81_FR_75526 81 FR 75316 - Excepted Benefits; Lifetime and Annual Limits; and Short-Term, Limited-Duration Insurance

81 FR 75316 - Excepted Benefits; Lifetime and Annual Limits; and Short-Term, Limited-Duration Insurance

DEPARTMENT OF THE TREASURY
Internal Revenue Service
DEPARTMENT OF LABOR
Employee Benefits Security Administration
DEPARTMENT OF HEALTH AND HUMAN SERVICES

Federal Register Volume 81, Issue 210 (October 31, 2016)

Page Range75316-75327
FR Document2016-26162

This document contains final regulations regarding the definition of short-term, limited-duration insurance for purposes of the exclusion from the definition of individual health insurance coverage, and standards for travel insurance and supplemental health insurance coverage to be considered excepted benefits. This document also amends a reference in the final regulations relating to the prohibition on lifetime and annual dollar limits.

Federal Register, Volume 81 Issue 210 (Monday, October 31, 2016)
[Federal Register Volume 81, Number 210 (Monday, October 31, 2016)]
[Rules and Regulations]
[Pages 75316-75327]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-26162]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Part 54

[TD 9791]
RIN 1545-BN44

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Part 2590

RIN 1210-AB75

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Parts 144, 146, 147, and 148

[CMS-9932-F]
RIN 0938-AS93


Excepted Benefits; Lifetime and Annual Limits; and Short-Term, 
Limited-Duration Insurance

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: Final rules.

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SUMMARY: This document contains final regulations regarding the 
definition of short-term, limited-duration insurance for purposes of 
the exclusion from the definition of individual health insurance 
coverage, and standards for travel insurance and supplemental health 
insurance coverage to be considered excepted benefits. This document 
also amends a reference in the final regulations relating to the 
prohibition on lifetime and annual dollar limits.

DATES: 
    Effective date. These final regulations are effective on December 
30, 2016.
    Applicability date. These final regulations apply to group health 
plans and health insurance issuers beginning on the first day of the 
first plan year (or, in the individual market, the first day of the 
first policy year) beginning on or after January 1, 2017.

FOR FURTHER INFORMATION CONTACT: Elizabeth Schumacher or Matthew Litton 
of the Department of Labor, at 202-693-8335, Karen Levin, Internal 
Revenue Service, Department of the Treasury, at (202) 317-5500, David 
Mlawsky or Cam Clemmons, Centers for Medicare & Medicaid Services, 
Department of Health and Human Services, at 410-786-1565.
    Customer Service Information: Individuals interested in obtaining 
information from the Department of Labor concerning employment-based 
health coverage laws may call the Employee Benefits Security 
Administration (EBSA) Toll-Free Hotline, at 1-866-444-EBSA (3272) or 
visit the Department of Labor's Web site (http://www.dol.gov/ebsa). In 
addition, information from the Department of Health and Human Services 
(HHS) on private health insurance for consumers can be found on the 
Centers for Medicare & Medicaid Services (CMS) Web site (www.cms.gov/cciio) and information on health reform can be found at 
www.HealthCare.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    The Health Insurance Portability and Accountability Act of 1996 
(HIPAA), Public Law 104-191 (110 Stat. 1936), added title XXVII of the 
Public Health Service Act (PHS Act), part 7 of the Employee Retirement 
Income Security Act of 1974 (ERISA), and Chapter 100 of the Internal 
Revenue Code (the Code), providing portability and nondiscrimination 
rules with respect to health coverage. These provisions of the PHS Act, 
ERISA, and the Code were later augmented by other consumer protection 
laws, including the Mental Health Parity Act of 1996,\1\ the Paul 
Wellstone and Pete Domenici Mental Health Parity and Addiction Equity 
Act

[[Page 75317]]

of 2008,\2\ the Newborns' and Mothers' Health Protection Act,\3\ the 
Women's Health and Cancer Rights Act,\4\ the Genetic Information 
Nondiscrimination Act of 2008,\5\ the Children's Health Insurance 
Program Reauthorization Act of 2009,\6\ Michelle's Law,\7\ and the 
Patient Protection and Affordable Care Act, as amended by the Health 
Care and Education Reconciliation Act of 2010 (Affordable Care Act).\8\
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    \1\ Public Law 104-204, 110 Stat. 2944 (September 26, 1996).
    \2\ Public Law 110-343, 122 Stat. 3881 (October 3, 2008).
    \3\ Public Law 104-204, 110 Stat. 2935 (September 26, 1996).
    \4\ Public Law 105-277, 112 Stat. 2681-436 (October 21, 1998).
    \5\ Public Law 110-233, 122 Stat. 881 (May 21, 2008).
    \6\ Public Law 111-3, 123 Stat. 65 (February 4, 2009).
    \7\ Public Law 110-381, 122 Stat. 4081 (October 9, 2008).
    \8\ The Patient Protection and Affordable Care Act, Public Law 
111-148, was enacted on March 23, 2010, and the Health Care and 
Education Reconciliation Act of 2010, Public Law 111-152, was 
enacted on March 30, 2010. (These statutes are collectively known as 
the ``Affordable Care Act''.)
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    The Affordable Care Act reorganizes, amends, and adds to the 
provisions of part A of title XXVII of the PHS Act relating to group 
health plans and health insurance issuers in the group and individual 
markets. For this purpose, the term ``group health plan'' includes both 
insured and self-insured group health plans.\9\ The Affordable Care Act 
added section 715(a)(1) of ERISA and section 9815(a)(1) of the Code to 
incorporate the provisions of part A of title XXVII of the PHS Act 
(generally, sections 2701 through 2728 of the PHS Act) into ERISA and 
the Code to make them applicable to group health plans and health 
insurance issuers providing health insurance coverage in connection 
with group health plans.
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    \9\ The term ``group health plan'' is used in title XXVII of the 
PHS Act, part 7 of ERISA, and Chapter 100 of the Code, and is 
distinct from the term ``health plan,'' as used in other provisions 
of title I of the Affordable Care Act. The term ``health plan'' as 
used in other provisions of title I of the Affordable Care Act does 
not include self-insured group health plans.
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II. Overview of the Final Regulations

    On June 10, 2016, the Departments of Labor, Health and Human 
Services and the Treasury (the Departments \10\) issued proposed 
regulations with respect to expatriate health plans, expatriate health 
plan issuers, and qualified expatriates; requirements for travel 
insurance, similar supplemental coverage, and hospital indemnity or 
other fixed indemnity insurance to be excepted benefits; the 
prohibition on lifetime and annual limits; and short-term, limited-
duration insurance.\11\ After consideration of comments on the proposed 
regulations, the Departments are publishing final regulations regarding 
short-term, limited duration insurance, travel insurance, similar 
supplemental coverage, and lifetime and annual limits. The Departments 
intend to address hospital indemnity or other fixed indemnity insurance 
and expatriate health plans in future rulemaking, taking into account 
comments received on these issues.\12\
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    \10\ Note, however, that in sections under headings listing only 
two of the three Departments, the term ``Departments'' generally 
refers only to the two Departments listed in the heading.
    \11\ 81 FR 38019 (June 10, 2016).
    \12\ The preamble to the proposed regulations also invited 
public comment on insurance coverage of specified diseases or 
illnesses as excepted benefits. While not addressed in this 
rulemaking, the Departments may address this issue in future 
regulations or guidance.
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    On July 20, 2015, the Internal Revenue Service published Notice 
2015-43, 2015-29 IRB 73, to provide interim guidance with respect to 
the treatment of expatriate health plans, expatriate health plan 
issuers, and employers in their capacity as plan sponsors of expatriate 
health plans, as defined in the Expatriate Health Coverage 
Clarification Act of 2014 (EHCCA).\13\ The interim guidance in Notice 
2015-43 generally allows a taxpayer to apply the requirements of the 
EHCCA using a reasonable good faith interpretation of the EHCCA until 
further guidance is issued, except as otherwise specifically provided 
with respect to the health insurance providers fee under section 9010 
of the Affordable Care Act. Notice 2015-29 provided interim guidance 
pertaining to the fee under section 9010 for calendar years 2014 and 
2015, and Notice 2016-14 provided guidance pertaining to the fee for 
calendar year 2016. Additionally, the preamble to the Departments' 
proposed regulations provides that issuers, employers, administrators, 
and individuals are permitted to rely on the proposed regulations 
pending the applicability date of final regulations in the Federal 
Register.\14\ Until final regulations are issued and effective, this 
reliance rule as well as the interim guidance in Notice 2015-43 remain 
in effect.
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    \13\ Division M of the Consolidated and Further Continuing 
Appropriations Act, 2015, Public Law 113-235.
    \14\ 81 FR 38019, 38033 (June 10, 2016).
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A. Short-Term, Limited-Duration Insurance

    Short-term, limited-duration insurance is a type of health 
insurance coverage that is designed to fill temporary gaps in coverage 
when an individual is transitioning from one plan or coverage to 
another plan or coverage. Although short-term, limited-duration 
insurance is not an excepted benefit, it is similarly exempt from PHS 
Act requirements because it is not individual health insurance 
coverage. Section 2791(b)(5) of the PHS Act provides that the term 
``individual health insurance coverage'' means health insurance 
coverage offered to individuals in the individual market, but does not 
include short-term, limited-duration insurance. The PHS Act does not 
define short-term, limited-duration insurance. Under current 
regulations, short-term, limited-duration insurance means ``health 
insurance coverage provided pursuant to a contract with an issuer that 
has an expiration date specified in the contract (taking into account 
any extensions that may be elected by the policyholder without the 
issuer's consent) that is less than 12 months after the original 
effective date of the contract.'' \15\
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    \15\ 26 CFR 54.9801-2, 29 CFR 2590.701-2, 45 CFR 144.103.
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    Before enactment of the Affordable Care Act, short-term, limited-
duration insurance was an important means for individuals to obtain 
health coverage when transitioning from one job to another (and from 
one group health plan to another) or when faced with other similar 
situations. However, with guaranteed availability of coverage and 
special enrollment period requirements in the individual health 
insurance market under the Affordable Care Act, individuals can 
purchase coverage with the protections of the Affordable Care Act to 
fill in the gaps in coverage.
    The Departments have become aware that short-term, limited-duration 
insurance is being sold in situations other than those that the 
exception from the definition of individual health insurance coverage 
was initially intended to address.\16\ In some instances, individuals 
are purchasing this coverage as their primary form of health coverage 
and, contrary to the intent of the 12-month coverage limitation in the 
current definition of short-term, limited-duration insurance, some 
issuers are providing renewals of the coverage that extend the duration 
beyond 12 months. Because short-term, limited-duration insurance is 
exempt from certain consumer protections, the Departments are concerned 
that these policies may have significant limitations, such as lifetime 
and annual dollar limits on essential health benefits

[[Page 75318]]

(EHB) and pre-existing condition exclusions, and therefore may not 
provide meaningful health coverage. Further, because these policies can 
be medically underwritten based on health status, healthier individuals 
may be targeted for this type of coverage, thus adversely impacting the 
risk pool for Affordable Care Act-compliant coverage.
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    \16\ See e.g., Mathews, Anna W. ``Sales of Short-Term Health 
Policies Surge,'' The Wall Street Journal April 10, 2016, available 
at http://www.wsj.com/articles/sales-of-short-term-health-policies-surge-1460328539.
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    To address the issue of short-term, limited-duration insurance 
being sold as a type of primary coverage, the Departments proposed 
regulations to revise the definition of short-term, limited-duration 
insurance so that the coverage must be less than three months in 
duration, including any period for which the policy may be renewed. The 
proposed regulations also included a requirement that a notice must be 
prominently displayed in the contract and in any application materials 
provided in connection with enrollment in such coverage with the 
following language: THIS IS NOT QUALIFYING HEALTH COVERAGE (``MINIMUM 
ESSENTIAL COVERAGE'') THAT SATISFIES THE HEALTH COVERAGE REQUIREMENT OF 
THE AFFORDABLE CARE ACT. IF YOU DON'T HAVE MINIMUM ESSENTIAL COVERAGE, 
YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR TAXES.
    In addition to proposing to reduce the length of short-term, 
limited-duration insurance to less than three months, the proposed 
regulations modified the permitted coverage period to take into account 
extensions made by the policyholder ``with or without the issuer's 
consent.'' This modification was intended to address the Departments' 
concern that some issuers are taking liberty with the current 
definition of short-term, limited-duration insurance--either by 
automatically renewing such policies or having a simplified 
reapplication process with the result being that such coverage, which 
does not contain the important protections of the Affordable Care Act, 
lasts longer than 12 months and serves as an individual's primary 
health coverage.
    The Departments received a number of comments relating to the 
treatment of short-term, limited-duration insurance. Several commenters 
supported the proposed rules and the reasoning behind them, noting that 
short-term, limited-duration insurance is not subject to the same 
consumer protections as major medical coverage and can discriminate 
based on health status by recruiting healthier consumers to the 
exclusion of sicker consumers. These commenters suggested the proposed 
rules would limit the number of consumers relying on short-term, 
limited-duration insurance as their primary form of coverage and 
improve the Affordable Care Act's single risk pool.
    Some commenters requested that the Departments go further and 
prohibit issuers from offering short-term, limited-duration insurance 
to consumers who have previously purchased this type of coverage to 
prevent consumers from stringing together coverage under policies 
offered by the same or different issuers. However, in the Departments' 
view, such a restriction is not warranted. The individual shared 
responsibility provision of the Code,\17\ which generally requires 
individuals to obtain minimum essential coverage in order to avoid an 
additional payment with their taxes, provides sufficient incentive to 
discourage consumers from purchasing multiple successive short-term, 
limited-duration insurance policies. The added notice requirement 
ensures that individuals purchasing such policies are aware of the 
individual shared responsibility requirement and its potential 
implications. Furthermore, such a prohibition would be difficult for 
State regulators to enforce, since prior coverage of a consumer would 
have to be tracked.
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    \17\ See Code section 5000A.
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    Other commenters expressed general opposition to the proposed rules 
or requested that short-term, limited-duration insurance be allowed to 
provide coverage for a longer period. Several commenters stated that 
some individuals who lose their employer-sponsored coverage may not be 
able to obtain COBRA continuation coverage \18\ and that a job search 
can often take longer than three months. One commenter suggested 
alignment of short-term, limited-duration insurance with the employer 
waiting period rules by permitting a coverage period of up to four 
months.\19\ Another commenter asked that issuers be allowed to renew 
coverage beyond the three-month period in certain situations, such as 
when an individual experiences a triggering event for a special 
enrollment period.\20\ The Departments decline to adopt these 
suggestions. Short-term, limited-duration insurance allows for coverage 
to fill temporary coverage gaps when an individual transitions between 
sources of primary coverage. As explained above, for longer gaps in 
coverage, guaranteed availability of coverage and special enrollment 
period requirements in the individual health insurance market under the 
Affordable Care Act ensure that individuals can purchase individual 
market coverage through or outside of the Exchange that is minimum 
essential coverage and includes the consumer protections of the 
Affordable Care Act. Further, limiting the coverage of short-term, 
limited-duration insurance to less than three months is consistent with 
the exemption from the individual shared responsibility provision for 
gaps in coverage of less than three months (the short coverage gap 
exemption).\21\ Under current law, an individual who is not enrolled in 
minimum essential coverage (whether enrolled in short-term, limited-
duration coverage or otherwise) for a period of three months or more 
generally cannot claim the short coverage gap exemption for any of 
those months. The final regulations help ensure that individuals who 
purchase a short-term, limited-duration insurance policy will be 
eligible for the short coverage gap exemption (assuming other 
requirements are met) during the temporary coverage period.
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    \18\ COBRA continuation coverage means coverage that satisfies 
an applicable COBRA continuation provision. These provisions are 
sections 601-608 of ERISA, section 4980B of the Code (other than 
paragraph (f)(1) of such section 4980B insofar as it relates to 
pediatric vaccines), or Title XXII of the PHS Act.
    \19\ See 26 CFR 54.9815-2708; 29 CFR 2590.715-2708; 45 CFR 
147.116.
    \20\ See 26 CFR 54.9801-6; 29 CFR 2590.701-6; 45 CFR 146.117 and 
147.104.
    \21\ 26 CFR 1.5000A-3(j).
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    After consideration of the comments and feedback received from 
stakeholders, the Departments are finalizing the proposed regulations 
without change.
    The revised definition of short-term, limited-duration insurance 
applies for policy years beginning on or after January 1, 2017. The 
Departments recognize, however, that State regulators may have approved 
short-term, limited-duration insurance products for sale in 2017 that 
met the definition in effect prior to January 1, 2017. Accordingly, the 
Department of Health and Human Services (HHS) will not take enforcement 
action against an issuer with respect to the issuer's sale of a short-
term, limited-duration insurance product before April 1, 2017 on the 
ground that the coverage period is three months or more, provided that 
the coverage ends on or before December 31, 2017 and otherwise complies 
with the definition of short-term, limited-duration insurance in effect 
under the regulations.\22\ States may also elect not

[[Page 75319]]

to take enforcement actions against issuers with respect to such 
coverage sold before April 1, 2017.
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    \22\ This non-enforcement policy is limited to the requirement 
that short-term, limited-duration insurance must be less than three 
months. It does not relieve issuers of short-term, limited-duration 
insurance of the notice requirement, which applies for policy years 
beginning on or after January 1, 2017.
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B. Excepted Benefits

