefit package without charge to entities and individuals 
described in this paragraph (a)(1) in accordance with the rules of this 
section.
    (i) SBC provided by a group health insurance issuer to a group 
health plan--(A) Upon application. A health insurance issuer offering 
group health insurance coverage must provide the SBC to a group health 
plan (or its sponsor) upon application for health coverage, as soon as 
practicable following receipt of the application, but in no event later 
than seven business days following receipt of the application. If an 
SBC was provided before application pursuant to paragraph (a)(1)(i)(D) 
of this section (relating to SBCs upon request), this paragraph 
(a)(1)(i)(A) is deemed

[[Page 78602]]

satisfied, provided there is no change to the information required to 
be in the SBC. However, if there has been a change in the information 
required, a new SBC that includes the correct information must be 
provided upon application pursuant to this paragraph (a)(1)(i)(A).
    (B) By first day of coverage (if there are changes). If there is 
any change in the information required to be in the SBC that was 
provided upon application and before the first day of coverage, the 
issuer must update and provide a current SBC to the plan (or its 
sponsor) no later than the first day of coverage.
    (C) Upon renewal, reissuance, or re-enrollment. If the issuer 
renews or reissues a policy, certificate, or contract of insurance for 
a succeeding policy year, or automatically re-enrolls the policyholder 
or its participants and beneficiaries in coverage, the issuer must 
provide a new SBC as follows:
    (1) If written application is required (in either paper or 
electronic form) for renewal or reissuance, the SBC must be provided no 
later than the date the written application materials are distributed.
    (2) If renewal, reissuance, or re-enrollment is automatic, the SBC 
must be provided no later than 30 days prior to the first day of the 
new plan or policy year; however, with respect to an insured plan, if 
the policy, certificate, or contract of insurance has not been issued 
or renewed before such 30-day period, the SBC must be provided as soon 
as practicable but in no event later than seven business days after 
issuance of the new policy, certificate, or contract of insurance, or 
the receipt of written confirmation of intent to renew, whichever is 
earlier.
    (D) Upon request. If a group health plan (or its sponsor) requests 
an SBC or summary information about a health insurance product from a 
health insurance issuer offering group health insurance coverage, an 
SBC must be provided as soon as practicable, but in no event later than 
seven business days following receipt of the request.
    (ii) SBC provided by a group health insurance issuer and a group 
health plan to participants and beneficiaries--(A) In general. A group 
health plan (including its administrator, as defined under section 
3(16) of ERISA), and a health insurance issuer offering group health 
insurance coverage, must provide an SBC to a participant or beneficiary 
(as defined under sections 3(7) and 3(8) of ERISA), and consistent with 
the rules of paragraph (a)(1)(iii) of this section, with respect to 
each benefit package offered by the plan or issuer for which the 
participant or beneficiary is eligible.
    (B) Upon application. The SBC must be provided as part of any 
written application materials that are distributed by the plan or 
issuer for enrollment. If the plan or issuer does not distribute 
written application materials for enrollment, the SBC must be provided 
no later than the first date on which the participant is eligible to 
enroll in coverage for the participant or any beneficiaries. If an SBC 
was provided before application pursuant to paragraph (a)(1)(ii)(F) of 
this section (relating to SBCs upon request), this paragraph 
(a)(1)(ii)(B) is deemed satisfied, provided there is no change to the 
information required to be in the SBC. However, if there has been is a 
change in the information content, a new SBC that includes the correct 
information must be provided upon application pursuant to this 
paragraph (a)(1)(ii)(B).
    (C) By first day of coverage (if there are changes). If there is 
any change to the information required to be in the SBC that was 
provided upon application and before the first day of coverage, the 
plan or issuer must update and provide a current SBC to a participant 
or beneficiary no later than the first day of coverage.
    (D) Special enrollees. The plan or issuer must provide the SBC to 
special enrollees (as described in Sec.  54.9801-6) no later than the 
date by which a summary plan description is required to be provided 
under the timeframe set forth in ERISA section 104(b)(1)(A) and its 
implementing regulations, which is 90 days from enrollment.
    (E) Upon renewal, reissuance, or re-enrollment. If the plan or 
issuer requires participants or beneficiaries to renew in order to 
maintain coverage (for example, for a succeeding plan year), or 
automatically re-enrolls participants and beneficiaries in coverage, 
the plan or issuer must provide a new SBC, as follows:
    (1) If written application is required for renewal, reissuance, or 
re-enrollment (in either paper or electronic form), the SBC must be 
provided no later than the date on which the written application 
materials are distributed.
    (2) If renewal, reissuance, or re-enrollment is automatic, the SBC 
must be provided no later than 30 days prior to the first day of the 
new plan or policy year; however, with respect to an insured plan, if 
the policy, certificate, or contract of insurance has not been issued 
or renewed before such 30-day period, the SBC must be provided as soon 
as practicable but in no event later than seven business days after 
issuance of the new policy, certificate, or contract of insurance, or 
the receipt of written confirmation of intent to renew, whichever is 
earlier.
    (F) Upon request. A plan or issuer must provide the SBC to 
participants or beneficiaries upon request for an SBC or summary 
information about the health coverage, as soon as practicable, but in 
no event later than seven business days following receipt of the 
request.
    (iii) Special rules to prevent unnecessary duplication with respect 
to group health coverage--(A) An entity required to provide an SBC 
under this paragraph (a)(1) with respect to an individual satisfies 
that requirement if another party provides the SBC, but only to the 
extent that the SBC is timely and complete in accordance with the other 
rules of this section. Therefore, for example, in the case of a group 
health plan funded through an insurance policy, the plan satisfies the 
requirement to provide an SBC with respect to an individual if the 
issuer provides a timely and complete SBC to the individual. An entity 
required to provide an SBC under this paragraph (a)(1) with respect to 
an individual that contracts with another party to provide such SBC is 
considered to satisfy the requirement to provide such SBC if:
    (1) The entity monitors performance under the contract;
    (2) If the entity has knowledge that the SBC is not being provided 
in a manner that satisfies the requirements of this section and the 
entity has all information necessary to correct the noncompliance, the 
entity corrects the noncompliance as soon as practicable; and
    (3) If the entity has knowledge the SBC is not being provided in a 
manner that satisfies the requirements of this section and the entity 
does not have all information necessary to correct the noncompliance, 
the entity communicates with participants and beneficiaries who are 
affected by the noncompliance regarding the regarding the 
noncompliance, and begins taking significant steps as soon as 
practicable to avoid future violations.
    (B) If a single SBC is provided to a participant and any 
beneficiaries at the participant's last known address, then the 
requirement to provide the SBC to the participant and any beneficiaries 
is generally satisfied. However, if a beneficiary's last known address 
is different than the participant's last known address, a separate SBC 
is required to be provided to the beneficiary at the beneficiary's last 
known address.
    (C) With respect to a group health plan that offers multiple 
benefit packages, the plan or issuer is required to provide a new SBC 
automatically to

