[Federal Register Volume 81, Number 91 (Wednesday, May 11, 2016)]
[Rules and Regulations]
[Pages 29146-29156]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-11017]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 155 and 156

[CMS-9933-IFC]
RIN 0938-AS87


Patient Protection and Affordable Care Act; Amendments to Special 
Enrollment Periods and the Consumer Operated and Oriented Plan Program

AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.

ACTION: Interim final rule with comment period.

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SUMMARY: This interim final rule with comment establishes provisions 
that alter the parameters of select special enrollment periods and that 
revise certain rules governing consumer operated and oriented plans 
(CO-OPs).

[[Page 29147]]


DATES: Effective date: These regulations are effective on May 11, 2016, 
with the exception of the amendments to 45 CFR 155.420, which are 
effective on July 11, 2016.
    Comment date: To be assured consideration, comments must be 
received at one of the addresses provided below, no later than 5 p.m. 
on July 5, 2016.

ADDRESSES: In commenting, please refer to file code CMS-9933-IFC. 
Because of staff and resource limitations, we cannot accept comments by 
facsimile (FAX) transmission.
    You may submit comments in one of four ways (please choose only one 
of the ways listed)
    1. Electronically. You may submit electronic comments on this 
regulation to http://www.regulations.gov. Follow the ``Submit a 
comment'' instructions.
    2. By regular mail. You may mail written comments to the following 
address ONLY: Centers for Medicare & Medicaid Services, Department of 
Health and Human Services, Attention: CMS-9933-IFC, P.O. Box 8016, 
Baltimore, MD 21244-8016.
    Please allow sufficient time for mailed comments to be received 
before the close of the comment period.
    3. By express or overnight mail. You may send written comments to 
the following address ONLY: Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, Attention: CMS-9933-IFC, Mail 
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
    4. By hand or courier. Alternatively, you may deliver (by hand or 
courier) your written comments ONLY to the following addresses prior to 
the close of the comment period:
    a. For delivery in Washington, DC--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, Room 445-G, Hubert 
H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 
20201.
    (Because access to the interior of the Hubert H. Humphrey Building 
is not readily available to persons without Federal government 
identification, commenters are encouraged to leave their comments in 
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing 
by stamping in and retaining an extra copy of the comments being 
filed.)
    b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid 
Services, Department of Health and Human Services, 7500 Security 
Boulevard, Baltimore, MD 21244-1850.
    If you intend to deliver your comments to the Baltimore address, 
call telephone number (410) 786-7195 in advance to schedule your 
arrival with one of our staff members.
    Comments erroneously mailed to the addresses indicated as 
appropriate for hand or courier delivery may be delayed and received 
after the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Jeff Wu, (301) 492-4305, or Lindsey 
Murtagh, (301) 492-4106, for general information. Rachel Arguello, 
(301) 492-4263, for matters related to special enrollment periods. 
Kevin Kendrick, (301) 492-4134, for matters related to CO-OPs.

SUPPLEMENTARY INFORMATION: 
    Inspection of Public Comments: All comments received before the 
close of the comment period are available for viewing by the public, 
including any personally identifiable or confidential business 
information that is included in a comment. We post all comments 
received before the close of the comment period on the following Web 
site as soon as possible after they have been received: http://regulations.gov. Follow the search instructions on that Web site to 
view public comments.
    Comments received timely will also be available for public 
inspection as they are received, generally beginning approximately 3 
weeks after publication of a document, at the headquarters of the 
Centers for Medicare & Medicaid Services, 7500 Security Boulevard, 
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 
a.m. to 4 p.m. To schedule an appointment to view public comments, 
phone 1-800-743-3951.

I. Executive Summary

    The Patient Protection and Affordable Care Act (Pub. L. 111-148) 
and the Health Care and Education Reconciliation Act of 2010 (Pub. L. 
111-152), as amended (the Affordable Care Act) enacted a set of reforms 
that make quality health insurance coverage and care more affordable 
and accessible to millions of Americans. These reforms include the 
creation of competitive marketplaces called Affordable Insurance 
Exchanges, or ``Exchanges'' (in this final rule, we also call an 
Exchange a Health Insurance Marketplace\SM\, or Marketplace\SM\ \1\) 
through which qualified individuals and qualified employers can 
purchase health insurance coverage during open enrollment periods or 
special enrollment periods, if eligible. These Affordable Care Act 
reforms also include the establishment of a loan program to foster the 
creation of Consumer Operated and Oriented Plans (CO-OPs) to offer 
qualified health plans (QHPs) to individuals and small employers. In 
previous rulemaking, we have outlined the major provisions and 
parameters related to these programs.
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    \1\ Health Insurance Marketplace\SM\ and Marketplace\SM\ are 
service marks of the U.S. Department of Health & Human Services.
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    Section 1311(c)(6) of the Affordable Care Act establishes 
enrollment periods, including special enrollment periods for qualified 
individuals, for enrollment into QHPs through an Exchange. This interim 
final rule with comment amends the eligibility requirements of the 
special enrollment period for individuals who gain access to new QHPs 
as a result of a permanent move so that this special enrollment period 
is generally available only to those individuals who had minimum 
essential coverage prior to their permanent move. This change aligns 
the eligibility requirements with the intent of this special enrollment 
period (that is, to afford individuals the full range of plan options 
when they relocate), and promotes stability in the health insurance 
market. This interim final rule with comment does not alter the 
eligibility for special enrollment periods for (1) those being released 
from incarceration; (2) those moving to the United States from abroad; 
or (3) those who previously were in a non-Medicaid expansion State and 
ineligible for advance payments of the premium tax credit because of a 
household income below 100 percent of the Federal poverty level, and 
ineligible for Medicaid during the same timeframe, who make a permanent 
move to a State where they are newly eligible for advance payments of 
the premium tax credit.
    We are also eliminating the January 1, 2017 implementation deadline 
for an Exchange to offer advanced availability of the special 
enrollment period for certain individuals who gain access to new QHPs 
as a result of a permanent move; and for offering a new special 
enrollment period for loss of a dependent or for no longer being 
considered a dependent due to divorce, legal separation, or death. This 
leaves the implementation of both provisions at the option of the 
Exchange. We do not believe it is appropriate to require Exchanges to 
expand eligibility for an existing special enrollment period or offer a 
new special enrollment period when both could introduce additional 
uncertainty to the Exchange risk pool at this time.

