[Federal Register Volume 78, Number 25 (Wednesday, February 6, 2013)]
[Proposed Rules]
[Pages 8456-8476]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-02420]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[REG-120391]
RIN 1545-BJ60

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2590

RIN 1210-AB44

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 147, 148, and 156

[CMS-9968-P]
RIN 0938-AR42


Coverage of Certain Preventive Services Under the Affordable Care 
Act

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

ACTION: Proposed rules.

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SUMMARY: This document proposes amendments to rules regarding coverage 
for certain preventive services under section 2713 of the Public Health 
Service Act, as added by the Patient Protection and Affordable Care 
Act, as amended, and incorporated into the Employee Retirement Income 
Security Act of 1974 and the Internal Revenue Code. Section 2713 of the 
Public Health Service Act requires coverage without cost sharing of 
certain preventive health services, including certain contraceptive 
services, in non-exempt, non-grandfathered group health plans and 
health insurance coverage. The proposed rules would amend the 
authorization to exempt group health plans established or maintained by 
certain religious employers (and group health insurance coverage 
provided in connection with such plans) with respect to the requirement 
to cover

[[Page 8457]]

contraceptive services. The proposed rules would also establish 
accommodations for group health plans established or maintained by 
eligible organizations (and group health insurance coverage offered in 
connection with such plans), including student health insurance 
coverage arranged by eligible organizations that are religious 
institutions of higher education. This document also proposes related 
amendments to regulations concerning excepted benefits and Affordable 
Insurance Exchanges.

DATES: Comments are due on or before April 8, 2013.

ADDRESSES: In commenting, please refer to file code CMS-9968-P. Because 
of staff and resource limitations, the Departments 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 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-9968-P, P.O. Box 8013, 
Baltimore, MD 21244-1850.
    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-9968-P, Mail Stop C4-26-05, 7500 
Security Boulevard, Baltimore, MD 21244-1850.
    4. By Hand or Courier. You may deliver (by hand or courier) your 
written comments to the following addresses only:
    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 Centers for Medicare & Medicaid Services 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 (410) 786-9994 in advance to schedule your arrival with one of our 
staff members.
    Do not mail comments to the addresses indicated as appropriate for 
hand or courier delivery because they may be delayed and received after 
the close of the comment period.
    For information on viewing public comments, see the beginning of 
the SUPPLEMENTARY INFORMATION section.

FOR FURTHER INFORMATION CONTACT: Jacob Ackerman, Centers for Medicare & 
Medicaid Services (CMS), Department of Health and Human Services (HHS), 
at (410) 786-1565. Amy Turner or Beth Baum, Employee Benefits Security 
Administration (EBSA), Department of Labor, at (202) 693-8335.
    Karen Levin, Internal Revenue Service (IRS), Department of the 
Treasury, at (202) 927-9639.
    Customer Service Information: Individuals interested in obtaining 
information from the Department of Labor concerning employment-based 
health coverage laws may call the EBSA Toll-Free Hotline at 1-866-444-
EBSA (3272) or visit the Department of Labor's Web site (www.dol.gov/ebsa). In addition, information from HHS on private health insurance 
coverage can be found on CMS's Web site (www.cciio.cms.gov), and 
information on health care reform can be found at www.HealthCare.gov.

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. The Departments 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: 
www.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 
three 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 4:00 p.m. To schedule an appointment to view public comments, 
call (800) 743-3951.

I. Background

    The Patient Protection and Affordable Care Act (Pub. L. 111-148) 
was enacted on March 23, 2010, and amended by the Health Care and 
Education Reconciliation Act of 2010 (Pub. L. 111-152) on March 30, 
2010. These statutes are referred to collectively as the Affordable 
Care Act. The Affordable Care Act reorganizes, amends, and adds to the 
provisions of part A of title XXVII of the Public Health Service Act 
(PHS Act) relating to group health plans and health insurance issuers 
in the group and individual markets. The Affordable Care Act adds 
section 715(a)(1) to the Employee Retirement Income Security Act of 
1974 (ERISA) and section 9815(a)(1) to the Internal Revenue Code (Code) 
to incorporate the provisions of part A of title XXVII of the PHS Act 
into ERISA and the Code, and to make them applicable to group health 
plans. The PHS Act sections incorporated by these references are 
sections 2701 through 2728.
    Section 2713 of the PHS Act, as added by the Affordable Care Act 
and incorporated into ERISA and the Code, requires that non-
grandfathered group health plans and health insurance issuers offering 
non-grandfathered group or individual health insurance coverage provide 
benefits for certain preventive health services without the imposition 
of cost sharing. These preventive health services include, with respect 
to women, preventive care and screenings as provided for in 
comprehensive guidelines supported by the Health Resources and Services 
Administration (HRSA).
    The Departments of Health and Human Services (HHS), Labor, and the 
Treasury (collectively, the Departments) published interim final rules 
with a request for comments implementing section 2713 of the PHS Act in 
the July 19, 2010 Federal Register (75 FR 41726) (2010 interim final 
rules). Among other things, the 2010 interim final rules provide that a 
plan or issuer must provide coverage, without cost sharing, for certain 
newly recommended preventive health services starting with the first 
plan year (or, in the individual market, policy year) that begins on or 
after the date that is one year after the date on which the 
recommendation or guideline is issued.\1\
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    \1\ 26 CFR 54.9815-2713T(b)(1); 29 CFR 2590.715-2713(b)(1); 45 
CFR 147.130(b)(1).
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    On August 1, 2011, HRSA adopted and released guidelines for women's 
preventive services based on

[[Page 8458]]

recommendations of the independent Institute of Medicine, which had 
undertaken a review of the scientific and medical evidence on women's 
preventive services (Women's Preventive Services: Required Health Plan 
Coverage Guidelines, or HRSA Guidelines).\2\ As relevant here, the HRSA 
Guidelines include all Food and Drug Administration (FDA)-approved 
contraceptive methods, sterilization procedures, and patient education 
and counseling for all women with reproductive capacity, as prescribed 
by a health care provider (collectively, contraceptive services).\3\ 
Accordingly, under section 2713 of the PHS Act and the 2010 interim 
final rules, non-grandfathered group health plans and health insurance 
issuers offering non-grandfathered group or individual health insurance 
coverage are required to provide coverage without cost sharing of 
women's preventive health services, including contraceptive services, 
consistent with the HRSA Guidelines in plan years (or, in the 
individual market, policy years) beginning on or after August 1, 2012, 
except as discussed later in this section.
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    \2\ The HRSA Guidelines are available at: http://www.hrsa.gov/womensguidelines.
    \3\ This excludes services relating to a man's reproductive 
capacity, such as vasectomies and condoms.
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    Contemporaneous with the issuance of the HRSA Guidelines, the 
Departments amended the 2010 interim final rules (76 FR 46621) (2011 
amended interim final rules). The amendment provided HRSA with the 
authority to exempt group health plans established or maintained by 
religious employers (and group health insurance coverage provided in 
connection with such plans) from the requirement to cover contraceptive 
services pursuant to the HRSA Guidelines.\4\ The 2011 amended interim 
final rules specified that, for purposes of this exemption, a religious 
employer is one that: (1) Has the inculcation of religious values as 
its purpose; (2) primarily employs persons who share its religious 
tenets; (3) primarily serves persons who share its religious tenets; 
and (4) is a nonprofit organization described in section 6033(a)(1) and 
(a)(3)(A)(i) or (iii) of the Code. Section 6033(a)(3)(A)(i) and (iii) 
of the Code refers to churches, their integrated auxiliaries, and 
conventions or associations of churches, as well as to the exclusively 
religious activities of any religious order. HRSA exercised this 
authority in the HRSA Guidelines such that group health plans 
established or maintained by these religious employers (and group 
health insurance coverage provided in connection with such plans) are 
exempt from the requirement to cover contraceptive services.
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    \4\ The 2011 amended interim final rules were issued and 
effective on August 1, 2011, and published on August 3, 2011.
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    On February 10, 2012, the Departments issued final rules that 
adopted the definition of religious employer in the 2011 amended 
interim final rules for purposes of the exemption from the requirement 
to cover contraceptive services (2012 final rules).\5\ Contemporaneous 
with the issuance of the 2012 final rules, HHS, with the agreement of 
the Departments of Labor and the Treasury, issued guidance establishing 
a temporary enforcement safe harbor for group health plans established 
or maintained by certain nonprofit organizations that have religious 
objections to contraceptive coverage (and any group health insurance 
coverage provided in connection with such plans).\6\
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    \5\ The 2012 final rules were published on February 15, 2012 (77 
FR 8725).
    \6\ Guidance on the Temporary Enforcement Safe Harbor for 
Certain Employers, Group Health Plans, and Group Health Insurance 
Issuers with Respect to the Requirement to Cover Contraceptive 
Services Without Cost Sharing Under Section 2713 of the Public 
Health Service Act, Section 715(a)(1) of the Employee Retirement 
Income Security Act, and Section 9815(a)(1) of the Internal Revenue 
Code, issued on February 10, 2012, and reissued on August 15, 2012. 
Available at: http://cciio.cms.gov/resources/files/prev-services-guidance-08152012.pdf. The guidance, as reissued on August 15, 2012, 
clarifies, among other things, that group health plans that took 
some action before February 10, 2012, to try, without success, to 
exclude or limit contraceptive coverage are not precluded from 
eligibility for the safe harbor.
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    The guidance provides that, under the temporary enforcement safe 
harbor, the Departments will not take any enforcement action against an 
employer, group health plan, or health insurance issuer for failing to 
cover some or all recommended contraceptive services in a non-
grandfathered group health plan (or any group health insurance coverage 
provided in connection with such a plan) where the plan is established 
or maintained by an organization meeting all of the following criteria:
     The organization is organized and operates as a nonprofit 
entity.
     From February 10, 2012, onward, the group health plan 
established or maintained by the organization has consistently not 
covered all or the same subset of recommended contraceptive services, 
consistent with any applicable state law, because of the religious 
beliefs of the organization.
     The group health plan established or maintained by the 
organization (or another entity on behalf of the plan, such as a health 
insurance issuer or third party administrator) provides to participants 
a notice indicating that some or all contraceptive services will not be 
covered under the plan for the first plan year beginning on or after 
August 1, 2012, as set forth in the guidance.
     The organization self-certifies that it satisfies the 
foregoing three criteria and documents its self-certification, as set 
forth in the guidance.
    The temporary enforcement safe harbor is also available for insured 
student health insurance coverage arranged by nonprofit institutions of 
higher education with religious objections to contraceptive coverage 
that similarly meet the four criteria.\7\
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    \7\ See final rule on student health insurance coverage 
published by HHS on March 21, 2012 (77 FR 16456 and 16457).
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    The temporary enforcement safe harbor is in effect until the first 
plan year that begins on or after August 1, 2013. The Departments 
committed to rulemaking during this 1-year safe harbor period to 
provide women with contraceptive coverage without cost sharing as 
required by section 2713 of the PHS Act, while protecting certain 
additional organizations from having to contract, arrange, pay, or 
refer for any contraceptive coverage to which they object on religious 
grounds.
    The first step toward realizing these policy goals was an advance 
notice of proposed rulemaking (ANPRM) published on March 21, 2012 (77 
FR 16501). The ANPRM presented potential approaches and solicited 
comments on alternative ways to fulfill the requirements of section 
2713 of the PHS Act when health coverage is established or maintained 
by eligible organizations, or arranged by eligible organizations that 
are religious institutions of higher education,\8\ with religious 
objections to contraceptive coverage. The 90-day comment period on the 
ANPRM closed on June 19, 2012.
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    \8\ In these proposed rules, any proposed accommodation specific 
to a religious institution of higher education is intended to 
accommodate the religious institution of higher education only with 
respect to its arrangement of student health insurance coverage. 
With respect to the establishment or maintenance of a group health 
plan by a religious institution of higher education, the religious 
institution of higher education is intended to be accommodated the 
same way as any other religious organization that has established or 
maintained a group health plan.
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    These proposed rules mark the next step in the process. The 
proposed rules would make two principal changes to the preventive 
services coverage rules to provide women contraceptive coverage without 
cost sharing, while taking into account religious objections to 
contraceptive services of eligible organizations, including eligible

[[Page 8459]]

organizations that are religious institutions of higher education, that 
establish or maintain or arrange health coverage. First, the proposed 
rules would amend the criteria for the religious employer exemption to 
ensure that an otherwise exempt employer plan is not disqualified 
because the employer's purposes extend beyond the inculcation of 
religious values or because the employer serves or hires people of 
different religious faiths. Second, the proposed rules would establish 
accommodations for health coverage established or maintained by 
eligible organizations, or arranged by eligible organizations that are 
religious institutions of higher education, with religious objections 
to contraceptive coverage. The proposed rules also propose related 
amendments to other rules, consistent with the proposed accommodations. 
The Departments intend to finalize all such proposed amendments before 
the end of the temporary enforcement safe harbor.
    Comments are welcome on any aspect of the proposed rules, including 
on how best to provide women with contraceptive coverage without cost 
sharing as required by section 2713 of the PHS Act, while protecting 
eligible organizations from having to contract, arrange, pay, or refer 
for any contraceptive coverage to which they object on religious 
grounds.

II. Overview of the Public Comments on the Advance Notice of Proposed 
Rulemaking

    The Departments received approximately 200,000 comments in response 
to the ANPRM. Commenters represented a wide variety of stakeholders, 
including religious groups; religiously affiliated educational 
institutions, health care organizations, charities, and associations; 
civil rights organizations; consumer groups; group health plan sponsors 
and administrators; third party administrators and other plan service 
providers; health insurance issuers; law and public policy 
organizations; states; secular organizations; private citizens; and 
women's rights and reproductive health advocacy organizations.
    Comments addressed both the religious employer exemption and the 
suggested accommodations, among other issues. Although the Departments 
do not separately address each comment received, the significant issues 
raised in the comments are summarized in this section. The Departments 
considered these comments in developing the policies in these proposed 
rules.