[[Page 78603]]

participants and beneficiaries upon renewal or re-enrollment only with 
respect to the benefit package in which a participant or beneficiary is 
enrolled (or will be automatically re-enrolled under the plan); SBCs 
are not required to be provided automatically upon renewal or re-
enrollment with respect to benefit packages in which the participant or 
beneficiary is not enrolled (or will not automatically be enrolled). 
However, if a participant or beneficiary requests an SBC with respect 
to another benefit package (or more than one other benefit package) for 
which the participant or beneficiary is eligible, the SBC (or SBCs, in 
the case of a request for SBCs relating to more than one benefit 
package) must be provided upon request as soon as practicable, but in 
no event later than seven business days following receipt of the 
request.
    (2) Content--(i) In general. Subject to paragraph (a)(2)(iii) of 
this section, the SBC must include the following:
    (A) Uniform definitions of standard insurance terms and medical 
terms so that consumers may compare health coverage and understand the 
terms of (or exceptions to) their coverage, in accordance with guidance 
as specified by the Secretary;
    (B) A description of the coverage, including cost sharing, for each 
category of benefits identified by the Secretary in guidance;
    (C) The exceptions, reductions, and limitations of the coverage;
    (D) The cost-sharing provisions of the coverage, including 
deductible, coinsurance, and copayment obligations;
    (E) The renewability and continuation of coverage provisions;
    (F) Coverage examples, in accordance with the rules of paragraph 
(a)(2)(ii) of this section;
    (G) With respect to coverage beginning on or after January 1, 2014, 
a statement about whether the plan or coverage provides minimum 
essential coverage as defined under section 5000A(f) and whether the 
plan's or coverage's share of the total allowed costs of benefits 
provided under the plan or coverage meets applicable requirements;
    (H) A statement that the SBC is only a summary and that the plan 
document, policy, certificate, or contract of insurance should be 
consulted to determine the governing contractual provisions of the 
coverage;
    (I) Contact information for questions;
    (J) For issuers, an Internet web address where a copy of the actual 
individual coverage policy or group certificate of coverage can be 
reviewed and obtained;
    (K) For plans and issuers that maintain one or more networks of 
providers, an Internet address (or similar contact information) for 
obtaining a list of network providers;
    (L) For plans and issuers that use a formulary in providing 
prescription drug coverage, an Internet address (or similar contact 
information) for obtaining information on prescription drug coverage; 
and
    (M) An Internet address for obtaining the uniform glossary, as 
described in paragraph (c) of this section, as well as a contact phone 
number to obtain a paper copy of the uniform glossary, and a disclosure 
that paper copies are available.
    (ii) Coverage examples. The SBC must include coverage examples 
specified by the Secretary in guidance that illustrate benefits 
provided under the plan or coverage for common benefits scenarios 
(including pregnancy and serious or chronic medical conditions) in 
accordance with this paragraph (a)(2)(ii).
    (A) Number of examples. The Secretary may identify up to six 
coverage examples that may be required in an SBC.
    (B) Benefits scenarios. For purposes of this paragraph (a)(2)(ii), 
a benefits scenario is a hypothetical situation, consisting of a sample 
treatment plan for a specified medical condition during a specific 
period of time, based on recognized clinical practice guidelines as 
defined by the National Guideline Clearinghouse, Agency for Healthcare 
Research and Quality. The Secretary will specify, in guidance, the 
assumptions, including the relevant items and services and 
reimbursement information, for each claim in the benefits scenario.
    (C) Illustration of benefit provided. For purposes of this 
paragraph (a)(2)(ii), to illustrate benefits provided under the plan or 
coverage for a particular benefits scenario, a plan or issuer simulates 
claims processing in accordance with guidance issued by the Secretary 
to generate an estimate of what an individual might expect to pay under 
the plan, policy, or benefit package. The illustration of benefits 
provided will take into account any cost sharing, excluded benefits, 
and other limitations on coverage, as specified by the Secretary in 
guidance.
    (iii) Coverage provided outside the United States. In lieu of 
summarizing coverage for items and services provided outside the United 
States, a plan or issuer may provide an Internet address (or similar 
contact information) for obtaining information about benefits and 
coverage provided outside the United States. In any case, the plan or 
issuer must provide an SBC in accordance with this section that 
accurately summarizes benefits and coverage available under the plan or 
coverage within the United States.
    (3) Appearance. (i) A group health plan and a health insurance 
issuer must provide an SBC in the form, and in accordance with the 
instructions for completing the SBC, that are specified by the 
Secretary in guidance. The SBC must be presented in a uniform format, 
use terminology understandable by the average plan enrollee, not exceed 
four double-sided pages in length, and not include print smaller than 
12-point font.
    (ii) A group health plan that utilizes two or more benefit packages 
(such as major medical coverage and a health flexible spending 
arrangement) may synthesize the information into a single SBC, or 
provide multiple SBCs.
    (4) Form--(i) An SBC provided by an issuer offering group health 
insurance coverage to a plan (or its sponsor), may be provided in paper 
form. Alternatively, the SBC may be provided electronically (such as by 
email or an Internet posting) if the following three conditions are 
satisfied--
    (A) The format is readily accessible by the plan (or its sponsor);
    (B) The SBC is provided in paper form free of charge upon request; 
and
    (C) If the electronic form is an Internet posting, the issuer 
timely advises the plan (or its sponsor) in paper form or email that 
the documents are available on the Internet and provides the Internet 
address.
    (ii) An SBC provided by a group health plan or health insurance 
issuer to a participant or beneficiary may be provided in paper form. 
Alternatively, the SBC may be provided electronically (such as by email 
or an Internet posting) if the requirements of this paragraph 
(a)(4)(ii) are met.
    (A) With respect to participants and beneficiaries covered under 
the plan, the SBC may be provided electronically as described in this 
paragraph (a)(4)(ii)(A). However, in all cases, the plan must provide 
the SBC in paper form if paper form is requested.
    (1) In accordance with the Department of Labor's disclosure 
regulations at 29 CFR 2520.104b-1;
    (2) In connection with online enrollment or online renewal of 
coverage under the plan; or
    (3) In response to an online request made by a participant or 
beneficiary for the SBC.
    (B) With respect to participants and beneficiaries who are eligible 
but not enrolled for coverage, the SBC may be provided electronically 
if:

[[Page 78604]]

