[Federal Register Volume 80, Number 134 (Tuesday, July 14, 2015)]
[Rules and Regulations]
[Pages 41318-41347]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-17076]



[[Page 41317]]

Vol. 80

Tuesday,

No. 134

July 14, 2015

Part IV





Department of the Treasury





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Internal Revenue Service





26 CFR Part 54





Department of Labor





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Employee Benefits Security Administration

29 CFR Parts 2510 and 2590





Department of Health and Human Services





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45 CFR Part 147





Coverage of Certain Preventive Services Under the Affordable Care Act; 
Final Rule

  Federal Register / Vol. 80 , No. 134 / Tuesday, July 14, 2015 / Rules 
and Regulations  

[[Page 41318]]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[TD-9726]
RIN 1545-BJ58, 1545-BM37, 1545-BM39

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Parts 2510 and 2590

RIN 1210-AB67

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Part 147

[CMS-9940-F]
RIN 0938-AS50


Coverage of Certain Preventive Services Under the Affordable Care 
Act

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: Final rules.

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SUMMARY: This document contains final regulations regarding coverage of 
certain preventive services under section 2713 of the Public Health 
Service Act (PHS Act), added by the Patient Protection and Affordable 
Care Act, as amended, and incorporated into the Employee Retirement 
Income Security Act of 1974 and the Internal Revenue Code. Section 2713 
of the PHS Act requires coverage without cost sharing of certain 
preventive health services by non-grandfathered group health plans and 
health insurance coverage. These regulations finalize provisions from 
three rulemaking actions: Interim final regulations issued in July 2010 
related to coverage of preventive services, interim final regulations 
issued in August 2014 related to the process an eligible organization 
uses to provide notice of its religious objection to the coverage of 
contraceptive services, and proposed regulations issued in August 2014 
related to the definition of ``eligible organization,'' which would 
expand the set of entities that may avail themselves of an 
accommodation with respect to the coverage of contraceptive services.

DATES: Effective Date: These final regulations are effective on 
September 14, 2015.
    Applicability Date: These final regulations are applicable 
beginning on the first day of the first plan year (or, for individual 
health insurance coverage, the first day of the first policy year) that 
begins on or after September 14, 2015.

FOR FURTHER INFORMATION CONTACT: David Mlawsky, Centers for Medicare & 
Medicaid Services (CMS), Department of Health and Human Services (HHS), 
at (410) 786-1565; Amy Turner or Elizabeth Schumacher, Employee 
Benefits Security Administration (EBSA), Department of Labor, at (202) 
693-8335; or Karen Levin, Internal Revenue Service (IRS), Department of 
the Treasury, at (202) 927-9639.
    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 (www.dol.gov/ebsa). Information from HHS on private health insurance coverage can be 
found on CMS's Web site (www.cms.gov/cciio), and information on health 
care reform can be found at www.HealthCare.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    The Patient Protection and Affordable Care Act (Pub. L. 111-148) 
was enacted on March 23, 2010. The Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152) was enacted on March 30, 
2010. These statutes 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 Affordable Care Act adds section 
715(a)(1) to the Employee Retirement Income Security Act of 1974 
(ERISA) and section 9815(a)(1) to the Internal Revenue Code (Code) to 
incorporate the provisions of part A of title XXVII of the PHS Act into 
ERISA and the Code, and to make them applicable to group health plans 
and health insurance issuers providing health insurance coverage in 
connection with group health plans. The sections of the PHS Act 
incorporated into ERISA and the Code are sections 2701 through 2728.
    Section 2713 of the PHS Act, as added by the Affordable Care Act 
and incorporated into ERISA and the Code, requires that non-
grandfathered group health plans and health insurance issuers offering 
non-grandfathered group or individual health insurance coverage provide 
coverage of certain specified preventive services without cost sharing. 
These preventive services include:
     Evidence-based items or services that have in effect a 
rating of ``A'' or ``B'' in the current recommendations of the United 
States Preventive Services Task Force (Task Force) with respect to the 
individual involved.
     Immunizations for routine use in children, adolescents, 
and adults that have in effect a recommendation from the Advisory 
Committee on Immunization Practices of the Centers for Disease Control 
and Prevention (Advisory Committee) with respect to the individual 
involved. A recommendation of the Advisory Committee is considered to 
be ``in effect'' after it has been adopted by the Director of the 
Centers for Disease Control and Prevention (CDC). A recommendation is 
considered to be for ``routine use'' if it appears on the Immunization 
Schedules of the CDC.
     With respect to infants, children, and adolescents, 
evidence-informed preventive care and screenings provided for in the 
comprehensive guidelines supported by the Health Resources and Services 
Administration (HRSA).
     With respect to women, preventive care and screenings 
provided for in comprehensive guidelines supported by HRSA (not 
otherwise addressed by the recommendations of the Task Force), 
including all Food and Drug Administration (FDA)-approved 
contraceptives, sterilization procedures, and patient education and 
counseling for women with reproductive capacity, as prescribed by a 
health care provider (collectively, contraceptive services).\1\
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    \1\ The HRSA Guidelines exclude services relating to a man's 
reproductive capacity, such as vasectomies and condoms.
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    The complete list of recommendations and guidelines that are 
required to be covered under these final regulations can be found at: 
https://www.healthcare.gov/preventive-care-benefits. Together, the 
items and services described in these recommendations and guidelines 
are referred to in this preamble as ``recommended preventive 
services.''
    The Departments of Labor, Health and Human Services, and the 
Treasury (the Departments) \2\ have issued rulemaking to implement 
these requirements:
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    \2\ Note, however, that in sections under headings listing only 
two of the three Departments, the term ``Departments'' generally 
refers only to the two Departments listed in the heading.

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[[Page 41319]]

     Interim final regulations on July 19, 2010, at 75 FR 41726 
(July 2010 interim final regulations), implemented the preventive 
services requirements of PHS Act section 2713;
     Interim final regulations amending the July 2010 interim 
final regulations on August 3, 2011, at 76 FR 46621, provided HRSA with 
the authority to exempt group health plans established or maintained by 
certain religious employers (and group health insurance coverage 
provided in connection with those plans) from the requirement to cover 
contraceptive services consistent with the HRSA Guidelines; \3\
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    \3\ On the same date, HRSA exercised this authority in the HRSA 
Guidelines to exempt group health plans established or maintained by 
these religious employers (and group health insurance coverage 
provided in connection with such plans) from the HRSA Guidelines 
with respect to contraceptive services.
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     Final regulations on February 15, 2012, at 77 FR 8725 
(2012 final regulations), finalized the definition of religious 
employer in the 2011 amended interim final regulations without 
modification; \4\
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    \4\ Contemporaneous with the issuance of the 2012 final 
regulations, HHS, with the agreement of the Departments of Labor and 
the Treasury, issued guidance establishing a temporary safe harbor 
from enforcement of the contraceptive coverage requirement by the 
Departments for group health plans established or maintained by 
certain nonprofit organizations with religious objections to 
contraceptive coverage (and group health insurance coverage provided 
in connection with such plans) originally issued on February 10, 
2012, and reissued on August 15, 2012, and June 28, 2013; available 
at: http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/preventive-services-guidance-6-28-2013.pdf. The guidance 
clarified, among other things, that plans that took some action 
before February 10, 2012, to try, without success, to exclude or 
limit contraceptive coverage were not precluded from eligibility for 
the safe harbor. The temporary enforcement safe harbor was also 
available to student health insurance coverage arranged by nonprofit 
institutions of higher education with religious objections to 
contraceptive coverage that met the conditions set forth in the 
guidance. See Student Health Insurance Coverage, 77 FR 16457 (Mar. 
21, 2012).
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     An advance notice of proposed rulemaking (ANPRM) on March 
21, 2012, at 77 FR 16501, solicited comments on how to provide for 
coverage of recommended preventive services, including contraceptive 
services, without cost sharing, while simultaneously ensuring that 
certain nonprofit organizations with religious objections to 
contraceptive coverage would not be required to contract, arrange, pay, 
or refer for that coverage;
     Proposed regulations on February 6, 2013, at 78 FR 8456, 
proposed to simplify and clarify the definition of ``religious 
employer'' for purposes of the religious employer exemption, and 
proposed accommodations for group health plans established or 
maintained by certain nonprofit religious organizations with religious 
objections to contraceptive coverage (and group health insurance 
coverage provided in connection with those plans) and for insured 
student plans arranged by certain nonprofit religious organizations 
that are institutions of higher education with religious objections to 
contraceptive coverage;
     Final regulations on July 2, 2013, at 78 FR 39870 (July 
2013 final regulations), simplified and clarified the definition of 
religious employer for purposes of the religious employer exemption and 
established accommodations for health coverage established or 
maintained or arranged by eligible organizations; \5\
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    \5\ A contemporaneously re-issued HHS guidance document extended 
the temporary safe harbor from enforcement of the contraceptive 
coverage requirement by the Departments to encompass plan years 
beginning on or after August 1, 2013, and before January 1, 2014. 
This guidance included a form to be used by an organization during 
this temporary period to self-certify that its plan qualified for 
the temporary enforcement safe harbor. In addition, HHS and the 
Department of Labor (DOL) issued a self-certification form, EBSA 
Form 700, to be executed by an organization seeking to be treated as 
an eligible organization for purposes of an accommodation under the 
July 2013 final regulations. This self-certification form was 
provided for use with the accommodation under the July 2013 final 
regulations, after the expiration of the temporary enforcement safe 
harbor (that is, for plan years beginning on or after January 1, 
2014). See http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/preventive-services-guidance-6-28-2013.pdf.
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     Interim final regulations on August 27, 2014, at 79 FR 
51092 (August 2014 interim final regulations), amended the July 2013 
final regulations in light of the United States Supreme Court's interim 
order in connection with an application for an injunction in Wheaton 
College v. Burwell (Wheaton interim order),\6\ and provided an 
alternative process that an eligible organization may use to provide 
notice of its religious objection to the coverage of contraceptive 
services; and
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    \6\ 134 S. Ct. 2806 (2014).
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     Proposed regulations on August 27, 2014, at 79 FR 51118 
(August 2014 proposed regulations), proposed potential changes to the 
definition of ``eligible organization'' in light of the United States 
Supreme Court's decision in Burwell v. Hobby Lobby Stores, Inc.\7\
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    \7\ 134 S. Ct. 2751 (2014).
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    In addition to these regulations, the Departments released six sets 
of Frequently Asked Questions (FAQs) regarding the preventive services 
coverage requirements. The Departments released FAQs about Affordable 
Care Act Implementation Parts II, V, XII, XIX, XX, and XXVI to answer 
outstanding questions, including questions related to the coverage of 
preventive services. These FAQs provided guidance related to compliance 
with the 2010 and 2014 interim final regulations, and addressed issues 
related to specific services required to be covered without cost 
sharing, subject to reasonable medical management, under 
recommendations and guidelines specified in section 2713 of the PHS 
Act. Information on related safe harbors, forms, and model notices is 
available at http://www.dol.gov/ebsa/healthreform and http://www.cms.gov/cciio/resources/regulations-and-guidance/index.html.
    After consideration of the comments and feedback received from 
stakeholders, the Departments are publishing these final 
regulations,\8\ which finalize the July 2010 interim final regulations 
related to coverage of recommended preventive services, the August 2014 
interim final regulations related to the process an eligible 
organization uses to provide notice of its religious objection to the 
coverage of contraceptive services, and the August 2014 proposed 
regulations related to the definition of eligible organization.
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    \8\ The Department of the Treasury/Internal Revenue Service 
published temporary regulations and proposed regulations with the 
text of the temporary regulations serving as the text of the 
proposed regulations as part of each of the joint rulemaking interim 
final rules listed above. The Departments of Labor and HHS published 
their rules as interim final rules and are finalizing their interim 
final rules. The Department of the Treasury/Internal Revenue Service 
is finalizing its proposed rules.
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II. Overview of the Final Regulations

A. Coverage of Recommended Preventive Services Under 26 CFR 54.9815-
2713, 29 CFR 2590.715-2713, and 45 CFR 147.130

(i) Scope of Recommended Preventive Services
    Section 2713 of the PHS Act, as added by the Affordable Care Act, 
requires that a non-grandfathered group health plan or a health 
insurance issuer offering non-grandfathered group or individual health 
insurance coverage provide, without cost sharing, coverage for 
recommended preventive services, as outlined above. The July 2013 final 
regulations finalized the requirement to provide coverage without cost 
sharing with respect to those preventive services provided for in the 
HRSA Guidelines for women. These regulations finalize the requirement 
to provide coverage without cost sharing with respect to the other 
three categories of recommendations and guidelines specified in section 
2713 of the PHS Act: Evidence-based items or services that have in 
effect a rating of ``A'' or ``B''

[[Page 41320]]

in the current recommendations of the Task Force, immunizations for 
routine use that have in effect a recommendation from the Advisory 
Committee, and evidence-informed preventive care and screenings for 
infants, children, and adolescents, provided for in guidelines 
supported by HRSA. The complete list of recommendations and guidelines 
can be found at: https://www.healthcare.gov/preventive-care-benefits.
    Commenters requested additional clarity on the specific items and 
services required to be covered without cost sharing. The Departments 
previously released FAQs about Affordable Care Act Implementation Parts 
XII \9\ and XIX \10\ to provide guidance related to the scope of 
coverage required under the recommendations and guidelines, including 
coverage of aspirin and other over-the-counter medication, 
colonoscopies, BRCA testing, well-woman visits, screening and 
counseling for interpersonal and domestic violence, HIV and HPV 
testing, contraception, breastfeeding and lactation counseling, and 
tobacco cessation interventions. Moreover, on May 11, 2015, the 
Departments issued FAQs about Affordable Care Act Implementation \11\ 
to address specific coverage questions related to BRCA testing, 
contraception, sex-specific recommended preventive services, services 
for dependents covered under the plan or policy, and colonoscopies. If 
additional questions arise regarding the application of the preventive 
services coverage requirements, the Departments may issue additional 
subregulatory guidance.
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    \9\ See FAQs about Affordable Care Act Implementation Part XII, 
available at http://www.dol.gov/ebsa/faqs/faq-aca12.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs12.html.
    \10\ See FAQs about Affordable Care Act Implementation Part XIX, 
available at http://www.dol.gov/ebsa/faqs/faq-aca19.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs19.html.
    \11\ See FAQs about Affordable Care Act Implementation Part 
XXVI, available at www.dol.gov/ebsa/faqs/faq-FAQs/Downloads/aca_implementaton_faqs26.pdf. and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/aca_implementation_faqs26.pdf.
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(ii) Office Visits
    The July 2010 interim final regulations clarified the cost-sharing 
requirements applicable when a recommended preventive service is 
provided during an office visit through the use of the ``primary 
purpose'' test: First, if a recommended preventive service is billed 
separately (or is tracked as individual encounter data separately) from 
an office visit, a plan or issuer may impose cost sharing with respect 
to the office visit. Second, if a recommended preventive service is not 
billed separately (or is not tracked as individual encounter data 
separately) from an office visit and the primary purpose of the office 
visit is the delivery of the recommended preventive service, a plan or 
issuer may not impose cost sharing with respect to the office visit. 
Finally, if a recommended preventive service is not billed separately 
(or is not tracked as individual encounter data separately) from an 
office visit and the primary purpose of the office visit is not the 
delivery of the recommended preventive service, a plan or issuer may 
impose cost sharing with respect to the office visit. The reference to 
tracking individual encounter data was included to provide guidance 
with respect to plans and issuers that use capitation or similar 
payment arrangements that do not bill individually for items and 
services.
    Several commenters supported the primary purpose test, while other 
commenters were concerned that the test provides too much discretion to 
providers or issuers to determine the primary purpose of the visit. 
Some commenters stated that many individuals only seek medical care 
from their physician when they are sick, and physicians must be able to 
provide preventive services, along with other treatment, in a single 
office visit. Other commenters recommended that the Departments 
eliminate the primary purpose test. Some of these commenters 
recommended that cost sharing be prohibited if any recommended 
preventive service is provided during the visit.
    These final regulations continue to provide that when a recommended 
preventive service is not billed separately (or is not tracked as 
individual encounter data separately) from an office visit, plans and 
issuers must look to the primary purpose of the office visit when 
determining whether they may impose cost sharing with respect to the 
office visit. Nothing in these requirements precludes a health care 
provider from providing preventive services, along with other 
treatment, in a single office visit. These rules only establish the 
circumstances under which an office visit that includes a recommended 
preventive service may be subject to cost sharing. The Departments 
anticipate that the determination of the primary purpose of the visit 
will be resolved through normal billing and coding activities, as they 
are for other services. If questions arise regarding the application of 
this rule to common medical scenarios, the Departments may issue 
additional subregulatory guidance.
(iii) Out-of-Network Providers
    With respect to a plan or health insurance coverage that maintains 
a network of providers, the July 2010 interim final regulations 
provided that the plan or issuer is not required to provide coverage 
for recommended preventive services delivered by an out-of-network 
provider. The plan or issuer may also impose cost sharing for 
recommended preventive services delivered by an out-of-network 
provider.
    Several commenters requested the rule be amended to require that 
preventive services be provided without cost sharing when services are 
provided out-of-network in all instances. Other commenters suggested 
that the rule be amended to require out-of-network coverage if an in-
network provider is not available to the individual, or if the services 
are not available to a material segment of the plan's population. One 
commenter asked that, in a situation where preventive services are 
obtained from a network provider with the assistance of medical 
professionals who are out-of-network, all of the services be treated as 
in-network services, and thus not subject to cost sharing. Several 
commenters stated that cost sharing for recommended preventive services 
received from out-of-network providers should not be higher than cost 
sharing for other ambulatory health services provided on an out-of-
network basis.
    In response to comments, the Departments issued an FAQ clarifying 
that, if a plan or issuer does not have in its network a provider who 
can provide a particular recommended preventive service, then, 
consistent with the statute and July 2010 interim final regulations, 
the plan or issuer must cover, without cost sharing, the item or 
service when performed by an out-of-network provider.\12\ These final 
regulations adopt the rule of the July 2010 interim final regulations 
with respect to out-of-network providers, with one clarification. These 
final regulations incorporate the clarification that a plan or issuer 
that does not have in its network a provider who can provide a 
particular recommended preventive service is required to cover the 
preventive service when performed by an out-of-network provider, and 
may

[[Page 41321]]

not impose cost sharing with respect to the preventive service.
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    \12\ See FAQ about Affordable Care Act Implementation Part XII, 
Q3 at http://www.dol.gov/ebsa/faqs/faq-aca12.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs12.html.
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(iv) Reasonable Medical Management
    The July 2010 interim final regulations included a provision on 
reasonable medical management. Specifically, if a recommendation or 
guideline for a recommended preventive service does not specify the 
frequency, method, treatment, or setting for the provision of that 
service, the plan or issuer may use reasonable medical management 
techniques to determine any coverage limitations.
    The Departments received a number of comments related to the use of 
reasonable medical management techniques. Some commenters were 
concerned that the July 2010 interim final regulations did not clearly 
outline what constitutes reasonable medical management techniques, and 
requested that the Departments provide greater clarity, particularly 
with respect to a situation where a patient's attending provider 
determines that the frequency, method, treatment, or setting of a 
particular item or service is medically appropriate for a particular 
patient. The Departments issued an FAQ clarifying that, under the July 
2010 interim final regulations, to the extent not specified in a 
recommendation or guideline, a plan or issuer may rely on the relevant 
evidence base and established reasonable medical management techniques 
to determine the frequency, method, treatment, or setting for the 
provision of a recommended preventive service.\13\ These final 
regulations incorporate the clarification of the July 2010 interim 
final regulations set forth in the FAQ.
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    \13\ See FAQs about Affordable Care Act Implementation Part II, 
Q8 available at http://www.dol.gov/ebsa/faqs/faq-aca2.html and 
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs2.html.
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    On May 11, 2015, the Departments issued FAQs to provide further 
guidance on the extent to which plans and issuers may utilize 
reasonable medical management when providing coverage for recommended 
women's contraception services in the HRSA guidelines.\14\ If further 
questions arise regarding the permissible application of reasonable 
medical management techniques, the Departments may issue additional 
subregulatory guidance.
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    \14\ See FAQs about Affordable Care Act Implementation Part 
XXVI, available at www.dol.gov/ebsa/faqs/faq-aca26.html and http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/aca_implementation_faqs26.pdf.
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    Other commenters cited the importance of flexibility to permit 
plans and issuers to maintain programs that are cost-effective, 
negotiate treatments with high-quality providers at reduced costs, and 
reduce fraud and abuse. Commenters requested guidance on how plans and 
issuers may employ value-based insurance designs (VBID) in a manner 
that complies with the preventive services coverage requirements.\15\ 
Some commenters requested that the final regulations permit plans and 
issuers to impose cost sharing on non-preferred network tiers for 
VBIDs. Another commenter requested the Departments permit cost sharing 
for preventive care delivered at centers of excellence. On December 22, 
2010, the Departments issued an FAQ to provide guidance regarding VBID 
related to the coverage of preventive services.\16\ If questions arise 
regarding VBID and the preventive services coverage requirements, the 
Departments may issue additional subregulatory guidance. Several 
commenters stated that plans and issuers should be required to use and 
identify credible references or sources supporting their medical 
management techniques. The Departments recognize the importance of 
having access to information relating to medical management techniques 
that a plan or issuer may apply. Several provisions applicable to plans 
and issuers address these concerns. ERISA section 104 and the 
Department of Labor's implementing regulations \17\ 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 \18\ upon request. In 
addition, the Department of Labor's claims procedure regulations \19\ 
(applicable to ERISA plans), as well as the Departments' internal 
claims and appeals and external review regulations under the Affordable 
Care Act (applicable to all non-grandfathered group health plans and 
health insurance issuers in the group and individual markets),\20\ 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. Other Federal and State law requirements may also apply, as 
applicable.
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    \15\ The Departments first solicited comments on value-based 
insurance designs in the July 2010 interim final regulations. 75 FR 
41726, 41729. Subsequently, the Departments published a request for 
information (RFI) related to value-based insurance design on 
December 28, 2010. 75 FR 81544.
    \16\ See FAQs about Affordable Care Act Implementation Part V, 
Q1, available at http://www.dol.gov/ebsa/faqs/faq-aca5.html and 
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/aca_implementation_faqs5.html.
    \17\ 29 CFR 2520.104b-1.
    \18\ 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 among 
benefit package options during open season, generally are considered 
plan participants for this purpose.
    \19\ 29 CFR 2560.503-1(h)(2)(iii).
    \20\ 29 CFR 2590.715-2719(b)(2)(i) and 45 CFR 147.136(b)(2)(i).
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(v) Services Not Described
    The July 2010 interim final regulations clarified that a plan or 
issuer may cover preventive services in addition to those required to 
be covered by PHS Act section 2713. These final regulations continue to 
provide that for the additional preventive services, a plan or issuer 
may impose cost sharing at its discretion, consistent with applicable 
law. Moreover, a plan or issuer may impose cost sharing for a treatment 
that is not a recommended preventive service, even if the treatment 
results from a recommended preventive service.
(vi) Timing
    The July 2010 interim final regulations provided that plans and 
issuers must provide coverage for new recommended preventive services 
for plan years (in the individual market, policy years) beginning on or 
after the date that is one year after the date the relevant 
recommendation or guideline under PHS Act section 2713 is issued. Some 
commenters encouraged the Departments to adopt a shorter implementation 
timeframe. With respect to the Advisory Committee recommendations, one 
commenter requested that the effective date for any new recommendation 
be either the publication of the committee's provisional 
recommendations or the publication of the official CDC immunization 
schedules, whichever occurs first. Other commenters expressed support 
for the implementation timeframe set forth in the July 2010 interim 
final regulations. The statute requires the Departments to establish an 
interval of not less than one year between when recommendations or 
guidelines under PHS Act section