A. Comments on the Religious Employer Exemption

    Some commenters asserted that the definition of religious employer 
as formulated in the 2012 final rules is too narrow. Some of these 
commenters expressed concern that the group health plans of a number of 
religious employers, including houses of worship, do not qualify for 
the exemption because the employers' purposes extend beyond the 
inculcation of religious values or because the employers serve or hire 
people of different religious faiths. Commenters noted that employers 
may not know the religious beliefs of those they serve or hire, and 
that employment discrimination laws may prohibit them from inquiring 
about the religious beliefs of their employees. Other commenters 
expressed concern that the definition of religious employer is not 
broad enough to allow them to continue their current exclusion of 
contraceptive services from coverage under their group health plans and 
warned that, if the definition of religious employer is not broadened, 
they could cease to offer health coverage to their employees in order 
to avoid having to offer coverage to which they object on religious 
grounds.
    Commenters also asserted that federal laws, including the 
Affordable Care Act, provide for conscience clauses and religious 
exemptions broader than the religious employer exemption provided for 
in the 2012 final rules. Other commenters asserted that the narrow 
scope of the exemption raises concerns under the First Amendment and 
the Religious Freedom Restoration Act (RFRA). Some commenters asserted 
that the criteria for the religious employer exemption could result in 
excessive government entanglement in religion. Several commenters 
expressed concern that the definition of religious employer sets a 
precedent for use in other areas of federal and state law. These 
commenters urged that the definition of religious employer be broadened 
such that more group health plans may qualify for the exemption.
    Other commenters, however, disputed claims that the contraceptive 
coverage requirement infringes on rights protected by the First 
Amendment or RFRA, noting that the requirement is neutral and generally 
applicable. They also explained that the requirement does not 
substantially burden religious exercise and, in any event, serves 
compelling governmental interests and is the least restrictive means to 
achieve those interests.
    Some commenters supported the inclusion of contraceptive services 
in the HRSA Guidelines and urged that the Departments not broaden the 
religious employer exemption. These commenters asserted that the 
definition of religious employer is appropriately targeted at houses of 
worship and argued that making contraceptive coverage available to as 
many women as possible would enhance access to important preventive 
health care services and would significantly reduce long-term health 
care costs and consequences associated with unplanned pregnancies. 
These commenters asserted that expanding the exemption would undermine 
the benefits of the law. Some commenters believed that the exemption 
should be eliminated entirely due to the importance of extending these 
benefits to as many women as possible.
    Several commenters requested clarification as to whether, if 
employees of multiple employers are covered under a single group health 
plan, each employer must independently meet the definition of religious 
employer for the plan to qualify for the exemption.

B. Comments on the Suggested Accommodations for Health Coverage 
Established or Maintained by Religious Organizations or Arranged by 
Religious Institutions of Higher Education

    Several commenters asserted that the suggested accommodations 
described in the ANPRM would fail to adequately accommodate religious 
objections to contraceptive coverage. These commenters emphasized that, 
in their view, religious organizations would continue to be involved, 
whether directly or indirectly, in providing coverage for services that 
they find religiously objectionable. For example, with respect to 
insured group health plans, these commenters disputed the claim that 
contraceptive coverage is at least cost neutral and argued that plan 
sponsors would end up funding the coverage in the form of higher 
premiums or fees. These commenters generally argued that, in order to 
provide adequate relief, the Departments would need to rescind the 
contraceptive coverage requirement in its entirety, provide an 
exemption for the group health plan of any organization with a 
religious or moral objection to contraceptive coverage, or provide 
government funding for provision of contraceptive services.
    Other commenters recommended that the Departments expand the 
suggested accommodations to encompass the group health plans of a 
broader class of religiously affiliated organizations. Several 
commenters stated that the rules

[[Page 8460]]

should accommodate all organizations with a religious or moral 
objection to contraceptive coverage, whether the organization is 
religious or secular, or nonprofit or for-profit, among other potential 
distinctions. These commenters also argued that an accommodation should 
be available without regard to whether an organization has covered 
contraceptive services in its group health plan in the past.
    Some commenters recommended using criteria in other federal laws, 
such as the National Labor Relations Act, for determining whether the 
group health plan of an organization qualifies for an accommodation. 
Some commenters suggested accommodating the group health plans of 
religiously affiliated organizations recognized as tax-exempt under an 
IRS group ruling.
    In contrast, other commenters urged that any accommodation apply 
only to health coverage established or maintained by a limited class of 
religiously affiliated organizations or arranged by a limited class of 
religiously affiliated institutions of higher education. For example, 
several commenters suggested limiting any accommodation to only health 
coverage established or maintained by nonprofit organizations owned or 
controlled by a church, association of churches, or religious order, or 
arranged by nonprofit institutions of higher education owned or 
controlled by a religious organization as defined for purposes of Title 
IX of the Education Amendments of 1972. These commenters also generally 
argued that health coverage established or maintained by for-profit 
organizations or arranged by for-profit institutions of higher 
education, or health coverage established or maintained by 
organizations, or arranged by institutions of higher education, that 
object to only some types of contraceptive services, should not qualify 
for an accommodation.
    A number of commenters supported a self-certification process, 
similar to that used for the temporary enforcement safe harbor, for 
religious organizations seeking to avail themselves of an 
accommodation. Some commenters urged that the Departments adopt 
appropriate oversight and enforcement mechanisms to monitor compliance 
with the criteria for any accommodation and recommended self-
certification as a tool to promote transparency and support compliance 
and enforcement. Other commenters suggested that the Departments 
consider any such self-certification to be conclusive to avoid inquiry 
into a religious organization's character, mission, or practices.
    Comments were quite varied regarding the ANPRM's suggested 
approaches with respect to the provision of contraceptive coverage to 
participants and beneficiaries enrolled in self-insured group health 
plans established or maintained by religious organizations with 
religious objections to such coverage. Many commenters supported the 
general approach suggested in the ANPRM of ensuring that participants 
and beneficiaries enrolled in such self-insured plans receive 
contraceptive coverage without cost sharing. These commenters stated 
that any accommodation should not create delays in or barriers to 
contraceptive benefits, and that these benefits should be provided 
without participants and beneficiaries having to specifically elect 
such benefits.
    Concerns were raised by some commenters about an objecting 
organization's ability to not administer, facilitate, or otherwise 
involve itself in the provision of contraceptive coverage to such 
participants and beneficiaries. Many commenters were concerned about 
how third party administrators would be able to fund these benefits. 
They noted that drug rebates, one suggested source of funds, often 
belong to another entity (such as the plan sponsor and/or the plan 
participants and beneficiaries), not the third party administrator, and 
stated that, in their view, costs incurred by third party 
administrators would ultimately be passed on to plan sponsors and/or 
plan participants and beneficiaries unless a separate source of funding 
could be found, such as some form of public funding or stand-alone 
contraceptive coverage with no premium or cost sharing. Others raised 
questions about the responsibility for communications regarding 
contraceptive coverage. Some third party administrators were concerned 
about becoming surrogate insurers, which might subject them to the 
application of state insurance laws. At the same time, other commenters 
believed that, with funding, notice, and adequate claims information, 
contraceptive coverage could be administered effectively by third party 
administrators.

III. Provisions of the Proposed Rules

A. Overview

    The Departments aim to secure the protections under section 2713 of 
the PHS Act that are designed to enhance coverage of important 
preventive services for women without cost sharing while accommodating 
the religious objections to contraceptive coverage of eligible 
organizations.
    The Departments propose two key changes to the preventive services 
coverage rules codified in 26 CFR 54.9815-2713T, 29 CFR 2590.715-2713, 
and 45 CFR 147.130 to meet these goals. First, the proposed rules would 
amend the criteria for the religious employer exemption to ensure that 
an otherwise exempt employer plan is not disqualified because the 
employer's purposes extend beyond the inculcation of religious values 
or because the employer serves or hires people of different religious 
faiths. Second, the proposed rules would establish accommodations for 
health coverage established or maintained by eligible organizations, or 
arranged by eligible organizations that are religious institutions of 
higher education, with religious objections to contraceptive coverage.
    Amendments to rules concerning excepted benefits and Affordable 
Insurance Exchanges (Exchanges) are also proposed in connection with 
the proposed accommodations.

B. Explanation of Terms

    In these proposed rules, all references to ``contraceptive 
coverage'' are references to coverage of the contraceptive services 
that are required to be covered without cost sharing in accordance with 
the HRSA Guidelines (that is, all FDA-approved contraceptive methods, 
sterilization procedures, and patient education and counseling for all 
women with reproductive capacity, as prescribed by a health care 
provider).
    All references to ``accommodation'' are references to an 
arrangement under which contraceptive coverage is provided without cost 
sharing to plan participants and beneficiaries (or, in the case of 
student health insurance coverage, student enrollees and their covered 
dependents) independent of health coverage established or maintained or 
arranged by an objecting religious organization, including an objecting 
religious institution of higher education.
    Finally, all references to ``religious organization'' and 
``religious institution of higher education'' are references to the 
class of organizations and institutions of higher education that 
establish or maintain or arrange health coverage that qualifies for an 
accommodation. These organizations are collectively referred to as 
``eligible organizations'' in these proposed rules.

[[Page 8461]]

C. Religious Employer Exemption and Accommodations for Health Coverage 
Established or Maintained or Arranged by Eligible Organizations

    For purposes of organization and clarity, proposed 45 CFR 
147.130(a)\9\ would provide that the requirement to provide coverage 
for recommended preventive services without cost sharing is subject to 
a new 45 CFR 147.131, which would establish standards and processes 
related to both the religious employer exemption and the accommodations 
for health coverage established or maintained or arranged by eligible 
organizations, as discussed in more detail later in this section.
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    \9\ For simplicity, this preamble refers only to provisions of 
45 CFR 147.130. Parallel provisions to 45 CFR 147.130 are contained 
in 26 CFR 54.9815-2713T and 29 CFR 2590.715-2713.
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    Accordingly, the proposed rules would move to new 45 CFR 
147.131\10\ the language currently in 45 CFR 147.130(a)(1)(iv)(A) and 
(B) (incorporated by reference in the rules of the Departments of Labor 
and the Treasury) that authorizes HRSA to exempt group health plans of 
religious employers (and group health insurance coverage provided in 
connection with such plans) from the contraceptive coverage requirement 
and that defines religious employer for this purpose, and would amend 
the authorization and definition as discussed later in this section.
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    \10\ For simplicity, this preamble refers only to provisions of 
45 CFR 147.131. Parallel provisions to 45 CFR 147.131 are contained 
in 26 CFR 54.9815-2713A and 29 CFR 2590.715-2713A.
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1. Religious Employer Exemption
    Currently, under the 2012 final rules, a religious employer is one 
that: (1) Has the inculcation of religious values as its purpose; (2) 
primarily employs persons who share its religious tenets; (3) primarily 
serves persons who share its religious tenets; and (4) is a nonprofit 
organization described in section 6033(a)(1) and 6033(a)(3)(A)(i) or 
(iii) of the Code. Section 6033(a)(3)(A)(i) and (iii) of the Code 
refers to churches, their integrated auxiliaries, and conventions or 
associations of churches, as well as to the exclusively religious 
activities of any religious order. The Departments explained in the 
2011 amended interim final rules that this definition was intended to 
focus the religious employer exemption on ``the unique relationship 
between a house of worship and its employees in ministerial 
positions.''\11\
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    \11\ 76 FR 46623.
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    Some commenters brought to the Departments' attention that the 
group health plans of certain religious entities that meet the fourth 
prong of the definition of religious employer (providing that a 
religious employer is a nonprofit organization described in section 
6033(a)(1) and (a)(3)(A)(i) or (iii) of the Code) may not qualify for 
the exemption because those entities provide benevolent services to 
their communities. For example, if a church maintains a soup kitchen 
that provides free meals to low-income individuals irrespective of 
their religious faiths, it could fail to satisfy the third prong of the 
definition of religious employer (providing that a religious employer 
primarily serves persons who share its religious tenets). The same 
question could arise if a church runs a parochial school that employs 
people of different religious faiths.
    The Departments agree that the exemption should not exclude group 
health plans of religious entities that would qualify for the exemption 
but for the fact that, for example, they provide charitable social 
services to persons of different religious faiths or employ persons of 
different religious faiths when running a parochial school. Indeed, 
this was never the Departments' intention in connection with the 2011 
amended interim final rules or the 2012 final rules. Accordingly, in 45 
CFR 147.131(a) (and the related rules of the Departments of Labor and 
the Treasury), the Departments propose to amend the definition of 
religious employer that was adopted in the 2012 final rules by 
eliminating the first three prongs of the definition and clarifying the 
application of the fourth. Under this proposal, an employer that is 
organized and operates as a nonprofit entity and referred to in section 
6033(a)(3)(A)(i) or (iii) of the Code would be considered a religious 
employer for purposes of the religious employer exemption. For this 
purpose, an organization that is organized and operates as a nonprofit 
entity is not limited to any particular form of entity under state law, 
but may include organizations such as trusts and unincorporated 
associations, as well as nonprofit, not-for-profit, non-stock, public 
benefit, and similar types of corporations. However, for this purpose, 
an organization is not considered to be organized and operated as a 
nonprofit entity if its assets or income accrue to the benefit of 
private individuals or shareholders. Under this standard, it is not 
necessary to determine the federal tax-exempt status of the nonprofit 
entity in determining whether the religious employer exemption applies. 
The Departments note that eliminating the first three prongs would 
avoid any inquiry into an employer's purposes, as well as any inquiry 
into the religious beliefs of its employees and the religious beliefs 
of those it serves.
    The Departments believe that this proposal would not expand the 
universe of employer plans that would qualify for the exemption beyond 
that which was intended in the 2012 final rules. As previously noted, 
when the Departments first defined religious employer, the primary goal 
was to exempt the group health plans of houses of worship. Section 
6033(a)(3)(A)(i) and (iii) of the Code refers to churches, their 
integrated auxiliaries, and conventions or associations of churches, as 
well as to the exclusively religious activities of any religious order. 
By restricting the exemption primarily to group health plans 
established or maintained by churches, synagogues, mosques, and other 
houses of worship, and religious orders, the fourth prong of the 
current definition of religious employer would alone suffice to meet 
the goal. By eliminating the first three prongs of the current 
definition, there no longer would be any question as to whether group 
health plans of houses of worship that provide educational, charitable, 
or social services to their communities qualify for the exemption.
    The Departments welcome comments on this proposal, including 
whether it would unduly expand the universe of employer plans that 
would qualify for the exemption and whether additional or different 
language is needed to clarify the scope of the exemption.
2. Accommodations for Health Coverage Established or Maintained or 
Arranged by Eligible Organizations
    In proposed 45 CFR 147.131(b) through (e) (and the related rules of 
the Departments of Labor and the Treasury) and as discussed later in 
this section, the Departments propose policies relating to the 
accommodation of certain group health plans and group health insurance 
coverage with respect to the contraceptive coverage requirement. The 
Departments propose a comparable accommodation with respect to student 
health insurance coverage arranged by eligible organizations that are 
religious institutions of higher education. The Departments believe 
these proposed accommodations, as opposed to the exemption that is 
provided to religious employers, are warranted given that participants 
and beneficiaries in group health plans established or maintained by 
eligible organizations, as well as student enrollees and their covered 
dependents in student health insurance coverage arranged by eligible 
organizations, may be less likely than participants and beneficiaries 
in group health plans established or maintained

