81 FR 40518 - Modification of Treatment of Certain Health Organizations
DEPARTMENT OF THE TREASURY
Internal Revenue Service Federal Register Volume 81, Issue 120 (June 22, 2016)
Internal Revenue Service
Federal Register Volume 81, Issue 120 (June 22, 2016)
| Page Range | 40518-40521 | |
| FR Document | 2016-14784 |
[Federal Register Volume 81, Number 120 (Wednesday, June 22, 2016)] [Rules and Regulations] [Pages 40518-40521] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2016-14784] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9772] RIN 1545-BN15 Modification of Treatment of Certain Health Organizations AGENCY: Internal Revenue Service (IRS), Treasury. ACTION: Final regulations. ----------------------------------------------------------------------- SUMMARY: This document contains final regulations that provide guidance to Blue Cross and Blue Shield organizations, and certain other organizations, on computing and applying the medical loss ratio and the consequences for not meeting the medical loss ratio threshold. The final regulations reflect the enactment of a technical correction to section 833(c)(5) of the Internal Revenue Code by the Consolidated and Further Continuing Appropriations Act of 2015. The final regulations affect Blue Cross and Blue Shield organizations, and certain other organizations involved in providing health insurance. DATES: Effective Date: These regulations are effective on June 22, 2016. Applicability Date: For the date of applicability, see Sec. 1.833- 1(e). FOR FUTHER INFORMATION CONTACT: Rebecca L. Baxter, at (202) 317-6995 (not a toll-free number). SUPPLEMENTARY INFORMATION: Background This Treasury decision contains final regulations that amend 26 CFR part 1 under section 833 of the Internal Revenue Code (the Code). Section 833(a) provides that Blue Cross and Blue Shield organizations, and certain other organizations involved in providing health insurance as described in section 833(c), are entitled to: (1) Treatment as stock insurance companies for purposes of sections 831 through 835 (related to taxation of non-life insurance companies generally); (2) a special deduction determined under section 833(b); and (3) computation of unearned premium reserves under section 832(b)(4) based on 100 percent, and not 80 percent, of unearned premiums for purposes of determining ``insurance company taxable income'' under section 832. Section 833(c)(5) was added to the Code by section 9016 of the Patient Protection and Affordable Care Act (Pub. L. 111-148, 124 Stat. 119) (the Affordable Care Act), effective for taxable years beginning after December 31, 2009. Section 833(c)(5), as enacted by the Affordable Care Act, provided that section 833 did not apply to any organization unless the organization's medical loss ratio (MLR) for the taxable year was at least 85 percent. For purposes of section 833, an organization's MLR was its percentage of total premium revenue expended on reimbursement for clinical services provided to enrollees under its policies during such taxable year (as reported under section 2718 of the Public Health Service Act (42 U.S.C. 300gg-18)). Section 2718 of the Public Health Service Act (PHSA) was added by section 1001 and amended by section 10101 of the Affordable Care Act. Section 2718 of the PHSA is administered by the Department of Health and Human Services. Section 2718(a) of the PHSA requires a health insurance issuer to submit a report for each plan year to the Secretary of the Department of Health and Human Services concerning the percentage of total premium revenue, after accounting for collections or receipts for risk adjustment and risk corridors and payments of reinsurance, that the issuer expends: (1) On reimbursement for clinical services provided to enrollees under such coverage; (2) for activities that improve health care quality; and (3) on all other non-claims costs, excluding federal and state taxes and licensing or regulatory fees. Section 2718(b) of the PHSA requires that a health insurance issuer offering group or individual health insurance coverage, with respect to each plan year, provide an annual rebate to each enrollee under such coverage, on a pro rata basis, if the ratio of the amount of the premium revenue the issuer expends on costs for reimbursement for clinical services provided to enrollees under such coverage and for activities that improve health care quality to the total amount of premium revenue (excluding federal and state taxes and licensing or regulatory fees and after accounting for payments or receipts for risk adjustment, risk corridors, and reinsurance under sections 1341, 1342, and 1343 of the Affordable Care Act (42 U.S.C. 18061, 18062, and 18063)) for the plan year is less than a prescribed percentage. Section 2718(b)(1)(B)(ii) of the PHSA provides that beginning on January 1, 2014, the medical loss ratio computed under section 2718(b) of the PHSA shall be based on expenses