    Sections 2722 and 2763 of the PHS Act, section 732 of ERISA, and 
section 9831 of the Code provide that the respective requirements of 
title XXVII of the PHS Act, part 7 of ERISA, and Chapter 100 of the 
Code generally do not apply to the provision of certain types of 
benefits, known as ``excepted benefits.'' Excepted benefits are 
described in section 2791(c) of the PHS Act, section 733(c) of ERISA, 
and section 9832(c) of the Code.
    The parallel statutory provisions establish four categories of 
excepted benefits. The first category, under section 2791(c)(1) of the 
PHS Act, section 733(c)(1) of ERISA and section 9832(c)(1) of the Code, 
includes benefits that are generally not health coverage (such as 
automobile insurance, liability insurance, workers compensation, and 
accidental death and dismemberment coverage). The benefits in this 
category are excepted in all circumstances. In contrast, the benefits 
in the second, third, and fourth categories are types of health 
coverage that are excepted only if certain conditions are met.
    The second category of excepted benefits is limited excepted 
benefits, which may include limited scope vision or dental benefits, 
and benefits for long-term care, nursing home care, home health care, 
or community-based care. Section 2791(c)(2)(C) of the PHS Act, section 
733(c)(2)(C) of ERISA, and section 9832(c)(2)(C) of the Code authorize 
the Secretaries of HHS, Labor, and the Treasury (collectively, the 
Secretaries) to issue regulations establishing other, similar limited 
benefits as excepted benefits. The Secretaries exercised this authority 
previously with respect to certain health flexible spending 
arrangements.\23\ To be excepted under this second category, the 
benefits must either: (1) Be provided under a separate policy, 
certificate, or contract of insurance; or (2) otherwise not be an 
integral part of a group health plan, whether insured or self-
insured.\24\
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    \23\ 26 CFR 54.9831-1(c)(3)(v), 29 CFR 2590.732(c)(3)(v), 45 CFR 
146.145(b)(3)(v).
    \24\ PHS Act section 2722(c)(1), ERISA section 732(c)(1), Code 
section 9831(c)(1).
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    The third category of excepted benefits, referred to as 
``noncoordinated excepted benefits,'' includes both coverage for only a 
specified disease or illness (such as cancer-only policies), and 
hospital indemnity or other fixed indemnity insurance. These benefits 
are excepted under section 2722(c)(2) of the PHS Act, section 732(c)(2) 
of ERISA, and section 9831(c)(2) of the Code only if all of the 
following conditions are met: (1) The benefits are provided under a 
separate policy, certificate, or contract of insurance; (2) there is no 
coordination between the provision of such benefits and any exclusion 
of benefits under any group health plan maintained by the same plan 
sponsor; and (3) the benefits are paid with respect to any event 
without regard to whether benefits are provided under any group health 
plan maintained by the same plan sponsor.
    The fourth category, under section 2791(c)(4) of the PHS Act, 
section 733(c)(4) of ERISA, and section 9832(c)(4) of the Code, is 
supplemental excepted benefits. These benefits are excepted only if 
they are provided under a separate policy, certificate, or contract of 
insurance and are Medicare supplemental health insurance (also known as 
Medigap), TRICARE supplemental programs, or ``similar supplemental 
coverage provided to coverage under a group health plan.'' The phrase 
``similar supplemental coverage provided to coverage under a group 
health plan'' is not defined in the statute or regulations. However, 
the Departments issued regulations clarifying that one requirement to 
be similar supplemental coverage is that the coverage ``must be 
specifically designed to fill gaps in primary coverage, such as 
coinsurance or deductibles.'' \25\
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    \25\ 26 CFR 54.9831-1(c)(5)(i)(C), 29 CFR 2590.732(c)(5)(i)(C), 
and 45 CFR 146.145(b)(5)(i)(C).
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    In 2007 and 2008, the Departments issued guidance on the 
circumstances under which supplemental health insurance would be 
considered excepted benefits under section 2791(c)(4) of the PHS Act 
(and the parallel provisions of ERISA and the Code).\26\ The guidance 
identifies several factors the Departments will apply when evaluating 
whether supplemental health insurance will be considered to be 
``similar supplemental coverage provided to coverage under a group 
health plan.'' The guidance provides a safe harbor that supplemental 
health insurance will be considered an excepted benefit if it is 
provided through a policy, certificate, or contract of insurance 
separate from the primary coverage under the plan and meets all of the 
following requirements: (1) The supplemental policy, certificate, or 
contract of insurance is issued by an entity that does not provide the 
primary coverage under the plan; (2) the supplemental policy, 
certificate, or contract of insurance is specifically designed to fill 
gaps in primary coverage, such as coinsurance or deductibles, but does 
not become secondary or supplemental only under a coordination of 
benefits provision; (3) the cost of the supplemental coverage is 15 
percent or less of the cost of primary coverage (determined in the same 
manner as the applicable premium is calculated under a COBRA 
continuation provision); and (4) the supplemental coverage sold in the 
group health insurance market does not differentiate among individuals 
in eligibility, benefits, or premiums based upon any health factor of 
the individual (or any dependents of the individual).
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    \26\ See EBSA Field Assistance Bulletin No. 2007-04 (available 
at http://www.dol.gov/ebsa/regs/fab2007-4.html); CMS Insurance 
Standards Bulletin 08-01 (available at http://www.cms.gov/CCIIO/Resources/Files/Downloads/hipaa_08_01_508.pdf); and IRS Notice 2008-
23 (available at http://www.irs.gov/irb/2008-07_IRB/ar09.html).
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    On February 13, 2015, the Departments issued Affordable Care Act 
Implementation FAQs Part XXIII, providing additional guidance on the 
circumstances under which health insurance coverage that supplements 
group health plan coverage may be considered supplemental excepted 
benefits.\27\ The FAQ states that the Departments intend to propose 
regulations clarifying the circumstances under which supplemental 
insurance products that do not fill in cost-sharing gaps under the 
primary plan are considered to be specifically designed to fill gaps in 
primary coverage. Specifically, the FAQ provides that health insurance 
coverage that supplements group health coverage by providing coverage 
of additional categories of benefits (as opposed to filling in cost-
sharing gaps under the primary plan) would be considered to be designed 
to ``fill in the gaps'' of the primary coverage only if the benefits 
covered by the supplemental insurance product are not EHB, as defined 
under section 1302(b) of the Affordable Care Act, in the State in which 
the product is being marketed. The FAQ further states that, until 
regulations are issued and effective, the Departments will not take 
enforcement action against an issuer of group or individual market 
coverage that otherwise meets the conditions to be supplemental 
excepted benefits that does not fill cost-sharing gaps in the group 
health plan and only provides coverage of additional categories of 
benefits that are not

[[Page 75320]]

covered by the group health plan and are not EHB in the applicable 
State. States were encouraged to exercise similar enforcement 
discretion.
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    \27\ Frequently Asked Questions about Affordable Care Act 
Implementation (Part XXIII), available at http://www.dol.gov/ebsa/pdf/faq-AffordableCareAct23.pdf and https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/Downloads/Supplmental-FAQ_2-13-15-final.pdf.
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1. Similar Supplemental Coverage
    The proposed regulations incorporated guidance from the Affordable 
Care Act Implementation FAQs Part XXIII addressing supplemental health 
insurance products that provide categories of benefits in addition to 
those in the primary coverage. Under the proposed regulations, if group 
or individual supplemental health insurance covers items and services 
not included in the primary coverage (referred to as providing 
``additional categories of benefits''), the coverage will be considered 
to be designed ``to fill gaps in primary coverage,'' for purposes of 
being supplemental excepted benefits if none of the benefits provided 
by the supplemental policy are an EHB, as defined under section 1302(b) 
of the Affordable Care Act, in the State in which the coverage is 
issued.\28\ Thus, if any benefit provided by the supplemental policy is 
either included in the primary coverage or is an EHB in the State where 
the coverage is issued, the insurance coverage would not be 
supplemental excepted benefits under the proposed regulations. 
Furthermore, supplemental health insurance products that both fill in 
cost sharing in the primary coverage, such as coinsurance or 
deductibles, and cover additional categories of benefits that are not 
EHB, would be considered supplemental excepted benefits under the 
proposed regulations provided all other criteria are met.
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    \28\ For this purpose, a supplemental plan would determine what 
benefits are EHB based on the EHB-benchmark plan applicable in the 
State, along with any additional benefits that are considered EHB 
consistent with 45 CFR 155.170(a)(2).
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    The Departments received several comments in support of the 
proposed regulations. One commenter expressed support but requested 
that the Departments provide additional examples in the regulations. 
Another commenter requested clarification regarding the application of 
the standards for similar supplemental coverage that provides benefits 
outside of the United States, noting that no State's EHB rules require 
coverage for services outside of the United States. If any benefit 
provided by the supplemental policy is a type of service that is an EHB 
in the State where the coverage is issued, the coverage would not be 
supplemental excepted benefits under the final regulations, even if the 
supplemental coverage was limited to covering the benefit in a location 
or setting where it would not be covered as an EHB.
    After consideration of the comments, the Departments are finalizing 
the proposed regulations on similar supplemental coverage without 
substantive change. For purposes of consistency and clarity, HHS is 
also including a cross reference in the individual market excepted 
benefits regulations at 45 CFR 148.220 to reflect the standard for 
similar supplemental coverage under the group market regulations at 45 
CFR 146.145(b)(5)(i)(C). The Departments may provide additional 
guidance on similar supplemental coverage that meets the criteria to be 
excepted benefits in the future.
2. Travel Insurance
    The Departments are aware that certain travel insurance products 
may include limited health benefits. However, these products typically 
are not designed as major medical coverage. Instead, the risks being 
insured relate primarily to: (1) The interruption or cancellation of a 
trip; (2) the loss of baggage or personal effects; (3) damages to 
accommodations or rental vehicles; or (4) sickness, accident, 
disability, or death occurring during travel, with any health benefits 
usually incidental to other coverage.
    Section 2791(c)(1)(H) of the PHS Act, section 733(c)(1)(H) of 
ERISA, and section 9832(c)(1)(H) of the Code provide that the 
Departments may, in regulations, designate as excepted benefits 
``benefits for medical care [that] are secondary or incidental to other 
insurance benefits.'' Pursuant to this authority, and to clarify which 
types of travel-related insurance products are excepted benefits under 
the PHS Act, ERISA, and the Code, the Departments' proposed regulations 
identified travel insurance as an excepted benefit under the first 
category of excepted benefits and proposed a definition of travel 
insurance consistent with the definition of travel insurance under 
final regulations issued by the Treasury Department and the IRS for the 
health insurance providers fee imposed by section 9010 of the 
Affordable Care Act,\29\ which uses a modified version of the National 
Association of Insurance Commissioners definition of travel insurance.
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    \29\ 26 CFR 57.2(h)(4).
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    The proposed regulations defined the term ``travel insurance'' as 
insurance coverage for personal risks incident to planned travel, which 
may include, but are not limited to, interruption or cancellation of a 
trip or event, loss of baggage or personal effects, damages to 
accommodations or rental vehicles, and sickness, accident, disability, 
or death occurring during travel, provided that the health benefits are 
not offered on a stand-alone basis and are incidental to other 
coverage. For this purpose, travel insurance does not include major 
medical plans that provide comprehensive medical protection for 
travelers with trips lasting six months or longer, including, for 
example, those working overseas as an expatriate or military personnel 
being deployed.
    The Departments received a number of comments in favor of the 
treatment of travel insurance as an excepted benefit, as well as the 
proposed definition of travel insurance. Several comments expressed 
support for the proposed definition's consistency with regulations 
governing the health insurance providers fee. One commenter requested 
clarification that the requirement that health benefits are incidental 
to other coverage be determined based solely on coverage under the 
travel insurance policy, without regard to other coverage provided by 
an employer or plan sponsor; the Departments agree that this is 
correct. The Departments are finalizing without change the proposed 
regulations defining travel insurance and treating such coverage as an 
excepted benefit.

C. Definition of EHB for Purposes of the Prohibition on Lifetime and 
Annual Limits

    Section 2711 of the PHS Act, as added by the Affordable Care Act, 
generally prohibits group health plans and health insurance issuers 
offering group or individual health insurance coverage from imposing 
lifetime and annual dollar limits on EHB, as defined under section 
1302(b) of the Affordable Care Act. These prohibitions apply to both 
grandfathered and non-grandfathered health plans, except the annual 
limits prohibition does not apply to grandfathered individual health 
insurance coverage.
    Under the Affordable Care Act, self-insured group health plans, 
large group market health plans, and grandfathered health plans are not 
required to offer EHB, but they generally cannot place lifetime or 
annual dollar limits on services they cover that are considered EHB. On 
November 18, 2015, the Departments issued final regulations 
implementing section 2711 of the PHS Act.\30\ The final regulations 
provide that, for plan years (in the individual

[[Page 75321]]

market, policy years) beginning on or after January 1, 2017, a plan or 
issuer that is not required to provide EHB must define EHB, for 
purposes of the prohibition on lifetime and annual dollar limits, in a 
manner consistent with any of the 51 EHB base-benchmark plans 
applicable in a State or the District of Columbia, or one of the three 
Federal Employees Health Benefits Program (FEHBP) EHB base-benchmark 
plans, as specified under 45 CFR 156.100.\31\
---------------------------------------------------------------------------

    \30\ 80 FR 72192.
    \31\ 26 CFR 54.9815-2711(c), 29 CFR 2590.715-2711(c), 45 CFR 
147.126(c).
---------------------------------------------------------------------------

    The final regulations under section 2711 of the PHS Act include a 
reference to selecting a ``base-benchmark'' plan, as specified under 45 
CFR 156.100, for purposes of determining which benefits cannot be 
subject to lifetime or annual dollar limits. The base-benchmark plan 
selected by a State or applied by default under 45 CFR 156.100, 
however, may not reflect the complete definition of EHB in the 
applicable State. For that reason, the Departments are amending the 
regulations at 26 CFR 54.9815-2711(c), 29 CFR 2590.715-2711(c), and 45 
CFR 147.126(c) to refer to the provisions that capture the complete 
definition of EHB in a State.
    Specifically, in these final regulations, the Departments replace 
the phrase ``in a manner consistent with one of the three Federal 
Employees Health Benefit Program (FEHBP) options as defined by 45 CFR 
156.100(a)(3) or one of the base-benchmark plans selected by a State or 
applied by default pursuant to 45 CFR 156.100'' in each of the 
regulations with the following: ``in a manner that is consistent with 
(1) one of the EHB-benchmark plans applicable in a State under 45 CFR 
156.110, and includes coverage of any additional required benefits that 
are considered EHB consistent with 45 CFR 155.170(a)(2); or (2) one of 
the three Federal Employees Health Benefit Program (FEHBP) plan options 
as defined by 45 CFR 156.100(a)(3), supplemented, as necessary, to meet 
the standards in 45 CFR 156.110.'' This change reflects the possibility 
that base-benchmark plans, including the FEHBP plan options, could 
require supplementation under 45 CFR 156.110, and ensures the inclusion 
of State-required benefit mandates enacted on or before December 31, 
2011 in accordance with 45 CFR 155.170, which when coupled with a 
State's EHB-benchmark plan, establish the definition of EHB in that 
State under regulations implementing section 1302(b) of the Affordable 
Care Act.\32\
---------------------------------------------------------------------------

    \32\ In the HHS Notice of Benefit and Payment Parameters for 
2016 published February 27, 2015 (80 FR 10750), HHS instructed 
States to select a new base-benchmark plan to take effect beginning 
with plan or policy years beginning in 2017. The new final EHB base-
benchmark plans selected as a result of this process are publicly 
available at downloads.cms.gov/cciio/Final%20List%20of%20BMPs_15_10_21.pdf. Additional information about 
the new base-benchmark plans, including plan documents and summaries 
of benefits, is available at www.cms.gov/CCIIO/Resources/Data-Resources/ehb.html. The definition of EHB in each of the 50 states 
and the District of Columbia is based on the base-benchmark plan, 
and takes into account any additions to the base-benchmark plan, 
such as supplementation under 45 CFR 156.110, and State-required 
benefit mandates in accordance with 45 CFR 155.170.
---------------------------------------------------------------------------

    Some commenters requested clarification that self-insured group 
health plans, large group market health plans and grandfathered plans 
are not required to include as covered benefits any specific items and 
services covered by the State-EHB benchmark plan, including any 
additional State-required benefits considered EHB under 45 CFR 
155.170(a)(2). The requirement in section 2707(a) of the PHS Act to 
provide the EHB package required under section 1302(a) of the 
Affordable Care Act applies only to non-grandfathered health insurance 
coverage in the individual and small group markets. Self-insured group 
health plans, large group market health plans and grandfathered health 
plans are not required to include coverage of EHB, but cannot place 
lifetime or annual dollar limits on any EHB covered by these plans.\33\ 
These plans are permitted to impose limits other than dollar limits on 
EHB, as long as they comply with other applicable statutory provisions. 
In addition, these plans can continue to impose annual and lifetime 
dollar limits on benefits that do not fall within the definition of 
EHB.
---------------------------------------------------------------------------

    \33\ The annual limits prohibition does not apply to 
grandfathered individual market coverage.
---------------------------------------------------------------------------

    One commenter urged the Departments to eliminate the option for 
large group market health plans to define EHB based on one of the three 
largest nationally available FEHBP benchmark plan options to ensure 
consistency with the definition of EHB in the individual and small 
group markets. However, these FEHBP plan options \34\ are unique among 
benchmark plans in that they are available nationally, and thus can 
more appropriately be utilized to determine what benefits would be 
categorized as EHB for those employers that provide health coverage to 
employees throughout the United States and are not situated only in a 
single State. The Departments are finalizing the proposed clarification 
to the lifetime and annual limit regulations without change.
---------------------------------------------------------------------------

    \34\ The three largest nationally available FEHBP plan options 
are available at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Top3ListFinal-5-19-2015.pdf.
---------------------------------------------------------------------------

D. Applicability Date

    These final regulations are applicable for plan years (or, in the 
individual market, policy years) beginning on or after January 1, 2017. 
The HHS final regulations specify the applicability dates in the group 
market regulations at 45 CFR 146.125 and in the individual market 
regulations at 45 CFR 148.102.

III. Economic Impact and Paperwork Burden

A. Summary--Department of Labor and Department of Health and Human 
Services

    These final regulations specify the conditions for similar 
supplemental coverage products that are designed to fill gaps in 
primary coverage by providing coverage of additional categories of 
benefits (as opposed to filling in gaps in cost sharing) to constitute 
supplemental excepted benefits, and clarify that certain travel-related 
insurance products that provide only incidental health benefits 
constitute excepted benefits.
    These final regulations also revise the definition of short-term, 
limited-duration insurance so that the coverage (including renewals) 
has to be less than three months in total duration (as opposed to the 
current definition of less than 12 months in duration), and provide 
that a notice must be prominently displayed in the contract and in any 
application materials provided in connection with enrollment in the 
coverage indicating that such coverage is not minimum essential 
coverage.
    Finally, the regulations amend the definition of ``essential health 
benefits'' for purposes of the prohibition on lifetime and annual 
dollar limits with respect to group health plans and health insurance 
issuers that are not required to provide essential health benefits, 
including self-insured group health plans, large group market health 
plans, and grandfathered health plans.
    The Departments are publishing these final regulations to implement 
the protections intended by the Congress in the most economically 
efficient manner possible. The Departments have examined the effects of 
this rule as required by Executive Order 13563 (76 FR 3821, January 21, 
2011), Executive Order 12866 (58 FR 51735, September 1993, Regulatory 
Planning and Review), the Regulatory Flexibility Act (September 19, 
1980, Pub. L. 96-354), the Unfunded Mandates Reform Act of

[[Page 75322]]

1995 (Pub. L. 104-4), Executive Order 13132 on Federalism, and the 
Congressional Review Act (5 U.S.C. 804(2)).