[[Page 8462]]

by religious employers to share such religious objections of the 
eligible organizations. The proposed accommodations would provide such 
plan participants and beneficiaries contraceptive coverage without cost 
sharing while insulating their employers or institutions of higher 
education from contracting, arranging, paying, or referring for such 
coverage.

a. Definition of Eligible Organization

    These proposed rules would provide that group health plans 
established or maintained by eligible organizations with religious 
objections to contraceptive coverage (and group health insurance 
coverage provided in connection with such plans), and student health 
insurance coverage arranged by eligible organizations that are 
religious institutions of higher education with such objections, comply 
with the requirement to provide coverage for contraceptive services 
under section 2713 of the PHS Act if the conditions of the 
accommodation are satisfied.
    For purposes of these proposed rules only, the Departments propose 
to define an eligible organization as an organization that meets all of 
the following criteria:
     The organization opposes providing coverage for some or 
all of the contraceptive services required to be covered under section 
2713 of the PHS Act on account of religious objections.
     The organization is organized and operates as a nonprofit 
entity.
     The organization holds itself out as a religious 
organization.
     The organization self-certifies that it satisfies the 
first three criteria, as described later in this section.
    This proposed definition of eligible organization is intended to 
allow health coverage established or maintained or arranged by 
nonprofit religious organizations, including nonprofit religious 
institutional health care providers, educational institutions, and 
charities, with religious objections to contraceptive coverage to 
qualify for an accommodation. For this purpose, an organization that is 
organized and operated as a nonprofit entity is not limited to any 
particular form of entity under state law, but may include 
organizations such as trusts and unincorporated associations, as well 
as nonprofit, not-for-profit, non-stock, public benefit, and similar 
types of corporations. However, for this purpose an organization is not 
considered to be organized and operated as a nonprofit entity if its 
assets or income accrue to the benefit of private individuals or 
shareholders.
    The Departments believe that the proposed definition of eligible 
organization would strike an appropriate balance because it would limit 
any accommodation to nonprofit organizations that hold themselves out 
as religious. The Departments solicit comments on whether the proposed 
definition of eligible organization would allow an appropriate universe 
of nonprofit religious organizations and institutions of higher 
education establishing or maintaining or arranging health coverage to 
qualify for an accommodation, including comments on whether it would be 
too broad or too narrow.
    The Departments do not propose that the definition of eligible 
organization extend to for-profit secular employers. Religious 
accommodations in related areas of federal law, such as the exemption 
for religious organizations under Title VII of the Civil Rights Act of 
1964, are available to nonprofit religious organizations but not to 
for-profit secular organizations. Accordingly, the Departments believe 
it would be appropriate to define eligible organization to include 
nonprofit religious organizations, but not to include for-profit 
secular organizations.

b. Self-Certification

    Each organization seeking accommodation under the proposed rules 
would be required to self-certify that it meets the definition of 
eligible organization, following a self-certification process similar 
to that under the temporary enforcement safe harbor. The self-
certification would also specify the contraceptive services for which 
the organization will not establish, maintain, administer, or fund 
coverage. The organization would not be required to submit the self-
certification to any of the Departments. The organization would 
maintain the self-certification (executed by an authorized 
representative of the organization) in its records for each plan year 
to which the accommodation applies and make the self-certification 
available for examination upon request so that regulators, issuers, 
third party administrators, and plan participants and beneficiaries may 
verify that an organization has qualified for an accommodation, while 
avoiding any inquiry into the organization's character, mission, or 
practices. The Departments intend to specify in guidance the form to be 
used for the self-certification.

c. Separate Contraceptive Coverage Without Cost Sharing for Plan 
Participants and Beneficiaries

    These proposed rules aim to provide women with contraceptive 
coverage without cost sharing and to protect eligible organizations 
from having to contract, arrange, pay, or refer for contraceptive 
coverage to which they object on religious grounds.

1. Insured Plans

    To achieve these goals, under HHS's authority in section 2792 of 
the PHS Act to promulgate rules ``necessary or appropriate'' to carry 
out the provisions of title XXVII of the PHS Act, and the parallel 
authorities of the Department of Labor in section 734 of ERISA and the 
Department of the Treasury in section 9833 of the Code, these proposed 
rules would provide that, in the case of an insured group health plan 
established or maintained by an eligible organization, the health 
insurance issuer providing group coverage in connection with the plan 
would assume sole responsibility, independent of the eligible 
organization and its plan, for providing contraceptive coverage without 
cost sharing, premium, fee, or other charge to plan participants and 
beneficiaries.
    The eligible organization would provide the issuer with a copy of 
its self-certification. If the plan uses a separate issuer for certain 
coverage, such as prescription drug coverage, the eligible organization 
may also need to provide a copy of its self-certification to the 
separate issuer. Nothing more would be required of the eligible 
organization to qualify for the accommodation.
    The proposed rules would direct the issuer receiving the copy of 
the self-certification to ensure that the coverage for those 
contraceptive services identified in the self-certification is not 
included in the group policy, certificate, or contract of insurance; 
that such coverage is not reflected in the group health insurance 
premium; and that no fee or other charge in connection with such 
coverage is imposed on the eligible organization or its plan.
    The proposed rules would further direct the issuer receiving the 
copy of the self-certification to provide contraceptive coverage under 
individual policies, certificates, or contracts of insurance 
(hereinafter referred to as individual health insurance policies) for 
plan participants and beneficiaries without cost sharing, premium, fee, 
or other charge. The coverage would not be offered by or through a 
group health plan. (As discussed later in this section, the Departments 
propose that this type

[[Page 8463]]

of individual health insurance policy be a new category of excepted 
benefits.)
    The issuer would automatically enroll plan participants and 
beneficiaries in a separate individual health insurance policy that 
covers recommended contraceptive services. The Departments envision 
that the issuer would ensure that contraceptive coverage for plan 
participants and beneficiaries is effective at the beginning of the 
plan year of their group health plan, to the extent possible, to 
prevent a delay or gap in contraceptive coverage. The eligible 
organization would have no role in contracting, arranging, paying, or 
referring for this separate contraceptive coverage. Such coverage would 
be offered at no charge to plan participants and beneficiaries, that 
is, the issuer would provide benefits for such contraceptive services 
without the imposition of any cost sharing requirement (such as a 
copayment, coinsurance, or a deductible), premium, fee, or other 
charge, consistent with section 2713 of the PHS Act. The requirements 
of section 2713 of the PHS Act, its implementing regulations, and other 
applicable federal and state law (as well as their enforcement 
mechanisms) would continue to apply with respect to such coverage. For 
example, an issuer providing such coverage could use reasonable medical 
management techniques consistent with 45 CFR 147.130(a)(4).
    The Departments believe that, in the case of insured group health 
plans, this proposed arrangement would alleviate the need for the 
eligible organization to contract, arrange, pay, or refer for 
contraceptive coverage while providing contraceptive coverage to plan 
participants and beneficiaries at no additional cost. Actuaries, 
economists, and insurers estimate that providing contraceptive coverage 
is at least cost neutral, and may result in cost-savings when taking 
into account all costs and benefits for the insurer.\12\ In this 
instance, contraceptive coverage without cost sharing would be provided 
to plan participants and beneficiaries through individual health 
insurance policies, separate from the group policy through which all 
other coverage would be provided to plan participants and 
beneficiaries. The Departments believe that issuers generally would 
find that providing such contraceptive coverage is cost neutral because 
they would be they would be insuring the same set of individuals under 
both policies and would experience lower costs from improvements in 
women's health and fewer childbirths.
---------------------------------------------------------------------------

    \12\ Bertko, John, F.S.A., M.A.A.A., Director of Special 
Initiatives and Pricing, Center for Consumer Information and 
Insurance Oversight, Centers for Medicare & Medicaid Services, 
Glied, Sherry, Ph.D., Assistant Secretary for Planning and 
Evaluation, Department of Health and Human Services (ASPE/HHS), et 
al., ``The Cost of Covering Contraceptives Through Health 
Insurance,'' (February 9, 2012), available at: http://aspe.hhs.gov/health/reports/2012/contraceptives/ib.shtml.
---------------------------------------------------------------------------

    The Departments note that a health insurance issuer providing 
coverage in connection with a plan established or maintained by an 
eligible organization would be held harmless under the accommodation if 
a representation by the organization to the issuer that the 
organization is an eligible organization on which the issuer relied in 
good faith were determined later to be incorrect. Conversely, the 
eligible organization and its plan would be held harmless if the issuer 
were to fail to comply with the requirement that it provide separate 
contraceptive coverage for plan participants and beneficiaries at no 
charge.
    The Departments request comments on this proposed arrangement.

2. Self-Insured Plans

    The Departments are considering alternative approaches for 
providing participants and beneficiaries in self-insured group health 
plans established or maintained by eligible organizations with 
contraceptive coverage at no additional cost, while protecting the 
eligible organizations from having to contract, arrange, pay, or refer 
for such coverage. Under each of these approaches, a health insurance 
issuer that provides individual health insurance policies for 
contraceptive coverage for plan participants and beneficiaries at no 
additional cost would be able to offset the costs of providing such 
coverage by claiming an adjustment in Federally-facilitated Exchange 
(FFE) user fees that would reduce the amount of the such fees for the 
issuer (or an affiliated issuer), as discussed later in this section. 
The Departments envision that the issuer would ensure that 
contraceptive coverage for plan participants and beneficiaries is 
effective at the beginning of the plan year of their group health 
plans, to the extent possible, to prevent a delay or gap in 
contraceptive coverage. Under each of these approaches, HHS would 
assist in identifying issuers offering the separate individual health 
insurance policies for contraceptive coverage.
    Under all approaches, if there is a third party administrator for 
the self-insured group health plan of the eligible organization, the 
eligible organization would provide the third party administrator with 
a copy of its self-certification. If the plan uses a separate third 
party administrator for certain coverage, such as prescription drug 
coverage, the eligible organization would also provide a copy of its 
self-certification to the separate third party administrator if the 
coverage administered by the separate third party administrator 
includes coverage of any contraceptive service listed in the self-
certification.
    Further, under all approaches, a third party administrator 
receiving a copy of the self-certification would automatically arrange 
separate individual health insurance policies for contraceptive 
coverage from an issuer providing such polices, as described above. The 
issuer providing the coverage (or an affiliated issuer) would receive 
an additional adjustment in the user fees that otherwise would be 
charged by an FFE in an amount that would offset a reasonable charge by 
the third party administrator for performing this service. In turn, the 
issuer would be required to pass the amount of this additional 
adjustment in FFE user fees on to the third party administrator as a 
condition of receiving any FFE user fee adjustment, and would be 
required to attest to HHS that it has in fact passed the amount of this 
additional adjustment on to the third party administrator. As a 
condition of payment of this amount by the issuer, the third party 
administrator would not be permitted to charge any amount to the 
eligible organization, its plan, or to plan participants or 
beneficiaries for performing the service. The Departments note that the 
issuer could either be affiliated with or be independent of the third 
party administrator.
    The Departments solicit comment on which of the proposed approaches 
below would best provide participants and beneficiaries in self-insured 
group health plans established or maintained by eligible organizations 
with contraceptive coverage at no additional cost, while protecting 
eligible organizations from having to contract, arrange, pay, or refer 
for such coverage. The Departments also request comment on whether 
there are other approaches that should be considered that would achieve 
the same goals.
    Under the first approach, a third party administrator receiving the 
copy of the self-certification would have an economic incentive to 
voluntarily arrange for the separate individual health insurance 
policies for contraceptive coverage for plan participants and 
beneficiaries because it would be compensated for a reasonable charge 
for automatically arranging for the contraceptive coverage through

[[Page 8464]]

payment by the issuer of the contraceptive coverage. Under this 
approach, in automatically arranging for the contraceptive coverage, 
the third party administrator would be acting, not as the third party 
administrator to the self-insured plan of the eligible organization, 
but rather in its independent capacity apart from its capacity as the 
agent of the plan. Under this approach, the self-insured plan of the 
eligible organization would be treated as complying with the 
requirement to provide contraceptive coverage based on the third party 
administrator's receipt of the copy of the self-certification.
    Under the second approach, coverage under the plan of the eligible 
organization would comply with the requirement to provide contraceptive 
coverage without cost sharing only if the third party administrator 
administering coverage in connection with the plan automatically 
arranges for an issuer to assume sole responsibility for providing 
separate individual health insurance policies offering contraceptive 
coverage without cost sharing, premium, fee, or other charge to plan 
participants and beneficiaries, the eligible organization, or its plan. 
As discussed above, any reasonable administrative costs of the third 
party administrator in performing this service would be covered through 
payment by the issuer of the contraceptive coverage. If the third party 
administrator performs the services, coverage under the plan of the 
eligible organization would comply with 45 CFR 147.130. While the third 
party administrator would not be directly responsible for assuring 
compliance with section 2713 of the PHS Act, the Departments expect 
that third party administrators would seek to assist eligible 
organizations such that eligible organizations would be able to avail 
themselves of the proposed accommodation.
    Under the third approach, the third party administrator receiving 
the copy of the self-certification would be directly responsible for 
automatically arranging for contraceptive coverage for plan 
participants and beneficiaries. Specifically, the self-certification 
would have the effect of designating the third party administrator \13\ 
as the plan administrator under section 3(16) of ERISA solely for the 
purpose of fulfilling the requirement that the plan provide 
contraceptive coverage without cost sharing. The third party 
administrator would satisfy its responsibility to automatically arrange 
for contraceptive coverage for plan participants and beneficiaries by 
arranging for an issuer to assume sole responsibility for providing 
separate individual health insurance policies offering contraceptive 
coverage without cost sharing, premium, fee, or other charge to plan 
participants and beneficiaries, the eligible organization, or its plan. 
The Departments note that there would be no obligation on a third party 
administrator to enter into or continue a third party administration 
contract with an eligible organization if the third party administrator 
were to object to having to carry out this responsibility. Although 
this approach would place the legal responsibility for assuring 
compliance with section 2713 of the PHS Act solely on the third party 
administrator, it would have legal implications under ERISA's 
reporting, disclosure, claims processing, and fiduciary provisions for 
both the third party administrator and the eligible organization. The 
Departments seek comment specifically on potential issues arising under 
ERISA if the third party administrator were to become the designated 
plan administrator under section 3(16) of ERISA, and therefore a plan 
fiduciary, even for the limited purposes contemplated.
---------------------------------------------------------------------------

    \13\ To the extent the plan uses more than one third party 
administrator (for example, one pharmacy benefit manager (PBM) to 
handle claims administration for prescription drugs and another 
entity to handle claims for inpatient and outpatient medical/
surgical benefits), each third party administrator would become the 
plan administrator upon receiving the copy of the self-certification 
with respect to the types of claims that it normally processes (that 
is, the PBM would continue to handle claims for prescription drugs 
and the other entity would continue to handle claims for inpatient 
and outpatient medical/surgical benefits), and each would do so in 
accordance with section 2713 of the PHS Act (even if plan terms 
might otherwise provide differently) as plan administration with an 
independent funding source.
---------------------------------------------------------------------------

    The Departments also seek comment on whether there is a need to 
provide an accommodation for self-insured plans of eligible 
organizations without third party administrators, and, if so, how best 
to ensure that participants and beneficiaries in such plans receive 
separate contraception coverage without cost sharing. No comments were 
submitted in response to the request in the ANPRM on the extent to 
which there are such plans without a third party administrator. The 
Departments continue to believe that there are very few, if any, self-
insured plans of eligible organizations in this circumstance.
    The Departments solicit comment on these alternative approaches.