and premium revenues for each of the previous three years of the plan. The Department of Health and Human Services published in the Federal Register (75 FR 74864) an interim final rule under section 2718 of the PHSA on December 1, 2010, an interim final rule and final rule on December 7, 2011 (76 FR 76596 and 76574), and a final rule on May 16, 2012 (77 FR 28790). These rules implementing section 2718 of the PHSA are codified at 45 CFR part 158 (HHS Regulations). On December 6, 2010, the Treasury Department and the IRS published Notice 2010-79 (2010-49 I.R.B. 809), which provided interim guidance and transitional relief to organizations under section 833(c)(5). The interim guidance applied to an organization's first taxable year beginning after December 31, 2009. The interim guidance provided that for purposes of determining whether an organization's percentage of total premium revenue expended on reimbursement for clinical services [[Page 40519]] provided to enrollees was at least 85 percent (and thus satisfied the requirement of section 833(c)(5)), organizations were required to use the definition of ``reimbursement for clinical services provided to enrollees'' set forth in the HHS Regulations. In addition, the interim guidance provided that for purposes of determining whether the 85- percent requirement of section 833(c)(5) was satisfied, the IRS would not challenge the inclusion of amounts expended for ``activities that improve health care quality'' as described in the HHS Regulations. Notice 2010-79 also stated that the consequences for an organization with an MLR of less than 85 percent (an insufficient MLR) were as follows: (1) The organization would not be taxable as a stock insurance company by reason of section 833(a)(1) (but may have been taxable as an insurance company if it otherwise met the requirements of section 831(c)); (2) the organization would not be allowed the special deduction set forth in section 833(b); and (3) the organization would only take into account 80 percent, rather than 100 percent, of its unearned premiums for purposes of computing premiums earned on insurance contracts under section 832(b)(4). However, Notice 2010-79 provided that solely for the first taxable year beginning after December 31, 2009, the IRS would not treat an organization as losing its status as a stock insurance company by reason of section 833(c)(5) provided the following conditions were met: (1) The organization was described in section 833(c) in the immediately preceding taxable year; (2) the organization would have been taxed as a stock insurance company for the current taxable year but for the enactment of section 833(c)(5); and (3) the organization would have met the requirements of section 831(c) to be taxed as an insurance company for the current taxable year but for its activities in the administration, adjustment, or settlement of claims under cost-plus or administrative services-only contracts. On July 5, 2011, the Treasury Department and the IRS published Notice 2011-51 (2011-27 I.R.B. 36) extending the interim guidance and transitional relief provided in Notice 2010-79 to an organization's first taxable year beginning after December 31, 2010. On June 11, 2012, the Treasury Department and the IRS published Notice 2012-37 (2012-24 I.R.B. 1014) extending the interim guidance and transitional relief provided in Notice 2010-79 and Notice 2011-51 through an organization's first taxable year beginning after December 31, 2012. On May 13, 2013, the Treasury Department and the IRS published in the Federal Register (78 FR 27873) a notice of proposed rulemaking (REG-126633-12) addressing the computation of an organization's MLR for purposes of section 833(c)(5) and the consequences of non-application of section 833 if an organization had an insufficient MLR. The proposed regulations provided that the numerator of an organization's MLR is the total premium revenue expended on ``reimbursement for clinical services provided to enrollees'' under its policies for the taxable year, but does not include amounts expended for ``activities that improve health care quality.'' In addition, the Treasury Department and the IRS concluded that, for administrative convenience and to be consistent with the MLR calculation under section 2718(b)(1)(B)(ii) of the PHSA, it was appropriate to compute the MLR for a taxable year under section 833(c)(5) using the same three-year period used under section 2718(b) of the PHSA. Therefore, the proposed regulations provided that amounts used for purposes of section 833(c)(5) for each taxable year should be determined based upon amounts reported under section 2718 of the PHSA for that taxable year and the two preceding taxable years, subject to the same adjustments that apply for purposes of the PHSA. The proposed regulations also provided that if an organization has an insufficient MLR, then section 833(a) does not apply to that organization. On