[[Page 29148]]

    Section 1322 of the Affordable Care Act establishes the CO-OP 
program, which is a loan program that funds the establishment of 
private, non-profit, consumer-operated, consumer-oriented health plan 
issuers of QHPs. As with many new businesses entering complex, 
competitive markets, a number of the CO-OPs have encountered 
challenging market conditions in their early years. Although the 
Affordable Care Act appropriated $6 billion for the CO-OP program, $4.9 
billion was subsequently rescinded, and there are no remaining funds 
available to award to these entities. In the absence of additional 
Federal loans to CO-OPs, many of these entities would benefit from the 
infusion of private capital to assist them in achieving long-term 
stability and competitive success in the market.
    In this interim final rule with comment, we amend certain CO-OP 
governance requirements to provide greater flexibility and facilitate 
private market transactions that can provide access to needed capital. 
These amendments will permit a CO-OP to recruit potential directors 
from a broader pool of qualified candidates. We also provide greater 
clarity with respect to what constitutes non-compliance with rules 
governing a CO-OP's business and the transactions into which it may 
enter. These changes will provide CO-OPs with flexibility common among 
private market health insurance issuers, and will support the financial 
viability of CO-OPs, while at the same time maintaining the fundamental 
member-governed, member-focused nature of the CO-OP program, and 
enabling CO-OPs to continue to benefit their enrollees.

II. Background

A. Legislative and Regulatory Overview

    The Patient Protection and Affordable Care Act (Pub. L. 111-148) 
was enacted on March 23, 2010. The Health Care and Education 
Reconciliation Act of 2010 (Pub. L. 111-152), which amended and revised 
several provisions of the Patient Protection and Affordable Care Act, 
was enacted on March 30, 2010. In this final rule, we refer to the two 
statutes collectively as the Affordable Care Act.
    Subtitles A and C of title I of the Affordable Care Act 
reorganized, amended, and added 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.
    Section 1311(c)(6)(C) of the Affordable Care Act directs the 
Secretary of HHS to require an Exchange to provide for special 
enrollment periods specified in section 9801 of the Internal Revenue 
Code of 1986 and other special enrollment periods under circumstances 
similar to such periods under part D of title XVIII of the Social 
Security Act.
    Section 1322 of the Affordable Care Act directs the Secretary to 
establish the CO-OP program to foster the creation of consumer-
governed, private non-profit health insurance issuers to offer QHPs in 
the individual and small group markets in the States in which they are 
licensed. The CO-OP program, in addition to improving consumer choice 
and plan accountability, also seeks to promote integrated models of 
care and enhance competition in the Exchanges. Section 1322 establishes 
eligibility standards for the CO-OP program and terms for loans, and 
provides basic standards that organizations must meet to participate in 
this program and become a CO-OP, including market participation and 
governance requirements.
1. Special Enrollment Periods
    In the July 15, 2011 Federal Register (76 FR 41865), we published a 
proposed rule establishing special enrollment periods for the 
individual Health Insurance Exchange. We implemented these special 
enrollment periods in a final rule published in the March 27, 2012 
Federal Register (77 FR 18309) (Exchange Establishment Rule). In the 
January 22, 2013 Federal Register (78 FR 4594), we published a proposed 
rule amending certain special enrollment periods, including the special 
enrollment periods described in 45 CFR 155.420(d)(3) and (7). We 
finalized these rules in the July 15, 2013 Federal Register (78 FR 
42321).
    In the June 19, 2013 Federal Register (78 FR 37032), we proposed to 
add a special enrollment period at 45 CFR 155.420(d)(10). We finalized 
this proposal in the Oct. 30, 2013 Federal Register (78 FR 65095). In 
the May 27, 2014 Federal Register (79 FR 30348), we published a 
proposed rule amending Sec.  155.420(b), (c), (d)(4), (d)(5), (d)(9), 
(d)(10), and (e). We finalized these provisions in the May 27, 2014 
Federal Register (79 FR 30348). In the October 1, 2014 Federal Register 
(79 FR 59138), we published a correcting amendment related to Sec.  
155.420(b).
    In the November 26, 2014 Federal Register (79 FR 70673), we 
proposed to amend Sec.  155.420(b), (c), (d)(1), (d)(2), (d)(4), and 
(d)(6). We finalized these provisions in the February 27, 2015 Federal 
Register (80 FR 10866). In the July 7, 2015 Federal Register (80 FR 
38653), we issued a correcting amendment to Sec.  155.420(b)(d)(2). In 
the December 2, 2015 Federal Register (80 FR 75487) (proposed 2017 
Payment Notice), we sought comment and data related to existing special 
enrollment periods, including data relating to the potential abuse of 
special enrollment periods. In the March 8, 2016 Federal Register (81 
FR 12203) (2017 Payment Notice), we stated that in order to review the 
integrity of special enrollment periods, the Federally-facilitated 
Exchange (FFE) will conduct an assessment by collecting and reviewing 
documents from consumers to confirm their eligibility for the special 
enrollment periods under which they enrolled.
2. CO-OP Program
    In the July 20, 2011 Federal Register (76 FR 43237), we published a 
proposed rule governing the CO-OP program (proposed CO-OP Rule). On 
December 13, 2011, we published the final CO-OP Rule (76 FR 77392).
    In the March 27, 2012 Federal Register, we published a final rule 
implementing components of the Exchanges and setting forth standards 
for eligibility for Exchanges (77 FR 18474) (Exchange Establishment 
Rule). This rule amended the regulations regarding the CO-OP program.

B. Stakeholder Consultation and Input

    HHS consulted stakeholders on the policies related to 
implementation of the Affordable Care Act, including special enrollment 
periods and CO-OPs. We have held a number of listening sessions with 
consumers, providers, employers, health plans, the actuarial community, 
and State representatives, to gather public input. We consulted with 
stakeholders through regular meetings with the National Association of 
Insurance Commissioners, regular contact with States, and meetings with 
health insurance issuers, organizations participating in the CO-OP 
program, trade groups, consumer advocates, employers, and other 
interested parties. We have held a number of recent meetings with 
issuers (including CO-OPs), regulators, and consumer groups relating to 
the effects of special enrollment periods on the risk pool, and on CO-
OPs' attempts to raise private capital. We considered all public input 
we received as we developed the policies in this interim final rule 
with comment.

[[Page 29149]]

