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Comment: Some commenters supported the proposal to require standard consumer notices when issuers discontinue or renew coverage. Other commenters felt the notices were overly prescriptive and advocated for issuer flexibility to modify the notices. For example, commenters suggested HHS provide model notice language or specify minimum content requirements. Many commenters requested issuers have the ability to customize the notices in order to provide specific information to help consumers make informed purchase decisions, such as information about premiums, a description of benefit changes, and the policy year and enrollment deadlines. Some commenters recommended eliminating the renewal notice requirement altogether. Other commenters argued that States are in the best position to regulate on product discontinuance and renewal and suggested that notice requirements be left to the States.
Response: While we acknowledge the advantages of tailored consumer communications, and recognize the importance of State involvement, the final rule adopts the proposed language that notices be provided in a form and manner specified by the Secretary. We plan to address the notices in future guidance and intend to address the use of State-specific notices at that point in time.
Comment: Several commenters recommended that notices be sent only to the group or individual market policyholder, arguing that it would be administratively burdensome for issuers and confusing for employees and dependents to receive information about product renewal and discontinuation when they are not the primary decision makers.
Response: The final rule maintains the requirement that discontinuation notices must be provided to all enrollees under the plan or coverage. Section 2703(c)(1) of the PHS Act requires
of the discontinuation in writing to each plan sponsor or individual provided that particular product and to “all participants and beneficiaries covered under such coverage.” We note that an issuer may satisfy this requirement by providing the notice only to the subscriber.
By contrast, renewal notices are not required to be provided to participants, beneficiaries, or enrollees. Both the proposed rule and this final rule make clear that notices of renewal must only be provided to the plan sponsor (for example, employer) in the small group market or the individual market policyholder in the individual market.
Comment: Several commenters recommended that renewal notices be sent prior to the beginning of the open enrollment period, rather than 90 days before the end of the plan or policy year, to better align with the options and schedule of the Exchange.
Response: The statute and regulations establish a 90-day notice requirement only for product discontinuation. In the final rule, we have added in §148.122(i) a requirement that renewal notices be delivered at least 60 calendar days before the date of renewal of the coverage for grandfathered products in the individual market and, in §147.106(f)(2) and §146.152(h), for all products in the small group market. For non-grandfathered products in the individual market, in response to the commenters’ request to coordinate the notices with enrollment in the Exchange, we are requiring in §147.106(f)(1) the renewal notices be delivered before the first day of the annual open enrollment period. We believe this provides sufficient advance notice for consumers in non-grandfathered individual policies to review other options for coverage. Since the small group market has continuous year-round open enrollment, the 60 day advanced notice of renewal provides sufficient notice to employers. Many grandfathered policies in the
enrollment period in the individual market. Accordingly, the 60 day advanced notice requirement is more appropriate for these policies.
Comment: Some commenters noted that the Federal notices will duplicate renewal notices developed by issuers, States, and Exchanges, and emphasized the need for coordination to prevent consumer confusion.
Response: We agree and encourage issuers, States, and Exchanges to coordinate enrollee communications to the extent possible.
Summary of Regulatory Changes We are finalizing the uniform modification provisions proposed in §147.106 of the proposed rule with the following modifications and made corresponding changes in §146.152 and §148.122. We are adding regulation text explicitly stating that the interpretation of uniform modification provided for in this rule also requires that the modifications be made uniformly.
We add language amending and clarifying the term “pursuant to applicable Federal and State law”; replace “product type” with “product network type”; and to specify that the product must continue to cover at least a majority of the same service area, and delete the reference to “counties.” We only finalize the ability of States to apply additional criteria that broaden the scope of what would be considered a uniform modification in connection with the criteria involving service area and cost-sharing structure. We clarify that the criteria related to costsharing and covered benefits apply at the plan-level. We do not finalize the interpretation of uniform modification or the corresponding renewal notice requirements with respect to issuers in the large group market, only with respect to issuers offering coverage in the individual and small
We also are adding definitions of “product” and “plan” at §144.103; changing the reference to “termination of plan” to “termination of product” at §146.152(b)(4), §147.106(b)(4), and §148.122(c)(3); and are amending the definition of “product” in the rate review regulations to reflect the interpretation of uniform modification, as applied in the rate review context.
D. Part 148—Requirements for the Individual Health Insurance Market
1. Conforming Changes to Individual Market Regulations (§§148.101 through 148.128) We proposed conforming revisions to the individual market provisions contained in 45 CFR Part 148 to remove provisions that are superseded by the prohibition on preexisting condition exclusions under new section 2704 of the PHS Act, added by the Affordable Care Act.17 We proposed these amendments generally apply when the final rule becomes effective.
Under our proposal, however, the requirement to issue certificates of creditable coverage would continue to apply until December 31, 2014. This would allow individuals to continue to offset a preexisting condition exclusion that could potentially be imposed by a group health plan with a plan year from December 31, 2013 to December 30, 2014. We indicated that these amendments were for clarity only and that they were consistent with amendments to the group market provisions and with previous CMS guidance.18 We solicited comment on these proposals.
The Affordable Care Act adds section 715(a)(1) of ERISA and section 9815(a)(1) of the Code to incorporate the provisions of part A of title XXVII of the PHS Act, including section 2704 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. PHS Act section 2704 applies to grandfathered and nongrandfathered group health plans and group health insurance coverage, and non-grandfathered individual health insurance coverage. It does not apply to grandfathered individual health insurance coverage. For more information on grandfathered health plans, see section 1251 of the Affordable Care Act and its implementing regulations at 26 CFR 54.9815-1251T, 29 CFR 2590.715-1251, and 45 CFR 147.140.