[[Page 41322]]

2713(a) \21\ are issued, and the plan year (in the individual market, 
policy year) for which coverage of the services addressed in the 
recommendations or guidelines must be in effect.
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    \21\ Section 2713(b)(1) refers to an interval between ``the date 
on which a recommendation described in subsection (a)(1) or (a)(2) 
or a guideline under subsection (a)(3) is issued and the plan year 
with respect to which the requirement described in subsection (a) is 
effective with respect to the service described in such 
recommendation or guideline.'' While the first part of this 
statement does not mention guidelines under subsection (a)(4), it is 
the Departments' view that it would not be reasonable to treat the 
services covered under subsection (a)(4) any differently than those 
in subsections (a)(1), (a)(2), and (a)(3). First, the statement 
refers to ``the requirement described in subsection (a),'' which 
would include a requirement under subsection (a)(4). Secondly, the 
guidelines under (a)(4) are from the same source as those under 
(a)(3), except with respect to women, rather than infants, children 
and adolescents; and other preventive services involving women are 
addressed in subsection (a)(1), so it is reasonable to treat the 
guidelines under subsection (a)(4) similarly. Third, without this 
clarification, it would be unclear when such services would have to 
be covered. The July 2010 interim final regulations and these final 
regulations accordingly apply the intervals established therein to 
services under section 2713(a)(4).
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    To provide plans and issuers adequate time to incorporate changes 
or updates to recommendations and guidelines, as provided in the July 
2010 interim final regulations, these final regulations continue to 
provide that a recommendation or guideline of the Task Force is 
considered to be issued on the last day of the month on which the Task 
Force publishes or otherwise releases the recommendation; a 
recommendation or guideline of the Advisory Committee is considered to 
be issued on the date on which it is adopted by the Director of the 
CDC; and a recommendation or guideline in the comprehensive guidelines 
supported by HRSA is considered to be issued on the date on which it is 
accepted by the Administrator of HRSA or, if applicable, adopted by the 
Secretary of HHS.
    Several commenters supported the policy that plans and issuers 
should not need to check the recommendations or guidelines for changes 
during the plan or policy year in order to determine coverage 
requirements and should not be required to implement changes during the 
plan or policy year. The Departments adopted this approach in the July 
2010 interim final regulations with respect to new recommendations or 
guidelines that impose additional preventive services coverage 
requirements, but adopted a different standard for changes in 
recommendations or guidelines, allowing plans and issuers to eliminate 
coverage for preventive services that are no longer recommended during 
the plan or policy year, consistent with other applicable federal and 
state law. We agree with those commenters who stated that changes in 
coverage should not occur during the plan or policy year, and are 
implementing an approach with respect to changes in recommendations or 
guidelines that narrow or eliminate coverage requirements for 
previously recommended services that is similar to the one adopted in 
the July 2010 interim final regulations for new recommendations or 
guidelines. Furthermore, participants and beneficiaries of group health 
plans (and enrollees and dependents in individual market coverage) may 
make coverage choices based on the benefits offered at the beginning of 
the plan or policy year. Plan years (and individual market policy 
years) vary and recommendations and guidelines may be issued at any 
time during a plan or policy year. These final regulations protect 
against disruption and provide certainty in coverage (including cost-
sharing requirements) for the duration of the plan or policy year. 
Accordingly, these final regulations state that a plan or issuer that 
is required to provide coverage for any recommended preventive service 
on the first day of a plan or policy year under a particular 
recommendation or guideline must generally provide that coverage 
through the last day of the plan or policy year, even if the 
recommendation or guideline changes or is eliminated during the plan or 
policy year.
    However, there are limited circumstances under which it may be 
inadvisable for a plan or issuer to continue to cover preventive items 
or services associated with a recommendation or guideline that was in 
effect on the first day of a plan year or policy year (for example, due 
to safety concerns). Therefore, these final regulations establish that 
if, during a plan or policy year, (1) an ``A'' or ``B'' recommendation 
or guideline of the Task Force that was in effect on the first day of a 
plan or policy year is downgraded to a ``D'' rating (meaning that the 
Task Force has determined that there is strong evidence that there is 
no net benefit, or that the harms outweigh the benefits, and therefore 
discourages the use of this service), or (2) any item or service 
associated with any preventive service recommendation or guideline 
specified in 26 CFR 54.9815-2713(a)(1) or 29 CFR. 2590.715-2713(a)(1) 
or 45 CFR 147.130(a)(1) that was in effect on the first day of a plan 
or policy year is the subject of a safety recall or is otherwise 
determined to pose a significant safety concern by a federal agency 
authorized to regulate that item or service, there is no requirement 
under this section to cover these items and services through the last 
day of the plan or policy year. Should such circumstances arise, the 
Departments expect to issue subregulatory guidance to this effect with 
respect to such preventive item or service.
    Other requirements of federal or state law may apply in connection 
with ceasing to provide coverage or changing cost-sharing requirements 
for any item or service. For example, PHS Act section 2715(d)(4) and 
its implementing regulations state that if a group health plan or 
health insurance issuer makes any material modification in any of the 
terms of the plan or coverage involved that would affect the content of 
the Summary of Benefits and Coverage (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 notification will become effective.
    A list of the recommended preventive services is available at 
https://www.healthcare.gov/preventive-care-benefits. We intend to 
update this list to include the date on which the recommendation or 
guideline was accepted or adopted. New recommendations and guidelines 
will also be reflected on this site. Plans and issuers need not make 
changes to coverage and cost-sharing requirements based on a new 
recommendation or guideline until the first plan year (in the 
individual market, policy year) beginning on or after the date that is 
one year after the new recommendation or guideline goes into effect. 
Therefore, by visiting this site once per year, plans or issuers should 
have access to all the information necessary to identify any additional 
items or services that must be covered without cost sharing, or to 
identify any items or services that are no longer required to be 
covered.

B. Accommodations in Connection With Coverage of Preventive Health 
Services--26 CFR 54.9815-2713A, 29 CFR 2510.3-16 and 2590.715-2713A, 
and 45 CFR 147.131.

(i) The Process an Eligible Organization Uses To Provide Notice of Its 
Religious Objection to the Coverage of Contraceptive Services
    After issuing the July 2013 final regulations, the Departments 
issued August 2014 interim final regulations in light of the Supreme 
Court's Wheaton interim order concerning notice to the federal 
government that an eligible

[[Page 41323]]

organization has a religious objection to providing contraceptive 
coverage, as an alternative to the EBSA Form 700 method of self-
certification, and to preserve participants' and beneficiaries' (and, 
in the case of student health insurance coverage, enrollees' and 
dependents') access to coverage for the full range of FDA-approved 
contraceptives, as prescribed by a health care provider, without cost 
sharing.
    These final regulations continue to allow eligible organizations to 
choose between using EBSA Form 700 or the alternative process 
consistent with the Wheaton interim order. The alternative process 
provides that an eligible organization may notify HHS in writing of its 
religious objection to covering all or a subset of contraceptive 
services. The notice must include the name of the eligible organization 
and the basis on which it qualifies for an accommodation; its objection 
based on sincerely held religious beliefs to covering some or all 
contraceptive services, as applicable (including an identification of 
the subset of contraceptive services to which coverage the eligible 
organization objects, if applicable); the plan name and type (that is, 
whether it is a student health insurance plan within the meaning of 45 
CFR 147.145(a) or a church plan within the meaning of ERISA section 
3(33)); and the name and contact information for any of the plan's 
third party administrators and health insurance issuers.\22\ A model 
notice to HHS that eligible organizations may, but are not required to, 
use is available at: http://www.cms.gov/cciio/resources/Regulations-and-Guidance/index.html#Prevention. If there is a change in any of the 
information required to be included, the organization must provide 
updated information to HHS.
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    \22\ Church plans are exempt from ERISA pursuant to ERISA 
section 4(b)(2). As such, a third party administrator of a self-
insured church plan established or maintained by an eligible 
organization does not become the plan administrator by operation of 
29 CFR 2510.3-16, although such third party administrators may 
voluntarily provide or arrange separate payments for contraceptive 
services and seek reimbursement for associated expenses under the 
process set forth in 45 CFR 156.50.
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    The content required for the notice represents the minimum 
information necessary for the Departments to determine which entities 
are covered by the accommodation, to administer the accommodation, and 
to implement the policies in the July 2013 final regulations.\23\ 
Comments on the August 2014 interim final regulations did not identify 
any way to administer the accommodation without this information, or 
any alternative means the Departments can use to obtain the required 
information. Nothing in this alternative notice process (or in the EBSA 
Form 700 notice process) provides for a government assessment of the 
sincerity of the religious belief underlying the eligible 
organization's objection. The notice to HHS, and any subsequent 
updates, should be sent electronically to: [email protected], or 
by regular mail to: Centers for Medicare & Medicaid Services, Center 
for Consumer Information and Insurance Oversight, 200 Independence 
Avenue SW., Washington, DC 20201, Room 739H.
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    \23\ An accommodation cannot be effectuated until all of the 
necessary information is submitted. If HHS receives a notice that 
does not include all of the required information, HHS will attempt 
to notify the organization of the incompleteness, so the 
organization can submit additional information to make its notice 
complete.
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    When an eligible organization that establishes or maintains a self-
insured plan subject to ERISA provides a notice to HHS, the Department 
of Labor (DOL) (working with HHS) will send a separate notification to 
each third party administrator of the ERISA plan. The DOL notification 
will inform each third party administrator of the eligible 
organization's religious objection to funding or administering some or 
all contraceptive coverage, will list the contraceptive services to 
which the employer objects, will describe the obligations of the third 
party administrator(s) under 29 CFR 2590.715-2713A and 26 CFR 54.9815-
2713A, and will designate the relevant third party administrator(s) as 
plan administrator under section 3(16) of ERISA for those contraceptive 
benefits that the third party administrator would otherwise manage on 
behalf of the eligible organization. The DOL notification will be an 
instrument under which the plan is operated, and will supersede any 
earlier designation. In establishing and implementing this alternative 
process, DOL is exercising its broad rulemaking authority under title I 
of ERISA, which includes the ability to interpret and apply the 
definition of a plan administrator under ERISA section 3(16)(A).
    If an eligible organization that establishes or maintains an 
insured group health plan or insured student health plan provides a 
notice to HHS under this alternative process, HHS will send a separate 
notification to each health insurance issuer of the plan. HHS's 
notification will inform each health insurance issuer of the eligible 
organization's religious objection to funding or administering some or 
all contraceptive coverage, will list the contraceptive services to 
which the organization objects, and will describe the obligations of 
the issuer(s) under 26 CFR 54.9815-2713A, 29 CFR 2590.715-2713A, and 45 
CFR 147.131. Issuers remain responsible for compliance with the 
statutory and regulatory requirement to provide coverage for 
contraceptive services without cost sharing to participants and 
beneficiaries of insured group health plans, and to enrollees and 
dependents of insured student health plans, notwithstanding that the 
policyholder is an eligible organization with a religious objection to 
contraceptive coverage that will not have to contract, arrange, pay, or 
refer for the coverage.
    Several comments addressed oversight and enforcement to monitor the 
accommodation. The Departments will use their established oversight 
processes, applicable to all the Affordable Care Act market reforms of 
PHS Act title XXVII, part A to monitor compliance with the requirement 
to arrange for or provide separate payments for contraceptive services 
without cost sharing.\24\
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    \24\ The Departments' oversight and enforcement role with 
respect to the market reforms under the Affordable Care Act builds 
upon their respective roles with respect to the market reforms under 
title I of HIPAA. For a description of the latter, see Notice of 
Signing of a Memorandum of Understanding among the Department of the 
Treasury, the Department of Labor, and the Department of Health and 
Human Services at 64 FR 70165 (Dec. 15, 1999).
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(ii) Definition of a Closely Held for-Profit Entity
(a) General Structure of a Closely Held for-Profit Entity
    After issuing the July 2013 final regulations, the Departments 
issued August 2014 proposed regulations in light of the Supreme Court's 
ruling in Hobby Lobby, that, under the Religious Freedom Restoration 
Act of 1993 (RFRA),\25\ the requirement to provide contraceptive 
coverage could not be applied to certain closely held for-profit 
entities that had a religious objection to providing coverage for some 
or all the FDA-approved contraceptive methods. The proposed regulations 
solicited comments on a number of different approaches for defining a 
closely held for-profit entity for purposes of qualifying as an 
eligible organization that can avail itself of an accommodation, and 
solicited comments on a number of other related issues.
---------------------------------------------------------------------------

    \25\ 42 U.S.C. 2000bb et. seq.

---------------------------------------------------------------------------

[[Page 41324]]

    The Departments received more than 75,000 comments in response to 
the August 2014 proposed regulations. Numerous comments addressed 
matters outside the scope of the proposed regulations (for example, 
many comments expressed support for or disagreement with the Supreme 
Court's Hobby Lobby decision, contraception in general, or different 
methods of contraception), and are not addressed in this preamble. To 
the extent comments addressed matters that were within the scope of the 
proposed regulations, those portions of the comments were considered, 
and all significant comments related to matters within the scope of the 
proposed regulations are discussed in this preamble. Many commenters 
expressed support for or disagreement with the general requirement to 
provide coverage for contraceptive services without cost sharing. Some 
commenters expressed support for the notion that any employer that has 
religious objections to covering contraceptive services should either 
be exempt from doing so, or should be able to avail itself of the 
accommodation. Other commenters stated that women should have access to 
contraceptive services without cost sharing, regardless of where they 
work, and that employers should not be permitted to deny them coverage, 
whether the employer's decision is for religious or other reasons. Many 
commenters suggested that the set of closely held for-profit entities 
eligible for the accommodation be defined as narrowly as possible.
    The August 2014 proposed regulations would extend the availability 
of the accommodation to closely held for-profit entities. The preamble 
proposed two possible approaches to defining a closely held for-profit 
entity. Under the first proposed approach, a qualifying closely held 
for-profit entity would be a for-profit entity where none of the 
ownership interests in the entity are publicly traded, and where the 
entity has fewer than a specified number of shareholders or owners (the 
Departments did not propose a specific number, but solicited comment on 
what the number should be). As explained in the preamble to the August 
2014 proposed regulations, there is precedent in other areas of federal 
law for limiting the definition of closely held entities to those with 
a relatively small number of owners.\26\ Under the second proposed 
approach, a qualifying closely held entity would be a for-profit entity 
in which the ownership interests are not publicly traded, and in which 
a specified fraction of the ownership interest is concentrated in a 
limited and specified number of owners (the Departments did not propose 
a specific level of ownership concentration but solicited comment on 
what that level should be). As explained in the preamble to the August 
2014 proposed regulations, this approach also has precedent in federal 
law, which limits certain tax treatment to entities that are more than 
50 percent owned by or for not more than five individuals.\27\ The 
Departments invited comments on the appropriate scope of the definition 
of a qualifying closely held for-profit entity.
---------------------------------------------------------------------------

    \26\ See discussion of definition of S corporations under 
section 1361 of the Tax Code, at 79 FR 51122.
    \27\ See discussion of several Tax code provisions, including 26 
U.S.C. 856(h), 542(a)(2), and 469(j)(1), at 79 FR 51122.
---------------------------------------------------------------------------

    As explained in more detail below, these final regulations extend 
the accommodation to a for-profit entity that is not publicly traded, 
is majority-owned by a relatively small number of individuals, and 
objects to providing contraceptive coverage based on its owners' 
religious beliefs. This definition includes for-profit entities that 
are controlled and operated by individual owners who are likely to have 
associational ties, are personally identified with the entity, and can 
be regarded as conducting personal business affairs through the entity. 
Those entities appear to be the types of closely held for-profit 
entities contemplated by Hobby Lobby, which involved two family-owned 
corporations that were operated in accordance with their owners' shared 
religious beliefs.\28\ The Departments also believe that the definition 
adopted in these regulations includes the for-profit entities that are 
likely to have religious objections to providing contraceptive 
coverage. That assessment is supported by the comments received on the 
proposed regulation. As explained below, the Departments sought comment 
on a definition similar to the one adopted here, and we believe that no 
commenter identified an entity that would want to avail itself of the 
accommodation but that would be excluded by the definition. In 
addition, based on the available information, it appears that the 
definition adopted in these final regulations includes all of the for-
profit entities that have as of the date of issuance of these 
regulations challenged the contraceptive coverage requirement in court.
---------------------------------------------------------------------------

    \28\ See 134 S. Ct. at 2764-2768.
---------------------------------------------------------------------------

    The Departments believe that the definition adopted in these 
regulations complies with and goes beyond what is required by RFRA and 
Hobby Lobby. The Departments have extended the accommodations to the 
specified class of for-profit entities in order to provide additional 
protection to entities that may have religious objections to providing 
contraceptive coverage, and because the Departments believe that 
eligibility for the accommodations should be based on a rule that has 
origins in existing law.
    Under the August 2014 proposed regulations and these final 
regulations, the first prong that an eligible organization (whether it 
be a nonprofit entity or a closely held for-profit entity) must meet in 
order to avail itself of the accommodation is that the entity must 
oppose providing coverage for some or all of any contraceptive item or 
service required to be covered, on account of religious objections. 
This requirement remains unchanged in these final regulations. (In the 
case of a for-profit entity, the entity must be opposed to providing 
these services on account of its owners' religious objections).
    Many commenters supported excluding publicly traded entities from 
the definition of a closely held for-profit entity. However, a few 
commenters stated that a publicly traded entity should not be 
disqualified from the accommodation. Although the entities in Hobby 
Lobby were not publicly traded, one commenter noted that the Court did 
not expressly preclude publicly traded corporations from the 
protections of RFRA. Another commenter stated that if a publicly traded 
corporation could provide evidence of a sincere religious objection to 
providing contraceptive coverage, it should not be precluded from the 
accommodation.
    These final regulations exclude publicly traded entities from the 
definition of an eligible organization. Hobby Lobby did not involve 
RFRA's application to publicly traded companies, and the Supreme Court 
emphasized that ``the idea that unrelated shareholders--including 
institutional investors with their own sets of stakeholders--would 
agree to run a corporation under the same religious beliefs seems 
improbable.'' \29\
---------------------------------------------------------------------------

    \29\ 134 S. Ct. at 2744.
---------------------------------------------------------------------------

    Many commenters favored limiting the number of owners to ``a 
handful,'' without specifying a maximum number. One commenter urged the 
Departments to establish a limit on the maximum number of shareholders 
for closely held entities of 999.
    One commenter favored limiting the number of owners, but stated 
that any particular limit could lead to anomalous