III. Provisions of the Interim Final Rule

A. Special Enrollment Periods (Sec.  155.420)

    Special enrollment periods provide a critical pathway to coverage 
for qualified individuals who experience qualifying events and need to 
enroll in or change plans outside of the annual open enrollment period 
or during open enrollment with a coverage effective date earlier than 
generally provided during the open enrollment period. One such special 
enrollment period described in 45 CFR 155.420(d)(7) may be granted to a 
qualified individual or enrollee, or his or her dependent, who gains 
access to new QHPs as a result of a permanent move.
    As discussed in the Exchange Establishment Rule (77 FR 18310, 
18392), the special enrollment period in Sec.  155.420(d)(7) was 
intended to afford individuals the full range of plan options when they 
relocate, which maximizes consumer choice and increases competition in 
the health insurance market. However, this special enrollment period 
was never intended to provide an opportunity for enrollment in coverage 
where individuals make a permanent move solely for the purpose of 
gaining health coverage outside of the annual open enrollment period. 
Stakeholders have raised significant concerns that while such use of 
this special enrollment period may be consistent with the plain 
language of the rule, it is not aligned with the provision's intent. 
This use has the potential to destabilize the health insurance market 
by creating an opportunity for adverse selection where persons 
undertake a permanent move solely for the purpose of gaining health 
coverage, in which they would otherwise not be qualified to enroll. 
Because of concerns that unintended uses of the permanent move special 
enrollment period will lead to adverse selection and immediate, 
unexpected losses in the remaining months of this year, which could 
lead to significant premium increases or issuers exiting the market, we 
believe that action is needed as soon as possible, and delaying the 
rule revisions would be impracticable and contrary to the public 
interest.
    Therefore, we are amending the eligibility parameters for this 
special enrollment period by adding requirements in Sec.  
155.420(d)(7)(i) and (ii). In paragraph (i), we require that 
individuals be enrolled in minimum essential coverage as described in 
26 CFR 1.5000A-1(b) for one or more days in the 60 days preceding the 
date of the permanent move in order to qualify for the special 
enrollment period based on a permanent move.
    The addition of paragraph (i) requires further amendments to the 
rule to maintain the availability of the permanent move special 
enrollment period for certain other individuals who should continue to 
be able to access this special enrollment period without the 
requirement of being previously enrolled in minimum essential coverage. 
Specifically, we make a necessary addition in paragraph (d)(7)(ii) to 
maintain eligibility for a special enrollment period for individuals 
previously living outside of the United States or in a United States 
territory who move to a location within the United States, so long as 
they seek to enroll in coverage within 60 days of completing their 
permanent move.
    In light of the addition of these new requirements, we are making a 
further change to Sec.  155.420(d)(7) and to (d)(3) related to 
incarcerated individuals. As noted in the preamble to the Exchange 
Establishment Rule (77 FR 18392), qualified individuals newly released 
from incarceration are eligible for the special enrollment period 
afforded to individuals under the current version of paragraph (d)(7). 
However, paragraph (d)(7) as amended in this interim final rule no 
longer enables these individuals to qualify for the special enrollment 
period because the health care coverage offered to incarcerated 
individuals in correctional facilities is generally not considered 
minimum essential coverage. Incarcerated individuals are also not 
eligible for Exchange coverage.
    Therefore, we are amending paragraph Sec.  155.420(d)(3) to include 
individuals who become newly eligible for a QHP due to a release from 
incarceration (other than incarceration pending disposition of 
charges), in addition to those who become newly eligible for a QHP by 
becoming a United States citizen or national or a lawfully present non-
citizen already included in this paragraph. In so doing, we are 
removing the current language in paragraph (d)(3) that states that a 
qualified individual or his or her dependent ``which was not previously 
a citizen, national, or lawfully present individual gains such status'' 
and are replacing it with a cross reference to Sec.  155.305(a)(1). 
This does not change the scope of the current special enrollment period 
and the population who may currently qualify. We are adding a cross 
reference to Sec.  155.305(a)(2) for individuals who are no longer 
incarcerated, other than incarcerated pending disposition of charges.
    In order that, at their option, Exchanges may continue to offer 
advanced availability of the special enrollment period for those who 
become newly eligible for a QHP due to a release from incarceration now 
included in paragraph (d)(3), we are amending paragraph Sec.  
155.420(c)(2) to include this population. Should Exchanges exercise or 
already have exercised this option to offer advance availability to 
those who become newly eligible for a QHP due to a release from 
incarceration, the Exchange must ensure that the coverage effective 
date is on the first day of the month following the release from 
incarceration, as was required when this population was included in the 
special enrollment period in paragraph (d)(7) of this section. 
Accordingly, we are amending Sec.  155.420(b)(2)(iv) to include those 
who become newly eligible for a QHP due to a release from incarceration 
now included in paragraph (d)(3).
    The amendment to Sec.  155.420(d)(7) also makes the special 
enrollment period for a permanent move inaccessible to qualified 
individuals who were previously living in a non-Medicaid expansion 
State and, during the same timeframe, were ineligible for advance 
payments of the premium tax credit solely because of a household income 
below 100 percent of the Federal poverty level (FPL), but who become 
newly eligible for advance payments of the premium tax credit as a 
result of a permanent move to another State. By being previously 
ineligible for both Exchange coverage with advance payments of the 
premium tax credit (because of their household income) and Medicaid 
(solely because of the State's decision not to expand), these 
individuals likely would have been exempted from the requirement under 
section 5000A(e)(1) of the Code and its implementing regulations to 
maintain minimum essential coverage or eligible for an exemption from 
the minimum essential coverage requirement under 45 CFR 155.605(d) or 
(e), and therefore are unlikely to qualify for the special enrollment 
period for a permanent move, as amended. In order to continue to 
provide for a special enrollment period for these individuals, we are 
amending Sec.  155.420(d)(6)(iv) to include individuals who were 
previously living in a non-Medicaid expansion State and, during the 
same timeframe, were ineligible for Medicaid, but who become newly 
eligible for advance payments of the premium tax credit as a result of 
a permanent move. This change secures the continued availability of a 
special enrollment period to qualified individuals who move out of a 
non-

[[Page 29150]]

Medicaid expansion State to a State where they may newly qualify for 
advance payments premium tax credit, but who might no longer qualify 
for the special enrollment period under Sec.  155.420(d)(7), as amended 
in this interim final rule, because they did not previously have 
minimum essential coverage for one or more days in the 60 days 
preceding the date of the permanent move.
    In addition, as discussed in the 2017 Payment Notice, we intend to 
conduct an assessment of QHP enrollments that were made through special 
enrollment periods in the FFE to ensure that consumers' eligibility for 
these special enrollment periods were properly determined. Until the 
FFE has collected and analyzed data on consumer eligibility for special 
enrollment periods and taken other actions to ensure that consumers are 
not inappropriately accessing and enrolling in coverage through 
existing special enrollment periods, we believe it is unnecessary and 
contrary to the public interest to require Exchanges to offer advanced 
availability of the special enrollment period in Sec.  155.420(d)(7) or 
to implement the new special enrollment period in paragraph (d)(2)(ii) 
of this section because it could introduce additional uncertainty to 
the risk pool at this time.
    We also considered that information technology system resources are 
needed to implement these provisions by January 1, 2017, and are 
concerned that the requirement to meet the January 1, 2017, deadline 
could cause needless expenditures of Exchange funds for operational 
changes to the extent that we propose and finalize rule amendments that 
delete the requirement to provide by a specific date advance 
availability for the special enrollment periods under (d)(7) or offer 
the special enrollment periods under (d)(2)(ii) based on our current 
program integrity efforts. In light of the competing financial and 
operational priorities of Exchanges, we believe it is contrary to the 
public interest to require that Exchanges meet the January 1, 2017, 
deadline. We have therefore determined that there is a need to take 
immediate action to delete this future deadline, rather than engaging 
in notice and comment rulemaking on this change, in order to avoid the 
unnecessary expenditure of funds by Exchanges to comply with the 
January 1, 2017, implementation deadline. Therefore, we are amending 
the following special enrollment period provisions to leave the 
implementation timeline for advanced availability at the discretion of 
the Exchange.
    Section 155.420(c)(2) provides for advanced availability of the 
special enrollment period for a qualified individual or enrollee, or 
his or her dependent who gains access to new QHPs as a result of a 
permanent move as described in paragraph (d)(7) of this section, 
meaning that a qualified individual or enrollee, or his or her 
dependent, has 60 days before or after the triggering event (the 
permanent move) to select a QHP. Paragraph (c)(2) also provides that 
this advanced availability be available by January 1, 2017 or earlier, 
at the option of the Exchange. We are amending this paragraph to remove 
the requirement for Exchanges to offer advanced availability of the 
permanent move special enrollment period by January 1, 2017, which 
keeps this provision at the option of the Exchange.
    We also amend paragraph (d)(2)(ii), which provides for a special 
enrollment period for an enrollee who loses a dependent or is no longer 
considered a dependent due to divorce, legal separation, or death, to 
remove the requirement that Exchanges offer this special enrollment 
period by January 1, 2017. We note that, if a loss of a dependent or no 
longer being considered a dependent due to divorce, legal separation, 
or death results in a loss of minimum essential coverage, such 
individuals may qualify for the special enrollment period for loss of 
minimum essential coverage. Implementation of this provision remains at 
the option of the Exchange.
    We note that certain special enrollment periods in 45 CFR 155.420 
are incorporated in the guaranteed availability regulations at Sec.  
147.104(b) and applied to issuers offering non-grandfathered individual 
coverage through or outside of the Exchange, and incorporated in the 
SHOP regulations at Sec.  155.725(j) and Sec.  156.285(b) and applied 
to QHP coverage offered through the SHOP. The changes to special 
enrollment periods in this interim final rule with comment therefore 
apply to the guaranteed availability and SHOP regulations, to the 
extent applicable.