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

    Executive Order 12866 (58 FR 51735) directs agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects; distributive impacts; and equity). Executive 
Order 13563 (76 FR 3821, January 21, 2011) is supplemental to and 
reaffirms the principles, structures, and definitions governing 
regulatory review as established in Executive Order 12866.
    Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a final 
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 rules with 
economically significant effects (for example, $100 million or more in 
any 1 year), and a ``significant'' regulatory action is subject to 
review by the Office of Management and Budget. The Departments have 
determined that this regulatory action is not likely to have economic 
impacts of $100 million or more in any one year, and is not significant 
within the meaning of Executive Order 12866. However, the Departments 
are nonetheless providing a discussion of the benefits and costs that 
might stem from these final regulations in the Summary of Impacts 
section below.
1. Need for Regulatory Action
    These final regulations clarify the conditions for similar 
supplemental coverage and travel insurance to be recognized as excepted 
benefits. These clarifications are necessary to provide health 
insurance issuers offering supplemental coverage and travel insurance 
products with a clearer understanding of the Federal standards that 
apply to these types of coverage. These final regulations also amend 
the definition of short-term, limited-duration insurance for purposes 
of the exclusion from the definition of individual health insurance 
coverage and impose a new notice requirement in response to reports 
that short-term, limited-duration insurance coverage is being sold to 
individuals as primary coverage.
2. Summary of Impacts
    The final regulations outline the conditions for travel insurance 
and similar supplemental health insurance coverage to be considered 
excepted benefits, and revise the definition of short-term, limited-
duration insurance.
    The Departments received comments suggesting that the majority of 
travel insurance policies are issued for trips of short duration, with 
the average policy length being approximately three months, and these 
policies generally provide limited medical coverage and property and 
casualty coverage to protect against risks related to travel. The 
Departments believe that the designation of certain travel insurance 
products (as defined by the regulations) as excepted benefits is 
consistent with prevailing industry practices, and therefore, will not 
result in significant cost to issuers of these products or consumers 
who purchase them.
    Short-term, limited-duration policies represent a very small 
fraction of the health insurance market, though their use is 
increasing. In 2015, total premiums earned for short-term, limited-
duration insurance was approximately $160 million for approximately 
1,517,000 member months and with approximately 148,000 covered lives at 
the end of the year,\35\ while in 2013, total premiums were 
approximately $98 million for 1,031,000 member months with 
approximately 80,400 covered lives at the end of the year.\36\
---------------------------------------------------------------------------

    \35\ National Association of Insurance Commissioners, 2015 
Accident and Health Policy Experience Report, 2016, available at 
http://naic.org/prod_serv/AHP-LR-16.pdf.
    \36\ National Association of Insurance Commissioners, 2013 
Accident and Health Policy Experience Report, 2014, available at 
http://naic.org/prod_serv/AHP-LR-14.pdf.
---------------------------------------------------------------------------

    The Departments received comments indicating that a large majority 
of the short-term, limited-duration insurance plans are sold as 
transitional coverage, particularly for individuals seeking to cover 
periods of unemployment or gaps between employer-sponsored coverage, 
and typically provide coverage for less than three months. Therefore, 
the Departments believe that the final regulations will have no effect 
on the majority of consumers who purchase such coverage and issuers of 
those policies. The small fraction of consumers who purchase such 
policies for longer periods and who may have to transition to 
individual market coverage will benefit from the protections afforded 
by the Affordable Care Act, such as no preexisting condition 
exclusions, essential health benefits without annual or lifetime dollar 
limits, and guaranteed renewability. While some of these consumers may 
experience an increase in costs due to higher premiums compared with 
short-term, limited-duration coverage, they will also avoid potential 
tax liability by having minimum essential coverage. Some consumers may 
also be eligible for premium tax credits and cost-sharing reductions 
for coverage offered through the Exchanges. Finally, inclusion of these 
individuals, often relatively healthier individuals, in the individual 
market will help strengthen the individual market's single risk pool. 
The notice requirement will help ensure that consumers do not 
inadvertently purchase these products expecting them to be minimum 
essential coverage. Further, the Departments believe that any costs 
incurred by issuers of short-term, limited-duration insurance to 
include the required notice in application or enrollment materials will 
be negligible since the Departments have provided the exact text for 
the notice.
    As a result, the Departments have concluded that the impacts of 
these final regulations are not economically significant.

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

    The final regulations provide that to be considered short-term, 
limited-duration insurance for policy years beginning on or after 
January 1, 2017, a notice must be prominently displayed in the contract 
and in any application materials, stating that the coverage is not 
minimum essential coverage and that failure to have minimum essential 
coverage may result in an additional tax payment. The Departments have 
provided the exact text for these notice requirements and the language 
will not need to be customized. The burden associated with these 
notices is not subject to the Paperwork Reduction Act

[[Page 75323]]

of 1995 in accordance with 5 CFR 1320.3(c)(2) because they do not 
contain a ``collection of information'' as defined in 44 U.S.C. 
3502(3).

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes 
certain requirements with respect to Federal rules that are subject to 
the notice and comment requirements of section 553(b) of the 
Administrative Procedure Act (5 U.S.C. 551 et seq.) and that are likely 
to have a significant economic impact on a substantial number of small 
entities. Unless an agency certifies that a proposed rule is not likely 
to have a significant economic impact on a substantial number of small 
entities, section 603 of RFA requires that the agency present an 
initial regulatory flexibility analysis at the time of the publication 
of the notice of proposed rulemaking describing the impact of the rule 
on small entities and seeking public comment on such impact. Small 
entities include small businesses, organizations and governmental 
jurisdictions.
    The RFA generally defines a ``small entity'' as (1) a proprietary 
firm meeting the size standards of the Small Business Administration 
(13 CFR 121.201); (2) a nonprofit organization that is not dominant in 
its field; or (3) a small government jurisdiction with a population of 
less than 50,000. (States and individuals are not included in the 
definition of ``small entity.'') The Departments use as their measure 
of significant economic impact on a substantial number of small 
entities a change in revenues of more than 3 to 5 percent.
    The Departments expect the impact of these final regulations to be 
limited because the provisions are generally consistent with current 
industry practices and impact only a small fraction of the health 
insurance market. Therefore, the Departments certify that the final 
regulations will not have a significant impact on a substantial number 
of small entities. In addition, section 1102(b) of the Social Security 
Act requires agencies to prepare a regulatory impact analysis if a rule 
may have a significant economic impact on the operations of a 
substantial number of small rural hospitals. This analysis must conform 
to the provisions of section 604 of the RFA. These final regulations 
will not affect small rural hospitals. Therefore, the Departments have 
determined that these final regulations will not have a significant 
impact on the operations of a substantial number of small rural 
hospitals.

E. Special Analysis--Department of the Treasury

    Certain IRS regulations, including this one, are exempt from the 
requirements of Executive Order 12866, as supplemented and reaffirmed 
by Executive Order 13563. Therefore, a regulatory impact assessment is 
not required. For applicability of RFA, see paragraph D of this section 
III.
    Pursuant to section 7805(f) of the Code, these regulations have 
been submitted to the Chief Counsel for Advocacy of the Small Business 
Administration for comment on their impact on small business.

F. Unfunded Mandates Reform Act

    For purposes of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 
1501 et seq.), as well as Executive Order 12875, these final 
regulations do not include any Federal mandate that may result in 
expenditures by State, local, or tribal governments, or the private 
sector, which may impose an annual burden of $146 million adjusted for 
inflation since 1995.

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

    Executive Order 13132 outlines fundamental principles of 
federalism. It requires adherence to specific criteria by Federal 
agencies in formulating and implementing policies that have 
``substantial direct effects'' on the States, the relationship between 
the national government and States, or on the distribution of power and 
responsibilities among the various levels of government. Federal 
agencies promulgating regulations 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 final regulation.
    In the Departments' view, these final regulations have federalism 
implications because they would have direct effects on the States, the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among various levels of 
government. Under these final regulations, health insurance issuers 
offering short-term, limited-duration insurance, travel insurance and 
similar supplemental coverage will be required to follow the minimum 
Federal standards to not be subject to the market reform provisions 
under the PHS Act, ERISA and the Code. However, in the Departments' 
view, the federalism implications of these final regulations are 
substantially mitigated because, with respect to health insurance 
issuers, the Departments expect that the majority of States will enact 
laws or take other appropriate action resulting in their meeting or 
exceeding the Federal standards.
    In general, through section 514, ERISA supersedes State laws to the 
extent that they relate to any covered employee benefit plan, and 
preserves State laws that regulate insurance, banking, or securities. 
While ERISA prohibits States from regulating an employee benefit plan 
as an insurance or investment company or bank, the preemption 
provisions of section 731 of ERISA and section 2724 of the PHS Act 
(implemented in 29 CFR 2590.731(a) and 45 CFR 146.143(a) and 
148.210(b)) apply so that the requirements in title XXVII of the PHS 
Act (including those added by the Affordable Care Act) are not to be 
construed to supersede any provision of State law which establishes, 
implements, or continues in effect any standard or requirement solely 
relating to health insurance issuers in connection with individual or 
group health insurance coverage except to the extent that such standard 
or requirement prevents the application of a Federal requirement. The 
conference report accompanying HIPAA indicates that this is intended to 
be the ``narrowest'' preemption of State laws (See House Conf. Rep. No. 
104-736, at 205, reprinted in 1996 U.S. Code Cong. & Admin. News 2018).
    States may continue to apply State law requirements except to the 
extent that such requirements prevent the application of the market 
reform requirements that are the subject of this rulemaking. 
Accordingly, States have significant latitude to impose requirements on 
health insurance issuers that are more restrictive than the Federal 
law.
    In compliance with the requirement of Executive Order 13132 that 
agencies examine closely any policies that may have federalism 
implications or limit the policy making discretion of the States, the 
Departments have engaged in efforts to consult with and work 
cooperatively with affected States, including consulting with, and 
attending conferences of, the National Association of Insurance 
Commissioners and consulting with State insurance officials on an 
individual basis. It is expected that the Departments will act in a 
similar fashion in enforcing the market reform provisions of the 
Affordable Care Act.
    Throughout the process of developing these final regulations, to 
the extent

[[Page 75324]]

feasible within the applicable preemption provisions, the Departments 
have attempted to balance the States' interests in regulating health 
insurance issuers, and Congress' intent to provide uniform minimum 
protections to consumers in every State. By doing so, it is the 
Departments' view that they have complied with the requirements of 
Executive Order 13132.
    Pursuant to the requirements set forth in section 8(a) of Executive 
Order 13132, and by the signatures affixed to this final rule, the 
Departments certify that the Employee Benefits Security Administration 
and the Centers for Medicare & Medicaid Services have complied with the 
requirements of Executive Order 13132 for the attached final rules in a 
meaningful and timely manner.

H. Congressional Review Act

    These final regulations are subject to the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801 et seq.) and will be transmitted to the Congress and 
to the Comptroller General for review in accordance with such 
provisions.

I. Statement of Availability of IRS Documents

    IRS Revenue Procedures, Revenue Rulings notices, and other guidance 
cited in this document are published in the Internal Revenue Bulletin 
(or Cumulative Bulletin) and are available from the Superintendent of 
Documents, U.S. Government Printing Office, Washington, DC 20402, or by 
visiting the IRS Web site at http://www.irs.gov.

IV. Statutory Authority

    The Department of the Treasury regulations are adopted pursuant to 
the authority contained in sections 7805 and 9833 of the Code.
    The Department of Labor regulations are adopted pursuant to the 
authority contained in 29 U.S.C. 1135 and 1191c; and Secretary of 
Labor's Order 1-2011, 77 FR 1088 (Jan. 9, 2012).
    The Department of Health and Human Services regulations are 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.

List of Subjects

26 CFR Part 54

    Pension and excise taxes.

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 Parts 144, 146 and 147

    Health care, Health insurance, Reporting and recordkeeping 
requirements.

45 CFR Part 148

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

John Dalrymple,
Deputy Commissioner for Services and Enforcement, Internal Revenue 
Service.
    Approved: October 25, 2016.
Mark J. Mazur,
Assistant Secretary of the Treasury (Tax Policy).
    Signed this 25th day of October 2016.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration, 
Department of Labor.
    Dated: October 24, 2016.
Andrew M. Slavitt,
Acting Administrator, Centers for Medicare & Medicaid Services.
    Dated: October 25, 2016.
Sylvia M. Burwell,
Secretary, Department of Health and Human Services.

DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Chapter I

    Accordingly, 26 CFR part 54 is amended as follows:

PART 54--PENSION AND EXCISE TAXES

0
Par. 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 
``short-term, limited-duration insurance'', and adding a definition of 
``travel insurance'' in alphabetical order. The revision and addition 
read as follows:


Sec.  54.9801-2  Definitions.

* * * * *
    Short-term, limited-duration insurance means health insurance 
coverage provided pursuant to a contract with an issuer that:
    (1) Has an expiration date specified in the contract (taking into 
account any extensions that may be elected by the policyholder with or 
without the issuer's consent) that is less than 3 months after the 
original effective date of the contract; and
    (2) Displays prominently in the contract and in any application 
materials provided in connection with enrollment in such coverage in at 
least 14 point type the following: ``THIS IS NOT QUALIFYING HEALTH 
COVERAGE (``MINIMUM ESSENTIAL COVERAGE'') THAT SATISFIES THE HEALTH 
COVERAGE REQUIREMENT OF THE AFFORDABLE CARE ACT. IF YOU DON'T HAVE 
MINIMUM ESSENTIAL COVERAGE, YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR 
TAXES.''
* * * * *
    Travel insurance means insurance coverage for personal risks 
incident to planned travel, which may include, but is not limited to, 
interruption or cancellation of trip or event, loss of baggage or 
personal effects, damages to accommodations or rental vehicles, and 
sickness, accident, disability, or death occurring during travel, 
provided that the health benefits are not offered on a stand-alone 
basis and are incidental to other coverage. For this purpose, the term 
travel insurance does not include major medical plans that provide 
comprehensive medical protection for travelers with trips lasting 6 
months or longer, including, for example, those working overseas as an 
expatriate or military personnel being deployed.
* * * * *

0
Par. 3. Section 54.9815-2711 is amended by revising paragraph (c) to 
read as follows:


Sec.  54.9815-2711  No lifetime or annual limits.

* * * * *
    (c) Definition of essential health benefits. The term ``essential 
health benefits'' means essential health benefits under section 1302(b) 
of the Patient Protection and Affordable Care Act and applicable 
regulations. For this purpose, a group health plan or a health 
insurance issuer that is not required to provide essential health 
benefits under section 1302(b) must define ``essential health 
benefits'' in a manner that is consistent with--
    (1) One of the EHB-benchmark plans applicable in a State under 45 
CFR 156.110, and includes coverage of any additional required benefits 
that are considered essential health benefits consistent with 45 CFR 
155.170(a)(2); or
    (2) One of the three Federal Employees Health Benefits Program 
(FEHBP) plan options as defined by 45 CFR 156.100(a)(3), supplemented, 
as necessary, to meet the standards in 45 CFR 156.110.
* * * * *

0
Par. 4. Section 54.9831-1 is amended:

[[Page 75325]]

0
a. In paragraph (b)(1) by removing the reference ``54.9812-1T'' and 
adding in its place the reference ``54.9812-1, 54.9815-1251 through 
54.9815-2719A,'' and in paragraph (c)(1) by removing the reference 
``54.9811-1T, 54.9812-1T'' and adding in its place the phrase 
``54.9811-1, 54.9812-1, 54.9815-1251 through 54.9815-2719A'';
0
b. In paragraph (c)(2)(vii) by removing ``and'' at the end;
0
c. In paragraph (c)(2)(viii) by removing the period and adding ``; 
and'' at the end;
0
d. Adding paragraph (c)(2)(ix); and
0
e. Revising paragraph (c)(5)(i)(C).
    The revisions and additions are as follows:


Sec.  54.9831-1  Special rules relating to group health plans.

* * * * *
    (c) * * *
    (2) * * *
    (ix) Travel insurance, within the meaning of Sec.  54.9801-2.
* * * * *
    (5) * * *
    (i) * * *
    (C) Similar supplemental coverage provided to coverage under a 
group health plan. To be similar supplemental coverage, the coverage 
must be specifically designed to fill gaps in the primary coverage. The 
preceding sentence is satisfied if the coverage is designed to fill 
gaps in cost sharing in the primary coverage, such as coinsurance or 
deductibles, or the coverage is designed to provide benefits for items 
and services not covered by the primary coverage and that are not 
essential health benefits (as defined under section 1302(b) of the 
Patient Protection and Affordable Care Act) in the State where the 
coverage is issued, or the coverage is designed to both fill such gaps 
in cost sharing under, and cover such benefits not covered by, the 
primary coverage. Similar supplemental coverage does not include 
coverage that becomes secondary or supplemental only under a 
coordination-of-benefits provision.
* * * * *

0
Par. 5. Section 54.9833-1 is amended by adding a sentence at the end to 
read as follows:


Sec.  54.9833-1  Effective dates.

    * * * Notwithstanding the previous sentence, the definition of 
``short-term, limited-duration insurance'' in Sec.  54.9801-2 and 
paragraph (c)(5)(i)(C) of Sec.  54.9831-1 apply for plan years 
beginning on or after January 1, 2017.

DEPARTMENT OF LABOR

Employee Benefits Security Administration

29 CFR Chapter XXV

    For the reasons stated in the preamble, the Department of Labor 
amends 29 CFR part 2590 as set forth below:

PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS

0
6. The authority citation for part 2590 is revised to read as follows:

    Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a, 1185b, 1191, 1191a, 1191b, and 1191c; 
sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b), Pub. L. 
105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L. 
110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111-
148, 124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 1029; 
Division M, Pub. L. 113-235, 128 Stat. 2130; Secretary of Labor's 
Order 1-2011, 77 FR 1088 (Jan. 9, 2012).


0
7. Section 2590.701-2 is amended by revising the definition of ``short-
term, limited-duration insurance'', and adding a definition of ``travel 
insurance'' in alphabetical order. The addition and revision read as 
follows:


Sec.  2590.701-2  Definitions.

* * * * *
    Short-term, limited-duration insurance means health insurance 
coverage provided pursuant to a contract with an issuer that:
    (1) Has an expiration date specified in the contract (taking into 
account any extensions that may be elected by the policyholder with or 
without the issuer's consent) that is less than 3 months after the 
original effective date of the contract; and
    (2) Displays prominently in the contract and in any application 
materials provided in connection with enrollment in such coverage in at 
least 14 point type the following: ``THIS IS NOT QUALIFYING HEALTH 
COVERAGE (``MINIMUM ESSENTIAL COVERAGE'') THAT SATISFIES THE HEALTH 
COVERAGE REQUIREMENT OF THE AFFORDABLE CARE ACT. IF YOU DON'T HAVE 
MINIMUM ESSENTIAL COVERAGE, YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR 
TAXES.''
* * * * *
    Travel insurance means insurance coverage for personal risks 
incident to planned travel, which may include, but is not limited to, 
interruption or cancellation of trip or event, loss of baggage or 
personal effects, damages to accommodations or rental vehicles, and 
sickness, accident, disability, or death occurring during travel, 
provided that the health benefits are not offered on a stand-alone 
basis and are incidental to other coverage. For this purpose, the term 
travel insurance does not include major medical plans that provide 
comprehensive medical protection for travelers with trips lasting 6 
months or longer, including, for example, those working overseas as an 
expatriate or military personnel being deployed.
* * * * *

0
8. Section 2590.715-2711 is amended by revising paragraph (c) to read 
as follows:


Sec.  2590.715-2711  No lifetime or annual limits.

* * * * *
    (c) Definition of essential health benefits. The term ``essential 
health benefits'' means essential health benefits under section 1302(b) 
of the Patient Protection and Affordable Care Act and applicable 
regulations. For this purpose, a group health plan or a health 
insurance issuer that is not required to provide essential health 
benefits under section 1302(b) must define ``essential health 
benefits'' in a manner that is consistent with--
    (1) One of the EHB-benchmark plans applicable in a State under 45 
CFR 156.110, and includes coverage of any additional required benefits 
that are considered essential health benefits consistent with 45 CFR 
155.170(a)(2); or
    (2) One of the three Federal Employees Health Benefits Program 
(FEHBP) plan options as defined by 45 CFR 156.100(a)(3), supplemented, 
as necessary, to meet the standards in 45 CFR 156.110.
* * * * *

0
9. Section 2590.732 is amended by adding paragraph (c)(2)(ix) and 
revising paragraph (c)(5)(i)(C) to read as follows:


Sec.  2590.732  Special rules relating to group health plans.

* * * * *
    (c) * * *
    (2) * * *
    (ix) Travel insurance, within the meaning of Sec.  2590.701-2.
* * * * *
    (5) * * *
    (i) * * *
    (C) Similar supplemental coverage provided to coverage under a 
group health plan. To be similar supplemental coverage, the coverage 
must be specifically designed to fill gaps in the primary coverage. The 
preceding sentence is satisfied if the coverage is designed to fill 
gaps in cost sharing in

[[Page 75326]]

the primary coverage, such as coinsurance or deductibles, or the 
coverage is designed to provide benefits for items and services not 
covered by the primary coverage and that are not essential health 
benefits (as defined under section 1302(b) of the Patient Protection 
and Affordable Care Act) in the State where the coverage is issued, or 
the coverage is designed to both fill such gaps in cost sharing under, 
and cover such benefits not covered by, the primary coverage. Similar 
supplemental coverage does not include coverage that becomes secondary 
or supplemental only under a coordination-of-benefits provision.
* * * * *

0
10. Section 2590.736 is amended by adding a sentence at the end to read 
as follows:


Sec.  2590.736  Applicability dates.