    (1) The format is readily accessible;
    (2) The SBC is provided in paper form free of charge upon request; 
and
    (3) In a case in which the electronic form is an Internet posting, 
the plan or issuer timely notifies the individual in paper form (such 
as a postcard) or email that the documents are available on the 
Internet, provides the Internet address, and notifies the individual 
that the documents are available in paper form upon request.
    (5) Language. A group health plan or health insurance issuer must 
provide the SBC in a culturally and linguistically appropriate manner. 
For purposes of this paragraph (a)(5), a plan or issuer is considered 
to provide the SBC in a culturally and linguistically appropriate 
manner if the thresholds and standards of 29 CFR 2590.715-2719(e) are 
met as applied to the SBC.
    (b) Notice of modification. If a group health plan, or health 
insurance issuer offering group health insurance coverage, makes any 
material modification (as defined under section 102 of ERISA) in any of 
the terms of the plan or coverage that would affect the content of the 
SBC, that is not reflected in the most recently provided SBC, and that 
occurs other than in connection with a renewal or reissuance of 
coverage, the plan or issuer must provide notice of the modification to 
enrollees not later than 60 days prior to the date on which the 
modification will become effective. The notice of modification must be 
provided in a form that is consistent with the rules of paragraph 
(a)(4) of this section.
    (c) Uniform glossary--(1) In general. A group health plan, and a 
health insurance issuer offering group health insurance coverage, must 
make available to participants and beneficiaries the uniform glossary 
described in paragraph (c)(2) of this section in accordance with the 
appearance and form and manner requirements of paragraphs (c)(3) and 
(c)(4) of this section.
    (2) Health-coverage-related terms and medical terms. The uniform 
glossary must provide uniform definitions, specified by the Secretary 
in guidance, of the following health-coverage-related terms and medical 
terms:
    (i) Allowed amount, appeal, balance billing, co-insurance, 
complications of pregnancy, co-payment, deductible, durable medical 
equipment, emergency medical condition, emergency medical 
transportation, emergency room care, emergency services, excluded 
services, grievance, habilitation services, health insurance, home 
health care, hospice services, hospitalization, hospital outpatient 
care, in-network co-insurance, in-network co-payment, medically 
necessary, network, non-preferred provider, out-of-network co-
insurance, out-of-network co-payment, out-of-pocket limit, physician 
services, plan, preauthorization, preferred provider, premium, 
prescription drug coverage, prescription drugs, primary care physician, 
primary care provider, provider, reconstructive surgery, rehabilitation 
services, skilled nursing care, specialist, usual customary and 
reasonable (UCR), and urgent care; and
    (ii) Such other terms as the Secretary determines are important to 
define so that individuals and employers may compare and understand the 
terms of coverage and medical benefits (including any exceptions to 
those benefits), as specified in guidance.
    (3) Appearance. A group health plan, and a health insurance issuer, 
must provide the uniform glossary with the appearance specified by the 
Secretary in guidance to ensure the uniform glossary is presented in a 
uniform format and uses terminology understandable by the average plan 
enrollee.
    (4) Form and manner. A plan or issuer must make the uniform 
glossary described in this paragraph (c) available upon request, in 
either paper or electronic form (as requested), within seven business 
days after receipt of the request.
    (d) Preemption. State laws that require a health insurance issuer 
to provide an SBC that supplies less information than required under 
paragraph (a) of this section are preempted.
    (e) Failure to provide. A group health plan that willfully fails to 
provide information required under this section to a participant or 
beneficiary is subject to a fine of not more than $1,000 for each such 
failure. A failure with respect to each participant or beneficiary 
constitutes a separate offense for purposes of this paragraph (e). The 
IRS will enforce this section using a process and procedure consistent 
with section 4980D of the Code.
    (f) Applicability. The requirements of this section do not apply to 
a group health plan benefit package that provides Medicare Advantage 
benefits pursuant to or 42 U.S.C. Chapter 7, Subchapter XVIII, Part C.

Department of Labor

Employee Benefits Security Administration

29 CFR Chapter XXV

    Accordingly, 29 CFR part 2590 is proposed to be amended as follows:

PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS

0
1. The authority citation for Part 2590 continues to read as follows:

    Authority:  29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a, 1185b, 1185d, 1191, 1191a, 1191b, and 
1191c; sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b), 
Pub. L. 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), 
Pub. L. 110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. 
L. 111-148, 124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 
1029; Secretary of Labor's Order 1-2011, 77 FR 1088 (January 9, 
2012).

0
2. Section 2590.715-2715 is revised to read as follows:


Sec.  2590.715-2715  Summary of benefits and coverage and uniform 
glossary.

    (a) Summary of benefits and coverage--(1) In general. A group 
health plan (and its administrator as defined in section 3(16)(A) of 
ERISA)), and a health insurance issuer offering group health insurance 
coverage, is required to provide a written summary of benefits and 
coverage (SBC) for each benefit package without charge to entities and 
individuals described in this paragraph (a)(1) in accordance with the 
rules of this section.
    (i) SBC provided by a group health insurance issuer to a group 
health plan--(A) Upon application. A health insurance issuer offering 
group health insurance coverage must provide the SBC to a group health 
plan (or its sponsor) upon application for health coverage, as soon as 
practicable following receipt of the application, but in no event later 
than seven business days following receipt of the application. If an 
SBC was provided before application pursuant to paragraph (a)(1)(i)(D) 
of this section (relating to SBCs upon request), this paragraph 
(a)(1)(i)(A) is deemed satisfied, provided there is no change to the 
information required to be in the SBC. However, if there has been a 
change in the information required, a new SBC that includes the correct 
information must be provided upon application pursuant to this 
paragraph (a)(1)(i)(A).
    (B) By first day of coverage (if there are changes). If there is 
any change in the information required to be in the SBC that was 
provided upon application and before the first day of coverage, the 
issuer must update and provide a current SBC to the plan (or its 
sponsor) no later than the first day of coverage.
    (C) Upon renewal, reissuance, or re-enrollment. If the issuer 
renews or reissues a policy, certificate, or contract of insurance for 
a succeeding policy

[[Page 78605]]