[[Page 41325]]

results for entities with more than the permitted number of owners that 
seek the accommodation. The commenter noted, for example, that if the 
maximum number of shareholders or owners is ten, non-publicly traded 
companies with eleven shareholders would have to provide contraceptive 
coverage, no matter how sincerely held the religious objections of the 
owners. Another commenter who favored the approach stated that the 
definition should be limited to entities that have ten or fewer 
shareholders, and that shareholders should be counted based upon the 
definitions under subchapter S--that is, individuals should be counted 
along with certain trusts and estates. This would account for Qualified 
Subchapter S Trusts, but would not allow for other partnerships or 
corporations to be shareholders. This commenter also urged that members 
of the same family be counted as separate shareholders. Another 
commenter explained that a closely held company is commonly understood 
to be one that chooses S-corporation status or has fewer than 100 
shareholders, and that many are privately held and owned by family 
members. Beyond these characteristics, the commenter urged, the size of 
the company should not matter. One commenter suggested following the 
close corporation definition from the applicable state or, in the 
absence of a corporate form, following the definition of a close 
corporation under Delaware law.
    A few commenters supported a test that would be aligned with one of 
the federal tax law's definitions of a ``closely held corporation.'' 
For example, commenters supported a definition that provides that the 
corporation may not have ownership interests that are publicly traded, 
that more than 50 percent of the outstanding ownership interests in the 
corporation must be owned (directly or indirectly) by five or fewer 
individuals at any time during the last half of the tax year, and that 
the corporation may not be a personal service corporation. The 
commenters favored identifying closely held entities through an 
approach based on this definition because such an approach would be 
easy to apply and already familiar to corporations that apply similar 
concepts under the Code.
    Other commenters were generally opposed to a limited ownership-
concentration test. One commenter observed that under this approach, a 
corporation would be able to concentrate a fraction of ownership, for 
example 50 percent, in a specified number of owners, such as ten 
people. The commenter observed that those ten individuals, who might 
comprise fewer than half of the total number of owners, would be able 
to direct the corporation to seek the accommodation, potentially 
against the wishes of the minority shareholders.
    Several commenters suggested that basing the definition either on 
the number of owners, or upon a concentration of ownership, would be 
inappropriate. One commenter stated that there is no basis in the Hobby 
Lobby decision to restrict the definition based on measures such as 
shareholder numbers, fractions of ownership, or tax rules. Another 
commenter stated that each of the proposed definitions of a ``closely 
held corporation'' is based on an arbitrary metric unrelated to the 
religious beliefs of the owners of the corporation. Another commenter 
stated that any rule that defines ``closely held'' in a narrow manner, 
such as by limiting the number, kind, or percentage control of a share 
of its owners, or by adopting definitions used in the Code, will 
violate RFRA and the Hobby Lobby decision. One commenter stated that a 
numerical test of shareholders will be both under- and over-inclusive, 
capturing corporations that meet the numerical test but whose 
shareholders are not expressing a religious belief through the 
corporation, and failing to capture corporations with a relatively 
large number of shareholders united in their religious interests. 
Another commenter believed that basing the definition of ``closely held 
entity'' solely on the number of owners would not limit eligibility to 
those types of entities addressed in the Hobby Lobby case.
    One commenter believed that, for purposes of qualifying for the 
accommodation, an entity should only employ individuals who adhere to 
the owners' religious beliefs. The Departments do not believe this is a 
necessary characteristic for an entity to qualify as an eligible 
organization that can avail itself of the accommodation, and in Hobby 
Lobby the court granted relief to companies that did not possess this 
feature. Additionally, while the Departments have noted that exempting 
churches and their integrated auxiliaries (which the regulations refer 
to as ``religious employers'') from the requirement to provide 
contraceptive coverage does not impermissibly undermine the 
government's compelling interests in promoting public health and 
ensuring that women have equal access to health care because churches 
are more likely to hire co-religionists,\30\ the exemption to the 
contraceptive coverage requirement was provided against the backdrop of 
the longstanding governmental recognition of a particular sphere of 
autonomy for houses of worship, such as the special treatment given to 
those organizations in the Code.\31\ This exemption for churches and 
houses of worship is consistent with their special status under 
longstanding tradition in our society and under federal law, and is not 
a mere product of the likelihood that these institutions hire 
coreligionists. Hiring coreligionists is not itself a determinative 
factor as to whether an organization should be accommodated or exempted 
from the contraceptive requirements.
---------------------------------------------------------------------------

    \30\ 78 FR 39887.
    \31\ 26 U.S.C. 6033(a)(3)(A).
---------------------------------------------------------------------------

    Another commenter stated that ownership of the entity should be 
limited to family members. The Departments do not believe that 
ownership of a closely held for-profit entity eligible for the 
accommodation should be limited to members of one family. Although many 
closely held corporations are family-owned, existing state and federal 
definitions of closely held or close corporations do not typically 
include this requirement. As stated below, however, for purposes of 
these final regulations, an individual is considered to own the 
ownership interests owned, directly or indirectly, by or for his or her 
family, meaning brothers and sisters (including half-brothers and half-
sisters), spouses, ancestors, and lineal descendants. The Departments 
agree with the commenters who urged us to define a closely held entity, 
for purposes of these regulations, based on an existing federal 
definition. The Departments believe that this approach will minimize 
confusion for entities seeking the accommodation.
    At the same time, the Departments also recognize the need for 
flexibility in the definition for purposes of the accommodation. 
Therefore, the Departments are adopting in these regulations a 
definition that is generally based on--but is more flexible than--the 
definition of a closely held corporation found in the Code \32\ (which 
we refer to as the tax-law definition). Under the tax-law definition, a 
closely

[[Page 41326]]

held corporation is a corporation that has more than 50 percent of the 
value of its outstanding stock owned (directly or indirectly) by five 
or fewer individuals at any time during the last half of the tax year, 
and is not a personal service corporation.\33\ The definitions for 
closely held corporation in various Code provisions reference the 
ownership test for personal holding companies contained in Code section 
542(a)(2), which generally has the effect of identifying those 
corporations that are controlled by a small group of individuals and 
closely affiliated with their owners.
---------------------------------------------------------------------------

    \32\ Code section 469(j)(1) states the ``term `closely held C 
corporation' means any C corporation described in section 
465(a)(1)(B).'' Section 465(a)(1)(B) provides ``a C corporation with 
respect to which the stock ownership requirement of paragraph (2) of 
section 542(a) is met.'' Section 542(a)(2) provides that the 
applicable stock ownership requirement is met if ``[a]t any time 
during the last half of the taxable year more than 50 percent in 
value of its outstanding stock is owned, directly or indirectly, by 
or for not more than 5 individuals.'' Similarly, section 
856(h)(1)(A) provides ``a corporation, trust, or association is 
closely held if the stock ownership requirement of section 542(a)(2) 
is met.''
    \33\ See http://www.irs.gov/Help-&-Resources/Tools-&-FAQs/FAQs-for-Individuals/Frequently-Asked-Tax-Questions-&-Answers/Small-Business,-Self-Employed,-Other-Business/Entities/Entities-5.
---------------------------------------------------------------------------

    Drawing on the tax-law definition, with appropriate modifications 
to reflect the context here, these regulations establish that to be 
eligible for the accommodation, a closely held, for-profit entity must, 
among other criteria, be an entity that is not a nonprofit entity, and 
have more than 50 percent of the value of its ownership interests owned 
directly or indirectly by five or fewer individuals, or must have an 
ownership structure that is substantially similar.
    As previously stated, for purposes of defining a closely held for-
profit entity in these regulations, the Departments are using a 
definition that is more flexible than the tax-law definition of closely 
held corporation. Because the Departments believe that the tax-law 
definition might exclude some entities that should be considered to be 
closely held for purposes of the accommodation, and because some for-
profit entities may have unusual or non-traditional ownership 
structures not readily analyzed under the 5/50 test, the definition 
under these final regulations also includes, as stated above, entities 
with ownership structures that are ``substantially similar'' to 
structures that satisfy the 5-owner/50-percent requirement.
    For example, an entity where 49 percent of the value of the 
outstanding ownership interests are owned directly by six individuals 
could also qualify as a closely held for-profit entity because it has 
an ownership structure that is substantially similar to one in which 
five or fewer individuals hold at least 50 percent of the value of the 
outstanding ownership interests.
    As another example, an entity owned by a series of corporate 
parents, where among the ultimate stockholders are a nonprofit entity 
and a for-profit corporation with three individual owners, who 
collectively own 45 percent of the outstanding ownership interests, 
also has a substantially similar ownership structure.
    We note, however, that a publicly traded entity would not qualify 
as having a substantially similar ownership structure.
    For purposes of the accommodation, the value of the ownership 
interests in the entity, whether the total ownership interests or those 
owned by five or fewer individuals, should be calculated based on all 
ownership interests, regardless of whether they have associated voting 
rights or any other privileges. This is consistent with how the tax-law 
definition of a closely held corporation is applied.
    Because the accommodation will be sought on a prospective basis, 
the Departments do not believe it appropriate to incorporate, from the 
tax-law definition, the time interval over which the test is measured--
that the given ownership structure be in place during the last half of 
the tax year--and instead adopt a test that is measured as of the date 
of the entity's self-certification or notice of its objection to 
provide contraceptive services on account of religious objections.
    The tax-law definition of ``closely held corporation'' excludes 
certain ``personal services corporations,'' such as accounting firms, 
actuarial science firms, architecture firms, and law firms. Although 
there are legitimate reasons for excluding personal service firms from 
the definition of ``closely held corporation'' for purposes of 
taxation, the Departments do not believe the distinction is necessary 
in this context. Therefore, a personal services corporation may qualify 
as a closely held for-profit entity under these final regulations, 
provided it satisfies the other criteria.
    Following the tax-law definition, to determine if more than 50 
percent of the value of the ownership interests is owned by five or 
fewer individuals, the following rules apply:
     Ownership interests owned by or for a corporation, 
partnership, estate, or trust are considered owned proportionately by 
the entity's shareholders, partners, or beneficiaries. For example, if 
a for-profit entity is 100 percent owned by a partnership, and the 
partnership is owned 100 percent by four individuals, the for-profit 
entity, for purposes of these regulations, is considered to be owned 
100 percent by those four individuals.
     An individual is considered to own the ownership interests 
owned, directly or indirectly, by or for his or her family. The 
``family'' includes only brothers and sisters (including half-brothers 
and half-sisters), a spouse, ancestors, and lineal descendants. 
Accordingly, the family members count as a single owner for purposes of 
these final regulations.
     If a person holds an option to purchase ownership 
interests, he or she is considered to be the owner of those ownership 
interests.
    To assist potentially eligible for-profit entities seeking further 
information regarding whether they qualify for the accommodation, an 
entity may send a letter describing its ownership structure to HHS at 
[email protected]. If the entity does not receive a response 
from HHS to a properly submitted letter describing the entity's current 
ownership structure within 60 calendar days, as long as the entity 
maintains that structure, it will be considered to meet the requirement 
set forth in 26 CFR 54.9815-2713A(a)(4)(iii), 29 U.S.C. 2590.715-
2713A(a)(4)(iii), and 45 CFR 147.131(b)(4)(iii). However, an entity is 
not required to avail itself of this process in order to qualify as a 
closely held for-profit entity.
    Based on the information available, it appears that the definition 
of closely held for-profit entity set forth in these final regulations 
includes all the for-profit corporations that have filed lawsuits 
alleging that the contraceptive coverage requirement, absent an 
accommodation, violates RFRA.
    One commenter stated that the definition should include any for-
profit entity that is controlled directly or indirectly by a nonprofit 
eligible organization. The Departments agree, because in this case the 
nonprofit entity will represent one shareholder that owns more than 50 
percent of the ownership interests in the for-profit entity.\34\ The 
same facts and circumstances that are considered in determining whether 
a given for-profit entity qualifies as an eligible for-profit 
organization under these final regulations will also apply when one or 
more of its owners is a nonprofit organization. For purposes of the 
ownership concentration test set forth in these final regulations that 
applies to for-profit entities, a nonprofit organization that has an 
ownership interest in a for-profit entity will be considered one 
individual owner of the for-profit entity, and the non-profit 
organization's percentage ownership in the for-profit entity will be 
attributed to that nonprofit organization.
---------------------------------------------------------------------------

    \34\ See EBSA Form 700.

---------------------------------------------------------------------------

[[Page 41327]]

(b) The Process for Making the Decision To Object To Covering 
Contraceptive Services
    The August 2014 proposed regulations proposed that a closely held 
for-profit entity's objection to covering some or all of the 
contraceptive services otherwise required to be covered on account of 
its owners' sincerely held religious beliefs must be made in accordance 
with the organization's applicable rules of governance, consistent with 
state law. Some comments proposed alternative or additional criteria 
for how the decision must be made. One criterion suggested by many 
commenters was unanimity among all owners regarding opposition to 
contraception. However, one commenter objected to this requirement, 
stating that the regulations should not require unanimous shareholder 
consent because neither the Hobby Lobby decision nor state corporate 
law imposes such a requirement.
    Some commenters favored requiring each equity holder to certify, 
under penalty of perjury, that he or she has a religious objection to 
the entity providing contraceptive coverage. These final regulations do 
not adopt a requirement that the owners unanimously decide that the 
entity will not offer contraceptive coverage based on a religious 
objection, or that any equity holder certify under penalty of perjury 
that he or she has a religious objection to the entity providing the 
coverage. The Departments believe that either requirement would be 
unduly restrictive, and would unnecessarily interfere with for-profit 
entities' decision-making processes. Instead, these final regulations 
provide that the organization's highest governing body (such as its 
board of directors, board of trustees, or owners, if managed directly 
by the owners) must adopt a resolution (or take other similar action 
consistent with the organization's applicable rules of governance and 
with state law) establishing that the organization objects to covering 
some or all of the contraceptive services on account of its owners' 
sincerely held religious beliefs.
(c) Documentation of the Decision To Assert a Religious Objection to 
Contraceptive Coverage
    In the August 2014 proposed regulations, the Departments sought 
comments on whether a for-profit entity seeking the accommodation 
should be required to document its decision-making process for 
objecting to coverage for some or all contraceptive services on account 
of religious objections (as opposed to merely disclosing the fact that 
it made such a decision). Many comments supported a requirement that 
the decision-making process be documented, and that the entity submit, 
to its third party administrator or health insurance issuer, as 
applicable, and to the federal government, documentation of the 
entity's decision. These final regulations require that a for-profit 
entity seeking the accommodation must make the decision pursuant to a 
resolution (or other similar action), as described above. However, the 
Departments are not requiring that this resolution be provided as a 
matter of course to the federal government or any other party. 
Generally, the Departments believe it is sufficient that the fact of 
the decision itself, as opposed to documentation of the decision, be 
communicated as set forth in August 2014 interim final regulations and 
these final regulations. However, with respect to documentation of the 
decision, record retention requirements under section 107 of ERISA 
apply directly to ERISA-covered plans and, with respect to other plans 
or coverage subject to these final regulations, by operation of these 
final regulations, which incorporate the record retention requirements 
under ERISA section 107 by reference. This approach is consistent with 
document standards for nonprofit entities seeking the accommodation.
(d) Disclosure of the Decision To Assert a Religious Objection to 
Contraceptive Services
    In the August 2014 proposed regulations, the Departments sought 
comments on whether a for-profit entity seeking the accommodation 
should be required to disclose publicly or to its employees its 
decision not to cover some or all contraceptive services on account of 
religious objections. This requirement would be in addition to the 
requirement that an eligible organization that is a for-profit entity 
that seeks the accommodation make its self-certification or notice of 
objection to providing contraceptive coverage on account of religious 
objections available for examination upon request by the first day of 
the plan year to which the accommodation applies, and be maintained in 
a manner consistent with the record retention requirements under 
section 107 of ERISA.
    Many commenters suggested that the entity should be required to 
notify HHS of its decision to object (even if it chooses to self-
certify and send the self-certification to its issuer or third party 
administrator). A few commenters stated that all employees and 
prospective employees (or student enrollees and their covered 
dependents) must be made aware of their employer's (or educational 
institution's) refusal to offer contraceptive coverage. One commenter 
stated that a closely held for-profit entity should disclose the 
following to its shareholders and employees: (A) The reasons the 
decision was made, (B) the changes that will take place as a result of 
the decision, and (C) the number of people that will be affected by the 
decision. Another commenter stated that entities availing themselves of 
the accommodation should be required to publicize their justifications 
for denying women access to coverage of medications that serve purposes 
other than contraception. One commenter noted the need of employees to 
know by the employer's annual open enrollment period whether the 
employer is availing itself of the accommodation.
    These final regulations do not establish any additional 
requirements to disclose the decision. The Departments believe that the 
current notice and disclosure standards afford individuals eligible for 
or enrolled in group health plans (and students eligible for or 
enrolled in student health insurance) with an accommodation adequate 
opportunity to know that the employer (or educational institution) has 
elected the accommodation for its group health plan (or insurance 
coverage), and that they are entitled to separate payment for 
contraceptive services from another source without cost sharing. Those 
standards require that, for each plan year to which the accommodation 
applies, a third party administrator that is required to provide or 
arrange payments for contraceptive services, and a health insurance 
issuer required to provide payment for these services, provide to plan 
participants and beneficiaries (or student enrollees and their covered 
dependents) written notice of the availability of separate payments for 
these services contemporaneous with (to the extent possible), but 
separate from, any application materials distributed in connection with 
enrollment or re-enrollment in health coverage. Model language for this 
notice is provided in the regulations.
(e) Sincerity of the Owners' Religious Beliefs
    Many commenters suggested that, for a closely held for-profit 
entity to be eligible for an accommodation, it should not be sufficient 
that the entity's owners object to providing contraceptive coverage. 
Rather, the commenters proposed that owners should also be required to 
agree to operate the entity in a manner consistent with religious

[[Page 41328]]

principles, and in fact to so operate the entity. Some commenters 
pointed out that the July 2013 final regulations require non-profit 
religious organizations that avail themselves of the accommodation to 
``hold themselves out'' as religious organizations.
    The Departments have not adopted such a criterion for for-profit 
entities. The Supreme Court's decision in Hobby Lobby discussed the 
application of RFRA in connection with the religious beliefs of the 
owners of a closely held corporation.\35\ These final regulations 
similarly focus on the religious exercise of the owners of the closely 
held entity and provide that the entity, in advancing the religious 
objection, represent that it does so on the basis of the religious 
beliefs of the owners. The Departments do not believe it is also 
necessary that the entity itself demonstrate by its bylaws, mission 
statement, or other documents or practices that it has a religious 
character. Non-profit entities ordinarily do not have owners in the 
same way as do for-profit entities, and thus the religious character of 
a non-profit entity would be reflected in how it holds itself out.
---------------------------------------------------------------------------

    \35\ See 134 S. Ct. at 2768.
---------------------------------------------------------------------------

(f) Other Steps the Departments Should Take To Ensure Contraceptive 
Coverage With No Cost Sharing
    The August 2014 proposed regulations solicited comments on other 
steps the Departments should take to help ensure that participants and 
beneficiaries (in the case of student health insurance coverage, 
enrollees and dependents) in plans subject to an accommodation are able 
to obtain, without cost, the full range of FDA-approved contraceptives 
without cost sharing. Many commenters stated that a government 
enforcement body should be established to monitor compliance by plan 
sponsors, third party administrators, and health insurance issuers, of 
their respective obligations associated with the accommodation. At this 
time, the Departments do not believe that an independent body need be 
established, although as stated above, the Departments will use their 
established oversight processes, applicable to all the Affordable Care 
Act market reforms of title XXVII of the PHS Act to monitor compliance 
with the requirement to provide contraceptive services without cost 
sharing. As part of those processes, the Departments will work with 
non-compliant parties to bring them into compliance, and will take 
enforcement action as appropriate.
    Other commenters stated that the federal government should ensure 
that no barriers to contraceptive coverage exist due to an enrollee's 
cultural background, English proficiency, disability, or sexual 
orientation. The Departments agree that no barriers should exist. The 
same federal and applicable state laws that would prohibit 
discrimination by employers, group health plans, third party 
administrators, and health insurance issuers generally would also apply 
with respect to the entities arranging for or providing separate 
payments for contraceptive services for women in group health plans and 
student health insurance subject to an accommodation.
    Other commenters urged that the separate payments for contraceptive 
services be provided in the same manner in which the group health plan 
or student health insurance would have otherwise covered these services 
had they not had an accommodation, or in the same manner in which the 
plan or coverage subject to an accommodation covers other, non-
contraceptive benefits. The Departments, however, maintain the view 
that reasonable differences in the way services are paid for or 
provided would not necessarily be inappropriate, provided those 
differences do not create barriers to accessing payments for 
contraceptive services. Another commenter stated that health insurance 
issuers of plans subject to an accommodation should not be permitted to 
require enrollees to have two insurance cards, one for contraceptive 
benefits, and one for other benefits. The Departments do not believe 
that this practice, in of itself, would constitute a barrier to 
accessing separate payments for contraceptive services.
(g) Other Comments That Relate to the July 2013 Final Regulations
    In the August 2014 proposed regulations and interim final 
regulations, the Departments sought comment on other potential changes 
to the July 2013 final regulations in light of the proposed change to 
the definition of eligible organization. In particular, the Departments 
sought comment on applying the approach set forth in the July 2013 
final regulations in the context of the expanded definition of eligible 
organization. The July 2013 final regulations provide for separate 
payments for contraceptive services for participants and beneficiaries 
in self-insured group health plans of eligible organizations in a 
manner that enables these organizations to completely separate 
themselves from administration and payment for contraceptive coverage. 
Specifically, the third party administrator must provide or arrange the 
payments, and the third party administrator can seek reimbursement for 
the costs (including an allowance for administrative costs and margin) 
by making an arrangement with a participating issuer--that is, an 
issuer offering coverage through a Federally-facilitated Exchange 
(FFE). The participating issuer can receive an adjustment to its FFE 
user fees to finance these costs.
    One commenter suggested that the federal government set up a 
program to dispense these services using contractors. Another commenter 
suggested that pharmaceutical companies could provide certain 
contraceptives directly by mail to persons who are told at a dispensing 
pharmacy that their plan has denied coverage. Additionally, the 
pharmaceutical companies could directly supply doctors who prescribe 
birth control, who in turn could dispense directly to patients who are 
not covered under their employer-sponsored group health plan or student 
health insurance coverage. One commenter suggested making contraception 
available for any woman free of charge through a doctor. One commenter 
suggested providing contraceptive care through Medicaid.
    The Departments have not adopted the proposals advanced by these 
comments for two reasons. First, the Departments do not have the legal 
authority to require pharmaceutical companies or doctors to provide 
contraceptives directly, nor do they have the authority to implement 
the other alternative arrangements proposed by these commenters. 
Second, these alternatives raise obstacles to access to seamless 
coverage. Consistent with the statutory objective of promoting access 
to contraceptive coverage and other preventive services without cost 
sharing, plan beneficiaries and enrollees should not be required to 
incur additional costs--financial or otherwise--to receive access and 
thus should not be required to enroll in new programs or to surmount 
other hurdles to receive access to coverage. The Departments believe 
that the third party administrators and health insurance issuers 
already paying for other medical and pharmacy services on behalf of the 
women seeking the contraceptive services are better placed to provide 
seamless coverage of the contraceptive services, than are other 
providers that may not be in the insurance coverage network, and that 
lack the coverage administration infrastructure to verify the identity 
of women in accommodated