B. CO-OP Program

    Subpart F of part 156 of title 45 of the Code of Federal 
Regulations sets forth the standards applicable to the CO-OP Program. 
In this interim final rule with comment, we are making a number of 
changes to the rules governing CO-OPs to provide additional flexibility 
for CO-OP issuers to enter into strategic financial transactions with 
other entities, to improve the issuer's capital position and to further 
the ability of the program to facilitate the offering of competitive, 
high-quality health insurance on Exchanges that increases competition 
and consumer choice. Given the financial challenges faced by some CO-
OPs recently, and the lack of opportunity for further Federal funding, 
we believe that these changes are needed as soon as possible. 
Furthermore, the CO-OPs have requested maximum flexibility in 
governance requirements to assist their efforts to enter into new, 
beneficial business relationships.
1. Definitions (Sec.  156.505)
    In this interim final rule with comment, we are amending the 
definitions of ``pre-existing issuer'' and ``representative'' to permit 
CO-OPs increased flexibility to explore and advance business 
opportunities, and increase the pool of eligible candidates for their 
boards of directors. Both terms are used in provisions governing the 
standards for membership of a CO-OP board of directors. The amended 
definitions expand the universe of individuals eligible for membership 
on a CO-OP board of directors, while ensuring that appropriate 
standards remain in place to protect against conflicts of interest and 
insurance industry involvement and interference.
    The definition of the term ``pre-existing issuer'' is amended to 
limit the definition to State-licensed health insurance issuers that 
competed in the individual and small group commercial health insurance 
markets on July 16, 2009, as required by section 1322(c)(2)(A) of the 
Affordable Care Act).
    The definition of the term ``representative'' is revised to mean an 
officer, director, or trustee of an organization, or group of 
organizations; or a senior executive or high level representative of 
the Federal government, or a State or local government or a sub-unit 
thereof.
    Section 156.515(b)(2) (which we are amending in this interim final 
rule with comment) provides limitations on board membership that 
prohibit any agent or employee of a State government or a unit of State 
government from serving on a CO-OP's board of directors. This standard 
was established to codify the requirement in section 1322(e) of the 
Affordable Care Act, which states that no representative of any 
Federal, State or local government (or of any political subdivision or 
instrumentality thereof) and no representative of a person described in 
section 1322(c)(2)(A) (referring to entities that were health insurance 
issuers on July 16, 2009) may serve on the board of directors of a

[[Page 29151]]