January 7, 2014, the Treasury Department and the IRS published in the Federal Register (79 FR 755) final regulations (TD 9651) adopting the provisions of the proposed regulations with certain modifications. These modifications included transition rules to phase in the same three-year period used under section 2718(b) of the PHSA to compute the MLR for a taxable year. Accordingly, the final regulations provide that for the first taxable year beginning after December 31, 2013, an organization's MLR is computed on a one-year basis. For the first taxable year beginning after December 31, 2014, an organization's MLR is computed on a two-year basis. Finally, for the first taxable year beginning after December 31, 2015, and for all succeeding taxable years, the final regulations provide that an organization's MLR is determined based on amounts reported under section 2718 of the PHSA for that taxable year and the two preceding taxable years, subject to the same adjustments that apply for purposes of section 2718 of the PHSA. The final regulations apply to taxable years beginning after December 31, 2013. Congress subsequently passed the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235, 128 Stat. 2130) (the Appropriations Act), which was signed into law by the President on December 16, 2014. Section 102 of Division N of the Appropriations Act made a technical correction to section 833(c)(5) (the Technical Correction). The Technical Correction provides that in calculating its MLR numerator, an organization includes both the cost of reimbursement for clinical services and amounts expended for activities that improve health care quality. In addition, the Technical Correction provides that the consequences for not meeting the MLR threshold are only that section 833(a)(2) and (3) do not apply. Therefore, an organization with an insufficient MLR is treated as if it were a stock insurance company under section 833(a)(1). The Technical Correction applies to taxable years beginning after December 31, 2009. Explanation of Provisions These final regulations restate Sec. 1.833-1 of the Income Tax Regulations (26 CFR part 1) and incorporate the Technical Correction. As explained in this preamble, the Technical Correction, in effect, retroactively amended the rules in the existing final regulations to determine the MLR and the consequences of an insufficient MLR. In order to avoid any confusion caused by the effect of the Technical Correction on the existing final regulations, the Treasury Department and the IRS are publishing the existing final regulations, as revised by the Technical Correction, in their entirety in this Treasury decision. 1. Determining the MLR Section 1.833-1 of the Income Tax Regulations generally provides that an organization's MLR with respect to a taxable year is the ratio, expressed as a percentage, of the organization's MLR numerator to its MLR denominator. Prior to the Technical Correction, the existing final regulations only included in the MLR numerator an organization's total premium revenue expended on reimbursement for clinical services provided to enrollees. Consistent with the Technical Correction, Sec. 1.833-1(c)(1)(i) of these final regulations describes an organization's MLR numerator as the total premium revenue the organization expended on reimbursement for clinical services and activities that improve health care quality provided to enrollees under its [[Page 40520]] policies for the taxable year. For purposes of section 833(c)(5), these final regulations define the term ``activities that improve health care quality'' to have the same meaning as the term has in section 2718 of the PHSA and the regulations issued under that section (see 45 CFR 158.150). In addition, consistent with the Technical Correction, the transition rules for computation of the MLR in Sec. 1.833-1(c)(2)(i) and (ii) of these final regulations include the premium revenue expended on activities that improve health care quality. 2. Consequences of an Insufficient MLR Consistent with the Technical Correction, these final regulations provide that the consequences for an organization described in section 833(c) that has an MLR of less than 85 percent are the following: (1) The organization is not allowed the special deduction set forth in section 833(b); and (2) it must take into account 80 percent, rather than 100 percent, of its unearned premiums under section 832(b)(4). Unlike under the rule in the existing final regulations, an organization that has an MLR of less than 85 percent does not lose its eligibility to be treated as a stock insurance company under section 833(a)(1). Effective/Applicability Date These final regulations apply to taxable years beginning after December 31, 2016. However, taxpayers may rely on these final regulations for taxable years beginning after December 31, 2009. Special Analyses Certain IRS regulations, including this one, are exempt from