[[Page 41329]]

health plans and provide formatted claims data for government 
reimbursement.
    Some commenters suggested other changes to the July 2013 
regulations, with respect to how separate payments for contraceptive 
services provided under the accommodation are funded. One commenter 
expressed concern that the August 2014 proposed regulations are silent 
as to possible funds for reimbursement of costs incurred for 
contraception services where there is no FFE operating in the state. 
This commenter also noted that the regulations do not consider the 
possibility that the cost for contraceptive services may exceed the 
issuer's FFE user fee, nor do they address how a third party 
administrator would be reimbursed if the issuer is no longer a 
participating issuer in the FFE. The commenter suggested the 
Departments consider several different financing options: The user fee 
for the risk adjustment program; the CMS program management fund; the 
user fee for the Medicare Part D program; the Prevention and Public 
Health Fund; medical loss ratio rebates; CMS innovation funding; and 
the health insurance provider fee.
    Another commenter recommended that HHS provide for an expedited 
process of adjusting FFE user fees in case the volume of contraceptive 
claims is greater than expected. This commenter also suggested that the 
Departments also consider alternative means of generating funding for 
this purpose, such as allowing an issuer to charge a premium of at 
least an amount equal to the pro rata share of the rate the eligible 
organization would have paid had it not elected the accommodation, or 
directly subsidize the cost of contraception using funding provided by 
the Prevention and Public Health Fund.
    One commenter stated that the Departments should evaluate the 
limitations of current funding arrangements with respect to the current 
accommodation for eligible non-profit entities, given the additional 
demands of the proposal to expand the accommodation to certain for-
profit entities. The commenter suggested allowing a separate government 
funded reimbursement mechanism for enrollees in both insured and self-
funded plans as an alternative approach to funding the program. If the 
current funding approach is continued, the commenter recommended a 
reassessment of the limitations of the approach for third party 
administrators. If third party administrators remain responsible for 
providing or arranging separate payments for contraceptive services, 
the commenter recommended a broadening of the pool available for 
reimbursement beyond individually negotiated arrangements with issuers 
participating in the FFE, including potentially establishing a single 
pool for reimbursement or finding an alternative, simpler financing 
mechanism for third party administrators, including offsets from 
federal income taxes, and offsets to amounts due from other lines of 
business operated by the third party administrator.
    At this time, the Departments are not adopting an alternative 
approach to funding separate payments for contraceptive services with 
respect to costs incurred for women in plans subject to an 
accommodation, although the Departments will continue to explore the 
feasibility of different ideas, including those proposed in the 
comments.
    One commenter suggested that issuers should be permitted to treat 
the cost of providing separate payments for contraceptive services for 
women in plans subject to an accommodation as an adjustment to claims 
costs for purposes of calculating their medical loss ratios, while 
still being allowed to treat such payments as an administrative cost 
spread across the issuer's entire risk pool.\36\ With respect to 
calculating medical loss ratios, HHS has previously stated in 
rulemaking that an insurer of an accommodated insured group health or 
student plan may include the cost of the actual payments it makes for 
contraceptive services in the numerator of its medical loss ratio.\37\
---------------------------------------------------------------------------

    \36\ See Discussion of how an issuer may achieve cost neutrality 
in the preamble to the July 2013 final regulations, at 78 FR 39878.
    \37\ See Patient Protection and Affordable Care Act; HHS Notice 
of Benefit and Payment Parameters for 2015 (Mar. 11, 2014), at 79 FR 
13809.
---------------------------------------------------------------------------

    Several commenters asked whether, in light of the fact that the 
accommodation was proposed to be expanded to a new set of entities, if 
the Department's discussion in the preamble to the July 2013 final 
regulations about the extent to which the accommodation has an effect 
on other laws, continues to apply.\38\ The Departments explained in 
that discussion that state insurance laws that provide greater access 
to contraceptive coverage than federal standards are unlikely to be 
preempted, and that, in states with broader religious exemptions and 
accommodations with respect to health insurance issuers than those in 
the regulations, plans are still required to comply with the federal 
standard. These principles continue to apply.
---------------------------------------------------------------------------

    \38\ 78 FR 39888.
---------------------------------------------------------------------------

    One commenter stated that the Hobby Lobby decision applies to every 
form of medical care, not just contraception, and that the regulations 
should reflect that. However, in Hobby Lobby, the Court stated:

    In any event, our decision in these cases is concerned solely 
with the contraceptive mandate. Our decision should not be 
understood to hold that an insurance-coverage mandate must 
necessarily fail if it conflicts with an employer's religious 
beliefs. Other coverage requirements, such as immunizations, may be 
supported by different interests (for example, the need to combat 
the spread of infectious diseases) and may involve different 
arguments about the least restrictive means of providing them.\39\
---------------------------------------------------------------------------

    \39\ 134 S. Ct. at 2783.

    Regarding fully insured plans, one commenter noted that the July 
2013 final regulations permit issuers that are providing separate 
payments for contraceptive services under the accommodation, to pay for 
all FDA-approved contraceptive services, or only for those services to 
which the eligible organization objects to covering on religious 
grounds. The commenter noted that this approach simplifies the 
operational issues associated with implementing the accommodation 
across multiple employers, and sought clarification that this approach 
is available to third party administrators as well. The Departments 
clarify that this option is available to third party administrators 
with respect to self-insured plans.
    One commenter requested that notices of objection to covering 
contraceptive services on religious grounds be provided with at least 
60 days' advance notice, and that any change in objection status based 
on change of ownership of the employer not be implemented until the 
next plan year or policy year. The Departments do not adopt this 
suggestion. Instead, the Departments are extending, to closely held 
for-profit entities, the same timeframes that have been in effect for 
non-profit eligible organizations, that is, a plan sponsor can provide 
such notice, and implement plan benefit changes associated with the 
accommodation, at any time. For group health plans subject to ERISA, 
existing notice and timeframe requirements under ERISA apply.
    Another commenter stated that health insurance issuers and third 
party administrators should only be required to provide or arrange for 
separate payments for contraceptive services for eligible organizations 
that have invoked an accommodation no earlier than the

[[Page 41330]]

first day of the first plan year that follows publication of these 
final regulations. To provide employers, institutions of higher 
education, third party administrators, and health insurance issuers 
adequate time to comply, these final regulations apply beginning on the 
first day of the first plan year (or, in the individual market, the 
first policy year) after these regulations are effective. Accordingly 
these final regulations are effective beginning on the first day of the 
first plan year (or, in the individual market, the first policy year) 
that begins on or after September 14, 2015.
    Several commenters stated that the decision to not cover some or 
all contraceptives on religious grounds should be made annually. The 
Departments do not believe such a requirement is appropriate or 
necessary.
    One commenter asked for clarification as to how a notice of 
objection would be provided by employers purchasing coverage through 
the Small Business Health Options Program (SHOP) and whether there will 
be a mechanism in place that permits an eligible organization to select 
a small group plan and provide a notice of objection. With respect to 
employers purchasing coverage through the SHOP, health insurance 
issuers selling policies through it, and participants and beneficiaries 
in such plans, all of the rights and obligations that are associated 
with these regulations apply no differently than if the employer were 
to purchase coverage outside of the SHOP.
    One commenter stated that providing separate payments for 
contraceptive services is not cost-neutral for an issuer, and that it 
is not appropriate for an issuer of a student health insurance plan to 
be required to make separate payments for contraceptive services for 
enrollees in student health plans subject to an accommodation, and 
suggested that the Marketplaces should instead offer free individual 
market policies covering contraception to those who desire such 
coverage, or that such individuals get such services through existing 
clinics. In the alternative, the commenter proposed an ``above the 
line'' deduction on their federal income taxes for all costs incurred 
for separate payments made for contraceptive services for enrollees in 
a student health plan subject to an accommodation. The Departments do 
not adopt the comment. For the reasons stated in the July 2013 final 
regulations, the Departments believe that covering contraceptive 
services is cost-neutral for an issuer at risk for the enrollees in a 
plan subject to an accommodation. With respect to student health 
insurance plans, these regulations finalize a clarification proposed in 
the August 2014 proposed regulations under which a reference to the 
definition of ``institution of higher education'' found in 20 U.S.C. 
1002 is added to 45 CFR 147.131(f), to clarify that both nonprofit and 
closely held for-profit institutions of higher education, with respect 
to their insured student health plans, may qualify as eligible 
organizations.

III. Economic Impact and Paperwork Burden

A. Executive Orders 12866 and 13563--Department of Health and Human 
Services and Department of Labor

    Executive Order 12866 (58 FR 51735) directs agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects; distributive impacts; and equity). Executive 
Order 13563 (76 FR 3821, January 21, 2011) is supplemental to and 
reaffirms the principles, structures, and definitions governing 
regulatory review as established in Executive Order 12866.
    Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a proposed 
rule--(1) having an annual effect on the economy of $100 million or 
more in any one year, or adversely and materially affecting a sector of 
the economy, productivity, competition, jobs, the environment, public 
health or safety, or state, local or tribal governments or communities 
(also referred to as ``economically significant''); (2) creating a 
serious inconsistency or otherwise interfering with an action taken or 
planned by another agency; (3) materially altering the budgetary 
impacts of entitlement grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) raising novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.
    A regulatory impact analysis (RIA) must be prepared for major rules 
with economically significant effects ($100 million or more in any 1 
year), and a ``significant'' regulatory action is subject to review by 
the Office of Management and Budget (OMB). As discussed below, the 
Departments anticipate that these regulations--most notably the 
policies first established in the 2010 interim final rule--are likely 
to have economic impacts of $100 million or more in any one year, and 
therefore meet the definition of ``significant rule'' under Executive 
Order 12866. Therefore, the Departments have provided an assessment of 
the potential costs, benefits, and transfers associated with these 
final regulations. In accordance with the provisions of Executive Order 
12866, these final regulations were reviewed by the OMB.
1. Need for Regulatory Action
    These final regulations finalize the July 2010 interim final 
regulations related to coverage of recommended preventive services, the 
August 2014 interim final regulations related to the process an 
eligible organization uses to provide notice of its religious 
objections to the coverage of contraceptive services, and the August 
2014 proposed regulations related to the definition of eligible 
organization.
    As discussed later in the RIA, historically there has been an 
underutilization of preventive services, as health insurance issuers 
have had little incentive to cover these services. Currently, there is 
still an underutilization of some preventive services due to a number 
of barriers, including costs, ethnic/gender disparities,\40\ and a 
general lack of knowledge by those with medical coverage.\41\ While 
many of these factors are being addressed through the Affordable Care 
Act and these final regulations, the current underutilization of 
preventive services stems from three main factors. First, due to 
turnover in the health insurance market, health insurance issuers have 
historically lacked incentives to cover preventive services, whose 
benefits may only be realized in the future when an individual may no 
longer be enrolled with that issuer. Second, many preventive services 
generate benefits that do not accrue immediately to the individual that 
receives the services, making the individual less likely to avail 
themselves of the services, especially in the face of direct, immediate 
costs. Third, some of the benefits of preventive services accrue to 
society as a whole, and thus do not get factored into an individual's 
decision making over whether to obtain such services.
---------------------------------------------------------------------------

    \40\ Call, K. T., McAlpine, D. D., Garcia, C. M., Shippee, N., 
Beebe, T., Adeniyi, T. C., & Shippee, T. (2014). Barriers to Care in 
an Ethnically Diverse Publicly Insured Population. Medical Care.
    \41\ Reed, M. E., Graetz, I., Fung, V., Newhouse, J. P., & Hsu, 
J. (2012). In consumer-driven health plans, a majority of patients 
were unaware of free or low-cost preventive care. Health Affairs, 
31(12), 2641-2648.

---------------------------------------------------------------------------

[[Page 41331]]

    The July 2010 interim final regulations and these final regulations 
address these market failures through two avenues. First, the 
regulations require coverage of recommended preventive services by non-
grandfathered group health plans and health insurance issuers in the 
group and individual markets, thereby overcoming plans' lack of 
incentive to invest in these services. Second, the regulations 
eliminate cost-sharing requirements, thereby removing a barrier that 
could otherwise lead an individual to not obtain such services, given 
the long-term and partially external nature of these benefits.
    The August 2014 interim final regulations provided an alternate 
process that eligible organizations can use to provide notice of their 
religious objections to providing coverage for some or all of the 
contraceptive services to HHS, instead of providing the EBSA Form 700 
to the issuers or third party administrators of their group health 
plan. The provisions of those interim final regulations are being 
finalized without any changes.
    These final regulations also amend the definition of an eligible 
organization to include a closely held for-profit entity that has a 
religious objection to providing coverage for some or all of the 
contraceptive services otherwise required to be covered by the group 
health plan or student health insurance plan established, maintained, 
or arranged by the organization.
    These final regulations are necessary in order to provide rules 
that plan sponsors and issuers can continue to use to determine how to 
provide coverage for certain recommended preventive services without 
the imposition of cost sharing, to ensure women's ability to receive 
those services, and to respect the religious beliefs of qualifying 
eligible organizations with respect to their objection to covering 
contraceptive services.
2. Summary of Impacts
    In accordance with OMB Circular A-4, Table III.1 below depicts an 
accounting statement summarizing the Departments' assessment of the 
benefits, costs, and transfers associated with this regulatory action. 
It is expected that all non-grandfathered plans are already complying 
with the provisions of the July 2010 and August 2014 interim final 
regulations. Therefore, benefits related to those regulations have been 
experienced and costs have already been incurred. The Departments are 
providing an assessment of the impacts of existing provisions already 
experienced and expected in the future, in addition to the anticipated 
impacts of new provisions in these final regulations.

                      Table III.1--Accounting Table
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Benefits:
------------------------------------------------------------------------
    Qualitative:
        * Increased access to and utilization of recommended preventive
         services, leading to the following benefits:
            (1) Prevention and reduction in transmission of illnesses as
             a result of immunization and screening of transmissible
             diseases;
            (2) delayed onset, earlier treatment, and reduction in
             morbidity and mortality as a result of early detection,
             screening, and counseling;
            (3) increased productivity and reduced absenteeism; and
            (4) savings from lower health care costs.
        * Benefits to eligible for-profit entities from not being
         required to facilitate access to or pay for services that
         contradict their owners' religious beliefs.
------------------------------------------------------------------------
Costs:
------------------------------------------------------------------------
    Qualitative:
        * New costs to the health care system when individuals increase
         their use of preventive services in response to the changes in
         coverage and cost-sharing requirements of preventive services.
         The magnitude of this effect on utilization depends on the
         price elasticity of demand and the percentage change in prices
         facing those with reduced cost sharing or newly gaining
         coverage.
        * Administrative cost to eligible for-profit entities to provide
         self-certification to issuers or third party administrators or
         notice to HHS.
        * Administrative cost to issuers and third party administrators
         for plans sponsored by eligible closely held for-profit
         entities to provide notice to enrollees.
------------------------------------------------------------------------
Transfers:
------------------------------------------------------------------------
        * Costs previously paid out-of-pocket for certain preventive
         services are now covered by group health plans and issuers.
        * Risk pooling in the group market will result in sharing
         expected cost increases across an entire plan or employee group
         as higher average premiums for all enrollee. However, not all
         of those covered will utilize preventive services to an
         equivalent extent. As a result, these final regulations create
         a small transfer from those paying premiums in the group market
         utilizing less than the average volume of preventive services
         in their risk pool to those whose utilization is greater than
         average. To the extent there is risk pooling in the individual
         market, a similar transfer will occur.
        * Transfer of costs related to certain preventive services from
         eligible self-funded closely held for-profit entities to third
         party administrators and issuers that provide (or arrange)
         separate payments for contraceptive services. Third party
         administrators can make arrangements with an issuer offering
         coverage through an FFE to obtain reimbursement for its costs,
         and the issuer offering coverage through the FFE can receive an
         adjustment to the FFE user fee.
------------------------------------------------------------------------

3. Estimated Number of Affected Entities
    For purposes of this analysis, the Departments have defined a large 
group health plan as an employer plan with 100 or more workers and a 
small group plan as an employer plan with less than 100 workers. The 
Departments estimate that there are approximately 140,000 large and 2.2 
million small ERISA-covered group health plans with an estimated 93.2 
million participants in large group plans and 36 million participants 
in small group plans. The Departments estimate that there are 
approximately 128,000 governmental plans with 39 million participants 
in large plans and 2.8 million participants in small plans.\42\ In 
2013, approximately

[[Page 41332]]

12.26 million participants were covered by individual health insurance 
policies.\43\
---------------------------------------------------------------------------

    \42\ All participant counts and the estimates of individual 
policies are from the U.S. Department of Labor, EBSA calculations 
using the March 2013 Current Population Survey Annual Social and 
Economic Supplement and the 2012 Medical Expenditure Panel Survey 
and the 2012 Census of Government.
    \43\ This estimate includes enrollment in student health 
insurance plans. Source: Data from Medical Loss Ratio submissions 
for 2013 reporting year, available at http://www.cms.gov/CCIIO/Resources/Data-Resources/mlr.html.
---------------------------------------------------------------------------

    Group health plans and health insurance issuers offering group and 
individual health insurance coverage that are not grandfathered health 
plans will be affected by these regulations. There are an estimated 500 
issuers offering group and individual health insurance coverage.\44\ 
The number of employer-sponsored grandfathered plans has been 
decreasing steadily since 2010. Thirty-seven percent of employers 
offering health benefits offered at least one grandfathered health plan 
in 2014, compared to 54 percent in 2013 and 72 percent in 2011. 
Therefore, more and more enrollees in employer-sponsored plans have 
gained access to preventive services without cost sharing. Twenty-six 
percent of covered workers were enrolled in a grandfathered health plan 
in 2014, as compared to 36 percent in 2013 and 56 percent in 2011.\45\ 
In the individual market, it is expected that a large proportion of 
individual policies are not grandfathered. In addition, enrollees in 
qualified health plans purchased through the Marketplaces have non-
grandfathered policies. At the end of the second enrollment period, 
nearly 11.7 million individuals selected or were automatically 
reenrolled into a 2015 health insurance plan through the 
Marketplaces.\46\
---------------------------------------------------------------------------

    \44\ Source: Data from Medical Loss Ratio submissions for 2013 
reporting year.
    \45\ See Kaiser Family Foundation and Health Research and 
Education Trust, Employer Health Benefits 2014 Annual Survey (2014), 
available at http://kff.org/private-insurance/report/2014-employer-health-benefits-survey/; and Employer Health Benefits 2011 Annual 
Survey (2011) available at http://kff.org/health-costs/report/employer-health-benefits-annual-survey-archives/.
    \46\ This estimate represents the number of individuals who have 
selected, or been automatically reenrolled into a 2015 plan through 
the Marketplaces, with or without payment of premium. See ASPE, 
Health Insurance Marketplaces 2015 Open Enrollment Period: March 
Enrollment Report, available at http://aspe.hhs.gov/health/reports/2015/MarketPlaceEnrollment/Mar2015/ib_2015mar_enrollment.pdf.
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    It is uncertain how many closely held for-profit entities have 
religious objections to providing coverage for some or all of the 
contraceptive services otherwise required to be covered. Based on 
litigation and communication received by HHS, the Departments estimate 
that at least 87 closely held for-profit eligible organizations will 
seek the religious accommodation provided in these final regulations. 
Health insurance issuers (or third party administrators for self-
insured plans) for the group health plans established or maintained by 
these eligible organizations (and health insurance issuers of closely 
held for-profit institutions of higher education) will assume sole 
responsibility for providing (or arranging) separate payments for 
contraceptive services directly for plan participants and beneficiaries 
(and for student enrollees and dependents), without cost sharing, 
premium, fee, or other charge to plan participants or beneficiaries (or 
student enrollees and dependents) or to the eligible organization or 
its plan. In addition, based on litigation, the Departments estimate 
that at least 122 non-profit eligible organizations will have the 
option to provide notice of their religious objections to HHS, instead 
of providing the EBSA Form 700 to the issuer or third party 
administrator of their group health plan. These numbers are likely to 
underestimate the number of eligible organizations that will seek the 
accommodation. However, these are the best estimates available to the 
Departments at this time.
4. Benefits
    In the July 2010 interim final regulations, the Departments 
anticipated several types of benefits that will result from expanding 
coverage and eliminating cost sharing for recommended preventive 
services. First, individuals will experience improved health as a 
result of reduced transmission, prevention or delayed onset, and 
earlier treatment of disease. Second, healthier workers and children 
will be more productive with fewer missed days of work or school. 
Third, some of the recommended preventive services will result in 
savings due to lower health care costs.
    As stated in the July 2010 interim final regulations, preventive 
service coverage is limited to those recommended by the Task Force 
(grade of A or B), an applicable Advisory Committee, and HRSA.\47\ 
These final regulations can be expected to continue to increase access 
to and utilization of these services, which have been historically 
underutilized. For example, 27.7 percent of adults aged 50 to 75 have 
never been screened for colorectal cancer (such as sigmoidoscopy and/or 
colonoscopy).\48\ In 2012, the median percentage of women over the age 
of 18 that have not had a pap test in the past 3 years was 22 
percent.\49\ The CDC recently found that in adults over 50, fewer than 
30 percent are up-to-date with core preventive services.\50\
---------------------------------------------------------------------------

    \47\ See http://www.ahrq.gov/research/findings/final-reports/uspstf/uspstfeval.pdf for details of the Task Force grading and 
http://www.uspreventiveservicestaskforce.org/Page/Name/uspstf-a-and-b-recommendations/ for current recommendations.
    \48\ CDC. Vital Signs: colorectal cancer screening test use--
United States, 2012. MMWR 2013;62:881-888.
    \49\ Behavioral Risk Factor Surveillance System Numbers (2012), 
http://apps.nccd.cdc.gov/BRFSS/page.asp?cat=CC&yr=2012&state=All#CC.
    \50\ CDC Focuses on Need for Older Adults To Receive Clinical 
Preventive Services, brief released by CDC (2012), http://www.cdc.gov/aging/pdf/cps-clinical-preventive-services.pdf.
---------------------------------------------------------------------------

    As explained in the July 2010 interim final regulations, numerous 
studies have shown that improved coverage, or reduced costs, of 
preventive services results in higher utilization of these services 
\51\ leading to potentially substantial benefits. Research suggests 
there are significant health benefits associated with a number of newly 
covered preventive services required under the statute and these final 
regulations. The National Council on Preventive Priorities (NCPP) has 
estimated that achieving a utilization rate of 90 percent for eight 
clinical preventive services would save more than 150,000 lives each 
year in the U.S., including 42,000 if smokers were offered medication 
or other cessation assistance (Table III.2).\52\ From an economic 
viewpoint, many preventive services offer high economic value \53\ 
resulting in an estimated savings of $3.7 billion.\54\ Even if a rate 
of 90 percent utilization is not achieved due to a variety of barriers, 
including financial, service accessibility, and socioeconomic 
disparities, the Departments expect that utilization will increase 
among those individuals in plans subject to the regulations because the 
provisions eliminate cost sharing and require coverage for these 
services. It is expected that the increased utilization

[[Page 41333]]

of these services will lead providers to increase their use of these 
services knowing that they will be covered without cost sharing.
---------------------------------------------------------------------------

    \51\ See e.g., Meeker D, Joyce GF, Malkin J, et al. Coverage and 
preventive screening. Health Serv Res. 2011; 46:173-184. Study found 
that patients responded to the exclusion of preventive services from 
deductibles and reducing cost sharing resulted in increased 
utilization of lipid screening, pap smears, and other services. See 
e.g., Jill Bernstein, Deborah Chollet, and G. Gregory Peterson, 
Encouraging Appropriate Use of Preventive Health Services, Issue 
Brief Mathematica Policy Research Inc., Princeton, NJ (May 2010) 
Number 2.
    \52\ National Commission on Prevention Priorities. Preventive 
Care: A National Profile on Use, Disparities, and Health Benefits. 
Partnership for Prevention, August 2007. http://www.prevent.org/data/files/initiatives/ncpppreventivecarereport.pdf.
    \53\ Woolf, Steven. A Closer Look at the Economic Argument for 
Disease Prevention. JAMA 2009; 301(5):536-538.
    \54\ Maciosek, Michael V., Coffield, Ashley B., Flottemesch, et 
al., Use of Preventive Services In U.S. Health Care Could Save Lives 
At Little Or No Cost. Health Affairs 2010, 29(9) 1656-1660.