qualified nonprofit health insurance issuer or with a private 
purchasing council established under section 1322(d), and to ensure 
that board members are free of conflicts of interest that could arise 
from their dual roles as a government representative and a CO-OP board 
member. For example, a State elected official may act to serve 
political objectives influenced by established, State-regulated 
competitors of the CO-OP in the insurance market, rather than acting in 
the best interest of the CO-OP program. Insurance company employees may 
pose a similar risk of conflict of interest as government employees--a 
representative of a competitor may be tempted not to make governance 
decisions based solely on the best interests of the CO-OP and its 
members.
    The term ``representative'' is not statutorily defined for purposes 
of section 1322 of the Affordable Care Act. Based on experience in the 
early years of the CO-OP program, we believe the current regulatory 
definition is too broad, and captures individuals for whom these 
concerns regarding conflicts of interests are not warranted. 
Specifically, we do not believe it is necessary to include within the 
definition of representative government employees who are neither 
senior executives nor high- level representatives (that is, employees, 
agents, trustees, or other persons who possess the ability to decide 
organization-wide or governmental policies or goals), and individuals 
who are not officers, directors or trustees of an organization or 
groups of organizations. Although these individuals may be associated 
with a governmental entity or pre-existing issuer due to their 
employment relationship, they are unlikely to hold a position in which 
they would be expected or required to represent their employer's 
interests in their outside activities. We, therefore, believe it is a 
reasonable interpretation of the prohibition in section 1322(e) to 
exclude from the definition of representative individuals who are 
neither senior executives nor high-level representatives of a 
government unit, or an officer, director or trustee of an organization 
or group of organization. Furthermore, we are aware of at least one 
instance in which this prohibition prevented an individual from joining 
a CO-OP board of directors, despite the individual having significant 
expertise that would have been beneficial to the CO-OP and with no 
discernible conflict of interest arising from the individual's position 
as a State employee.
    Current regulations also prohibit board membership by any agent or 
employee of an entity that held an insurance license and was subject to 
State insurance law on July 16, 2009 (a ``pre-existing issuer'' under 
the regulations). Under the original definition of ``pre-existing 
issuer,'' this would prohibit participation from agents and employees 
of issuers that (1) do not compete in the markets for which CO-OPs were 
developed to bring competition (individual or small group health 
insurance markets), and (2) do not market any standard commercial 
health insurance available to the general public. However, employees of 
insurance companies that do not compete in the general commercial 
health insurance market also do not pose a clear or significant risk 
for conflicts of interest, and may have expertise that could be 
valuable to a CO-OP board. Therefore, exclusion of these groups of 
employees exceeds the purpose of the rule while unnecessarily 
restricting the available pool of qualified candidates for the CO-OP 
boards of directors. By amending the definition of ``pre-existing 
issuer'' to exclude issuers that do not compete in the individual or 
group health insurance markets, we narrow the exclusion so that 
employees of these companies may serve on CO-OP boards. We believe that 
the concept of a ``pre-existing issuer'' in the statute was intended to 
protect CO-OPs from conflicts of interest by barring persons associated 
with organizations that offer individual and group health insurance 
policies to the general public from participating on CO-OP boards of 
directors. This definition of ``pre-existing issuer'' is consistent 
with that intent. These revisions would permit representatives of 
licensees that market only Medicare, Medicaid, or other health 
insurance products that are not individual and small group insurance 
(for example, dental, vision, disability products) to sit on a CO-OP 
board.
2. CO-OP Standards (Sec.  156.515)
    Under 45 CFR 156.515(b)(1), a CO-OP must be governed by a board of 
directors, with all of its directors elected by a majority vote of a 
quorum of the CO-OP's members that are age 18 or older, and the voting 
directors on the board must be members of the CO-OP. These requirements 
are based on the statutory requirement that the governance of a CO-OP 
be ``subject to a majority vote of its members.''
    We are amending these standards to require that only a majority of 
directors be elected by the members and to remove the requirement that 
a majority of voting directors be members of the CO-OP. This revision 
allows entities offering loans, investments, and services to 
participate on the board of directors, as is common practice in the 
private sector, while maintaining the overall control of the board by 
the members of the CO-OP. We are making this change in response to 
program experience demonstrating that the inability to grant designated 
board positions to prospective partners or investors may create 
obstacles to potentially favorable business arrangements for CO-OPs. 
This amendment also provides opportunities for CO-OPs to enlist 
qualified individuals from outside their membership to participate in 
board governance. CO-OPs have experienced significant obstacles in 
identifying qualified and willing CO-OP members to serve on their 
boards of directors, in particular with regard to State requirements 
concerning industry experience and expertise that directors of 
insurance companies must possess. However, we believe that these 
changes will not alter the fundamental member-driven and member-
governed nature of CO-OPs, since all of the CO-OP's directors will have 
a duty to further the CO-OP's goals, and since the membership of the 
CO-OP will retain control of a majority of the seats on the board of 
directors, thus ensuring that ultimate control will lie with directors 
responsible to the membership.
    Section 156.515(b)(2) establishes the standards the board must 
meet. Section 156.515(b)(2)(i) is revised to comport with proposed 
changes in the types of representatives permitted to sit on the board 
of directors while still retaining ethical, conflict of interest, and 
disclosure standards. We note that any fiduciary duties that exist 
under State law would continue to apply. Section 156.515(b)(2)(ii) is 
revised to provide that each director has one vote. Section 
156.515(b)(2)(iv), which provided that positions on the board 
designated for individuals with specialized expertise, experience, or 
affiliation cannot constitute a majority of the board, is removed and 
reserved. Our intent in doing so is to increase flexibility for CO-OPs 
to include on their board of directors members with suitable expertise, 
to improve governance and potentially facilitate strategic 
transactions. Section 156.515(b)(2)(v) is revised to permit 
representatives of State or local governments or organizations 
described in Sec.  156.510(b)(1)(i) to participate on CO-OP boards of 
directors, provided the CO-OP does not issue policies in the State in 
which the government representative serves or the organization 
operates. This amendment is also intended to provide CO-OPs with

[[Page 29152]]

increased flexibility regarding board membership, as well as to 
increase business opportunities for CO-OPs.
    We also note that the requirements of Sec.  156.515(c)(1) have at 
times posed an obstacle to potential strategic partners of CO-OPs. That 
paragraph states that at least two-thirds of the policies issued by a 
CO-OP must be QHPs issued in the individual and small group markets in 
States in which a CO-OP is licensed. This regulatory requirement is 
based on a statutory requirement that ``substantially all'' of the 
``activities'' of CO-OPs consist of issuing QHPs in the individual and 
small group markets. We understand that considerable uncertainty 
accompanies the implementation of business plans, particularly for new 
entrants to complex, dynamic markets, and in relation to a standard 
that measures voluntary actions taken by third parties. Section 1322 of 
the Affordable Care Act requires CO-OP loan repayment if this 
substantially all standard is not met and the CO-OP fails to correct 
such failure within a reasonable period of time. HHS clarifies that, if 
a CO-OP fails to meet the standard in a given year, it would not 
necessarily require immediate loan repayment as long as the CO-OP is in 
compliance with 45 CFR 156.515(c)(2); has a specific plan and timetable 
to meet the two-thirds requirement, and acts with demonstrable 
diligence and good faith to meet the standard. A CO-OP must ultimately 
come back into compliance with the two-thirds standard in future years.
    This clarification reflects HHS's experience in the early years of 
the CO-OP program, when some CO-OPs were deterred from implementing 
plans to enter into potentially beneficial new lines of business, such 
as Medicare or Medicaid products or ancillary lines such as dental or 
vision, out of concern that they could inadvertently, temporarily, end 
up with less than two-thirds of policies issued being QHPs in the 
individual and small group markets.
3. Loan Terms (Sec.  156.520)
    Under Sec.  156.520(f), a CO-OP may not convert or sell to a for-
profit or non-consumer operated entity, or undertake a transaction that 
would result in the CO-OP implementing a governance structure that does 
not meet our regulatory standards. We note that the question has arisen 
as to whether this provision prohibits the sale or conversion of 
policies to a non-CO-OP issuer in connection with the wind-down of a 
CO-OP. If a CO-OP is out of compliance with this provision, the CO-OP 
will cease to be a qualified non-profit health insurance issuer, and 
certain rights under the CO-OP Loan Agreement will become available to 
CMS, including the right to accelerate repayment of the loans or 
terminate the Loan Agreement itself. However, in the appropriate 
circumstances, to preserve coverage for enrollees upon the insolvency 
of the issuer, notwithstanding those remedies, we recognize that a CO-
OP could elect to enter into such a transaction.
    We seek comment on these provisions.

C. Risk Adjustment

    Based on our experience operating the 2014 benefit year risk 
adjustment program, HHS has become aware that certain issuers, 
including some new, rapidly growing, and smaller issuers, owed 
substantial risk adjustment charges that they did not anticipate. HHS 
has had a number of discussions with issuers and State regulators on 
ways to help ease issuers' transition to the new health insurance 
markets and the effects of unanticipated risk adjustment charge 
amounts. We believe that a robust risk adjustment program that 
addresses new market dynamics due to rating reforms and guaranteed 
issue is critical to the proper functioning of these new markets. 
However, we are sympathetic to these concerns and recognize that States 
are the primary regulators of their insurance markets. We encourage 
States to examine whether any local approaches, under State legal 
authority, are warranted to help ease this transition to new health 
insurance markets. Additionally, we will also continue to seek ways to 
improve the risk adjustment methodology. We updated the risk adjustment 
models in the 2017 Payment Notice, and we are exploring future 
improvements to the HHS risk adjustment methodology.