the requirement of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (APA) (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulations do not impose a collection of information on small entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. The Treasury Department and the IRS have determined that section 553(b) of the APA does not apply to these regulations, including because good cause exists under section 553(b)(B) of the APA. Section 553(b)(B) provides that an agency is not required to publish a notice of proposed rulemaking in the Federal Register when the agency, for good cause, finds that notice and public comment thereon are impracticable, unnecessary, or contrary to the public interest. The Treasury Department and the IRS have determined that notice and public comment are unnecessary inasmuch as these revisions (1) merely incorporate the Technical Correction by adding or removing language in the existing final regulations and make nonsubstantive conforming changes to reflect the Technical Correction and (2) provide taxpayers with immediate guidance. For the same reason, a delayed effective date is not required pursuant to section 553(d)(3) of the APA. Pursuant to section 7805(f)(3) of the Code, these final regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comments on its impact on small businesses, and no comments were received. Drafting Information The principal author of these regulations is Rebecca L. Baxter, Office of Associate Chief Counsel (Financial Institutions & Products). However, other personnel from the Treasury Department and the IRS participated in their development. Availability of IRS Documents The IRS notices and Treasury decisions cited in this preamble are made available by the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Adoption of Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1--INCOME TAXES 0 Paragraph 1. The authority citation for part 1 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * 0 Par. 2. Section 1.833-1 is revised to read as follows: Sec. 1.833-1 Medical loss ratio under section 833(c)(5). (a) In general. Section 833(a)(2) and (3) do not apply to an organization unless the organization's medical loss ratio (MLR) for a taxable year is at least 85 percent. Paragraph (b) of this section provides definitions that apply for purposes of section 833(c)(5) and this section. Paragraph (c) of this section provides rules for computing an organization's MLR under section 833(c)(5). Paragraph (d) of this section addresses the treatment under section 833 of an organization that has an MLR of less than 85 percent. Paragraph (e) of this section provides the effective/applicability date. (b) Definitions. The following definitions apply for purposes of section 833(c)(5) and this section. (1) Activities that improve health care quality. The term activities that improve health care quality has the same meaning as that term has in section 300gg-18 of title 42, United States Code and the regulations issued under that section (see 45 CFR 158.150). (2) Reimbursement for clinical services. The term reimbursement for clinical services has the same meaning as that term has in section 300gg-18 of title 42, United States Code and the regulations issued under that section (see 45 CFR 158.140). (3) Total premium revenue. The term total premium revenue means the total amount of premium revenue (excluding federal and state taxes and licensing or regulatory fees and after accounting for payments or receipts for risk adjustment, risk corridors, and reinsurance under sections 1341, 1342, and 1343 of the Patient Protection and Affordable Care Act, Public Law 111-148 (124 Stat. 119 (2010)) (42 U.S.C. 18061, 18062, and 18063)) as those terms are used for purposes of section 300gg 18(b) of title 42, United States Code and the regulations issued under that section (see 45 CFR part 158). (c) Computation of MLR under section 833(c)(5)--(1) In general. Starting with the first taxable year beginning after December 31, 2015, and for all succeeding taxable years, an organization's MLR with respect to a taxable year is the ratio, expressed as a percentage, of the MLR numerator, as described in paragraph (c)(1)(i) of this section, to the MLR denominator, as described in paragraph (c)(1)(ii) of this section. (i) MLR numerator. The numerator of an organization's MLR is the total premium revenue expended on reimbursement for clinical services and activities that improve health care quality provided to enrollees under its policies for the taxable year, computed using a three-year period in the same manner as those expenses are computed for the plan year for purposes of section 300gg-18(b) of title 42, United States Code and regulations issued under that section (see 45 CFR part 158). (ii) MLR denominator. The denominator of an organization's MLR is the organization's total premium revenue for the taxable year, computed using a three-year period