See Ninety-Day Waiting Period Limitation and Technical Amendments to Certain Health Coverage Requirements Under the Affordable Care Act, 78 FR 10296 (February 24, 2014). See also Questions and Answers Related to Health Insurance Market Rules, Q2. Available at: http://www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/qa_hmr.html.
CMS-9949-F 54 Comment: Two commenters stated that certificates of creditable coverage might continue to be needed in limited circumstances after 2014, such as when a dependent is added to a grandfathered individual health insurance plan, which is not subject to the prohibition on preexisting condition exclusions. The commenters recommended that certificates be required to be provided upon request after December 31, 2014.
Response: While certain plans in the individual market, such as grandfathered health plans that are individual health insurance coverage and transitional individual market plans, may impose preexisting condition exclusions after 2014, such plans are not required to give credit for prior coverage against a preexisting condition exclusion period. Accordingly, there are no circumstances in which a certificate of creditable coverage will be relevant after December 30, 2014.
Summary of Regulatory Changes We are finalizing the amendments proposed in §§148.101 through 148.128 of the proposed rule without change.
2. Fixed Indemnity Insurance in the Individual Health Insurance Market (§148.220) As indicated in previous CMS guidance, which described our intended approach, we proposed to amend the criteria for fixed indemnity insurance to be treated as an excepted benefit in the individual health insurance market. Excepted benefits are exempt from many of the requirements of title XXVII of the PHS Act.
Specifically, under the proposed rule, individual fixed indemnity policies would be considered an excepted benefit if the benefits are provided under a separate policy, certificate, or contract of insurance and all of the following criteria are met: (1) The benefits are provided only
meaning of section 5000A(f) of the Code; (2) there is no coordination between the provision of benefits and an exclusion of benefits under any other health coverage; (3) the benefits are paid in a fixed dollar amount per day of hospitalization or illness or per service (for example, $100/day or $50/visit) regardless of the amount of expenses incurred and without regard to the amount of benefits provided with respect to the event or service under any other health coverage; and (4) a notice is displayed prominently in the plan materials in at least 14-point type that has the following language: “THIS IS A SUPPLEMENT TO HEALTH INSURANCE AND IS NOT A
SUBSTITUTE FOR MAJOR MEDICAL COVERAGE. LACK OF MAJOR MEDICAL COVERAGE
(OR OTHER MINIMUM ESSENTIAL COVERAGE) MAY RESULT IN AN ADDITIONALPAYMENT WITH YOUR TAXES.” This proposal was intended to prevent disruption and address stakeholder concerns that many fixed indemnity insurance policies marketed today in the individual market do not qualify as excepted under the regulations at §148.220(b)(3) and, as further described in a frequently asked question (FAQ) published on January 24, 2013, because they pay on a per-service rather than a per-period basis.19 We solicited comment on this approach, including comments on the proposed notice language.
We explained that, to meet the standard that fixed indemnity insurance must be sold only to individuals who have other health coverage that is minimum essential coverage, the issuer would have to be “reasonably assured” that an individual purchasing a fixed indemnity policy has minimum essential coverage. We sought comment on the extent of verification issuers may need for reasonable assurance, including the possibility of consumer self-attestation. We also
sought comment on whether the “other health coverage that is minimum essential coverage” standard was sufficient protection or if another standard may be appropriate (for example, requiring that fixed indemnity insurance be sold to individuals with other health coverage that meets the EHB requirements).
We noted that under a safe harbor approach established by the Departments of HHS, Labor, and the Treasury (the Departments) for supplemental health insurance coverage to be considered an excepted benefit, the supplemental coverage must be issued by an entity that does not provide the primary coverage under the plan.20 We indicated that were considering adopting a similar standard for individual fixed indemnity insurance to qualify as excepted and sought comment.
Finally, we indicated that, in our view, most fixed indemnity products offered in the individual market today would largely satisfy these proposed criteria. We solicited comment, nonetheless, on how the proposal might affect existing market arrangements. We also solicited comment on whether applying the provisions for policy years beginning on or after January 1, 2015 would provide a sufficient transition period, and whether keeping the current regulatory criteria in place on a permanent or temporary basis could help to alleviate any potential market disruption.
Comment: Several commenters questioned HHS’s legal authority to impose the requirement that fixed indemnity insurance must be sold as supplement to minimum essential coverage in order to be an excepted benefit. They noted that Congress created another category See CMS Insurance Standards Bulletin 08-01 (available at http://www.cms.gov/CCIIO/Resources/Files/Downloads/hipaa_08_01_508.pdf) ; the Department of Labor's Employee Benefits Security Administration's Field Assistance Bulletin No. 2007-04 (available at http://www.dol.gov/ebsa/pdf/fab2007-4.pdf); and Internal Revenue Service Notice 2008-23 (available at http://www.irs.gov/irb/2008-07_IRB/ar09.html).
CMS-9949-F 57 of excepted benefits for supplemental coverage. Some commenters indicated that imposing the supplemental requirement was an encroachment of States’ regulatory authority since States have the primary authority to regulate excepted benefits. One commenter stated that the proposal contravenes the holding of the Supreme Court that the government cannot compel individuals to engage in economic activity. One commenter stated that the requirement that fixed indemnity insurance be sold only as supplemental coverage to minimum essential coverage should be removed, and that Federal and State regulators, along with consumer and carrier representatives, should work together to develop requirements that will protect consumers and also retain coverage options.