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Response: As noted in the preamble to the proposed rule, the requirement to provide confirmation of a telephonic withdrawal can be met through issuance of the dismissal notice, which is required to contain instructions on how to request to vacate the dismissal in accordance with §155.530(b)(3). However, even if the appeals entity decides to provide confirmation of the telephonic withdrawal in a notice separate from the dismissal notice, a dismissal notice, including instructions on requesting to vacate a dismissal, is required in the case of a withdrawal nonetheless. Therefore, all appellants who provide a telephonic withdrawal will receive instructions on requesting to vacate the dismissal, which would have the effect of reopening the
Comment: We received one comment suggesting that telephonic withdrawals only be accepted through the Exchange toll-free number and that assisters, Navigators, and certified application counselors not be authorized to accept telephonic withdrawals.
Response: If an appeals entity wishes to provide telephonic withdrawals in accordance with the final requirements, the appeals entity must maintain a phone line, capable of recording calls from appellants for the purposes of withdrawing an appeal. Whether that phone line is the same as the Exchange’s customer service number or not is at the discretion of the appeals entity.
We also note that, although appellants may seek assistance from assisters, Navigators, and certified application counselors, these consumer support entities are not authorized to operate any portion of the Exchange appeals process, including accepting telephonic withdrawals.
Summary of Regulatory Changes We are finalizing the provision as proposed and note, as in the proposed rule, that this change also impacts employer appeal withdrawals by cross-reference at §155.555(f)(1).
c. Employer Appeals Process (§155.555) We proposed to amend §155.555 by redesignating paragraphs (d)(1) through (d)(4) to more clearly delineate between the requirements associated with valid appeal requests versus invalid appeal requests. We note that under this proposed redesignation, paragraph (d)(4) would become new paragraph (d)(2), stating that upon receipt of an invalid appeal request, the appeals entity must promptly and without undue delay send written notice to the employer that the appeal request is not valid because it fails to meet the requirements of this section. New paragraph (d)(2) would also provide introductory language for the requirements provided in paragraphs
requirements for valid appeal requests in redesignated paragraph (d)(1) and the requirements for invalid appeal requests in new paragraph (d)(2).
Summary of Regulatory Changes We received no comments on the proposed redesignations and are finalizing the redesignations as proposed.
6. Subpart G—Exchange Functions in the Individual Market: Eligibility Determinations for Exemptions a. Required Contribution Percentage Under section 5000A of the Code, an individual must maintain minimum essential coverage for each month, qualify for an exemption, or make a shared responsibility payment.
Sections 5000A(d) and (e) provide for nine categories of exemptions, and authorize the Secretary to determine individuals’ eligibility for some of the exemptions, including the hardship exemption. Sections 1.5000A-3(a) through (h) of 26 CFR enumerate the circumstances in which an individual may be exempt from the shared responsibility payment. These grounds for exemption include: (1) under 26 CFR 1.5000A-3(e), the individual lacks affordable coverage because the individual’s annualized required contribution for minimum essential coverage for the month exceeds the required contribution percentage of the individual’s household income; (2) under 26 CFR 1.5000A-3(h), the individual has in effect a hardship exemption certification issued by an Exchange because, based on the individual’s projected household income, the individual is not eligible for affordable minimum essential coverage; and (3) as described in 45 CFR 155.605(g)(5), the individual and one or more employed members of his or her family have been determined eligible for affordable self-only employer-sponsored coverage through their
employed members of the family exceeds 8 percent of household income for that calendar year.
Determining eligibility for these exemptions requires comparison between the individual’s share of the costs for obtaining minimum essential coverage and a certain percentage of the individual’s household income, actual or projected, for the taxable year (the required contribution percentage). Under section 5000A(e)(1)(A) of the Code, the required contribution percentage is 8 percent. Section 5000A(e)(1)(D) of the Code and 26 CFR 1.5000A-3(e)(2)(ii) further provide that, for plan years beginning in any calendar year after 2014, the percentage will be the percentage determined by the Secretary to reflect the excess of the rate of premium growth between the preceding calendar year and 2013 over the rate of income growth for that period.
As discussed below, in this final rule, we establish a methodology for determining the excess of the rate of premium growth over the rate of income growth for a period, and establish the required contribution percentage for the 2015 calendar year. For calendar years after 2015, the required contribution percentage will be published in the annual HHS notice of benefit and payment parameters. We also define the required contribution percentage under §155.600(a) to mean the product of 8 percent and the rate of premium growth over the rate of income growth for the calendar year, rounded to the nearest one-hundredth of one percent. Finally, we modify §155.605(g)(5), which currently sets the required contribution percentage at 8 percent, so that the required contribution percentage for purpose of section 5000A in future years reflects the required contribution percentage for the applicable calendar year.
Methodology for Determining the Excess of the Rate of Premium Growth Over the Rate of Income Growth In the proposed rule, we outlined and requested comments on methodologies for
discussed an approach under which the rate of premium growth over the rate of income growth for a particular calendar year would be calculated as the quotient of (x) one plus the rate of premium growth between the preceding calendar year and 2013, divided by (y) one plus the rate of income growth between the preceding calendar year and 2013. We sought comment on whether we should constrain this ratio to be greater than or equal to one, as well as the impact of these constraints on the excess of the rate of premium growth over the rate of income growth.