year, or automatically re-enrolls the policyholder or its participants 
and beneficiaries in coverage, the issuer must provide a new SBC as 
follows:
    (1) If written application is required (in either paper or 
electronic form) for renewal or reissuance, the SBC must be provided no 
later than the date the written application materials are distributed.
    (2) If renewal, reissuance, or re-enrollment is automatic, the SBC 
must be provided no later than 30 days prior to the first day of the 
new plan or policy year; however, with respect to an insured plan, if 
the policy, certificate, or contract of insurance has not been issued 
or renewed before such 30-day period, the SBC must be provided as soon 
as practicable but in no event later than seven business days after 
issuance of the new policy, certificate, or contract of insurance, or 
the receipt of written confirmation of intent to renew, whichever is 
earlier.
    (D) Upon request. If a group health plan (or its sponsor) requests 
an SBC or summary information about a health insurance product from a 
health insurance issuer offering group health insurance coverage, an 
SBC must be provided as soon as practicable, but in no event later than 
seven business days following receipt of the request.
    (ii) SBC provided by a group health insurance issuer and a group 
health plan to participants and beneficiaries--(A) In general. A group 
health plan (including its administrator, as defined under section 
3(16) of ERISA), and a health insurance issuer offering group health 
insurance coverage, must provide an SBC to a participant or beneficiary 
(as defined under sections 3(7) and 3(8) of ERISA), and consistent with 
the rules of paragraph (a)(1)(iii) of this section, with respect to 
each benefit package offered by the plan or issuer for which the 
participant or beneficiary is eligible.
    (B) Upon application. The SBC must be provided as part of any 
written application materials that are distributed by the plan or 
issuer for enrollment. If the plan or issuer does not distribute 
written application materials for enrollment, the SBC must be provided 
no later than the first date on which the participant is eligible to 
enroll in coverage for the participant or any beneficiaries. If an SBC 
was provided before application pursuant to paragraph (a)(1)(ii)(F) of 
this section (relating to SBCs upon request), this paragraph 
(a)(1)(ii)(B) is deemed satisfied, provided there is no change to the 
information required to be in the SBC. However, if there has been is a 
change in the information content, a new SBC that includes the correct 
information must be provided upon application pursuant to this 
paragraph (a)(1)(ii)(B).
    (C) By first day of coverage (if there are changes). If there is 
any change to the information required to be in the SBC that was 
provided upon application and before the first day of coverage, the 
plan or issuer must update and provide a current SBC to a participant 
or beneficiary no later than the first day of coverage.
    (D) Special enrollees. The plan or issuer must provide the SBC to 
special enrollees (as described in Sec.  2590.701-6) no later than the 
date by which a summary plan description is required to be provided 
under the timeframe set forth in ERISA section 104(b)(1)(A) and its 
implementing regulations, which is 90 days from enrollment.
    (E) Upon renewal, reissuance, or re-enrollment. If the plan or 
issuer requires participants or beneficiaries to renew in order to 
maintain coverage (for example, for a succeeding plan year), or 
automatically re-enrolls participants and beneficiaries in coverage, 
the plan or issuer must provide a new SBC, as follows:
    (1) If written application is required for renewal, reissuance, or 
re-enrollment (in either paper or electronic form), the SBC must be 
provided no later than the date on which the written application 
materials are distributed.
    (2) If renewal, reissuance, or re-enrollment is automatic, the SBC 
must be provided no later than 30 days prior to the first day of the 
new plan or policy year; however, with respect to an insured plan, if 
the policy, certificate, or contract of insurance has not been issued 
or renewed before such 30-day period, the SBC must be provided as soon 
as practicable but in no event later than seven business days after 
issuance of the new policy, certificate, or contract of insurance, or 
the receipt of written confirmation of intent to renew, whichever is 
earlier.
    (F) Upon request. A plan or issuer must provide the SBC to 
participants or beneficiaries upon request for an SBC or summary 
information about the health coverage, as soon as practicable, but in 
no event later than seven business days following receipt of the 
request.
    (iii) Special rules to prevent unnecessary duplication with respect 
to group health coverage--(A) An entity required to provide an SBC 
under this paragraph (a)(1) with respect to an individual satisfies 
that requirement if another party provides the SBC, but only to the 
extent that the SBC is timely and complete in accordance with the other 
rules of this section. Therefore, for example, in the case of a group 
health plan funded through an insurance policy, the plan satisfies the 
requirement to provide an SBC with respect to an individual if the 
issuer provides a timely and complete SBC to the individual. An entity 
required to provide an SBC under this paragraph (a)(1) with respect to 
an individual that contracts with another party to provide such SBC is 
considered to satisfy the requirement to provide such SBC if:
    (1) The entity monitors performance under the contract;
    (2) If the entity has knowledge that the SBC is not being provided 
in a manner that satisfies the requirements of this section and the 
entity has all information necessary to correct the noncompliance, the 
entity corrects the noncompliance as soon as practicable; and
    (3) If the entity has knowledge the SBC is not being provided in a 
manner that satisfies the requirements of this section and the entity 
does not have all information necessary to correct the noncompliance, 
the entity communicates with participants and beneficiaries who are 
affected by the noncompliance regarding the regarding the 
noncompliance, and begins taking significant steps as soon as 
practicable to avoid future violations.
    (B) If a single SBC is provided to a participant and any 
beneficiaries at the participant's last known address, then the 
requirement to provide the SBC to the participant and any beneficiaries 
is generally satisfied. However, if a beneficiary's last known address 
is different than the participant's last known address, a separate SBC 
is required to be provided to the beneficiary at the beneficiary's last 
known address.
    (C) With respect to a group health plan that offers multiple 
benefit packages, the plan or issuer is required to provide a new SBC 
automatically to participants and beneficiaries upon renewal or re-
enrollment only with respect to the benefit package in which a 
participant or beneficiary is enrolled (or will be automatically re-
enrolled under the plan); SBCs are not required to be provided 
automatically upon renewal or re-enrollment with respect to benefit 
packages in which the participant or beneficiary is not enrolled (or 
will not automatically be enrolled). However, if a participant or 
beneficiary requests an SBC with respect to another benefit package (or 
more than one other benefit package) for which the participant or 
beneficiary is eligible, the SBC (or SBCs, in the case of a request for 
SBCs relating to more than one benefit package) must be provided upon 
request as soon as practicable, but in no

[[Page 78606]]

event later than seven business days following receipt of the request.
    (2) Content--(i) In general. Subject to paragraph (a)(2)(iii) of 
this section, the SBC must include the following:
    (A) Uniform definitions of standard insurance terms and medical 
terms so that consumers may compare health coverage and understand the 
terms of (or exceptions to) their coverage, in accordance with guidance 
as specified by the Secretary;
    (B) A description of the coverage, including cost sharing, for each 
category of benefits identified by the Secretary in guidance;
    (C) The exceptions, reductions, and limitations of the coverage;
    (D) The cost-sharing provisions of the coverage, including 
deductible, coinsurance, and copayment obligations;
    (E) The renewability and continuation of coverage provisions;
    (F) Coverage examples, in accordance with the rules of paragraph 
(a)(2)(ii) of this section;
    (G) With respect to coverage beginning on or after January 1, 2014, 
a statement about whether the plan or coverage provides minimum 
essential coverage as defined under section 5000A(f) and whether the 
plan's or coverage's share of the total allowed costs of benefits 
provided under the plan or coverage meets applicable requirements;
    (H) A statement that the SBC is only a summary and that the plan 
document, policy, certificate, or contract of insurance should be 
consulted to determine the governing contractual provisions of the 
coverage;
    (I) Contact information for questions;
    (J) For issuers, an Internet web address where a copy of the actual 
individual coverage policy or group certificate of coverage can be 
reviewed and obtained;
    (K) For plans and issuers that maintain one or more networks of 
providers, an Internet address (or similar contact information) for 
obtaining a list of network providers;
    (L) For plans and issuers that use a formulary in providing 
prescription drug coverage, an Internet address (or similar contact 
information) for obtaining information on prescription drug coverage; 
and
    (M) An Internet address for obtaining the uniform glossary, as 
described in paragraph (c) of this section, as well as a contact phone 
number to obtain a paper copy of the uniform glossary, and a disclosure 
that paper copies are available.
    (ii) Coverage examples. The SBC must include coverage examples 
specified by the Secretary in guidance that illustrate benefits 
provided under the plan or coverage for common benefits scenarios 
(including pregnancy and serious or chronic medical conditions) in 
accordance with this paragraph (a)(2)(ii).
    (A) Number of examples. The Secretary may identify up to six 
coverage examples that may be required in an SBC.
    (B) Benefits scenarios. For purposes of this paragraph (a)(2)(ii), 
a benefits scenario is a hypothetical situation, consisting of a sample 
treatment plan for a specified medical condition during a specific 
period of time, based on recognized clinical practice guidelines as 
defined by the National Guideline Clearinghouse, Agency for Healthcare 
Research and Quality. The Secretary will specify, in guidance, the 
assumptions, including the relevant items and services and 
reimbursement information, for each claim in the benefits scenario.
    (C) Illustration of benefit provided. For purposes of this 
paragraph (a)(2)(ii), to illustrate benefits provided under the plan or 
coverage for a particular benefits scenario, a plan or issuer simulates 
claims processing in accordance with guidance issued by the Secretary 
to generate an estimate of what an individual might expect to pay under 
the plan, policy, or benefit package. The illustration of benefits 
provided will take into account any cost sharing, excluded benefits, 
and other limitations on coverage, as specified by the Secretary in 
guidance.
    (iii) Coverage provided outside the United States. In lieu of 
summarizing coverage for items and services provided outside the United 
States, a plan or issuer may provide an Internet address (or similar 
contact information) for obtaining information about benefits and 
coverage provided outside the United States. In any case, the plan or 
issuer must provide an SBC in accordance with this section that 
accurately summarizes benefits and coverage available under the plan or 
coverage within the United States.
    (3) Appearance. (i) A group health plan and a health insurance 
issuer must provide an SBC in the form, and in accordance with the 
instructions for completing the SBC, that are specified by the 
Secretary in guidance. The SBC must be presented in a uniform format, 
use terminology understandable by the average plan enrollee, not exceed 
four double-sided pages in length, and not include print smaller than 
12-point font.
    (ii) A group health plan that utilizes two or more benefit packages 
(such as major medical coverage and a health flexible spending 
arrangement) may synthesize the information into a single SBC, or 
provide multiple SBCs.
    (4) Form--(i) An SBC provided by an issuer offering group health 
insurance coverage to a plan (or its sponsor), may be provided in paper 
form. Alternatively, the SBC may be provided electronically (such as by 
email or an Internet posting) if the following three conditions are 
satisfied--
    (A) The format is readily accessible by the plan (or its sponsor);
    (B) The SBC is provided in paper form free of charge upon request; 
and
    (C) If the electronic form is an Internet posting, the issuer 
timely advises the plan (or its sponsor) in paper form or email that 
the documents are available on the Internet and provides the Internet 
address.
    (ii) An SBC provided by a group health plan or health insurance 
issuer to a participant or beneficiary may be provided in paper form. 
Alternatively, the SBC may be provided electronically (such as by email 
or an Internet posting) if the requirements of this paragraph 
(a)(4)(ii) are met.
    (A) With respect to participants and beneficiaries covered under 
the plan, the SBC may be provided electronically as described in this 
paragraph (a)(4)(ii)(A). However, in all cases, the plan must provide 
the SBC in paper form if paper form is requested.
    (1) In accordance with the Department of Labor's disclosure 
regulations at 29 CFR 2520.104b-1;
    (2) In connection with online enrollment or online renewal of 
coverage under the plan; or
    (3) In response to an online request made by a participant or 
beneficiary for the SBC.
    (B) With respect to participants and beneficiaries who are eligible 
but not enrolled for coverage, the SBC may be provided electronically 
if:
    (1) The format is readily accessible;
    (2) The SBC is provided in paper form free of charge upon request; 
and
    (3) In a case in which the electronic form is an Internet posting, 
the plan or issuer timely notifies the individual in paper form (such 
as a postcard) or email that the documents are available on the 
Internet, provides the Internet address, and notifies the individual 
that the documents are available in paper form upon request.
    (5) Language. A group health plan or health insurance issuer must 
provide the SBC in a culturally and linguistically appropriate manner. 
For purposes of this paragraph (a)(5), a plan or issuer is considered 
to provide the SBC in a culturally and linguistically appropriate 
manner if the thresholds