in the same manner as the total premium revenue is [[Page 40521]] computed for the plan year for purposes of section 300gg-18(b) of title 42, United States Code and regulations issued under that section (see 45 CFR part 158). (2) Transition rules. The transition rules in paragraphs (c)(2)(i) and (ii) of this section apply solely for the first taxable year beginning after December 31, 2013, and the first taxable year beginning after December 31, 2014. (i) First taxable year beginning after December 31, 2013. For the first taxable year beginning after December 31, 2013, the numerator of an organization's MLR is the total premium revenue expended on reimbursement for clinical services and activities that improve health care quality provided to enrollees under its policies for the first taxable year beginning after December 31, 2013, and the denominator of an organization's MLR is the organization's total premium revenue for the first taxable year beginning after December 31, 2013. (ii) First taxable year beginning after December 31, 2014. For the first taxable year beginning after December 31, 2014, the numerator of an organization's MLR is the sum of the total premium revenue expended on reimbursement for clinical services and activities that improve health care quality provided to enrollees under its policies for the first taxable year beginning after December 31, 2013, and for the first taxable year beginning after December 31, 2014, and the denominator of an organization's MLR is the sum of the organization's total premium revenue for the first taxable year beginning after December 31, 2013, and for the first taxable year beginning after December 31, 2014. (d) Failure to qualify under section 833(c)(5)--(1) In general. If, for any taxable year, an organization's MLR is less than 85 percent, then beginning in that taxable year and for each subsequent taxable year for which the organization's MLR remains less than 85 percent, paragraphs (d)(1)(i) and (ii) of this section apply. (i) Special deduction. The organization is not allowed the special deduction set forth in section 833(b). (ii) Premiums earned. The organization must take into account 80 percent, rather than 100 percent, of its unearned premiums under section 832(b)(4) as it applies to other non-life insurance companies. (2) No material change. An organization's loss of eligibility for the treatment provided by sections 833(a)(2) and (3) solely by reason of section 833(c)(5) will not be treated as a material change in the operations of such organization or in its structure for purposes of section 833(c)(2)(C). (e) Effective/applicability date. This section applies to taxable years beginning after December 31, 2016. However, taxpayers may rely on this section for taxable years beginning after December 31, 2009. John Dalrymple, Deputy Commissioner for Services and Enforcement. Approved: May 18, 2016. Mark J. Mazur, Assistant Secretary of the Treasury (Tax Policy). [FR Doc. 2016-14784 Filed 6-21-16; 8:45 am] BILLING CODE 4830-01-P
![40518 Federal Register / Vol. 81, No. 120 / Wednesday, June 22, 2016 / Rules and Regulations
use under § 1271.45(c) even when the consequences for not meeting the Health and Human Services. Section
applicable donor eligibility medical loss ratio threshold. The final 2718(a) of the PHSA requires a health
requirements under subpart C of this regulations reflect the enactment of a insurance issuer to submit a report for
part are not met. Nothing in this technical correction to section 833(c)(5) each plan year to the Secretary of the
paragraph creates an exception for of the Internal Revenue Code by the Department of Health and Human
deficiencies that occurred in making the Consolidated and Further Continuing Services concerning the percentage of
donor eligibility determination for Appropriations Act of 2015. The final total premium revenue, after accounting
either the oocyte donor or the semen regulations affect Blue Cross and Blue for collections or receipts for risk
donor as required under § 1271.45(b), or Shield organizations, and certain other adjustment and risk corridors and
for deficiencies in performing donor organizations involved in providing payments of reinsurance, that the issuer
screening or testing, as required under health insurance. expends: (1) On reimbursement for
§§ 1271.75, 1271.80, and 1271.85. DATES: Effective Date: These regulations clinical services provided to enrollees
(c) Required labeling. As applicable, are effective on June 22, 2016. under such coverage; (2) for activities
you must prominently label an HCT/P Applicability Date: For the date of that improve health care quality; and (3)
described in paragraphs (a) and (b) of applicability, see § 1.833–1(e). on all other non-claims costs, excluding
this section as follows: FOR FUTHER INFORMATION CONTACT:
federal and state taxes and licensing or
* * * * * Rebecca L. Baxter, at (202) 317–6995 regulatory fees.