IV. Waiver of Proposed Rulemaking and Delay in Effective Date

    Under the Administrative Procedure Act (APA) (5 U.S.C. 551, et 
seq.), a notice of proposed rulemaking and an opportunity for public 
comment are generally required before promulgation of a regulation. We 
also ordinarily provide a 30-day delay in the effective date of the 
provisions of a rule in accordance with the APA (5 U.S.C. 553(d)), 
which requires a 30-day delayed effective date, unless the rule is a 
major rule and subject to the 60-day delayed effective date required by 
the Congressional Review Act (5 U.S.C. 801(a)(3)) for major rules.
    However, the procedure can be waived if the agency, for good cause, 
finds that notice and public comment and delay in effective date are 
impracticable, unnecessary, or contrary to the public interest and 
incorporates a statement of the finding and its reasons in the rule 
issued. 5 U.S.C. 553(d)(3); 5 U.S.C. 808(2).
    HHS has determined that issuing this regulation in proposed form, 
such that it would not become effective until after public comments are 
submitted, considered and responded to in a final rule, would be 
impracticable and contrary to the public interest.
    Regarding the amendments to special enrollment periods, HHS has 
determined that taking immediate action to amend the parameters of the 
special enrollment period for qualified individuals, enrollees, or 
their dependents who gain access to new QHPs as a result of a permanent 
move, so that it is aligned with the provision's intent, is imperative 
to guarding against adverse selection and gaming of the permanent move 
special enrollment period. Immediate action is also necessary to 
assuring issuer confidence in the appropriate pricing to account for 
the Exchange risk pool. This issuer confidence is necessary to maintain 
robust issuer participation in and competition on the Exchanges and to 
encourage affordability of coverage for enrollees and the continuity of 
care that is supported by the continued availability of plans on the 
Exchanges that were available in the previous year. Therefore, HHS has 
determined that delaying the effective date of the special enrollment 
period regulatory changes to allow for proposed rulemaking and comment 
is contrary to the public interest because consumers would be 
negatively impacted absent robust participation by issuers and by the 
risk of insurance rate increases that can result from unchecked adverse 
selection.
    In addition, HHS has determined it needs to take immediate action 
to remove the January 1, 2017 implementation deadline for (1) offering 
advance availability of the special enrollment period for qualified 
individuals who gain access to new QHPs as a result of a permanent move 
and (2) for offering the special enrollment period for losing a 
dependent or no longer being considered a dependent due to divorce, 
legal separation, or death. Postponing this change to allow for 
proposed rulemaking and comment could result in unnecessary 
expenditures of dollars by Exchanges on information technology system 
builds to comply with deadlines that may not be implemented if HHS's 
current study of special enrollment periods leads to

[[Page 29153]]

removal of the January 2017 implementation date. If a State is 
permitted under a no cost extension of its 1311 grant funding to use 
those funds for establishment activities, including those related to 
special enrollment periods, it is possible this could also result in 
the unnecessary expenditure of Federal grant funds. Therefore, delaying 
action to remove this implementation deadline is contrary to the public 
interest because it could lead to the unnecessary expenditure of State 
and possibly Federal funds.
    We also believe that it would be impracticable and contrary to the 
public interest to delay the implementation of the amendments to the 
CO-OP program regulations. A large fraction of the CO-OPs have ceased 
operations due to financial conditions and other issues in the past 
year. The amendments in this rule are intended to enhance the ability 
of CO-OPs to attract investors or develop new relationships or products 
that we anticipate will support their short- and long-term financial 
viability. We believe having the flexibility provided by these 
amendments may help some CO-OPs engage in new opportunities, and have 
determined that it would not be in the public interest to delay 
implementation of this rule. Specifically, we believe it is essential 
that these regulation changes be effective by the summer of 2016 when, 
due to the prevailing business cycle, CO-OPs, regulators, and HHS must 
determine whether a CO-OP will be in a position to enter open 
enrollment for plan year 2017, and develop and operationalize forms and 
rates accordingly.
    HHS has determined the continued viability of CO-OPs and their 
participation in open enrollment for plan year 2017 is important to 
encouraging competition in the individual and small group markets. 
Because no additional Federal loan funds can be awarded, and all 
awarded funds have been disbursed for most CO-OPs, a large number of 
CO-OPs are seeking to stabilize their balance sheets this summer. In 
order for CO-OPs to benefit from the governance changes described in 
this interim final rule with comment, those changes must be implemented 
immediately. Therefore, HHS has determined that delaying the effective 
date of the regulatory changes to allow for proposed rulemaking, 
comment or a delayed effective date would be detrimental to the public 
interest, as markets with healthy competition are essential to consumer 
choice of affordable coverage options. In addition, by permitting a 
broader group of people to serve as board members, the rule relieves a 
restriction on how CO-OPs may operate, which also justifies waiver of 
the delay in effective date.
    We find good cause to waive the notice of proposed rulemaking and 
to issue this final rule on an interim basis. In addition, with respect 
to the provisions regarding CO-OPs, we find good cause to waive the 30-
day delay in the effective date for this interim final rule with 
comment. Finally, with respect to the provisions regarding CO-OPs, we 
also find alternate justification for waiving the 30-day delay in 
effective date. These provisions will be effective on May 11, 2016. The 
amendments regarding special enrollment periods will be effective on 
July 11, 2016. The delay in the effective date for these amendments 
will provide Exchanges with time to operationalize these amendments. We 
are providing a 60-day public comment period.

V. Collection of Information Requirements

    This document does not impose information collection requirements, 
that is, reporting, recordkeeping or third-party disclosure 
requirements. Consequently, there is no need for review by the Office 
of Management and Budget under the authority of the Paperwork Reduction 
Act of 1995 (44 U.S.C. 3501 et seq.).

VI. Response to Comments

    Because of the large number of public comments we normally receive 
on Federal Register documents, we are not able to acknowledge or 
respond to them individually. We will consider all comments we receive 
by the date and time specified in the ``DATES'' section of this 
preamble and, when we proceed with a subsequent document, we will 
respond to the comments in the preamble to that document.

VII. Regulatory Impact Statement

    We have examined the impact of this rule as required by Executive 
Order 12866 on Regulatory Planning and Review (September 30, 1993), 
Executive Order 13563 on Improving Regulation and Regulatory Review 
(January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 
1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, 
section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 
1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 
1999) and the Congressional Review Act (5 U.S.C. 804(2).
    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). A 
regulatory impact analysis (RIA) must be prepared for major rules with 
economically significant effects ($100 million or more in any one 
year).
    We do not anticipate that the amendments to the parameters of the 
special enrollment period for a permanent move in 45 CFR 155.420(d)(7), 
combined with the amendments to the special enrollment periods in 
paragraphs (d)(3) and (d)(6)(iv), will reduce the availability of a 
special enrollment period to those individuals who should qualify under 
the provision's original intent, and we believe that the effect of the 
amendments will result in closer alignment with earlier regulatory 
impact estimates. We seek comment and data on the impact of these 
amendments on the actual use of special enrollment period by 
individuals who would previously have qualified for the permanent move 
special enrollment period.
    Although most of the original $6 billion appropriated for the CO-OP 
program has been rescinded (as mentioned above), the program has issued 
significant sums to its borrowers. The total loan awards for currently 
operating CO-OPs is as follows:

------------------------------------------------------------------------
                                                            Current
           CO-OP Name                    State            obligations
------------------------------------------------------------------------
HealthyCT, Inc..................  CT................        $127,980,768
Land of Lincoln Mutual Health     IL................         160,154,812
 Insurance Company.
Minuteman Health, Inc...........  MA, NH............         156,442,995
Evergreen Health Cooperative,     MD................          65,450,900
 Inc..
Maine Community Health Options..  ME................         132,316,124
Montana Health Cooperative......  MT, ID............          85,019,688
Freelancers Consumer Operated     NJ................         109,074,550
 and Oriented Program of New
 Jersey, Inc..