[[Page 78607]]

and standards of Sec.  2590.715-2719(e) are met as applied to the SBC.
    (b) Notice of modification. If a group health plan, or health 
insurance issuer offering group health insurance coverage, makes any 
material modification (as defined under section 102 of ERISA) in any of 
the terms of the plan or coverage that would affect the content of the 
SBC, that is not reflected in the most recently provided SBC, and that 
occurs other than in connection with a renewal or reissuance of 
coverage, the plan or issuer must provide notice of the modification to 
enrollees not later than 60 days prior to the date on which the 
modification will become effective. The notice of modification must be 
provided in a form that is consistent with the rules of paragraph 
(a)(4) of this section.
    (c) Uniform glossary--(1) In general. A group health plan, and a 
health insurance issuer offering group health insurance coverage, must 
make available to participants and beneficiaries the uniform glossary 
described in paragraph (c)(2) of this section in accordance with the 
appearance and form and manner requirements of paragraphs (c)(3) and 
(c)(4) of this section.
    (2) Health-coverage-related terms and medical terms. The uniform 
glossary must provide uniform definitions, specified by the Secretary 
in guidance, of the following health-coverage-related terms and medical 
terms:
    (i) Allowed amount, appeal, balance billing, co-insurance, 
complications of pregnancy, co-payment, deductible, durable medical 
equipment, emergency medical condition, emergency medical 
transportation, emergency room care, emergency services, excluded 
services, grievance, habilitation services, health insurance, home 
health care, hospice services, hospitalization, hospital outpatient 
care, in-network co-insurance, in-network co-payment, medically 
necessary, network, non-preferred provider, out-of-network co-
insurance, out-of-network co-payment, out-of-pocket limit, physician 
services, plan, preauthorization, preferred provider, premium, 
prescription drug coverage, prescription drugs, primary care physician, 
primary care provider, provider, reconstructive surgery, rehabilitation 
services, skilled nursing care, specialist, usual customary and 
reasonable (UCR), and urgent care; and
    (ii) Such other terms as the Secretary determines are important to 
define so that individuals and employers may compare and understand the 
terms of coverage and medical benefits (including any exceptions to 
those benefits), as specified in guidance.
    (3) Appearance. A group health plan, and a health insurance issuer, 
must provide the uniform glossary with the appearance specified by the 
Secretary in guidance to ensure the uniform glossary is presented in a 
uniform format and uses terminology understandable by the average plan 
enrollee.
    (4) Form and manner. A plan or issuer must make the uniform 
glossary described in this paragraph (c) available upon request, in 
either paper or electronic form (as requested), within seven business 
days after receipt of the request.
    (d) Preemption. See Sec.  2590.731. In addition, State laws that 
require a health insurance issuer to provide an SBC that supplies less 
information than required under paragraph (a) of this section are 
preempted.
    (e) Failure to provide. A group health plan that willfully fails to 
provide information required under this section to a participant or 
beneficiary is subject to a fine of not more than $1,000 for each such 
failure. A failure with respect to each participant or beneficiary 
constitutes a separate offense for purposes of this paragraph (e). The 
Department will enforce this section using a process and procedure 
consistent with 29 CFR 2560.502c-2 of this chapter and 29 CFR part 
2570, subpart C.
    (f) Applicability. The requirements of this section do not apply to 
a group health plan benefit package that provides Medicare Advantage 
benefits pursuant to or 42 U.S.C. Chapter 7, Subchapter XVIII, Part C.

Department of Health and Human Services

45 CFR Subtitle A

    For the reasons stated in the preamble, the Department of Health 
and Human Services proposes to amend 45 CFR part 147 as follows:

PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND 
INDIVIDUAL HEALTH INSURANCE MARKETS

0
1. The authority citation for part 147 continues to read as follows:

    Authority: Sections 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.

0
2. Revise Sec.  147.200 to read as follows:


Sec.  147.200  Summary of benefits and coverage and uniform glossary.

    (a) Summary of benefits and coverage--(1) In general. A group 
health plan (and its administrator as defined in section 3(16)(A) of 
ERISA)), and a health insurance issuer offering group or individual 
health insurance coverage, is required to provide a written summary of 
benefits and coverage (SBC) for each benefit package without charge to 
entities and individuals described in this paragraph (a)(1) in 
accordance with the rules of this section.
    (i) SBC provided by a group health insurance issuer to a group 
health plan--(A) Upon application. A health insurance issuer offering 
group health insurance coverage must provide the SBC to a group health 
plan (or its sponsor) upon application for health coverage, as soon as 
practicable following receipt of the application, but in no event later 
than seven business days following receipt of the application. If an 
SBC was provided before application pursuant to paragraph (a)(1)(i)(D) 
of this section (relating to SBCs upon request), this paragraph 
(a)(1)(i)(A) is deemed satisfied, provided there is no change to the 
information required to be in the SBC. However, if there has been a 
change in the information required, a new SBC that includes the correct 
information must be provided upon application pursuant to this 
paragraph (a)(1)(i)(A).
    (B) By first day of coverage (if there are changes). If there is 
any change in the information required to be in the SBC that was 
provided upon application and before the first day of coverage, the 
issuer must update and provide a current SBC to the plan (or its 
sponsor) no later than the first day of coverage.
    (C) Upon renewal, reissuance, or re-enrollment. If the issuer 
renews or reissues a policy, certificate, or contract of insurance for 
a succeeding policy year, or automatically re-enrolls the policyholder 
or its participants and beneficiaries in coverage, the issuer must 
provide a new SBC as follows:
    (1) If written application is required (in either paper or 
electronic form) for renewal or reissuance, the SBC must be provided no 
later than the date the written application materials are distributed.
    (2) If renewal, reissuance, or re-enrollment is automatic, the SBC 
must be provided no later than 30 days prior to the first day of the 
new plan or policy year; however, with respect to an insured plan, if 
the policy, certificate, or contract of insurance has not been issued 
or renewed before such 30-day period, the SBC must be provided as soon 
as practicable but in no event later than seven business days after 
issuance of the new policy, certificate, or contract of insurance, or 
the receipt of written confirmation of intent to renew, whichever is 
earlier.