(2) ‘‘NOT EVALUATED FOR Section 2718(b) of the PHSA requires
(not a toll-free number).
that a health insurance issuer offering
INFECTIOUS SUBSTANCES,’’ unless SUPPLEMENTARY INFORMATION: group or individual health insurance
you have performed all otherwise
Background coverage, with respect to each plan year,
applicable screening and testing under
provide an annual rebate to each
§§ 1271.75, 1271.80, and 1271.85. This This Treasury decision contains final enrollee under such coverage, on a pro
paragraph does not apply to regulations that amend 26 CFR part 1 rata basis, if the ratio of the amount of
reproductive cells or tissue labeled in under section 833 of the Internal the premium revenue the issuer
accordance with paragraph (c)(6) of this Revenue Code (the Code). Section 833(a) expends on costs for reimbursement for
section. provides that Blue Cross and Blue clinical services provided to enrollees
* * * * * Shield organizations, and certain other under such coverage and for activities
(6) ‘‘Advise recipient that screening organizations involved in providing that improve health care quality to the
and testing of the donor(s) were not health insurance as described in section total amount of premium revenue
performed at the time of recovery or 833(c), are entitled to: (1) Treatment as (excluding federal and state taxes and
cryopreservation of the reproductive stock insurance companies for purposes licensing or regulatory fees and after
cells or tissue, but have been performed of sections 831 through 835 (related to accounting for payments or receipts for
subsequently,’’ for paragraphs (a)(3) or taxation of non-life insurance risk adjustment, risk corridors, and
(a)(4) of this section. companies generally); (2) a special reinsurance under sections 1341, 1342,
deduction determined under section and 1343 of the Affordable Care Act (42
§ 1271.370 833(b); and (3) computation of unearned U.S.C. 18061, 18062, and 18063)) for the
■ 3. Amend § 1271.370(b)(4) by premium reserves under section plan year is less than a prescribed
removing ‘‘§ 1271.90(b)’’ and by adding 832(b)(4) based on 100 percent, and not percentage. Section 2718(b)(1)(B)(ii) of
in its place ‘‘§ 1271.90(c)’’. 80 percent, of unearned premiums for the PHSA provides that beginning on
Dated: June 16, 2016.
purposes of determining ‘‘insurance January 1, 2014, the medical loss ratio
company taxable income’’ under section computed under section 2718(b) of the
Leslie Kux,
832. PHSA shall be based on expenses and
Associate Commissioner for Policy. Section 833(c)(5) was added to the premium revenues for each of the
[FR Doc. 2016–14721 Filed 6–21–16; 8:45 am] Code by section 9016 of the Patient previous three years of the plan.
BILLING CODE 4164–01–P Protection and Affordable Care Act The Department of Health and Human
(Pub. L. 111–148, 124 Stat. 119) (the Services published in the Federal
Affordable Care Act), effective for Register (75 FR 74864) an interim final
DEPARTMENT OF THE TREASURY taxable years beginning after December rule under section 2718 of the PHSA on
31, 2009. Section 833(c)(5), as enacted December 1, 2010, an interim final rule
Internal Revenue Service by the Affordable Care Act, provided and final rule on December 7, 2011 (76
that section 833 did not apply to any FR 76596 and 76574), and a final rule
26 CFR Part 1 organization unless the organization’s on May 16, 2012 (77 FR 28790). These
[TD 9772] medical loss ratio (MLR) for the taxable rules implementing section 2718 of the
year was at least 85 percent. For PHSA are codified at 45 CFR part 158
RIN 1545–BN15 purposes of section 833, an (HHS Regulations).