[[Page 29154]]

 
New Mexico Health Connections...  NM................          77,317,782
Coordinated Health Mutual, Inc..  OH................         129,225,604
Community Care of Oregon, Inc...  OR................          56,656,900
Common Ground Healthcare          WI................         107,739,354
 Cooperative.
                                 ---------------------------------------
    Total.......................  11................       1,207,379,477
------------------------------------------------------------------------

    With respect to the changes to the CO-OP program that we are 
implementing, we do not have any data available to estimate the likely 
number or magnitude of capital-raising transactions that may result 
from our changes. Directionally, we expect the changes to facilitate 
the raising of additional capital for some number of CO-OPs, and that 
the additional capital cushion will strengthen the financial base and 
allow those CO-OPs to better weather financial stress including both 
the types of market-wide and CO-OP specific issues that led to wind-
downs in 2015. We seek comments and any supporting data that may shed 
light on that potential impact.
    We have concluded that this rule does not reach the economic 
threshold of $100 million or more in any one year, and therefore is not 
considered a major rule with economically significant effects.
    The Regulatory Flexibility Act, (5 U.S.C. 601, et seq.), requires 
agencies to prepare an initial regulatory flexibility analysis to 
describe the impact of this interim final rule with comment on small 
entities, unless the head of the agency can certify that the rule will 
not have a significant economic impact on a substantial number of small 
entities. For purposes of the Regulatory Flexibility Act, small 
entities include small businesses, nonprofit organizations, and small 
governmental jurisdictions. Individuals and States are not included in 
the definition of a small entity. We are not preparing an analysis for 
the Regulatory Flexibility Act because we have determined, and the 
Secretary certifies, that this interim final rule with comment would 
not have a significant economic impact on a substantial number of small 
entities.
    In addition, section 1102(b) of the Social Security Act requires us 
to prepare a regulatory impact analysis if a rule may have a 
significant impact on the operations of a substantial number of small 
rural hospitals. This analysis must conform to the provisions of 
section 604 of the Regulatory Flexibility Act. For purposes of section 
1102(b) of the Act, we define a small rural hospital as a hospital that 
is located outside of a Metropolitan Statistical Area for Medicare 
payment regulations and has fewer than 100 beds. We are not preparing 
an analysis for section 1102(b) of the Act because we have determined, 
and the Secretary certifies, that this interim final rule with comment 
would not have a significant impact on the operations of a substantial 
number of small rural hospitals.
    Section 202 of the Unfunded Mandates Reform Act of 1995 also 
requires that agencies assess anticipated costs and benefits and take 
certain other actions before issuing any rule that includes any Federal 
mandate that may result in expenditures in any 1 year by State, local, 
or Tribal government, in the aggregate, or by the private sector, of 
$100 million in 1995 dollars, updated annually for inflation. In 2016, 
that threshold is approximately $146 million. This interim final rule 
with comment does not establish Federal mandates that would result in 
expenditures in any 1 year of more than $146 million by State, local, 
or Tribal government, in the aggregate, or by the private sector.
    Executive Order 13132 establishes certain requirements that an 
agency must meet when it promulgates an interim final rule with comment 
that imposes substantial direct requirement costs on State and local 
governments, preempts State law, or otherwise has Federalism 
implications. This interim final rule with comment does not impose 
substantial direct costs on State and local governments or preempt 
State law. However, we believe the rule has Federalism implications. In 
the amendments regarding the CO-OP program, we have amended a 
prohibition on participation on CO-OP board of directors that 
previously prevented any State employee from participating to allow 
certain State employees who are unlikely to have a potential conflict 
of interest to participate. In removing the January 1, 2017 
implementation deadline for (1) offering advance availability of the 
special enrollment period for qualified individuals who gain access to 
new QHPs as a result of a permanent move and (2) for offering the 
special enrollment period for losing a dependent or no longer being 
considered a dependent due to divorce, legal separation, or death, we 
leave implementation at the option of Exchanges, including State 
Exchanges.
    This interim final rule with comment is subject to the 
Congressional Review Act provisions of the Small Business Regulatory 
Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.), which 
specifies that before a rule can take effect, the Federal agency 
promulgating the rule shall submit to each House of the Congress and to 
the Comptroller General a report containing a copy of the rule along 
with other specified information, and has been transmitted to Congress 
and the Comptroller General for review.

List of Subjects

45 CFR Part 155

    Administrative practice and procedure, Advertising, Brokers, 
Conflict of interest, Consumer protection, Grant administration, Grant 
programs--health, Health care, Health insurance, Health maintenance 
organizations (HMO), Health records, Hospitals, Indians, Individuals 
with disabilities, Intergovernmental relations, Loan programs--health, 
Medicaid, Organization and functions (Government agencies), Public 
assistance programs, Reporting and recordkeeping requirements, 
Technical assistance, Women and youth.

45 CFR Part 156

    Administrative practice and procedure, Advertising, Advisory 
Committees, Brokers, Conflict of interests, Consumer protection, Grant 
programs--health, Grants administration, Health care, Health insurance, 
Health maintenance organizations (HMO), Health records, Hospitals, 
Indians, Individuals with disabilities, Loan programs--health, 
Medicaid, Organization and functions (Government agencies), Public 
assistance programs, Reporting and recordkeeping requirements, State 
and local governments, Sunshine Act, Technical assistance, Women, 
Youth.

    For the reasons set forth in the preamble, the Department of Health 
and Human Services amends 45 CFR parts 155 and 156 as set forth below:

[[Page 29155]]

PART 155--EXCHANGE ESTABLISHMENT STANDARDS AND OTHER RELATED 
STANDARDS UNDER THE AFFORDABLE CARE ACT

0
1. The authority citation for part 155 continues to read as follows:

    Authority: Title I of the Affordable Care Act, sections 1301, 
1302, 1303, 1304, 1311, 1312, 1313, 1321, 1322, 1331, 1332, 1334, 
1402, 1411, 1412, 1413, Public Law 111-148, 124 Stat. 119 (42 U.S.C. 
18021-18024, 18031-18033, 18041-18042, 18051, 18054, 18071, and 
18081-18083).