    * * * Notwithstanding the previous sentence, the definition of 
``short-term, limited-duration insurance'' in Sec.  2590.701-2 and 
paragraph (c)(5)(i)(C) of Sec.  2590.732 apply for plan years beginning 
on or after January 1, 2017.

DEPARTMENT OF HEALTH AND HUMAN SERVICES

45 CFR Chapter 1

    For the reasons stated in the preamble, the Department of Health 
and Human Services amends 45 CFR parts 144, 146, 147, and 148 as set 
forth below:

PART 144--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE

0
11. The authority citation for part 144 continues to read as follows:

    Authority: Secs. 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.


0
12. Section 144.103 is amended by revising the definition of ``short-
term, limited-duration insurance'' and adding a definition of ``travel 
insurance'' in alphabetical order. The revision and addition read as 
follows:


Sec.  144.103  Definitions.

* * * * *
    Short-term, limited-duration insurance means health insurance 
coverage provided pursuant to a contract with an issuer that:
    (1) Has an expiration date specified in the contract (taking into 
account any extensions that may be elected by the policyholder with or 
without the issuer's consent) that is less than 3 months after the 
original effective date of the contract; and
    (2) Displays prominently in the contract and in any application 
materials provided in connection with enrollment in such coverage in at 
least 14 point type the following: ``THIS IS NOT QUALIFYING HEALTH 
COVERAGE (``MINIMUM ESSENTIAL COVERAGE'') THAT SATISFIES THE HEALTH 
COVERAGE REQUIREMENT OF THE AFFORDABLE CARE ACT. IF YOU DON'T HAVE 
MINIMUM ESSENTIAL COVERAGE, YOU MAY OWE AN ADDITIONAL PAYMENT WITH YOUR 
TAXES.''
* * * * *
    Travel insurance means insurance coverage for personal risks 
incident to planned travel, which may include, but is not limited to, 
interruption or cancellation of trip or event, loss of baggage or 
personal effects, damages to accommodations or rental vehicles, and 
sickness, accident, disability, or death occurring during travel, 
provided that the health benefits are not offered on a stand-alone 
basis and are incidental to other coverage. For this purpose, the term 
travel insurance does not include major medical plans that provide 
comprehensive medical protection for travelers with trips lasting 6 
months or longer, including, for example, those working overseas as an 
expatriate or military personnel being deployed.
* * * * *

PART 146--REQUIREMENTS FOR THE GROUP HEALTH INSURANCE MARKET

0
13. The authority citation for part 146 continues to read as follows:

    Authority: Secs. 2702 through 2705, 2711 through 2723, 2791, and 
2792 of the Public Health Service Act (42 U.S.C. 300gg-1 through 
300gg-5, 300gg-11 through 300gg-23, 300gg-91, and 300gg-92.


0
14. Section 146.125 is amended by adding a sentence at the end to read 
as follows:


Sec.  146.125  Applicability dates.

    * * * Notwithstanding the previous sentence, the definition of 
``short-term, limited-duration insurance'' in Sec.  144.103 of this 
subchapter and paragraph (c)(5)(i)(C) of Sec.  146.145 apply for policy 
years and plan years beginning on or after January 1, 2017.

0
15. Section 146.145 is amended by adding paragraph (b)(2)(ix) and 
revising paragraph (b)(5)(i)(C) to read as follows:


Sec.  146.145  Special rules relating to group health plans.

* * * * *
    (b) * * *
    (2) * * *
    (ix) Travel insurance, within the meaning of Sec.  144.103 of this 
subchapter.
* * * * *
    (5) * * *
    (i) * * *
    (C) Similar supplemental coverage provided to coverage under a 
group health plan. To be similar supplemental coverage, the coverage 
must be specifically designed to fill gaps in the primary coverage. The 
preceding sentence is satisfied if the coverage is designed to fill 
gaps in cost sharing in the primary coverage, such as coinsurance or 
deductibles, or the coverage is designed to provide benefits for items 
and services not covered by the primary coverage and that are not 
essential health benefits (as defined under section 1302(b) of the 
Patient Protection and Affordable Care Act) in the State where the 
coverage is issued, or the coverage is designed to both fill such gaps 
in cost sharing under, and cover such benefits not covered by, the 
primary coverage. Similar supplemental coverage does not include 
coverage that becomes secondary or supplemental only under a 
coordination-of-benefits provision.
* * * * *

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

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

    Authority: Secs. 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
17. Section 147.126 is amended by revising paragraph (c) to read as 
follows:


Sec.  147.126  No lifetime or annual limits.

* * * * *
    (c) Definition of essential health benefits. The term ``essential 
health benefits'' means essential health benefits under section 1302(b) 
of the Patient Protection and Affordable Care Act and applicable 
regulations. For this purpose, a group health plan or a health 
insurance issuer that is not required to provide essential health 
benefits under section 1302(b) must define ``essential health 
benefits'' in a manner that is consistent with--
    (1) One of the EHB-benchmark plans applicable in a State under 45 
CFR 156.110, and includes coverage of any additional required benefits 
that are considered essential health benefits consistent with 45 CFR 
155.170(a)(2); or
    (2) One of the three Federal Employees Health Benefits Program

[[Page 75327]]

(FEHBP) plan options as defined by 45 CFR 156.100(a)(3), supplemented, 
as necessary, to meet the standards in 45 CFR 156.110.
* * * * *

PART 148--REQUIREMENTS FOR THE INDIVIDUAL HEALTH INSURANCE MARKET

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

    Authority:  Secs. 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
19. Section 148.102 is amended by adding a sentence at the end of 
paragraph (b) to read as follows:


Sec.  148.102  Scope, applicability, and effective dates.

    (b) * * * Notwithstanding the previous sentence, the definition of 
``short-term, limited-duration insurance'' in Sec.  144.103 of this 
subchapter and paragraph (b)(7) of Sec.  148.220 apply for policy years 
beginning on or after January 1, 2017.

0
20. Section 148.220 is amended by adding paragraph (a)(9) and revising 
paragraph (b)(7) to read as follows:


Sec.  148.220  Excepted benefits.

* * * * *
    (a) * * *
    (9) Travel insurance, within the meaning of Sec.  144.103 of this 
subchapter.
    (b) * * *
    (7) Similar supplemental coverage provided to coverage under a 
group health plan (as described in Sec.  146.145(b)(5)(i)(C) of this 
subchapter).

[FR Doc. 2016-26162 Filed 10-28-16; 8:45 am]
 BILLING CODE 4830-01-P; 4120-01-P; 4510-29-P



                                           75316               Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Rules and Regulations

                                           Consistency With Safety and Soundness                       Dated: October 19, 2016.                            travel insurance and supplemental
                                              The Agencies also have determined                      Thomas J. Curry,                                      health insurance coverage to be
                                           that the exceptions are consistent with                   Comptroller of the Currency.                          considered excepted benefits. This
                                           safety and soundness, provided that the                     By order of the Board of Governors of the
                                                                                                                                                           document also amends a reference in
                                           depository institution determines and                     Federal Reserve System, October 21, 2016.             the final regulations relating to the
                                           maintains appropriate documentation of                                                                          prohibition on lifetime and annual
                                                                                                     Margaret McCloskey Shanks,                            dollar limits.
                                           the following: (1) The transaction
                                           involves real property located in the                     Deputy Secretary of the Board.                        DATES:
                                           Major Disaster Area; (2) there is a                         Dated at Washington, DC, October 19,                   Effective date. These final regulations
                                           binding commitment to fund the                            2016.                                                 are effective on December 30, 2016.
                                           transaction that was entered into on or                     By order of the Board of Directors.                    Applicability date. These final
                                           after August 14, 2016, but no later than                  Federal Deposit Insurance Corporation.                regulations apply to group health plans
                                           December 31, 2017; and (3) the value of                   Robert E. Feldman,
                                                                                                                                                           and health insurance issuers beginning
                                           the real property supports the                                                                                  on the first day of the first plan year (or,
                                           institution’s decision to enter into the                  Executive Secretary.                                  in the individual market, the first day of
                                           transaction. In addition, the transaction                  Dated at Alexandria, VA, October 27, 2016.           the first policy year) beginning on or
                                           must continue to be subject to review by                   By order of the Board of Directors.                  after January 1, 2017.
                                           management and by the Agencies in the                     National Credit Union Administration.                 FOR FURTHER INFORMATION CONTACT:
                                           course of examinations of the                                                                                   Elizabeth Schumacher or Matthew
                                                                                                     Gerard Poliquin,
                                           institution.                                                                                                    Litton of the Department of Labor, at
                                                                                                     Secretary of the Board.
                                           Expiration Date                                                                                                 202–693–8335, Karen Levin, Internal
                                                                                                     [FR Doc. 2016–26234 Filed 10–28–16; 8:45 am]
                                                                                                                                                           Revenue Service, Department of the
                                             Exceptions made under section 1123                      BILLING CODE 6210–01–P
                                                                                                                                                           Treasury, at (202) 317–5500, David
                                           of FIRREA may be provided for no more
                                                                                                                                                           Mlawsky or Cam Clemmons, Centers for
                                           than three years after the President
                                                                                                                                                           Medicare & Medicaid Services,
                                           determines that a major disaster exists                   DEPARTMENT OF THE TREASURY                            Department of Health and Human
                                           in the area.4 The Agencies have
                                                                                                                                                           Services, at 410–786–1565.
                                           determined that the exceptions                            Internal Revenue Service
                                                                                                                                                              Customer Service Information:
                                           provided for by this order shall expire
                                                                                                                                                           Individuals interested in obtaining
                                           on December 31, 2017.                                     26 CFR Part 54
                                                                                                                                                           information from the Department of
                                           Order                                                     [TD 9791]                                             Labor concerning employment-based
                                             In accordance with section 2 of                                                                               health coverage laws may call the
                                                                                                     RIN 1545–BN44
                                           DIDRA, relief is hereby granted from the                                                                        Employee Benefits Security
                                           provisions of Title XI of FIRREA and the                  DEPARTMENT OF LABOR                                   Administration (EBSA) Toll-Free
                                           Agencies’ appraisal regulations for any                                                                         Hotline, at 1–866–444–EBSA (3272) or
                                           real estate-related financial transaction                 Employee Benefits Security                            visit the Department of Labor’s Web site
                                           that requires the services of an appraiser                Administration                                        (http://www.dol.gov/ebsa). In addition,
                                           under those provisions, provided that                                                                           information from the Department of
                                           the institution determines, and                           29 CFR Part 2590                                      Health and Human Services (HHS) on
                                           maintains documentation made                                                                                    private health insurance for consumers
                                                                                                     RIN 1210–AB75                                         can be found on the Centers for
                                           available to the Agencies upon request,
                                           of the following:                                                                                               Medicare & Medicaid Services (CMS)
                                                                                                     DEPARTMENT OF HEALTH AND
                                             (1) The transaction involves real                                                                             Web site (www.cms.gov/cciio) and
                                                                                                     HUMAN SERVICES
                                           property located in one of the 22                                                                               information on health reform can be
                                           parishes declared a major disaster area                                                                         found at www.HealthCare.gov.
                                                                                                     45 CFR Parts 144, 146, 147, and 148
                                           as a result of severe storms and flooding                                                                       SUPPLEMENTARY INFORMATION:
                                           in Louisiana by the President on August                   [CMS–9932–F]
                                                                                                                                                           I. Background
                                           14, 2016 (identified in the Appendix);                    RIN 0938–AS93
                                             (2) There is a binding commitment to                                                                             The Health Insurance Portability and
                                           fund a transaction that was entered into                  Excepted Benefits; Lifetime and                       Accountability Act of 1996 (HIPAA),
                                           on or after August 14, 2016, but no later                 Annual Limits; and Short-Term,                        Public Law 104–191 (110 Stat. 1936),
                                           than December 31, 2017; and                               Limited-Duration Insurance                            added title XXVII of the Public Health
                                             (3) The value of the real property                                                                            Service Act (PHS Act), part 7 of the
                                           supports the institution’s decision to                    AGENCY:  Internal Revenue Service,                    Employee Retirement Income Security
                                           enter into the transaction.                               Department of the Treasury; Employee                  Act of 1974 (ERISA), and Chapter 100 of
                                                                                                     Benefits Security Administration,                     the Internal Revenue Code (the Code),
                                           Appendix (Major Disaster Area)                            Department of Labor; Centers for                      providing portability and
                                             Designated Parishes: Acadia,                            Medicare & Medicaid Services,                         nondiscrimination rules with respect to
                                           Ascension, Avoyelles, East Baton Rouge,                   Department of Health and Human                        health coverage. These provisions of the
                                           East Feliciana, Evangeline, Iberia,                       Services.                                             PHS Act, ERISA, and the Code were
                                           Iberville, Jefferson Davis, Lafayette,                    ACTION: Final rules.                                  later augmented by other consumer
                                           Livingston, Pointe Coupee, St. Helena,                                                                          protection laws, including the Mental
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                                           St. James, St. Landry, St. Martin, St.                    SUMMARY:   This document contains final               Health Parity Act of 1996,1 the Paul
                                           Tammany, Tangipahoa, Vermilion,                           regulations regarding the definition of               Wellstone and Pete Domenici Mental
                                           Washington, West Baton Rouge and                          short-term, limited-duration insurance                Health Parity and Addiction Equity Act
                                           West Feliciana.                                           for purposes of the exclusion from the
                                                                                                     definition of individual health                         1 Public Law 104–204, 110 Stat. 2944 (September
                                             4 12   U.S.C. 3352(b).                                  insurance coverage, and standards for                 26, 1996).



                                      VerDate Sep<11>2014     14:07 Oct 28, 2016   Jkt 241001   PO 00000   Frm 00002   Fmt 4700   Sfmt 4700   E:\FR\FM\31OCR1.SGM   31OCR1


                                                             Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Rules and Regulations                                                 75317

                                           of 2008,2 the Newborns’ and Mothers’                     excepted benefits; the prohibition on                   plan or coverage to another plan or
                                           Health Protection Act,3 the Women’s                      lifetime and annual limits; and short-                  coverage. Although short-term, limited-
                                           Health and Cancer Rights Act,4 the                       term, limited-duration insurance.11                     duration insurance is not an excepted
                                           Genetic Information Nondiscrimination                    After consideration of comments on the                  benefit, it is similarly exempt from PHS
                                           Act of 2008,5 the Children’s Health                      proposed regulations, the Departments                   Act requirements because it is not
                                           Insurance Program Reauthorization Act                    are publishing final regulations                        individual health insurance coverage.
                                           of 2009,6 Michelle’s Law,7 and the                       regarding short-term, limited duration                  Section 2791(b)(5) of the PHS Act
                                           Patient Protection and Affordable Care                   insurance, travel insurance, similar                    provides that the term ‘‘individual
                                           Act, as amended by the Health Care and                   supplemental coverage, and lifetime and                 health insurance coverage’’ means
                                           Education Reconciliation Act of 2010                     annual limits. The Departments intend                   health insurance coverage offered to
                                           (Affordable Care Act).8                                  to address hospital indemnity or other                  individuals in the individual market,
                                              The Affordable Care Act reorganizes,                  fixed indemnity insurance and                           but does not include short-term,
                                           amends, and adds to the provisions of                    expatriate health plans in future                       limited-duration insurance. The PHS
                                           part A of title XXVII of the PHS Act                     rulemaking, taking into account                         Act does not define short-term, limited-
                                           relating to group health plans and                       comments received on these issues.12                    duration insurance. Under current
                                           health insurance issuers in the group                       On July 20, 2015, the Internal                       regulations, short-term, limited-duration
                                           and individual markets. For this                         Revenue Service published Notice                        insurance means ‘‘health insurance
                                           purpose, the term ‘‘group health plan’’                  2015–43, 2015–29 IRB 73, to provide                     coverage provided pursuant to a
                                           includes both insured and self-insured                   interim guidance with respect to the                    contract with an issuer that has an
                                           group health plans.9 The Affordable                      treatment of expatriate health plans,                   expiration date specified in the contract
                                           Care Act added section 715(a)(1) of                      expatriate health plan issuers, and                     (taking into account any extensions that
                                           ERISA and section 9815(a)(1) of the                      employers in their capacity as plan                     may be elected by the policyholder
                                           Code to incorporate the provisions of                    sponsors of expatriate health plans, as                 without the issuer’s consent) that is less
                                           part A of title XXVII of the PHS Act                     defined in the Expatriate Health                        than 12 months after the original
                                           (generally, sections 2701 through 2728                   Coverage Clarification Act of 2014                      effective date of the contract.’’ 15
                                           of the PHS Act) into ERISA and the                       (EHCCA).13 The interim guidance in                         Before enactment of the Affordable
                                           Code to make them applicable to group                    Notice 2015–43 generally allows a                       Care Act, short-term, limited-duration
                                           health plans and health insurance                        taxpayer to apply the requirements of                   insurance was an important means for
                                           issuers providing health insurance                       the EHCCA using a reasonable good                       individuals to obtain health coverage
                                           coverage in connection with group                        faith interpretation of the EHCCA until                 when transitioning from one job to
                                           health plans.                                            further guidance is issued, except as                   another (and from one group health plan
                                                                                                    otherwise specifically provided with                    to another) or when faced with other
                                           II. Overview of the Final Regulations
                                                                                                    respect to the health insurance                         similar situations. However, with
                                              On June 10, 2016, the Departments of                  providers fee under section 9010 of the                 guaranteed availability of coverage and
                                           Labor, Health and Human Services and                     Affordable Care Act. Notice 2015–29                     special enrollment period requirements
                                           the Treasury (the Departments 10) issued                 provided interim guidance pertaining to                 in the individual health insurance
                                           proposed regulations with respect to                     the fee under section 9010 for calendar                 market under the Affordable Care Act,
                                           expatriate health plans, expatriate                      years 2014 and 2015, and Notice 2016–                   individuals can purchase coverage with
                                           health plan issuers, and qualified                       14 provided guidance pertaining to the                  the protections of the Affordable Care
                                           expatriates; requirements for travel                     fee for calendar year 2016. Additionally,               Act to fill in the gaps in coverage.
                                           insurance, similar supplemental                          the preamble to the Departments’                           The Departments have become aware
                                           coverage, and hospital indemnity or                      proposed regulations provides that                      that short-term, limited-duration
                                           other fixed indemnity insurance to be                    issuers, employers, administrators, and                 insurance is being sold in situations
                                                                                                    individuals are permitted to rely on the                other than those that the exception from
                                              2 Public Law 110–343, 122 Stat. 3881 (October 3,
                                                                                                    proposed regulations pending the                        the definition of individual health
                                           2008).                                                                                                           insurance coverage was initially
                                              3 Public Law 104–204, 110 Stat. 2935 (September
                                                                                                    applicability date of final regulations in
                                           26, 1996).                                               the Federal Register.14 Until final                     intended to address.16 In some
                                              4 Public Law 105–277, 112 Stat. 2681–436              regulations are issued and effective, this              instances, individuals are purchasing
                                           (October 21, 1998).                                      reliance rule as well as the interim                    this coverage as their primary form of
                                              5 Public Law 110–233, 122 Stat. 881 (May 21,
                                                                                                    guidance in Notice 2015–43 remain in                    health coverage and, contrary to the
                                           2008).                                                   effect.                                                 intent of the 12-month coverage
                                              6 Public Law 111–3, 123 Stat. 65 (February 4,
                                                                                                                                                            limitation in the current definition of
                                           2009).                                                   A. Short-Term, Limited-Duration                         short-term, limited-duration insurance,
                                              7 Public Law 110–381, 122 Stat. 4081 (October 9,
                                                                                                    Insurance
                                           2008).                                                                                                           some issuers are providing renewals of
                                              8 The Patient Protection and Affordable Care Act,       Short-term, limited-duration                          the coverage that extend the duration
                                           Public Law 111–148, was enacted on March 23,             insurance is a type of health insurance                 beyond 12 months. Because short-term,
                                           2010, and the Health Care and Education                  coverage that is designed to fill
                                           Reconciliation Act of 2010, Public Law 111–152,
                                                                                                                                                            limited-duration insurance is exempt
                                           was enacted on March 30, 2010. (These statutes are
                                                                                                    temporary gaps in coverage when an                      from certain consumer protections, the
                                           collectively known as the ‘‘Affordable Care Act’’.)      individual is transitioning from one                    Departments are concerned that these
                                              9 The term ‘‘group health plan’’ is used in title
                                                                                                                                                            policies may have significant
                                           XXVII of the PHS Act, part 7 of ERISA, and Chapter         11 81 FR 38019 (June 10, 2016).                       limitations, such as lifetime and annual
                                           100 of the Code, and is distinct from the term             12 The preamble to the proposed regulations also
                                           ‘‘health plan,’’ as used in other provisions of title    invited public comment on insurance coverage of
                                                                                                                                                            dollar limits on essential health benefits
                                           I of the Affordable Care Act. The term ‘‘health plan’’   specified diseases or illnesses as excepted benefits.
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                                           as used in other provisions of title I of the            While not addressed in this rulemaking, the               15 26 CFR 54.9801–2, 29 CFR 2590.701–2, 45 CFR

                                           Affordable Care Act does not include self-insured        Departments may address this issue in future            144.103.
                                           group health plans.                                      regulations or guidance.                                  16 See e.g., Mathews, Anna W. ‘‘Sales of Short-
                                              10 Note, however, that in sections under headings       13 Division M of the Consolidated and Further         Term Health Policies Surge,’’ The Wall Street
                                           listing only two of the three Departments, the term      Continuing Appropriations Act, 2015, Public Law         Journal April 10, 2016, available at http://
                                           ‘‘Departments’’ generally refers only to the two         113–235.                                                www.wsj.com/articles/sales-of-short-term-health-
                                           Departments listed in the heading.                         14 81 FR 38019, 38033 (June 10, 2016).                policies-surge-1460328539.