              Table III.2--Lives Saved From Increasing Utilization of Selected Preventive Services
----------------------------------------------------------------------------------------------------------------
                                                                                                  Lives saved
                                                                                   Percent      annually if  90
             Preventive service                       Population group           utilization        percent
                                                                                   (2005)         utilization
----------------------------------------------------------------------------------------------------------------
Regular aspirin use.........................  Men 40+/Women 50+..............              40             45,000
Smoking cessation (medication and advice)...  All adult smokers..............              28             42,000
Colorectal cancer screening.................  Adults 50+.....................              48             14,000
Influenza vaccination.......................  Adults 50+.....................              37             12,000
Cervical cancer screening (in past 3 years).  Women 18-64....................              83                620
Cholesterol screening.......................  Men 35+/Women 45+..............              79              2,450
Breast cancer screening (in past 2 years)...  Women 40+......................              67              3,700
Chlamydia screening.........................  Women 16-25....................              40             30,000
----------------------------------------------------------------------------------------------------------------
Source: National Commission on Prevention Priorities, 2007.

    Studies comparing the utilization of preventive services among 
adults show utilization rates range from as high as 89 percent for 
blood pressure checks to only 40 percent for annual flu 
vaccinations.\55\ Under the Affordable Care Act, there have been 
significantly higher usage rates of several preventive services in 
young adults and women, including blood pressure tests, cholesterol 
screening, and contraceptive services.\56\ Numerous studies have shown 
that improved coverage, or reduced costs, of preventive services 
results in higher utilization of these services \57\ leading to 
potentially substantial benefits. The Departments expect that 
utilization of preventive services will continue to increase over time 
among those individuals in plans affected by these regulations because 
the provisions eliminate cost sharing and require coverage for these 
services.
---------------------------------------------------------------------------

    \55\ The Commonwealth Fund. ``Current Trends in Health Coverage 
and the Effects of Implementing the Affordable Care Act'' (2013). 
http://www.commonwealthfund.org/~/media/files/publications/fund-
report/2013/apr/
1681_collins_insuring_future_biennial_survey_2012_final.pdf.
    \56\ See. e.g., Lau JS, Adams SH, Park MJ, Boscardin WJ, Irwin 
CE. Improvement in preventive care of young adults after the 
affordable care act: the affordable care act is helping. JAMA 
Pediatr. 2014; 168(12):1101-1106. See e.g., Sonfield, A., Tapales, 
A., Jones RK., Finer, LB. Impact of the federal contraceptive 
coverage guarantee on out-of-pocket payments for contraceptives: 
2014 update. Contraception, 2015: 91(1): 44-48.
    \57\ See e.g., Meeker D, Joyce GF, Malkin J, et al. Coverage and 
preventive screening. Health Serv Res. 2011; 46:173-184. Study found 
exclusion of deductibles from, and reduced cost sharing of 
preventive services resulted in increased utilization of lipid 
screening, pap smears, and other services. See e.g., Jill Bernstein, 
Deborah Chollet, and G. Gregory Peterson, Issue Brief Mathematica 
Research Policy Inc., Princeton, NJ (May 2010) Number 2.
---------------------------------------------------------------------------

    Some recommended preventive services have both individual and 
public health value. Vaccines have reduced or eliminated serious 
diseases that, prior to vaccination, routinely caused serious illnesses 
or deaths. Maintaining high levels of immunization in the general 
population protects the un-immunized from exposure so that individuals 
who cannot receive, or who do not have a sufficient immune response to 
the vaccine, are indirectly protected.\58\
---------------------------------------------------------------------------

    \58\ See Modern Infectious Disease Epidemiology by Johan 
Giesecke 1994, Chapter 18, The Epidemiology of Vaccination.
---------------------------------------------------------------------------

    A second type of benefit of these final regulations is improved 
workplace productivity and decreased absenteeism for school children. A 
study by Gallup has found that among workers working at least 30 hours 
a week, those considered overweight or obese with one or more chronic 
condition will miss one to 3.5 days of work a month.\59\ With an 
estimated 450 million days lost to absenteeism, the cost of lost 
productivity due to personal health or the inability to concentrate due 
to their own or a family member's illness is estimated to be between 
$153 and $260 billion annually.\60\
---------------------------------------------------------------------------

    \59\ Unhealthy U.S. Workers' Absenteeism Costs $153 Billion. 
Well-Being, Gallop October 17, 2011 at http://www.gallup.com/poll/150026/Unhealthy-Workers-Absenteeism-Costs-153-Billion.aspx.
    \60\ Ibid, see e.g., Health and Productivity Among U.S. Workers, 
Karen Davis, Ph.D., Sara R. Collins, Ph.D., Michelle M. Doty, Ph.D., 
Alice Ho, and Alyssa L. Holmgren, The Commonwealth Fund, August 
2005. http://www.commonwealthfund.org/publications/issue-briefs/2005/aug/health-and-productivity-among-u-s-workers.
---------------------------------------------------------------------------

    Illness and poorly controlled chronic disease also contribute to 
increased absenteeism among school children. Recent data indicates that 
in the 2011-2012 academic year, 6.2 percent of children aged 6 through 
17 missed 11 or more days of school.\61\ Studies have shown that 
student health and well-being have been positively linked to students' 
academic outcomes, including attendance, grades, test scores, and high 
school graduation.\62\ As discussed in the July 2010 interim final 
rules, studies show that reduced cost sharing and increased access to 
care can improve productivity in both schools and the labor market. 
Thus, it is expected that these final regulations can have a 
substantial benefit to the children in the nation's education system 
and the labor market, both current and future.
---------------------------------------------------------------------------

    \61\ Children Who Missed 11 or More Days of School per Year Due 
to Illness or Injury, Kids Count Data Center at http://datacenter.kidscount.org/data/tables/5202-children-who-missed-11-or-more-days-of-school-per-year-due-to-illness-or-injury?loc=1&loct=2#detailed/1/any/false/1021,18,14/691,30,18/11683.
    \62\ Vaughn, B., Princiotta, D., Barry, M., Fish, H., & Schmitz, 
H. (2013). Safe Supportive Living Brief: Schools and The Affordable 
Care Act. https://safesupportivelearning.ed.gov/sites/default/files/1953_Schools%20Affordable%20Care%20Brief_d3%20lvr.pdf.
---------------------------------------------------------------------------

    A third type of benefit from some preventive services is cost 
savings. Increasing the provision of preventive services is expected to 
reduce the incidence or severity of illness, and, as a result, reduce 
expenditures on treatment of illness. As discussed in the July 2010 
interim final regulations and elsewhere,\63\ childhood vaccinations 
have been found to generate considerable benefit and savings to both 
individuals and society. Employing a decision analysis cohort model of 
U.S. children born during 1994-2013, researchers at CDC analyzed the 
economic impact of DTaP (diphtheria and tetanus toxoids and acellular 
Pertussis), Hib (Haemophilus influenza type b), Polio (OPV then IPV), 
MMR (measles, mumps and rubella), Hepatitis B, varicella, pneumococcal 
disease (PCV, 7-valent and 13-valent), and rotavirus vaccines in 
children aged <=6

[[Page 41334]]

years. The study estimates that among the 78.6 million children born 
during this period, these routine immunizations will prevent 322 
million illnesses and 21 million hospitalizations, averting 732,000 
premature deaths over their lifetime. Furthermore, it was estimated 
that these routine vaccinations will potentially avert $402 billion in 
direct costs and $1.5 trillion in societal costs and a net savings of 
$295 billion and $1.38 trillion for payers and society, respectively 
(in 2013 dollars).\64\
---------------------------------------------------------------------------

    \63\ See e.g. Maciosek, Michael V., Coffield, Ashley B., 
Flottemesch, et al., Use of Preventive Services In U.S. Health Care 
Could Save Lives At Little Or No Cost. Health Affairs 2010 29(9) 
1656-1660. See eg. Zhou F, Santoli J, Messonnier ML, et al. Economic 
Evaluation of the 7-Vaccine Routine Childhood Immunization Schedule 
in the United States, 2001. Arch Pediatr Adolesc Med. 2005; 
159(12):1136-1144.
    \64\ Whitney, CG., Zhou, F., Singleton, J., Schuchat, A. 
Benefits from Immunization During the Vaccines of Children Program 
Era--United States, 1994-2013. MMWR 2014;63(16):352-355.
---------------------------------------------------------------------------

    As with immunizations, other preventive services have been 
estimated to have cost-savings benefits. As discussed in the July 2010 
interim final regulations, aspirin use with high risk adults and 
tobacco cessation and screening can both yield net savings. For 
example, in Massachusetts, the availability of tobacco cessation 
treatments combined with promotional campaigns resulted in a ten 
percent decline in Medicaid enrolled smokers, a $3.12 savings for every 
dollar spent on the benefit.\65\ As discussed in more detail in the 
July 2010 interim final regulations, another area where prevention can 
achieve savings is obesity prevention and reduction. Based on recent 
guidelines, up to 116.1 million American adults are candidates for both 
pharmaceutical and behavioral treatments for weight loss, and up to 32 
million are eligible for bariatric surgery.\66\ According to the CDC, 
from 2011-2012, 16.9 percent of children 2 through 19 years of age and 
34.9 percent of adults aged 20 and over were obese (defined as having a 
body mass index (BMI) greater than or equal to the age and sex-specific 
95th percentiles of the 200 CDC growth charts).\67\ One study used the 
number of obese and overweight twelve-year olds in 2005 to simulate a 
cohort over their lifetimes, indicating that a sustained one-
percentage-point decrease in the prevalence of obesity over the 
lifetime of this cohort would result in an estimated savings of $260.4 
million in total medical expenditures.\68\ These final regulations are 
expected to increase the take-up rate of preventative services 
counseling for obesity and other conditions among patients, and lead 
physicians to increase appropriate referrals for such services. The 
effect of these final regulations is expected to be magnified due to 
the numerous public and private sector initiatives dedicated to 
combating the obesity epidemic and smoking cessation.
---------------------------------------------------------------------------

    \65\ McAfee, T., Babb, S., McNabb, S., Fiore, MC. N Engl J Med 
2015; 372:5-7.
    \66\ Stevens, J., Oakkar, EE., Cui, Z., Cai, J., Truesdale, KP. 
US adults recommended for weight reduction by 1998 and 2013 obesity 
guidelines, NHANES 2007-2012, 2015 Obesity 23(3) 527-531.
    \67\ Ogden CL, Carroll MD, Kit BK, Flegal KM. Prevalence of 
Childhood and Adult Obesity in the United States, 2011-2012. JAMA. 
2014; 311(8):806-814.
    \68\ Trasande, L., 2010, How Much Should We Invest in Preventing 
Childhood Obesity? Health Affairs, 29, no. 3:372-378.
---------------------------------------------------------------------------

    Eligible closely held for-profit entities that seek the 
accommodation to exclude coverage for contraceptive services from 
health coverage offered to their employees and students, and eligible 
organizations that opt to provide notice to HHS, will benefit from not 
being required to facilitate access to or pay for coverage that are 
contrary to their owners' religious beliefs. Women enrolled in plans 
under this accommodation will have continued access to contraceptive 
services without cost sharing.
5. Costs and Transfers
    The changes in how plans and issuers continue to cover the 
recommended preventive services resulting from these final regulations 
will result in changes in covered benefits and premiums for individuals 
in plans and health insurance coverage subject to these final 
regulations. New costs to the health system result when individuals 
increase their use of preventive services in response to the changes in 
coverage of those services. Cost sharing, including coinsurance, 
deductibles, and copayments, divides the costs of health services 
between the plan or issuer and the enrollees. The removal of cost 
sharing increases the quantity of services demanded by lowering the 
direct cost of the service to consumers. Therefore, the Departments 
expect that the statute and these final regulations will continue to 
increase utilization of the covered preventive services. The magnitude 
of this effect on utilization depends on the price elasticity of 
demand.
    Several studies have found that individuals are sensitive to prices 
for health services.\69\ CDC researchers who studied out-of pocket 
costs of immunizations for privately insured children up to age 5 (in 
families in Georgia in 2003) found that a one percent increase in out-
of-pocket costs for routine immunizations (DTaP, IPV, MMR, Hib, and Hep 
B) was associated with a 0.07 percent decrease in utilization.\70\
---------------------------------------------------------------------------

    \69\ Liu, S., and Chollet, D., Price and Income Elasticity of 
the Demand for Health Insurance and Health Care Services: A Critical 
Review of the Literature, Mathematica Policy Research Inc., (March 
2006) http://www.mathematica-mpr.com/~/media/publications/PDFs/
priceincome.pdf. See e.g., Ringel, JS., Hosek, SD., Vollaard, BA., 
and S. Mahnovski (2002), The elasticity of demand for health care; A 
review of the literature and its application to the military health 
system, National Defense Research Institute, RAND Health. http://www.rand.org/content/dam/rand/pubs/monograph_reports/2005/MR1355.pdf.
    \70\ See e.g., Noelle-Angelique Molinari et al., ``Out-of-Pocket 
Costs of Childhood Immunizations: A Comparison by Type of Insurance 
Plan,'' Pediatrics, 120(5) pp. e1148-e1156 (2007).
---------------------------------------------------------------------------

    Eligible closely held for-profit entities that seek the 
accommodation for contraceptive services will incur administrative 
costs to provide self-certifications to issuers or third party 
administrators or notices to HHS. Issuers and third party 
administrators for health plans sponsored by these eligible 
organizations will also incur administrative costs to provide 
notifications to enrollees. The costs related to these information 
collection requirements are estimated in section D below.
    Along with new costs of induced utilization, there are transfers 
associated with these final regulations. A transfer is a change in who 
pays for the services, where there is not an actual change in the level 
of resources used. For example, costs that were previously paid out-of-
pocket for certain preventive services will now be covered by plans and 
issuers under these final regulations. Such a transfer of costs could 
be expected to lead to an increase in premiums.
    In the July 2010 interim final regulations, the Departments 
analyzed the impact of eliminating cost sharing, increases in services 
covered, and induced utilization on the average insurance premium using 
a model to evaluate private health insurance plans against a nationally 
representative population. In the July 2010 interim final regulations, 
the Departments analyzed Medical Expenditure Panel Survey (MEPS) data 
and determined the average person with employer-sponsored insurance 
(ESI) would have $264 in covered preventive service expenses, of which 
$240 would be paid by insurance and $24 paid out-of-pocket.\71\ When 
preventive services are covered with zero copayment, the Departments 
estimated the average preventive benefit (holding utilization constant) 
would increase by $24, or a 0.6 percent increase in insurance benefits 
and premiums for plans that have relinquished their grandfather

[[Page 41335]]

status. Furthermore, in the July 2010 interim final regulations, the 
Departments estimated that additional coverage for genetic screening, 
depression screening, lead testing, autism testing, and oral health 
screening would result in a total average increase in insurance 
benefits on these services to be 0.12 percent, or just over $4 per 
insured person. This increase represented a mixture of new costs and 
transfers, dependent on whether beneficiaries previously purchased 
these services on their own. Impacts were expected to vary depending on 
baseline benefit levels, and grandfathered health plans were not 
expected to experience any impact from those interim final regulations.
---------------------------------------------------------------------------

    \71\ The model does not distinguish between recommended and non-
recommended preventive services, and so this likely represents an 
overestimate of the insurance benefits for preventive services.
---------------------------------------------------------------------------

    As discussed in the July 2010 interim final regulations, the 
Departments used the standard actuarial ``induction formula'' 1/
(1+alpha*P), where alpha is the ``induction parameter'' and P is the 
average fraction of the cost of services paid by consumers to estimate 
behavioral changes to estimate the induced demand for preventive 
services.\72\ Removing cost sharing for preventive services lowers the 
direct cost to consumers of using preventive services, which induces 
additional utilization, estimated with the model above to increase 
covered expenses and benefits by approximately $17, or 0.44 percent in 
insurance benefits in group health plans. A similar, but larger, effect 
was anticipated in the individual market because individual health 
insurance policies generally had less generous benefits for preventive 
services than group health plans.
---------------------------------------------------------------------------

    \72\ Standard formula best described in ``Quantity- Price 
Relationships in Health Insurance'', Charles L Trowbridge, Chief 
Actuary, Social Security Administration (DHEW Publication No. (SSA) 
73-11507, November 1972).
---------------------------------------------------------------------------

    When eligible closely held for-profit entities seek the 
accommodation, health insurance issuers (or third party administrators 
for self-insured plans) for the group health plans established or 
maintained by the eligible organizations (and health insurance issuers 
of student health plans arranged by eligible organizations that are 
institutions of higher education) will assume sole responsibility for 
providing (or arranging) separate payments for contraceptive services 
directly for plan participants and beneficiaries (or student enrollees 
and dependents), without cost sharing, premium, fee, or other charge to 
plan participants or beneficiaries (or student enrollees and 
dependents) or to the eligible organization or its plan. The 
Departments continue to believe that issuers will find that providing 
contraceptive coverage is at least cost neutral because they will be 
insuring the same set of individuals under both the group or student 
health insurance policies for whom they will also be making the 
separate payments for contraceptive services and, as a result, will 
experience lower costs from improvements in women's health, healthier 
timing and spacing of pregnancies, and fewer unplanned pregnancies. 
Several studies have estimated that the costs of providing 
contraceptive coverage are balanced by cost savings from lower 
pregnancy-related costs and from improvements in women's health.\73\ A 
third party administrator can make arrangements with an issuer offering 
coverage through an FFE to obtain reimbursement for its costs 
(including an allowance for administrative costs and margin). The 
issuer offering coverage through the FFE can receive an adjustment to 
the FFE user fee, and the issuer is expected to pass on a portion of 
that adjustment to the third party administrator to account for the 
costs of providing or arranging payments for contraceptive services.
---------------------------------------------------------------------------

    \73\ Bertko, J., Glied, S., et al. The Cost of Covering 
Contraceptives Through Health Insurance (February 9, 2012), http://aspe.hhs.gov/health/reports/2012/contraceptives/ib.shtml; Washington 
Business Group on Health, Promoting Healthy Pregnancies: Counseling 
and Contraception as the First Step, Report of a Consultation with 
Business and Health Leader (September 20, 2000), Campbell, K.P., 
Investing in Maternal and Child Health: An Employer's Toolkit, 
National Business Group on Health (2007) http://www.businessgrouphealth.org/healthtopics/maternalchild/investing/docs/mch_toolkit.pdf; Trussell, J., et al. The Economic Value of 
Contraception: A Comparison of 15 Methods, American Journal Public 
Health, 1995; 85(4):494-503, Revenues of H.R. 3162, the Children's 
Health and Medicare Protection Act, for the Rules Committee (August 
1, 2007).
---------------------------------------------------------------------------

B. Regulatory Alternatives

    Several provisions in these final regulations involved policy 
choices. One was whether to allow a plan or issuer to impose cost 
sharing for an office visit when a recommended preventive service is 
provided in that visit. Sometimes a recommended preventive service is 
billed separately from the office visit; sometimes it is not. The 
Departments decided that the cost-sharing prohibition of these final 
regulations applies to the specific preventive service as recommended 
by the guidelines. Therefore, if the preventive service is billed 
separately (or is tracked as individual encounter data separately) from 
the office visit, it is the preventive service that has cost sharing 
waived, not the entire office visit.
    A second policy choice was, if the preventive service is not billed 
separately (or is not tracked as individual encounter data separately) 
from the office visit, whether these final regulations should prohibit 
cost sharing for any office visit in which any recommended preventive 
service was administered, or whether cost sharing should be prohibited 
only when the preventive service is the primary purpose of the office 
visit. Prohibiting cost sharing for office visits when any recommended 
preventive service is provided, regardless of the primary purpose of 
the visit, could lead to an overly broad application of these final 
regulations; for example, a person who sees a specialist for a 
particular condition could end up with a zero copayment simply because 
his or her blood pressure was taken as part of the office visit. This 
could create financial incentives for consumers to request preventive 
services at office visits that are intended for other purposes in order 
to avoid copayments and deductibles. The increased prevalence of the 
application of zero cost sharing would lead to increased premiums 
compared with the chosen option, without a meaningful additional gain 
in access to preventive services.
    A third issue involves health plans that have differential cost 
sharing for services provided by in-network vs. out-of-network 
providers. These final regulations provide that a plan or issuer 
generally is not required to provide coverage for recommended 
preventive services delivered by an out-of-network provider. The plan 
or issuer generally may also impose cost sharing for recommended 
preventive services delivered by an out-of-network provider. However, 
if the plan or issuer does not have in its network a provider who can 
provide the recommended preventive service, the plan or issuer must 
cover the item or service when performed by an out-of-network provider, 
and may not impose cost sharing with respect to the item or service. 
The Departments considered that requiring coverage by out-of-network 
providers with no cost sharing would result in higher premiums. Plans 
and issuers negotiate allowed charges with in-network providers as a 
way to promote effective, efficient health care, and allowing 
differences in cost sharing in- and out-of-network enables plans to 
encourage use of in-network providers. Allowing zero cost sharing for 
out-of-network providers could reduce providers' incentives to 
participate in insurer networks. The Departments decided that 
permitting cost sharing for recommended preventive services provided by 
out-of-network providers

[[Page 41336]]

(except in cases where the recommended service is only available from 
an out-of-network provider) is the appropriate option to preserve a 
choice of providers for individuals, while avoiding potentially larger 
increases in costs and transfers as well as potentially lower quality 
care.
    As discussed previously in the preamble, the Departments also 
considered different ways to define a closely held for-profit entity. 
Under one approach, a qualifying closely held for-profit entity would 
have been defined as a for-profit entity where none of the ownership 
interests in the entity is publicly traded and where the entity has 
fewer than a specified number of shareholders or owners.
    Under the second approach, a qualifying closely held for-profit 
entity would have been defined as a for-profit entity in which the 
ownership interests are not publicly traded, and in which a specified 
fraction of the ownership interest is concentrated in a limited and 
specified number of owners. Within the second approach, the Departments 
considered adopting the IRS test to define a closely held corporation. 
The definition adopted in these final rules, although based on the IRS 
test, is more flexible and ensures that it does not exclude some 
entities that should be considered to be closely held for the purposes 
of these final regulations.
    Under a third approach, the Departments considered a test under 
which none of the ownership interests in the entity is publicly traded, 
without any other restrictions on the number of owners or on ownership 
concentration. The Departments believe, however, that such a test would 
be excessively broad.