[[Page 78608]]

    (D) Upon request. If a group health plan (or its sponsor) requests 
an SBC or summary information about a health insurance product from a 
health insurance issuer offering group health insurance coverage, an 
SBC must be provided as soon as practicable, but in no event later than 
seven business days following receipt of the request.
    (ii) SBC provided by a group health insurance issuer and a group 
health plan to participants and beneficiaries--(A) In general. A group 
health plan (including its administrator, as defined under section 
3(16) of ERISA), and a health insurance issuer offering group health 
insurance coverage, must provide an SBC to a participant or beneficiary 
(as defined under sections 3(7) and 3(8) of ERISA), and consistent with 
the rules of paragraph (a)(1)(iii) of this section, with respect to 
each benefit package offered by the plan or issuer for which the 
participant or beneficiary is eligible.
    (B) Upon application. The SBC must be provided as part of any 
written application materials that are distributed by the plan or 
issuer for enrollment. If the plan or issuer does not distribute 
written application materials for enrollment, the SBC must be provided 
no later than the first date on which the participant is eligible to 
enroll in coverage for the participant or any beneficiaries. If an SBC 
was provided before application pursuant to paragraph (a)(1)(ii)(F) of 
this section (relating to SBCs upon request), this paragraph 
(a)(1)(ii)(B) is deemed satisfied, provided there is no change to the 
information required to be in the SBC. However, if there has been is a 
change in the information content, a new SBC that includes the correct 
information must be provided upon application pursuant to this 
paragraph (a)(1)(ii)(B).
    (C) By first day of coverage (if there are changes). If there is 
any change to the information required to be in the SBC that was 
provided upon application and before the first day of coverage, the 
plan or issuer must update and provide a current SBC to a participant 
or beneficiary no later than the first day of coverage.
    (D) Special enrollees. The plan or issuer must provide the SBC to 
special enrollees (as described in Sec.  146.117 of this subchapter) no 
later than the date by which a summary plan description is required to 
be provided under the timeframe set forth in ERISA section 104(b)(1)(A) 
and its implementing regulations, which is 90 days from enrollment.
    (E) Upon renewal, reissuance, or re-enrollment. If the plan or 
issuer requires participants or beneficiaries to renew in order to 
maintain coverage (for example, for a succeeding plan year), or 
automatically re-enrolls participants and beneficiaries in coverage, 
the plan or issuer must provide a new SBC, as follows:
    (1) If written application is required for renewal, reissuance, or 
re-enrollment (in either paper or electronic form), the SBC must be 
provided no later than the date on which the written application 
materials are distributed.
    (2) If renewal, reissuance, or re-enrollment is automatic, the SBC 
must be provided no later than 30 days prior to the first day of the 
new plan or policy year; however, with respect to an insured plan, if 
the policy, certificate, or contract of insurance has not been issued 
or renewed before such 30-day period, the SBC must be provided as soon 
as practicable but in no event later than seven business days after 
issuance of the new policy, certificate, or contract of insurance, or 
the receipt of written confirmation of intent to renew, whichever is 
earlier.
    (F) Upon request. A plan or issuer must provide the SBC to 
participants or beneficiaries upon request for an SBC or summary 
information about the health coverage, as soon as practicable, but in 
no event later than seven business days following receipt of the 
request.
    (iii) Special rules to prevent unnecessary duplication with respect 
to group health coverage--(A) An entity required to provide an SBC 
under this paragraph (a)(1) with respect to an individual satisfies 
that requirement if another party provides the SBC, but only to the 
extent that the SBC is timely and complete in accordance with the other 
rules of this section. Therefore, for example, in the case of a group 
health plan funded through an insurance policy, the plan satisfies the 
requirement to provide an SBC with respect to an individual if the 
issuer provides a timely and complete SBC to the individual. An entity 
required to provide an SBC under this paragraph (a)(1) with respect to 
an individual that contracts with another party to provide such SBC is 
considered to satisfy the requirement to provide such SBC if:
    (1) The entity monitors performance under the contract;
    (2) If the entity has knowledge that the SBC is not being provided 
in a manner that satisfies the requirements of this section and the 
entity has all information necessary to correct the noncompliance, the 
entity corrects the noncompliance as soon as practicable; and
    (3) If the entity has knowledge the SBC is not being provided in a 
manner that satisfies the requirements of this section and the entity 
does not have all information necessary to correct the noncompliance, 
the entity communicates with participants and beneficiaries who are 
affected by the noncompliance regarding the regarding the 
noncompliance, and begins taking significant steps as soon as 
practicable to avoid future violations.
    (B) If a single SBC is provided to a participant and any 
beneficiaries at the participant's last known address, then the 
requirement to provide the SBC to the participant and any beneficiaries 
is generally satisfied. However, if a beneficiary's last known address 
is different than the participant's last known address, a separate SBC 
is required to be provided to the beneficiary at the beneficiary's last 
known address.
    (C) With respect to a group health plan that offers multiple 
benefit packages, the plan or issuer is required to provide a new SBC 
automatically to participants and beneficiaries upon renewal or re-
enrollment only with respect to the benefit package in which a 
participant or beneficiary is enrolled (or will be automatically re-
enrolled under the plan); SBCs are not required to be provided 
automatically upon renewal or re-enrollment with respect to benefit 
packages in which the participant or beneficiary is not enrolled (or 
will not automatically be enrolled). However, if a participant or 
beneficiary requests an SBC with respect to another benefit package (or 
more than one other benefit package) for which the participant or 
beneficiary is eligible, the SBC (or SBCs, in the case of a request for 
SBCs relating to more than one benefit package) must be provided upon 
request as soon as practicable, but in no event later than seven 
business days following receipt of the request.
    (iv) SBC provided by a health insurance issuer offering individual 
health insurance coverage--(A) Upon application. A health insurance 
issuer offering individual health insurance coverage must provide an 
SBC to an individual covered under the policy (including every 
dependent) upon receiving an application for any health insurance 
policy, as soon as practicable following receipt of the application, 
but in no event later than seven business days following receipt of the 
application. If an SBC was provided before application pursuant to 
paragraph (a)(1)(iv)(D) of this section (relating to SBCs upon 
request), this paragraph (a)(1)(iv)(A) is deemed satisfied, provided 
there is no change to