3. Notice of Availability of Contraceptive Coverage and Coordination of 
Benefits

    The proposed rules would direct a health insurance issuer providing 
separate individual health insurance policies for contraceptive 
coverage at no additional cost to participants and beneficiaries in 
plans of eligible organizations to provide a written notice to plan 
participants and beneficiaries regarding the availability of the 
separate contraceptive coverage. Issuers providing such contraceptive 
coverage would be responsible for providing the notice of availability 
of such coverage to participants and beneficiaries in both insured and 
self-insured group health plans of eligible organizations. The notice 
would be provided directly to plan participants and beneficiaries by 
the issuer, separate from but contemporaneous with (to the extent 
possible) any application materials distributed in connection with 
enrollment (or re-enrollment) in group coverage established, 
maintained, or arranged by the eligible organization in any plan year 
to which the accommodation is to apply. As such, this notice generally 
would be provided annually. To satisfy the proposed notice requirement, 
issuers could use the model language set forth in the proposed rules or 
substantially similar language. The Departments request comments on the 
proposed notice requirement, including ways to improve the proposed 
model language, the timing and delivery (including electronically) of 
the notice to plan participants and beneficiaries, and whether this 
notice requirement could be combined with other existing notice 
requirements to simplify administration for issuers.
    The Departments also seek comment on whether there are efficient 
ways to limit the benefits provided under the separate individual 
health insurance policies for contraceptive coverage to match the 
contraceptive benefits identified in the self-certification or whether 
the separate individual health insurances policies for contraceptive 
coverage should simply cover the full set of recommended contraceptive 
services. One option would be to require coordination of benefits such 
that the contraceptive coverage is secondary to the coverage provided 
by the group health plan established or maintained by the eligible 
organization (and any group health insurance coverage provided in 
connection with the plan). The Departments solicit comment on this 
issue.

[[Page 8465]]

d. Adjustments of Federally-Facilitated Exchange (FFE) User Fees

    To fund contraceptive coverage for participants and beneficiaries 
in self-insured plans established or maintained by eligible 
organizations at no cost to plan participants or beneficiaries, HHS 
proposes that the existing proposed FFE user fee calculation, set forth 
in the December 7, 2012 proposed rule titled ``Patient Protection and 
Affordable Care Act; HHS Notice of Benefit and Payment Parameters for 
2014'' (77 FR 73213), take into account that an issuer that offers a 
qualified health plan (QHP) through an FFE (or an affiliated issuer in 
a state without an FFE) provides such contraceptive coverage by 
reducing the amount of the user fee.
    Consistent with Office of Management and Budget (OMB) Circular No. 
A25-R, the proposed revised FFE user fee calculation (which would 
result in an adjustment of the FFE user fee) would facilitate the 
proposed accommodation of self-insured plans established or maintained 
by eligible organizations by ensuring that plan participants and 
beneficiaries have separate individual health insurance policies for 
contraceptive coverage at no additional cost such that eligible 
organizations are not required to administer or fund such coverage. It 
would thereby support many of the goals of the Affordable Care Act, 
including improving the health of the population, reducing health care 
costs, providing access to health coverage, encouraging eligible 
organizations to continue to offer health coverage, and ensuring access 
to affordable QHPs via efficiently operated Exchanges. Moreover, as 
described in the 2012 final rules and the ANPRM, there are significant 
benefits associated with contraceptive coverage without cost sharing. 
Such contraceptive coverage significantly furthers the governmental 
interests in promoting public health and in promoting gender equality.
    Under this proposal, the FFE user fee calculation would take into 
account contraceptive coverage that is provided by an issuer in a state 
without an FFE so long as the issuer is affiliated with an issuer that 
offers a QHP through an FFE.\14\ The affiliated issuer would not be 
required to be a QHP issuer. An issuer that provides contraceptive 
coverage in a state without an FFE could offset the estimated cost of 
such coverage through an affiliated QHP issuer in a state with an FFE. 
This would encourage issuers to provide this type of coverage widely, 
to meet the goal of providing all plan participants and beneficiaries 
of self-insured plans established or maintained by eligible 
organizations with separate contraceptive coverage without cost 
sharing.
---------------------------------------------------------------------------

    \14\ For simplicity, the discussion that follows uses the 
shorthand ``contraceptive coverage'' to refer to contraceptive 
coverage for participants and beneficiaries in self-insured plans 
established or maintained by eligible organizations at no cost to 
plan participants or beneficiaries.
---------------------------------------------------------------------------

    HHS proposes that, in order for the FFE user fee calculation to 
take into account that a QHP issuer (or an affiliated issuer) provides 
contraceptive coverage, the issuer providing coverage for contraceptive 
services for the plan participants and beneficiaries of a self-insured 
plan established or maintained by an eligible organization must provide 
coverage for all recommended contraceptive services identified in the 
self-certification of the eligible organization, and do so without cost 
sharing, premiums, fees, or other costs to the plan participants and 
beneficiaries. It also must pay the reasonable charge of third party 
administrators. The contraceptive coverage would be subject to all 
applicable federal and state laws, including state filing and rate 
review requirements. HHS seeks comment on ways to streamline the 
regulatory processes for, and minimize the costs of, obtaining approval 
of such coverage in all states.
    HHS further proposes that, if an issuer provides contraceptive 
coverage to plan participants and beneficiaries of self-insured plans 
of eligible organizations at no additional cost, and it, or another 
issuer in the same issuer group, is required to pay an FFE user fee, an 
adjustment in the FFE user fee may be sought for the estimated cost of 
the contraceptive coverage. HHS would use the definition of issuer 
group proposed at 45 CFR 156.20 for this purpose. That section proposes 
that issuer group means all entities treated under section 52(a) or (b) 
of the Code as a member of the same controlled group of corporations as 
(or under common control with) a health insurance issuer, or issuers 
affiliated by the common use of a nationally licensed service mark. HHS 
seeks comment on whether this definition would provide the appropriate 
amount of flexibility in calculating the FFE user fee to correctly 
reflect the costs of issuers in states without an FFE, and on the 
advantages and disadvantages of permitting an adjustment in the FFE 
user fee with respect to unaffiliated issuers.
    Under this proposal, the issuer providing the contraceptive 
coverage would provide certain information and documentation (jointly 
with the affiliated QHP issuer if applicable) to HHS. First, monthly 
data on the number of individuals for whom the contraceptive coverage 
is being provided would be submitted, along with an attestation that a 
copy of the self-certification of the eligible organization was 
provided by the third party administrator that arranged for the 
coverage for the plan participants and beneficiaries. Second, the 
issuer(s) would be required to provide an attestation that coverage for 
all recommended contraceptive services identified in the self-
certification of the eligible organization is being provided, and being 
provided without cost sharing, premiums, fee, or other costs to the 
plan participants or beneficiaries. The issuer also would attest to HHS 
that it passed the portion of its adjustment attributable to reasonable 
charges by third party administrators on to those parties. Third, the 
issuer(s) would be required to identify the QHP(s) being offered 
through an FFE with respect to which the FFE user fee adjustment is to 
be made. In addition, if the issuer providing the contraceptive 
coverage is not the QHP issuer for which the adjustment in the FFE user 
fee is being sought, HHS proposes to require an attestation that the 
issuers are from the same issuer group. Finally, the issuer(s) would be 
required to submit to HHS an estimate of the cost of the contraceptive 
coverage, along with data or documentation supporting that estimate. 
HHS approval of the cost estimate would be required before a QHP issuer 
could receive an FFE user fee adjustment. HHS solicits comment on 
whether additional information or attestations should be required of 
issuers, for example, whether issuers should be required to attest that 
they provided the required notice of availability of contraceptive 
coverage to plan participants and beneficiaries.
    HHS is considering two approaches to ensuring that the cost 
estimate reasonably reflects the cost of the contraceptive coverage. 
One approach would require the issuer(s) to submit to HHS the estimated 
per capita cost of the contraceptive coverage, as well as an actuarial 
memorandum prepared by a member of the American Academy of Actuaries in 
accordance with generally accepted actuarial principles and 
methodologies validating the estimate. HHS seeks comment on appropriate 
standards to guide such calculations. Under this approach, HHS expects 
that, in 2016 and beyond, the estimated cost of providing the 
contraceptive coverage would be based on the issuer's experience in 
previous years.

[[Page 8466]]

    HHS also proposes that the estimate of the cost of the 
contraceptive coverage could include a reasonable charge for the 
issuer's administrative costs, including the costs of obtaining 
regulatory approval of the contraceptive coverage policy in the 
applicable state as well as a third party administrator's charge. HHS 
seeks comment on the magnitude of a reasonable administrative charge. 
HHS recognizes that the contraceptive coverage that issuers would 
provide under this proposed accommodation could see limited enrollment 
in a particular state. Given the potentially narrow markets available 
to the issuers of the contraceptive coverage, the per capita cost of 
administering this type of coverage may be higher than that for major 
medical coverage or other excepted benefits. On the other hand, given 
that a third party administrator would be connecting the plan 
participants and beneficiaries with the issuer, and there would 
therefore be reduced marketing costs, the administrative costs could be 
lessened. HHS seeks comment on the appropriate magnitude of these 
administrative costs generally, as well as ways of minimizing the 
administrative costs. In particular, HHS notes the issues associated 
with reimbursing for fixed costs, including the cost of obtaining 
regulatory approval for the policy in the applicable state. Fixed 
administrative costs could be amortized across the expected life of the 
policy, or could be reimbursed in the first year of operation. HHS 
seeks comment on the appropriate manner of compensating for such costs.
    HHS also seeks comment on whether HHS should limit the number of 
issuers providing the contraceptive coverage in each state with respect 
to which an FFE user fee adjustment may be made. If HHS were to modify 
its proposal in this way, HHS would add that an issuer must be willing 
and have the ability to offer the contraceptive coverage to any 
participant or beneficiary in a self-insured plan of an eligible 
organization who resides in the state.
    HHS notes that the estimate of the cost of the contraceptive 
coverage could include a reasonable margin. HHS seeks comment on the 
magnitude of a reasonable margin, and notes that the proposed HHS 
Notice of Benefit and Payment Parameters for 2014 proposes a presumed 
margin of 3 percent within allowable administrative costs for the risk 
corridors program.
    The proposed inclusion of reasonable administrative costs and 
margin in the estimate of the cost of the contraceptive coverage is 
intended to ensure that issuers receive reasonable compensation for 
providing the contraceptive coverage, as they would expect to receive 
in their other commercial businesses. HHS would review the submission 
by the issuer(s) to ensure that the cost estimate reflects reasonable 
assumptions and was calculated in accordance with applicable standards 
and generally accepted actuarial principles and methodologies. HHS 
would multiply the estimated per capita cost of the contraceptive 
coverage by the number of individuals being provided the contraceptive 
coverage each month in order to determine the magnitude of the FFE user 
fee adjustment. The amount should also take into account the reasonable 
administrative charges of third party administrators.
    Alternatively, HHS could provide a national per capita estimate for 
the cost of the contraceptive coverage, which would also include 
adjustments for reasonable administrative costs and margin. This 
estimate could then be multiplied by the monthly enrollment in the 
contraceptive coverage in order to determine the magnitude of the FFE 
user fee adjustment for each QHP issuer concerned. This latter approach 
would provide for a more standardized approach, but could result in FFE 
user fee adjustments that do not fund the entire cost of the 
contraceptive coverage for some issuers, or that overcompensate other 
issuers. The former approach, however, would place a greater 
administrative burden on issuers, and would require a more in-depth 
review by HHS. HHS seeks comment on these two approaches, as well as 
alternative approaches for determining the estimated cost of the 
contraceptive coverage.
    In both approaches to establishing an estimated cost of providing 
the contraceptive coverage described above, HHS seeks comment on the 
appropriate manner of accounting for a third party administrator's 
administrative costs of arranging for the contraceptive coverage in the 
issuer's estimated cost of the contraceptive coverage. For example, a 
flat administrative fee approved by HHS could be included in that 
estimated cost--with that flat administrative fee including an 
appropriate margin for the third party administrator. However, such an 
approach risks providing over- or under-incentives to the third party 
administrator for arranging for the contraceptive coverage, if the flat 
administrative fee is too high or too low. Alternatively, the third 
party administrator's actual reasonable charge, or actual reasonable 
administrative costs, for arranging the contraceptive coverage could be 
included in the estimated cost of the contraceptive coverage. HHS seeks 
comment on these and other approaches to estimating the third party 
administrator's administrative costs, and how HHS may ensure that they 
reflect reasonable administrative costs.
    HHS proposes that, if the information described previously is 
provided and the cost estimate is approved, the FFE user fee will be 
reduced for the issuer of the identified QHP(s) by the amount of the 
approved estimate of the cost of the contraceptive coverage (multiplied 
by enrollment in the coverage for the month). While a highly unlikely 
occurrence given the relatively small population under consideration, 
HHS proposes that, if the amount of the adjustment is greater than the 
amount of the obligation to pay the FFE user fee in a particular month, 
the issuer of the identified QHP(s) will be provided a credit for the 
FFE user fee charged in succeeding months in the amount of the excess, 
consistent with OMB Circular No. A25-R. HHS seeks comment on whether a 
QHP issuer's FFE user fee should be adjusted for any excess in 
succeeding months at all; whether, if a QHP issuer's FFE user fee is 
adjusted for any excess in succeeding months, any time limit should be 
placed on how much later the adjustment should take place; and 
alternative methods of compensating an issuer with greater 
contraceptive coverage costs than its (or its affiliated QHP issuer's) 
FFE user fees.
    HHS also proposes that an issuer providing contraceptive coverage 
for which the FFE user fee has been adjusted (whether the adjustment 
was provided to the issuer or an affiliated QHP issuer) must maintain 
for 10 years and make available to HHS upon request: documentation 
demonstrating that the contraceptive coverage was provided to 
participants or beneficiaries in a self-insured plan of an eligible 
organization, as evidenced by the copy of the self-certification that 
was provided by the third party administrator that arranged for such 
coverage; documentation demonstrating that the contraceptive coverage 
was provided without the imposition of any cost sharing, premium, fee, 
or other charge; documentation or data supporting the estimate of the 
cost of the contraceptive coverage; and documentation or data on the 
actual cost of providing the contraceptive coverage. This record-
keeping requirement is consistent with timeframes under the False 
Claims Act, 31 U.S.C. 3729-3733. HHS is considering mechanisms for 
ensuring program integrity with respect to the provision of the 
contraceptive coverage under this proposed accommodation.