C. Special Analyses--Department of Treasury

    For purposes of the Department of the Treasury, it has been 
determined that this rule 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 also has 
been determined that section 553(b) of the Administrative Procedure Act 
(5 U.S.C. chapter 5) does not apply to this rule. Pursuant to the 
Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified 
that this rule will not have a significant economic impact on a 
substantial number of small entities. This certification is based on 
the fact that the regulations merely modify the definition of eligible 
organization to include certain closely held for-profit entities. This 
modification, as adopted, will not increase costs to or burdens on the 
affected organizations. Pursuant to section 7805(f) of the Code, the 
proposed rule preceding these regulations was submitted to the Chief 
Counsel for Advocacy of the Small Business Administration for comment 
on their impact on small business and no comments were received.

D. Paperwork Reduction Act--Department of Health and Human Services

    These final regulations contain information collection requirements 
that are subject to review by OMB. A description of these provisions is 
given in the following paragraphs with an estimate of the annual 
burden. In order to fairly evaluate whether an information collection 
should be approved by OMB, section 3506(c)(2)(A) of the Paperwork 
Reduction Act of 1995 requires that we solicit comment on the following 
issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of our agency.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
1. Wage Estimates
    To derive average costs, we used data from the U.S. Bureau of Labor 
Statistics' May 2014 National Occupational Employment and Wage 
Estimates for all salary estimates (http://www.bls.gov/oes/current/oes_nat.htm).
2. Information Collection Requirements (ICRs)
a. ICRs Regarding Self-Certification (Sec.  147.131(b)(3))
    All eligible organizations will have the option of either providing 
a self-certification (EBSA Form 700) to the issuers or third party 
administrators of the plans that would otherwise arrange for or provide 
coverage for the contraceptive services, or providing a notice to HHS. 
For the purpose of estimating burdens, HHS is assigning the burden of 
the self-certification to eligible for-profit entities and the burden 
of notice to HHS to eligible non-profit organizations.
    The July 2013 final regulations require an eligible organization 
that seeks an accommodation to self-certify that it meets the 
definition of an eligible organization using the EBSA Form 700 and 
provide it directly to each third party administrator or issuer of the 
plan that would otherwise arrange for or provide coverage for the 
contraceptive services. These final regulations continue to allow 
eligible organizations to use EBSA Form 700 to notify their third party 
administrators and issuers, as set forth in the July 2013 final 
regulations and guidance.
    The Departments received comments that HHS underestimated the 
number of closely held for-profit eligible organizations that may seek 
the accommodation. Some commenters noted that it would be difficult to 
estimate this number. One commenter estimated that about 1.3 million S-
corporations offer health insurance to their employees and, based on 
this data, objection rates of 1 percent of S-corporations would result 
in 13,000 objecting firms, an objection rate of 2 percent would result 
in 26,000 objecting firms and an objection rate of 5 percent would 
result in 65,000 objecting firms. However, the Departments have no 
indication that such large numbers of closely held for-profit entities 
would seek the accommodation. The Departments also note that the 
definition of a qualifying closely held for-profit entity adopted in 
these final regulations differs from the definition of an S-
corporation. In the proposed rules, based on the number of plaintiffs 
that are for-profit employers in recent litigation objecting on 
religious grounds to the provision of contraceptive services, HHS 
estimated that 71 closely held for-profit entities would seek the 
accommodation. In the final regulations, based on updated information, 
HHS is revising the estimate to 87. Even though this may underestimate 
the number of eligible closely held for-profit entities that will seek 
the accommodation, this is the best estimate available to the 
Departments at this time.
    For each eligible organization, it is assumed that clerical staff 
will gather and enter the necessary information, send the self-
certification to its issuer(s) or third party administrator(s) or the 
notice to HHS, and retain a copy for recordkeeping. A manager and legal 
counsel will subsequently review the information, and a senior 
executive will execute it. It is estimated that an organization will 
need approximately 50 minutes (30 minutes of clerical labor at a cost 
of $30 per hour, 10 minutes for a manager at a cost of $102 per hour, 5 
minutes for legal counsel at a cost of $127 per hour, and 5 minutes for 
a senior executive at a cost of $121 per hour) to execute the self-
certification. Therefore, the total one-time burden for preparing and 
providing the information in the self-certification is estimated to be 
approximately $53 for each eligible organization. The certification may 
be electronically transmitted to the issuer

[[Page 41337]]

or third party administrator at minimal cost or mailed. For purposes of 
this analysis, HHS assumes that all notices will be mailed. It is 
estimated that mailing each notice will require $0.49 in postage and 
$0.05 in materials cost (paper and ink) and the total postage and 
materials cost for each notice sent via mail will be $0.54.
    Based on this estimate of 87 affected entities and the individual 
burden estimates of 50 minutes and a cost of $53, we estimate the total 
hour burden to be 72.5 hours with an equivalent cost of $4,611. The 
total paper filing cost burden for the notices is approximately $47. As 
DOL and HHS share jurisdiction, they are splitting the hour burden so 
each will account for 36.25 burden hours at an equivalent cost of 
approximately $2,306 and a paper filing cost burden of approximately 
$23, with approximately 44 respondents.
b. ICRs Regarding Notice to HHS (Sec.  147.131(b)(3))
    These final regulations provide an organization seeking to be 
treated as an eligible organization under the August 2014 interim final 
regulations an alternative process, consistent with the Supreme Court's 
interim order in Wheaton College, under which an eligible organization 
may notify HHS of its religious objection to coverage of all or a 
subset of contraceptive services. The eligible organization must 
maintain the notice to HHS in its records. The burden related to this 
alternate notice is currently approved under OMB Control Number 0938-
1248.
    Based on litigation, HHS believes that at least 122 eligible non-
profit organizations will have the option to provide the alternative 
notice to HHS rather than their third party administrators or issuers. 
Even though this likely underestimates the number of eligible non-
profit organizations that will seek the accommodation, this is the best 
estimate available to the Departments at this time. In order to 
complete this task, HHS assumes that clerical staff for each eligible 
organization will gather and enter the necessary information and send 
the notice. HHS assumes that a compensation and benefits manager and 
inside legal counsel will review the notice and a senior executive will 
execute it. HHS estimates that an eligible organization will spend 
approximately 50 minutes (30 minutes of clerical labor at a cost of $30 
per hour, 10 minutes for a compensation and benefits manager at a cost 
of $102 per hour, 5 minutes for legal counsel at a cost of $127 per 
hour, and 5 minutes by a senior executive at a cost of $121 per hour) 
preparing and sending the notice and filing it to meet the 
recordkeeping requirement. Therefore, the total annual burden for 
preparing and providing the notice to HHS will require approximately 50 
minutes for each eligible organization with an equivalent cost burden 
of approximately $53 for a total hour burden of 102 hours with an 
equivalent cost of $6,425. As HHS and DOL share jurisdiction, they are 
splitting the hour burden so each will account for 51 burden hours with 
an equivalent cost of $3,213, with a total of 61 respondents.
    Notices to HHS may be sent electronically at minimal cost or by 
mail. For purposes of this analysis, HHS assumes that all notices will 
be mailed. It is estimated that mailing each notice will require $0.49 
in postage and $0.05 in materials cost (paper and ink) with a total 
postage and materials cost for each notice sent via mail of $0.54. The 
total cost burden for the notices is approximately $66. As DOL and HHS 
share jurisdiction, they are splitting the cost burden so each will 
account for $33 of the cost burden.
c. Notice of Availability of Separate Payments for Contraceptive 
Services (Sec.  147.131(d))
    As required by the July 2013 final regulations, a health insurance 
issuer or third party administrator providing or arranging separate 
payments for contraceptive services for participants and beneficiaries 
in insured plans (or student enrollees and covered dependents in 
student health insurance coverage) of eligible organizations is 
required to provide a written notice to plan participants and 
beneficiaries (or student enrollees and covered dependents) informing 
them of the availability of such payments. The notice must be separate 
from but contemporaneous with (to the extent possible) any application 
materials distributed in connection with enrollment (or re-enrollment) 
in group or student coverage of the eligible organization in any plan 
year to which the accommodation is to apply and will be provided 
annually. To satisfy the notice requirement, issuers may, but are not 
required to, use the model language set forth in the July 2013 final 
regulations or substantially similar language.
    As mentioned, HHS is anticipating that at least 122 non-profit and 
87 closely held for-profit entities will seek an accommodation. It is 
unknown how many issuers or third party administrators provide health 
insurance coverage or services in connection with health plans of 
eligible organizations, but HHS will assume at least 209. It is 
estimated that each issuer or third party administrator will need 
approximately 1 hour of clerical labor (at $30 per hour) and 15 minutes 
of management review (at $102 per hour) to prepare the notices. The 
total burden for each issuer or third party administrator to prepare 
notices will be 1.25 hours with an equivalent cost of approximately 
$56. The total burden for all issuers or third party administrators 
will be 261.25 hours, with an equivalent cost of $11,600. As DOL and 
HHS share jurisdiction, they are splitting the hour burden so each will 
account for 130.63 burden hours with an equivalent cost of $5,800, with 
approximately 105 respondents.
d. Letter to HHS Regarding Ownership Structure (Sec.  147.131(b)(4)(v))
    To assist potentially eligible for-profit entities seeking further 
information regarding whether they qualify for the accommodation, an 
entity may send a letter describing its ownership structure to HHS at 
[email protected]. However, an entity is not required to avail 
itself of this process in order to qualify as a closely held for-profit 
entity.
    As stated earlier in the preamble, the Departments believe that the 
definition adopted in these regulations includes the for-profit 
entities that are likely to have religious objections to providing 
contraceptive coverage. In addition, it appears based on available 
information that the definition adopted in these final regulations 
includes all of the for-profit entities that have, as of the date of 
issuance of these regulations, challenged the contraceptive coverage 
requirement in court. Therefore, the Departments anticipate that fewer 
than 10 entities will submit a letter to HHS. Under 5 CFR 1320.3(c)(4), 
this provision is not subject to the PRA as it will affect fewer than 
10 entities in a 12-month period.
3. Summary of Proposed Annual Burden Estimates

[[Page 41338]]



                                              Table III.3--Annual Recordkeeping and Reporting Requirements
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                         Total
                                                                                       Burden     Total      Burden      labor        Total
       Regulation section(s)           OMB  Control No.     Respondents     Total       per       annual    cost per    cost of     capital/      Total
                                                                          responses   response    burden   respondent  reporting   maintenance  cost ($)
                                                                                      (hours)    (hours)       ($)        ($)      costs  ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Self-Certification (Sec.            New..................            44          44       0.83      36.25         $53     $2,306           $23    $2,329
 147.131(b)(3)).
Notice to HHS (Sec.                 0938-1248............            61          61       0.83         51          53      3,213            33     3,246
 147.131(b)(3)).
Notice of Availability of Separate  New..................           105         105       1.25     130.63          56      5,800             0     5,800
 Payments for Contraceptive
 Services (Sec.   147.131(d)).
                                                          ----------------------------------------------------------------------------------------------
    Total.........................  .....................           210         210  .........     217.88  ..........    $11,319           $56   $11,375
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. Submission of PRA-Related Comments
    We have submitted a copy of this rule to OMB for its review of the 
rule's information collection and recordkeeping requirements. These 
requirements are not effective until they have been approved by OMB.

E. Paperwork Reduction Act--Department of Labor

    In accordance with the requirements of the Paperwork Reduction Act 
of 1995 (PRA) (44 U.S.C. 3506(c)(2)), the Department submitted an 
information collection request (ICR) to OMB in accordance with 44 
U.S.C. 3507(d), contemporaneously with the publication of the interim 
final regulation, for OMB's review under the emergency PRA 
procedures.\74\ OMB approved the ICR on August 27, 2014 under OMB 
Control Number 1210-0150 through February 28, 2015. Contemporaneously 
with the publication of the emergency ICR, the Department published a 
separate Federal Register notice informing the public that it intends 
to request OMB to extend the approval for 3 years and soliciting 
comments on the ICR.\75\ The Department submitted the extension request 
to OMB on February 27, 2015. OMB approved the ICR extension on April 
14, 2015, which currently is scheduled to expire on April 30, 2018.
---------------------------------------------------------------------------

    \74\ 5 CFR 1320.13.
    \75\ 79 FR 51197 (Aug. 27, 2014).
---------------------------------------------------------------------------

    The Department also submitted an ICR to OMB in accordance with 44 
U.S.C. 3507(d), for the ICR contained in the August 2014 proposed 
regulations contemporaneously with the publication of the proposal that 
solicited public comments on the ICR. OMB filed a comment regarding the 
proposed ICR on October 16, 2014, stating that it was not approving the 
ICR associated with the proposed rule at the proposed rule stage and 
requesting the Department to resubmit the ICR at the final rule stage 
after taking into account public comments. OMB assigned OMB Control 
Number 1210-0152 to the proposed ICR.
    Although no public comments were received in response to the ICRs 
contained in the August 2014 interim final and proposed regulations 
that specifically addressed the paperwork burden analysis of the 
information collections, the comments that were submitted, and which 
are described earlier in this preamble, contained information relevant 
to the costs and administrative burdens attendant to the proposals. The 
Department took into account the public comments in connection with 
making changes to the proposal, analyzing the economic impact of the 
proposals, and developing the revised paperwork burden analysis 
summarized below.
    In connection with publication of this final rule, the Department 
submitted ICRs to OMB as a revision to OMB Control Number 1210-0150 for 
eligible non-profit organizations and under new OMB Control Number 
1210-0152 for eligible for-profit organizations and received OMB 
approval for both ICRs.
    A copy of the ICRs may be obtained by contacting the PRA addressee 
shown below or at http://www.RegInfo.gov. 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.
1. ICRs Regarding Self-Certification (29 CFR 2590.2713A(b) or (c))
    Under these final regulations, all eligible organizations will have 
the option of either providing (1) a self-certification (EBSA Form 700) 
to the issuers or third party administrators of the plans that would 
otherwise arrange for or provide coverage for the contraceptive 
services or (2) a notice to HHS. For the purpose of estimating burdens, 
the Department is assigning the burden of the self-certification to 
eligible for-profit entities and the burden of notice to HHS to 
eligible non-profit organizations.
    The July 2013 final regulations require an eligible organization 
that seeks an accommodation to self-certify that it meets the 
definition of an eligible organization using the EBSA Form 700 and 
provide it directly to each third party administrator or issuer of the 
plan that would otherwise arrange for or provide coverage for the 
contraceptive services. These final regulations continue to allow 
eligible organizations to use EBSA Form 700 to notify their third party 
administrators and issuers, as set forth in the July 2013 final 
regulations and guidance.
    In response to the public comment solicitation for the ICRs in the 
August 2014 proposed regulations, the Departments received comments 
that they underestimated the number of closely held for-profit eligible 
organizations that may seek the accommodation. Some commenters noted 
that it would be difficult to estimate this number. One commenter 
estimated that about 1.3 million S-corporations offer health insurance 
to their employees and, based on this data, objection rates of 1 
percent of S-corporations would result in 13,000 objecting firms, an 
objection rate of 2 percent would result in 26,000 objecting firms and 
an objection rate of 5 percent

[[Page 41339]]

would result in 65,000 objecting firms. However, the Departments have 
no indication that such large numbers of closely held for-profit 
entities would seek the accommodation. The Departments also note that 
the definition of a qualifying closely held for-profit entity adopted 
in these final regulations differs from the definition of an S-
corporation. In the proposed rules, based on the number of plaintiffs 
that are for-profit employers in recent litigation objecting on 
religious grounds to the provision of contraceptive services, the 
Departments estimated that 71 closely held for-profit entities would 
seek the accommodation. In these final regulations, based on updated 
information, the Departments are revising the estimate to 87. Even 
though this may underestimate of the number of eligible closely held 
for-profit entities that will seek the accommodation, this is the best 
estimate available to the Departments at this time.
    For each eligible organization, the Departments assume that 
clerical staff will gather and enter the necessary information, send 
the self-certification to its issuer(s) or third party administrator(s) 
or the notice to HHS, and retain a copy for recordkeeping. A manager 
and legal counsel will subsequently review the information, and a 
senior executive will execute it. It is estimated that an organization 
will need approximately 50 minutes (30 minutes of clerical labor at a 
cost of $30 per hour,\76\ 10 minutes for a manager at a cost of $102 
per hour,\77\ 5 minutes for legal counsel at a cost of $127 per 
hour,\78\ and 5 minutes for a senior executive at a cost of $121 per 
hour \79\) to execute the self-certification. Therefore, the 
Departments estimate that the total one-time burden for preparing and 
providing the information in the self-certification is estimated to be 
approximately $53 for each eligible organization. The certification may 
be electronically transmitted to the issuer or third party 
administrator at minimal cost or mailed. For purposes of this analysis, 
the Departments assume that all notices will be mailed. The Departments 
estimate that mailing each notice will require $0.49 in postage and 
$0.05 in materials cost (paper and ink) and the total postage and 
materials cost for each notice sent via mail will be $0.54.
---------------------------------------------------------------------------

    \76\ Secretaries, Except Legal, Medical, and Executive (43-
6014): $16.13(2012 BLS Wage rate)/0.679(ECEC ratio) *1.2(Overhead 
Load Factor) *1.019(Inflation rate) -2(Inflated 2 years from base 
year) = $29.60
    \77\ Compensation and Benefits Manager (11-3041): $50.92(2012 
BLS Wage rate)/0.697(ECEC ratio) *1.35(Overhead Load Factor) 
*1.019(Inflation rate) -2(Inflated 2 years from base year) = $102.41
    \78\ Legal Professional (23-1011): $62.93(2012 BLS Wage rate)/
0.697(ECEC ratio) *1.35(Overhead Load Factor) *1.019(Inflation rate) 
-2(Inflated 2 years from base year) = $126.56
    \79\ Financial Managers (11-3031): $59.26(2012 BLS Wage rate)/
0.689(ECEC ratio) *1.35(Overhead Load Factor) *1.019(Inflation rate) 
-2(Inflated 2 years from base year) = $120.57
---------------------------------------------------------------------------