Modification of Treatment of Certain organization’s MLR was its percentage On December 6, 2010, the Treasury
Health Organizations of total premium revenue expended on Department and the IRS published
reimbursement for clinical services Notice 2010–79 (2010–49 I.R.B. 809),
AGENCY: Internal Revenue Service (IRS), provided to enrollees under its policies which provided interim guidance and
Treasury. during such taxable year (as reported transitional relief to organizations under
ACTION: Final regulations. under section 2718 of the Public Health section 833(c)(5). The interim guidance
sradovich on DSK3TPTVN1PROD with RULES
Service Act (42 U.S.C. 300gg–18)). applied to an organization’s first taxable
SUMMARY: This document contains final Section 2718 of the Public Health year beginning after December 31, 2009.
regulations that provide guidance to Service Act (PHSA) was added by The interim guidance provided that
Blue Cross and Blue Shield section 1001 and amended by section for purposes of determining whether an
organizations, and certain other 10101 of the Affordable Care Act. organization’s percentage of total
organizations, on computing and Section 2718 of the PHSA is premium revenue expended on
applying the medical loss ratio and the administered by the Department of reimbursement for clinical services
VerDate Sep<11>2014 16:06 Jun 21, 2016 Jkt 238001 PO 00000 Frm 00042 Fmt 4700 Sfmt 4700 E:\FR\FM\22JNR1.SGM 22JNR1](https://thefederalregister.org/doc/81_FR_40638/page/1.svg)
![Federal Register / Vol. 81, No. 120 / Wednesday, June 22, 2016 / Rules and Regulations 40521
computed for the plan year for purposes (e) Effective/applicability date. This 313–568–9508, email
of section 300gg–18(b) of title 42, United section applies to taxable years Todd.M.Manow@uscg.mil.
States Code and regulations issued beginning after December 31, 2016. SUPPLEMENTARY INFORMATION:
under that section (see 45 CFR part 158). However, taxpayers may rely on this
(2) Transition rules. The transition section for taxable years beginning after I. Table of Abbreviations
rules in paragraphs (c)(2)(i) and (ii) of December 31, 2009. CFR Code of Federal Regulations
this section apply solely for the first COTP Captain of the Port
John Dalrymple,
taxable year beginning after December DHS Department of Homeland Security
Deputy Commissioner for Services and E.O. Executive Order
31, 2013, and the first taxable year
Enforcement. FR Federal Register
beginning after December 31, 2014.
Approved: May 18, 2016. NAD 83 North American Datum of 1983
(i) First taxable year beginning after
Mark J. Mazur, NPRM Notice of Proposed Rulemaking
December 31, 2013. For the first taxable
Assistant Secretary of the Treasury (Tax U.S.C. United States Code
year beginning after December 31, 2013,
the numerator of an organization’s MLR Policy). II. Background Information and
is the total premium revenue expended [FR Doc. 2016–14784 Filed 6–21–16; 8:45 am] Regulatory History
on reimbursement for clinical services BILLING CODE 4830–01–P
On February 10, 2016, the Tuskegee
and activities that improve health care Airmen National Historical Museum
quality provided to enrollees under its submitted an application for a marine
policies for the first taxable year DEPARTMENT OF HOMELAND event for an aerial display spanning
beginning after December 31, 2013, and SECURITY three days in conjunction with the
the denominator of an organization’s Detroit River Days Festival on June 24,
MLR is the organization’s total premium Coast Guard
25, and 26, 2016. A safety zone is
revenue for the first taxable year required by the Federal Aviation
beginning after December 31, 2013. 33 CFR Part 165
Administration to separate aircraft from
(ii) First taxable year beginning after [Docket No. USCG–2016–0460] persons and property on the ground or
December 31, 2014. For the first taxable water’s surface for all air shows. For the
RIN 1625–AA00
year beginning after December 31, 2014, purposes of this event, the Coast Guard
the numerator of an organization’s MLR Safety Zone; Detroit River Days Air is establishing a safety zone around the
is the sum of the total premium revenue Show, Detroit River, Detroit, MI proposed flight path and a standoff zone
expended on reimbursement for clinical between the flight path and the shore,
services and activities that improve AGENCY: Coast Guard, DHS. matching the safety zone created for this
health care quality provided to enrollees ACTION: Temporary final rule. same event in 2015 [USCG–2015–0491].