[[Page 8467]]

These mechanisms may include requiring cooperation with audits and 
investigations, and requiring corrective action. HHS seeks comment on 
the oversight requirements that should be implemented with respect to 
the contraceptive coverage under this proposal.
    Finally, HHS is proposing that a QHP issuer that is to receive an 
FFE user fee adjustment as described above prior to January 1, 2014, 
will be provided a credit in the amount of the adjustment beginning in 
January 2014. HHS seeks comment on issuers' ability to fund the 
contraceptive coverage under the proposal between the end of the 
temporary enforcement safe harbor and December 31, 2013, if HHS is not 
able to provide the FFE user fee adjustment until January 2014.
    The Departments also seek comment on alternative ways to finance 
separate contraceptive coverage without cost sharing with respect to 
participants and beneficiaries in self-insured plans of eligible 
organizations.

e. Treatment of Multiple Employer Group Health Plans

    The Departments recognize that, in some instances, several 
affiliated employers--only some of which are eligible organizations or 
religious employers--offer health coverage to their employees and their 
covered dependents through a single group health plan. The Departments 
considered allowing all employers in such instances to qualify for an 
accommodation or the religious employer exemption if any single 
employer met the definition of eligible organization or religious 
employer. Alternatively, the Departments considered precluding all 
employers in such instances from qualifying for an accommodation or the 
religious employer exemption if any single employer failed to meet the 
definition of eligible organization or religious employer.
    The Departments propose to make the accommodation or the religious 
employer exemption available on an employer-by-employer basis. That is, 
each employer would have to independently meet the definition of 
eligible organization or religious employer in order to take advantage 
of the accommodation or the religious employer exemption with respect 
to its employees and their covered dependents. Conversely, an employer 
that did not meet the definition of eligible organization or religious 
employer could not take advantage of the accommodation or the religious 
employer exemption with respect to its employees and their covered 
dependents. This approach would prevent what could be viewed as a 
potential way for employers that are not eligible for the accommodation 
or the religious employer exemption to avoid the contraceptive coverage 
requirement by offering coverage in conjunction with an eligible 
organization or religious employer through a common plan. The 
Departments seek comment on this approach, including comments on the 
extent to which an employer-by-employer approach would pose 
administrative challenges for plans and issuers, as well as comments on 
alternative approaches.

f. Student Health Insurance Coverage

    Many institutions of higher education administer programs that 
provide students and their dependents with access to health coverage. 
Some institutions of higher education sponsor self-insured student 
health plans, but the vast majority of student health plans are 
insured, meaning that a health insurance issuer contracts with the 
institution of higher education to issue a blanket health insurance 
policy, from which students can buy coverage. Under final rules 
published by HHS on March 21, 2012, student health insurance coverage 
is a type of individual health insurance coverage offered to students 
and their covered dependents under a written agreement between an 
institution of higher education and an issuer.\15\
---------------------------------------------------------------------------

    \15\ Because student health plans are not employment-based, they 
are not group health plans under federal law. Section 2791(a)(1) of 
the PHS Act defines ``group health plan'' as an employee welfare 
benefit plan as defined in section 3(1) of ERISA to the extent that 
the plan provides medical care to employees and their dependents 
directly or through insurance, reimbursement, or otherwise.
---------------------------------------------------------------------------

    Some religiously affiliated colleges and universities object to 
signing a written agreement for student health insurance coverage that 
provides benefits for contraceptive services. Such colleges and 
universities sometimes include funding for student health plans in 
their student financial aid packages and object to funding student 
health plans that include coverage for contraceptive services.
    The proposed rules would provide for an accommodation for student 
health insurance coverage arranged by a nonprofit religious institution 
of higher education with religious objections to contraceptive coverage 
comparable to the proposed accommodation for group health insurance 
coverage provided in connection with a group health plan established or 
maintained by a nonprofit religious organization with religious 
objections to contraceptive coverage. Accordingly, among other things, 
upon receiving a copy of the self-certification from an institution of 
higher education that meets the criteria for being an eligible 
organization, an issuer offering student health insurance coverage 
would provide contraceptive coverage, without cost sharing or 
additional premium, fee, or other charge, directly to student enrollees 
and their covered dependents, independent of the issuer's written 
agreement with the institution of higher education to offer the student 
health plan. The Departments solicit comments on this proposal.

g. Contraceptive-Only Excepted Benefits

    In order to implement the proposed accommodations, it would be 
necessary and appropriate to establish a new contraceptive-only 
excepted benefits category. Sections 2722(c)(2) and 2763(b) of the PHS 
Act provide that the requirements of parts A and B of title XXVII of 
the PHS Act do not apply to any individual health insurance coverage in 
relation to its provision of excepted benefits described in section 
2791(c)(2) of the PHS Act if the benefits are provided under a separate 
policy, certificate, or contract of insurance. Section 2791(c)(2) of 
the PHS Act provides that this category of excepted benefits includes 
limited scope dental or vision benefits, as well as benefits for long-
term care, nursing home care, home health care, or community-based 
care, or any combination thereof. The law authorizes similar limited 
benefits to be specified in rule as excepted benefits. Additionally, 
section 2792 of the PHS Act authorizes HHS to promulgate such rules as 
may be necessary or appropriate to carry out the provisions of title 
XXVII of the PHS Act. Parallel provisions in section 734 of ERISA and 
section 9833 of the Code do the same with respect to the Departments of 
Labor and the Treasury.
    Pursuant to the authority in section 2791(c)(2) of the PHS Act (and 
companion provisions in ERISA and the Code), the proposed rules would 
provide that benefits for contraceptive services only, when provided 
under a separate individual market health insurance policy, 
certificate, or contract of insurance constitute excepted benefits 
(subject to the conditions discussed later in this section). The 
Departments propose to establish this new category of excepted benefits 
to ensure that individual health insurance policies providing 
contraceptive coverage offered by an issuer pursuant to the proposed 
accommodations are not subject to certain generally applicable PHS Act 
and Affordable Care Act

[[Page 8468]]

requirements, such as guaranteed availability (section 2702 of the PHS 
Act) given the unique nature of this coverage. Thus, for example, while 
issuers would offer this coverage to plan participants and 
beneficiaries in plans established or maintained by eligible 
organizations, issuers would not be required to make this coverage 
available to all other individuals in a state. These proposed 
amendments are reflected in proposed 45 CFR 148.220(b).
    Notwithstanding this proposed excepted benefits status, the 
Departments believe that a core set of basic consumer protection 
requirements should apply to individual health insurance policies 
providing contraceptive-only coverage. This core set of consumer 
protection requirements would be drawn from the broader set of 
requirements applicable to individual health insurance coverage under 
the PHS Act. This core set would include the requirements regarding 
guaranteed renewability of coverage (section 2703 of the PHS Act), the 
prohibition against lifetime and annual dollar limits on benefits 
(section 2711 of the PHS Act), the prohibition against rescissions of 
coverage (section 2712 of the PHS Act), and internal appeals and 
external review rights (section 2719 of the PHS Act). Accordingly, 
pursuant to the authority in section 2792 of the PHS Act to promulgate 
rules that are ``necessary or appropriate'' to carry out section 2713 
of the PHS Act (and companion provisions in ERISA and the Code), the 
proposed rules would require compliance with these provisions of 
federal law as a condition of excepted benefits status. The Departments 
welcome comments on which requirements of the PHS Act, ERISA, and the 
Code should or should not apply to individual health insurance policies 
that provide contraceptive-only coverage. We also seek comments on how 
to simplify the establishment of these products and how best to ensure 
their availability in all states, including alternatives to excepted 
benefits in any state without any such product.

D. No Effect on Other Law

    The religious employer exemption and accommodations in these 
proposed rules are intended to have meaning solely with respect to the 
contraceptive coverage requirement under section 2713 of the PHS Act 
and the companion provisions of ERISA and the Code. Whether an employer 
or organization (including an institution of higher education) is 
designated as ``religious'' for these purposes is not intended as a 
judgment about the mission, sincerity, or commitment of the employer or 
organization (including an institution of higher education), or 
intended to differentiate among the religious merits, commitment, 
mission, or public or private standing of religious entities. The use 
of such designation is limited solely to defining the class of 
employers or organizations (including institutions of higher education) 
that would qualify for the religious employer exemption and 
accommodations under these proposed rules. The definition of religious 
employer or eligible organization in these proposed rules is not being 
proposed to apply with respect to, or relied upon for the 
interpretation of, any other provision of the PHS Act, ERISA, the Code, 
or any other provision of federal law, nor is it intended to set a 
precedent for any other purpose. For example, nothing in these proposed 
rules should be construed as affecting the interpretation of federal or 
state civil rights statutes, such as Title VII of the Civil Rights Act 
of 1964 or Title IX of the Education Amendments of 1972.
    Furthermore, nothing in these proposed rules would preclude 
employers or others from expressing their opposition, if any, to the 
use of contraceptives; require anyone to use contraceptives; or require 
health care providers to prescribe contraceptives if doing so is 
against their religious beliefs.
    Finally, the provisions of these proposed rules would not prevent 
states from enacting stronger consumer protections than these minimum 
standards. Federal health insurance regulation generally establishes a 
federal floor to ensure that individuals in every state have certain 
basic protections. State health insurance laws requiring coverage for 
contraceptive services that provide more access to contraceptive 
coverage than the federal standards would therefore continue under the 
proposed rules. The Departments solicit comment on the interaction 
between state law and these proposed rules.

IV. Economic Impact and Paperwork Burden

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

    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, and public 
health and safety effects; distributive impacts; and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility.
    Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a rule: 
(1) Having an annual effect on the economy of $100 million or more in 
any one year, or adversely and materially affecting a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or state, local, or tribal governments or communities 
(also referred to as ``economically significant''); (2) creating a 
serious inconsistency or otherwise interfering with an action taken or 
planned by another agency; (3) materially altering the budgetary 
impacts of entitlement grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) raising novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.
    A regulatory impact analysis must be prepared for major rules with 
economically significant effects ($100 million or more in any one 
year), and an ``economically significant'' regulatory action is subject 
to review by the Office of Management and Budget (OMB). The Departments 
have concluded that these proposed rules are not likely to have 
economic impacts of $100 million or more in any one year, and therefore 
do not meet the definition of ``economically significant'' under 
Executive Order 12866.
1. Need for Regulatory Action
    As stated earlier in this preamble, the Departments previously 
issued amended interim final rules authorizing an exemption for group 
health plans established or maintained by religious employers (and any 
group health insurance coverage provided in connection with such plans) 
from certain coverage requirements under section 2713 of the PHS Act 
(76 FR 46621, August 3, 2011). The amended interim final rules were 
finalized on February 15, 2012 (77 FR 8725). The Departments are 
proposing in these proposed rules to amend the definition of religious 
employer in the HHS rule at 45 CFR 147.130(a)(1)(iv)(B) (incorporated 
by reference in the rules of the Departments of Labor and the Treasury) 
by eliminating the first three prongs of the definition of religious 
employer that was established in the 2012 final rules and clarifying 
the fourth prong. Under this proposal, an employer that is an 
organization that is organized and operates as a nonprofit entity and

[[Page 8469]]

is referred to in section 6033(a)(3)(A)(i) or (iii) of the Code would 
be considered a religious employer and its group health plan would 
qualify for the exemption from the requirement to cover contraceptive 
services. In addition, the proposed rules would establish 
accommodations for health coverage established or maintained or 
arranged by eligible organizations, which have religious objections to 
contraceptive coverage, while providing women contraceptive coverage 
without cost sharing.
2. Anticipated Effects
    The Departments expect that these proposed rules would not result 
in any additional significant burden on or costs to the affected 
entities.