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                                           75318            Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Rules and Regulations

                                           (EHB) and pre-existing condition                        limited-duration insurance as their                    individual transitions between sources
                                           exclusions, and therefore may not                       primary form of coverage and improve                   of primary coverage. As explained
                                           provide meaningful health coverage.                     the Affordable Care Act’s single risk                  above, for longer gaps in coverage,
                                           Further, because these policies can be                  pool.                                                  guaranteed availability of coverage and
                                           medically underwritten based on health                     Some commenters requested that the                  special enrollment period requirements
                                           status, healthier individuals may be                    Departments go further and prohibit                    in the individual health insurance
                                           targeted for this type of coverage, thus                issuers from offering short-term,                      market under the Affordable Care Act
                                           adversely impacting the risk pool for                   limited-duration insurance to                          ensure that individuals can purchase
                                           Affordable Care Act-compliant coverage.                 consumers who have previously                          individual market coverage through or
                                              To address the issue of short-term,                  purchased this type of coverage to                     outside of the Exchange that is
                                           limited-duration insurance being sold as                prevent consumers from stringing                       minimum essential coverage and
                                           a type of primary coverage, the                         together coverage under policies offered               includes the consumer protections of
                                           Departments proposed regulations to                     by the same or different issuers.                      the Affordable Care Act. Further,
                                           revise the definition of short-term,                    However, in the Departments’ view,                     limiting the coverage of short-term,
                                           limited-duration insurance so that the                  such a restriction is not warranted. The               limited-duration insurance to less than
                                           coverage must be less than three months                 individual shared responsibility                       three months is consistent with the
                                           in duration, including any period for                   provision of the Code,17 which                         exemption from the individual shared
                                           which the policy may be renewed. The                    generally requires individuals to obtain               responsibility provision for gaps in
                                           proposed regulations also included a                    minimum essential coverage in order to                 coverage of less than three months (the
                                           requirement that a notice must be                       avoid an additional payment with their                 short coverage gap exemption).21 Under
                                           prominently displayed in the contract                   taxes, provides sufficient incentive to                current law, an individual who is not
                                           and in any application materials                        discourage consumers from purchasing                   enrolled in minimum essential coverage
                                           provided in connection with enrollment                  multiple successive short-term, limited-               (whether enrolled in short-term,
                                           in such coverage with the following                     duration insurance policies. The added                 limited-duration coverage or otherwise)
                                           language: THIS IS NOT QUALIFYING                        notice requirement ensures that                        for a period of three months or more
                                           HEALTH COVERAGE (‘‘MINIMUM                              individuals purchasing such policies are               generally cannot claim the short
                                           ESSENTIAL COVERAGE’’) THAT                              aware of the individual shared                         coverage gap exemption for any of those
                                           SATISFIES THE HEALTH COVERAGE                           responsibility requirement and its                     months. The final regulations help
                                           REQUIREMENT OF THE AFFORDABLE                           potential implications. Furthermore,                   ensure that individuals who purchase a
                                           CARE ACT. IF YOU DON’T HAVE                             such a prohibition would be difficult for              short-term, limited-duration insurance
                                           MINIMUM ESSENTIAL COVERAGE,                             State regulators to enforce, since prior               policy will be eligible for the short
                                           YOU MAY OWE AN ADDITIONAL                               coverage of a consumer would have to                   coverage gap exemption (assuming other
                                           PAYMENT WITH YOUR TAXES.                                be tracked.                                            requirements are met) during the
                                              In addition to proposing to reduce the                  Other commenters expressed general                  temporary coverage period.
                                           length of short-term, limited-duration                  opposition to the proposed rules or                       After consideration of the comments
                                           insurance to less than three months, the                requested that short-term, limited-                    and feedback received from
                                           proposed regulations modified the                       duration insurance be allowed to                       stakeholders, the Departments are
                                           permitted coverage period to take into                  provide coverage for a longer period.                  finalizing the proposed regulations
                                           account extensions made by the                          Several commenters stated that some                    without change.
                                           policyholder ‘‘with or without the                      individuals who lose their employer-                      The revised definition of short-term,
                                           issuer’s consent.’’ This modification was               sponsored coverage may not be able to                  limited-duration insurance applies for
                                           intended to address the Departments’                    obtain COBRA continuation coverage 18                  policy years beginning on or after
                                           concern that some issuers are taking                    and that a job search can often take                   January 1, 2017. The Departments
                                           liberty with the current definition of                  longer than three months. One                          recognize, however, that State regulators
                                           short-term, limited-duration                            commenter suggested alignment of                       may have approved short-term, limited-
                                           insurance—either by automatically                       short-term, limited-duration insurance                 duration insurance products for sale in
                                           renewing such policies or having a                      with the employer waiting period rules                 2017 that met the definition in effect
                                           simplified reapplication process with                   by permitting a coverage period of up to               prior to January 1, 2017. Accordingly,
                                           the result being that such coverage,                    four months.19 Another commenter                       the Department of Health and Human
                                           which does not contain the important                    asked that issuers be allowed to renew                 Services (HHS) will not take
                                           protections of the Affordable Care Act,                 coverage beyond the three-month period                 enforcement action against an issuer
                                           lasts longer than 12 months and serves                  in certain situations, such as when an                 with respect to the issuer’s sale of a
                                           as an individual’s primary health                       individual experiences a triggering                    short-term, limited-duration insurance
                                           coverage.                                               event for a special enrollment period.20               product before April 1, 2017 on the
                                              The Departments received a number                    The Departments decline to adopt these                 ground that the coverage period is three
                                           of comments relating to the treatment of                suggestions. Short-term, limited-                      months or more, provided that the
                                           short-term, limited-duration insurance.                 duration insurance allows for coverage                 coverage ends on or before December
                                           Several commenters supported the                        to fill temporary coverage gaps when an                31, 2017 and otherwise complies with
                                           proposed rules and the reasoning                                                                               the definition of short-term, limited-
                                           behind them, noting that short-term,                      17 See  Code section 5000A.                          duration insurance in effect under the
                                           limited-duration insurance is not                         18 COBRA     continuation coverage means coverage
                                                                                                                                                          regulations.22 States may also elect not
                                           subject to the same consumer                            that satisfies an applicable COBRA continuation
                                                                                                   provision. These provisions are sections 601–608 of
                                           protections as major medical coverage                   ERISA, section 4980B of the Code (other than             21 26 CFR 1.5000A–3(j).
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                                           and can discriminate based on health                    paragraph (f)(1) of such section 4980B insofar as it     22 This non-enforcement policy is limited to the
                                           status by recruiting healthier consumers                relates to pediatric vaccines), or Title XXII of the   requirement that short-term, limited-duration
                                                                                                   PHS Act.                                               insurance must be less than three months. It does
                                           to the exclusion of sicker consumers.                     19 See 26 CFR 54.9815–2708; 29 CFR 2590.715–
                                                                                                                                                          not relieve issuers of short-term, limited-duration
                                           These commenters suggested the                          2708; 45 CFR 147.116.                                  insurance of the notice requirement, which applies
                                           proposed rules would limit the number                     20 See 26 CFR 54.9801–6; 29 CFR 2590.701–6; 45       for policy years beginning on or after January 1,
                                           of consumers relying on short-term,                     CFR 146.117 and 147.104.                               2017.



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                                                            Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Rules and Regulations                                                  75319

                                           to take enforcement actions against                     PHS Act, section 732(c)(2) of ERISA,                    supplemental policy, certificate, or
                                           issuers with respect to such coverage                   and section 9831(c)(2) of the Code only                 contract of insurance is issued by an
                                           sold before April 1, 2017.                              if all of the following conditions are                  entity that does not provide the primary
                                                                                                   met: (1) The benefits are provided under                coverage under the plan; (2) the
                                           B. Excepted Benefits
                                                                                                   a separate policy, certificate, or contract             supplemental policy, certificate, or
                                              Sections 2722 and 2763 of the PHS                    of insurance; (2) there is no                           contract of insurance is specifically
                                           Act, section 732 of ERISA, and section                  coordination between the provision of                   designed to fill gaps in primary
                                           9831 of the Code provide that the                       such benefits and any exclusion of                      coverage, such as coinsurance or
                                           respective requirements of title XXVII of               benefits under any group health plan                    deductibles, but does not become
                                           the PHS Act, part 7 of ERISA, and                       maintained by the same plan sponsor;                    secondary or supplemental only under a
                                           Chapter 100 of the Code generally do                    and (3) the benefits are paid with                      coordination of benefits provision; (3)
                                           not apply to the provision of certain                   respect to any event without regard to                  the cost of the supplemental coverage is
                                           types of benefits, known as ‘‘excepted                  whether benefits are provided under                     15 percent or less of the cost of primary
                                           benefits.’’ Excepted benefits are                       any group health plan maintained by                     coverage (determined in the same
                                           described in section 2791(c) of the PHS                 the same plan sponsor.                                  manner as the applicable premium is
                                           Act, section 733(c) of ERISA, and                          The fourth category, under section                   calculated under a COBRA continuation
                                           section 9832(c) of the Code.                            2791(c)(4) of the PHS Act, section                      provision); and (4) the supplemental
                                              The parallel statutory provisions                    733(c)(4) of ERISA, and section                         coverage sold in the group health
                                           establish four categories of excepted                   9832(c)(4) of the Code, is supplemental                 insurance market does not differentiate
                                           benefits. The first category, under                     excepted benefits. These benefits are                   among individuals in eligibility,
                                           section 2791(c)(1) of the PHS Act,                      excepted only if they are provided                      benefits, or premiums based upon any
                                           section 733(c)(1) of ERISA and section                  under a separate policy, certificate, or                health factor of the individual (or any
                                           9832(c)(1) of the Code, includes benefits               contract of insurance and are Medicare                  dependents of the individual).
                                           that are generally not health coverage                  supplemental health insurance (also                        On February 13, 2015, the
                                           (such as automobile insurance, liability                known as Medigap), TRICARE                              Departments issued Affordable Care Act
                                           insurance, workers compensation, and                    supplemental programs, or ‘‘similar                     Implementation FAQs Part XXIII,
                                           accidental death and dismemberment                      supplemental coverage provided to                       providing additional guidance on the
                                           coverage). The benefits in this category                coverage under a group health plan.’’                   circumstances under which health
                                           are excepted in all circumstances. In                   The phrase ‘‘similar supplemental                       insurance coverage that supplements
                                           contrast, the benefits in the second,                   coverage provided to coverage under a                   group health plan coverage may be
                                           third, and fourth categories are types of               group health plan’’ is not defined in the               considered supplemental excepted
                                           health coverage that are excepted only                  statute or regulations. However, the                    benefits.27 The FAQ states that the
                                           if certain conditions are met.                          Departments issued regulations                          Departments intend to propose
                                              The second category of excepted                      clarifying that one requirement to be                   regulations clarifying the circumstances
                                           benefits is limited excepted benefits,                  similar supplemental coverage is that                   under which supplemental insurance
                                           which may include limited scope vision                  the coverage ‘‘must be specifically                     products that do not fill in cost-sharing
                                           or dental benefits, and benefits for long-              designed to fill gaps in primary                        gaps under the primary plan are
                                           term care, nursing home care, home                      coverage, such as coinsurance or                        considered to be specifically designed to
                                           health care, or community-based care.                   deductibles.’’ 25                                       fill gaps in primary coverage.
                                           Section 2791(c)(2)(C) of the PHS Act,                      In 2007 and 2008, the Departments                    Specifically, the FAQ provides that
                                           section 733(c)(2)(C) of ERISA, and                      issued guidance on the circumstances                    health insurance coverage that
                                           section 9832(c)(2)(C) of the Code                       under which supplemental health                         supplements group health coverage by
                                           authorize the Secretaries of HHS, Labor,                insurance would be considered                           providing coverage of additional
                                           and the Treasury (collectively, the                     excepted benefits under section                         categories of benefits (as opposed to
                                           Secretaries) to issue regulations                       2791(c)(4) of the PHS Act (and the                      filling in cost-sharing gaps under the
                                           establishing other, similar limited                     parallel provisions of ERISA and the                    primary plan) would be considered to
                                           benefits as excepted benefits. The                      Code).26 The guidance identifies several                be designed to ‘‘fill in the gaps’’ of the
                                           Secretaries exercised this authority                    factors the Departments will apply                      primary coverage only if the benefits
                                           previously with respect to certain health               when evaluating whether supplemental                    covered by the supplemental insurance
                                           flexible spending arrangements.23 To be                 health insurance will be considered to                  product are not EHB, as defined under
                                           excepted under this second category,                    be ‘‘similar supplemental coverage                      section 1302(b) of the Affordable Care
                                           the benefits must either: (1) Be provided               provided to coverage under a group                      Act, in the State in which the product
                                           under a separate policy, certificate, or                health plan.’’ The guidance provides a                  is being marketed. The FAQ further
                                           contract of insurance; or (2) otherwise                 safe harbor that supplemental health                    states that, until regulations are issued
                                           not be an integral part of a group health               insurance will be considered an                         and effective, the Departments will not
                                           plan, whether insured or self-insured.24                excepted benefit if it is provided                      take enforcement action against an
                                              The third category of excepted                       through a policy, certificate, or contract              issuer of group or individual market
                                           benefits, referred to as ‘‘noncoordinated               of insurance separate from the primary                  coverage that otherwise meets the
                                           excepted benefits,’’ includes both                      coverage under the plan and meets all                   conditions to be supplemental excepted
                                           coverage for only a specified disease or                of the following requirements: (1) The                  benefits that does not fill cost-sharing
                                           illness (such as cancer-only policies),                                                                         gaps in the group health plan and only
                                           and hospital indemnity or other fixed                     25 26 CFR 54.9831–1(c)(5)(i)(C), 29 CFR               provides coverage of additional
                                                                                                   2590.732(c)(5)(i)(C), and 45 CFR 146.145(b)(5)(i)(C).   categories of benefits that are not
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                                           indemnity insurance. These benefits are
                                                                                                     26 See EBSA Field Assistance Bulletin No. 2007–
                                           excepted under section 2722(c)(2) of the                04 (available at http://www.dol.gov/ebsa/regs/            27 Frequently Asked Questions about Affordable

                                                                                                   fab2007-4.html); CMS Insurance Standards Bulletin       Care Act Implementation (Part XXIII), available at
                                             23 26 CFR 54.9831–1(c)(3)(v), 29 CFR
                                                                                                   08–01 (available at http://www.cms.gov/CCIIO/           http://www.dol.gov/ebsa/pdf/faq-
                                           2590.732(c)(3)(v), 45 CFR 146.145(b)(3)(v).             Resources/Files/Downloads/hipaa_08_01_508.pdf);         AffordableCareAct23.pdf and https://www.cms.gov/
                                             24 PHS Act section 2722(c)(1), ERISA section          and IRS Notice 2008–23 (available at http://            CCIIO/Resources/Fact-Sheets-and-FAQs/
                                           732(c)(1), Code section 9831(c)(1).                     www.irs.gov/irb/2008-07_IRB/ar09.html).                 Downloads/Supplmental-FAQ_2-13-15-final.pdf.