under its policies for the first taxable
year beginning after December 31, 2013, SUMMARY: The Coast Guard is III. Legal Authority and Need for Rule
and for the first taxable year beginning establishing a temporary safety zone on
The Coast Guard is issuing this rule
after December 31, 2014, and the the waters of the Detroit River in the
under authority in 33 U.S.C. 1231, 33
denominator of an organization’s MLR vicinity of Detroit, MI. This zone is
CFR 1.05–1 and 160.5; and Department
is the sum of the organization’s total intended to restrict and control
of Homeland Security Delegation No.
premium revenue for the first taxable movement of vessels in a portion of the
0170.1. Having reviewed the application
year beginning after December 31, 2013, Detroit River. This zone is necessary to
for a marine event submitted by the
and for the first taxable year beginning protect spectators and vessels from
sponsor on February 10, 2016, the
after December 31, 2014. potential hazards associated with the
Captain of the Port Detroit (COTP) has
(d) Failure to qualify under section Detroit River Days Air Show.
determined that an aircraft aerial
833(c)(5)—(1) In general. If, for any DATES: This temporary final rule is display proximate to a gathering of
taxable year, an organization’s MLR is effective from 12:30 p.m. on June 24, watercraft poses a significant risk to
less than 85 percent, then beginning in 2016 until 6:30 p.m. on June 26, 2016. public safety and property. Such
that taxable year and for each ADDRESSES: Documents indicated in this hazards include potential aircraft
subsequent taxable year for which the preamble as being available in the malfunctions, loud noise levels, and
organization’s MLR remains less than 85 docket are part of docket USCG–2016– waterway distractions. Therefore, the
percent, paragraphs (d)(1)(i) and (ii) of 0460 and are available online by going COTP is establishing a safety zone
this section apply. to www.regulations.gov, type the docket around the event location to help
(i) Special deduction. The number in the ‘‘SEARCH’’ box and click minimize risks to safety of life and
organization is not allowed the special ‘‘SEARCH.’’ Click on Open Docket property during this event.
deduction set forth in section 833(b). Folder on the line associated with this The Coast Guard is issuing this
(ii) Premiums earned. The rulemaking. They are also available for temporary final rule without prior
organization must take into account 80 inspection or copying at the Docket notice and opportunity to comment
percent, rather than 100 percent, of its Management Facility (M–30), U.S. pursuant to authority under section 4(a)
unearned premiums under section Department of Transportation, West of the Administrative Procedure Act
832(b)(4) as it applies to other non-life Building Ground floor, Room W12–140, (APA) (5 U.S.C. 553(b)). This provision
insurance companies. 1200 New Jersey Avenue SE., authorizes an agency to issue a rule
(2) No material change. An Washington, DC 20590, between 9 a.m. without prior notice and opportunity to
sradovich on DSK3TPTVN1PROD with RULES
organization’s loss of eligibility for the and 5 p.m., Monday through Friday, comment when the agency for good
treatment provided by sections 833(a)(2) except Federal holidays. cause finds that those procedures are
and (3) solely by reason of section FOR FURTHER INFORMATION CONTACT: If ‘‘impracticable, unnecessary, or contrary
833(c)(5) will not be treated as a you have questions on this temporary to the public interest.’’ Under 5 U.S.C.
material change in the operations of final rule, call or email Petty Officer 553(b)(B), the Coast Guard finds that
such organization or in its structure for Todd Manow, Prevention Department, good cause exists for not publishing a
purposes of section 833(c)(2)(C). Sector Detroit, Coast Guard; telephone notice of proposed rulemaking with
VerDate Sep<11>2014 16:06 Jun 21, 2016 Jkt 238001 PO 00000 Frm 00045 Fmt 4700 Sfmt 4700 E:\FR\FM\22JNR1.SGM 22JNR1](https://thefederalregister.org/doc/81_FR_40638/page/4.svg)
Document Created: 2016-06-22 01:06:18
Document Modified: 2016-06-22 01:06:18
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final regulations. | |
| FR Citation | 81 FR 40518 | |
| RIN Number | 1545-BN15 | |
| CFR Associated | Income Taxes and Reporting and Recordkeeping Requirements |
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