B. Special Analyses--Department of the Treasury

    For purposes of the Department of the Treasury, it has been 
determined that this notice of proposed rulemaking is not a significant 
regulatory action as defined in Executive Order 12866, as amended by 
Executive Order 13563. Therefore, a regulatory assessment is not 
required. It has also been determined that section 553(b) of the 
Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to 
this proposed rule. It is hereby certified that the collections of 
information contained in this notice of proposed rulemaking would not 
have a significant impact on a substantial number of small entities. 
Accordingly, a regulatory flexibility analysis under the Regulatory 
Flexibility Act (5 U.S.C. chapter 6) is not required.
    The proposed rules would require each organization seeking 
accommodation under the proposed rules to self-certify that it meets 
the definition of eligible organization in the proposed rules. Each 
organization must self-certify that: (1) On account of religious 
objections, it opposes providing coverage for some or all of the 
contraceptive items or services that it would otherwise be required to 
provide; (2) it is organized and operates as a nonprofit entity; and 
(3) it holds itself out as a religious organization. The self-
certification must be executed by an authorized representative of the 
organization. The organization must maintain the self-certification in 
its records for each plan year to which the accommodation is to apply 
and make it available for examination upon request. The proposed rules 
would also require each eligible organization that establishes or 
maintains an insured group health plan to provide a copy of its self-
certification to the group health insurance issuer. If the group health 
plan of the eligible organization is self-insured, the proposed rules 
would direct the eligible organization to provide a copy of its self-
certification to the third party administrator.
    The Departments intend to specify in guidance the form to be used 
for the self-certification, similar to the form previously prescribed 
in guidance for the temporary enforcement safe harbor. The Departments 
are unable to estimate the number of eligible organizations that would 
seek an accommodation. The Departments seek comment on the likely 
number of eligible organizations seeking an accommodation. Of the 
eligible organizations, some would likely be small entities. It is 
estimated that each eligible organization would need only approximately 
50 minutes of labor (30 minutes of clerical labor at a cost of $30.64 
per hour, 10 minutes for a manager at a cost of $55.22 per hour, 5 
minutes for legal counsel at a cost of $83.10 per hour, and 5 minutes 
for a senior executive at a cost of $112.43 per hour) each year to 
prepare and provide the information in the self-certification. This 
would not be a significant economic impact. For these reasons, this 
information collection requirement would not have a significant impact 
on a substantial number of small entities.
    The proposed rules also would require health insurance issuers 
providing separate contraceptive coverage to provide written notice to 
plan participants and beneficiaries regarding the availability of the 
contraceptive coverage. The notice would be provided separate from but 
contemporaneous with (to the extent possible) any application materials 
distributed in connection with enrollment (or re-enrollment) in group 
coverage established, maintained, or arranged by the eligible 
organization in any plan year to which the accommodation is to apply. 
The proposed rules contain model language for issuers to use to satisfy 
the notice requirement. There are 446 issuers in the individual and 
group markets. It is believed that very few, if any, of them are small 
entities. Moreover, the cost for preparation and distribution of the 
notice would not be significant. It is estimated that each issuer would 
need approximately 1 hour of clerical labor (at $31.64 per hour) and 15 
minutes of management review (at $55.22 per hour) to prepare the 
notices for a total cost of approximately $44. It is estimated that 
each notice would require $0.46 in postage and $0.05 in materials cost 
(paper and ink) and the total postage and materials cost for each 
notice sent via mail would be $0.51. For these reasons, these 
information collection requirements would not have a significant impact 
on a substantial number of small entities.
    HHS is soliciting public comment on each of these issues for 
purposes of the following section as well.
    Pursuant to section 7805(f) of the Code, this proposed rule has 
been submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on its impact on small business.

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

    Under the Paperwork Reduction Act of 1995, HHS is required to 
provide 60-day notice in the Federal Register and solicit public 
comment before an information collection requirement (ICR) is submitted 
to the Office of Management and Budget (OMB) for review and approval. 
These proposed rules contain proposed ICRs that are subject to review 
by OMB. A description of these provisions is given in the following 
paragraphs with an estimate of the annual burden. In order to fairly 
evaluate whether an ICR should be approved by OMB, section 
3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that HHS 
solicit public comment on the following issues:
     The need for the information collection and its usefulness 
in carrying out the proper functions of HHS.
     The accuracy of our estimate of the information collection 
burden.
     The quality, utility, and clarity of the information to be 
collected.
     Recommendations to minimize the information collection 
burden on the affected public, including automated collection 
techniques.
    HHS is soliciting public comment on each of these issues for the 
following sections of these proposed rules that contain proposed ICRs. 
Average labor costs (including fringe benefits) used to estimate the 
costs are calculated using data available from the Bureau of Labor 
Statistics.
1. Self-Certification (Sec. Sec.  147.131(b)(4), 147.131(c)(1), 
147.131(c)(2))
    Each organization seeking accommodation under the proposed rules 
would be required to self-certify that it meets the definition of an 
eligible organization. The self-certification would be executed by an 
authorized representative of the organization and would also specify 
the contraceptive services for which the organization will not 
establish, maintain, administer, or fund coverage. The self-
certification would not be submitted to any of the Departments. The 
form that would be

[[Page 8470]]

used by organizations for their self-certification would be specified. 
This form is available for inspection at http://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html. The organization would maintain the self-certification in 
its records for each plan year to which the accommodation is to apply. 
The eligible organization would need to provide a copy of its self-
certification to a health insurance issuer (for insured group health 
plans or student health insurance coverage) or to a third party 
administrator (for self-insured group health plans).
    HHS does not have an estimate for how many organizations would seek 
an accommodation. HHS seeks comment on the likely number of 
organizations seeking an accommodation or the number of participants 
and beneficiaries in the plans of such organizations. Therefore, the 
burden for only one eligible organization, as opposed to all eligible 
organizations in total, is estimated. It is assumed that, for each 
eligible organization, clerical staff would gather and enter the 
necessary information, send the self-certification electronically to 
the issuer or third party administrator, and retain a copy for record-
keeping, a manager and legal counsel would review it, and a senior 
executive would execute it. HHS estimates that an organization would 
need approximately 50 minutes (30 minutes of clerical labor at a cost 
of $30.64 per hour, 10 minutes for a manager at a cost of $55.22 per 
hour, 5 minutes for legal counsel at a cost of $83.10 per hour, and 5 
minutes for a senior executive at a cost of $112.43 per hour) to 
execute the self-certification. Therefore, the total annual burden for 
preparing and providing the information in the self-certification would 
be approximately $41 for each eligible organization.
    With respect to self-insured plans of eligible organizations, the 
third party administrator would provide a health insurance issuer a 
copy of the self-certification of the eligible organization. The third 
party administrator would be able to provide a copy of the self-
certification to the issuer electronically at minimal cost.
2. Notice of Availability of Contraceptive Coverage (Sec.  147.131(d))
    The proposed rules would direct a health insurance issuer providing 
separate individual contraceptive coverage at no additional cost to 
participants and beneficiaries in insured plans of eligible 
organizations (or to student enrollees and covered dependents in 
student health insurance coverage arranged by eligible organizations) 
and to participants and beneficiaries in self-insured plans of eligible 
organizations whose coverage is automatically arranged for them by a 
third party administrator to provide a written notice to such plan 
participants and beneficiaries (or to such student enrollees and 
covered dependents) regarding the separate contraceptive coverage. The 
notice would be separate from but contemporaneous with (to the extent 
possible) any application materials distributed in connection with 
enrollment (or re-enrollment) in group coverage of the eligible 
organization in any plan year to which the accommodation is to apply 
and would be provided annually. To satisfy the proposed notice 
requirement, issuers could use the model language set forth in the 
proposed rules or substantially similar language.
    It is unknown how many issuers provide health insurance coverage in 
connection with insured plans of eligible organizations or how many 
third party administrators provide services to self-insured plans of 
eligible organizations or how many issuers would provide separate 
individual contraceptive coverage to plan participants and 
beneficiaries of self-insured plans of eligible organizations. 
Therefore, the burden for only one issuer, as opposed to all issuers in 
total, is estimated. It is estimated that each issuer would need 
approximately 1 hour of clerical labor (at $31.64 per hour) and 15 
minutes of management review (at $55.22 per hour) to prepare the 
notices for a total cost of approximately $44. It is estimated that 
each notice would require $0.46 in postage and $0.05 in materials cost 
(paper and ink) and the total postage and materials cost for each 
notice sent via mail would be $0.51.
3. FFE User Fee Adjustments (Sec.  156.50(d))
    In order for a QHP issuer to be eligible for the proposed FFE user 
fee adjustment, the proposed rules would provide that the issuer 
providing the contraceptive coverage would provide certain information 
and documentation (jointly with the affiliated QHP issuer for which the 
reduction in the FFE user fee is being sought, if the issuers are not 
the same) to HHS. First, monthly data on the number of individuals for 
whom the contraceptive coverage is being provided would be required, 
along with an attestation that a copy of the self-certification of the 
eligible organization was provided by the third party administrator 
that arranged for the coverage for the plan participants and 
beneficiaries. Second, the issuer would provide an attestation that 
coverage for all recommended contraceptive services identified in the 
self-certification of the eligible organization is being provided, and 
being provided without cost sharing, premiums, fee, or other costs to 
the plan participants or beneficiaries. The issuer also would attest to 
HHS that it passed the portion of its adjustment attributable to 
reasonable charges by third party administrators on to those parties. 
Third, the issuer(s) would identify the QHP(s) being offered through an 
FFE with respect to which the FFE user fee reduction is to be applied. 
In addition, where the issuer providing the contraceptive coverage is 
not the QHP issuer for which the reduction in the FFE user fee is being 
sought, an attestation that the issuers are from the same issuer group 
would be submitted. Finally, the issuer(s) would submit to HHS an 
estimate of the cost of the contraceptive coverage, along with data or 
documentation supporting that estimate. HHS approval of the cost 
estimate would be required before a QHP issuer could receive an FFE 
user fee adjustment.
    Although the number of QHP issuers that would seek an FFE user fee 
adjustment is unknown at this point, HHS anticipates that a small 
number of issuer groups would provide such contraceptive coverage 
nationwide, and that, for purposes of efficiency, those issuer groups 
would consolidate their applications for FFE user fee adjustments with 
fewer than 9 issuers of QHPs on FFEs. Collections from fewer than 10 
persons are exempt from the Paperwork Reduction Act under 44 U.S.C. 
3502(3)(A)(i). Therefore, HHS does not plan to seek OMB approval for 
this proposed ICR. However, in the event that, by the time of the 
issuance of the final rules, HHS believes that the number of QHP 
issuers that would seek an FFE user fee adjustment would be greater 
than 9, HHS would seek OMB approval for this proposed ICR.
    To obtain copies of the supporting statement and any related forms 
for the proposed ICRs referenced above, access CMS's web site at http://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html or email your request, 
including your address, phone number, OMB number, and CMS document 
identifier, to paperwork@cms.hhs.gov, or call the Reports Clearance 
Office at (410) 786-1326.
    If you comment on these proposed ICRs, please do either of the 
following:
    1. Submit your comments electronically as specified in the

[[Page 8471]]

ADDRESSES section of these proposed rules; or
    2. Submit your comments to the Office of Information and Regulatory 
Affairs, Office of Management and Budget, Attention: CMS Desk Officer, 
9968-P, FAX: (202) 395-5806, or email: OIRA_submission@omb.eop.gov.

D. Paperwork Reduction Act--Department of Labor and Department of the 
Treasury

    As noted above, each organization seeking accommodation under the 
proposed rules would be required to self-certify that it meets the 
definition of an eligible organization. This proposed requirement, 
which is the same in all three sets of proposed rules, is set out in 
proposed 26 CFR 54.9815-2713A(b)(4) and proposed 29 CFR 2590.715-
2713A(b)(4). The Departments are soliciting public comments for 60 days 
concerning this record-keeping requirement. The Departments will submit 
a copy of these proposed rules to OMB in accordance with 44 U.S.C. 
3507(d) for review of the proposed ICRs. The Departments and OMB are 
particularly interested in comments that:
     Evaluate whether the collection of information is 
necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility;
     Evaluate the accuracy of the agency's estimate of the 
burden of the collection of information, including the validity of the 
methodology and assumptions used;
     Enhance the quality, utility, and clarity of the 
information to be collected; and
     Minimize the burden of the collection of information on 
those who are to respond, including through the use of appropriate 
automated, electronic, mechanical, or other technological collection 
techniques or other forms of information technology, for example, by 
permitting electronic submission of responses.
    Comments should be sent to the Office of Information and Regulatory 
Affairs, Attention: Desk Officer for the Employee Benefits Security 
Administration either by Fax to (202) 395-5806 or by email to oira_
submission@omb.eop.gov. A copy of the proposed ICRs may be obtained by 
contacting the PRA addressee: G. Christopher Cosby, Office of Policy 
and Research, Department of Labor, Employee Benefits Security 
Administration, 200 Constitution Avenue NW., Room N-5718, Washington, 
DC 20210; telephone: (202) 693-8410; Fax: (202) 219-4745 (please note 
that these numbers are not toll-free numbers); email: ebsa.opr@dol.gov. 
Proposed ICRs submitted to OMB also are available at www.reginfo.gov 
(http://www.reginfo.gov/public/do/PRAMain).
    Consistent with the HHS analysis presented above, the Departments 
do not have an estimate for how many organizations would seek an 
accommodation. The Departments seek comment on the likely number of 
organizations seeking an accommodation and the number of participants 
and beneficiaries in the plans of such organizations. The Departments 
rely on the same estimates noted above: 50 minutes per organization to 
execute the self-certification (i.e., approximately $41 for each 
eligible organization).
    With respect to self-insured plans of eligible organizations, the 
third party administrator would provide a health insurance issuer a 
copy of the self-certification of the eligible organization. The third 
party administrator would be able to provide a copy of the self-
certification to the issuer electronically at minimal cost.
    The Departments note that persons are not required to respond to, 
and generally are not subject to any penalty for failing to comply 
with, an ICR unless the ICR has a valid OMB control number. The 
paperwork burden estimates are summarized as follows:
    Type of Review: New collection.
    Agencies: Employee Benefits Security Administration, Department of 
Labor; Internal Revenue Service, Department of the Treasury.
    Title: Self-Certification; Preventive Services Coverage.
    OMB Number: XXXX-XXXX; XXXX-XXXX.
    Affected Public: Business or other for-profit; not-for-profit 
institutions.
    Total Respondents: Unknown.
    Total Responses: Unknown.
    Frequency of Response: Once.
    Estimated Total Annual Burden Hours: 50 minutes per respondent.
    Estimated Total Annual Burden Cost: Unknown.

V. Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4), as well as Executive Order 12875, these proposed rules do not 
include any proposed federal mandate that may result in expenditures by 
state, local, or tribal governments, nor does it include any proposed 
federal mandates that may impose an annual burden of $100 million, 
adjusted for inflation, or more on the private sector.\16\
---------------------------------------------------------------------------

    \16\ In early 2013, that threshold level is approximately $139 
million.
---------------------------------------------------------------------------

VI. Federalism--Department of Health and Human Services and Department 
of Labor

    Executive Order 13132 outlines fundamental principles of 
federalism, and requires the adherence to specific criteria by federal 
agencies in the process of their formulation and implementation of 
policies that have ``substantial direct effects'' on states, the 
relationship between the federal government and states, or the 
distribution of power and responsibilities among the various levels of 
government. Federal agencies promulgating rules that have these 
federalism implications must consult with state and local officials, 
and describe the extent of their consultation and the nature of the 
concerns of state and local officials in the preamble to the rules.
    In the Departments' view, these proposed rules have federalism 
implications, but the federal implications are substantially mitigated 
because, with respect to health insurance issuers, 15 states have 
enacted specific laws, rules, or bulletins that meet or exceed the 
federal standards requiring coverage of specified preventive services 
without cost sharing. The remaining states which provide oversight for 
these federal law requirements are doing so using their general 
authority to enforce these federal standards. Therefore, the proposed 
rules are not likely to require substantial additional oversight of 
states by HHS.
    In general, section 514 of ERISA provides that state laws are 
superseded to the extent that they relate to any covered employee 
benefit plan, and preserves state laws that regulate insurance, 
banking, or securities. ERISA also prohibits states from regulating a 
covered plan as an insurance or investment company or bank. HIPAA added 
a new preemption provision to ERISA (as well as to the PHS Act) 
narrowly preempting state requirements for group health insurance 
coverage. States may continue to apply state law requirements but not 
to the extent that such requirements prevent the application of the 
federal requirement that group health insurance coverage provided in 
connection with group health plans provide coverage for specified 
preventive services without cost sharing. HIPAA's Conference Report 
states that the conferees intended the narrowest preemption of state 
laws with regard to health insurance issuers (H.R. Conf. Rep. No. 104-
736, 104th Cong. 2d Session 205, 1996). State insurance laws that are 
more stringent

[[Page 8472]]

than the federal requirement are unlikely to ``prevent the application 
of'' the preventive services coverage provision, and therefore are not 
preempted. Accordingly, states have significant latitude to impose 
requirements on health insurance issuers that are more restrictive than 
those in federal law.
    Guidance conveying this interpretation was published in the Federal 
Register on April 8, 1997 (62 FR 16904), and December 30, 2004 (69 FR 
78720), and these proposed rules would clarify and implement the 
statute's minimum standards and would not significantly reduce the 
discretion given the states by the statute.
    The PHS Act provides that the states may enforce the provisions of 
title XXVII of the PHS Act as they pertain to issuers, but that the 
Secretary of HHS will enforce any provisions that a state does not have 
authority to enforce or that a state has failed to substantially 
enforce. When exercising its responsibility to enforce provisions of 
the PHS Act, HHS works cooperatively with the state for the purpose of 
addressing the state's concerns and avoiding conflicts with the 
exercise of state authority.\17\ HHS has developed procedures to 
implement its enforcement responsibilities, and to afford states the 
maximum opportunity to enforce the PHS Act's requirements in the first 
instance. In compliance with Executive Order 13132's requirement that 
agencies examine closely any policies that may have federalism 
implications or limit the policymaking discretion of states, the 
Departments have engaged in numerous efforts to consult and work 
cooperatively with affected state and local officials.
---------------------------------------------------------------------------

    \17\ This authority applies to insurance issued with respect to 
group health plans generally, including plans covering employees of 
church organizations. Thus, this discussion of federalism applies to 
all group health insurance coverage that is subject to the PHS Act, 
including those church plans that provide coverage through a health 
insurance issuer (but not to church plans that do not provide 
coverage through a health insurance issuer).
---------------------------------------------------------------------------

    In conclusion, throughout the process of developing these proposed 
rules, to the extent feasible within the specific preemption provisions 
of ERISA and the PHS Act, the Departments have attempted to balance 
states' interests in regulating health plans and health insurance 
issuers, and the rights of those individuals that Congress intended to 
protect in the PHS Act.

VII. Statutory Authority

    The Department of the Treasury regulations are proposed to be 
adopted pursuant to the authority contained in sections 7805 and 9833 
of the Code.
    The Department of Labor regulations are proposed to be adopted 
pursuant to the authority contained in 29 U.S.C. 1002(16), 1027, 1059, 
1135, 1161-1168, 1169, 1181-1183, 1181 note, 1185, 1185a, 1185b, 1185d, 
1191, 1191a, 1191b, and 1191c; sec. 101(g), Public Law 104-191, 110 
Stat. 1936; sec. 401(b), Public Law 105-200, 112 Stat. 645 (42 U.S.C. 
651 note); sec. 512(d), Public Law 110-343, 122 Stat. 3881; sec. 1001, 
1201, and 1562(e), Public Law 111-148, 124 Stat. 119, as amended by 
Public Law 111-152, 124 Stat. 1029; Secretary of Labor's Order 3-2010, 
75 FR 55354 (September 10, 2010).
    The Department of Health and Human Services regulations are 
proposed to be adopted pursuant to the authority contained in sections 
2701 through 2763, 2791, and 2792 of the PHS Act (42 U.S.C. 300gg 
through 300gg-63, 300gg-91, and 300gg-92), as amended; and Title I of 
the Affordable Care Act, sections 1301-1304, 1311-1312, 1321-1322, 
1324, 1334, 1342-1343, 1401-1402, and 1412, Public Law 111-148, 124 
Stat. 119 (42 U.S.C. 18021-18024, 18031-18032, 18041-18042, 18044, 
18054, 18061, 18063, 18071, 18082, 26 U.S.C. 36B, and 31 U.S.C. 9701).

List of Subjects

26 CFR Part 54

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

29 CFR Part 2590

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

45 CFR Part 147

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

45 CFR Part 148

    Administrative practice and procedure, Health care, Health 
insurance, Penalties, and Reporting and recordkeeping requirements.

45 CFR Part 156

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

Department of the Treasury

Internal Revenue Service

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

PART 54--PENSION EXCISE TAXES

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

    Authority:  26 U.S.C. 7805. * * *

0
Par. 2. Section 54.9801-2 is amended by revising the definition of 
excepted benefits as follows:


Sec.  54.9801-2  Definitions.

* * * * *
    Excepted benefits means the benefits described as excepted in Sec.  
54.9831(c), or 45 CFR Sec.  148.220 (describing when individual health 
insurance policies constitute excepted benefits).
* * * * *
0
Par. 3. Section 54.9815-2713 is amended by adding paragraph (a)(1) 
introductory text and revising paragraph (a)(1)(iv) to read as follows:


Sec.  54.9815-2713  Coverage of preventive health services.

    (a) Services--(1) In general. Beginning at the time described in 
paragraph (b) of this section and subject to Sec.  54.9815-2713A, a 
group health plan, or a health insurance issuer offering group health 
insurance coverage, must provide coverage for all of the following 
items and services, and may not impose any cost sharing requirement 
(such as a copayment, coinsurance, or a deductible) with respect to 
those items and services:
* * * * *
    (iv) With respect to women, to the extent not described in 
paragraph (a)(1)(i) of this section, evidence-informed preventive care 
and screenings provided for in binding comprehensive health plan 
coverage guidelines supported by the Health Resources and Services 
Administration, in accordance with 45 CFR 147.131(a).
* * * * *
0
Par. 4. Section 54.9815-2713A is added to read as follows:


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

    (a) Eligible organizations. An eligible organization is an 
organization that

[[Page 8473]]

satisfies all of the following requirements:
    (1) The organization opposes providing coverage for some or all of 
any contraceptive services required to be covered under Sec.  54.9815-
2713(a)(1)(iv) on account of religious objections.
    (2) The organization is organized and operates as a nonprofit 
entity.
    (3) The organization holds itself out as a religious organization.
    (4) The organization maintains in its records a self-certification, 
made in the manner and form specified by the Secretary of Health and 
Human Services, for each plan year to which the accommodation is to 
apply, executed by a person authorized to make the certification on 
behalf of the organization, indicating that the organization satisfies 
the criteria in paragraphs (a)(1) through (3) of this section, and, 
specifying those contraceptive services for which the organization will 
not establish, maintain, administer, or fund coverage, and makes such 
certification available for examination upon request.
    (b) Contraceptive coverage--self-insured group health plan 
coverage. [Reserved.]
    (c) Contraceptive coverage--insured group health plan coverage--(1) 
A group health plan established or maintained by an eligible 
organization and that provides benefits through one or more issuers 
complies with any requirement under Sec.  54.9815-2713(a)(1)(iv) to 
provide contraceptive coverage if the eligible organization or plan 
administrator furnishes each issuer that would otherwise provide 
coverage for any contraceptive services required to be covered under 
Sec.  54.9815-2713(a)(1)(iv) with a copy of the self-certification 
described in paragraph (a)(4) of this section.
    (2) A group health insurance issuer that receives a copy of the 
self-certification described in paragraph (a)(4) of this section with 
respect to a plan for which the issuer would otherwise provide coverage 
for any contraceptive services required to be covered under Sec.  
54.9815-2713(a)(1)(iv) must automatically provide health insurance 
coverage for any contraceptive services required to be covered by Sec.  
54.9815-2713(a)(1)(iv) and identified in the self-certification, 
through a separate health insurance policy that is excepted under 45 
CFR 148.220(b)(7), for each plan participant and beneficiary. The 
issuer providing the individual market excepted benefits policy may not 
impose any cost sharing requirement (such as a copayment, coinsurance, 
or a deductible) with respect to coverage of those services, or impose 
any premium, fee, or other charge, or portion thereof, directly or 
indirectly, on the eligible organization, its group health plan, or 
plan participants or beneficiaries with respect to coverage of those 
services.
    (d) Notice of availability of contraceptive coverage. An issuer 
providing contraceptive coverage arranged pursuant to paragraph (b) or 
(c) of this section must provide to plan participants and beneficiaries 
written notice of the availability of the contraceptive coverage, 
separate from but contemporaneous with (to the extent possible) 
application materials distributed in connection with enrollment (or re-
enrollment) in group coverage of the eligible organization for any plan 
year to which this paragraph applies. The following model language, or 
substantially similar language, may be used to satisfy the notice 
requirement of this paragraph: ``The organization that establishes and 
maintains, or arranges, your health coverage has certified that your 
group health plan qualifies for an accommodation with respect to the 
federal requirement to cover all Food and Drug Administration-approved 
contraceptive services for women, as prescribed by a health care 
provider, without cost sharing. This means that your health coverage 
will not cover the following contraceptive services: [contraceptive 
services specified in self-certification]. Instead, these contraceptive 
services will be covered through a separate individual health insurance 
policy, which is not administered or funded by, or connected in any way 
to, your health coverage. You and any covered dependents will be 
enrolled in this separate individual health insurance policy at no 
additional cost to you. If you have any questions about this notice, 
contact [contact information for health insurance issuer].''

Department of Labor

Employee Benefits Security Administration

    For the reasons stated in the preamble, the Department of Labor 
proposes to amend 29 CFR part 2590 as follows:

PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS

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

    Authority:  29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a, 1185b, 1185c, 1185d, 1191, 1191a, 
1191b, and 1191c; sec. 101(g), Public Law 104-191, 110 Stat. 1936; 
sec. 401(b), Public Law 105-200, 112 Stat. 645 (42 U.S.C. 651 note); 
sec. 512(d), Public Law 110-343, 122 Stat. 3881; sec. 1001, 1201, 
and 1562(e), Public Law 111-148, 124 Stat. 119, as amended by Public 
Law 111-152, 124 Stat. 1029; Secretary of Labor's Order 3-2010, 75 
FR 55354 (September 10, 2010).

0
2. Section 2590.701-2 is amended by revising the definition of Excepted 
benefits as follows:


Sec.  2590.701-2  Definitions.

* * * * *
    Excepted benefits means the benefits described as excepted in Sec.  
2590.732(c), or 45 CFR Sec.  148.220 (describing when individual health 
insurance policies constitute excepted benefits).
* * * * *
0
3. Section 2590.715-2713 is amended by revising paragraphs (a)(1) 
introductory text and (a)(1)(iv) to read as follows:


Sec.  2590.715-2713  Coverage of preventive health services.

    (a) Services--(1) In general. Beginning at the time described in 
paragraph (b) of this section and subject to Sec.  2590.715-2713A, a 
group health plan, or a health insurance issuer offering group health 
insurance coverage, must provide coverage for all of the following 
items and services, and may not impose any cost sharing requirement 
(such as a copayment, coinsurance, or a deductible) with respect to 
those items and services:
* * * * *
    (iv) With respect to women, to the extent not described in 
paragraph (a)(1)(i) of this section, evidence-informed preventive care 
and screenings provided for in binding comprehensive health plan 
coverage guidelines supported by the Health Resources and Services 
Administration, in accordance with 45 CFR 147.131(a).
* * * * *
0
4. A new Sec.  2590.715-2713A is added to read as follows:


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

    (a) Eligible organizations. An eligible organization is an 
organization that satisfies all of the following requirements:
    (1) The organization opposes providing coverage for some or all of 
any contraceptive services required to be covered under Sec.  2590.715-
713(a)(1)(iv) on account of religious objections.
    (2) The organization is organized and operates as a nonprofit 
entity.
    (3) The organization holds itself out as a religious organization.