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                                           75320            Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Rules and Regulations

                                           covered by the group health plan and                    covering the benefit in a location or                  cancellation of a trip or event, loss of
                                           are not EHB in the applicable State.                    setting where it would not be covered as               baggage or personal effects, damages to
                                           States were encouraged to exercise                      an EHB.                                                accommodations or rental vehicles, and
                                           similar enforcement discretion.                           After consideration of the comments,                 sickness, accident, disability, or death
                                                                                                   the Departments are finalizing the                     occurring during travel, provided that
                                           1. Similar Supplemental Coverage                        proposed regulations on similar                        the health benefits are not offered on a
                                              The proposed regulations                             supplemental coverage without                          stand-alone basis and are incidental to
                                           incorporated guidance from the                          substantive change. For purposes of                    other coverage. For this purpose, travel
                                           Affordable Care Act Implementation                      consistency and clarity, HHS is also                   insurance does not include major
                                           FAQs Part XXIII addressing                              including a cross reference in the                     medical plans that provide
                                           supplemental health insurance products                  individual market excepted benefits                    comprehensive medical protection for
                                           that provide categories of benefits in                  regulations at 45 CFR 148.220 to reflect               travelers with trips lasting six months or
                                           addition to those in the primary                        the standard for similar supplemental                  longer, including, for example, those
                                           coverage. Under the proposed                            coverage under the group market                        working overseas as an expatriate or
                                           regulations, if group or individual                     regulations at 45 CFR                                  military personnel being deployed.
                                           supplemental health insurance covers                    146.145(b)(5)(i)(C). The Departments                      The Departments received a number
                                           items and services not included in the                  may provide additional guidance on                     of comments in favor of the treatment of
                                           primary coverage (referred to as                        similar supplemental coverage that                     travel insurance as an excepted benefit,
                                           providing ‘‘additional categories of                    meets the criteria to be excepted                      as well as the proposed definition of
                                           benefits’’), the coverage will be                       benefits in the future.                                travel insurance. Several comments
                                           considered to be designed ‘‘to fill gaps                                                                       expressed support for the proposed
                                           in primary coverage,’’ for purposes of                  2. Travel Insurance
                                                                                                                                                          definition’s consistency with
                                           being supplemental excepted benefits if                    The Departments are aware that                      regulations governing the health
                                           none of the benefits provided by the                    certain travel insurance products may                  insurance providers fee. One commenter
                                           supplemental policy are an EHB, as                      include limited health benefits.                       requested clarification that the
                                           defined under section 1302(b) of the                    However, these products typically are                  requirement that health benefits are
                                           Affordable Care Act, in the State in                    not designed as major medical coverage.                incidental to other coverage be
                                           which the coverage is issued.28 Thus, if                Instead, the risks being insured relate                determined based solely on coverage
                                           any benefit provided by the                             primarily to: (1) The interruption or                  under the travel insurance policy,
                                           supplemental policy is either included                  cancellation of a trip; (2) the loss of                without regard to other coverage
                                           in the primary coverage or is an EHB in                 baggage or personal effects; (3) damages               provided by an employer or plan
                                           the State where the coverage is issued,                 to accommodations or rental vehicles; or               sponsor; the Departments agree that this
                                           the insurance coverage would not be                     (4) sickness, accident, disability, or                 is correct. The Departments are
                                           supplemental excepted benefits under                    death occurring during travel, with any                finalizing without change the proposed
                                           the proposed regulations. Furthermore,                  health benefits usually incidental to                  regulations defining travel insurance
                                           supplemental health insurance products                  other coverage.                                        and treating such coverage as an
                                           that both fill in cost sharing in the                      Section 2791(c)(1)(H) of the PHS Act,               excepted benefit.
                                           primary coverage, such as coinsurance                   section 733(c)(1)(H) of ERISA, and
                                           or deductibles, and cover additional                    section 9832(c)(1)(H) of the Code                      C. Definition of EHB for Purposes of the
                                           categories of benefits that are not EHB,                provide that the Departments may, in                   Prohibition on Lifetime and Annual
                                           would be considered supplemental                        regulations, designate as excepted                     Limits
                                           excepted benefits under the proposed                    benefits ‘‘benefits for medical care [that]               Section 2711 of the PHS Act, as added
                                           regulations provided all other criteria                 are secondary or incidental to other                   by the Affordable Care Act, generally
                                           are met.                                                insurance benefits.’’ Pursuant to this                 prohibits group health plans and health
                                              The Departments received several                     authority, and to clarify which types of               insurance issuers offering group or
                                           comments in support of the proposed                     travel-related insurance products are                  individual health insurance coverage
                                           regulations. One commenter expressed                    excepted benefits under the PHS Act,                   from imposing lifetime and annual
                                           support but requested that the                          ERISA, and the Code, the Departments’                  dollar limits on EHB, as defined under
                                           Departments provide additional                          proposed regulations identified travel                 section 1302(b) of the Affordable Care
                                           examples in the regulations. Another                    insurance as an excepted benefit under                 Act. These prohibitions apply to both
                                           commenter requested clarification                       the first category of excepted benefits                grandfathered and non-grandfathered
                                           regarding the application of the                        and proposed a definition of travel                    health plans, except the annual limits
                                           standards for similar supplemental                      insurance consistent with the definition               prohibition does not apply to
                                           coverage that provides benefits outside                 of travel insurance under final                        grandfathered individual health
                                           of the United States, noting that no                    regulations issued by the Treasury                     insurance coverage.
                                           State’s EHB rules require coverage for                  Department and the IRS for the health                     Under the Affordable Care Act, self-
                                           services outside of the United States. If               insurance providers fee imposed by                     insured group health plans, large group
                                           any benefit provided by the                             section 9010 of the Affordable Care                    market health plans, and grandfathered
                                           supplemental policy is a type of service                Act,29 which uses a modified version of                health plans are not required to offer
                                           that is an EHB in the State where the                   the National Association of Insurance                  EHB, but they generally cannot place
                                           coverage is issued, the coverage would                  Commissioners definition of travel                     lifetime or annual dollar limits on
                                           not be supplemental excepted benefits                   insurance.                                             services they cover that are considered
                                           under the final regulations, even if the                   The proposed regulations defined the                EHB. On November 18, 2015, the
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                                           supplemental coverage was limited to                    term ‘‘travel insurance’’ as insurance                 Departments issued final regulations
                                                                                                   coverage for personal risks incident to                implementing section 2711 of the PHS
                                             28 For this purpose, a supplemental plan would
                                                                                                   planned travel, which may include, but                 Act.30 The final regulations provide
                                           determine what benefits are EHB based on the EHB-
                                           benchmark plan applicable in the State, along with
                                                                                                   are not limited to, interruption or                    that, for plan years (in the individual
                                           any additional benefits that are considered EHB
                                           consistent with 45 CFR 155.170(a)(2).                     29 26   CFR 57.2(h)(4).                                30 80   FR 72192.



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                                                            Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Rules and Regulations                                          75321

                                           market, policy years) beginning on or                     Some commenters requested                           Departments are finalizing the proposed
                                           after January 1, 2017, a plan or issuer                 clarification that self-insured group                 clarification to the lifetime and annual
                                           that is not required to provide EHB must                health plans, large group market health               limit regulations without change.
                                           define EHB, for purposes of the                         plans and grandfathered plans are not
                                                                                                                                                         D. Applicability Date
                                           prohibition on lifetime and annual                      required to include as covered benefits
                                           dollar limits, in a manner consistent                   any specific items and services covered                  These final regulations are applicable
                                           with any of the 51 EHB base-benchmark                   by the State-EHB benchmark plan,                      for plan years (or, in the individual
                                           plans applicable in a State or the                      including any additional State-required               market, policy years) beginning on or
                                           District of Columbia, or one of the three               benefits considered EHB under 45 CFR                  after January 1, 2017. The HHS final
                                           Federal Employees Health Benefits                       155.170(a)(2). The requirement in                     regulations specify the applicability
                                           Program (FEHBP) EHB base-benchmark                      section 2707(a) of the PHS Act to                     dates in the group market regulations at
                                           plans, as specified under 45 CFR                        provide the EHB package required                      45 CFR 146.125 and in the individual
                                           156.100.31                                              under section 1302(a) of the Affordable               market regulations at 45 CFR 148.102.
                                              The final regulations under section                  Care Act applies only to non-
                                                                                                                                                         III. Economic Impact and Paperwork
                                           2711 of the PHS Act include a reference                 grandfathered health insurance coverage
                                                                                                                                                         Burden
                                           to selecting a ‘‘base-benchmark’’ plan, as              in the individual and small group
                                           specified under 45 CFR 156.100, for                     markets. Self-insured group health                    A. Summary—Department of Labor and
                                           purposes of determining which benefits                  plans, large group market health plans                Department of Health and Human
                                           cannot be subject to lifetime or annual                 and grandfathered health plans are not                Services
                                           dollar limits. The base-benchmark plan                  required to include coverage of EHB, but                 These final regulations specify the
                                           selected by a State or applied by default               cannot place lifetime or annual dollar
                                                                                                                                                         conditions for similar supplemental
                                           under 45 CFR 156.100, however, may                      limits on any EHB covered by these
                                                                                                                                                         coverage products that are designed to
                                           not reflect the complete definition of                  plans.33 These plans are permitted to
                                                                                                                                                         fill gaps in primary coverage by
                                           EHB in the applicable State. For that                   impose limits other than dollar limits on
                                                                                                                                                         providing coverage of additional
                                           reason, the Departments are amending                    EHB, as long as they comply with other
                                                                                                                                                         categories of benefits (as opposed to
                                           the regulations at 26 CFR 54.9815–                      applicable statutory provisions. In
                                                                                                                                                         filling in gaps in cost sharing) to
                                           2711(c), 29 CFR 2590.715–2711(c), and                   addition, these plans can continue to
                                                                                                                                                         constitute supplemental excepted
                                           45 CFR 147.126(c) to refer to the                       impose annual and lifetime dollar limits
                                                                                                                                                         benefits, and clarify that certain travel-
                                           provisions that capture the complete                    on benefits that do not fall within the
                                                                                                                                                         related insurance products that provide
                                           definition of EHB in a State.                           definition of EHB.
                                                                                                     One commenter urged the                             only incidental health benefits
                                              Specifically, in these final regulations,
                                                                                                   Departments to eliminate the option for               constitute excepted benefits.
                                           the Departments replace the phrase ‘‘in                                                                          These final regulations also revise the
                                           a manner consistent with one of the                     large group market health plans to
                                                                                                   define EHB based on one of the three                  definition of short-term, limited-
                                           three Federal Employees Health Benefit                                                                        duration insurance so that the coverage
                                           Program (FEHBP) options as defined by                   largest nationally available FEHBP
                                                                                                   benchmark plan options to ensure                      (including renewals) has to be less than
                                           45 CFR 156.100(a)(3) or one of the base-                                                                      three months in total duration (as
                                           benchmark plans selected by a State or                  consistency with the definition of EHB
                                                                                                   in the individual and small group                     opposed to the current definition of less
                                           applied by default pursuant to 45 CFR                                                                         than 12 months in duration), and
                                           156.100’’ in each of the regulations with               markets. However, these FEHBP plan
                                                                                                   options 34 are unique among benchmark                 provide that a notice must be
                                           the following: ‘‘in a manner that is                                                                          prominently displayed in the contract
                                           consistent with (1) one of the EHB-                     plans in that they are available
                                                                                                   nationally, and thus can more                         and in any application materials
                                           benchmark plans applicable in a State                                                                         provided in connection with enrollment
                                           under 45 CFR 156.110, and includes                      appropriately be utilized to determine
                                                                                                   what benefits would be categorized as                 in the coverage indicating that such
                                           coverage of any additional required                                                                           coverage is not minimum essential
                                           benefits that are considered EHB                        EHB for those employers that provide
                                                                                                   health coverage to employees                          coverage.
                                           consistent with 45 CFR 155.170(a)(2); or                                                                         Finally, the regulations amend the
                                           (2) one of the three Federal Employees                  throughout the United States and are
                                                                                                   not situated only in a single State. The              definition of ‘‘essential health benefits’’
                                           Health Benefit Program (FEHBP) plan                                                                           for purposes of the prohibition on
                                           options as defined by 45 CFR                                                                                  lifetime and annual dollar limits with
                                           156.100(a)(3), supplemented, as                         (80 FR 10750), HHS instructed States to select a
                                                                                                   new base-benchmark plan to take effect beginning      respect to group health plans and health
                                           necessary, to meet the standards in 45                  with plan or policy years beginning in 2017. The      insurance issuers that are not required
                                           CFR 156.110.’’ This change reflects the                 new final EHB base-benchmark plans selected as a      to provide essential health benefits,
                                           possibility that base-benchmark plans,                  result of this process are publicly available at
                                                                                                                                                         including self-insured group health
                                           including the FEHBP plan options,                       downloads.cms.gov/cciio/
                                                                                                   Final%20List%20of%20BMPs_15_10_21.pdf.                plans, large group market health plans,
                                           could require supplementation under 45                  Additional information about the new base-            and grandfathered health plans.
                                           CFR 156.110, and ensures the inclusion                  benchmark plans, including plan documents and            The Departments are publishing these
                                           of State-required benefit mandates                      summaries of benefits, is available at www.cms.gov/
                                                                                                                                                         final regulations to implement the
                                           enacted on or before December 31, 2011                  CCIIO/Resources/Data-Resources/ehb.html. The
                                                                                                   definition of EHB in each of the 50 states and the    protections intended by the Congress in
                                           in accordance with 45 CFR 155.170,                      District of Columbia is based on the base-            the most economically efficient manner
                                           which when coupled with a State’s                       benchmark plan, and takes into account any            possible. The Departments have
                                           EHB-benchmark plan, establish the                       additions to the base-benchmark plan, such as
                                                                                                                                                         examined the effects of this rule as
                                           definition of EHB in that State under                   supplementation under 45 CFR 156.110, and State-
                                                                                                   required benefit mandates in accordance with 45       required by Executive Order 13563 (76
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                                           regulations implementing section                        CFR 155.170.                                          FR 3821, January 21, 2011), Executive
                                           1302(b) of the Affordable Care Act.32                     33 The annual limits prohibition does not apply
                                                                                                                                                         Order 12866 (58 FR 51735, September
                                                                                                   to grandfathered individual market coverage.          1993, Regulatory Planning and Review),
                                             31 26 CFR 54.9815–2711(c), 29 CFR 2590.715–             34 The three largest nationally available FEHBP
                                           2711(c), 45 CFR 147.126(c).                             plan options are available at https://www.cms.gov/
                                                                                                                                                         the Regulatory Flexibility Act
                                             32 In the HHS Notice of Benefit and Payment           CCIIO/Resources/Regulations-and-Guidance/             (September 19, 1980, Pub. L. 96–354),
                                           Parameters for 2016 published February 27, 2015         Downloads/Top3ListFinal-5-19-2015.pdf.                the Unfunded Mandates Reform Act of


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                                           75322            Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Rules and Regulations

                                           1995 (Pub. L. 104–4), Executive Order                   recognized as excepted benefits. These                particularly for individuals seeking to
                                           13132 on Federalism, and the                            clarifications are necessary to provide               cover periods of unemployment or gaps
                                           Congressional Review Act (5 U.S.C.                      health insurance issuers offering                     between employer-sponsored coverage,
                                           804(2)).                                                supplemental coverage and travel                      and typically provide coverage for less
                                                                                                   insurance products with a clearer                     than three months. Therefore, the
                                           B. Executive Orders 12866 and 13563—
                                                                                                   understanding of the Federal standards                Departments believe that the final
                                           Department of Labor and Department of
                                                                                                   that apply to these types of coverage.                regulations will have no effect on the
                                           Health and Human Services
                                                                                                   These final regulations also amend the                majority of consumers who purchase
                                              Executive Order 12866 (58 FR 51735)                  definition of short-term, limited-                    such coverage and issuers of those
                                           directs agencies to assess all costs and                duration insurance for purposes of the                policies. The small fraction of
                                           benefits of available regulatory                        exclusion from the definition of                      consumers who purchase such policies
                                           alternatives and, if regulation is                      individual health insurance coverage                  for longer periods and who may have to
                                           necessary, to select regulatory                         and impose a new notice requirement in                transition to individual market coverage
                                           approaches that maximize net benefits                   response to reports that short-term,                  will benefit from the protections
                                           (including potential economic,                          limited-duration insurance coverage is                afforded by the Affordable Care Act,
                                           environmental, public health and safety                 being sold to individuals as primary                  such as no preexisting condition
                                           effects; distributive impacts; and                      coverage.                                             exclusions, essential health benefits
                                           equity). Executive Order 13563 (76 FR                                                                         without annual or lifetime dollar limits,
                                           3821, January 21, 2011) is supplemental                 2. Summary of Impacts                                 and guaranteed renewability. While
                                           to and reaffirms the principles,                           The final regulations outline the                  some of these consumers may
                                           structures, and definitions governing                   conditions for travel insurance and                   experience an increase in costs due to
                                           regulatory review as established in                     similar supplemental health insurance                 higher premiums compared with short-
                                           Executive Order 12866.                                  coverage to be considered excepted                    term, limited-duration coverage, they
                                              Section 3(f) of Executive Order 12866                benefits, and revise the definition of                will also avoid potential tax liability by
                                           defines a ‘‘significant regulatory action’’             short-term, limited-duration insurance.               having minimum essential coverage.
                                           as an action that is likely to result in a                 The Departments received comments                  Some consumers may also be eligible for
                                           final rule—(1) having an annual effect                  suggesting that the majority of travel                premium tax credits and cost-sharing
                                           on the economy of $100 million or more                  insurance policies are issued for trips of            reductions for coverage offered through
                                           in any one year, or adversely and                       short duration, with the average policy               the Exchanges. Finally, inclusion of
                                           materially affecting a sector of the                    length being approximately three                      these individuals, often relatively
                                           economy, productivity, competition,                     months, and these policies generally                  healthier individuals, in the individual
                                           jobs, the environment, public health or                 provide limited medical coverage and                  market will help strengthen the
                                           safety, or state, local or tribal                       property and casualty coverage to                     individual market’s single risk pool. The
                                           governments or communities (also                        protect against risks related to travel.              notice requirement will help ensure that
                                           referred to as ‘‘economically                           The Departments believe that the                      consumers do not inadvertently
                                           significant’’); (2) creating a serious                  designation of certain travel insurance               purchase these products expecting them
                                           inconsistency or otherwise interfering                  products (as defined by the regulations)              to be minimum essential coverage.
                                           with an action taken or planned by                      as excepted benefits is consistent with               Further, the Departments believe that
                                           another agency; (3) materially altering                 prevailing industry practices, and                    any costs incurred by issuers of short-
                                           the budgetary impacts of entitlement                    therefore, will not result in significant             term, limited-duration insurance to
                                           grants, user fees, or loan programs or the              cost to issuers of these products or                  include the required notice in
                                           rights and obligations of recipients                    consumers who purchase them.                          application or enrollment materials will
                                           thereof; or (4) raising novel legal or                     Short-term, limited-duration policies              be negligible since the Departments
                                           policy issues arising out of legal                      represent a very small fraction of the                have provided the exact text for the
                                           mandates, the President’s priorities, or                health insurance market, though their                 notice.
                                           the principles set forth in the Executive               use is increasing. In 2015, total                        As a result, the Departments have
                                           Order.                                                  premiums earned for short-term,                       concluded that the impacts of these
                                              A regulatory impact analysis must be                 limited-duration insurance was                        final regulations are not economically
                                           prepared for rules with economically                    approximately $160 million for                        significant.
                                           significant effects (for example, $100                  approximately 1,517,000 member                        C. Paperwork Reduction Act—
                                           million or more in any 1 year), and a                   months and with approximately 148,000                 Department of Health and Human
                                           ‘‘significant’’ regulatory action is subject            covered lives at the end of the year,35               Services
                                           to review by the Office of Management                   while in 2013, total premiums were
                                           and Budget. The Departments have                        approximately $98 million for 1,031,000                 The final regulations provide that to
                                           determined that this regulatory action is               member months with approximately                      be considered short-term, limited-
                                           not likely to have economic impacts of                  80,400 covered lives at the end of the                duration insurance for policy years
                                           $100 million or more in any one year,                   year.36                                               beginning on or after January 1, 2017, a
                                           and is not significant within the                          The Departments received comments                  notice must be prominently displayed
                                           meaning of Executive Order 12866.                       indicating that a large majority of the               in the contract and in any application
                                           However, the Departments are                            short-term, limited-duration insurance                materials, stating that the coverage is
                                           nonetheless providing a discussion of                   plans are sold as transitional coverage,              not minimum essential coverage and
                                           the benefits and costs that might stem                                                                        that failure to have minimum essential
                                           from these final regulations in the                       35 National Association of Insurance                coverage may result in an additional tax
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                                           Summary of Impacts section below.                       Commissioners, 2015 Accident and Health Policy        payment. The Departments have
                                                                                                   Experience Report, 2016, available at http://         provided the exact text for these notice
                                           1. Need for Regulatory Action                           naic.org/prod_serv/AHP-LR-16.pdf.                     requirements and the language will not
                                                                                                     36 National Association of Insurance
                                              These final regulations clarify the                  Commissioners, 2013 Accident and Health Policy
                                                                                                                                                         need to be customized. The burden
                                           conditions for similar supplemental                     Experience Report, 2014, available at http://         associated with these notices is not
                                           coverage and travel insurance to be                     naic.org/prod_serv/AHP-LR-14.pdf.                     subject to the Paperwork Reduction Act