We sought comment on this and other approaches for determining the excess of the rate of premium growth over the rate of income growth, and in particular, whether the excess of the rate of premium growth over income growth should be calculated based on the difference between the growth rates, the ratio of the growth rates, or through other methods, and whether the result should be subject to other adjustments.
In response to comments, we are finalizing the methodology outlined in the proposed rule, such that the rate of premium growth over the rate of income growth for a particular calendar year will be the quotient of (x) one plus the rate of premium growth between the preceding calendar year and 2013, carried out to ten significant digits, divided by (y) one plus the rate of income growth between the preceding calendar year and 2013, carried out to ten significant digits. The quotient will be carried out to ten significant digits, and multiplied by the required contribution percentage for 2014 (8 percent). The result will then be rounded to the nearest hundredth of a percent, to yield the required contribution percentage for the calendar year. We do not constrain this percentage to be greater than or equal to one, or subject it to other adjustments or constraints.
Comment: Several commenters supported our proposal that we perform this calculation
(x) one plus the rate of premium growth between the preceding calendar year and 2013, over (y) one plus the difference between the rate of premium growth between the preceding calendar year and 2013, and the rate of income growth between the preceding calendar year and 2013, stating that this would minimize volatility of the formula. Some commenters supported permitting the ratio to be less than one, while another commenter suggested that the ratio should be constrained to be greater than or equal to one, to avoid the required contribution increasing when both premium growth and income growth are negative. One commenter suggested a ceiling on the index factor of 1.1 to ensure that premium contributions do not increase by more than 1 percent of consumers’ incomes.
Response: We believe that the methodology described above most accurately measures the relationship between changes in premiums and income. While we recognize some of the policy concerns raised by commenters, we believe that any constraints on the ratio could result in the required contribution percentage not fully reflecting the growth rates of premiums and income, which we believe is the general intent of the statute.
Comment: Some commenters recommended delaying any adjustments to the required contribution percentage. One commenter stated that adjustments to the required contribution percentage and to the applicable percentages used to calculate the premium tax credits under section 36B of the Code should be delayed until at least 2016, to permit fuller assessments of the consequences of these adjustments. Another commenter suggested delaying any increase in premium contributions for the foreseeable future, noting significant technical and administrative costs, such as revising online calculators and coding Exchange functions.
Response: While we recognize the commenters’ concerns, we believe the required
delaying this adjustment would conflict with the general intent of the statute. We also anticipate that the operational changes associated with these adjustments will be manageable.
Premium Growth: In the proposed rule, we sought comment on whether we should use the premium adjustment percentage as a measure of premium growth for the purpose of calculating the adjustment to the required contribution percentage, and whether that adjustment should be constrained through the use of ceilings or floors. We also sought comment on whether other data sources or methods should be used to measure premium growth.
Taking into consideration the comments received, we are finalizing our proposal to measure the rate of premium growth for a calendar year by using the premium adjustment percentage for the year, without any adjustments or constraints. We provided in the 2015 Payment Notice29 that the premium adjustment percentage, described at 45 CFR 156.130(e), will be published each year in the HHS notice of benefit and payment parameters, and will be used to adjust certain cost-sharing parameters established by the Affordable Care Act. As established in the 2015 Payment Notice, the premium adjustment percentage for 2015 is 4.213431463 percent.
Comment: Several commenters supported setting the rate of premium growth equal to the premium adjustment percentage. One commenter stated we should not consider constraining the annual rate of premium growth to equal or exceed zero, while another commenter argued that premium growth should constrained to be a positive number. Another commenter suggested that HHS use actual, rather than projected, growth in private insurance premiums, and suggested that HHS delay implementation of any adjustment until the 2016 plan year, when a number of significant market changes would have concluded and when actual premium growth between
2014 and 2015 will be known. One commenter was concerned that the trend in employer plan premiums may understate premium growth in the individual market.
Response: The premium adjustment percentage is calculated based on projections of average per enrollee employer-sponsored insurance premiums from the National Health Expenditure Accounts (NHEA), which are calculated by the CMS Office of the Actuary. As discussed in the 2015 Payment Notice, these projected premiums reflect premiums from nearly the entire private health insurance market. However, because these projected premiums will exclude premiums from the individual market, which are likely to be subject to a number of short-term effects related to implementation of market reforms, we believe these projections provide an appropriate measure of average per capita premiums for health insurance coverage for the initial years. However, as noted in the proposed rule, after the initial year(s) of implementation of market reforms, we may propose to change the methodology for calculating the premium adjustment percentage.
Income Growth: In the proposed rule, we discussed measuring the rate of income growth for a calendar year as the percentage by which the per capita GDP for the preceding calendar year exceeds the per capita GDP for 2013, carried out to ten significant digits. We stated that we were considering using the projections of per capita GDP used for the NHEA.30 We sought comment on alternative sources of income data that we should consider, and whether adjustments should be made to our data source, or to the methodology outlined in the proposed rule. We also sought comment on whether we should seek to measure income growth per person under the age of 65 or per worker.
In response to comments, in this final rule, we are establishing as the measure of income growth for a calendar year the percentage by which the per capita GDP for the preceding calendar year exceeds the per capita GDP for 2013, carried out to ten significant digits, using the projections of per capita GDP used for the NHEA. Under this methodology, the rate of income growth for 2015 is 3.608458790 percent. This measure is based on data sources that are consistent with the data sources used for determining premium projections, resulting in a consistent estimate of the ratio of premiums to income. In future years we may consider alternative income measures.