[[Page 8474]]

    (4) The organization maintains in its records a self-certification, 
made in the manner and form specified by the Secretary of Health and 
Human Services, for each plan year to which the accommodation is to 
apply, executed by a person authorized to make the certification on 
behalf of the organization, indicating that the organization satisfies 
the criteria in paragraphs (a)(1) through (3) of this section, and, 
specifying those contraceptive services for which the organization will 
not establish, maintain, administer, or fund coverage, and makes such 
certification available for examination upon request.
    (b) Contraceptive coverage--self-insured group health plan 
coverage. [Reserved.]
    (c) Contraceptive coverage--insured group health plan coverage. (1) 
A group health plan established or maintained by an eligible 
organization and that provides benefits through one or more issuers 
complies with any requirement under Sec.  2590.715-2713(a)(1)(iv) to 
provide contraceptive coverage if the eligible organization or plan 
administrator furnishes each issuer that would otherwise provide 
coverage for any contraceptive services required to be covered under 
Sec.  2590.715-2713(a)(1)(iv) with a copy of the self-certification 
described in paragraph (a)(4) of this section.
    (2) A group health insurance issuer that receives a copy of the 
self-certification described in paragraph (a)(4) of this section with 
respect to a plan for which the issuer would otherwise provide coverage 
for any contraceptive services required to be covered under Sec.  
2590.715-2713(a)(1)(iv) must automatically provide health insurance 
coverage for any contraceptive services required to be covered by Sec.  
2590.715-2713(a)(1)(iv) and identified in the self-certification, 
through a separate health insurance policy that is excepted under 45 
CFR 148.220(b)(7), for each plan participant and beneficiary. The 
issuer providing the individual market excepted benefits policy may not 
impose any cost sharing requirement (such as a copayment, coinsurance, 
or a deductible) with respect to coverage of those services, or impose 
any premium, fee, or other charge, or portion thereof, directly or 
indirectly, on the eligible organization, its group health plan, or 
plan participants or beneficiaries with respect to coverage of those 
services.
    (d) Notice of availability of contraceptive coverage. An issuer 
providing contraceptive coverage arranged pursuant to paragraph (b) or 
(c) of this section must provide to plan participants and beneficiaries 
written notice of the availability of the contraceptive coverage, 
separate from but contemporaneous with (to the extent possible) 
application materials distributed in connection with enrollment (or re-
enrollment) in group coverage of the eligible organization for any plan 
year to which this paragraph applies. The following model language, or 
substantially similar language, may be used to satisfy the notice 
requirement of this paragraph: ``The organization that establishes and 
maintains, or arranges, your health coverage has certified that your 
group health plan qualifies for an accommodation with respect to the 
federal requirement to cover all Food and Drug Administration-approved 
contraceptive services for women, as prescribed by a health care 
provider, without cost sharing. This means that your health coverage 
will not cover the following contraceptive services: [contraceptive 
services specified in self-certification]. Instead, these contraceptive 
services will be covered through a separate individual health insurance 
policy, which is not administered or funded by, or connected in any way 
to, your health coverage. You and any covered dependents will be 
enrolled in this separate individual health insurance policy at no 
additional cost to you. If you have any questions about this notice, 
contact [contact information for health insurance issuer].''

Department of Health and Human Services

    For the reasons stated in the preamble, the Department of Health 
and Human Services proposes to amend 45 CFR Subtitle A parts 147, 148, 
and 156 as follows:

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

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

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

0
2. Section 147.130 is amended by revising paragraphs (a)(1) 
introductory text and (a)(1)(iv) to read as follows:


Sec.  147.130  Coverage of preventive health services.

    (a) Services--(1) In general. Beginning at the time described in 
paragraph (b) of this section and subject to Sec.  147.131, a group 
health plan, or a health insurance issuer offering group or individual 
health insurance coverage, must provide coverage for all of the 
following items and services, and may not impose any cost sharing 
requirement (such as a copayment, coinsurance, or a deductible) with 
respect to those items and services:
* * * * *
    (iv) With respect to women, to the extent not described in 
paragraph (a)(1)(i) of this section, evidence-informed preventive care 
and screenings provided for in binding comprehensive health plan 
coverage guidelines supported by the Health Resources and Services 
Administration.
* * * * *
0
2. A new Sec.  147.131 is added to read as follows:


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

    (a) Religious employers. In issuing guidelines under Sec.  
147.130(a)(1)(iv), the Health Resources and Services Administration may 
establish an exemption from such guidelines with respect to a group 
health plan established or maintained by a religious employer (and 
health insurance coverage provided in connection with a group health 
plan established or maintained by a religious employer) with respect to 
any requirement to cover contraceptive services under such guidelines. 
For purposes of this paragraph (a), a ``religious employer'' is an 
organization that is organized and operates as a nonprofit entity and 
is referred to in section 6033(a)(3)(A)(i) or (a)(3)(A)(iii) of the 
Internal Revenue Code of 1986, as amended.
    (b) Eligible organizations. An eligible organization is an 
organization that satisfies all of the following requirements:
    (1) The organization opposes providing coverage for some or all of 
any contraceptive services required to be covered under Sec.  
147.130(a)(1)(iv) on account of religious objections.
    (2) The organization is organized and operates as a nonprofit 
entity.
    (3) The organization holds itself out as a religious organization.
    (4) The organization maintains in its records a self-certification, 
made in the manner and form specified by the Secretary of Health and 
Human Services, for each plan year to which the accommodation is to 
apply, executed by a person authorized to make the certification on 
behalf of the organization, indicating that the organization satisfies 
the criteria in paragraphs (b)(1) through (3) of this section, and, 
specifying those contraceptive services for which the

[[Page 8475]]

organization will not establish, maintain, administer, or fund 
coverage, and makes such certification available for examination upon 
request.
    (c) Contraceptive coverage--insured group health plan coverage. (1) 
A group health plan established or maintained by an eligible 
organization and that provides benefits through one or more issuers 
complies with any requirement under Sec.  147.130(a)(1)(iv) to provide 
contraceptive coverage if the eligible organization or plan 
administrator furnishes each issuer that would otherwise provide 
coverage for any contraceptive services required to be covered under 
Sec.  147.130(a)(1)(iv) with a copy of the self-certification described 
in paragraph (b)(4) of this section.
    (2) A group health insurance issuer that receives a copy of the 
self-certification described in paragraph (b)(4) of this section with 
respect to a plan for which the issuer would otherwise provide coverage 
for any contraceptive services required to be covered under Sec.  
147.130(a)(1)(iv) must automatically provide health insurance coverage 
for any contraceptive services required to be covered by Sec.  
147.130(a)(1)(iv) and identified in the self-certification, through a 
separate health insurance policy that is excepted under Sec.  
148.220(b)(7) of this subtitle, for each plan participant and 
beneficiary. The issuer providing the individual market excepted 
benefits policy may not impose any cost sharing requirement (such as a 
copayment, coinsurance, or a deductible) with respect to coverage of 
those services, or impose any premium, fee, or other charge, or portion 
thereof, directly or indirectly, on the eligible organization, its 
group health plan, or plan participants or beneficiaries with respect 
to coverage of those services.
    (d) Notice of availability of contraceptive coverage. An issuer 
providing contraceptive coverage arranged pursuant to paragraph (c) of 
this section must provide to plan participants and beneficiaries 
written notice of the availability of the contraceptive coverage, 
separate from but contemporaneous with (to the extent possible) 
application materials distributed in connection with enrollment (or re-
enrollment) in group coverage of the eligible organization for any plan 
year to which this paragraph applies. The following model language, or 
substantially similar language, may be used to satisfy the notice 
requirement of this paragraph: ``The organization that establishes and 
maintains, or arranges, your health coverage has certified that your 
[group health plan/student health insurance coverage] qualifies for an 
accommodation with respect to the federal requirement to cover all Food 
and Drug Administration-approved contraceptive services for women, as 
prescribed by a health care provider, without cost sharing. This means 
that your health coverage will not cover the following contraceptive 
services: [contraceptive services specified in self-certification]. 
Instead, these contraceptive services will be covered through a 
separate individual health insurance policy, which is not administered 
or funded by, or connected in any way to, your health coverage. You and 
any covered dependents will be enrolled in this separate individual 
health insurance policy at no additional cost to you. If you have any 
questions about this notice, contact [contact information for health 
insurance issuer].''
    (e) Application to student health insurance coverage. The 
provisions of this section apply to student health insurance coverage 
arranged by an eligible organization that is an institution of higher 
education in a manner comparable to that in which they apply to group 
health insurance coverage provided in connection with a group health 
plan established or maintained by an eligible organization that is an 
employer. In applying this section in the case of student health 
insurance coverage, a reference to ``plan participants and 
beneficiaries'' is a reference to student enrollees and their covered 
dependents.

PART 148--REQUIREMENTS FOR THE INDIVIDUAL HEALTH INSURANCE MARKET

0
3. The authority citation for part 148 continues to read as follows:

    Authority:  Secs. 2741 through 2763, 2791, and 2792 of the 
Public Health Service Act (42 U.S.C. 300gg-41 through 300gg-63, 
300gg-91, and 300gg-92).
0
4. Section 148.220 is amended as follows:
0
a. In the introductory text of paragraph (b), the reference ``(b)(6)'' 
is removed and the reference ``(b)(7)'' is added in its place.
0
b. Adding paragraph (b)(7).
    The addition reads as follows:


Sec.  148.220  Excepted benefits.

* * * * *
    (b) * * *
    (7) Individual health insurance coverage that provides coverage 
only for contraceptive services pursuant to Sec.  147.131(c) of this 
subtitle, 26 CFR 54.9815-2713A(b) or (c), or 29 CFR 2590.715-2713A(b) 
or (c), but only if such coverage complies with the requirements in the 
following provisions:
    (i) Section 2703 of the PHS Act (relating to guaranteed 
renewability of coverage).
    (ii) Section 2711 of the PHS Act (relating to the prohibition on 
lifetime and annual dollar limits on benefits).
    (iii) Section 2712 of the PHS Act (relating to the prohibition on 
rescissions of coverage).
    (iv) Section 2719 of the PHS Act (relating to internal appeals and 
external review).

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

0
5. 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
6. Section 156.150 is amended by adding paragraph (d) to read as 
follows:


Sec.  156.50  Financial support.

* * * * *
    (d) Adjustment of Federally-facilitated Exchange user fee. If a QHP 
issuer (or another issuer in the same issuer group) provides individual 
health insurance coverage consisting of coverage for any contraceptive 
services required to be covered under Sec.  147.130(a)(1)(iv) of this 
subchapter, and identified in the self-certification referenced in 
Sec.  147.131(b)(4) of this subchapter, to any plan participant or 
beneficiary with respect to whom the QHP issuer receives the written 
notice referenced in 26 CFR 54.9815-2713A(b) or 29 CFR 2590.715-
2713A(b), the QHP issuer may qualify for a reduction in the user fee 
for a Federally-facilitated Exchange specified in paragraph (c) as 
described in this paragraph (d).
    (1) In order for a QHP issuer to be eligible for the Federally-
facilitated Exchange user fee reduction, in providing such 
contraceptive coverage to such individuals, the QHP issuer (or another 
issuer in the same issuer group) may not impose any cost-sharing 
requirement (such as a copayment, coinsurance, or a deductible), or 
impose any premium, fee, or other charge, directly or indirectly, with 
respect to such contraceptive coverage, and must satisfy the other 
conditions set forth in this section.
    (2) If an issuer provides such contraceptive coverage to such 
individuals, and it, or another issuer in the same issuer group, is 
required to pay

[[Page 8476]]

the Federally-facilitated Exchange user fee, a reduction in that user 
fee may be sought for the HHS-approved estimated cost of such 
contraceptive coverage.
    (3) In order for a QHP issuer to be eligible for the Federally-
facilitated Exchange user fee reduction, the issuer of such 
contraceptive coverage to such individuals must (jointly with the 
issuer seeking the reduction in the Federally-facilitated Exchange user 
fee, if not the same issuers) do all of the following:
    (i) Provide monthly data on the number of individuals to whom the 
contraceptive coverage is being provided, and provide an attestation by 
the issuer providing the contraceptive coverage that the issuer 
received a copy of the written notice referenced in 26 CFR 54.9815-
2713A(b) or 29 CFR 2590.715-2713A(b) with respect to each plan 
participant or beneficiary.
    (ii) Provide an attestation by the issuer providing the 
contraceptive coverage that the issuer provided contraceptive coverage 
in accordance with paragraph (d) of this section and that the issuer 
passed the portion of the reduction in the Federally-facilitated 
Exchange user fee attributable to reasonable charges by third party 
administrators on to the third party administrators.
    (iii) Identify the QHP(s) being offered through a Federally-
facilitated Exchange with respect to which the user fee reduction is to 
be applied, and, if the issuer providing the contraceptive coverage is 
not the issuer seeking the user fee reduction, provide an attestation 
by the issuer providing the contraceptive coverage that both the issuer 
providing the contraceptive coverage and the issuer seeking the user 
fee reduction belong to the same issuer group.
    (iv) Submit an estimate of the cost of the contraceptive coverage 
to HHS for approval, in the manner and timeframe specified by HHS, 
concurrent with documentation or data supporting that estimate.
    (4) If the information specified under paragraphs (d)(3)(i) through 
(iii) of this section is provided and the estimate specified under 
paragraph (d)(3)(iv) of this section is submitted and approved by HHS, 
the issuer of the identified QHP(s) will be provided a reduction in its 
obligation to pay the Federally-facilitated Exchange user fee specified 
in paragraph (c) in an amount equal in value to the approved estimated 
cost of the contraceptive coverage, as long as an exception from OMB 
Circular No. A-25 is in effect. If the amount of the reduction is 
greater than the amount of the obligation to pay the Federally-
facilitated Exchange user fee in a particular month, the issuer of the 
identified QHP(s) will be provided a credit in succeeding months in the 
amount of the excess. An issuer that is eligible for a user fee 
reduction in accordance with this paragraph (d) prior to January 1, 
2014, will be provided a credit in the amount of the user fee reduction 
beginning January 2014.
    (5) An issuer providing contraceptive coverage for which a 
reduction in the Federally-facilitated Exchange user fee has been 
provided under paragraph (d)(4) of this section (whether the reduction 
was provided to the issuer or another issuer in the same issuer group) 
must maintain for 10 years and make available to HHS upon request all 
of the following:
    (i) Documentation demonstrating that the contraceptive coverage was 
provided to plan participants or beneficiaries with respect to whom the 
issuer received a copy of the written notice referenced in 26 CFR 
54.9815-2713A(b) or 29 CFR 2590.715-2713A(b).
    (ii) Documentation demonstrating that the contraceptive coverage 
was provided in accordance with paragraph (d) of this section.
    (iii) Documentation or data supporting the estimate of the cost of 
the contraceptive coverage.
    (iv) Documentation or data on the actual cost of providing the 
contraceptive coverage.

    Signed this 30th day of January 2013.
Steven T. Miller,
Deputy Commissioner for Services and Enforcement, Internal Revenue 
Service.
    Signed this 30th day of January 2013.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
    Dated: January 29, 2013.
Marilyn Tavenner,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Approved: January 29, 2013.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
[FR Doc. 2013-02420 Filed 2-1-13; 11:15 am]
BILLING CODE 4830-01; 4510-029; 4120-01; 6325-64-P