    Based on this estimate of 87 affected entities and the individual 
burden estimates of 50 minutes and a cost of $53, the Departments 
estimate the total hour burden associated with the ICR to be 72.5 hours 
with an equivalent cost of $4,611. The total paper filing cost burden 
for the notices is approximately $47. The hour burden associated with 
the ICR is allocated equally between DOL and HHS, because the agencies 
share jurisdiction of preventive health services resulting in an hour 
burden for each agency of 36.25 burden hours at an equivalent cost of 
approximately $2,306 and a paper filing cost burden of approximately 
$23, with approximately 44 respondents.
2. ICRs Regarding Notice to HHS (29 CFR 2590.2713A(b) or (c))
    These final regulations provide an organization seeking to be 
treated as an eligible organization under the August 2014 interim final 
regulations with an alternative process, consistent with the Supreme 
Court's interim order in Wheaton College, under which an eligible 
organization may notify HHS of its religious objection to coverage of 
all or a subset of contraceptive services. The eligible organization 
must maintain the notice to HHS in its records. The burden related to 
this alternate notice is currently approved under OMB Control Number 
1210-0150.
    Based on litigation, the Departments estimate that at least 122 
eligible non-profit organizations will have the option to provide the 
alternative notice to HHS rather than their third party administrators 
or issuers. Even though this may underestimate the number of eligible 
non-profit organizations that will seek the accommodation, it is the 
best estimate available to the Departments at this time. In order to 
complete this task, the Departments assume that clerical staff for each 
eligible organization will gather and enter the necessary information 
and send the notice. The Departments assume that a compensation and 
benefits manager and inside legal counsel will review the notice and a 
senior executive will execute it. The Departments estimate that an 
eligible organization will spend approximately 50 minutes (30 minutes 
of clerical labor at a cost of $30 per hour, 10 minutes for a 
compensation and benefits manager at a cost of $102 per hour, 5 minutes 
for legal counsel at a cost of $127 per hour, and 5 minutes by a senior 
executive at a cost of $121 per hour) preparing and sending the notice 
and filing it to meet the recordkeeping requirement. Therefore, the 
total annual burden for preparing and providing the notice to HHS will 
require approximately 50 minutes for each eligible organization with an 
equivalent cost burden of approximately $53 for a total hour burden of 
102 hours with an equivalent cost of $6,425. As HHS and DOL share 
jurisdiction, they are splitting the hour burden so each will account 
for 51 burden hours with an equivalent cost of $3,213, with a total of 
61 respondents.
    Notices to HHS may be sent electronically at minimal cost or by 
mail. For purposes of this analysis, the Departments assume that all 
notices will be mailed. It is estimated that mailing each notice will 
require $0.49 in postage and $0.05 in materials cost (paper and ink) 
with a total postage and materials cost for each notice sent via mail 
of $0.54. The total cost burden for the notices is approximately $66. 
As DOL and HHS share jurisdiction, they are sharing the cost burden 
equally and each is attributed $33 of the cost burden.
3. Notice of Availability of Separate Payments for Contraceptive 
Services (29 CFR 2590.2713A(d))
    As required by the July 2013 final regulations, a health insurance 
issuer or third party administrator providing or arranging separate 
payments for contraceptive services for participants and beneficiaries 
(or student enrollees and covered dependents) in insured plans of 
eligible organizations is required to provide a written notice to plan 
participants and beneficiaries (or student enrollees and covered 
dependents) informing them of the availability of such payments. The 
notice must be separate from but contemporaneous with (to the extent 
possible) any application materials distributed in connection with 
enrollment (or re-enrollment) in group or student coverage of the 
eligible organization in any plan year to which the accommodation is to 
apply and will be provided annually. To satisfy the notice requirement, 
issuers may, but are not required to, use the model language set forth 
in the July 2013 final regulations or substantially similar language.
    As mentioned, the Departments anticipate that at least 122 non-
profit and 87 closely held for-profit entities will seek an 
accommodation. It is unknown how many issuers or third party 
administrators provide health

[[Page 41340]]

insurance coverage or services in connection with health plans of 
eligible organizations, but that for the purposes of the analysis, the 
Departments assume at least 209 do. The Departments assume that each 
issuer or third party administrator will need approximately one hour of 
clerical labor (at $30 per hour) and 15 minutes of management review 
(at $102 per hour) to prepare the notices. Therefore, the Departments 
estimate that the total burden for each issuer or third party 
administrator to prepare notices will be 1.25 hours with an equivalent 
cost of approximately $56. The total burden for all issuers or third 
party administrators will be 261.25 hours, with an equivalent cost of 
$11,600. The cost burden associated with this ICR is allocated equally 
between DOL and HHS, because the agencies share jurisdiction under the 
provision. Therefore, the hour burden for each is 130.63 burden hours 
with an equivalent cost of $5,800 for approximately 105 respondents.
4. Letter to HHS Regarding Ownership Structure (29 CFR 
2590.2713A(a)(4)(v))
    To assist potentially eligible for-profit entities seeking further 
information regarding whether they qualify for the accommodation, an 
entity may send a letter describing its ownership structure to HHS at 
[email protected]. However, an entity is not required to avail 
itself of this process in order to qualify as a closely held for-profit 
entity.
    As stated earlier in the preamble, the Departments believe that the 
definition adopted in these regulations includes the for-profit 
entities that are likely to have religious objections to providing 
contraceptive coverage. In addition, it appears based on available 
information that the definition adopted in these final regulations 
includes all of the for-profit entities that have, as of the date of 
issuance of these regulations, challenged the contraceptive coverage 
requirement in court. Therefore, the Departments anticipate that fewer 
than 10 entities will submit a letter to HHS. Under 5 CFR 1320.3(c)(4), 
this provision is not subject to the PRA as it will affect fewer than 
10 entities in a 12-month period.

F. Regulatory Flexibility Act--Department of Labor and Department of 
Health and Human Services

    The Regulatory Flexibility Act (RFA) requires agencies that issue a 
rule to analyze options for regulatory relief of small businesses if a 
rule has a significant impact on a substantial number of small 
entities. The RFA generally defines a ``small entity'' as--(1) a 
proprietary firm meeting the size standards of the Small Business 
Administration (SBA), (2) a non-profit organization that is not 
dominant in its field, or (3) a small government jurisdiction with a 
population of less than 50,000 (states and individuals are not included 
in the definition of ``small entity''). The Departments use as their 
measure of significant economic impact on a substantial number of small 
entities a change in revenues of more than 3 percent to 5 percent.
    As discussed in the Web Portal interim final rule with comment 
period published on May 5, 2010 (75 FR 24481), HHS examined the health 
insurance industry in depth in the Regulatory Impact Analysis we 
prepared for the proposed rule on establishment of the Medicare 
Advantage program (69 FR 46866, August 3, 2004). In that analysis it 
was determined that there were few, if any, insurance firms 
underwriting comprehensive health insurance policies (in contrast, for 
example, to travel insurance policies or dental discount policies) that 
fell below the size thresholds for ``small'' business established by 
the SBA (currently $38.5 million in annual receipts for health 
insurance issuers).\80\ In addition, analysis of data from Medical Loss 
Ratio annual report submissions for the 2013 reporting year was used to 
develop an estimate of the number of small entities that offer 
comprehensive major medical coverage. It is estimated that 141 out of 
500 issuers of health insurance coverage nationwide had total premium 
revenue of $38.5 million or less. This estimate may overstate the 
actual number of small health insurance companies that would be 
affected, since 77 percent of these small companies belong to larger 
holding groups, and many if not all of these small companies are likely 
to have non-health lines of business that would result in their 
revenues exceeding $38.5 million. For these reasons, the Departments 
expect that these final regulations will not affect a significant 
number of small issuers.
---------------------------------------------------------------------------

    \80\ ``Table of Small Business Size Standards Matched To North 
American Industry Classification System Codes,'' effective July 14, 
2014, U.S. Small Business Administration, available at http://www.sba.gov.
---------------------------------------------------------------------------

    The provisions of these final regulations affect small employers 
with self-insured group health plans by requiring them to include 
coverage under their group health plans for recommended preventive 
services without cost sharing. However, small employers also benefit 
from having healthier employees and reduced absenteeism. Small 
employers are less likely to be self-insured compared to large 
employers; only about 13.3 percent of employers with less than 100 
employees that offer a group health plan have a self-funded plan.\81\
---------------------------------------------------------------------------

    \81\ Source: Agency for Healthcare Research and Quality, Center 
for Financing, Access and Cost Trends. 2013 Medical Expenditure 
Panel Survey-Insurance Component.
---------------------------------------------------------------------------

    With respect to contraceptive coverage, some eligible organizations 
that seek the accommodation may be small entities and will incur costs 
to provide the self-certification to issuers or third party 
administrators or notice to HHS. However, the related administrative 
costs are expected to be minimal.
    Third party administrators for self-insured group health plans 
established or maintained by eligible organizations will incur 
administrative costs to send notices to enrollees and arrange for 
separate payments for contraceptive services. It is unknown how many 
third party administrators impacted by this requirement have revenues 
below the size thresholds for ``small'' business established by the SBA 
(currently $32.5 million for third party administrators). However, a 
third party administrator can make arrangements with an issuer offering 
coverage through an FFE to obtain reimbursement for the third party 
administrator's costs.

G. 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. In the Departments' view, these final regulations have 
federalism implications, but the federalism implications are 
substantially mitigated because, with respect to health insurance 
issuers, 45 states are either enforcing the requirements related to 
coverage of specified preventive services (including contraception) 
without cost sharing pursuant to state law or otherwise are working 
collaboratively with HHS to ensure that issuers meet these standards. 
In five states, HHS ensures that issuers comply with these 
requirements. Therefore, the final regulations are not likely to 
require substantial additional oversight of states by HHS.

[[Page 41341]]

    In general, section 514 of ERISA provides that state laws are 
superseded to the extent that they relate to any covered employee 
benefit plan, and preserves state laws that regulate insurance, 
banking, or securities. ERISA also prohibits states from regulating a 
covered plan as an insurance or investment company or bank. The Health 
Insurance Portability and Accountability Act of 1996 (HIPAA) added a 
new preemption provision to ERISA (as well as to the PHS Act) narrowly 
preempting state requirements on group health insurance coverage. 
States may continue to apply state law requirements but not to the 
extent that such requirements prevent the application of the federal 
requirement that group health insurance coverage provided in connection 
with certain group health plans (or student health insurance issuers) 
provide coverage for specified preventive services without cost 
sharing. HIPAA's Conference Report states that the conferees intended 
the narrowest preemption of state laws with regard to health insurance 
issuers (H.R. Conf. Rep. No. 104-736, 104th Cong. 2d Session 205, 
1996). State insurance laws that are more stringent than the federal 
requirement are unlikely to ``prevent the application of'' the 
preventive services coverage provision, and therefore are unlikely to 
be preempted. Accordingly, states have significant latitude to impose 
requirements on health insurance issuers that are more restrictive than 
those in federal law.
    Guidance conveying this interpretation was published in the Federal 
Register on April 8, 1997 (62 FR 16904) and December 30, 2004 (69 FR 
78720), and these final regulations implement the preventive services 
coverage provision's minimum standards and do not significantly reduce 
the discretion given to states under the statutory scheme.
    The PHS Act provides that states may enforce the provisions of 
title XXVII of the PHS Act as they pertain to issuers, but that the 
Secretary of HHS will enforce any provisions that a state does not have 
authority to enforce or that a state has failed to substantially 
enforce. When exercising its responsibility to enforce provisions of 
the PHS Act, HHS works cooperatively with the state to address the 
state's concerns and avoid conflicts with the state's exercise of its 
authority. HHS has developed procedures to implement its enforcement 
responsibilities, and to afford states the maximum opportunity to 
enforce the PHS Act's requirements in the first instance. In compliance 
with Executive Order 13132's requirement that agencies examine closely 
any policies that may have federalism implications or limit the 
policymaking discretion of states, the Departments have engaged in 
numerous efforts to consult and work cooperatively with affected state 
and local officials.
    In conclusion, throughout the process of developing these final 
regulations, to the extent feasible within the specific preemption 
provisions of ERISA and the PHS Act, the Departments have attempted to 
balance states' interests in regulating health insurance coverage and 
health insurance issuers, and the rights of individuals intended to be 
protected in the PHS Act, ERISA, and the Code.

H. Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act (UMRA) of 1995 
requires that agencies assess anticipated costs and benefits before 
issuing any final rule that includes a Federal mandate that could 
result in expenditure in any one year by state, local or tribal 
governments, in the aggregate, or by the private sector, of $100 
million in 1995 dollars, updated annually for inflation. In 2015, that 
threshold level is approximately $144 million.
    UMRA does not address the total cost of a regulatory action. 
Rather, it focuses on certain categories of cost, mainly those 
``Federal mandate'' costs resulting from--(1) imposing enforceable 
duties on state, local, or tribal governments, or on the private 
sector; or (2) increasing the stringency of conditions in, or 
decreasing the funding of, state, local, or tribal governments under 
entitlement programs. These final regulations include no mandates on 
state, local, or tribal governments. Health insurance issuers, third 
party administrators and eligible organizations would incur costs to 
comply with the provisions of these final regulations. However, 
consistent with policy embodied in UMRA, these final regulations have 
been designed to be the least burdensome alternative while achieving 
the objectives of the Affordable Care Act.

I. Congressional Review Act

    These final rules are 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 have been transmitted to Congress and the Comptroller General for 
review.

IV. Statutory Authority

    The Department of the Treasury regulations are adopted pursuant to 
the authority contained in sections 7805 and 9833 of the Code.
    The Department of Labor regulations are adopted pursuant to the 
authority contained in 29 U.S.C. 1002(16), 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 
(Jan. 9, 2012).
    The Department of Health and Human Services regulations are 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; and Title I of the Affordable Care Act, 
sections 1301-1304, 1311-1312, 1321-1322, 1324, 1334, 1342-1343, 1401-
1402, and 1412, Public Law 111-148, 124 Stat. 119 (42 U.S.C. 18021-
18024, 18031-18032, 18041-18042, 18044, 18054, 18061, 18063, 18071, 
18082, 26 U.S.C. 36B, and 31 U.S.C. 9701).

List of Subjects

26 CFR Part 54

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

29 CFR Part 2510

    Employee benefit plans, Pensions.

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, State regulation of health insurance.


[[Page 41342]]


    Approved: July 8, 2015.
John Dalrymple,
Deputy Commissioner for Services and Enforcement, Internal Revenue 
Service.
    Approved: July 8, 2015.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
    Signed this 7th day of May 2015.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
    Dated: May 7, 2015.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: May 20, 2015.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Chapter I

    Accordingly, 26 CFR part 54 is 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:  26 U.S.C. 7805 * * *
* * * * *
    Section 54.9815-2713 also issued under 26 U.S.C. 9833;

0
Par.2. Section 54.9815-2713 is amended by adding paragraphs (a)(1)(i), 
(ii), and (iii), and revising paragraphs (a)(2), (3), (4), and (5), 
(b), and (c) to read as follows:


Sec.  54.9815-2713  Coverage of preventive health services.

    (a) * * *
    (1) * * *
    (i) Evidence-based items or services that have in effect a rating 
of A or B in the current recommendations of the United States 
Preventive Services Task Force with respect to the individual involved 
(except as otherwise provided in paragraph (c) of this section);
    (ii) Immunizations for routine use in children, adolescents, and 
adults that have in effect a recommendation from the Advisory Committee 
on Immunization Practices of the Centers for Disease Control and 
Prevention with respect to the individual involved (for this purpose, a 
recommendation from the Advisory Committee on Immunization Practices of 
the Centers for Disease Control and Prevention is considered in effect 
after it has been adopted by the Director of the Centers for Disease 
Control and Prevention, and a recommendation is considered to be for 
routine use if it is listed on the Immunization Schedules of the 
Centers for Disease Control and Prevention);
    (iii) With respect to infants, children, and adolescents, evidence-
informed preventive care and screenings provided for in comprehensive 
guidelines supported by the Health Resources and Services 
Administration; and
* * * * *
    (2) Office visits--(i) If an item or service described in paragraph 
(a)(1) of this section is billed separately (or is tracked as 
individual encounter data separately) from an office visit, then a plan 
or issuer may impose cost-sharing requirements with respect to the 
office visit.
    (ii) If an item or service described in paragraph (a)(1) of this 
section is not billed separately (or is not tracked as individual 
encounter data separately) from an office visit and the primary purpose 
of the office visit is the delivery of such an item or service, then a 
plan or issuer may not impose cost-sharing requirements with respect to 
the office visit.
    (iii) If an item or service described in paragraph (a)(1) of this 
section is not billed separately (or is not tracked as individual 
encounter data separately) from an office visit and the primary purpose 
of the office visit is not the delivery of such an item or service, 
then a plan or issuer may impose cost-sharing requirements with respect 
to the office visit.
    (iv) The rules of this paragraph (a)(2) are illustrated by the 
following examples:

    Example 1.  (i) Facts. An individual covered by a group health 
plan visits an in-network health care provider. While visiting the 
provider, the individual is screened for cholesterol abnormalities, 
which has in effect a rating of A or B in the current 
recommendations of the United States Preventive Services Task Force 
with respect to the individual. The provider bills the plan for an 
office visit and for the laboratory work of the cholesterol 
screening test.
    (ii) Conclusion. In this Example 1, the plan may not impose any 
cost-sharing requirements with respect to the separately-billed 
laboratory work of the cholesterol screening test. Because the 
office visit is billed separately from the cholesterol screening 
test, the plan may impose cost-sharing requirements for the office 
visit.
    Example 2.  (i) Facts. Same facts as Example 1 of this section. 
As the result of the screening, the individual is diagnosed with 
hyperlipidemia and is prescribed a course of treatment that is not 
included in the recommendations under paragraph (a)(1) of this 
section.
    (ii) Conclusion. In this Example 2, because the treatment is not 
included in the recommendations under paragraph (a)(1) of this 
section, the plan is not prohibited from imposing cost-sharing 
requirements with respect to the treatment.
    Example 3.  (i) Facts. An individual covered by a group health 
plan visits an in-network health care provider to discuss recurring 
abdominal pain. During the visit, the individual has a blood 
pressure screening, which has in effect a rating of A or B in the 
current recommendations of the United States Preventive Services 
Task Force with respect to the individual. The provider bills the 
plan for an office visit.
    (ii) Conclusion. In this Example 3, the blood pressure screening 
is provided as part of an office visit for which the primary purpose 
was not to deliver items or services described in paragraph (a)(1) 
of this section. Therefore, the plan may impose a cost-sharing 
requirement for the office visit charge.
    Example 4.  (i) Facts. A child covered by a group health plan 
visits an in-network pediatrician to receive an annual physical exam 
described as part of the comprehensive guidelines supported by the 
Health Resources and Services Administration. During the office 
visit, the child receives additional items and services that are not 
described in the comprehensive guidelines supported by the Health 
Resources and Services Administration, nor otherwise described in 
paragraph (a)(1) of this section. The provider bills the plan for an 
office visit.
    (ii) Conclusion. In this Example 4, the service was not billed 
as a separate charge and was billed as part of an office visit. 
Moreover, the primary purpose for the visit was to deliver items and 
services described as part of the comprehensive guidelines supported 
by the Health Resources and Services Administration. Therefore, the 
plan may not impose a cost-sharing requirement with respect to the 
office visit.

    (3) Out-of-network providers. (i) Subject to paragraph (a)(3)(ii) 
of this section, nothing in this section requires a plan or issuer that 
has a network of providers to provide benefits for items or services 
described in paragraph (a)(1) of this section that are delivered by an 
out-of-network provider. Moreover, nothing in this section precludes a 
plan or issuer that has a network of providers from imposing cost-
sharing requirements for items or services described in paragraph 
(a)(1) of this section that are delivered by an out-of-network 
provider.
    (ii) If a plan or issuer does not have in its network a provider 
who can provide an item or service described in paragraph (a)(1) of 
this section, the plan or issuer must cover the item or service when 
performed by an out-of-network provider, and may not impose cost-
sharing with respect to the item or service.
    (4) Reasonable medical management. Nothing prevents a plan or 
issuer from using reasonable medical management techniques to determine 
the frequency,

[[Page 41343]]

method, treatment, or setting for an item or service described in 
paragraph (a)(1) of this section to the extent not specified in the 
relevant recommendation or guideline. To the extent not specified in a 
recommendation or guideline, a plan or issuer may rely on the relevant 
clinical evidence base and established reasonable medical management 
techniques to determine the frequency, method, treatment, or setting 
for coverage of a recommended preventive health service.
    (5) Services not described. Nothing in this section prohibits a 
plan or issuer from providing coverage for items and services in 
addition to those recommended by the United States Preventive Services 
Task Force or the Advisory Committee on Immunization Practices of the 
Centers for Disease Control and Prevention, or provided for by 
guidelines supported by the Health Resources and Services 
Administration, or from denying coverage for items and services that 
are not recommended by that task force or that advisory committee, or 
under those guidelines. A plan or issuer may impose cost-sharing 
requirements for a treatment not described in paragraph (a)(1) of this 
section, even if the treatment results from an item or service 
described in paragraph (a)(1) of this section.
    (b) Timing--(1) In general. A plan or issuer must provide coverage 
pursuant to paragraph (a)(1) of this section for plan years that begin 
on or after September 23, 2010, or, if later, for plan years that begin 
on or after the date that is one year after the date the recommendation 
or guideline is issued.
    (2) Changes in recommendations or guidelines. (i) A plan or issuer 
that is required to provide coverage for any items and services 
specified in any recommendation or guideline described in paragraph 
(a)(1) of this section on the first day of a plan year must provide 
coverage through the last day of the plan year, even if the 
recommendation or guideline changes is or is no longer described in 
paragraph (a)(1) of this section, during the plan year.
    (ii) Notwithstanding paragraph (b)(2)(i) of this section, to the 
extent a recommendation or guideline described in paragraph (a)(1)(i) 
of this section that was in effect on the first day of a plan year is 
downgraded to a ``D'' rating, or any item or service associated with 
any recommendation or guideline specified in paragraph (a)(1) of this 
section is subject to a safety recall or is otherwise determined to 
pose a significant safety concern by a federal agency authorized to 
regulate the item or service during a plan year, there is no 
requirement under this section to cover these items and services 
through the last day of the plan year.
    (c) Recommendations not current. For purposes of paragraph 
(a)(1)(i) of this section, and for purposes of any other provision of 
law, recommendations of the United States Preventive Services Task 
Force regarding breast cancer screening, mammography, and prevention 
issued in or around November 2009 are not considered to be current.

0
Par. 3. Section 54.9815-2713A is amended by revising paragraphs (a), 
(b), (c)(1), and (c)(2)(i) introductory text to read as follows:


Sec.  54.9815-2713A  Accommodations in connection with coverage of 
preventive health services.