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                                                            Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Rules and Regulations                                         75323

                                           of 1995 in accordance with 5 CFR                        E. Special Analysis—Department of the                 implications of these final regulations
                                           1320.3(c)(2) because they do not contain                Treasury                                              are substantially mitigated because,
                                           a ‘‘collection of information’’ as defined                Certain IRS regulations, including this             with respect to health insurance issuers,
                                           in 44 U.S.C. 3502(3).                                   one, are exempt from the requirements                 the Departments expect that the
                                                                                                   of Executive Order 12866, as                          majority of States will enact laws or take
                                           D. Regulatory Flexibility Act                                                                                 other appropriate action resulting in
                                                                                                   supplemented and reaffirmed by
                                              The Regulatory Flexibility Act (5                                                                          their meeting or exceeding the Federal
                                                                                                   Executive Order 13563. Therefore, a
                                           U.S.C. 601 et seq.) (RFA) imposes                                                                             standards.
                                                                                                   regulatory impact assessment is not                      In general, through section 514,
                                           certain requirements with respect to                    required. For applicability of RFA, see
                                           Federal rules that are subject to the                                                                         ERISA supersedes State laws to the
                                                                                                   paragraph D of this section III.                      extent that they relate to any covered
                                           notice and comment requirements of                        Pursuant to section 7805(f) of the
                                           section 553(b) of the Administrative                                                                          employee benefit plan, and preserves
                                                                                                   Code, these regulations have been                     State laws that regulate insurance,
                                           Procedure Act (5 U.S.C. 551 et seq.) and                submitted to the Chief Counsel for
                                           that are likely to have a significant                                                                         banking, or securities. While ERISA
                                                                                                   Advocacy of the Small Business                        prohibits States from regulating an
                                           economic impact on a substantial                        Administration for comment on their
                                           number of small entities. Unless an                                                                           employee benefit plan as an insurance
                                                                                                   impact on small business.                             or investment company or bank, the
                                           agency certifies that a proposed rule is
                                           not likely to have a significant economic               F. Unfunded Mandates Reform Act                       preemption provisions of section 731 of
                                           impact on a substantial number of small                                                                       ERISA and section 2724 of the PHS Act
                                                                                                      For purposes of the Unfunded                       (implemented in 29 CFR 2590.731(a)
                                           entities, section 603 of RFA requires                   Mandates Reform Act of 1995 (2 U.S.C.
                                           that the agency present an initial                                                                            and 45 CFR 146.143(a) and 148.210(b))
                                                                                                   1501 et seq.), as well as Executive Order             apply so that the requirements in title
                                           regulatory flexibility analysis at the time             12875, these final regulations do not
                                           of the publication of the notice of                                                                           XXVII of the PHS Act (including those
                                                                                                   include any Federal mandate that may                  added by the Affordable Care Act) are
                                           proposed rulemaking describing the                      result in expenditures by State, local, or
                                           impact of the rule on small entities and                                                                      not to be construed to supersede any
                                                                                                   tribal governments, or the private sector,            provision of State law which
                                           seeking public comment on such                          which may impose an annual burden of
                                           impact. Small entities include small                                                                          establishes, implements, or continues in
                                                                                                   $146 million adjusted for inflation since             effect any standard or requirement
                                           businesses, organizations and                           1995.
                                           governmental jurisdictions.                                                                                   solely relating to health insurance
                                                                                                   G. Federalism—Department of Labor                     issuers in connection with individual or
                                              The RFA generally defines a ‘‘small
                                                                                                   and Department of Health and Human                    group health insurance coverage except
                                           entity’’ as (1) a proprietary firm meeting
                                                                                                   Services                                              to the extent that such standard or
                                           the size standards of the Small Business
                                                                                                                                                         requirement prevents the application of
                                           Administration (13 CFR 121.201); (2) a                     Executive Order 13132 outlines                     a Federal requirement. The conference
                                           nonprofit organization that is not                      fundamental principles of federalism. It              report accompanying HIPAA indicates
                                           dominant in its field; or (3) a small                   requires adherence to specific criteria by            that this is intended to be the
                                           government jurisdiction with a                          Federal agencies in formulating and                   ‘‘narrowest’’ preemption of State laws
                                           population of less than 50,000. (States                 implementing policies that have                       (See House Conf. Rep. No. 104–736, at
                                           and individuals are not included in the                 ‘‘substantial direct effects’’ on the                 205, reprinted in 1996 U.S. Code Cong.
                                           definition of ‘‘small entity.’’) The                    States, the relationship between the                  & Admin. News 2018).
                                           Departments use as their measure of                     national government and States, or on                    States may continue to apply State
                                           significant economic impact on a                        the distribution of power and                         law requirements except to the extent
                                           substantial number of small entities a                  responsibilities among the various                    that such requirements prevent the
                                           change in revenues of more than 3 to 5                  levels of government. Federal agencies                application of the market reform
                                           percent.                                                promulgating regulations that have                    requirements that are the subject of this
                                              The Departments expect the impact of                 these federalism implications must                    rulemaking. Accordingly, States have
                                           these final regulations to be limited                   consult with State and local officials,               significant latitude to impose
                                           because the provisions are generally                    and describe the extent of their                      requirements on health insurance
                                           consistent with current industry                        consultation and the nature of the                    issuers that are more restrictive than the
                                           practices and impact only a small                       concerns of State and local officials in              Federal law.
                                           fraction of the health insurance market.                the preamble to the final regulation.                    In compliance with the requirement
                                           Therefore, the Departments certify that                    In the Departments’ view, these final              of Executive Order 13132 that agencies
                                           the final regulations will not have a                   regulations have federalism                           examine closely any policies that may
                                           significant impact on a substantial                     implications because they would have                  have federalism implications or limit
                                           number of small entities. In addition,                  direct effects on the States, the                     the policy making discretion of the
                                           section 1102(b) of the Social Security                  relationship between the national                     States, the Departments have engaged in
                                           Act requires agencies to prepare a                      government and the States, or on the                  efforts to consult with and work
                                           regulatory impact analysis if a rule may                distribution of power and                             cooperatively with affected States,
                                           have a significant economic impact on                   responsibilities among various levels of              including consulting with, and
                                           the operations of a substantial number                  government. Under these final                         attending conferences of, the National
                                           of small rural hospitals. This analysis                 regulations, health insurance issuers                 Association of Insurance Commissioners
                                           must conform to the provisions of                       offering short-term, limited-duration                 and consulting with State insurance
                                           section 604 of the RFA. These final                     insurance, travel insurance and similar               officials on an individual basis. It is
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                                           regulations will not affect small rural                 supplemental coverage will be required                expected that the Departments will act
                                           hospitals. Therefore, the Departments                   to follow the minimum Federal                         in a similar fashion in enforcing the
                                           have determined that these final                        standards to not be subject to the market             market reform provisions of the
                                           regulations will not have a significant                 reform provisions under the PHS Act,                  Affordable Care Act.
                                           impact on the operations of a substantial               ERISA and the Code. However, in the                      Throughout the process of developing
                                           number of small rural hospitals.                        Departments’ view, the federalism                     these final regulations, to the extent


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                                           75324            Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Rules and Regulations

                                           feasible within the applicable                          plans, Health care, Health insurance,                    (2) Displays prominently in the
                                           preemption provisions, the Departments                  Medical child support, Reporting and                  contract and in any application
                                           have attempted to balance the States’                   recordkeeping requirements.                           materials provided in connection with
                                           interests in regulating health insurance                                                                      enrollment in such coverage in at least
                                                                                                   45 CFR Parts 144, 146 and 147
                                           issuers, and Congress’ intent to provide                                                                      14 point type the following: ‘‘THIS IS
                                           uniform minimum protections to                            Health care, Health insurance,                      NOT QUALIFYING HEALTH
                                           consumers in every State. By doing so,                  Reporting and recordkeeping                           COVERAGE (‘‘MINIMUM ESSENTIAL
                                           it is the Departments’ view that they                   requirements.                                         COVERAGE’’) THAT SATISFIES THE
                                           have complied with the requirements of                  45 CFR Part 148                                       HEALTH COVERAGE REQUIREMENT
                                           Executive Order 13132.                                                                                        OF THE AFFORDABLE CARE ACT. IF
                                              Pursuant to the requirements set forth                 Administrative practice and                         YOU DON’T HAVE MINIMUM
                                           in section 8(a) of Executive Order                      procedure, Health care, Health                        ESSENTIAL COVERAGE, YOU MAY
                                           13132, and by the signatures affixed to                 insurance, Penalties, Reporting and                   OWE AN ADDITIONAL PAYMENT
                                           this final rule, the Departments certify                recordkeeping requirements.                           WITH YOUR TAXES.’’
                                           that the Employee Benefits Security                     John Dalrymple,                                       *      *    *     *     *
                                           Administration and the Centers for                      Deputy Commissioner for Services and                     Travel insurance means insurance
                                           Medicare & Medicaid Services have                       Enforcement, Internal Revenue Service.                coverage for personal risks incident to
                                           complied with the requirements of                         Approved: October 25, 2016.                         planned travel, which may include, but
                                           Executive Order 13132 for the attached                  Mark J. Mazur,                                        is not limited to, interruption or
                                           final rules in a meaningful and timely                                                                        cancellation of trip or event, loss of
                                                                                                   Assistant Secretary of the Treasury (Tax
                                           manner.                                                 Policy).                                              baggage or personal effects, damages to
                                           H. Congressional Review Act                               Signed this 25th day of October 2016.               accommodations or rental vehicles, and
                                                                                                   Phyllis C. Borzi,                                     sickness, accident, disability, or death
                                              These final regulations are subject to                                                                     occurring during travel, provided that
                                           the Congressional Review Act                            Assistant Secretary, Employee Benefits
                                                                                                   Security Administration, Department of                the health benefits are not offered on a
                                           provisions of the Small Business                                                                              stand-alone basis and are incidental to
                                           Regulatory Enforcement Fairness Act of                  Labor.
                                                                                                     Dated: October 24, 2016.                            other coverage. For this purpose, the
                                           1996 (5 U.S.C. 801 et seq.) and will be                                                                       term travel insurance does not include
                                           transmitted to the Congress and to the                  Andrew M. Slavitt,
                                                                                                                                                         major medical plans that provide
                                           Comptroller General for review in                       Acting Administrator, Centers for Medicare
                                                                                                                                                         comprehensive medical protection for
                                           accordance with such provisions.                        & Medicaid Services.
                                                                                                                                                         travelers with trips lasting 6 months or
                                                                                                     Dated: October 25, 2016.
                                           I. Statement of Availability of IRS                                                                           longer, including, for example, those
                                           Documents                                               Sylvia M. Burwell,                                    working overseas as an expatriate or
                                                                                                   Secretary, Department of Health and Human             military personnel being deployed.
                                              IRS Revenue Procedures, Revenue                      Services.
                                           Rulings notices, and other guidance                                                                           *      *    *     *     *
                                           cited in this document are published in                 DEPARTMENT OF THE TREASURY                            ■ Par. 3. Section 54.9815–2711 is
                                           the Internal Revenue Bulletin (or                       Internal Revenue Service                              amended by revising paragraph (c) to
                                           Cumulative Bulletin) and are available                                                                        read as follows:
                                           from the Superintendent of Documents,                   26 CFR Chapter I
                                                                                                                                                         § 54.9815–2711    No lifetime or annual
                                           U.S. Government Printing Office,                          Accordingly, 26 CFR part 54 is
                                                                                                                                                         limits.
                                           Washington, DC 20402, or by visiting                    amended as follows:
                                           the IRS Web site at http://www.irs.gov.                                                                       *     *     *     *     *
                                                                                                   PART 54—PENSION AND EXCISE                              (c) Definition of essential health
                                           IV. Statutory Authority                                 TAXES                                                 benefits. The term ‘‘essential health
                                             The Department of the Treasury                                                                              benefits’’ means essential health
                                           regulations are adopted pursuant to the                 ■ Par. 1. The authority citation for part             benefits under section 1302(b) of the
                                           authority contained in sections 7805                    54 continues to read in part as follows:              Patient Protection and Affordable Care
                                           and 9833 of the Code.                                       Authority: 26 U.S.C. 7805 * * *                   Act and applicable regulations. For this
                                             The Department of Labor regulations                                                                         purpose, a group health plan or a health
                                                                                                   ■ Par. 2. Section 54.9801–2 is amended
                                           are adopted pursuant to the authority                                                                         insurance issuer that is not required to
                                                                                                   by revising the definition of ‘‘short-term,
                                           contained in 29 U.S.C. 1135 and 1191c;                                                                        provide essential health benefits under
                                                                                                   limited-duration insurance’’, and adding
                                           and Secretary of Labor’s Order 1–2011,                                                                        section 1302(b) must define ‘‘essential
                                                                                                   a definition of ‘‘travel insurance’’ in
                                           77 FR 1088 (Jan. 9, 2012).                                                                                    health benefits’’ in a manner that is
                                                                                                   alphabetical order. The revision and
                                             The Department of Health and Human                                                                          consistent with—
                                                                                                   addition read as follows:                               (1) One of the EHB-benchmark plans
                                           Services regulations are adopted
                                           pursuant to the authority contained in                  § 54.9801–2       Definitions.                        applicable in a State under 45 CFR
                                           sections 2701 through 2763, 2791, and                   *      *    *     *     *                             156.110, and includes coverage of any
                                           2792 of the PHS Act (42 U.S.C. 300gg                       Short-term, limited-duration                       additional required benefits that are
                                           through 300gg–63, 300gg–91, and                         insurance means health insurance                      considered essential health benefits
                                           300gg–92), as amended.                                  coverage provided pursuant to a                       consistent with 45 CFR 155.170(a)(2); or
                                                                                                   contract with an issuer that:                           (2) One of the three Federal
                                           List of Subjects                                                                                              Employees Health Benefits Program
                                                                                                      (1) Has an expiration date specified in
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                                           26 CFR Part 54                                          the contract (taking into account any                 (FEHBP) plan options as defined by 45
                                                                                                   extensions that may be elected by the                 CFR 156.100(a)(3), supplemented, as
                                             Pension and excise taxes.
                                                                                                   policyholder with or without the                      necessary, to meet the standards in 45
                                           29 CFR Part 2590                                        issuer’s consent) that is less than 3                 CFR 156.110.
                                             Continuation coverage, Disclosure,                    months after the original effective date              *     *     *     *     *
                                           Employee benefit plans, Group health                    of the contract; and                                  ■ Par. 4. Section 54.9831–1 is amended:



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                                                             Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Rules and Regulations                                           75325

                                           ■  a. In paragraph (b)(1) by removing the                DEPARTMENT OF LABOR                                   accommodations or rental vehicles, and
                                           reference ‘‘54.9812–1T’’ and adding in                   Employee Benefits Security                            sickness, accident, disability, or death
                                           its place the reference ‘‘54.9812–1,                     Administration                                        occurring during travel, provided that
                                           54.9815–1251 through 54.9815–2719A,’’                                                                          the health benefits are not offered on a
                                           and in paragraph (c)(1) by removing the                  29 CFR Chapter XXV                                    stand-alone basis and are incidental to
                                           reference ‘‘54.9811–1T, 54.9812–1T’’                       For the reasons stated in the                       other coverage. For this purpose, the
                                           and adding in its place the phrase                       preamble, the Department of Labor                     term travel insurance does not include
                                           ‘‘54.9811–1, 54.9812–1, 54.9815–1251                     amends 29 CFR part 2590 as set forth                  major medical plans that provide
                                           through 54.9815–2719A’’;                                 below:                                                comprehensive medical protection for
                                           ■ b. In paragraph (c)(2)(vii) by removing                                                                      travelers with trips lasting 6 months or
                                           ‘‘and’’ at the end;                                      PART 2590—RULES AND                                   longer, including, for example, those
                                           ■ c. In paragraph (c)(2)(viii) by
                                                                                                    REGULATIONS FOR GROUP HEALTH                          working overseas as an expatriate or
                                           removing the period and adding ‘‘; and’’                 PLANS                                                 military personnel being deployed.
                                           at the end;                                                                                                    *     *     *     *     *
                                                                                                    ■  6. The authority citation for part 2590
                                           ■ d. Adding paragraph (c)(2)(ix); and                                                                          ■ 8. Section 2590.715–2711 is amended
                                                                                                    is revised to read as follows:
                                           ■ e. Revising paragraph (c)(5)(i)(C).                                                                          by revising paragraph (c) to read as
                                                                                                      Authority: 29 U.S.C. 1027, 1059, 1135,              follows:
                                              The revisions and additions are as                    1161–1168, 1169, 1181–1183, 1181 note,
                                           follows:                                                 1185, 1185a, 1185b, 1191, 1191a, 1191b, and           § 2590.715–2711   No lifetime or annual
                                                                                                    1191c; sec. 101(g), Pub. L. 104–191, 110 Stat.        limits.
                                           § 54.9831–1 Special rules relating to group              1936; sec. 401(b), Pub. L. 105–200, 112 Stat.
                                           health plans.                                                                                                  *     *     *     *     *
                                                                                                    645 (42 U.S.C. 651 note); sec. 512(d), Pub. L.
                                                                                                    110–343, 122 Stat. 3881; sec. 1001, 1201, and           (c) Definition of essential health
                                           *      *    *     *     *
                                                                                                    1562(e), Pub. L. 111–148, 124 Stat. 119, as           benefits. The term ‘‘essential health
                                             (c) * * *                                                                                                    benefits’’ means essential health
                                                                                                    amended by Pub. L. 111–152, 124 Stat. 1029;
                                             (2) * * *                                              Division M, Pub. L. 113–235, 128 Stat. 2130;          benefits under section 1302(b) of the
                                             (ix) Travel insurance, within the                      Secretary of Labor’s Order 1–2011, 77 FR              Patient Protection and Affordable Care
                                           meaning of § 54.9801–2.                                  1088 (Jan. 9, 2012).                                  Act and applicable regulations. For this
                                           *      *    *     *     *                                ■ 7. Section 2590.701–2 is amended by                 purpose, a group health plan or a health
                                             (5) * * *                                              revising the definition of ‘‘short-term,              insurance issuer that is not required to
                                                                                                    limited-duration insurance’’, and adding              provide essential health benefits under
                                             (i) * * *
                                                                                                    a definition of ‘‘travel insurance’’ in               section 1302(b) must define ‘‘essential
                                             (C) Similar supplemental coverage                                                                            health benefits’’ in a manner that is
                                           provided to coverage under a group                       alphabetical order. The addition and
                                                                                                    revision read as follows:                             consistent with—
                                           health plan. To be similar supplemental                                                                          (1) One of the EHB-benchmark plans
                                           coverage, the coverage must be                           § 2590.701–2      Definitions.                        applicable in a State under 45 CFR
                                           specifically designed to fill gaps in the                *      *    *     *     *                             156.110, and includes coverage of any
                                           primary coverage. The preceding                             Short-term, limited-duration                       additional required benefits that are
                                           sentence is satisfied if the coverage is                 insurance means health insurance                      considered essential health benefits
                                           designed to fill gaps in cost sharing in                 coverage provided pursuant to a                       consistent with 45 CFR 155.170(a)(2); or
                                           the primary coverage, such as                            contract with an issuer that:                           (2) One of the three Federal
                                           coinsurance or deductibles, or the                          (1) Has an expiration date specified in            Employees Health Benefits Program
                                           coverage is designed to provide benefits                 the contract (taking into account any                 (FEHBP) plan options as defined by 45
                                           for items and services not covered by                    extensions that may be elected by the                 CFR 156.100(a)(3), supplemented, as
                                           the primary coverage and that are not                    policyholder with or without the                      necessary, to meet the standards in 45
                                           essential health benefits (as defined                    issuer’s consent) that is less than 3                 CFR 156.110.
                                           under section 1302(b) of the Patient                     months after the original effective date              *     *     *     *     *
                                           Protection and Affordable Care Act) in                   of the contract; and
                                           the State where the coverage is issued,                                                                        ■ 9. Section 2590.732 is amended by
                                                                                                       (2) Displays prominently in the                    adding paragraph (c)(2)(ix) and revising
                                           or the coverage is designed to both fill                 contract and in any application
                                           such gaps in cost sharing under, and                                                                           paragraph (c)(5)(i)(C) to read as follows:
                                                                                                    materials provided in connection with
                                           cover such benefits not covered by, the                  enrollment in such coverage in at least               § 2590.732 Special rules relating to group
                                           primary coverage. Similar supplemental                   14 point type the following: ‘‘THIS IS                health plans.
                                           coverage does not include coverage that                  NOT QUALIFYING HEALTH                                 *     *     *     *     *
                                           becomes secondary or supplemental                        COVERAGE (‘‘MINIMUM ESSENTIAL                           (c) * * *
                                           only under a coordination-of-benefits                    COVERAGE’’) THAT SATISFIES THE                          (2) * * *
                                           provision.                                               HEALTH COVERAGE REQUIREMENT                             (ix) Travel insurance, within the
                                           *      *    *     *     *                                OF THE AFFORDABLE CARE ACT. IF                        meaning of § 2590.701–2.
                                           ■ Par. 5. Section 54.9833–1 is amended                   YOU DON’T HAVE MINIMUM                                *     *     *     *     *
                                           by adding a sentence at the end to read                  ESSENTIAL COVERAGE, YOU MAY                             (5) * * *
                                           as follows:                                              OWE AN ADDITIONAL PAYMENT                               (i) * * *
                                                                                                    WITH YOUR TAXES.’’                                      (C) Similar supplemental coverage
                                           § 54.9833–1      Effective dates.                        *      *    *     *     *                             provided to coverage under a group
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                                             * * * Notwithstanding the previous                        Travel insurance means insurance                   health plan. To be similar supplemental
                                           sentence, the definition of ‘‘short-term,                coverage for personal risks incident to               coverage, the coverage must be
                                           limited-duration insurance’’ in                          planned travel, which may include, but                specifically designed to fill gaps in the
                                           § 54.9801–2 and paragraph (c)(5)(i)(C) of                is not limited to, interruption or                    primary coverage. The preceding
                                           § 54.9831–1 apply for plan years                         cancellation of trip or event, loss of                sentence is satisfied if the coverage is
                                           beginning on or after January 1, 2017.                   baggage or personal effects, damages to               designed to fill gaps in cost sharing in