[[Page 78609]]

the information required to be in the SBC. However, if there has been a 
change in the information content, a new SBC that includes the correct 
information must be provided upon application pursuant to this 
paragraph (a)(1)(iv)(A).
    (B) By first day of coverage (if there are changes). If there is 
any change in the information required to be in the SBC that was 
provided upon application and before the first day of coverage, the 
issuer must update and provide a current SBC to the individual no later 
than the first day of coverage.
    (C) Upon renewal, reissuance, or re-enrollment. If the issuer 
renews or reissues a policy, certificate, or contract of insurance for 
a succeeding policy year, or automatically re-enrolls an individual (or 
dependent) covered under a policy, certificate, or contract of 
insurance into a policy, certificate, or contract of insurance under a 
different plan or product, the issuer must provide an SBC for the 
coverage in which the individual (including every dependent) will be 
enrolled, as follows:
    (1) If written application is required (in either paper or 
electronic form) for renewal, reissuance, or re-enrollment, the SBC 
must be provided no later than the date on which the written 
application materials are distributed.
    (2) If renewal, reissuance, or re-enrollment is automatic, the SBC 
must be provided no later than 30 days prior to the first day of the 
new policy year; however, if the policy, certificate, or contract of 
insurance has not been issued or renewed before such 30 day period, the 
SBC must be provided as soon as practicable but in no event later than 
seven business days after issuance of the new policy, certificate, or 
contract of insurance, or the receipt of written confirmation of intent 
to renew, whichever is earlier.
    (D) Upon request. A health insurance issuer offering individual 
health insurance coverage must provide an SBC to any individual or 
dependent upon request for an SBC or summary information about a health 
insurance product as soon as practicable, but in no event later than 
seven business days following receipt of the request.
    (v) Special rule to prevent unnecessary duplication with respect to 
individual health insurance coverage.--(A) In general. If a single SBC 
is provided to an individual and any dependents at the individual's 
last known address, then the requirement to provide the SBC to the 
individual and any dependents is generally satisfied. However, if a 
dependent's last known address is different than the individual's last 
known address, a separate SBC is required to be provided to the 
dependent at the dependents' last known address.
    (B) Student health insurance coverage. With respect to student 
health insurance coverage as defined at Sec.  147.145(a), the 
requirement to provide an SBC to an individual will be considered 
satisfied for an entity if another party provides a timely and complete 
SBC to the individual.
    (2) Content--(i) In general. Subject to paragraph (a)(2)(iii) of 
this section, the SBC must include the following:
    (A) Uniform definitions of standard insurance terms and medical 
terms so that consumers may compare health coverage and understand the 
terms of (or exceptions to) their coverage, in accordance with guidance 
as specified by the Secretary;
    (B) A description of the coverage, including cost sharing, for each 
category of benefits identified by the Secretary in guidance;
    (C) The exceptions, reductions, and limitations of the coverage;
    (D) The cost-sharing provisions of the coverage, including 
deductible, coinsurance, and copayment obligations;
    (E) The renewability and continuation of coverage provisions;
    (F) Coverage examples, in accordance with the rules of paragraph 
(a)(2)(ii) of this section;
    (G) With respect to coverage beginning on or after January 1, 2014, 
a statement about whether the plan or coverage provides minimum 
essential coverage as defined under section 5000A(f) and whether the 
plan's or coverage's share of the total allowed costs of benefits 
provided under the plan or coverage meets applicable requirements;
    (H) A statement that the SBC is only a summary and that the plan 
document, policy, certificate, or contract of insurance should be 
consulted to determine the governing contractual provisions of the 
coverage;
    (I) Contact information for questions;
    (J) For issuers, an Internet web address where a copy of the actual 
individual coverage policy or group certificate of coverage can be 
reviewed and obtained;
    (K) For plans and issuers that maintain one or more networks of 
providers, an Internet address (or similar contact information) for 
obtaining a list of network providers; (L) For plans and issuers that 
use a formulary in providing prescription drug coverage, an Internet 
address (or similar contact information) for obtaining information on 
prescription drug coverage;
    (M) An Internet address for obtaining the uniform glossary, as 
described in paragraph (c) of this section, as well as a contact phone 
number to obtain a paper copy of the uniform glossary, and a disclosure 
that paper copies are available; and
    (N) For qualified health plans sold through an individual market 
Exchange that exclude or provide for coverage of the services described 
in Sec.  156.280(d)(1) of this subchapter, a notice of exclusion or 
such coverage.
    (ii) Coverage examples. The SBC must include coverage examples 
specified by the Secretary in guidance that illustrate benefits 
provided under the plan or coverage for common benefits scenarios 
(including pregnancy and serious or chronic medical conditions) in 
accordance with this paragraph (a)(2)(ii).
    (A) Number of examples. The Secretary may identify up to six 
coverage examples that may be required in an SBC.
    (B) Benefits scenarios. For purposes of this paragraph (a)(2)(ii), 
a benefits scenario is a hypothetical situation, consisting of a sample 
treatment plan for a specified medical condition during a specific 
period of time, based on recognized clinical practice guidelines as 
defined by the National Guideline Clearinghouse, Agency for Healthcare 
Research and Quality. The Secretary will specify, in guidance, the 
assumptions, including the relevant items and services and 
reimbursement information, for each claim in the benefits scenario.
    (C) Illustration of benefit provided. For purposes of this 
paragraph (a)(2)(ii), to illustrate benefits provided under the plan or 
coverage for a particular benefits scenario, a plan or issuer simulates 
claims processing in accordance with guidance issued by the Secretary 
to generate an estimate of what an individual might expect to pay under 
the plan, policy, or benefit package. The illustration of benefits 
provided will take into account any cost sharing, excluded benefits, 
and other limitations on coverage, as specified by the Secretary in 
guidance.
    (iii) Coverage provided outside the United States. In lieu of 
summarizing coverage for items and services provided outside the United 
States, a plan or issuer may provide an Internet address (or similar 
contact information) for obtaining information about benefits and 
coverage provided outside the United States. In any case, the plan or 
issuer must provide an SBC in accordance with this section that 
accurately summarizes benefits and

[[Page 78610]]