    (a) Eligible organizations. An eligible organization is an 
organization that meets the criteria of paragraphs (a)(1) through (3) 
of this section.
    (1) The organization opposes providing coverage for some or all of 
any contraceptive items or services required to be covered under Sec.  
54.9815-2713(a)(1)(iv) on account of religious objections.
    (2)(i) The organization is organized and operates as a nonprofit 
entity and holds itself out as a religious organization; or
    (ii) The organization is organized and operates as a closely held 
for-profit entity, as defined in paragraph (a)(4) of this section, and 
the organization's highest governing body (such as its board of 
directors, board of trustees, or owners, if managed directly by its 
owners) has adopted a resolution or similar action, under the 
organization's applicable rules of governance and consistent with state 
law, establishing that it objects to covering some or all of the 
contraceptive services on account of the owner's sincerely held 
religious beliefs.
    (3) The organization must self-certify in the form and manner 
specified by the Secretary of Labor or provide notice to the Secretary 
of Health and Human Services as described in paragraph (b) or (c) of 
this section. The organization must make such self-certification or 
notice available for examination upon request by the first day of the 
first plan year to which the accommodation in paragraph (b) or (c) of 
this section applies. The self-certification or notice must be executed 
by a person authorized to make the certification or notice on behalf of 
the organization, and must be maintained in a manner consistent with 
the record retention requirements under section 107 of ERISA.
    (4) A closely held for-profit entity is an entity that--
    (i) Is not a nonprofit entity;
    (ii) Has no publicly traded ownership interests, (for this purpose, 
a publicly traded ownership interest is any class of common equity 
securities required to be registered under section 12 of the Securities 
Exchange Act of 1934); and
    (iii) Has more than 50 percent of the value of its ownership 
interest owned directly or indirectly by five or fewer individuals, or 
has an ownership structure that is substantially similar thereto, as of 
the date of the entity's self-certification or notice described in 
paragraph (b) or (c) of this section.
    (iv) For the purpose of the calculation in paragraph (a)(4)(iii) of 
this section, the following rules apply:
    (A) Ownership interests owned by a corporation, partnership, 
estate, or trust are considered owned proportionately by such entity's 
shareholders, partners, or beneficiaries. Ownership interests owned by 
a nonprofit entity are considered owned by a single owner.
    (B) An individual is considered to own the ownership interests 
owned, directly or indirectly, by or for his or her family. Family 
includes only brothers and sisters (including half-brothers and half-
sisters), a spouse, ancestors, and lineal descendants.
    (C) If a person holds an option to purchase ownership interests, he 
or she is considered to be the owner of those ownership interests.
    (v) A for profit entity that seeks further information regarding 
whether it qualifies for the accommodation described in this section 
may send a letter describing its ownership structure to the Department 
of Health and Human Services. An entity must submit the letter in the 
manner described by the Department of Health and Human Services. If the 
entity does not receive a response from the Department of Health and 
Human Services to a properly submitted letter describing the entity's 
current ownership structure within 60 calendar days, as long as the 
entity maintains that structure it will be considered to meet the 
requirement set forth in paragraph (a)(4)(iii) of this section.
    (b) Contraceptive coverage--self-insured group health plans. (1) A 
group health plan established or maintained by an eligible organization 
that provides benefits on a self-insured basis complies for one or more 
plan years with any requirement under Sec.  54.9815-2713(a)(1)(iv) to 
provide contraceptive coverage if all of the requirements of this 
paragraph (b)(1) are satisfied:

[[Page 41344]]

    (i) The eligible organization or its plan contracts with one or 
more third party administrators.
    (ii) The eligible organization provides either a copy of the self-
certification to each third party administrator or a notice to the 
Secretary of Health and Human Services that it is an eligible 
organization and of its religious objection to coverage of all or a 
subset of contraceptive services.
    (A) When a copy of the self-certification is provided directly to a 
third party administrator, such self-certification must include notice 
that obligations of the third party administrator are set forth in 29 
CFR 2510.3-16 and this section.
    (B) When a notice is provided to the Secretary of Health and Human 
Services, the notice must include the name of the eligible organization 
and the basis on which it qualifies for an accommodation; its objection 
based on sincerely held religious beliefs to coverage of some or all 
contraceptive services (including an identification of the subset of 
contraceptive services to which coverage the eligible organization 
objects, if applicable); the plan name and type (that is, whether it is 
a student health insurance plan within the meaning of 45 CFR 147.145(a) 
or a church plan within the meaning of ERISA section 3(33)); and the 
name and contact information for any of the plan's third party 
administrators and health insurance issuers. If there is a change in 
any of the information required to be included in the notice, the 
organization must provide updated information to the Secretary of 
Health and Human Services. The Department of Labor (working with the 
Department of Health and Human Services), will send a separate 
notification to each of the plan's third party administrators informing 
the third party administrator that the Secretary of Health and Human 
Services has received a notice under paragraph (b)(1)(ii) of this 
section and describing the obligations of the third party administrator 
under 29 CFR 2510.3-16 and this section.
    (2) If a third party administrator receives a copy of the self-
certification from an eligible organization or a notification from the 
Department of Labor, as described in paragraph (b)(1)(ii) of this 
section, and agrees to enter into or remain in a contractual 
relationship with the eligible organization or its plan to provide 
administrative services for the plan, the third party administrator 
shall provide or arrange payments for contraceptive services using one 
of the following methods--
    (i) Provide payments for contraceptive services for plan 
participants and beneficiaries without imposing any cost-sharing 
requirements (such as a copayment, coinsurance, or a deductible), or 
imposing a premium, fee, or other charge, or any portion thereof, 
directly or indirectly, on the eligible organization, the group health 
plan, or plan participants or beneficiaries; or
    (ii) Arrange for an issuer or other entity to provide payments for 
contraceptive services for plan participants and beneficiaries without 
imposing any cost-sharing requirements (such as a copayment, 
coinsurance, or a deductible), or imposing a premium, fee, or other 
charge, or any portion thereof, directly or indirectly, on the eligible 
organization, the group health plan, or plan participants or 
beneficiaries.
    (3) If a third party administrator provides or arranges payments 
for contraceptive services in accordance with either paragraph 
(b)(2)(i) or (ii) of this section, the costs of providing or arranging 
such payments may be reimbursed through an adjustment to the Federally-
facilitated Exchange user fee for a participating issuer pursuant to 45 
CFR 156.50(d).
    (4) A third party administrator may not require any documentation 
other than a copy of the self-certification from the eligible 
organization or notification from the Department of Labor described in 
paragraph (b)(1)(ii) of this section.
    (c) * * *
    (1) General rule. A group health plan established or maintained by 
an eligible organization that provides benefits through one or more 
group health insurance issuers complies for one or more plan years with 
any requirement under Sec.  54.9815-2713(a)(1)(iv) to provide 
contraceptive coverage if the eligible organization or group health 
plan provides either a copy of the self-certification to each issuer 
providing coverage in connection with the plan or a notice to the 
Secretary of Health and Human Services that it is an eligible 
organization and of its religious objection to coverage for all or a 
subset of contraceptive services.
    (i) When a copy of the self-certification is provided directly to 
an issuer, the issuer has sole responsibility for providing such 
coverage in accordance with Sec.  54.9815-2713. An issuer may not 
require any further documentation from the eligible organization 
regarding its status as such.
    (ii) When a notice is provided to the Secretary of Health and Human 
Services, the notice must include the name of the eligible organization 
and the basis on which it qualifies for an accommodation; its objection 
based on its sincerely held religious beliefs to coverage of some or 
all contraceptive services, as applicable (including an identification 
of the subset of contraceptive services to which coverage the eligible 
organization objects, if applicable); the plan name and type (that is, 
whether it is a student health insurance plan within the meaning of 45 
CFR 147.145(a) or a church plan within the meaning of ERISA section 
3(33)); and the name and contact information for any of the plan's 
third party administrators and health insurance issuers. If there is a 
change in any of the information required to be included in the notice, 
the organization must provide updated information to the Secretary of 
Health and Human Services. The Department of Health and Human Services 
will send a separate notification to each of the plan's health 
insurance issuers informing the issuer that the Secretary of Health and 
Human Services has received a notice under paragraph (c)(1) of this 
section and describing the obligations of the issuer under this 
section.
    (2) * * *
    (i) A group health insurance issuer that receives a copy of the 
self-certification or notification described in paragraph (c)(1)(ii) of 
this section with respect to a group health plan established or 
maintained by an eligible organization in connection with which the 
issuer would otherwise provide contraceptive coverage under Sec.  
54.9815-2713(a)(1)(iv) must--
* * * * *


Sec.  54.9815-2713AT  [REMOVED]

0
Par. 4. Section 54.9815-2713AT is removed.


Sec.  54.9815-2713T  [REMOVED]

0
Par. 5. Section 54.9815-2713T is removed.

DEPARTMENT OF LABOR

Employee Benefits Security Administration

    For the reasons stated in the preamble, under the authority 
contained in 29 U.S.C. 1002(16), 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 (Jan. 9, 2012)

[[Page 41345]]

the Department of Labor adopts as final the interim rules amending 29 
CFR part 2590 published on July 19, 2010 (75 FR 41726) and amending 29 
CFR parts 2510 and 2590 published August 27, 2014 (79 FR 51092) and 
further amends 29 CFR part 2590 as follows:

PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS

0
6. 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. 12(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
7. Section 2590.715-2713 is amended by revising paragraphs (a)(3) and 
(4) and (b)(2) to read as follows:


Sec.  2590.715-2713  Coverage of preventive health services

    (a) * * *
    (3) Out-of-network providers--(i) Subject to paragraph (a)(3)(ii) 
of this section, nothing in this section requires a plan or issuer that 
has a network of providers to provide benefits for items or services 
described in paragraph (a)(1) of this section that are delivered by an 
out-of-network provider. Moreover, nothing in this section precludes a 
plan or issuer that has a network of providers from imposing cost-
sharing requirements for items or services described in paragraph 
(a)(1) of this section that are delivered by an out-of-network 
provider.
    (ii) If a plan or issuer does not have in its network a provider 
who can provide an item or service described in paragraph (a)(1) of 
this section, the plan or issuer must cover the item or service when 
performed by an out-of-network provider, and may not impose cost 
sharing with respect to the item or service.
    (4) Reasonable medical management. Nothing prevents a plan or 
issuer from using reasonable medical management techniques to determine 
the frequency, method, treatment, or setting for an item or service 
described in paragraph (a)(1) of this section to the extent not 
specified in the relevant recommendation or guideline. To the extent 
not specified in a recommendation or guideline, a plan or issuer may 
rely on the relevant clinical evidence base and established reasonable 
medical management techniques to determine the frequency, method, 
treatment, or setting for coverage of a recommended preventive health 
service.
* * * * *
    (b) * * *
    (2) Changes in recommendations or guidelines. (i) A plan or issuer 
that is required to provide coverage for any items and services 
specified in any recommendation or guideline described in paragraph 
(a)(1) of this section on the first day of a plan year must provide 
coverage through the last day of the plan year, even if the 
recommendation or guideline changes or is no longer described in 
paragraph (a)(1) of this section, during the plan year.
    (ii) Notwithstanding paragraph (b)(2)(i) of this section, to the 
extent a recommendation or guideline described in paragraph (a)(1)(i) 
of this section that was in effect on the first day of a plan year is 
downgraded to a ``D'' rating, or any item or service associated with 
any recommendation or guideline specified in paragraph (a)(1) of this 
section is subject to a safety recall or is otherwise determined to 
pose a significant safety concern by a federal agency authorized to 
regulate the item or service during a plan year, there is no 
requirement under this section to cover these items and services 
through the last day of the plan year.
* * * * *

0
8. Section 2590.715-2713A is amended by revising paragraph (a) to read 
as follows:


Sec.  2590.715-2713A  Accommodations in connection with coverage of 
preventive health services.

    (a) Eligible organizations. An eligible organization is an 
organization that meets the criteria of paragraphs (a)(1) through (3) 
of this section.
    (1) The organization opposes providing coverage for some or all of 
any contraceptive items or services required to be covered under Sec.  
2590.715-2713(a)(1)(iv) on account of religious objections.
    (2)(i) The organization is organized and operates as a nonprofit 
entity and holds itself out as a religious organization; or
    (ii) The organization is organized and operates as a closely held 
for-profit entity, as defined in paragraph (a)(4) of this section, and 
the organization's highest governing body (such as its board of 
directors, board of trustees, or owners, if managed directly by its 
owners) has adopted a resolution or similar action, under the 
organization's applicable rules of governance and consistent with state 
law, establishing that it objects to covering some or all of the 
contraceptive services on account of the owners' sincerely held 
religious beliefs.
    (3) The organization must self-certify in the form and manner 
specified by the Secretary or provide notice to the Secretary of Health 
and Human Services as described in paragraph (b) or (c) of this 
section. The organization must make such self-certification or notice 
available for examination upon request by the first day of the first 
plan year to which the accommodation in paragraph (b) or (c) of this 
section applies. The self-certification or notice must be executed by a 
person authorized to make the certification or notice on behalf of the 
organization, and must be maintained in a manner consistent with the 
record retention requirements under section 107 of ERISA.
    (4) A closely held for-profit entity is an entity that--
    (i) Is not a nonprofit entity;
    (ii) Has no publicly traded ownership interests (for this purpose, 
a publicly traded ownership interest is any class of common equity 
securities required to be registered under section 12 of the Securities 
Exchange Act of 1934); and
    (iii) Has more than 50 percent of the value of its ownership 
interest owned directly or indirectly by five or fewer individuals, or 
has an ownership structure that is substantially similar thereto, as of 
the date of the entity's self-certification or notice described in 
paragraph (b) or (c) of this section.
    (iv) For the purpose of the calculation in paragraph (a)(4)(iii) of 
this section, the following rules apply:
    (A) Ownership interests owned by a corporation, partnership, 
estate, or trust are considered owned proportionately by such entity's 
shareholders, partners, or beneficiaries. Ownership interests owned by 
a nonprofit entity are considered owned by a single owner.
    (B) An individual is considered to own the ownership interests 
owned, directly or indirectly, by or for his or her family. Family 
includes only brothers and sisters (including half-brothers and half-
sisters), a spouse, ancestors, and lineal descendants.
    (C) If a person holds an option to purchase ownership interests, he 
or she is considered to be the owner of those ownership interests.
    (v) A for-profit entity that seeks further information regarding 
whether it qualifies for the accommodation described in this section 
may send a letter describing its ownership structure to the Department 
of Health and Human Services. An entity must submit the letter in the 
manner described by the Department of Health and Human Services. If the 
entity does not receive

[[Page 41346]]

a response from the Department of Health and Human Services to a 
properly submitted letter describing the entity's current ownership 
structure within 60 calendar days, as long as the entity maintains that 
structure it will be considered to meet the requirement set forth in 
paragraph (a)(4)(iii) of this section.
* * * * *

DEPARTMENT OF HEALTH AND HUMAN SERVICES

    For the reasons stated in the preamble, under the authority 
contained in Secs. 2701 through 2763, 2791, and 2792 of the Public 
Health Service Act (42 U.S.C. 300gg through 300gg-63, 300gg-91, and 
300gg-92, as amended), the Department of Health and Human Services 
adopts as final the interim rules amending 45 CFR part 147 published on 
July 19, 2010 (75 FR 41726) and amending 45 CFR part 147 published 
August 27, 2014 (79 FR 51092) and further amends 45 CFR part 147 as 
follows:

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

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

    Authority:  Secs. 2701 through 2763, 2791, and 2792 of the 
Public Health Service Act (42 U.S.C. 300gg through 300gg-63, 300gg-
91, and 300gg-92), as amended.

0
10. Section 147.130 is amended by revising paragraphs (a)(3) and (4) 
and (b)(2) to read as follows:


Sec.  147.130  Coverage of preventive health services

    (a) * * *
    (3) Out-of-network providers--(i) Subject to paragraph (a)(3)(ii) 
of this section, nothing in this section requires a plan or issuer that 
has a network of providers to provide benefits for items or services 
described in paragraph (a)(1) of this section that are delivered by an 
out-of-network provider. Moreover, nothing in this section precludes a 
plan or issuer that has a network of providers from imposing cost-
sharing requirements for items or services described in paragraph 
(a)(1) of this section that are delivered by an out-of-network 
provider.
    (ii) If a plan or issuer does not have in its network a provider 
who can provide an item or service described in paragraph (a)(1) of 
this section, the plan or issuer must cover the item or service when 
performed by an out-of-network provider, and may not impose cost 
sharing with respect to the item or service.
    (4) Reasonable medical management. Nothing prevents a plan or 
issuer from using reasonable medical management techniques to determine 
the frequency, method, treatment, or setting for an item or service 
described in paragraph (a)(1) of this section to the extent not 
specified in the relevant recommendation or guideline. To the extent 
not specified in a recommendation or guideline, a plan or issuer may 
rely on the relevant clinical evidence base and established reasonable 
medical management techniques to determine the frequency, method, 
treatment, or setting for coverage of a recommended preventive health 
service.
* * * * *
    (b) * * *
    (2) Changes in recommendations or guidelines. (i) A plan or issuer 
that is required to provide coverage for any items and services 
specified in any recommendation or guideline described in paragraph 
(a)(1) of this section on the first day of a plan year (in the 
individual market, policy year) must provide coverage through the last 
day of the plan or policy year, even if the recommendation or guideline 
changes or is no longer described in paragraph (a)(1) of this section, 
during the plan or policy year.
    (ii) Notwithstanding paragraph (b)(2)(i) of this section, to the 
extent a recommendation or guideline described in paragraph (a)(1)(i) 
of this section that was in effect on the first day of a plan year (in 
the individual market, policy year) is downgraded to a ``D'' rating, or 
any item or service associated with any recommendation or guideline 
specified in paragraph (a)(1) of this section is subject to a safety 
recall or is otherwise determined to pose a significant safety concern 
by a federal agency authorized to regulate the item or service during a 
plan or policy year, there is no requirement under this section to 
cover these items and services through the last day of the plan or 
policy year.
* * * * *

0
11. Section 147.131 is amended by revising paragraphs (b) and (f) to 
read as follows:


Sec.  147.131  Exemption and accommodations in connection with coverage 
of preventive health services.

* * * * *
    (b) Eligible organizations. An eligible organization is an 
organization that meets the criteria of paragraphs (b)(1) through (3) 
of this section.
    (1) The organization opposes providing coverage for some or all of 
any contraceptive items or services required to be covered under Sec.  
147.130(a)(1)(iv) on account of religious objections.
    (2)(i) The organization is organized and operates as a nonprofit 
entity and holds itself out as a religious organization; or
    (ii) The organization is organized and operates as a closely held 
for-profit entity, as defined in paragraph (b)(4) of this section, and 
the organization's highest governing body (such as its board of 
directors, board of trustees, or owners, if managed directly by its 
owners) has adopted a resolution or similar action, under the 
organization's applicable rules of governance and consistent with state 
law, establishing that it objects to covering some or all of the 
contraceptive services on account of the owners' sincerely held 
religious beliefs.
    (3) The organization must self-certify in the form and manner 
specified by the Secretary of Labor or provide notice to the Secretary 
of Health and Human Services as described in paragraph (c) of this 
section. The organization must make such self-certification or notice 
available for examination upon request by the first day of the first 
plan year to which the accommodation in paragraph (c) of this section 
applies. The self-certification or notice must be executed by a person 
authorized to make the certification or notice on behalf of the 
organization, and must be maintained in a manner consistent with the 
record retention requirements under section 107 of ERISA.
    (4) A closely held for-profit entity is an entity that--
    (i) Is not a nonprofit entity;
    (ii) Has no publicly traded ownership interests (for this purpose, 
a publicly traded ownership interest is any class of common equity 
securities required to be registered under section 12 of the Securities 
Exchange Act of 1934); and
    (iii) Has more than 50 percent of the value of its ownership 
interest owned directly or indirectly by five or fewer individuals, or 
has an ownership structure that is substantially similar thereto, as of 
the date of the entity's self-certification or notice described in 
paragraph (b) or (c) of this section.
    (iv) For the purpose of the calculation in paragraph (b)(4)(iii) of 
this section, the following rules apply:
    (A) Ownership interests owned by a corporation, partnership, 
estate, or trust are considered owned proportionately by such entity's 
shareholders, partners, or beneficiaries. Ownership interests owned by 
a nonprofit entity are considered owned by a single owner.

[[Page 41347]]

    (B) An individual is considered to own the ownership interests 
owned, directly or indirectly, by or for his or her family. Family 
includes only brothers and sisters (including half-brothers and half-
sisters), a spouse, ancestors, and lineal descendants.
    (C) If a person holds an option to purchase ownership interests, he 
or she is considered to be the owner of those ownership interests.
    (v) A for-profit entity that seeks further information regarding 
whether it qualifies for the accommodation described in this section 
may send a letter describing its ownership structure to the Department 
of Health and Human Services. An entity must submit the letter in the 
manner described by the Department of Health and Human Services. If the 
entity does not receive a response from the Department of Health and 
Human Services to a properly submitted letter describing the entity's 
current ownership structure within 60 calendar days, as long as the 
entity maintains that structure it will be considered to meet the 
requirement set forth in paragraph (b)(4)(iii) of this section.
* * * * *
    (f) Application to student health insurance coverage. The 
provisions of this section apply to student health insurance coverage 
arranged by an eligible organization that is an institution of higher 
education as defined in 20 U.S.C. 1002 in a manner comparable to that 
in which they apply to group health insurance coverage provided in 
connection with a group health plan established or maintained by an 
eligible organization that is an employer. In applying this section in 
the case of student health insurance coverage, a reference to ``plan 
participants and beneficiaries'' is a reference to student enrollees 
and their covered dependents.

[FR Doc. 2015-17076 Filed 7-10-15; 11:15 am]
 BILLING CODE 6325-64-P; 4150-28-P; 4120-01-P