0
2. Section 155.420 is amended by revising paragraphs (b)(2)(iv), 
(c)(2), (d)(2)(ii), (d)(3), (d)(6)(iv), and (d)(7) to read as follows:


Sec.  155.420  Special enrollment periods.

* * * * *
    (b) * * *
    (2) * * *
    (iv) If a consumer loses coverage as described in paragraph (d)(1) 
or (d)(6)(iii) of this section, gains access to a new QHP as described 
in paragraph (d)(7) of this section, becomes newly eligible for 
enrollment in a QHP through the Exchange in accordance with Sec.  
155.305(a)(2) as described in paragraph (d)(3) of this section, or 
becomes newly eligible for advance payments of the premium tax credit 
in conjunction with a permanent move as described in paragraph 
(d)(6)(iv) of this section, if the plan selection is made on or before 
the day of the triggering event, the Exchange must ensure that the 
coverage effective date is on the first day of the month following the 
date of the triggering event. If the plan selection is made after the 
date of the triggering event, the Exchange must ensure that coverage is 
effective in accordance with paragraph (b)(1) of this section or on the 
first day of the following month, at the option of the Exchange.
* * * * *
    (c) * * *
    (2) Advanced availability. A qualified individual or his or her 
dependent who is described in paragraph (d)(1) or (d)(6)(iii) of this 
section has 60 days before or after the triggering event to select a 
QHP. At the option of the Exchange, a qualified individual or his or 
her dependent who is described in paragraph (d)(7) of this section; who 
is described in paragraph (d)(6)(iv) of this section and becomes newly 
eligible for advance payments of the premium tax credit as a result of 
a permanent move to a new State; or who is described in paragraph 
(d)(3) of this section and becomes newly eligible for enrollment in a 
QHP through the Exchange because he or she newly satisfies the 
requirements under Sec.  155.305(a)(2), has 60 days before or after the 
triggering event to select a QHP.
* * * * *
    (d) * * *
    (2) * * *
    (ii) At the option of the Exchange, the enrollee loses a dependent 
or is no longer considered a dependent through divorce or legal 
separation as defined by State law in the State in which the divorce or 
legal separation occurs, or if the enrollee, or his or her dependent, 
dies.
    (3) The qualified individual, or his or her dependent, becomes 
newly eligible for enrollment in a QHP through the Exchange because he 
or she newly satisfies the requirements under Sec.  155.305(a)(1) or 
(2);
* * * * *
    (6) * * *
    (iv) A qualified individual who was previously ineligible for 
advance payments of the premium tax credit solely because of a 
household income below 100 percent of the FPL and who, during the same 
timeframe, was ineligible for Medicaid because he or she was living in 
a non-Medicaid expansion State, who either experiences a change in 
household income or moves to a different State resulting in the 
qualified individual becoming newly eligible for advance payments of 
the premium tax credit;
    (7) The qualified individual or enrollee, or his or her dependent, 
gains access to new QHPs as a result of a permanent move and either--
    (i) Had minimum essential coverage as described in 26 CFR 1.5000A-
1(b) for one or more days during the 60 days preceding the date of the 
permanent move, or
    (ii) Was living outside of the United States or in a United States 
territory at the time of the permanent move;
* * * * *

PART 156--HEALTH INSURANCE ISSUER STANDARDS UNDER THE AFFORDABLE 
CARE ACT, INCLUDING STANDARDS RELATED TO EXCHANGES

0
3. The authority citation for part 156 continues to read as follows:

    Authority: Title I of the Affordable Care Act, sections 1301-
1304, 1311-1312, 1321-1322, 1324, 1334, 1342-1343, 1401-1402, and 
1412, Pub. L. 111-148, 124 Stat. 119 (42 U.S.C. 18021-18024, 18031-
18032, 18041-18042, 18044, 18054, 18061, 18063, 18071, 18082, 26 
U.S.C. 36B, and 31 U.S.C. 9701).

0
4. Section 156.505 is amended by revising the definitions of ``pre-
existing issuer'' and ``representative'' to read as follows:


Sec.  156.505  Definitions.

* * * * *
    Pre-existing issuer means a health insurance issuer licensed by a 
State regulator that marketed individual or group health insurance 
benefit plans (other than Medicare or Medicaid Managed Care plans) on 
July 16, 2009.
* * * * *
    Representative means an officer, director, or trustee of an 
organization, or group of organizations; or a senior executive or high-
level representative of the Federal government, or a State or local 
government or a sub-unit thereof.
* * * * *
0
5. Section 156.515 is amended by:
0
a. Revising paragraphs (b)(1)(i) through (v), (b)(2)(i), (ii), (iii), 
and (v);
0
b. Removing paragraph (b)(1)(vi); and
0
c. Removing and reserving paragraph (b)(2)(iv).
    The revisions read as follows:


Sec.  156.515  CO-OP standards.

* * * * *
    (b) * * *
    (1) * * *
    (i) The CO-OP must be governed by an operational board with a 
majority of directors elected by a majority vote of a quorum of the CO-
OP's members that are age 18 or older;
    (ii) All members age 18 or older must be eligible to vote for each 
of the directors on the organization's operational board subject to a 
vote of the members under paragraph (b)(1)(i) of this section;
    (iii) Each member age 18 or older must have one vote in each 
election for each director subject to a vote of the members under 
paragraph (b)(1)(i) of this section in that election;
    (iv) The first elected directors of the organization's operational 
board must be elected no later than one year after the effective date 
on which the organization provides coverage to its first member; the 
entire operational board must be elected or in place, and in full 
compliance with paragraph (b)(1)(i) of this section, no later than two 
years after the same date;
    (v) Elections of the directors on the organization's operational 
board subject to a vote of the members under paragraph (b)(1)(i) of 
this section must be contested so that the total number of candidates 
for contested seats on the operational board exceeds the number of 
contested seats for such directors, except in cases where a seat is 
vacated mid-term due to death, resignation, or removal.
    (2) * * *
    (i) Each director must meet ethical, conflict-of-interest, and 
disclosure standards;

[[Page 29156]]

    (ii) Each director has one vote;
    (iii) Positions on the board of directors may be designated for 
individuals with specialized expertise, experience, or affiliation (for 
example, providers, employers, and unions); and
    (iv) [Reserved]
    (v) Limitation on government and issuer participation. No 
representative of any Federal, State or local government (or of any 
political subdivision or instrumentality thereof) and no representative 
of any organization described in Sec.  156.510(b)(1)(i) (in the case of 
a representative of a State or local government or organization 
described in Sec.  156.510(b)(1)(i), with respect to a State in which 
the CO-OP issues policies), may serve on the CO-OP's formation board or 
as a director on the organization's operational board.
* * * * *

    Dated: May 5, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: May 5, 2016
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.
[FR Doc. 2016-11017 Filed 5-6-16; 4:15 pm]
 BILLING CODE 4120-01-P