coverage available under the plan or coverage within the United States.
    (3) Appearance. (i) A group health plan and a health insurance 
issuer must provide an SBC in the form, and in accordance with the 
instructions for completing the SBC, that are specified by the 
Secretary in guidance. The SBC must be presented in a uniform format, 
use terminology understandable by the average plan enrollee (or, in the 
case of individual market coverage, the average individual covered 
under a health insurance policy), not exceed four double-sided pages in 
length, and not include print smaller than 12-point font. A health 
insurance issuer offering individual health insurance coverage must 
provide the SBC as a stand-alone document.
    (ii) A group health plan that utilizes two or more benefit packages 
(such as major medical coverage and a health flexible spending 
arrangement) may synthesize the information into a single SBC, or 
provide multiple SBCs.
    (4) Form--(i) An SBC provided by an issuer offering group health 
insurance coverage to a plan (or its sponsor), may be provided in paper 
form. Alternatively, the SBC may be provided electronically (such as by 
email or an Internet posting) if the following three conditions are 
satisfied--
    (A) The format is readily accessible by the plan (or its sponsor);
    (B) The SBC is provided in paper form free of charge upon request; 
and
    (C) If the electronic form is an Internet posting, the issuer 
timely advises the plan (or its sponsor) in paper form or email that 
the documents are available on the Internet and provides the Internet 
address.
    (ii) An SBC provided by a group health plan or health insurance 
issuer to a participant or beneficiary may be provided in paper form. 
Alternatively, the SBC may be provided electronically (such as by email 
or an Internet posting) if the requirements of this paragraph 
(a)(4)(ii) are met.
    (A) With respect to participants and beneficiaries covered under 
the plan or coverage, the SBC may be provided electronically as 
described in this paragraph (a)(4)(ii)(A). However, in all cases, the 
plan or issuer must provide the SBC in paper form if paper form is 
requested.
    (1) In accordance with the Department of Labor's disclosure 
regulations at 29 CFR 2520.104b-1;
    (2) In connection with online enrollment or online renewal of 
coverage under the plan; or
    (3) In response to an online request made by a participant or 
beneficiary for the SBC.
    (B) With respect to participants and beneficiaries who are eligible 
but not enrolled for coverage, the SBC may be provided electronically 
if:
    (1) The format is readily accessible;
    (2) The SBC is provided in paper form free of charge upon request; 
and
    (3) In a case in which the electronic form is an Internet posting, 
the plan or issuer timely notifies the individual in paper form (such 
as a postcard) or email that the documents are available on the 
Internet, provides the Internet address, and notifies the individual 
that the documents are available in paper form upon request.
    (iii) An issuer offering individual health insurance coverage must 
provide an SBC in a manner that can reasonably be expected to provide 
actual notice in paper or electronic form.
    (A) An issuer satisfies the requirements of this paragraph 
(a)(4)(iii) if the issuer:
    (1) Hand-delivers a printed copy of the SBC to the individual or 
dependent;
    (2) Mails a printed copy of the SBC to the mailing address provided 
to the issuer by the individual or dependent;
    (3) Provides the SBC by email after obtaining the individual's or 
dependent's agreement to receive the SBC or other electronic 
disclosures by email;
    (4) Posts the SBC on the Internet and advises the individual or 
dependent in paper or electronic form, in a manner compliant with 
paragraphs (a)(4)(iii)(A)(1) through (3), that the SBC is available on 
the Internet and includes the applicable Internet address; or
    (5) Provides the SBC by any other method that can reasonably be 
expected to provide actual notice.
    (B) An SBC may not be provided electronically unless:
    (1) The format is readily accessible;
    (2) The SBC is placed in a location that is prominent and readily 
accessible;
    (3) The SBC is provided in an electronic form which can be 
electronically retained and printed;
    (4) The SBC is consistent with the appearance, content, and 
language requirements of this section;
    (5) The issuer notifies the individual or dependent that the SBC is 
available in paper form without charge upon request and provides it 
upon request.
    (C) Deemed compliance. A health insurance issuer offering 
individual health insurance coverage that provides the content required 
under paragraph (a)(2) of this section, as specified in guidance 
published by the Secretary, to the federal health reform Web portal 
described in Sec.  159.120 of this subchapter will be deemed to satisfy 
the requirements of paragraph (a)(1)(iv)(D) of this section with 
respect to a request for summary information about a health insurance 
product made prior to an application for coverage. However, nothing in 
this paragraph should be construed as otherwise limiting such issuer's 
obligations under this section.
    (iv) An SBC provided by a self-insured non-Federal governmental 
plan may be provided in paper form. Alternatively, the SBC may be 
provided electronically if the plan conforms to either the substance of 
the provisions in paragraph (a)(4)(ii) or (a)(4)(iii) of this section.
    (5) Language. A group health plan or health insurance issuer must 
provide the SBC in a culturally and linguistically appropriate manner. 
For purposes of this paragraph (a)(5), a plan or issuer is considered 
to provide the SBC in a culturally and linguistically appropriate 
manner if the thresholds and standards of Sec.  147.136(e) are met as 
applied to the SBC.
    (b) Notice of modification. If a group health plan, or health 
insurance issuer offering group or individual health insurance 
coverage, makes any material modification (as defined under section 102 
of ERISA) in any of the terms of the plan or coverage that would affect 
the content of the SBC, that is not reflected in the most recently 
provided SBC, and that occurs other than in connection with a renewal 
or reissuance of coverage, the plan or issuer must provide notice of 
the modification to enrollees (or, in the case of individual market 
coverage, an individual covered under a health insurance policy) not 
later than 60 days prior to the date on which the modification will 
become effective. The notice of modification must be provided in a form 
that is consistent with the rules of paragraph (a)(4) of this section.
    (c) Uniform glossary--(1) In general. A group health plan, and a 
health insurance issuer offering group health insurance coverage, must 
make available to participants and beneficiaries, and a health 
insurance issuer offering individual health insurance coverage must 
make available to applicants, policyholders, and covered dependents, 
the uniform glossary described in paragraph (c)(2) of this section in 
accordance with the appearance and form and manner requirements of 
paragraphs (c)(3) and (c)(4) of this section.
    (2) Health-coverage-related terms and medical terms. The uniform 
glossary must provide uniform definitions, specified by the Secretary 
in guidance, of the following health-coverage-related terms and medical 
terms:

[[Page 78611]]

    (i) Allowed amount, appeal, balance billing, co-insurance, 
complications of pregnancy, co-payment, deductible, durable medical 
equipment, emergency medical condition, emergency medical 
transportation, emergency room care, emergency services, excluded 
services, grievance, habilitation services, health insurance, home 
health care, hospice services, hospitalization, hospital outpatient 
care, in-network co-insurance, in-network co-payment, medically 
necessary, network, non-preferred provider, out-of-network co-
insurance, out-of-network co-payment, out-of-pocket limit, physician 
services, plan, preauthorization, preferred provider, premium, 
prescription drug coverage, prescription drugs, primary care physician, 
primary care provider, provider, reconstructive surgery, rehabilitation 
services, skilled nursing care, specialist, usual customary and 
reasonable (UCR), and urgent care; and
    (ii) Such other terms as the Secretary determines are important to 
define so that individuals and employers may compare and understand the 
terms of coverage and medical benefits (including any exceptions to 
those benefits), as specified in guidance.
    (3) Appearance. A group health plan, and a health insurance issuer, 
must provide the uniform glossary with the appearance specified by the 
Secretary in guidance to ensure the uniform glossary is presented in a 
uniform format and uses terminology understandable by the average plan 
enrollee (or, in the case of individual market coverage, an average 
individual covered under a health insurance policy).
    (4) Form and manner. A plan or issuer must make the uniform 
glossary described in this paragraph (c) available upon request, in 
either paper or electronic form (as requested), within seven business 
days after receipt of the request.
    (d) Preemption. For purposes of this section, the provisions of 
section 2724 of the PHS Act continue to apply with respect to 
preemption of State law. In addition, State laws that require a health 
insurance issuer to provide an SBC that supplies less information than 
required under paragraph (a) of this section are preempted.
    (e) Failure to provide. A health insurance issuer or a non-federal 
governmental health plan that willfully fails to provide information to 
a covered individual required under this section is subject to a fine 
of not more than $1,000 for each such failure. A failure with respect 
to each covered individual constitutes a separate offense for purposes 
of this paragraph (e). HHS will enforce these provisions in a manner 
consistent with Sec. Sec.  150.101 through 150.465 of this subchapter.
    (f) Applicability. The requirements of this section do not apply to 
a group health plan benefit package that provides Medicare Advantage 
benefits pursuant to or 42 U.S.C. Chapter 7, Subchapter XVIII, Part C.

[FR Doc. 2014-30243 Filed 12-22-14; 4:15 pm]
BILLING CODE 4830-01-P; 4150-28-P; 4120-01-P