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                                           75326              Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Rules and Regulations

                                           the primary coverage, such as                                (2) Displays prominently in the                       (ix) Travel insurance, within the
                                           coinsurance or deductibles, or the                        contract and in any application                        meaning of § 144.103 of this subchapter.
                                           coverage is designed to provide benefits                  materials provided in connection with                  *      *    *     *     *
                                           for items and services not covered by                     enrollment in such coverage in at least                  (5) * * *
                                           the primary coverage and that are not                     14 point type the following: ‘‘THIS IS                   (i) * * *
                                           essential health benefits (as defined                     NOT QUALIFYING HEALTH                                    (C) Similar supplemental coverage
                                           under section 1302(b) of the Patient                      COVERAGE (‘‘MINIMUM ESSENTIAL                          provided to coverage under a group
                                           Protection and Affordable Care Act) in                    COVERAGE’’) THAT SATISFIES THE                         health plan. To be similar supplemental
                                           the State where the coverage is issued,                   HEALTH COVERAGE REQUIREMENT                            coverage, the coverage must be
                                           or the coverage is designed to both fill                  OF THE AFFORDABLE CARE ACT. IF                         specifically designed to fill gaps in the
                                           such gaps in cost sharing under, and                      YOU DON’T HAVE MINIMUM                                 primary coverage. The preceding
                                           cover such benefits not covered by, the                   ESSENTIAL COVERAGE, YOU MAY                            sentence is satisfied if the coverage is
                                           primary coverage. Similar supplemental                    OWE AN ADDITIONAL PAYMENT                              designed to fill gaps in cost sharing in
                                           coverage does not include coverage that                   WITH YOUR TAXES.’’                                     the primary coverage, such as
                                           becomes secondary or supplemental                         *      *    *     *     *                              coinsurance or deductibles, or the
                                           only under a coordination-of-benefits                        Travel insurance means insurance                    coverage is designed to provide benefits
                                           provision.                                                coverage for personal risks incident to                for items and services not covered by
                                           *      *   *     *     *                                  planned travel, which may include, but                 the primary coverage and that are not
                                           ■ 10. Section 2590.736 is amended by                      is not limited to, interruption or                     essential health benefits (as defined
                                           adding a sentence at the end to read as                   cancellation of trip or event, loss of                 under section 1302(b) of the Patient
                                           follows:                                                  baggage or personal effects, damages to                Protection and Affordable Care Act) in
                                                                                                     accommodations or rental vehicles, and                 the State where the coverage is issued,
                                           § 2590.736       Applicability dates.
                                                                                                     sickness, accident, disability, or death               or the coverage is designed to both fill
                                             * * * Notwithstanding the previous                      occurring during travel, provided that                 such gaps in cost sharing under, and
                                           sentence, the definition of ‘‘short-term,                 the health benefits are not offered on a               cover such benefits not covered by, the
                                           limited-duration insurance’’ in                           stand-alone basis and are incidental to                primary coverage. Similar supplemental
                                           § 2590.701–2 and paragraph (c)(5)(i)(C)                   other coverage. For this purpose, the                  coverage does not include coverage that
                                           of § 2590.732 apply for plan years                        term travel insurance does not include                 becomes secondary or supplemental
                                           beginning on or after January 1, 2017.                                                                           only under a coordination-of-benefits
                                                                                                     major medical plans that provide
                                           DEPARTMENT OF HEALTH AND                                  comprehensive medical protection for                   provision.
                                           HUMAN SERVICES                                            travelers with trips lasting 6 months or               *      *    *     *     *
                                           45 CFR Chapter 1                                          longer, including, for example, those
                                                                                                     working overseas as an expatriate or                   PART 147—HEALTH INSURANCE
                                             For the reasons stated in the                           military personnel being deployed.                     REFORM REQUIREMENTS FOR THE
                                           preamble, the Department of Health and                                                                           GROUP AND INDIVIDUAL HEALTH
                                                                                                     *      *    *     *     *
                                           Human Services amends 45 CFR parts                                                                               INSURANCE MARKETS
                                           144, 146, 147, and 148 as set forth                       PART 146—REQUIREMENTS FOR THE
                                           below:                                                    GROUP HEALTH INSURANCE                                 ■ 16. The authority citation for part 147
                                                                                                     MARKET                                                 continues to read as follows:
                                           PART 144—REQUIREMENTS
                                                                                                                                                              Authority: Secs. 2701 through 2763, 2791,
                                           RELATING TO HEALTH INSURANCE                              ■ 13. The authority citation for part 146              and 2792 of the Public Health Service Act (42
                                           COVERAGE                                                  continues to read as follows:                          U.S.C. 300gg through 300gg–63, 300gg–91,
                                                                                                                                                            and 300gg–92), as amended.
                                           ■ 11. The authority citation for part 144                   Authority: Secs. 2702 through 2705, 2711
                                           continues to read as follows:                             through 2723, 2791, and 2792 of the Public             ■ 17. Section 147.126 is amended by
                                                                                                     Health Service Act (42 U.S.C. 300gg–1                  revising paragraph (c) to read as follows:
                                             Authority: Secs. 2701 through 2763, 2791,
                                                                                                     through 300gg–5, 300gg–11 through 300gg–
                                           and 2792 of the Public Health Service Act,
                                                                                                     23, 300gg–91, and 300gg–92.                            § 147.126   No lifetime or annual limits.
                                           42 U.S.C. 300gg through 300gg–63, 300gg–91,
                                           and 300gg–92.                                             ■ 14. Section 146.125 is amended by                    *     *     *     *     *
                                           ■ 12. Section 144.103 is amended by                       adding a sentence at the end to read as                  (c) Definition of essential health
                                           revising the definition of ‘‘short-term,                  follows:                                               benefits. The term ‘‘essential health
                                           limited-duration insurance’’ and adding                                                                          benefits’’ means essential health
                                                                                                     § 146.125     Applicability dates.                     benefits under section 1302(b) of the
                                           a definition of ‘‘travel insurance’’ in
                                           alphabetical order. The revision and                        * * * Notwithstanding the previous                   Patient Protection and Affordable Care
                                           addition read as follows:                                 sentence, the definition of ‘‘short-term,              Act and applicable regulations. For this
                                                                                                     limited-duration insurance’’ in                        purpose, a group health plan or a health
                                           § 144.103    Definitions.                                 § 144.103 of this subchapter and                       insurance issuer that is not required to
                                           *      *    *     *     *                                 paragraph (c)(5)(i)(C) of § 146.145 apply              provide essential health benefits under
                                              Short-term, limited-duration                           for policy years and plan years                        section 1302(b) must define ‘‘essential
                                           insurance means health insurance                          beginning on or after January 1, 2017.                 health benefits’’ in a manner that is
                                           coverage provided pursuant to a                           ■ 15. Section 146.145 is amended by                    consistent with—
                                           contract with an issuer that:                             adding paragraph (b)(2)(ix) and revising                 (1) One of the EHB-benchmark plans
                                              (1) Has an expiration date specified in                paragraph (b)(5)(i)(C) to read as follows:             applicable in a State under 45 CFR
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                                           the contract (taking into account any                                                                            156.110, and includes coverage of any
                                           extensions that may be elected by the                     § 146.145 Special rules relating to group              additional required benefits that are
                                           policyholder with or without the                          health plans.                                          considered essential health benefits
                                           issuer’s consent) that is less than 3                     *         *    *       *      *                        consistent with 45 CFR 155.170(a)(2); or
                                           months after the original effective date                        (b) * * *                                          (2) One of the three Federal
                                           of the contract; and                                            (2) * * *                                        Employees Health Benefits Program


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                                                            Federal Register / Vol. 81, No. 210 / Monday, October 31, 2016 / Rules and Regulations                                              75327

                                           (FEHBP) plan options as defined by 45                   535.0, Sabula, IA; and the Clinton                    coordinated with waterway users. No
                                           CFR 156.100(a)(3), supplemented, as                     Railroad Drawbridge, mile 518.0,                      objections were received.
                                           necessary, to meet the standards in 45                  Clinton, IA. The deviation is necessary                  In accordance with 33 CFR 117.35(e),
                                           CFR 156.110.                                            to allow the bridge owners time to                    each of these drawbridges must return
                                           *    *     *    *     *                                 perform preventive maintenance that is                to its regular operating schedule
                                                                                                   essential to the continued safe operation             immediately at the end of the effective
                                           PART 148—REQUIREMENTS FOR THE                           of the drawbridges and allows for a                   period of this temporary deviation. This
                                           INDIVIDUAL HEALTH INSURANCE                             seasonal deviation issued for these                   deviation from the operating regulations
                                           MARKET                                                  bridges each year. Maintenance is                     is authorized under 33 CFR 117.35.
                                                                                                   scheduled in the winter, when there is                  Dated: October 25, 2016.
                                           ■ 18. The authority citation for part 148               less impact on navigation due to less
                                           continues to read as follows:                                                                                 Eric A. Washburn,
                                                                                                   traffic. This deviation allows the bridges
                                                                                                   to open on signal if at least 24 hours                Bridge Administrator, Western Rivers.
                                             Authority: Secs. 2701 through 2763, 2791,
                                                                                                   advance notice is given.                              [FR Doc. 2016–26150 Filed 10–28–16; 8:45 am]
                                           and 2792 of the Public Health Service Act (42
                                           U.S.C. 300gg through 300gg–63, 300gg–91,                DATES: This deviation is effective from               BILLING CODE 9110–04–P
                                           and 300gg–92), as amended.                              5 p.m., December 13, 2016 until 9 a.m.,
                                           ■ 19. Section 148.102 is amended by                     March 2, 2017.
                                           adding a sentence at the end of                                                                               DEPARTMENT OF HOMELAND
                                                                                                   ADDRESSES: The docket for this
                                           paragraph (b) to read as follows:                                                                             SECURITY
                                                                                                   deviation, (USCG–2016–0956) is
                                           § 148.102 Scope, applicability, and
                                                                                                   available at http://www.regulations.gov.              Coast Guard
                                           effective dates.                                        Type the docket number in the
                                                                                                   ‘‘SEARCH’’ box and click ‘‘SEARCH.’’                  33 CFR Part 117
                                              (b) * * * Notwithstanding the
                                                                                                   Click on Open Docket Folder on the line
                                           previous sentence, the definition of
                                                                                                   associated with this deviation.                       [Docket No. USCG–2016–0948]
                                           ‘‘short-term, limited-duration
                                                                                                   FOR FURTHER INFORMATION CONTACT: If
                                           insurance’’ in § 144.103 of this                                                                              Drawbridge Operation Regulation;
                                           subchapter and paragraph (b)(7) of                      you have questions on this temporary
                                                                                                   deviation, call or email Eric A.                      Newtown Creek, Brooklyn and Queens,
                                           § 148.220 apply for policy years                                                                              NY
                                           beginning on or after January 1, 2017.                  Washburn, Bridge Administrator,
                                                                                                   Western Rivers, Coast Guard; telephone                AGENCY: Coast Guard, DHS.
                                           ■ 20. Section 148.220 is amended by
                                                                                                   314–269–2378, email Eric.Washburn@
                                           adding paragraph (a)(9) and revising                    uscg.mil.                                             ACTION:Notice of deviation from
                                           paragraph (b)(7) to read as follows:                                                                          drawbridge regulation.
                                                                                                   SUPPLEMENTARY INFORMATION: The
                                           § 148.220   Excepted benefits.                          Illinois Central, Canadian Pacific, and               SUMMARY:    The Coast Guard has issued a
                                           *     *    *     *      *                               Union Pacific Railroads requested a                   temporary deviation from the operating
                                             (a) * * *                                             temporary deviation for the Illinois                  schedule that governs the Pulaski Bridge
                                             (9) Travel insurance, within the                      Central Railroad Drawbridge, mile                     across the Newtown Creek, mile 0.6,
                                           meaning of § 144.103 of this subchapter.                579.9, Dubuque, Iowa, Sabula Railroad                 between Brooklyn and Queens, New
                                             (b) * * *                                             Drawbridge, mile 535.0, Sabula, Iowa,                 York. This deviation is necessary to
                                             (7) Similar supplemental coverage                     and Clinton Railroad Drawbridge, mile                 allow the bridge owner to perform span
                                           provided to coverage under a group                      518.0, Clinton, Iowa, across the Upper                locks adjustment at the bridge.
                                           health plan (as described in                            Mississippi River to open on signal if at             DATES: This deviation is effective from
                                           § 146.145(b)(5)(i)(C) of this subchapter).              least 24 hours advance notice is given                12:01 a.m. on November 8, 2016 to 5
                                           [FR Doc. 2016–26162 Filed 10–28–16; 8:45 am]            for 79 days from 5 p.m., December 13,                 a.m. on December 2, 2016.
                                           BILLING CODE 4830–01–P; 4120–01–P; 4510–29–P            2016 to 9 a.m., March 2, 2017 for                     ADDRESSES: The docket for this
                                                                                                   scheduled maintenance on the bridges.                 deviation, [USCG–2016–0948] is
                                                                                                      The Illinois Central, Sabula, and                  available at http://www.regulations.gov.
                                           DEPARTMENT OF HOMELAND                                  Clinton Railroad Drawbridges currently                Type the docket number in the
                                           SECURITY                                                operate in accordance with 33 CFR                     ‘‘SEARCH’’ box and click ‘‘SEARCH’’.
                                                                                                   117.5, which states the general                       Click on Open Docket Folder on the line
                                           Coast Guard                                             requirement that drawbridges open on                  associated with this deviation.
                                                                                                   signal.
                                                                                                      There are no alternate routes for                  FOR FURTHER INFORMATION CONTACT: If
                                           33 CFR Part 117
                                                                                                   vessels transiting these sections of the              you have questions on this temporary
                                           [Docket No. USCG–2016–0956]                             Upper Mississippi River. The bridges                  deviation, call or email Judy Leung-Yee,
                                                                                                   cannot open in case of emergency.                     Project Officer, First Coast Guard
                                           Drawbridge Operation Regulation;                           The Illinois Central Railroad                      District, telephone (212) 514–4330,
                                           Upper Mississippi River, Clinton, IA                    Drawbridge provides a vertical                        email judy.k.leung-yee@uscg.mil.
                                           AGENCY: Coast Guard, DHS.                               clearance of 19.9 feet, Sabula Railroad               SUPPLEMENTARY INFORMATION: The
                                           ACTION:Notice of deviation from                         Drawbridge provides a vertical                        Pulaski Bridge, mile 0.6, across the
                                           drawbridge regulation.                                  clearance of 18.1 feet, and Clinton                   Newtown Creek, has a vertical clearance
                                                                                                   Railroad Drawbridge provides a vertical               in the closed position of 39 feet at mean
                                           SUMMARY:   The Coast Guard has issued a                 clearance of 18.7 feet, above normal                  high water and 43 feet at mean low
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                                           temporary deviation from the operating                  pool in their closed-to-navigation                    water. The existing bridge operating
                                           schedule that governs three drawbridges                 positions. Navigation on the waterway                 regulations are found at 33 CFR
                                           crossing the Upper Mississippi River in                 consists primarily of commercial tows                 117.801(g)(1).
                                           Iowa: The Illinois Central Railroad                     and recreational watercraft and will not                 The waterway is transited by
                                           Drawbridge, mile 579.9, Dubuque, IA;                    be significantly impacted. This                       commercial barge traffic of various
                                           the Sabula Railroad Drawbridge, mile                    temporary deviation has been                          sizes.


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Document Created: 2018-02-02 12:13:42
Document Modified: 2018-02-02 12:13:42
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rules.
DatesEffective date. These final regulations are effective on December 30, 2016.
ContactElizabeth Schumacher or Matthew Litton of the Department of Labor, at 202-693-8335, Karen Levin, Internal Revenue Service, Department of the Treasury, at (202) 317-5500, David Mlawsky or Cam Clemmons, Centers for Medicare & Medicaid Services, Department of Health and Human Services, at 410-786-1565.
FR Citation81 FR 75316 
RIN Number1545-BN44, 1210-AB75 and 0938-AS93
CFR Citation26 CFR 54
29 CFR 2590
45 CFR 144
45 CFR 146
45 CFR 147
45 CFR 148
CFR AssociatedPension and Excise Taxes; Continuation Coverage; Disclosure; Employee Benefit Plans; Group Health Plans; Health Care; Health Insurance; Medical Child Support; Reporting and Recordkeeping Requirements; Administrative Practice and Procedure and Penalties

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